1 SHAPING OUR FUTURE
`2 CORPRPORRATA E GOVERRNANCE ANDND CCSRS RREPORRT
`3 COMPPENSSATION REPEPORT
`4 FINANCCIALL REPORT
`
`Annual Report 2013
`
`SHAPING
`OUR FUTURE.
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 1 of 82
`
`

`

`HOME
`
`CONTENTS
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`CONTENTS
`
`04
`
`08
`
`12
`
`18
`
`22
`
`Chairman’s Letter to Shareholders
`
`CEO’s Letter to Shareholders
`
`Key Performance Indicators
`
`Finance in Brief
`
`Strategy for Value Creation
`
`Actelion Ltd. is a leading biopharmaceutical
`company focused on the discovery, development
`and commercialization of innovative drugs for
`diseases with significant unmet medical needs.
`
`Actelion is a leader in the field of pulmonary arterial hypertension (PAH). Our
`portfolio of PAH treatments covers the spectrum of disease, from WHO Functional
`Class (FC) II through to FC IV, with oral, inhaled and intravenous medications.
`Although not available in all countries, Actelion has treatments approved
`by health authorities for a number of specialist diseases, including Type 1
`Gaucher disease, Niemann-Pick type C disease, digital ulcers in patients
`suffering from systemic sclerosis and mycosis fungoides in patients with
`cutaneous T-cell lymphoma.
`
`Founded in late 1997, with close to 2,400 dedicated professionals
`covering all key markets around the world – including the US, Japan,
`China, Russia and Mexico – Actelion has its corporate headquarters in
`Allschwil/Basel, Switzerland.
`
`SHAPING OUR FUTURE.
`
`3
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 2 of 82
`
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`HOME
`
`CONTENTS
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`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`Dear Shareholders,
`
`I am delighted to present our Annual
`Report for 2013. This was another
`landmark year for Actelion, with the
`granting of both US and European
`approval for our latest pulmonary
`arterial hypertension (PAH) product,
`Opsumit® (macitentan). I am also
`pleased to report a very strong
`operational performance over
`the past year – revenues, core
`earnings and cash generation have
`all increased significantly, and we
`have made excellent progress with
`the implementation of the three key
`strategic initiatives announced in
`mid-2012. These, you may recall,
`involved sustaining and growing our
`PAH franchise, building additional
`specialty franchises over the
`medium term, and optimizing the
`company’s profitability. We have
`made significant advances in all
`these areas.
`
`BUSINESS PERFORMANCE
`The past year has been highly successful for Actelion
`despite various headwinds, including challenging market
`conditions (particularly in the US), the strong Swiss
`franc and increasing price competition in many markets.
`Indeed, the strength of our performance allowed us to
`amend our three-year guidance when we published
`our interim results in July, bringing forward the growth
`previously foreseen for 2014 into 2013. As a result, as the
`year ended, we met our objective of achieving double-digit
`core earnings growth at constant exchange rates.
`
`Sales for the year amounted to CHF 1,784 million, an
`increase of 6% at constant exchange rates, and core
`earnings per share were up 20% at constant exchange
`rates to CHF 4.41. This excellent operational performance
`was rewarded with strong returns for shareholders. Our
`shares, which stood at CHF 43.53 at the beginning of
`the year, rose to CHF 75.35 by the end of December, a
`jump of 73%. This was substantially ahead of both the
`Swiss Market Index and the NASDAQ Biotechnology
`Index, up 20% and 65% respectively. As well as the strong
`share price performance during the year, we delivered
`a dividend of CHF 1.00 per share resulting in a total
`shareholder return (TSR) in 2013 of 76%. Looking ahead
`to 2014, we will recommend that shareholders approve an
`increase in the dividend at the upcoming Annual General
`Meeting (AGM), proposing a rise of 20% to CHF 1.20 per
`share.
`
`Finally, we completed the CHF 800 million share buyback
`launched in 2010. At the end of 2013, with this repurchase
`program complete, the Board announced a new program
`to buy back up to 8.31% of the outstanding share capital
`(up to 10 million shares) over the next three years.
`The repurchased registered shares will be used for
`reactive servicing of existing employee option and share
`ownership programs, compensating for a possible dilution
`of earnings per share resulting from these schemes.
`
`4
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`SHAPING OUR FUTURE.
`
`5
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`
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`

`HOME
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`CONTENTS
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`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
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`PREVIOUS
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`ACTELION ANNUAL REPORT
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`2013
`
`Disappointingly, with regard to the Asahi litigation, the
`California Court of Appeal affirmed the amended final
`judgment. Together with our external advisors, we
`continue to believe that the decision of the Court of Appeal
`is not supported by the facts and is incorrect as a matter
`of law; we have therefore filed a petition in the Supreme
`Court of California, requesting that the Court review the
`Court of Appeal’s decision.
`
`However, in early January 2014, we were very pleased
`to hear that, after more than 3 years investigating our
`marketing practices for Tracleer in the US since launch
`in 2001, the US Attorney’s Office found no grounds
`to intervene. This dismissal is an excellent result for
`Actelion and is virtually unheard of in today’s regulatory
`environment. All our stakeholders can take confidence
`from the fact that our employees strive to work
`professionally and ethically at all times.
`
`STRATEGY
`Strategically, Actelion has made strong progress, with
`two major pieces of news dominating 2013. First, at the
`end of July, we announced the acquisition of the privately
`held US specialty pharmaceutical company, Ceptaris
`Therapeutics, Inc., including its lead drug, Valchlor™.
`Valchlor is a topical formulation of mechlorethamine
`for the treatment of IA and IB mycosis fungoides-type
`cutaneous T-cell lymphoma, (MF-CTCL) in patients
`who have received prior skin-directed therapy, and
`FDA approval of this product was a precondition for the
`acquisition proceeding. This was duly received in August,
`and the acquisition was completed at the end of the
`summer. Valchlor is now being marketed by our specialist
`sales force which also markets Zavesca® in the US; it
`thus represents an excellent strategic fit with our existing
`capabilities. It is also a significant step forward on our
`broader strategic path of building additional specialty
`franchises beyond our core PAH portfolio. We remain on
`the lookout for further opportunities of this kind.
`
`The other major event was, of course, the first launch
`of Opsumit. Enormous efforts have been put into the
`development of Opsumit over the past decade, and
`we have every reason to believe that it can change the
`treatment paradigm in this therapeutic area. The early
`feedback from the marketplace since the launch at the
`end of 2013 has been highly favorable.
`
`Our strategy for long-term value creation is thus
`progressing well, and there is much to be proud of as we
`look back over the past year.
`
`In addition to strategy and the monitoring of business
`performance, the Board has focused much of its attention
`during the year on people and governance, so let me
`share with you some of the Board’s thinking on these
`key topics.
`
`PEOPLE
`Investing in our people is, without doubt, the most
`important investment we make in the future of our
`business. The development, motivation and well-
`being of staff are vital to the success of Actelion,
`and their dedication, professionalism, knowledge
`and enthusiasm is always of the highest standard.
`On behalf of all our stakeholders, I would like to
`thank all our employees for their hard work and
`their contribution to the company’s success.
`
`From the Board’s perspective, it is important to find
`the correct compensation policies that balance the
`expectations of shareholders with our ability to attract
`and retain the best in the business – which is essential, if
`we are to execute our ambitious strategy and maximize
`returns for all stakeholders. While our compensation
`policies were regrettably not approved as part of the
`Compensation Report at last year’s AGM, significant
`modifications were implemented in 2013, which shift the
`emphasis towards long-term, performance-driven equity
`plans, strengthening the alignment between the interests
`of management and those of shareholders, as well as
`ruling out the possibility of pay for failure through caps
`and thresholds.
`
`In 2013, we created a special Task Force within
`the company to consider the implications of the
`“Minder Initiative” insofar as it affects the Company’s
`compensation system and philosophy. As a first, important
`step in complying with the provisions of the law, the
`company will seek shareholder approval of amendments
`to its Articles of Association. This will enable the company
`– with the support of its external legal advisors – to
`complete a review of all compensation practices so as
`to ensure that they are fully compliant with the new
`regulatory landscape.
`
`GOVERNANCE
`Good governance plays a critical role in maintaining
`Actelion’s position as a successful and sustainable
`company. A key element of this is ensuring that the
`Board has a diverse group of non-executive directors
`who have the necessary experience and expertise – and
`are provided with the right information and support – to
`
`constructively challenge and assist the executive team.
`I believe these criteria are well and truly met within
`Actelion’s Board, which was further enhanced by the
`appointment of John Greisch at last year’s AGM. John,
`who is President and CEO of Hill-Rom Holdings, Inc., a
`US healthcare products company, has brought a strong
`international business perspective to the Board.
`
`We also announced the appointment of André C. Muller as
`the company’s new Chief Financial Officer and member of
`the Actelion Executive Committee, succeeding Andrew J.
`Oakley. André joins us from Pierre Fabre SA, the Paris-
`based pharmaceutical and cosmetic company where he
`was the Chief Financial Officer, and we warmly welcome
`him to his new role. We also thank Andrew Oakley for
`his contribution and commitment to Actelion. He led the
`finance department at Actelion over the past decade,
`strongly supporting the company’s expansion. We wish
`him every success for the future.
`
`Another aspect of good governance is the maintenance
`of a good dialogue with shareholders, and we consider
`effective engagement with shareholders to be an
`important part of our role as members of the Board.
`During the year, we have met with many of our largest
`shareholders on an individual basis, and their opinions
`and comments have helped to shape our thinking,
`particularly with regard to executive remuneration. Their
`feedback and support are much appreciated.
`
`SUMMARY AND OUTLOOK
`Actelion has made great strides in 2013, both financially
`and strategically. We have a strong leadership team,
`which has put a clear strategy in place and is delivering
`on its commitments. As CEO Jean-Paul Clozel explains
`in his letter to shareholders, the foundations are in place
`for sustainable future growth. Enormous opportunities lie
`ahead of us, and I am confident that Actelion will go from
`strength to strength, for the benefit of all its stakeholders.
`
`Yours sincerely,
`
`
`
`JEAN-PIERRE GARNIER
`Chairman of the Board of Directors
`
`6
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`SHAPING OUR FUTURE.
`
`7
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`HOME
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`LETTER TO
`SHAREHOLDERS
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`CEO’S
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`SHAREHOLDERS
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`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
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`STRATEGY FOR
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`ACTELION ANNUAL REPORT
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`2013
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`Dear Shareholders,
`
`The end of 2013 marked the
`completion of the first sixteen years
`since the founding of Actelion and,
`as we look back over that period,
`it is clear that the efforts made in
`the first chapter of our history are
`coming to fruition. This first chapter
`has, of course, been dominated by
`the success of Tracleer® and the
`IPO on the Swiss Stock Exchange,
`together with many other interesting
`(and sometimes challenging) twists
`and turns along the way. During this
`period, we have also put in place the
`building blocks for success that allow
`us to enter the next phase with real
`and growing confidence.
`
`THE BUILDING BLOCKS
`The foundation of Actelion’s story throughout that first
`chapter – and the basis of its strength today – consists of
`a small number of core building blocks. First, we knew
`from the outset that the success of any biopharmaceutical
`company is predicated on the quality of its science and its
`ability to innovate.
`
`Back in the mid-1990s, a small group of researchers had
`accumulated substantial knowledge about specific families
`of molecular targets, such as G-protein coupled receptors,
`and particularly those associated with the powerful
`vasoconstrictor endothelin. This pioneering research gave
`rise to endothelin receptor antagonists (ERAs), which were
`largely unexplored at the time, but which we believed had
`very significant potential as a new class of cardiopulmonary
`drugs. When the opportunity arose to acquire the
`intellectual property relating to the ERAs which we had
`discovered, we did so. This in turn led to the registration
`and approval of bosentan (Tracleer), the first and most
`important ERA on the market for the treatment of PAH,
`which – despite intense competition – still has a global
`PAH market share of almost 40% and a global ERA market
`share of over 60%.
`
`The success of Tracleer gave us the second core building
`block required by any fast-growing and ambitious
`biopharmaceutical company – cash generation. Cash
`flows allow an enterprise to invest for future growth, to
`deepen expertise, to broaden the pipeline, and to find better
`therapies for patients. And such has been the strength
`of cash generation from Tracleer that we have been able
`not only to return significant amounts to our shareholders
`through dividends and share buy-backs, but also to reinvest
`very substantially in our business, in drug discovery and
`development, and in building our own marketing and
`corporate infrastructure.
`
`8
`
`SHAPING OUR FUTURE.
`
`9
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 5 of 82
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`SHAREHOLDERS
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`INDICATORS
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`FINANCE
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`2013
`
`What at the turn of the century was a young biotechnology
`company has been transformed over a period of just
`sixteen years into a fully fledged, sustainably profitable
`global biopharmaceutical company, with a market value of
`around CHF 9 billion. That is no small feat, but we now feel
`ready to take the company to the next stage. The strategy
`for long-term shareholder value creation through this stage
`was set out in 2012 and is being delivered around three
`key objectives: to sustain and grow our pulmonary arterial
`hypertension (PAH) franchise, to build additional specialty
`franchises over the medium term, and to optimize our
`profitability. We are making excellent progress on all
`these fronts.
`
`GLOBAL LEADERSHIP IN PAH
`Today, we have unquestioned global leadership in PAH,
`and our position in this therapeutic area has been
`further strengthened by the recent launch of Opsumit®
`(macitentan), which builds on everything we have learned
`about the fundamental mechanisms of PAH and ERAs.
`
`Opsumit has the potential, once again, to revolutionize
`the treatment of PAH, as it was designed using our deep
`knowledge of the endothelium to meet a number of key
`requirements. We sought to create an optimized ERA
`for PAH patients – specifically, one that can bind to and
`block both endothelin receptors, has greater activity in
`the tissue where endothelin is produced, and therefore
`offers improved efficacy, as well as once-daily dosing and
`a more favorable side effect profile for patients.
`
`The success of our research efforts was demonstrated in
`the landmark SERAPHIN study, which set a new standard
`for clinical trials in PAH. SERAPHIN – the largest and
`longest trial ever conducted in this indication – showed
`that Opsumit significantly reduces the risk of a morbidity
`or mortality event, both in treatment-naive patients and
`in those on background therapy for PAH. Compared to
`placebo, the risk of morbidity and mortality events over
`the treatment period was reduced by 45% in the group
`receiving 10 mg Opsumit. This dose also reduced the
`risk of hospitalization or death due to PAH by 50%. These
`remarkable data were published in the New England
`Journal of Medicine in August last year (Pulido T et al.,
`Macitentan and Morbidity and Mortality in Pulmonary
`Arterial Hypertension. N Engl J Med 2013;369:809–818).
`
`Following approval by the US FDA in October and by the
`EMA in Europe in December, we are pleased to report
`that the market’s response to the launch of Opsumit has
`been highly favorable, with strong support from key PAH
`opinion leaders throughout the world. We have every
`expectation that it will become the market-leading ERA in
`PAH over the coming years.
`
`Aside from Opsumit, our efforts to deepen and strengthen
`Actelion’s PAH franchise continue to make excellent
`progress. Not far behind Opsumit is selexipag, an
`investigational selective IP receptor agonist in late-stage
`trials, which is being developed in partnership with
`Nippon Shinyaku. Selexipag has the potential to provide
`the benefits of another class of drugs – prostacyclin
`receptor agonists – for the treatment of PAH, but in an
`oral form. Today, a relatively small percentage of PAH
`patients receive prostacyclin therapy, which is available
`in various dosage forms. Selexipag could therefore offer
`patients a new alternative, with the power of prostacyclin
`in a pill. Selexipag is currently in a Phase III trial,
`GRIPHON, which has been designed to evaluate its
`long-term efficacy and safety in an event-driven
`morbidity/mortality study. GRIPHON, which has now
`become the largest PAH study ever conducted (with
`1,156 patients enrolled), is expected to report its results
`in mid-2014.
`
`Today, including our other PAH products – Ventavis® and
`Veletri® – our PAH franchise encompasses oral, inhaled
`and intravenous formulations, for patients at various
`stages in the course of this disease (PAH Functional
`Classes II–IV), enabling us to deliver treatments across
`the entire continuum of care. Our PAH products are
`currently taken by more than 50,000 patients around the
`world and have revolutionized the treatment of PAH. We
`are now ready to change the treatment paradigm once
`again with Opsumit and also, potentially, with selexipag.
`
`BUILDING ADDITIONAL SPECIALTY FRANCHISES
`We have also made considerable advances in the second
`element of our strategy, building additional specialty
`franchises beyond PAH. We are doing this both internally,
`through investment in our own R&D, and externally,
`where we are looking to acquire assets which either fit
`strategically with our existing operations, enabling us to
`leverage our infrastructure, or could establish or serve as
`a stepping stone to a new franchise.
`
`In our own R&D, multiple opportunities arise from
`our expertise and experience with specific families of
`molecular targets and disease mechanisms. We have
`gained knowledge of different classes of compounds and,
`as this knowledge grows, we see how to differentiate our
`assets from those of our competitors. With Opsumit, for
`instance, we are investigating potential indications where
`our innovation could offer benefits for additional groups
`of patients. In one particularly interesting early-stage
`program, we are testing whether high doses – up to fifteen
`times the regular dose – are well tolerated and might
`show potential as a therapy for patients with glioblastoma
`(a form of brain cancer).
`
`Looking forward, despite the much higher profitability
`delivered in 2013, we are able to upgrade guidance for
`2014 to low single-digit percentage core earnings growth,
`and maintain the single-digit percentage range growth
`foreseen for 2015, once again from a higher base - all at
`constant exchange rates and unforeseen events excluded.
`
`IN SHAPE FOR THE FUTURE
`The building blocks for sustainable future growth are
`therefore in place. They are very much the same as
`those that served us so well during the first part of our
`journey – a commitment to pharmaceutical innovation
`that can deliver real benefits for patients, to quality in
`everything we do and, of course, a focus on profitability
`and cash generation which allows us to invest for future
`growth. These are the key components of the culture we
`have created at Actelion, around which all our people are
`aligned. They have enabled us to deliver life-changing
`medicines for patients and to create substantial value for
`shareholders, and we believe they will allow us to write
`new chapters in our success story in the coming years.
`
`We are very proud of what we have achieved at Actelion.
`As the next phase in our corporate life begins with the
`launch of Opsumit and the broadening of our product
`portfolio, we are as confident as we have ever been
`about the future of the company. We thank you for your
`continuing support and look forward to reporting regularly
`on our progress.
`
`Yours sincerely,
`
`JEAN-PAUL CLOZEL
`Chief Executive Officer
`
`In other areas of development, we are well advanced in
`our search for new classes of antibiotics with a reduced
`risk of resistance. The first of our antibiotics to reach
`clinical development is cadazolid, which is now being
`studied in a large Phase III program in Clostridium difficile-
`associated diarrhea (CDAD). In an exploratory Phase II
`study, cadazolid was numerically similar to or better than
`vancomycin on key endpoints, including CDAD cure rates,
`as well as sustained cure rates. These results supported
`the initiation of the Phase III program with a larger
`population, which could report out by 2016.
`
`We have also made good progress with our search
`for growth opportunities from external sources. In
`September, we closed the acquisition of the privately
`owned US specialty pharmaceutical company, Ceptaris –
`adding Valchlor™ to our product portfolio – for an initial
`USD 250 million plus other potential milestone and
`additional payments. This is an example of an acquisition
`that will enable us to leverage our existing know-how and
`infrastructure in orphan and ultra-orphan indications
`as we market Valchlor to specialists in the fields of
`dermatology and oncology. Valchlor, the first and only
`FDA-approved topical formulation of mechlorethamine for
`the treatment of stage IA and IB mycosis fungoides-type
`cutaneous T-cell lymphoma (MF-CTCL) in patients who
`have received prior skin-directed therapy, is now being
`marketed by our upsized Zavesca® sales force in the US.
`We remain on the lookout for other acquisitions allowing
`us to leverage our expertise and build additional specialty
`franchises.
`
`OPTIMIZING PROFITABILITY
`Like the second element of our strategy, the third –
`optimizing profitability – is well on track. In 2013, we took
`a number of steps to improve our operational efficiency,
`including completion of the cost-saving initiative originally
`commenced in 2012. Our commitment to optimizing
`Actelion’s profitability was again evident in 2013, as we
`met our raised target of crossing over into double-digit
`local-currency earnings growth, with core earnings rising
`to CHF 619 million, up 20% at constant exchange rates.
`This was achieved despite strong competition in the US
`and a pricing environment which remained difficult in
`Europe.
`
`We also used our strong cash flow to deliver substantial
`cash returns to shareholders during 2013. We completed
`our CHF 800 million share repurchase program,
`commenced a new first-line program and, together with
`the dividend of CHF 1.00 per share, returned a total of
`CHF 588 million to shareholders in 2013.
`
`10
`
`SHAPING OUR FUTURE.
`
`11
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`
`

`

`HOME
`
`CONTENTS
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`KEY
`PERFORMANCE
`INDICATORS
`
`PRODUCT SALES
`Our outstanding PAH product portfolio and specialty products
`have all grown at constant exchange rates (CER), with total
`product sales increasing by 6%. This performance allowed
`growth previously forecast for 2014 to be delivered in 2013.
`
`CORE EARNINGS PER SHARE
`Core EPS increased by 20% at CER, enhanced by the
`company’s commitment to manage dilution through
`share buybacks.
`
`2011
`
`CHF 1,713 million
`
`2012
`
`CHF 1,722 million
`
`2013
`CHF 1,784 million
`
`2011
`
`CHF 3.04
`
`2012
`
`CHF 3.81
`
`2013
`CHF 4.41
`
`CORE R&D EXPENDITURE
`Through careful investment in the right programs,
`Actelion aims to ensure future profitable growth.
`
`TOTAL SHAREHOLDER RETURN
`Delivering on our strategy for value creation, first
`announced in May 2012, our commitment to creating
`shareholder value is demonstrated through Total
`Shareholder Return.
`
`2011
`
`CHF 400 million
`
`2012
`
`CHF 398 million
`
`2013
`CHF 356 million
`
`3-year TSR
`
`TSR: 56%
`
`2-year TSR
`
`TSR: 143%
`
`1-year TSR
`TSR: 76%
`
`CORE EARNINGS
`We are delighted to have delivered double-digit core
`earnings growth earlier than originally anticipated,
`demonstrating the strength of the company’s underlying
`performance of the company.
`
`CASH RETURNED TO SHAREHOLDERS
`In 2013, Actelion significantly increased the return of
`cash to shareholders through dividend payments and
`share buy-backs, while maintaining a strong cash position
`despite the acquisition of Ceptaris.
`
`2011
`
`CHF 481 million
`
`2012
`
`CHF 537 million
`
`2013
`CHF 619 million
`
`2011
`
`CHF 205 million
`
`2012
`
`CHF 358 million
`
`2013
`CHF 588 million
`
`12
`
`SHAPING OUR FUTURE.
`
`13
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 7 of 82
`
`

`

`HOME
`
`CONTENTS
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`ACTELION’S PRODUCT PORTFOLIO
`
`OUR PAH FRANCHISE
`Pulmonary arterial hypertension (PAH)
`is a chronic, life-threatening disorder
`characterized by abnormally high blood
`pressure in the arteries between the heart
`and lungs of an affected individual.
`
`
`Actelion’s PAH franchise encompasses oral,
`inhaled and intravenous formulations of
`compounds, for patients at various stages in
`the course of this disease (PAH Functional
`Classes II–IV), enabling us to deliver treatments
`across the entire continuum of care.
`
`OUR SPECIALTY PRODUCTS
`Actelion is creating specialty franchises
`alongside PAH – discovering, developing
`and/or in-licensing/acquiring products
`in new therapeutic areas.
`
`OPSUMIT® (MACITENTAN)
`
`Sales in 2013: CHF 5 million
`
`Launched in the US in November
`2013, together with an early
`access program. Launched in
`Canada and first European launch
`in Germany in January 2014.
`
`Opsumit is an orally available
`endothelin receptor antagonist
`(ERA) that resulted from a
`tailored drug discovery process
`in Actelion’s laboratories.
`
`VELETRI® (EPOPROSTENOL
`FOR INJECTION)
`
`Sales in 2013: CHF 37 million
`Sales in 2012: CHF 24 million
`
`52% increase in Swiss francs
`60% increase at CER
`
`Veletri is an intravenous
`prostacyclin. Unlike other
`epoprostenol formulations
`approved for PAH, this
`formulation is stable at room
`temperature (77°F/25°C).
`
`TRACLEER® (BOSENTAN)
`
`Sales in 2013: CHF 1,532 million
`Sales in 2012: CHF 1,500 million
`
`2% increase in Swiss francs
`5% increase at CER
`
`Tracleer is an orally available
`endothelin receptor antagonist
`(ERA).
`
`VENTAVIS® (ILOPROST)
`
`Sales in 2013: CHF 110 million
`Sales in 2012: CHF 110 million
`
`Unchanged in Swiss francs
`1% increase at CER
`
`Ventavis is an inhaled formulation
`of iloprost, a synthetic compound
`that is structurally similar to
`prostacyclin (PGI2). It is marketed
`by Actelion in the US and by Bayer
`Healthcare elsewhere.
`
`VALCHLOR™
`(MECHLORETHAMINE)
`
`Launched in November 2013
`
`Valchlor gel 0.016% is applied
`topically once a day and
`dries on the skin. The active
`substance mechlorethamine
`is a chemotherapeutic agent
`previously approved for
`intravenous treatment of mycosis
`fungoides, the most common type
`of cutaneous T-cell lymphoma.
`
`In the US, Valchlor gel 0.016% is
`indicated for the topical treatment
`of stage IA and IB mycosis
`fungoides-type cutaneous T-cell
`lymphoma (MF-CTCL) in patients
`who have received prior skin-
`directed therapy.
`
`ZAVESCA® (MIGLUSTAT)
`
`Sales in 2013: CHF 96 million
`Sales in 2012: CHF 85 million
`
`13% increase in Swiss francs
`14% increase at CER
`
`Zavesca is a low-molecular-
`weight competitive, reversible
`inhibitor of glucosylceramide
`synthase.
`
`Zavesca is approved for the
`treatment of Niemann-Pick type C
`disease in 43 countries, including
`the European Union since 2009
`and Japan since 2012.
`
`Zavesca is approved for the
`treatment of mild to moderate
`type 1 Gaucher disease in 43
`countries, including the US and
`the European Union since 2003.
`
`14
`
`SHAPING OUR FUTURE.
`
`15
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 8 of 82
`
`

`

`HOME
`
`CONTENTS
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`ACTELION’S DEVELOPMENT PIPELINE
`
`Indication
`
`Results expected
`
`Combination bosentan & sildenafil
`in PAH
`
`Pediatric PAH
`
`Clostridium difficile-associated
`diarrhea
`
`Eisenmenger syndrome
`
`PAH
`
`H1 2014
`
`2014
`
`2016
`
`-
`
`2014
`
`Multiple sclerosis
`
`Phase II complete in Aug 2011
`
`Lipid storage disorders
`
`Immunological disorders
`
`Glioblastoma
`
`S1P1 modulator
`
`Immunological disorders
`
`-
`
`-
`
`-
`
`-
`
`Phase
`
`IV
`
`IV
`
`III
`
`III
`
`III
`
`II (extension)
`
`I
`
`I
`
`I
`
`I
`
`Compound
`
`Bosentan
`
`Bosentan
`
`Cadazolid
`
`Macitentan
`
`Selexipag
`
`Ponesimod
`
`Lucerastat
`
`NCE
`
`Macitentan
`
`EMPLOYEES
`
`EMPLOYEES BY FUNCTION
`
`415
`
`370
`
`TOTAL
`2,396
`
`585
`
`1,026
`
`EMPLOYEES BY REGION
`
`456
`
`237
`
`442
`
`241
`
`TOTAL
`2,396
`
`1,020
`
`1,020
`
`456
`
`442
`
`241
`
`237
`
`Marketing & Sales
`
`1,026
`
`Switzerland
`
`Clinical Development
`
`Support functions
`
`Drug Discovery
`
`585
`
`415
`
`370
`
`EU
`
`US
`
`RoW
`
`Japan
`
`16
`
`SHAPING OUR FUTURE.
`
`17
`
`WATSON LABORATORIES, INC. , IPR2017-01622, Ex. 1070, p. 9 of 82
`
`

`

`HOME
`
`CONTENTS
`
`CHAIRMAN’S
`LETTER TO
`SHAREHOLDERS
`
`CEO’S
`LETTER TO
`SHAREHOLDERS
`
`KEY
`PERFORMANCE
`INDICATORS
`
`FINANCE
`IN BRIEF
`
`STRATEGY FOR
`VALUE CREATION
`
`PREVIOUS
`
`NEXT
`
`ACTELION ANNUAL REPORT
`
`2013
`
`FINANCE
`IN BRIEF
`
`HIGHLIGHTS 2013
`
`1,784 MILLION
`
`CHF
`
`Product sales increased by 6% at constant
`exchange rates (CER)1 to CHF 1,784 million
`
`20%
`
`EPS
`INCREASE
`
`Core earnings per share (EPS, fully diluted)
`increased by 20% (CER)
`
`20%
`
`CORE
`EARNINGS
`GROWTH
`
`Solid top-line performance, spending discipline
`and restructuring benefits resulted in core
`earnings growth of 20% (CER)
`
`20%
`
`INCREASED
`DIVIDEND
`
`Board’s proposal to increase the dividend by 20%
`to CHF 1.20 demonstrates its confidence in the
`current and future strength of the underlying business
`
`CORE PERFORMANCE2
`
`In CHF million
`
`Total Product sales
`
`Tracleer
`
`Opsumit
`
`Veletri
`
`Ventavis
`
`Zavesca
`
`Other products
`
`Core R&D expenditure
`
`Core earnings (core operating income)
`
`Core net income
`
`Core EPS fully diluted (in CHF)
`
`
`
`2013
`
`1,784
`
`1,532
`
`5
`
`37
`
`110
`
`96
`
`4
`
`356
`
`619
`
`509
`
`4.41
`
`2012
`
`1,722
`
`1,500
`
`-
`
`24
`
`110
`
`85
`
`3
`
`398
`
`537
`
`450
`
`3.81*
`
`Variance
`
`CHF %
`
`CER %
`
`4
`
`2
`
`-
`
`52
`
`0
`
`13
`
`-
`
`(11)
`
`15
`
`13
`
`16
`
`6
`
`5
`
`-
`
`60
`
`1
`
`14
`
`-
`
`(9)
`
`20
`
`17
`
`20
`
`* 2012 Core EPS was recalculated to apply the prevailing tax rate for each adjustment (formerly CHF 3.69 using an average blended rate)
`
`(1) Unless otherwise stated all growth rates are calculated using constant exchange
`rates (CER). CER percentage changes are calculated by reconsolidating both the
`2013 and 2012 results at constant currencies (the average exchange rates for the
`year ended 31 December 2012).
`
`(2) Actelion continues to measure, report and