Outlook 2021

Based on UCB’s current assessment of the COVID-19 pandemic, UCB remains confident in the fundamental underlying demand for its products and its prospects for long-term growth. UCB will continue to closely follow evolving COVID-19 pandemic diligently to assess potential near- and mid-term challenges.

The figures of the outlook 2021 as mentioned below were calculated on the same basis as the actual figures for 2020.

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Operating expenses went up to € 2 891 million reflecting digital business transformation, higher marketing and selling as well as higher research and development expenses. Operating expense ratio (total operating expenses in relation to revenue) increased to 54% after 50% in 2019.

• 10% higher marketing and selling expenses of € 1 221 million, , driven by launches and pre-launch activities: Cimzia®, in non-radiographic axial spondyloarthritis in the U.S. and the launches in China and Japan, Nayzilam® in the U.S., Evenity® in Europe as well as launch preparations for bimekizumab for people living with psoriasis, zilucoplan and rozanolixizumab in myasthenia gravis.
• 23% higher research and development expenses of € 1 569 million include the first time the R&D expenses for the acquired Ra Pharma, Engage Therapeutics and Handl Therapeutics R&D programs as well as termination costs of padsevonil in focal onset seizures. Ongoing high investments in UCB’s progressing pipeline encompass five late stage assets, including expenses in connection with digital transformation for better patient experience and faster development time. Slightly lower R&D expenses due to the pandemic related recruitment pause in the first half 2020 were compensated by higher pandemic related expenses for the safety of patients as well as ensuring patient recruitment in the second half of the year. Hence the R&D ratio reached 29% in 2020 after 26% in 2019.
• With +1% almost stable general and administrative expenses of € 196 million, , reflecting lower costs due to COVID-19 pandemic compensated by digital business transformation activities and the contribution to the UCB fund (€ 5 million) in connection with COVID-19 pandemic.
• other operating income doubled to € 95 million, after € 48 million in 2019 - driven by an income of € 96 million in connection of the commercialization of Evenity® in collaboration with Amgen, after an income of € 8 million in 2019, compensating mainly UCB’s marketing & selling as well as R&D expenses. UCB’s share to the total Evenity®  contribution has turned to positive earnings for the first time. In 2019, “other” operating items were impacted by one-time positive contributions from investment grants, the divestiture of the campus in Germany and release of VAT provisions.

Net financial debt of € -1 411 million as per end December 2020 compared to net financial cash of € 12 million as of end December 2019, mainly relates to the underlying net profitability, offset by the acquisition of Ra Pharmaceuticals Inc and Engage Therapeutics Inc, the dividend payment on the 2019 results and the acquisition of own shares. Net debt [Non-current and current borrowings and bank overdrafts less debt securities, restricted cash deposit with respect to nancial lease agreements, cash and cash equivalents.] ratio (net debt to adjusted (recurring) EBITDA) for 2020 is 0.98.

The evolution of cash flow generated by biopharmaceuticals activities is affected by the following:

• Cash flow from operating activities from continuing operations amounted to € 1 081 million compared to € 893 million in 2019. The cash inflow stems from underlying net profitability, deferred income, higher outstanding payables in the last quarter, offset with higher commercial inventory, higher receivables after a strong Q4 2020.

• Cash flow from investing activities showed an outflow of € 2 228 million, compared to € 235 million in 2019 and includes the net of cash acquisition of Ra Pharma Inc and Engage Therapeutics Inc (€ 1 986 million), capital expenditures (€ 349 million), offset with the sale of non-core assets and investments (€ 114 million).
•  Cash flow from financing activities had an inflow of € 1 177 million, which includes the proceeds from borrowings mainly related to the acquisition of Ra Pharma (€ 1 895 million), proceeds from private placement (€ 150 million) offset with the dividend paid to UCB shareholders (€ -235 million), the acquisition of treasury shares (€ -106 million), the 2013 retail bond maturing (€ -250 million) and interest payments.