Boehringer Ingelheim 2005 - strong growth and profits once again - Spiriva® the first blockbuster

Ingelheim/Germany, 4 April 2006 – The pharmaceutical company Boehringer Ingelheim maintained its successful growth path once again in 2005. As the company announced at its annual press conference in Ingelheim, net sales grew by 17% to 9.5 billion euros (2004: EUR 8.2 billion). Operating income, comparable to EBIT, was 40% higher at over 1.9 billion euros (1.4 billion). The number of employees worldwide rose by some 1,900 to total 37,400 (+5.3%).

Dr Alessandro Banchi, Chairman of the Board of Managing Directors, with responsibility for Pharma Marketing and Sales, said the financial year 2005 was clear confirmation ”that Boehringer Ingelheim has entered the group of leading international pharmaceutical companies, not only in terms of sales growth, but also in terms of profits”. “We look back on a most satisfactory financial year,” Dr Banchi said.

The group’s good net sales development was positively reflected in the results. Boehringer Ingelheim achieved an operating return (operating income in relation to net sales) of 20.2%, which Professor Marbod Muff, responsible at Boehringer Ingelheim for the Corporate Board Divisions Finance and Human Resources, described as “exceptionally good”.

“We trust in our own strengths”
According to figures from the market analysts IMS, which all pharmaceutical companies use, Boehringer Ingelheim was last year the fastest growing company among the major international pharmaceutical groups. Boehringer Ingelheim grew by 23% (sales in constant euros), while the pharmaceutical market average could only add 6%. This growth dynamic was particularly marked in the USA, where Boehringer Ingelheim’s 33% growth clearly outstripped the US market (+5%).

The company, which for the sixth time in a row has grown faster than the pharmaceutical company average, has in the meantime secured a world market share of around 2%, ranking it as No.14 internationally.

Dr Banchi expects distinctly faster than average pharmaceutical market growth again in 2006. “We trust in our own strengths and are confident that we can extend our position further in our market segments, ” the Chairman said. Simultaneously, Dr Banchi underlined that successful growth and good profits are no end in themselves, but are the “preconditions for developing innovative medicines to benefit people”.

Spiriva® - first blockbuster
Boehringer Ingelheim has a number of drugs whose potential has not yet been exhausted. They made a decisive contribution to the company’s growth last year. The medication Spiriva®, for chronic obstructive pulmonary disease (COPD), with sales of 950 million euros – or 1.2 billion US dollars – became the company’s first blockbuster drug, that is one with annual turnover exceeding 1.0 billion dollars. Spiriva® grew by 80% against the previous year and has become the most-prescribed COPD medication worldwide. ”We are proud, ”Dr Banchi said, ”that in 2005 we were with Spiriva® able to help four million people to enjoy a better quality of life.”

Micardis® (against high blood pressure) which gained almost 30% to 720 million euros, and Sifrol®/Mirapex® (for Parkinson’s disease), with 50% higher sales at 420 million euros, are future growth drivers. In contrast, Boehringer Ingelheim expects generic meloxicam on the US market and therefore declining sales for Mobic®, its second blockbuster in 2005 after Spiriva®. A medication for treating osteoarthritis and rheumatoid arthritis, MOBIC® grew by almost 30% in 2005 to almost 850 million euros.

The highlight of the last year was the market launch of the AIDS drug Aptivus®, a novel protease inhibitor which offers additional treatment options for patients with multiple resistance to other HIV drugs.

Boehringer Ingelheim is a purely pharmaceutical company with the business segments Prescription Medicines (+17% to 7.2 billion euros), Consumer Health Care (+8% to almost 1.1 billion euros) and Animal Health (+8% to 360 million euros). In addition, the Industrial Customer business (Biopharmaceuticals, Manufacturing Pharma and Chemicals) made a considerable contribution of 850 million euros (+30%) to net sales.

For years, the company’s biopharmaceutical production has here been particularly successful, with net sales last year growing by 40% to 550 million euros. In this business segment Boehringer Ingelheim offers its customers the whole process chain from active ingredient development to product registration. Dr Hans-Jürgen Leuchs, responsible Boehringer Ingelheim Board Member for Operations, said: “We are pioneers in biopharmaceuticals production and aim to retain our leadership in this technology through innovation and quality.”

The most important regions for Boehringer Ingelheim last year were once again both American continents with 4.6 billion euros net sales. Europe contributed 3.1 billion euros to sales and Triple A (Asia, Australasia, Africa) 1.9 billion euros.

Taxation peculiarities of partnerships
The good development of net sales led to markedly higher income after taxes. This amounted to 1.5 billion euros, corresponding to an increase of almost 70% compared to the previous year. However, this result contains only part of the overall tax burden. The position regarding the taxation of partnerships in Germany – and the family-owned company Boehringer Ingelheim is such a partnership – includes only the trade tax, but not the income tax also incurred. This has to be shown on the balance sheet as “capital withdrawn”, said Prof. Muff.

The cash flow too, which in 2005 rose by 45% to 2.1 billion euros, should also be adjusted by this amount. Deducting investments in fixed assets, which rose strongly again last year (+25% to 530 million euros), we were left with free cash flow of more than 1.5 billion euros. Prof. Muff described the very substantial level of liquidity and good profitability as important pillars for the company’s independence.

Employees – the main source of success
Dr Banchi und Prof. Muff drew attention to Boehringer Ingelheim’s peculiarity as a company independent of the capital market. “We can plan really long term, “ said Dr Banchi. “The development of our business is characterised by stability and continuity.” This also has a decisive influence on our vibrant corporate culture.

Prof. Muff presented international surveys by independent institutes which see Boehringer Ingelheim out in front in many countries, especially in Germany, in terms of workplace quality and employee satisfaction. The Board Member responsible for Human Resources called the employees ”the most important source of our success” and also stressed the high level of apprenticeships in the company. The number of apprentices – in more than 20 trades - rose further by 10% last year to 685.

Product pipeline with strong potential
For the future, the company presents a positive picture. The product pipeline contains a number of promising candidates in various therapeutic areas. In 2005, almost 1.4 billion euros was invested in Research & Development + Medicine. That is 10% higher than the previous year. However, due to the very positive development of net sales the R&D+M expenditure as a share of net sales in Prescription Medicines slightly declined to 18.2% (2004: 19.3 %).

Many of Boehringer Ingelheim´s successful products will be patent-protected or will enjoy exclusivity for a significant number of years. New market launches and indication extensions are to come in 2006, including pramipexole (Sifrol®/Mirapex®) in the indication restless legs syndrome – RLS. For Dr Banchi the goals for 2006 are clearly defined: “We will maintain our dynamic growth in 2006 too.”

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Ulrich Bock

Boehringer Ingelheim GmbH

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