annUal
`RePoRt
`2010
`
`INSPIRING
`THE FUTURE.
`
`annUal RePoRt 2010
`
`actelion
`
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`

`

`TRaNSFoRmING
`RESEaRcH
`INTo REalITy.
`
`Actelion todAy
`Actelion is a team of more than 2,400 professionals. We come
`to work each day to change someone’s life. Our freedom
`to create generates inspirational medicines. Together we are
`defining our long-term future with the discoveries of today.
`
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`

`

`contents
` Actelion
`AnnuAl RePoRt 2010
`
` Actelion
`toDAY
`
`02
`
`02
`05
`
`08
`12
`
` Milestones 2010
` Letter to the
`Shareholders
` Financial Summary
` Creating Long-Term
`Value
`
`19
`
`20
`
`22
`24
`
` Delivering on
`a Global Scale
` Actelionʼs Products
`in the Marketplace
` The Products
` Leadership in PAH
`
`coRPoRAte
`GoVeRnAnce
`
`40
`
`41
`
`44
`50
`53
`
`55
`
`55
`
`55
`56
`57
`
` Group Structure &
`Shareholders
` Board of Directors
` Management Board
` Compensation,
`Shareholdings &
`Loans
` Shareholders’
`Participation Rights
` Changes of Control &
`Defense Measures
` Auditors
` Information Policy
` Further Information
`
`coRPoRAte sociAl
`ResPonsiBilitY
`
`58
`
`59
`
`60
`
`60
`60
`61
`
`61
`61
`
` Discovering
`Medicines
`Responsibly
` Reaching for the
`Highest Standards
` Environment
` Access to Medicines
` Our work in
`Communities
` Research Ethics
` Clincal Trial
`Registry & Results
`Database
`
`Business stRAteGY
`AnD oPeRAtions
`
`ReseARcH AnD
`DeVeloPMent
`
` 18
`
`28
`
`29
`32
`34
`36
`
` Driven by Science
` Pipeline Progress
` The Pipeline
` Maximize the Value
`of Innovation
`
`FinAnciAl
`RePoRt
`
`62
`
`64
`
`68
`
`97
`
` Consolidated
`Financial Statements
` Notes to Consolidated
`Financial Statements
` Report of Actelion
`Management
`98
` Auditors’ Reports
`102 Holding Company
`Statements
`104 Notes to the Financial
`Statements 2010
`114 Auditorsʼ Report
`116 Contacts
`
`Actelion Annual Report 2010
`
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`

`

`2
`
`MILESTONES
`
`STRONG REVENUE GROWTH
`
`EMpLOyEES pER fUNCTION
`
`Total net revenues of CHF 1,929.0 million, an
` increase of 13% in local currencies as com-
`pared to 2009 due to growing product sales.
`
`MANAGING THE BOTTOM LINE
`
`Non-GAAP EBIT of CHF 619.3 million, an increase
`of 19% in local currencies as compared to 2009
`– a result of strong revenue growth and contin-
`ued commitment to managing the bottom line.
`
`ENHANCING EARNINGS pER SHARE
`
`The Board of Directors has authorized the
` repurchase of up to CHF 800 million of the
` company’s common stock over the next three
`years, enhancing EPS growth without sacri-
`ficing strategic flexibility.
`
`TRACLEER – GOLD STANDARD IN pAH
`
`Treating pulmonary arterial hypertension
`with the target of improving symptoms to, or
`maintaining patients at, Functional Class II.
`
`TRACLEER – CHANGING LIVES
`
` Actelion’s flagship product is currently being
`used to treat over 40,000 patients.
`
`VELETRI – NEW pRODUCT LAUNCH
`
` Actelion’s fourth product – Veletri, an improved
`formulation of i.v. epoprostenol – has been
`launched in the US for the treatment of PAH.
`Room temperature stability, at most commonly
`used concentrations, eliminates the need for ice
`packs.
`
`Actelion Annual Report 2010
`
`EMpLOyEES pER REGION
`
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`

`3
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion today
`
`VENTAVIS – IMpROVED CONVENIENCE
`
`TOTAL NET REVENUES
`
`More than 70% of Ventavis patients in the US
`are using the increased strength 20mcg/ml
`formulation launched in the second half of
`2009.
`
`MACITENTAN – AHEAD Of SCHEDULE
`
`Early completion of enrollment into the large
`Phase III morbidity/mortality study in PAH
`could result in data availability early in 2012.
`
`SELEXIpAG – pRESENTED AT ATS
`
`Phase II results with selexipag, currently en-
`rolling patients into a large Phase III study in
`PAH, were presented at the American Thoracic
`Society (ATS) 2010 International Conference.
`
`OpTION TO ACQUIRE TROpHOS
`
` Actelion entered into a binding agreement with
` Trophos SA, thereby integrating the potential of
`a late-stage Phase III compound into Actelion’s
`pipeline. Olesoxime is currently being investigat-
`ed in amyotrophic lateral sclerosis and is ex-
`pected to report data in late 2011.
`
`ADVANCING EARLy-STAGE pIpELINE
`
`In total, dose-finding studies for five compounds
`were initiated in 2010, broadening Actelion’s
`commitment to multiple therapeutic areas.
`
`MULTIpLE fUTURE OppORTUNITES
`
`By the end of 2010, Actelion was analyzing six
`compounds in preclinical development, with
`around 25 further projects in the drug discovery
`phase.
`
`CHF million
`
`945.7
`
`1,473.5
`
`1,317.4
`
`1,772.6
`
`1,929.0
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`NON-GAAp EBIT
`
`CHF million
`
`471.4
`
`476.8
`
`320.4
`
`619.3
`
`567.9
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`TOTAL pRODUCT SALES
`
`CHF million
`
`1,698.0
`
`1,826.3
`
`1,292.1
`
`1,428.9
`
`CORpORATION Of THE yEAR
`
`924.1
`
`The Pulmonary Hypertension Association named
` Actelion the 2010 Corporation of the Year,
` making Actelion the first company to receive this
`award twice and demonstrating our ongoing
`commitment to improving the care of patients.
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`Actelion Annual Report 2010
`
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`

`

`4
`
`Actelion Annual Report 2010
`
`COMMITTED TO
`pROfITABILITy
`
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`

`

`5
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion today
`
`DEaR
`ShaREhOLDERS
`
`The Board and Management are proud to report to you, our
`shareholders, that in 2010 Actelion achieved strong finan-
`cial results. Your company has also made significant pro-
`gress in strengthening the pillars required for continued
`long-term success.
`
`COMMITTED TO pROfITABILITy
`With a 2010 net profit of CHF 390.6 million and fully diluted
`earnings per share of CHF 3.22, Actelion demonstrated its
`ongoing commitment to value creation for shareholders.
`Actelion grew its total revenues in 2010 by 13% in local
`currencies to reach CHF 1,929.0 million.
`Product sales grew by 12% in local currencies to reach
`CHF 1,826.3 million. Operating profit grew by 50% in local
`currencies to reach CHF 457.3 million.
`These results – the best in the 11 years since Actelion
`became a public company – were achieved in a difficult
`economic environment for pharmaceuticals in general
`and specifically for Swiss-based international companies
`exposed to the strong Swiss currency.
`
`COMMITTED TO pAH – TODAy AND TOMORROW
`Actelion is a highly profitable life science firm as a result of
`our leading franchise in pulmonary arterial hypertension
`(PAH), where our three marketed products Tracleer, Ventavis
`and Veletri continue to bring significant value to patients.
`In 2010, we continued to invest appropriately in sup-
`porting our existing product portfolio. We also focused on
`two late-stage clinical compounds – macitentan and
`selexipag – both under investigation in PAH. The studies
`are designed to demonstrate that these two compounds
`significantly improve the outcome for patients by reducing
`morbidity/mortality.
`The success of these two studies, expected to report in
`early 2012 and 2013 respectively, would result in further
`long-term value creation for patients and shareholders
`alike.
`
`COMMITTED TO INNOVATION IN MEDICINE
`Throughout 2010, we focused our attention on turning in-
`novation into medicines, one step at a time. Conscious of
`
`Actelion Annual Report 2010
`
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`

`

`6
`
`Robert E. Cawthorn
`
`the risks inherent in innovation, the company broadened
`its preclinical and clinical activities. While two late-stage
`clinical trials did not meet expectations, and clinical devel-
`opment with almorexant was discontinued in January
`2011, other projects moved forward. Consequently, at the
`end of this reporting period, Actelion has 10 compounds in
`various stages of clinical development.
`As a result of our high research and development pro-
`ductivity, we will obtain important data during 2011 on four
`different projects in mid-stage clinical development in
`areas of high unmet medical need – Clostridium difficile
`infection, idiopathic pulmonary fibrosis, autoimmune dis-
`orders and allergies.
`
`COMMITTED TO A GLOBAL INfRASTRUCTURE
`In 2010, Actelion also continued to strengthen its global
`reach and its global infrastructure. Actelion now has 29
`operative affiliates and is thus present with sales, market-
`ing, distribution, regulatory and medical capabilities in all
`key pharmaceutical markets. This is true even in Japan,
`
`where no other biotechnology company has built up its
`own presence from its inception.
`We also continued to invest appropriately in the physi-
`cal infrastructure required to provide our employees with
`a stimulating and productive working environment. At the
`end of 2010, a new business center for central corporate
`functions was opened in Allschwil, just outside Basel/
`Switzerland.
`In the same location, the company will expand its Re-
`search and Development facilities in 2011. This commit-
`ment to global presence and appropriate infrastructure
`levels will assure continued leverage going forward.
`
`COMMITTED TO VALUE-ENHANCING pARTNERSHIpS
`Our profitability, our strong PAH franchise, our focus on
`an innovative pipeline and our global business organiza-
` tion make Actelion an attractive in-licensing partner.
`This is evidenced by the Trophos agreement we entered
`into – with the option to acquire the company – in anticipa-
`tion of positive results from their Phase III compound in
`
`Actelion Annual Report 2010
`
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`

`

`7
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion Today
`
`Jean-Paul Clozel
`
`development for the rare disease amyotrophic lateral
`sclerosis. This mortality study is expected to report be-
`fore the end of 2011.
`The same assets also allow Actelion to enter into indi-
`vidually tailored partnerships with companies that have
`the required capabilities to maximize value and manage
`risk for a number of our development projects.
`
`Committed to shareholders
`In view of the company’s strong prospects, the Board of
`Directors will ask shareholders at the upcoming Annual
`General Meeting to approve the cancellation of shares
`bought back as part of the ongoing share repurchase pro-
`gram. The repurchase of up to CHF 800 million of shares,
`over a 3-year period, utilizes part of our strong ongoing
`cash generation to enhance shareholder return. The size
`of the repurchase program leaves the company with full
`strategic flexibility and an undiminished determination to
`seek innovation from external sources and internalize that
`potential when appropriate.
`
`Additionally, the Board of Directors has decided to ask
`shareholder approval for an annual dividend payment of
`CHF 0.80 per share.
`
`Committed to the Future
`In the course of its regular meetings, the Board of Direc-
`tors has given much attention to directing and reviewing
`the company’s strategy. We are committed to continuing
`this and look forward to reporting to you on these efforts
`on a regular basis.
`We are well aware that your support as shareholders has
`been and will remain fundamental to our ongoing success.
`
`Robert E. Cawthorn
`Chairman of the Board of Directors
`
`Jean-Paul Clozel
`Chief Executive Officer
`
`Actelion Annual Report 2010
`
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`

`

`8
`
`FINaNCIaL SuMMaRy
`
`fINANCIAL RESULTS OVERVIEW
`
`in CHF million
`
`Net revenues
`Operating expenses
`Operating income
`Non-GAAP EBIT
`Net income
`Diluted EPS in CHF
`No of shares in calculation
`Gross cash
`Total assets
`Cash from operations
`Shareholder’s equity
`Treasury shares
`
`2010
`
`2009
`
`%
`
`1,929.0
`1,471.7
`457.3
`619.3
`390.6
`3.22
`121.394
`1,445.9
`2,921.0
`316,4
`1,795.2
`10.458
`
`1,772.6
`1,433.2
`339.4
`567.9
`311.3
`2.53
`122.880
`1,343.6
`2,664.9
`424.2
`1,407.7
`9.757
`
`9
`3
`35
`9
`25
`27
`–
`–
`–
`–
`–
`–
`
`NET REVENUES
`During 2010, Actelion not only continued to grow revenues
`and profit but also strengthened its infrastructure and gen-
`erated strong cash flow, enabling the company to continue
`investing for future growth as well as returning cash to
`shareholders. In October 2010, Actelion announced an CHF
`800 million share buyback that will enhance EPS growth
`going forward without sacrificing strategic flexibility.
`Total net revenues grew to CHF 1,929.0 million in 2010,
`an increase of 9%. Growth in local currencies (LC) – masked
`by the appreciation of the Swiss franc – was even more
`pronounced, at 13% year on year.
`Demand for all of Actelion’s products has remained
`strong, but throughout the year the company observed an
`increasing impact of pricing pressure and healthcare aus-
`terity measures, resulting in reduced healthcare utilization.
`Also, a continued adverse currency market environment
`negatively impacted the results, with the US dollar and the
`euro reaching new all-time lows against the Swiss franc.
`
`Tracleer continues to be the main driver of performance,
`with growth continuing across all markets. Ventavis per-
`formed very well in the face of increasing competition, and
`our latest product in the PAH space, Veletri, was launched
`successfully in the US. Zavesca sales growth was driven
`by the NP-C indication in Europe.
`Contract revenues for 2010 amounted to CHF 102.6
`million, which represents an increase of 38%. A substan-
`tial portion of this increase can be attributed to the final
`recognition of milestone payments received from Roche in
`connection with the S1P1 collaboration (CHF 77.2 million).
`The company also recognized CHF 18.9 million from the
`GlaxoSmithKline almorexant collaboration, as well as
`CHF 6.5 million related to other contracts.
`
`OpERATING EXpENSES
`Total operating expenses for 2010 were CHF 1,471.7 mil-
`lion, compared to CHF 1,433.2 million in the previous year.
`This represents an increase of 3% in Swiss francs and 4%
`in local currencies. Non-GAAP operating expenses for the
`full year amount to CHF 1,309.6 million, an increase of 10%
`in local currencies compared to 2009. Non-GAAP operat-
`ing expenses exclude all charges related to employee
`stock options as well as depreciation and amortization,
`and other one-off items which would distort comparative
`analysis.
`Cost of sales amounted to CHF 200.3 million or 11% of
`sales. This represents a 0.5% decrease due to a USD 10
`million payment made to Bayer Schering in 2009.
`Research and development expenses increased by 4%
`to reach CHF 484.3 million, compared to CHF 464.1 million
`during the prior year.
`Actelion’s pipeline has 10 compounds in clinical devel-
`opment, 3 of which are in Phase III, and 6 projects in pre-
`clinical development. The ratio of R&D spend to product
`sales is 27%, which the company considers an appropriate
`level of spending. Non-GAAP research and development
`expenses increased by 3% to reach CHF 428.7 million.
`
`Actelion Annual Report 2010
`
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`

`9
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion today
`
`Selling, General and Administration (SG&A) expenses for
`2010 amounted to CHF 744.1 million, a 15% increase. The
`company continued to expand its geographic reach, with
`emerging markets acting as a strong driver for rest-of-
`the-world sales growth. The expanded sales force in Ja-
`pan continues to deliver excellent results. Some of the
`main drivers of growth during 2010 were support for all
`our products in their respective markets and continued
`investment in education and disease awareness, as well as
`the generation of new data in Phase IV medical marketing
`trials and product registries.
`Although not apparent from the Swiss franc numbers,
`the company is pleased to report continued margin im-
`provement within the commercial organization.
`In addition to the impact of exchange rates, this margin
`improvement is also masked by an increase in legal costs.
`As announced previously, legal costs have increased due
`to a lawsuit filed against Actelion Ltd and certain subsidi-
`aries in a Californian Superior Court, in relation to the
`CoTherix acquisition. Actelion has reviewed the claims,
`disagrees with the factual and legal assertions, and is pre-
`paring to defend itself against the claims in a jury trial
`which began in February 2011.
`Another driver of the increase in General and Adminis-
`tration portion is a continued investment in infrastructure
`to support the organization. At the end of 2010, Actelion
`employed 2,441 people worldwide, of whom more than
`1,000 are located in Allschwil. The company opened a new
`business center in December 2010 which will house 350
`employees. A new building for research and clinical devel-
`opment, also in Allschwil, will be finished in late 2011 to
`house 380 scientists as of 2012. Actelion continues to be-
`lieve that having all its research efforts concentrated in
`one location is most beneficial, as it greatly facilitates
`open and transparent communication between teams, re-
`sulting in rapidly advancing projects
`Non-GAAP SG&A expenses increased to CHF 680.6
`million, compared to CHF 593.5 million during the same
`period last year.
`
`GAAp EBIT
`
`CHF million
`
`268.2
`
`142.6
`
`457.3
`
`371.4
`
`339.4
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
` “In 2010, we have made signif-
`icant investments to increase
`opera tional efficacy that will
`drive further margin expansion
`in 2011.”
`
`Andrew J. Oakley, CFO
`
`EARNINGS pER SHARE, DILUTED
`
`CHF per share
`
`3.22
`
`2.48
`
`2.53
`
`1.97
`
`0.88
`
`2006*
`
`2007*
`
`2008*
`
`2009
`
`2010
`
`* Adjusted for the effect of application of ASC 470-20 as of January 1, 2009
`
`Actelion Annual Report 2010
`
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`

`

`Net iNCome aNd earNiNGs Per share
`Net income for 2010 amounted to CHF 390.6 million, com-
`pared to CHF 311.3 million in 2009, an increase of 25%. Basic
`earnings per share for the same period amounted to CHF
`3.28, compared to CHF 2.62 in 2009. On a fully diluted basis,
`EPS in 2010 was CHF 3.22, compared to CHF 2.53 in 2009.
`During the first quarter of 2010, the company bought
`back 529,271 shares, bringing the number of treasury
`shares held to 10.3 million. In October 2010, the company
`
` “In 2010, with operating income
`exceeding 450 million Swiss francs,
`we report, on a diluted basis, a
`27 percent growth in earnings per
`share, supporting the Board’s
`proposal of an annual dividend.”
`
`Andrew J. Oakley, CFO
`
`announced that the Board of Directors had authorized the
`repurchase of up to CHF 800 million of the company’s
`common stock over the next three years and subsequently
`purchased in the fourth quarter an additional 186,000
`shares.
`Given the company’s solid financial position and robust
`cash generation, Actelion’s Board of Directors and senior
`management believe that the share repurchase program
`represents an appropriate use of the company’s cash,
`whilst maintaining sufficient flexibility for continued in-
`vestments in research and development, in-licensing and
`potential M&A opportunities. At the 2011 and subsequent
`Annual General Meetings, the Board of Directors will pro-
`pose that the shares bought through this process be
`canceled and the issued share capital reduced accordingly.
`
`10
`
`oPeratiNG iNCome aNd
`NoN-GaaP oPeratiNG iNCome
`Operating income for 2010 reached CHF 457.3 million, an
`increase of 35% compared to the full year 2009. Non-GAAP
`operating profit for 2010 amounted to CHF 619.3 million,
`compared to CHF 567.9 million during 2009. This repre-
`sents a 9% increase in Swiss francs and a 19% increase in
`local currencies. Adjusted non-GAAP diluted earnings per
`share amounted to CHF 4.54, compared to CHF 4.38 for
`2009.
`
`NoN-oPeratiNG iNCome aNd taX
`Interest income for the year 2010 amounted to CHF 3.2
`million, compared to CHF 4.4 million during 2009. The in-
`terest environment in Switzerland continues to be su-
`pressed, albeit at slightly higher levels than during 2009,
`especially during the last quarter of 2010. Interest expense
`for the year amounted to CHF 2.7 million, compared to CHF
`7.5 million during the previous year. As the company still
`does not carry any interest bearing debt, this charge is
`mostly related to future payments for Veletri, the improved
`formulation of intravenous epoprostenol acquired in March
`2009.
`Amortization of debt discount for 2010 amounted to
`CHF 18.7 million, compared to CHF 17.9 million in 2009.
`Since 1 January 2009, Actelion has adopted FSP APB 14-1,
`which bifurcates the convertible bond into debt and equity
`components and imputes a non-cash interest charge
`equivalent to “market rates” based on a company’s indi-
`vidual circumstances. This charge is related to the charge
`on the outstanding 2011 CHF 460 million bond.
`Other financial income for the year amounted to CHF
`1.7 million, compared to an income of CHF 20.0 million in
`2009. The current currency environment continues to add
`great volatility to both gains and losses on the company’s
`hedge positions, as well as on the valuation of intercompany
`receivables.
`Income tax expense for the period under review amount-
`ed to CHF 50.3 million, compared to CHF 27.3 million dur-
`ing 2009. This translates into a tax rate of 11.4% compared
`to 8% for the previous year. As previously announced, the
`company expected this slight increase in the tax rate,
`which is likely to stay around current levels for the near
`future.
`
`Actelion Annual Report 2010
`
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`
`

`

`11
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion today
`
`RESEARCH & DEVELOpMENT SpENDING
`
`CHF million
`
`292.1
`
`211.8
`
`464.1
`
`484.3
`
`374.5
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`390.6
`
`306.1
`
`311.3
`
`NET INCOME
`
`CHF million
`
`239.6
`
`109.8
`
`2006
`
`2007
`
`2008
`
`2009
`
`2010
`
`Actelion Annual Report 2010
`
`The buyback is being carried out via a second trading line
`on the SIX Swiss Exchange, which was established for the
`purpose of the share repurchase. The second trading line
`was opened, following regulatory approval, on 25 Novem-
`ber 2010 and will be maintained until the end of October
`2013 at the latest.
`Shares purchased on the second trading line are sub-
`ject to the Swiss federal withholding tax at the rate of 35%
`on the difference between the repurchase price of the
`Actelion registered share and
`its nominal value of
`CHF 0.50. This withholding tax can be reclaimed by eligible
`investors.
`
`BALANCE SHEET AND CASH fLOW
`The company’s operating activities continue to generate
`strong cash flows driven by continued top-line growth and
`careful management of working capital. Cash from opera-
`tions for the period under review amounted to CHF 316.4
`million, compared to CHF 424.2 million in 2009. The com-
`pany’s gross cash position as per 31 December 2010
`amounted to CHF 1,445.9 million. In addition, the company
`also holds 10.5 million treasury shares.
`The increase in product sales as well as a more chal-
`lenging healthcare environment resulted in trade and
`other receivables rising to CHF 520.0 million at the end of
`December, compared to CHF 469.6 million at the end of the
`previous year. DSO (days sales outstanding) increased to 91
`days from 83 days in 2009. Actelion continues to evaluate
`and actively pursue measures to improve cash collection
`that include factoring and/or securitization arrangements.
`Investment in property, plant and equipment for 2010
`was CHF 127.6 million for the year, compared to CHF 132.5
`million for the previous year. A large proportion of this in-
`vestment is due to the construction of a new headquarters
`building in Allschwil, Switzerland, as well as the construc-
`tion of a new research and development building in the
`same area. Total property, plant and equipment (PPE) as
`at year-end was CHF 399.0 million, compared to CHF 281.2
`million as at the end of 2009.
`In keeping with Actelion‘s commitment to maintaining a
`control infrastructure capable of supporting high-quality
`financial statements in the face of rapid growth, for the
`fifth consecutive year, Actelion can announce Internal
`Controls over Financial Reporting certified as meeting the
`requirements of the Sarbanes-Oxley Act 2002, section 404
`(SOX 404) as at 31 December 2010.
`
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`
`

`

`CREaTING
`LONG-TERM
`VaLuE.
`
`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 14 of 122
`
`

`

`SECURING A SUCCESSfUL fUTURE
` Actelion has a track record of mastering research
`and development to generate sustainable value for
`patients and shareholders alike. The company’s
`rich pipeline, broad business organization, tailored
`partnerships, strong leadership team and inspiring
`culture are the foundation of further growth and
`value creation.
`
`Actelion Annual Report 2010
`
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`
`

`

`pOWERfUL
`AGILITy
`
`toGetHeR We innoVAte
`
`HIGHLy pROfITABLE
`
`Strategy
`
`Actelion’s four strategic Principles describe the
`fundamental priorities required to reach its long-term
`business objective – to become one of the top
`biopharmaceutical companies in the world:
`
`1. Follow innovation where it leads
`Pursue top quality science, internally and externally,
`balanced with medical need and commercial potential.
`
`2. Retain the value of innovation
`Develop projects ourselves and seek partners when
`necessary to maximize value.
`
`3. excel in sales and marketing
`expand innovative commercial capabilities to new
`customers and regions. Manage alliances, putting the
`product first.
`
`4. Drive core values together
`culture of innovation, trust & teamwork, open
`communication, and Results Driven.
`
`Since its foundation in 1997,
`Actelion has grown significantly.
`In just 13 years, we have built a
`profitable biotech company with
`the leading PAH franchise.
`As a result, our share price has
`increased 300% since first listing
`in 2000.
`
`This sustained growth is based
`on a solid business strategy, built
`upon a foundation of science and
`innovation, leadership in PAH, and
`a global presence.
`
`We have demonstrated in the past
`that we can deliver solutions for
`healthcare problems in orphan indi -
`cations, and we are committed to
`doing so in the future.
`
`pROMISING pIpELINE
`
`Our pipeline today reflects the
`productivity of the founding
`company philosophy, of science
`and innovation. We have one
`of the richest pipelines of any
`pharmaceutical company of
`comparable size, with 10 com -
`pounds currently in clinical trials,
`
`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 16 of 122
`
`

`

`neurial spirit that reflects the
`innovative nature of our company
`driving us to further success.
`
`Hotspot of possibilities
`
`and around 30 projects in drug
`discovery. Almost all of these
`compounds were discovered in
`our own research laboratories.
`
`Our R&D efforts have delivered
`not only first-in-class com-
`pounds such as a CRTH2 receptor
`antagonist but improvements
`on existing treatments such as
`macitentan, resulting in a well
`balanced pipeline in terms of risk,
`potential benefit for patients
`and successful growth for Actelion.
`
`With this pipeline, we will deliver
`more news of clinical trial
`results in 2011 than we have ever
`delivered before.
`
`TAILORED pARTNERSHIpS
`
`Our global infrastructure is one of
`our major assets. With 29 operative
`affiliates distributed globally, we
`have local expertise in specialized
`medicine distribution, regula-
`tory affairs and business acumen,
`especially within orphan disease
`indications.Through in-licensing
`or product acquisition activity,
`Actelion can utilize these assets
`and optimize their value.
`
`Actelion also joins forces
`with qualified industry partners
`who bring additional expertise
`or development and marketing
`power to maximize the value of
`our innovation and manage risks.
`
`LEADERSHIp AND CULTURE
`
`Sustained growth over the
`past years could only be achieved
`because of our experienced man-
`agement and dedicated employees.
`Our Board and Man agement,
`no matter how long they have been
`with the company, are a diverse,
`yet aligned team. They consist of
`industry leaders and financial
`experts with proven track records.
`
`Actelion employees represent a
`unique blend of strong profession-
`als who are committed to
`delivering on the company strategy.
`We are a diverse population of
`over 2,400 people from more than
`50 nations working together
`with a variety of skills. Each shares
`their experience and culture to
`ensure strong collaboration and
`team work. Every team member is
`encouraged to engage in their
`role with a passion and entrepre-
`
`Actelion Annual Report 2010
`
`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 17 of 122
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`

`

`16
`
`BuILDING ThE FuTuRE
`
` “The architecture stands for in-
`novation, openness and com-
`munication and thus symbolizes
`core values of our company.
`The new Business Center offers
`our employees an innovative,
`inspiring work environment.”
`
`Jean-Paul Clozel, CEO
`
`The Actelion Business Center is the heart of the Actelion
`Center in Allschwil, Switzerland.
`
`fROM HUMBLE BEGINNINGS
`In late 1997, Actelion was simply 5 founders – Jean-Paul
`Clozel, Martine Clozel, Walter Fischli, Andre Mueller, and
`Tom Widman. Today, Actelion has grown to more than 2,400
`employees worldwide, with over 1,000 based at our head-
`quarters in Allschwil. With such rapid growth, we needed
`space for our growing workforce, but this space had to
`meet very specific requirements.
`
`Actelion Annual Report 2010
`
`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 18 of 122
`
`

`

`17
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` Operations
`Business Strategy &
`Actelion today
`
` “Innovation can only happen when
`people exchange ideas and
`communicate. The structure of
`our Business Center very much
`reflects this at every level, not
`only on each individual floor but
`also in the interaction between
`the floors.” Louis de Lassence, Head Corporate Services
`
`Our strong focus on functionality led us to avoid expensive
`or luxurious materials, which would only have distracted
`from the core principles of the building.
`
`pROUD TO WORK AT ACTELION
`We have created a building that we are proud to have as-
`sociated with Actelion – and one which our employees are
`proud to work in.
`
`Actelion Annual Report 2010
`
`The building we asked renowned architects Herzog & de
`Meuron to create had to reflect the spirit and culture of
`innovation that we have at Actelion. It had to provide the
`best environment for our employees to work in – one which
`emphasized the open communication and team interac-
`tions that are fundamental to efficient productivity. The
`building had to fit into the existing environment in order to
`increase usability and preserve the value of both the pre-
`sent and the future infrastructure nearby.
`Today, we have a building that meets all of these re-
`quirements in an ideal way – a building that is a key motiva-
`tor for our organization and which will attract talented
`professionals in the future.
`
`CHALLENGING CONSTRUCTION
`Construction proved to be more challenging than origi-
`nally anticipated, but with the same persistence and solu-
`tion oriented approach that Actelion employs on a daily
`basis within its core business, the challenges were over-
`come in collaboration with the architects.
`
`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 19 of 122
`
`

`

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`WATSON LABORATORIES, INC. , IPR2017-01621, Ex. 1067, p. 20 of 122
`
`

`

`19
`
`Financial Report
`Responsibility
`Corporate Social
`Corporate Governance
`R & D
` operations
`Business strategy &
`actelion Today
`
`BuSINESS
`STRaTEGy &
`OpERaTIONS
`pOWERFuL &
`SuCCESSFuL
`GROWTh.
`
`DELIVERING ON
`A GLOBAL SCALE
`
`REGIONAL pERfORMANCE
`
`In 2010, Actelion delivered a strong top-line performance
`while improving operational leverage. Total product sales
`for 2010 were CHF 1,826.3 million, an increase of 12% in
`local currencies. This solid result, achieved in a gener-
`ally difficult environment for healthcare, was mostly
`driven by patient demand for Tracleer, with some contri-
`bution from pricing effects in the US. The United States
`delivered 45% of total sales, on a constant currency basis,
`
`an excellent performance despite some initial impact of
`the