20 years as a pioneer

We can now look back at yet another successful year, and not without a certain pride and satisfaction. We can celebrate 20 years as pioneers in the market for orphan drugs. We have travelled far during these 20 years and have since the very beginning been a leading and driving player seeking to develop, provide and distribute drugs for treating rare diseases. The roughly 40 special and orphan drugs in our product portfolio help to significantly extend the life expectancy and improve the lives of thousands of people suffering from rare diseases or diseases for which there has beenno satisfactory treatment. We have always managed to couple growth with good profitability, and so also this year. In the last three years we have grown by an average of 28 per cent a year.

The organisation was strengthened during the year, primarily in Europe outside the Nordics, through the recruitment of individuals with specialist expertise in medicine, regulatory issues and marketing. Overall, our employees have a very high level of expertise in key areas of orphan drugs. Many of them have academic and/or research backgrounds and all are driven by the invaluable entrepreneurial spirit and continual focus on the patient that pervades the whole company.

Strenghtened product portfolio

The product portfolio was also strengthened and secured during the year. The company signed a distribution agreement with PharmaMar, a Spanish pharmaceutical company, on Yondelis®, an innovative orphan drug that has been extracted from a marine organism. In August 2007 Yondelis® was approved by the European Commission for treatment of patients with the rare disease advanced soft tissue sarcoma. We hold the rights for the Nordic countries, the Baltic states and central eastern Europe. Swedish Orphan concluded one further preparatory agreement with the US company Ucyclyd for distribution of Ammonul® in Europe and the Middle East. Ammonul® is used for treating patients with severe urea cycle disorders.

To ensure future access to Multiferon®, a drug for treatment of patients with advanced malignant melanoma and secondary treatment of patients who are intolerant to or do not respond to recombinant interferon treatment, we acquired assets in ViraNative AB’s bankruptcy estate and offered employment to some of the existing workforce in order to continue production. The purchase included international patent and brand rights for Multiferon®. After this, Swedish OrphanInternational Manufacturing AB has developed an entirely new patient-friendly formulation of Multiferon® in the form of a pre-filled syringe, which was approved by the Swedish Medical Products Agency in December 2007. We have obtained approval for the selling price in Sweden, and the product is now being launched. We have also initiated a mutual recognition procedure (MRP) in Europe aimed at gaining approval for Multiferon® throughout the continent, so that patients can soon be offered this life-prolonging treatment. The share of proprietary and licensed products increased during the year. These products entail increased rights and obligations, but also ensure better control and higher margins, which in turn lays the groundwork for continued growth and creates opportunities for investments in new orphan drugs.

Broad geographic coverage

Swedish Orphan’s geographic expansion has proceeded according to plan. Including the new start-up in the Czech Republic, we now have 13 offices around Europe, covering almost the entire European market. Next in turn is Russia, where we see large opportunities. Our broad coverage and local presence, with strong local knowledge and proximity to the patient, are some of the factors that will be crucial to our continued success.

Focusing on the patient

Thanks to some – in an orphan drug context – relatively large and profitable products in our portfolio, we now have an opportunity to provide and distribute smaller products that can save lives and are therefore extremely important for a limited group of patients. These products help to extend the life expectancy and quality of life of people suffering from a specific rare disease. Our desire to include these products in portfolio is explained by our mission: to provide patients with orphan drugs for treatment of rare diseases. We always put the focus on the patient – this is a view that is shared by all our employees and is one of the core elements of our company culture. For all of us, there are values which go beyond the purely economic, and we want to safeguard these values in our business. But it is of course of the greatest importance for our staff, owners and, not least, the people suffering from rare diseases, that our business continues to grow and that it remains profitable. Profitability is crucial to our long-term survival and our ability to expand – both geographically and in terms of the product range, which will be expanded through development and licensing of new orphan drugs. This improves our ability to reach out to and assist a growing number of patients in need of treatment for their rare disease.

Increased competition

Special legislation in the US, Japan, EU and other regions provide incentives for research and development in orphan drugs. A growing number of drug makers, including some of the big global players, are therefore investing resources in developing drugs for treating rare diseases. This will increase competition, but more importantly, it will help to ensure that more orphan drugs are developed for patients with a strong need for better and more treatment opportunities. There are about 7,000 rare diseases, of which only about 400 are treatable today. The greater the number of companies working on orphan drugs, the greater the number of people who will receive help.

Focus for the future

We have a stable and strong financial position that enables us to act on attractive business opportunities. We will be focusing on further licensing of products in late phases of development and on acquisitions of products and small niche companies. Our biggest challenge is to identify interesting acquisition candidates. In addition to our active search effort, we also receive many proposals. At any given time we have 10 to 15 projects under evaluation. Since our establishment 20 years ago, our business model has proved to be sustainable and very successful. Throughout these years we have managed to grow and remain profitable. As long as we continue to put the focus on the patient, I am convinced that our business model will prove viable for a long time yet, for the benefit of our employees, owners and patients. Last but not least, I would like to thank all our employees for their unerring commitment, enthusiasm and huge contributions, both to ensure that our life-saving products reach all patients who need them in time and to ensure Swedish Orphan International’s continued growth.