expiring patent protection with new products. The number of new registrations still trails behind the high points of previous years. Nor was Boehringer Ingelheim able to avoid the worldwide trend of declining growth rates in the industry. Following turnover growth, according to the healthcare information provider IMS Health, of 24% in 2005, discounting currency effects, primarily borne by innovative launches (spiriva® and micardis®) and extraordinary effects (mobic®), growth of only 8.4 % was achieved in 2006. However, as in the last seven years, this exceeded overall market growth (6.1 % in 2006). A significant cause of the slowed growth at Boehringer Ingelheim is that our anti- rheumatic mobic®, as expected, faced generic competition in the USA from summer 2006 and compared to 2005 experienced a decline in turnover of EUR 250 million.
Boehringer Ingelheim’s growth in 2006 was again borne by all three regions, each of which surpassed its respective market growth. This testifies to the international orientation and strength of our group. The strongest growth was achieved in the Asia, Australasia, Africa (AAA) region, with 15 % at constant exchange rates according to IMS Health. In the Americas region turnover growth was 9 %, discounting currency effects. In Europe we posted market growth of
4.6 % at comparable exchange rates.
Pharma Chemicals and and Pharmaceuticals
Production 306 299 +2 %
Animal Health 374 361 +4 % Borne by growth in all three regions, group net sales were increased by 10.9 % to almost EUR
10.6 billion. The favourable development of the business in the last few years (2005: +17 %, 2004: +10.5 %) has thus continued. As in 2005, exchange
rate developments in 2006 had no decisive impact on turnover growth. The Japanese yen only lost some 6% of its value compared with the previous period, which only had an effect of less than -1 % on group net sales.
Boehringer Ingelheim’s most important sales segment is the Prescription Medicines (PM) business that again in 2006 developed very favourably, with an increase of 15 %.
Net sales by region
(in millions of EUR) 2006 2005
Americas 5,388 4,559
Europe 3,295 3,117
Asia, Australasia, Africa 1,891 1,859
In our Animal Health business, with growth of
10 %, we further reinforced our No. 10 position internationally and thereby secured a market share of 3 % in this highly competitive market. We considered growth of 1 % for our Consumer Health Care (CHC) as unsatisfactory. The main reason lies in the restrained development of our business in Japan, which, in addition, suffered from the marked depreciation of the Japanese yen. We expect the acquisition at the end of 2006 of the medication zantac® in the USA to give us strong growth in CHC business in this market in 2007.
We anticipated the 8 % decline in turnover in the Biopharmaceuticals segment, as the previous period had been positively affected by certain extraordinary factors (2005 growth in this segment amounted to 40 %).
In the business area PM we further extended the market position of our main sales generators
spiriva®, flomax® and micardis®. In these products Boehringer Ingelheim now has three medications with sales volumes exceeding USD 1 billion. spiriva®, one of the most pre- scribed medications for the treatment of chronic obstructive pulmonary disease (COPD), achieved the strongest growth with a 45 % increase on the previous year. micardis®, a medication for the treatment of hypertension, achieved growth of
34 %, which underlines the strength of this medication in this highly contested market segment. micardis® has thereby met our expec-
tations and we assume that it has further growth potential that can gain additional momentum on publication of the results of the ontarget™
study in 2008. flomax®/alna®, a medication for the treatment of benign prostatic hyperplasia (BPH), achieved sales growth of 28 %. This growth is primarily attributable to its market success in the USA, where it holds a market share of around 57 %. We expect another important turnover driver from the 2006 market approval for sifrol®/mirapex® in the indication restless legs syndrome (RLS) in both Europe and the USA. The generic competition for our mobic® in the USA had been anticipated, but some months later than it actually happened. For the first time, the US Food and Drug Administration (FDA) granted market approval to 14 applicants simultaneously, which immediately after they entered the market led to a dramatic decline in prices.
As in previous periods, the positive influence of our concepts Value through Innovation (VTI) and Lead & Learn was of importance in 2006. Both have continued to play a decisively formative role in our corporate culture and are a significant basis for successful cooperation at Boehringer Ingelheim. With a series of projects we have ensured that these principles will continue to be translated into reality so that we can thereby also successfully meet the challenges of the future.
Boehringer Ingelheim A n n u A l R e p o R t 2 0 0 6 102
with confidence.
The most important figures for earnings for 2006
are as follows:
(in millions of EUR) 2006 2005 Change
Net sales 10,574 9,535 +10.9 % Operating income 2,140 1,923 +11.3 % Return on net sales (as %) 20.2 20.2
Research and Development
Boehringer Ingelheim has firmly anchored in its guiding principles (Leitbild) the mission of helping people suffering from diseases by researching innovative medicines. Against this background, the worldwide deployment of resources in research and development are of prime importance. In the reporting period,
In our Human Pharmaceuticals business, R&D expenditure as a share of net sales was 15.0 % (2005: 14.4 %). We have distributed our global research activities to our sites in Germany, the USA, Austria and Canada. In addition to each site’s focussing on certain fields of research, numerous international project teams ensure that necessary know-how concerning successful project management is available. Boehringer Ingelheim has concentrated its R&D on seven therapeutic areas: • respiratory diseases • virology • oncology • metabolic diseases • cardiovascular diseases
• central nervous system diseases • immunology and inflammation
Research and development 2006 2005 2004 2003 2002
Total expenditure (in millions of EUR) 1,574 1,360 1,232 1,176 1,304
– as % of net sales 14.9 14.3 15.1 15.9 17.2
Human Pharma. expend. (in millions of EUR) 1,527 1,318 1,195 1,140 1,264
– as % of HP net sales 15.0 14.4 15.3 16.1 17.4
Average number of employees 6,003 5,678 5,471 5,362 5,205 Investments in tangible assets (in millions of EUR;
without investments in infrastructure) 125 116 97 93 97
Our medications spiriva®, combivent® and
atrovent® have for many years given us a leading position in the treatment of COPD.
spiriva®, our first blockbuster medication, is one of the medicines that is most often prescribed for this indication. The product, co-promoted with Pfizer, Inc., was also launched in France in 2006
and is now available in most countries. We assume that the clinical study uplift®, the outcome of which we expect in 2008, will further reaffirm the medicinal efficacy of spiriva® with additional favourable results.
In the therapeutic area of central nervous system diseases we have in the dopamine agonist
sifrol®/mirapex® (pramipexole) a successful medication for the treatment of Parkinson’s disease. In 2006, pramipexole was also given market approval by the EU and the FDA for the treatment of RLS. Together with Lilly, Boehringer Ingelheim has developed the antidepressant
cymbalta® that has already been introduced in more than 20 countries. In Germany cymbalta®
has developed into the most successful intro- duction of an antidepressant.
In the area of virology Boehringer Ingelheim has had for years, with the medication viramune®, a successful drug in the non-nucleoside reverse transcriptase inhibitor (NNRTI) class. The intro- duction of aptivus® in 2005 complemented our portfolio of treatments for the immune deficiency disease AIDS. A further focus in virological research is in the area of the hepatitis C virus. With growth of more than 30 % in 2006,
micardis® (angiotensin II receptor blocker) is one of the fastest growing Boehringer Ingelheim products. The medication has developed highly successfully since launch and is a cornerstone
of our therapy area cardiovascular diseases. We assume that the presentation of the results of the large-scale studies ontarget™ and transcend®
(together including more than 30,000 patients) at the beginning of 2008 will show that the spectrum for using micardis® can be further widened substantially. The clinical study
profess®, with over 20,000 patients, to demon- strate the efficacy of aggrenox® in secondary stroke prevention, will be concluded in 2008. Here too we expect an outcome that promises success. In dabigatran we have a highly promising substance in clinical phase III in the therapeutic area cardiovascular diseases for the prevention and treatment of thrombo-embolic diseases.
In the urology area Boehringer Ingelheim markets flomax®/alna®, a medication in-licensed from Astellas, for the treatment of benign prostate hyperplasia (BPH). In the areas oncology and metabolic diseases, newer research areas for Boehringer Ingelheim, we have some interesting development products in clinical phase II.
Our own previously mentioned research efforts are complemented by strategic alliances and in-licensing. Here we can note our exemplary cooperation with Ablynx for researching and developing new forms of therapy for Alzheimer’s disease based on Nanobodies® developed by Ablynx.
With several compounds in clinical phases II and III, and a number of substances in the pre-clinical phase, we will be able to ensure the flow of new products.
Boehringer Ingelheim A n n u A l R e p o R t 2 0 0 6 104
like “Business Process Excellence” and “Customer Relation Excellence” characterise the
management culture at these sites. Compliance and optimisation are among the main focus areas when new products or technologies are implemented.
Significant investments in 2006 were at the site at Cleveland, Ohio, USA to expand our production capacity (> EUR 50 million) and in our LogiPack-Center (packaging facility) at the site in Ingelheim, Germany.
With an investment volume of more than EUR 250 million in our production plants over the next few years we will establish the basis to be able to meet future demands on capacity and fulfil the ever-growing regulatory requirements of the authorities.
In the area of chemical production we will in the next few years invest a total of over EUR 150
million at the sites Petersburg, Virginia, USA and Fornovo, Italy. With these plants and the existing capacity at Ingelheim and Malgrat, Spain we will guarantee active substance supply for
our pharmaceutical products, and with a view to our planned launches, on a lasting basis. At both of our biopharmaceutical production sites, Biberach, Germany and Vienna, Austria, capacity was expanded markedly over the past few years. We consider ourselves very well- equipped for the next few years, underpinned by continued strong demand for biotechnological
environment play a central role for Boehringer Ingelheim at all of our sites. This high priority is also expressed by the fact that this aspect is written down in our Leitbild. Our aim is to avoid damaging impact on the environment and to conserve natural resources in conducting our activities. For us, it goes without saying that we respect and adhere to the legal requirements in the respective countries. Indeed, we also go beyond the legally defined demands, where we regard it as purposeful. Our established processes in the field of environmental, health and safety (EH&S) are the foundation for the successful implementation of the basic principles of environmental policy. Here our objective is to scrutinise our existing procedures in a continuous process of improvement constantly in search of improvement potential. We ensure consistent groupwide adherence to these standards through environmental audits at our sites (2006: 13 environmental audits). Within the framework of our participation in “Responsible Care”, the global initiative of the chemical industry, we have also committed ourselves to its basic principles.
The certification of our sites at Fornovo, Italy and Yamagata, Japan, by external inspectors in accordance with ISO 14001 confirmed our high internal standards. In this we also see an incentive to build on our excellent position in these areas.
Employee reporting
The sustained, positive development of our business has led to a further expansion of the number of our employees. Averaged over the year, Boehringer Ingelheim in 2006 employed 38,428
people. This corresponds to growth of 3 %, following 5 % growth in 2005.
In the reporting year, we, through a series of programmes and events, intensified and established as a central element of our working culture, the Lead & Learn concept that has been implemented since 2005. In this we see a significant basis to further create Value through Innovation in order to face the challenges ahead. An important goal of our human resources work is to recruit and retain the best people on a lasting basis. Boehringer Ingelheim offers talented employees various paths to personal and leader- ship development in order to develop further their abilities. We are convinced that our remu- neration schemes also put us in a very good, competitive position. Our system of financial rewards provides, in addition to a basic market- orientated salary, for a variable salary element that essentially follows company success and the achievement of personal targets. Alongside this, our extensive social contributions play an impor- tant role in the overall remuneration concept. As in previous years, Boehringer Ingelheim in 2006 again received recognition in many countries in conjunction with opinion polls to find the best employers. Part of our fundamental beliefs is not to rest on our laurels. In 2007, we will conduct a group-wide opinion survey among our employees. From the results of this survey we will access further improvement potential.
In addition, an important part of our human resources work is our commitment to education. In the reporting period, we offered apprentice- ships to 667 young people in Germany, thereby raising the previous year’s level once again. In the years before, we had already at the Biberach and Ingelheim sites taken account of the social challenge of creating a better work-life balance and, in cooperation with the local communities, promoted and supported the establishment of day-care centres for children.
In 2006, a childcare centre with 130 places was also built at our site at Ridgefield, Connecticut, USA.
Social responsibility
Boehringer Ingelheim has for more than 100
years taken care of its social responsibility in a very extensive and highly attentive manner. Our understanding is that our responsibility applies to our patients, our employees and their families as well as the communities and countries in which we operate (Good Corporate Citizenship). Boehringer Ingelheim orientates itself after the basic principles of “corporate governance” and “corporate social responsibility”, as proposed
by various international organisations (United Nations, World Health Organization, Organisa- tion for Economic Cooperation and Development and the EU). These principles are employed in our strategic deliberations, our corporate culture and our daily business.
Boehringer Ingelheim A n n u A l R e p o R t 2 0 0 6 106
medicine. Through our donation programme we support activities that clearly reduce the risk of transmission of HIV from mother to child during birth using an antiretroviral therapy. For this purpose we make our AIDS medication
viramune® available free of charge. In 2006, we in addition reduced the price for viramune®
for some developing countries and within the framework of the Accelerating Access Initiative (AAI) programme we offer these countries con- siderable price reductions. Furthermore, we have in the meantime granted seven manufacturing licences that allow generic production in the developing countries concerned.
At the same time in 2006, we sought through numerous clinical studies with aptivus® and
viramune® to gain further insights into the treatment and therapy of AIDS.
Another given for our social responsibility as a company is, where possible, to encourage and support the voluntary commitment of our employees. Many of our employees engage voluntarily in their free time in social projects and make a decisive contribution where help is called for.
Results from operations
Independent market data show that Boehringer Ingelheim again grew faster than the overall market in 2006. We thereby gained market share for the seventh consecutive year. This success was all the more remarkable, as Boehringer Ingelheim achieved this growth essentially with its own resources, i.e. with products from its own research. According to current market data, Boehringer Ingelheim ranks 15th among the
world’s largest pharmaceutical companies, with a market share of 2 %.
Boehringer Ingelheim increased its net sales by
10.9 % in 2006 to EUR 10,574 million. Exchange rate movements, compared to the previous period
2005, had a slightly negative impact (-1 %) on this development. When analysing our growth, it must be noted that changes in the consolidation were negligible. The acquisition of the product
zantac® in the USA took place at the end of
2006 and has not yet affected our turnover development.
Boehringer Ingelheim is divided into the busi- nesses Human Pharmaceuticals and Animal
Components of growth in net sales (as %) 2006 2005 2004 2003 2002
Price/quantity/new introductions 12.1 17.4 16.1 7.8 10.1 Acquisition and sale of businesses –0.3 –0.5 –0.5 –0.2 7.1
Currency effect –0.9 0 –5.1 –10.2 –4.0
Health. The Human Pharmaceuticals business encompasses the segments PM, CHC as well as Industrial Customers. In 2006, this business achieved net sales of EUR 10,200 million, corresponding to growth of 11 %. The Human Pharmaceuticals business thereby accounted for 96 % of group net sales.
Prescription Medicines
PM is by far the most important segment in our Human Pharmaceuticals business. In 2006, net sales of EUR 8,311 million were achieved, corresponding to growth of 14.7 % compared to the previous year (2005: EUR 7,247 million). The significance of this segment is evident in that it accounts for 81 % of our Human Pharma- ceuticals business.
This gratifying development was borne by our strategic products which all showed marked growth:
Net sales
(in millions of EUR) 2006 2005 Growth
spiriva® 1,381 951 45 % micardis® 967 724 34 % aggrenox® 225 172 31 % flomax® sifrol®/mirapex® 922 536 721 434 28 % 23 %
spiriva® continued to develop favourably and is our fastest growing product. For the products
micardis® and aggrenox® we also expect further growth in the next few years, supported by the outcomes of clinical studies. In 2006, our medication sifrol®/mirapex® was granted market approval in the indication RLS, so we can also expect further growth from the extended spectrum of use in 2007. Due to the
loss of exclusivity for mobic® in the USA in 2006, we had, as already mentioned, to take a drop in net sales of this product exceeding EUR 250
million which will be even greater in the 2007
period.
The overwhelmingly strongest region in the PM segment is the Americas, with a 54 % share of group net sales. With only a very modest foreign exchange influence, growth of 8.9 % was achieved, discounting currency effects. Growth of 8.5 % in the pharmaceutical market was thereby surpassed once again. Net sales for the region amounted to EUR 4.5 billion. As a single market, the USA was the largest and most impor- tant country for Boehringer Ingelheim, with an
86 % share of net sales. In the US market the products spiriva®, micardis® and flomax®
showed very gratifying development, all achiev- ing double-digit growth.
In the Europe region a net sales volume of EUR 2,180 million was achieved, giving the region a share of 26 % in this segment. Market growth of 3.9 % in the region was exceeded slightly. The country in this region with the biggest turnover was Germany, which contrib- uted EUR 446 million to total net sales. This represented a 2 % decline in net sales in our home market compared to the previous period. Our businesses in Eastern Europe showed very