Percentage Share of Total Expenses by Canadian Blood Services Lines of Business and Other Programs For

Transcription

1 OuR performance Consolidated results The consolidated results include the operations of Canadian Blood Services various lines of business and two captive insurance subsidiaries. For the year ending March 31, 2011, all business lines had a combined surplus of $5.1 million compared to a surplus of $1.9 million in 2009/2010. The captive insurance subsidiaries had a consolidated surplus of $17.3 million compared to a deficit of $3.0 million in 2009/2010. Consolidated expenses totaled $982.6 million, a decrease of $32.7 million across all lines of business, including the results of our captive insurance subsidiaries. Both the Plasma Protein Products and Transfusable Products business lines account for an equal proportion of total expenses. While the Plasma Protein Products business line accounts for a large portion of total expenses, its costs are largely driven by the procurement and distribution of the underlying plasma protein products themselves. The Transfusable Products business line, however, is a much more complex program. This line of business employs over 4,000 staff and collects, manufactures, tests and distributes fresh blood products. For budgetary reasons the various support services required to run the blood system are also included within the Transfusable Products business line. While the remaining programs are equally as important, their proportion of the total budget are small. Percentage Share of Total Expenses by Canadian Blood Services Lines of Business and Other Programs For % Plasama Protein Products 46.9% Transfusable Products 2.1% Stem Cells 1.8% Diagnostic Services 1.0% National Facilities Redevelopment Program 0.9% Organs and Tissues 0.1% Captive Insurance Subsidaries In July 2007, Canadian Blood Services committed to finding efficiencies of $36.8 million as a means of keeping the cost per unit constant over a three-year period starting in 2008/2009. In order to deliver efficiencies of $36.8 million ($9.8 million in 2008/2009 and $13.5 million in 2009/2010 and 2010/1011), a target of $50 million over the three-year period was set ($10 million in 2008/2009 and $20 million in 2009/2010 and 2010/11). The $13.2 million variance was needed for investing in equipment and systems to allow us to deliver the net efficiencies of $36.8 million and also offset costs resulting from inflationary pressures on items such as fuel and utilities. The efficiencies committed to in 2010/11 were fully realized. With this, our multi-year commitment promised in July 2007 has been achieved. In our 2011/2014 Corporate Plan, which is the mechanism for the approval of our 2010/11 budget, we continued to commit to the efficiencies journey. We committed to keep our cost-per-unit measure, a high-level performance measure, at a growth rate of no more than 2.3%, a rate well below the increase in the cost of inputs to the organization. Our core processes continue to be examined to ensure that they are not only necessary but that they enhance our operations and our products. We will continue to refine those activities where necessary to achieve optimum efficiency and quality of service. 28 report to canadians 2010/2011

2 performance By BuSinESS LinE transfusable products Our Transfusable Products business line includes red blood cells, platelets, plasma for transfusion and other plasmaderived products. We nurture relations with approximately 410,000 donors, annually collect approximately one million units of whole blood and apheresis donations, test each donation for a variety of transmissible disease markers, produce component products for hospital use from each donation and distribute to hospitals. We hold more than 22,000 donor clinics annually and serve more than 700 hospitals and health-care facilities. Our products are administered to hundreds of thousands of patients every year. Transfusable Products includes allogeneic (i.e., donating for any recipient), directed (i.e., donating for someone specific) and autologous donations (i.e., donating for self). The financial performance of this line of business is largely linked to the supply and demand for our products and services and is influenced by productivity and cost efficiency initiatives. Red blood cells (RBCs) RBC demand: We shipped 820,487 RBC units this year, an 11,691 unit or 1.4% decrease from the prior fiscal year. Demand trends vary across regions and blood groups, adding complexity to ensuring that the right products are available where needed. Canadian Blood Services continues to work with hospital customers to better understand the nature of demand for blood products and to improve inventory management methods to minimize product losses due to outdates. Although we continue to see softening in hospital demand, the long-term outlook and underlying trend of RBC shipments remain at an estimated growth of 1.8% in 2011/2012. Whole blood collections: We collected 895,273 whole blood units this year, a 27,355 unit or 3% decrease for the prior fiscal year. The effect of softening demand and a drawdown on RBC inventories from 31,610 to 27,638 units throughout the fiscal year allowed for this decrease while still meeting demand. Opening inventory levels were high as a result of a planned inventory build up associated with our response to the threat of an H1N1 flu epidemic in the prior fiscal year which was actively managed down to our target inventory levels throughout the year. The number of whole blood collections is a material cost driver, and reductions create a cascading impact throughout our supply chain groups tasked with collections, component production and testing. report to canadians 2010/

3 Whole Blood Collections/RBC Shipments (% increase / decrease) 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% -1.00% -2.00% -3.00% -4.00% 05/06 vs 06/07 06/07 vs 07/08 07/08 vs 08/09 08/09 vs 09/10 09/10 vs 10/11 10/11 vs 11/12 (b) 11/12 (b) vs 12/13 (p) 12/13 (p) vs 13/14 (p) 13/14 (p) vs 14/15 (p) Whole Blood Collections Red Blood Cell Shipments Ratio of red blood cells (RBCs) shipped to whole blood collected: The ratio of RBCs shipped to whole blood collected was 91.6% in 2010/11 compared to 90.2% in 2009/2010. During the process of collecting blood, manufacturing blood components and maintaining a product inventory, a number of units are discarded for a variety of reasons, including, positive test results, post-donation information (e.g., a donor informs Canadian Blood Services after the donation of something requiring a deferral), process non-conformances and product expiry. Canadian Blood Services continues to develop processes to further reduce the number of discards, as well as a refinement of the various blood types held, in an effort to increase the proportion of red blood cell units issued from the whole blood units collected. The increase in the ratio this year is explained by a decrease in discards and a drawdown in year-end inventory of RBCs. Future-year projections show a continued improvement in this ratio as we continue to further refine our processes and drive down the level of discards. Whole Blood Collections/RBC Shipments 1,000, , , , , , , , , , % 92.5% 92.0% 91.5% 90.0% 89.5% 89.0% 88.5% 88.0% 87.5% (Ratio Shipment to Collections) 05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (a) (a) (b) (p) (p) (p) Whole Blood Collections Red Blood Cell Shipments Ratio Shipment to Collections A = actual, B = budgeted and P = planned 30 report to canadians 2010/2011

4 platelets Demand: Total platelet shipments include platelets collected through our apheresis program and those derived from whole blood collections using either the Buffy Coat production method or platelet rich plasma (PRP). A dose is considered equivalent to one apheresis platelet, one Buffy Coat platelet or five PRP platelets. We shipped 114,193 platelet doses, an increase of 2,790 doses or 2.5% from the prior fiscal year. Doses collected through the apheresis program represented 34% of the shipments, with the remaining doses derived from whole blood collection. Because they are sourced from a single donor, apheresis platelets are often preferred during the treatment of sensitized patients because this enables more precise matching and avoids multiple donor exposures. Although sometimes preferred for specific medical reasons, apheresis platelets are much more expensive to collect than a platelet dose manufactured through the Buffy Coat production method. Our long-term planning will hold the growth in our apheresis program and meet increasing demand through Buffy Coat production. We also saw the end of the PRP platelets in 2010/11 as our changeover to Buffy Coat production was fully implemented across all our regions. Platelet Doses Shipped by Production Type 140, , ,000 80,000 60,000 40,000 20, /06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (a) (a) (b) (p) (p) (p) Buffy Coat Production Apheresis Platelet Rich Plasma Production A= actual, B = budgeted and P = planned Collections: Platelet apheresis technology allows for the collection of a single dose or, if the donor qualifies, the collection of a large-volume dose, which is equivalent to twice the volume of a single collection and allows for the preparation of two transfusion doses from a single platelet donation. Increasing the proportion of large-volume apheresis collections allows for twice the collection volume using a reduced number of collection appointments. The overall number of platelet-equivalent doses collected increased by 523 (1.2%); however, the appointments required to collect those doses decreased by 1,146 (3.3%) as the proportion of large-volume procedures increases. As the proportion of double collection procedures increases, we drive efficiencies by reducing the amount of labour and supplies needed to collect an equivalent dose. In 2010/11 30% of platelet apheresis collections were large-volume, an increase from a 24% split rate reached in the prior fiscal year. In future years we are planning to continue to grow the split rate, further driving efficiencies. report to canadians 2010/

5 Platelet Apheresis Collections 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, /06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (a) (a) (b) (p) (p) (p) 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% Single Apheresis Large Volume Apheresis % Large Volume Split A = actual, B = budgeted and P = planned plasma Demand: Plasma is shipped for transfusion or fractionation and is collected through the apheresis program or recovered from whole blood collections. In 2010/11 total litres shipped for transfusion fell 11.2% as demand shifts to synthetic products within the plasma protein products business line. In 2010/11 Canadian Blood Services started a pilot program to purchase surplus recovered plasma from the United States (collected by organizations with an FDA licence) which will continue in 2011/2012. The results of this pilot are shown in the table below. Litres of Plasma Shipped 200, , , , , ,000 80,000 60,000 40,000 20, /06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (a) (a) (b) (p) (p) (p) Transfusion Fractionation US Normal Recovered Plasma for Fractionation A = actual, B = budgeted and P = planned 32 report to canadians 2010/2011

6 Consolidated financial performance The financial performance of the Transfusable Products business line is shown below % change total nfrp* adjusted total nfrp* adjusted adjusted total total total Revenue: Members contributions $495,424 $28,924 $466,500 $468,019 $13,384 $454, % Federal contributions 5,000 5,000 5,000 5, % Less deferred amounts (61,368) (28,924) (32,444) (34,399) (13,384) (21,015) 54.4% 439, , , , % Amortization of previously deferred contributions: Relating to property, plant and equipment 18,111 18,111 18,490 18, % Relating to operations 16,902 9,001 7,901 8,593 1,784 6, % Total contributions recognized as revenue 474,069 9, , ,703 1, , % Investment income 1, , % Other income % Total revenue 476,965 9, , ,188 1, , % Expenses: Staff costs 286,678 8, , ,350 1, , % General and administrative 87,468 1,024 86,444 91, , % Medical supplies 78,601 78,601 78,601 78, % Depreciation and amortization 17,892 17,892 18,340 18, % Total expenses 470,639 9, , ,905 1, , % Excess (deficiency) of revenue over expenses $6,326 $ $6,326 $2,283 $ $2, % *NFRP: National Facilities Redevelopment Program Revenues The core driver of activity in Transfusable Products is supply and demand for red blood cells, platelets and plasma. In order to meet the demand for our products, Canadian Blood Services held more than 22,000 collection events and shipped more than 1.2 million products to hospitals across Canada. Revenue for the Transfusable Products business line includes funding related to the facilities NFRP in southern and central Ontario and the Maritimes regions. In order to depict relevant year-over-year comparisons, the results of the facilities redevelopment program have been removed in the table above, resulting in a net year-over-year increase in Member contributions of 2.6%. Deferred revenue increased $11.4 million from the prior fiscal year largely as a result of the elimination of the debt associated with the Winnipeg Blood Transfusion Service Centre. We also experienced a modest increase in investment income as a result of higher interest rates. report to canadians 2010/

7 Expenses Expenses incurred by the Transfusable Products program fall into four broad categories: staff, medical supplies, general and administrative costs and depreciation and amortization. In 2010/11 total expenses decreased 0.4% to $461.2 from $463 million in 2009/2010 after the results of the NFRP are removed. Percentage of Total Expenses By Cost Category 60% Staff 19% G&A 17% Medical Supplies 4% Depreciation Staff costs: Staff costs make up approximately 60% of total Transfusable Products expenses and are largely influenced by product demand and collective agreement obligations. The overall increase after removing the expenses related to the National Facilities Redevelopment Program (see table on page 33) was $3.2 million, a 1.2% change from prior years, but below the inflationary factor of approximately 4%. Staff costs are affected by two drivers: the rate paid per hour and the number of labour hours required to meet demand for our products and services. Much of the organization s cost-reduction efforts have been directed at making our various recruitment, collection, manufacturing and testing processes more efficient, which has a direct influence on our overall staff costs. As Canadian Blood Services staff is largely unionized, wage rates are determined through collective bargaining. Historically, we have attempted to reach wage agreements with our Unions that reflect those of the acute health-care sector. Progress in improving the effectiveness of our processes can be measured through historic trending of our labour hours. Within the Transfusable Products business line we used approximately 7.0 million labour hours in 2010/11, a decrease of approximately 2.4% when compared to the prior fiscal year. As we continue on our efficiency journey, the number of labour hours required to ship our products is anticipated to decrease by another 2.2% in 2011/2012. Transfusable Products Labour Hours and Average Rate Per Hour including benefits 7,250,000 7,200,000 7,150,000 7,100,000 7,050,000 7,000,000 6,950,000 6,900,000 6,850,000 6,800, /08 (a) 08/09 (a) 09/10 (a) 10/11 (a) Rate per Hour Labour Hours 34 report to canadians 2010/2011

8 Medical supplies: Medical supply expenses remained flat in 2010/11. Medical supplies are materials used in the collection, production and testing processes and, as with staffing costs, are influenced by the demand for our products. Efficiencies have been gained in the platelet apheresis program as we continue to increase the capacity of our large-volume platelet collections, which allows for the collection of twice the volume during the same collection event, therefore, fewer supplies are required. There have also been efforts to reduce the cost of other consumables used in our collection processes by standardizing and consolidating consumable items, as well as the management and cost of our donor testing supplies. Medical supplies are exposed to contractual price increases, which were partially offset by the softening demand and lower collections of our various products this fiscal year. General and administrative: General and administrative expenses include those other than staff, medical supplies, and depreciation and amortization and include a significant portion of energy-related costs for freight, transportation and utilities. The total decrease after removing the impact of the National Facilities Redevelopment Program was $4.5 million or 5.0%, even with inflationary pressures related to utilities and fuel required to maintain our facilities and manage our logistics infrastructure. This reduction was achieved by our continued focus on efficiencies and cost reductions. Cost per unit /07 (a) 07/08 (a) 08/09 (a) 09/10 (a) 10/11 (a) Upper Actual Lower Cost per unit (CPU) is a ratio of total expenses to shipments of all products and represents an integrated measure of our performance. Costs include all expenses related to the blood operations functions, strategic projects and research and development; however, they exclude those expenses related to the NFRP because they are temporary in nature. Our shipments of fresh blood products are categorized into five broad groups: red blood cells, plasma for fractionation, plasma for transfusion, other plasma-derived products and platelets. report to canadians 2010/

9 Cost Per Unit % change Total Transfusable Products expenses 461,170, ,960, % Inventory adjustment (166,000) 2,807, % Adjusted Transfusable Products expenses 461,004, ,767, % Total units shipped 1,236,719 1,245, % Cost per unit shipped % Total red blood cells 820, , % Total plasma for fractionation 178, , % Total plasma for transfusion 49,968 56, % Total other plasma-derived products 73,321 64, % Total platelets 114, , % Total units shipped 1,236,719 1,245, % Our accounting policy requires a movement of direct costs and associated overheads related to the collection of fresh blood products to inventory. In order to facilitate a year-over-year comparison, this amount has been excluded in the CPU calculation. Weighted Inflationary Increases approximate budget line item inflation weighted 2010/11 as % of total on line item inflation Staff costs 283, % 4.0% 2.4% General & administrative 79, % 3.0% 0.5% Medical supplies 81, % 2.0% 0.3% Amortization 18, % 0.0% 0.0% Strategic and R&D 14, % 2.0% 0.1% 476, % Even with weighted inflationary increases of 3.3%, the consolidated CPU for the year ending March 31, 2011, decreased 0.3% to $ compared to $ in 2009/2010. This decrease was a result of improvements to process efficiencies and general cost reductions. The CPU variance from 2009/2010 was driven by two factors: Volumes shipped: Shipments of all transfusable products decreased 0.7% in 2010/11 as demand softend for some product groups. Shipment of RBC s decreased 1.4%; shipment of plasma for transfusion decreased 1.3%; and shipment of platelets increased 2.5%. Variances in expenses: Adjusted Transfusable Products expenses decreased 1.0% to $465.8 million from $461.0 million in 2010/11. Canadian Blood Services is committed to maintaining the CPU constant for 2011/2012. Our intention is to identify further efficiencies based on benchmarking data. Since demand is expected to remain flat or grow slightly in the next three years, achieving our commitment will require enhancing operating efficiencies. It also assumes: No new major safety measures requiring new tests will be introduced; No sudden or sustained increase in demand beyond current levels projected for RBCs and for platelets; The full facilities renewal program proceeding as planned; No major change in economic conditions that could cause significantly higher-than-forecast price increases in specific sectors, such as fuel or utilities; 36 report to canadians 2010/2011

10 No extraordinary pay equity settlements; and No events requiring the need to implement contingency measures, such as disasters or a flu pandemic. Research and Development (R&D) program An effective R&D program is intrinsic to the safety and security of the blood system. The program s goal is to drive continuous improvement and to foster an innovative culture that focuses on knowledge creation and problem-solving to meet business goals and objectives. Canadian Blood Services integrated R&D program focuses the efforts of expert researchers on specific areas within transfusion. In 2010/11 scientists focused on enhanced blood and blood product safety and quality, solutions to problems related to blood conservation and utilization, and minimizing blood system risks. R&D continues to benefit from its Network Centre for Applied Development (netcad) site in Vancouver, an authentic blood collection and processing site with research-only blood donors that is unique in the public blood industry. Our R&D program encompasses many laboratories across Canada, with expertise concentrated in different centres: Vancouver blood product processing and storage, modified cellular blood products and blood substitutes; Edmonton cryobiology, bone marrow stem cells and nanotechnology; Toronto transfusion immunology, lg and adverse events; Hamilton clinical use of blood products and plasma products; Ottawa blood-borne infectious diseases and quality monitoring; and Halifax industrial engineering and inventory management. In 2010/11, the R&D program was reorganized, with four priority areas of research identified: Therapeutic Immunoglobulins: These plasma protein products include IVIG, subcutaneous Ig and anti-d. We seek to understand how lg works so that replacement products can be designed for some of its uses. Replacements are urgently needed because of the difficulty of meeting Canadian demand for this plasma protein product. Pathogen Reduction/Inactivation: In this approach, blood or blood components are treated proactively to eliminate infectious agents. Our research in this area is not restricted to existing pathogen reduction technologies, which currently have limitations. Product Quality: This priority encompasses the storage, processing or quality control of blood products and related aspects of donor research. Improved Cellular Products: This priority area relates not only to modified red cells and platelets, but also to stem cell products and established and emerging cellular therapies. The integration of both research-focused and development-focused laboratories into collaborative teams was a continued focus. In 2010/11, access to internal operating funds within the program was made contingent on the establishment of teams of at least three researchers. The quality of the research was safeguarded by ensuring that proposals are ranked and critiqued by independent scientists at arm s length from Canadian Blood Services. Activities that directly support Canadian Blood Services business lines included: Simplification of whole blood centrifugation conditions: In 2010/11, R&D conducted a study to evaluate the impact of centrifuging whole blood at room temperature. Previously, our processing method in this regard differed according to whether two components (red cells and plasma) or three components (red cells, platelets and plasma) were being made from a donation. This study showed that no decrease in red cell or plasma quality would result from this change. Data from the study was used to obtain regulatory approval to simplify our processes and increase efficiency in our blood centres. Sterility testing of stem cells: In 2010/11 R&D reviewed the current Canadian Blood Services Stem Cell Laboratory (SCL) sterility testing process to see if it was appropriate for detecting aerobic and anaerobic microbes. This research showed that the current process used would detect common aerobic but not anaerobic microbial contaminants in small volumes of stem cells. Using the methodology we currently use for quality control sterility testing of blood components, R&D identified that this process would detect aerobic and anaerobic microbes if applied to stem cells. These results provided a platform that can be used for validation studies for the upcoming OneMatch National Public Umbilical Cord Blood Bank. report to canadians 2010/

11 VERAX study: We currently culture apheresis platelets and Buffy Coat pools within 24 hours of preparation in order to detect bacterial contamination. R&D conducted a study using outdated Buffy Coat platelets to determine how often a contaminated product escapes this early testing, and to see if a rapid test called Verax Platelet PGD that could be used shortly before transfusion would offer a better level of protection from bacteria for platelets that were held in extended storage. R&D concluded from this study that extending platelet storage times would be safe if screening using repeat culture or a rapid test such as Verax Platelet PGD is applied close to the time of transfusion. Inventory Management in the Maritimes: The planned consolidation of the Maritimes production in Dartmouth, Nova Scotia, has provided Canadian Blood Services with the need to evaluate the inventory system and distribution network in the region. In 2010/11, a large R&D study was conducted to evaluate and compare the existing and proposed systems for product distribution. Computer simulation tools were developed to assist in comparing the performance of the proposed distribution network against that of the current network. The simulation study evaluated the new service model, helping develop distribution plans and demand forecast for the areas. In 2011/2012 the last phase will test the transport network to facilities in the northeast and northwest of New Brunswick. Five-Day Thawed Plasma: In March 2010, the Canadian Standards Association changed the out-date time for thawed refrigerated plasma from 24 hours to five days. In response to queries from hospital customers, we conducted a stability study. We concluded that the loss of coagulation factor during the five days was not significant and the product is still effective after five days. The results of the study are being communicated to hospital customers and to Health Canada in order to change the storage requirements for plasma specified in our Circular of Information. Evaluating the ACP 215 Cell Processor: Our current special red blood cell programs focus on the production of cryopreserved and washed RBCs. Under the present system, all washed and deglycerolized units we process have a 24-hour post-processing expiry to minimize the risk of possible bacterial contamination due to the open system used in processing. This limited shelf life will have an impact on our ability to provide cryopreserved or washed RBCs in certain locations with the planned consolidated production facilities. The chief advantage of the Haemonetics ACPT 215 red cell processing instrument is that it significantly extends storage time for washed and deglycerolized units through the use of sterile docking and the addition of an RBC preservative after processing. The R&D program has led the evaluation and validation of this instrument for use in the washing of red blood cell products. A Health Canada submission is planned for approval to use this device in 2011/2012. Implementation of New Technology for Donor Screening: Until August 2010, the copper sulphate gravimetric test was used for hemoglobin screening of potential blood donors. In 2010/11, R&D supported an initiative to replace copper sulphate with the DiaSpect analyzer by preparing, testing and supplying control samples in order to evaluate the performance of the DiaSpect. This initiative was successfully implemented with the national verification of 224 DiaSpect hemoglobinometers across Canada. Additionally, through its partnership with the Canadian Institutes of Health Research, the R&D program has supported research studies into the development of new blood bags, stakeholder perception of pathogen reduction technologies, a new blood product tailored to the specific needs of newborn patients, and blood utilization/conservation practices. These projects are ongoing and will continue to provide us with new information to improve our blood system. For 2011/2012, the R&D program anticipates ramping up its work with pathogen reduction technologies to assist Canadian Blood Services in determining the implementation pathway for this critical blood safety initiative. Other key research initiatives for the year include research into the identification of donor-specific factors that influence blood product quality, the creation of improved approaches to the destructive testing of blood products for quality control, continued effort to understand the mechanism of action of lg to ensure that it is used optimally and support of ongoing clinical studies into the use of plasma and plasma derivatives and the significance of the age of red blood cells in patient outcome. 38 report to canadians 2010/2011

12 An important priority in 2011/2012 will remain the public sharing of new knowledge related to transfusion science with hospital customers, physician partners, the scientific community and the public at large. R&D will build on achievements in 2010/11, in which 64 peer-reviewed articles were published from the department, including some drawing prestigious editorial commentaries. plasma protein products Plasma protein products include plasma-derived, recombinant and synthetic therapeutic products such as intravenous immunoglobulin (Ig), albumin, hyperimmunes and various clotting factors (e.g., factor IX, factor VIII or factor VIIa). We purchase approximately 35 plasma protein products from Canadian and international suppliers. We also ship approximately 180,000 litres of plasma each year to commercial fractionators, where it is processed into albumin, Ig and Antihemophilic Factor/von Willebrand Factor Complex for redistribution back into Canada through Canadian Blood Services. Product Demand The demand for plasma protein products varies considerably by product. One consistent fact over the last number of years is that the main products (those with the highest usage, such as Ig and rfviii) also continue to be the products with high continued growth. This puts pressure on Canadian Blood Services and our funders in terms of managing usage growth and future costs. In addition, there have been some lower utilization products that have experienced very high growth (such as Prothrombin complex concentrate and C1 Inhibitor products), which creates new funding pressures. The high-growth products challenge Canadian Blood Services abilities to keep adequate inventory levels and to find ways to increase the available plasma for producing plasma-derived products. Year-Over-Year Growth in Plasma Protein Product Units Shipped variance % Albumin 25% (25 g equivalents) 189, ,915 4, % Albumin 5% (25 g equivalents) 73,237 68,868 4, % Starches (500 ml equivalents) 270, ,114 4, % Ig (g) 3,366,227 3,106, , % Recombinant factor VIII (iu s) 145,837, ,087,576 12,749, % Recombinant factor IX (iu s) 30,478,203 29,108,109 1,370, % Recombinant factor VIIa (mg s) 27,171 28,381 (1,210) -4.3% Synagis (each) 4,903 (4,903) % The amount of plasma shipped for fractionation, and subsequently returned as Albumin, Ig and Antihemophilic Factor/von Willebrand Factor Complex, is an important strategic driver for the Plasma Protein Products business line, not only for the security of inventory but also from a cost perspective. Plasma shipped for fractionation consists of whole blood-derived plasma (recovered plasma) and apheresis plasma (source plasma). The volume of recovered plasma that is made available for fractionation is dependent on whole blood collections and the demand for transfusable plasma and cryoprecipitate. Source plasma is dependent on how many apheresis plasma donors are diverted to a source plasma collection instead of whole blood collection. The amount of Canadian plasma available for fractionation is under some downward pressure. The demand for whole blood has been in a slight decline in the last two years, resulting in less available plasma. Some apheresis plasma donors may also be diverted to reduce the risk of TRALI (transfusion-related acute lung injury). The reduction of available plasma from these factors has been offset by the trend of less plasma being used for transfusion, but this is only a partial offset. In order to mitigate this reduction, plasma supply agreements have been arranged with third-party suppliers in the United States. The plasma made available through this channel helps contribute to the plasma that Canadian Blood Services sends for fractionation. This contributes to our sufficiency for Ig and makes products available for a reduced price compared to commercial product purchases. report to canadians 2010/

13 Plasma Protein Product shipments and costs Total Plasma Protein Product program expenses decreased 5.3% to $463.4 million in 2010/11 compared to $489.1 million in 2009/2010. These expenses include both the cost of product shipped and the administrative overhead of the program, which includes gains or losses on foreign exchange related to the purchase of inventory. Total cost of goods sold decreased $10 million on a net basis. This net decrease has two components; 1) a decrease in product prices of $36 million largely related to the appreciation of the Canadian dollar, and 2) a volume increase of $26 million due to increased utilization. Members are charged for the actual cost of plasma protein products used by the hospitals in their jurisdictions. Administration costs are allocated to provinces based on the dollar value of the product used. The following table provides a comparison of program costs to those recorded in the prior fiscal year. 2010/11 versus 2009/2010 Plasma Protein Product Program cost price volume total expenditure variance details actual actual variance variance variance Ig $186,739 $192,631 $20,286 (14,394) $5,892 Recombinant factor VIII 131, ,329 7,135 (9,379) (2,244) Recombinant factor VIIa 29,610 30,717 (212) 1,319 1,107 Recombinant factor IX 25,580 24,390 (41) (1,150) (1,190) Albumin 15,538 17,708 2,702 (532) 2,171 Starches 13,576 13, (242) (133) Feiba 9,555 10,792 1, ,237 Humate P 8,631 10,128 2,237 (741) 1,497 Prothrombin complex concentrate 7,207 4, (2,885) (2,749) Winrho 6,017 6,255 (51) C1 inhibitor 5,841 4, (1,778) (1,481) Wilate factor VIII 4,957 3, (1,587) (1,498) Other products 9,453 16,594 2,243 4,897 7,141 Cost of Plasma Protein Products $454,279 $464,263 $36,004 (26,019) $9,985 B19 testing 2,930 3, Total Cost of Plasma Protein Products $457,209 $467,343 $36,004 (25,869) $10,135 Staff costs 1,697 1, Freight 1,578 1,315 (263) (263) Inventory, interest & other 1,049 1, Program Administration Costs 4,324 4, (27) 56 Foreign exchange losses 1,608 16,380 14,771 14,771 Cost of issues to other customers 234 1, Total Program Costs $463,375 $489,118 $50,859 (25,115) $25,744 In 2010/11, the average U.S. dollar/canadian dollar exchange rate was versus an average rate in 2009/2010 of and as a result, the cost of our products fell, resulting in lower cost of goods sold. As a result of our foreign exchange risk exposure, management uses hedges to mitigate its exposure to fluctuations in exchange rates. Due the volatility of exchange rates in 2009/2010 and 2010/11 foreign exchange losses of $16.4 million and $1.6 million were recorded. In both fiscal years, the average exchange rate realized was well below the budgeted rates, including the results of the hedges. It is important to note that Canadian Blood Services has averaged foreign exchange rates at or below the budgeted rate over the last several fiscal years and, as a result, has generated favourable price variance, even including the results of our hedges. Volume variances, however, have continued to be unfavourable; i.e., the provinces and territories are using more product than planned. The appreciation of the Canadian dollar continues to mask the increase in 40 report to canadians 2010/2011

14 product utilization. If the Canadian dollar depreciated throughout the year and rose to levels above our targeted exchange rate, the Provinces and Territories would find themselves owing Canadian Blood Services incremental funding. This situation would likely put working capital pressures on the organization. Working capital The total value of plasma protein product inventories on March 31, 2011, was $86.1 million compared to $96.4 million in 2009/2010. Members provide $5.0 million in working capital annually to fund the plasma protein product inventory. As of March 31, 2011, total working capital received for the plasma protein product inventory was $67.7 million, leaving a working capital shortfall of $18.4 million. In order to address any future working capital issues, an operating line of credit of up to $50 million is in place specifically for inventories. The Plasma Protein Products group continues to work toward reducing the level of inventories held over the next fiscal years. Diagnostic Services Diagnostic Services includes prenatal testing, cross-matching and Human Leukocyte Antigen (HLA) typing provided in British Columbia, Alberta, Saskatchewan, Manitoba and Ontario. We also perform HLA and Human Platelet Antigen (HPA) typing and antibody investigations at our Winnipeg platelet laboratory. In other provinces, these services are often performed within hospitals. In Winnipeg, Regina and Edmonton, Diagnostic Services matches and issues blood components for client hospitals. The activities differ from one province or territory to another based on their unique customer requirements. Diagnostic Services Procedure Volumes bc ab sk mb on 10/11 (a) 09/10 (a) 10/11 (a) 09/10 (a) 10/11 (a) 09/10 (a) 10/11 (a) 09/10 (a) 10/11 (a) 09/10 (a) Red Cell Serology 67,571 66,056 87,303 87,304 19,237 18, , ,564 Platelet Immunology 1,900 2,147 Platelet Serology Immunohematology 1,024 1,304 Stem Cell Therapeutic Apheresis Autologous ,479 1,949 67,590 66,117 87,559 87,548 19,366 19, , ,783 3,424 4,338 *components of Ontario s Platelet Serology program were assumed by the Immunohematology program in the 09/10 fiscal year (In table above, A= actual) Funding by members matches the cost of diagnostic services received. For the year ending March 31, 2011, Diagnostic Services revenues and costs were $17.7 million compared to $16.8 million in 2009/2010. Expenses include staff, general and administrative charges and medical supplies required to complete patient laboratory and patient therapeutic services. Diagnostic Services has completed the implementation of TRACE LINE, a new blood bank software that replaces the current laboratory information system (LIS) at the Diagnostic Services laboratories in the Western Canada sites. Phase II of the project is under way, which includes expanding TRACE LINE to 18 hospital sites in Manitoba. The implementation of the new LIS provides a common and consistent platform for managing patient test records across the Diagnostic Services laboratories. Because of the electronic interfacing of the automated testing equipment with the new LIS, there will be fewer errors as a result of manual entry of test results, and the automatic faxing of prenatal reports to the requesting physician will mean a marked decrease in turnaround time. All expenses are charged on a per-procedure basis and include direct costs as well as overhead. report to canadians 2010/

15 Stem Cells Our Stem Cells business line consists of the OneMatch Stem Cell and Marrow Network, supported by the HLA Laboratory situated at our head office location, and our autologous/related stem cell activities in Ottawa and Edmonton. OneMatch recruits volunteer Canadians who are willing to donate blood stem cells to patients in need of an unrelated stem cell donor. OneMatch coordinates the search on behalf of all Canadian unrelated stem cell patients, manages all logistics related to the collection and ensures transport of the stem cell product to the transplant centre (hospitals) and/ or the international registry. Stem cell donations must come from donors who have been genetically matched (through HLA typing) to specific patients in need. OneMatch supports all Canadian unrelated stem cell transplant programs, as well as more than 60 registries throughout the world in their search for donors and/or umbilical cord blood units that match patients in need. A top priority for the Stem Cells business line is continuing to build a high-performing national network of potential donors and being an active member of the international community, all of which will benefit patients in need of stem cell transplants. Our autologous/related stem cell activities serve Edmonton, Ottawa, Kingston and Sudbury hospitals. We collect, process, store and transport stem cells under contract with local hospitals. The OneMatch Stem Cell and Marrow Network comprises three distinct patient/donor costing scenarios that are managed by case managers, all supported by the HLA typing laboratory. The scenarios are outlined below: Canadian patient matched with a Canadian donor: In this scenario, case managers administer the search of the donor database and work with the various collection and transplant centres located in Canada if a successful match is found. International patient matched with a Canadian donor: In this scenario, case managers administer the search of the donor database on the behalf of international registries and, if a successful match is found, work with the various Canadian collection centres and the international transplant centre. Canadian patient matched with a international donor: In this scenario, case managers administer the search of the various international donor databases on the behalf of a Canadian patient and, if a successful match is found, work with the international collection centre and the Canadian transplant centre. The program is funded by the provinces and territories, as well as revenues generated from services, including search activations, and products provided to international registries. Revenue increased to $19.8 million in 2010/11 from $19.3 million in 2009/2010, while expenses increased to $21.0 million from $19.7 million, generating a deficit of $1.2 million for the year compared to the $0.4 million deficit in 2009/2010. The largest component of this planned deficit related to an increase in new donors well beyond plan. The number of new donors grew by 17,425, a 101% increase from the prior fiscal year. For each new donor, a series of HLA typings have to be completed in order to update the searchable database. The increase in new donors is a result of grassroots community support; however, it created both testing throughput and budgetary pressures on the organization. Number of New Donors 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5, /08 08/09) 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (b) (p) (p) (p) Number of New Donors A = actual, B = budgeted and P = planned 42 report to canadians 2010/2011

16 Many of the expenses charged by international registries for products are rebilled to the transplant centre requesting the services and are recorded as revenue; thus, there is often a correlation between increased revenues and expenses. Expenses not recovered include international search activations, HLA laboratory expenses and various administrative expenses. Since the OneMatch Stem Cell and Marrow Network operates in an international environment, it is exposed to foreign exchange fluctuations. All of its products are priced in U.S. dollars and, as a result, its revenues are affected by the appreciation of the Canadian dollar. The number of patients in need of stem cells continues to grow and in the past year grew by 83 patients (10%) and is projected to grow by an incremental 10% in the outlying fiscal years. Number of New Patients 1,400 1,200 1, /06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (a) (a) (a) (b) (p) (p) (p) Number of Patients A= actual, B = budgeted and P = planned Stem Cell Database by Ethnicity As a result of incremental demand the Stem Cells program continues to build the Canadian donor database with an ethnically diverse base, which not only enhances the success rate of a match for Canadian and international patients but also reduces cost to the Canadian health-care system if the success rate of Canadian matches is increased. 80.6% Caucasian 4.2% Unknown 3.5% Chinese 3.2% Other 2.8% Asian 1.7% East Indian 0.9% Aboriginal 0.7% South Asian 0.6% Black 0.5% Multi-Ethnic 0.3% Latin American 0.3% Hispanic 0.2% Arab/West Asian 0.2% South East Asian 0.1% Filipino 0.1% Korean 0.03% Japanese report to canadians 2010/

17 Canada continues to receive approximately 85% of its supply of stem cells from international sources, as can be seen in the graph below. Our reliance on international donors increases the cost to the Canadian health-care system because these transactions cost more than obtaining stem cells from Canadian donors. Reducing this reliance is a key part of the strategy by improving the quality of the registrant database to more readily satisfy Canadian patient needs. Source of Canadian Unrelated Transplants /09 09/10 10/11 11/12 12/13 13/14 14/15 (a) (a) (a) (b) (p) (p) (p) International Donor Canadian Patient A= actual, B = budgeted and P = planned Canadian Donor Canadian Patient Cord Blood The provincial and territorial ministers of health (excluding Québec) approved $48 million in funding, including approximately $12 million in fundraising, for a national public umbilical cord blood bank in March Canadian Blood Services was asked to manage this project because of in-house expertise developed through its OneMatch Stem Cell and Marrow Network and the organization s existing national presence and success as a trusted health-care partner. The establishment of a national public umbilical cord blood bank will yield many benefits: A national (excluding Québec) integrated collection program will reduce Canada s dependency on international cord blood units. Increased ability to find units for hard-to-match patients: While not replacing the need for cord blood units obtained internationally, a Canadian bank will improve the chances of finding high-quality cord blood for Canadian patients. It increases confidence and consistency in product quality and safety. It leverages Canada s ethnic demographics for our benefit and the benefit of international patients and ensures readiness to meet the needs of an increasingly ethnically diverse Canadian population. It stimulates stem cell research in Canada and provides support for translating Canada s leading-edge research into cellular therapies. During the first phase, which launched in Ottawa on April 1, 2011, Canadian Blood Services, through its OneMatch Stem Cell and Marrow Network, will: Develop recruitment plans and cord collection procedures; Develop a cord blood stem cell laboratory in Ottawa; Develop information systems that will allow for the storing of donor information compatible with national and international cord network standards; and Obtain FACT (Foundation for the Accreditation of Cellular Therapy) accreditation. 44 report to canadians 2010/2011

18 Organ and tissue Donation and transplantation On August 12, 2008, federal, provincial and territorial ministries of health announced a commitment over five years to create an integrated national system to significantly improve organ and tissue donation and transplantation in Canada. Under the new funding arrangement, the Canadian Council for Donation and Transplantation (CCDT) merged with Canadian Blood Services, which subsequently expanded its mandate and operations beyond blood services into organ and tissue donation and transplantation. Canadian Blood Services mandate related to organ and tissue donation and transplantation encompassed four pillars of activity in 2010/11 and includes: the development of a national system design (strategic plan); support for and development of leading practices; facilitation of system performance improvement; and development and operation of patient registries. System Design To ensure the development of the best possible system for Canadians, Canadian Blood Services undertook a rigorous system design process that was underpinned by extensive consultation and collaboration. In 2010/11, Canadian Blood Services continued to work with three external committees; a Steering Committee made up of prominent experts in health-care policy, an expert organ donation and transplantation committee and an expert tissue donation and transplantation committee as well as hundreds of experts, key stakeholders and interested Canadians who provided their input into the new system. A defined process was used that first assessed the current state of OTDT, next established strategic direction, then defined goals and measures, and finally set out an implementation approach. The resulting evidence-based plan, a culmination of three years of engagement and planning, set the stage for significant system performance improvement for Canadians. The report was delivered to the ministers of health in April 2011 for their consideration. Support for Leading Practices The program of activities related to leading practices includes development and evaluation of clinical practice guidelines and recommendations and knowledge transfer to health practitioners, as well as facilitation of public education and awareness. In 2010/11, program highlights included collaboration with provincial representatives to work toward harmonizing living donor reimbursement policies in Canada. While every province has some form of living donor reimbursement policy in place, eight provinces have implemented formal programs. Canadian Blood Services hosted the Atlantic Donation Collaborative to share strategies for improving deceased organ and tissue donation. Forty-five health-care professionals from New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island attended the two-day event. It also provided information and expertise to government stakeholders on the impact of transplant tourism for consideration by policy-makers in their respective jurisdictions. In August 2010, results of an Ipsos-Reid survey commissioned to measure public awareness of and attitudes toward organ and tissue donation and transplantation was announced. Results showed that Canadians are overwhelmingly (95%) in support of organ and tissue donation regardless of their personal decision about donation. The survey revealed that while support for donation is high, there is public confusion over how to declare one s intention to donate; and most have little awareness of the organizations that are involved. The survey also highlighted that people already expect a system to be in place to notify families of the options to donate. In fact, they have rated organ and tissue donation as one of the top five health-care priorities of the day. In the fall of 2010, Canadian Blood Services completed a comprehensive survey of health-care professionals awareness, attitudes and actions concerning organ and tissue donation and transplantation. A key finding was that 95% were committed to organ donation and 92% were committed to tissue donation. report to canadians 2010/

19 System Performance Improvement In terms of facilitating and supporting system performance improvement through the development of performance metrics and accreditation standards, Canadian Blood Services work with Accreditation Canada resulted in a full complement of OTDT standards that are now in use for ongoing hospital accreditation across the country. Canadian Blood Services also participated in the Madrid Resolution, an initiative of the Transplantation Society and the World Health Organization (WHO) to support nations in achieving self-sufficiency in organ donation, thus decreasing the occurrence of transplant tourism worldwide. Canadian Blood Services also hosted an international panel discussion at the XXIII International Congress of the Transplantation Society held in Vancouver in August Panel members including international leaders from the World Health Organization, Germany and the United States shared leading practices in system OTDT design and discussed the importance of improved self-sufficiency and how it relates to transplant tourism and black market organs. Registries The Living Donor Paired Exchange (LDPE) registry matches incompatible donor-recipient pairs from across Canada to identify opportunities for kidney transplants. The LDPE registry also identifies domino, or chain, transplants which are initiated by an anonymous altruistic donor. By the end of 2010/11 the LDPE Registry had facilitated 69 kidney transplants across Canada. As of October, 2010 all Canadian provinces were participating in the LDPE registry. The National Organ Waitlist (NOW) and the Highly Sensitized Patient (HSP) registries are currently in development. The NOW is a real-time, web-based listing of Canadian waitlist transplant candidates that will list all non-renal patients with end-stage organ failure and the HSP registry will further enable patients with difficult to match tissue types finding suitable matches more readily. Fundraising Canadian Blood Services National Fundraising Office raises money to improve the donor experience and to support recruitment initiatives, as well as outreach to ethnically diverse communities. Examples include bloodmobiles and the middle school program. The work of the National Fundraising Office also supports the work of the OneMatch Stem Cell and Marrow Network to recruit new registrants. Total cash donations received for the year ending March 31, 2011, were $695,611 compared to $573,139 in 2009/2010. Gift-in-kind donations were $185,084. Thanks to all our financial and in-kind donors who supported our new and existing fundraising programs, we have surpassed our revenue goal of $650,000 for the 2010/11 fiscal year. Established this year was our Legacy for Life Society, which is our planned giving program. In March 2011, the ministers of health have announced a $48 million investment in Canada s first national publicly funded umbilical cord blood bank. Funding for this new project will be a combined investment from the provinces and territories and a new fundraising campaign by Canadian Blood Services to raise approximately $12 million over the next three years. During 2010/11, the National Fundraising Office stewarded the following major donations and participated in the following activities to raise funds and awareness of the blood system and OneMatch Stem Cell and Marrow Network. 46 report to canadians 2010/2011

20 partner Donation A. Lassonde Inc., makers of Oasis Be Pure juice, $50,000 cash donation and a $66,658 gift-in-kind partnered with Canadian Blood Services for the juice donation second year as the official juice of blood donors. Bayer Inc. Sponsored the Elementary/Middle School Education Program for $125,000 over three years Standard Life $97,000 gift-in-kind donation of rental space for the permanent Standard Life Blood Clinic in Vancouver Manulife Financial long-standing partner with $35,000 to pay for the rent for the permanent blood donor more than 55 years saving lives clinic held in the Manulife Centre in Toronto RBC Foundation $25,000 for second-year sponsorship of the bloodmobiles in Toronto Sing Tao Canada Foundation $23,000 to the OtherHalf Chinese Stem Cell Initiative fund for awareness and registration events for OneMatch Bell Canada $15,000 gift-in-kind donation of BlackBerry mobile devices CIBC $15,000 sponsorship of bloodmobiles in Ottawa Blood Donor Appreciation Event With the Ottawa Senators Hockey Club Gold Sponsors: $20,000 each EMC/OnX Enterprise Solutions Ltd., Baxter Corporation, Talecris Biotherapeutics Ltd. (Canada) Silver Sponsors: $10,000 each Bayer Inc., CSL Behring Canada Inc., Fenwal Inc., IBM Canada Bronze Sponsor: SAP Canada Inc. $5,000 Captive insurance program The Canadian Blood Services Captive Insurance Program comprises two wholly owned insurance corporations: CBS Insurance Company Limited (CBSI) and the Canadian Blood Services Captive Insurance Company Limited (CBSE). CBSI provides comprehensive liability coverage up to $250 million for risks associated with the operation of the blood system; CBSE provides coverage in excess of $250 million to a limit of $750 million. CBSE has entered into an arrangement whereby the Members have agreed to indemnify CBSE for all amounts payable by CBSE under the terms of the excess policy up to $750 million. No payment shall be made under CBSE until the limit of the liability under the primary policy in CBSI, in the amount of $250 million, has been exhausted.this provides Canadian Blood Services with $1.0 billion in liability coverage. CBSI also provides coverage to CBS for transit risks for a limit of liability of $5 million per occurrence. Coverage is also provided to CBS for consequential loss to blood inventory resulting from a peril insured under the all-risks property coverage and boiler and machinery policies. The insured limit provides coverage in excess of the deductibles of the commercial property damage policy. An aggregate limit of $10 million is applicable in respect of the combination of both transit risk coverage and the consequential loss coverage, subject to one full automatic reinstatement. Because CBSI and CBSE are wholly owned subsidiaries, the financial results of the Captive Insurance Program are consolidated. For the year ended March 31, 2011, revenue of $18.4 million was recognized with expenses of $1.1 million, resulting in a net surplus of $17.3 million. CBSI s core asset is an investment portfolio managed by an investment manager according to the Board-approved investment policy. Generally the portfolio comprises 75% fixed income securities and 25% domestic and global equity securities. The net results of the Captive Insurance Program are largely dependent on the results of the investment portfolio, as well as the actuarially derived level of the outstanding loss reserve. Throughout the year the investment report to canadians 2010/