Letter to our stakeholders

Dear people living with severe chronic disease, dear shareholders, partners and colleagues,

Welcome to our first Integrated Annual Report!

A journey to become a patient preferred biopharma leader, encompassing the different dimensions of our business to deliver sustainable value for patients, stakeholders and our people, navigating the changing ecosystem and sharpening the role we play in society.

Today too many patients living with severe chronic diseases are still looking for solutions as they face daily challenges in their lives. The Patient Value Strategy invites each of us at UCB to start everything we do with a simple question:

“How will this create value for people living with severe chronic diseases?”

We are convinced that our Patient Value Strategy will lead to a positive impact for patients, our stakeholders and UCB.

UCB wants to be present and lead in specific patient populations by 2025, defined by leading patient share in the relevant segment. Therefore, our innovation will focus on differentiated medicines with high predictability of response; and leveraging new scientific platforms wherever appropriate. 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’s ambition is to be the patient preferred Biopharma Leader creating patient value for specific populations through unique outcomes, the best patient experience to as many of these lives as possible.

2018, an eventful year!

2018 marked the 90th anniversary of UCB. Since its creation in 1928, UCB has been characterized by a very strong entrepreneurial spirit, a strong determination and resilience, long term views and a strong belief that science and innovation would improve humanity. The company went through several transformations, requiring tough decisions at certain times, to guarantee the long-term growth of the company. Today we are a mid-size global biopharma providing solutions to patients in almost every corner of the world.

Our key medicines continued their growth. Based on its differentiated profile and the new indication launches in 2018, 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 regions – also reflected in the new blockbuster status for Vimpat®. Our key medicines got closer to patients in China: we obtained approval for Keppra® for monotherapy of partial onset epilepsy seizures (approved based on extrapolation from adjunctive therapy with sound scientific rationales) and Neupro® where launch preparations are ongoing. UCB also submitted Vimpat® for the adjunctive therapy of partial onset epilepsy seizures in children above 4 years and for adults, based on extrapolation.

UCB continued its R&D effort on generating increasingly differentiated solutions that show the promise of advancing the standard of care: Evenity™ (romosozumab) was refiled with the U.S. authorities and was approved in Japan; bimekizumab Phase 3 program started in psoriasis while recruitment for psoriatic arthritis and axial spondyloarthitis will start in 2019. The late-stage program for padsevonil made good progress. Rozanolixizumab achieved positive proof of concept and will move to the confirmatory development phase. 

Psoriasis is a cruel disease, there is no cure, it’s hereditary, people stare and shy away from you and it can have impacts not only physically but mentally too. Having lived with the disease for 32 years I have accepted it as part of who I am. I now freely talk it about and love the skin I have as it’s me. I love being part of UCB panel so I can share my experiences and views.

Victoria, living with psoriasis

We initiated the “New Development Paradigm” with the aim to reduce clinical development time and costs and for differentiated medicines creating additional patient value. One example is our partnership with Science 37, Los Angeles, which brings clinical studies directly to patients’ homes. We also have further differentiated the clinical pipeline and strengthened our research capabilities.

UCB pursued its strategic focus with the acquisition of midazolam nasal spray, intended as a rescue treatment of acute repetitive seizures in patients with epilepsy. The new drug application was filed in August 2018 with the U.S. authorities, following previous orphan drug status and fast-track designation. We sold our subsidiary “Innere Medizin”, which successfully promoted pharmaceutical products for cardiovascular and respiratory diseases in Germany.

UCB showed +2% revenue growth – at constant exchange rates a plus of 5% – i.e. € 4.6 billion, underlying profitability, recurring EBITDA, amounted to € 1.4 billion (+2%; 5% at constant exchange rates) – both at the upper end of the range for our financial outlook for 2018 and forming a solid foundation: allowing us to intensify our R&D investments. Having reached the midterm target of 30% recurring EBITDA margin already in 2017, one year earlier than planned, we put out a new target: 31% in 2021 recovering from the expected short-term impact of investing into our strong development pipeline.

We also made good progress on our long-term environmental targets of being carbon neutral, reducing water consumption by 20% and reducing waste production by 25% by 2030.

We are very pleased with the achievements of our first patient value strategy phase with increasing the number of patients treated with our key medicines and the “Go to Market” approach, tailored to local markets and specific patient needs.

The coming years will be dedicated to accelerate and expand sustainable growth.

2019 and beyond: accelerate and expand growth, sustainability and profitability

As proven in the last years UCB’s Patient Value Strategy remains the best route to achieve sustainable growth.
We are now entering its next phase which we call “Accelerate & Expand”.

We will accelerate our growth potential by maximizing patients’ access to our key medicines, by further improving our ability to demonstrate differentiation and by accelerating the development timelines through new approaches. We will expand into new patient populations with the launch of Evenity™ for post fracture osteoporosis and the development of bimekizumab in psoriasis, and other autoimmune conditions including arthritis indications, padsevonil in epilepsy and rozanolixizumab in several – mainly neuro-inflammatory – indications.

Based on our existing strong development pipeline, we have the potential for 6 product launches in the next 5 years. The successful evolution of our late stage pipeline requires additional resources in the short-term therefore we will continue to invest significantly into R&D to deliver breakthrough medicines with sustainable value propositions for patients, healthcare professionals and payers and securing UCB sustainability. Thanks to its strong financial foundations, UCB will selectively use its financial and strategic flexibility to complement its internal pipeline with external innovative assets, programs or platforms through partnerships, licenses or acquisitions.

For 2019, we target revenue in the range of € 4.6-4.7 billion – thanks to core product growth, and recurring EBITDA of 27-29% of revenue.

While in the short-term we will increase our investments maximizing our new growth drivers for the time after 2021 and to foster sustainability, we are committed to return to competitive profitability and to increase thereafter our recurring EBITDA/revenue ratio to 31% in 2021. We also have defined new peak sales targets for Cimzia®, expected to reach € 1.7 billion by 2024, and Vimpat®, expected to reach € 1.4 billion by 2022.

We will continue to engage: developing our people, institutionalizing reflection and continuous learning, increasing collaboration and ensuring early and consistent engagement of patients, physicians, payers, regulators and partners. We continue and welcome an open dialog with all our stakeholders.

We are grateful for the continued support of our shareholders, of the Board of Directors and the Executive Committee as well as – most importantly – of all UCB employees for their commitment to fulfill our vision.

With this support UCB is entering the next strategic phase of becoming a patient preferred biopharma leader – inspired by patients and driven by science. We will strive, with humility and confidence, to create patient value for specific patient populations through unique outcomes, delivering the best patient experience to as many of these lives as possible and with that to achieve sustainable growth and profitability for UCB, and contributing positively to our stakeholders and society.

Jean-Christophe Tellier, Chief Executive Officer
Evelyn du Monceau, Chair of the Board

February 2019