Letter to our stakeholders
Letter to our stakeholders
Dear people living with severe chronic disease,
dear shareholders, partners and colleagues,
Welcome to our second Integrated Annual Report – thank you for continuing with us or joining our journey!
Our aspiration to become the patient preferred biopharma leader – leveraging the different dimensions of our business to deliver sustainable value for patients, our employees, society and our shareholders – continues to guide us while we learn and adapt to new and challenging environments.
The implementation of our Patient Value Strategy in early 2015 allowed us to positively impact 3.5 million patients’ lives in 2019 and deliver sustained company growth for the last five years: An 8% annual revenue growth rate (CAGR) since 2014 and a boosted profitability (rEBITDA to revenue) from 18% in 2014 to 29% in 2019.
Our strategic approach starts with an in-depth understanding of the patients, from biology to behavior rather than commencing from a pure scientific point of view. We want to understand the full impact of their disease which guides our scientists to develop original scientific hypothesis and translate them into innovative solutions for specific patient populations.
By 2025, UCB aims to be a leader in specific patient populations and provide an increasing number of people with severe diseases the freedom to live their best possible lives. Guided by our Patient Value Strategy and focusing on these patient populations, our ambition is to deliver unique outcomes and the best experience to all patients who need our solutions, in a way which is viable for patients, for society and for UCB. We are convinced that our strategy is the way to ensure UCB’s future success and sustainable growth.
In today’s world full of environmental and social challenges, we also acknowledge our responsibility to drive positive change. We are committed to consider sustainability as a true business approach and we will focus our efforts on four areas that we believe are critical to our long-term success and our contribution to society alongside our financial performance: continuously innovate to bring differentiated medicines to patients, improve patient access to our solutions, promote our employees’ safety, health and well-being and minimize our environmental footprint.
UCB’s purpose is to create value for patients, now and into the future.
Our ambition for patients relies on our innovation ability to bring differentiated solutions with unique outcomes that help specific patients achieve their life goals and that create the best individual experience for them. This also means ensuring access for all who need these solutions, in a way which is viable for patients, society and UCB.
We believe that, to fulfil our ambition for patients, we must create the right conditions for our employees, the communities in which we operate, and our shareholders. We cannot do this alone and we embrace partnerships with other healthcare system stakeholders.
2019, a transformational year!
In 2019 we entered the next phase of our Patient Value Strategy, which we call “Accelerate and Expand” (2019-2022).
During this phase, we are accelerating our growth potential by further improving our ability to demonstrate differentiation of our medicines, by accelerating our development timelines through new approaches and by improving patients’ access to our key medicines.
Based on our strong clinical development pipeline, we have the potential for six new product launches by 2025:
In 2019, we made significant progress towards this ambitious goal and improved UCB’s risk profile:
- Evenity® and Nayzilam® were approved and launched as planned.
- bimekizumab delivered three positive Phase 3 study results in psoriasis and the submission to regulatory bodies should occur in mid-2020.
- UCB started multiple Phase 3 studies: bimekizumab in psoriatic arthritis and axial spondyloarthitis and in early 2020 in hidradenitis suppurativa, padsevonil in drug resistant epilepsy and rozanolixizumab in generalized myasthenia gravis as well as in immune thrombocytopenia (ITP).
- UCB0107, our anti-Tau antibody, reported positive Phase 1 results and will enter the confirmatory study in the second quarter of 2020.
- To accompany our growth and to prepare for the launch and long-term supply of future medicines currently in clinical development, UCB decided also to build a new biotechnology plant in Braine-l’Alleud (Belgium), kicking-off early 2020.
Additionally, in October 2019, we entered into an agreement to acquire Ra Pharmaceuticals, Inc. (Ra Pharma). The transaction would enhance UCB’s leadership potential in myasthenia gravis by adding a Phase 3 development project to our pipeline. It would also bring a new proprietary technology platform augmenting UCB discovery capabilities and could strengthen UCB’s presence in the U.S. with a location in the Boston area. The transaction remains subject to antitrust clearance and is expected to close by the end of the first quarter 2020.
In 2019, we adapted our organization and our ways of working to further embrace the opportunities and prepare for the launches in front of us. Our culture is more than ever centered on encouraging each of us to take accountability to create meaningful value for patients in a transversal and agile way. This evolution is visible in the new composition of our Executive Committee and their direct reports with transversal accountabilities and a smaller size for these two groups. We believe that our people and leaders are the key to deliver on our ambition. We will therefore continue to develop the leadership capability of our organization as well as authentic, adaptive and resilient leaders. We want to promote a growth mindset to increase engagement and performance.
Importantly we are also going through an acceleration process to fully embrace how digital technology is impacting the way healthcare is developed, delivered, experienced by healthcare professionals, payers and patients.
Serving patients, our key medicines continued their growth in 2019. Based on its differentiated profile and new indication launches, Cimzia® (certolizumab pegol) is keeping up well in a competitive environment. In the U.S., Cimzia® is the first and only biologic treatment of non-radiographic axial spondyloarthritis (nr-axSpA) approved by the Food and Drug Administration (FDA). Cimzia® is now also available to patients living with rheumatoid arthritis in China and to patients living with psoriasis and psoriatic arthritis in Japan. Vimpat® (lacosamide), Keppra® (levetiracetam) and Briviact® (brivaracetam) reach more and more patients living with epilepsy. In the U.S., Keppra® was approved as monotherapy in treatment of partial-onset epilepsy seizures, with an updated labeling for pregnancy and lactation. In Japan, on top of two new formulations (intravenous and dry syrup), Vimpat® also received approval in the treatment of children living with partial onset seizures.
In 2019, UCB delivered a stronger than expected financial performance due to the strong demand for Cimzia® and Vimpat® in the fourth quarter of the year, with 6% revenue growth to € 4.9 billion – at constant exchange rates a plus of 7%. UCB’s underlying operational profitability, recurring EBITDA, reached € 1.4 billion (+2%; +11% at constant exchange rates). This allowed us to intensify our R&D investments as planned: 26% of revenue were invested into our research and clinical development activities.
We also made good progress on our long-term environmental targets of being carbon neutral, reducing water withdrawal by 20% and reducing waste production by 25% by 2030. In 2020, we will be working on our commitments related to access to medicines and health, safety and well-being of our employees which are both critical for our commitment to sustainability.
We have a clear strategy and confirmed objectives for 2020 and beyond
The successful evolution of our late stage pipeline requires additional resources in the short-term. We will therefore continue to invest significantly into Research and Development to deliver breakthrough medicines that create value for patients now and into the future. Thanks to its strong financial foundations, UCB will still 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 in our new growth drivers for the years after 2022, we are committed to return to competitive profitability with a recurring EBITDA/revenue ratio of 31% in 2021. We also defined new peak sales targets for Vimpat®, expected to reach € 1.5 billion by 2022, and Cimzia®, expected to reach at least € 2 billion by 2024. The planned acquisition of Ra Pharmaceuticals, Inc. and its pipeline would enable accelerated top and bottom line company growth from 2024 onwards.
For 2020, we are aiming for revenues in the range of € 5.05-5.15 billion – thanks to our current core product growth and new patient populations being served, and for a recurring EBITDA of 28-29% of revenue. The outlook will be updated upon closing of the planned Ra Pharma acquisition.
Last but not least …
We would not have achieved any of our 2019 impressive results without the commitment, engagement and passion of all our colleagues – it is extremely enriching to work with you all to make UCB stronger and the world a better place. We are deeply thankful for your hard work.
We also want to thank our shareholders, our Board of Directors, our Executive Committee and Leadership Teams for their support and trust while we are working to become the patient preferred biopharma leader – inspired by patients and driven by science.
Jean-Christophe Tellier, Chief Executive Officer
Evelyn du Monceau, Chair of the Board