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3 RECORDATI INDUSTRIA CHIMICA E FARMACEUTICA S.P.A. Company under the management and coordination of Rossini Luxembourg S.àr.l. Registered office: Via Matteo Civitali, 1 ‐ Milan, Italy Share capital: € 26,140,644.50 fully paid‐in Tax identification code and registration number in the Milan, Monza, Brianza and Lodi Business Register: 00748210150 The Company prepares the consolidated financial statements for the Recordati group. BOARD OF DIRECTORS ANDREA RECORDATI Chairman GUIDO GUIDI Vice Chairman ROBERT KOREMANS Chief Executive Officer MICHAELA CASTELLI Lead Independent Director ELISA CORGHI Independent GIORGIO DE PALMA LUIGI LA CORTE Group Chief Financial Officer JOANNA LE COUILLIARD Independent GIAMPIERO MAZZA PIERGIORGIO PELUSO Independent CATHRIN PETTY KIM STRATTON CONTROL, RISK AND CSR COMMITTEE MICHAELA CASTELLI Chair ELISA CORGHI PIERGIORGIO PELUSO REMUNERATION AND NOMINATIONS COMMITTEE JOANNA LE COUILLIARD Chair MICHAELA CASTELLI ELISA CORGHI BOARD OF STATUTORY AUDITORS ANTONIO SANTI Chair EZIO SIMONELLI LIVIA AMIDANI ALIBERTI Statutory Auditors ANDREA BALELLI SILVIA MINA Alternate Auditors AUDIT FIRM EY S.p.A.
4 The 2023 consolidated financial statements are presented in accordance with the International Financial Reporting Standards (IFRSs) issued or revised by the International Accounting Standards Board (IASB) and endorsed by the European Union, as well as the provisions issued implementing Art. 9 of Italian Legislative Decree 38/2005. The same accounting standards were used in the preparation of the 2022 consolidated financial statements. This document contains forward‐looking statements relating to future events and future operating, economic and financial results of the Recordati group. By their nature, forward‐looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Actual results may therefore differ materially from those forecasts as a result of a variety of reasons, most of which are beyond the Recordati group’s control. The information on the group’s pharmaceutical specialties and other products contained in this document is intended solely as information on Recordati’s activities and therefore, as such, it is not intended as medical scientific indication or recommendation, nor as advertising. This is an English courtesy translation of the original documentation prepared in Italian language.
RECORDATI, AT THE FOREFRONT OF LIFE ENHANCING AND LIFE‐CHANGING MEDICINES 5 RECORDATI, AT THE FOREFRONT OF LIFE-ENHANCING AND LIFE-CHANGING MEDICINES Revenue 2,082.3 Million Euros Net Income 389.2 Million Euros Employees Exceed 4,450
RECORDATI, AT THE FOREFRONT OF LIFE ENHANCING AND LIFE‐CHANGING MEDICINES 6 AT THE FOREFRONT OF LIFE-ENHANCING AND LIFE-CHANGING MEDICINES FOR ALMOST 100 YEARS. With its beginnings in a family‐run pharmacy in Correggio, Italy in the 1920s, Recordati is now a global pharmaceutical group, listed on the Italian Stock Exchange since 1984, with over 4,450 employees. In 2023, the Group generated revenue of € 2,082.3 million and net income of € 389.2 million. Recordati has always believed that health, and the opportunity to live life to the fullest, is a right, not a privilege. Whether that is for common diseases or the rarest – Recordati wants to give everyone the opportunity to be the best version of themselves. This drive will never stop. The people who work across Recordati are passionate individuals who go to extraordinary lengths for partners, customers, investors, and the people across the globe that they serve. Every day, they strive to deliver on the Group’s purpose of Unlocking the full potential of life. Recordati: Has fully integrated operations across research and development, chemical and finished product manufacturing through to commercialisation and licensing. Has a global footprint with direct presence in more than 65 countries and partnerships in remaining markets. Has a diversified portfolio across Speciality & Primary Care and Rare Diseases, available in around 150 countries worldwide. Is a partner of choice for many companies in the industry due to its unique structure and successful track record in integrating new products and licenses. Maintains the highest quality and safety standards of products throughout their life cycle. Manufactures pharmaceutical ingredients to support its supply‐chain, while also providing them to customers worldwide. STRATEGY In a constantly changing marketplace, Recordati is committed to seeking new opportunities, with a focus on developing new treatments and investing in medical innovations that can address the unmet needs of patients. Since its beginnings, Recordati has generated strong consistent growth thanks to the continued success of its products and its strategy based on internationalisation and diversification. The Group has focused on driving profitable organic growth of its product portfolio and on business development, through licensing and acquisitions, since the 1990s. Partnerships are a core component of Recordati’s successful history. The group has developed a long‐standing track record, a commitment to partnering and has the focus to treat each product as if it were Recordati’s own. BUSINESS AND PORTFOLIO Specialty & Primary Care The Specialty & Primary Care (SPC) business unit has a strong and proven heritage of supporting people living with a wide range of common illnesses that affect large populations day to day. It creates value for patients, payers, and physicians with both prescription and self‐medication treatments. The business has a direct presence in Europe, North Africa and Türkiye, and makes its products available in other international markets through distribution partners. The product portfolio includes medicines developed historically internally and several which have been in‐licensed from other pharmaceutical companies for commercialization in specific territories.
RECORDATI, AT THE FOREFRONT OF LIFE ENHANCING AND LIFE‐CHANGING MEDICINES 7 SPC’s best‐known products are focused in the following areas: Cardiovascular, with lercanidipine, a latest‐generation calcium channel blocker indicated for the treatment of hypertension, discovered and developed entirely at Recordati’s research laboratories, and its combination with enalapril, a widely prescribed ACE inhibitor. The group also offers well‐established metoprolol‐based products, a beta‐blocker mainly indicated to control a range of conditions including hypertension, angina pectoris, cardiac rhythm disorders, maintenance treatment after a myocardial infarction, and functional heart disorders with palpitations. Pitavastatin, a latest‐generation statin for controlling hypercholesterolemia, is also marketed in several countries. Urology and Uro-Oncology, with well‐recognized drugs for the treatment of benign prostatic hyperplasia such as silodosin, and of urinary incontinence, such as flavoxate. Its portfolio also includes a leuprorelin acetate depot formulation for subcutaneous injection indicated for palliative care in hormone‐dependent prostate cancer (PCa). A new pre‐connected syringe, developed by Tolmar, was introduced in first markets in the later part of 2023, further enhancing the differentiated position of the drug. In 2023, a long‐term, commercialization agreement was finalised with GSK for the sales and distribution of two drugs, Avodart® (dutasteride) and Combodart ®/ Duodart® (dutasteride/tamsulosin) (1) . These drugs have helped support millions of men worldwide who experience moderate to severe symptoms relating to benign prostatic hyperplasia (BPH) and are at risk of suffering complications. Gastroenterological, with several established brands for evacuating the intestine based on sodium picosulfate and magnesium citrate (including Citrafleet®, Casenlax®), widely used before diagnostic tests, products used for constipation for adults and children, and a line of probiotics based on lactobacillus reuteri protectis, particularly popular in Western Europe. Procto‐Glyvenol® (tribenoside) is one of our leading CHC brands across several Central and Eastern European markets. “Cough and cold” ranging from an antiseptic based on biclotymol for sore throats, to combination products for the treatment of ear, nose and throat infections, successfully sold mainly in Italy, France, Russia and the CIS countries. In addition to the above, we have products available across a variety of other areas, including central nervous system, with an antipsychotic drug for the treatment of schizophrenia, Reagila® (cariprazine), a third‐generation antipsychotic for this seriously debilitating mental disorder which is marketed in several European countries. Rare Diseases The Rare Diseases (RD) business unit develops, produces and markets drugs for the treatment of rare diseases, operating globally and dedicated entirely to serving patients suffering from these diseases. The drugs are marketed directly in Europe, the Middle East, Türkiye, United States, Canada, Russia, Australia, Japan, China and in Latin America, and through selected partners in several other countries. Historically focused on rare genetic metabolic illnesses, acquired through the acquisitions of Orphan Europe in 2007 and Lundbeck product portfolio in US in 2012, the Rare Diseases portfolio was expanded with the acquisition of additional important specialties in rare endocrine diseases through the acquisition of Signifor®, Signifor LAR® (pasireotide) and Isturisa® (osilodrostat) from Novartis in 2019, and further expanded with the acquisition of EUSA Pharma that was completed in March 2022, adding four drugs for the treatment of rare and niche oncological diseases. RD provides medicines across three main therapeutic areas: Metabolic - The activity on rare genetic metabolic illnesses, with an initial presence in 2007 mostly in Europe and the MENA region, has expanded its scope into the US in 2012. Cystadrops ® (cysteamine hydrochloride), Carbaglu ® (carglumic acid) and Panhematin ® (human hemin) form the core of the business’s legacy metabolic products, to which Ledaga ® (chlormethinean hydrochloride was added in 2018. Recordati continues to expand access to these treatments, with Carbaglu ® launched in 2023 in China for the (1) Trademarks are owned by or licensed to the GSK group of companies. Transition to Recordati of commercialization of Avodart® and Combodart® / Duodart® has been effected in the following markets: Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Portugal, Spain, Sweden, Switzerland, UK.
RECORDATI, AT THE FOREFRONT OF LIFE ENHANCING AND LIFE‐CHANGING MEDICINES 8 treatment of hyperammonia associated with NAGS deficiency and organic acidemias, a set of rare metabolic conditions characterized by raised levels of ammonia in the blood which can be extremely toxic to the brain in infants, children and adults. Endrocrinology ‐ Recordati expanded into important endocrine speciality treatment areas in 2019, which included conditions such as Cushing disease/ syndrome and Acromegaly, both rare conditions which can have a significant impact on quality of life. The expansion was part of the acquisition of Signifor ® , Signifor LAR ® and Isturisa ® from Novartis. Access to these treatments continues to expand globally with the launch of Istruisa ® in Columbia in 2023 and the filing of the New Drug Application (NDA) for the same treatment in China and Brazil. Oncology ‐ The business expanded into rare oncological conditions through the acquisition of EUSA Pharma in March 2022 adding important treatments that cover rare and niche oncological diseases, the main ones being Qarziba ® (dinutuximab beta) for high‐risk neuroblastoma, Sylvant ® (siltuximab) for idiopathic multi‐ centric Castleman disease and Fotivda ® (tivozanib), indicated in advanced renal cell carcinoma. Access to these treatments continues to expand internationally; for example, in 2023 discussions were held with the FDA in the US regarding the potential regulatory path for the Biologics Licence Application for Qarziba ® ,a product already present on the market in Europe and other countries. Rare Diseases continually develops new specialties and new indications within its portfolio originating either internally or acquired through development agreements with other pharmaceutical companies and research institutes across its three focus areas. PRODUCTION SITES Recordati has seven pharmaceutical production facilities, located in the Czech Republic, France, Italy, Spain, Switzerland, Türkiye and Tunisia, all of which operate in full compliance with environmental protection regulations and current Good Manufacturing Practice (cGMP). Recordati also has one packaging and distribution center dedicated to rare disease products in Nanterre (near Paris), France. The site delivers, at short notice, more than 27,000 orders annually to more than 60 countries worldwide. The group also produces several active ingredients and intermediates for the pharmaceutical industry at two pharmaceutical chemical plants: one in Campoverde di Aprilia, Italy, which marked its 60 th anniversary in 2023, and the other in Cork, Ireland. The key focus of Recordati’s pharmaceutical chemicals business is providing quality Active Pharmaceutical Ingredients (API) for some of the group’s key drugs across both business units, with residual capacity made available to manufacture and commercialise APIs to third party customers worldwide. The pharmaceutical chemicals business focuses on: striving for maximum product quality, safety of production processes, protection of the environment, health and safety in the workplace meeting the requirements of the Recordati pharmaceuticals business strengthening the Group’s presence in highly regulated markets, like the United States, European and Japan. RESEARCH & DEVELOPMENT Recordati continuously brings new medicines to patients, originating either internally or acquired through agreements with other pharmaceutical companies and research institutes. Commitment, scientific rigor, capability, and highly specialised personnel allow the group to develop new treatments and build an innovative product pipeline.
RECORDATI, AT THE FOREFRONT OF LIFE ENHANCING AND LIFE‐CHANGING MEDICINES 9 In 2023, Recordati invested € 255.7 million in research and development (including amortisation arising from the purchase or license of new products), + 16.2% compared to 2022. DIGITAL INNOVATION Recordati has embarked on a transformative journey to elevate the group’s digital landscape. One of the cornerstones of this digital transformation is the comprehensive implementation of a group‐wide ERP system, revolutionizing the way processes across the organization are streamlined. In addition, the Group has successfully implemented a cutting‐edge data warehouse system, allowing it to harness the full potential of all data, fostering informed decision‐making and strategic planning. As well as these milestones, Recordati has implemented other transformative initiatives to strengthen its digital footprint. These efforts collectively show the group’s commitment to not only stay abreast of industry trends but also set new benchmarks for operational excellence and technological prowess. ENVIRONMENT, SOCIAL AND GOVERNANCE (ESG) Recordati has a long history of entrepreneurial passion, a strong reputation and a desire to continue growing and creating value in an ethical, enduring and sustainable way. It does this while respecting the laws and regulations that apply in the countries in which it operates, protecting people and the environment and supplying safe, high‐quality products. The group’s Sustainability Plan describes its future commitments and is built around qualitative and quantitative goals in five priority areas: patient care, people care, environmental protection, responsible sourcing, ethics and integrity. To pursue a long‐term sustainable growth model, Recordati integrates social and environmental aspects into its corporate strategy. An example of this is that, in 2023, Recordati finalised its first sustainability‐linked loan, linking the credit raised to two ESG KPIs: environmental protection (Renewable Energy Installed Power Capacity) and responsible sourcing (Suppliers’ Sustainability Audit). Recordati’s focus and efforts in driving the group’s ESG strategy were recognized by main ESG indices and ratings in 2023. The inclusion in the FTSE4GOOD Index series was reconfirmed alongside the “Platinum” rating by EcoVadis. MSCI ESG Research confirmed Recordati’s A rating and the Group was rated C+ with Prime status by ISS ESG, awarded to companies with a leading sustainability performance in their industry. In addition, Recordati received a “Robust” ESG Assessment from Moody’s Analytics and is included in the MIB ESG Index, promoted by Euronext and Borsa Italiana. PEOPLE AND CULTURE Recordati prides itself on having built – and continuing to further develop – a culture in which people are able to thrive and grow. In 2023, Recordati continued to promote initiatives to foster a more diverse and inclusive working environment for all, with the aim of increasing the percentage of women in Top and Senior Manager positions. The group ran its first global People engagement survey for the whole employee base of more than 4,300 people. It also repeated 2022’s Diversity and Inclusion survey that specifically targets the Senior Leadership Team of around 300 people. Both surveys achieved a high response rate as well as encouraging results. To truly illustrate what Recordati and its people stand for, in 2023, the group refreshed its purpose to Unlocking the full potential of life, a step that has received positive feedback from employees and key external stakeholders, including patient organisations. To reflect the purpose, Recordati also refreshed its brand identity, with a new look and feel that can be seen on the company’s website www.recordati.com, which has also been updated to offer more detailed information for all the group’s stakeholders.
LETTER TO OUR SHAREHOLDERS 10 LETTER TO OUR SHAREHOLDERS Dear Shareholders, In 2023, we continued to deliver value and sustainable growth to all our stakeholders in a very dynamic environment. Against the backdrop of increasing geopolitical instability and higher inflationary pressures, we achieved an outstanding financial performance, marked by strong momentum across both the Specialty & Primary Care (SPC) and Rare Diseases (RD) businesses. Throughout the year, we continued to demonstrate our ability to successfully execute our business strategy, focused on driving organic growth of our current portfolio, complemented with accretive M&A and targeted business development, as well as capturing growth opportunities within our own pipeline. We firmly believe these strategic pillars will further strengthen our position for future profitable growth. Our consolidated revenues for 2023 exceeded € 2 billion for the first time, with broad‐based strength across both our Specialty & Primary Care and Rare Diseases businesses. Specifically, our SPC business grew ahead of relevant markets, achieving € 1,313.6 million of revenue growing 13.6% on a like‐for‐like basis compared to FY2022, while the RD business, with revenue totalling € 714.7 million, grew by 14.9% on a like‐for‐like basis year‐on‐year, driven by the endocrinology and oncology franchises. This growth, combined with continued cost discipline, allowed us to sustain sector‐leading margins despite a challenging financial environment. Given the strong momentum across the business, we remain on track to deliver on our mid‐ and longer‐term growth ambitions. There were also a number of important milestones achieved in 2023 to expand access to our existing treatments, whilst also strengthening our portfolio. We are particularly proud of the agreement signed with GSK in July to commercialize Avodart® (dutasteride) and Combodart®/ Duodart® (dutasteride/tamsulosin) across 21 countries. The deal adds two leading and well‐established brands to our core urology portfolio in Specialty & Primary Care, significantly reinforcing the competitiveness of the Group’s offering as well as extending Recordati’s proven excellence in the urology space. Throughout the year, the expansion of the Group’s footprint in China has continued to progress. We obtained approval of Marketing Authorization for Carbaglu® in June, with first commercial sales taking place in November. ANDREA RECORDATI Chairman ROB KOREMANS Chief Executive Officer
LETTER TO OUR SHAREHOLDERS 11 We’ve also continued important development and life‐cycle management activities. A new program was initiated in 2023, with a Phase II study on pasireotide s.c. for the treatment of patients with Post‐Bariatric Hypoglycemia (PBH). The Group has also completed enrollment of the global phase II study of REC 0559 for the treatment of neurotrophic keratitis and expects the topline data readout in mid‐2024. Discussions are ongoing with the FDA on the potential regulatory path to bring dinutuximab beta (Qarziba®) to patients in the US; we are addressing the FDA’s comments from our Type C meeting in 2023 and expect to have further interactions with the authority in the first half of 2024. To support innovation in the clinical community, in May we launched the call for applications to the 11 th edition of the Arrigo Recordati International Prize for Scientific Research, held once every two years. The 2024 Award is dedicated to the promotion and recognition of excellence in research on paediatric oncology, specifically neuroblastoma, which reflects our strong commitment to support innovation and research within rare diseases. In 2023, we refreshed our purpose to Unlocking the full potential of life, which reflects what the company and our people stand for today. This new purpose reaffirms Recordati’s long‐standing belief that health and the opportunity to live life to the fullest are a right not a privilege. Culture Ambassador volunteers across Recordati supported the creation and rollout of the purpose, with over 70 people worldwide working tirelessly to engage colleagues locally and further build a shared sense of pride in the Group. We also reflect with pride on this year’s achievements on the sustainability front. Our focus and efforts in driving the Group’s ESG strategy were further recognized by main ESG indices and ratings this year. In June 2023, the inclusion in the FTSE4GOOD Index series was reconfirmed alongside the “Platinum” rating by EcoVadis in July. MSCI ESG Research confirmed Recordati’s A rating in August and the Group was rated C+ with Prime status by ISS ESG in September, awarded to companies with a leading sustainability performance in their industry. We also received a “Robust” ESG Assessment from Moody’s Analytics in October, and we are included in the MIB ESG Index, promoted by Euronext and Borsa Italiana since October 2021. As we look to build a more connected and inclusive work environment that supports the wellbeing of our people, in 2023 we ran our first global engagement survey for the whole employee base of more than 4,300 people. We also repeated 2022’s Diversity and Inclusion survey that specifically targets the Senior Leadership Team of around 300 people. A high response rate, as well as encouraging results in both surveys, clearly show that we are heading in the right direction. It was an honour and privilege to lead Recordati in such a great year, and we are thankful for the dedication, hard work, and unwavering belief showed by all our people worldwide. Your commitment inspires us every day. Finally, to our shareholders, we extend our sincere gratitude for your constant trust, support, and investment in our company. Thank you for playing a pivotal role in the continued success of Recordati. DIVIDENDS Based on the results obtained and consistent with the Company dividend policy, the Board of Directors has proposed a dividend to shareholders of € 0.63 per share, in full balance of the interim 2023 dividend of € 0.57, for all shares outstanding at the ex‐dividend date of 20 May 2024, excluding treasury shares in the portfolio at that date, with payment on 22 May 2024 and record date 21 May 2024. The proposed full 2023 dividend is therefore € 1.20 per share (€ 1.15 per share in 2022). Sincerely, ANDREA RECORDATI ROB KOREMANS Chairman Chief Executive Officer
RECORDATI IN THE WORLD 12 RECORDATI IN THE WORLD Present in around 150 countries with our SPC products and our treatments for Rare Diseases SPECIALTY & PRIMARY CARE ◣ Albania ◣ Algeria ◣ Angola ◣ Argentina ◣ Armenia ◣ Australia ◣ Austria ◣ Azerbaijan ◣ Belarus ◣ Belgium ◣ Benin ◣ Bosnia‐Herzegovina ◣ Brazil ◣ Bulgaria ◣ Burkina‐Faso ◣ Cambodia ◣ Cameroon ◣ Cape Verde ◣ Central African Republic ◣ Chad ◣ Chile ◣ China ◣ Colombia ◣ Congo ◣ Croatia ◣ Cyprus ◣ Czech Republic ◣ Denmark ◣ Djibouti ◣ Dominican Republic ◣ Ecuador ◣ Egypt ◣ El Salvador ◣ Estonia ◣ Finland ◣ France ◣ French Guiana ◣ French Polynesia ◣ Gabon ◣ Georgia ◣ Germany ◣ Greece ◣ Guadeloupe ◣ Guatemala ◣ Guinea ◣ Haiti ◣ Holy See ◣ Hong Kong ◣ Hungary ◣ Iceland ◣ India ◣ Indonesia ◣ Iraq ◣ Ireland ◣ Israel ◣ Italy ◣ Ivory Coast ◣ Jamaica ◣ Japan ◣ Jordan ◣ Kazakhstan ◣ Kenya ◣ Kosovo ◣ KSA (Kingdom of Saudi Arabia) ◣ Kyrgyzstan ◣ Latvia ◣ Lebanon ◣ Libya ◣ Lithuania ◣ Luxembourg ◣ Macedonia ◣ Madagascar ◣ Malaysia ◣ Mali ◣ Malta ◣ Martinique ◣ Mauritania ◣ Mauritius ◣ Mayotte ◣ Mexico ◣ Moldova ◣ Mongolia ◣ Morocco ◣ Netherlands ◣ New Caledonia ◣ New Zealand ◣ Niger ◣ Norway ◣ Pakistan ◣ Panama ◣ Paraguay ◣ Philippines ◣ Poland ◣ Portugal ◣ Reunion ◣ Romania ◣ Russian Federation ◣ San Marino ◣ Senegal ◣ Serbia ◣ Singapore ◣ Slovak Republic ◣ Slovenia ◣ Somalia ◣ South Africa ◣ South Korea ◣ Spain ◣ Sri Lanka ◣ Sudan ◣ Sweden ◣ Switzerland ◣ Taiwan ◣ Tajikistan ◣ Tanzania ◣ Thailand ◣ Togo ◣ Tunisia ◣ Türkiye ◣ Turkmenistan ◣ UAE (United Arab Emirates) ◣ Ukraine ◣ United Kingdom ◣ Uruguay ◣ USA (United States of America) ◣ Uzbekistan ◣ Venezuela ◣ Vietnam ◣ Wallis and Futuna Subsidiaries and direct selling organizations Countries where Recordati products are sold (under license or export)
RECORDATI IN THE WORLD 13 RARE DISEASES ◣ Algeria ◣ Andorra ◣ Argentina ◣ Australia ◣ Austria ◣ Azerbaijan ◣ Bahrain ◣ Belarus ◣ Belgium ◣ Bosnia‐Herzegovina ◣ Brazil ◣ Brunei ◣ Bulgaria ◣ Canada ◣ Chile ◣ China ◣ Colombia ◣ Costa Rica ◣ Croatia ◣ Cyprus ◣ Czech Republic ◣ Denmark ◣ Dominican Republic ◣ Egypt ◣ Estonia ◣ Finland ◣ France ◣ Georgia ◣ Germany ◣ Greece ◣ Guatemala ◣ Haiti ◣ Honduras ◣ Hong Kong ◣ Hungary ◣ Iceland ◣ India ◣ Indonesia ◣ Iran ◣ Iraq ◣ Ireland ◣ Israel ◣ Italy ◣ Jamaica ◣ Japan ◣ Jordan ◣ Kazakhstan ◣ KSA (Kingdom of Saudi Arabia) ◣ Kuwait ◣ Latvia ◣ Lebanon ◣ Libya ◣ Lithuania ◣ Luxembourg ◣ Macau ◣ Macedonia ◣ Malaysia ◣ Malta ◣ Mauritania ◣ Mexico ◣ Montenegro ◣ Morocco ◣ Netherlands ◣ New Zealand ◣ Norway ◣ Oman ◣ Pakistan ◣ Peru ◣ Philippines ◣ Poland ◣ Portugal ◣ Qatar ◣ Romania ◣ Russian Federation ◣ Rwanda ◣ Serbia ◣ Singapore ◣ Slovak Republic ◣ Slovenia ◣ South Africa ◣ South Korea ◣ Spain ◣ Sri Lanka ◣ Sweden ◣ Switzerland ◣ Taiwan ◣ Thailand ◣ Tunisia ◣ Türkiye ◣ UAE (United Arab Emirates) ◣ Ukraine ◣ United Kingdom ◣ Uruguay ◣ USA (United States of America) ◣ Venezuela ◣ Vietnam Subsidiaries and direct presence of orphan drug representatives Commercial agreements and direct delivery
THE GROUP IN FIGURES 14 THE GROUP IN FIGURES 2019 2020 2021 2022 2023 Euro ADJUSTED NET INCOME PER SHARE 2019 2020 2021 2022 2023 Euro NET INCOME PER SHARE 2019 2020 2021 2022 2023 DIVIDEND PER SHARE Euro 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 EBITDA * 2019 2020 2021 2022 2023 RESEARCH & DEVELOPMENT 2019 2020 2021 2022 2023 NET INCOME 2019 2020 2021 2022 2023 ADJUSTED NET INCOME ** * Net income before income taxes, financial income and expenses, depreciation, amortization and write‐downs of property, plant and equipment, intangible assets and goodwill, non‐recurring items and non‐cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3. ** Net income excluding the amortization and write‐down of intangible assets (except software) and goodwill, non‐recurring items, non‐cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory pursuant to IFRS 3, and monetary net gains/losses from hyperinflation (IAS 29), net of tax effects. *** Proposed by the Board of Directors. Million Euros Million Euros Million Euros Million Euros Million Euros EBITDA * AS % OF REVENUE * 2019 2020 2021 2022 2023 REVENUE 1,481.8 1,448.9 1,580.1 1,853.3 2,082.3 544.0 569.3 602.3 672.8 769.6 36.7 39.3 38.1 36.3 37.0 129.7 146.2 166.1 220.1 368.9 355.0 386.0 312.3 382.4 410.4 424.6 473.3 1.00 1.05 1.10 1.15 255.7 389.2 524.6 1.20 *** 1.800 1.725 1.874 1.519 1.893 2.551 1.866 1.995 2.061 2.302
THE GROUP IN FIGURES 15 PHARMACEUTICAL REVENUE BY THERAPEUTIC AREA PHARMACEUTICAL REVENUE BY GEOGRAPHY BALANCE SHEET at 31 December 2023 71.4 Current Assets 40.1% Shareholder's Equity 28.6% Non‐Current Assets 36.1% Non‐Current Liabilities 23.8% Current Liabilities SHAREHOLDER’S EQUITY 1,686.4 Million Euros NET FINANCIAL POSITION (1,579.4) Million Euros US 15.5% Italy 15.2% Other international sales 13.4% France 8.8% Spain 8.1% Other Western Europe 7.5% Germany 7.4% Other C.E.E. 7.4% Russia, Ukraine, other CIS 6.9% Türkiye 4.8% Portugal 3.0% North Africa 2.0% RARE DISEASES 34.3% SPECIALTY AND PRIMARY CARE 65.7% Chemicals 2.6% Cough and Cold 6.6% Gastro & Intestinal 10.5% Urology 13.5% Other pharmaceuticals 15.0% Cardiovascular 17.5% Metabolic 13.0% Endocrinology 11.6% Oncology 9.6%
THE RECORDATI SHARE 16 THE RECORDATI SHARE Listing: Borsa Italiana, Blue Chip segment, healthcare ISIN Code: It 0003828271 Ticker: Bloomberg REC IM, Reuters RECI.MI Index: FTSE MIB, FTSE Italia All‐Share Health Care Index, FTSE Italia All‐Share Pharmaceuticals & Biotechnology Index, FTSE4Good Index Series, STOXX Europe 600, Euro STOXX Health Care, MSCI Indexes Share Capital: n. 209,125,156 common shares Nominal value: € 0.125 per share EPS (diluted): € 1.861 Dividend per share: € 1.20 * * Proposed by the Board of Directors
THE RECORDATI SHARE 17 COMPARED TO FTSE ITALIA ALL-SHARE Source: FactSet COMPARED TO STOXX 600/HEALTHCARE Source: FactSet DIVIDEND (Euro per Share) * Proposed by the Board of Directors. PRINCIPAL SHAREHOLDERS at 31 December 2023 0.33 0.50 0.60 0.70 0.85 0.92 1.00 1.05 1.10 1.20* 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1.15 Consortium of investment funds controlled by CVC Capital Partners 51.8% Free float 46.7% Treasury Stock 1.5% Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 Dec 21 Jan 22 Feb 22 Mar 22 Apr 22 May 22 Jun 22 Jul 22 Aug 22 Sep 22 Oct 22 Nov 22 Dec 22 80 90 100 110 120 130 Jan‐23 Feb‐23 Mar‐23 Apr‐23 May‐23 Jun‐23 Jul‐23 Aug‐23 Sep‐23 Oct‐23 Nov‐23 Dec‐23 Recordati Industria Chimica e Farmaceutica S.p.A. FTSE MIB 80 90 100 110 120 130 Jan‐23 Feb‐23 Mar‐23 Apr‐23 May‐23 Jun‐23 Jul‐23 Aug‐23 Sep‐23 Oct‐23 Nov‐23 Dec‐23 Recordati Industria Chimica e Farmaceutica S.p.A. STOXX Europe 600 Health Care
LA SALUTE, UN OBIETTIVO GLOBALE 18 HEALTH, A GLOBAL OBJECTIVE
HEALTH, A GLOBAL OBJECTIVE 19 The World Health Organisation (WHO) defines health as a state of complete physical, mental and social well‐being and not merely the absence of disease or infirmity. To improve health, it is therefore necessary to intervene on a number of determining factors, such as the social, physical and economic conditions in which people are born, live and work, including the health care system. In this context, besides institutions and governments, pharmaceutical companies are also called upon to develop strategies to improve the health care system, in terms of the availability, accessibility and quality of health care structures and the goods and services provided. Health care expenditure is a significant indicator of the growing attention to the subject of health. The largest driver of medicine spending growth through the next five years is expected to be the availability and use in developed markets of innovative therapeutics, offset by losses of exclusivity and the lower costs of generics and biosimilars. The global medicine market is expected to grow at 5‐8% CAGR through 2028, reaching about US$ 2.3 trillion in 2028. Spending globally is expected to grow by more than $600Bn, driven by existing branded medicines in the leading ten developed markets. (Source: Global Use of Medicines 2024, outlook to 2028, IQVIA). The Consumer Health Care retail market (self‐medication) grew by 6.1% in the 12 months to end September 2023, reaching $166 billion globally, and consolidating its recovery following the pandemic (source: Nicholas Hall’s CHC Dashboard). This global trend was driven by a combination of different therapeutic areas and regional dynamics, with cough & cold still holding a primary position as the key growth driver, followed by Gastrointestinals, boosted by travel‐associated subcategories, and analgesics. This trend was even more pronounced in Asia, aided by the relaxation of long‐held lockdown restrictions in China and Japan, and in Europe, with EU5 – the top 5 European markets ‐ outperforming the global growth. The trend in the pharmaceutical sector to invest more in the treatment of rare diseases has continued. Although the target population is smaller, it has significant unmet needs with often devastating effects for affected people. The FDA approved 55 novel therapeutics in 2023, the second highest count in the past 30 years, with more than half (53%) of the new drug approvals being for orphan drugs. 2023 was also a year of many firsts in the gene therapy space for rare diseases, with 5 new gene therapies approved, including the first CRISPR gene editing technology‐based therapy. Orphan drug sales are projected to grow almost 12% between 2023 and 2028, and to reach an estimated $300 billion total value in 2028 when orphan sales will account for almost a fifth of all non‐generic prescription drug sales. That share has been climbing steadily over the last decade: in 2018 it was 13% while in 2023 it was close to 15%, with US$173 billion in sales for rare diseases. (source: FDA, Evaluate Pharma Orphan Drug Report 2023‐2028, Evaluate Pharma World Preview 2023). In this dynamic and competitive environment, pharmaceutical companies must remain constantly committed on a number of fronts: degree of internationalization, in order to guarantee broader outlet markets for medicines relationships with opinion leaders, fundamental in terms of research and development and the education and training of company medical representatives support continuous improvement of diagnosis and treatment of diseases education, training and refresher courses for doctors regarding new pharmaceutical products developing relationships with national governments, patient associations and public administrations to improve access to treatment developing new pharmaceutical products and technology to deal with emerging health emergencies (influenza pandemic and resistance to antibiotics).
RESEARCH & DEVELOPMENT 20 RESEARCH & DEVELOPMENT
RESEARCH & DEVELOPMENT 21 In 2023, Research and Development activities concentrated primarily on the Rare Diseases segment, whereas new acquisitions and licences were focused on Specialty & Primary Care. Recordati is expanding its commitment to researching and developing treatments for rare diseases and has a number of projects in the pipeline in various phases, from discovering new formulations to late stage and post‐approval studies. Furthermore, various collaborations with the best universities worldwide are in place, with the objective of finding new therapeutic uses for the current treatments as well as to promote research and development in the more relevant areas (metabolic diseases, endocrinology, oncology). Progress was made on the clinical development and life cycle management (LCM) programs of key assets, notably pasireotide (Signifor®), osilodrostat (Isturisa®), dinutuximab beta (Qarziba®) and REC 0559 (for neurotrophic keratitis). At the same time, multiple registration and regulatory activities were carried out to maintain and obtain marketing approvals for Recordati products in new territories. The addition of new products via external acquisitions, which complements the Group’s internal efforts on clinical development and LCM activities, was again a significant pillar of our growth. Indeed in July 2023 Recordati announced an agreement with GSK to commercialize Avodart (dutasteride) and Combodart /Duodart (dutasteride/tamsulosin) in across 21 countries, mainly in Europe. Details on key development programs related to both Business Unites are reported in the following sections. PRODUCT DEVELOPMENT PIPELINE Name Indication Development status REC 0559* Neurotrophic keratitis Phase II enrolment completed. Topline results expected in mid 2024 REC 0545 Acute decompensation episodes in maple syrup urine disease (MSUD) or leucinosis Filing in EU in 2023 ISTURISA® Endogenous Cushing’s syndrome/ Cushing’s disease Approved in the US, Europe, Switzerland, Australia, Israel and Japan. Filed in other countries. Work on‐going to support potential label extension to Cushing’s Syndrome in US pasireotide Post‐Bariatric Hypoglycaemia Phase II enrolment initiated in 2024 CYSTADROPS® Corneal cystine crystal deposits in patients with cystinosis Approved in the US and Europe. Development of new formulations in the US and EU CARBAGLU® Hyperammonemia due to NAGS deficiency and to the main organic acidemias Approved in China
RESEARCH & DEVELOPMENT 22 Name Indication Development status QARZIBA® Treatment of high‐risk neuroblastoma patients who achieved at least a partial response at the chemotherapeutical induction, followed by myeloablative therapy and stem cell transplantation, and of patients with relapsed or refractory neuroblastoma Approved in the EU, UK, Australia, Brazil, China Hong Kong, Israel, Russia and Taiwan. The Group is working on addressing the FDA’s comments from the Type C meeting in November 2023 and is planning further interactions in H1 2024 with the FDA. The dossier is under review in Switzerland SYLVANT® Treatment of idiopathic Multicentric Castleman Disease (iMCD) Approved in over 40 countries including EU, US and China. Potential indication expansion evaluation ongoing * In‐licensed from Mimetech
RESEARCH & DEVELOPMENT 23 TREATMENTS FOR RARE DISEASES Signifor®/Signifor® LAR (pasireotide) and Isturisa® (osilodrostat) During 2019, universal rights were acquired from Novartis for Signifor® and Signifor® LAR for the treatment of Cushing’s disease and Acromegaly in adult patients when surgery is not indicated or when surgery has failed, as well as Isturisa® (osilodrostat), an innovative oral administration treatment. Isturisa® received European approval in January 2020 for Cushing’s syndrome, U.S. approval in March 2020 for Cushing’s disease, with further approvals for Cushing’s syndrome in Switzerland in October 2020, Japan in March 2021, Australia in May 2022 and Israeli in December 2022. During 2022, the transfer of sponsorship from Novartis to Recordati AG was completed on a number of global trials involving the above‐mentioned products, including: a global interventional study with Signifor® and Signifor® LAR (SOM230B2412) an observational study (PASS) with Signifor® (SOM230B2410) a global interventional study with Isturisa® (CLCI699C2X01B) a pediatric study with Isturisa® (CLCI699C2203). Recordati made a significant effort to register Isturisa® in other countries and is working on the possible extension of the current indications, including the potential future extension to Cushing’s syndrome in the U.S. Within this context, a retrospective observational study (LINC‐7) commenced in France in 2022 to assess the safety and effectiveness of Isturisa® for the treatment of patients with non‐Cushing’s disease Cushing’s syndrome. Furthermore, a non‐interventional study (LINC6) is being conducted in patients with endogenous Cushing's syndrome who are already being treated with osilodrostat, alone or in combination with other therapies. pasireotide In alignment with our internal strategic objectives related to clinical development and the life cycle management (LCM) activities, a new LCM program was initiated in 2023, with the planning of a Phase II study on pasireotide s.c. for the treatment of patients with Post‐Bariatric Hypoglycemia (PBH). The IND (Investigational New Drug) submission to the FDA, and first site activation was achieved in 2023, and have initiated screening in 2024. Carbaglu® (carglumic acid) This product is an orphan drug approved in the European Union by the European Commission and in the U.S. by the Food and Drug Administration (FDA) for the treatment of hyperammonemia due to N‐Acetyl Glutamate Synthase (NAGS) deficiency. NAGS deficiency is an extremely rare inherited metabolic disorder affecting the urea cycle which leads to accumulation of ammonia in the blood. If not adequately and quickly treated, NAGS‐D can cause irreversible brain damage, coma, and eventually death. Carbaglu® provides specific treatment for this genetic disorder, treating the patient’s lifelong disorder. Carbaglu® is also indicated in the European Union, US and Canada to treat hyperammonemia due to the three main organic acidemias (OAs): isovaleric acidemia, methylmalonic acidemia and propionic acidemia. During 2023, recruitment into the PRospective Observational study of long‐TErm carglumic acid for the Treatment of PA and MMA study (PROTECT), continued. Cystadrops® (cysteamine hydrochloride) Nephropathic cystinosis is a congenital disorder which affects all the body’s organs. Currently, the oral administration of cysteamine (Cystagon®) is the only specific treatment that reduces the accumulation of cystine in various organs and tissues. Special focus is given to cystinosis when it affects the eyes. If quick, continuous and proper treatment is not received, cystine crystals accumulate in the cornea causing visual complications such as photophobia (sensitivity to light), retinal damage, ulcerations and degenerative infections that can lead to corneal erosion and consequent blindness. Whereas Cystagon® has a limited effect on the ocular manifestation of the condition due to the absence of corneal vascularization, Cystadrops® are gel‐based eye drops containing cysteamine chlorhydrate, developed by Recordati for the specific treatment
RESEARCH & DEVELOPMENT 24 of this condition. This treatment acts directly on the accumulations of cystine crystals in the eyes and therefore reduces and eventually eliminates the crystals, improving the symptoms. Cystadrops® is marketed in European Union countries and in the U.S.A., where approval has been granted by the FDA. Currently, new innovative formulations of Cystadrops® are being developed to better meet patient needs. During 2023 the interventional study assessing the safety of Cystadrops® in pediatric cystinosis patients from 6 months to less than 2 years old, was completed. Treatment with Cystadrops® was shown to be safe and well‐tolerated as no SAEs and no SADRs related to Cystadrops® were reported in this study. No new safety signals were detected during the study. In addition, the Post‐Authorization Safety Study to assess the safety of Cystadrops® in paediatric and adult cystinosis patients in long term use completed enrolment in February. With 5 years of follow‐up, the group expects results in 2028. Qarziba® (dinutuximab beta) The product, acquired in 2022 through the acquisition of EUSA Pharma, is anti‐ganglioside‐D 2 (GD 2 ) mAb licensed and commercialized for the treatment of high‐risk neuroblastoma patients aged 12 months and above, who achieved at least a partial response at the chemotherapeutical induction, followed by myeloablative therapy and stem cell transplantatiom as well as patients with relapsed or refractory neuroblastoma. Qarziba® is supplied globally and approved in the EU, UK, Israel, Australia, Brazil, China, Hong Kong, Russia and Taiwan. Neuroblastoma is a rare cancer that originates in the nervous system. It is the most common extracranial solid tumour diagnosed in children under 15 years of age, comprising around 7% of all childhood cancers. Around 50% of patients are diagnosed with high‐risk neuroblastoma and this has the worst prognosis. When used as maintenance therapy, Qarziba has demonstrated a significant improvement in five‐year overall survival. Discussions are ongoing with the FDA around potential regulatory path to bring dinutuximab beta to patients in US, following FDA’s comments from the Type C meeting in November 2023. Sylvant® (siltuximab) The product is an anti‐interleukin‐6 (IL‐6) mAb licensed and commercialized for the treatment of idiopathic Multicentric Castleman Disease (iMCD). Sylvant® is supplied globally and approved in over 40 countries including EU, US and China. Castleman Disease is a rare disease that affects the lymphatic system and Multi‐centric Castleman Disease (MCD) is a sub‐type of Castleman Disease. Being ‘idiopathic’ means that the cause of your MCD is not known. Only between 3 and 4 people among every million in the general population are diagnosed with iMCD each year. It can affect anyone – males, females, adults and children, although most people with iMCD are above the age of 45. Sylvant® is the only IL‐6 targeted therapy approved and recommended for iMCD, with the aim to support a durable tumour and symptomatic response. In 2023, research activities have been conducted to explore new options to develop siltuximab in other IL‐6 driven diseases. REC 0559 In June 2017, Recordati and Recordati Rare Diseases (formerly Orphan Europe) signed an exclusive license agreement with MimeTech, an Italian development company founded by scientists from the University of Florence, to develop and subsequently market a human nerve growth factor (NGF) peptidomimetic for the treatment of neurotrophic keratitis, on a global level. Neurotrophic keratitis is a rare degenerative corneal disease caused by an impairment of the trigeminal nerve. In its more severe forms, it affects less than one person out of 10,000. The progression of the disease can result in corneal ulcers and perforation with a dramatic impact on the patient’s vision. The global phase 2 trial targeting 108 patients has completed enrolment in February 2024, and topline results expected mid 2024. REC 0545 Leucinosis or maple syrup urine disease (MSUD) is a rare metabolic disorder affecting branched‐chain amino acids (leucine, isoleucine and valine) caused by a build‐up of these amino acids and the corresponding metabolites.
RESEARCH & DEVELOPMENT 25 Based on results from a retrospective clinical study on patients suffering from Maple syrup urine disease (MSUD), and formulation work a file was submitted in the EU in 2023. SPECIALTY & PRIMARY CARE SEGMENT The main research and development activities in the Specialty and Primary Care segment during 2023 are summarized in the paragraphs below. Eligard® (leuprorelin acetate) Following the approval granted by the Reference Member State (Germany) in late 2022, the variation to introduce the improved administration device (now consisting of preconnected syringes to ease the administration procedure) was approved in 2003 in most of the countries where the product is registered and marketed. The same variation has been rolled‐out in the remaining countries in 2023. Additional variations to ensure supply continuity were submitted in 2023 and approved early 2024. A large prospective real‐life observational clinical study has started in France to evaluate the efficacy and tolerability of leuprorelin acetate 22.5 mg (3‐month) and 45 mg (6‐month) in daily medical practice. The study included over 700 patients. Results are being analyzed, publication planned. In addition, the “REC study” (Retrospective analysis on the use of Eligard® and other ADT medications in Clinical practice), an RWE study in over 200 patients, performed in Italy and Spain, was initiated and completed. Results confirm the data reported in the literature for the treatment of patients with prostate cancer: in particular, they suggest that frequent monitoring of testosterone levels during androgen‐ deprivation therapy (ADT) can be advisable for better management of these patients. Data were presented to the investigators and will be used for scientific communication purposes. Publication expected in 2024. Zanidip®/Zanipress® (lercanidipine/ lercanidipine-enalapril) In June 2023, the Marketing Authorisations of Zanidip® 10mg and 20mg film coated tablets in Austria have been transferred to Recordati Ireland Ltd and the local distributor of Zanidip® 10mg and 20mg film coated tablets and Zanipril® 10mg/10mg, 20mg/10mg and 20mg/20mg film coated tablets changed from KWIZDA Pharma GmbH to Recordati Austria GmbH. Seloken®/Seloken® ZOK (metoprolol) and Logimax® (metoprolol + felodipine) In June 2023, the distributor of Beloc® for injection, Beloc® tablets 50 and 100 mg and Seloken® retard 47.5 and 95 mg prolonged‐release tablets in Austria has been changed from KWIZDA Pharma GmbH to Recordati Austria GmbH. In addition, during 2023 CMC variations affecting the manufacturing process of API metoprolol tartrate has been approved for Beloken® 100 mg tablets and Beloken® 1 mg/ml solution for injection in Spain,variations to extend the shelf‐life to 5 years has been approved in Netherlands and submitted in Ireland and United Kingdom, for Seloken ampoules and several administrative changes concerning the manufacturing sites of AstraZeneca AB in Sweden at Gartunavagen (finished product manufacturer) and Forskargatan (drug substance manufacturer) has been approved for all the Marketing Authorizations of Seloken, Seloken® Zoc and Logimax® in Europe, Albania, Switzerland and the United Kingdom. Reagila® (cariprazine) Trials continue aimed at demonstrating the efficacy and safety of cariprazine in adolescents (13‐17), with a significant slowdown recorded in patient recruitment due to the effects of the COVID‐19 pandemic and the Russian‐Ukrainian war. Reagila has been launched in the Tunisian market from Opalia in November 2023. The marketing authorizations of Reagila® 1.5 mg, 3 mg, 4.5 mg, 6 mg hard capsules have been suspended in Türkiye in August 2023 and the rights in Algeria are being returned to Gedeon Richter who will continue the registration application.
RESEARCH & DEVELOPMENT 26 The variation for the inclusion of the indication for mania and bipolar depression has been withdrawn in Switzerland in September 2023, while the variation to update the Summary of Product Characteristics and Package Leaflet and the risk management plan with the results of Carola study (RGH‐188‐302) concerning the interaction between cariprazine and oral contraceptive ethinyl estradiol and levonorgestrel has been approved in December 2023. A variation to update the Summary of Product Characteristics and Package Leaflet of Reagila® in Europe with the results of Cypress study (RGH‐188‐301) concerning the interaction between cariprazine and erythomycin has been submitted to EMA by Gedeon Richter in August 2023. Zoryon® (methadone) Work continued in 2023 on the commitments undertaken with the French Authority at the time that the Zoryon® approval was issued for the treatment of moderate and severe oncological pain in patients who do not respond adequately to other opioids. According to French Health Authorities, the patient inclusions were completed by the end of December 2023, with a total of 136 patients included for the real‐life observational study to describe cancer pain management with methadone (Zoryon®) in patients not adequately relieved by other opioids. Lomexin® (fenticonazole) Fenticonazole is a topical antimycotic drug with a broad spectrum of action originated by Recordati. A number of different projects were conducted in support of the development of the product, given its increase in sales and the potential associated with its change of status from prescription to over‐the‐counter in various European countries as well as the scientific evidence supporting the fenticonazole molecule as a treatment for vaginal infections with different etiology. The change from prescription only to over‐the‐counter for 600 mg vaginal capsules has been approved in Belarus, Bosnia and Bulgaria while for 2% vaginal cream is under assessment in Belgium and Kazakhstan. A variation to extend the indication to the treatment of mixed infections with gram positive bacteria has been approved for Lomexin® 600 mg vaginal capsules and Lomexin® 2% vaginal cream in Czech Republic and for Lomexin® 200 mg and 600 mg vaginal capsule, soft in Latvia. The variation has been submitted for the national registrations of 2% vaginal cream, 200 mg and 600 mg vaginal capsule, soft in Lithuania and for DCP procedure in Belgium, Croatia, Cyprus, Denmark, Estonia, Luxembourg, Netherlands and Slovenia. The antifungal activity of Lomexin® against susceptible and resistant strains of biofilm forming Candida has been evaluated in collaboration with the Sacred Heart Catholic University of Rome. The study has demonstrated that Lomexin® reduces significantly cell viability of susceptible and resistant Candida species in biofilms at therapeutically viable concentrations. In addition, the activity of Lomexin® against topical and visceral form of leishmania have been determined in collaboration with the University of Milan. Leishmaniasis is a parasitic condition classified as a neglected tropical disease (tropical infections that are particularly common in low‐income populations in developing regions of Africa, Asia and the Americas). Livazo® (pitavastatin) Pitavastatin is indicated for the reduction of elevated total cholesterol (TC) and LDL cholesterol (LDL‐C) in adults, adolescents and children aged 6 years or older with primary hypercholesterolemia, including heterozygous familial hypercholesterolemia, and combined (mixed) dyslipidemia, when the response to diet and other non‐pharmacological measures is inadequate. The Summary of Product Characteristics and Package Leaflet of all the European registrations belonging to the DCP Procedures PT/H/2350/001‐003/DC (Livazo) PT/H/2351/001‐003/DC (Alipza) and PT/H/2441/001‐ 003/DC (Pitavastatin Jaba) and national registrations in Belarus, Russia, Türkiye and Switzerland have been updated to implement the PRAC recommendation on Myasthenia. The renewal of the marketing authorization of Livazo® 1, 2, 4 mg film‐coated tablets have been submitted in Armenia and Kazakhstan.
RESEARCH & DEVELOPMENT 27 Proctoglyvenol® (tribenoside + lidocaine) The marketing authorisations of Procto‐Glyvenol® 5% +2 % rectal cream and 400 mg + 40 mg suppository have been approved according to the new Eurasian Economic Union regulation in Russia in July 2023 and December 2023, respectively.
RESEARCH & DEVELOPMENT 28 PRODUCTION SITES
PRODUCTION SITES 29 PRODUCTION SITES Recordati’s production sites are equipped with state‐of‐the‐art installations and their research laboratories are fitted with the latest equipment. All plants operate in full compliance with environmental protection regulations and in compliance with the cGMP (current Good Manufacturing Practices). PHARMACEUTICAL MANUFACTURING PLANTS Italy The Milan site occupies a surface area of around 5,000 sq. m., built vertically over a number of floors for a total of 21,000 sq. m. and produces around 67 million units per year. It is specialized in the manufacturing and packaging of solid oral forms, liquids, and semisolids for topical use. Recordati has undertaken a restructuring project in certain production areas, including the installation of a new blister packaging line, which has been added to the 5 already in place. The new line has been operational since the beginning of 2023 increasing significantly the production capacity. Certain corporate products are manufactured at the Milan site (lercanidipine, enalapril + lercanidipine, silodosin, tribenoside, pitavastatin and metoprolole. In the case of these two latter, only packaging is done) for all the markets where they are sold. 2 Pharmaceutical chemical plants 7 Pharmaceutical manufacturing plants 1 Packaging and distribution center dedicated to products for rare diseases
PRODUCTION SITES 30 France The plant at Saint Victor covers a surface of 6,750 sq. m. and produces up to around 30 million units per year. It is specialized in the production and packaging of liquid, solid oral and spray formulations. Certain corporate products are manufactured at the French site (Abufene®, Hexaspray® and Hexalise®) for all the markets where they are sold. Spain The Spanish plant is situated near Zaragoza covering a surface area of 7,100 sq. m. and produces around 24 million units a year. It is specialized in the production and packaging of solid and liquid oral and topical formulations. In particular, the plant manufactures a line of gastroenterological products; furthermore a packaging ‐line was installed and approved few years ago for the packaging of tablets in bottles. In relation to the Group's environmental commitment, the project to install a photovoltaic solar panel system with the capacity to generate up to 185 kWh of electricity for self‐consumption has been successfully completed; in 2023, a new project for increasing the capacity up to 470 kWh within the next two years has been started. Türkiye The Turkish site is in Çerkezköy, Türkiye, built on 45,000 sq. m. of land, and covering approximately 11,300 sq. m.. It currently produces around 70 million units per year of solid oral and liquid formulations and products for topical use, of which 25% are for other pharmaceutical companies. The project for the installation of a new liquid line has started in 2023 and will allow to significantly increase the production capacity from 2025. The Çerkezköy plant, in addition to the Turkish market, is authorized to produce medicines for the European Union, Azerbaijan, Libya, Kenya, the Russian Federation, Kyrgyzstan and Kazakhstan. In relation to the Group’s environmental commitment, the project to install a photovoltaic solar panel system with the capacity to generate up to 476 kWh of electricity for self‐consumption has already started in 2023 and will be completed in 2024. Tunisia The plant is situated in Ariana, near Tunis. It covers an area of around 9,100 sq. m. and produces around 18 million units a year of liquid, semi‐solid and oral solid forms for the local market and for some of the countries in the Arabian Peninsula. Certified GMP compliant, the manufacturing site was approved by the Gulf Health Council and the Saudi Food and Drug Authority. During 2023 a project to expand the existing warehouse has been started. In relation to the Group’s environmental commitment, the project to install a photovoltaic solar panel system with the capacity to generate up to 1200 kWh of electricity for self‐consumption has already started in 2023 and will be completed in 2025. Switzerland The facility, acquired in 2022 in the context of agreements with Novartis for the acquisition of the rights to Signifor, are located in the north‐western part of Switzerland, Basel (within the Novartis Campus). The plant is covering an area of approx. 1500 sq.m. Since the successful qualification in 2012 and GMP certification by Swissmedic, it is used for commercial production of Signifor® LAR Bulk – a specialized drug product used for the treatment of Acromegaly and Cushing’s disease. Czech Republic The plant, situated in Pardubice, produces creams, gels and ointments for a total of around 2 million units per year.
PRODUCTION SITES 31 PACKAGING AND DISTRIBUTION CENTER DEDICATED TO PRODUCTS FOR RARE DISEASES A packaging and distribution site in Nanterre, near Paris, exclusively destined to products for the treatment of rare diseases is in operation. It occupies a surface area of 1,600 sq. m. and is entirely dedicated to the secondary packaging, storage and shipping of rare disease products. The site delivers, upon short notice, more than 27,000 orders annually to more than 60 countries worldwide thanks to its highly qualified staff and a modern GDP (Good Distribution Practices) certified logistics platform. PHARMACEUTICAL CHEMICAL PLANTS Italy The Campoverde di Aprilia plant in Italy mainly supplies the active ingredients used in the preparation of the various pharmaceutical specialties produced by the Company but is also an established independent producer of a number of active and intermediate ingredients for the international pharmaceutical industry. It is one of the most important producers in the world of verapamil HCl, phenytoin, papaverine HCl, dimenhydrinate, tribenoside and manidipine 2HCl. Other pharmaceutical chemicals are produced on behalf of important pharmaceutical companies. The plant was one of the first European facilities to undergo inspections by the American Food and Drug Administration (FDA). The United States has become and continues to be the primary outlet market for its production. The Campoverde site extends over approximately 375,000 sq. m., with an operational area of 35,000 sq. m., and produces approximately 600 MT/year of finished goods with approximately 4,000 MT/year of semi‐finished goods handled internally. High‐tech systems are employed for the management of particularly delicate processes such as reactions using cyanides, high pressure hydrogenations, dehydrogenations, methylations, chlorine methylations, halogenations or those which involve substances which require very stringent safety measures. Investments have been made to enhance the technological and production capacity of the plant, which over the last ten years have installed more than 25 new reactors, a latest‐generation three‐stage distillation unit for high‐temperature unstable liquids, 2 thin film evaporators and 4 filters for the isolation of solid products, 3 centrifuges and an anti‐acid drier. From the perspective of continual improvement, important upgrades were also carried out in the intermediates and active ingredients’ discharge and packaging areas. A vast range of technologies, skills and expertise in the field of organic synthesis is employed, making it possible to quickly and effectively develop new processes for the production of active ingredients, from their synthesis to purification and finishing, through the various research stages, scale up and final industrialization. The Research & Development laboratories are fitted with the latest equipment such as a high containment HP‐API pharmaceutical isolator (glove box) and a micro reactor for the development of new continuous production processes. An extremely versatile pilot plant is also available, equipped for the small‐scale production of active ingredients, in accordance with cGMP (current Good Manufacturing Practice). During 2021, significant investments were made to expand the Pilot System in terms of technology, with the establishment of a plant to manage reactions at extremely low temperatures (‐80°C) and to isolate high‐containment products. The plant operates in compliance with current Good Manufacturing Practice (cGMP) and is regularly inspected by national and international authorities such as AIFA (Agenzia Italiana del Farmaco), the FDA (Food and Drug Administration), ANVISA (the Brazilian agency), PMDA (the Japanese Ministry of Health), and the KFDA (Korean Food and Drug Administration). The plant’s environmental management system has been certified according to the UNI EN ISO 14001:2015 standards by Det Norske Veritas Italia (DNV), an internationally accredited body, and is inspected on an annual basis. In 2022 the technology transfer of osilodrostat, Isturisa’s API, manufacturing process has been completed. Three validation batches have been flawlessly manufactured and regulatory file has been submitted to the
PRODUCTION SITES 32 Authorities. Process and plant have been audited by Italian Minister of Health in the same year and the manufacturing license was granted in 2023, with the GMP certificate update. At the Campoverde di Aprilia site, in order to promote an approach aimed at the circular economy that reduces waste and the use of natural resources, various initiatives to recover and re‐use chemical raw materials used in production processes were analysed. Specifically, with the new contribution of the recovery of palladium from the flavoxate process, since 2022, the Group has been able to recover at least 55% of the palladium used in all processes. At the Campoverde plant, Recordati has also started a three‐year project aimed to the installation of a 10 MW photovoltaic power generation facility and to the downsizing of the methane‐based cogeneration unit currently operated. These measures will provide a significant reduction of the Recordati group carbon footprint. Ireland To guarantee adequate and continuous supplies of the active ingredient lercanidipine, in 2005, a new and dedicated plant was constructed in Cork, Ireland. This facility boasts automated process control systems which ensure constant high‐quality production. The plant is certified according to cGMP (current Good Manufacturing Practice) standards and covers a surface area of around 43,000 sq. m, with an installed area of 8,300 sq. m. The continuous commitment to reduce and improve the use of energy was recognized in 2012 with the National Energy Efficiency Award, which is promoted by the Sustainable Energy Authority of Ireland (SEAI), and in 2013 by the European Energy Efficiency Award, promoted by the Chemical European Federation Industry Council (CEFIC). In 2016, the site was extended, enlarging the two buildings housing the administration and quality control laboratories. Photovoltaic panels for the generation of electricity were installed in 2022 for a total area of 1,100 sqm providing 10% of the site electricity demand.
ATTIVITÀ OPERATIVE E FINANZIARIE 2022 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023
34 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 FINANCIAL HIGHLIGHTS NET REVENUE € (thousands) 2023 % 2022 % Changes 2023/2022 % TOTAL 2,082,331 100.0 1,853,307 100.0 229,024 12.4 Italy 317,144 15.2 277,322 15.0 39,822 14.4 International 1,765,187 84.8 1,575,985 85.0 189,202 12.0 KEY CONSOLIDATED P&L DATA € (thousands) 2023 % of revenue 2022 % of revenue Changes 2023/2022 % Net revenue 2,082,331 100.0 1,853,307 100.0 229,024 12.4 EBITDA (1) 769,631 37.0 672,750 36.3 96,881 14.4 Operating income 558,008 26.8 437,326 23.6 120,682 27.6 Adjusted operating income (2) 626,593 30.1 536,060 28.9 90,533 16.9 Net income 389,214 18.7 312,336 16.9 76,878 24.6 Adjusted net income (3) 524,591 25.2 473,306 25.5 51,285 10.8 (1) Net income before income taxes, financial income and expenses, depreciation, amortization and write‐downs of property, plant and equipment, intangible assets and goodwill, non‐recurring items and non‐cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3. (2) Net income before income taxes, financial income and expenses and non‐recurring items, non‐cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory according to IFRS 3. (3) Net income excluding the amortization and write‐downs of intangible assets (except software) and goodwill, non‐recurring items, non‐cash charges arising from the allocation of the purchase price of EUSA Pharma to the gross margin of acquired inventory pursuant to IFRS 3, and monetary net gains/losses from hyperinflation (IAS 29), net of tax effects. KEY CONSOLIDATED BALANCE SHEET DATA € (thousands) 31 December 2023 31 December 2022 Changes 2023/2022 % Net financial position (4) (1,579,424) (1,419,909) (159,515) 11.2 Shareholders’ equity 1,686,392 1,546,248 140,144 9.1 (4) Cash and cash equivalents, less bank debts and loans, which include the measurement at fair value of hedging derivatives. PER SHARE DATA € 2023 2022 Changes 2023/2022 % Net income (5) 1.893 1.519 (0.374) 24.6 Shareholders’ equity 8.186 7.526 0.660 8.8 Dividends (6) 1.20 1.15 0.05 4.3 SHARES OUTSTANDING: Year average 205,634,136 205,582,127 At 31 December 206,006,112 205,441,123 (5) Net income per share is based on average shares outstanding during the year net of average treasury shares. Shareholders’ equity per share is based on total shares outstanding at year end. Shares outstanding are net of treasury shares, amounting to 3,119,044 shares at 31 December 2023 and 3,684,033 shares at 31 December 2022. Average treasury shares amounted to 3,491,022 shares in 2023 and 3,543,029 shares in 2022. (6) The amount for 2023 was proposed by the Board of Directors.
35 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 Consolidated net revenue for FY 2023 was € 2,082.3 million, up 12.4% versus FY 2022 or +14.0% on a like‐ for‐like (1) basis at CER (+9.6% excluding Türkiye), at the high end of the guidance range upgraded in May 2023. This was driven by strong business momentum across both Specialty & Primary Care and Rare Diseases, which continued to grow at double‐digit levels (at constant exchange rate). The adverse impact of FX, which increased in H2 2023, was € 99.9 million (‐5.4%) for the full year, mainly affecting Specialty & Primary Care; of this € 60.1 million was driven by the devaluation of the Turkish lira, which was compensated by higher price inflation. Specialty & Primary Care revenue totaled € 1,313.6 million in FY 2023, growing 8.7% or 13.6% on a like‐for‐ like (2) basis at CER as compared to FY 2022 (6.6% excluding Türkiye); Avodart ® and Combodart ® /Duodart ® , following completion of the commercialization agreement with GSK in July 2023 and the transfer of the activities to the main markets, contributed revenue of € 25.6 million in relevant markets (3) , ahead of expectations thanks to the fast and successful transition in most territories. Eligard ® and other key promoted products continued to grow ahead of the market, with robust sales of cough and cold medicines, following an exceptionally strong performance in the first half of the year and normalizing in the second half (with decline in Q4 also reflecting FX headwind). Rare Diseases revenue totaled € 714.7 million in FY 2023, up 20.0% or 14.9% on a like‐for‐like (4) basis at CER compared to FY 2022, driven by key growth franchises Oncology and Endocrinology. 2023 reflected the first full year contribution from the Oncology franchise, with net revenue of € 200.9 million, growing by 15.2% on a pro‐forma basis (4) , significantly ahead of the EUSA Pharma acquisition business case thanks to strong performance of both Sylvant ® and Qarziba ® . Performance of the sector for the year also reflects continued growth of Signifor ® and Isturisa ® (sales totaling € 242.3 million, up 41.0% versus FY 2022), as well as continued resilient sales of the Metabolic franchise, with good growth of Panhematin ® and Ledaga ® offsetting the impact of generic competition on Carbaglu ® in the US and Europe. EBITDA was € 769.6 million for FY 2023, up 14.4% as compared to FY 2022, and 37.0% of net revenue (versus 36.3% of full year 2022), reflecting strong operating leverage and continued cost discipline. Adjusted operating income was € 626.6 million for FY 2023, up 16.9% over the previous year, and 30.1% of net revenue, reflecting strong revenue growth and continued efficiency initiatives that have offset inflation. Operating income was € 558.0 million in FY 2023, up 27.6% over the previous year, absorbing gross margin‐ related non‐cash charges, arising from the unwind of the fair value step up of the acquired rare oncology inventory, of € 58.9 million (versus € 49.8 million in 2022). Non‐recurring costs were € 9.6 million, significantly reduced versus € 48.9 million in 2022, and reflect mainly the continued rightsizing of sales activities of Specialty & Primary Care and residual integration costs of EUSA Pharma. Adjusted net income was € 524.6 million for FY 2023, above the guidance range, up 10.8% over the previous year, and 25.2% of net revenue, benefitting from both the positive operating performance and a lower tax rate, with Financial expenses at € 67.0 million, up by € 31.1 million compared to the previous year, driven by higher interest expenses partially offset by FX gains (gains of € 2.2 million in 2023 versus € 5.8 million losses in 2022). Net income was € 389.2 million for FY 2023, up 24.6% over the previous year, at 18.7% of net revenue, driven by the strong operating performance and lower non‐recurring expenses versus 2022. The net financial position as of 31 st December 2023 was € 1,579.4 million, or leverage of approximately 1.96x EBITDA (5) , compared to net debt of € 1,419.9 million on 31 st December 2022. During FY 2023, an upfront payment of € 245.0 million was paid to GSK for the sales and distribution agreement to commercialize Avodart ® (dutasteride) and Combodart ® /Duodart ® (dutasteride/tamsulosin) and € 70.0 million to Tolmar International Ltd. after approval of the variation for the new device to administer Eligard ® . In addition, there (1) Pro‐forma growth calculated adding Q1 2022 revenue of EUSA Pharma and excluding FY 2023 revenue of Avodart® and Combodart®/Duodart®. (2) Pro‐forma growth calculated excluding FY 2023 revenue of Avodart® and Combodart®/Duodart®. (3) Trademarks are owned by or licensed to the GSK group of companies. Transition of Avodart® and Combodart® / Duodart® commercialization to Recordati has been completed in the following markets: Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Portugal, Spain, Sweden, Switzerland, UK. (4) Pro‐forma growth calculated adding Q1 2022 revenue of EUSA Pharma. (5) Pro‐forma, assuming contribution of Avodart® and Combodart®/Duodart® for twelve months.
36 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 were $ 20 million of residual Isturisa ® milestones paid to Novartis. Total dividends of € 245.9 million were paid in the year. Free cash flow, operating cash flow excluding financing items, milestones, dividends, and purchases of treasury shares net of proceeds from the exercise of stock options, was € € 456.0 million for FY 2023, an increase of € 17.0 million versus the previous year, absorbing working capital growth driven by higher volume of business and higher interest payments. Shareholders’ equity as of 31 st December 2023 was € 1,686.4 million. Beyond the strong financial performance for the year, in 2023 the Group made significant progress on a number of initiatives, in line with its strategy, which provide a strong foundation for continued growth in the future. On 20 th July 2023, Recordati announced an agreement with GSK to commercialize Avodart ® (dutasteride) and Combodart ® /Duodart ® (dutasteride/tamsulosin) across 21 countries, mainly in Europe, excluding only those where GSK already has a sales and distribution agreement in place. Recordati made an upfront payment of € 245 million. Avodart ® and Combodart ® /Duodart ® are marketed products, presented as oral form (capsules), indicated for the treatment of moderate to severe symptoms of benign prostatic hyperplasia (BPH) and for the reduction in the risk of acute urinary retention (AUR) and surgery in patients with moderate to severe symptoms of BPH. Avodart ® and Combodart ® /Duodart ® are leading and well‐established brands, post loss of exclusivity, that enlarge and complete Recordati’s proven presence in the urology space, significantly reinforcing the competitiveness of the Group’s portfolio. Both brands, which remain the property of GSK, are synergistic with Recordati’s urology portfolio, complementing Urorec ® and Eligard ® . The two products have been commercialized by GSK in the territories licensed to Recordati, with annual sales in 2022 in the region of approximately € 115 million. In December, Recordati completed the transition of commercialization in all key markets (6) , which contributed € 25.6 million in FY 2023 to the Group’s net revenue. Total FY 2023 sales of the products in relevant territories, including those made by GSK prior to transitions, was approximately € 120 million. As previously announced, the deal is expected to be accretive in 2024. Expansion of the Group’s rare disease footprint in China continues to progress. On 28 th September 2023, the Isturisa® New Drug Application (NDA) was submitted to the Chinese agency. This follows approval, on 27 th June 2023, of the Marketing Authorization for Carbaglu ® , with first commercial sales achieved at the end of 2023. As part of the development and regulatory path for the registration of Qarziba ® in the United States, the Company is working on addressing the FDA’s comments from the Type C meeting in November 2023 and is planning further interactions in H1 2024 with the FDA. As for ongoing clinical trials, Recordati has initiated patient screening for the phase II study for pasireotide for the treatment of post‐bariatric hypoglycemia. The Group has also completed enrollment of the global phase II study of REC 0559 for the treatment of neurotrophic keratitis and expects the top‐line data readout in mid‐2024. Recordati’s focus and efforts in driving the group’s ESG strategy were recognized in 2023 by the main ESG indices and ratings. The inclusion in the FTSE4GOOD Index series was reconfirmed alongside the “Platinum” rating by EcoVadis. MSCI ESG Research confirmed Recordati’s A rating and the Group was rated C+ with Prime status by ISS ESG, awarded to companies with a leading sustainability performance in their industry. In addition, Recordati received a “Robust” ESG Assessment from Moody’s Analytics and is included in the MIB ESG Index, promoted by Euronext and Borsa Italiana. (6) Transition of Avodart® and Combodart® / Duodart® commercialisation to Recordati has been completed in the following markets: Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Portugal, Spain, Sweden, Switzerland, UK.
37 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 Recordati has agreed key sustainability milestones as part of its € 400 million credit facility finalized in May 2023 with a pool of international relationship banks. The credit facility is thus linked to two ESG KPIs: Environmental protection (Renewable Energy Installed Power Capacity) and Responsible sourcing (Suppliers’ Sustainability Audit). This represents another step forward in the Group's commitment to pursue a sustainable growth model by integrating social and environmental aspects into its corporate strategy.
38 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVIEW OF OPERATIONS
39 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 The Group’s primary business involves the development, production and commercialization of specialty medicines, including the production of active ingredients and intermediates, mainly for internal use. The Group’s pharmaceutical business includes two segments: Specialty and Primary Care and Rare Diseases. Business is conducted through subsidiaries in Europe, Russia, Türkiye, North Africa, the United States of America, Canada, Mexico, certain South American countries, Japan, Australia, New Zealand, China and South Korea and, in the rest of the world, through licensing agreements with leading pharmaceutical companies. Sales of specialty medicines represent 97.4% of the Group's total revenues. Recordati also produces several active ingredients and intermediates in its two pharmaceutical chemical production plants. These are mainly used in the production of some of the key products in the portfolio, but in part are also sold externally to other pharmaceutical companies. The chemical plants focus on maintaining maximum product quality, strengthening our presence in highly regulated markets (the United States, Europe and Japan) and on constantly guaranteeing maximum safety standards, protecting the environment and securing health and safety in the workplace. Sales of the Pharmaceutical Chemicals business represent 2.6% of the Group's total revenues and are classified in the Specialty and Primary Care segment. As already mentioned, total Consolidated Group revenue in 2023 was € 2,082.3 million, up by 12.4% compared to the previous year or +14.0% on a like‐for‐like basis (1) and at constant exchange rates, and includes € 25.6 million in the second half of 2023 for revenues of Avodart® and Combodart®/Duodart® following completion of the new sales distribution agreement with GSK in July. Growth was driven by strong business momentum across both Specialty & Primary Care and Rare Diseases, both of which grew at double‐ digit levels at CER, with stronger than expected FX headwinds in the later part of the year. The adverse impact of FX on revenue was € 99.9 million (‐5.4%), mainly affecting Specialty & Primary Care, of which € 60.1 million driven by the devaluation of the Turkish lira which was compensated by higher price inflation. BREAKDOWN OF REVENUE (1) Pro‐forma growth calculated adding Q1 2022 revenue of EUSA Pharma and excluding Q3 and Q4 2023 revenue of Avodart® and Combodart®/Duodart®. Chemicals 2.6% Cough and Cold 6.6% Gastro & Intestinal 10.5% Urology 13.5% Other pharmaceuticals 15.0% Cardiovascular 17.5% Metabolic 13.0% Endocrinology 11.6% Oncology 9.6% RARE DISEASES 34.3% SPECIALTY AND PRIMARY CARE 65.7%
40 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVIEW OF OPERATIONS SPECIALTY & PRIMARY CARE
41 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVENUE BY THERAPEUTIC AREA The table below shows Specialty & Primary Care revenue in 2023, broken down by therapeutic area, compared to the previous year. The positive performance in Specialty and Primary Care reflects solid volume growth in all segments, in particular Cough and Cold and Urology products, with Eligard® and other key promoted products continuing to grow ahead of reference markets, and the effect of the significant price increases in Türkiye (which were, however, offset by the significant impact of the devaluation in the Turkish lira, reflected retrospectively from 1st January 2023 as required by IAS 21 for hyperinflationary economies in conjunction with the application of IAS 29). € (thousands) 2023 2022 Changes 2023/2022 % Cardiovascular 365,213 351,854 13,359 3.8 Urology 280,375 227,444 52,930 23.3 Gastro‐Intestinal 219,267 203,218 16,049 7.9 Cough & Cold 137,121 125,505 11,616 9.3 Other treatment areas 311,604 300,626 10,978 3.7 Total (excluding Pharmaceutical Chemicals) 1,313,580 1,208,647 104,933 8.7 Pharmaceutical Chemicals 54,031 48,875 5,156 10.5 Total 1,367,611 1,257,522 110,089 8.8 CARDIOVASCULAR For over 20 years Recordati has been at the forefront of supporting patients with cardiovascular disease with a wide portfolio of products and services in primary and secondary care including Zanidip® (lercanidipine) and Zanipress® (lercanidipine and enalapril) a portfolio of anti‐hypertensive calcium channel blockers discovered and developed entirely in the Recordati research laboratories and currently available in more than 60 countries worldwide. Livazo® (pitavastatin) a latest‐generation statin indicated for the treatment of dyslipidemia and metoprolol based products, a beta‐blocker mainly indicated to control a range of conditions including hypertension, angina pectoris and cardiac rhythm disorders. In 2023, sales reached € 365.2 million, showing growth of 3.8% compared to the previous year mainly driven by lercanidipine sales, in both direct markets and to international distributors, also with continued strong uptake of Reselip® in France. UROLOGY and URO-ONCOLOGY Recordati is also a recognised partner in Urology, providing therapeutic solutions for both men’s and women’s health including prostate cancer, benign prostatic hyperplasia (BPH), over‐active bladder (OAB) and infection related diseases. The portfolio of products includes Eligard® (leuprorelin acetate), a depot formulation for subcutaneous injection, indicated for palliative treatment of advanced hormone‐dependent prostate cancer (PCa), Urorec® (silodosin), a drug indicated for the treatment of the symptoms of benign prostatic hyperplasia (BPH, enlargement of the prostate), Avodart® (dutasteride) and Combodart®/Duodart® (dutasteride/tamsulosin), leading and well‐established brands, post loss of exclusivity, that reinforce and complete Recordati’s proven presence in the urology space. In 2023, sales reached € 280.4 million, 23.3% higher than the previous year thanks to the ongoing strong performance of Eligard®, return to growth of silodosin post loss of exclusivity, and the first sales of Avodart® and Combodart®/Duodart®, following the new sales distribution agreement with GSK in July, with sixteen markets already transitioned at the end of December (1) . (1) Trademarks are owned by or licensed to the GSK group of companies. Transition of Avodart® and Combodart® / Duodart® commercialization to Recordati has been completed in the following markets: Austria, Belgium, Czech Republic, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Poland, Portugal, Spain, Sweden, Switzerland, UK.
42 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 GASTROENTEROLOGY In Gastroenterology, Recordati has several leading brands including products for bowel cleansing based on sodium picosulfate and magnesium citrate (Citrafleet®, Casenlax®) which are widely used before diagnostic tests, products used for constipation for adults and children and a line of probiotics based on lactobacillus reuteri protectis, particularly popular in Western Europe. In 2023, sales reached € 219.3 million, showing a growth of 7.9% compared to the previous year, mainly thanks to the good performance of Procto‐Glyvenol® (tribenoside) and the product lines under license from BioGaia (which include lactobacillus reuteri protectis supplements with the Reuflor® brand in Italy and the Casenbiotic®, Bioralsuero®, Reuteri® and Gastrus® brands in Spain and Portugal). COUGH AND COLD Recordati has a large portfolio of prescription and self‐medication treatments to promote respiratory health including asthma and symptoms associated with cough and cold. In 2023, the Cough and Cold therapeutic area benefitted from a strong season and enhanced competitiveness, with sales reaching € 137.1 million, a growth of 9.3% compared to previous year, finishing higher than pre‐pandemic levels. This was driven by both strong growth in most markets of the prescription and OTC portfolio, particularly in France, Italy and Türkiye, and the benefits of restocking the channel in Russia which contributed to exceptional growth in the first quarter of 2023, with sales normalizing in the second half of the year, also reflecting adverse FX (RUB). OTHER TREATMENT AREAS Recordati commercializes products within a broad range of other therapeutic areas, across both prescription and OTC markets, arising from Recordati’s original research and the acquisition of product rights and license agreements. Notable products include Reagila® (cariprazine) for schizophrenia, Lomexin® (fenticonazole) for the treatment of gynecological and dermatological infections and Magnesio Supremo®, a dietary supplement. In 2023, Other Treatment Areas reached € 311.6 million growing by 3.7% compared to previous year. PHARMACEUTICAL CHEMICALS Sales of Pharmaceutical Chemicals, which comprise active substances, other than the ones marketed by the Other International Sales organization to its licensees, produced in the Campoverde di Aprilia plant (Italy), were € 54.0 million, up by 10.5%, mainly driven by higher prices to offset impact of inflation, and represented 2.6% of total Group revenue.
43 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 CORPORATE PRODUCTS The performance of products sold directly in more than one market (corporate products) during 2023 is shown in the table below. € (thousands) 2023 2022 Changes 2023/2022 % Zanidip® (lercanidipine) 144,959 130,521 14,438 11.1 Zanipress® (lercanidipine+enalapril) 36,412 37,486 (1,074) (2.9) Urorec® (silodosin) 70,038 60,702 9,336 15.4 Livazo® (pitavastatin) 44,616 44,073 543 1.2 Seloken®/Seloken® ZOK/Logimax® (metoprolol/metoprolol + felodipine) 97,983 97,806 178 0.2 Avodart® and Combodart®/Duodart® 25,594 ‐ 25,594 n.s. Eligard® (leuprorelin acetate) 110,682 104,081 6,601 6.3 Other corporate products * 346,066 313,493 32,573 10.4 * Includes corporate OTC products for a total of € 139.5 million in 2023 and 124.7 million in 2022 (+11.9%). Zanidip® (lercanidipine) is an anti‐hypertensive calcium channel blocker discovered and developed entirely in the Recordati research laboratories and is currently available in more than 60 countries. Lercanidipine is effective in gradually lowering blood pressure values to optimal levels, preventing episodes of reflex tachycardia and reducing the risk of cardiovascular events and their related mortality. Its lipophilicity and high selectivity are properties that make lercanidipine effective with a superior tolerability profile. It protects the kidneys and the endothelium of blood vessels. Thanks to this organ protection characteristic and its metabolic neutrality, lercanidipine is well tolerated by patients suffering from other diseases such as diabetes and nephropathy. The lercanidipine based products are sold directly by marketing organizations in Western, Central and Eastern Europe, Türkiye and North Africa and through licenses and co‐marketing agreements in other countries. € (thousands) 2023 2022 Changes 2023/2022 % Direct sales 80,826 74,175 6,651 9.0 Sales to licensees 64,133 56,345 7,788 13.8 Total lercanidipine sales 144,959 130,520 14,439 11.1 2023 sales reached roughly € 145.0 million, 11.1% higher than the previous year. Direct sales of lercanidipine products increased by 9.0% compared to 2022, mainly thanks to growth in Ireland, Germany, Italy, Poland and Türkiye where the impact of the exchange rate was offset by the increase in prices. Sales to licensees, representing 44.2% of the total, increased by 13.8% thanks to growth in Central and Eastern Europe and recovery of sales to China. Zanipress® (lercanidipine+enalapril) is a drug developed by Recordati to treat hypertension. It associates lercanidipine, a latest‐generation calcium channel blocker, with enalapril, a widely prescribed ACE inhibitor, allowing the simultaneous administration of two active ingredients and increasing treatment compliance by the patient. Combination therapy is considered a first‐line treatment for hypertensive patients at high risk for cardiovascular events. The benefits of the combination of these two active ingredients have been confirmed by the results of a number of clinical trials which have shown its significant antihypertensive efficacy, excellent tolerability in
44 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 addition to renal and vascular protection from the damage caused by hypertension. This product is successfully marketed directly by Recordati or by its licensees in more than 54 countries. € (thousands) 2023 2022 Changes 2023/2022 % Direct sales 33,053 33,686 (633) (1.9) Sales to licensees 3,359 3,800 (441) (11.6) Total lercanidipine+enalapril sales 36,412 37,486 (1,074) (2.9) In 2023, direct sales of Zanipress® fell by 1.9%, mainly due to lower sales volume in Germany, Türkiye and Tunisia. Sales to licensees represented 9.2% of the total and fell by 11.6% due to lower sales volumes mainly in Austria, Romania and Italy. Urorec® (silodosin) is a drug indicated for the treatment of the symptoms of benign prostatic hyperplasia (BPH, enlargement of the prostate). BPH manifests with problems linked to urination. It frequently occurs in men over the age of fifty, and its symptoms significantly reduce quality of life. This disorder is becoming more prevalent with the aging of the population. A recent study (Fusco et al, 2020), found that silodosin improves symptoms and quality of life in patients with severe lower urinary tract symptoms related to benign prostatic obstruction. Symptom improvement is maintained during long‐term treatment. The safety and tolerability of silodosin has been widely assessed with positive results. The low incidence of orthostatic and vasodilatory side effects makes it a well‐tolerated treatment, even in patients taking antihypertensive medication. Silodosin was originally developed by Kissei Pharmaceutical Co. (Japan) and was obtained under license by Recordati for development and marketing in Europe and a further 5 countries in the Middle East and Africa. Currently, the product is successfully marketed in 47 countries, including France, Germany, Italy, Spain, Portugal, CIS countries, Tunisia, Türkiye and Switzerland. Silodosin‐based products are sold directly by our subsidiaries under the Urorec® brand and by our licensees under the Silodyx™ brand. Sales in 2023 were € 70.0 million, increasing by 15.4 % compared to the previous year, thanks to the good performance in Italy, Türkiye and Russia despite strong FX headwinds in both these international markets. Livazo® (pitavastatin) is a latest‐generation statin indicated for the treatment of dyslipidemia, a condition characterized by altered levels of blood cholesterol and other lipids and associated with an increased risk for heart disease and strokes. Controlled clinical trials have shown that pitavastatin induces a reduction in LDL‐cholesterol (the “bad” cholesterol that contributes to formation of atherosclerotic plaques) and an increase in HDL‐ cholesterol (the “good” cholesterol that is removed from the arterial walls). This dual effect is highly significant because it has shown that the risk for cardiovascular complications can be reduced further in this way. Furthermore, pitavastatin presents an excellent safety profile due to the lower risk of drug‐drug interactions compared to most other statins. Based on these findings, pitavastatin is regarded as an effective and safe treatment for dyslipidemia. Pitavastatin was licensed by Recordati from the Japanese pharmaceutical company Kowa for the European market, Russia and the other CIS countries and Türkiye. The drug is sold by the Group’s marketing organizations in Spain, Portugal, Switzerland, Greece, Russia, Ukraine, other CIS countries and Türkiye. Sales in 2023 were € 44.6 million, up by 1.2% compared to the previous year. Seloken®, Seloken® ZOK (metoprolol) and Logimax® (metoprolol + felodipine) are metoprolol‐based medicines belonging to the beta blocker class of drugs that are widely used in the treatment of angina pectoris, myocardial infarction and cardiac rhythm disorders, as well as hypertension and functional heart disorders. Logimax® is a fixed association of metoprolol with felodipine which, over the years, has shown high antihypertensive efficacy. The use of metoprolol together with felodipine reduces
45 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 possible episodes of reflex tachycardia induced by the calcium channel blocker, while felodipine associated with metoprolol facilitates vasodilation by reducing peripheral vascular resistance. These drugs have been widely studied in large and important clinical trials and are frequently used in primary care and by cardiologists to treat cardiac disorders and hypertension. Long‐term mortality studies (Seloken®/Seloken® ZOK Core Data Sheet) have shown that the use of metoprolol reduces the rates of general mortality, cardiovascular mortality, sudden death and the progression of heart failure. The European marketing rights for Seloken®/ Seloken® ZOK (metoprolol) and Logimax® (metoprolol + felodipine) were acquired from AstraZeneca in 2017. The products are sold directly in 36 countries and through distribution agreements in other European countries. Sales in 2023 were € 98.0 million, largely in line with 2022. Eligard® (leuprorelin acetate) is a depot formulation for subcutaneous injection, indicated for palliative treatment of advanced hormone‐ dependent prostate cancer (PCa) and localized hormone‐dependent prostate cancer, and locally advanced high risk, combined with radiotherapy. It combines the active ingredient leuprorelin acetate with a biodegradable polymer matrix release system (Atrigel®) and is available in a 1‐month (7.5 mg), 3‐month (22.5 mg) and 6‐month (45 mg) formulations. Eligard® provides a standard and consistent administration of leuprorelin over time, with significant and long‐lasting testosterone suppression (≤ 20 ng/Dl), thus improving patient outcomes, such as response time and survival rate free of any progression, with a favorable tolerability profile. The extended interval between injections, the low volume of the injection and the short needle are additional advantages to the leuprorelin depot formulation. Developed by the American pharmaceutical company Tolmar and previously licensed to Astellas, Eligard® now represents a consolidated product, distributed by Recordati since January 2021 in 30 countries in Europe, North Africa and the CIS countries. A new device, consisting of two pre‐connected syringes, developed by Tolmar International Ltd, was approved at the European level in 2022 and launched in the first countries in the second half of 2023, further improving the positioning of Eligard®, with roll out to main countries expected in the first part of 2024. Revenue for Eligard® in 2023 was € 110.7 million, up by 6.3% compared to the same period of the previous year, continuing the turnaround of the brand since the start of promotional activities by Recordati. Avodart® (dutasteride) and Combodart®/Duodart® (dutasteride/tamsulosin) are marketed products, presented as oral form (capsules), indicated for the treatment of moderate to severe symptoms of benign prostatic hyperplasia (BPH) and for the reduction in the risk of acute urinary retention (AUR) and surgery in patients with moderate to severe symptoms of BPH. In July 2023, Recordati announced an agreement with GSK for the commercialization of Combodart® as well as Avodart® across 21 countries, mainly in Europe, excluding only those where GSK already has a distribution agreement in place. Avodart® and Combodart®/Duodart® are leading and well‐established brands, post loss of exclusivity, that enhance Recordati’s proven presence in the urology space, significantly reinforcing the competitiveness of its offer. Both brands are synergistic with Recordati’s urology product portfolio, complementing Urorec® and Eligard®. Dutasteride is an oral, selective, irreversible inhibitor of type 1 and type 2 5α‐reductase (5AR), the intracellular enzyme that converts testosterone to dihydrotestosterone (DHT) in the prostate gland. As a result, dutasteride reduces intraprostatic and serum levels of DHT, decreasing prostate volume. Tamsulosin is a selective α1‐adrenoceptor antagonist (α1‐blocker). The effects of tamsulosin are targeted for the smooth muscle receptors of the prostate, bladder and urethra. Blocking this receptor relaxes the smooth muscle of the bladder and urethra to improve urine flow and symptoms. GSK will continue to supply the products and they will retain Marketing Authorization holder responsibilities in all 21 countries. In 2023, Recordati completed relevant transition activities and started to recognize revenues in most markets included in the Agreement, reaching overall sales of € 25.6 million. Total FY 2023 sales of the products in relevant territories, including those made by GSK prior to transitions, was approximately € 120 million.
46 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 OTHER CORPORATE PRODUCTS include specialties from Recordati’s original research, the acquisition of product rights for various markets and through license agreements for multiple territories. The paragraphs below describe their characteristics and the sales generated. Reagila® (cariprazine) is a new drug for the treatment of schizophrenia, a third‐generation antipsychotic, which, thanks to its specific pharmacological nature, can be considered unique in the panorama of this therapeutic class. It not only acts on the “positive” symptoms of the disease, such as delirium, hallucinations, thought dissociation, etc., but also on the “negative” component such as apathy, anhedonia and antisocial behaviour. Cariprazine has the added advantage of reducing neurological and metabolic side effects and has a low cardiovascular impact. Extending the treatment spectrum for schizophrenia has a positive effect on the functional recovery of patients. It comes in a once daily administration form, with a long half‐life. Its clinical efficacy has been demonstrated in numerous clinical studies involving more than 2,000 patients, and testing is currently underway in the adolescent population. Reagila® was originated by Gedeon Richter and is under license to Recordati in Western Europe. The product was launched in Germany, Switzerland, Italy, Benelux, the United Kingdom, Sweden, Denmark, Finland, Spain, Portugal and Ireland. Sales in 2023 totaled € 27.3 million, with 34.6% growth compared to 2022, mainly thanks to higher sales volumes in Spain, Germany and Portugal. Procto-Glyvenol® (tribenoside), leader in its class, is a tribenoside‐based over‐the‐counter drug, indicated for the treatment of internal and external hemorrhoids. Recordati markets it in the following countries: Russia, Poland, Turkey, Romania, Ukraine, Czech Republic, Slovakia, Portugal, Baltic countries and Cyprus. Sales for this product in 2023 were € 37.9 million, increasing by 11.0%, mainly due to higher sales volumes in Poland and Türkiye. Polydexa®, Isofra® and Otofa® are combination products for the treatment of ear, nose and throat infections, sold in North Africa, sub‐Saharan Africa, Russia and the CIS countries. In 2023, sales of Polydexa® were € 34.7 million, sales of Isofra® were € 18.1 million and sales of Otofa® were € 2.1 million. Overall, sales decreased by 2.6% compared to 2022, mainly due to the adverse Ruble FX impact. Tergynan® is a fixed combination of different active ingredients with antimicrobial, anti‐inflammatory, antiprotozoal and antimycotic activity for the treatment and prevention of gynecological infections. Tergynan® is a leading brand in the class of anti‐infective and antiseptic gynecological medicines in the countries where it is marketed, in particular in Russia, in other countries in the Commonwealth of Independent States, in Ukraine, Mongolia, Romania and Vietnam. Total sales for 2023 were € 20.4 million, an increase of 2.9% compared to the previous year, with most of the sales in Russia and Ukraine and reflecting the unfavorable impact of the exchange rate compared to 2022 and shortage of supply for part of the year. CitraFleet® and Phosphosoda® are bowel cleansers indicated for use prior to any diagnostic procedure which requires cleaning out the intestines, such as a colonoscopy or X‐rays. Phosphosoda® is an effective osmotic bowel cleanser with over 20 years of clinical experience, available in 39 countries. CitraFleet®, on the market since 2004, offers a double mechanism (osmotic + stimulant) and is one of the best tolerated products in its class, improving patient compliance thanks to its lower volume and good taste. It is available in 34 countries and occupies primary market positions in various countries, including Spain. In 2023, sales of CitraFleet® and Phosphosoda® totaled € 39.6 million, up by 10.4% compared to 2022. Lomexin® (fenticonazole), an original Recordati product, is an internationally and widely used broad‐ spectrum antimycotic indicated for the treatment of gynecological and dermatological infections caused by fungi, mould, yeast and gram‐positive bacteria. The brand recently obtained OTC status and was successfully relaunched in various EU countries, providing patients with a new easily accessible self‐ medication option. Sales of Lomexin® in 2023 were at € 23.4 million, increasing by 21.2% compared to the previous year, mainly due to the positive performance in Poland and Türkiye.
47 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 The Hexa line of products comprises biclotymol‐based antibacterial treatments for the oral cavity, which are in high demand, especially in France and North Africa, Russia, the Community of Independent States (CIS), Ukraine and Mongolia. The line’s main brand is Hexaspray®, a throat spray and leader in its class in France. Overall, this product line saw sales of € 21.4 million in 2023, up by 17.9%, mainly thanks to higher sales in France after a strong recovery in seasonal flu illnesses and low inventories for competitor businesses. Magnesio Supremo®, a dietary supplement that contains a special mix of ingredients that guarantee maximum bioavailability of magnesium, is marketed in Italy and achieved sales of €26.5 million in 2023, up by 21.9% thanks to strong sales of the lead preparations as well as active life‐cycle management. The most significant self‐medication and supplements include the product lines under license from BioGaia (which include lactobacillus reuteri protectis supplements and the Reuflor® brand in Italy and the Casenbiotic®, Bioralsuero®, Reuteri® and Gastrus® brands in Spain and Portugal), which grew by 9.8% compared to the previous year, with sales at € 30.8 million. Other corporate products achieved total sales of € 39.9 million, up by 10.0% compared to 2022. These include flavoxate (sold under the names Genurin® and Urispas®), Lopresor® (metoprolol), Lacdigest® (tilactase), rupatadine (sold in Italy and Germany under the Rupafin® brand and in France as Wystamm®), Abufene® and Muvagyn®, Vitaros®/Virirec® (alprostadil) and Fortacin® (lidocaine+prilocaine).
48 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVIEW OF OPERATIONS RARE DISEASES
49 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 Rare diseases bring great suffering to millions of affected people worldwide. These diseases are chronic, fatal or severely debilitating, strongly impacting patients, their families and society as a whole. In most cases, they affect newborns, children and young adults. An orphan drug is a medicinal product specifically developed to treat a rare disease. According to the European definition, a rare disease is defined as one that affects fewer than five in 10,000 people or, based on the American definition, fewer than 200,000 people in the United States of America. Over 30 million people are affected in Europe alone. There are currently over 7,000 known rare diseases, but approved treatment only exists today for less than 10% of them. Due to the extensive range of existing diseases and scarce available information, a specialist or general practitioner may never come across a patient affected by a rare disease in their entire career. This always poses the risk that when a baby is born with a rare disease, it may not be correctly diagnosed and provided with timely and appropriate treatment. The limited number of patients and sparse relevant knowledge and expertise are specific characteristics of rare diseases. Governments have introduced legal and financial incentives to provide treatment to people affected by rare diseases and encourage pharmaceutical and biotechnology companies to invest in these treatments. The Orphan Drug Act was approved in the USA in 1983. In 1999, European legislation explicitly recognized the need to identify targeted treatments for these conditions and introduced specific regulatory processes and incentives to develop orphan drugs. The designation as “orphan drug” in Europe provides exclusivity on the marketing of the designated indication for 10 years from the time the drug is approved. Since April 2000, when the EU orphan drug regulation came into effect, many hundreds of drugs have been designated as orphan drugs by the European Medicines Agency (EMA). Of these designated drugs, over 150 have received marketing authorization (MA). Of those, 40% have been authorized for the treatment of oncological and hematological conditions and about 30% for the treatment of rare genetic metabolic disorders. More recently, there has been an increase in international research investments by different funding bodies to boost the number of authorized treatments. The Recordati group operates in the rare disease segment worldwide through Recordvati Rare Diseases, its group of subsidiaries entirely dedicated to the research, development and marketing of medicines for the treatment of rare diseases which share the conviction that every person with a rare disease has the right to the best possible treatment. The Group’s business is mainly in three treatment areas: metabolic (after the acquisition of Orphan Europe and the portfolio of Lundbeck products in the United States), endocrinology (following the 2019 acquisition of the products Signifor® and Isturisa® from Novartis) and oncology (following the 2022 acquisition of EUSA Pharma). The Group’s organizations work closely with specialists, health care professionals, patients, their families and associations to spread knowledge, improve diagnosis and treatment, and enable access to treatment by supporting patients. Recordati Rare Diseases has developed a global presence through its network of subsidiaries and highly qualified distributors. It operates directly in Europe, the US – which in 2023 became the largest overall business for the Recordati group ‐ Russia, the Middle East and North Africa, Canada, Mexico, Colombia, Brazil, Japan, Australia, New Zealand, China and South Korea, as well as through selected partners in a number of other countries, covering 88 countries worldwide. Recordati also has a facility in Nanterre (Paris, France) dedicated to packaging and storing these drugs and shipping them to various countries. This direct distribution and packaging system effectively guarantees the rapid availability of these specialties around the world, in ad hoc quantities and packaging. A significant commitment is continually being made to enhance and extend the product portfolio for rare diseases, both with molecule development programs in the pipeline, and by acquiring late‐stage‐ development or already‐marketed compounds. Work is also ongoing in the life cycle management of the compounds currently sold and, specifically, on formulation improvement projects.
50 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVENUE BY THERAPEUTIC AREA In 2023, sales of products for the treatment of Rare Diseases were € 714.7 million, up 20.0% (or 14.9% on a like‐for‐like (1) basis at CER) compared to the previous year, driven by key growth franchises Oncology and Endocrinology. 2023 reflected the first full year contribution from the Oncology franchise after the EUSA Pharma acquisition, with net revenue of € 200.9 million, growing by 15.2% on a pro‐forma basis (1) , significantly ahead of the acquisition business case. € (thousands) 2023 2022 Changes 2023/2022 % Metabolic and other areas 271,551 287,913 (16,362) (5.7) Endocrinology * 242,318 171,901 70,417 41.0 Oncology 200,851 135,971 64,880 47.7 Total Rare Diseases 714,720 595,785 118,935 20.0 * Isturisa® € 139.5 million and Signifor® € 102.9 million in 2023, compared to € 81.3 million and € 90.6 million, respectively, in 2022. The main corporate products (i.e. products sold directly in more than one market) in the rare diseases sector, in the metabolic and other treatment areas (excluding endocrinology and oncology), are shown in the following table and contributed a total of € 271.6 million to revenue in 2023, compared to € 287.9 million in 2022, with growth of Panhematin®, Ledaga® offset by generics erosion of sales of Carbaglu® in the USA and Europe: Name Active Ingredient Indication CARBAGLU® carglumic acid Treatment of hyperammonemia due to N‐acetylglutamate synthase deficiency (NAGS deficiency) and some organic acidaemias (isovaleric acidaemia, methylmalonic acidaemia and propionic acidaemia) NORMOSANG® PANHEMATIN® human hemin Treatment of acute attacks of hepatic porphyria CYSTADANE® betaine anhydrous Treatment of homocystinuria CYSTADROPS® cysteamine hydrochloride Treatment of the ocular manifestations of cystinosis JUXTAPID® Lomitapide Treatment of homozygous familial hypercholesterolemia (HoFH) CYSTAGON® cysteamine bitartrate Treatment of nephropathic cystinosis LEDAGA® chlormethine hydrochloride Treatment of mycosis fungoides (MF), T‐cell cutaneous lymphoma (CTCL) PEDEA® NEOPROFEN® IV ibuprofene Treatment of patent ductus arteriosus (PDA) Carbaglu® (carglumic acid) is an orphan drug approved in the European Union by the European Commission and in the US by the Food and Drug Administration (FDA) for the treatment of hyperammonemia due to N‐ Acetyl Glutamate Synthase (NAGS) deficiency. NAGS deficiency is an extremely rare inherited metabolic disorder affecting the urea cycle which leads to accumulation of ammonia in the blood. If not adequately and quickly treated, NAGS‐D can cause irreversible brain damage, coma, and eventually death. Carbaglu® provides specific treatment for this genetic disorder, treating the patient’s lifelong disorder. In 2011, Carbaglu® obtained approval in the European Union to extend its indications to treat hyperammonemia due to the three main organic acidemias (OAs): isovaleric acidemia, methylmalonic acidemia and propionic acidemia. In 2014, Carbaglu® was granted Orphan Drug Designation (ODD) by the (1) Pro‐forma growth calculated adding Q1 2022 revenue of EUSA Pharma.
51 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 FDA for its use in the treatment of OA. Regulatory approval was obtained in Canada in 2020, and in January 2021, the FDA in the United States gave its approval for propionic and methylmalonic acidemia. In June 2023, Regulatory approval for Carbaglu® was obtained in China. Juxtapid® (lomitapide) is a microsomial protein inhibitor for transferring N‐triglycerides. It was approved by the Japanese Ministry of Health in September 2016 on an exclusive marketing basis because it is an orphan product, to treat patients affects by homozygous familial hypercholesterolemia. Homozygous familial hypercholesterolemia is a serious genetic disease that inhibits the functioning of the receptor responsible for removing LDL (“bad”) cholesterol from the body. This failed functioning of the LDL receptor causes a sharp rise in blood cholesterol levels. Patients affected by this condition tend to develop premature and progressive atherosclerosis (narrowing and blockage of the arteries). Cystadrops® are the first cysteamine‐based eye drops, administered four times a day. These were approved in the European Union in 2017 and in the US in 2020 for the treatment of the ocular manifestations of cystinosis in adults and children from 2 years of age. Cystadrops® was designated an orphan drug by the European Commission with effect from November 2008. Cystinosis is a rare and very serious congenital condition that could be fatal. Cystinosis is characterized by a cystine crystal build‐up, causing damage to all the organs in the body, especially the kidneys and eyes. Cystine crystal deposits begin in the cornea, progressively causing hypersensitivity to the light (photophobia), a deterioration to the surface of the cornea (keratopathy) and blindness. Systematic treatment with orally administered cysteamine benefits patients suffering from cystinosis. Nonetheless, orally administered cysteamine does not adequately resolve ocular manifestations of cystinosis due to the absence of corneal vascularization. If adequate and ongoing topical ocular treatment is not received, the cystine crystals build up in the cornea with serious ophthalmic consequences, which could lead to blindness over time. Panhematin®/Normosang® (human hemin) is a drug for the treatment of acute attacks of hepatic porphyria. Porphyria are rare genetic diseases, which present with acute and often painful crises, requiring immediate medical attention. Panhematin®/Normosang® is therefore an emergency treatment drug and is recognized as the treatment of choice to reduce the crisis and prevent possible neuropathic complications. The product was approved under the Normosang® brand in Europe, and Panhematin® brand in the United States of America. The main products for rare endocrine conditions are listed in the table below and contributed € 242.3 million to revenue in 2023, up by 41.0% compared to the previous year, with continued strong uptake of Isturisa® across all regions, delivering revenue of € 139.5 million in 2023, and Signifor® also continuing to grow double digit, with revenue of € 102.9 million: Nome Principio Attivo Indicazione SIGNIFOR® and SIGNIFOR® LAR Pasireotide Treatment of Cushing’s disease and acromegaly ISTURISA® Osilodrostat Treatment of Cushing’s disease (United States of America) and Cushing’s syndrome (European Union, Japan Switzerland). Within Cushing’s syndrome (CS), Cushing’s disease (CD) is a severe endocrine disease caused by a pituitary adenoma, an enlargement in the pituitary gland which results in over‐production of cortisol by the adrenal glands. Other causes of endogenous Cushing’s syndrome include rarer conditions such as adrenal adenoma, ectopic corticotropin syndrome and ACTH independent macronodular adrenal hyperplasia. This condition is associated with increased morbidity and mortality. Acromegaly is caused by an overexposure to growth hormone, which leads to the production of insulin‐like growth factor‐1. The most common cause of acromegaly is pituitary adenoma. Signifor® contains the active substance pasireotide, a somatostatin analogue. The human body naturally produces somatostatin, which blocks the production and release of certain hormones, including ACTH.
52 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 Pasireotide works in a very similar way to somatostatin. Signifor® is thus able to block the production of ACTH, helping to control the overproduction of cortisol and improve the symptoms of Cushing’s disease. Isturisa® is an innovative drug for the oral treatment of endogenous Cushing’s syndrome. The relevant marketing authorization was granted by the European Commission in January 2020 and approval was obtained in the US in March 2020. The active substance in Isturisa® is osilodrostat, a cortisol synthesis inhibitor. Osilodrostat works by inhibiting 11‐beta‐hydroxylase, an enzyme responsible for the final step of cortisol biosynthesis in the adrenal gland. The benefits of Isturisa® are its ability to control or normalize cortisol levels in adult CS patients with a manageable safety profile, making this product a valuable treatment option for patients with Cushing’s syndrome. Isturisa® was launched in the United States, France and Germany in 2020. Geographic expansion continued into other European markets in 2021. In March 2021, the Japanese Ministry of Health, Labor and Welfare approved Isturisa® for the treatment of patients with endogenous Cushing’s syndrome, when pituitary surgery is not an option or has not been curative. The product was also successfully launched in Japan where it is reimbursed for Cushing’s Disease patients. In order to manage this new and promising endocrinology product range, the Recordati Group established the Recordati AG Rare Diseases Branch in Basel (Switzerland), which also deal with the marketing of the product Ledaga®. The main products in the rare oncological segment, acquired with the acquisition of EUSA Pharma (completed in March 2022), are shown in the table below and contributed € 200.9 million to revenue in 2023: Name Active Ingredient Indication QARZIBA® dinutuximab beta, anti‐GD2 monoclonal antibody Treatment for high‐risk neuroblastoma in patients aged 12 months or older, with at least partial response to chemotherapy induction, followed by myeloablative therapy and stem cell transplant SYLVANT® siltuximab, anti‐IL‐6 monoclonal antibody Treatment for idiopathic Multicentric Castleman’s Disease (iMCD) in the adult population FOTIVDA® tivozanib, highly selective oral inhibitor of tyrosine kinase (TKI) for vascular endothelial growth factor (VEGF) receptors 1, 2 and 3 First‐line treatment for advanced renal cell carcinoma (RCC). CAPHOSOL® mouthwash with supersaturated electrolytic solution of phosphate and calcium ions Prescription medical device for treatment of oral mucositis due to chemo and radiation therapy Qarziba® (dinutuximab beta) is an anti‐ganglioside‐D2 (GD2) monoclonal antibody approved and sold for the treatment of high‐risk neuroblastoma in patients aged 12 months or older who have undergone chemotherapy induction, with at least partial response, followed by myeloablative therapy and stem cell transplant and in patients with a clinical history of recurrent or refractory neuroblastoma. Qarziba is approved in the European Union, United Kingdom, Australia, Brazil, China, Hong Kong, Israel, Russia and Taiwan and distributed in other areas globally through managed access programs. Neuroblastoma is a rare type of cancer originating in the nervous system. It is the most common form of solid extra‐cranial tumors diagnosed in patients under 15, representing around 7% of pediatric tumors. Approximately 50% of these patients receive a diagnosis of high‐risk neuroblastoma, the type with the worst prognosis. Used as maintenance therapy, Qarziba has shown a significant increase in total survival at 5 years.
53 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 Sylvant® (siltuximab) is a mAb anti‐interleukin‐6 (IL‐6) granted through a license and marketed by EUSA Pharma (UK) Ltd. to treat idiopathic Multicentric Castleman’s Disease (iMCD). Supplied globally, it is approved in over 40 countries, including the European Union, USA and China. Castleman’s Disease is a rare disease that affects the lymphatic system. Idiopathic Multicentric Castleman’s Disease (iMCD) is a type of Multicentric Castleman’s Disease for which the cause is unknown. Only 3 or 4 people out of every 1 million in the general population are diagnosed with iMCD each year. It can affect anyone, male, female, adult or child, but most people with iMCD are 45 or older. Sylvant® is the only IL‐6 targeted therapy approved and recommended for iMCD, with the aim to support a durable tumor and symptomatic response. Fotivda® (tivozanib) is a VEFG 1, 2 and 3 (small TKI molecule) blocker licensed and marketed by EUSA Pharma (UK) Ltd. for first‐line treatment of advanced renal cell carcinoma (aRCC). Fotivda is supplied in Europe, Asia and Oceania, Africa and Latin America. Renal cell cancer (also known as kidney cancer and renal cell adenocarcinoma) is a disease in which malignant cells (cancer) are found in the lining of tubules (very small tubes) in the kidney. Renal cancer represents, 5% and 3% of all newly diagnosed tumors in men and women, respectively. Over 90% of renal tumors are renal cell carcinoma (RRC). RCC is one of the 10 most common tumors globally. Fotivda is intended to support survival in patients free of progression. Caphosol® (electrolytic calcium phosphate solution) is available in ampules or in dispersible form. It is licensed and marketed by EUSA Pharma (UK) Ltd. for the treatment and prevention of oral mucositis, a complication due to cancer treatments (including radiation and chemotherapy). It is supplied globally and approved in China, European Union, United Kingdom and the USA. Oral mucositis is diagnosed when the mouth is painful and inflamed. It is a common side effect of chemotherapy and radiation for cancer.
54 REVIEW OF OPERATIONS AND FINANCIAL ACTIVITIES 2023 REVIEW OF OPERATIONS SALES BY GEOGRAPHIC AREA