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Annual Report 2006
Mipharm at a glance
Total assets (€/000)
Net fixed assets (€/000)
Cash Flow (€/000)
Free Cash Flow (€/000)
MIPHARM® S.p.A.
20141 Milan – Italy Phone (39) 02 53548.1 Fax (39) 02 53548.010 e-mail: [email protected] Annual Report 2006
Mipharm at a glance
Total assets (€/000)
Net fixed assets (€/000)
Cash Flow (€/000)
Free Cash Flow (€/000)
MIPHARM® S.p.A.
20141 Milan – Italy Phone (39) 02 53548.1 Fax (39) 02 53548.010 e-mail: [email protected] Annual Report 2006
Ho voluto colorare questa edizione del nostroAnnual Report 2006 con una serie di dipintidi Giovanni Carnovali detto "il Piccio". Quest'anno, 2007, si festeggia il bicentenariodella nascita dell'artista (1804)con una bella mostra internazionale a Cremona. Il mio è un atto di affetto e di ricordo. Sono un erede del Carnovali, ramo materno,sponda Lago Maggiore, alture di Luino.
Tengo parecchio a questa discendenza. Al Piccio, sono certo!, l'"IDEA" Mipharmsarebbe sicuramente piaciuta! Cav. Lav. Dr. Giuseppe Giampiero Miglio Milano, Aprile 2007 Piccio, ultimo e primo
Piccio, ultimo o primo dei romantici?
Nella nozione critica di romanticismo artistico si è soliti fare coincidere due tendenze che, nella comune propensione a svi-
luppare una nuova poetica in cui l'esaltazione dell'elemento sentimentale gioca un ruolo determinante, sono in realtà distin-
guibili e non sempre sovrapponibili. Una tendenza è maggiormente rivolta al rinnovamento dei contenuti espressi, l'altra al
rinnovamento delle modalità espressive attraverso le quali certi contenuti vengono trasmessi. Nel primo Ottocento, ancora
fortemente condizionato dal peso del neoclassicismo e del magistero accademico, è la prima tendenza a prevalere; nel secon-
do, che avverte la necessità del moderno e la sviluppa in chiave anti-accademica, è la seconda a prendere il sopravvento. Fran-
cesco Hayez, punto di svolta fondamentale del rinascimento lombardo e nazionale, è perfetta manifestazione della prima ten-
denza. Il Piccio, che vive prevalentemente nel primo Ottocento, è invece artista romantico da seconda metà del secolo, di cui
anticipa molte istanze formali. In questo senso, se da una parte Carnovali può essere visto come l'ultimo artista italiano, e
forse non solo, del primo romanticismo, dall'altra, con pretese altrettanto legittime, dovrebbe essere ritenuto il primo del se-
condo romanticismo, quando ancora esso si trovava in fase di piena gestazione. Il Piccio, quindi, come anomalia virtuosa,
outsider in relazione mutevole col proprio tempo, fra continuità e discontinuità da uomo di provincia che, come talvolta ac-
cade nella storia, sfrutta al meglio la sua emancipazione fisiologica dai centri motori della cultura, proponendo direttrici di-
verse rispetto alle loro. Una formazione tradizionale, presso l'ancora giovane Accademia Carrara di Bergamo, sotto l'ala pro-
tettrice di Giuseppe Diotti, da cui scaturisce però una cultura artistica assai più mobile e variegata di quanto non si possa ri-
scontrare negli artisti lombardi suoi contemporanei, certamente cosciente della lezione di Appiani, senza dubbio disposta ad
accogliere il nuovo indirizzo sentimentale di Hayez con cui il linguaggio classicistico andava rinnovandosi, ma anche, con in-
solito coraggio, assai aperta a cio che il neoclassicismo aveva maggiormente represso: l'"anti-disegno", l'"anti-idealismo",
l'anti-classicismo del colorismo rococò. È questo il carattere decisivo della figura del Piccio: se in altri il legame fra due se-
coli, il Settecento pre-classicistico e l'Ottocento post-neoclassico, è impossibile, per Carnovali non solo non è contradditto-
rio, ma necessario. Il Piccio capisce che il romanticismo in pittura, per essere davvero novità non può non essere evoluzione
linguistica. Un'evoluzione che deve rimandare storicamente a quanto di più innovativo, dal punto di vista strettamente pit-
torico, si era manifestato prima dell'Ottocento. Come ormai viene comunemente ammesso, non è con David o Ingres, né tan-
to meno con Delacroix o Géricault, con Corot o Courbet, che ha origine il primato della pittura francese, ma con il rococò.
Un rococò che aveva attinto a piene mani da ciò che l'Italia e Venezia in particolare avevano proposto, con una serie di epi-
goni aggiornati di Tiziano e Tintoretto che vanno dai Ricci a Tiepolo e Pellegrini, da Bellucci a Balestra e Amigoni, dalla Car-
riera ai Diziani, fino a Guardi. Pittori itineranti per mezza Europa o abituati a lavorare per committenti stranieri, che con-
cepiscono uno stile internazionale in grado di essere recepito in qualunque corte europea, forse di dimensione eccessivamen-
te privata e disimpegnata, da art pour l'art, aereo, bozzettistico, compiaciuto della propria raffinatezza fino alla leziosità ma
dotato di un lirismo sensuale e coinvolgente come mai si era visto prima, musicale, crepitante di vitalità interiore, ultima pro-
paggine dell'estetismo dell'ancien régime. Il Piccio capisce che quello stile e quel discorso, svecchiati, disincrostati della loro
aristocraticità, rinforzati da un nuovo, borghese senso della sostanza, avevano ancora tanto da dire a un artista dell'Otto-
cento che volesse esprimere cose realmente nuove. Il Piccio, soprattutto, capisce che gli artisti italiani potevano essere i più
moderni d'Europa se avessero guardato nel giusto modo ai loro compatrioti settecenteschi, invece di liquidarli facilmente co-
me pessimi disegnatori.
Ossia a quella stessa radice coloristica che, dopo la Rivoluzione e la pausa neoclassica, stava risucchiando irresistibilmente i
pittori francesi, anche quando non ne erano troppo consapevoli. È il colore il vero, grande medium del sentimento, base fon-
dante di ogni linguaggio espressivo che voglia parlare al cuore, limitando al minimo il ruolo della convezione, come già ave-
vano intuito durante il Settecento.
Nella storia dell'arte, il colore ha una tradizione padana, chiara, indiscutibile.Veneta nella sua matrice più riconoscibile, na-
turalmente, ma diffusasi poi nell'entroterra padano per essere rielaborata in modo diverso da contesto a contesto locale, con
innumerevoli varianti. Giuseppe Bazzani, pittore al quale il Piccio è stato certamente attento, è un colorista mantovano.
Ho sempre sentito il Piccio come un pittore padano per eccellenza, malgrado i suoi natali non siano i più ortodossi per con-
siderarlo tale. L'ho sempre interpretato come esponente di un ductus artistico padano che ha per prodromo Bastianino, il Ba-
stianino che "sfocava" Michelangelo, e per esito più coerente la scapigliatura di Tranquillo Cremona, con imprevedibili an-
ticipazioni che talvolta sembrano rimandare a Redon.
Il Piccio è disinteressato al racconto, alla composizione ben costruita, alla storia, vuole rendere la densità materiale di luo-
ghi che sono sempre riconoscibili, precisi, ma alterati come se fossero visti da un vetro appannato, o da un miope privo de-
gli occhiali.
La bellezza non proviene dalla natura in sé e per sé, ma dalla complessità fisica e spirituale, dell'atmosfera in cui la natura è
immersa. È questo il punctum della lettura romantica proposta dal Piccio, il nuovo modo di vedere che corrisponde al mo-
do di sentire. Se Hayez è stato il romanticismo della retorica altisonante, dantesco, il Piccio è il romanticismo della lirica pu-
ra, petrarchesco. Ma nei paesaggi, meglio che in qualunque altro genere, il Piccio rivela anche la propria interiorità tormen-
tata.
La contemplazione della natura non genera serenità nello spirito del rinascimento, ma uno stato di spleen, una sospensione
malinconica, alla Torquato Tasso, che provoca disagio esistenziale.
Nel Po, fonte primaria d'ispirazione, il Piccio sarebbe tornato per sempre, perdendovi la vita. Da ultimo, o primo, dei
romantici.
Vittorio Sgarbi Giovanni Carnovali detto il Piccio (1804-1873), "Autoritratto di profilo con il pennello in mano",
1872 circa, olio su tela, 48,5 x 40 cm, collezione privata.
Provenienza: Giannino Steiner, Bergamo. Esposizioni: Bergamo 1931.
Cav. Lav. Dr. Giuseppe G. Miglio Letter of the Chairman
"A successful innovation strategy hasto focus on what will come next." Ladies and Gentlemen, It is with pride and satisfaction that I present to you Mipharm's 9thAnnual Report.
The outstanding performance in 2006 is the fruit of our relentlesstechnological innovation, product quality, and market strategy aswell as an intense customer focus.
Our strategy has produced the results we hoped for: Olux®, in the firstyear of its launch and thanks to its Versafoam® technology, has revo-lutionized the topical corticosteroids market; Hedrin®, another prod-uct of our pipeline, thus representing a real alternative to the tradi-tional chemical treatments, reached the market on 7 February 2007.
This product is the first clinically proven, effective anti-lice productcontaining no chemical insecticides and represents the only validalternative to the traditional treatments.
The never ending organizational evolution of Mipharm responds tothe needs of the market and reflects the development of our productmix, giving a high priority to the size and quality of our own FieldForce. Needless to say that Management has all our attention in orderto secure an efficient and professional execution of our strategies.
I am convinced that we are on the right path to sustain and improveour performance in 2007 and beyond.
My warmest thanks go to the people of Mipharm who have madethese results possible, but also to our friends, customers and stake-holders outside the company who have supported us and contributedto the company's success.
Cav. Lav. Dr. Giuseppe Giampiero Miglio
Founder, Chairman and CEO MIPHARM® Board of Directors
Giuseppe G. Miglio Founder, Chairman and Chief Executive Officer Board of Auditors
Gianluca Nicolini Via Quaranta, 12 – 20141 Milano – Italia € 7,627,389.00 Milan RegisteredCompany's numberand Fiscal code: MIPHARM® Executive Committee – MEC
Giuseppe G. Miglio Founder, Chairman and Chief Executive Officer In the above picture, from your left: Technology / Special Services Manager Gianluigi Dognini Quality Assurance Manager Legal Affairs Manager Marketing Manager / Skin Manager Regulatory Affairs Manager General Manager Pharma Manufacturing Manager Massimo Quattrini Pharmacy Line Manager 2006: Mipharm in its 9th year
Giovanni Carnovali detto il Piccio (1804-1873), "Ritratto di un ragazzo con berretto rosso",
1845 circa, olio su tela, 50,5 x 42,5 cm, firmato in basso a destra "Piccio", collezione privata,
courtesy Studio Francesco Maspes, Saronno. Provenienza: Paolo Stramezzi, Crema; Ludovico Cartotti, Lessona.
Esposizioni: Milano 1948; New York 1949, n. 6; Varese 1952, n. 15; Bergamo 1952, n. 30.
2006: Mipharm in its 9th year
Profitability increased sharply; Net Result went from 0 in 2005 to € 2.4 mio. in 2006 (5.7% of revenues); EBIT in 2006 was at10.2% and EBITDA at 15.8% of revenues; Working capital stayed at historically low level; Personnel costs are under tight control; while the management team was reinforced; BU1 closed 2006 with a result below expectations, but without consequence for the future; new customers were acquired andprofitability remained at a satisfactory level; BU2 achieved an impressive result, both in terms of revenues and EBIT (break-even); sales growth, pushed by the launch of Olux®,reached 6.4% and more than offset three price cuts imposed bythe Italian Health Ministry; BU2's pipeline underwent a strategic review, bringing it a clearer At a level of € 1.1 mio., investments in 2006 were mostly for manufacturing equipment improvements (gels and cream). Thetotal investment volume, since Mipharm's inception, is € 41.7mio.; Net debt was further reduced significantly, by over € 2.6 mio.
2006: Mipharm in its 9th year
2006 Consolidation and Relaunch
After several turnaround years, the key focus in 2006 was the prof-itability of the company by better managing the costs on the one handand improve the margins on the other. As a consequence, EBITDA rosefrom € 5.5 mio. to € 6.7 mio. and EBIT from € 2.5 mio. to € 4.3 mio.,an improvement of +75%.
In the meantime, Mipharm restructured the customer portfolio in BU1and realigned the product pipeline in BU2.
The launch of Olux® was an impressive success, and the launch ofHedrin® in February 2007 was actively prepared.
Giovanni Carnovali
detto il Piccio (1804-1873),
"Paesaggio a Brembate sotto",
1862-63, olio su tela,
46 x 61 cm, Piacenza,
Galleria d'Arte Moderna Ricci
Oddi (inv. n. 125).
Provenienza: Gaetano Goltara,
Bergamo; Luigi Goltara, Bergamo;
Vittorio Goltara, Bergamo.
Esposizioni: Milano 1909,
Il Cairo 1949; Varese 1952;
Bergamo 1952; Como 1954;
Bergamo 1974.
2006: Mipharm in its 9th year
The intended overall result in 2006 in terms of profitability wasreached.
On the revenue side, the outstanding accomplishments of BU2 werehampered by the transitory recession of BU1 which, however, cameafter a brilliant performance in 2005 with a revenue growth of 13%. Results were further substantially improved, and the net result gives usthe opportunity for the first time since the company foundation to dis-tribute a dividend to the shareholders.
Giovanni Carnovali
detto il Piccio (1804-1873),
"Ritratto di Gina Caccia
(La collana verde)",
1862, olio su tela,
collezione privata.
2006: Mipharm in its 9th year
Net equity (€/000)
Balance Sheet
The year ending 31 December 2006 closed with a net result of €2,392,935. Depreciation of property and equipment and amortization grew to € 2,364,942.
Cash flow amounted to € 4,757,877.
Total net sales in 2006 reached € 42,317,683.
Investments in 2006 amounted to € 1,133,342.
Between its inception in 1998 and 2006, the Company invested € 41.7mio. This investment reflects a growth in size as well as in the qualityof the assets.
These substantial investments were mainly financed with the company'sown funds, i.e. € 32.2 mio. out of a capital increase and cash flow, Net income
while for the difference of € 9.5 mio. the Company financed with debt.
On 31 December 2006, net debt reached € 21,735,011 which is €2,642,690 less than prior year. The productive investments as well asthose in trademarks, licences, and research and development justify thelevel of debt of our Company.
Equity as per 31 December 2006 amounted to € 11,815,738. This rep-resents an increase over prior year of € 2,392,935 due to the impact of The total amount of investments of € 1,133,341 in 2006 breaks downas follows: Plant and equipment Licenses, know-how, R&D Information Technology 2006: Mipharm in its 9th year
From 1998 to 2006, total investments amounted to € 41.7 mio.
as per 31 Dec. 2006
(€ mio.)
(€ mio.)
Plant and equipment Licenses, know-how,R&D Information Technology * Includes revaluation of equipment of € 3,903,000 (Legislation no. 342 ofNovember 21, 2000) and revaluation of building of € 1,000,000 (Legislation no.
266 of December 23, 2005), and revaluation of building of € 2,500,000. Amortization
(percentage on revenues, €/000)
Revenues in our different businesses developed as follows (in €/000): ■ BU1 Manufacturing
suffered a temporary setback mainly due to a single US customer butalso because of the negative impact of the strong € versus Swiss franc(Supplies to Novartis are invoiced in Swiss franc), but with a revenueincrease on the Italian Market thanks to the acquisition of new cus-tomers.
On the positive side, the Health Ministry granted Mipharm the autho-rization to produce cream and gel formulations as well as for clinicaltrials productions (Dec. 2006).
2006: Mipharm in its 9th year
The "Lean Manufacturing Project" was rigorously implemented with (Percentage on total revenues,
the aim to fully exploit the benefits of a much improved Production and Quality Assurance organization, mainly for small batches.
■ BU2 Promotion
achieved a growth of 6.4% despite three price cuts imposed by the
Health Ministry in its attempt to contain health care costs.
BU2 was particularly successful in its launch of Olux®, a new psoriasistreatment: the product, based on cortisone active principles, is superiorto competitive products thanks to the integration of the newVersafoam® technology. Remarkable results were also reached by Milice® (lice treatment) andPancrex® (treatment of pancreatitis).
Last but not least, the launch of Hedrin® in early 2007 was prepared, a new anti-lice product which is not an insecticide and therefore compet- ing against chemical based products.
■ BU3 Special Services
(specialized in galenical and analytical development
and Trial Logistics Management)
enjoyed an expansion of 14.8%. BU3 developed galenical and analytical studies for Italian and Europeancustomers. Particularly successful was the "Logistic Support for Trials"with over 180 clinical studies with more than 32,000 patients.
Also accomplished was the completion of Nidrox®, a new thermosensi-tive mousse based on aluminum salts for the treatment of hyperidrosis(unmet clinical need).
■ BU4 Licensing out
is currently in the building phase. In 2006, suitable partners were iden-
tified, mainly in Southern European countries. An important objective
for 2007 is to hire a professional BU4 manager.
2006: Mipharm in its 9th year
EBIT and EBITDA (€/000)
The improvement in EBIT and EBITDA is due to the improvement ofthe productivity of the Business Unit Manufacturing (BU1), as well asto the higher volume of the New Products with a higher profitability inthe Business Unit Promotion (BU2) and an increase in profitability ofBusiness Unit Special Services (BU3) and Licensing (BU4).
Cash Flow Statement (€/000)
Cash Flow
(Percentage on sales, €/000)
Cash Flow as % of sales 2006: Mipharm in its 9th year
Free cash flow in 2006 was used mainly to reduce financial debt. A. Cash-in
Current assets variation:
Short term fin. assets Cash and equivalents B. Cash-out
Current liabilities variation:
Deferred payments Trade accounts payable C. Free cash flow
Total debt, net of marketable securities, decreased by € 2,642,693 par-ticularly due to investments lower than depreciation and a higher cashflow.
Headcount on 31 December 2006 was 190 associates (185 in 2005).
The BU2 Field Force includes 5 Area Managers, who are all associates,and 45 representatives (sole agents).
2006: Mipharm in its 9th year
Giovanni Carnovali detto il Piccio (1804-1873), "Ritratto di bambina con bambola", 1863, olio su tela, 55 x 45,5 cm,
firmato e datato in basso a destra "Piccio 1863", collezione privata.
Provenienza: Ludovico Cartotti, Biella.
2006: Mipharm in its 9th year
Outlook for 2007
First Quarter Revenues
The new year started positively, and all the BUs contributed to the
favourable result.
1st Quarter '07
1st Quarter '06
BU 1 Production
BU1 seems to go back to its historic growth pattern (+4% in 1st quar-
ter '07), to be soon further enhanced by the imminent start of the new
gel/cream manufacturing and new incoming transfers from Novartis.
New facilities for cream, gel and ointment manufacturing and packag-
ing were installed. The facilities have been inspected by the Italian
Agency for Medicinal Product (AIFA) and approved, providing addi-
tional capability to the manufacturing operations in Mipharm.
Two Customers will represent an upside if compared with 2007 budget:Sandoz generici S.p.A. will complete the transfer to Mipharm of someproducts, including Nimesulide and Ticlopidine based products, somecreams (both Sandoz and Hexal labelled). The development of a newgeneric cream, based on an exclusive contract, will be also carried out,with the objective to manufacture the new product in Via Quaranta.
Valeant: today we manufacture for Valeant Migranal Nasal Spray inbulk vials. We are working to complete the production process inMipharm, including also the packaging activities. As the final packedproduct has a high price, the increase in the revenues could be impor-tant. The activities regarding the new artwork and the layout havealready started. It is possible to complete this process starting with Julyorders.
On the efficiency/efficacy side, we will further exploit the benefits of theLean Production Project, while improving our production planning sys-tem.
2006: Mipharm in its 9th year
BU 2 Promotion
After intense pre-marketing, we will initiate with Nidrox®, a new activ-
ity within "Project Skin" to treat hyperhidrosis, which – excessive
sweating – can be a social embarrassment. The VersaFoam® technology
will play an important role. At the same time, our Pharmaceutical Line
will bring to the market Ketoil® in the spring, an innovative oil sham-
poo with double action to control dandruff and fragile hair.
BU3 and BU4 will continue to build upon their strengths.
Finance
On June 30, 2007, the first dividend in the short history of Mipharm
will be distributed to shareholders. This is a very important step in the
less than appealing and complex Italian environment.
We will continue our strike for excellence at all levels, profitability,working capital, bank debt reduction. The 2007 investments areplanned at about € 2 mio., part for Production maintenance activitiesand part for products or rights acquisitions (Hedrin®).
During 2006 total debt, net of marketable securities, decreased by anamount of € 2,642,693 from € 24,377,012 to € 21,735,011.
Human Resources
In the Budget 2007 period, we will take a close look at our organiza-
tional structure. While a rejuvenation of our management is overdue, a
reinforcement of BU3 and BU4 is also necessary to execute our Business
Plans. The same will occur in BU2 (External Sales Force and individu-
alization of new targets).
Company organization
Under the leadership of the Chairman/CEO, the strengthening and reju-
venation of the Management team is a priority of the first order.
2006: Mipharm in its 9th year
Giovanni Carnovali detto il Piccio (1804-1873), "Salmace ed ermafrodito", 1871, olio su tela,
60 x 46 cm, firmato e datato in basso a destra "Piccio 1871", collezione G.G. Miglio.
Balance Sheet and Profit & Loss Statement
Profit and Loss Statement
A Value of manufacturing
Net turnover (sales and services) Other operating income B Cost of production
and goods purchased for resale Salaries and wages Value adjustments a Amortization of intangible assets b Depreciation of tangible assets c Other adjustments Other operating charges Difference between value and cost of production
C Financial income and charges
D Extraordinary income and charges
Profit (loss) before income taxes
Income taxes
Profit (loss) for the financial period
Balance Sheet and Profit & Loss Statement
B Fixed assets*
I Intangible assets II Tangible assets* C Current assets
II Accounts receivables which are not permanent IV Cash on hand and banks D Prepaid expenses and deferred charges
TOTAL ASSETS
* Value after revaluations 2005/2006 fixed assets (law no. 342 of 21 November 2000 and law no. 266 of 23 December 2005 and revaluation 2006). Balance Sheet and Profit & Loss Statement
Equity and liabilities
A Capital and reserves
B Provision for risks and charges
C Employee severance indemnity
D Creditors
Amounts owed to other financiers E Accruals and deferred income
TOTAL EQUITY AND LIABILITIES
Produced byMIPHARM S.p.A. – Italy Printed by:Centro Stampa S.n.c. Milan, Italy – April 2007 Annual Report 2006
Mipharm at a glance
Total assets (€/000)
Net fixed assets (€/000)
Cash Flow (€/000)
Free Cash Flow (€/000)
MIPHARM® S.p.A.
20141 Milan – Italy Phone (39) 02 53548.1 Fax (39) 02 53548.010 e-mail: [email protected]

Source: http://www.mipharm.eu/pdf/annual_report06.pdf