Annual Report 2013
`
`Exhibit 1068
`IPR2017-00807
`ARGENTUM
`
`000001
`
`

`

`2013 in brieF
`
`Table of Contents
`
` Meda in brief
`1 2013 in brief
`2 CEO’s report
` 4 Market
`12 Strategy and business model
`16 Sales and marketing
`19 Product portfolio
`28 Product development
`30 Manufacturing and supply
` 32 Employees
`34
`Investment story
`
`36 Sustainability report
`
` Management report
` 56 Operations
`60 Risk factors
`63 Corporate governance report
`
`Financial reports
`68 Accounts group
`74 Notes group
`97 Accounts parent company
` 102 Notes parent company
` 108 Statement of the board
`
` 109 Audit report
` 110 Financial review
` 112 The Meda share
` 114 Board members
` 116 Executives information
` 118 Definitions
` 119 Glossary
` 120 Shareholder information
`
`000002
`
`

`

`13,114
`
`Group sales reached
`SEK 13,114 million
`
`3,734
`
`EBITDA amounted to
`SEK 3,734 million
`
`3,062
`
`1,914
`
`At the end of 2013, Meda
`had 3,062 employees …
`
`… about 1,914 of whom
`in sales and marketing
`
`120
`
`60
`
`Our pharmaceuticals
`are sold in more than
`120 countries
`
`Our sales organizations
`are present in close to
`60 countries
`
`000003
`
`

`

`Meda in brief
`
`Meda is a leading international specialty pharma company with
`a broad product portfolio and its own sales organization in
`close to 60 countries. Including the markets where distributors
`handle sales activities, Meda’s products are sold in more than
`120 countries. This means that Meda reaches 80% of the global
`pharmaceutical market. Measured in sales, Meda is the 48th
`largest pharmaceutical company and the 15th largest specialty
`pharma company in the world.
`At the end of 2013 Meda had 3,062 (2,900) employees,
`1,914 of which worked in sales and marketing. Over the past
`few years Meda’s presence in growth markets has grown. The
`marketing organizations in these markets employ about 680
`people.
`Meda AB is the Group’s 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 areas:
`• Respiratory and Dermatology
`• Over-the-counter drugs (OTC)
`
`The company offers niche products that meet particular
` medical needs:
`• Comprehensive product portfolio in selected therapy areas
`• Clear synergies in sales and marketing
`
`000004
`
`

`

`
`
`Important events during 2013
`
`Geographical
`expansion for
`the OTC
`portfolio
`
`Increased
` therapeutic
`focus
`
`Launch of new
`products
`
`Strong, positive
`contribution
`from Emerging
`Markets
`
`Product launches in
`new markets
`
`Respiratory and
`Dermatology
`
`Dymista (US and
`Europe) and
`Zyclara (Europe)
`
`Good return
`on marketing
`investments
`
`Acquisitions of
`Acton Pharma-
`ceuticals
`with Aerospan
`and EB24
`
`Aerospan is the only
`approved inhaler
`with a built-in spacer
`
`The year in figures
`
`• Group sales amounted to SEK 13,114 million (12,991)
`• Organic growth of 4%
`• Free cash flow of SEK 2,688 million (2,672)
`•
`Increased focus on the Respiratory therapy area and the OTC portfolio
`• Operating profit of SEK 1,548 million (1,801)
`• Profit after tax amounted to SEK 805 million (1,175)
`• Earnings per share was SEK 2.67 (3.98)
`• EBITDA amounted to SEK 3,734 million (3,945), equivalent to a margin of 28.5% (30.4)
`• Proposed dividend per share SEK 2.50 (2.25)
`
`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
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`MeDa aNNual report 2013
`
`1
`
`000005
`
`

`

`CEO’s REPORt
`
`Entering
`the next phase
`
`First of all, I would like to take the opportunity to
`thank Anders Lönner for his fantastic work at
`Meda. It has been a great inspiration working
`with him and I look forward to continuing to
`build and position Meda as one of the leading
`specialty pharma companies.
`
`Progress on many fronts
`2013 was an important year for Meda. It was
`a year of focused investments and revived
`organic growth. While we continued to invest
`in our key therapy areas Respiratory and Der-
`matology, growth markets and the over-the-
`counter (OTC) portfolio, we saw organic growth
`increase. Supported by Emerging Markets, our
`product Dymista and our international strategy
`for the OTC portfolio, organic growth acce-
`lerated in the second half of the year to reach
`4% for the full year. This is significantly stronger
`than in previous periods.
`
`Growth driven by product launches…
`In Respiratory, Dymista was well received in
`the US and it was ranked the 2nd largest brand
`in the respiratory area by the end of the year.
`In Dermatology, Elidel’s strong growth was
` supported by solid demand in several markets.
`Furthermore, the OTC portfolio benefited from
`the roll-out of selective products into new
` markets.
`
`…and Emerging Markets
`In terms of geography, Emerging Markets per-
`formed very well this year. Net sales increased
`by 6% with China and Commonwealth of Inde-
`pendent States (CIS) as the strongest growth
`markets. The positive development reflects
`both our ambitious market investments and
`our competitive product portfolio.
`
`000006
`
`

`

`CEO’s REPORt
`
`“ Our organic growth accelerated in the second
`half of the year to reach 4% for the full year. This is
`significantly stronger than in previous periods.”
`
`synergies coming in Respiratory
`In October Meda completed the acquisition of
`Aerospan – a patented product for the treat-
`ment of asthma. The acquisition secures unique
`spacer technology and supports Meda’s
` strategy of an increased focus on the respira-
`tory area. Aerospan – an important comple-
`ment to Dymista – is expected to generate
` marketing synergies with Dymista when it is
`launched in 2014.
`
`A trustworthy Meda
`Meda has a clear commitment to creating value
`for the various stakeholders. We express our
`continued support for the UN Global Compact
`and renew our ongoing commitment to the
` initiative and its principles. For us, it is equally
`important to be a responsible member of the
`global pharmaceutical market, as it is to be a
`reliable and trustworthy partner to the local
`community. During the year Meda has intro-
`duced a new system for supplier follow-up, and
`we have further developed our anti-corruption
`processes.
`
`A sustainable Meda
`There has been significant progress in health-
`care, but the needs are far from being met.
`Population growth, greater life expectancy and
`changes in lifestyles are increasing the need for
`care in different ways. Meda’s most important
`mission is to provide effective and safe pharma-
`ceuticals for patients and customers. Patient
`safety is therefore our highest priority. High
`quality in the manufacturing process is essen-
`tial to ensure patient safety, and we strive to
`continuously improve our supply chain
` management practices and expand our market
`knowledge. Corporate social responsibility
`
`(CSR) risks relating to suppliers and partners
`are increasingly important to manage, particu-
`larly when entering new markets and facing
`new local regulations and business practices.
`It is also important to manage such risks when
`considering acquisitions of companies and
`products.
`
`Our talent base is the foundation
`for future success
`Meda’s future success is entirely dependent on
`the strength of our talent base. We have always
`put a high priority on attracting people who
`wish to make a difference. Today we have
`excellent breadth, depth and quality of both
`employees and management. The Meda Way
`provides leadership inspiration and summa-
`rizes the key drivers of our corporate culture.
`Fast decision making, continuous learning and
`client focus are imprinted on our DNA. At year-
`end, Meda had a total of 3,226 employees and
`contractors. To maintain speed and flexibility
`even as we grow, Meda increasingly provides
`corporate management training and specialist
`training.
`
`Cash and cost discipline
`It is also important to highlight our rigorous
`cash and cost discipline. Our cash flow is strong
`and we protect it by continuously implementing
`efficiency measures throughout our business,
`with the objective of maintaining our financial
`flexibility. To us, financial flexibility is a strategic
`asset that enables us to finance both our own
`growth investments and shareholder value ini-
`tiatives over time. In 2013, our free cash flow
`amounted to SEK 2,688 million, representing
`20.5% of sales.
`
`A strong market position
`To conclude, we have the strategy and core
`strengths required to expand our position in our
`industry. Our position is well defined, our go-to-
`market capabilities are strong and we have both
`scale and efficiency to leverage our product
`portfolio globally. With greater focus to faster
`growing areas, both in terms of products and
`geographies, Meda’s organic growth outlook is
`positive. By adding targeted acquisitions in our
`key therapy areas, higher growth rates are
`achievable. Actions to improve our operational
`efficiency, especially in the area of supply
`chain, are also expected to support our profit-
`ability and cash flow going forward.
`
`Great confidence in our future
`Based on the support from all our competent
`individuals, and our newly formed team of
` well- experienced and progressive senior exec-
`utives, I have great confidence in our future.
`Together we will grow Meda considerably in
`the coming years. In light of our many achieve-
`ments, I would like to thank all employees of
`Meda for your hard work, contribution and
` dedication in 2013.
`
`Dr. Jörg-Thomas Dierks
`Chief Executive Officer
`
`MeDa aNNual report 2013
`
`3
`
`000007
`
`

`

`MARkEt
`
`Healthy growth in the global
`pharmaceutical market
`
`In 2012 drugs were sold for a total of USD 965 billion globally, according to IMS Consulting Group.
`In 2014, for the first time, the global pharmaceutical market is expected to be worth more than USD 1,000
`billion and to reach net sales of USD 1,200 billion in 2017, an increase of around 24% from 2012.
`
`24%
`
`The global pharma-
`ceutical market is
`expected to grow around
`24% by 2017.
`
`Faster growth for OtC
`The market for over-the-counter
`(OTC) drugs is growing faster than
`the prescription drugs market. In
`2012 the global OTC drugs market
`was worth around USD 115 billion,
`equivalent to 12% of the total
` pharmaceutical market. The per-
`centage of OTC sales is signifi-
`cantly higher in growth markets
`than in Europe, North America and
`Japan.
`
`Branded drugs still growing
`in developed countries
`In 2012 the percentage of gener-
`ics (copies of original, more expen-
`sive drugs whose patents have
`expired) was 27% of the total sales
`of drugs globally. The percentage
`is expected to increase to 36% in
`2017. The percentage of generics
`is highest in growth markets
`where it is estimated that around
`63% of drugs prescribed will be
`
`generics in 2017. A key driver of
`the increased use of generics is
`the expiring patents for numerous
`blockbusters over the next few
`years. However, even though
`generics have grown significantly,
`branded drugs are expected to
`continue to grow, driven by spe-
`cialty pharma. In developed mar-
`kets branded drugs still account
`for more than 67% of spending.
`
`By Emerging Markets we
`mean our geographical busi-
`ness segment.
`
`By growth markets we mean
`markets where growth is
`above the global average for
`the pharmaceutical industry.
`
`Global pharMaceutical Market, 2012 vS 2017
`
`1) Developed markets are defined
`as Canada, France, Germany,
`Italy, Japan, South Korea, Spain,
`UK and US.
`
`2) Pharmerging countries are
`defined as Algeria, Argentina,
`Brazil, China, Colombia, Egypt,
`India, Indonesia, Mexico, Nigeria,
`Pakistan, Poland, Romania,
` Russia, Saudi Arabia, South
`Africa, Thailand, Turkey, Ukraine,
` Vene zuela and Vietnam.
`
`Value in USD bn
`1,200
`
`1,000
`
`800
`
`600
`
`400
`
`200
`
`0
`
`665
`
`622
`
`1,185
`
`956
`
`385
`
`224
`
`120
`
`140
`
`Source: iMS consulting Group
`
`2012 actual
`
`2017 estimate
`
`Developed1)
`
`Pharmerging2)
`
`Rest of World
`
`Global
`
`4
`
`MeDa aNNual report 2013
`
`000008
`
`

`

`MARkEt
`
`Growth drivers
`
`Demand on the global drug market is mainly driven by three factors: demographic trends,
`economic development and development of new drugs and therapies.
`
`Demographic trends
`The earth’s population is increas-
`ing. An aging population, primarily
`in Europe, North America and
`Japan is driving demand for drugs
`for age-related and chronic
` diseases. The combination of
`increased drug use per patient
`and a growing number of new
`patients is driving the upswing in
`pharma ceutical market volumes in
`the number of prescriptions and
`the dosages dispensed.
`
`larly in Europe as a result of bud-
`getary problems, and an increase
`in the use of generics are slowing
`the growth in these markets.
`Growth is, however, expected
`to increase as economies recover.
`Greater interest among people
`in preventive care and a better
`quality of life is driving demand
`for OTC drugs. The change of
` eating habits is as well impacting
`the demand for drugs such as
` diabetes etc.
`
`Economic development
`As people’s incomes in growth
`markets rise and healthcare bud-
`gets increase, the citizens of those
`countries have more and more
`access to modern healthcare and
`modern drugs. Strong cost control
`in many mature markets, particu-
`
`Development of new drugs
`More and more diagnoses, espe-
`cially in lifestyle diseases, can be
`treated with drugs. Specialty phar-
`maceuticals targeting specific dis-
`eases are expected to become
`more important going forward,
`which will support overall market
`
`pharMaceutical SpeNDiNG iN SoMe iMportaNt couNtrieS
`
`Share of the
`total market
`2012, %
`
`Equivalent to,
`USD billion
`2012
`
`Expected growth
`per year
`2013–2017, %
`
`34
`24
`20
`
`330
`222
`193
`
`1–4
`0–3
`10–13
`
`North America
`Western Europe
`Growth markets
`
`Source: iMS consulting Group
`
`Development in the pharmaceutical market looks different depending
`on the region. While the mature markets in Europe and the US are
` experiencing modest growth, the sales growth in growth markets
`is taking off with double digits.
`
`growth. New, advanced drugs can
`treat increasingly severe diseases
`in very small patient groups and
`these drugs will grow in impor-
`tance in the developed world. At
`the same time, more generics are
`
`being prescribed and growth is
`therefore expected to be lower
`than in the past five years in the
`pharmaceutical market in devel-
`oped countries.
`
`Global pharMaceutical Market, Growth rateS 2008–2017
`
`15.0
`
`13.0
`
`10.0
`
`Growth%
`15
`
`12
`
`9
`
`6
`
`3
`
`0
`
`4.0
`
`2.9
`
`1.0
`
`4.7
`
`5.0
`
`2.0
`
`5.4
`
`6.0
`
`3.0
`
`Developed1)
`
`Pharmerging2)
`
`Rest of World
`
`Global
`
`2008–2012 actual
`
`2013–2017 low estimate
`
`2013–2017 high estimate
`
`Source: iMS consulting Group
`
`MeDa aNNual report 2013
`
`5
`
`000009
`
`

`

`MARkEt
`
`Transformation in the pharmaceutical industry
`
`The global pharmaceutical industry is changing at a rapid pace and companies are
`facing major challenges because of this. This trend also brings important opportunities
`for specialized companies such as Meda to compete in well-defined areas.
`
`More expensive research
`but not more drugs
`The major pharmaceutical companies – Big
`Pharma – are increasingly seeing the patents
`for their blockbuster drugs expire. The cost of
`research for new drugs has increased consider-
`ably. At the same time there are fewer block-
`busters in the pipeline.
`According to Food and Drug Administration
`(FDA), the global R&D spending by the world’s
`top 500 pharmaceutical companies rose from
`USD 59 billion in 2001 to USD 132 billion in
`2011. At the same time, the number of FDA New
`Molecular Entity (NME) approvals decreased
`from 29 per year to 26 per year. Instead, these
`companies are investing in more diversified
`
`research portfolios containing advanced pro-
`ducts aimed at specific therapeutic areas.
` Existing patented products that do not fit into
`the new strategy can, for example, be sold to
`specialty pharma companies.
`
`Concentration and consolidation
`The increasing cost of research & develop-
`ment, in combination with fewer new block-
`busters, is driving consolidation in the pharma-
`ceutical industry. The industry is being restruc-
`tured in the search for economies of scale.
`Many companies have also launched extensive
`rationalization programs to reduce costs in
`research, production and sales & marketing.
`
`the value chain is breaking up
`Paradoxically, this market consolidation is caus-
`ing the value chain to break up. As competition
`increases, it is becoming more and more diffi-
`cult to retain the highest level of expertise in all
`segments, and companies are being forced to
`specialize in one or a few links in the chain.
`There are no signs that this trend is diminishing.
`Conversely, the trend toward drugs for increas-
`ingly specific diagnoses with smaller patient
`groups – and by extension, solutions rather
`than products – is also driving companies to
`further specialize.
`
`r&D activity haS More thaN DoubleD iN the paSt DecaDe, but New Molecule eNtity approvalS have DroppeD
`
`1999–2001
`86 FDA NME
`approvals
`(29 per year)
`
`USD billion
`
`140
`
`100
`
`50
`
`20
`
`500
`
`1,500
`
`1,500
`
`2,000
`
`2,500
`
`59.0
`
`2001
`
`1,167
`
`N (companies)
`
`6 MeDa aNNual report 2013
`
`Global R&D spending by world’s top 500 pharma companies
`(USD billion)
`
`Number of companies performing pharma R&D
`
`2011
`
`131.7
`
`2009–2011
`77 FDA NME
`approvals
`(26 per year)
`
`2,455
`
`Source: atkearney
`
`000010
`
`

`

`Elidel is currently available for sale
`in 90 markets globally through
`Meda’s own marketing organiza-
`tion and via partners.
`
`MARkEt
`
`MeDa aNNual report 2013
`
`7
`
`000011
`
`

`

`MARkEt
`
`Q&A with our Executive
`Vice Presidents
`
`Q • Can you provide a brief overview of the competitive landscape in your region?
`
`• What are your growth expectations in the years ahead?
`• Which are the strongest therapy areas?
`• What are Meda’s key priorities for 2014 in your region?
`
`A
`
`Maria Carell: Executive Vice President, North America/Australia
`
`The number of patients in the US
`is rising due to an aging popula-
`tion, increased life span and the
`Affordable Care Act (Obamacare)
`which will provide coverage for up
`to 30 million previously uninsured
`Americans. At the same time, ris-
`ing government costs and the eco-
`nomic downturn since 2008 have
`increased price pressure.
`Our key segments in the US –
`rhinitis and asthma and our OTC
`product portfolio – have been
`
`growing. According to the Centers
`for Disease Control and Preven-
`tion (CDC) asthma rates have
`increased and are still increasing,
`and rhinitis prescriptions are grow-
`ing steadily. The US market for
`OTC drugs is on the rise as well,
`driven to some extent by govern-
`ment measures.
`Meda’s main priority in the US is
`to optimize the portfolio and grow
`the respiratory franchise by capi-
`talizing on the significant syner-
`
`gies of our product offering.
`This includes continued efforts
`to increase Dymista’s market
`share and to leverage existing
`relationships with allergy and
`asthma experts to effectively
`launch Aerospan, taking advan-
`tage of the increased rhinitis
` market coverage.
`
`SaleS per reGioN
`
`USA
`
`MSEK
`3,000
`
`2,500
`
`2,000
`
`1,500
`
`1,000
`
`500
`
`0
`
`EMERGING MARKETS
`
`WESTERN EUROPE
`
`MSEK
`10,000
`
`8,000
`
`6,000
`
`4,000
`
`2,000
`
`0
`
`MSEK
`2,000
`
`1,500
`
`1,000
`
`500
`
`0
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`8 MeDa aNNual report 2013
`
`000012
`
`

`

`Ton van’t Hullenaar: Executive Vice President, Europe/Latin America
`
`The competitive landscape differs
`from country to country in the
`countries I am responsible for. In
`several countries, Meda is the
`market leader in selected therapy
`areas and the main objective is to
`continue to grow and ensure that
`patients have access to our prod-
`
`ucts. We are facing price pressure
`for some of our prescription drugs
`and our challenge is to offset that
`by growing sales for newly
`launched and existing products.
`Growth in the OTC segment is
`helped by improved brand aware-
`ness for in particular CB12.
`
`We expect the continued rollout of
`Dymista in Respiratory and Zyclara
`and Acnatac in Derma tology to
`increase growth. There is also
`good momentum in the OTC port-
`folio. These launches continue to
`be key priorities for 2014.
`
`Esfandiar Faghfouri: Executive Vice President, Europe/Asia/Africa
`
`In the established markets of the
`EU, governments and health
`authorities have been focusing on
`reducing healthcare costs in
`recent years. However, we expect
`these markets to stabilize and
`show moderate growth over the
`next few years. Meda is in a strong
`position, especially in the growing
`key therapy areas of Dermatology
`and Respiratory. The OTC sector
`continues to demonstrate good
`
`growth in the EU countries and we
`expect the recently launched
`products in particular CB12 to
` benefit from that momentum.
`As regards Emerging Markets,
`we are expecting continued good
`growth because a majority of
`countries are launching in the
`future public health insurance sys-
`tems as economic growth contin-
`ues and public demand for health-
`care services grows.
`
`Meda’s key priorities for 2014 in
`Emerging Markets are to streng-
`then the respiratory and derma-
`tology franchises alongside the
`local products and to ensure sales
`growth by adding new products to
`the current offering. In Europe our
`priority is to continue with the
`launch and promotion of Dymista,
`Zyclara, Elidel and Acnatac.
`
`SaleS by couNtry
`
`US, 18%
`
`Sweden, 10%
`
`Germany, 10%
`
`France, 10%
`
`Italy, 6%
`
`UK, 6%
`
`Spain, 4%
`
`Belgium, 3%
`
`Netherlands, 3%
`
`Other, 30%
`
`MARkEt
`
`A
`
`A
`
`MeDa aNNual report 2013
`
`9
`
`000013
`
`

`

`Meda would be nothing without its
`employees. Ever since the start,
`Meda has focused on creating a
`culture of entrepreneurship and
`drive process. The goal has always
`been to attract people with a strong
`desire to bring about change.
`
`10
`
`MeDa aNNual report 2013
`
`000014
`
`

`

`MeDa aNNual report 2013
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`11
`
`000015
`
`

`

`stRAtEGy AND BusINEss MODEl
`
`Specialized position
`in the value chain
`
`Clear business
`concept
`
`Focus on sales
`and marketing
`
`Meda holds a clearly-defined position in
`the value chain. The company’s main
`focus is sales and marketing. One of
`Meda’s strongest assets is the ability to
`quickly and effectively integrate acquired
`operations and commercialize new pro-
`ducts. Key activities are primarily sales
`and marketing, development of existing
`products, manufacturing and supply.
`
`Meda’s business concept is to offer cost-
`effective and medically well-motivated
`products. The company’s goal is to be -
`come a world-leading specialty pharma
`company. The means for achieving this
`involves organic growth through market-
`adapted product development and an
`active acquisition strategy.
`
`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 selected therapy areas
`(primarily Respiratory and Dermatology)
`and the OTC market segment.
`
`MeDa’S poSitioN iN the pharMaceutical value-chaiN
`
`New products secured through acquisitions Meda’s position in the pharmaceutical value chain
`
`Drug discovery
`
`Drug development
`
`Manufacturing & supply
`
`sales & marketing
`
`specialist advisory
`
`Market adapted product development in late clinical phase, typically phase III
`
`Meda holds a specialized position in the value chain. The company does not conduct any high-risk, in-house, early-stage
` pharmaceutical development. Instead, Meda is focused on market adapted product development in key therapeutic areas and
`sales and marketing. Read more on page 28.
`
`12 MeDa aNNual report 2013
`
`000016
`
`

`

`stRAtEGy AND BusINEss MODEl
`
`Products are
`acquired and further
`developed
`
`Two-legged
`growth strategy
`
`Greater focus
`on organic growth
`
`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
`formulations (Astepro and Zyclara)
`• Through new combinations of products
`(Dymista and Acnatac)
`• Through the internationalization
`of drugs (Elidel and Dymista)
`
`Meda’s development work can best be
`described as market-adjusted product
`development in late clinical phases with
`the objective of, for example, prolonging
`the life cycle of a drug or securing
`approval for a drug in new markets so that
`it can be re-launched in those markets.
`
`Meda’s growth strategy involves a combi-
`nation of organic growth and acquisitions.
`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, Derma-
`tology and OTC.
`
`From 2000 to 2013 Meda made more than
`30 major acquisitions of companies and
`product rights. Several strategic acquisi-
`tions were completed in the period 2005
`to 2008, including German pharmaceuti-
`cal group Viatris, 3M’s European pharma-
`ceuticals division, US specialty pharma
`company MedPointe and Valeant’s Euro-
`pean pharmaceutical division. In 2010
`Meda acquired US specialty pharma com-
`pany Alaven and in 2011 Nordic OTC com-
`pany Antula was incorporated.
`
`Since 2012, in addition to the OTC portfo-
`lio and growth markets, Meda has focused
`on a number of selected therapy areas,
`particularly Respiratory and Dermatology.
`This has involved a greater focus on
`organic growth. In 2012 and 2013 new
`products were successfully launched in
`these therapeutic focus areas, for exam-
`ple Dymista and Zyclara.
`
`Several products of the Nordic OTC port-
`folio were launched in new markets in
`2013. Meda also increased its market
`investments in a number of growth market
`countries during the year. The combina-
`tion of new launches and increased
`investments in countries with higher
`growth improved Meda’s organic growth
`in 2013. This is a pattern that is expected
`to continue in the years ahead.
`
`MeDa aNNual report 2013
`
`13
`
`000017
`
`

`

`In 2013 the product portfolio was
`strengthened in Respiratory
`through the acquisition of US drug
`company Acton Pharmaceuticals
`Inc. This acquisition gave Meda
`the rights to Aerospan, a patented
`product with a built-in spacer to
`treat asthma.
`
`stRAtEGy AND BusINEss MODEl
`
`14
`
`MeDa aNNual report 2013
`
`000018
`
`

`

`Important acquisitions
`
`stRAtEGy AND BusINEss MODEl
`
`key acquiSitioNS aND aGreeMeNtS 2005–2013, SaleS per year
`
`2013
`
`Acton (Aerospan), Zpearpoint (EB24)
`
`2012
`
`Jazz (Women's health products), Midnite (Product acquisition)
`
`2011
`
`McNeil AB/Cilag GmbH International (Treo), Antula (OTC), Novartis (Elidel)
`
`2010
`
`Graceway (Zyclara), Alaven (US OTC)
`
`11,571
`
`2009
`
`Cipla (Dymista expanded rights)
`
`2008
`
`Valeant (European business, Expansion eastern Europe including Russia)
`
`10,675
`
`2007
`
`MedPointe (US), Recip
`
`8,145
`
`13,114
`
`12,991
`
`12,856
`
`13,178
`
`2006
`
`3M (European business)
`
`5,256
`
`2005
`
`Viatris (Pan-European)
`
`2,870
`
`2004
`
`793
`
`2005
`
`The acquisition of Viatris
`was of great importance
`for several reasons. It
`transformed Meda into a
`Pan European Specialty
`Pharma Company,
`strengthened the product
`portfolio and had signifi-
`cant synergies.
`
`2006–2007
`
`The acquisition of the 3M
`European business
`strengthened Meda’s
`European product portfo-
`lio. The MedPointe acquisi-
`tion established Meda in
`the US and gave access to
`an allergy franchise with
`the market leading prod-
`ucts Asteline and Astepro
`as well as the develop-
`ment project Dymista
`which was at that time in
`clinical development.
`
`2008–2009
`
`Meda acquired the Euro-
`pean business of Valeant
`thereby establishing Meda
`in Eastern Europe. Meda
`expanded it’s rights to
`Dymista to other markets
`including Europe and other
`major markets.
`
`2013
`
`Meda acquired Acton
`including the patented
`product Aerospan thereby
`expanding Meda’s product
`portfolio in the focus area
`Respiratory. Through the
`Zpearpoint acquisition
`Meda received an impor-
`tant addition to the OTC
`portfolio and a comple-
`ment to CB12.
`
`2011
`
`Meda acquired the global
`product rights to Elidel
`from Novartis. Elidel is one
`of Meda’s more important
`products within Dermatol-
`ogy. Recently a new study
`has been presented which
`has given the use of Elidel
`further support in the area
`of atopic dermatitis.
` Antula, a Nordic com-
`pany focusing on the OTC
`area was acquired in the
`beginning of 2011. CB12
`was one of the successful
`brands in the Antula prod-
`uct portfolio. The product
`portfolio also included
`other well-known brands
`such as Zyx and Naloc.
`
`MeDa aNNual report 2013
`
`15
`
`000019
`
`

`

`sAlEs AND MARkEtING
`
`Growing presence
`in growth markets
`
`60
`
`Our sales organizations
`are present in close to
`60 countries.
`
`Geographic
`distribution
`
`Expansion in Emerging Markets
`Meda’s sales and marketing organization is dis-
`tinguished by its efficient structure where the
`employees in general have a high level of edu-
`cation. The company has 1,914 employees
`working in sales and marketing in close to 60
`countries.
`For historical reasons, Meda’s market pre-
`sence is the strongest in Europe and the US,
`where the company has 843 and 345 employ-
`ees respectively in sales and marketing. How-
`ever, Meda’s presence in Emerging Markets is
`growing. In recent years Meda has invested sig-
`nificant resources into the sales and marketing
`organization in these markets. At the end of
`2013 Emerging Markets accounted for 15% of
`Meda’s total sales, compared to 14% in 2012.
`
`Expansion strategy
`
`A constant focus on sales and marketing
`Meda’s expansion has taken place both organi-
`cally and through acquisitions. Sales and mar-
`keting are crucial processes in the integration
`of an acquisition because success depends on
`the acquired company and its products being
`quickly integrated and commercialized accord-
`ing to the Meda model.
`The Meda model reflects several of the com-
`pany’s fundamental values:
`• Non-bureaucratic, efficient and business-
`driven
`• Highly efficient marketing and personal sales
`• Always take full advantage of the top talent
`and expertise in the acquired operations.
`
`SaleS treND
`
`SaleS by GeoGraphy
`
`MSEK
`15,000
`
`12,000
`
`9,000
`
`6,000
`
`3,000
`
`0
`
`2009
`
`2010
`
`2011
`
`2012
`
`2013
`
`16 MeDa aNNual report 2013
`
`MSEK
`15,000
`
`12,000
`
`9,000
`
`6,000
`
`3,000
`
`0
`
`2009
`Western Europe
`
`2013
`Emerging Markets
`
`US
`
`Other sales
`
`000020
`
`

`

`sAlEs AND MARkEtING
`
`Marketing
`
`Differentiated approach to markets
`Quality and knowledge are the cornerstones
`of Meda’s marketing operations. Meda also
`has a strong incentive for adapting to local
` conditions, which differentiates the approach
`between different markets and products, be -
`cause local legislation and the type of approval
`that a product has must be taken into account.
`There is a big difference between marketing
`prescription drugs and OTC drugs.
`Prescription drugs are marketed mainly
`via personal sales combined with training
` programs and seminars, often in collaboration
`with clinics. For prescription drugs in the early
`launch phase, relations with experts and their
`endorsements are the most important success
`factors.
`
`OTC drugs are primarily marketed to the public
`through a number of different media channels.
`Here the emphasis is on developing and posi-
`tioning the brands in a retail environment.
`It is becoming increasingly common for indi-
`vidual patients to search for more information
`on both prescription and OTC drugs. This raises
`their level of knowledge and their participation
`in treatment decisions. The internet is a very
`important channel for information. Patient orga-
`nizations are another channel where relevant
`information can be communicated.
`
`Digital marketing
`In recent years Meda has developed expertise in
`digital marketing. In the retailing of OTC products,
`digital knowledge is an essential element in the
`
`marketing toolbox. The internet is a growing
`channel for information and promotion of OTC
`products to consumers, making it an integral
`part of our promotional campaigns, which allows
`Meda to build stronger international brands.
`Internet has also increased in importance
`in sales and marketing of prescription drugs.
`Through a proprietary system called Meda
`Connects, physicians, pharmacists and other
`professionals are able to collect b