First half year 2014: Boehringer Ingelheim meets challenges

The research-driven pharmaceutical company Boehringer Ingelheim overcame major challenges in the first half of 2014. These included the settlement of lawsuits over PRADAXA® in the USA and the sale of certain key assets of Bedford Laboratories, which was concluded in July. Bedford Laboratories is a provider of generic injectable medicines in the USA under the corporate umbrella of the Boehringer Ingelheim subsidiary Ben Venue Laboratories Inc. An agreement on the sale of the production facilities and the premises of Ben Venue in Bedford, Ohio, has since been reached. In addition, the US Food and Drug Administration (FDA) at the beginning of June lifted the Warning Letter for its Ingelheim manufacturing facility.

At the same time, the pressure resulting from the rapidly changing global market and economic conditions has increased sharply. Particularly in the USA, Boehringer Ingelheim, triggered by reforms to the healthcare system, was forced to accept significant price reductions. Currency-adjusted net sales at around €6.5 billion in the first half of 2014 were thus three percent below the level of the same period last year (in euro terms: -7.9 percent).

“The year 2014 is marked by numerous changes and challenges,“ said Prof. Dr. Andreas Barner, Chairman of the Board of Managing Directors, at the announcement of the business results for the first half of the year. “In the first six months we have brought many important issues to a favourable conclusion. We can now concentrate all our efforts on the development and launch of new medicines and on the expansion of our biopharmaceutical business.“

Product launches and successful marketing authorisations

The prospects for new products are good: Boehringer Ingelheim is planning to launch more than ten new products in the course of the next two years. Submissions of marketing authorisation applications to the regulatory authorities in many countries are accordingly numerous. The FDA has meanwhile granted “Breakthrough Therapy” designation to no less than three Boehringer Ingelheim development substances. These are nintedanib for the treatment of idiopathic pulmonary fibrosis (IPF), volasertib for the treatment of a special form of leukemia and the antidote for PRADAXA^® for use in emergency situations. “Breakthrough Therapy” means that a regular exchange of information takes place with the FDA with the aim of accelerating the development and registration process.

Both the European and the US regulatory authorities have approved PRADAXA^® for the treatment of deep vein thrombosis and pulmonary embolism; the launch of GIOTRIF^® for the targeted treatment of a specific form of lung cancer is running on schedule. A pleasing development is the approval of the active ingredients olodaterol granted recently by the FDA for the treatment of chronic obstructive pulmonary disease (STRIVERDI^®) and empagliflozin for diabetes (JARDIANCE^®). The European Medicines Agency EMA gave the go-ahead in May for the latter. JARDIANCE^® is scheduled to be available in Germany in August.

The insulin glargin, which was developed jointly in the global diabetes alliance with Lilly, received a recommendation for approval in the European Union in June. Boehringer Ingelheim submitted its application to the EU regulatory authorities for further approval of its combination tablet consisting of empagliflozin and metformin in the field of diabetes at the beginning of August.

In June, the European Medicines Agency (EMA) accepted the submission of data required for the approval of nintedanib for the treatment of a serious and life-threatening lung disease, idiopathic pulmonary fibrosis. Also in June, the FDA granted nintedanib “Breakthrough Therapy” designation.

Initiative to improve the cost structure, while continuing to invest heavily in the future

Boehringer Ingelheim has responded to the changing market situation and declining net sales by introducing measures designed to reduce costs. “We have to create scope for further development, which will enable us to continue to invest vigorously in organic and sustainable growth,“ said Andreas Barner.

2014 is yet another year in which Boehringer Ingelheim’s investment level has been substantial, with the company planning to invest €643 million in tangible assets worldwide. “We are once again investing heavily in areas that are necessary for the future of our company,“ explained Hubertus von Baumbach, Member of the Board of Managing Directors responsible for Finance. “Germany alone is expected to account for almost half of the total investments.“

Currency effects impact on sales performance

In the first half of 2014, exchange rate developments had a negative impact on net sales compared with last year. “The effects resulting from the conversion into euros, the Group’s currency, of net sales generated in US dollars, yen and several currencies in South America were very noticeable,“ von Baumbach commented. Overall, Boehringer Ingelheim’s net sales were down €358 million in the first six months compared to the same period last year, solely as a result of the relatively strong euro.

As a result of exchange rates fluctuating from one period to the next, net sales are very difficult to compare. For this reason, Boehringer Ingelheim – as do other international companies – adjusts the net sales figures to eliminate the effects of these fluctuations in exchange rates.

Bulk of net sales in Prescription Medicines

In the first half of the year, the pharmaceutical company generated net sales of €4,793 million in Prescription Medicines, Boehringer Ingelheim’s most important business area. Currency-adjusted, this represented a decline of 5.4 percent. The bestselling medication, as in the previous years, was SPIRIVA^® for the treatment of chronic obstructive pulmonary disease (COPD), with net sales of €1,621 million. As TRAJENTA^® for the treatment of diabetes has not been attributed any additional benefit in Germany, Boehringer Ingelheim has decided against launching the product in Germany. Demand in markets outside Germany, however, is steadily increasing. Currency-adjusted net sales have risen by more than 63 percent to over €300 million. The greatest growth was achieved by the recently launched medicine for the treatment of lung cancer, GIOTRIF^®.

Net sales in over-the-counter medications in the first half of 2014 amounted to €683 million and grew by a currency-adjusted three percent. This corresponds to some 10 percent of total net sales in this period. International core brands are BUSCOPAN^®, DULCOLAX^®, MUCOSOLVAN^®, PHARMATON^® and BISOLVON^®.

In the business area Animal Health, Boehringer Ingelheim reported currency-adjusted growth of six percent to €536 million.

Business in biopharmaceuticals was up 2.5 percent in the first half of the year to €173 million.

Outlook for the full year 2014

In view of the speed at which the market situation is changing, Boehringer Ingelheim expects currency-adjusted a decline in net sales in the lower single-digit range for the current business year compared with last year.