Annual Report Value through Innovation. nopq

Transcription

1 Annual Report 2005 Value through Innovation nopq

2 Financial Highlights Boehringer Ingelheim group of companies Amounts in millions of EUR, unless otherwise indicated Change Net sales 9,535 8, % by region Europe 33 % 32 % Americas 48 % 48 % Asia, Australasia, Africa 19 % 20 % by business area Human Pharmaceuticals 96 % 96 % Animal Health 4 % 4 % Research and development 1,360 1, % Personnel costs 2,671 2,443 9 % Average number of employees* 37,406 35,529 5 % Operating income 1,923 1, % Operating income as % of sales 20.2 % 16.8 % Income after taxes 1, % Income after taxes as % of sales 15.9 % 11.1 % Shareholders equity 4,609 4,363 6 % Return on shareholders equity 34.2 % 23.1 % Cash flow 2,069 1, % Investments in tangible assets % Depreciation of tangible assets % * including the total number of employees in joint ventures included in the consolidation

3 Contents 2 The Shareholders Perspective 4 Key Aspects of Our Caring Culture 10 Our Commitment 12 For Our Neighbours 14 For Our People 18 For Our Environment 22 Our R&D Drive 26 HIV is Being Played Down 28 Our Strength in R&D + Medicine Business Development Prescription Medicines 40 A New Quality of Treatment, a New Quality of Life 44 Overview Prescription Medicines Consumer Health Care 56 Let s Talk About it 60 Overview Consumer Health Care Biopharmaceuticals and Chemicals 62 Time is Critical 66 Overview Biopharmaceuticals and Chemicals Animal Health 70 Helping the Heart 74 Overview Animal Health 77 Group Management Report Consolidated Financial Statements Overview of the Major Consolidated Companies 92 Consolidated Balance Sheet 93 Consolidated Profit and Loss Statement 94 Cash Flow Statement 95 Statement of Changes in Group Equity 96 Notes to the Consolidated Financial Statements 114 Auditor s Report 116 Glossary Flap Comparison of Balance Sheet/Financial Data

4 Our Company Boehringer Ingelheim is a research-driven group of companies dedicated to researching, developing, manufacturing and marketing pharmaceuticals that improve health and quality of life. Our business consists largely of Prescription Medicines, Consumer Health Care, Biopharmaceuticals and Animal Health. We focus on the production of innovative drugs and treatments that represent major therapeutic advances. Excellence in innovation and technology guides our actions in all areas. Our products have long been highly successful in the treatment of respiratory, cardiovascular, central nervous system, urological and virological disorders. In addition we have intensified our research into the immune system, metabolic diseases and cancer. Boehringer Ingelheim, which currently has almost 37,500 employees, has 143 affiliated companies spread around the globe. We have research facilities in nine countries and production plants in more than 20. Our pharmaceuticals research and development spending corresponds to about 18 % of net sales in Prescription Medicines. Our headquarters is at Ingelheim, the German town where the company was founded in 1885.

5 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.

6 The Shareholders Perspective The importance of family-owned companies in Germany is repeatedly given prominence in the public debate over significant economic policy issues, for instance, regarding the labour market situation or taxation policy. Family-owned companies represent a peculiarity in the German system. Of the 50 largest European companies of this type, more than half come from Germany. The results of investigations lead to the conclusion that such companies are, in terms of both revenues and earnings development, more than competitive compared with companies listed on the stock exchange. Looking into the reasons for this, you find features like long-term orientation combined with higher attention to risk, personal commitment of the owners as well as a strong employee focus. These aspects also apply to Boehringer Ingelheim, which serves as a positive example with its successful business and corporate development. We are frequently described as a company that is different to its competitors. What is meant by that? The criteria which mark us out and form Boehringer Ingelheim s identity are our orientation towards values, such as reliability and predictability, the close alignment with the needs of patients and physicians, the awareness of the importance of our employees, and our long-term thinking and commitment. Our strength is founded on our stability. As a family-owned company, we can transform the parameters mentioned above into a wellbalanced strategic approach along with a marketorientated growth strategy. We are not under pressure from the short-term demands of anonymous investors or the capital market. This does not, however, mean that we do not comply with standards and norms that apply to companies listed on the stock market. In this respect, we share the approach of those companies perceiving themselves as Good Corporate Citizens. Social commitment, openness and transparency are of utmost importance for us. The principle of sustainability applied to the long-term, stable development of the company s value, applied to the selection and targeted promotion and fair treatment of our employees, and applied to environment-friendly and sociallyorientated economies is reflected in our Leitbild, the guiding principles for our corporate behaviour. For us, sustainability is the basis of stability and success. Our company is growing dynamically. Indeed, in the last few years, it has clearly outpaced average growth of the pharmaceutical market. In 2005, the successful development continued once 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

7 of innovative medications. Our expectations for 2005 have been achieved or were exceeded in a whole number of areas. On all of these grounds, the Shareholders of Boehringer Ingelheim are very satisfied with the course and results of the business year. Nevertheless, we must not ignore the potential risks the pharmaceutical industry is facing. Developing new, innovative medicines is a protracted and expensive process. Only a few research approaches end up as new medicines and make it to market approval. The healthcare policy environment in most countries, which is afflicted with ever-increasing uncertainties and continuously deteriorating, represents a considerable burden for our industry. For capital expenditure creating new jobs or developing innovative medicines, we win many public plaudits. Sadly, these fine-sounding words are in reality not often followed by corresponding deeds. In spite of such limitations, 2005 was once again a successful business year. The Shareholders and the Board of Managing Directors of Boehringer Ingelheim took or prepared the decisions to achieve the goals we have set in close cooperation and coordination with the Advisory Board. The decisions concerned the company s strategic direction, important business matters or decisions on capital expenditure. In regular joint sessions, the Advisory Board, the Shareholders Committee and the Board of Managing Directors have discussed the short and medium-term development of the company and the necessary decisions entailed. The Shareholders of Boehringer Ingelheim thank all employees, the Board of Managing Directors and the Advisory Board for their successful work and commitment in The path Boehringer Ingelheim has taken as an independent familyowned company also promises us growth and success for the future. Instead of strengthening the power to innovate for which an appropriate risk premium is a pre-condition, that is to say, reasonable prices 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. Dr Heribert Johann Chairman of the Shareholders Committee The Shareholders Perspective

8 Key Aspects of 2005 position No. 14 worldwide in terms of sales, with a market share of 2 %. We are a research-driven pharmaceutical company that invests about 18 % of net sales of our Prescription Medicines business every year in the research and development of medicinal products. Our goal is to serve mankind through research into different diseases and to create the drugs and therapies to treat them. This principle guides all our business activities. Our success to date and our future prospects are measured by the degree of innovation of our new medicines now available to patients and by the innovative potential of our product pipeline. We are proud that in 2005 four million of patients worldwide affected by chronic obstructive pulmonary disease could benefit from our spiriva and live a better life. For some years now, Boehringer Ingelheim has been one of the fastest-growing companies in the pharmaceutical industry. In 2005 again, we maintained a fast pace of dynamic growth. According to the market analysts IMS, employed by all pharmaceutical companies, we achieved the strongest growth of the top 20 pharmaceutical companies. We also outpaced the average for the pharmaceutical market in all major regions of the world. This takes us to Strong international brands In 2005, our net sales rose by around 17 % to EUR 9.5 billion. Currency effects played a secondary role compared with previous years. Our growth was primarily driven by our prescription medicines products. spiriva, for the treatment of chronic obstructive pulmonary disease, and mobic, for the treatment of arthritis, both passed the blockbuster threshold of more than USD 1 billion annual net sales. micardis, our product for the treatment of hypertension, and sifrol /mirapex, to treat Parkinson s disease, were significant growth drivers too. flomax /alna, our drug for benign prostatic hyperplasia, also contributed to the successful sales development. To measure our development in financial results is one thing. But of ultimate importance for us is the benefit we offer to the millions of patients whom we have supported with our above mentioned drugs and for people infected with HIV. Since it was first introduced in 1996, we have helped a million patients with our drug viramune. And the success of our viramune 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

9 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 greater emphasis on our efforts to create value for patients and society. The launch of our new HIV drug aptivus in 2005 is thus another step towards fulfilling our commitment to Value through Innovation. Prescription Medicines, by far our largest business area, accounting for 76 % of total net sales, increased its turnover by more than 17 % to total EUR 7.2 billion. The share of our product portfolio which still enjoys patent protection or exclusivity rights rose to 59 %. Our other business areas also achieved significant growth. In Consumer Health Care (CHC), our self-medication business, net sales rose by 8.5 % to almost EUR 1.1 billion. This was mainly attributable to our flagship brands and leading products in the cough & cold and gastrointestinal indications, such as bisolvon, mucosolvan, dulcolax and buscopan. In addition, pharmaton, our well-established international brand for the improvement and maintenance of vitality and well-being, held the second strongest position in our CHC product portfolio. For some years, Boehringer Ingelheim has been one of the world s largest manufacturers of biopharmaceuticals for industrial customers. We also market our own biotech products, metalyse (heart attack) and actilyse (stroke). Our overall biopharmaceuticals business, which grew by 40 % in 2005 to EUR 548 million, is expected to play an increasingly important role in combating many major and developing diseases. Our Animal Health business, which accounts for 4 % of our net sales, has also grown above the market average in recent years. In 2005, sales rose by almost 8 % to EUR 361 million. A key factor for Boehringer Ingelheim s sustained success is our well-distributed presence in all important world markets. Our products are sold in some 150 countries. The USA, again by far the most important market in 2005, generated 36 % of our total net sales. Our US sales grew by 17 % to EUR 3.4 billion. Japan (+8 % to EUR 1.2 billion) and Europe (+19 % to EUR 3.1 billion) also posted excellent development. Europe as a region contributed 33 % of our total net sales. The healthy business development of the past business year led to a 40 % rise in operating income (broadly comparable to EBIT), totalling EUR 1.9 billion and reflecting an operating margin of more than 20 %. Key Aspects of 2005

10 Our successful business activities go hand in hand with increasing effectiveness in cost management through all areas of the corporation. Cost-effective pharmaceutical manufacture is one of the key factors in attracting new partners for third-party manufacture. Patented drugs or drugs with exclusivity continue to drive our growth. Our product pipeline includes a number of promising substances in major indication areas such as respiratory, cardiovascular and inflammatory diseases, virology, urology and CNS. In addition, good progress was made with development candidates in oncology, metabolism and immunology. Our areas of research are divided across the four main research sites in Germany (Biberach), Austria (Vienna), the USA (Ridgefield) and Canada (Laval), in line with their defined key areas. In addition, our activities and projects are supported by strategic alliances and in-licensing of new technologies. In 2005, we moved various candidates into predevelopment and development with promising prospects for the future. In a continued move to support this strong growth, we took the opportunity to increase our manpower by 5 % to total 37,400 employees in the past year, mainly in the USA, Germany and Spain. Outlook The gratifying development of our business in 2005 reflects the strengths of our company. However, yesterday s successes are today s history and the way ahead is uphill. The pharmapolitical measures in a number of important countries, starting with Germany, pose an increasing barrier to innovation and to patient s access to new and better therapies. Developing medicines is a lengthy, costly and risky process. Short patent lifetimes, frequent regulatory interventions, rigorous price containment measures and fierce competition make it all the more difficult to guarantee the financial basis required for R&D. We once again expect to grow faster than the pharmaceutical market in 2006, although we are unlikely to match the growth rates posted in mobic, for example, is expected to face competition of the first generic versions in the USA in However, our product portfolio contains numerous branded medicines with medium to long-term patent protection which still have significant potential for growth. We are also pleased to have a number of interesting drug candidates for various indications in our promising pipeline. All in all, Boehringer Ingelheim is optimistic about the future. Dr Alessandro Banchi Dr Andreas Barner Dr Hans-Jürgen Leuchs Prof. Marbod Muff Boehringer Ingelheim A n n u a l R e p o r t

11 Shareholders Committee Advisory Board Board of Managing Directors Dr Heribert Johann Chairman of the Shareholders Committee Albert Boehringer Christian Boehringer Christoph Boehringer Ferdinand von Baumbach Hubertus von Baumbach Dr Mathias Boehringer Prof. Michael Hoffmann-Becking Attorney at Law, Düsseldorf Chairman of the Advisory Board Dr Rolf-E. Breuer Chairman of the Supervisory Board Deutsche Bank AG, Frankfurt (Main) Prof. Fredmund Malik 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 Dr Alessandro Banchi Corporate Board Division Chairman of the Board Corporate Board Division Pharma Marketing and Sales Dr Andreas Barner Vice-Chairman of the Board 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

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13 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

14 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 acknowledges its special responsibility as a research-driven pharmaceutical company in the war on the pandemic. It is engaged in wide-ranging initiatives to combat AIDS. The company has increased efforts in HIV/AIDS research, in supplying anti-aids drugs free of charge to treat the transmission of the disease from mother-to-child during birth, or providing them at substantially reduced prices to developing countries for chronical treatment. It has furthermore increased its activities supplying knowledge and training and supporting philanthropic initiatives via its affiliates in areas strongly affected by HIV/AIDS. Since 2000, Boehringer Ingelheim has given free access to single-dose viramune (nevirapine), to be used alone or in combination with other drugs, to prevent mother-to-child transmission of the HI virus during birth. The company currently donates the product to some 140 programmes in around 60 countries in Africa, Asia, Latin America and Eastern Europe. In total some 700,000 mother and child pairs have been treated so far. Boehringer Ingelheim strives to facilitate the access to life-saving nevirapine. Five voluntary licenses to manufacture and market generic nevirapine have been granted to companies in South Africa, Nigeria, Egypt and Kenya. Moreover, as a founding partner of the Accelerating Access Initiative (AAI), Boehringer Ingelheim offers developing countries considerable discounts in order to enable access to viramune. Some 6,000 of Papua New Guinea s 5.3 million inhabitants are infected with HIV and the infection rate is 1,000 per year. Very few infected people go to healthcare centres so the figures are likely to be vastly underestimated. Apart from the viramune Donation Programme, Boehringer Ingelheim in partnership with other pharmaceutical companies, the Catholic Aids Office, the Australasian Society for HIV Medicine (ASHM) and the government of Papua New Guinea (PNG), have designed and implemented a pilot project to train healthcare workers under the auspices of the Collaboration for Health in Papua New Guinea. 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

15 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, counsellors, social workers and technicians working in healthcare centres. Topics covered in workshops included basic infection control, infection prevention, record keeping, diagnosis and management of opportunistic infections. The collaboration for Health in PNG is an initiative of a group of pharmaceutical manufacturers committed to the treatment and care of people living with HIV/AIDS. 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. Among other initiatives was the Student Education Programme in collaboration with the University of Cape Town, South Africa, which provides full financial support from Boehringer Ingelheim for medical students from disadvantaged backgrounds. The Boehringer Ingelheim Lung Institute at the same university has been set up as a centre of excellence to support clinical trial activities in the country with research facilities in infectious and respiratory diseases. In 2005, the Boehringer Ingelheim Training and Facilitation Unit was opened in Botswana. 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

16 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 enormous scale of the devastation wreaked by the tsunami that struck Southeast Asia. People from our operation in Indonesia reacted immediately, sending donations of clothes, food, medication and toys to the Aceh region of Sumatra. A crisis team made up of volunteer employees also went to Aceh to see how best to further support the local population. Among the displaced in Aceh were more than 150,000 children, many traumatised by the disaster. The company crisis team therefore decided to fund the construction of a trauma centre, which also serves as a school and village hall in Krueng Raya village. Aksari Ibnu, who co-headed the Boehringer Ingelheim Indonesia tsunami task force, commenting on the school opening in July, said: The smiling faces of young children and the people of Krueng Raya was a huge reward for our team who had all dedicated themselves to this worthwhile project. The company made substantial donations through its international and local organisations to aid agencies involved in the 2005 disasters, the Asian tsunami and the devastating earthquake that hit Kashmir in October. In response to the hurricane Katrina disaster in September, the company s US organisation also funded a free mobile clinic to treat people in New Orleans in addition to making financial and product contributions through MAP International to disaster relief efforts in the USA and elsewhere. Our people taking the initiative Our wide range of charitable activities in the USA heavily involves volunteering by employees. A Day of Caring sponsored by the company, gives employees at our Ridgefield, Connecticut, USA, site the opportunity to volunteer for tasks to help the aged and deprived. In many ways, from decorating homes to reading to children at day care centres. Our US employees also participate 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

17 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 help families made homeless when their shanties burned down at Baseco Compound in Tondo. Not only did the employees donate funds to build eight new row houses for the homeless, they also helped with the construction work in their free time. The homes, built in cooperation with an organisation dedicated to eradicating homelessness, were handed over to their new occupants in June. Promoting equal opportunity In Latin America, the company has a long, solid tradition of charitable activities. In Brazil, Boehringer Ingelheim launched a two-year social 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 Colombia, we not only contribute to healthcare and schooling for people in our immediate community, but also support two foundations: the Padre Luna Farms, which help battered children and teach agricultural labourers; and Fundafidro, an organisation working with healthrelated issues in deprived neighbourhoods. Despite the extraordinary challenges of the tsunami disaster, Boehringer Ingelheim Indonesia succeeded in October in continuing its established community-awareness programme, giving general medical treatment to hundreds of needy people near the company s Bogor plant as well as fostering educational improvement. 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

18 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 Innovation, calls for the dedication, passion and continuous powers of renewal of our more than 37,000 employees. They are our unique source of strength and inspiration. Our persistent, combined efforts and resulting achievements in pharmaceutical innovation have enabled us to maintain growth and create new jobs. In many countries we have generated a significant volume of employment opportunities, led by the USA, with a total of 1,000 new jobs. The increased employment prospects we offer have been greeted extremely favourably in countries where lowering unemployment is a national challenge. On employment, Boehringer Ingelheim has received numerous accolades. In 2005, we were awarded first price in Arbeitsplätze absolut for being the company which generated the highest number of new jobs in Germany. We also gained considerable public recognition in Germany for continuing to increase the number of apprenticeships which rose from 623 to 698. The relatively large number of apprentices in our extensive vocational programmes has won widespread praise as a powerful encouragement to the labour market. Great place to work We are proud of the attractive working environment that we have created and the status that we enjoy as a preferred employer. Authoritative, independent workplace surveys in many countries have confirmed our position among the top companies in this area so vital to recruiting and maintaining high quality employees (see box on page 17, list of awards). Such positive recognition of our company as a great place to work spurs us on to enhance our distinctive company culture still further. Ever responsive to the changing needs of our employees, we at the same time call for everyone to be personally engaged in improving our working environment at the heart of which are mutual respect, fairness, openness and space for both personal and professional development. 14 Boehringer Ingelheim A n n u a l R e p o r t

19 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 Our aspiration to continuously innovate requires firm commitment from everyone in the company. Ongoing dialogue between our employees and their supervisors is also essential to allow all parties to participate in our achievements and development. And our ability to progress coherently towards realising our vision by developing and leveraging the immense diversity within the company is pivotal to our success. Our annual employee supervisor dialogue (Mitarbeitergespraech MAG) is at the core of our performance and development culture. Engaging and stretching performance objectives are mutually agreed and career aspirations and perspectives for professional development are addressed. Every individual is expected to have a valid and forward-looking development plan to meet the qualification needs of our rapidly changing business and work environment. Career aspirations and prospects are also embedded in our global succession planning process. Here we seek to guarantee a strong pipeline of leadership talent for local and international key positions. Talent reviews linked to the succession planning support the identification and development of leadership talent across the corporation. International assignments are an integrated part of our succession planning process and our business and capability development. Our international assignees represent a large number of our organisations and are uniformly distributed throughout our geographical regions. While the focus groups and purpose of the assignment might differ from strategic positions to development measures or knowledge transfers, these moves serve clearly as a vehicle to enhance cultural understanding and broadening a global mindset. The Boehringer Ingelheim Academy, encompassing a variety of development courses and approaches in numerous countries, is designed to support and strengthen our core values and capabilities. Everyone at the company can access local and international development information on our intranets. The Boehringer Ingelheim Academy offers a wide spectrum of options from vocational subjects to leadership development programmes Personnel costs in millions of EUR 2,671 2,443 2,252 2,175 1,916 Personnel costs as % of net sales Number of employees (incl. apprentices) 37,406 35,529 34,221 31,843 27,980 For our people 15

20 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 tailored local and international development approaches are applied to help our current and potential leaders to discover ways to create a context in which our people can excel and all of us can continuously enhance our outcomes. Our third consecutive International Management Development Programme, launched in 2005, marked the beginning of 14 months of international, interdisciplinary learning and working for some 100 potentials. The programme involves participants in hands-on work on 14 strategically relevant projects, close professional mentoring and frequent exposure to senior management in various countries. Benefits Our benefits programmes, which vary from country to country, include, amongst others, retirement benefits, health coverage, insurance cover, company restaurants, kindergartens, childcare centres and access to a variety of personal and family support services. Numerous additional initiatives and programmes are available for our employees and their families. These include international clubs, our International Cultural Student Exchange programmes, local internships for family members and summer camps for children. The way we work together From the mid-1990s, our corporate culture has built on our vision Value through Innovation (VTI), which has given direction to all our activities. An annual VTI Day brings our organisations together to celebrate our achievements in line with our vision and encourages and inspires our employees to participate in realising it in practical ways. Value through Innovation has guided and will continue to guide our way of working together. It helps us build on our strength and make the most of our distinctive character, enabling us individually and collectively to achieve great success. In 2005, Lead & Learn was introduced to outline ways in which we can enhance our culture of working together to realise and deliver Value through Innovation. The core principles of Lead & Learn encourage increased questioning and seizing opportunities while fostering a culture of shared leadership and learning. VTI teams that fairly represent the diversity of our employees, together with our line management, have commenced their challenge to explore and realise complementary new ways to support our aspired cultural development throughout the corporation. 16 Boehringer Ingelheim A n n u a l R e p o r t

21 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 Great Place to Work: The best companies to work for in Latin America Brazil < 50 Great Place to Work: The best companies to work for women Denmark 11 Denmark s Best Place to Work Germany 1 Germany s Best Employers (VAA) Germany 15 Germany s Best Employers (Capital) Germany 2 Germany s Best Employers with more than 5,000 employees (Capital) Netherlands non given The 49 Preferred Employers in the Netherlands Mexico 8 Great Place to Work United Kingdom Best Companies to Work for (Sunday Times) USA (Roxane) 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

22 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 guiding principles (Leitbild) and formulated in our Principles on Safety, Quality and Environmental Protection, are put into practice through systematic environmental protection, health and safety (EHS) management. Global standards are defined and enforced wherever they are indicated. Goals are set annually, while our EHS status is checked regularly by Corporate Headquarters. In 2005 alone, this involved twelve audits at various sites. Every plant undertakes to set up a local management system and is free to have this certified or not. For further details of our EHS management please visit 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. examples show that we accept responsibility for our products and attach great value to EHS, not only at our own plants but also at those of our business partners. Climate protection In the wake of disasters, such as those caused by the hurricanes Wilma and Katrina in 2005, the subject of climate protection moved to centrestage in public debate. By converting the power station at our Ingelheim site to burn a renewable source of energy, waste wood, Boehringer Ingelheim has already made an active contribution to improving the carbon dioxide (CO2) balance. Compared with the two Work accidents Frequency rate = accidents x 1 million hours / total labour hours Severity rate = lost labour days x 1 million hours / total labour hours Frequently it is not only our employees and the environment that benefit, but measures taken can also have an economic impact, as illustrated by the example of our wood-fired power station in Ingelheim, Germany, described below. Other Boehringer Ingelheim A n n u a l R e p o r t

23 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 about 60,000 tonnes, or a quarter of the Corporation s total CO2 emissions. A secondary benefit of the conversion has been a major reduction in emissions of sulphur dioxide, a contributor to acid rain. In a move to reduce emissions of gases detrimental to the global climate, in accordance with the Kyoto Protocol, the European Union introduced the Emissions Trading Scheme for CO2 in Boehringer Ingelheim has joined this scheme. Our heating power station in Ingelheim was issued trading certificates on the basis of the emissions in Following the switch to wood, a CO2-neutral power source, we can now trade any certificates that we no longer need. This project has allowed us to pursue both ecological and economic goals at the same time. Another example of our responsible approach to climate protection came within the framework of a programme run by the Swiss national energy authorities in Our Swiss site undertook to reduce CO2 emissions by 10 % by the year 2010 and has already met interim goals. Pharmaceuticals in the environment We are not only responsible for clean production, but also for ensuring our products have minimal impact on the environment. An environmental risk assessment is now required when registering new products. This is prepared on the basis of studies on environmental impact and ecotoxicological effects. We also assess the environmental data for products already on the market and, where necessary, run further voluntary studies to assess the ultimate impact. Water Water consumption (in millions of m 3 ) Water consumption index (in %) Energy Energy consumption (in millions of gigajoules) Energy consumption index (in %) For our environment 19

24 Assessments to date show that our substances present no risk to man. Business partners Our EHS management system guarantees that all Boehringer Ingelheim sites satisfy set requirements and make constant improvements. However, we also attach great value to ensuring that our business partners likewise meet our expectations in terms of EHS, while satisfying minimum requirements, in order to ensure the continuity of our own business. For this reason, we increasingly check EHS aspects as well as quality during qualification of suppliers and contract manufacturers. Awards In 2005, a number of sites were again awarded prizes by external agencies for their efforts in EHS. For the 6th time running, our site in Colombia won an award for its excellent contribution to long-term development. The local agencies awarded the site in Toride, Japan, a prize for its exemplary efforts in the storage of hazardous goods and fire safety, while the site in Petersburg, Virginia, USA, was given an award for its modern wastewater treatment plant. Our French chemical plant received first place in a countrywide external safety audit conducted to international standards. Incidents Our local and global crisis management allows us to react rapidly to potential incidents. No major incidents occurred in Our performance The graphs show the EHS performance figures for the last five years. Performance in the field of safety at work is measured by the number of accidents and their rate adjusted for the number of employees. As can be seen from the graph (page 18), the rate of accidents has fallen again since Our environmental impacts are shown both as absolute values and relative to production represented in our production index. The index represents our overall production in all business areas and is weighted to compensate for differences in environmental impact. Our baseline year is Since 2005 the figures include the values for the company microparts, Germany, which was acquired in They do not include SSP Co., Ltd., Japan, which has also not been included in previous years. Over the last few years, most indicators have reached a relative stable level because many prior technical or organisational improvements 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 %) , Boehringer Ingelheim A n n u a l R e p o r t

25 reflected clearly in the respective indices compared with The production-adjusted amount of pollutants in wastewater produced has been reduced by 60 %, solvent emissions (volatile organic hydrocarbon VOC) have been halved and water consumption lowered by a quarter. Our recycling rate has stabilised at a very high level of about 80 %. Many of our ongoing efforts are therefore no longer reflected as clearly as in earlier years. For a more detailed explanation of the individual graphs, please visit Our goals We are aware that there is further potential for optimisation in terms of solvent emissions (VOC) into the air. We are making changes at our chemical site in Spain, where VOCs will be eliminated 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 %. nitrogen removal by improving the nitrification/ denitrification process, and will also target the specific halogen-containing wastewater which can be difficult to treat when using only conventional technology. Our chemical sites in Malgrat, Spain, and Fornovo, Italy, are seeking to have their environmental management systems certified in 2006 in accordance with ISO This report only mentions some of the activities we engage in to fulfil our responsibilities. Please visit the internet for further details about our product responsibility, the safe handling of highly potent substances in production and other examples of our many safety activities. 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 Wastewater chemical oxygen demand (COD) COD load before treatment (in tonnes) COD load after treatment (in tonnes) COD load (after treatment) index (in %) Disposed waste Domestic waste (in tonnes) Hazardous waste (in tonnes), incl. pharmaceutical waste Disposed waste index (in %) Recycling rate (in %) ,000 6,000 4,000 2,000 20,000 15,000 10,000 5, For our environment 21

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27 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