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Financial Highlights Boehringer Ingelheim group of companies 2005 2004 Change 9,535 8,157 17 % Europe 33 % 32 % Americas 48 % 48 % Asia, Australasia, Africa 19 % 20 % 96 % 96 % 4 % 4 % Research and development 1,360 1,232 10 % Personnel costs 2,671 2,443 9 % 37,406 35,529 5 % 1,923 1,372 40 % 20.2 % 16.8 % Amounts in millions of EUR, unless otherwise indicated Net sales by region by business area Human Pharmaceuticals Boehringer Ingelheim Animal Health Operating income Operating income as % of sales Annual Report 2005 Income after taxes 1,514 908 15.9 % 11.1 % 4,609 4,363 34.2 % 23.1 % 2,069 1,430 45 % Investments in tangible assets 532 427 25 % Depreciation of tangible assets 439 377 16 % Income after taxes as % of sales Annual Report 2005 www.boehringer-ingelheim.com Average number of employees* Shareholders’ equity Return on shareholders’ equity Cash flow *including the total number of employees in joint ventures included in the consolidation Value through Innovation nopq 67 % 6 % Financial Highlights Boehringer Ingelheim group of companies 2005 2004 Change 9,535 8,157 17 % Europe 33 % 32 % Americas 48 % 48 % Asia, Australasia, Africa 19 % 20 % 96 % 96 % 4 % 4 % Research and development 1,360 1,232 10 % Personnel costs 2,671 2,443 9 % 37,406 35,529 5 % 1,923 1,372 40 % 20.2 % 16.8 % Amounts in millions of EUR, unless otherwise indicated Net sales by region by business area Human Pharmaceuticals Boehringer Ingelheim Animal Health Operating income Operating income as % of sales Annual Report 2005 Income after taxes 1,514 908 15.9 % 11.1 % 4,609 4,363 34.2 % 23.1 % 2,069 1,430 45 % Investments in tangible assets 532 427 25 % Depreciation of tangible assets 439 377 16 % Income after taxes as % of sales Annual Report 2005 www.boehringer-ingelheim.com Average number of employees* Shareholders’ equity Return on shareholders’ equity Cash flow *including the total number of employees in joint ventures included in the consolidation Value through Innovation nopq 67 % 6 % Contents 8 22 40 56 62 70 Comparison of Balance Sheets/ Financial Data 1996—2005 (in millions of EUR) 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 89 508 452 400 344 322 302 242 267 233 Tangible assets 1,342 1,612 1,739 1,992 2,217 2,467 2,840 2,767 2,712 2,900 Financial assets 1,007 757 731 849 1,135 1,008 1,689 2,462 2,756 3,396 Fixed assets 2,438 2,877 2,922 3,241 3,696 3,797 4,831 5,471 5,735 6,529 Assets (as of 31.12.) Intangible assets Inventories Accounts receivable (incl. deferred charges) Cash and cash equivalents (incl. securities) 2 The Shareholders’ Perspective 627 794 806 944 1,021 1,014 971 1,000 1,085 1,229 1,057 1,211 1,255 1,870 1,938 2,314 2,360 2,537 2,477 3,013 156 134 299 459 477 1,002 1,055 1,134 1,333 1,247 Current assets 1,840 2,139 2,360 3,273 3,436 4,330 4,386 4,671 4,895 5,489 Total assets 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 383 399 441 332 211 200 178 178 178 178 Our Company 4 Key Aspects of 2005 8 Our Caring Culture Boehringer Ingelheim is a research-driven group of companies 10 Our Commitment dedicated to researching, developing, manufacturing and marketing 12 For Our Neighbours pharmaceuticals that improve health and quality of life. 14 For Our People 18 For Our Environment Our business consists largely of Prescription Medicines, Consumer Health 22 Our R&D Drive Care, Biopharmaceuticals and Animal Health. We focus on the production 26 “HIV is Being Played Down” of innovative drugs and treatments that represent major therapeutic 28 Our Strength in R&D + Medicine advances. Business Development Excellence in innovation and technology guides our actions in all areas. Prescription Medicines Our products have long been highly successful in the treatment 40 A New Quality of Treatment, a New Quality of Life of respiratory, cardiovascular, central nervous system, urological and 44 Overview Prescription Medicines virological disorders. In addition we have intensified our research into Consumer Health Care Liabilities and equity (as of 31.12.) Shareholders’ capital Reserves (incl. currency conversion difference) 1,307 1,461 1,651 1,982 2,362 2,753 2,818 3,139 3,297 2,940 Net income 167 212 229 320 379 401 537 529 888 1,491 Total equity 1,857 2,072 2,321 2,634 2,952 3,354 3,533 3,846 4,363 4,609 0 0 0 0 0 1 203 188 193 216 Group equity 1,857 2,072 2,321 2,634 2,952 3,355 3,736 4,034 4,556 4,825 Provisions (incl. deferred taxes) 1,841 1,982 2,012 2,631 2,932 3,150 3,568 3,963 4,172 4,958 Minority interests 580 962 949 1,249 1,248 1,622 1,913 2,145 1,902 2,235 Total liabilities Liabilities (incl. deferred charges) 2,421 2,944 2,961 3,880 4,180 4,772 5,481 6,108 6,074 7,193 Total liabilities and equity 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 the immune system, metabolic diseases and cancer. 56 Let’s Talk About it Boehringer Ingelheim, which currently has almost 37,500 employees, Summary of selected financial data 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 has 143 affiliated companies spread around the globe. We have research Sales 3,623 4,201 4,474 5,086 6,188 6,694 7,580 7,382 8,157 9,535 62 Time is Critical facilities in nine countries and production plants in more than 20. Operating income 333 350 336 655 800 980 1,082 901 1,372 1,923 66 Overview Biopharmaceuticals and Chemicals Our pharmaceuticals research and development spending corresponds Operating income as % of sales 9.2 8.3 7.5 12.9 12.9 14.6 14.3 12.2 16.8 20.2 to about 18 % of net sales in Prescription Medicines. Income after taxes 167 212 229 320 379 401 551 537 908 1,514 Income after taxes as % of sales 4.6 5.0 5.1 6.3 6.1 6.0 7.3 7.3 11.1 15.9 Our headquarters is at Ingelheim, the German town where the company Return on equity (in %) 9.8 11.4 11.0 13.8 14.4 13.6 16.0 15.0 23.1 34.2 was founded in 1885. Own capital resources (in %) 43.4 41.3 43.9 40.4 41.4 41.3 38.3 37.9 41.0 38.4 Cash flow 426 561 595 737 791 1,117 1,049 1,059 1,430 2,069 60 Overview Consumer Health Care Biopharmaceuticals and Chemicals Animal Health 70 Helping the Heart 74 Overview Animal Health 77 Group Management Report Financial funds Consolidated Financial Statements 2005 Personnel expenditure 966 722 858 1,055 1,094 1,645 2,645 3,516 4,015 4,585 1,153 1,270 1,409 1,527 1,749 1,916 2,175 2,252 2,443 2,671 30.5 29.9 28.0 34,221 35,529 37,406 90 Overview of the Major Consolidated Companies Personnel expenditure as % of sales 92 Consolidated Balance Sheet Average numbers of employees 93 Consolidated Profit and Loss Statement Research and development costs 626 771 812 94 Cash Flow Statement R&D as % of sales 17.3 18.4 18.1 95 Statement of Changes in Group Equity Investments in tangible assets 346 455 421 96 Notes to the Consolidated Financial Statements Depreciation of tangible assets 169 189 211 114 Auditor’s Report 116 Glossary Flap Comparison of Balance Sheet/Financial Data 1996–2005 *As of the comparative financial statement 1999, accounting and evaluation methods were brought closer into line with International Accounting Standards (IAS), in particularly with regard to deferred taxes and provisions for pensions. 31.8 30.2 31.5 30.0 28.3 28.6 28.7 24,074 24,860 25,927 26,448 27,325 27,980 31,843 826 968 1,019 1,304 1,176 1,232 1,360 16.2 15.6 15.2 17.2 15.9 15.1 14.3 377 497 548 634 516 427 532 256 288 305 340 354 377 439 Contents 8 22 40 56 62 70 Comparison of Balance Sheets/ Financial Data 1996—2005 (in millions of EUR) 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 89 508 452 400 344 322 302 242 267 233 Tangible assets 1,342 1,612 1,739 1,992 2,217 2,467 2,840 2,767 2,712 2,900 Financial assets 1,007 757 731 849 1,135 1,008 1,689 2,462 2,756 3,396 Fixed assets 2,438 2,877 2,922 3,241 3,696 3,797 4,831 5,471 5,735 6,529 Assets (as of 31.12.) Intangible assets Inventories Accounts receivable (incl. deferred charges) Cash and cash equivalents (incl. securities) 2 The Shareholders’ Perspective 627 794 806 944 1,021 1,014 971 1,000 1,085 1,229 1,057 1,211 1,255 1,870 1,938 2,314 2,360 2,537 2,477 3,013 156 134 299 459 477 1,002 1,055 1,134 1,333 1,247 Current assets 1,840 2,139 2,360 3,273 3,436 4,330 4,386 4,671 4,895 5,489 Total assets 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 383 399 441 332 211 200 178 178 178 178 Our Company 4 Key Aspects of 2005 8 Our Caring Culture Boehringer Ingelheim is a research-driven group of companies 10 Our Commitment dedicated to researching, developing, manufacturing and marketing 12 For Our Neighbours pharmaceuticals that improve health and quality of life. 14 For Our People 18 For Our Environment Our business consists largely of Prescription Medicines, Consumer Health 22 Our R&D Drive Care, Biopharmaceuticals and Animal Health. We focus on the production 26 “HIV is Being Played Down” of innovative drugs and treatments that represent major therapeutic 28 Our Strength in R&D + Medicine advances. Business Development Excellence in innovation and technology guides our actions in all areas. Prescription Medicines Our products have long been highly successful in the treatment 40 A New Quality of Treatment, a New Quality of Life of respiratory, cardiovascular, central nervous system, urological and 44 Overview Prescription Medicines virological disorders. In addition we have intensified our research into Consumer Health Care Liabilities and equity (as of 31.12.) Shareholders’ capital Reserves (incl. currency conversion difference) 1,307 1,461 1,651 1,982 2,362 2,753 2,818 3,139 3,297 2,940 Net income 167 212 229 320 379 401 537 529 888 1,491 Total equity 1,857 2,072 2,321 2,634 2,952 3,354 3,533 3,846 4,363 4,609 0 0 0 0 0 1 203 188 193 216 Group equity 1,857 2,072 2,321 2,634 2,952 3,355 3,736 4,034 4,556 4,825 Provisions (incl. deferred taxes) 1,841 1,982 2,012 2,631 2,932 3,150 3,568 3,963 4,172 4,958 Minority interests 580 962 949 1,249 1,248 1,622 1,913 2,145 1,902 2,235 Total liabilities Liabilities (incl. deferred charges) 2,421 2,944 2,961 3,880 4,180 4,772 5,481 6,108 6,074 7,193 Total liabilities and equity 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 the immune system, metabolic diseases and cancer. 56 Let’s Talk About it Boehringer Ingelheim, which currently has almost 37,500 employees, Summary of selected financial data 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 has 143 affiliated companies spread around the globe. We have research Sales 3,623 4,201 4,474 5,086 6,188 6,694 7,580 7,382 8,157 9,535 62 Time is Critical facilities in nine countries and production plants in more than 20. Operating income 333 350 336 655 800 980 1,082 901 1,372 1,923 66 Overview Biopharmaceuticals and Chemicals Our pharmaceuticals research and development spending corresponds Operating income as % of sales 9.2 8.3 7.5 12.9 12.9 14.6 14.3 12.2 16.8 20.2 to about 18 % of net sales in Prescription Medicines. Income after taxes 167 212 229 320 379 401 551 537 908 1,514 Income after taxes as % of sales 4.6 5.0 5.1 6.3 6.1 6.0 7.3 7.3 11.1 15.9 Our headquarters is at Ingelheim, the German town where the company Return on equity (in %) 9.8 11.4 11.0 13.8 14.4 13.6 16.0 15.0 23.1 34.2 was founded in 1885. Own capital resources (in %) 43.4 41.3 43.9 40.4 41.4 41.3 38.3 37.9 41.0 38.4 Cash flow 426 561 595 737 791 1,117 1,049 1,059 1,430 2,069 60 Overview Consumer Health Care Biopharmaceuticals and Chemicals Animal Health 70 Helping the Heart 74 Overview Animal Health 77 Group Management Report Financial funds Consolidated Financial Statements 2005 Personnel expenditure 966 722 858 1,055 1,094 1,645 2,645 3,516 4,015 4,585 1,153 1,270 1,409 1,527 1,749 1,916 2,175 2,252 2,443 2,671 30.5 29.9 28.0 34,221 35,529 37,406 90 Overview of the Major Consolidated Companies Personnel expenditure as % of sales 92 Consolidated Balance Sheet Average numbers of employees 93 Consolidated Profit and Loss Statement Research and development costs 626 771 812 94 Cash Flow Statement R&D as % of sales 17.3 18.4 18.1 95 Statement of Changes in Group Equity Investments in tangible assets 346 455 421 96 Notes to the Consolidated Financial Statements Depreciation of tangible assets 169 189 211 114 Auditor’s Report 116 Glossary Flap Comparison of Balance Sheet/Financial Data 1996–2005 *As of the comparative financial statement 1999, accounting and evaluation methods were brought closer into line with International Accounting Standards (IAS), in particularly with regard to deferred taxes and provisions for pensions. 31.8 30.2 31.5 30.0 28.3 28.6 28.7 24,074 24,860 25,927 26,448 27,325 27,980 31,843 826 968 1,019 1,304 1,176 1,232 1,360 16.2 15.6 15.2 17.2 15.9 15.1 14.3 377 497 548 634 516 427 532 256 288 305 340 354 377 439 Value through Innovation Our vision drives us forward. It helps us to foster value creation through innovation throughout our company and to look to the future with constantly renewed commitment and ambition. The Shareholders’ Perspective of the importance of our employees, and our long-term thinking and commitment. Our strength is founded on our stability. As a The importance of family-owned companies in family-owned company, we can transform the Germany is repeatedly given prominence in the parameters mentioned above into a well- public debate over significant economic policy balanced strategic approach along with a market- issues, for instance, regarding the labour market orientated growth strategy. We are not under situation or taxation policy. Family-owned pressure from the short-term demands of companies represent a peculiarity in the German anonymous investors or the capital market. system. Of the 50 largest European companies of this type, more than half come from Germany. This does not, however, mean that we do not comply with standards and norms that apply to The results of investigations lead to the conclu- companies listed on the stock market. In this sion that such companies are, in terms of both respect, we share the approach of those compa- revenues and earnings development, more than nies perceiving themselves as Good Corporate competitive compared with companies listed on Citizens. Social commitment, openness and the stock exchange. Looking into the reasons for transparency are of utmost importance for us. this, you find features like long-term orientation The principle of sustainability – applied to the combined with higher attention to risk, personal long-term, stable development of the company’s commitment of the owners as well as a strong value, applied to the selection and targeted employee focus. These aspects also apply to promotion and fair treatment of our employees, Boehringer Ingelheim, which serves as a positive and applied to environment-friendly and socially- example with its successful business and orientated economies – is reflected in our corporate development. Leitbild, the guiding principles for our corporate behaviour. For us, sustainability is the basis of We are frequently described as a company that stability and success. is “different” to its competitors. What is meant by that? The criteria which mark us out and Our company is growing dynamically. Indeed, in form Boehringer Ingelheim’s identity are our the last few years, it has clearly outpaced average orientation towards values, such as reliability growth of the pharmaceutical market. In 2005, and predictability, the close alignment with the the successful development continued once needs of patients and physicians, the awareness again. Once more we are in the top ranks of the pharmaceutical companies with the strongest growth. We have succeeded in providing new therapeutic options for our patients with a row Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 of innovative medications. Our expectations for In spite of such limitations, 2005 was once again 2005 have been achieved or were exceeded in a a successful business year. The Shareholders and whole number of areas. On all of these grounds, the Board of Managing Directors of Boehringer the Shareholders of Boehringer Ingelheim are Ingelheim took or prepared the decisions to very satisfied with the course and results of the achieve the goals we have set in close coopera- business year. tion and coordination with the Advisory Board. The decisions concerned the company’s Nevertheless, we must not ignore the potential strategic direction, important business matters or risks the pharmaceutical industry is facing. decisions on capital expenditure. Developing new, innovative medicines is a In regular joint sessions, the Advisory Board, protracted and expensive process. Only a few the Shareholders’ Committee and the Board of research approaches end up as new medicines Managing Directors have discussed the short and make it to market approval. The healthcare and medium-term development of the company policy environment in most countries, which is and the necessary decisions entailed. afflicted with ever-increasing uncertainties and continuously deteriorating, represents a The Shareholders of Boehringer Ingelheim thank considerable burden for our industry. For capital all employees, the Board of Managing Directors expenditure creating new jobs or developing and the Advisory Board for their successful work innovative medicines, we win many public and commitment in 2005. The path Boehringer plaudits. Sadly, these fine-sounding words are in Ingelheim has taken as an independent family- reality not often followed by corresponding owned company also promises us growth and deeds. success for the future. Instead of strengthening the power to innovate – for which an appropriate risk premium is a Dr Heribert Johann pre-condition, that is to say, reasonable prices Chairman of the Shareholders’ Committee and adequate protection of innovations against imitation – the precise opposite is happening. Prices are being forced down, reimbursement opportunities restricted and parallel imports encouraged. In our opinion, supporting economic progress in combating disease looks different. When making future investment decisions we will also have to take such aspects into consideration. The Shareholders’ Perspective Key Aspects of 2005 position No. 14 worldwide in terms of sales, with a market share of 2 %. We are a research-driven pharmaceutical Strong international brands company that invests about 18 % of net sales of In 2005, our net sales rose by around 17 % to EUR our Prescription Medicines business every year in 9.5 billion. Currency effects played a secondary the research and development of medicinal role compared with previous years. products. Our goal is to serve mankind through research into different diseases and to create the Our growth was primarily driven by our pre- drugs and therapies to treat them. This principle scription medicines products. spiriva®, for the guides all our business activities. Our success treatment of chronic obstructive pulmonary to date and our future prospects are measured by disease, and mobic®, for the treatment of arthri- the degree of innovation of our new medicines tis, both passed the blockbuster threshold of now available to patients and by the innovative more than USD 1 billion annual net sales. potential of our product pipeline. We are proud micardis®, our product for the treatment of that in 2005 four million of patients worldwide hypertension, and sifrol®/mirapex®, to treat affected by chronic obstructive pulmonary Parkinson’s disease, were significant growth disease could benefit from our spiriva® and live drivers too. flomax®/alna®, our drug for benign a better life. prostatic hyperplasia, also contributed to the successful sales development. For some years now, Boehringer Ingelheim has been one of the fastest-growing companies in the To measure our development in financial results pharmaceutical industry. In 2005 again, we is one thing. But of ultimate importance for us maintained a fast pace of dynamic growth. is the benefit we offer to the millions of patients According to the market analysts IMS, employed whom we have supported with our above by all pharmaceutical companies, we achieved mentioned drugs and for people infected with the strongest growth of the top 20 pharma HIV. Since it was first introduced in 1996, we ceutical companies. We also outpaced the have helped a million patients with our drug average for the pharmaceutical market in all viramune®. And the success of our viramune® major regions of the world. This takes us to Donation Programme to prevent the mother-tochild transmission of HIV in developing Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Members of the Board of Managing Directors: Dr Hans-Jürgen Leuchs Dr Andreas Barner Dr Alessandro Banchi Prof. Marbod Muff (from left to right) countries since 2000 encourages us to put even We also market our own biotech products, greater emphasis on our efforts to create value metalyse® (heart attack) and actilyse® (stroke). for patients and society. The launch of our new Our overall biopharmaceuticals business, HIV drug aptivus® in 2005 is thus another step which grew by 40 % in 2005 to EUR 548 million, towards fulfilling our commitment to ‘Value is expected to play an increasingly important through Innovation’. role in combating many major and developing diseases. Prescription Medicines, by far our largest business area, accounting for 76 % of total net sales, Our Animal Health business, which accounts for increased its turnover by more than 17 % to 4 % of our net sales, has also grown above the total EUR 7.2 billion. The share of our product market average in recent years. In 2005, sales portfolio which still enjoys patent protection or rose by almost 8 % to EUR 361 million. exclusivity rights rose to 59 %. Our other business areas also achieved signifi- A key factor for Boehringer Ingelheim’s sustained cant growth. In Consumer Health Care (CHC), success is our well-distributed presence in all our self-medication business, net sales rose important world markets. Our products are sold by 8.5 % to almost EUR 1.1 billion. This was in some 150 countries. The USA, again by far mainly attributable to our flagship brands and the most important market in 2005, generated leading products in the cough & cold and gastro 36 % of our total net sales. Our US sales grew intestinal indications, such as bisolvon®, by 17 % to EUR 3.4 billion. Japan (+8 % to EUR mucosolvan®, dulcolax® and buscopan®. 1.2 billion) and Europe (+19 % to EUR 3.1 billion) In addition, pharmaton®, our well-established also posted excellent development. Europe as a international brand for the improvement and region contributed 33 % of our total net sales. maintenance of vitality and well-being, held the second strongest position in our CHC product The healthy business development of the past portfolio. business year led to a 40 % rise in operating For some years, Boehringer Ingelheim has EUR 1.9 billion and reflecting an operating been one of the world’s largest manufacturers margin of more than 20 %. income (broadly comparable to EBIT), totalling of biopharmaceuticals for industrial customers. Key Aspects of 2005 Our successful business activities go hand in Outlook hand with increasing effectiveness in cost The gratifying development of our business in management through all areas of the corporation. 2005 reflects the strengths of our company. Cost-effective pharmaceutical manufacture is However, yesterday’s successes are today’s history one of the key factors in attracting new partners and the way ahead is uphill. The pharmapolitical for third-party manufacture. measures in a number of important countries, starting with Germany, pose an increasing Patented drugs or drugs with exclusivity con- barrier to innovation and to patient’s access to tinue to drive our growth. Our product pipeline new and better therapies. Developing medicines includes a number of promising substances is a lengthy, costly and risky process. Short patent in major indication areas such as respiratory, lifetimes, frequent regulatory interventions, cardiovascular and inflammatory diseases, rigorous price containment measures and fierce virology, urology and CNS. In addition, good competition make it all the more difficult to progress was made with development candidates guarantee the financial basis required for R&D. in oncology, metabolism and immunology. Our areas of research are divided across the four main We once again expect to grow faster than the research sites in Germany (Biberach), Austria pharmaceutical market in 2006, although we are (Vienna), the USA (Ridgefield) and Canada unlikely to match the growth rates posted in (Laval), in line with their defined key areas. 2005. mobic®, for example, is expected to face In addition, our activities and projects are competition of the first generic versions in the supported by strategic alliances and in-licensing USA in 2006. However, our product portfolio of new technologies. In 2005, we moved various contains numerous branded medicines with candidates into predevelopment and develop- medium to long-term patent protection which ment with promising prospects for the future. still have significant potential for growth. We are also pleased to have a number of interest- In a continued move to support this strong ing drug candidates for various indications growth, we took the opportunity to increase our in our promising pipeline. All in all, Boehringer manpower by 5 % to total 37,400 employees in Ingelheim is optimistic about the future. the past year, mainly in the USA, Germany and Spain. Dr Alessandro Banchi Dr Andreas Barner Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Dr Hans-Jürgen Leuchs Prof. Marbod Muff Shareholders’ Committee Advisory Board Board of Managing Directors Dr Heribert Johann Prof. Michael Hoffmann-Becking Dr Alessandro Banchi Chairman of the Attorney at Law, Düsseldorf Corporate Board Division Shareholders’ Committee Chairman of the Advisory Board Chairman of the Board Albert Boehringer Dr Rolf-E. Breuer Christian Boehringer Chairman of the Supervisory Board Corporate Board Division Pharma Marketing and Sales Deutsche Bank AG, Dr Andreas Barner Christoph Boehringer Frankfurt (Main) Vice-Chairman of the Board Ferdinand von Baumbach Prof. Fredmund Malik Hubertus von Baumbach Dr Mathias Boehringer Chairman of the Board Managementzentrum St. Gallen Holding AG Prof. Axel Ullrich Director of the Max Planck Institute for Biochemistry, Martinsried Dr Heinrich Weiss Chairman of the Board SMS AG, Düsseldorf Corporate Board Division Pharma Research, Development and Medicine Dr Hans-Jürgen Leuchs Corporate Board Division Operations Corporate Board Division Animal Health Prof. Marbod Muff Corporate Board Division Finance Corporate Board Division Human Resources Key Aspects of 2005 Our caring culture The caring culture to which Boehringer Ingelheim has been committed for well over a century embraces a broad range of stakeholders from our patients, our employees and their families through neighbouring communities and society at large to our natural environment. Corporate responsibility as practised by our company takes many forms. Of paramount importance for us are the needs of our patients. It is the quest for innovation and medical breakthrough which drives all our activities. We understand that the importance of our company directly depends on the value of the therapies which we can present to those in need of medical help. And we fully grasp the central role of our employees in all our endeavours. Boehringer Ingelheim has been always regarded as an excellent employer. From the very beginning, it has focused on providing employees with an attractive place to work, a place in which they feel their contribution is fully recognised and properly rewarded. But our sense of responsibility does not stop there. It has always reached out far beyond our factory gates and today addresses many issues of a truly global nature. Boehringer Ingelheim complies with the intention and basic principles of corporate governance and corporate social responsibility as proposed by international organisations, such as the United Nations (UN), the World Health Organization (WHO), the Organisation for Economic Co-operation and Development (OECD) or the European Union (EU). We regard ourselves as a good corporate citizen in all countries in which we operate, or where our products are available. We fully comply with the principles set out in the Global Compact in 1999 under a United Nations initiative. Such principles are already fully integrated into our business activities around the world and guide our strategy, corporate culture and day-to-day operations. Our aim is to provide full transparency concerning our business and corporate conduct within the framework of our annual report and other publications. In order to sustain our corporate responsibility, we depend on our business success, driven by product innovation and the morale of our people. Photo: Young tsunami survivors gather at new school-cum-village hall in Krueng Raya, Indonesia, supported by Boehringer Ingelheim. Our caring culture Our commitment We have committed ourselves to the goal of serving mankind through research into diseases and the development of new drugs and therapies. In this endeavour the future of the Corporation will depend on its innovative capability. Boehringer Ingelheim strives for medical breakthroughs and invests heavily in research, development and medicine for therapies which fulfil unmet medical needs. In improving access to anti-AIDS drugs, Boehringer Ingelheim strives to facilitate the Boehringer Ingelheim acknowledges its special access to life-saving nevirapine. Five voluntary responsibility as a research-driven pharma licenses to manufacture and market generic ceutical company in the war on the pandemic. nevirapine have been granted to companies in It is engaged in wide-ranging initiatives to South Africa, Nigeria, Egypt and Kenya. combat AIDS. The company has increased efforts Moreover, as a founding partner of the Accelerat- in HIV/AIDS research, in supplying anti-AIDS ing Access Initiative (AAI), Boehringer Ingelheim drugs free of charge to treat the transmission of offers developing countries considerable dis- the disease from mother-to-child during birth, counts in order to enable access to viramune®. or providing them at substantially reduced prices to developing countries for chronical treatment. Some 6,000 of Papua New Guinea’s 5.3 million It has furthermore increased its activities supply- inhabitants are infected with HIV and the infec- ing knowledge and training and supporting tion rate is 1,000 per year. Very few infected philanthropic initiatives via its affiliates in areas people go to healthcare centres so the figures are strongly affected by HIV/AIDS. likely to be vastly underestimated. Apart from the viramune® Donation Programme, Boehringer Since 2000, Boehringer Ingelheim has given free Ingelheim in partnership with other pharmaceu- access to single-dose viramune® (nevirapine), tical companies, the Catholic Aids Office, the to be used alone or in combination with other Australasian Society for HIV Medicine (ASHM) drugs, to prevent mother-to-child transmission and the government of Papua New Guinea of the HI virus during birth. The company (PNG), have designed and implemented a pilot currently donates the product to some 140 project to train healthcare workers under the programmes in around 60 countries in Africa, auspices of the Collaboration for Health in Papua Asia, Latin America and Eastern Europe. In total New Guinea. some 700,000 mother and child pairs have been treated so far. Unlike other programmes, this model used a multi-disciplinary approach to train teams of healthcare workers rather than doctors only. 10 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Uganda has made strong progress in reducing the prevalence rate of HIV. The key to this success has been public openness, at all levels of society, in addressing the issue. Here, people living with HIV in Uganda demonstrate their support for treatment at the opening of a free AIDS clinic in Masaka, close to where the pandemic is thought to have begun. The teams consisted of physicians, nurses, Among other initiatives was the Student counsellors, social workers and technicians Education Programme in collaboration with the working in healthcare centres. Topics covered in University of Cape Town, South Africa, which workshops included basic infection control, provides full financial support from Boehringer infection prevention, record keeping, diagnosis Ingelheim for medical students from disadvan- and management of opportunistic infections. taged backgrounds. The Boehringer Ingelheim Lung Institute at the same university has been set The collaboration for Health in PNG is an initia- up as a centre of excellence to support clinical tive of a group of pharmaceutical manufacturers trial activities in the country with research committed to the treatment and care of people facilities in infectious and respiratory diseases. living with HIV/AIDS. In 2005, the Boehringer Ingelheim Training and Facilitation Unit was opened in Botswana. Addressing infrastructure needs As improving access to treatment remains seriously limited in many developing countries due to local structural problems in healthcare, Boehringer Ingelheim has also engaged increasingly in projects to improve education and relevant infrastructure. In addition to donation and increasing access to drugs, the company continues to explore ways to partner governments and NGOs to improve healthcare in developing countries. Initiatives the company has already undertaken in South Africa include the “Turning the Tide” programme of training and education for health professionals in HIV and its management. This has been extended into Swaziland and Botswana and now reaches over 1,000 healthcare workers. In 2005, Boehringer Ingelheim opened discussions with healthcare organisations in Uganda with a view to possibly replicating schemes which have been successful in other parts of Africa. Our commitment 11 For our neighbours We are fundamentally committed to fostering economic and social wellbeing in the countries and communities where we operate. Working together as a corporate entity and as individuals using their own time, we seek in a people-orientated and inspirational way to deliver value through innovation in all we do. We contribute actively to communities, charitable organisations, research, science, education, healthcare, environmental protection and cultural projects. As 2005 began, the world was becoming aware of The company made substantial donations the enormous scale of the devastation wreaked through its international and local organisations by the tsunami that struck Southeast Asia. to aid agencies involved in the 2005 disasters, People from our operation in Indonesia reacted the Asian tsunami and the devastating earth- immediately, sending donations of clothes, quake that hit Kashmir in October. In response food, medication and toys to the Aceh region of to the hurricane Katrina disaster in September, Sumatra. A crisis team made up of volunteer the company’s US organisation also funded a free employees also went to Aceh to see how best to mobile clinic to treat people in New Orleans in further support the local population. addition to making financial and product contri- Among the displaced in Aceh were more than relief efforts in the USA and elsewhere. butions through MAP International to disaster 150,000 children, many traumatised by the disaster. The company crisis team therefore Our people taking the initiative decided to fund the construction of a trauma Our wide range of charitable activities in the centre, which also serves as a school and village USA heavily involves volunteering by employees. hall in Krueng Raya village. Aksari Ibnu, who A “Day of Caring” sponsored by the company, co-headed the Boehringer Ingelheim Indonesia gives employees at our Ridgefield, Connecticut, tsunami task force, commenting on the school USA, site the opportunity to volunteer for tasks opening in July, said: “The smiling faces of young to help the aged and deprived. In many ways, children and the people of Krueng Raya was a from decorating homes to reading to children at huge reward for our team who had all dedicated day care centres. Our US employees also partici- themselves to this worthwhile project.” pate in numerous sponsored events to raise funds for good causes. At our Roxane, Ohio, USA, site employees help the Salvation Army buy and distribute Christmas presents for poor families. 12 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Employees at Boehringer Ingelheim Portugal volunteered to build houses for two families in need in Braga in the north of the country in association with the humanitarian organisation Habitat for Humanity. Miguel Moreira, Area Manager for Prescription Medicines in Portugal, an active volunteer, said: “I am very proud that the company where I work shares the same concern: helping the ones most in need.” In the Philippines, our employees stepped in to In Colombia, we not only contribute to health- help families made homeless when their shanties care and schooling for people in our immediate burned down at Baseco Compound in Tondo. community, but also support two foundations: Not only did the employees donate funds to build the Padre Luna Farms, which help battered eight new row houses for the homeless, they also children and teach agricultural labourers; and helped with the construction work in their free Fundafidro, an organisation working with health- time. The homes, built in cooperation with an related issues in deprived neighbourhoods. organisation dedicated to eradicating homelessness, were handed over to their new occupants in Despite the extraordinary challenges of the June. tsunami disaster, Boehringer Ingelheim Indonesia succeeded in October in continuing its Promoting equal opportunity established community-awareness programme, In Latin America, the company has a long, giving general medical treatment to hundreds of solid tradition of charitable activities. In Brazil, needy people near the company’s Bogor plant as Boehringer Ingelheim launched a two-year social well as fostering educational improvement. responsibility programme, “Conectar”, directed at disabled people to help them prepare for jobs market (many have never been employed). An employment assistance programme in the favelas of São Paulo is another example of how we actively promote fairness and equal opportunity. The company’s human resources professionals, voluntarily and in co-operation with those of other organisations, provide youngsters with poor prospects hands-on training and support in employment counselling, identifying ways to move forward and ensuring professional and emotional back-up. In Venezuela, the company gives training to the doctors at the respiratory care centres in Chacao neighbourhood and the Hospital Pérez de León in Caracas. The hospital also receives free medicines and equipment. For our neighbours 13 For our people To achieve our corporate objectives we deploy flexible, mobile, self-confident employees prepared to accept responsibility and capable of thinking and acting globally. Our internal principles guide employee selection and assessment. To attain continuous innovation in all we do, we apply our employees’ and managers’ creativity, capability, commitment and willingness to learn and change. The Corporation in this regard delegates responsibilities to employees and acknowledges their success, performance and commitment in meeting agreed goals. Remuneration and classification are based on the task, performance, achievement and competitive comparison. Successfully pursuing our vision, Value through large number of apprentices in our extensive Innovation, calls for the dedication, passion and vocational programmes has won widespread continuous powers of renewal of our more than praise as a powerful encouragement to the labour 37,000 employees. They are our unique source of market. strength and inspiration. Great place to work Our persistent, combined efforts and resulting We are proud of the attractive working environ- achievements in pharmaceutical innovation have ment that we have created and the status that we enabled us to maintain growth and create new enjoy as a preferred employer. Authoritative, jobs. In many countries we have generated a independent workplace surveys in many coun- significant volume of employment opportunities, tries have confirmed our position among the top led by the USA, with a total of 1,000 new jobs. companies in this area so vital to recruiting and The increased employment prospects we offer maintaining high quality employees (see box on have been greeted extremely favourably in page 17, list of awards). countries where lowering unemployment is a Such positive recognition of our company as national challenge. a great place to work spurs us on to enhance On employment, Boehringer Ingelheim has Ever responsive to the changing needs of our our distinctive company culture still further. received numerous accolades. In 2005, we were employees, we at the same time call for everyone awarded first price in “Arbeitsplätze absolut” for to be personally engaged in improving our being the company which generated the highest working environment at the heart of which are number of new jobs in Germany. We also gained mutual respect, fairness, openness and space for considerable public recognition in Germany for both personal and professional development. continuing to increase the number of apprenticeships which rose from 623 to 698. The relatively 14 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Teamwork is a key element of Boehringer Ingelheim’s corporate culture. In Istanbul, our Turkish employees are here celebrating the 2005 launch of Lead & Learn with its implications for improved teamwork. Development opportunities International assignments are an integrated part Our aspiration to continuously innovate requires of our succession planning process and our firm commitment from everyone in the company. business and capability development. Ongoing dialogue between our employees and their supervisors is also essential to allow all Our international assignees represent a large parties to participate in our achievements and number of our organisations and are uniformly development. And our ability to progress coher- distributed throughout our geographical regions. ently towards realising our vision by developing While the focus groups and purpose of the and leveraging the immense diversity within the assignment might differ from strategic positions company is pivotal to our success. to development measures or knowledge transfers, Our annual employee – supervisor dialogue these moves serve clearly as a vehicle to enhance (Mitarbeitergespraech – MAG) is at the core of cultural understanding and broadening a global our performance and development culture. mindset. Engaging and stretching performance objectives are mutually agreed and career aspirations and The Boehringer Ingelheim Academy, encompass- perspectives for professional development are ing a variety of development courses and addressed. Every individual is expected to have a approaches in numerous countries, is designed to valid and forward-looking development plan to support and strengthen our core values and meet the qualification needs of our rapidly capabilities. Everyone at the company can access changing business and work environment. local and international development information Career aspirations and prospects are also embed- on our intranets. The Boehringer Ingelheim ded in our global succession planning process. Academy offers a wide spectrum of options from Here we seek to guarantee a strong pipeline of vocational subjects to leadership development leadership talent for local and international key programmes. positions. Talent reviews linked to the succession planning support the identification and development of leadership talent across the corporation. Personnel costs in millions of EUR Personnel costs as % of net sales Number of employees (incl. apprentices) 2005 2004 2003 2002 2001 2,671 2,443 2,252 2,175 1,916 28.0 29.9 30.5 28.7 28.6 37,406 35,529 34,221 31,843 27,980 For our people 15 A key benefit for many employees is the provision by the company of day care facilities for their children. Here, (left) toddlers enjoy a meal at the kindergarten in Ingelheim, Germany, set up in cooperation with the local community. In the US, construction of the Child Development Center on the Ridgefield, USA, campus is in full swing. We foster good leadership at all levels. Carefully The way we work together tailored local and international development From the mid-1990s, our corporate culture has approaches are applied to help our current and built on our vision Value through Innovation potential leaders to discover ways to create a (VTI), which has given direction to all our activi- context in which our people can excel and all of ties. An annual VTI Day brings our organisations us can continuously enhance our outcomes. together to celebrate our achievements in line with our vision and encourages and inspires our Our third consecutive International Management employees to participate in realising it in practi- Development Programme, launched in 2005, cal ways. marked the beginning of 14 months of international, interdisciplinary learning and working for Value through Innovation has guided and will some 100 potentials. The programme involves continue to guide our way of working together. It participants in hands-on work on 14 strategically helps us build on our strength and make the most relevant projects, close professional mentoring of our distinctive character, enabling us individu- and frequent exposure to senior management in ally and collectively to achieve great success. various countries. In 2005, Lead & Learn was introduced to outline Benefits ways in which we can enhance our culture of Our benefits programmes, which vary from working together to realise and deliver Value country to country, include, amongst others, through Innovation. The core principles of Lead retirement benefits, health coverage, insurance & Learn encourage increased questioning and cover, company restaurants, kindergartens, child- seizing opportunities while fostering a culture of care centres and access to a variety of personal shared leadership and learning. and family support services. VTI teams that fairly represent the diversity of Numerous additional initiatives and programmes our employees, together with our line manage- are available for our employees and their fami- ment, have commenced their challenge to lies. These include international clubs, our Inter- explore and realise complementary new ways to national Cultural Student Exchange programmes, support our aspired cultural development local internships for family members and sum- throughout the corporation. mer camps for children. 16 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Awards 2005 Country Ranking Survey Austria 13 Great Place to Work Belgium 11 Great Place to Work Brazil < 150 Great Place to Work: The best companies to work for in Brazil Brazil Brazil Denmark Germany Germany Germany Netherlands Mexico United Kingdom USA (Roxane) Great Place to Work: The best companies to work for in Latin America < 50 Great Place to Work: The best companies to work for women 11 Denmark’s Best Place to Work 1 Germany’s Best Employers (VAA) 15 Germany’s Best Employers (Capital) 2 Germany’s Best Employers with more than 5,000 employees (Capital) non given The 49 Preferred Employers in the Netherlands 8 Great Place to Work 19 100 Best Companies to Work for (Sunday Times) 9 Business First Places to Work in Central Ohio “Great Place to Work”®, USA, is an international initiative that has been undertaken for many years in various countries to evaluate the world of work and employee satisfaction. For our people 17 For our environment In all our activities we will protect our employees, the facilities and the environment from harmful influences, conserve natural resources and promote environmental awareness. These tenets, which are firmly established in our examples show that we accept responsibility for guiding principles (Leitbild) and formulated in our products and attach great value to EHS, our Principles on Safety, Quality and Environ- not only at our own plants but also at those of mental Protection, are put into practice through our business partners. systematic environmental protection, health and safety (EHS) management. Global standards Climate protection are defined and enforced wherever they are In the wake of disasters, such as those caused indicated. Goals are set annually, while our by the hurricanes Wilma and Katrina in 2005, EHS status is checked regularly by Corporate the subject of climate protection moved to centre- Headquarters. In 2005 alone, this involved stage in public debate. twelve audits at various sites. Every plant undertakes to set up a local management system By converting the power station at our Ingelheim and is free to have this certified or not. For fur- site to burn a renewable source of energy, waste ther details of our EHS management please visit wood, Boehringer Ingelheim has already made www.boehringer-ingelheim.com/ehs. an active contribution to improving the carbon dioxide (CO2) balance. Compared with the two With our declared support for the concepts of the Responsible Care® Initiative of the chemical industry, we have undertaken to exceed the minimum legal requirements wherever we consider it appropriate. Consequently, each site draws up its own programme for continuous improvements in the EHS field. Work accidents ■ Frequency rate = accidents x 1 million hours / total labour hours ■ Severity rate = lost labour days x 1 million hours / total labour hours 80 Frequently it is not only our employees and the 70 environment that benefit, but measures taken 60 can also have an economic impact, as illustrated 50 by the example of our wood-fired power station 4 in Ingelheim, Germany, described below. Other 3 40 2 1 ’01 18 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 ’02 ’03 ’04 ’05 The safety checklist for vehicles carrying hazardous materials to and from company sites is longer as that for a passenger aircraft. Here the tyres on a truck are being examined at the Ingelheim site in Germany as part of the comprehensive checks made before it may leave the plant. previous years, the balance has improved by Another example of our responsible approach to about 60,000 tonnes, or a quarter of the Corpo- climate protection came within the framework of ration’s total CO2 emissions. a programme run by the Swiss national energy A secondary benefit of the conversion has been a authorities in 2003. Our Swiss site undertook to major reduction in emissions of sulphur dioxide, reduce CO2 emissions by 10 % by the year 2010 a contributor to acid rain. and has already met interim goals. In a move to reduce emissions of gases detrimental to the global climate, in accordance with the Pharmaceuticals in the environment Kyoto Protocol, the European Union introduced We are not only responsible for clean production, the Emissions Trading Scheme for CO2 in 2005. but also for ensuring our products have minimal Boehringer Ingelheim has joined this scheme. impact on the environment. Our heating power station in Ingelheim was issued trading certificates on the basis of the An environmental risk assessment is now emissions in 2000–2002. Following the switch required when registering new products. This is to wood, a CO2-neutral power source, we can prepared on the basis of studies on environmen- now trade any certificates that we no longer need. tal impact and ecotoxicological effects. We also This project has allowed us to pursue both assess the environmental data for products ecological and economic goals at the same time. already on the market and, where necessary, run further voluntary studies to assess the ultimate impact. Energy ■ Energy consumption (in millions of gigajoules) ■ Energy consumption index (in %) Water ■ Water consumption (in millions of m3) ■ Water consumption index (in %) 120 140 100 120 80 10 60 100 5 8 4 6 3 4 2 2 1 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 For our environment 19 Assessments to date show that our substances Incidents present no risk to man. Our local and global crisis management allows us to react rapidly to potential incidents. Business partners No major incidents occurred in 2005. Our EHS management system guarantees that all Boehringer Ingelheim sites satisfy set require- Our performance ments and make constant improvements. The graphs show the EHS performance figures However, we also attach great value to ensuring for the last five years. that our business partners likewise meet our expectations in terms of EHS, while satisfying Performance in the field of safety at work is minimum requirements, in order to ensure the measured by the number of accidents and their continuity of our own business. For this reason, rate adjusted for the number of employees. we increasingly check EHS aspects as well as As can be seen from the graph (page 18), the rate quality during qualification of suppliers and of accidents has fallen again since 2004. contract manufacturers. Our environmental impacts are shown both Awards as absolute values and relative to production – In 2005, a number of sites were again awarded represented in our production index. The index prizes by external agencies for their efforts in represents our overall production in all business EHS. For the 6th time running, our site in areas and is weighted to compensate for differ- Colombia won an award for its excellent contri- ences in environmental impact. Our baseline year bution to long-term development. The local is 1995. Since 2005 the figures include the values agencies awarded the site in Toride, Japan, a for the company microParts, Germany, which prize for its exemplary efforts in the storage of was acquired in 2004. They do not include hazardous goods and fire safety, while the site in SSP Co., Ltd. , Japan, which has also not been Petersburg, Virginia, USA, was given an award included in previous years. for its modern wastewater treatment plant. Our French chemical plant received first place Over the last few years, most indicators have in a countrywide external safety audit conducted reached a relative stable level because many prior technical or organisational improvements to international standards. resulted in a high performance standard. This is Carbon dioxide (CO2) ■ CO2 by energy purchased (in 1,000 tonnes) ■ CO2 by process emissions (in 1,000 tonnes) ■ CO2 emissions index, direct emissions (in %) (without company car park) Volatile organic carbon (VOC) ■ VOC emissions, non-halogenated (in tonnes) ■ VOC emissions, halogenated (in tonnes) ■ VOC emissions index (in %) 120 80 100 60 40 80 500 60 400 800 300 600 200 400 100 200 ’01 20 1,000 ’02 ’03 ’04 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 ’05 ’01 ’02 ’03 ’04 ’05 reflected clearly in the respective indices com- nitrogen removal by improving the nitrification/ pared with 1995. The production-adjusted denitrification process, and will also target the amount of pollutants in wastewater produced specific halogen-containing wastewater which has been reduced by 60 %, solvent emissions can be difficult to treat when using only conven- (volatile organic hydrocarbon – VOC) have been tional technology. halved and water consumption lowered by a quarter. Our recycling rate has stabilised at a very Our chemical sites in Malgrat, Spain, and high level of about 80 %. Many of our ongoing Fornovo, Italy, are seeking to have their environ- efforts are therefore no longer reflected as mental management systems certified in 2006 clearly as in earlier years. For a more detailed in accordance with ISO 14001. explanation of the individual graphs, please visit www.boehringer-ingelheim.com/ehs This report only mentions some of the activities Our goals Please visit the internet for further details about We are aware that there is further potential for our product responsibility, the safe handling optimisation in terms of solvent emissions (VOC) of highly potent substances in production and into the air. We are making changes at our chemi- other examples of our many safety activities. cal site in Spain, where VOCs will be eliminated www.boehringer-ingelheim.com/ehs we engage in to fulfil our responsibilities. in future through thermal oxidation rather than by scrubbing with aqueous media. In Ingelheim, Germany, too, additional plants are to be connected to the existing incinerator. Our goal for 2008 is to reduce VOC emissions by at least 50 %. Our wastewater treatment plants are already performing on a very high level. To maintain and further improve this level and to adapt to increasing loads, we started a major investment in our Ingelheim wastewater treatment plant. An additional state-of-the art treatment step will make the process more effective, will increase Disposed waste ■ Domestic waste (in tonnes) ■ Hazardous waste (in tonnes), incl. pharmaceutical waste ■ Disposed waste index (in %) ■ Recycling rate (in %) Wastewater — chemical oxygen demand (COD) ■ COD load before treatment (in tonnes) ■ COD load after treatment (in tonnes) ■ COD load (after treatment) index (in %) 80 100 60 90 40 80 20 70 8,000 20,000 6,000 15,000 4,000 10,000 2,000 5,000 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 For our environment 21 22 Our R&D drive Holger Pfister has been treated with almost all of the 22 currently available HIV drugs. “But my doctors never managed to bring my viral load under the detectable limit,” says Holger. The viral load, the number of virus particles in the blood, measures a person’s HIV / AIDS status. Owing to the failure to treat Holger’s virus effectively, it has become resistant in his body to almost all AIDS medications. Resistance is a very serious HIV issue. In 2003, Holger took part in the resist clinical study for Boehringer Ingelheim’s novel protease inhibitor (PI) aptivus® (tipranavir). “Since then I’ve been under the measurable limit for the first time ever,” he says. Continuing the treatment, he is in good mental and physical health. Professor Schlomo Staszewski from Frankfurt university, a leading AIDS expert and the first person in Germany to hold a professorship in HIV infections, hails aptivus®, launched in the first markets in 2005, as “the most efficacious protease inhibitor so far”. And it is not just a question of efficacy. “Tipranavir is the largest antiretroviral development to date,” says Dr Paul Carter, who coordinated the project at Boehringer Ingelheim. “This project has clearly shown that our closely integrated development network, which links our R&D centres around the world, together with our well established interactions with clinical investigators, gives us access to all the capabilities necessary to achieve successful and timely development of even the most challenging drugs,” he notes. In only five years, tipranavir was taken from a promising candidate to a potent new drug. Tipranavir, in-licensed in phase II development from the former Pharmacia-Upjohn in 2000, is a non-peptidic PI. It works by inhibiting protease, an enzyme needed to complete the HIV replication process. Based on available clinical and in vitro data, tipranavir is active against most strains of HIV-1 that are resistant to commercially available protease inhibitors. Tipranavir does not cure HIV infection/AIDS or prevent the transmission of HIV to others. What it importantly offers is a treatment that benefits patients with limited therapeutic options. Our R&D drive 23 Since Holger Pfister was diagnosed with human immune deficiency virus (HIV) infection in 1986, he has been fighting AIDS (acquired immune deficiency syndrome). “I am one of the few who survived,” he says. AIDS drug resistance — a big issue The resist programme examined the treatment Since the initial detection of AIDS in the early response of tipranavir boosted with ritonavir 1980s, viral resistance to drugs treating HIV has versus a comparator group in which patients become a crucial issue. The pharmaceutical received one of several marketed ritonavir- industry has thus sought to constantly develop boosted PIs. The comparator PI was lopinavir, new drugs. To date, a total of over 20 are avail- indinavir, saquinavir or amprenavir. In addition, able. However, the HI virus has proved to be a patients received in both arms a personally very dangerous master of metamorphosis, always optimised background regimen of another finding ways to change its genetic pattern and antiretroviral. thus ward off the attacks of antiviral drugs. The results of the resist studies demonstrated A recent six-year study demonstrated a high that a statistically significant greater percentage prevalence of drug-resistant virus in a European of HIV-positive patients taking tipranavir group of patients under treatment for HIV-1 boosted with ritonavir achieved a treatment infection. Data from the United Kingdom indi- response versus the comparator group (40 % cate that the transmission of drug-resistant virus compared to 18 %). Furthermore, more than is on the rise, with 47 % of patients resistant to at twice the number of patients receiving regimens least one PI. The estimated prevalence of people that contain boosted tipranavir were able to with drug resistant virus in a recent large-scale reduce the amount of HIV in their blood to study in the United States was 78 % (Richmann et undetectable levels than in the boosted compara- al., 2001). For all of HIV infected, new and potent tor group (viral load <400 virus copies/ml blood: drugs, like aptivus®, are a last resort. 34 % compared to 15 %). Patients treated with tipranavir boosted with ritonavir also experi- The RESIST clinical programme enced greater increases in the numbers of their In 2003, the first patients were recruited for the CD4+ immune cells than those treated with a resist pivotal trial programmes. These involved ritonavir-boosted comparator PI (34 cells vs. 4). the most clinically advanced population ever studied and included 1,500 patients with highly However, as with all PIs, tipranavir boosted with resistant virus in 270 hospitals in 21 countries. ritonavir was also associated with side-effects, Recruitment was completed in just eight months. such as diarrhoea, nausea and vomiting as well as increases in liver enzyme and lipid levels. 24 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 The development of effective treatments for viral infections, such as human immunodeficiency virus (HIV), presents a significant scientific challenge. A researcher studies an HIV-infected T lymphocyte cell on-screen. T cells, a type of white blood cell, are important for protecting the immune system against viral infections and are a prime target for the HI virus that causes a reduction in the number of T cells. New data presented at the 10th European AIDS A key indicator for Boehringer Ingelheim’s Conference in Dublin demonstrate that through strength in R&D is the ratio of products still 48 weeks, aptivus® provides a convincing and patented or under exclusivity protection to durable benefit, achieving and maintaining a our net sales. It rose to 59 % in 2005. superior treatment response in patients with resistant HIV. A large number of further clinical Speed and efficiency are key to successful studies with tipranavir boosted with ritonavir pharmaceutical development projects, as novel are currently running or planned to start in the medicines that bring real benefit in terms of near future. Some of these are designed to inves- health and well-being are taking longer and tigate tipranavir’s safety and efficacy in other longer to get to the market. And more time adds patient populations such as children, women, further expenditure to the enormous cost of patients co-infected with hepatitis B or C and developing modern medications. naïve (previously untreated) patients. This range of studies demonstrates Boehringer Ingelheim’s Our R&D expenditure in 2005 amounted to continuing commitment to fully understand the 18.2 % of our net sales in Prescription Medicines, profile of aptivus®. indicating the extent to which a modern researchdriven pharmaceutical company has to invest Our development strength in discovering and developing new products, aptivus® is not the only AIDS drug to emerge or extending the life and indication coverage of from our development programmes. The now existing drugs in its portfolio. widely-used antiretroviral agent nevirapine (viramune®) is a product of original Boehringer Ingelheim R&D and was the first member of the non-nucleoside reverse transcriptase inhibitor (NNRTI) class of anti-HIV drugs. In many other indication areas there are also new medications discovered and developed in-house by Boehringer Ingelheim, amongst them tiotropium bromide (spiriva®), a treatment for chronic obstructive pulmonary disease (COPD), pramipexole (sifrol®/mirapex®) against Parkinson’s disease or telmisartan (micardis®) for treating essential hypertension. Our R&D drive 25 ‘HIV is being played down’ An interview with Prof. Schlomo Staszewski Q: Prof. Staszewski, let’s start by discussing AIDS in the new infections in European countries. In 2005, industrialised world. Hasn’t the disease here to a consider- they rose by about 10 %, in Germany, even by as able extent already disappeared from public awareness, much as 20 %. even though it naturally remains with us? What’s your experience with this issue? Prof. Staszewski: AIDS, or HIV infection, is the most dangerous epidemic, and the one with the greatest Q: What’s the reason? Prof. Staszewski: HIV is being played down. Awareness of the therapies and their effects on the consequences, in the latter part of the 20th course of the disease HIV are removed and remote century and the beginning of the 21st century. from the real situation. This we have to correct. According to the World Health Organization, we We must say what kind of disease it is. have more than 40 million infected people. Some three million died of the disease in 2005. In the same year, an additional five million were infected. My criticism of the current trend is also that, content with the possibility of individual therapy, we’ve lost sight of the overall epidemic. People no Most deaths occur in sub-Saharan Africa. AIDS is longer regard HIV as a fatal disease. really a deadly disease there. In our countries nobody needs to die of AIDS any longer. With Advertising by the pharmaceutical industry often the appropriate treatment the progression of the also contributes considerably to glossing over the disease can be halted and patients can be disease. It focuses the HIV disease to the prevented from developing the manifestations industrialised world and shows in its pictures and of AIDS. personal testimonials people who are well. It presents things as though there is no problem The dilemma with AIDS is, on the one hand, its at all. good treatability, and, on the other hand, that it’s 26 the most dangerous infectious disease of our time. Q: A problem in the West is the development of drug- The question is how do we deal with it? resistance. How do we deal with this? Naturally you can gloss over or keep AIDS secret, Prof. Staszewski: if you live in the western world, where patients can enon. In the event of therapy failure or side-effects, receive all the available medications. You can the switch to a tolerable or effective therapy conceal the fact that some things in the world are is more difficult. When resistance has occurred, not in order. You can also see that in the number of you have to switch therapy to combine those Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Resistance is a common phenom- Thanks to new treatments and innovative drugs, AIDS has become controllable in the developed world. Although it is still a deadly disease, HIV awareness has weakened, leading to increasing infection rates. In Mainz, Germany, with the support of Boehringer Ingelheim, a group of teenage schoolchildren put on a play, “Damned positive”, which highlights the dangers of an HIV infection. medications to which the virus is still sensitive. viruses that are resistant to aptivus®. This, one has Here, the right combination is decisive. If we use to know. Because only then it becomes clear that an effective medication in the wrong combination, aptivus® must also be used sensibly. When I use it there is a danger that it will be wasted because of too late, or use it in the wrong combination, resistance developing. I waste the medication. Q: Is aptivus® effective because of the very fact that it can aptivus® has strengths and weaknesses. also be used for patients who are already resistant to many Basically, it has all the side-effects familiar to protease inhibitors. As dosage-related side-effects other medications? Is that its strength? occur, it is a good idea to test lower doses in Prof. Staszewski: That’s currently the most important patients whose disease is less advanced than the indication area for aptivus®, as it is effective dose necessary for the patient with PI-resistent against viruses that have already become resistant virus. This should though at present only occur to other protease inhibitors (ed: PI). But there are within a controlled clinical study. Prof. Schlomo Staszewski • First holder in Germany of a professorship dedicated to AIDS, established in 2003 at Johann Wolfgang Goethe University, Frankfurt am Main • Director of the Out-Patient Clinic for the HIV-infected Patients and the Antiretroviral Research Unit • Principal investigator in several international multi-centre studies with new HIV compounds. Current editor of HIV-Medicine • Executive Committee Member of the European AIDS Clinical Society (EACS) Our R&D drive 27 Our strength in R & D + Medicine Research and Development has been the foundation of Boehringer Ingelheim’s success so far and continues to be the major driver of innovative, new medicines. We recognise the unique opportunities and challenges that medical needs and the health environment present. We have consequently committed ourselves to discovering, profiling and developing new products of high therapeutic value for patients and healthcare systems. New biological entities (NBEs) During 2005, we expanded our NBE discovery We are widely recognised as a world leader in all programme to include some 10 discovery projects, aspects of biopharmaceutical manufacturing, a first step towards a steady stream of innovative from early process development to large-scale NBE therapeutics feeding our development commercial manufacturing in microbial as well pipeline. While our key focus is on human mono- as mammalian expression systems. Combined clonal antibody projects, we are also exploring with our disease expertise in key therapeutic treatment options for cardiovascular and meta- areas, our strategy is to create a comprehensive bolic diseases with optimised bioactive therapeu- NBE programme addressing unmet medical tic proteins (OBTs). In-licensing promising NBE needs in several indication areas, thus expanding candidates is an important complement to our proprietary NBE product portfolio beyond in-house research activities and to this end we actilyse® (first generation t-PA), metalyse® have in-licensed AbGn-168, a humanised (second generation t-PA), imukin® (interferon monoclonal antibody that induces apoptosis of gamma) and beromun® (tumour necrosis factor). activated T cells, from AbGenomics Corporation, Taiwan. AbGn-168 holds promise in delivering In order to fully exploit the synergistic potential long-lasting control of T cell mediated diseases, of our internal capabilities, we have established including autoimmune diseases. centralised expertise in human antibody drug discovery at our research site in Vienna, Austria, Drug Discovery and Non-Clinical Development facilitated by in-licensing of key technologies Insight into the workings of diseases at a from MorphoSys (phage display) and Medarex molecular level is an important prerequisite for (genetically modified mice). We have also identifying promising targets for new drugs. strengthened our protein technology infrastruc- In this context, integrating state-of–the-art ture across research sites and allocated dedicated technologies to enhance the R&D value chain biology resources in key therapeutic areas. is the key to success in pharmaceutical R&D. Despite significant progress in recent years, unmet medical needs continue to be great and growing due to changes in the environment and people living longer. 28 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Laboratory assistants at our Quality & Compliance Department, Biopharmaceutical Manufacture, Biberach, Germany, undertake visual assessment of biotechnically produced proteins using gel electrophoresis. Today, we carry out drug discovery in seven At these sites, pharmaceutical development is major therapeutic areas allocated to four major focused on conventional dosage forms, whereas R&D sites. Our R&D sites maintain strong Ingelheim represents our centre of competence responsibility and accountability for their thera- for developing all inhalative dosage forms. peutic areas locally and deploy their innovation Boehringer Ingelheim has a particular focus on and flexibility. International scientific reviews the development of innovative inhalation devices. and portfolio management ensure a sustainable, handihaler® and respimat® Soft Mist™ Inhaler competitive and risk-balanced discovery portfo- offer us a very competitive platform in inhalation lio. To further strengthen our R&D organisation therapy and meet the challenges of drug develop- we have international skill centres to improve ment in a variety of indications. Added support efficiency and to secure equal access to state-of- on drug formulations and manufacturing clinical the-art technologies and informatics platforms trial supplies is provided by our sites in Kawa for all sites. In Biberach, Germany, our largest nishi and Buenos Aires, Argentina. Our coopera- R&D centre, we concentrate on diseases of the tions with biotech and academic groups provide central nervous system (CNS), metabolic diseases another key string to Boehringer Ingelheim’s and respiratory diseases. Biberach is supported bow in finding and developing innovative medi- by our chemistry laboratories in Milan, Italy. cines. A good example is the strategic research Drug discovery in immunology & inflammation collaboration initiated between our Biberach and and cardiovascular diseases is carried out in Ridgefield centres and Evotec OAI that enabled Ridgefield, USA. Further fully-fledged drug us to establish a novel research platform for discovery centres are located in Laval, Canada, elucidating innovative receptor-based drugs. This carrying out research in virology, and in Vienna, collaboration started on receptor targets involved doing research in oncology. In Kawanishi, Japan, in CNS diseases but now also addresses targets we have an additional centre in molecular cell of potential interest in other therapeutic areas, biology, specialised in membrane receptor targets. such as metabolic and immunological diseases. Our non-clinical drug development activities are The bridge between our R&D people and concentrated in Europe and North America at academia is reinforced by the strong link to the sites Biberach and Ingelheim, Germany, the renowned Research Institute of Molecular and Ridgefield, USA. Biberach and Ridgefield are Pathology (IMP) which we fund in Vienna. conducting the full range of non-clinical development work packages including activities for chemistry, manufacturing and control (CMC) as well as relevant pharmacokinetic and safety studies. Our strength in R&D+Medicine 29 IMP scientists are at the forefront of discovery only poorly controlled by current, widely-used defining fundamental processes of cell division anti-inflammatory drugs, such as corticosteroids. and differentiation in healthy and diseased states. Our research in asthma is aimed at new A collaboration started in 2001 between the IMP mechanisms and immunological paradigms and the Institute of Molecular Biotechnology which would allow us to replace or reduce the Austria (IMBA) added a new dimension to our doses of inhaled steroids by providing anti- academic network. Intensified interactions with inflammatory therapy better tolerated by patients. IMBA began in 2005 in target identification Another goal is to provide a new treatment for using model organisms. specific syndromes with high unmet medical need, such as severe, steroid-resistant asthma. The more than 3,000 scientists, technicians and support personnel we employ in preclinical R&D Virology is complemented by about 2,100 clinical moni- Antiviral therapies for many serious, life-threat- tors, statisticians and data managers in clinical ening chronic and acute viral diseases are lacking development and medical departments. or are unsatisfactory. Our Laval centre focuses on the discovery and development of new antiviral Respiratory diseases therapeutics for the treatment of the human Respiratory diseases have long been a major immunodeficiency virus type 1 (HIV-1) and the focus area for Boehringer Ingelheim and we hepatitis C virus (HCV). These two devastating dedicate ample resources for research in this field. pathogens have each emerged epidemically in Our main objective in pulmonary research is to recent decades, afflicting millions globally. provide still further improved treatment options for chronic obstructive pulmonary disease Our HCV research is directed toward identifying (COPD) and severe asthma. COPD is currently inhibitors targeting essential viral enzymes, such the fourth most common cause of death, yet up as the HCV serine protease and RNA polymerase. to three quarters of sufferers in Europe go Such new mechanisms offer the potential for undiagnosed. This suggests a major unmet need new therapies with improved safety and efficacy for treatment for this debilitating lung disease compared to current treatments of chronic which often afflicts smokers. Our worldwide hepatitis C. Our clinical studies with an HCV launch of tiotropium (spiriva®) provided a serine protease inhibitor provided the first proof medication to improve COPD therapy, strength- of clinical concept for this class of antiviral agent ening our leading position in the bronchodilator and we continue to make efforts to exploit this field. This is being build up by developing antiviral target together with other novel bronchodilators with alternative mechanisms approaches. which additionally offer the opportunity for combination with our anticholinergic compounds. Our R&D activities in HIV aim at developing new treatment options, especially for HIV patients who have failed prior therapy due to the develop- Extending our product portfolio to drugs that ment of drug resistance. Our research into the target treatment of the underlying inflammation rapidly growing resistance problem has identified and the tissue remodelling process are the key a promising new non-nucleoside reverse tran- goals in our COPD research. Inflammation in scriptase inhibitor (NNRTI) as a follow-up to our COPD patients is provoked by an infiltration of existing HIV treatment viramune® (nevirapine). the lungs by macrophages and neutrophils. It is Development is proceeding on this compound which may become a treatment alternative for patients who have failed first line NNRTI therapy. 30 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Basic research plays an important role for Boehringer Ingelheim. At the Research Institute of Molecular Pathology (IMP) in Vienna, Austria, where the fundamental principles and mechanisms of living organisms are analysed, about 200 researchers from all over the world investigate new ways forward in science, novel approaches and targets, thereby enriching applied research. The IMP enjoys a worldwide reputation in research in the areas of developmental biology and molecular genetics. In addition, our discovery efforts are addressing Vienna oncology research centre have success- several new targets for HIV therapy. fully completed phase I studies in various cancer indications. A novel type of triple angiokinase Oncology inhibitor, targeting endothelial cell receptors Every year, more than 10 million people find responsible for cancer neo-angiogenesis, has themselves grappling with the medical uncer- entered phase II of clinical development. A dual tainties and emotional upheaval of a newly kinase inhibitor targeting epidermal growth diagnosed cancer. Fortunately, an increasing factor receptor and HER2 kinase, has shown number of patients benefit from surgery, radia- promising results in patients with advanced solid tion and medicines, but still there is recurrence of tumours. And further, a first-in-class cell cycle/ the disease. Thus, there remains a therapeutic polo-like kinase 1 inhibitor was applied in a gap to be bridged with innovative and improved single dose escalation study to patients with treatments that enhances the quality of life. advanced solid malignancies. In addition, we are increasing our efforts in monoclonal antibody The sequencing of the human genome mean- based projects for treatment of both solid and while promises to accelerate the emergence of haematological neoplasias. new cancer drugs. While not specifically designed for cancer research, no other area of Metabolic diseases biomedicine has profited more from the Human Health authorities and governments have been Genome Project than cancer biology, with deep alarmed by recent epidemiological data suggest- insights into the fundamentals of how gene ing that metabolic diseases, including obesity, mutations and faulty cellular circuitry lie behind diabetes mellitus type II and dyslipidemia, will the aberrant growth, invasion, and metastasis of grow worldwide by a much greater extent than cancerous tissues in the body. previously expected. This has been identified as a major health problem not only for industrialised Armed with such insights, we have embarked on societies but also in, for example, South America, a major drive to discover and develop innovative India and China. Particularly worrisome is the medicines for some of the most common cancers. increasing prevalence of obesity in children Cutting-edge research conducted at Boehringer together with the onset of type II diabetes in Ingelheim Austria has resulted in promising drug young adults. This disturbing fact leads to the candidates moving into clinical development. forecast that today’s children may have a lower As presented for the first time at the American life expectancy than their parent generation. Association for Cancer Research – European We are therefore putting great efforts on the Organisation for Research and Treatment of metabolic disease field with particular focus on Cancer meeting in Philadelphia in November diabetes type II, obesity and dyslipidemia. 2005, three compounds originating from our Our strength in R&D+Medicine 31 When Dr Barry Dickson talks about fruit flies, his eyes light up, as he has been working with Drosophila melanogaster for most of his scientific life. “The focus of my research is to understand the nervous system at the level of neural circuits and trying to understand how genes direct the assembly and function of specific circuits. Just as many of today’s major therapeutic targets came from studies of Drosophila development in the 70s and 80s, we anticipate that our work will open up new opportunities for the future treatment of neurological disorders,” Dr Dickson says. In January 2006, the 43-year old Australian, one of the world’s leading developmental neuro biologists, became Scientific Director of the Boehringer Ingelheim-funded Research Institute of Molecular Pathology (IMP) in Vienna. Work by his team at the Institute of Molecular Biotechnology (IMBA) of the Austrian Academy of Sciences showed that a single gene determines the complex mating ritual of Drosophila. This was a front-page story in the New York Times in 2005. New therapeutic approaches for the treatment of Boehringer Ingelheim has been at the forefront of diabetes type II have the potential of delaying or research and development in the cardiovascular even inhibiting the progression of the disease. disease area for decades, establishing its market Several research projects even offer the possibil- presence in the treatment of thromboembolic ity of preventing manifestation of the illness. diseases as well as hypertension and consequen- We were successful in several of our research tial diseases. Ongoing research efforts in the projects and have achieved promising results in thromboembolic area could be successfully preclinical but also clinical trials. In obesity there completed by advancing a new product into pre- is a great need for new drugs that are more clinical development. We will continue to efficacious than the existing ones while provid- develop our cardiovascular research platform ing a high level of patient safety. Research in that in the area of atherothrombosis and widen our area is directed both at a reduction of appetite research to include heart failure. and food intake as well as increasing the metabolism of energy carriers. We have established To address the ever-increasing unmet medical state-of-the-art technologies to carefully profile need for treating these cardiovascular diseases, advanced compounds in vitro and in vivo. our Ridgefield scientists are already focusing on innovative approaches to identify novel and Despite efficacious treatment for the lowering of effective drugs that reach beyond current treat- low-density lipoprotein (LDL) cholesterol, 60 % ment regimes. to 70 % of cardiovascular events still cannot be prohibited. The role of low levels of high-density These programmes will benefit from close inter- lipoprotein (HDL) cholesterol and malfunction of action with research scientists in our other drug the reverse cholesterol transport are hence areas discovery units. Targeting related human dis- of increasing research interest. We have started eases, such as metabolic and immunological/ several new research projects to address that inflammatory disorders, will undoubtedly therapeutic need. increase the opportunities for developing novel, innovative therapeutic agents in the fight against Cardiovascular diseases cardiovascular disease. With cardiovascular diseases forecasted to be the most common cause of premature death world- Central nervous system diseases wide within the next decade, according to the According to WHO predictions, diseases of the World Health Organization (WHO), we commit- central nervous system will constitute an ted ourselves to renewed efforts in this therapeu- increasing medical need this century, attributable tic area by moving our cardiovascular research to to an exponential increase of these diseases after Ridgefield in 2003. 32 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Photo: IMP the age of 65 combined with an aging population. Immunology & inflammation To date, available therapeutic treatments are still Autoimmune diseases such as rheumatoid unsatisfactory for the majority of CNS diseases. arthritis, multiple sclerosis and psoriasis are serious chronic inflammatory disorders with Our research in CNS diseases therefore focuses a large unmet medical need for safer and more on novel treatment concepts for the major neuro- efficacious treatments. At our Ridgefield site, degenerative disorders, Alzheimer’s and Parkin- our drug discovery efforts aim to regulate the son’s disease, prominent consequences of the processes involved in lymphocyte trafficking, aging population. An additional focus lies on immune cell signalling and the synthesis of chronic pain, a condition for which medical critical inflammatory mediators. Additionally, attention is sought most frequently. New molecu- we aim to deploy our knowledge about the lar targets, such as ion channels and G-protein influence of the immune and inflammatory coupled receptors (GPCRs), which are involved systems on diseases in other therapeutic areas. in pain transduction pathways and have been In that regard, small molecule inhibitors of validated in neuropathic and inflammatory pain immunological signalling are being tested for models, form the basis for our drug discovery their activities against inflammatory diseases efforts in the chronic pain indication. Our drug as well as respiratory diseases that have an discovery activities in the indication migraine inflammatory component. Small molecules, address a new mechanism of action to interfere able to inhibit inflammatory processes, have also with cerebral vasodilation for which we have advanced into pre-clinical development and obtained clinical proof of concept. others are currently being evaluated for key Our research efforts to interfere with disease rheumatoid arthritis has allowed our scientists progression in Alzheimer’s and Parkinson’s the identification of new approaches to under- decisions. The mechanistic understanding of disease focus on targets established by pathology standing the biology of the disease that we hope and genetics. Our activities in Alzheimer’s will continue to lead to further innovation in the disease are, for example, aimed at reducing future. Given the recent success of biologics in amounts of the amyloid-beta peptide, the major autoimmune diseases, such as rheumatoid mediator of this fatal disorder and additionally arthritis and psoriasis, the focus of NBE research searching for pro-cognitive therapies beyond has been applied to these diseases. In order to acetylcholine restoration in this disease. maximise our portfolio, we have in-licensed an Moreover, we are investigating approaches for antibody from the biotechnology company reducing treatment-induced motor complications AbGenomics that targets activated T lymphocytes (dyskinesias), a major medical problem for patients with late stage Parkinson’s disease. Our strength in R&D+Medicine 33 sparing the early immune response and therefore collaboration with the German biotech company shows promise as therapy for autoimmune Evotec now also includes the joint identification diseases. Progress has also been made in the of novel ligands to selected Boehringer Ingel- identification of antibodies targeting the inflam- heim target proteins. matory cascade, further building our NBE portfolio. Given the variety of approaches and the In line with our vision to expand our R&D focus on the mechanistic understanding of portfolio of biopharmaceuticals, in particular disease pathogenesis, we are confident that our monoclonal antibodies, partnering in this area research in immunology and inflammation will was a very important goal in 2005. The biotech result in improved treatment options for patients companies MorphoSys and Medarex have devel- who suffer from autoimmune diseases. oped innovative and complementary technologies for the generation of fully human mono- In-licensing and partnering clonal antibodies. We have concluded collabora- Our alliances range from early stage research to tions with both companies enabling our development and marketing or co-promotion researchers to exploit these technologies in all of collaborations. Complementing our in-house our therapeutic areas. The collaboration with R&D efforts, these tie-ups are a vital component MorphoSys was extended and has already of our search for novel therapeutics which pro- resulted in the start of a new antibody project vide new treatment options for patients. against a novel target molecule involved in cardiovascular diseases. In addition, we have Reflecting the growing importance of alliances in explored collaborations with companies highly the pharmaceutical industry, Boehringer Ingel- specialised in proteomics based identification of heim has stepped up its partnering activities in biomarkers (Caprion, Canada) and modulation of recent years, particularly in early stage collabora- delivery of bioactive proteins (Syntonix, USA). tions. In its October 2005 issue, Nature Reviews Furthermore, we have signed an exclusive licens- Drug Discovery characterised Boehringer ing agreement with the Taiwanese company Ingelheim as one of the top ten pharmaceutical AbGenomics for the worldwide rights to develop, deal-makers worldwide. When deal activity was manufacture and commercialise the human adjusted against ethical sales, we even ranked monoclonal antibody AbGn 168, discovered by number one in the analysis. AbGenomics in cooperation with the National Taiwan University. Due to its innovative mode of A key example of our partnerships in 2005 was action, AbGn 168 has the potential to open up the worldwide exclusive research and license new avenues for the treatment of autoimmune collaboration with the Swedish biotech company disease, such as psoriasis, rheumatoid arthritis Biolipox. Based on a new approach to the inhibi- and multiple sclerosis. This agreement represents tion of prostaglandin E2, an important endog- the first R&D partnership between a Taiwanese enous inflammatory mediator, the aim of the biotech company and a multinational pharma- collaboration is to develop a new class of drugs ceutical corporation and illustrates our drive to with a novel mechanism of action for the treat- tap new R&D resources in emerging markets. ment of pain and inflammation. In 2005, we also It has also given a significant boost for Taiwan’s extended two existing agreements with our efforts to build up a biotechnology industry. partners Evotec and Astex. In addition to a substantial discovery programme to identify and develop therapeutics acting on G-Protein Coupled Receptors (GPCRs), the scope of our 34 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Clinical development and registration graphic territories outside of Western Europe Both for clinical development and registration and North America has supported the progress in 2005 was again very dynamic and resulted in our clinical trial activities. Eastern Europe and remarkable progress in many areas. Our clinical Southeast Asia benefited most from our strength- programmes in clinical phases I to IV added ened clinical trial platform established in these another 32,000 patients newly recruited on top regions. We will continue to build on our of the large programmes ongoing from last year. extended reach and are encouraged by the More than ever, the contribution from geo- impressive quality delivered in these countries (see table). Boehringer Ingelheim Clinical Trial Statistics During the period from 1996 to 2005, Boehringer Ingelheim conducted or sponsored 1,399 studies with 142 substances in 59 countries from all regions of the world. Study type number of protocols Phase I 344 Phase II 161 Phase III 229 Phase IV 115 PMS studies 183 Consumer health care 61 Other* 73 Co-sponsored studies 233 The studies enrolled approximately 1.2 million patients during this decade, of which 300,000 were in Phase I–IV studies and over 700,000 in PMS studies (post-marketing surveillance). The term “patient” refers here in a wider sense to patients receiving test medication, comparative medications, receiving placebo, marketed medication, or being healthy volunteers. Detailing these numbers by region and clinical phases reveals a broad geographical distribution with emphasis on North America and Western Europe. Region Africa I—III IV Other PMS 8,188 2,553 – – 59,829 28,745 3,676 36,275 America, S & L 5,707 6,660 96 52,019 Asia (Japan) 7,531 1,890 – 16,924 Asia (other) 4,028 13,972 113 140,692 Australia 4,658 2,903 36 America, North Europe, East Europe, West Near East Total – 5,705 11,367 296 3,065 105,485 36,254 166,636 482,476 582 436 – – 201,713 104,780 170,853 731,451 February 2006 The category “other” includes, for example, compassionate use and methodological studies. Our strength in R&D+Medicine 35 Before new drug candidates can be given to patients in clinical studies to test their efficacy, they are first studied in healthy volunteers, as here at the Human Pharma cology Center at Biberach, Germany. This provides valuable information about the safety profile and tolerability of the substances. Important new registrations were also obtained In the USA, mobic® was approved for juvenile in 2005. The US Food and Drug Administration rheumatoid arthritis. Our successful clinical (FDA) granted accelerated approval for aptivus® development in this paediatric indication is an in June and European registration under excep- important contribution towards a great medical tional circumstances was granted in October. need and was additionally honoured by an Following these approvals, our second HIV drug extension of US market exclusivity. after viramune® has reached the market and adds an important treatment option for heavily cymbalta® a brand of duloxetine licensed from pre-treated patients who have developed resistant Eli Lilly & Company, co-developed in post- virus and depend on new drugs with improved registration studies and marketed for the treat- resistance profile. ment of depression, received registration in spiriva®, the once daily maintenance treatment Europe for the additional indication diabetic for COPD was approved in France and is now neuropathic pain. approved in 97 countries. Fast worldwide registration and numerous excellent clinical trial Without exception, all of our large-scale clinical results have facilitated its rapid growth into the outcome studies continued according to plan. leading COPD treatment position. The phase III The micardis® mega-trial ontarget™/ programme for spiriva® administered through transcend with 31,000 patients recruited has the innovative propellant-free soft mist inhaler undergone repeated independent Drug Safety respimat® was successfully completed and Monitoring Board (DSMB) review and is in its registration files are under development. second year after last patient included. With a As planned, we submitted sifrol® the leading from similar trials, the likelihood that we Parkinson’s medication simultaneously to the will have results available as planned in 2008 is patient retention rate clearly above that known US FDA and the European Medicines Agency further reinforced. A proof of concept study to (EMEA) for approval in the new indication investigate a newly identified pharmacologic restless legs syndrome. We expect regulatory mechanism of micardis® and its metabolic effect review to be completed in 2006. in patients with type II diabetes has been completed. Results will be available in early 2006. The excellent and very rapid patient uptake for the long-term factorial secondary stroke prevention study profess® comparing aggrenox®, micardis® and clopidogrel allowed us to 36 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 increase the planned patient number to 18,500 metalyse®, our bolus injection thrombolytic, and still expect the last patient to be included in has been investigated in two exploratory settings: early 2006. lysis followed by routine primary percutaneous uplift, our 6,000-patient long-term outcome intervention (PCI) after myocardial infarction study with spiriva®, is also in stable follow-up (assent iv trial) and as rescue intervention with DSMB review and approval and patients during reanimation in cardiac arrest (troica treated up to three years. trial). While assent iv has been discontinued Results from several well-controlled clinical because routine combination of lysis and PCI studies have become available, enhancing its was inferior to PCI alone, troica is continuing profile spiriva® was shown to improve and and will complete recruitment in 2006. extend the beneficial effect of pulmonary rehabilitation in patients with moderate to severe In all our therapeutic areas clinical pipeline COPD. In a comparison of spiriva® combined projects in phase I to III have been advanced. with a long-acting beta agonist (LABA) versus the combination of a LABA and an inhaled Three new compounds entered clinical phase I, steroid, the spiriva®-LABA combination resulted two in respiratory, one in oncology. in superior lung function improvements. This confirms the international guideline recommen- Phase I was successfully completed by our oral dation to first combine long-acting bronchodila- LFA antagonist with positive ex vivo signals tors before adding a steroid. spiriva® also suggestive of immune modulatory effects. We confirmed its clinical efficacy in a selected Afro- will therefore start phase II proof of concept American patient population and demonstrated studies in patients with psoriasis early next year. excellent lung function improvements in a study Already in an expedited phase I study we could in patients with mild COPD. Earlier clinical trial establish a clear proof of principle for a new oral results on COPD exacerbation reduction and anti-diabetic drug when given to type II diabetic improvements in exercise performance have been patients. Results from extended exposure in submitted for registration in Europe. diabetic patients will complete the clinical profile and are expected for early 2006. The robust clinical data base for sifrol® (prami- In the important respiratory field, we advanced a pexole) in the treatment of Parkinson’s disease new anti-cholinergic compound to clinical phase was acknowledged in a review article in the New II in patients with COPD. We expect this com- England Journal of Medicine where pramipexole pound to provide beneficial effects through was recommended as starting treatment of choice increased target selectivity and maintenance of a in early Parkinson’s disease. very reliable 24-hour efficacy. Our strength in R&D+Medicine 37 In addition to the first clinical administration of The most exciting progress has been made for a new cell cycle inhibitor in patients, our first dabigatran, an orally available thrombin inhibi- angiokinase inhibitor has achieved proof of tor for the prevention and treatment of thrombo- principle in phase I as an anti-cancer drug active embolic diseases. The programme in the preven- in patients suffering from a variety of different tion of deep vein thrombosis (DVT) following cancers. With this encouraging result we could orthopaedic hip or knee replacement surgery has move the first oncology compound from own developed with impressive speed and recruited research to clinical phase II. more than 6,000 patients into controlled phase III trials by the end of the year. We expect all With NS 2330, a compound licensed from Neuro- three international trials to close in the second search, results of three well-performed proof of half of 2006. In a large global cooperative concept trials in early and advanced Parkinson’s approach with leading academic centres we disease and in Alzheimer’s disease were disap- developed the final protocol for re-ly, the pointing and did not meet our predefined efficacy pivotal trial in the indication stroke prevention criteria to justify a phase III development. in patients with atrial fibrillation. The protocol for this 15,000 patient warfarin controlled mega- For flibanserine, a new therapeutic principle to trial passed successful authority review and the treat hyposexual desire disorder in females, the first patients were randomised in December 2005. final phase III development has been agreed with The programmes for DVT treatment and long- the FDA and several methodology studies in term prevention are in preparation and sched- support of the pivotal phase III studies have been uled to start mid-2006. performed. The first six months phase III study Our capability to perform electronic remote data to be conducted in North America is in final capture in practically every country of the world preparation and ready to initiate in QI 2006. was strengthened in cooperation with a leading computer technology provider. This enables us to meet the challenges of our growing clinical programmes, deliver quality data in an expedited fashion and extend our clinical trials to geographic regions with new opportunities. 38 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Business Development Our Businesses consist of Human Pharmaceuticals and Animal Health. We focus on the production of innovative drugs and treatments that represent major therapeutic advances. 2005 Net sales (in EUR million) 2004 Human Pharmaceuticals 7,822 Prescription Medicines 6,183 – Branded Prescription Medicines 5,743 6,712 969 17 % 440 535 95 22 % Consumer Health Care 970 1,052 82 8 % Industrial Customer 654 847 193 30 % — and Manufacturing Pharma 262 299 37 14 % — Biopharmaceuticals 392 548 156 40 % 15 28 13 87 % 335 361 26 8 % 8,157 9,535 1,378 17 % – Non-Branded Prescription Medicines Growth in % 9,174 1,352 17 % 7,247 1,064 17 % — Fine Chemicals Others Animal Health Total 40 Human Pharmaceuticals A new quality of treatment, a new quality of life “I long to run, but I actually make it a rule to go for a brisk walk around a park twice a week since starting to take spiriva® in December 2004,” says Hiroshi Aida, a 76-year-old man from Tokyo, who used to run out of breath even on the gentlest slope due to chronic obstructive pulmonary disease (COPD). “Today, I can walk the 1,800-metre course twice without strain and my finishing time is quicker every time. The drug works like a charm.” Mr Aida now has a dream of walking from Tokyo to Kyoto, about 510 kilometres, before his 100th birthday. Recently, he successfully completed a 10-kilometre walk. 41 “spiriva® has obviously improved Mr Aida’s Around 80 % of cases are attributed to smoking quality of life,” comments Mr Aida’s family doctor, tobacco. In fact, smokers are 10 times more likely Dr Kozui Kida, Professor and Director of the Res- to die of COPD than non-smokers. Another cause piratory Care Clinic, Nippon Medical School. Six of COPD is exposure to indoor or outdoor pollut- million people are estimated to suffer from COPD ants. Workers exposed to toxic chemicals and in Japan alone, but only some 20,000 are currently pollutants have increased odds of developing receiving treatment for the condition. This mis- COPD. A recent study found that some 20 % of match is not just a Japanese issue. “COPD stays COPD was attributed in part to work-related undiagnosed in many cases,” says Professor Bart exposure. Celli, Head of Pulmonary and Critical Care Medicine, St Elizabeth’s Medical Center, Boston. “This is presenting a very serious problem.” “spiriva® has obviously improved Mr Aida’s quality of life.” Millions of people around the globe suffer from COPD which the World Health Organization expects to be the third most common cause of death worldwide by 2020. This debilitating lung condition makes it increasingly difficult to breathe. For many patients even walking or performing simple daily tasks is difficult. It can affect both men and women from their early 40s. 42 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 spiriva® (tiotropium bromide), discovered, developed and manufactured by Boehringer Ingelheim has further strengthened the company’s position as a world leader in COPD treatment. The novel, once daily inhaled medication is recommended for the first line maintenance treatment of COPD. The disease is characterised by chronic airflow limitation, shortness of breath (dyspnoe), cough, wheezing and increased sputum production. spiriva® helps to relax narrowed muscles in the airways inside the lungs or prevent them from Revolutionising drug delivery narrowing (and to release trapped air), enabling sufferers to exhale more easily. Boehringer Ingelheim is revolutionising inhaler therapy spiriva® is already the world’s most prescribed inhaler device successfully launched in 2004 with drug for COPD. The highly favourable reception it berodual®, a drug for treating asthma and chronic has had since its initial launch in mid-2002 obstructive pulmonary diseases (COPD). with the respimat® Soft Mist™ Inhaler (SMI), a unique secured it blockbuster status (a pharmaceutical brand with annual sales exceeding USD 1 billion) “As a world leader in the treatment of COPD, we are as expected, in 2005, with net sales of 951 million. committed to developing the respimat® SMI as the gold It is co-promoted with the US pharmaceutical standard for the administration of respiratory inhalation company, Pfizer Inc. Following the launch in medications,” says Allan Hillgrove, head of Boehringer Japan, the world’s second largest pharmaceutical Ingelheim’s Respiratory Marketing. market, and in China in 2005, the medication is now available in almost all important markets. After the acquisition of the Dortmund (Germany) based microParts GmbH, a leading company in micro-system Kim Jong-Hyun, a South Korean farmer and technology, Boehringer Ingelheim is currently developing former heavy smoker, now in his early 60s, recalls several substances for use with respimat®. Boehringer his situation when, after suffering from cold Ingelheim microParts will meanwhile be built up as an symptoms, heavy sputum and difficulties in international centre of excellence for inhaler technology. breathing for months, he decided to visit the general hospital in Seoul. “When I was working, For more information on respimat® walking and even doing minor things, I had please visit www.respimat.com difficulties in breathing. I thought that I could not ignore the symptoms any longer.” Mr Kim feared his life was slowly coming to an end after he was told that he had COPD. Initial medication failed to restore any normality to his life, but on switching to spiriva® in early 2005 he got much better. “Now I can work on the farm and take care of my cows. I feel like I have a second new life when walking in the sunshine.” Real improvement has also been confirmed in clinical studies, such as the tiphon* study, presented to the American Thoracic Society in 2005. Fifteen times finer than human hair, the micro-channels (5 μm) Dr André-Bernard Tonnel, Service de Pneumolo- inside the respimat® Soft Mist™ Inhaler are responsible for the highly gie et Immuno-Allergologie, Centre Hospitalier effective distribution in the human lung of the mist containing Regional et Universitaire de Lille and the study’s respiratory medication. The inhalers are manufactured in Dortmund, lead investigator, said: “The tiphon study results Germany, by microParts, a Boehringer Ingelheim subsidiary. are encouraging because they show that treatment with spiriva® can result in clinically significant and sustained improvements in health–related quality of life for patients with COPD.” n Human Pharmaceuticals 43 Prescription Medicines Boehringer Ingelheim’s product range is mainly focused on human pharma ceuticals, which contribute the largest share of the turnover of our group of companies, accounting for 96 % of net sales in 2005. Human Pharmaceuticals covers the following business segments: Branded Prescription Medicines (BPM), Generic Prescription Medicines (GPM), Consumer Health Care (CHC) and Industrial Customers, which is sub-divided into Biopharmaceuticals, Chemicals and Manufacturing Pharma. Our Human Pharmaceuticals business developed very dynamically in 2005. World sales rose by 17 % compared with the previous year to EUR 9.2 billion, primarily due to our innovative patented medications. The successful growth reinforces our approach of continuing intensive research into new drugs that offer relief and improvement for patients. Branded Prescription Medicines (BPM) Therapeutic areas BPM, which accounts for almost 70 % of our sales, Chronic obstructive pulmonary disease (COPD), expanded markedly in 2005, with worldwide a chronic progressive respiratory disease charac- sales rising by 17 % to EUR 6.7 billion. terised by chronic airflow limitation, shortness of Respiratory diseases breath, cough, wheezing and increased sputum Sales growth was mainly driven by the growth of production, can restrict a patient’s ability to our more recent drugs micardis®, spiriva® and perform normal daily activities. It is the fourth sifrol®/mirapex® but more mature products, leading cause of death in the world. such as aggrenox® and mobic®, continued to contribute to the excellent development too. spiriva® (tiotropium bromide), a novel once daily Meanwhile, the launch of new products – aptivus® inhaled medication recommended for first line and cymbalta®/xeristar® – contributed to the maintenance treatment of COPD, works by further rejuvenation of our product portfolio. targeting a dominant reversible mechanism of Top 10 products Branded Prescription Medicines 44 Sales Branded Prescription Medicines by Therapeutic Area Net sales 2005 in millions of EUR change 1. spiriva® 951 +81.2 % 2. mobic® 848 +26.1 % 3. micardis® 724 +27.3 % 4. flomax® 721 –2.0 % 5. combivent® 561 +9.8 % 6. sifrol® 434 +52.2 % 7. viramune® 288 +2.0 % 8. atrovent® 248 +0.7 % 9. catapresan® 176 –2.1 % 10. aggrenox® 172 +17.8 % Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Gastrointestinal/ Metabolic 3.4 % Others 1.6 % HIV 4.6 % Central Nervous System 9.3 % Respiratory 34.8 % Muscoloskeletal/ Rheumatology 13.0 % Urology 11.4 % Cardiovascular 21.9 % COPD – cholinergic constriction. It helps patients spiriva®, currently delivered to patients via our breathe more easily by opening narrowed airways HandiHaler® device, will be used in the future and helping to keep them open for 24 hours. with respimat® Soft Mist™ Inhaler (SMI). This spiriva®, globally co-promoted with Pfizer Inc, propellant-free, new generation inhaler, which is now available to patients in most of the world. generates a slow-moving, long-lasting cloud with In France the launch is planned in 2006. a high fine particle fraction, represents a major The benefits which spiriva® provides to patients travels more slowly and lasts longer than aerosol step forward in inhalation therapy. The soft mist are reflected in sales of EUR 951 million in 2005 clouds from pressurised metered dose inhalers and market shares of 20 % or even more on a (pMDIs). Scintigraphic studies have shown that country basis. It has achieved blockbuster status. these properties increase drug deposition in the More importantly, spiriva® is now the world’s lungs where desired and reduce unwanted deposi- No. 1 prescribed product for COPD. tion in the mouth and throat compared to pMDIs. It is important that patients feel comfortable with The spiriva® clinical trials programme has inhalers as this may influence adherence to treat- recruited over 25,000 patients so far. The drug has ment. Patients with obstructive lung diseases demonstrated significant and sustained broncho prefer respimat® SMI to pMDIs, expressing a dilation (opening of the airways) and reduction in high level of satisfaction. markers of air trapping. It has also demonstrated superior and sustained improvements in lung function (FEV1) over atrovent® (ipratropium bromide) Inhalation Aerosol, which were main- Cardiovascular diseases tained over one year. Further, it has demonstrated Hypertension (high blood pressure) is a serious superior improvement in key lung function cardiovascular risk, linked to stroke and heart parameters over salmeterol. In addition, in attack as well as other conditions. placebo-controlled studies, patients treated with spiriva® required fewer doses of rescue medica- It is vitally important that therapy controls this tions, had fewer exacerbations and COPD-related high blood pressure, but, despite available hospitalisations. treatment options, hypertension is still not well controlled. An estimated 45–73 % of hypertensive In another part of the clinical trial programme the patients in the USA remain uncontrolled. This is influence of spiriva® on the exercise endurance of particular concern as hypertension increases has been studied. It improved the capability of the risk of cardiovascular events and reducing patients to exercise in a consistent way in 6-24 blood pressure may prevent cardiovascular week studies and showed a reduction in hospi- mortality and morbidity. Among patients with talisation as well as an improved quality of life. stage 1 hypertension, a reduction of 12 mmHg in systolic blood pressure for 10 years prevents one death for every 12 treated patients with diabetes or cardiovascular diseases. Even small reductions of 3 to 5 mmHg produce significant reductions in stroke or heart failure (Source: American Journal of Medicines, 2005, 118: 695-705). With micardis® (telmisartan), our angiotensin II receptor blocker (ARB), and micardisplus® (telmisartan in a fixed-dose combination with the diuretic hydrochlorothiazide), Boehringer Ingelheim offers two innovative options and flexibility for the treatment of essential hypertension. Prescription Medicines 45 Protection around the clock micardis® has the longest half-life in the ARB “In treating hypertension, the early morning hours are powerful blood pressure reductions. class, providing effective blood pressure control over 24 hours with a once daily dosage, including the early morning hours when blood pressure surges. At this critical time of day, it delivers critical, as blood pressure is known to surge at that time. This surge corresponds to a sharp increase in the micardis®/micardisplus® posted net sales of risk of having a heart attack or stroke. Studies have EUR 724 million in 2005, representing growth of shown an estimated 40 % more people suffer a heart 27 % and making it our third biggest BPM product. attack and 50 % more people suffer a stroke between Having grown above the market average for anti- 6 a.m. and 12 noon,” says Professor Bryan Williams, hypertensives (34 %), its global market share University of Leicester and lead investigator of the improved to 7.6 %. prisma studies. In the protection programme of clinical trials micardis® (telmisartan), Boehringer Ingelheim’s with micardis®, five trials versus main competi- successful, highly efficacious drug for treating essential tors have provided new important clinical data for hypertension, offers 24-hour blood pressure control, micardis® and micardisplus® in hypertension, and also provides superior blood pressure lowering showing clear clinical superiority over ramipril, compared to ramipril in the early hours. It is being losartan, valsartan, and amlodipine + HCTZ. The evaluated for its potential to protect end-organs, such detail study, published in the New England Jour- as the kidneys or the brain, as well as the potential to nal of Medicine in November 2004 in diabetic delay the onset of diabetes II in patients with increased nephropathy has put micardis® in the map of risk, in the ontarget™ trial. nephro-protection. The trendy study reported in major congresses in 2005 supported the nephroprotective benefits of micardis® and three addi- Systolic blood pressure (in mmHg) in relation to time (wakening hours) (0 = wake-up time) tional renal trials will consolidate the profile of the brand in this area in 2006. 160 The landmark trials ontarget™ (in patients of high cardiovascular risk, with 31,700 randomised 150 patients) and profess® (in patients with previous 140 aiming to prove the cardio and cerebro-vascular stroke with 15,000 patients already recruited), protection properties of micardis®, are proceeding on schedule. Results of these trials are expected 130 -4 -2 0 2 4 6 8 10 12 14 16 18 hours in 2008. The good acceptance of the product in 2005 provide an excellent platform to put micardis® on track to become another blockbuster. For additional information please visit our websites at www.micardis.com / www.ontarget-micardis.com Every year, approximately three million people worldwide suffer from acute myocardial infarction (AMI), or heart attack. However, only about 47 % are diagnosed and treated. About 53 % are 46 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 either not recognised or are beyond treatment. actilyse® (alteplase), is indicated for the thrombo The most important factor for a successful treat- lytic treatment in AMI as well as in thrombolytic ment of AMI is time to treatment. Thrombolytic treatment in acute massive pulmonary embolism therapy, established as one of the most successful with haemodynamic instability. It has also a modern AMI treatment options, is easy to apply, conditional license for the treatment of acute available in all hospitals and considered safe in ischemic stroke (see below). view of the serious nature of the disease. metalyse® (tenecteplase), the only thrombolytic to be administered as single shot injection, is also registered for the thrombolytic treatment in AMI for patients, in whom a coronary intervention cannot be performed within 90 minutes of onset. With its ease of administration, metalyse® is very well-suited for pre-hospital and in-hospital thrombolysis to keep the time from onset of symptoms to effective treatment as short as possible. Both products continued to be leaders in their The Stroke Lysis Box from Boehringer Ingelheim class and posted combined net sales of EUR 151 enables hospital emergency departments to provide million, giving a 57.7 % market share in this com- rapid clot-busting treatment. bined class of fibrinolytics. Telemedicine helps stroke victims Acute ischaemic stroke is caused by blood clots in the brain and requires urgent specialist attention. those in rural areas do not always have access to specialist care. New technologies can link rural hospitals with specialist centres. Remote patient interviewing, data transmission and video conferencing are available 24 hours a day to all hospitals linked in the network. The benefit to the patients is twofold: they now have access to this modern treatment and the treatment is started by very experienced people. This allows a greater proportion of acute stroke patients to be assessed for thrombolysis with Boehringer Ingelheim’s actilyse® (alteplase), the only medication available Photo: Lennart Nilsson However, only 30 % of acute stroke patients reach hospital within the first three hours. Particularly for the treatment of acute stroke. Prescription Medicines 47 Stroke treatment and prevention Stroke is the third leading cause of death and the most important reason for medical disability. In industrialised countries some five people in every 1,000, and three in every 100 people aged 65 years and above, suffer a stroke. A stroke occurs when a blood clot blocks a vessel or artery in the brain (ischaemic stroke), or when a blood vessel ruptures (haemorrhagic stroke), interrupting blood flow to an area of the brain. A stroke kills brain cells in the immediate area within a few minutes or a few hours. actilyse® is the first and only treatment indicated for acute ischaemic stroke within three hours after onset of symptoms. With sits most and sits istr, Boehringer Ingelheim is sole sponsor of the largest international stroke registry, providing Diseases of the central nervous system (CNS) Parkinson’s disease affects approximately 1 % of people over 60, but Parkinson’s can also afflict people much younger. It is caused by a slow, gradual loss of specific cells in the brain that produce a chemical called dopamine which is ultimately necessary for normal muscle function. The disease is characterised by three main symptoms: slowness of motion, stiffness and shaking of arms, legs or head. Pramipexole, a dopamine agonist, is indicated for the symptomatic treatment of Parkinson’s disease, alone or in combination, throughout all stages of the disease. stroke experts worldwide with a valuable tool for documenting and monitoring stroke patients. For more information please visit the website: www.stroke-forum.com aggrenox® / asasantin® / asasantin retard® (dipyridamole/ASA) is indicated to reduce the risk of secondary stroke in patients who have had transient ischaemia of the brain or completed ischaemic stroke due to thrombosis. It posted net sales of EUR 172 million in 2005, with growth of 18 %. With profess®, the world’s largest trial in secondary stroke prevention, Boehringer Ingelheim is aiming to prove that aggrenox® is superior to clopidogrel. The trial, conducted since 2002, will involve 18,500 patients in 32 countries. The outcome is expected in 2008. The compound is internationally marketed as mirapex®, mirapexin®, sifrol® or pexola®. mirapex®/sifrol® continued to show strong growth in 2005, in part due to the launch in Japan. At the end of 2005, it ranked No. 6 among our bestselling products, with total net sales of EUR 430 million, up 52 % against 2004. It is the world’s best-selling brand for Parkinson’s disease, with a market share of more than 20 %. The clinical development of mirapex®/sifrol® has been completed for restless legs syndrome (RLS), a sensorimotor disorder characterised by a distressing urge to move the legs and sometimes other parts of the body. It is usually accompanied by a marked sense of discomfort or pain in affected body parts. A comprehensive clinical development programme with more than 1,000 patients in the USA and six European countries, completed in 48 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 2005, showed significant improvements in RLS symptoms, rapid onset of action and an excellent tolerability profile. Regulatory dossiers for the approval of mirapex®/sifrol® for RLS were filed in 2005 in the USA and the EU. Major depressive disorder (MDD), a common disorder of complex, often recurring symptoms affecting mind and body, can be life-threatening and certainly disabling, according to World Health Organization (WHO) research. The neuropathology of depression is not fully understood but the two neurotransmitters serotonin and norepine phrine seem to play a major role in the develop- Stilling restless legs “The feeling is very irritating and I cannot sit still. It is frustrating because I can feel the ‘bubbles’, but I cannot make them disappear. The only way I can stop this feeling in my legs is to move them and to walk,” says Katrin Scherman from Sweden, who spent 25 years of her life enduring the symptoms of RLS before seeking treatment. Restless legs syndrome (RLS) is a neurological disorder characterised by an uncontrollable urge to move the legs, usually accompanied by unpleasant and sometimes painful sensations which worsen at night. Social activities, including travelling, can also be severely affected by RLS, as sufferers can find sitting still very painful or difficult, espe- ment and course of the disease. In November 2002, Eli Lilly and Company and Boehringer Ingelheim signed a long-term agreement to jointly develop and commercialise duloxetine hydrochloride. Duloxetine for MDD and diabetic peripheral neuropathic pain (DPNP) is internationally marketed under the brand names cymbalta® and for Boehringer Ingelheim in Greece, Italy and Spain as xeristar®. cymbalta®/xeristar® is a potent and balanced dual reuptake inhibitor of both serotonin and norepinephrine that provides rapid, sustained relief of the emotional and painful physical symptoms of depression and gives patients a better chance of getting well and staying well. In 2005, major milestones were achieved with marketing authorisation for MDD in the EU and other parts of the world. cymbalta® had been launched in 20 countries by December 2005. cially in the evening. Recent clinical studies showed that pramipexole, with its fastacting effect on a broad range of RLS symptoms, cannot only provide rapid relief from RLS symptoms, but also suggest significant sustained efficacy. Pramipexole, a compound from Boehringer Ingelheim research, was first approved in 1997 and is available in major countries worldwide under the trade names sifrol®, mirapex® and mirapexin® for the symptomatic treatment of idiopathic Parkinson’s disease. Boehringer Ingelheim anticipates approval in 2006 in Europe and the USA for the treatment of RLS. Prescription Medicines 49 Serotonin and norepinephrine also play a major results in wake-up several times at night with role in the neuronal modulation of pain signals. urgent need to urinate (nocturia), one of the most cymbalta®/xeristar® has been successfully bothersome symptoms of BPH. developed for the treatment of DPNP, which occurs in approximately 30 % of patients suffering Stress urinary incontinence from diabetes mellitus. Symptoms of DPNP Stress urinary incontinence (SUI) is the involun- include lancinating pain, paraesthesia and dys- tary loss of urine with an increase in abdominal aesthesia as well as pain produced by a normally pressure caused by a physical activity such as non-painful stimulus. By effectively de-amplify- coughing, laughing, sneezing, lifting or exercising. ing the pain signalling, duloxetine offers a new Around 97 % of SUI patients are female, but less approach in the treatment of DPNP patients. than half of the women suffering from this condition seek treatment. In November 2002, Eli Lilly and Company and Urologic diseases Benign prostate hyperplasia (BPH), a common Boehringer Ingelheim signed a long-term agree ment to jointly develop and commercialise y entreve®/ariclaim® (duloxetine) for treating disease that occurs in about 25 % of men aged 40 SUI. This partnership covers most countries world years or over and in more than 30 % of men over wide. 50, results in lower urinary tract symptoms (LUTS) In mid-August 2004, EU approval was received related to obstructions of the urethra and gradual for yentreve®/ariclaim® for the treatment of loss of bladder function. These symptoms, such as women with moderate to severe SUI. In 2005, frequent need to urinate (particularly at night), yentreve®/ariclaim® was launched in Greece urgency, leaking, or dribbling, disrupt the activity and Italy (by Boehringer Ingelheim as ariclaim®) and sleep patterns of sufferers, drastically affect- and in Mexico. ing their quality of life. alna®/flomax® (tamsulosin), an alpha receptor antagonist, is indicated for the treatment of func- Virologic diseases tional symptoms of BPH, significantly improving Boehringer Ingelheim aims to improve HIV/AIDS symptoms and quality of life. The product was in- therapy by providing physicians and patients with licensed in and jointly developed together with innovative antiretroviral drugs. Astellas Pharma and is marketed under a license For more information, please visit the website: from Astellas Pharma. It achieved net sales of www.boehringer-ingelheim.com/hiv EUR 721 million in 2005 and maintained its market leadership in the USA, where a co-promo- aptivus® (tipranavir), a non-peptidic protease tion collaboration with Astellas Pharma started in inhibitor, works by blocking the viral protease, an 2004. enzyme needed to complete HIV replication. Due to its unique chemical structure, aptivus® In 2005, a new formulation of preserves activity against viruses which have lost alna®/flomax® using the ocas® susceptibility to other treatment options – a sig- (Oral Controlled Absorption System) nificant advantage compared to other commer- technology, was launched in several cially available protease inhibitors (PI). European countries. This allows a 50 smoother 24-hour drug release with When co-administered with low dose ritonavir, it reduced plasma peaks independent is indicated for combined antiretroviral treatment of food intake, resulting in an even of HIV infection in highly treatment experienced better safety profile and favourable (HTE) patients. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Teamwork sets benchmark It took only 168 hours after market approval by the US regulatory authority, the Food and Drug Administration (FDA), for the first packages of Boehringer Ingelheim’s novel anti-AIDS-drug aptivus® (tipranavir) to leave the warehouse for US distribution. Due to the long manufacturing processes, the wheels of our supply chain began aptivus®, which complements viramune® in our HIV portfolio, was launched in the USA in July 2005 and in the EU in November 2005. viramune® (nevirapine) was the first compound of the new class of non-nucleoside reverse transcriptase inhibitors (NNRTI) to be launched in 1996 as a powerful component of combination therapy for HIV-1. This product is now available in about 100 countries which makes it one of the most widely used compounds in chronic HIV-1 therapy worldwide. turning well before approval starting with chemical production of the active ingredient tipranavir and pharmaceutical production. These two different manufacturing steps were conducted on two continents at Boehringer Ingelheim’s company site in Ingelheim, Germany and a third party site – Cardinal Health, USA. After the FDA had endorsed and released all detailed drug-related information, the company was on the home straight. Printing the packages and leaflets, packaging, shipment and distribution under refrigerated conditions: the cogs – coordinated by Boehringer Ingelheim’s packaging site Roxane (Columbus, Ohio, USA) – meshed perfectly. Even with another step added – release testing and distribution via our product release site in Ingelheim – aptivus® was available to patients in Germany and the United Kingdom within a few days after the subsequent approval in Europe in October was granted. Early involvement of Operations during the development process was a key success factor. Numerous challenges arose which called for close communication between the company’s Research & Development and Operations divisions as well as with the external US manufacturing partner to develop the appropriate chemical and pharmaceutical processes. “Seam- viramune® has also been demonstrated to be beneficial to prevent transmission from the HIV-1 infected mother to her infant. A single dose to the mother during labour and a single dose to the infant after birth has shown to significantly reduce less cooperation between multi-faceted teams across the Boehringer Ingelheim development and supply chain, and beyond, played a key role in the successful initial launch of aptivus®,” Operations teamleader Joerg Hefer said. “A new benchmark has been set.” the HIV transmission rate. This simple and effective treatment, also tested successfully in combination with zidovudine/lamivudine, has particular value in the healthcare setting of developing countries, and, as such, is recommended by the WHO. viramune® posted sales of EUR 288 million in 2005. Prescription Medicines 51 Rheumatologic diseases Osteoarthritis is the most commonly diagnosed degenerative joint disease affecting the joints, especially in elderly people. Signs and symptoms of osteoarthritis might include joint stiffness and discomfort often with a sensation of a grinding in the affected joint. Rheumatoid arthritis, an autoimmune disease that affects the body as a whole, may also lead to joint destruction. mobic®/mobec® (meloxicam) is indicated for the symptomatic treatment of osteoarthritis and rheumatoid arthritis as well as ankylosing spondylitis (Morbus Bechterew). The drug which became our second blockbuster drug in 2005, posted net sales of EUR 848 million, with a market share of 14.9 % in the IMS anti-rheumatic market. The debate about cost containment, rebates and reimbursement payments (“Medicare” and “Medic aid”) continuously put pressure on prices and may render patient access to innovative products more difficult. But the ongoing healthcare reform initiative (“Medicare Drug Benefit”) will provide access to health services for additional patients. The impact of this initiative on pharmaceutical sales volumes and price levels will be seen over the the next years. spiriva® was our biggest growth driver in the region, achieving net sales of EUR 379 million, up 120 % from the previous year. Additional growth drivers in 2005 were mobic®, combivent® and sifrol®. In 2005, Boehringer Ingelheim continued to increase its field force in the USA and a customer relationship management (CRM) programme was successfully implemented. An additional phase of increased focus on the specific needs of physicians and their need for individual information will continue to improve the service level during the coming years. In Latin America, economic growth slowed in Economic Regions 2005 to a more sustainable level compared to the sharp increase in 2004. Inflation in the region Americas stabilised, but remains volatile, with highly fluctuating commodity prices. The currencies of the The economic environment in the Americas main countries stabilised against the Euro. Some, Region developed favourably during 2005. The like the Brazilian real, even strengthened. region posted sales of EUR 3.7 billion with a growth rate of 17 %, representing a 51 % share of The total pharmaceutical market, including Boehringer Ingelheim’s Prescription Medicines branded and generic products, continued to grow, business. The USA achieved net sales of EUR 3.1 with Mexico up 12.0 %, Brazil up 14.6 % and billion, corresponding to 18 % growth. Argentina 12.2 %. However, a stable and dependable development of our BPM business in this The USA remains the worldwide motor for eco- region is still hampered by the lack of binding nomic growth in the innovative pharmaceutical patent laws, except in Brazil and Mexico. industry. A highly competitive environment with free market price development and rapid market Total net sales of our BPM business in Latin acceptance for innovations, it offers patients quick America amounted to EUR 200 million in 2005, comprehensive access to improved treatments. an increase of 26 % against the previous year. The USA will remain the most important market Growth drivers were mobic®, micardis® and for Boehringer Ingelheim’s innovative pharma- selected local products. Currency revaluations ceuticals for the foreseeable future. 52 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 The USA remained the by far most important market for our drugs. Europe 2,037 Prescription Medicines of which: Germany 455 (which accounted for 76 % of our net sales) had a turnover of more than EUR Americas 3,670 of which: USA branded 2,592 USA non-branded 535 Asia, Australasia, Africa 1,312 of which: Japan 801 7.2 billion to which US sales contributed 43 %. The Europe Region achieved 28 % of PM net sales. Sales Prescription Medicines 2005, excluding licenses (in millions of EUR) also contributed positively. spiriva® and the in all major markets, reaching market shares of recently launched product cymbalta® performed 10–15 % and even up to 20 %. strongly and continued to gain market share. micardis® / micardisplus® became our second In Latin America, we implemented a new regional leading product in Europe, growing with net sales business concept by implementing a regional of EUR 191 million. Newly published data on its operative unit located in Argentina. benefits, not only in hypertension but specifically new benefits for nephroprotection in hypertensive diabetic patients, is expected to support further Europe growth. Our business developed highly satisfactorily in sifrol®, our leading Parkinson’s medicine, more Europe in 2005. With a growth rate of 15 % and than doubled its turnover to EUR 183 million. net sales of EUR 2 billion, we grew about twice as Currently it is under registration for RLS. Three fast as the market. Our market share increased to important new introductions to the European 2 %, ranking us as No. 12 in the European pharma- market came in 2005. cymbalta® for MDD. alna ceutical market. This success is based on the good ocas®, a tablet version of our market-leading BPH acceptance of our innovative products by physi- product and aptivus®, our HIV treatment. cians and patients. With the exception of France, all major European However, the pharma-political environment in markets gained considerable growth momentum Europe remained challenging during 2005 and in 2005. After a difficult year 2004, our German patient access to new innovative medicines was business developed quite satisfactorily due to the often delayed. In addition, cost containment new introductions of cymbalta®, aptivus® and measures in national healthcare systems mainly alna® ocas® as well as the high market accept- target pharmaceutical spending with mandatory ance of spiriva®, micardis® and sifrol®. rebates, repayments and parallel trade. Dynamic growth was achieved in Central and Eastern Europe, especially in Russia. Double-digit The main growth driver in 2005 is spiriva®. growth rates were recorded in Italy, Spain and the Net sales reached EUR 459 million, an increase of United Kingdom. 54 % over 2004. spiriva® developed very positively Prescription Medicines 53 Asia, Australasia, Africa In all major markets in our Asia, Australasia, Africa (AAA) Region – Japan, Australia, Turkey and South Korea – we experienced strong growth. This is particularly remarkable considering the business environment of our industry in the region was in 2005 determined by a continuation of cost containment initiatives and governmental restrictions. The development in AAA must therefore be considered against a background of mandatory South Africa, AAA’s sixth largest country, also showed positive development. Here, however, the largest sales contribution came from viramune®. Our company in China celebrated its tenth anniversary. Net sales reached more than EUR 40 million. In India, besides our licensing agreement with Cadila Healthcare Ltd., we have started our own subsidiary. In the region Near East / Middle East, we implemented a new regional business concept at the end of 2005 by creating a regional operative unit located in Dubai. price reductions, governmental prescription recommendations, such as positive lists, and, in almost every country, strong encouragement of generic prescribing. In Japan, Nippon Boehringer Ingelheim had the Generic Prescription Medicines (GPM) fastest growing business among the leading In the USA, Boehringer Ingelheim Corporation’s 25 pharmaceutical companies. Net sales grew by GPM business consists of its subsidiaries Ben 12 % to EUR 800 million, driven in particular Venue Laboratories with its separate division by micardis®, due to a continuation of our highly Bedford Laboratories, based in Columbus, Ohio. successful cooperation with Astellas. micardis®, Bedford Laboratories is dedicated to the market- now our leading product in Japan, achieved a ing of a select line of liquid and lyophilised sterile market share of 10.6 % within two years of injectables from Ben Venue. Roxane Laboratories launch. and Bedford Laboratories, generated 6 % of Boehringer Ingelheim’s sales. Although sifrol® and spiriva® also contributed to the excellent development in Japan, much of With respect to generic drugs, the US pharmaceu- the Nippon Boehringer Ingelheim’s sales growth tical market is currently in a change process. can be explained by a range of field force efficiency improvements in 2005. It is expected that demand for pharmaceuticals and generics in particular, will continue to In Australia, above-market performance achieved increase due to pressure to reduce healthcare in the last few years continued in 2005, with net costs, the aging population, and the 2006 Medi- sales growing by 25 % to EUR 120 million, the care Prescription Drug Benefit. main contribution coming from spiriva®. The situation in Turkey was similar. Our sales, driven However, as the size of the generic market by spiriva®, flomax® and micardis®, achieved increases, there is increased competition for a growth of 54 % to achieve net sales of EUR 80 revenues coming from traditional brand pharma- million. ceutical companies with a renewed interest in generics, from extremely large multinational generic companies that have grown through merger and acquisition, and from Indian, Eastern European, and very soon Chinese companies. 54 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 As the size of the market increases, competition is putting downward pressure on prices and margins. Many companies are moving, or looking to move manufacturing off-shore. Roxane Roxane Laboratories focuses on developing, manufacturing and packaging more than 400 medications, including oral liquids, tablets, and capsules. The business posted sales of EUR 194 million (USD 241 million), representing an increase of 14 %. Roxane launched nine new generic drugs in 2005, High value injectables including the antibiotic clarithromyin and almost 20 new abbreviated new drug applications Over the past 12 years, Bedford Laboratories has focused (ANDAs) were filed. its efforts on improving and advancing high-quality Bedford Laboratories for select specialty injectables, many not available from Bedford posted net sales of EUR 341 million (USD any other source. Bedford currently offers 84 inject- 424 million), a growth rate of 26 %. Key products able products in 229 different configurations, covering a products that offer value to its customers. It is renowned for 2005 included propofol, octreotide, GlucaGen®, wide variety of therapeutic classes, mainly in the areas of paclitaxel and Adriamycin®. oncology, cardiology, anaesthesia and antipsychotics. In 2005, Bedford launched six new products, including propofol, an anaesthesia product, and octreotide, an oncology adjunct. Propofol entered the US market as one of two generics. Octreotide entered the US market as the sole generic with 180 days exclusivity. These two products accounted for USD 94 million sales. With these six new products, Bedford has solidified its position in the generic market and remains one of the largest US suppliers of speciality injectable pharmaceuticals to hospitals and clinics. Bedford’s recent partnership with an intravenous (IV) bag manufacturer will provide Bedford’s customers with a wider variety of drug deliver choices. Bedford will also continue to file 10 to 12 ANDAs each year to create a pipeline of products that will allow us to maintain a leadership position. Prescription Medicines 55 Consumer Health Care Let’s talk about it “Constipation is a widespread and sensitive disorder. Many sufferers often feel guilty and responsible for their symptoms, believing that their lifestyle is to blame,” according to the gastroenterologist Professor Stefan A. Müller-Lissner of ParkKlinik Weissensee, Humboldt University, Berlin. 56 57 A review that he led on constipation, published in While diet and lifestyle should not be assumed to the American Journal of Gastroenterology (AJG) be the main cause of constipation, it is advisable in 2005, provided sufferers and healthcare profes- to remain healthy overall by eating a balanced sionals with strong, legitimate grounds to remove diet, drinking enough water and taking regular such feelings of guilt. Boehringer Ingelheim’s exercise. As a proven, safe and effective laxative, long-standing contribution to relieving this com- dulcolax® can be taken as a first-line treatment mon, very uncomfortable condition is dulcolax®, to help restart the natural rhythm. the world’s leading laxative brand. Our communication initiatives The independent paper, “Myths and Misconcep- The review in AJG prompted Boehringer Ingel- tions About Chronic Constipation”, which heim to launch a major campaign in 24 countries appeared in the AJG, concluded that many aspects to communicate its key findings in order to con- of constipation, including the use of laxatives, are tribute to a better understanding of constipation based on traditional views and misunderstand- and laxatives’ role in treatment options. ings. It clarified many wrongly held beliefs and showed that often they are not based on hard fact The scientists too had a good opportunity to make or medical evidence. their findings known. Professor Carmelo Scarpignato, University of Parma, Italy, co-author of the AJG paper called the health education campaign a “great success”. The international dulcolax® website, locally implemented, underlines the global presence of the brand. The review’s key findings were that diet and life- Significantly, new constipation treatment guide- style should not be assumed to be the main cause lines for pharmacy staff were, for instance, pub- of constipation. For some, a fibre-rich diet may be lished in the United Kingdom after the review in helpful, however, in many people with more the AJG with the endorsement of the College of severe constipation, fibre intake can make symp- Pharmacy Practice, which followed the recom- toms even worse. Increased fluid intake will not mendations in the paper. provide significant relief from constipation, except if you are dehydrated. Further findings relate to Boehringer Ingelheim’s commitment to raising the use of laxatives that have wrongly been associ- disease and treatment awareness was also evident ated with a number of unsubstantiated claims. in the USA where the dulcolax® Guide for The review found, for instance, that there is no Healthy Living, a national educational pro- evidence that laxative use might cause damage to gramme, was launched by the Hispanic talk show the colon and that it is uncommon for most laxa- host Cristina Saralegui in 2004. “Constipation tive users to develop a level of tolerance. sufferers need to listen to their bodies and take action by becoming aware of the things they are doing and not doing to alleviate symptoms,” she said. n 58 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Gentle and effective dulcolax® forms a key part of Boehringer Ingelheim’s self-medication heritage. On the market for over 50 years, dulcolax® is available as sugar-coated tablets and suppositories containing the active ingredient bisacodyl as well as pearls and drops containing the active ingredient sodium picosulphate. A unique comfort coating prevents the tablet from being dissolved until it reaches the colon, where its active ingredient is released exactly in the right place. Today, this gentle and effective laxative is marketed in over 90 countries, both on prescription and over-the-counter (OTC). It is recognised as the top selling contact laxative (influence on the motility of the colon by direct contact with the colon wall). And the new thinking about constipation has had a real impact. Shailesh Amin, a retail pharmacist in the UK, noted: “I have already made a monumental shift in prescribing advice and sale for constipation products. Out goes lactulose and fibre and in come the contact laxatives.” For more information visit www.dulcolax.com Consumer Health Care 59 Consumer Health Care Our Consumer Health Care (CHC) segment achieved net sales of EUR 1.1 billion in 2005 (+8,5 % against the previous year). Both our Americas and Europe Regions achieved strong double-digit growth. Boehringer Ingelheim is ranked No. 8 worldwide among CHC companies and in 2005 enhanced its position primarily through line-extensions and switching prescription-only medicines to over-the-counter (OTC) products. Our key international brands continued to develop positively. dulcolax® – our leading laxative brand – Development by brand successfully marketed in more than 100 countries, maintained its No. 1 market position in 2005. In buscopan® – a medication against abdominal the Americas it continues to reinforce its strong discomfort and cramping – is the worldwide No. 1 category position. Good performances were antispasmodic brand, according to IMS data. The achieved in Europe and Asia, with dulcolax® buscopan® franchise produced strong double- holding a strong lead position in important digit growth in 2005, mainly due to successful markets, such as Germany and South Korea. Plans switches in Mexico, Brazil, Argentina, Colombia to strengthen this brand into a worldwide OTC and Venezuela. laxative leader over the forthcoming years is a key focus of our strategic development. The product is now marketed in more than 100 countries. The development of antistax® – our brand for the prevention and a validated international brand platform treatment of chronic leg vein weakness – suc- was started in 2005 and is expected to be ceeded in further accelerating growth in 2005, implemented from 2006, helping to with Italy, Belgium and Germany the main con- capitalise on the brand’s strong medical tributors to this positive performance. In Germany, heritage and build a robust OTC umbrella antistax® extended its leadership in the leg vein as a basis for future line-extensions. Top 10 products Consumer Health Care Net sales 1. dulcolax® Sales Consumer Health Care in millions of EUR 2. mucosolvan® 1,000 800 600 ’03 ’04 ’05 60 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 114.8 +18.8 % 91.3 +226.6 % 88.4 +4.5 % 4. bisolvon® 66.9 +8.4 % 5. buscopan® 59.5 +38.2 % 6. laxoberal® 31.8 +126.6 % 7. thomapyrin® 30.0 –15.3 % 8. anador® 25.3 +13.0 % 9. antistax® 22.6 +2.5 % 18.6 –12.1 % 549.2 21.1 % others 964 change 3. geriatric pharmaton® 10.frubienzym® 400 200 in millions of EUR 970 For information about indications, 1,052 see our Glossary on pages 116–118. health market. With 2006. This will help capitalise on the strong brand sales of almost 30 % in image/market position that pharmaton® com- the market, Italy made a mands in many markets. pharmaton® kiddi very substantial contri- (children’s supplement) produced strong growth bution to the perform- in Mexico in 2005, boosted by the launch of ance of antistax® in galenic line extensions in late 2004. 2005. mucoangin® – our sore throat brand – achieved satisfactory growth in the major markets Germany Development by region and Mexico. New product launches were made in Europe Denmark and Sweden. In 2005, the region reported sales growth as of 14 % compared to the previous year, as a result of mucosolvan® – the world’s a favourable seasonal demand for cough & cold leading cough expectorant – brands combined with several line extension strengthened its position with launches, switches and healthy, above-market good growth of 14 %, compared growth. Activities in 2005 were intensively with 2004. New marketing focused on our international brands. Germany, campaigns were initiated in Spain, Italy and Russia, our major markets in Mexico, Brazil and Germany Europe, were the prime drivers of the positive during the year. development. bisolvon® – the cough remedy Americas – consolidated its position as one of the leading The year 2005 was a very positive one for the brands in the world OTC CHC business in the Americas Region, which expectorant market. In achieved growth of 19 % against previous year. 2005, it successfully sus- The main growth driver was Mexico. tained its strong position in many markets, particu- Asia, Australasia, Africa (AAA) larly in South America SSP Co. Ltd. – the No. 3 OTC company in Japan, and Europe, achieving whose major shareholder is Nippon Boehringer double-digit growth. Ingelheim Co. Ltd. – strengthened its position in a highly competitive market environment. The AAA pharmaton® – our umbrella brand for the Region, excluding Japan, achieved strong growth improvement and maintenance of vitality and of +16 % against the previous year. Our interna- well-being – performed well in 2005, with strong tional core brands pharmaton®, bisolvon® and growth in the key markets in Latin America – dulcolax® showed overall sales growth of 86 %. Mexico, Brazil and Argentina. IMS figures put pharmaton® as world No. 2 in its category. In 2005, development of a validated international brand platform was started, with implementation expected to start in Consumer Health Care 61 Margareta Ebelt collapsed in her bathroom, struck down by a severe heart attack. Walking her dog, she had felt a twinge in her chest but had not taken any notice. Fortunately, her husband alerted the emergency services immediately. Otherwise, the incident could have been fatal. Margareta lives to tell her story, thanks to right in time treatment with Boehringer Ingelheim’s metalyse®. Time is extremely critical when suffering a heart attack. In the ideal scenario, treatment can begin aboard the ambulance or as in Margareta’s case in the patient’s home. The probability of patients recovering fully then rises to around 70 %. Biopharmaceuticals 62 Time is critical 63 “I did not want to become one of those helpless folk,” Margareta Ebelt says. And she certainly is not. As before, Margareta is now managing the accounts of the company she and her husband own in Dueren, Germany. Besides the human suffering, cardiovascular diseases have a major financial and social impact. Many people who survive a stroke or a heart attack need long-term care. It is estimated that stroke accounts for 4–6 % of healthcare budgets, excluding the costs of social services and care. metalyse® (tenecteplase) is the first and only clot-dissolving medication administered as a five-second injection. This bio pharmaceutical, manufactured and marketed by Boehringer Ingelheim, is today considered the first line treatment for heart attack (acute myocardial infarction). Early leadership in biotechnology morphine and codeine, and later, atropine, theo- In the rapidly expanding field of biopharmaceuti- bromine and ergot alkaloids – all clinically impor- cals Boehringer Ingelheim is one of the world’s tant agents. leading players, building on a wealth of expertise that the company has generated since 1885. Drugs for the 21st century In biopharmaceuticals the active substances are The company began using bacteria for the produc- extracted from natural materials, from cells or tion of lactic acid in commercial quantities as plants, and not through chemical synthesis. It is early as 1895. This was the world’s first successful widely accepted today that a wide range of diseases, use of micro-organisms for large-scale product such as diabetes, autoimmune diseases or cancer, manufacturing. In 1933, the company successfully are better treated with medicines produced using developed a process for manufacturing citric acid biotechnology. through the fermentation of fungi. Our competence in fermentation processes provided valuable 64 Reflecting this, the importance of biotechnology support in the 1970s for the manufacture of has grown significantly since 1990, when not even numerous new antibiotics, including amicleno- 1 % of all drugs were produced biologically. Now mycin, epidermin and gunacin, lead substances they account for 8 % and are on a rising trend. It is for chemically optimizing medications. After first estimated that by 2018 half of all pharmaceutical extracting alkaloids from plants in 1905, turnover will be generated by biopharmaceutical Boehringer Ingelheim increased production con- medicines. For newly launched medicines, the siderably from the 1960s onwards. This led to the figure is already as high as 35 %. For Boehringer commercial introduction of products, such as Ingelheim the modern era of biotechnology began Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 at the end of the 1970s with the manufacture of The company has maintained its early technologi- therapeutically active proteins by genetic engi- cal lead to the present day. At the Biberach site, neering. Again, the company was among the the company has the world’s second largest plant pioneers. Our output included interferon beta, for manufacturing biopharmaceuticals. Its 12 fer- interferon omega, Namalwa interferon, interferon menters each have a capacity of 15,000 litres. alpha, interferon gamma and manganese super- Mammalian cell cultures are here turned into oxide dismutase. highly efficacious drugs, such as metalyse® or actilyse®, a medication indicated against stroke. Successful cooperations Our technical lead in biopharmaceutical manu- To maintain our strong performance in microbial facture and competence across the whole devel- production of biopharmaceuticals a new plant opment and production chain led in the early was inaugurated in April 2005 at our site in 1980s to the highly successful cooperation with Vienna, Austria. the California-based Genentech Inc. This resulted in the development of drugs such as actilyse® In addition, we provide know-how to our (rt-PA), metalyse (TNK-tPA), imukin® (inter- commercial partners, companies such as Amgen, feron gamma) and beromun® (tumour necrosis Pfizer or Schering, for which we do contract factor alpha). manufacturing. n Biopharmaceuticals 65 Biopharmaceuticals and Chemicals Our Biopharmaceuticals division is a leader in time-to-market development for efficient and robust large-scale production of high quality biopharmaceuticals. Its major sites in Vienna, Austria, and Biberach, Germany, have both established a strong track record in development and regulatory approval during the last 25 years. In our Industrial Customer business for global marketing and sales of third parties, we provide the entire biopharmaceutical process chain with our own intellectual property from cell-line development, fermentation, downstream processing, formulation as well as fill and finish in state-of-the-art application systems, including global registration and marketing support for biopharmaceuticals. Biopharmaceuticals In order to further accommodate our high-yield fermentation processes for mammalian cell cultures, additional investments are being made Ground-breaking for a brighter future at the Biberach site, groundbreaking for competi- The year 2005 represents the most successful tive manufacturing costs. business year so far for Biopharmaceuticals. To address patient convenience, an investment To maintain our strong performance in microbial into an aseptic filling line for pre-filled syringes production of biopharmaceuticals a new plant has been given the go-ahead. This should was inaugurated in April 2005 at our site in strengthen our leading position in the develop- Vienna, where the capacity is now doubled with ment of application systems for therapeutic pro- an investment of EUR 80 million, raising total teins and in future for gene therapeutics too. capacity of 12,300 litres fermentation volume in three parallel operating facilities and created 200 new highly qualified jobs. The full operation of our new facility for cell culture-derived products in Biberach, high-yield processes, extraordinary success rates and our demanding long-term contracts contributed to a sales increase of more than 40 % to EUR 548 million. Our investment in a brighter future was fully materialised, due to very substantial synergies with existing onsite plants in Vienna and Biberach and skilled, highly-experienced employees. 66 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Moreover, for Boehringer Ingelheim’s own bio targets and estimated lower treatment cost. We pharmaceutical products – actilyse®, metalyse®, are already prepared to take up such processes in beromun® and imukin® – sales amounted to our Industrial Customer business and for in- EUR 163 million. metalyse® gained significant licensing for our own R&D pipeline. One of our market share over actilyse®, indicating that partners in this field is Avidia. second generation products with improved efficacy pay off in the market. Short half-life and parental application of bio pharmaceuticals can be compensated, for example, Cost of goods is a key issue in a competitive envi- by pegylation of the protein therapeutic. Expertise ronment. For our gene therapy production line at in this technology led in 2005 to new business. our microbial plant in Vienna improvements in For mammalian cell cultures, a monoclonal anti- expression yields up to 1.2 g pDNA/litre were body titer of more than 4g/litre has been reached obtained through culture media development and successfully in process development. optimised feeding strategies. Our proprietary microbial expression system for the production of Major investments in increased capacity combined therapeutic proteins was also advanced signifi- with achievements in process sciences and manu- cantly during 2005 to 12 g protein-inclusion facturing, together with improved business proc- bodies/litre fermentation volume and 80 % yield esses, provide potential for improved profitability in the following refolding step. in manufacturing and strengthen Biopharmaceuticals’ competitiveness on the world market. Comparable with our franchise in manufacturing gene therapeutics, an economic manufacturing The year 2005 marked the 10th anniversary of our process for protein scaffolds has been established. mammalian cell culture multi-product US Food It is believed that protein scaffolds will be a second and Drug Administration (FDA) license. During wave of immuno-therapeutics with certain advan- the FDA’s 2005 biannual inspection, all of our tages over monoclonal antibodies such as brain facilities and products were certified. In the new penetration, suitability for specific intracellular cell culture facility with 6 x 15,000 litre capacity a Biopharmaceuticals and Chemicals 67 second manufacturing process has been successfully implemented. The facility was also licensed Chemicals as a multi-product facility by the FDA in 2005, just one year after initial licensing as a monoproduct facility. Our new biological entity (NBE) pipeline strategy has been implemented to fuel Boehringer Ingelheim’s R&D pipeline with biopharmaceuticals. In this context, a monoclonal antibody for the treatment of psoriasis was in-licensed from AbGenomics. A research collaboration for natriuretic peptide receptor fusion proteins with Syntonix has been commenced. Medarex and MorphoSys technologies have been licensed in 2005. All these efforts are designed to create added value for Boehringer Ingelheim’s NBE development. Chemical Production In recent years, our production network Chemicals has been developed into a globally-orientated organisation, developing and producing active pharmaceutical ingredients (APIs) for Boehringer Ingelheim. By focusing our chemical sites – Germany, France, Italy, Spain and the USA – on specific predefined roles within the network, flexible and highly competitive production of active pharmaceutical ingredients (APIs) has been secured for captive use and industrial customers. In 2005, the launch of aptivus® was supported by API production at the launch site Ingelheim, Germany. To satisfy constantly growing demand for micardis®, the Petersburg, Virginia, USA, site commenced production of telmisartan. In addition, the Malgrat, Spain, site hosted an international workshop, where members of the “Telmisartan Expert Teams” from Ingelheim, Petersburg and Malgrat met to establish best practices at all sites through an intensive exchange of experiences and accessing opportunities for continuous improvement. Investments Worldwide investments in property, plant and equipment accelerated at Boehringer Ingelheim in 2005. They increased by about 25 % compared to 2004 to EUR 532 million. “These investments mirror our dynamic business growth,” says Dr Hans-Jürgen Leuchs, Board Member responsible for Operations. The most important project completed in 2005 was the new biopharmaceutical production plant in Vienna, Austria (inauguration in Vienna 2005, picture on the right), an investment of some EUR 80 million, which will also create 200 new jobs. The company is strongly expanding its biopharmaceutical investments in order to maintain its leading edge in this field. EUR 70 million will be invested to modernise (de-bottleneck) one of the high capacity biopharmaceutical plants in Biberach, Germany. Further investment projects in 2005 were the starts of a new logistics centre in Ingelheim, and a physical science building in Ridgefield, Connecticut, USA. The expansion of the chemical production plant in Petersburg, Virginia, USA is ongoing, and also the expansion of the production lines at our companies Roxane Laboratories, Inc., Columbus, Ohio/USA, and Ben Venue Laboratories, Bedford, Ohio. 68 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Pioneering college course in biotechnology In a unique educational venture Boehringer Ingelheim is participating in a pioneering public-private partnership in Biberach, Germany, to create a college course in pharmaceutical biotechnology. The groundbreaking ceremony for the technical college building that will house the course took place in June 2005. The first group of 35 students is scheduled to start the bachelor of science course in the winter semester 2006-7, but ultimately the number of students will total 200. Prof. Rolf Werner, head of the division Biopharmaceuticals at Boehringer Ingelheim, described the venture as an “investment in the future” for the Baden-Wuertemberg region, for Germany and for Boehringer Ingelheim. Biberach is the main site of the company’s biopharmaceutical activities. The partners in the project are the local, regional and federal authorities, a local bank and the biotechnology company Rentschler. The degree course will cover everything from the basic science and analytical techniques in biopharmaceuticals through process development and plant technology to business economics and medical law. Fine Chemicals A highlight of 2005 was the performance of The sales figures of our worldwide Fine Chemicals phenylephrine. Volumes doubled due to sales business developed very well. Despite difficult restrictions on an alternative API in the USA. market conditions, arising, for example, from Controlled substances also showed gratifying Indian competition surplus capacities, they growth in the USA. Sales from new business attained the same level as in 2004. Consolidated development projects performed very well, too. sales amounted to EUR 140 million in 2005, just matching the 2004 level, irrespective of the substantial loss of a custom synthesis product. The importance of the US market increased further. Biopharmaceuticals and Chemicals 69 Animal Health Helping the 70 heart When her Labrador Buster fell ill, he could no longer play with little Anna Kingston. “Our dog was frail and apathetic,” says Anna’s mother, Liz. Buster was unresponsive, weak and lacked his usual spirit. Like the one in ten dogs with heart disease, he was suffering from what the experts call dilated cardiomyopathy (DCM) which produces changes in the heart, reducing its capacity, leading to congestive heart failure. This at first causes breathing difficulties and exhaustion, later leading to premature death. 71 Fortunately for Buster and the Kingston family, vetmedin®, a breakthrough treatment developed by Boehringer Ingelheim for treating heart failure in dogs, was available. Buster has been part of the Kingston family for the past five years. “He won our hearts in an instant and bonded particularly strongly with our little daughter Anna,” says Liz Kingston. “They would tumble around all the time, playing with a ball or exploring their surroundings. In winter, we suddenly noticed that Buster at night paced to and fro nervously. His breathing was difficult and he developed a cough. At first we thought it was just a cold, but Buster would lay on his blanket all day and not even want to go for walkies.” The family finally turned to their veterinarian, Dr Henry Norfolk, who diagnosed that Buster had DCM, a disorder which, if untreated, means an average life expectancy for the dog of only a few weeks or months. “This news hit us very hard, but thankfully Dr Norfolk knew that vetmedin® (pimobendan) has been shown to be a highly effective medication for this condition,” Liz Kingston recalls. After hearing about the favourable results of various studies involving the treatment, the family had renewed hope for their much-loved pet. Their hope was fulfilled when, shortly after treatment began, Buster was much better and almost back to his old playful self. That was over a year ago and Buster is still going strong. “We’ve been so thankful for every extra day that we’ve had with Buster,” Liz concludes. 72 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 According to the American Veterinary Medical Association (AVMA), canine heart disease is one of Beneficial alliance the leading causes of death in pet dogs. Of the 10 % of dogs which develop congestive heart failure, Boehringer Ingelheim Animal Health cares for pet animals, DCM is the second most frequent cause. for a longer and happier life together. This is one of the cornerstones of our mission. Boehringer Ingelheim has for Studies prove efficacy the past half century cared for the benefit of animals and Veterinarians have increasingly recognised people, discovering and developing a wide range of novel, v etmedin® as a first-line treatment for canine practical treatments for cats and dogs. congestive heart failure due to both DCM and mitral valve disease (MVD). vetmedin® differs The company is dedicated to fostering a beneficial alliance from previous treatments by helping the heart between man and animals by uniting research expertise pump more easily and efficiently, often bringing and human pharmaceutical excellence. Our pets are living dramatic clinical improvement within days of longer, healthier and happier lives through improved initiating treatment. nutrition and healthcare. This has created a real demand for effective and safe treatments for chronic and geriatric In contrast to other commonly used heart drugs conditions, such as heart disease, osteoarthritis and that only attack the disorder with a single mode of cancer. action, vetmedin® combines two favourable actions. It dilates the blood vessels, thereby reducing the effort the heart has to make to circulate blood. At the same time, vetmedin® works to increase contractility by helping the heart to pump more strongly and more efficiently. The first of a new class of compounds, this inodilator’s unique dual action, makes it an optimum treatment for MVD and DCM, the two most common forms of heart disease in dogs. Clinical studies have independently confirmed the significant superiority of vetmedin®. Boehringer Ingelheim aims with the long-term study quest (QUality of Life and Extension of Survival Time), initiated two years ago, to further research the important parameters of quality of life and life vetmedin® helps the heart to pump more strongly and more efficiently. expectancy. Based on this study, one of the world’s largest independent studies in companion animal veterinary medicine, a new benchmark will be set for treating heart failure in dogs. n Animal Health 73 Animal Health Our Animal Health division celebrated its 50th anniversary in 2005. While this makes Boehringer Ingelheim one of the long-established companies in this industry, it stands out as one of the most innovative and dynamic. The anniversary year saw generally very satisfactory business development. Sales rose by 8 % to around EUR 360 million in local currency. Our focus in 2005 continued to be on the core segments livestock vaccines and chronic diseases in companion animals and on optimisation of organisational and marketing structures. This further consolidated our position among the top 10 leading animal health companies in the world, giving us a global market share of 3 %. Regional differences management of pigs. In Germany, some produc- Growth in 2005 varied greatly from one region to ers’ associations have already declared the use of another. Once again, Europe, the growth engine the oral vaccine to be mandatory, only one year behind the Animal Health division, posted excel- after launch. enterisol® ileitis is thus well on lent business development in the market with an the way to becoming another of Animal Health’s 7 % increase in sales. The NAFTA region posted top products. sound growth of 9 %, but the year was marked by special factors, such as the sale of the antibiotic It is noteworthy that we received marketing denagard® to Novartis. Asia also had a success- authorisation for enterisol® ileitis in Australia. ful year. Sales in China and Thailand more than Not only is this the first Boehringer Ingelheim doubled, while the registration of ingelvac® prrs vaccine to be introduced in Australia, but it is also in these countries paved the way for continued the first imported modified live vaccine to be given strong growth. In Japan, the restructuring process, marketing authorisation there. aimed at streamlining the product portfolio and concentrating on our core segments, is practically Our flagship product ingelvac® prrs showed complete. The launch of our porcine vaccine range extraordinary development, particularly in South in Latin America and Eastern Europe is currently Korea where sales doubled. Our best-selling being prepared. vaccine is now also available in China, the largest swine market in the world, allowing us to consolidate further our No. 1 position there among Food-producing animals the international suppliers of porcine vaccines. Swine ingelvac® m. hyo also posted strong growth. This The key event in the swine segment in 2005 was enabled our young company in Thailand to the pan-European launch in Barcelona in October become market leader in this indication in a very 2005 of enterisol® ileitis, the first and only short time. Excellent results were also achieved in vaccine in the world for the widespread dis- France where ingelvac® m. hyo improved ease ileitis that is associated with diar- by 36 % in a flat market, thus securing a rhoea. Our experience in practice to date market share of 31 %. has been extraordinarily positive. In the USA, every third pig was vaccinated 74 On the whole, 2005 saw excellent progress against ileitis in 2005, while control of with our porcine vaccines, one of our core the disease was established as an essential target segments, putting us well on the way element to becoming global market leader. of professional healthcare Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Cattle There were two highly gratifying developments in the cattle segment. First, the food-producing animal industry is becoming increasingly aware that healthy animals also produce healthy meat and higher milk yields. More and more farmers Half a century keeping animals healthy therefore attach value to effective treatment of their animals’ pain and inflammation, thus help- Boehringer Ingelheim has been committed to maintaining ing our metacam® progress towards becoming and improving the health of companion and farm animals the gold standard in this area. The drug continued since the mid-1950s. The following milestones show the its double-digit growth in the cattle segment in launch years for key veterinary medicines from our own 2005. research and development. Secondly, our mastitis products not only main- 1955 tained their excellent market position in 2005, pecusanol® (lindane) – a treatment for ectoparasitic but were also able to step up market penetration infestation of all types of animals in the developing markets, a positive trend that is likely to be consolidated further. An international congress in Maastricht provided impressive evidence of the excellent efficacy of our classical product mamyzin® in sub- 1956 lobelin® (lobelin HCl) – a treatment for airway diseases in horses, especially used as a stimulant for newborn foals, based on the active principle of lobelia inflata (Indian tobacco plant) clinical mastitis. The vaccine 1964 portfolio continues to represent voren® (dexamethasone-21-isonicotinate) – a long- one of the strongholds of our acting catabolic steroid used to treat metabolic disorders, cattle business in the NAFTA inflammation and allergic reactions in cattle, swine, region. horses, dogs, and cats 1966 buscopan compositum® (N-butyl scopolamonium bromide + metamizole) – a spasmolytic and pain inhibitor for treating colic in horses, based on active substance Companion animals from the Duboisia (Corkwood) plant 1967 Small animals bisolvon® (bromhexine) – a mucolytic for treating The small animals segment can look back on a respiratory disease in cattle, swine and small animals highly successful year. With consistent growth of where mucus is a complicating factor our existing products we confirmed our leading market position in many key countries. The extraordinary performance of vetmedin® is particularly promising, with worldwide growth of 24 %. This drug secured first or second position on all the leading markets in Europe. The outstanding growth rates in Canada (82 %) and France (27 %) give us every reason to be extremely optimistic about the next few years when the product will be registered in other key markets. 1980 ventipulmin® (clenbuterol HCl) – an equine respiratory treatment that relieves the breathing difficulty of horses with conditions characterised by reversible broncho spasm, or mucus accumulation, including heaves or chronic obstructive pulmonary disease (COPD) 1989 ingelvac® aujeszky mlv (Bartha strain K-61) – the first of the ingelvac® series of products to immunize swine against a range of viral infections continued on next page ➤ Animal Health 75 ➤ continued from page before 1995 ingelvac® prrs mlv (Porcine respiratory & reproductive syndrom virus, modified live virus) 1998 metacam® (meloxicam) – initially launched for dogs, this treatment is now licensed for alleviating pain and reducing inflammation in many indications in dogs, cats, horses, cattle and pigs 1999 vetmedin® (pimobendan) – a treatment for congestive heart failure in dogs 2001 (US) enterisol® ileitis (Lawsonia intracellularis a virulent live culture) – first vaccine against Lawsonia intracellularis worldwide 2002 (EU) ingelvac® m. hyo (Mycoplasma hyopneumoniae bacterin) – novel technique allows a one shot only vaccination metacam® also achieved a strong increase in sales Business with our non-prescription products which highlights the excellent performance once canosan®, seraquin® and viatop®, a new again in 2005. With double-digit global growth product for skin disorders, showed a gratifying rates, we effectively maintained our position in trend throughout the entire companion animals Europe, Canada, and Australia, in spite of fierce segment. competition. The new small animals team in the USA achieved striking success, advancing in record time to take 3rd position in the market. Horses 76 Research and development We once again maintained our strong position in True to our company vision Value through Inno- the horse segment in the European and American vation, we invested around 12 % of our Animal markets. With the introduction of the intravenous Health sales in research and development in 2005, solution for injection, metacam® horse, in a high percentage for the international industry. Europe, we extended our portfolio with a The focus was primarily on the development of frequently demanded product. At the same time, new pharmaceutical solutions for small animals two launches in the USA, the world’s largest and preventive measures for the large animals equine market, provided further impetus for sector. These efforts have culminated in several growth: buscopan®, the classical treatment for interesting projects in the current pipeline and equine colic, and sedivet®, a drug used to sedate good progress in the development of innovative animals. pharmaceutical molecules and vaccines. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Group Management Report Group Management Report Business and operating environment remains very difficult due to high unemployment and stagnating domestic demand. Stimulation for the German economy came substantially from exports. Overview The development of the world economy in 2005, Global conditions for research-driven pharma- compared with the previous year, was character- ceutical companies did not improve last year. ised by a marked increase in raw material prices. Regulatory interventions are no positive signal At the same time, generally low capital market for the development of innovative medicines. interest rates, a rather expansion-orientated Despite these trends, Boehringer Ingelheim will monetary policy and the corporate earnings continue to do its best in researching new, position had an overall positive influence on the innovative pharmaceuticals for the benefit of economic cycle. patients. Regionally, the USA and China were the growth The world pharmaceutical market grew by 6.3 % centres of the world economy. The Japanese in the financial year 2005, discounting currency economic situation also developed favourably effects. With an increase of 23.9 % in this period, and it is to be hoped that the stagnation phase is Boehringer Ingelheim clearly exceeded average now overcome for good. The development of the market growth. It is noteworthy that Boehringer economic cycle in Europe was rather restrained. Ingelheim outpaced the pharmaceutical market In Germany in particular the economic situation in every region, reflecting the global orientation Net Net sales sales by businesses by businesses 2005 2005 (in millions (in millions of EUR) of EUR) Medicines Medicines Prescription Prescription 6,183 6,183 7,247 7,247 CareCare Health Health Consumer Consumer 970 970 1,052 1,052 Biopharmaceuticals Biopharmaceuticals 392 392 and and Chemicals Chemicals Fine Fine Pharma Pharma Manufacturing Manufacturing 262 262 Health Health Animal Animal 335 335 Net Net sales sales by region by region 2005 2005 (in millions (in millions of EUR) of EUR) 548 548 299 299 9,5359,535 ’04 ’05 ’04 ’05 78 4,559 4,559 Europe Europe 2,622 2,622 3,117 3,117 Total Total Total Total 8,1578,157 361 361 Americas Americas 3,905 3,905 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Australasia, Australasia, Asia,Asia, Africa Africa 1,630 1,630 8,1578,157 1,859 1,859 9,5359,535 ’04 ’05 ’04 ’05 and strength of the group. The greatest stimulus disease HIV, was remarkable in two senses. First, for growth in 2005 came once again from the medication was developed to market maturity America, the most important market for in a very short time. Secondly, only seven days research-driven pharmaceutical manufacturers. after approval by the US Food and Drug Admin- Here, we gained additional benefit from the istration (FDA) in June 2005, aptivus® was positive commercial development of our product already commercially available. Thus, patients mobic®. have access to a new, highly efficacious therapy option for the treatment of HIV disease. In Boehringer Ingelheim’s growth on the pharma- November, the product was launched in Germany ceuticals market consequently led to a marked and the United Kingdom. increase in group turnover. In 2005, Boehringer Ingelheim generated net sales of EUR 9.5 billion, The very positive uptake of already established, corresponding to an increase of 17 %. The positive innovative pharmaceutical products in our development of business in 2004 was thereby markets also contributed to the success in 2005. continued further. A comparative analysis of spiriva® is already the most commonly the business results for the years 2004 and 2005 prescribed product for the treatment of chronic can virtually ignore the influence of foreign obstructive pulmonary disease (COPD). exchange, as this only accounts for a factor of The launch of spiriva® in Japan in December < 0.1%. 2004 made it possible for the first time for patients to be treated with this innovative medi- The business segment Prescription Medicines cation in almost all important pharmaceutical (PM) was responsible for the largest share of the markets. The cooperation with Pfizer Inc. on success achieved in the past financial year. marketing the product has proved its worth. In addition, our other segments also developed very satisfactorily: Sales of micardis®, a treatment for hyper tension, have also shown very gratifying development. Clinical studies which were concluded in Net sales (in millions of EUR) 2005 2004 Change Prescription Medicines 7,247 6,183 +17 % Consumer Health Care 1,052 970 +9 % Biopharmaceuticals 548 392 +40 % Animal Health 361 335 +8 % 2005 have confirmed our high expectations concerning the efficacy of micardis®. Despite intensive competition in this market segment, we still anticipate further growth potential for this product. Our business success in previous years was also The development of net sales in the segments founded on the vision Value through Innovation Consumer Health Care (CHC) and Animal Health (VTI) embedded in our corporate culture. With is noteworthy, as both businesses had to main- the introduction in 2005 of the initiative Lead & tain their position in a very difficult market Learn we have given the VTI concept fresh environment. The outstanding business develop- stimulus. We thereby ensure that the VTI princi- ment of Biopharmaceuticals was the main ples will also be secured in the company in future growth driver of our Industrial Customer and continue to be translated into reality. business and maintained the growth rates of the previous year. To sum up, 2005 was for Boehringer Ingelheim a highly successful year in which we laid solid For the business segment Prescription Medicines, foundations for the further development of the the market launch of aptivus®, a protease inhib- group of companies. itor for the treatment of immunodeficiency Group Management Report 79 The most important key figures for earnings are These areas of research are divided according to as follows: their defined focus between four main research sites in Germany, the USA, Austria and Canada. (in millions of EUR) 2005 2004 Change Net sales 9,535 8,157 +17 % Operating income 1,923 1,372 +40 % 20.2 16.8 Return on net sales (as %) In the area of respiratory diseases, 2005 saw the successful launch of spiriva® in Japan. Further studies have long confirmed the efficacy of this medication. Research in the disease COPD is being consistently continued. A focus of research in virology is a new non- Research and Development nucleoside reverse transcriptase inhibitor Boehringer Ingelheim sees its objective as devel- (NNRTI) which can be applied particularly when oping new medicines and therapies, thereby resistance to hitherto used therapeutic regimes helping the sick. This strategic orientation is occurs. In addition, this concerns the consistent shown in both actual projects and initiatives and further development of the class of drugs to in the worldwide expenditure on research and which the successfully launched viramune® development. In the financial year 2005, belongs. Boehringer Ingelheim invested EUR 1,360 In oncology, new active ingredients have been million in R&D. discovered which promise new therapeutic approaches and opportunities to cure various R&D expenditure as percentage of net sales types of tumour. These are currently in phase I amounted to 14.3 % in 2005 (2004: 15.1 %). of clinical development. The first results were The focus of our R&D activities is Prescription presented to the scientific community in the USA Medicines. In this segment, the R&D expenditure in late autumn last year. as a share of net sales stood at 18.2 % in 2005 In metabolic diseases, new therapeutic (2004: 19.3 %). approaches to treating diabetes mellitus type II are in the foreground, especially in conjunction Boehringer Ingelheim supports this focus with with associated secondary diseases. Some its own research that is concentrated on the projects show promising therapeutic approaches following therapeutic areas: and are at present in the pre-clinical or clinical • respiratory diseases phases. • virology Studies in the area of central nervous system • oncology diseases have confirmed that mirapex®/sifrol® • metabolic diseases can be used to treat restless legs syndrome. • cardiovascular diseases In addition to its efficacy, its good tolerability • central nervous system diseases in particular was confirmed. Applications for • immunology and inflammation market approval for this indication were submitted in the USA and Europe in 2005. Research and development 2005 2004 2003 2002 2001 Expenditure (in millions of EUR) 1,360 1,232 1,176 1,304 1,019 14.3 15.1 15.9 17.2 15.2 – as % of net sales Human Pharma. expend. (in millions of EUR) – as % of net sales of HP Average number of employees Investments in tangible assets (in millions of EUR) 80 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 1,318 1,140 1,264 984 14.4 1,195 15.3 16.1 17.4 15.4 5,678 5,471 5,362 5,205 4,828 116 97 93 97 99 cymbalta®, the anti-depressive in-licensed help people with our products. This helping from Eli Lilly & Co., received in the meantime stance is only credible if Boehringer Ingelheim approval as a treatment in 20 countries, thereby takes an active part in preserving the environ- reinforcing our therapy area central nervous ment. system. It goes without saying that Boehringer Ingelheim On top of our own research efforts, our activities respects and observes each country’s legal and projects are complemented by strategic regulations. Beyond that it is our aim to exceed alliances and in-licensing technologies. In the the environmental requirements where we past financial year, technologies were, for exam- consider this purposeful and necessary. Our ple, in-licensed from MorphoSys and Medarex established processes in the field of Environmen- that should support our research activities in tal, Health & Safety (EHS) form the foundation the field of biotechnologically manufactured for successful implementation of the fundamen- pharmaceuticals. This also applies for a mono- tal principles of environmental policy. Thus we clonal antibody in-licensed from AbGenomics. carried out environmental audits at 11 different sites in 2005. The purpose was to see whether the From today’s perspective, Boehringer Ingelheim’s environmental guidelines we have set out were R&D pipeline provides a very good foundation to being observed. In 2005, Boehringer Ingelheim support and enable the further development of was also awarded various prizes in the EHS field. our company on a lasting basis. The award received by the chemical site Petersburg,Virginia, USA, hailed its new waste- Production water plant as exemplary. Boehringer Ingelheim’s production activities are divided into three areas: Employee reporting • chemical production (five sites worldwide): The favourable business development of the past this encompasses both the manufacture of year is also expressed in the marked increase in active ingredients for our own pharmaceutical the number of employees. Averaged over the year, production and chemical active ingredients for 37,406 people were employed at Boehringer customers outside the Boehringer Ingelheim Ingelheim, corresponding to an increase of 5 % group. against the previous year. In Germany, we • pharmaceutical production (19 sites world- received first prize for the highest number of new wide): pharmaceutical production concentrates people hired in 2005 in our reference group. on manufacturing finished products. We are particularly proud that in 2005 we clearly Production is structured in technological increased our offer of apprenticeships at our centres of competence, which operate in a German subsidiaries compared to 2004. production alliance. • biopharmaceutical production (two sites in An essential goal for our human resources work Europe): as for chemicals, biopharmaceuticals is to hire the best employees and retain them are produced for both Boehringer Ingelheim long-term. Various personnel and leadership medications and for third parties. development paths are available in order to consistently develop further the talents of our Environmental reporting employees. According to the guiding principles (Leitbild) of Boehringer Ingelheim, the preservation and protection of the environment has a very high priority. This derives ultimately from our claim to Group Management Report 81 Social responsibility Boehringer Ingelheim’s net sales increased by Boehringer Ingelheim takes an active part in the 17 % in 2005 to EUR 9,535 million. This gratify- overall social responsibility with great care and ing development reflects the favourable market considerable enthusiasm. uptake of the pharmaceuticals, which we produce For example, since the year 2000, programmes and sell. The currency effect of EUR 3.3 million have been supported that substantially reduce only had insignificant influence when the finan- the transmission of HIV from mother to child cial years 2004 and 2005 are compared. The full during birth through antiretroviral therapy. The consolidation of our South Korean subsidiary viramune® necessary for this purpose is made since 2005 has a one-off effect of EUR 18 million available free of charge by Boehringer Ingelheim. on net sales. Comparing growth rates in 2005 In calendar year 2005, Boehringer Ingelheim and 2004, an additional extraordinary effect due supported about 140 programmes in around 60 to the product sifrol® has to be considered. countries. Except for the USA, exclusive worldwide market- In addition, Boehringer Ingelheim fosters the ing rights were returned to Boehringer Ingelheim development of healthcare systems in defined by Pfizer Inc. on 15 October 2004. countries. In Botswana, for instance, a training unit was opened to promote medical education. Boehringer Ingelheim’s activities are concen- Our overall social responsibility is expressed in trated on the two businesses Human Pharma additional international initiatives. For example, ceuticals and Animal Health. Net sales in Human we gave rapid and unbureaucratic support with Pharmaceuticals, with activities grouped under money and materials to the victims of the natural the segments Prescription Medicines, Consumer catastrophes in Southeast Asia and Pakistan. Health Care and Industrial Customer, amounted In this context, it is important to point out that, corresponds to 96% of total group net sales. to EUR 9,174 million in 2005 (+17 %). This in addition to the engagement of our company, many of our employees voluntarily use their free Prescription Medicines (PM) time to involve themselves in social projects. Within the Human Pharmaceuticals business, For this, we would like to express our heartfelt PM accounts for 79 % of net sales, forming the thanks to all our employees. Actively helping centrepiece of our activities. In 2005, we people is for us an expression of an attitude that achieved net sales of EUR 7,247 million in this reflects the way Boehringer Ingelheim perceives segment (2004: EUR 6,183 million). A currency itself and which we support as much as possible. effect of EUR 6 million must be taken into account when analysing the figures. Results from operations, financial position and net assets Results from operations perspective, the following products were the strongest growth drivers: Net sales (in millions of EUR) 2005 2004 Growth Based on currently available market data, spiriva® 951 525 +81 % Boehringer Ingelheim was last year the fastest- sifrol®/mirapex® 434 285 +52 % growing pharmaceutical company in the world micardis® 724 568 +27 % within its benchmark group. Our company is mobic® 848 672 +26 % now ranked No.14 among the largest pharma ceutical companies, with a worldwide market share of 2 %. 82 From a worldwide business development Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 2005 2004 2003 2002 2001 Price/quantity/new introductions 17.4 16.1 7.8 10.1 8.9 Acquisition and sale of businesses –0.5 –0.5 –0.2 7.1 –0.7 0 –5.1 –10.2 –4.0 0.0 Components of growth in net sales (as %) Currency effect spiriva®, our new medication for the treatment Germany was very gratifying compared to the of COPD, has developed very satisfactorily. previous year. Growth in our home country was Net sales for cymbalta®, the product in-licensed mainly achieved with our innovative medications from Eli Lilly & Co. and launched in 2004, spiriva®, sifrol®, micardis® and cymbalta®. performed as expected. In addition, there was the launch in Germany of The positive uptake by patients and the market of the product alna® ocas®, which allows benign aptivus®, a protease inhibitor for the treatment prostatic hyperplasia (BPH) to be treated with a of the immunodeficiency disease HIV, will also single dose per day. strengthen the development of our innovative product portfolio in the coming financial year. Despite increasing regulatory restrictions too, the In addition, products that are already established Asia, Australasia, Africa (AAA) Region achieved on the market will support the business develop- double-digit growth in net sales, contributing to ment in the future. group success with net sales of EUR 1,312 million. With its 61 % share, Japan is for us the Analysing the regions in which we operate largest market in this region. In 2005, our around the world, it can be observed that Japanese subsidiary attained net sales growth of Boehringer Ingelheim has clearly grown more 12 % to EUR 801 million in this market, largely strongly than the respective regional pharma attributable to the highly favourable develop- ceutical markets. ment of micardis®. The Australian market also performed above average, with a EUR 24 million, The Americas Region, with a share of 51 %, or 25 %, increase in growth. Overall, we achieved contributes the largest part of net sales in PM. net sales of EUR 120 million in this market. Compared to the previous year, growth of 17% In India, we have started to build up our own was achieved here, corresponding to net sales of subsidiary. EUR 3,670 million. The USA, with its 85 % share of net sales, is the largest and thereby the most important country for Boehringer Ingelheim in this region. Our products spiriva® and mobic® in particular were responsible for the positive US business development, increasing net sales by EUR 345 million (+58 %) compared to the previous year. Foreign exchange development ■ EUR 1 in USD (average exchange rates) ■ EUR 1 in YEN (average exchange rates) 1.30 150 1.25 The Europe Region’s share of net sales in this 1.20 market segment stands, with a volume of EUR 1.10 2,037 million, at 28 %. It contributed to the 1.05 success in 2005 with a 15 % increase in net sales 0.95 compared to the previous year. With net sales growth of over 22 %, business development in 140 1.15 130 1.00 120 0.90 ’01 110 ’02 ’03 ’04 ’05 Group Management Report 83 Consumer Health Care (CHC) difficult business environment in Japan. In the business segment CHC we raised our net Overall, in the financial year 2005, we achieved sales by 9 % to EUR 1,052 million (discounting the following net sales figures for each region: currency effects: EUR 1,056 million). Consistent Americas EUR 222 million, Europe EUR 436 orientation towards core brands defined in our million and AAA EUR 394 million. strategy continues. Non-prescription products, whose patent protection has expired, will be Industrial Customer integrated into existing product lines, and, The third party business in pharmaceutical wherever possible and purposeful, an umbrella production and the fine chemicals area broadly brand strategy will be built up. matched the previous year’s level with net sales of EUR 298 million. Worldwide growth was achieved by the following product groups in particular: Alongside the important role that Biopharma ceuticals has in developing and manufacturing Net sales (in millions of EUR) medications for the Boehringer Ingelheim group, 2005 2004 Growth mucosolvan® 91 40 +228 % buscopan® 59 43 +37 % dulcolax® 115 97 +19 % 88 85 +4 % pharmaton® last year it was highly successful with regard to producing biopharmaceuticals for other pharmaceutical companies. Net sales of biotechno logically produced medications for third parties rose from EUR 392 million to EUR 548 million, corresponding to growth of 40 %. Increased customer demand indicates the market success of The distinct increase in net sales for the products our group manufactures for third mucosolvan® resulted, on the one hand, from parties. The commissioning of our new produc- a major cold outbreak at the beginning of 2005, tion facility in Vienna, Austria, and the marked and on the other hand, from product group improvement in productivity of the existing switches in some countries from prescription- production plant in Biberach, Germany, enabled only pharmaceuticals to the CHC business us to fulfil market demand. segment. Routine inspections carried out by the FDA last year resulted in certification of our production buscopan®, as a result of product switches in facilities and processes by the auditors. certain countries in the Americas Region, also benefited from this special effect, which explains Animal Health part of the double-digit growth in net sales. Compared to the previous year, the Animal Based on available market data, the buscopan® Health business developed very positively in an brand has secured No. 1 position worldwide in intensely competitive market, with net sales antispasmodics. growth of 8 %. Total net sales in the last financial Business development differed greatly from year amounted to EUR 361 million (discounting region to region. While in the Americas (+19 %) currency effects EUR 360 million). and Europe (+14 %) marked net sales increases were achieved, net sales in AAA fell slightly (-1.8 %). This was because we were able to maintain, but not expand, our market share in a very 84 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Worldwide growth was achieved by the following Again, in 2005, Boehringer Ingelheim made product groups in particular: further efforts to secure the future of the group of companies through appropriate investments. Net sales (in millions of EUR) Taking into account the newly initiated projects 2005 2004 Growth vetmedin® 16 13 +23 % ventipulmin® 13 11 +18 % metacam® 68 58 +17 % ingelvac® m. hyo 21 18 +17 % in 2005, depreciations increased by EUR 60 million to EUR 531 million, corresponding to an increase of 13 %. Other operating expenses rose by EUR 414 million (13 %). The amount of EUR 3,573 million includes expenditures arising from the termination of a sales cooperation with Abbott. enterisol® ileitis was successfully launched Overall, this produces a EUR 551 million higher in Europe in October 2005. This is an oral operating income of EUR 1,923 million, that aptly vaccine for preventing the bacterium Lawsonia records the success of the past financial year. The intracellularis. This bacterium triggers inflamma- Boehringer Ingelheim group’s return on net sales tion in the gut of domestic pigs that hitherto rose distinctly from 16.8 % to 20.2 %. could only be treated with an antibiotic therapy. The financial income diminished by EUR 20 Some producer associations in Germany have million to EUR -35 million compared to the already made vaccination mandatory for their previous year. The reasons for this decline were members’ farms. mainly losses on transactions in foreign metacam® has developed favourably for all types exchange derivatives. of animal. vetmedin®, a pharmaceutical for the Holding income, with a contribution EUR treatment of degenerative heart failure in dogs, 0 million, was EUR 2 million lower than the has exceeded our commercial expectations. previous year. In the past financial year, the extraordinary effect arising from the disposal Business developed very well in all three Regions. of a holding was not repeated. Europe, with a 45 % share of net sales, is just ahead of the Americas Region (42 %). In the Taking into account the individual income Americas, extraordinary effects have to be taken components, income before taxes was EUR 1,888 into account. For example, the sale of the anti million, a significant increase of EUR 529 million biotic denagard® to Novartis in the NAFTA or 39 % above the previous year. region produced a fall in net sales, which had a correspondingly negative impact on the business. Tax expenses amounted to EUR 374 million, The 8 % growth in net sales achieved in 2005 corresponding to a tax ratio of 20 % (2004: 33 %). must therefore be regarded as all the more grati- Here, it must be taken into consideration that, fying. due to regulations in the German commercial In the AAA Region net sales growth of 7 % also code, personal taxes on group activities levied on contributed to the success of the Animal Health the shareholders may not be shown as tax business. expenses. These are presented as withdrawals from accumulated group equity. Taking this effect Expenditure and income into consideration, the actual tax ratio is Total operating costs of EUR 8,388 million were markedly higher than the value shown in the 14 % above the previous year (EUR 7,362 million). profit and loss statement. Material costs (EUR 1,613 million) by comparison increased above average, with growth of 25 %, mainly due to changes in the product mix. The increase in the average headcount led to a 9 % rise in personnel costs to EUR 2,671 million. Group Management Report 85 The clear decline in the tax ratio compared to To summarise, it can be noted that, because of financial year 2004 is a result of the restructur- the existing liquidity, the given capital structure ing of inter-company relationships at group level. and the available funding potential, the financial This has full effect for the first time in 2005. preconditions for successfully realising our In 2004, the tax ratio was negatively impacted by strategy remain in place. The goals we set within a one-off extraordinary effect amounting to EUR our financial strategy have been fulfilled. 121 million which arose from changes to the tax tariff applied in the calculation of deferred taxes. Investments are necessary and important for securing our future development. We have there- Taking into account the described tax effects, fore increased our investment activity in 2005 to net income rose from EUR 888 million to EUR EUR 532 million (2004: EUR 427 million), which 1,491 million. registered as a distinct increase in our tangible assets. The bulk of the investments were made in Financial position implementing new technologies, expanding our Boehringer Ingelheim’s financial management is capacity and rationalisation projects. in its instruments and methods aligned with the international standards for a modern industrial At our German research site in Biberach the new company. The goal of the financial management galenics building was commissioned. Further- is to support the business strategy of our com- more, funds were released for a packaging centre pany by providing or investing financial assets, (LogiPack Center) and a new works canteen taking account of the foreign exchange risk at the Ingelheim site. In future, products manu- which arises from our international business factured in Germany will receive their final relations. finishing in our LogiPack Center. The canteen’s capacity will be in line with the markedly For the financial year 2005, Boehringer Ingel increased number of employees in recent years heim’s very good economic development is also and the expected increase. reflected in its further improved financial position compared to the previous year. The cash In the USA, we have also commenced important flow in 2005 amounted to EUR 2,069 million, investment projects. Good examples are the corresponding to 45 % growth compared to the expansion of production facilities at our sub previous year. The cash flow from operating sidiary Ben Venue Laboratories in Bedford, Ohio, activities rose to EUR 2,390 million and is and additional research capacity at Ridgefield, thereby markedly higher than funds used for Connecticut. investment activities in the past year. Financial activities yielded an outflow of EUR 1,334 million Net assets from changes in equity as well as credits raised Total assets rose by 13 % in 2005 to EUR 12,018 with financial institutions. million. The long-term, secured assets are Securities and liquid funds increased by 14 % to covered by Boehringer Ingelheim’s total equity. EUR 4,585 million. The complete presentation of the cash flow calculation is to be found in the By actively managing our receivables, and financial section of the annual report. discounting currency effects, we achieved a development that was disproportionately small relative to the expansion of our business. 86 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Liquid assets declined by 12 % compared to the previous year to EUR 1,167 million due to the transfer of liquid funds into the financial assets. Group equity increased to EUR 4,825 million (2004: EUR 4,556 million) because of the favourable business development compared to the previous year. Long-term disposable capital rose by EUR 281 million compared to the previous year to stand at EUR 7,052 million, corresponding to 59 % of the balance sheet total. This year again, this item covers all intangible and tangible assets, inventories and liabilities as well as nearly half of the liquid assets. The balance sheet and the related balance sheet ratios round off the altogether favourable picture that the earnings and financial position have already drawn. The combined evaluation of the net assets, financial position and results of operations shows that Boehringer Ingelheim is a soundly financed and profitable company. In 2005, we created a firm basis for our further business development. Risk report The risk management system of the Boehringer Ingelheim group has proved effective and the concept was unchanged in the financial year 2005. Business-specific risks are reported and systematically monitored. Our strategy and planning processes also form a significant element in our active risk management. Hereby, we ensure that all risks known to us are thoroughly analysed. Following the appropriate classification, counter-measures from the risk management system are commenced and their implementation consistently monitored. Within the framework of the audit plan approved by the Board of Managing Directors, internal auditing conducted routine and extraordinary audits worldwide during the reporting year. The focus was the efficiency of structures and processes, securing assets, adherence to legal requirements and guidelines, the functionality of systems and the effectiveness of internal controls. Currency and interest rate risks, which arise Report on post-balance sheet date events Since the end of the financial year 2005, we are not aware of any events that are of material significance to the group of companies or could lead to a reappraisal of its asset, financial or earnings position. because of our group’s international business relationships, are constantly examined and limited by appropriate hedging strategies. Risks in the area of Environmental Health & Safety (EHS) are minimised preventively by adherence to our own very high safety standards. For possible incidents, appropriate emergency plans are in place that are regularly tested and trained. Furthermore, Boehringer Ingelheim has risk-adjusted insurance coverage in case damage occurs, despite the high safety standards. In addition to the general business risks associated with the industry, we are not currently aware of any risks that substantially threaten the further development of Boehringer Ingelheim’s business. Group Management Report 87 Report on expected developments For the financial year 2006, we assume that the vigorous growth rates of 2005 will not be maintained. One reason for this is the anticipated stronger generic competition for mobic® that will In the financial year 2005, we updated our affect our business development during the first strategy according to our defined planning half of the year in some European countries. processes. The newly defined milestones and The USA will feel the effect in the second half of targets of our reworked strategy make us all the the current year. more determined to consistently continue to Based on present planning, we expect net sales pursue the course we have chosen and build in 2006 of around EUR 10 billion and predict on our strengths. that Boehringer Ingelheim’s business development will again exceed that of the world pharma- We will make every effort to launch our new ceutical market. pharmaceuticals aptivus®, cymbalta® and spiriva® in additional markets. For sifrol® we In the financial year 2006, we plan to invest expect registration for the new indication restless EUR 660 million in fixed assets. The focus for legs syndrome. The spiriva® respimat® Soft this expenditure will be in the areas of produc- Mist™ Inhaler (SMI) will also be submitted for tion and research. We want to ensure that our registration. Studies show that the spiriva® production can deliver an optimal response to respimat® SMI is preferred by our patients the demands of new products, at the same time compared to other dosage forms. It is free of gas exploiting opportunities to rationalise. propellant and furthermore allows improved Adequately equipping research will also make a uptake of the active ingredient via the lungs. significant contribution in 2006 to building alna® ocas® was successfully launched in three potential for future success. European countries last year. This involves a retard tablet of the already launched active It is our declared goal to manage Boehringer ingredient tamsulosin, in-licensed from Astellas Ingelheim long-term as an independent family- Pharma. The launch of this dosage form is owned company. Our endeavour in this context is planned for additional European markets. to achieve above-average growth in the market that will deliver a corresponding increase in the Important studies are entering their decisive value of the company. To this end, we will also phases and we are confident that they will bring continue to keep a close eye on the profitability positive results for our company. of our group. This is for no other reason than our Noteworthy, for example, are the uplift being highly aware of the risks concerning the (spiriva®) und ontarget (micardis®) studies. success rate for our research pipeline and that At the beginning of 2006, we initiated the sustainable financing of the required research biggest-ever clinical study programme for projects can only be ensured in this way. thrombo-embolic diseases. In the study programme re-volution™, 27,000 patients world- For reaching this demanding goal, we have in wide are expected to take part. The study will the financial year 2005 created a very good basis. investigate Dabigatran (rendix™) the novel, We will also continue to use every means to orally available thrombin inhibitor researched enable Boehringer Ingelheim to achieve its and developed by Boehringer Ingelheim for the ambitious goals and develop successfully further prevention and treatment of thrombo-embolic as a company. We consider this a duty towards all conditions. stakeholders, especially towards all patients for whom we also want to provide efficacious and safe medicines in the future as well. 88 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Consolidated Financial Statements 2005 Overview of the major consolidated companies C. H. Boehringer Sohn* Boehringer Ingelheim GmbH Boehringer Ingelheim Boehringer Ingelheim Deutschland GmbH International GmbH Germany Finland Austria Boehringer Ingelheim Pharma GmbH & Co. KG, Ingelheim Boehringer Ingelheim Finland Ky, Espoo Forschungsinstitut für Molekulare Pathologie Gesellschaft mbH, Vienna Boehringer Ingelheim Vetmedica GmbH, Ingelheim Norway Boehringer Ingelheim Norway KS, Asker Belgium Boehringer Ingelheim Coordination Centre S.C.S., Brussels China Boehringer Ingelheim International Trading (Shanghai) Co. Ltd., Shanghai Boehringer Ingelheim Shanghai Pharmaceuticals Co. Ltd., Shanghai Philippines Boehringer Ingelheim (Phil.) Inc., Manila South Korea Boehringer Ingelheim Korea Ltd., Seoul (50 %) Boehringer Ingelheim Vetmedica Korea Ltd., Seoul Distribution Production Research *sole general partner: Boehringer AG 90 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG Boehringer Ingelheim Auslandsbeteiligungs GmbH Pharma Investment Ltd., Burlington, Canada Argentina France South Africa Mexico Boehringer Ingelheim S.A., Buenos Aires Boehringer Ingelheim France S.A.S., Paris Boehringer Ingelheim (Pty.) Ltd., Randburg Boehringer Ingelheim Promeco S.A. de C.V., Mexico City Australia Labso Chimie Fine S.A.R.L., Blanquefort Ingelheim Pharmaceuticals (Pty.) Ltd., Randburg Boehringer Ingelheim Vetmedica S.A. de C.V., Guadalajara Boehringer Ingelheim Pty. Ltd., North Ryde Austria Boehringer Ingelheim Austria GmbH, Vienna Greece Spain USA Boehringer Ingelheim Ellas AE, Athens Boehringer Ingelheim España S.A., Barcelona Boehringer Ingelheim Corp., Ridgefield, Connecticut Indonesia Boehringer Ingelheim S.A., Barcelona Boehringer Ingelheim Pharmaceuticals, Inc., Ridgefield, Connecticut Boehringer Ingelheim Pharma Ges.m.b.H., Vienna PT Boehringer Ingelheim Indonesia, Jakarta Belgium Italy N.V. Boehringer Ingelheim S.A., Brussels Boehringer Ingelheim Italia S.p.A., Reggello Brazil Bidachem S.p.A., Fornovo S. Giovanni Boehringer Ingelheim do Brasil Quimica e Farmaceutica Ltda., São Paulo Solana Agro Pecuaria Ltda., Arapongas Canada Boehringer Ingelheim (Canada) Ltd., Burlington Chile Boehringer Ingelheim Ltda., Santiago de Chile Colombia Pharmaton S.A., Lugano Nippon Boehringer Ingelheim Co. Ltd., Kawanishi Taiwan SSP Co. Ltd., Tokio (57 %) Boehringer Ingelheim Taiwan Ltd., Taipei Boehringer Ingelheim Vetmedica Japan Co. Ltd., Kawanishi Boehringer Ingelheim Seiyaku Co., Ltd., Yamagata Boehringer Ingelheim B. V., Alkmaar Ecuador Boehringer Ingelheim del Ecuador Cia. Ltda., Quito Switzerland Japan Czech Republic Boehringer Ingelheim Danmark A/S, Copenhagen Sweden Boehringer Ingelheim AB, Stockholm Boehringer Ingelheim (Schweiz) GmbH, Basel Netherlands Denmark Laboratorios Fher S.A., Barcelona Istituto De Angeli srl, Reggello Boehringer Ingelheim S.A., Bogotá Boehringer Ingelheim s.r.o., Prague Europharma S.A., Barcelona Poland Boehringer Ingelheim Sp.zo.o., Warsaw Portugal Boehringer Ingelheim Lda., Lisbon Ben Venue Laboratories, Inc., Bedford, Ohio Roxane Laboratories, Inc., Columbus, Ohio Boehringer Ingelheim Vetmedica, Inc., St. Joseph, Missouri Boehringer Ingelheim Roxane, Inc., Columbus, Ohio Boehringer Ingelheim Chemicals, Inc., Petersburg, Virginia Thailand Boehringer Ingelheim (Thai) Ltd., Bangkok Turkey Boehringer Ingelheim Ilac Ticaret A.S., Istanbul United Kingdom Boehringer Ingelheim Ltd., Bracknell Venezuela Boehringer Ingelheim C.A., Caracas Unilfarma Lda., Lisbon Consolidated Financial Statements 2005 91 C. H. Boehringer Sohn, Ingelheim Consolidated balance sheet Assets (in millions of EUR) Notes1) 31.12.2004 Intangible assets (3.1) 233 267 Tangible assets (3.2) 2,900 2,712 Financial assets (3.3) Fixed assets 3,396 2,756 6,529 5,735 Inventories (3.4) 1,229 1,085 Accounts receivable (3.5) 2,143 1,814 80 1 Securities Cash and cash equivalents 1,167 1,332 Current assets 4,619 4,232 Deferred taxes 821 619 49 44 12,018 10,630 31.12.2005 31.12.2004 178 178 3,001 3,465 –61 –168 Deferred charges and prepaid expenses Total assets Liabilities and equity (in millions of EUR) Notes1) Shareholders’ capital Group reserves Balance sheet currency conversion difference Net income 1,491 888 Equity 4,609 4,363 216 193 4,825 4,556 4,754 3,979 Minority interests Group equity Provisions (3.6) Accounts payable (3.7) Liabilities Deferred taxes Deferred charges Total liabilities and equity 1) 92 31.12.2005 For explanation, see relevant section in the Notes to the Consolidated Financial Statements. Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 2,174 1,886 6,928 5,865 204 193 61 16 12,018 10,630 C. H. Boehringer Sohn, Ingelheim Consolidated profit and loss statement (in millions of EUR) Notes1) 2005 2004 Net sales (4.1) 9,535 8,157 175 91 Changes in inventories Other internal work performed and capitalised Other operating income Total revenues 3 3 598 483 10,311 8,734 Material costs (4.2) –1,613 –1,289 Personnel costs (4.3) –2,671 –2,443 Amortisation of intangible and depreciation of tangible assets (4.4) –531 –471 Other operating expenses (4.5) –3,573 –3,159 1,923 1,372 –35 –15 Operating income Financial income (4.6) Holding income (4.7) Income before taxes Taxes2) (4.8) Income after taxes Third-party share Net income 1) (4.9) 0 2 1,888 1,359 –374 –451 1,514 908 –23 –20 1,491 888 For explanation, see relevant section in the Notes to the Consolidated Financial Statements. Due to legal requirements the disclosure of the shareholders’ personal taxes arising from consolidated business activities as tax expenses is not allowed. These taxes are shown as withdrawels from the accrued group capital. 2) Consolidated Financial Statements 2005 93 C. H. Boehringer Sohn, Ingelheim Cash flow statement 2005 2004 1,514 908 529 467 26 55 2,069 1,430 561 256 Other non-cash income and expenses 43 –17 Gain/loss on disposals of fixed assets –4 3 –90 –110 –385 –20 196 –123 2,390 1,419 (in millions of EUR) Income after taxes Write-downs/write-ups on fixed assets 1) Change in provisions for pensions Cash flow Change in other provisions Increase of inventories Increase of accounts receivable and other assets not related to investing or financing activities Increase/decrease of trade accounts payable and other liabilities not related to investing or financing activities Cash flow from operating activities Investments in intangible assets –57 –115 –532 –450 Investments in non-current financial assets1) –6 –11 Proceeds from disposals of intangible assets 2 0 43 50 Investments in property, plant and equipment Proceeds from disposals of property, plant and equipment Proceeds from disposals of non-current financial assets 21 16 –529 –510 –1,360 –295 26 –59 –1,334 –354 527 555 0 0 43 –56 Securities and liquid funds 2) as of 1. 1. 4,015 3,516 Securities and liquid funds as of 31. 12. 4,585 4,015 1) Cash flow from investing activities Cash payments to shareholders and minority shareholders Cash proceeds from borrowings/repayments of loans Cash flow from financing activities Change in liquid funds from cash relevant transactions Changes in liquid funds due to changes in scope of consolidation Changes in liquid funds due to exchange rate movements 2) excl. fixed-asset securities 2) liquid funds, securities within fixed and current assets (+) = source of funds, (–) = use of funds 1) 94 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 C. H. Boehringer Sohn, Ingelheim Statement of changes in group equity (in millions of EUR) Shareholders’ capital1) Accrued group capital of which currency effects Equity Minority interests of which currency effects Group equity Group Equity 178 3,668 –84 3,846 188 –22 4,034 Contributions Balance as of 31. 12. 2003 0 0 0 0 0 0 0 Withdrawals 0 –286 0 –286 0 0 –286 Net income 0 888 0 888 20 0 908 Change of scope of consolidation 0 0 0 0 –4 0 –4 Other changes 0 –85 –84 –85 –11 –7 –96 178 4,185 –168 4,363 193 –29 4,556 Contributions Balance as of 31. 12. 2004 0 0 0 0 0 0 0 Withdrawals 0 –1,352 0 –1,352 0 0 –1,352 Net income 0 1,491 0 1,491 23 0 1,514 Change of scope of consolidation 0 0 0 0 7 0 7 0 107 107 107 –7 2 100 178 4,431 –61 4,609 216 –27 4,825 Other changes Balance as of 31. 12. 2005 1) The shareholders’ capital consists of the equity of C. H. Boehringer Sohn and C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG. The balance as of 31.12. 2005 consists only of capital of the limited partners. The shareholders’ personal taxes arising from consolidated business activities are shown as withdrawals from the accrued group capital. Consolidated Financial Statements 2005 95 C. H. Boehringer Sohn, Ingelheim Notes to the consolidated financial statements 2005 1 Principles and methods 1.1 General principles The consolidated financial statements of Boehringer Ingelheim for the fiscal year 2005 have been prepared pursuant to section 264a German Commercial Code (HGB) by applying the group accounting regulations of section 290 to 314 HGB. In accordance with section 297, paragraph 1 HGB, the consolidated financial statements are composed of the consolidated balance sheet, the consolidated profit and loss statement, notes to the consolidated financial statement, the consolidated cash flow statement and the statement on changes in equity. 1.2 Companies included in the consolidation The ultimate parent of boehringer ingelheim is c. h. boehringer sohn. Boehringer AG is the sole unlimited managing partner of this company. Besides c. h. boehringer sohn there is c. h. boehringer sohn grundstücksverwaltung GmbH & Co. KG whose unlimited partner is under the unified management of c. h. boehringer sohn. boehringer ingelheim consists of 143 affiliated companies in and outside Germany. In addition to c. h. boehringer sohn and c. h. boehringer sohn grundstücksverwaltung GmbH & Co. KG, a further 109 companies in which c. h. boehringer sohn holds directly or indirectly the majority of voting shares are included in the consolidated financial statements. One company, hitherto included on a proportional consolidation basis, has since fiscal 2005 been wholly consolidated. 30 companies were not consolidated in the reporting year, as the net assets, financial position and results of operations of these companies were insignificant to Boehringer Ingelheim. Combined they represent less than 1% of the Group’s net sales, equity and net profit. A further two companies are subject to bylaws containing enduring restrictions. Compared to the previous year, the total number of affiliated companies was reduced by one. In the past year, three companies established, two companies were sold and a further two companies were dissolved due to mergers. Two existing subsidiaries hitherto not included due to insignificance were taken up in the consolidation. In this context, one company was no longer consolidated as it was below the materiality threshold. A separate statement of interests held by Boehringer Ingelheim will be filed with the Register of Companies of the District Court in Mainz. 96 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 The following subsidiaries were exempted from the reporting and disclosure obligations in accordance with section 264, paragraph 4 HGB in conjunction with section 264, paragraph 3 HGB: • Boehringer Ingelheim GmbH, Ingelheim • Boehringer Ingelheim International GmbH, Ingelheim • Dr. Karl Thomae GmbH, Biberach • Boehringer Ingelheim Deutschland GmbH, Ingelheim • Boehringer Ingelheim Vetmedica GmbH, Ingelheim • Boehringer Ingelheim Secura Versicherungsvermittlungs GmbH, Ingelheim • Boehringer Ingelheim Grundstücks-GmbH, Ingelheim • Boehringer Ingelheim Finanzierungs GmbH, Ingelheim. Exempted from reporting and disclose obligations of annual financial statements according to HGB regulations for joint stock companies under section 264b HGB are: • C.H. Boehringer Sohn, Ingelheim • C.H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG, Ingelheim • Boehringer Ingelheim Pharma GmbH & Co. KG, Ingelheim. 1.3 Consolidation methods For inventories, accounts receivable and payable, and the income and expense items, business transactions between the companies consolidated were eliminated as part of the debt consolidation, according to section 303 HGB, the elimination of inter-company profits according to section 304 HGB, and the income and expense consolidation according to section 305 HGB. The purchase method of accounting was used for the capital consolidation of those subsidiaries that were included for the first time in the consolidated financial statements. First-time consolidation takes place at the time of the respective company becoming a subsidiary. The goodwill of two major companies wholly acquired in 1997 is being amortised according to plan over 10 years. Credit balances from capital consolidation primarily represent retained earnings during group membership; they therefore have the characteristics of equity and are included in group reserves. Negative goodwill arising from the first-time consolidation of a subsidiary was further amortised in the fiscal year in accordance with section 309, paragraph 2, clause 1 HGB to the amount of the share of the losses (EUR 0.6 million). Consolidated Financial Statements 2005 97 1.4 Currency conversions The financial statements prepared in foreign currencies were translated into euros, the functional currency of the group parent company, C. H. Boehringer Sohn, according to the year-end method. All assets and liabilities have been converted at the year-end rate. The profit and loss statement and, consequently, net income, were converted at the average annual rate for the reporting year. Translation differences due to the conversion of foreign currencies are shown as a balancing item in the equity without impact on income. Inflation effects in high inflation countries were eliminated by separate hard currency financial statements (in US dollars or euros) drawn up by the respective local subsidiaries. The most important currencies for Boehringer Ingelheim reflect the following changes in the reporting year (base 1 euro): year-end rate US dollar Japanese yen 98 average annual rate 31.12.2005 31.12.2004 2005 2004 1.18 1.36 1.24 1.24 138.90 139.83 136.87 134.40 Pound sterling 0.69 0.71 0.68 0.68 Canadian dollar 1.37 1.64 1.51 1.61 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 2 Accounting and evaluation methods 2.1 Fixed assets Intangible and tangible assets are shown at purchase or manufacturing cost, net of regular straightline depreciation, according to the technical and economic situation. The following periods of use were applied: Buildings 20 years Technical facilities and machinery 10 years Other facilities, operating and business equipment 3 to 10 years Diverging from the declining-balance method of depreciation applied in the individual financial statements of C. H. Boehringer Sohn the straight-line method of depreciation is used in the consolidated financial statements for the purpose of uniformity in group-wide measurement. Anticipated long-term losses in the value of investments were accounted for by unscheduled writeoffs. Appropriate portions of material and production overheads were taken into consideration for the determination of manufacturing costs. Fully amortised goodwill that is more than five years old, or is materially insignificant, is shown under disposals. All capitalised intangible assets have a limited useful life. The financial assets were valued at the lower of either purchase cost or fair market value. 2.2 Current assets Inventories were valued at purchase or manufacturing cost using the weighted average cost flow method as the group-wide uniform method of measurement, whereas for tax purposes, C. H. Boehringer Sohn applies the LIFO Method in its individual financial statements. Appropriate portions of material and production overheads were taken into consideration for the determination of the manufacturing costs. Necessary reductions were made for inventory risks. Accounts receivable were stated at their nominal value net of any individual valuation allowances required. The general credit risk was covered by a general valuation allowance for bad debt. Other assets were stated at the lower of either purchase cost or fair market value. Foreign currency items were recorded at the year-end rate of exchange. 2.3 Group reserves Group reserves include the retained earnings of the consolidated subsidiaries from prior years, consolidation entries that affect earnings, where they relate to prior years, and credit balances arising from capital consolidation. Consolidated Financial Statements 2005 99 2.4 Provisions The provisions include required amounts to cover any perceptible obligations and risks, including provisions for contingent losses from pending contracts. The valuation is made at the amount that is necessary on the basis of reasonable commercial judgement. Provisions with an implied interest were shown on a discounted basis (e. g. certain personnel provisions). 2.5 Liabilities Liabilities are shown in the balance sheet at the repayable amount. Liabilities in foreign currencies were recorded at the year-end rate of exchange. 2.6 Deferred taxes The deferred tax assets and liabilities represent the tax deferral in accordance with section 274 and 306 HGB, which arise because of temporary differences between the tax balance sheets of the individual companies and the consolidated balance sheet (including differences arising from adjustments for conformity in group-wide reporting and evaluation as well as consolidation measures). Quasi-permanent differences between the consolidated balance sheet and the tax balance sheet are treated as temporary differences in accordance with German Accounting Standard 10 (GAS 10). Deferred tax assets and liabilities are offset in accordance with GAS 10. In the individual balance sheets (i.e. the financial statements II) the consolidated companies made use of their option to capitalise assets to the amount of probable tax savings in the following years in accordance with section 274, paragraph 2 HGB. The calculation of deferred taxes is based on the tax rates that are expected to be valid at the time of their realisation. The capitalisation of deferred tax assets on tax loss carryforwards is carried out if it is sufficiently probable that the tax benefits can be realised. 100 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 3 Notes to the consolidated balance sheet 3.1 Intangible assets (in millions of EUR) Concessions/ Similar rights Goodwill Advance payments Total 432 –6 807 3 1,242 –1 0 –7 Procurement/manufacturing costs Balance as of 1. 1. 2004 Currency conversion difference Additions due to first consolidation 5 0 0 5 Additions 98 10 3 111 Disposals –9 0 0 –9 6 0 –3 3 526 816 3 1,345 11 3 0 14 0 0 0 0 Reclassifications Balance as of 31. 12. 2004 Currency conversion difference Additions due to first consolidation Additions 50 0 7 57 Disposals –18 –13 0 –31 4 0 –4 0 573 806 6 1,385 Reclassifications Balance as of 31. 12. 2005 Accumulated depreciations Balance as of 1. 1. 2004 Currency conversion difference Additions due to first consolidation Additions Value adjustments Disposals Reclassifications Balance as of 31. 12. 2004 336 664 0 1,000 –6 –1 0 –7 1 0 0 1 36 58 0 94 0 0 0 0 –9 0 0 –9 –1 0 0 –1 357 721 0 1,078 Currency conversion difference 9 2 0 11 Additions due to first consolidation 0 0 0 0 44 48 0 92 0 0 0 0 –16 –13 0 –29 0 0 0 0 Balance as of 31. 12. 2005 394 758 0 1,152 Book value as of 31. 12. 2004 169 95 3 267 Book value as of 31. 12. 2005 179 48 6 233 Additions Value adjustments Disposals Reclassifications Consolidated Financial Statements 2005 101 3.2 Tangible assets (in millions of EUR) Property and Technical plants facilities and machines Procurement/manufacturing costs Balance as of 1. 1. 2004 Currency conversion difference Additions due to first consolidation Other Advance facilities/ payments/ operating construction equipment in progress Total 2,055 1,900 1,113 383 5,451 –60 –47 –30 –7 –144 1 21 11 4 37 Additions 30 59 134 204 427 Disposals –45 –53 –79 –5 –182 41 102 163 –309 –3 2,022 1,982 1,312 270 5,586 96 82 61 15 254 3 2 2 0 7 Reclassifications Balance as of 31. 12. 2004 Currency conversion difference Additions due to first consolidation Additions 37 77 140 278 532 Disposals –31 –42 –89 –8 –170 Reclassifications 56 98 49 –203 0 2,183 2,199 1,475 352 6,209 Balance as of 1. 1. 2004 890 942 852 0 2,684 Currency conversion difference –25 –24 –20 0 –69 0 7 7 0 14 81 151 145 0 377 Balance as of 31. 12. 2005 Accumulated depreciations Additions due to first consolidation Additions Value adjustments Disposals Reclassifications 0 –4 0 –4 –48 –69 0 –129 –1 2 0 0 1 933 1,030 911 0 2,874 42 43 40 0 125 2 1 2 0 5 125 163 151 0 439 0 –2 0 0 –2 –13 –37 –82 0 –132 0 0 0 0 0 Balance as of 31. 12. 2005 1,089 1,198 1,022 0 3,309 Book value as of 31. 12. 2004 1,089 952 401 270 2,712 Book value as of 31. 12. 2005 1,094 1,001 453 352 2,900 Balance as of 31. 12. 2004 Currency conversion difference Additions due to first consolidation Additions Value adjustments Disposals Reclassifications 102 0 –12 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 3.3 Financial assets Investments in affilated companies Loans to affiliated companies Related companies Loans to related companies Investment securities Other loans Total Balance as of 1. 1. 2004 21 6 10 6 2,391 49 2,483 Currency conversion difference –1 0 0 0 –2 0 –3 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 1 2 0 0 679 8 690 Disposals 0 0 0 0 –382 –16 –398 (in millions of EUR) Procurement/manufacturing costs Reclassifications 0 0 0 0 0 0 0 21 8 10 6 2,686 41 2,772 Currency conversion difference 0 0 0 0 3 0 3 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 1 0 0 674 5 680 Disposals –1 0 0 0 –7 –21 –29 Balance as of 31. 12. 2004 Reclassifications 0 0 0 0 0 0 0 20 9 10 6 3,356 25 3,426 Balance as of 1. 1. 2004 3 0 3 3 9 3 21 Currency conversion difference 0 0 0 0 1 0 1 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 0 0 0 0 0 0 Value adjustments 0 0 0 0 –1 0 –1 Disposals 0 0 0 0 –5 0 –5 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2004 3 0 3 3 4 3 16 Currency conversion difference 0 0 0 0 0 0 0 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 0 0 0 14 0 14 Value adjustments 0 0 0 0 0 0 0 Disposals 0 0 0 0 0 0 0 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2005 3 0 3 3 18 3 30 Book value as of 31. 12. 2004 18 8 7 3 2,682 38 2,756 Book value as of 31. 12. 2005 17 9 7 3 3,338 22 3,396 Balance as of 31. 12. 2005 Accumulated depreciations The item “other loans” includes no loans to the shareholders (2004: EUR 12 million). Consolidated Financial Statements 2005 103 3.4 Inventories (in millions of EUR) 31.12.2005 31.12.2004 Raw materials and supplies 225 217 Unfinished products 537 444 Finished products and goods for resale 460 416 7 8 1,229 1,085 Advance payments to suppliers 3.5 Accounts receivable (in millions of EUR) Trade accounts receivable Receivables from affiliated companies Receivables from related companies Other assets 31.12.2005 Residual term over 1 year 31.12.2004 Residual term over 1 year 1,854 71 1,543 6 2 0 4 0 5 0 6 0 282 12 261 11 2,143 83 1,814 17 The item “other assets” contains no receivables from the shareholders (2004: EUR 2 million). 3.6 Provisions (in millions of EUR) 31.12.2005 31.12.2004 Pension provisions 2,035 1,983 Tax provisions Other provisions 104 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 548 380 2,171 1,616 4,754 3,979 Pension provisions Boehringer Ingelheim’s pension schemes are based on various defined contribution plans as well as defined benefit plans. Pension obligations arising from direct or indirect defined benefit plans are determined on the basis of the projected unit credit method, taking future salary and pension increases into consideration. The actuarial calculation of the pension obligation from defined benefit plans is based on countryspecific biometric data (in Germany the “generation tables” issued in 2005 by Professor Klaus Heubeck were used) and actuarial assumptions. The main countries applied the following parameters: Germany USA Japan 2005 2004 2005 2004 2005 2004 4.1 5.0 5.5 5.75 1.5 1.5 Expected return on assets 6.0 6.0 8.0 8.5 2.2–3.0 3.0 Salary increase 2.5 3.0 5.5 5.5 2.4–4.7 3.9 Pension increase 1.7 1.7 3.0 3.0 0.0 Parameter (in %) Discount rate 0.0 At the balance sheet date, the present value of the expected pension obligation was netted with the fair value of the respective pension plan assets (funding status). Based on this, pension provisions are determined by deducting unrealised transition amounts as well as unrealised actuarial gains and losses from the funding status. Based on the “corridor approach”, unrealised gains and losses are amortised over the expected average service periods of the respective active employees. At balance sheet date, pension commitments (including total unrealised transition amounts and actuarial gains and losses) of EUR 698 million (2004: EUR 343 million) were not recognised as part of pension provisions. In conjunction with defined contribution plans, group companies paid contributions to state or private insurers on the basis of legal or contractual regulations. On payment of the contributions the companies no longer have any performance obligations. Contributions are recognised as personnel costs upon payment. Consolidated Financial Statements 2005 105 3.7 Accounts payable (in millions of EUR) Bank loans Residual term less than 1 year Residual term 1–5 years Residual term over 5 years 31.12.2005 Residual term 31.12.2004 less than 1 year 216 221 43 480 441 190 1,549 – 145 1,694 1,445 1,271 775 – – 775 516 516 –Advance payments 45 – – 45 66 66 –Notes payable 14 – – 14 17 17 8 – – 8 7 7 related companies 1 – – 1 6 6 –Other liabilities (*) 706 – 145 851 833 659 1,765 221 188 2,174 1,886 1,461 – taxes 24 35 – social security contributions 22 17 Other accounts payable of which: –Trade accounts payable –Accounts payable to affiliated companies – Accounts payable to (*) of which: There were no liabilities secured by mortgages or similar rights on the balance sheet date consistent with the previous year. Liabilities due to shareholders amounted to EUR 215 million (2004: EUR 190 million) at year-end. These were disclosed under “other liabilities”. They stem from the shareholders’ personal taxes arising from consolidated business activities. Payments received from the ABS partners in conjunction with the ABS transaction are shown as short-term loans under “other liabilities” until the underlying accounts receivable are paid off. 106 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 4 Notes to the consolidated profit and loss statement The consolidated profit and loss statement is presented in line with the total cost method. 4.1 Net sales by business and business segment (in millions of EUR) 2005 2004 Human Pharmaceuticals 9,174 7,822 of which: Prescription Medicines 7,247 6,183 Consumer Health Care 1,052 970 Industrial Customer 847 654 Other sales 28 15 361 335 9,535 8,157 by geographic region (in millions of EUR) 2005 2004 Europe 3,117 2,622 Animal Health of which: Germany Americas 816 656 4,559 3,905 of which: USA/Canada/Mexico 4,219 3,625 Asia, Australasia, Africa 1,859 1,630 of which: Japan 1,232 1,142 9,535 8,157 (in millions of EUR) 2005 2004 Costs of raw material, supplies and goods for resale 1,351 1,076 262 213 1,613 1,289 (in millions of EUR) 2005 2004 Salaries and wages 4.2 Material costs Expenditure on services 4.3 Personnel costs 2,087 1,913 Social benefits and retirement benefits 584 530 of which: retirement benefits 155 154 2,671 2,443 The interest component with respect to the increase in pensions and similar obligations is included in financial income rather than in personnel costs and is, therefore, not included in the operating result of the company. Consolidated Financial Statements 2005 107 Average headcount Production Administration Marketing and Sales Research and Development Apprentices 2005 2004 12,044 10,614 4,742 5,670 14,257 13,151 5,678 5,471 685 623 37,406 35,529 0 245 This includes: Average number of employees in joint ventures, proportionately consolidated Regarding 2005, transfers from “administration” to “production” caused by changes in organisational structure have to be considered. 4.4 Amortisation of intangible and depreciation of tangible assets The amortisation of intangible assets and depreciation of tangible assets includes unscheduled writeoffs of EUR 2 million (2004: EUR 1 million). 4.5 Other operating expenses Other operating expenses include third-party services in research, development, medicine, and marketing, in addition to administration costs, fees, contributions, commissions, rents, freight costs, and expenses for third-party repairs as well as expenses incurred by restructuring measures. 4.6 Financial income (in millions of EUR) 2005 2004 Interest expense relating to pensions and similar obligations –108 –111 Other interest expense and similar expenditure –70 –49 –178 –160 Amortisation of other financial assets and short-term investments –14 –4 Income from other investment securities and from long-term loans 110 103 Interest expense and similar expenditure Other interest income and similar proceeds 108 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 47 46 –35 –15 4.7 Holding income 2005 2004 0 2 2005 2004 Income taxes 504 360 Deferred taxes –154 72 (in millions of EUR) Gains from the sale of investments 4.8 Taxes (in millions of EUR) Other taxes 24 19 374 451 By concluding profit transfer agreements, significant German corporations have since 1 January 2004 belonged to the trade and corporate taxation group of integrated companies of the parent company C. H. Boehringer Sohn. As income tax levied on operating income of the shareholders of C. H. Boehringer Sohn may not be shown in the consolidated profit and loss statement, only the trade tax of the relevant companies is shown as a tax expense. As a consequence of the conclusion of profit transfer agreements in the previous year, the deferred taxes of these corporations as of 31 December 2004 were no longer calculated at a profit tax rate of 37.6 % but at a trade tax rate of around 15 %. In 2004, this change led to a one-off deferred tax expense of EUR 121 million. In the effective tax-rate reconciliation an expected tax expense for Boehringer Ingelheim is calculated on a profit tax rate for corporations (corporate tax, solidarity levy and trade tax). As in the profit and loss statement tax expenses related to the income tax for partnerships and integrated companies of C. H. Boehringer Sohn are limited to showing trade tax, the expected tax expense in the effective tax-rate reconciliation is in this respect adjusted for fictive current and deferred corporate tax expenses in order to link to the profit tax expense shown in the profit and loss statement. This elimination of fictive corporate tax (including the solidarity levy) is shown in the items Fictive Corporation. Consolidated Financial Statements 2005 109 The expected tax expense derived by using a fictive tax rate of 37.6 % (average tax rate for a German corporation at a municipal trade tax levy rate of 360 %) can be related to the actual tax expense as follows: 2005 (in millions of EUR) Income before taxes minus other taxes 2004 1,864 Expected tax expense (current and deferred) 1,340 701 37.6 % 504 37.6 % –378 –20.3 % –191 –14.3 % 2.6 % 18 1.3 % Decrease/increase in expected tax by –Fictive Corporation current taxes –Fictive Corporation deferred taxes 49 0 0.0 % 121 9.0 % –34 –1.8 % –41 –3.1 % –6 –0.3 % –6 –0.4 % –One-off effect of profit transfer agreements –Local tax rate divergences –Non-taxable income –Non-tax-deductible expense 34 1.8 % 36 2.7 % –Taxes related to prior periods –35 –1.9 % –19 –1.4 % 18 1.0 % 21 1.6 % 7 0.4 % 9 0.7 % –Amortisation of goodwill –Changes in applicable tax rates –Withholding taxes not subject to tax credits –Tax credits for research activities 20 1.1 % 18 1.3 % –19 –1.0 % –36 –2.7 % –7 –0.4 % –2 –0.1 % 350 18.8 % 432 32.2 % –Other effects Actual tax expense (current and deferred) The deferred taxes can be attributed to the following balance sheet items: 31.12.2005 (in millions of EUR) Intangible assets Liabilities Assets Liabilities 7 2 7 1 Tangible assets 32 132 18 125 Financial assets 15 24 16 23 Inventories 104 19 88 21 Receivables 38 9 22 7 600 16 448 9 14 2 15 7 Provisions Liabilities Tax loss carryforwards and tax credits 110 Assets 31.12.2004 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 11 0 5 0 821 204 619 193 Other mandatory disclosures according to GAS 10.39: 2005 2004 Deferred tax expense from changes in law 0 –4 Deferred tax expense relating to the write-off of deferred tax assets in fiscal year 5 0 (in millions of EUR) The absence of changes in accounting and evaluation methods results, as in the previous year, in no deferred tax income. Potential corporate tax reductions in accordance with section 37, paragraph 2 corporation tax law (KStG) amount to EUR 22 million. The valuation allowances relating to deferred tax assets amount to EUR 19 million. Unused tax loss carryforwards, on which no deferred tax assets are recognised in the balance sheet, amount to EUR 51 million at year-end, EUR 30 million of which can be carried forward without time limits. The remainder expire after five years (EUR 11 million) and 10 years (EUR 10 million) respectively. 4.9 Net income Net income for the year 2005 includes operating income unrelated to the accounting period (mainly the release of other provisions) amounting to EUR 81 million (2004: EUR 92 million). Operating expenditure unrelated to the accounting period (mainly increase of other provisions) amounted to EUR 27 million (2004: EUR 47 million). Consolidated Financial Statements 2005 111 5 Notes to the cash flow statement The cash flow statement shows how the total securities and liquid funds (liquid assets and securities in fixed and current assets) of the Boehringer Ingelheim Group have changed during the reporting year through inflow and outflow of cash and cash equivalents. In accordance with German Accounting Standard No. 2, (GAS 2), Cash Flow Statements, cash flows are classified by operating, investing or financing activities. Changes reported by consolidated companies are converted at the average annual rate. Securities and liquid funds are converted, as shown in the balance sheet, according to the year-end rate method. The influence of exchange rate changes on securities and liquid assets is provided separately. 6 Other information 6.1 Derivative financial instruments Boehringer Ingelheim is, due to its extensive international structure, highly dependent on the development of the major world currencies and interest rates. In order to hedge against the risks, particularly those inherent in supplies and services and financial funding, use is generally made of foreign exchange forward contracts in the case of currency risks. Regarding interest rate risks, use is made of interest rate swaps and interest rate options. The risk positions are recorded, analysed and assessed regularly in a special consolidated financial report. The use of derivative financial instruments and the organisational procedure are laid down in internal guidelines. Trade, processing, documentation, and control are kept strictly separate. The items are periodically re-evaluated and monitored. Derivative financial instruments are only agreed on with banks of sound financial standing. As of 31 December 2005, the nominal value of all foreign currency and interest rate hedging transactions amounted to EUR 3,618 million (2004: 2,179 million). The corresponding market values amounted to EUR -63 million (2004: EUR 85 million). 112 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 Derivative financial instruments at year-end were as follows: Nominal value (in millions of EUR) Market value 31.12.2005 31.12.2004 31.12.2005 31.12.2004 3,355 1,906 –62 86 263 273 –1 –1 Foreign exchange forward contracts Interest instruments The nominal value is the sum of all purchases and sales. The market value is calculated on the basis of quoted prices or derived values for derivative instruments. 6.2 Contingent liabilities to the benefit of third parties (in millions of EUR) 31.12.2005 31.12.2004 176 154 31.12.2005 31.12.2004 741 752 Liabilities from guarantees, guarantees for bills and cheques, warranties and provisions of collateral for third-party liabilities 6.3 Other financial obligations (in millions of EUR) To third parties At year-end, other financial obligations included capital investments of EUR 552 million (2004: EUR 593 million). Furthermore EUR 182 million (2004: EUR 146 million) from renting and leasing contracts are included, of which EUR 87 million concern long-term rent contracts with subsidiaries not included in the consolidation. 6.4 Research and development expenses (in millions of EUR) 2005 2004 Expenditures for Research and Development 1,360 1,232 Consolidated Financial Statements 2005 113 Auditor’s Report We have audited the consolidated financial We conducted our audit of the consolidated statements prepared by C. H. Boehringer Sohn, annual financial statements in accordance with Ingelheim – comprising the balance sheet, the section 317 HGB and the generally accepted income statement, the statement of changes in standards for the audit of financial statements equity, the cash flow statement and the notes to promulgated by the Institut der Wirtschaftsprüfer the consolidated financial statements – together in Deutschland (IDW). Those standards require with the group management report for the busi- that we plan and perform the audit such that ness year from 1 January to 31 December 2005. misstatements materially affecting the presenta- The preparation of the consolidated financial tion of the net assets, financial position and statements and the group management report in results of operations in the consolidated financial accordance with German commercial law are the statements in accordance with German princi- responsibility of the Management Board of the ples of proper accounting and in the group Managing Corporate Partnership-AG. Our management report are detected with reasonable responsibility is to express an opinion on the assurance. Knowledge of the business activities consolidated financial statements and the group and the economic and legal environment of the management report based on our audit. Company and evaluations of possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the companies included in consolidation, the determination of the companies to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Management Board of the Managing Corporate Partnership-AG, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. 114 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 5 With the following exception, our audit has not led to any reservations: contrary to section 314 paragraph 1 number 6 HGB compensation of the members and former members of the board of managing directors have not been disclosed. In our opinion based on the findings of our audit the consolidated financial statements with the exception mentioned comply with the legal requirements. The consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the Group in accordance with German principles of proper accounting. The group management report is consistent with the consolidated financial statements and as a whole provides a suitable view of the Group’s position and suitably presents the opportunities and risks of future development. Frankfurt am Main, 15 February 2006 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (E.-W. Frings) (P. Marshall) Wirtschaftsprüfer Wirtschaftsprüfer (German Certified (German Certified Public Accountant) Public Accountant) Consolidated Financial Statements 2005 115 Glossary Human Pharmaceuticals Product name 116 Active ingredient Indication actilyse® alteplase Fibrinolytic treatment of acute myocardial infarction, acute massive pulmonary embolism and ischaemic stroke aggrenox® asasantin® persantin® ASA / dipyridamole extended release Prevention of stroke following a first stroke or for transient ischaemic attacks As above and adjunct to coumarin anticoagulants in the prevention of postoperative thrombo embolic complications of cardiac valve replacement alesion® flurinol® talerc® epinastine Antiallergic agent antistax® standardized red wine leaf extract AS195® Prevention and treatment of symptoms of chronic venous insufficiency – such as painful swollen, heavy or tired legs aptivus® tipranavir Available as capsules for adults – used coadministered with 200 mg of ritonavir, is indicated for combination antiretroviral treatment of HIV-1 infected adult patients with evidence of viral replication, who are highly treatment-experienced or have HIV-1 strains resistant to multiple protease inhibitors atrovent® ipratropium bromide Bronchodilator for maintenance treatment of bronchospasm associated with chronic obstructive pulmonary disease, including chronic bronchitis, emphysema and asthma berotec® dosberotec® fenoterol a) Symptomatic treatment of acute asthma attacks b) Prophylaxis of exercise induced asthma c) Symptomatic treatment of bronchial asthma and other conditions with reversible airway narrowing e.g. chronic obstructive bronchitis. Concomitant anti-inflammatory therapy should be considered for patients with bronchial asthma and steroid responsive chronic obstructive pulmonary disease (COPD) bisolvon® bromhexine Mucolytic for the treatment of acute and chronic bronchopulmonary diseases associated with impaired formation and transport of mucus buscopan® buscapina® butylscopolamine Treatment of abdominal discomfort and pain due to intestinal cramps catapresan® catapres® catapressan® atensina® clonidine All forms of high blood pressure, unless caused by phaeochromocytoma Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Product name Active ingredient Indication combivent® ipratropium bromide/ salbutamol Treatment of bronchospasms associated with reversible obstructive airways diseases in patients requiring more than one bronchodilator cymbalta® xeristar® duloxetine Major depressive disorder (MDD), Diabetic peripheral neuropathic pain (DPNP) dulcolax® bisacodyl Laxative for the treatment of constipation (tablets, suppositories), sodium picosulphate (drops, pearls, tablets) duovent® bronchodual® berodual® fenoterol / ipratropium bromide Prevention and treatment of symptoms in asthmic and chronic obstructive pulmonary disease (COPD) patients with reversible bronchospasm flomax® alna® josir® pradif® secotex® urolosin® tamsulosin ydrochloride h Lower urinary tract symptoms (LUTS) associated with benign prostatic hyperplasia (BPH) flomax® cr alna® ocas® pradif® t urolosin® ocas® tamsulosin ydrochloride, h Oral Controlled Absorption System Lower urinary tract symptoms (LUTS) associated with benign prostatic hyperplasia (BPH) inflammide® budesonide Bronchial asthma laxoberal® sodium picosulphate (drops, pearls and tablets) Laxative for the treatment of constipation lendormin® lendorm® lindormin® sintonal® brotizolam Short-term treatment of disorders of initiating and maintaining sleep metalyse® tenecteplase Fibrinolytic treatment of acute myocardial infarction mexitil® mexitilen® mexiletine Serious symptomatic ventricular tachycardic heart rhythm disturbances micardis® micardisplus® micardis® hct co-micardis® telmisartan telmisartan / hydro chlorothiazide Treatment of essential hypertension Glossary 117 Product name 118 Active ingredient Indication mobic® mobec® movalis® movatec® meloxicam Symptomatic treatment of rheumatic diseases motens® caldine® tens® midotens® lacidipine Treatment of essential hypertension mucoangin® ambroxol hydrochloride Pain relief in acute sore throat mucosolvan® motosol® mucosan® surbronc® ambroxol Mucolytic treatment of acute and chronic bronchopulmonary diseases associated with impaired formation and transport of mucus pharmaton® pharmaton® capsules geriavit pharmaton® pharmaton® caplets standardized ginseng extract G115®, vitamins, minerals, trace elements To improve physical and mental performance and well-being sifrol® pramipexole Symptomatic treatment of idiophathic arkinson’s disease P silomat® clobutinol ydrochloride h Symptomatic treatment of irritable, non-productive cough spiriva® tiotropium bromide Maintenance treatment of patients with COPD (including chronic bronchitis and emphysema), the maintenance treatment of associated dyspnoea and for prevention of exacerbations thomapyrin® ASA, paracetamol, caffeine Pain viramune® nevirapine Available as tablets for adults and suspension for children – for the combination therapy of HIV infection and for the prevention of mother-to-child transmission of HIV yentreve® ariclaim® duloxetine Moderate to severe stress urinary incontinence (SUI) in women Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 5 Animal Health Product name Active ingredient Indication buscopan® compositum N-butyl scopolamonium Spasmolitic and pain inhibitor for the treatment bromide + metamizole of colic (horse and cattle) enterisol® ileitis attenuated life vaccine (Lawsonia intracellularis) lyophilised express® attenuated life vaccine For prevention of reproductive and respiratory (IBRV, BVDV, PI3V, BRSV) diseases in cattle ingelvac® m.hyo inactivated ycoplasma M hyopneumoniae ingelvac® prrs mlv modified live PRRS virus, For the active immunization of clinically healthy grown in a permanent swine against the respiratory and cell line freeze-dried reproductive form of PRRS virus infection (porcine reproductive respiratory syndrome) mamyzin® penethamate ydroiodide h For the treatment of mastitis caused by Gram-positive pathogens metacam® meloxicam Dog, horse: alleviation of pain and inflammation associated with acute or chronic musculoskeletal disorders Cat, dog: reduction of postoperative pain Cattle: respiratory infection, diarrhoea, acute mastitis Swine: non-infectious locomoter disorders, mastitis-metritis-agalactic-syndrome ventipulmin® clenbuterol Bronchodilator for the treatment of acute and chronic obstructive airway disease in horses vetmedin® pimobendan For the treatment of congestive heart failure in dogs voren® dexamethasone-21isonicotinate For the treatment of metabolic disorders, i nflammation and allergic reactions in cattle, swine, horses, dogs and cats For active immunisation of pigs to reduce intestinal lesions caused by Lawsonia intracel lularis infection and to reduce growth variability and loss of weight gain associated with the disease For the active immunization of swine from three weeks of age to reduce lung lesions following infection with Mycoplasma hyopneumoniae Glossary 119 Corporate Head Office Boehringer Ingelheim GmbH Binger Strasse 173 55216 Ingelheim Germany Telephone + 49 / 6132 / 77-0 Fax + 49 / 6132 / 77-3000 Contacts CD Communications Telephone + 49 / 6132 / 77-2012 Fax + 49 / 6132 / 77-6601 Internet www.boehringer-ingelheim.com Issued by Boehringer Ingelheim GmbH Design and layout Neufrankfurt Corporate Design GmbH, Offenbach am Main Photos on title page Jens Wunderlich, Lennart Nilsson Printed by Süddeutsche Verlagsgesellschaft, Ulm Copyright © Boehringer Ingelheim GmbH, 2006 All rights reserved. No part of this Annual Report 2005 may be reproduced or transmitted in any form or by any means, electronic or photocopy, without permission in writing from Boehringer Ingelheim GmbH. Contents 8 22 40 56 62 70 Comparison of Balance Sheets/ Financial Data 1996—2005 (in millions of EUR) 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 89 508 452 400 344 322 302 242 267 233 Tangible assets 1,342 1,612 1,739 1,992 2,217 2,467 2,840 2,767 2,712 2,900 Financial assets 1,007 757 731 849 1,135 1,008 1,689 2,462 2,756 3,396 Fixed assets 2,438 2,877 2,922 3,241 3,696 3,797 4,831 5,471 5,735 6,529 Assets (as of 31.12.) Intangible assets Inventories Accounts receivable (incl. deferred charges) Cash and cash equivalents (incl. securities) 2 The Shareholders’ Perspective 627 794 806 944 1,021 1,014 971 1,000 1,085 1,229 1,057 1,211 1,255 1,870 1,938 2,314 2,360 2,537 2,477 3,013 156 134 299 459 477 1,002 1,055 1,134 1,333 1,247 Current assets 1,840 2,139 2,360 3,273 3,436 4,330 4,386 4,671 4,895 5,489 Total assets 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 383 399 441 332 211 200 178 178 178 178 Our Company 4 Key Aspects of 2005 8 Our Caring Culture Boehringer Ingelheim is a research-driven group of companies 10 Our Commitment dedicated to researching, developing, manufacturing and marketing 12 For Our Neighbours pharmaceuticals that improve health and quality of life. 14 For Our People 18 For Our Environment Our business consists largely of Prescription Medicines, Consumer Health 22 Our R&D Drive Care, Biopharmaceuticals and Animal Health. We focus on the production 26 “HIV is Being Played Down” of innovative drugs and treatments that represent major therapeutic 28 Our Strength in R&D + Medicine advances. Business Development Excellence in innovation and technology guides our actions in all areas. Prescription Medicines Our products have long been highly successful in the treatment 40 A New Quality of Treatment, a New Quality of Life of respiratory, cardiovascular, central nervous system, urological and 44 Overview Prescription Medicines virological disorders. In addition we have intensified our research into Consumer Health Care Liabilities and equity (as of 31.12.) Shareholders’ capital Reserves (incl. currency conversion difference) 1,307 1,461 1,651 1,982 2,362 2,753 2,818 3,139 3,297 2,940 Net income 167 212 229 320 379 401 537 529 888 1,491 Total equity 1,857 2,072 2,321 2,634 2,952 3,354 3,533 3,846 4,363 4,609 0 0 0 0 0 1 203 188 193 216 Group equity 1,857 2,072 2,321 2,634 2,952 3,355 3,736 4,034 4,556 4,825 Provisions (incl. deferred taxes) 1,841 1,982 2,012 2,631 2,932 3,150 3,568 3,963 4,172 4,958 Minority interests 580 962 949 1,249 1,248 1,622 1,913 2,145 1,902 2,235 Total liabilities Liabilities (incl. deferred charges) 2,421 2,944 2,961 3,880 4,180 4,772 5,481 6,108 6,074 7,193 Total liabilities and equity 4,278 5,016 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 the immune system, metabolic diseases and cancer. 56 Let’s Talk About it Boehringer Ingelheim, which currently has almost 37,500 employees, Summary of selected financial data 1996 1997 1998 1999* 2000 2001 2002 2003 2004 2005 has 143 affiliated companies spread around the globe. We have research Sales 3,623 4,201 4,474 5,086 6,188 6,694 7,580 7,382 8,157 9,535 62 Time is Critical facilities in nine countries and production plants in more than 20. Operating income 333 350 336 655 800 980 1,082 901 1,372 1,923 66 Overview Biopharmaceuticals and Chemicals Our pharmaceuticals research and development spending corresponds Operating income as % of sales 9.2 8.3 7.5 12.9 12.9 14.6 14.3 12.2 16.8 20.2 to about 18 % of net sales in Prescription Medicines. Income after taxes 167 212 229 320 379 401 551 537 908 1,514 Income after taxes as % of sales 4.6 5.0 5.1 6.3 6.1 6.0 7.3 7.3 11.1 15.9 Our headquarters is at Ingelheim, the German town where the company Return on equity (in %) 9.8 11.4 11.0 13.8 14.4 13.6 16.0 15.0 23.1 34.2 was founded in 1885. Own capital resources (in %) 43.4 41.3 43.9 40.4 41.4 41.3 38.3 37.9 41.0 38.4 Cash flow 426 561 595 737 791 1,117 1,049 1,059 1,430 2,069 60 Overview Consumer Health Care Biopharmaceuticals and Chemicals Animal Health 70 Helping the Heart 74 Overview Animal Health 77 Group Management Report Financial funds Consolidated Financial Statements 2005 Personnel expenditure 966 722 858 1,055 1,094 1,645 2,645 3,516 4,015 4,585 1,153 1,270 1,409 1,527 1,749 1,916 2,175 2,252 2,443 2,671 30.5 29.9 28.0 34,221 35,529 37,406 90 Overview of the Major Consolidated Companies Personnel expenditure as % of sales 92 Consolidated Balance Sheet Average numbers of employees 93 Consolidated Profit and Loss Statement Research and development costs 626 771 812 94 Cash Flow Statement R&D as % of sales 17.3 18.4 18.1 95 Statement of Changes in Group Equity Investments in tangible assets 346 455 421 96 Notes to the Consolidated Financial Statements Depreciation of tangible assets 169 189 211 114 Auditor’s Report 116 Glossary Flap Comparison of Balance Sheet/Financial Data 1996–2005 *As of the comparative financial statement 1999, accounting and evaluation methods were brought closer into line with International Accounting Standards (IAS), in particularly with regard to deferred taxes and provisions for pensions. 31.8 30.2 31.5 30.0 28.3 28.6 28.7 24,074 24,860 25,927 26,448 27,325 27,980 31,843 826 968 1,019 1,304 1,176 1,232 1,360 16.2 15.6 15.2 17.2 15.9 15.1 14.3 377 497 548 634 516 427 532 256 288 305 340 354 377 439 Financial Highlights Boehringer Ingelheim group of companies 2005 2004 Change 9,535 8,157 17 % Europe 33 % 32 % Americas 48 % 48 % Asia, Australasia, Africa 19 % 20 % 96 % 96 % 4 % 4 % Research and development 1,360 1,232 10 % Personnel costs 2,671 2,443 9 % 37,406 35,529 5 % 1,923 1,372 40 % 20.2 % 16.8 % Amounts in millions of EUR, unless otherwise indicated Net sales by region by business area Human Pharmaceuticals Boehringer Ingelheim Animal Health Operating income Operating income as % of sales Annual Report 2005 Income after taxes 1,514 908 15.9 % 11.1 % 4,609 4,363 34.2 % 23.1 % 2,069 1,430 45 % Investments in tangible assets 532 427 25 % Depreciation of tangible assets 439 377 16 % Income after taxes as % of sales Annual Report 2005 www.boehringer-ingelheim.com Average number of employees* Shareholders’ equity Return on shareholders’ equity Cash flow *including the total number of employees in joint ventures included in the consolidation Value through Innovation nopq 67 % 6 %

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