Letter to our stakeholders
Dear shareholders, partners, colleagues and those living with severe diseases,
In an increasingly constrained external world where innovation is essential, we confirm our patient value strategy to drive UCB’s future success and sustainable growth.
UCB achieved strong results in 2017. On top of our fourth consecutive year of revenue and earnings growth, we also achieved our recurring EBITDA1 / revenue target of 30% – one year earlier. Our ability to build an increasingly differentiated pipeline was demonstrated with key results for Cimzia® in women of child bearing age, Evenity™, padsevonil and bimekizumab. We further strengthened our scientific platforms. However, 2017 also delivered both external and internal challenges that led to share price volatility during 2017.
Externally, the shift from volume to value is translating at differing speed and in heterogeneous ways across health systems. In addition, several advances in science led to increasing numbers of innovative products being launched, which further pressures healthcare system costs, resulting in decreasing return on pharmaceutical R&D investment.
Internally, Evenity™ results confirmed unprecedented efficacy although numeric safety imbalance in ARCH presented an unforeseen challenge. The positive bimekizumab Phase 2b results and padsevonil proof of concept results lead to accelerated Phase 3 programs. While supporting UCB’s long-term sustainability, at the same time, it put pressure on resources in the short-term.
UCB achieved strong results in 2017
In the last year, UCB delivered 9% revenue growth, i.e. € 4.53 billion, the recurring EBITDA1 amounted to € 1.38 billion, and we achieved – one year earlier than originally planned – our objective of a 30% recurring EBITDA1 / revenue margin.
Our key medicines continued to grow. Based on its differentiated profile, Cimzia® is keeping up well in a competitive environment. Vimpat®, Keppra® and Briviact® reached more and more patients living with epilepsy, thanks to new indications and launches in new countries. Based on its strong performance, we increased our peak sales guidance for Briviact® in the year before patent expiry (2026) from € 450 to € 600 million. Neupro® in Parkinson’s disease performed as planned.
In 2017, key R&D results demonstrated our focus on increasingly differentiated solutions that show the promise of advancing the standard of care: Evenity™ results confirmed unprecedented efficacy; bimekizumab achieved positive and competitive Phase 2b results in psoriasis, psoriatic arthritis and ankylosing spondylitis patients, and we started the Phase 3 program in psoriasis; padsevonil achieved positive proof of concept in highly refractory epilepsy patients and started Phase 2b in February 2018; Cimzia® now offers a unique solution to women of childbearing age.
In May, the ARCH results completed the set of data proving Evenity™ efficacy superiority over the current standard-of-care. It also presented an unforeseen challenge: a numeric imbalance in cardiovascular events. To understand this safety signal which was not observed in the FRAME study, a comprehensive evaluation is underway. Filing of the marketing authorization application with the European authorities occurred as planned at the end of 2017.
To continuously enhance our research capabilities, UCB acquired Beryllium LLC, a small-size research based company in Boston, MA (U.S.) specializing in protein expression and structural biology. UCB also created a venture fund to support promising but very early or higher risk assets, approaches or technologies underlining UCB’s ability to deeply connect with external science and to complement our scientific capabilities in dialogue with new partners.
New patient support programs were launched or expanded. UCBCares®, a single customer care point bringing value to patients and health care professionals who contact our company, was implemented across France, Germany, Italy, Spain and the U.K.. In the U.S., UCB Assist connects epilepsy patients with a dedicated case manager to help them.
Jean-Christophe Tellier, CEO
“We are very pleased that – after achieving our net debt / recurring EBITDA target of 1:1 two years earlier in 2016 – we achieved our 30% recurring EBITDA / revenue ratio target – also one year earlier than guided – based on the strong growth of our core products. The next years are now dedicated to accelerate growth drivers for the time after 2021 while we reconfirm our commitment to competitive profitability in the mid-term.”
2018 and beyond: growth, sustainability and profitability
In this context, UCB’s patient value strategy is and remains the best route to achieve long-term success.
Our key medicines will continue to grow and will reach more patients through additional launches in new indications or regional expansion. We will continue to invest above the industry average in R&D to deliver breakthrough medicines with compelling value propositions for patients, healthcare professionals and payers and securing UCB long-term sustainability. Thanks to its strong financial foundations, UCB will be able to selectively use its financial and strategic flexibility to complement its internal pipeline with external innovative assets, programs or platforms through partnerships, licenses or acquisitions.
While in the short term we will increase our investments maximizing our new growth drivers for the time after 2021 and to foster long term sustainability we are committed to return to competitive profitability after this and increase our recurring EBITDA / revenue ratio to 31% in 2021. For 2018, we target revenue in the range of € 4.5 to 4.6 billion, a recurring EBITDA of approximately € 1.3 to 1.4 billion and a Core EPS of € 4.30-4.70 per share.
Thanks to the support of the Board, the guidance of the Executive Committee and – most importantly – the commitment of all UCB employees, UCB has successfully transformed into a leading biotech company, inspired by patients and driven by science.
Our trajectory and achievements in recent years, including growth of strategic therapeutic products while divesting non-core assets or activities, provides a solid base for further, sustainable expansion and growth.
Chief Executive Officer
Evelyn du Monceau,
Chair of the Board
1 EBITDA: Earnings Before Interest, Taxes, Depreciation and Amortization charge