Delivering on our promise

2023 was a milestone year for LEO Pharma as we committed to delivering positive EBITDA, which is a first and necessary step towards driving profitable and sustained growth towards 2026 and beyond. And we successfully achieved this goal.

LEO Pharma saw 7% revenue growth in 2023, with constant exchange rates (CER) showing a growth of 10%. The Dermatology portfolio grew by 11% (15% in CER). Geographically, growth was driven by North America, Europe, China, and alliance markets. North America, in particular, stood out as a key growth driver, with revenue of DKK 1.7 billion in 2023, representing a growth of 49% (57% in CER).

Throughout 2023, LEO Pharma took decisive actions to enhance efficiencies and optimize the cost structure, resulting in a reduction of total operating costs by DKK 1.1 billion, equivalent to 14%. EBITDA for the period increased to DKK 551 million, reflecting a 5% margin. This translates to an absolute increase of DKK 2.1 billion compared to the previous year and a 20-percentage-point margin uplift.

LEO Pharma reported a net loss of DKK 3.6 billion, which represents an improvement of DKK 0.5 billion compared to the previous year. This result was negatively affected by non-recurring project impairments, tax asset adjustments, and increasing interest expenses.

New innovation strategy

In 2023, we continued to advance medical dermatology by scouting for external innovation in areas with high unmet need. An agile approach allows us to identify and maximize the value of opportunities globally through co-creation and co-development partnerships.

As part of the streamlining of our Research & Development model, we have also sharpened our business development strategy, targeted at value-accretive investments. As a result of this, we acquired Timber Pharmaceuticals’ TMB-001 program, which adds an attractive late-stage asset to our medical dermatology pipeline with the potential to strengthen our presence in the U.S.

Importantly, it provides us with an asset which shows promising potential in helping patients suffering from a debilitating disease, congenital ichthyosis, for which there are currently no approved treatment options available. The asset is currently in Phase 3 and results are pending.

Outlook 2024

LEO Pharma’s key focus is to drive growth within medical dermatology and profitability from operations in 2024.

We anticipate revenue growth of 4-8% in 2024 in constant exchange rates, driven by increasing sales of Adtralza®/Adbry® and growth of our core brands. Compared to 2023, the revenue growth is expected to be negatively impacted by generic competition and price reforms in selected geographies. Delgocitinib launch is expected during Q4 2024, and thus drive revenue growth from 2025 and onwards.

LEO Pharma will continue to focus on improving operating profit through efficiencies and simplification.

• We expect to deliver a positive mid-single digit adjusted EBITDA margin in 2024. The profitability guidance for 2024 is negatively impacted by movements in foreign exchange rates, delayed impact of higher input costs procured during 2023 and investments in newly acquired asset from Timber Pharmaceuticals.
• We expect significant improvements in EBIT and net result, although still expecting to deliver both negative EBIT and net result in 2024.

Potential changes in key assumptions for valuation of intangible assets, currency rates and unexpected health care and pricing reforms are risk factors, among others, which could change the outlook for the year.