annual report 2010/11 ypsomed holding ag

Ypsomed Holding AG – Annual Report 2010/11

Ypsomed – Better Life

All over the world, there are many people who live their lives independently and with great enjoyment despite their condition, such as having diabetes. And all over the world, there are large numbers of people who are committed to achieving a better life for patients: family members, doctors, nurses, pharma-ceutical researchers, developers and Ypsomed staff. All of them have their own personal story.

Wen Z.Diabetes patient


Wen Z. was diagnosed with Type 2 diabetes a few years ago. But the 62-year-old no longer lets his ill-ness worry him, not least because of the very minor effort involved in self-medication. Automatic ad-ministration of insulin using the ServoPen® developed by Ypsomed is simple and fits easily and con-veniently into his everyday routine. Wen also likes the sophisticated design and the quality of the pen. With the Servo Pen® he always feels secure.

Daniela Frangi Key Account ManagerBurgdorf, Switzerland

Ypsomed Key Account Manager Daniela Frangi is committed to helping people with diabetes in Asia. She is not afraid of the size of the Asian market. On the contrary, because here too, one of the largest insulin suppliers has chosen Ypsomed to provide its pens, on the basis of Ypsomed’s glo-bally recognized position as tech-nological leader. The cooperation is running very well and the com-mon goals are being achieved de-spite the language differences.

Kathrin A.Diabetes patient


Kathrin A. was diagnosed with Type 1 diabetes at the age of twelve. Even at her young age, the schoolgirl knows all about the illness. When she needs new pods for her OmniPod® insulin patch pump, she simply orders them her-self online from Dia Expert. The reliable 24-hour service from Dia-Expert Germany means that she can always rely on having her pods available in good time.

Daniel Käser Planning & Control Pen Needle Packaging

Burgdorf, Switzerland

Daniel Käser is one of the people who ensure that diabetics in Germany always receive their pen needles – and all their other mylife™ products – reliably and in good time. He is responsible for planning and control of the pack-aging line, which plays an im-portant part in the distribution of Ypsomed products. Daniel Käser and his team are totally committed to ensuring the efficiency required for distribu-tion. They make sure that the pen needles manufactured by Ypsomed are always available on time in Germany and monitor shipments to more than 50 other countries.

Rosalinde G.Polyarthritis patient


Rheumatoid arthritis is the most common of the inflamma tory joint diseases causing pain and restricting movement. This is the case for Rosalinde G. Her ill-ness means that the 58-year-old is no longer able to move her hand as well as she used to, so it is particularly important for her to have an injection aid available for self-medication that does not require any complex movements. Even on particularly bad days, the ease of handling of the auto-matic injection system causes no difficulties for Rosalinde, who has had to take early retirement for health reasons.

Orfeo Niedermann Business Development Manager


As a Business Development Manager with Ypsomed, Orfeo Niedermann is very familiar with the concerns of patients with respect to self-medication. He works with patient groups to understand their needs which provide important inputs for the development and improvement of new products. One example of this has been in the product de-velopment for YpsoJect®. This auto- injector has been specifically de-signed for ease of handling with a “push-on-skin” automatic injec-tion mechanism which is particu-lary suitable for arthritis patients.

Jacqueline D.Leukemia patient


The treatment of cancer involves repeated and often stressful hos-pital stays. Jacqueline D. is all too familiar with them. She was diag-nosed with leukemia in her mid-twenties and her initial treatment was successful. But the cancer has now returned and she is going to have to undergo another course of chemotherapy. Jacqueline would be happy if she could complete at least some of the treatment at home. She has high hopes that fu-ture developments in the field of self-medication will make life easier for cancer patients.

Dr. Rudolf A.Physician

Making things easier for patients being treated for cancer is a particular concern of Rudolf A. As both doctor and research scientist, he pays great attention to medical innovations. At a time of cost-cutting in the health-care system, he is pleased that companies like Ypsomed are com-mitted to enhancing patients’ quality of life by developing inno-vative administration systems for biotech products used in the treatment of cancer.

Roy Huang CEO and Chairman of the Board of Directors at Bionime Corp. Taichung, Taiwan


Ypsomed is working together with the Taiwanese company, Bionime Corp., on the develop-ment of a new blood glucose monitoring system. Roy Huang, CEO of Bionime Corp., located in Taichung, is delighted by the successful and fruit ful coopera-tion between the two companies. He felt that a solid partnership and common interests were equal-ly decisive factors for the coop-erative venture with Ypsomed as Ypsomed’s many years of exper-tise in the field of dia betes and the company’s European sales organi-zation, with its focus on diabetes.

Patrick Heil Head of Swiss Market


Patrick Heil is Head of the Swiss Market at Ypsomed. He views the introduction of the mylife™ Diabetescare product range on to the Swiss Market as a particularly important step. He is convinced that the combination of high-qual-ity and innovative products will significantly improve the everyday lives of diabetics.

Ian Thompson Vice President Business Development Burgdorf, Switzerland


One of the important tasks for Ian Thompson and his team is to gain a keen awareness of and accu-rately analyze the market and patient demand. Business Develop-ment forms the interface be-tween patient requirements and the product developments at Ypsomed. The findings of market analysis are passed on to the Ypsomed tech nology team special-ized in innovation, which con-centrates on the design and man-ufacturing of new products.

Ulrich Moser Senior Engineer Concept Development


Ulrich Moser and his team are responsible for the development of new products and concepts at Ypsomed. As an experienced product developer the creation of new designs and solutions goes hand in hand with cooperative work with research scientists and market analysts. Innovation management that is focused on the market allows Ulrich Moser to develop products that are specifi-cally tailored to the handling needs of patients.

Annual Report 2010/11

Ypsomed Holding AG

Contents

19 Ypsomed key figures at a glance

20 Letter to shareholders

24 Annual Report

24 Self-medication – the future trend 25 “Injection systems” and “diabetes care” strategic business segments

28 Growth factors for self-injection and diabetes care

31 Self-injection – the need of patients and pharma customers 31 Portfolio of innovative injection systems

34 Ypsomed offers the leading pen systems for insulin

36 Disposable pen systems for insulin and GLP-1

38 Auto-injectors for pre-filled syringes

39 Fast product development

40 Customers and patients trust Ypsomed's quality

42 Professional diabetes care – a strategically important business segment 44 mylife™ OmniPod® – the first insulin patch pump

48 mylife™ Pura® – the most accurate blood glucose monitoring system

50 mylife™ Clickfine® – pen needles and safety pen needles

53 DiaExpert – the leading diabetes mail order business in Germany

55 Sustainability and Corporate Responsibility Report 55 Employees

60 Society

63 Environment and safety

67 Financial Report 67 Comments on the consolidated financial statement 2010/11

72 Consolidated financial statement 2010/11

106 Financial statement of Ypsomed Holding AG 2010/11

113 Five-year overview

114 Corporate Governance Report 114 Corporate governance

133 Information policy

134 Glossary

22.9.2004 2005 2006 2007 2008 2009 2010 31.3.2011

Ypsomed Holding AG SPI Index (rebased)

Share Price Development

CHF

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Key fi gures and share price development

Key fi gures at a glance

In thousand CHFApril 1, 2010

March 31, 2011April 1, 2009

March 31, 2010Change in %

Sales of goods and services 242 461 254 014 –11 553 – 4.5 %

thereof delivery devices 155 812 168 338 –12 525 – 7.4 %

thereof diabetes direct business 69 395 70 900 –1 506 – 2.1 %

thereof others 17 254 14 776 2 478 16.8 %

Gross profi t 66 724 66 446 278 0.4 %

Gross profi t in % 27.5 % 26.2 %

Operating profi t 8 610 13 449 – 4 838 – 36.0 %

Operating profi t in % 3.6 % 5.3 %

Net profi t 5 206 9 425 – 4 219 – 44.8 %

Net profi t in % 2.1 % 3.7 %

Comprehensive income 3 504 13 896 –10 391 – 74.8 %

Comprehensive income in % 1.4 % 5.5 %

Earnings per share (in CHF) 0.41 0.79 – 0.38 – 47.6 %

Research and development expenditures, total 26 102 31 717 – 5 615 –17.7 %

Investments in fi xed assets 14 485 32 487 –18 002 – 55.4 %

Equity ratio in % 79.8 % 81.2 %

Employee headcount (as of March 31, 2010) 1 097 1 199 –102 – 8.5 %

Employees fulltime equivalents (as of March 31, 2010) 1 056 1 149 – 93 – 8.1 %

Audited IFRS fi gures. In thousand CHF. Earnings per share in CHF.

– –

19

Ypsomed – Annual Report

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The new Ypsomed is on the right track!

Dear shareholders,

As you can see from the financial figures, our business has

not developed as planned. It is taking longer than expected

to make up for the decline in Sanofi-Aventis sales, and the

cost of building up the blood glucose monitoring and pump

market is also higher than originally planned. We also made

a mistake in selecting an Italian manufacturer for the pen

needle assembly machine as part of the new project to

industrialize needle production in Solothurn. This decision

meant the introduction of the new pen needles was more

expensive. We have learned lessons and taken measures,

which we will outline later in this report.

We are building a new Ypsomed!

In the 2010/11 business year, we have worked intensively on

the transformation of Ypsomed and reached some important

milestones. In spite of a strong Swiss franc, we have achieved

our sales and profitability targets for the 2010/11 business

year as defined in autumn 2010. We are far from satisfied,

however, as we are not only intent on continually giving our

patients and customers better and more innovative products

and services, but we also want to achieve significantly better

results again in future, for you, dear shareholders.

“Our business has not developed in the way we had imagined. We have failed to match our own expectations. But we have learned lessons from this and taken measures.”

Difficult starting position

The Ypsomed Group found itself in a difficult starting position.

Our enormous reliance on Sanofi-Aventis meant we gener-

ated over 65 % of our sales during the 2005/06 business

year from this one customer alone with just three insulin pen

systems. In only five years, Ypsomed has lost over CHF 145 mil-

lion of sales with Sanofi-Aventis and a good deal of the

associated profits. Today, we make around 24 % of our sales

with Sanofi-Aventis and we expect this share to fall below

10 % in the future. In view of this, one of the key challenges

is to make up for these lost sales as quickly as possible and

build up a broad customer base with high-margin products.

Big challenge

Looking back, we have been over-optimistic in believing we

could make up more quickly for declining sales of previously

key products for Sanofi-Aventis. Although our portfolios are

generating considerable interest from pharma customers, some

projects for new pen systems were stopped by our pharma

customers. This had nothing to do with poor performance on

the part of Ypsomed. It was more a case of some pharma

companies having problems with drug approvals or setting

other internal priorities. This is, of course, unfortunate, given

all the commitment and development work performed. It is

also a real disappointment for the production team, which is

now unable to manufacture the planned new pen systems. We

have also made considerable efforts in order to quickly expand

production of pen needles and market the new mylife™ Pura®

blood glucose monitoring system. However it is costing more

to launch the blood glucose monitoring system than was

budgeted. The expansion of pen needle production has also

taken longer and cost Ypsomed more than originally planned.

The problems experienced with those providing the new as-

sembly machine have also meant the launch of the new pen

needles and safety pen needles was ultimately delayed. The

market for pen needles is subject to increasing price pressures

and the weak Euro and US dollar are also pressurising both

sales and profitability for pen needles.

Letter to Ypsomed’s shareholders

20


2004

2010/11

Turnover

Sanofi -Aventis(Ypsomed pens)existing and new pen customers

SoloStar®

(Sanofi -Aventis pen)

other pens

2004

2010/11

Turnover

pen needles

DiaExpert

Pura® and OmniPod®

FreeStyle™ on Abbott

“Ypsomed is pursuing the right strategy and is investing today in tomorrow’s growth, since self-injection systems and diabetes care are worldwide growth markets.”

Investment in growth is every bit as necessary as cost savings

During the 2010/11 business year, the Board of Directors and

the management have been involved in intensive discussions

concerning problems, causes and possible solutions, and have

taken appropriate measures. Long-term competitiveness will

depend on both investment in future growth and savings in

terms of operating costs. We have adjusted personnel levels

at Ypsomed to suit the new situation and have also been forced

to make diffi cult decisions as part of this process, leading to

redundancies, mainly in manual assembly and manufacturing

staff. Ypsomed has also slimmed down its executive manage-

ment board and general team management, as well as

greatly simplifying many business processes. At the same time,

we have expanded our sales force in Europe.

The strategy is right

We are convinced that Ypsomed is pursuing the right strat-

egy. Self-medication with modern injection systems is a

growing global trend. New pharma companies want their

patients to have simple and safe self-injection systems to

administer their drugs. In addition, diabetes is a global epi-

demic, with more than 285 million people now suffering from

Type 1 or Type 2 diabetes. This will rise to over 440 million

worldwide by 2030, with Asia, India and the Middle East in

particular seeing steep increases. Both injection systems and

diabetes are defi nite growth markets and will remain so for

decades, in spite of cost pressures in the public health sector.

We are convinced that Ypsomed will continue to enjoy a

strong position in these growth markets thanks to innovative

pen systems and professional diabetes care.

Sketch from internal discussions on the sales trend (rough estimate) of Ypsomed's most important products

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2003/04* 2005/06 2010/11 Future

Injection systems Diabetes care * Diabetes care incl. distribution of Therasense blood glucose monitoring systems

Ypsomed is currently investing in future growth

The growth initiatives launched by Ypsomed in the area of

injection systems and diabetes care make sense and are

promising. In spite of – or even because of – the significant

fall in sales with our main customer, we have continued to

make sizeable up-front investments with an eye on future

growth. Strategic measures for future growth in terms of injec-

tion systems include the development of a unique portfolio

of insulin pens, such as the reusable ServoPen® and dispos-

able UnoPen™ insulin pen, several dual-chamber cartridge

pen systems and various auto-injectors. All these have enabled

us to win business from new pharma companies.

“Ypsomed is going through a demanding transformation phase in both strategic and operational terms.”

New ServoPen® insulin pen from Ypsomed launched in China for the first time

We are particularly pleased about the Chinese launch of the

new ServoPen® insulin pen in collaboration with our long-

standing customer Tonghua Dongbao Pharmaceutical Co. Ltd.

China’s leading insulin manufacturer.

Transformation of Ypsomed

Successful launch of the insulin patch pump in Europe

During the 2010/11 business year, we have extended the

distribution of our pen needles to more than 50 countries

and, with mylife™ Diabetescare, launched and established a

new and independent diabetes umbrella brand. We have

also made significant investments in both financial and per-

sonnel terms in the European marketing of mylife™ Pura®, a

new blood glucose monitoring system, and started in June

2010 with the launch of the mylife™ OmniPod®, the first tubing-

free insulin patch pump. Since then, the mylife™ OmniPod®

insulin patch pump has become a real favorite with Type 1

diabetics with ongoing launches in Germany, Great Britain,

the Netherlands, Switzerland, Norway and Sweden. We are

planning product launches in further countries.

22


Solid financing with a high equity ratio

Faced with a starting position like this – a significant fall in

sales coupled with substantial investment levels – many

companies would have found themselves making a loss or

fearing for their very existence. Thanks to the conservative

approach to financing with a high equity ratio and our

entrepreneurial focus, we were able to work through this

difficult time and even make profits, albeit at the current less

typical low level.

Further measures for improved strategy implementation

We have confidence in the strategy and the measures intro-

duced. During the new business year, the Board of Directors

and the management will be firmly focused on implementing

the measures defined both quickly and systematically. We

are particularly keen to press ahead with the European launch

of the mylife™ Pura® blood glucose monitoring system and

the mylife™ OmniPod® insulin patch pump, and to improve

our profitability margins as quickly as possible in these areas.

A special thank you to our employees

The considerable commitment and dedication shown by all

our employees continues to be very positive, particularly

during one of the most important transformations in our com-

pany’s history. It is especially important therefore to take this

opportunity to extend our heartfelt thanks to all our employ-

ees and partners for their really active support during this

important and demanding phase, and for their expertise and

experience in ensuring the successful implementation of our

growth strategy. Similarly, we are also pleased with the results

of the latest employee survey, which showed motivation and

satisfaction levels remaining high and employees even show-

ing greater affinity with the company.

Strategy implementation will take time

We are convinced our efforts and investments will pay off in

the near future. Our confidence is based on Ypsomed’s in-

novative products, committed employees, reliable partners

and solid financing, without which success would be impos-

sible. In spite of the difficult situation, we will in this business

year propose a payment to shareholders out of capital reserves

at the General Meeting. We thank you, our valued sharehold-

ers, for accompanying us through what is a challenging

transformation phase for the Ypsomed Group in both strategic

and operational terms. We are fully aware of the consider-

able patience and entrepreneurial spirit we are asking from

you as investors. In view of this, please accept our special

thanks for your loyalty and confidence.

Dr. h. c. Willy Michel Richard FritschiChairman of the Board of Directors CEO

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A better quality of life – that is what Ypsomed is all about

Gotlinde Wiegel is just one of the thousands of people across

Europe with Type 1 diabetes who are crying out for the new

mylife™ OmniPod® insulin patch pump from Ypsomed. Many

struggle with their old tubing-based insulin pump and find

the device disturbs their sleep. It is a different story with

mylife™ OmniPod®. Gotlinde Wiegel, a triathlete, can barely

contain her enthusiasm: “I no longer need to keep my pump

at the side of the pool when I’m swimming. I can get on with

running and cycling and feel confident that I’m always being

dosed the right amount of insulin.”

Making self-care simpler and easier

If patients like Gotlinde Wiegel can make sustainable improve-

ments to their quality of life and look forward to a new future,

we are making real strides towards realizing our vision of

Ypsomed products making self-care simpler and easier. Con-

stantly striving towards this vision is what motivates and spurs

us on. At Ypsomed, we have 1 100 employees giving patients

their all every day they come to work.

“A 37-year-old nurse from Lahntal near Marburg, Gotlinde Wiegel has had Type 1 diabetes mellitus since 1994. She had her third child in March 2011 and wore a mylife™ OmniPod®, one of Germany’s first adhesive insulin pumps, from the start of her pregnancy. She told her diabetes specialist: ̒ I’ve just got to have this new insulin patch pump!ʼ ”

Vision and missionThe vision and mission of the Ypsomed Group guides us when

we define our strategy, develop new products and services,

and when we evaluate partner products for sale. The vision

and mission are defined below:

Self-medication – the future trend

VisionYpsomed solutions make self-care simpler and easier.

MissionWith innovative, simple-to-use and reliable products as

well as modern care concepts we contribute signifi-

cantly to the success of a therapy and thereby enable

people to enjoy the best possible quality of life.

24


Ypsomed strategy

“Injection systems” and “diabetes care” as strategic business segments

Ypsomed’s strategy has focused for years on “self-care solu-

tions”, that is on solutions that allow patients to self-inject

drugs and in particular on products and services for people

with diabetes who need to treat themselves with insulin. This

has resulted in the two strategic business segments “injection

systems” and “diabetes care.”

“At Ypsomed, we put patients at the heart of everything we do, because successful treatment relies on very user-friendly products and patient acceptance.”

Pharma customers for injection systems The injection systems developed and manufactured by

Ypsomed are sold around the world by leading pharma and

biotech companies under their own brand names. Ypsomed

maintains long-standing customer relationships as part of

this business-to-business partnership. Ypsomed wants to

continue to expand its customer base with newly developed

injection systems.

Diabetes careIn terms of diabetes care, Ypsomed markets products and

services directly to end users (diabetes patients), prescribers

(doctors and specialist personnel) or funding agencies (health

insurance providers). Ypsomed runs a business-to-consumer

operation for diabetes care.

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First reusable dual-chamber pen (hGH / Kabi-Pharmacia)

ISO-certification

OptiPen® Pro (Insulin / Sanofi-Aventis)

First reusable hGH electronic pens (hGH / Eli Lilly & Pharmacia)

First electronic OptiPen® (Insulin / Hoechst)

Pen needle (needle for OptiPen®)

Roferon Pen (Roferon®-A / Roche)

D-Tron insulin pump for type A cartridges from Eli Lilly Co.

Disetronic listed on Swiss Exchange

“Click-on” pen needle Penfine®

First click pen needle 4x2 snapper

1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999

Building of class D clean room

First micro insulin pump H-Tron Hoechst MRS-1 (Hoechst)

Foundation of Disetronic Medical Systems

Foundation of Disetronic GmbH, Germany

First reusable pen (Insulin / Hoechst)

“Ypsomed is consistent in its pursuit of strategic targets by both investing in future growth and making cost savings.”

Consistent strategy implementationThe main target of the Ypsomed Group is to strengthen both

the “injection systems” and “diabetes care” business segments

and improve profitability. The Ypsomed Group also wants to

generate sales from a broader customer base. This will lead

to greater diversification and help avoid risk concentration

in future.

Sales diversification thanks to new products

The previous business year saw Ypsomed launch a whole

range of new products, with existing products also being

launched in new countries. This represents an important step

towards achieving the strategic target of sales diversification.

Milestones in the Ypsomed and Disetronic company story

26


Disposable pen Gonal-f® (FSH / Serono)

SymlinPen™ disposable pen (Symlin / Amylin Pharmaceuticals)

Preotact® Pen (PTH / Nycomed)Manufacturer certification Japan

Acquisition new industrial site in Solothurn

Semi-disposable pen OptiClik® (Insulin / Sanofi-Aventis)

HumatroPen® (hGH / Eli Lilly)

ServoPen® Gansulin® Pen (Insulin / Dongbao)Insulin patch pump mylife™ OmniPod® (Insulet)Disposable pen Genotropin® GoQuick™ (hGH / Pfizer)Distribution of pen needles extended to 50 countries

BGM mylife™ Pura® (Bionime)

YpsoPen® (Insulin / Polfa Tarchomin & Pharmstandard)

Launch of umbrella brand mylife™ Diabetescare

Acquisition of several diabetes retail organisations in GermanyStrategic cooperation with tool-maker Adval Tech Group

10 %-share in Bionime Corp.

Ypsomed listed on SIX Swiss Exchange

New logistic and manufacturing site in Burgdorf, Switzerland

First disposable pen OptiSet®

(Insulin / Sanofi-Aventis)

Nutropin® Pen (hGH / Genentech)

Start distribution BGM FreeStyle™ (TheraSense)

Disetronic insulin pump business sold to RocheCompany renamed Ypsomed

2010/11

Genotropin® Pen (hGH / Pfizer)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Major milestones during the 2010/11 business year• First launch of the new ServoPen® insulin pen in China in

collaboration with long-standing customer Tonghua Dong-

bao Pharmaceutical Co. Ltd. in October 2010.

• Launch of the mylife™ OmniPod® insulin patch pump in

Germany and Great Britain ( July), the Netherlands

(December), and Switzerland and Scandinavia (March).

• Opening of the seventh and largest DiaExpert competence

center in the renowned diabetes center in Mergentheim,

offering a comprehensive range of diabetes-related pro-

ducts and services.

• Launch of the web portal, www.mylife-diabetescare.com,

in June for diabetes patients and diabetes experts from

clinics and other medical practices.

• Doubling of the sales force in France and thereby intensi-

fication of marketing and sales for mylife™ Pura® blood

glucose monitoring systems.

• International expansion of sales of pen needles via new

distributors in Latin America, the Middle East and North

Africa.

• Introduction of the Genotropin® GoQuick™ disposable pen

by Pfizer.

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Innovative injection systems

Auto-injectors Patch-injectors

GLP-1 Biosimilars

New biotechnological agents

Analog insulins Short- and long-acting insulins

Population growth and demography

Increase of diabetesLife style and nutrition

PensInsulin pens

Dual-chamber pen systems

Pen needles Safety pen needles

Blood glucose measurement Insulin pumps

Mail order business

Pharmaceutical companies:better success of a therapy

Patient:more quality of life

Professional diabetes care

Society:lower health costs

Global trends

Products

Strategy

Customer

Self-medication

Global trends and market dynamicsThrough its strategic focus on injection systems and diabetes

care, Ypsomed is active in markets experiencing sustained

growth. These global markets are highly dynamic and the

reasons for past and future growth are numerous, mutually

dependent and even synergistic. It is important to be familiar

with these dynamics and trends in order to gain a better

understanding of the corporate strategy and future of the

Ypsomed Group. Ypsomed is very well placed to benefit from

this growth.

“Technological innovations support the use of self-injection systems for safe and effective treatment, enhance patients’ quality of life and also reduce costs within the public health sector.”

Population growth, demography and lifestyleExperts agree that the world’s population will increase from

its current level of just over 7 billion to more than 8 billion

by 2030. The populations of newly industrialized and devel-

oping countries in particular will continue to increase

sharply, with rising prosperity levels seeing changes in terms

of eating habits and lifestyle. A growing lack of exercise and

a high or excessive intake of calories in all kinds of forms are

already facts of life in industrial countries and are also

becoming more widespread in the Middle East as well as in

China, India and Central and South America. At the same

time, the elderly will continue to make up a bigger proportion

of the population worldwide and in the industrialized countries

in particular, increasing the proportion of the population

requiring medical treatment.

Growth factors for self-injection and diabetes care

Illustration of the growth trends and dynamics

Illustration of the growht trend andynami

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250

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USA Europe Asia

2001 20052003 2007 2011 2013 20152009

Insulin units (in billions I.U.)

Source: IMS data; extrapolation of data through Ypsomed from 2008.

Advances in genetics and biotechnologyOver the last few decades, there has been a massive increase

in knowledge about the building blocks of life and their

complex interaction. By adopting a genetics-based approach

and with the benefi t of modern technology, many new drugs

are manufactured biotechnologically. This is making condi-

tions such as diabetes, growth disorders, infertility, osteoporo-

sis, hepatitis C and kidney-related anemia amenable to

treatment. Newer biotech drugs are also used to treat cancer

and various autoimmune diseases such as arthritis, multiple

sclerosis, psoriasis and Crohn’s disease.

“There will be over 440 million people worldwide living with diabetes by 2030, with 70 million of them in China alone. India will have as many as 90 million.”

A worldwide diabetes epidemic

The global increase in diabetes mellitus, which has unques-

tionably reached epidemic proportions, is an important

factor for Ypsomed. Experts estimate that there are currently

around 285 million diabetes sufferers worldwide, around

94 % of whom have Type 2 diabetes. The International Dia-

betes Federation (IDF) expects there will be an estimated 440

million people around the world with diabetes by 2030.

Today, there are particularly large numbers of diabetics in

India, China, the USA, Russia and Brazil as well as in the

Middle East in percentage terms. Unimaginably large is the

90 % increase to 90 million diabetics in India within the next

19 years, and the 50 % increase in China to 70 million over

the same period. Although Europe remains the largest insulin

market for the time being, Asia will soon catch up with and

overtake the USA (see illustration).

Insulin market by geographic regions

d ic

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Novo Nordisk Eli Lilly Sanofi-Aventis Other manufacturers

Insulin units (in billion I.U.)

2000 2003 2006 2009 2012 2015


“Changes within the diabetes market are opening up opportunities for Ypsomed to win new customers for pen systems and sell its patented click-on pen needles, which are compatible with all competitor pen systems, in even more countries around the world.”

There are worrying concerns about the global cost of diabe-

tes care, which the WHO claims will rise from the current

level of around USD 418 billion to something like USD 560 bil-

lion by 2030. More and more people are using insulin to

avoid the serious complications associated with the later

stages of diabetes. These include blindness, amputation, heart

attack and kidney failure. In addition, GLP-1 analog sub-

stances currently represent an important new market for the

early treatment of diabetes (see page 37).

Global insulin market by manufacturers

The patent cliff, biosimilars and new pharma customers

Discussions about the imminent expiry of patents at pharma-

ceutical companies have reached a new intensity recently.

The problem of the “patent cliff” affects well-known pharma

groups with blockbuster drugs whose patents are due to expire.

This allows cheaper generic and biosimilar drugs an oppor-

tunity to enter the market. However, the providers of these new

products will only be able to position themselves against the

established competition with the help of modern injection

systems. In the insulin market, for example, the main patent

for Lantus®, the highly successful long-acting insulin from Sanofi-

Aventis, will expire as early as 2014. In view of this, new or

existing smaller manufacturers of insulin are looking to break

into the market with biosimilar insulins. It is also interesting

that Pfizer, one of the leading US pharma companies, is join-

ing forces with the Indian manufacturer Biocon to break into

the insulin market, previously the preserve of Novo Nordisk,

Eli Lilly and Sanofi-Aventis. In addition, local insulin manufac-

turers in countries like India, China, Poland and Russia are

enjoying above-average growth and are also expanding

geographically. They will play a decisive part in shaping the

future of the insulin market and provide new opportunities for

an independent pen system manufacturer like Ypsomed.

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Reusable pens for insulinDisposable pen for insulin

YpsoPen® ServoPen® YpsoPen® Twist™ UnoPen™

Multidose

Single dose

Variable dose

Fixed dose

Automatic administration

Self-injection – the need of patients and pharma customers

Treatment with injection systems

Modern biotechnologically manufactured drugs are based

on peptide hormones and monoclonal antibodies. Biophar-

maceuticals have developed into a multi-billion dollar market

within three decades. Given their chemical structure, how-

ever, these drugs cannot be taken orally (i. e. as tablets), but

must be administered in a way that bypasses the gastroin-

testinal tract. Today, these biopharmaceuticals are generally

injected subcutaneously (i. e. under the skin). As such,

pharma and biotech companies are increasingly making

these drugs available to their patients with modern injection

systems in order to provide a safe and cost-effective self-

medication option.

For every need the rightinjection systemIn addition to the many injection systems on the market,

Ypsomed offers a range of innovative pen systems and auto-

injectors designed to meet the needs of existing and new

customers (see illustration). Thanks to years of development

and industrialization experience, Ypsomed has a choice of

systems to cover customer needs and is able to provide pro-

totypes at very short notice for patient handling studies.

Innovative portfolio of injection systems

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Dual-chamber disposable pens

LyoTwist™ Trio LyoTwist™ Vario LyoTwist™ Trio S LyoTwist™ Vario S

Multidose

Single dose

Variable dose

Fixed dose

Automatic administration

Both reusable and disposable pen systems are suitable for

drugs that need to be injected by the patient either once or

even several times a day, such as insulin, GLP-1 and growth

or fertility hormones. Dual-chamber pen systems are used for

drugs that cannot be stored in the liquid state. With these

pen systems, the substance in its freeze-dried form is mixed

with the diluent in a dual-chamber cartridge just before use.

In addition, auto-injectors with a pre-fi lled syringe tend to be

used where even inexperienced patients need to administer

the required substance easily, safely and in the required

quantity, or where drugs need to be injected less frequently

as a depot formulation e. g. once weekly or monthly.

“Pharma and biotech companies all around the world have been placing their trust for years in Ypsomed’s innovative and user-friendly injection systems, as they enable them to improve treatment success levels and stand out from the competition.”

Innovative portfolio of injection systems

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Auto-injectors

UnoPen™ Memo YpsoJect® YpsoMate® YpsoMate® HF

“Ypsomed reduces time to market for pharma customers, as production capaci-ties are already in place for existing products and the various platform systems have been verifi ed from both a tech-nical and patent perspective.”

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Ypsomed offers the leading pen systems for insulin

Successful launch of the ServoPen® in ChinaAn important milestone in the 2010/11 business year for

Ypsomed was the successful launch of the newly developed

ServoPen® reusable insulin pen in China in collaboration with

its long-standing pharma customer Tonghua Dongbao Phar-

maceutical Co. Ltd., a leading local pharma company and

insulin manufacturer in China. This was only possible after

an intensive cooperation phase between Ypsomed and Dong-

bao, during which the ServoPen® was adapted to suit the

individual customer requirements of Dongbao and the neces-

sary documentation requirements for registration in China

were completed. Within a very short timeframe, the ServoPen®

manufactured by Ypsomed in Switzerland was ready to be

launched in conjunction with Gansulin® insulin under the

“Gansulin® Pen” brand.

Booming insulin market in ChinaYpsomed has succeeded in strenghening its customer relation-

ship with Tonghua Dongbao Pharmaceutical Co. Ltd. and

gaining a bigger share of the booming diabetes and insulin

market in China. Over the next few years, the Chinese insulin

market is expected to experience very strong annual growth

of between 25 % and 30 %. Sales of human insulins, which

currently account for an estimated market share of 80 %, are

the main driver of this tremendous growth. Dongbao Enterprise

Group (www.thdb.com) was founded in 1985 and, with

20 subsidiaries, has grown to become one of China’s leading

pharma companies thanks to considerable investment in re-

search and development. As a manufacturer of active phar-

maceutical ingredients (APIs), the company holds numerous

patents and provides millions of people in China and Asia

with drugs, particularly human insulins.

Simon Michel, Senior Vice President Marketing & Sales, hands over the first Gansulin® Pens to Yikui Li, Chairman of the Board of Directors of Dongbao Enterprise Group Co. Ltd., and Li Cong, CEO of Tonghua Dongbao Pharmaceutical Co. Ltd.

“With the ServoPen® reusable insulin pen, Ypsomed is introducing a top- quality Swiss product to the booming Chinese insulin market.”

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YpsoPen® Twist – the value insulin penAgainst a background of ever increasing cost pressures

within the public health sector, the insulin market has a sig-

nifi cantly growing need for simple and low-cost pen systems.

With this in mind, Ypsomed has developed a lower-priced

reusable insulin pen named YpsoPen® Twist. YpsoPen® Twist

is designed to be used with standard 3 ml insulin cartridges

and can be adapted to inject other drugs. Based on the

proven “twist and push” concept, it is very intuitive to use.

The large display ensures good legibility during dosing.

Doses can also be varied and corrected at any time. Unlike

the ServoPen®, injection is a manual process, although very

little force is required. As with the ServoPen®, the YpsoPen®

Twist also features easy and convenient cartridge changing

and an easily retractable piston rod (please turn to page 31

to see a picture of the pen).

Benefi ts of the new ServoPen® insulin penThe innovative ServoPen® insulin pen developed by Ypsomed

features an attractive combination of user-oriented design

and improved functionality. The ServoPen® is a high-quality

reusable insulin pen with a spring-assisted injection mechanism

and a robust but lightweight aluminum housing available in

different colors. In technical terms, benefi ts include spring-

assisted release (no force required, short stroke distance),

effortless cartridge changing thanks to bayonet locking, eas-

ily retractable piston rod, easy-grip dosing knob for simplifi ed

dose setting, dose correction and dose interruption options

and excellent durability. All these factors make the pen easy

to use on a day-to-day basis and give users the peace of

mind they need. With the ServoPen®, Ypsomed is setting new

standards in insulin therapy in terms of patient convenience

and user-friendliness.

ServoPen® developed by Ypsomed and awarded with the “red dot design award 2010”

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2001

Reusable pen systems Disposable pen systems Conventional syringes with vials

20052003 2007 2011 2013 20152009

80 %

60 %

40 %

20 %

0 %


UnoPen™ – the disposable pen for ambitious insulin providersInsulin dependent diabetics are increasingly using disposable

pen systems. Ypsomed estimates that the market for dispos-

able insulin pen systems is growing by over 20 % a year.

Today, disposable insulin pen systems are only available from

the three major insulin providers Novo Nordisk, Eli Lilly and

Sanofi -Aventis. Ypsomed has therefore developed the UnoPen™

disposable insulin pen for the new ambitious and fast-grow-

ing insulin providers. The UnoPen™ boasts many of the user-

friendly features and functionality found in Ypsomed’s two

reusable insulin pens, but has been designed to be used as

a disposable pen. Patients use the UnoPen™ with the inte-

grated 3 ml insulin cartridge (1 – 60 IU or 10 – 600 μl) until

no insulin is left, and then replace it with a new UnoPen™.

“Thanks to biosimilars, the potential for disposable insulin pens is huge, not only in the established markets, but also in the USA, China and India in particular.”

Disposable pen systems for insulin and GLP-1

UnoPen™

Disposable pen systems become more and more important for the administration of insulin

36


LyoTwist™ – the dual-chamber cartridge pen systemSince many biopharmaceuticals are unstable in liquid form,

they are supplied in freeze-dried form with a diluent, both

contained in a dual-chamber cartridge. The freeze-dried drug

needs to be mixed with the diluent before use. In order to

make this preparation stage as simple as possible for patients,

Ypsomed has developed the LyoTwist™ dual-chamber cartridge

pen. Only Ypsomed offers a pen system like LyoTwist™. There

are four different versions available, based on fi xed or vari-

able dosing, each featuring either a manual or automatic

injection mechanism.

LyoTwist™ Pen

Interesting market potential for GLP-1 diabetes drugsWithin the context of diabetes treatment, recent years have

seen a new and increasingly important market emerge along-

side the existing insulin market. This new market is known as

GLP-1 (glucagon-like peptide 1). GLP-1 is a hormone released

into the bloodstream by special intestinal mucosal cells fol-

lowing a meal. The hormone in turn releases insulin. Since

the naturally occurring human GLP-1 hormone is metabolized

within just a few minutes, substances similar to GLP-1 are used

as drugs. Studies show that Type 2 diabetes patients still

capable of pancreatic insulin production enjoy better meta-

bolic control after taking GLP-1 substances and even lose

weight, unlike with insulin, which tends to make patients gain

weight. GLP-1 drugs will be marketed in the form of either

user-friendly disposable pens or auto-injectors.

“Ypsomed believes diabetes treatment with GLP-1 offers an interesting market potential for self-injection systems, with a number of pharma companies having GLP-1 drugs in their product pipeline.”

The world’s simplest dual-chamber pen system made of only three single components.

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Diabetes pens

Auto-injectors for pre-fi lled syringes

“Disposable auto-injectors contain a pre-fi lled disposable syringe that the patient cannot see. When the button is pressed, a completely automatic process inserts the needle, administers the drug and makes the needle safe after the injection without the patient seeing anything.”

For historical reasons, Ypsomed is the leading provider of

pen systems. In the last few years, however, Ypsomed has

invested signifi cant human and fi nancial resources in the

development of a range of auto-injectors to cover different

patient and drug needs. The YpsoJect® and YpsoMate® auto-

injector systems are suitable for a wide range of biopharma-

ceuticals administered as a fi xed dose, and as long-acting

depot formulations in pre-fi lled ready-to-use 1 ml syringes.

The new disposable auto-injectors are very user-friendly and

enjoy high patient acceptance levels.

YpsoMate®

Disposable auto-injector

Current customers for injection systems

38


Fast product development

Lean development means fast product development

For Ypsomed’s pharma customers, both time to market (i.e.

fast product development and short intervals before launch-

es) and the quality, safety and reliability of the end product

are without question the most important decision criteria.

Ypsomed has made further signifi cant operational improve-

ments in both these areas.

“Thanks to its lean development approach, Ypsomed is able to execute customer projects more successfully by saving both time and money.”

As part of a special lean development project during the

2010/11 business year, Ypsomed has thoroughly analyzed

the business processes associated with development and

industrialization and identifi ed areas for improvement. Vari-

ous measures have already been successfully implemented

or will be undertaken during the course of the current business

year. Lean development improvements have made it possible,

for example, to reduce paperwork, simplify the required

measurement and test processes, cut down on expenditure

and rejection levels, and shorten the project time. In terms of

development, Ypsomed also takes a more systematic approach

to design for manufacturing. This means devising and devel-

oping products in such a way that they can be produced as

effi ciently as possible.

At the same time, improvements have been made in the ar-

eas of tool making and capacity planning to reduce ex-

penditure and cycle times. By ensuring uniformity in terms of

project planning and monitoring, using standardization, and

achieving closer integration and collaboration with customers,

it has proved possible to make a range of improvements and

eliminate duplication.

Non diabetes pens

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Successful FDA auditProducts and business processes within the medical technol-

ogy and pharmaceutical industries are becoming subject to

ever tougher quality requirements imposed not only by cus-

tomers, but increasingly by international and national regula-

tory authorities as well. With its professional, committed

quality management team, Ypsomed is able to ensure these

demanding requirements are satisfied. All Ypsomed business

processes are certified in accordance with the medical de-

vices directives as well as ISO 9001 and ISO 13485. Custom-

ers check Ypsomed’s quality management system during

regular audits. During the last business year, Ypsomed passed

a total of 10 customer audits with flying colors. As one of

Switzerland’s first medical technology companies, Ypsomed

underwent a successful audit in September 2010 by the State

Food and Drug Administration (SFDA) of the People’s Repub-

lic of China in accordance with the ISO 13485 standard.

The audit performed by the US health authority FDA in Janu-

ary 2011 in Burgdorf also went extremely well. A four-day

intensive, detailed inspection of the quality management

systems and their implementation by an experienced inspec-

tor generated no 483 observations. This is an excellent result

confirming that Ypsomed's existing quality management

system fulfills international standards and that customers and

end-users can rely on the quality of Ypsomed products.

“Ypsomed’s quality management system is inspected by the authorities and pharma companies on a regular basis. Ypsomed was particularly pleased with the successful audit performed by the US health authority FDA in January 2011 in Burgdorf.”

Customers and patients trust Ypsomed’s quality

40


Trade

Customer's order process

Internal purchase

Purchase plan

Innovation Development and industrialization

Customer acquisition

Strategic management

Vision, mission, management manual

Operative management

Client service

Product management

Warehouse

External purchase

Strategic purchasing

Quality management

Human Resources

Finance Maintenance Enviroment, health, safety

Facility management

Legal and patents

Project management

IT Supporting process

Supply chain management

Product lifecycle management

Customer relationship management

Management process

Quality within business processes – Ypsomed’s new process structureYpsomed is eager to keep improving and ensure business

processes and quality management are adapted on a regu-

lar basis in line with new requirements. Another special project

was launched in the 2010/11 business year with a view to

defining a new uniform and process-oriented management

system for the Ypsomed Group based on a holistic approach

to management. This important project is intended, among

other things, to simplify and standardize existing business

processes, to design processes to be more effective, and to

ensure process content and responsibilities are compatible

with the organizational structure. The idea is not only to

eliminate duplication and improve the fit between different

interfaces, but also to increase transparency and simplify

employee training by making process descriptions more

concise and easy to understand. The interdisciplinary project

team is implementing the new process structure (see illustra-

tion) between now and the fall of 2011.

Ypsomed’s process house

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Professional diabetes care – a strategically important business segment

Long-standing diabetes expertise and market presence in Europe

Ypsomed has over 25 years of experience in the “diabetes

care” strategic business segment and boasts an undisputed

reputation within the industry for profound expertise regard-

ing diabetes. At the same time, Ypsomed is active in Europe

with an independent sales organization and a sales force

dedicated to diabetes. The Ypsomed Group is present in

Germany, France, Great Britain, Switzerland, the Netherlands,

Sweden, Norway, Finland and Denmark as well as India

through its own subsidiaries. Ypsomed also runs DiaExpert,

Germany’s largest diabetes mail order business with tens of

thousands of diabetics as regular customers, via its subsidiary

in that country. In total, 200 employees work for subsidiaries

in the diabetes care business.

“mylife™ Diabetescare” diabetes umbrella brand successfully establishedYpsomed unveiled the new mylife™ Diabetescare umbrella

brand for people with diabetes mellitus in September 2009

at the Vienna conference of the European Association for the

Study of Diabetes (EASD) and has since cemented its suc-

cessful positioning. A number of products are sold under the

same global mylife™ Diabetescare brand. These include the

mylife™ Penfine®, Optifine® and Clickfine® pen needles

manufactured by Ypsomed. The brand also covers mylife™

Clickfine® AutoProtect™ safety needles and diabetes products

provided by partners, such as the mylife™ Pura® blood glucose

monitoring system from Bionime and the innovative mylife™

OmniPod® insulin patch pump from Insulet, as well as the

universal mylife™ Rotofine™ and Rotosoft™ infusion sets. This

allows Ypsomed to provide a wealth of products for safe and

convenient diabetes therapy from a single source. Ypsomed

sells mylife™ products and services through its own subsidiar-

ies in Europe and India and collaborates with over 40 expert

distribution partners around the world. During the 2010/11

business year alone, Ypsomed concluded additional distribu-

tion agreements for pen needles in 18 new countries.

mylife™ Diabetescare product portfolio

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The new www.mylife-diabetescare.com web portal offers valuable information for people with diabetes and for healthcare professionals.

Diabetes web portal

“Thanks to the slogan ‘More freedom. More confidence. With mylife™.’ within a short period of time Ypsomed has man-aged to develop a strong market presence and stand out from the competition.”

mylife™ diabetes web portal www.mylife-diabetescare.com

Ypsomed’s new mylife™ Diabetescare web portal has been

up and running since June 2010 at www.mylife-diabetescare.

com. The web portal offers people with diabetes and diabe-

tes experts based at clinics and other medical practices a

range of useful information on diabetes and everything they

need to know about the products in the mylife™ Diabetescare

range, as well as providing a platform for debate and discus-

sion. Users not only receive practical tips regarding day-to-

day diabetes issues, but can also request advice by telephone

or email.

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Rapid launch of mylife™ OmniPod®

The recent rapid launch of the mylife™ OmniPod® insulin patch

pump, the only one of its kind in the world, in mid-July 2010

in Germany and Great Britain, followed by staggered

launches in the Netherlands, Switzerland, Norway and

Sweden, has enabled Ypsomed to impress both its customers

and leading diabetes experts. With the exception of France,

the registration process for the mylife™ OmniPod® went so

smoothly that further launches are planned for other countries

during 2011.

Experts recommend the mylife™ OmniPod® thanksto its many benefits

Doctors and experts in the field are recommending this new

patch pump for Type 1 diabetics because of its numerous

benefits compared to conventional insulin pumps. The mylife™

OmniPod® does not need an infusion set and offers users

greater freedom and simplicity. The mylife™ OmniPod® system

is available from diabetes specialists and practices with a

particular interest in this area. Treatment costs are reimbursed

by health insurance providers. Patients can obtain new pods

and accessories from specialist suppliers of diabetes equipment

and also, in Germany, from DiaExpert (www.diaexpert.de),

Ypsomed's mail order portal.

mylife™ OmniPod® is a hit with patients

The first patient in Germany to use the mylife™ OmniPod® was

44-year-old Thomas Zetzmann from Coburg. He was diag-

nosed with Type 1 diabetes 12 years ago. He had always

felt in great shape before this. The diagnosis marked a real

turning point for him. A stressful job involving physically

strenuous field work meant he found it impossible to control

his blood glucose levels with insulin injections. Because of

this, he had been wearing an insulin pump since 1999. The

big problem for him was the insulin pump infusion set tubing.

This caused him some irritation when he played with his five

children or turned over in bed at night, restricting his move-

ments. With this in mind, Thomas Zetzmann has opted for

the new mylife™ OmniPod® insulin patch pump. His experience

with this small and innovative system has been very positive.

Many others share Thomas Zetzmann’s enthusiasm for the

mylife™ OmniPod®, as this selection of comments and feedback

from our new customers on the following clearly show:

mylife™ OmniPod® – the first insulin patch pump

Thomas Zetzmann, Germany's first patient with the mylife™ OmniPod® insulin patch pump.

“Just try taking my mylife™ OmniPod® away from me! The new pump has finally given me back my freedom. Instead of still having to wear my insulin pump on a belt with an infusion set and tubing, I just have to stick a pod on every three days and everything’s OK.”

44


Online comments made by mylife™ OmniPod® users

“My husband, who has been diabetic for over 25 years, was blown away by the device and had no issues in wearing it. He’s never liked the thought of wearing a pump because of the tubing, but found this device to be incred-ibly discreet.”

“The doctors I have spoken to can't rate it highly enough.”

“I was put on an OmniPod ® today and absolutely love it!”

“I am thoroughly impressed with the system as a whole. Insertion is quite a revelation; so fast that I had probably missed it. In fact, I jumped more from the ‘snap’ sound than from any sensation – it really was painless.”

“It is the best thing I have ever done for my-self and I will NEVER go back to all those injections and the inaccuracy that comes with them.”

“Yeaaaaaaaah! I will get my OmniPod ® soon! Ready for a new life.”

“My 6-year-old son and my husband have just trialed the OmniPod®. I have to say that it is amazing! The pod itself is very small.”

“Oh my God Emma, it is just great! I have had it two and a half weeks now. It is just so easy and pain-free and I love the fact I can bolus when I’m walking down the street. It has reduced my insulin need by nearly a third, which is great. My control is much tighter and it is so easy to correct highs.”

Customers are being won over by the OmniPod® insulin patch pump1

• 98 % believe the OmniPod® system makes it easier

for them to live with diabetes

• 96 % prefer OmniPod® to their previous therapy

• 95 % would recommend the OmniPod® insulin patch

pump to others

1 Source: Survey by Insulet Corporation. All participants in this survey have been using the OmniPod® for more than one year.

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Insulin patch pump – the way forward for Type 1 diabetes therapy

The mylife™ OmniPod® system only has two parts

The huge demand for the mylife™ OmniPod® insulin patch

pump can be explained by its obvious benefits. It only has

two parts and does not need an infusion set. The OmniPod®

system consists of a small, lightweight pod, which is simply

applied directly onto the skin, and the Personal Diabetes

Manager for wireless control. The pod acts as an insulin

dispenser for up to three days and is worn discreetly under

clothing. The Personal Diabetes Manager is simple to operate

thanks to its menu-driven system and doubles as a blood

glucose monitoring device.

“The mylife™ OmniPod® is a continuous tubing-free insulin infusion system. It offers insulin-dependent diabetics real convenience and flexibility and also provides new opportunities for treating children and young people.”

Benefits in brief

• World’s first insulin pump with no infusion set

• Insulin pump comprising only two components:

the pod with an insulin reservoir for 2 – 3 days

and the Personal Diabetes Manager (PDM) to en-

sure simple and intuitive operation

• Automatic, invisible and pain-free cannula insertion

• Watertight, so no need to remove when taking a

shower, bathing or swimming

• Discreet, lightweight and comfortable thanks to a

wide range of sites where it can be worn

• Integrated blood glucose monitoring system

Tubing-free pump therapy – more freedom, flexibility and convenienceLeading experts in the field believe the insulin patch pump is

showing the way forward for diabetes therapy. The mylife™

OmniPod® offers patients who use it greater freedom and

simplicity compared with conventional subcutaneous insulin

infusion (CSII). There is no longer any need for an infusion

set, as the cannula is introduced automatically with the mylife™

OmniPod® at the push of a button – the whole process is both

fast and precise. No more tubing to snag or tangle. The fact

that the pod can be worn in a range of positions ensures

greater flexibility and means less stress on skin and tissue.

The pod adhesive patch is breathable, kind to skin and flex-

ible. Unlike treatment options involving infusion sets that

generally need to be removed before taking a shower or

swimming, the mylife™ OmniPod® has no infusion set at all

and is also watertight. This means insulin therapy is continu-

ous and safe at all times.

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The mylife™ OmniPod® insulin patch pump consists of only two part: the Personal Diabetes Manager (PDM) and the pod for the insulin.

Development project “continuous injection device”

Ypsomed has been working for several years to develop its

own infusion system for insulin. The continuous injection

system will permit the continuous administration of human

insulin via a simple device produced at the lowest possible

cost. The idea is to make the continuous injection device also

available in newly industrialized and developing countries

at reasonable costs. The main target market includes insulin-

dependent patients, particularly elderly people requiring

medical treatment. The project to develop the continuous

injection system is taking longer than originally planned,

because the development work involved is complex and many

technical hurdles must be overcome. Ypsomed has made

further progress during the 2010/11 business year and has

manufactured a variety of prototypes. The system should be

ready for sale by the middle of 2013.

Benefi ts of the mylife™ OmniPod® system compared with intensi-fi ed conventional insulin therapy Patients with intensifi ed conventional insulin therapy (ICT) enjoy

improved blood glucose (glycemic) control over the long term

after switching to the mylife™ OmniPod® thanks to continuous

insulin administration, as was shown by an improvement in the

average HbA1c (–0.49 %) reading recorded as part of a study1.

The acceptance level for the OmniPod® in this study was 92.2 %.

A previous study has shown that users prefer OmniPod® to a

conventional insulin pump. In this study, most existing pump

users preferred OmniPod® to their conventional insulin pump

and also improved their HbA1c value, reducing it from 7.1 %

to 6.8 %. The kind of improvement in HbA1c values recorded

in both studies reduces the risk of possible secondary compli-

cations associated with diabetes. In addition, the bolus calcu-

lator contained in the Personal Diabetes Manager (PDM) helps

users determine the amount of insulin they need. Since there

is no need for daily injections, patients benefi t from a more

fl exible and less stressful daily routine, which also helps ensure

successful treatment.1 Source: Zisser H, Jovanovic L: OmniPod Insulin Management System. Patient perceptions, preference and glycemic control. Diabetes Care 29 (9), 2175; 2006.

mylife™ OmniPod® insulin patch pump

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15 %10 %5 %

Number of measurement values in target range

Deviation from reference method

mylife™ Pura® (%)

Accu-Chek® Aviva Nano (%)

Contour® (%)

FreeStyle Lite® (%)

OneTouch® Ultra® 2 (%)

Legend for the graph: Use of mylife™ Pura® resulted in more than 50 % of measurement values in the range of ± 5 % of the reference value. When using the compared devices, this occurred in 23 % (Accu-Chek® Aviva Nano) und 27 % (FreeStyle Lite®) of the cases (p < 0.05 in both tests) as well as 35 % for OneTouch® Ultra® 2, (p = 0.11) and 37 % for Contour® (p = 0.14).

1 Mentis et al. Klinische Performance durch Messgenauigkeit des Blutzuckermessgerätes „mylife™ Pura®“ in der Steuerung der intensivierten Insulintherapie bei Patienten mit Typ-1-Diabetes. DDG Abstract Ref. No. A-274-0007-00399 / Poster P303. Poster Pres-entation at the 45th Annual Congress of the German Diebetic Association in Stuttgart 12. to 15 May 2010.

2 Baumstark et al. Bewertung der Systemgenauigkeit des neuen Blutzucker-Messsystems mylife™ Pura® nach EN ISO 15197 und Vergleich mit dem etablierten System OneTouch® Ultra® 2. DDG Abstract / Poster P325 Poster at the 45th Annual Congress of the German Diabetic Assocation in Leipzig 2009.

1,2

Results for glucose values < 4.2 mmol / L (< 75 mg / dL)

100 %

90 %

80 %

70 %

60 %

50 %

40 %

30 %

20 %

10 %

0 %

mylife™ Pura® – the most accurate blood glucose monitoring system

Exclusive sales rights for mylife™ Pura® in Europe

Ypsomed has had exclusive European rights to sell blood

glucose monitoring systems from its Taiwanese partner Bionime

Corp. since May 2009. Since the mylife™ Diabetescare um-

brella brand was launched, the blood glucose monitoring

system has been marketed under the name mylife™ Pura® in

Germany, France, Great Britain, the Netherlands, Switzerland,

Sweden, Norway and Finland by Ypsomed subsidiaries’ own

sales forces. It will also be marketed in India from May 2011

onwards. The blood glucose monitoring system fits very

nicely with the rest of Ypsomed’s mylife™ product portfolio.

“Self-monitoring of blood glucose levels and the resulting treatment adjustment are critically important in the treatment of diabetes mellitus.”

mylife™ Pura® is test champion thanks to high measurement accuracyA comparative study has shown the mylife™ Pura® blood

glucose monitoring device to have a higher measurement

accuracy than four established monitoring devices. According

to the assessment criteria, mylife™ Pura® outperforms all

comparable devices at blood glucose levels below 4.2 mmol / L.

A study1 carried out at the Bad Lauterberg diabetes center

showed that the high measurement accuracy offered by

mylife™ Pura® compares favorably not only with established

monitoring devices, but also with laboratory methods. Blood

glucose measurements in the 40 – 381 mg / dL range corre-

lated extremely well with laboratory-measured blood samples.

The comparative study also showed that mylife™ Pura® – un-

like three comparable established devices – satisfi es the

currently defi ned ISO criteria. Besides mylife™ Pura®, only

one other device was able to satisfy the ISO criteria in full.

48


IPO of Bionime Corp. in Taiwan

The history of Bionime Corp. is a real success story in com-

mercial terms. The company was founded in April 2003 and

currently has over 500 employees. Bionime has its head-

quarters in Taichung (Taiwan), as well as operations in

Switzerland, the People’s Republic of China, Australia and

the USA. Bio nime has fi led around 60 patents in total in

order to protect its core technologies. It currently sells its

blood glucose monitoring systems in over 70 countries via

distributors, OEM partners and Ypsomed. Bionime continued

to develop its business very successfully during 2010 and

was able to increase both sales and profi tability. The initial

public offering planned for the end of 2010 was success-

fully implemented: Bionime Corp. traded on the principal

market of the stock exchange in Taipei for the fi rst time on

December 23, 2010 (see www.bionime.com).

“Ypsomed’s equity stake acquired inBionime Corp. in the 2008/09 business year has been fi nancially rewarding.”

Close collaboration between Ypsomed and Bionime Corp.

The collaboration with the Taiwanese partner Bionime Corp.

has intensifi ed during the 2010/11 business year, particu-

larly through the development of new joint products. Next

generation products are already under discussion.

mylife™ Pura® – the most accurate blood glucose monitoring system

The mylife™ Pura® blood glucose monitoring system offers the following attractive benefi ts:

• Highest levels of measurement accuracy, ensuring

high acceptance levels among patients and

specialists

• Test strip is extremely easy to grip, ensuring no

contact with blood

• Easy to operate, with clear menu-driven control

system

• Modern design and large display

• Very low-pain mylife™ lancet

49


An

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Rep

ort

The Ypsomed pen needle product range was extended with the mylife™ Clickfi ne® AutoProtect™ safety pen needle and the mylife™ Clickfi ne® 4.5 mm pen needle.

mylife™ Clickfi ne® AutoProtect™ and mylife™ Clickfi ne® 4.5 mm

mylife™ – pen needles and safety pen needles

Launch of Ypsomed’s new 4.5 mm pen needle

Ypsomed has been manufacturing high-quality patented pen

needles for 20 years and boasts the world’s most compre-

hensive product range. Patients appreciate the different

needle lengths (6 mm, 8 mm, 10 mm and 12 mm), which enable

them to choose the right length of pen needle for their own

physical constitution. Since January 2011, Ypsomed has also

offered a new 4.5 mm pen needle, which is perfect for children

and very slim adults.

“Ypsomed’s mylife™ pen needles are compatible with all the main insulin pens. The patented click-on mechanism means users no longer have to waste time twisting needles into place. The new 4.5 mm pen needle is perfect for children.”

The mylife™ Clickfi ne® AutoProtect™ safety pen needle for health care professionalsYpsomed has developed the new mylife™ Clickfi ne® AutoProtect™

safety pen needle for health care professionals which also

features Ypsomed’s patented “click-on” mechanism. A locking

mechanism prevents a second injection and the used needle

remains invisible and protected. This avoids the possibility of

accidental needle-stick injuries, infections and the transmission

of life-threatening diseases, thus improving safety levels for

physicians and health care professionals. Ypsomed launched

the safety pen needle in March 2011 and has already con-

cluded contracts with a number of hospitals and nursing homes.

With the mylife™ Needle Remover™ for conventional pen

needles, Ypsomed also offers an ideal tool for the fast and

safe removal of pen needles. The mylife™ Needle Remover™

reduces the risk of needle-stick injuries and improves safety

levels for patients and health care professionals.

50


50 %

91 %

47 % 46 %

66 %

45 %

60 %

72 %

77 %

82 % 83 %

49 %

71 %

2000 20042002 2006 20092001 20052003 2007 20102008 2011E 2012E

60

50

40

30

20

10

0

Presence in % of the world pen market (left scale) Number of countries with presence (right scale)

100 %

90 %

80 %

70 %

60 %

50 %

40 %

30 %

20 %

10 %

0 %

Ypsomed has greatly increased its geographical sales presence for its own pen needles

Stronger international market presence thanks to new distribu-tion partners for pen needlesDuring the 2010/11 business year, Ypsomed has continued

to signifi cantly expand the geographical customer base for

its self-manufactured pen needles. In the last 10 years, the

number of countries where Ypsomed pen needles are sold

has increased from 12 to the current level of 50. During the

2010/11 business year alone, Ypsomed has been able to

conclude contracts with new distributors in 18 countries. Today,

Ypsomed’s mylife™ pen needles are available to 82 % of all

pen users worldwide. Ypsomed believes there is still potential

for further growth in geographical terms. A few larger markets

are yet to be covered, such as Japan, Korea and Argentina

as well as Thailand, the Philippines and New Zealand.

“Today, Ypsomed’s mylife™ pen needles are available to 82 % of pen users worldwide.”

51


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Ypsomed at the Aarab Health 2011

Regional Sales Managers Philippe Miloda (on the picture) and Birgit Fechter attended the biggest Medical Device exhibition in the middle east, the Arab Health, for a second time.

New market presence established in Latin America

Ypsomed has concluded several contracts with leading local

distributors in Latin America, the Middle East and North

Africa. Following the relevant registration procedures for the

various countries, mylife™ Penfine® pen needles will be sold

in Mexico, Colombia and Venezuela through the Venezuelan

distributor Innova Technologies, part of the established DAI

Group family business, which has around 130 employees

and is represented in 18 Latin American countries. Some

180 million people live in Mexico, Colombia and Venezuela,

which equates to a third of the total population of Latin and

Central America. These countries also account for around

40 % of all those diagnosed with diabetes in the region.

“Diabetes is particularly widespread in the Middle East, especially in Saudi Arabia, which has one of the highest rates of diabetes in the world at over 17 %. The International Diabetes Federation (IDF) estimates that the number of diabetics in the Middle East will double from the current level of around 26 million to over 52 million by 2030.”

Ypsomed with new distributors in the Middle East

With its own exhibition stand in the Swiss Pavilion, Ypsomed

was present for the second time at Arab Health in Dubai, the

Middle East’s largest trade fair for medical technology and

healthcare, attended by over 2 700 exhibitors from some

60 countries. More than 60 000 distributors, doctors and

industry representatives visited the trade fair, mainly from

Saudi Arabia and the United Arab Emirates, but also from

India and Pakistan. During the 2010/11 business year,

Ypsomed concluded a distribution contract with Innovative

Medical Solutions (IMS), whose headquarters are in Beirut

(Lebanon), with a view to selling mylife™ Penfine® pen needles

in Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain,

Qatar, Oman, Jordan, Lebanon and Iraq through the sub-

sidiaries and distributors of IMS following product registration.

Consequently, Ypsomed has secured an area of the Middle

East with a population of around 75 million for its products.

Ypsomed has also expanded its presence in North Africa

through its new distributor Expensimed Sarl., whose head-

quarters are in Algiers (Algeria). Algeria, Africa’s second

largest country in terms of surface area, with around 33 mil-

lion inhabitants, is home to a fast-increasing diabetic popula-

tion estimated at 3 million. As a result, Ypsomed is now

actively represented in the following North African countries:

Egypt, Tunisia, Algeria and Morocco.

52


DiaExpert's new revised homepage became more informative and user-friendly than before.

DiaExpert diabetes mail order businessThe one-stop shop for round-the-clock diabetes advice and care

DiaExpert, an Ypsomed subsidiary, is Germany’s leading

provider of diabetes direct care. In addition to its compre-

hensive product offer, which comprises over 1 200 day-to-day

items for diabetics, DiaExpert is also noted for the expert

advice it provides. Many DiaExpert employees are diabetics

themselves, so the advice they give is based on experience.

In terms of the advice available, the telephone hotline is

complemented by the regular “feelfree” customer magazine,

which contains diabetes-related specialist articles and the

latest diabetes product information. During the lastest business

year, DiaExpert has totally revamped its website and online

shop, making it easier for visitors to use. Customers benefit

from round-the-clock access to the latest information and the

convenience of being able to order any product online, in-

cluding blood glucose monitoring systems, test strips, insulin

pump accessories, lancets and pen needles as well as other

products needed by diabetics. A professional mail order

operation ensures customers receive the products they have

ordered within 24 hours.

“DiaExpert supplies more than half of all insulin pump users in Germany. This makes DiaExpert the leading mail order provider for patients using insulin pump therapy or intensified insulin therapy.”

DiaExpert is also a partner of all the health insurance provid-

ers in Germany and is able to ensure all patients receive the

right therapy, and that prescriptions and payments are proc-

essed efficiently.

DiaExpert – the leading diabetes mail order business in Germany

53


An

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New DiaExpert diabetes competence center opens in Bad MergentheimIn October 2010, DiaExpert opened another competence

center to add to the six it has already. At the renowned dia-

betes center in Bad Mergentheim, diabetics and their family

members can seek information and advice from specialists.

They also have access to a comprehensive range of products

and services designed to cater for the day-to-day needs of

diabetics. Visitors have the opportunity to inspect, handle

and try out the various products. The diabetes center in Bad

Mergentheim treats around 15 000 patients a year. DiaExpert

plans to open further competence centers in future. DiaExpert’s

mission is to help even more diabetics deal with their condi-

tion on a day-to-day basis, not only via its mail order business,

but also on a face-to-face basis.

Diabetes competence center Bad Mergentheim

“Around 8 million people in Germany have diabetes. As well as insulin, patients also need equipment to manage their diabetes on a day-to-day basis: pens, nee-dles, blood glucose monitoring devices and test strips, lancets and insulin pump accessories. DiaExpert, the specialist retailer and mail order provider, has been supplying patients with high-quality products and expert advice for over 20 years.”

54


Employees

Sustainability towardscustomers and employeesFor Ypsomed, sustainability is inseparably linked to corporate

responsibility. For this reason, Ypsomed acts sustainably not

only in the traditional fi elds of environment and society but also

with respect to its customers and staff. Ypsomed develops

products and services with major medical benefi ts for its phar-

maceutical customers and for patients. Ypsomed invests about

10 % of sales each year in research and development, which

– calculated from the time of its stock market fl otation in 2004 –

adds up to a total of CHF 205 million. Only the expertise,

experience and commitment of its staff allow peak perform-

ances to be achieved in the development of new products and

the manufacture of products of outstanding quality.

Values and management principles of the Ypsomed GroupYpsomed has defi ned consistent values and management

principles for the Group as a whole, based on its vision and

mission. Ypsomed expects all management staff to set an

active example of the integration of these important values

and management principles in their own work and to pass

them on to their staff.

“Ypsomed has created the Ypsomed cube in order to make every member of the staff aware of and actively embrace the vision, the values and the management principles of the Ypsomed Group.”

Cube describing Ypsomed Group’s vision, values and management principles

55

Ypsomed – Sustainability Report

Sust

ain

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Rep

ort

Age structure of employees Duration of employment

Percentage of employees Percentage of employees

50 + years

40 – 49 years

30 – 39 years

Until 29 years

11 + years

6 – 10 years

3 – 5 years

1 – 2 years

Until 1 year

Development of employee structure from 2005 until 2010. Source: Ypsomed employee survey.

12 %

31 %

25 %

30 %27 %

10 %

19 %

35 %

33 %

38 %

26 %

35 %

26 %

35 %

22 %

23 %

23 %

27 %

25 %

40 %

27 %

9 %

15 %15 %14 %

18 %

19 %

2005 2006 2008 2010

100 %

75 %

50 %

25 %

0 %

4 % 6 %5 %

14 %

40 %

34 %

10 %

100 %

75 %

50 %

25 %

0 %2006 2008 20102005

26 %

Development of the staffi ng structureThe Ypsomed Group employed a total staff of 1 097 as of

March 31, 2011, of whom 36 % were women and 64 % men.

879 people work for Ypsomed in Switzerland and 218 abroad.

As can be seen from the illustration below, the staff at Ypsomed

are still very young: 50 % of them are under 40. The number

of years of service has increased signifi cantly over the past

six years. In comparison with 2005, when 58 % of the staff

at Ypsomed had been with the company for less than two

years, the fi gure at the end of 2010 was 16 %.

Within the framework of Ypsomed’s increased strategic

orientation as a diabetes specialist, the European sales

force and marketing have been increased. Against the

backdrop of the sharp fall in demand from Sanofi-Aventis

for pen systems, Ypsomed was forced to improve productiv-

ity in Switzerland and to adjust staffing structures accord-

ingly. In April 2010, 46 employees were laid off and left

the company, and in August 2010 a further 20 jobs were

cut on economic grounds. The redundancy program was

drawn up in close cooperation with the Personnel Commis-

sion. Ypsomed provided affected employees with support

in analyzing their current situation and in seeking new

employment. The results were: positive feedback from the

participants, greater success in job searches and less sick

leave during the notice period. A total of 17 people found

a new position either immediately upon leaving or sooner

and – instead of a long period of wage compensation pay-

ments as a result of being unemployed – received a bonus

for successfully finding a new position.

At the same time, Ypsomed also streamlined the manage-

ment in Switzerland and reduced the executive management

board to five people. With effect from September 2010,

the former Chief Operating Officer (COO), Maurice Meytre,

took over as managing director of Ypsotec AG, a member

of the Ypsomed Group located in Grenchen. Dr. Christoph

Rindlisbacher, formerly responsible for Corporate Develop-

ment, and Dr. Manfred Mäder, responsible for Quality

Management and Regulatory Affairs, both left Ypsomed at

their own request.

56


Satisfaction of employees

Average value (rating based on scale of hundred)

Satisfaction

I’m happy with my current job situation

Motivating environment

All employees in my department have the will to perform on a high level

2004 2005 2006 2008 2010

Bond

I care a lot about the future of this company

Indentification

I have a strong belonging to this company

Source: Extract from the results of Ypsomed’s employee survey.

6064

67 6663

727574

100 %

75 %

50 %

25 %

0 %

7577

82 8286

64 6466

7370

Conditions of employment

As part of a Social & Ethical Audit, a large customer checked

the conditions of employment on site at Ypsomed in the

2010/11 business year. The inspectors also held interviews

with staff members from the production facilities on topics

such as wages, vacation and employee satisfaction. The

outcome of the audit was entirely positive.

“The attitudes that are critical for corporate success – a feeling of belonging and a desire to perform at a high level – have seen a positive development.”

High level of satisfaction among the staffAn important component of the corporate culture for Ypsomed

is to regularly and systematically ask staff for their opinions.

Both employees and management view the staff survey as a

valuable tool for “taking the pulse” within the company and

thus focusing specifically on topics where there is a need for

action. It is of particular importance during the current trans-

formation period, with its numerous organizational and staff

changes, to be aware of the opinions of the staff and initiate

relevant measures as needed. For this reason, the fif th

Ypsomed AG employee survey was carried out from October

18 to November 15, 2010. The response rate of 84 % was

higher than in previous years and also higher than the Swiss

company average of 66 % in the 2010 “cash” Employer

Award.

57


Sust

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Rep

ort

Development of the number of apprentices of the Ypsomed Group

Number of apprentices / graduating apprentices / apprentices offered a job at Ypsomed

Apprentices graduating apprentices apprentices offered a job at Ypsomed

50

40

30

20

10

02005

19

2 2

14

3

2004

3

26

2006

4 4

28

2007

86

38

2008

5

2

42

2009

8 8

42

2010

11

7

“It is gratifying that Ypsomed employed a total of 42 apprentices in the 2010/11 business year and that 11 apprentices were able to pass their basic vocational training with very good results.”

Employee education and trainingYpsomed offers many interesting training positions for apprentices

For years, Ypsomed has set great priority on the training of

apprentices. Ypsomed offers the following occupational areas

for apprenticeships: design engineers, polymechanics, plas-

tics technologists, logistics assistants, computer scientists, IT

support and business assistants. There has been a signifi cant

increase in the number of apprentices in recent years, and

also in the number of apprentices kept on after qualifying,

as can be seen from the diagram below. Despite receiving

almost 300 applications for apprenticeships starting in August

2011, it is becoming ever more diffi cult to fi nd equally inter-

ested and qualifi ed applicants for certain occupations.

58


Human resources development and career planningYpsomed has a career model including management, project

leader and expert career paths. This model has proved very

valuable over several years and is actively encouraged

within the framework of human resources development. In

the 2010/11 business year, a total of 48 people were able

to make a step ahead in their continuing development and

take on a new function, half of these being in a manage-

ment position.

Occupational health promotion

Occupational health promotion is an important concern for

Ypsomed. In addition to the primary goal of reducing occu-

pational and non-occupational accidents and absence as a

result of sickness, the aim is also to raise awareness and

motivate staff to take more active care of their health. Man-

agement staff have a particularly important role model func-

tion here, and must accept this responsibility. The necessary

preconditions have been in place since 2006 within the

framework of a project with the active cooperation of SUVA,

the Swiss Accident Insurance Fund. Since that time, Ypsomed

has invested a high five-figure sum each year in the health

and safety of its employees. The successes of health promo-

tion and accident prevention can be measured in quantitative

terms and are monitored by the Board of Directors and man-

agement on the basis of facts and figures. The trend is es-

sentially positive but not all the targets set have yet been

achieved. Absences as a result of sickness and accidents

have been reduced from 12.2 days per person in the 2006

calendar year to a current figure of 9.5 days per person.

Because of the active downsizing, Ypsomed is satisfied with

being able to hold the absence rate steady at present, with

the goal of further reductions in future.

Family-friendly corporate culture

Factors that help create attractive working conditions for work-

ing parents are flexible working hours, part-time work, paren-

tal leave and contributions to childcare costs. Ypsomed offers

these family-friendly conditions to help acquire and retain

experienced and qualified staff. The average age of an

Ypsomed employee is 39 years. With such a young workforce

(average age 39), there are many Ypsomed employees with

families who are interested in and dependent on the availabil-

ity of local childcare facilities. Childcare places are available

for the children of Ypsomed employees at a daycare center

in Burgdorf. The “leolea” organization, which runs the Bucher

Areal daycare center, was partly funded by the Ypsomed

Innovation Fund. Read more about “leolea” on page 61.

59


Sust

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Rep

ort

Commitment to society and the region

Ypsomed continues to make available about 1 % of consoli-

dated net profit every year for sponsorship of projects in

social, cultural, educational and public sports initiatives.

These are principally regionally based, and geared to Burg-

dorf, Solothurn and Grenchen. Ypsomed has very close and

diverse links to the Franz Gertsch Museum, and contributes

to the promotion of art in Burgdorf and the region. Ypsomed

also makes regular financial contributions to the Ypsomed

Innovation Fund to support innovative enterprises in the Swiss

Mittelland region, and has set up the CHF 50 000.– Ypsomed

Innovation Prize for the promotion of knowledge and technol-

ogy transfer at the University of Bern and the Bern University

of Applied Sciences.

“In addition to its comprehensive commitment to its employees, Ypsomed has also been active for many years in direct initiatives for the benefit of society.”

Ypsomed Innovation Fund – promoting innovation and technology transferThe aim of the Ypsomed Innovation Fund foundation is to

promote young innovative companies in the Mittelland region.

By granting loans or convertible loans, or through equity

funding, it makes available to companies the resources re-

quired to realize innovative projects and growth strategies.

The Ypsomed Innovation Fund supports project funding for

both new and existing enterprises. The Disetronic Innovation

Fund was set up by Dr. h. c. Willy Michel in 1997 as an

independent foundation of Disetronic Holding AG. In 2005,

the Disetronic Innovation Fund was renamed the Ypsomed

Innovation Fund. The founders include Dr. h. c. Willy Michel,

Ypsomed Holding AG and the Bernese Cantonal Bank. The

Chief Executive Officer of the foundation is Dr. med. vet.

Christoph Rindlisbacher and members of the board of trustees

are Heinrich Mühlemann, dipl. Ing. ETH / lic. oec. publ.,

Daniel Kusio, lic. rer. pol., and Prof. Dr. Peter Mürner, Prof.

Dr. phil. nat. One example of a successful project in the field

of social entrepreneurship, which was initially supported by

the Ypsomed Innovation Fund, is “leolea”.

Society

60


“leolea” child daycare

“leolea” child daycare centers – successful growth project with start-up funding from the Ypsomed Innovation FundSeven years ago, Dr. Marcel Brülhart presented a project to

the board of trustees of the Ypsomed Innovation Fund, with

which private initiatives would be used to create more child-

care centers in the Bern region. After detailed examination

and discussion, the Ypsomed Innovation Fund decided, in

2004, to support the “leolea” association with CHF 120 000.–

start-up funding.

“leolea” offers facilities where pre-school and school-age

children are cared for and their abilities developed so as to

provide support and ease the burden of childcare for parents.

The daycare center in Burgdorf, which is used by Ypsomed,

is run by “leolea.” “leolea” is innovative and a benefit to

society. The care it offers ranges from customer-oriented

opening hours, to in-home daycare providers and school

vacation care, and on to forest playgrounds and specialist

advice for parents and local authorities. This is not merely a

regional need: innovative daycare centers are in short supply

throughout the whole of Switzerland. So Dr. Marcel Brülhart,

Chairman of “leolea,” also hopes to expand across Switzer-

land in the future.

Ypsomed employees also get personally involved

It is not only Ypsomed that is committed to society; the em-

ployees themselves are also personally involved in initiatives.

By taking part in blood donation campaigns, for example,

and preventive flu vaccination, participating in company

sports events or using the fitness training facility and the indoor

swimming pool made available free of charge by Ypsomed.

In 2010, many Ypsomed employees also took part once more

in the “bike to work” campaign and in the National Day for

the Future (Nationaler Zukunftstag).

“ʻleolea ,̓ which started with just a few childcare centers in the Bern area, has today grown into a professional, customer-oriented organization with 19 childcare centers in canton Berne and the city of Lucerne, employing more than 300 people.”

61


Sust

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Supporting Dream Trust in IndiaSince 2007, Ypsomed has had its own subsidiary in India,

through which it markets the mylife pen needles manufactured

in Switzerland. In recent years, Ypsomed has also forged

close contacts with all the local insulin manufacturers and

with Indian pharmaceutical and biotech companies, and has

positioned itself as an independent supplier of innovative pen

systems. In India, where already 50 million people live with

diabetes mellitus today, many do not yet have access to in-

sulin and to services required for treatment, such as diabetes

advice and blood glucose monitoring. Ypsomed runs regular

training courses in India on the subject of diabetes and, in

2010 and 2011, once again provided financial support to

the aid organization Dream Trust (www.dreamtrust.org).

Dream Trust helps socially disadvantaged people with dia-

betes in Nagpur.

To the summit with diabetes Increasing numbers of people are living with diabetes but

don’t want to be restricted by their disease, either in their

everyday lives or with respect to specific challenges. For this

reason, Ypsomed invited the readers of “feel free,” our Dia-

Expert customer magazine, to climb the famous peak of Mont

Blanc with an experienced mountain guide. Ralf Weber from

Worms in Germany, who only developed Type 1 diabetes

at the age of 41, finally took up the challenge and success-

fully conquered the 4 180 meter high mountain in the French

Alps on July 1st, 2010. An experienced hiker, he reached

the summit via the normal route in a French team accompa-

nied by a specialist in diabetes, two mountain guides and a

cameraman.

Ralf Weber is convinced that there should be no restrictions

to life, even with diabetes. And his motto is: “You are not

sick. You simply have a condition that you have to take into

account.” You can read more about this unforgettable trip in

a blog at www.gisele-lafond.com (in French only).

“A crazy day! We were lucky with the weather and wonderful visibility. We started just before 2 am and reached the summit after 8½ hours, travelling across ice and snow for almost the whole route. I needed almost no insulin for the meals of muesli and energy bars, since the effort had eaten ̒ everythingʼ up. I had my pen and glucose meter in my trouser pocket and used them only briefly.”

“feelfree”-reader Ralf Weber in front of the Mont Blanc

Ralf Weber (3rd from right).

62


Environment and safety

“In order to raise staff awareness of behavior that is environmentally friendly and conserves resources, and to imple-ment improvements on a continual basis, Ypsomed has had a full-time officer with responsibility for the environment, health and safety since 2007. In general, Ypsomed uses very few resources in its production, particularly in comparison with other sectors or industries.”

Ypsomed invests in energy efficiency

Investments in energy efficiency are not only a good idea for

ecological reasons, but are also an economic necessity against

the backdrop of continually increasing energy costs. The

focus of attention for Ypsomed is ongoing optimization with

respect to the two most important energy sources, natural

gas and electricity. In the 2010/11 business year, Ypsomed

invested once again in the modernization of building serv-

ices at the Solothurn production plant and in improving the

energy efficiency of injection molding machinery.

Project “Free Cooling” in Solothurn

The idea behind the “Free Cooling Solothurn” project was to

save energy in the winter months by making available the

cold air required in injection molding production directly from

outside rather than by using a cooling unit as has previously

been the case. In 2010, Ypsomed successfully entered this

project in the Swiss Federal Office of Energy’s competition

for electrical efficiency and was awarded a significant sub-

sidy. The project will be realized in summer 2011 using this

financial support, making it possible to save 0.5 gigawatts

of electrical energy per year from as soon as winter 2011/12.

Electric injection molding machines use up to 50 % less energy

Like many other plastics components manufacturers, Ypsomed

formerly used hydraulic injection molding machines. Although

the new electric injection molding machines are more expen-

sive to purchase than the hydraulic machines, the investment

is worthwhile because electric injection molding machines

require up to 50 % less energy during operation. Ypsomed

has decided on standardization for its injection molding

machines and will in future purchase only electric injection

molding machines.

63


Sust

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13 % site balance (10 %)

19 % energy supply and waste disposal (18 %)

68 % complementary balance (72 %)

Complementary balance 9750 t CO2 equiv. –8 %

Core balance 4600 t CO2 equiv. +7 %

6 % site balance (4 %)

40 % energy supply and waste disposal (40 %)

54 % purchased environmental impact (complementary balance) (56 %)

Complementary balance 9100 million UBP –13 %

Core balance 7600 million UBP –6 %

Environmental impact 2010: Total 16 700 million EIP (–10 % compared to previous year)

Emissions 2010: Total 14 350 t CO2 equivalent(–4 % compared to previous year)

Environmental auditYpsomed carries out an environmental audit for each calen-

dar year, using the method devised by the öbu (Schweizerische

Vereinigung für ökologisch bewusste Unternehmensführung

– Swiss Association for Environmentally Conscious Manage-

ment). The diagrams show the most important environmental

key data for Ypsomed for the calendar years 2007 to 2010.

The definition of the key data and technical terms is given in

the Glossary from page 134 onwards.

Falling energy consumption

Total energy consumption by Ypsomed AG fell slightly once

again in the 2010 calendar year as compared with previous

years, although more stringent requirements relating to ambi-

ent air and air conditioning quality have increased energy

consumption in relation to production quantity. It is pleasing

to see that it has been possible to achieve a significant reduc-

tion in production-related power consumption, while the

consumption of fossil fuels based on area rose as a result of

weather conditions and because of the increased air condi-

tioning requirements.

Reduction of environmental impact and greenhouse gas emissions

The environmental impact of Ypsomed AG also declined once

more in the 2010 calendar year. The environmental impact in

the complementary balance, which accounts for about 25 %

of the total balance, is chiefly derived from the raw materials,

particularly the plastic granulate, which is the main component

of Ypsomed products. In the core balance, which accounts for

30 % of Ypsomed’s total environmental impact, the main impact

comes from purchased electricity. It is the waste from nuclear

power plants that has a particular effect on the balance in

terms of environmental impact caused by electricity. Green-

house gas emissions also decreased slightly again in 2010.

The main impacting factors in the complementary balance

are, once again, the raw materials, which make up more than

40 % of the total greenhouse gas emissions. In the core bal-

ance, the main impact comes from heating energy, and from

natural gas, which accounts for just under 10 % of total green-

house gas emissions.

64


In km

In t

Own vehicles

Vehicles of employees

Air travel

Prints / papers

Packaging in general

Disposable trays

Granulate

VOC kg

Environmental impact million UBP

CO2 equivalent

Business traffi c

Material (extract)

Environmental impact (core balance)

In GJ

Natural gas

Heating oil

Electricity

Energy

2 500 000

2 000 000

1 500 000

1 000 000

500 000

02007 20072008 20082009 20092010 2010

40 000

30 000

20 000

10 000

0

2007 20072008 20082009 20092010 2010

100 000

75 000

50 000

25 000

0

2500

2000

1500

1000

500

0

65


Sust

ain

abil

ity

Rep

ort

2003 2004 2006 20082005 2007 2009 2010

Accidents in the workplace

40

30

20

10

0

Accidents per 1 000 employees

Refund of carbon tax for the first time in 2010

Ypsomed received a refund of its carbon tax for the first time

in the 2010 calendar year. In cooperation with “myclimate,”

the Swiss climate protection organization, this sum was used

to offset all business travel by car or air for the entire Ypsomed

Group. In total, Ypsomed was able to offset more than a

thousand metric tons of CO2 and the payments are being

invested by the “myclimate” organization in high-quality

climate protection projects at home and abroad. The refund

was also invested in new, more energy-efficient company

vehicles with lower CO2 emissions.

“Ypsomed distributes REKA travel checks amounting to the cost of a half-fare public transport travelcard to employees free of charge each year, as an incentive for increased use of public transportation. At the same time, Ypsomed also charges a fee for parking spaces for employees’ cars.”

Fewer occupational accidents at Ypsomed again

Ypsomed set a new record last year: never in the company’s

history have so few accidents per 1000 employees been

reported as in 2010, with a figure of just 28. It was also

gratifying to see that 80 % of the events reported were minor

accidents and the other 20 % were not very serious. This

means that Ypsomed has achieved an important goal and

continuously improved safety over the past few years, as can

be seen from the illustration below. There is no doubt that the

close cooperation with SUVA, the Swiss Accident Insurance

Fund, has been very worthwhile.

66


Delivery Devices

In million CHF

2009/10 2010/11

Sales third parties Sales with Sanofi-Aventis Currency effect

180

160

140

120

100

80

60

40

20

0

Diabetes Direct Business

2009/10 2010/11 2009/10 2010/11

Sales development

Others

Financial results 2010/11

Consolidated sales of CHF 242.5 million – slight sales growth in local currencyIn the 2010/11 business year, Ypsomed generated consoli-

dated sales of CHF 242.5 million. Although there was a slight

overall sales increase of 0.5 % in local currency as compared

to the previous year, sales were some 4.5 % below the previ-

ous year’s figure of CHF 254.0 million, principally as a result

of the strong Swiss franc. The total currency effect on sales

amounted to CHF 12.9 million. Sales development in the

individual business segments can be seen in the figure below.

In the “Delivery Devices” segment, Ypsomed achieved sales

of CHF 155.8 million as compared to CHF 168.3 million in

the previous year. Thus, although the decrease of 7.4 % in

sales is less than the figure of 13.6 % in the previous year, it

continues to be strongly influenced by the decreasing revenues

from Sanofi-Aventis. The proportion of sales with Sanofi-

Aventis declined from the previous year’s figure of 28 % to a

current figure of 24 %.

“Sales development in the individual business segments illustrates the fact that Ypsomed is still in a demanding transformation phase. Ypsomed is investing in building up its diabetes care business and is simultaneously diversifying its customer base for pen systems with globally active pharma-ceutical companies.”

Ypsomed further expands the diabetes business

In the 2010/11 business year, Ypsomed continued to expand

the Diabetes Direct Business with the market launch of the

new mylife™ OmniPod® insulin patch pump and intensified

sales of the mylife™ Pura® blood glucose monitoring system

thereby generating consolidated sales of CHF 69.4 million.

Although a positive increase in sales was achieved with both

products in the last business year, the strong Swiss franc

resulted in a major currency translation effect of CHF 8.3 mil-

lion in the Diabetes Direct Business. Thus, in overall terms,

sales in Swiss francs in the Diabetes Direct Business segment

decreased by 2.1 % in comparison with the previous year.

“The strong Swiss franc resulted in a negative currency effect of CHF 12.9 mil-lion on consolidated sales. In all other respects, the revenues, expenditures and investments in foreign currencies are largely balanced out within the Ypsomed Group.”

67

Ypsomed – Financial Report

Fin

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Product groups Sales Costs

Pen systems and components Swiss franc Swiss franc

Pen needles Euro / US dollar Swiss franc

Diabetes business (DiaExpert) Euro Euro

Blood glucose monitoring systems Euro Euro

Insulin patch pump Euro US dollar / euro

Overview of currency effects for the individual products of the Ypsomed Group.

Gross profit improved slightly despite decrease in sales

Although sales decreased by CHF 11.5 million in the 2010/11

business year, Ypsomed was able to increase gross profit

slightly by 0.4 % from CHF 66.4 million in the previous year

to CHF 66.7 million. Manufacturing costs of products sold and

the costs of services declined by a total of CHF 11.8 million

from CHF 187.6 million in the previous year to CHF 175.7 mil-

lion in the 2010/11 business year. The gross margin thus rose

from 26.2 % to 27.5 %, which was mainly due to efficiency

improvement measures, such as combining production units,

increasing automation and the rapid start-up of facilities as

well as the creation of the production capacities required for

new products, such as the ServoPen® insulin pen and a new

disposable pen for human growth hormone. Improvement of

the gross margin in the medium term to above 30 % is realistic

in the mid-term compared to the 2010/11 business year which

was negatively impacted by the very high costs and insufficient

productivity of the new pen needle production facility in

Solothurn. Moreover, an additional sales tax charge in Ger-

many, which was contested by the whole industry, for blood

glucose meters that had been supplied free of charge in pre-

vious years, burdened manufacturing costs with a one-off sum

of CHF 0.6 million.

“Despite lower sales, Ypsomed improved the gross profit margin from 26.2 % to 27.5 % in the business year 2010/11.”

Ypsotec AG increases salesIn the 2010/11 business year, the proportion of sales in the

“Others” segment increased by 16.8 % from CHF 14.8 million

in the previous year to CHF 17.3 million. This was particu-

larly the result of a pleasing increase in sales by Ypsotec AG

with third party customers, among others in the medical

technology sector. The wholly owned subsidiary Ypsotec AG,

with its head office in Grenchen, specializes in precision

turning parts and subassemblies. In the “Others” segment,

Ypsomed also consolidates external real estate income, which

has seen largely stable development in the last business year

at CHF 2.2 million.

Explanation of the currency effects at Ypsomed

With the exception of the pen needles, which are

manufactured exclusively in Switzerland but are pre-

dominantly sold in euros and US dollars, foreign cur-

rencies are largely balanced out operationally in the

product groups, as can be seen from the table below.

The extent to which the Swiss franc has risen is illus-

trated by the differences in exchange rates between

the start and end of the latest business year: as of March

31, 2011, the exchange rate of the Swiss franc against

the euro was 1.30 and against the US dollar the rate

was 0.91, as compared to 1.43 against the euro and

1.05 against the US dollar as of March 31, 2010.

68


Personnel expense

2009/10 2010/11

Cost development thereof capitalized R & D

In million CHF

Cost development

140

120

100

80

60

40

20

0

R & D expenses

2009/10 2010/11

Capital expenditure (capex)

2009/10 2010/112010/11

Marketing & Sales expenses

2009/10 2010/11

Administration expenses

2009/10

Consistent cost savings and investments in future growth

The Board of Directors and the management believe in the

strategy adopted by Ypsomed and have taken a large number

of measures in the 2010/11 business year. In order to secure

long-term competitiveness, investments were made in the

expansion of international marketing and sales in the diabe-

tes business, in the market launch of the promising mylife™

OmniPod® insulin patch pump, and in the mylife™ Pura® high-

precision blood glucose monitoring system. At the same time,

significant savings were made in operating costs in the De-

livery Devices segment and in operational investments in

machinery and buildings. The overview below illustrates the

measures taken on the cost side.

Staff cuts and lower adminis-tration expenses

In the 2010/11 business year, Ypsomed downsized by a total

of 102 staff members within the Group and thus reduced

personnel expense by CHF 7.7 million from CHF 115.5 million

in the previous year to CHF 107.8 million. In Switzerland,

Ypsomed cut staff numbers by 126, mostly by means of natu-

ral staff turnover but redundancies were also involved, par-

ticularly in the area of manual assembly and manufacturing.

Furthermore, general streamlining was undertaken at manage-

ment level and the executive management board was also

reduced. Administration expenses decreased significantly by

a total of CHF 4.6 million from CHF 18.0 million to CHF 13.4

million. However, patent expenses amounting to CHF 1.8 mil-

lion were allocated to R & D expenses for the first time.

“Innovation and new product develop-ments are important success factors for Ypsomed. This is why Ypsomed once again invested more than 10 % of sales revenues in research and development in the 2010/11 business year.”

69


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Continuing high research and development expensesInnovative products are of central significance for Ypsomed

and levels of expenditure on research and development were

once again correspondingly high, amounting to a total of

CHF 26.1 million or 10.7 % of sales in the 2010/11 business

year. It was pleasing to see another increase in licensing

revenues of 14.1 %, from CHF 1.0 to CHF 1.1 million. Revenues

from research and development contracts amounted to

CHF 8.3 million, CHF 6.2 million lower than the previous

year’s figure of CHF 14.4 million as a result of project

phases, in which proportionally fewer injection molds were

invoiced. For the same reason, research and development

expenses were also lower at CHF 17.5 million than the

previous year’s figure of CHF 21.7 million. In the last busi-

ness year, Ypsomed reviewed its existing patent portfolio

and performed a detailed cost-benefit analysis and there-

after undertook numerous cost optimizing measures in this

respect. Moreover, amortization of CHF 1.5 million was

incurred for the first time in the second half of the 2010/11

business year for capitalized R & D expenses for the newly

launched pen needles and the ServoPen®.

Expansion in marketing and salesIn the 2010/11 business year, Ypsomed invested substantial

resources in the market launch of the mylife™ OmniPod®

insulin patch pump and in building a market for the mylife™

Pura® blood glucose monitoring system. In marketing and

sales, Ypsomed expanded its staff by 12 % and created new

sales force positions at the European subsidiaries as well as

new positions at the central marketing department in Burgdorf.

In addition, at the start of the business year, Ypsomed took

over its former distributor in Great Britain and integrated it

as an Ypsomed subsidiary. Marketing and sales expenses

increased by a total of 15.8 % in the 2010/11 business year,

from CHF 31.9 million to 36.9 million. The extensive market

launch of the blood glucose monitoring system, in particular,

required more resources than had been budgeted.

Operating profit of CHF 8.6 mil-lion and EBITDA of 33.7 millionDespite very high marketing and sales expenses, operating

profit in the 2010/11 business year reached CHF 8.6 million,

not least as a result of the substantial cost savings and major

efforts to improve efficiency in all areas of the company. The

EBIT margin, at 3.6 %, was lower than the previous year’s

figure of 5.3 % or 4.1 % respectively, if profit from real estate

disposals is taken into account. Ypsomed achieved an oper-

ating profit before depreciation and amortization (EBITDA)

of CHF 33.7 million, corresponding to an EBITDA margin of

13.9 % compared with 16.1 % in the previous year. Financial

income in the last business year was CHF 0.6 million less

than in the previous year. Financial expenses, made up of

unrealized exchange losses and interest payments, stood at

CHF 2.6 million, about the same level as the previous year,

and the same applies to taxes at CHF 2.5 million. The con-

solidated net profit resulting from these figures amounted to

CHF 5.2 million as compared with CHF 9.4 million in the

previous year. Translated for the total of 12 621 863 outstand-

ing shares, this resulted in net earnings of CHF 0.41 per share

(previous year: CHF 0.79).

“Despite decreasing sales, the operating profit of the Delivery Devices business segment increased by 11.6 % from CHF 19.8 million to CHF 22.1 million. The operating result of the Diabetes Direct Business, however, amounted to a loss of CHF –12.9 million compared to CHF –9.2 million in the previous year, mainly caused by the high cost for the new product launches.”

70


Comprehensive income negatively impacted by currency effectsIn the 2010/11 business year, Ypsomed achieved a compre-

hensive income of CHF 3.5 million, significantly lower than

the previous year’s figure of CHF 13.9 million. On the one

hand, the currency translation differences from intercompany

loans in foreign currency, amounting to CHF 4.3 million, were

some CHF 1.8 million higher than in the previous year. On

the other, the previous year’s figure of CHF 7.1 million of

value increases with the participations in Bionime Corp. in

Taiwan and Insulet Corp. in the USA was significantly higher

than the CHF 2.1 million in the 2010/11 business year. The

participations in Bionime Corp. and Insulet Corp. have been

worthwhile for Ypsomed overall and have resulted in value

increases of CHF 9.1 million over the past two years.

“Ypsomed traditionally enjoys a healthy balance sheet and very high equity ratio, which provide the Group with financial security even during the current transfor-mation phase.”

Adequate manufacturing capaci-ties reduce operating investmentToday, Ypsomed has sufficient modern manufacturing capac-

ity and infrastructure at its disposal, not least because of very

high levels of investment in the past. Investments in fixed assets

in the 2010/11 business year were correspondingly lower.

They totaled CHF 14.5 million and were thus 55 % lower than

the previous year’s figure of CHF 32.5 million.

Solid balance sheet and high equity ratio of 80 %The asset side of Ypsomed’s balance sheet expanded by

about CHF 12.6 million in the 2010/11 business year. On

the one hand, goods inventories increased by CHF 4.8 million

from CHF 46.8 million to CHF 51.6 million because of the

market launch of new mylife™ products and the sales expan-

sion into new countries. On the other, Ypsomed implemented

industrialization projects for pharma customers, which

increased the customer machinery positions by CHF 4.1 mil-

lion from CHF 1.2 million to CHF 5.3 million. At the same

time, as already mentioned, financial assets increased in

value by CHF 2.1 million and the new figure as of March 31,

2011, was CHF 22.1 million. As a result of the lower invest-

ments and depreciation amounting to CHF 19.6 million, the

value of fixed assets declined from CHF 186.3 million to

CHF 179.1 million. Intangible assets, on the other hand,

increased by CHF 9.2 million from CHF 352.3 million to

CHF 361.5 million, particularly as a result of capitalized

development expenditure for new products. On the liabilities

side of the balance sheet, financial liabilities increased by

CHF 10.0 million from CHF 30.0 million to CHF 40.0 million,

while the loan from the major shareholder, Dr. h. c. Willy

Michel, was reduced from CHF 44.5 million to CHF 34.5

million by 10.0 million. The equity ratio was 79.8 % as of

March 31, 2011, compared to 81.2 % in the previous year.

Dividend payment from capital reserves In the first half of the 2010/11 business year, Ypsomed paid

shareholders a repayment of par value amounting to

CHF 3.2 million. Ypsomed’s Board of Directors will once

again propose to the General Meeting of Shareholders, to

be held on June 28, 2011, in Bern, that a dividend payment

of CHF 0.20 per registered share be made from tax-bene-

ficial capital reserves.

71


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(Audited IFRS figures) in thousand CHFNotes 1 April 2010

31 March 2011in % 1 April 2009

31 March 2010in %

Sales of goods and services 240 261 99.1 251 688 99.1

Rental Income 2 200 0.9 2 326 0.9

Total Sales of goods and services 23 242 461 100.0 254 014 100

Cost of goods and services sold –175 737 –72.5 –187 568 –73.8

Gross profit 66 724 27.5 66 446 26.2

Gains from disposals of fixed assets 23 381 0.2 3 255 1.3

Licensing revenue 1 119 0.5 981 0.4

Research and development reimbursed 8 261 3.4 14 424 5.7

Research and development expenses –17 508 –7.2 –21 748 –8.6

Research and development – expenses net 17 –9 247 –3.8 –7 324 –2.9

Marketing and sales expenses 17 –36 928 –15.2 –31 890 –12.6

Administration expenses 17 –13 439 –5.5 –18 020 –7.1

Operating profit 8 610 3.6 13 449 5.3

Financial income 19 1 666 0.7 1 010 0.4

Financial expense 20 –2 601 –1.1 –2 662 –1.0

Profit before income taxes 7 675 3.2 11 797 4.6

Income taxes 21 –2 469 –1.0 –2 372 –0.9

Net profit 5 206 2.1 9 425 3.7

Other comprehensive income

Change in fair value of financial assets 2 070 0.9 7 074 2.8

Translation differences –4 320 –1.8 –2 563 –1.0

Tax effects 21 549 0.2 –40 0.0

Comprehensive income 3 504 1.4 13 896 5.5

Earnings per share (basic and diluted) in CHF 27 0.41 0.79

Operating profit 8 610 13 449

Depreciation of fixed assets 19 645 23 946

Amortization of intangible assets 5 436 3 532

EBITDA (Operating profit before depreciation and amortization) 33 691 13.9 40 926 16.1

Net profit and comprehensive income are fully attributable to the shareholders of Ypsomed Holding AG.

Consolidated statement of comprehensive income

– –

72


Consolidated balance sheet

(Audited IFRS figures) in thousand CHF

Assets Notes 31 March 2011 in % 31 March 2010 in %

Cash and cash equivalents 4 5 022 0.7 8 065 1.2

Trade receivables 5 32 246 4.8 32 246 4.9

Other receivables, accrued income and prepaid expenses 6 13 098 1.9 11 396 1.7

Current income tax assets 185 0.0 467 0.1

Inventories 7 51 576 7.6 46 800 7.1

Customer machinery 5 258 0.8 1 178 0.2

Total current assets 107 385 15.9 100 152 15.1

Financial assets 8 22 129 3.3 20 058 3.0

Deferred income tax assets 21 3 991 0.6 2 572 0.4

Other non-current assets 9 530 0.1 629 0.1

Fixed assets 10 179 052 26.5 186 273 28.1

Intangible assets 11 361 544 53.6 352 327 53.2

Total non-current assets 567 247 84.1 561 858 84.9

Total assets 674 632 100.0 662 010 100.0

Liabilities and equity Notes 31 March 2011 in % 31 March 2010 in %

Financial liabilities 40 000 5.9 30 000 4.5

Current financial liabilities to major shareholder 13 10 000 1.5 10 000 1.5

Trade payables 13 080 1.9 13 292 2.0

Prepayments from customers 7 333 1.1 1 888 0.3

Current income taxes payable 4 593 0.7 3 335 0.5

Other payables, accrued expenses and deferred income 12 24 318 3.6 18 369 2.8

Provisions 14 1 418 0.2 1 069 0.2

Total current liabilities 100 742 14.9 77 953 11.8

Non-current financial liabilities to major shareholder 13 24 500 3.6 34 500 5.2

Other non-current financial liabilities 42 0.0 656 0.1

Provisions 14 8 025 1.2 8 199 1.2

Deferred income tax liabilities 21 3 268 0.5 2 959 0.4

Total non-current liabilities 35 834 5.3 46 314 7.0

Share capital 16 178 994 26.5 182 156 27.5

Group reserves 359 062 53.2 355 587 53.7

Total equity 538 056 79.8 537 743 81.2

Total liabilities and equity 674 632 100.0 662 010 100.0

73


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Consolidated statement of cash flows


31 March 20111 April 2009

31 March 2010

Profit before income taxes 7 675 11 797

Depreciation of fixed assets 10 19 645 23 946

Amortization of intangible assets 11 5 436 3 532

Change in provisions, net 182 –937

Financial income 19 –1 666 –1 010

Financial expense 20 2 601 2 662

Gain (–) / loss (+) disposals fixed and financial assets –43 –3 281

Cash flow from operating activities before changes in net working capital 33 830 36 709

Increase (–) / decrease (+) in trade receivables –1 643 –2 156

Increase (–) / decrease (+) in other current and non-current assets –1 830 –755

Increase (–) / decrease (+) in inventories –6 223 –3 719

Increase (–) / decrease (+) in customer machinery –4 080 172

Increase (+) / decrease (–) in trade payables 46 –1 841

Increase (+) / decrease (–) in prepayments from customers 5 445 –2 775

Increase (+) / decrease (–) in other payables and accrued expenses 5 859 –2 215

Income taxes paid –1 900 –939

Cash flow from operating activities 29 504 22 480

Disposals of marketable securities 0 2 417

Purchases of financial assets 0 –6 405

Purchases of fixed assets 10 –14 485 –32 487

Disposals of fixed assets 2 002 6 549

Purchases of intangible assets 11 –11 739 –13 894

Acquisitions, net of cash acquired 1 –3 681 0

Interest received 29 58

Other financial income 416 23

Cash flow from investing activities –27 458 –43 739

– –

74




31 March 2010

Repayment of financial liabilities to major shareholder 13 –10 000 –10 024

Proceeds from borrowings 10 000 30 000

Repayment of financial liabilities –648 0

Interest paid –914 –623

Increase of share capital 16 0 9 010

Par value repayment 16 –3 190 –7 575

Other financial expense –160 –92

Purchases of treasury shares 0 –249

Disposals of treasury shares 0 43

Cash flow from financing activities –4 911 20 489

Effect of foreign currency translation –178 –155

Total cash flow –3 043 –925

Cash and cash equivalents as of 1 April 4 8 065 8 990

Cash and cash equivalents as of 31 March 4 5 002 8 065

Net increase (+) / decrease (–) in cash and cash equivalents –3 043 –925

– –

75


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Consolidated statement of changes in equity

(Audited IFRS figures) in thousand CHF Share capital Capital reserves and

share premium

Treasury shares

Cumulative trans-lation exchange

reserve

Changes in value of financial instruments

Retained earnings

Total

Balance as of 1 April 2009 109 631 166 652 –1 771 594 0 161 924 437 031

Comprehensive income –2 209 6 679 9 425 13 896

Capital increase 21 083 75 196 96 279

Expenditures related to capital increase –1 693 –1 693

Increase par value 59 032 – 59 032 0

Par value repayment –7 590 15 –7 575

Purchases of own shares –235 –235

Disposals of own shares (net of tax) 3 40 43

Balance as of 31 March 2010 182 156 181 125 –1 951 –1 615 6 679 171 349 537 743

Balance as of 1 April 2010 182 156 181 125 –1 951 –1 615 6 679 171 349 537 743

Comprehensive income –3 656 1 955 5 206 3 504

Par value repayment –3 162 –34 7 –3 190

Balance as of 31 March 2011 178 994 181 091 –1 944 –5 271 8 634 176 555 538 056

76


Consolidated financial statements accounting policies

1. General information

Ypsomed Holding AG is a limited company (Aktiengesellschaft) established on 29 December 2003 under Swiss law with a registered office in Burgdorf (canton of Berne, Switzerland).

Operating in the field of medical technology, Ypsomed is an independent manufacturer of injection pens for pharmaceutical and biotech companies, as well as a supplier of pen needles. Ypsomed’s core business consists of developing and marketing products and services allowing patients to administer their own medication. The Group operates production sites in Burgdorf, Solothurn, Grenchen (all CH) and Tabor (CZ) and a sales and distribution network across Europe. The shares of Ypsomed Holding AG have been traded on the principal market of the SIX Swiss Exchange since 2004, and since 2007, on the BX Bern eXchange.

The company was created as a result of the split-up of the Disetronic group in 2003. Disetronic had been founded in 1984 to develop, manufacture and sell infusion pumps and had started the injection systems business in 1986.

The consolidated financial statements were authorized for issuance by the Board of Directors of Ypsomed Holding Ltd on 17 May 2011 and recommended for acceptance to the Annual General Meeting scheduled for 28 June 2011.

2. Summary of significant accounting policies

Basis of preparationThe consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS). They are based on the financial statements of the subsidiaries prepared for the same reporting period using consistent accounting policies. The Group’s reporting currency is the Swiss franc (CHF). The period under review comprises twelve months and ends 31 March.

The accompanying financial statements have been published in German and English. The German version is legally binding.

All figures included in these financial statements and notes to the financial statements are rounded to the nearest CHF 1 000 except where otherwise indicated.

The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and financial liabilities that are measured at fair value.

Changes in accounting policies

New and amended standards and interpretations listed below were im-plemented by Ypsomed on 1 April 2010. The amendments do not have an impact on the Ypsomed’s financial position, performance and cash flows.

IFRS 3R The changes affect the measurement of contingent liabilities, the classification of assets and liabilities at the acquisition date, treatment of contingent considerations and the immediate rec-ognition of transaction costs in the statement of comprehensive income. In addition, an option regarding the measurement of non-controlling interests and provisions in the event of step acquisitions are introduced. The application of the revised standard did not have a material impact on the consolidated financial statements.

IFRS 1 The amended standard contains additional exceptions for the

retrospective recognition of assets in connection with oil, gas and leasing for the first-time application of IFRS.

IFRS 2 The amended standard clarifies the definition of a share-based

payment. As part of the amendment, the rules of IFRIC 8 with respect to the scope of IFRS 2 and the requirements of IFRIC 11 regarding share-based payment involving an entity’s own equity instruments were integrated into IFRS 2.

IAS 27 The revised standard requires that changes in ownership interest

in Group companies that do not result in loss of control by the Group are to be accounted for as equity transactions.

IAS 32 For rights issues offered for a fixed amount of foreign currency

current practice appeared to require such issues to be accounted for as derivative liabilities. The amendment states that if such rights are issued pro rata to an entity’s all existing shareholders in the same class for a fixed amount of currency, they should be classified as equity regardless of the currency in which the exercise price is denominated.

IAS 39 The changes relate to hedging transactions and specify the

principles for determining hedgeable items.

The improvements to IFRSs are related to clarification issues which have been applicable since January 1, 2010. The application of these amendments has no material impact on the consolidated financial statements.

Ypsomed has refrained from the early adoption of the following standards and interpretations and will implement them in the accounting period they become applicable.

IFRS 1

The amended standard grants first-time adopters the same tran-sitional provisions as were granted to users already applying IFRS when IFRS 7 has been introduced. Ypsomed is not affected by this amendment.

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IFRS 1

The amendment replaces the references to the fixed time of transition of “1 January 2004” by “Time of transition to IFRS”. Ypsomed is not affected by this amendment.

IFRS 1

The purpose of this amendment is to provide guidance on presenting financial statements in accordance with IFRS after a period during which a company was unable to comply with IFRS because its functional currency was subject to hyperinflation. Ypsomed will not be affected by this amendment.

IFRS 7

The amendment relates to improvements with respect to presenta-tion and disclosures in order to clarify the impact of the transfer of financial assets. Ypsomed will analyze the amendment in detail and implement the provisions accordingly.

IFRS 9

The new standard IFRS 9 relates to classification and measure-ment of financial assets and financial liabilities and represents the first phase of the project to replace IAS 39. According to IFRS 9 the classification of the financial asset is based on the entity’s business model and does not depend solely on the contractual provisions of the financial instruments. Ypsomed currently evalu-ates the impact of the new standard on its consolidated financial statements.

IAS 12

The amendment of the standard defines whether the carrying amount of an asset is recovered through use or sale. The amend-ment provides a practical solution to the problem by introducing a presumption that recovery of the carrying amount will be through sale. Ypsomed will analyze the impact on its consolidated financial statements and implement the amendment accordingly, but does not anticipate any impact on its consolidated financial statements.

IAS 24

The amendments to IAS 24 are disclosure related only and will have no impact on the Group’s financial statements.

IFRIC 14

The change in interpretation permits a company, under certain circumstances to present prepayments of contributions to defined benefit pension plans under IAS 19 as an asset. Ypsomed is evaluating the impact of IFRIC 14 but does not anticipate any significant impact on its consolidated financial statements.

IFRIC 19

The interpretation governs the treatment of a full or partial repayment of a financial liability by issuing equity instruments. Ypsomed will analyze the implication, but does not anticipate any impact on the consolidated financial statements.

The IASB issued a number of largely minor amendments to the existing standards within the scope of its annual improvement process. Ypsomed analyzes the impact and does not expect these amendments to have a material impact on its consolidated financial statements.

Consolidation

Subsidiaries are all entities over which the Group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or tradable determine whether the Group controls another entity. Subsidiaries are fully consolidated from the date on which control is obtained. They are de-consolidated from the date that control ceases.

Subsidiaries are recognized using the acquisition method. The considera-tion transferred in exchange for obtaining control is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, the liabilities incurred by the Group to the former owners and the equity interest issued by the Group. The net assets acquired comprising identifi-able assets, liabilities and contingent liabilities are recognized at their fair value. The compensation encompasses cash payments as well as the fair market value of both the transferred assets, the incurred or assumed liabilities, and in addition the equity instruments as of the trade date that have been issued by the Group. Goodwill is recognized as of the acquisi-tion date and is measured as the excess of the consideration transferred as described above over the fair value of the identified net assets. If the Group does not acquire 100 % of the shares of a company, non-controlling interests are normally recognized in the balance sheet according to their share in the fair value of the acquired net assets. However, in limited cases, the non-controlling interest may be measured at fair value.

Transactions, balances and gains on transactions between subsidiaries are eliminated in full. Losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset.

Associates are those companies that are significantly influenced but not controlled by the Group. This normally applies to investments in which the Group owns between 20 % and 50 %. Investments in associates are accounted for using the equity method. The Group’s investment in as-sociates includes goodwill identified on acquisition. Ypsomed does not currently own any associates.

Foreign currency translationOn initial recognition foreign currency transactions are translated to the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settle-ment of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income as financial income or expenses.

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Assets and liabilities of foreign subsidiaries are converted into the Group’s presentation currency at year-end exchange rates. The statement of com-prehensive income and the statement of cash flows are translated at annual average exchange rates. The effects of this conversion as well as foreign exchange gains and losses arising from the translation of not currency congruent financed equity-like corporate loans denominated in foreign currencies, which are a component of net investments in a subsidiary and the repayment of which is neither planned nor intended, are disclosed as currency translation differences in other comprehensive income.

Financial assets and liabilities Ypsomed allocates financial assets and liabilities to the following categories:

• Financial assets and liabilities at fair value through profit or loss • Financial assets available for sale • Loans and receivables • Financial liabilities at amortized cost

The categorization of financial assets and liabilities depends on the pur-pose of the financial instrument. Management determines the category at the time of acquisition. All purchases and sales of financial assets and liabilities are recognized on the trade date, i.e. the day on which the Group is obliged to purchase or sell the asset or liability. Financial as-sets not recognized at fair value are regularly reviewed for impairment. Financial assets are only derecognized if Ypsomed has lost control over them or the rights associated with them have expired. Financial liabilities are derecognized when they are settled or do not have to be settled anymore according to their contractual rights.

For the subsequent measurement of financial assets and financial liabilities Ypsomed distinguishes between the following types:

Financial assets and liabilities are allocated to this category when they are intended for trading purposes or allocated by designation when initially recognized. Ypsomed has not designated any financial asset or liabilities to this category at initial recognition. Initial recognition and subsequent measurement of financial instruments in this category are at fair value. Real-ized and unrealized changes to fair values are recognized through profit or loss in financial income or expenses. Derivative financial instruments are used to hedge currency and interest rate risk and are also included in this category. Ypsomed does not use hedge accounting. Ypsomed has no such financial assets and liabilities.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and include loans, trade receivables and other receivables. Initial recognition is at fair value plus transaction costs. Subsequent measurement is at amortized cost using the effective interest method less accumulated allowances. With this method, the difference between the amortized cost and the expected repayment value is allocated over the period of the investment resulting in a constant interest rate until final maturity. The derecognition of receivables or loans is accounted for if the settlement has occurred or a certificate of unsatisfied claims has been obtained.

Assets that cannot be allocated to the above categories are classified as available for sale and are recognized at fair value. Changes in fair value are recorded directly in other comprehensive income. On sale, impair-ment or any other form of disposal the cumulative gain or loss previously recognized in the statement of comprehensive income is reclassified to profit or loss and reported as financial income or financial expense.

Financial debts, trade payables and other liabilities are included in this category. Initial recognition is at fair value less transaction costs. Subsequent measurement is at amortized cost using the effective interest method. Financial liabilities are derecognized when they are settled or do not have to be settled anymore according to their contractual rights.

Cash Cash and cash equivalents comprise cash on hand, demand deposits and time deposits with original maturity dates of three months or less. They form the basis of the consolidated statement of cash flows.

Trade receivables / other receivablesTrade receivables and other receivables are recognized at the original invoice amount or nominal value (i. e. fair value). An allowance is set aside if objective indications show that receivables cannot be collected. Allowances are based on individual valuations.

InventoriesRaw materials and merchandise purchased are recognized at cost, semi-finished and finished goods at their cost of conversion. Costs of conversion include direct production costs and production overhead related to these goods. After initial recognition inventories are valued at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinary course of business, less estimated selling expenses and estimated costs of completion. Inventories with a lower net realizable value compared to cost are adjusted to the net realizable value. Inventories that cannot be sold are written off in full. The costs of inventories are determined by using the FIFO method.

Customer machinery / Prepayments from customersYpsomed receives prepayments from pharma partners in order to acquire production machinery for these pharma partners. Ypsomed coordinates the manufacturing of the machineries with suppliers and makes contractual advance payments to the suppliers. After installation and successful test runs, the machinery is accepted by Ypsomed. From a legal and commercial viewpoint, once the machinery has been accepted by Ypsomed the title is transferred to the pharma partners. The advance and final payments made by Ypsomed to suppliers are disclosed in the consolidated balance sheet until acceptance of the machinery as current assets. The prepayments from customers are recognized in current liabilities. Once the machinery is accepted, the advance and final payments from Ypsomed are settled with the prepayments from the customer.

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Fixed assetsFixed assets are carried at cost less accumulated depreciation. Deprecia-tion on fixed assets is calculated using the straight-line method based on the following estimated useful lives:

• Buildings 20 to 40 years • Technical assets 6 to 20 years • Machinery and company facilities 3 to 12 years • Fixtures and fittings and vehicles 3 to 8 years • Other fixed assets 2 to 10 years

Depreciation is included in the following income statement categories: manufacturing costs of goods sold, R & D costs, marketing and distribution costs and administration costs. Should an asset be impaired as a result of impairment testing the corresponding impairment charge is included in depreciation and reported separately as an impairment loss. Long-term leasing contracts, which are, in substance, equivalent to the purchase of assets with long-term financing (finance leases), are recognized at the beginning of the lease as an asset and measured at fair value or, if lower, the present value of minimum lease payments. The asset is depreciated over the the duration of the contract or, if shorter, the useful life using the straight-line method.

Intangible assets

Goodwill is recognized at the time of the business combination and cor-responds to the difference between the consideration transferred and the fair value of the net identifiable assets as identified in the purchase price allocation. Goodwill is capitalized and allocated to the cash-generating unit that is the principal beneficiary. A negative goodwill (bargain pur-chase) is recognized in the statement of comprehensive income. Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

Development costs are recognized as assets if an asset is identifiable, it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be reliably measured. Recognized development costs are amortized on a straight-line basis over their useful life. Amortization is included in research and development expenses and cost of goods and services sold.

Patents have a definite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method to allocate the cost of patents over their estimated useful lives of 15 to 20 years. Amortization is included in research and development expenses and in cost of goods and services sold.

Software is capitalized on the basis of the costs incurred to acquire the software and bring the software to use. These costs are amortized over the estimated useful live of three to four years using the straight-line method. Amortization is mainly included in administration expenses.

Intangible assets, such as brand names or customer relationships that were acquired through a business combination, are identified and reported separately from goodwill if they fulfill the definition of an intangible asset and their fair value can be reliably determined. Such intangible assets are measured at fair value at their initial recognition. After recognition those assets are amortized over the useful life of five to eight years us-ing the straight-line method. Amortization is included in marketing and distribution costs.

Financial assets available for saleInitial recognition is at acquisition cost (fair value) plus transaction costs. Subsequent measurement is at fair value. Changes in fair value are reported in other comprehensive income. Upon sale, the fair value adjustments previously reported in other comprehensive income are reclassified to the statement of comprehensive income.

Impairment of assetsNon-financial assets that have an indefinite useful life, goodwill, and capitalized development costs for products not yet in use are not subject to amortization but are tested for impairment when impairment indica-tors have been identified but at least annually. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the asset might be impaired. An impairment loss is recognized if the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the fair value less cost to sell and the value in use. The impairment testing is performed at the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets (cash-generating units). For financial assets categorized as avail-able for sale significant or prolonged unrealized losses accumulated in a separate component of equity result in impairment (reclassification to the income statement). Unrealized losses of 20 % or more are considered significant and unrealized losses over a period of more than six months are deemed prolonged.

Financial liabilities to shareholdersThe loan to the major shareholder is measured at its nominal amount.

ProvisionsProvisions are recognized to cover present legal or constructive obligations resulting from past events if it is probable that on outflow of economic resources will be required to settle the obligation and the amount of the obligation can be measured reliably. If the obligation cannot be measured reliably or the outflow of economic benefit is not probable, the resulting contingent liability is disclosed in the notes.

Employee pensionsThe vast majority of Ypsomed’s employees are insured in Switzerland through pension funds which are legally and financially independent of the Ypsomed Group. These plans provide additional coverage to the national Old Age and Survivors Insurance (AHV) and cover risks against the financial consequences of old age, invalidity and death. Employees of foreign subsidiaries are responsible for their own retirement provision based on the legal provisions of the corresponding countries. Therefore, Ypsomed does not incur any additional staff pension costs. Swiss pension plans meet the requirements for a defined benefit pension plan according to IAS 19. The expenses and liabilities of Ypsomed in connection with defined benefit plans are calculated annually by external experts on the basis of actuarial assumptions using the projected unit credit method. The assumptions include projections of future salary developments, employee turnover rates and mortality tables.

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The difference between the present value of the defined benefit obligation and the fair value of the plan assets is reported separately as an asset under long-term fixed assets or as a liability under provisions taking into consideration any unrecognized actuarial gains and losses and past serv-ice costs. An asset is only recognized if Ypsomed has a future economic benefit in the form of refunds or lower contributions.

Actuarial gains and losses arise from changes in actuarial assumptions and the difference between actuarial assumptions and actual values. If cumulative actuarial gains or losses not yet recognized exceed 10 % of the higher amount of the fair value of plan assets or the present value of the defined benefit obligation, the exceeding amount is amortized over the remaining average service period of the insured employees through profit or loss.

Current income taxesIncome taxes are calculated based on reported profits for the correspond-ing period and in conformity with the tax laws prevailing in the individual countries and recognized in profit or loss of the current year.

Deferred taxes are taken into account on temporary differences between tax bases and the carrying amounts in the consolidated financial state-ments and are calculated using the liability method based on effective or expected effective local tax rates. Deferred tax assets are recognized for loss carry-forwards where it is highly probable that they can be offset against future taxable income. The changes in deferred tax assets and liabilities are recognized in the statement of comprehensive income. Taxes on transactions that are reported in other comprehensive income are also recognized in other comprehensive income.

Revenue recognition

Net proceeds correspond to received payments and receivables for goods supplied to customers, less price reductions, discounts and refunds. Ap-propriate provision is taken for all costs arising in connection with the sale including the costs of return of goods. Revenue from sale of goods and services is recognized when risk and benefit of ownership have been transferred to the buyer. Net proceeds are only recognized if the amount of revenue can be measured reliably and it is probable that the economic benefit associated with the transaction will flow to the entity.

Rental income arises based on rental agreements from renting out proper-ties owned by the Ypsomed Group.

Ypsomed receives license revenues from the exploitation of Ypsomed assets by external parties according the terms and conditions of the underlying agreements. This income is recognized when the inflow of financial benefit is probable and the amounts can be reliably measured.

Gains from disposals of fixed assets and intangible assets are disclosed separately in the consolidated statement of comprehensive income. Losses from disposals of fixed assets and intangible assets are recorded in the function of the statement of comprehensive income, in which the assets have been used.

Contributions to product developmentReimbursement from third parties for the development of new products is recognized in the period during which the development costs are incurred.

Research and developmentResearch costs are recognized as an expense in the period in which they are incurred. Development costs are recognized as assets if the project is identifiable, it is probable that the expected future economic benefits that are attributable to the project will flow to the entity and the cost of the project can be reliably measured. Capitalized research and development costs are amortized over the useful life using the straight-line method. Fixed assets used for research and development are capitalized and depreciated over their useful life on a straight-line basis.

Borrowing costsBorrowing costs that are related to a qualifying asset are recognized in the carrying amount of the qualifying asset, all other borrowing cost are recognized as expense.

3. Legal risks

The Ypsomed Group develops, manufactures and sells innovative medi-cal devices, based on technical expertise and technologies protected by intellectual property rights. The Group is either owner of the required rights or license holder of the property rights of a third party. In the medi-cal devices market, disputes over patent rights and patent infringements occur fairly frequently and can involve costly and time-intensive patent infringement suits.

The development, manufacture and sale of medical products involves product liability risks and can lead to product recall. There is no guarantee that the present liability insurance is sufficient to cover all damage cases connected with the development, manufacture and sale of medical products and that the insurance companies will still be prepared in future to insure Ypsomed Group business activities against liability risks.

The risk of patent infringement or product liability claims by a third party, risks in connection with the recall of products and negative develop-ments in the reimbursement of costs of Ypsomed products through state-prescribed cost-saving measures in the area of healthcare or by health insurance schemes as well as problems with authorization and upholding of authorization of drugs used together with Ypsomed products can also result in lasting detrimental effects, not only on the business performance of the Ypsomed Group but also on its financial situation and competitive position in the marketplace.

4. Key assumptions and estimates

The preparation of the consolidated financial statements in accordance with generally accepted accounting principles, assumes that management makes certain estimates and assumptions which have an impact on the reported carrying amounts assets and liabilities shown in the balance sheet and income and expenses accounted for in the period under review. These estimates and assumptions are based on future expectations and are held reasonable at the time of preparation of the financial statements. The actual amounts can deviate from these assumptions. The most important influential factors on positions based on estimates and assumptions are expressed as follows:

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GoodwillYpsomed carries out an impairment test on capitalized goodwill at least once a year. The value in use of the entity generating the cash flows to which goodwill has been allocated is determined to ascertain whether there has been impairment. The estimate of future cash flows is based on medium-term planning approved by the Board of Directors and Executive Board, as well as on a permanent growth rate for cash flows outside the planning years. The discount rates based on external factors also have a crucial impact on the calculation of the value in use. The goodwill as of 31 March 2011 amounted CHF 312.2 million (prior year CHF 309.0 million).

Capitalized development expenses The development expenses are capitalized when the requirements for the capitalization are met. Ypsomed’s estimation of future economic benefits is based on management’s assumptions with regard to all economic baseline conditions, expected prospective cash flows and the discount rates to be applied within the relevant period of time of economic benefits. Capitalized development expenses amounted to CHF 41.4 million as of 31 March 2011 (prior year CHF 22.9 million).

Provisions for warrantiesWhen determining the provisions for warranties, management takes into accounted currently marketed own products and sets the provisions neces-sary to cover all callable claims based on the maturity and characteristics of the products as well as experience. Provisions for warranties as of 31 March, 2011, amount to CHF 1.8 million (prior year CHF 1.7 million).

Employee pensionsThe calculation of pension obligations is carried out by using the pro-jected unit credit method. The calculation takes into accounted various actuarial assumptions as well as assumptions for future developments of capital markets and salary increases. Due to the long-term nature of the plans, these assumptions are subject to significant uncertainty. The most important parameters are disclosed in the notes to the consolidated finan-cial statements. Provision for employee pensions as of 31 March, 2011, amount to CHF 7.1 million (prior year CHF 6.9 million). Other non-current assets as of 31 March 2011 include employee pensions in the amounted of CHF 0.4 million (prior year CHF 0.5 million).

Income taxesWhen accruals for income taxes are made for a period, uncertainties regarding final tax payments remain. Estimates that vary from the defini-tive tax amount have an impact on current and deferred income taxes. In particular, with the capitalization of deferred tax assets from losses carried forward, the value of these tax loss carry-forwards and the tax rates to be applied must be estimated. Deferred income tax assets related to tax loss carryforwards amount of CHF 3.9 million (prior year CHF 2.5 million).

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Notes to the consolidated financial statements

In thousand CHF, unless otherwise stated

1. Acquisitions

On April 1, 2010, Ypsomed Ltd, UK acquired the assets of the diabetes business of its existing distributor in Great Britain for the distribution of mylife™ Penfine® Pen-Needles, mylife™ Pura® blood glucose monitoring systems and mylife™ OmniPod® insulin patch pumps. On August 1, 2010, Ypsomed GmbH Germany acquired 100 % of the shares of DIABETIC

SERVICES Vertriebs- und Beratungsgesellschaft GmbH in Ulm. In the prior period no acquisitions have been made.

The following assets and liabilities were acquired as part of the business combination:

AssetsBook value

after acquisition

Cash and cash equivalents 5

Trade receivables 126

Inventories 509

Other assets 4

Total assets 644

Liabilities

Trade payables 75

Other liabilities 76

Total liabilities 152

Net working capital 492

Goodwill 4 468

Total purchase consideration 4 960

Cash and cash equivalents acquired –5

Deferred purchase consideration –383

Offsetting of receivables –891Net cash outflow 3 681

The goodwill is attributable to the stronger market position and the expected synergies resulting in a higher profitability. The goodwill of CHF 4.5 million is deductible for tax purposes. Ypsomed Ltd. UK has agreed to pay to the seller a subsequent purchase price payment. The amount of the payment will be determined by multiplying the 2009/10 revenues with a multiplier. The multiplier will be determined based on the 2010/11 revenues, however, the

factor remains in the agreed range and thus the amount of payment itself is limited. Based on the actual revenues the subsequent payment will amount to TCHF 641, thereof TCHF 258 was paid as per 31.03.2011. Book value and fair value of the trade receivables are identical and do not include any provisions. The transaction costs amount to TCHF 120 and are expensed as part of administration expenses.

Contribution of acquired business / companies from the acquisition date

Sales of goods and services 4 920

Net profit 366

Contribution if the acquisition date had been 1 April

Sales of goods and services 5 295

Net profit 388

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2. Consolidation scope Interest heldCapital /

Votes

Share capital Research &Development

Production Marketingand Sales

Financingand Services

Ypsomed Holding AG, CH-Burgdorf CHF 178 993 807 •

Ypsomed AG, CH-Burgdorf 100 % CHF 10 000 000 • • • •

Ypsomed Distribution AG, CH-Burgdorf 100 % CHF 6 000 000 •

TecPharma Licensing AG, CH-Burgdorf 100 % CHF 100 000 •

Ypsotec AG, CH-Grenchen 100 % CHF 1 000 000 • •

Ypsotec s.r.o., CZ-Tábor 100 % CZK 200 000 • •

Ypsomed GmbH, DE-Liederbach 100 % EUR 100 000 •

DiaExpert GmbH, DE-Liederbach 100 % EUR 50 000 •

Feelfree GmbH, DE-Liederbach 100 % EUR 25 000 •

Ypsomed AB, SE-Helsingborg 100 % SEK 100 000 •

Ypsomed S.A.S., FR-Paris 100 % EUR 50 000 •

Ypsomed BV, NL-Vianen 100 % EUR 50 000 •

Ypsomed India Private Ltd, IN-New Delhi 100 % INR 26 657 470 •

Ypsomed Limited, GB-Selby 100 % GBP 300 000 •

Balance sheet year-end rates Income statement average rates3. Foreign currencies31 March 2011 31 March 2010 2010/11 2009/10

Euro (EUR) 1.30 1.43 1.34 1.50

US-dollar (USD) 0.91 1.05 1.01 1.06

Swedish krona (100 SEK) 14.52 14.63 14.43 14.50

Norwegian krone (100 NOK) 16.57 17.73 16.87 17.64

Danish krone (100 DKK) 17.42 19.14 17.98 20.18

Czech koruna (100 CZK) 5.29 5.60 5.37 5.79

Indian rupee (100 INR) 2.05 2.35 2.22 2.24

British pound (GBP) 1.47 1.59 1.58 1.70

4. Cash and cash equivalents31 March 2011 31 March 2010

Cash 15 18

Postal accounts 586 174

Bank accounts 4 421 7 874

Total 5 022 8 065

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5. Trade receivables 31 March 2011 31 March 2010

Trade receivables 32 721 32 812

Provision for bad and doubtful debts –474 –566

Total 32 246 32 246

The net book values for trade receivables correspond to the fair value.

Provision for bad and doubtful debts 2010/11 2009/10

At 1 April 566 1 997

Addition 12 50

Use –53 –1 388

Reversal –41 –81

Currency translation differences –10 –11

At 31 March 474 566

Age analysis of receivables past due but not impaired 31 March 2011 31 March 2010

Past due up to 2 months 3 026 2 811

Past due 2 to 4 months 882 93

Past due over 4 months 172 126

Total receivables past due but not impaired 4 080 3 030

Age analysis of receivables past due and impaired 31 March 2011 31 March 2010

Due over 4 months 474 566

Total receivables past due and impaired 474 566

Of which impaired 474 566

6. Other receivables, accrued income and prepaid expenses31 March 2011 31 March 2010

Other receivables 5 024 5 290

Accrued income, prepaid expenses and accrued income 8 073 6 106

Total 13 098 11 396

Other receivables, accrued income and prepaid expenses include financial assets in the amount of CHF 6.9 million (prior year CHF 7.0 million) which are due within two month and for which no provision is required. The book values of the financial assets correspond to their fair value.

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7. Inventories

31 March 2011 31 March 2010

Raw materials and supplies 5 227 5 620

Goods in process 15 774 18 447

Finished products 32 627 26 182

Gross inventories 53 628 50 248Valuation allowance –2 052 –3 448

Total 51 576 46 800

8. Financial assets31 March 2011 31 March 2010

Bionime Corp. Taiwan and Insulet Corp. USA 22 129 20 058

9. Other non-current assets31 March 2011 31 March 2010

Employee benefits 421 519

Other non-current assets 109 110

Total 530 629

Other non-current assets include financial assets in the amount of TCHF 105 (prior year TCHF 106).

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10. Fixed assets

CostLand

and buildingsMachinery

and equipmentOther

fixed assetsAssets

under constructionTotal

At 1 April 2009 93 966 212 031 11 417 15 723 333 136

Additions 1 525 14 039 2 390 14 533 32 487

Disposals –6 135 –3 007 –1 057 –10 198

Transfers 671 13 744 384 –15 865 –1 066

Currency translation differences –3 –91 –115 –209

At 31 March 2010 90 024 236 717 13 019 14 391 354 150

Accumulated depreciation

At 1 April 2009 –22 059 –120 789 –7 355 0 –150 203

Depreciation –2 915 –19 282 –1 750 –23 946

Disposals 2 127 3 010 858 5 996

Transfers 218 –55 163

Currency translation differences 2 48 62 113

At 31 March 2010 –22 845 –136 793 –8 240 0 –167 878

Net book value at 1 April 2009 71 907 91 242 4 062 15 723 182 933

Net book value at 31 March 2010 67 180 99 924 4 779 14 391 186 273

Cost

At 1 April 2010 90 024 236 717 13 019 14 391 354 150Additions 1 450 6 397 1 113 5 774 14 734

Disposals –16 151 –1 126 –17 277

Transfers 1 305 7 965 –314 –9 397 –442

Currency translation differences –10 –269 –183 –462

At 31 March 2011 92 769 234 658 12 508 10 768 350 703

Accumulated depreciation

At 1 April 2010 –22 845 –136 793 –8 240 0 –167 878Depreciation –2 998 –14 954 –1 693 –19 645

Disposals 14 309 1 009 15 319

Transfers 125 201 327

Currency translation differences 5 121 101 226

At 31 March 2011 –25 838 –137 191 –8 621 0 –171 651

Net book value at 1 April 2010 67 180 99 924 4 779 14 391 186 273

Net book value at 31 March 2011 66 931 97 467 3 887 10 768 179 052

There are no fixed assets pledged to secure loans and there are no long-term leasing agreements (financial leasing). The fire insurance value of fixed assets at 31 March 2011 amounted to CHF 514.4 million (prior year CHF 506.7 million).

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11. Intangible assets

CostGoodwill Development costs Other intangible

assetsTotal

At 1 April 2009 324 355 22 875 20 086 367 315

Additions 9 969 5 177 15 146

Disposals –221 –221

Transfers 148 148

Currency translation differences –673 –419 –1 092

At 31 March 2010 323 682 32 844 24 770 381 295

Accumulated amortization

At 1 April 2009 –14 690 0 –11 110 –25 799

Amortization –3 532 –3 532

Transfers 220 220

Currency translation differences 2 140 142

At 31 March 2010 –14 688 0 –14 281 –28 969

Net book value at 1 April 2009 309 665 22 875 8 976 341 515

Net book value at 31 March 2010 308 994 32 844 10 489 352 327

Cost

At 1 April 2010 323 682 32 844 24 770 381 295Additions 10 046 1 693 11 739

Disposals –161 –161

Change in consolidation scope 4 468 4 468

Transfers 115 115

Currency translation differences –1 307 –600 –1 907

At 31 March 2011 326 842 42 889 25 818 395 549

Accumulated amortization

At 1 April 2010 –14 688 0 –14 281 –28 969Amortization –1 452 –3 985 –5 436

Disposals 161 161

Currency translation differences 3 236 239

At 31 March 2011 –14 684 –1 452 –17 869 –34 005

Net book value at 1 April 2010 308 994 32 844 10 489 352 327

Net book value at 31 March 2011 312 158 41 437 7 949 361 544

Development costs capitalized include CHF 18.3 million (prior year CHF 13.6 million) for products in the development phase, CHF 1.0 million (prior year CHF 10.8 million) for products in the industrialization phase, CHF 0.0 million (prior year CHF 8.4 million) for products in the pre-launch phase and CHF 22.1 million (prior year CHF 0.0 million) for products in the phase of commercialisation.

On April 1, 2009 Ypsomed acquired intangible assets in the amount of CHF 1.9 million, payable in monthly installments. At closing date the un-paid installments amounts to CHF 0.8 million (prior year CHF 1.3 million). The book value of this intangible asset is CHF 0.6 million (prior year CHF 1.2 million).

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Impairment test for goodwillGoodwill from acquisitions is allocated to cash-generating units and subjected to annual impairment tests. The following table shows the allocation of goodwill to cash-generating units:

31 March 2011 31 March 2010

Ypsomed AG / TecPharma Licensing AG 295 220 295 220

Ypsotec AG 3 023 3 023

DiaExpert GmbH 9 922 10 751

Ypsomed Limited, GB-Selby 3 993

Total Goodwill 312 158 308 994

The impairment test for goodwill is based on the following assumptions:

Ypsomed AG / TecPharma Licensing AG 31 March 2011 31 March 2010

Weighted average cost of capital (WACC, pre-tax) 11.0 % 11.0 %

Perpetual growth rate 1.4 % 1.4 %

Ypsotec AG



DiaExpert GmbH



Ypsomed Limited, GB-Selby

Weighted average cost of capital (WACC, pre-tax) 11.0 %

Perpetual growth rate 1.4 %

Impairment tests are carried out using value-in-use calculations, based on strategic financial planning embracing the next five years. The future expected free cash flows are discounted with the weighted average cost of capital (WACC). The WACC thereby reflects the specific risks and

financial structure of the cash-generating unit. Free cash flows outside of the five-year planning period are extrapolated with a perpetual growth rate.

The goodwill impairment test did not result in an impairment.

,12. Other payables, accrued expenses and deferred income31 March 2011 31 March 2010

Other payables 3 698 3 129

Accrued expenses and deferred income 20 621 15 240

Total 24 318 18 369

Other payables, accrued expenses and deferred income include financial liabilities in the amount of CHF 10.7 million (prior year CHF 9.1 million).

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13. Financial liabilities to major shareholder31 March 2011 31 March 2010

Loan from Techpharma Management AG, Burgdorf

Current 10 000 10 000

Non-Current 24 500 34 500

Until March 31, 2010 interest on the loan was set at 0.5 %. From this date on interest is based on CHF 12-month LIBOR rate as published by the Swiss National Bank plus a margin of 0.5 % with semi-annual interest rate fixing. At any time Ypsomed Holding AG is eligible to amortize the loan in full or partially. Techpharma Management AG for its part may call for an amortization of CHF 10 million per annum starting April 1, 2011 by

applying a term of notice of 3 months. Techpharma Management AG is controlled by Dr. h. c. Willy Michel. In the 2010/11 business year, interest amounting to CHF 0.4 million (prior year CHF 0.4 million) was paid on the loan.

Warranties Employee pensions liabilities

Restructuring Other Total14. Provisions

At 1 April 2009 2 879 6 332 0 1 000 10 211

Additions 97 5 895 100 6 093

Release –1 247 –150 –1 397

Utilization –40 –5 284 –315 –5 639

At 31 March 2010 1 690 6 943 0 635 9 268

of which current 1 069 1 069

At 1 April 2010 1 690 6 943 0 635 9 268Additions 687 4 827 5 514

Release –581 –581

Utilization –40 –4 718 –4 758At 31 March 2011 1 756 7 052 0 635 9 443

of which current 1 418 1 418

WarrantiesThere is a risk that medical products developed and produced by Ypsomed could have material defects or product faults, resulting in legal liability and product liability in particular, as well as other liabilities, such as the withdrawal or recall of products. Provisions are recorded based on management`s best estimate and relate to guarantees and also to replace-ment costs for withdrawn products. The company’s management bases these provisions on the estimated potential guarantee claim for each product.

Ypsomed holds insurance policies with third parties to cover material damages, interruption of operation, product liability and other risks, with worldwide cover. Ypsomed believes that its insurance cover and provisions with regard to business activities and the associated operative risks involved with this are appropriate and sensible. However, events can arise that are not covered, or only partly covered by insurance policies or provisions made by Ypsomed. The closing of an insurance contract, covering product liability, depends on the development of the insurance market, in particular on the general development of the pharmaceutical

industry, in which high claims for compensation are typical. Although no such losses are presently expected at Ypsomed, there is no guarantee that the company might not be subjected to damage claims in the future that are in excess of the cover available.

Expected cash outflowsProvisions for warranties cover any guarantee claims that may occur for products on the market. The provisions extend for the average life of the products, which is between 1 and 4 years, depending on the product, and are also determined by the best possible assessment of the risk of a claim for each product category. Provisions for pension obligations are based on a valuation in accordance with IAS 19, from which no direct cash outflow arises.

Other provisionsOther provisions are based on estimates and have the purpose of com-plying with requirements for disposal of waste related to the upcoming conversions of buildings.

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15. Employee benefits

Most employees are insured under private and / or state pension schemes. The defined benefit obligations and the assets of the most important pen-sion plans associated with them (one Swiss pension plan of an individual

pension scheme and one Swiss pension plan of the collective foundation SwissLife) are evaluated on an annual basis by independent actuarial experts.

Pension schemes 31 March 2011 31 March 2010

Fair value of plan assets 115 079 115 664

Defined benefit obligation –131 037 –137 949

Deficit –15 958 –22 285Unrecognized actuarial (gain )/ loss 9 327 15 861

Total net book value –6 631 –6 424of which recognized in the balance sheet as asset 421 519

of which recognized in the balance sheet as liability 7 052 6 943

Development of defined benefit obligation 2010/11 2009/10

Defined benefit obligation as at 1 April –137 949 –125 589

Current service cost –6 177 –5 696

Interest expense –4 447 –4 419

Curtailments and settlements 285 456

Benefits paid / deposits 13 216 4 569

Employee contributions –4 191 –4 670

Actuarial gains / (losses) 8 166 –2 600

Defined benefit obligation as at 31 March –131 037 –137 949

Development of plan assets 2010/11 2009/10

Fair value of plan assets as at 1 April 115 664 98 189

Expected return on plan assets 5 205 4 419

Employer contributions 5 121 5 697

Employee contributions 4 191 4 670

Benefits paid / deposits –13 216 –4 569

Actuarial gains / (losses) –1 886 7 258

Fair value of plan assets as at 31 March 115 079 115 664

The actual return on plan assets was CHF 3.3 million (prior year CHF 11.7 million).

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Pension costs defined benefit plans 31 March 2011 31 March 2010

Current service cost –6 117 –5 696

Interest expense –4 447 –4 419

Expected return on plan assets 5 205 4 419

Curtailments and settlements 285 456

Net actuarial gain / (loss) recognized in year –254 –995

Total pension costs –5 328 –6 235

The expected employer contributions for the business year 2011/12 will amount to CHF 4.7 million.

Asset allocation 31 March 2011 31 March 2010

Cash and cash equivalents 2.1 % 6.8 %

Mortgages 2.3 % 3.6 %

Bonds 44.8 % 42.8 %

Real estate 25.4 % 23.9 %

Securities 24.7 % 22.2 %

Other 0.7 % 0.7 %

Total 100.0 % 100.0 %

The Ypsomed Group does not use any assets owned by the defined benefit plans. Further the defined benefit plans do not held any shares of Ypsomed Holding AG.

Year-on-year comparison 31 March 2011 31 March 2010 31 March 2009 31 March 2008 31 March 2007

Fair value of plan assets 115 079 115 664 98 189 92 505 87 626

Defined benefit obligation –131 037 –137 949 –125 589 –109 726 –107 745

Liability –15 958 –22 285 –27 400 –17 221 –20 119Experience adjustments on plan assets –1 886 7 258 –9 282 –7 266 –1 642

Experience adjustments on defined benefit obligation 3 203 505 1 584 2 387 –5 199

The significant actuarial assumptions used are as follows 31 March 2011 31 March 2010

Discount rate 3.0 % 3.0 %

Expected rate of return on plan assets 4.5 % 4.5 %

Expected rate of salary increase 2.5 % 2.5 %

Rate of pension increase 0.5 % 0.5 %

Average retirement age men 65 65

Average retirement age women 64 64

Actuarial bases BVG 2010 EVK 2000

The expected 4.5 % rate of return on plan assets is based on strategic asset allocation to defined investment categories and a tailored analysis by independent investment strategists

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16. Share capital

Share capital (in thousand CHF) 2010/11 2009/10

At 1 April 182 156 109 631Repayment of nominal value CHF 0.25 per share (prior year CHF 0.60) –3 162 –7 590

Capital increase 21 083

Increase par value 59 032

At 31 March 178 994 182 156

Shares issued as at 31 March 12 649 739 12 649 739Treasury shares as at 31 March 27 877 27 876

Shares outstanding as at 1 April 12 621 863 11 219 553Purchases –1 –3 786

Sales 570

Capital increase 1 405 526

Shares outstanding as at 31 March 12 621 862 12 621 863

Ypsomed Holding AG was founded on 29 December 2003 with original share capital of CHF 250 000, consisting of 2 500 shares with a nominal value of CHF 100 each. There exist a total of 12 649 739 shares, each with a par value of CHF 14.15. The General Meeting of Shareholders resolved on June 24, 2009 an increase of the par value of CHF 5.25 to CHF 15.00. As a result the share capital has increased in the amount of CHF 59.0 million by debiting the group reserves. Within the scope of

the capital increase that took place in June 2009 the share capital was increased in the amount of CHF 21.1 million. As of September 30, 2010, the par value was reduced by CHF 0.25 (prior year: CHF 0.60) to CHF 14.15 and repaid to the shareholders. The total reduction of the par value was CHF 3.2 million. On 31 March 2011, Ypsomed Holding AG and its Group companies held a total of 27 877 own shares (prior year: 27 876).

Conditional share capital (in thousand CHF) 2010/11 2009/10

At 1 April 2 304 1 560Increase of par value CHF 0.00 per share (prior year CHF 5.25) 840

Repayment of nominal value CHF 0.25 per share (prior year CHF 0.60) –40 –96

At 31 March 2 264 2 304

The company has a conditional share capital totalling CHF 2.3 million (prior year CHF 2.3 million). The company may issue a maximum of 160 000 fully paid up registered shares of nominal value CHF 14.15 (prior year CHF 14.40) each to selected employees and members of the Board of Directors.

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17. Operating expense2010/11 2009/10

Cost of goods and services sold 175 737 74.7 % 187 568 76.6 %

Research and development expenditures total 26 102 11.1 % 31 717 13.0 %

Amortization of development costs capitalized 1 452 0.6 %

Development costs capitalized –10 046 –4.3 % –9 969 –4.1 %

Research and development reimbursed –8 261 –3.5 % –14 424 –5.9 %

Marketing and sales expense 36 928 15.7 % 31 890 13.0 %

Administration expense 13 439 5.7 % 18 020 7.4 %

Total 235 351 100.0 % 244 802 100.0 %

Cost of materials 81 405 34.6 % 88 434 36.1 %

Personnel expense 107 847 45.8 % 115 477 47.2 %

Depreciation / amortization 25 081 10.7 % 27 478 11.2 %

Other operating expense 39 324 16.7 % 37 805 15.4 %

Development costs capitalized –10 046 –4.3 % –9 969 –4.1 %

Research and development reimbursed –8 261 –3.5 % –14 424 –5.9 %

Total 235 351 100.0 % 244 802 100.0 %

18. Personnel expense2010/11 2009/10

Wages and salaries 91 260 96 853

Social security expenses 14 906 16 414

Other personnel expenses 1 681 2 210

Total 107 847 115 477

Personnel at 31 March (full-time equivalents) 31 March 2011 31 March 2010

Switzerland 849 966

Germany 145 148

Netherlands 5 2

France 21 11

Scandinavia 5 6

Czech Republic 19 12

United Kingdom 6

India 6 4

Total 1 056 1 149

Headcount 1 097 1 199

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19. Financial income2010/11 2009/10

Interest income 32 58

Gains from marketable securities 122

Foreign exchange gains 1 218 642

Other financial income 416 189

Total 1 666 1 010

20. Financial expense2010/11 2009/10

Interest expense 944 640

Losses from marketable securities 12

Foreign exchange losses 1 478 1 917

Other financial expense 179 92

Total 2 601 2 662

21. Taxes2010/11 2009/10

Income taxes for current period 3 634 3 678

Income taxes for prior period 84 –17

Deferred income taxes –1 248 –1 290

Total 2 469 2 372

Consolidated statement of other comprehensive income 2010/11 2009/10

Income tax related to items charged / credited directly to equity:

Unrealised gain on available-for-sale financial assets 115 394

Unrealised foreign exchange loss on net investment in foreign subsidiaries –664 –354

Total –549 40

The tax charge on the Group’s profit before taxes differs from the theoretical amount that would arise using the expected tax rate for the Ypsomed Group as follows:

2010/11 2009/10

Profit before income taxes 7 675 11 797

Tax calculated at an expected tax rate of 29.5 % (prior year 18.5 %) 2 264 2 182

Effect of other tax rates 139 63

Effect of change in tax rates 14 –115

Effect of prior periods 84 –17

Effect of realisation / resolution of tax loss carryforwards –34 139

Effect of tax assets related to previously unrecognised tax loss carryforwards –51 0

Effect of loss of the current year, for which no tax assets were capitalized 53 120

Total income taxes 2 469 2 372

The Group benefits from reduced tax rates that are subject to change from year to year. Changes in reduced tax rate impact the Group’s effective tax rate. The higher tax rate compared to prior year results from a negative result in a company with reduced tax rate in the segment Diabetes Direct Business.

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Deferred taxes on temporary differences exist on the following balance sheet items 31 March 2011 31 March 2010

Trade receivables 249 249

Inventories 22 –107

Financial assets 523 394

Non-current assets 79 98

Fixed assets 1 686 1 601

Intangible assets 849 861

Provisions –16 –19

Equity –75 –80

Total deferred taxes on temporary differences, net 3 317 2 998of which recognized in the balance sheet as deferred income tax liabilities 3 268 2 959

of which recognized in the balance sheet as deferred income tax assets 50 39Tax losses carried forward 3 941 2 532

Total deferred income tax assets recognized in the balance sheet 3 991 2 572

Amounts for deferred income taxes stated in the consolidated balance sheet are disclosed as non-current assets and non-current liabilities. Tax-loss carryforwards are only recognized if the associated tax benefits can be realized. Deferred tax assets have been recognized in the amount of CHF 3.9 million for such entities that have suffered a loss in the current and the preceding period. The losses have primarily occurred due to expenses

for marketing and product launches in the affiliated sales organizations. The recognition of the deferred tax assets is supported by future taxable profits, which will be ensured by both a continuous growing market de-velopment and the existing customers relations as well as contracts with vendors. Unused tax loss carryforwards, for which no deferred tax has been recognized, will expire as follows:

31 March 2011 31 March 2010

Within 12 months 0 129

Within 1-2 years 0 131



Later than 4 years 693 909

Unused tax loss carryforwards at 31 March 693 1 243

Temporary differences for which no deferred taxes are recognized in the balance sheet 31 March 2011 31 March 2010

Investments in Group companies 110 914 118 790

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22. Financial instruments

The financial assets of the Group include cash and cash equivalents, securities, trade receivables, other receivables, financial investments and other assets. Financial liabilities comprise trade payables, other payables and financial liabilities to major shareholder.

31 March 2011 31 March 2010

Cash and cash equivalents (without petty cash) 5 008 8 048


Other current receivables, accrued income 6 955 7 071


Loans and receivables 44 315 47 470

Financial assets 22 129 20 058Available for sale financial assets 22 129 20 058

Trade payables 13 080 13 292

Other current payables and accrued expenses 10 692 9 093

Financial liabilities 40 000 30 000

Other non-current financial liabilities 7 656

Current financial liabilities to major shareholder 10 000 10 000

Non-current financial liabilities to major shareholder 24 500 34 500

Financial liabilities at amortized cost 98 280 97 540

Net income from financial instruments 2010/11 2009/10

Financial assets at fair value through profit and loss –120 102

Loans and receivables –1 123 –1 080

Available for sale financial assets 22

Financial liabilities at amortized cost 1 031 24

Total included in the consolidated net profit –189 –954

Change in fair value of Financial assets available for sale 2 070 7 074

Total recorded in the consolidated statement of comprehensive income 1 882 6 120

Net income includes currency income, exchange rate income and valuation allowance.

Interest income / expense of financial instruments 2010/11 2009/10

Loans and receivables 31 58

Financial liabilities at amortized cost –944 –640

Total –912 –582

Fair value hierarchy

Following hierachy is used for determining and disclosing the fair value: Level 1: Quoted prices in active markets. Level 2: Fair value based on observ-able market data, either directly or indirectly. Level 3: Fair value, not based on observable market data.

Ypsomed has no financial assets in hierarchy level 1, 2 and 3.

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Financial risk managementIn its business activities, Ypsomed is exposed to various financial risks. The most significant risks arise from changes in foreign exchange rates, interest rates and share prices, as well as the credit ratings of the customers and business partners of Ypsomed. Risk management is performed by the central finance department at the company’s headquarters in Burgdorf and follows the principles and guidelines laid down by management. The use of financial instruments and securities is made with the intention optimizing profits within the framework of the Group’s risk policy.

a) Market risks

As an internationally active company, Ypsomed is exposed to the effects of fluctuations in exchange rates. Currency risks apply to all monetary financial assets and financial liabilities denominated in a currency other than the functional currency.

Foreign exchange contracts (forward transactions and option contracts) are concluded from time to time with recognized financial institutions to hedge material exchange rate exposure. The outstanding contracts at the end of the business year are stated at fair values. Any gains or losses are reported in the income statement. No hedge accounting is applied.

Transaction risks apply to transactions executed in a currency other than the functional currency, given that the amounts paid or received in the local currency are subject to exchange rate fluctuations. Ypsomed issues invoices to its Group companies in the respective local currency; exchange rate risks therefore apply primarily to the headquarters in Switzerland. The non-Swiss Group companies invoice in their respective local currencies, thereby generating no exchange rate risks.

The monetary financial assets and liabilities consist of the following net assets and liabilities per currency pair, as well as the sensivitiy of individual currency pairs to changes in exchange rates:

Net exposure Change in % Effect on income statement

31 March 2011 31 March 2010 2010/11 2009/10

EUR / CHF 1 567 2 604 + / – 5 % 78 130

USD / CHF 462 1 137 + / – 5 % 23 57

JPY / CHF 316 188 + / – 5 % 16 9

GBP / CHF 404 3 668 + / – 5 % 20 183

The sensitivity analysis is based on assumptions for possible changes in the exchange rate as per the balance sheet date. The effect on the income statement (profit before taxes) is due to the change in fair values result-ing from the new foreign exchange rates. With the exception of foreign exchange translation differences on net investments in subsidiaries there are no effects on the other comprehensive income.

Interest rate fluctuations lead to changes in interest income and expense in relation to interest-bearing assets and liabilities, thereby influencing the financial result.

In addition, they can also have an impact on the fair value of certain financial assets and liabilities and on derivative financial instruments. Interest rate management is centralized with a view to limiting the effects of changes in interest rates on the financial result. Interest rate risks are managed by means of a balanced mixture of fixed and variable interest financial receivables and liabilities.

Payments arising from operational leasing and rental agreements do not carry any interest rate risks.

The financial assets and liabilities subject to interest rate risks are short term, variable rate bank accounts and financial liabilities to the shareholder. If the market interest rate had been 100 basis points higher (lower) on the balance sheet date, the financial result would have been CHF 0.4 million (higher) lower (2009/10: CHF 0.1 million).

Other price risks are mainly limited to share price risk of financial assets held for sale. With all other parameters remaining the same, a 10 % increase or drop in share prices would have resulted in an improvement or deterioration of CHF 2.0 million (prior year: CHF 0.7 million) in the result of other comprehensive income.

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b) Credit risksCredit risks arise when a customer or a counterparty fails to fulfil its con-tractual obligations and causes the Group to suffer financial damages as a result. Credit risk associated with financial assets is controlled by the Group’s policy of dealing solely with first-class counterparties, by ongoing credit reviews and by limiting aggregated individual risks.

Active risk management in connection with trade receivables takes the form of the ongoing monitoring and review of credit risks as part of the reporting process to management. The necessary value allowances for foreseeable

losses on receivables are made by the Group companies and reviewed by the Group on the basis of standardized Group guidelines concerning the valuation of outstanding receivables.

The maximum credit default risk – without taking into account any col-lateral – corresponds to the book values of the following financial assets:

2010/11 2009/10

Cash and cash equivalents (without petty cash) 5 008 8 048


Other receivables 6 955 7 071


Total 44 315 47 470

A total of 33.5 % of Group net sales (prior year 37.6 %) are attributable to the Group’s 3 largest customers. The 3 highest amounts for trade receiva-bles make up approx. 21.6 %, 6.8 % and 5.7 % of all trade receivables as per the balance sheet date (prior year 19 %, 5.7 % and 5.7 %). The largest proportion of sales was generated with Sanofi-Aventis, and the largest trade receivable was also due from Sanofi-Aventis.

c) Liquidity risksLiquidity management is centralized and involves providing sufficient funds for the timely fulfilment of financial liabilities while also maintaining flexibility with regard to the exploitation of market opportunities and the best possible conditions for investment. Investment decisions concerning surplus funds are made centrally and primarily concern fixed deposits and securities held over the short term. Group Controlling monitors cash flow by means of liquidity planning, taking into account the maturities of financial instruments and cash flow from business activities.

Ypsomed is financed exclusively by bank loans and the loan granted by its major sharehodler Dr. h. c. Willy Michel and his company Techpharma Management AG. At any time Ypsomed Holding AG is eligible to amortize the loan in full or partially. Techpharma Management AG for its part may call for an amortization of CHF 10 million per annum starting April 1, 2011 by applying a term of notice 3 months.

Ypsomed has approved current account credit limits of CHF 67.5 million (prior year CHF 45 million), thereof CHF 40 million utilized (prior year CHF 30 million).

Contractual maturities of financial liabilities 31 March 2011 31 March 2010

2010/11 62 648

2011/12 74 680 34 892

2012/13 10 250

2013/14 14 650

Total 99 580 97 540

The above table shows the maturities of contractually agreed, non-discounted payment amounts (including interest). For trade payables in foreign currencies, the fair value as per the balance sheet date is recorded as the due amount the following year. These values can deviate from the actual payments on maturity.

In its capital management, Ypsomed ensures that its healthy and solid balance sheet structure is maintained. Ypsomed’s aim is to secure the Group’s financial scope for future investments and acquisitions. Reported equity capital as at the end of 2010/11 was CHF 538.1 million (2009/10: CHF 537.7 million). The equity ratio stood 79.8 % as at the end of 2010/11 (2009/10: 81.2 %).

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23. Segment information

The Management Approach is used to determine the operating segments. Accordingly, external segment reporting is based on the internal organisa-tional and management structures of the Group and the internal financial reporting to the Chief Operating Decision Maker. The Chief Operating Decision Maker of Ypsomed is the Board of Directors of Ypsomed Holding AG. It defines business activities and monitors internal reporting to assess performance and resource allocation. For the purposes of company man-agement, the Ypsomed Group is organised into business sectors according

to products and services. The segment “Delivery Devices” comprises the product groups pen systems, pen neeedles and other injection mouldings produced by Ypsomed. The business segment “Diabetes Direct Business” covers the direct trade in a range of diabetes articles. “Others” contains the business segment “precison turned parts” and currently not used real estate for operational purposes. Intersegmental sales are executed at arm’s length.

Business year 2010/11

Delivery Devices Diabetes Direct Business

Others Eliminations Group

Sales of goods and services to third party customers 155 812 69 395 17 254 242 461

Intersegmental sales 2 739 –2 739 0

Total sales of goods and services 155 812 69 395 19 993 –2 739 242 461

Operating profit 22 072 –12 908 –554 8 610Financial income 1 666

Financial expense –2 601

Profit before income taxes 7 675


Others Group

Segment assets 560 229 71 961 42 442 674 632

Investments in fixed and intangible assets 23 029 582 2 862 26 473

Depreciation / amortization 19 618 2 384 3 079 25 081

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Business year 2009/10


Others Eliminations Group

Sales of goods and services to third party customers 168 338 70 900 14 776 254 014

Intersegmental sales 6 233 –6 233 0

Total sales of goods and services 168 338 70 900 21 009 –6 233 254 014

Operating profit 19 775 –9 277 2 901 13 449

Financial income 1 010

Financial expense –2 662

Profit before income taxes 11 797

The operating profit “Others” contians a profit in the amount of CHF 3.0 million for disposals of real estate.


Others Group

Segment assets 555 412 63 954 42 644 662 010

Investments in fixed and intangible assets 43 113 2 676 1 843 47 632

Depreciation / amortization 22 035 1 989 3 454 27 478

Geographical information

Sales Fixed and intangible assets

2010/11 2009/10 31 March 2011 31 March 2010

Switzerland 21 683 18 346 520 594 520 425

Germany 155 277 171 731 14 846 16 993

Other 65 501 63 937 5 157 1 181

Total 242 461 254 014 540 596 538 599

Sales are recognized in the geographical location of the invoice adress. The sales of injection systems to biotech and pharma customers is made mainly to their European group companies, although the products are distributed world wide. The tangible and intangible assets are indicated according to the locations of the group companies.

Major customer – Sales share of 10 % or more 2010/11 2009/10

Sanofi-Aventis / sales in the segment Delivery Devices 57 395 70 739

24. Contingent liabilities

The Group has contingent liabilities of TCHF 803 (prior year TCHF 860) toward third parties arising in the ordinary course of business. Ypsomed does not anticipate that any material liabilities will arise from the contingent liabilities.

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25. Contractual obligations31 March 2011 31 March 2010

Contractual obligations from consultancy and research and development projects 300 300

Contractual purchase commitments for products 5 907 6 785

Contractual obligations from rental contract with Techpharma Management AG 4 681 5 666

Contractual obligations from service contract with GBUK Healthcare 659

Total contractual obligations 11 546 12 751

Due within 1 year 7 522 8 071

Due within 1 and up to 5 years 4 025 4 681

The rental contract (see note 26) between Ypsomed AG and Techpharma Management AG, a company controlled by Dr. h. c Willy Michel, was signed at arm’s length. Rental interest is based on an independent rental value estimate and amounts to TCHF 985.4 annually plus VAT; it is linked to the consumer price index. The rental contract arranges for small and normal maintenance work on the building to be paid by the tenant up to a maximum amount of 2 % of the annual rent per calendar year.

As at 31 March 2011 contractual obligations for the purchase of fixed assets amount to CHF 2.4 million (prior year CHF 7.6 million), and for the purchase of intangible assets these amount to CHF 0.08 (prior year CHF 0.0 million).

26. Transactions with related parties

Related Group parties are the pension fund, Techpharma Management AG, Adval Tech Group, Finox AG and Faes Bau AG. Services are remunerated in line with industry standards Receivables from related parties amounted to TCHF 23 (prior year TCHF 47) on the balance sheet date. Liabilities amounted to

TCHF 53 (prior year TCHF 110). In the year under review the following transactions were made with members of the Board of Directors, manage-ment and parties related to them:

2010/11 2009/10

Board of Directors (compensation) 627 612

Management (compensation) 2 860 3 398

Pension fund (employer contributions) 4 735 5 294

Techpharma Management AG (interest according to note 13) 400 358

Techpharma Management AG (compensation for rented business premises) 985 985

Techpharma Management AG (amounts in accordance with service contract) 50 85

Techpharma Management AG (amounts in accordance with service contract) 0 –28

Adval Tech 598 1 020

Finox AG –24 –24

Finox AG 69 95

Faes Bau AG 364 375

Total 10 665 12 169

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Since 1 January 2006, Ypsomed AG has rented business premises from Techpharma Management AG, which belongs to the majority shareholder Dr. h. c. Willy Michel. The rental contract was signed at arm’s length (see note 25) and can be terminated at the earliest and with 24 months notice as from 31 December 2015. The tenant has unlimited first right of refusal for the whole rental period, to a maximum of 25 years from the begin-ning of the rental contract. Between Techpharma Management AG and Ypsomed AG there is a service contract which can be terminated by either side at any time. Within the context of this contract the companies provide reciprocal management and IT support as well as services in the area of hotel business and gastronomy. A cooperation contract exists between Ypsomed Holding AG and two of its subsidiaries, on the one hand, and the Techpharma Management AG and its subsidiary Finox AG, which be-long to Dr. h. c. Willy Michel, on the other hand. The business objective of Finox AG is the development, manufacturing and sales of pharmaceuticals.

The cooperation agreement regulates the cooperation between Ypsomed AG and Finox AG in the area of research and development in the field of devices for administering drugs and their exchange and compensation. Ypsomed AG provides know-how and in return receives a right of first refusal to purchase the shares of Finox AG. The cooperation contract was discussed and approved by the Board of Directors and in its opinion is consistent with customary cooperation on the market. Dr. h. c. Willy Michel has furthermore a minority shareholding in Faes Bau AG, which is headquartered in Burgdorf, and is a member of its Board of Directors. Ypsomed occasionally awards Faes Bau AG building contracts that are in line with normal market conditions. In June 2007, Ypsomed AG and Adval Tech Holding AG signed an agreement on strategic cooperation in tool construction with a fixed contract term of 5 years. The services purchased are in line with normal market conditions.

Personnel compensation to board of directors and management 2010/11 2009/10

Short-term benefits 3 142 3 557

Post-employment benefits 345 453

Other long-term benefits

Termination benefits

Share-based payments

Total 3 487 4 010

See the appendix to the annual financial statements of Ypsomed Holding AG for details of the transparency law in accordance with the Swiss Code of Obligations.

27. Earnings per share

Earnings per share are calculated by dividing net profit through the weighted monthly number of shares outstanding during the period. The average number of treasury shares is deducted from the number of shares issued.

2010/11 2009/10

Net profit in thousand CHF 5 206 9 425

Number of outstanding shares weighted on a monthly basis 12 621 863 11 975 054

Earnings per share in CHF (basic and diluted) 0.41 0.79

28. Proposal for the appropriation of retained earnings

The Board of Directors proposes to the General Meeting of Share -holders on 28 June 2011 instead of a reduction of the nominal value of the Ypsomed share (prior year CHF 0.25) a withholding tax free distribution of capital reserves in the amount of CHF 0.20 per share.

The total distribution based on the actual share capital as per 31 March 2011 will be approximately CHF 2.5 million (prior year reduction of the nominal value CHF 3.2 million). This amount will be credited to shareholders.

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In thousand CHF

Assets 31 March 2011 31 March 2010

Cash and cash equivalents 125 147

Marketable securities 1 589 1 896

Accrued income and prepaid expenses 25 24

Other receivables 4 155

Total current assets 1 743 2 221

Loans to Group companies 171 088 176 114

Investments 327 951 322 051

Expenditures related to capital increase 1 103 1 435

Total non-current assets 500 142 499 599

Total assets 501 885 501 820

Liabilities and equity 31 March 2011 31 March 2010

Trade payables 45 21

Accrued expenses and deferred income 890 943

Current financial liabilities to major shareholder 10 000 10 000

Bank loans 35 000 30 000

Current income taxes payable 264 318

Total current liabilities 46 200 41 281

Non-current financial liabilities to major shareholder 24 500 34 500

Total non-current liabilities 24 500 34 500

Share capital 178 994 182 156

Share premium 193 653

Capital contribution reserves1 193 802

Disagio –150

Legal reserves 50 50

Reserves for own shares 1 952 1 952

Retained earnings 48 229 36 513

Net profit 8 308 11 716

Total equity 431 185 426 039

Total liabilities and equity 501 885 501 820

1 The classification as capital contribution reserves is subject to the approval of the federal tax authority.

Balance sheet of Ypsomed Holding AG – statutory financial statements

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In thousand CHF

Income1 April 2010


31 March 2010

Financial income 11 911 15 064

Total income 11 911 15 064

Expenses

Depreciation and amortization 366 359

Financial expenses 981 669

Administration 1 877 1 943

Income tax expenses 379 378

Total expenses 3 603 3 349

Net profit 8308 11 716

Proposal for the appropriation of retained earningsThe Board of Directors proposes to the General Meeting of Shareholder that the retained earnings be appropriated as follows:

In thousand CHF 31 March 2011 31 March 2010

Retained earnings 48 229 36 722

Decrease / Increase reserve for own shares –209

Net profit for business year 8 308 11 716

Retained earnings at disposal of the General Meeting 56 537 48 229

Allotment from capital contribution reserves 2 529 0

Distribution of dividend from capital contribution reserves1 –2 529 0

Carried forward to the next year 56 537 48 229

1 The Board of Directors proposes to the General Meeting of Sharehold-ers on 28 June 2011 instead of a reduction of the nominal value of the Ypsomed share (prior year CHF 0.25) a withholding tax free distribution of capital contribution reserves in the amount of CHF 0.20 per share.

The total distribution based on the actual share capital as per 31 March 2011 will be approximately CHF 2.5 million (prior year reduction of the nominal value CHF 3.2 million). This amount will be credited to shareholders.

Income statement of Ypsomed Holding AG – statutory financial statements

– –

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Income

Financial income mainly consists of dividends, interest income and gains on securities.

Share capital

The share capital of CHF 178 993 806 (prior year CHF 182 156 241) consists of 12 649 739 (prior year 12 649 739) registered shares with a nominal value of CHF 14.15 (prior year CHF 14.40).

Conditional share capital

The company has a conditional share capital totalling CHF 2.2 million (prior year CHF 2.3 million). The company may issue a maximum of 160 000 (prior year 160 000) fully paid up registered shares with a nominal value of CHF 14.15 (prior year CHF 14.40) each to selected employees and members of the Board of the Directors.

31 March 2011 31 March 2010Important shareholders

Number of shares Capital and vote share

Number of shares Capital andvote share

Dr. h. c. Willy Michel 8 946 834 70.7 % 8 946 834 70.7 %

Techpharma Management AG, Burgdorf 507 125 4.0 % 330 362 2.6 %

31 March 2011 31 March 2010InvestmentsInterest held Share capital Interest held Share capital

Ypsomed AG, CH-Burgdorf 100 % CHF 10 000 000 100 % CHF 10 000 000

Ypsotec AG, CH-Grenchen 100 % CHF 1 000 000 100 % CHF 1 000 000

Techpharma Licensing AG, CH-Burgdorf 100 % CHF 100 000 100 % CHF 100 000

Ypsomed Distribution AG, CH-Burgdorf 100 % CHF 6 000 000 100 % CHF 100 000

Bionime Corporation, Taiwan 8.7 % TWD 399 516 310 9.6 % TWD 362 356 310

Insulet Corporation, Bedford, MA, U.S.A. 1.3 % USD 45 441 1.6 % USD 37 755

31 March 2011 31 March 2010Own sharesNumber of shares Ø price Number of shares Ø price

Purchase of own shares 1 52 3 786 66

Disposal of own shares –570 77

Own shares held 27 877 27 876

Claim subject to subordination clause against subsidiaries 31 March 2011 31 March 2010

Loan to Ypsomed Distribution AG, CH-Burgdorf 17 167 872 11 201 167

In addition there is letter of comfort with unlimited amount in favour of a group company.

Securities, reserve for guarantees and collateral order in favour of third parties 31 March 2011 31 March 2010

Credit Suisse, CH-ZürichGuarantee in the context of credit business for Ypsomed AG 22 500 00 15 000 000

Notes to the financial statements 2010/11 of Ypsomed Holding AG

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Board of Directors remuneration

(Gross, in thousand CHF, exclusive VAT)

Remuneration Board of Directors Dr. h. c. Willy Michel(Chairman)

Gerhart Isler(Member)

Anton Kräuliger(Vice-Chairman)

Prof.Dr. Dr. h. c. mult. Norbert Thom

(Member)

Total

10/11 09/10 10/11 09/10 10/11 09/10 10/11 09/10 10/11 09/10

Fixed amount 150.0 150.0 90.0 90.0 90.0 90.0 90.0 90.0 420.0 420.0

Variable amount 11.7 6.7 7.0 4.0 7.0 4.0 7.0 4.0 32.7 18.7

Attendance fee / Others 9.0 9.0 9.0 7.5 9.0 9.0 7.5 7.5 34.5 33

Total remuneration and attendance fee 170.7 165.7 106.0 101.5 106.0 103.0 104.5 101.5 487.2 471.7

Techpharma Management AG: for consultancy services Dr. h. c. Willy Michel 140.0 140.0 140.0 140.0

Total remuneration Board of Directors 310.7 305.7 106.0 101.5 106.0 103.0 104.5 101.5 627.2 611.7

Highest remuneration to Dr. h. c. Willy Michel 310.7 305.7

Further transactions to affiliated persons of Dr. h. c. Willy Michel

Techpharma Management AG: for loan (interest) 400.5 357.8

Techpharma Management AG: for rented business premises (rent) 985.4 985.4

Risk assessment

Ypsomed Holding AG performs an extensive risk assessment at least once a year. The standardized process is based on an inventory of risks, which covers the relevant categories of risks as strategic risks, management risks, general risks of the business areas, legal risks, system risks, financial risks including market-, credit- and liquidity risks and occurrence risks covering

political, regulatory, fiscal and external risks. The significant risks are valuated regarding the probability of occurrence and impact, and both Management and the Board of Directors determine measures and monitor the implementation according to established criteria.

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Management remuneration

(Gross, in thousand CHF)

Highest remuneration to: Basic Salary Variable Salary Payments Employercontributions toSocial Insurance

Total

10/11 09/10 10/11 09/10 10/11 09/10 10/11 09/10 10/11 09/10

Richard Fritschi, CEO 607.1 607.1 214.2 161.4 100.2 126.9 921.5 895.4

Additional members of management including those who left the company in the year under review 1 508.0 2 007.8 133.8 164.0 52.0 5.0 244.4 326.1 1 938.2 2 502.9

Total management remuneration 2 859.7 3 398.3

As of 31 March 2011 the non-executive members oft he board of directors held the following shares. No Ypsomed share options were held.

Share ownership of Board of DirectorsShares as of

31 March 2011Shares as of

31 March 2010

Dr. h. c. Willy Michel, Chairman 8 946 834 8 946 834

Techpharma Management AG as related person of Dr. h. c. Willy Michel, Chairman 507 125 330 362

Total of Willy Michel and Techpharma Management AG combined 9 453 959 9 277 196

Gerhart Isler, Member 3 000 3 000

Anton Kräuliger, Vice-Chairman 225 225

Prof. Dr. rer. pol. Dr. h. c. mult. Norbert Thom, Member 0 0

Total 9 457 184 9 280 421

As of 31 March 2011 members of the non-executive and executive boards held the following shares. No Ypsomed share options were held.

Share ownership of ManagementShares as of

31 March 2011Shares as of

31 March 2010

Richard Fritschi, CEO 3 500 3 500

Simon Michel, Senior Vice President Marketing & Sales 8 528 8 528

Dr. Manfred Mäder, Senior Vice President Quality Management & Regulatory Affairs no longer member 0

Dr. Beat Maurer, Senior Vice President Legal and Intellectual Property, Secretary of the Board

3 000

3 000

Maurice Meytre, Chief Operating Officer (COO) no longer member 500

Yvonne Müller, Senior Vice President Human Resources 800 800

Niklaus Ramseier, Chief Financial Officer (CFO) 1 069 1 069

Dr. Christoph Rindlisbacher, Senior Vice President Corporate Development no longer member 0

Total 16 897 17 397

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Report of the statutory auditors

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In thousand CHF 2010/11 2009/10 2008/09 2007/08 2006/07

Total Sales1 242 461 254 014 275 058 287 468 277 450

Gross profit 66 724 66 446 84 310 90 197 64 239

Gross profit in % 27.5 % 26.2 % 30.7 % 31.4 % 23.2 %

Operating profit 8 610 13 449 30 735 30 976 2 338

Operating profit in % 3.6 % 5.3 % 11.2 % 10.8 % 0.8 %

Net profit 5 206 9 425 26 166 26 583 2 742

Net profit in % 2.1 % 3.7 % 9.6 % 9.2 % 1.0 %

Depreciation of fixed assets 19 645 23 946 24 753 22 678 23 825

Amortization of intangible assets 5 436 3 532 1 770 1 667 1 237

EBITDA2 33 691 40 926 57 258 55 322 27 400

EBITDA in % 13.9 % 16.1 % 20.8 % 19.2 % 9.9 %

Current assets 107 385 100 152 98 461 144 164 161 541

Non-current assets 567 247 561 858 533 755 494 066 461 248

Current liabilities 100 742 77 953 43 391 48 056 40 551

Non-current liabilities 35 834 46 314 151 793 172 595 192 210

Balance sheet total 674 632 662 010 632 216 638 230 622 789

Capital expenditure –14 485 –32 487 –43 698 –42 741 –36 808

Cash flow from operating activities 29 504 22 480 48 404 70 155 32 189

Cash flow from investing activities –27 458 –43 739 –49 589 –52 306 –19 096

Cash flow from financing activities –4 911 20 489 –28 041 –20 130 –38 131

Issued shares as of 31 March 12 649 739 12 649 739 11 244 213 11 244 213 11 244 213

Average shares outstanding 12 621 863 11 975 054 11 223 971 11 233 080 11 229 318

Earnings per share in CHF (basic / diluted) 0.41 0.79 2.33 2.37 0.24

Dividend per share (in CHF) 0.00 0.00 0.00 0.00 0.00

Par value repayment per share (in CHF) 0.25 0.60 0.60 0.00 1.25

Book value per issued share (in CHF) 42.53 42.51 38.87 37.14 34.69

Share price: year’s highest (in CHF) 70.00 79.00 101.00 120.30 215.15

Share price: year’s lowest (in CHF) 51.50 58.75 64.80 75.00 87.30

Share price: year-end (in CHF) 57.00 68.00 76.90 92.00 103.20

Market capitalization (in million CHF) 721 860 865 1 034 1 160

Average headcount 1 150 1 228 1 209 1 208 1 225

Average fulltime equivalent 1 104 1 176 1 152 1 157 1 178

Year-end headcount 1 097 1 199 1 209 1 210 1 211

Year-end fulltime equivalent 1 056 1 149 1 153 1 150 1 166

Sales per average fulltime equivalent (in CHF) 219 620 215 998 238 766 248 629 235 526

1 Since April 1, 2008, Real Estate income has been included in Total sales.2 Operating profit before depreciation and amortization.

Five-year overview 1 April – 31 March

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Corporate structure at March 31, 2011

Ypsotec AGGrenchen

100 %

TecPharmaLicensing AG

Burgdorf100 %

DiaExpert GmbHLiederbach, DE

100 %

Ypsomed GmbHLiederbach, DE

100 %

feelfree GmbHLiederbach, DE

100 %

Ypsomed BVVianen, NL

100 %

Ypsomed ABHelsingborg, SE

100 %

Ypsomed SASParis, FR100 %

Ypsomed India Private Ltd.

New Delhi, IN 100 %

Ypsomed Ltd. Selby, UK

100 %

Ypsomed Holding AGBurgdorf

Ypsotec s.r.oTábor, CZ

100 %

Ypsomed AGBurgdorf / Solothurn

100 %

Ypsomed Distribution AG

Burgdorf100 %

Ypsomed – Corporate Governance Report

Corporate Governance

This Corporate Governance report describes the management

and control principles at the highest corporate level of

Ypsomed Holding AG and its subsidiaries according to the

directive of the SIX Swiss Exchange concerning information

on corporate governance.

Ypsomed, which is headquartered in Burgdorf, Switzerland,

is a world leader in the field of injection systems for the self-

administering of pharmaceutical substances. Ypsomed devel-

ops and produces its products primarily in Switzerland.

Ypsomed injection systems are largely marketed by biotech

and pharmaceutical partners around the world. Increasingly,

Ypsomed also sells medical products, focusing on self-medi-

cation products for patients with diabetes. The company’s

own injection systems and pen needles as well as commercial

products purchased from third parties are sold through the

company’s own distribution network and by independent

distributors. The Ypsomed Group also includes Ypsotec,

headquartered in Grenchen, Switzerland, a supplier of pre-

cision turning parts and subassemblies.

The Ypsomed Group’s rules and regulations on Corporate

Governance are defined in the Articles of Association, in the

Organizational Policy of Ypsomed Holding AG and in the

Code of Conduct of the Ypsomed Group and correspond to

the Corporate Governance Directive of October 29, 2008,

issued by the SIX Swiss Exchange. The Board of Directors

has issued an organizational policy that stipulates the duties,

powers and responsibilities of the executive bodies of the

Ypsomed Group. A copy of Ypsomed Holding AG’s Articles

of Association (in the German version) can be ordered from

the company or can be viewed on the company’s website at

www.ypsomed.com (under Company / Investors / Corporate

Governance). A copy of the Code of Conduct of the Ypsomed

Group (in the German, English and French versions) can be

ordered from the company or can be viewed on the com-

pany’s website at www.ypsomed.com (under Company / Inves-

tors / Corporate Governance). Compliance with the basic

principles and values laid down in the Code of Conduct is

reviewed on an ongoing basis during the company’s day-to-

day business. In addition, the Board of Directors receives

information on a periodic basis regarding experiences with

the Code of Conduct. In the previous business year, contracts

with suppliers were amended to ensure compliance with the

basic principles stipulated in our Code of Conduct with regard

to health, safety and environmental protection.

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Group structure

Ypsomed Holding AG is organized as a holding company

pursuant to Swiss law and directly or indirectly owns or

controls all companies that are part of the Ypsomed Group

worldwide. None of Ypsomed Holding AG’s subsidiaries are

listed companies.

History of Ypsomed’s development

Ypsomed was formed from what was previously Disetronic,

which was founded in 1984 and which developed and pro-

duced infusion systems and also, starting in 1986, injection

systems. On April 30, 2003, Roche Holding AG acquired

the infusion business of Disetronic through a public tender

offer. Dr. h. c. Willy Michel continued the injection business

under the Ypsomed trade name.

Listed holding company

Ypsomed Holding AG, which has its headquarters in Burgdorf,

is the holding company of the Ypsomed Group. It has a share

capital of CHF 178 993 806.85, divided into 12 649 739

registered shares with a par value of CHF 14.15 each. Shares

in Ypsomed Holding AG have been traded on the principal

market of the SIX Swiss Exchange since September 22, 2004,

and since June 27, 2007 on the BX Bern eXchange, under

Security Number 1 939 699 and the symbol YPSN.

as of 31 March 2011 as of 31 March 2010

Market capitalization in CHF 721 035 123 860 182 252

in % of equity 134.0* 160.0*

Share price in CHF 57.0 68.0

Price-earnings ratio 139.0** 86.0**

* Equity on 31 March 2010: CHF 537 742 766 Equity on 31 March 2011: CHF 538 056 159 ** Profit per share 31 March 2010: CHF 0.79 Profit per share 31 March 2011: CHF 0.41

Operating organization

The Ypsomed Group’s operating organization is based on a

parent company structure. It is divided into the following

departments: CEO (including Technology, Production &

Logistics, Quality Management & Regulatory Affairs and

Precision Rotary Parts), Corporate Finance / IT, Marketing &

Sales, Human Resources, and Legal & Intellectual Property.

As a rule, two members of Ypsomed Group management sit

on the Board of Directors of each subsidiary. In terms of

operations, the Ypsomed Group is divided into two business

segments: the Delivery Devices segment consists of business

with the product groups pen systems, pen needles and other

injection-molded parts. The Diabetes Direct Business segment

consists of the sales and direct trade business with various

supplies for diabetic needs. The “Other” segment brings

together precision revolving parts and properties not cur-

rently used operationally.

The corporate structure of Ypsomed Holding AG on March 31,

2011, is illustrated on page 84.

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Capital structureCapital

Ypsomed Holding AG has a share capital of CHF

178 993 806.85, divided into 12 649 739 fully paid up reg-

istered shares, each with a par value of CHF 14.15. All shares

entitle the holder to receive dividends. Ypsomed Holding AG

does not have an authorized share capital amount. The

company has issued neither profit certificates nor participa-

tion certificates. There are no convertible bonds outstanding,

and no options have been issued for participation rights in

Ypsomed Holding AG or any Group companies.

Conditional share capital

Ypsomed Holding AG has conditional share capital totaling

CHF 2 264 000. The company may issue to selected employ-

ees and members of the Board of Directors up to 160 000

registered shares, to be paid up in full, with a par value of

CHF 14.15 each. Shareholders’ purchase and advance sub-

scription rights are excluded. Pursuant to the Articles of As-

sociation, shares and option rights may be issued at a price

below the stock market value. The acquisition of shares through

the exercising of subscription or option rights is subject to the

statutory recording limitation and the statutory voting right

limitation (see thereafter). The company has not issued any

shares or option rights to date.

Changes in capital

Changes in capital up to March 31, 2011, pursuant to the accounts

of Ypsomed Holding AG (all amounts in CHF)

Date Issue

29.12.03 Founding

31.03.04 Net profit

01.04.04 Balance

01.07.04 Reverse merger with Finox Beteilig ungen AG

28.07.04 Capital increase settled with shareholder loan

18.09.04 Split 1 : 8

20.09.04 Capital increase IPO

28.09.04 Capital increase IPO over-allotment

31.03.05 Net profit

31.08.05 Nominal value reduction CHF 0.90 per share

31.03.06 Net profit


31.03.07 Reserves for own shares

31.03.07 Net profit


31.03.08 Net profit



31.03.09 Net profit

03.07.09 Nominal value increase

Capital increase



31.03.10 Net profit



31.03.11 Reassignment of capital reserves to reserves as capital investments

31.03.11 Reassignment of capital reserves to reserves as capital investments

31.03.11 Reclassification of general reserves

31.03.11 Net profit

31.03.11 Balance

Share premium of IPO 20. + 28.09.2004

18.09.04 Capital increase

28.09.04 Capital increase

Total

The costs for the IPO have been capitalized in the statutory accounts and have been amortized over five years since September 2004.

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General statutory reserves

Number of shares Nominalvalue

Share capital Capital reserves Retained earnings Reserves from equity

General reserves

Reserves for own shares

Total

2 500 100.00 250 000.00 250 000.00

11 096 910.20 11 346 910.20

2 500 100.00 250 000.00 11 096 910.20 11 346 910.20

–150 000.00 6 315 915.24 17 512 825.44

997 500 100.00 99 750 000.00 117 262 825.44

8 000 000 12.50 117 262 825.44

3 016 000 12.50 37 700 000.00 165 143 042.21 320 105 867.65

228 213 12.50 2 852 662.50 12 495 951.29 335 454 481.44

825 726.81 336 280 208.25

–0.90 –10 119 791.70 326 160 416.55

1 187 206.38 327 347 622.93

–1.25 –14 055 266.25 313 292 356.68

–2 223 985.21 2 223 985.21 313 292 356.68

1 020 967.85 314 313 324.53

873 759.26 –873 759.26 314 313 324.53

6 099 149.38 320 412 473.91

–0.60 –6 746 527.80 313 665 946.11

–392 705.90 392 705.90 313 665 946.11

11 968 630.02 325 634 576.13

5.25 59 032 118.25 384 666 694.38

1 405 526 21 082 890.00 16 163 522.75 421 913 107.13

–0.6 –7 589 843.40 414 323 263.73

–208 715.75 208 715.75 414 323 263.73

11 715 880.66 426 039 144.39

–0.25 –3 162 434.75 422 876 709.64

–51.50 51.50 422 876 709.64

–193 802 516.25 193 802 516.25 422 876 709.64

150 000.00 –150 000.00 422 876 709.64

–50 000.00 50 000.00 422 876 709.64

8 308 089.98 431 184 799.62

12 649 739 14.15 178 993 806.85 193 652 516.25 56 536 777.42 193 652 516.25 50 000.00 1 951 699.10 431 184 799.62

Capital in % IPO costs Share premium gross Share premium net

37 700 000.00 92.97 % 10 189 057.47 165 143 042.21 154 953 984.74

2 852 662.50 7.03 % 770 979.90 12 495 951.29 11 724 971.39

40 552 662.50 100.00 % 10 960 037.37 177 638 993.50 166 678 956.13

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Shareholder structureRegistered shareholders

There were 5789 shareholders registered in the Share Register on March 31, 2011 (prior year: 6449 shareholders). Of these

shareholders, 98 % report Switzerland as their place of residence. The distribution of shareholdings is as follows:

Number of shares Number of shareholders as of 31 March 2011

Number of shareholders as of 31 March 2010

1 to 100 3 234 3 597

101 to 1000 2 357 2 646

1001 to 10 000 178 186

10 001 to 100 000 16 16

more than 100 000 4 4

Shareholder structure according to investor category as of 31 March 2011 (number of shares) 31 March 2011 31 March 2010

Dr. h. c. Willy Michel including affiliated persons 74.7 % 73.3 %

Natural persons 8.6 % 9.9 %

Banks 0.5 % 0.7 %

Funds, foundations, pension funds, insurances, public corporations and other legal entities 6.0 % 6.6 %

Not registered in Share Register 10.2 % 9.5 %

Significant shareholder

The significant shareholder is Dr. h. c. Willy Michel, Chairman

of the Board of Directors of Ypsomed Holding AG, who held

8 946 834 registered shares on March 31, 2011 (prior year:

8 946 834 shares). Dr. h. c. Willy Michel as well as Tech-

pharma Management AG, over which he exerts full control,

hold a total of 9 453 959 registered shares, which equals to

74.7 % of the shares (prior year: 9 277 196 shares, making

up 73.3 %).

There are no shareholder agreements or other agreements

between shareholders

Cross participations

There are no cross participations.

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Limitation on the transferability of sharesNo share certificates are issued for Ypsomed Holding AG

shares. Any shareholder may ask the company at any time

to issue a confirmation regarding the registered shares entered

in the Share Register in his name. Any person validly entered

in the Share Register as an owner or beneficiary is considered

to be a shareholder of the company. Any person acquiring

registered shares or the beneficial entitlement to registered

shares must apply in writing to be entered in the Share Reg-

ister. Approval is given by the Board of Directors, which may

delegate this power. The transfer is then entered in the Share

Register. Applicants will be entered in the Share Register as

shareholders with voting rights provided they expressly declare

that they have acquired the registered shares in their own

name and for their own account. If this declaration is not

made, the Board of Directors may refuse the entry. The Board

of Directors may draw up guidelines for the entry of nominees

and may permit nominees to be entered in the Share Register

with voting rights for shares up to a maximum of 5 % of the

nominal share capital. The Board of Directors may also allow

nominees to be entered in the Share Register with voting

rights for shares exceeding this limit if the nominees disclose

the names, addresses, nationality, domicile and shareholdings

of the natural persons and legal entities on whose account

they hold 1 % or more of the nominal share capital. The 5 %

limit also applies to nominees who are related to one an-

other through capital ownership or voting rights by virtue of

a common management or otherwise. If a shareholder has

been entered in the Share Register on the basis of incorrect

information, having given the parties involved the right to be

heard, the Board of Directors may remove from the Share

Register the entry as a shareholder with voting rights and

replace it instead with an entry as a shareholder without

voting rights. In the year under review, no applications for

the entry of nominees were made.

Restrictions on the transfer of registered shares may only be

amended by a resolution passed at the General Meeting of

Shareholders with a qualified majority of at least two-thirds

of the votes represented and an absolute majority of the

nominal share capital represented at such meeting.

Board of Directors

Members of the Board of Directors

The Board of Directors consists of a minimum of three and a

maximum of five members elected for a term of office of three

years with the possibility of re-election. The Board of Direc-

tors was re-elected on the occasion of the 2010 General

Meeting of Shareholders. The Board of Directors is self-

constituting. All four members are non-executive members.

Dr. h. c. Willy Michel was a member of the executive manage-

ment of Disetronic Holding AG until April 2003.

The main task of the Board of Directors is the overall manage-

ment of the company and the supervision and control of

executive management. No member of the Board of Directors

holds an operative function with Ypsomed Holding AG or

one of its subsidiaries or has held such a position in the past

three years. With the exception of Dr. h. c. Willy Michel, no

business relationships exist between the individual members

of the Board of Directors and Ypsomed Holding AG or any

of its subsidiaries. The following business relationships

between Dr. h. c. Willy Michel and affiliated persons and

Ypsomed Holding AG and / or its subsidiaries existed in the

year under review (information relating to the actual remu-

neration paid directly or indirectly in the 2010/11 business

year that is stipulated by Art. 663b bis of the Swiss Code of

Obligations can be found in the Notes to the 2010/11 finan-

cial statement, page 109):

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Executive loans

Dr. h. c. Willy Michel made a loan to the company that he

assigned to his company Techpharma Management AG. In

the year under review, an amount of CHF 10 million was

paid off. As of March 31, 2011, a loan amount of CHF 34.5

million was still outstanding. The key terms of the loan agree-

ment are: since April 1, 2010, the loan has borne interest at

a rate based on the CHF 12-month LIBOR as published by

the Swiss National Bank plus 0.5 % and it is adjusted in line

with the prevailing rate as at the end of March and the end

of September every year. Ypsomed Holding AG may repay

the loan in full or partially at any time. However, it is repay-

able by March 31, 2014, at the latest. Starting April 1, 2011,

Techpharma Management AG may each year demand repay-

ment of a maximum of CHF 10 million on three months’ notice.

There are no further executive loans.

Rental contract

Dr. h. c. Willy Michel (respectively his company Techpharma

Management AG) has been renting the building on Buch-

mattstrasse in Burgdorf (Ypsomed Nord) to Ypsomed since

January 1, 2006. The parties signed a rental contract set at

an indexed market rent, based on a rental assessment per-

formed by an independent party. The rent was last adjusted

on January 1, 2009, to CHF 985 402 plus VAT (excluding

additional costs). The rental contract can be terminated for

the first time on December 31, 2015, conditional upon

24 months’ notice. The tenant has unlimited first right of refusal

for purchasing the property for the entire rental period, for a

maximum of 25 years from the start of the rental. The rental

contract dictates that small and normal maintenance work on

the building be paid by the tenant up to a maximum amount

of 2 % of the annual rent per calendar year. Major maintenance

work and repairs necessary for safeguarding the asset value

of the building is at the lessor’s expense. On termination of

the contract, the tenant will be reimbursed for the alterations

carried out to the leased property with the lessor’s consent

in application of IFRS depreciation rates at the residual book

value. The rental contract was discussed and approved by

the Board of Directors, in whose opinion this is regarded as

a rental contract at normal market conditions.

Other contractual relationships

Dr. h. c. Willy Michel (respectively his company Techpharma

Management AG) and Ypsomed have concluded a service

contract that can be terminated by either side at any time.

This contract allows for Techpharma Management AG to

provide occasional services to the Ypsomed Group (e. g.

hotel and catering services) as well as selected management

support services (including temporary personnel) and, for

its part, for the Ypsomed Group to offer occasional serv-

ices to Techpharma Management AG (e. g. management

and IT support, including temporary personnel). The serv-

ices are invoiced at normal market conditions. The mutual

supply of temporary personnel is invoiced at the personnel

cost rate. This contract was discussed and approved by the

Board of Directors, in whose opinion this is regarded as a

cooperation agreement at normal market conditions. In the

year under review, there were no significant temporary

personnel services.

Furthermore Dr. h. c. Willy Michel has a minority shareholding

in Faes Bau AG, which is headquartered in Burgdorf, and is

a member of its Board of Directors. Ypsomed occasionally

awards Faes Bau AG with building contracts that are in line

with normal market conditions based on a competitive pro-

posal process.

Contractual cooperation with Finox AG

Agreements on cooperation exist between Ypsomed Holding

AG and two of its subsidiaries on the one hand, and Tech-

pharma Management AG and its subsidiary Finox AG, which

belong to Dr. h. c. Willy Michel, on the other hand. The busi-

ness objective of Finox AG is the development, manufacturing

and sale of pharmaceuticals. The cooperation between

Ypsomed AG and Finox AG relates to research and develop-

ment in the field of devices for administering drugs and their

exchange and compensation. Furthermore, employees may

switch between the two companies on a project-specific

basis. The services provided by the parties on the correspond-

ing projects are remunerated at standard market rates;

Ypsomed AG also receives a right of first refusal to purchase

the shares of Finox AG. The contractual cooperation was

discussed and approved by the Board of Directors, in whose

opinion it is consistent with customary cooperation agreements

in the market.

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Members of the Board of DirectorsDr. h. c. Willy Michel, Chairman of the Board of Directors

of Ypsomed Holding AG, founded Disetronic together with

his brother in 1984. They were together until his brother’s

departure from the business in 1995, and thereafter Dr. h. c.

Willy Michel was solely responsible for the development,

production, distribution and sale of Disetronic products

(until 1999). Within the scope of the sale of Disetronic to

Roche Holding AG in 2003, Dr. h. c. Willy Michel repur-

chased the injection business of Disetronic, which has since

then traded under the name Ypsomed. He has held the post

of Chairman of the Board of Directors of the Disetronic Group

and now the Ypsomed Group without interruption. Prior to

the founding of Disetronic, Dr. h. c. Willy Michel, who holds

a professional qualification as a pharmaceutical consultant

with a federal diploma, obtained a broad range of experi-

ence with several industrial and pharmaceutical companies

in the fields of development, sales & marketing, and he was

the head of Novo-Nordisk Switzerland for six years (from

1978 until 1984). For three years (from 1998 until 2001) he

was a member of the Burgdorf City Council, and in 2004

the city awarded him its Medal of Honor. In addition, he is

the owner of a number of companies including several well-

known firms involved in the fields of art, watchmaking and

gastronomy as well as Finox AG, which is active in the de-

velopment, manufacturing and sale of pharmaceuticals. He

is currently Vice-Chairman of the Board of Directors of BV

Holding AG (from 2001 until March 2008 President), mem-

ber of the Board of Directors of Adval Tech Holding AG

(since 2007), and is a member of the Boards of Directors of

various non-listed companies operating in different sectors

to the Ypsomed Group and of no significance to its business

activities (Faes Bau AG and others). In 2005, Dr. h. c. Willy

Michel was declared the “Master Entrepreneur of the Year”

for his overall business performance by Ernst & Young AG,

and in 2006 he was awarded an honorary doctorate (Dr. h. c.)

by the Economic and Social Science Faculty of the Univer-

sity of Bern.

Prof. Dr. rer. pol. Dr. h. c. mult. Norbert Thom, Member

of the Board of Directors of Ypsomed Holding AG since 2005.

After studying economics and social sciences, he became a

scientific assistant, project manager and private tutor at the

University of Cologne, Acting Professor at the University of

Giessen and then full Professor of management, organization

and human resources studies at the University of Freiburg,

Switzerland. Prof. Thom is the founder (in 1991) and director

of the Institute for Organization and Human Resources at the

University of Bern as well as a full Professor of Business

Management Studies. From 1995 until 1997 he was Vice-

Chancellor of Finance and Planning and member of the Board

of Governors at the University of Bern. From 1997 until 2000

he was a member of the Swiss Scientific Board, which is the

advisory body of the Federal Council for questions concern-

ing economic policy. Prof. Thom has three honorary doctorates

for his academic achievements in the areas of public manage-

ment, organization and human resource management. He

received these awards from universities in Lithuania (Vilnius),

Austria (Linz) and Germany (Halle-Wittenberg). He has many

years of practical experience as, among other things, an

organizational and human resources advisor to companies,

authorities and governments. He is further a member of the

Board of Directors at WIFAG Polytype Holding AG, Bern (up

to 2011). He has extensive involvement in the further training

of managers, is a lecturer for several executive master level

courses and is Vice-Chairman of the Volkswirtschaftliche

Gesellschaft of the Canton of Bern and Vice Chairman of the

Schweizerische Gesellschaft für Organisation und Manage-

ment (SGO).

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Name Nationality Yea of birth Position Member since*

Elected until the GM

Dr. h. c. Willy Michel Swiss 1947 Chairman of the Board of Directors 1984 2013

Gerhart Isler Swiss 1949 Member of the Board of Directors 2008 2013

Prof. Dr. rer. pol. Dr. h. c. mult. Norbert Thom German 1946 Member of the Board of Directors 2005 2013

Anton Kräuliger Swiss 1946 Vice-Chairman of the Board of Directors 2007 2013

* including Member of the Board of Directors of Disetronic


Gerhart Isler, Member of the Board of Directors of Ypsomed

Holding AG since 2008. After completing his studies in

economics at the University of Zurich, Mr. Isler joined the

family newspaper publishing company Finanz und Wirtschaft

AG as an editor in 1976. In 1980 he managed the company’s

editorial department in New York, was head of foreign cor-

respondents from 1981 until 1986, and then held the position

of manager of the publishing house until 1989. He then

became the owner of Finanz und Wirtschaft, which enjoyed

strong growth up to 2000 and became the country’s most

important financial newspaper. Mr. Isler subsequently sold

the publishing firm but continued as its publisher until the end

of 2004. From 2005 until the end of 2008, Mr. Isler was a

member of the Board of Directors of the listed company

PubliGroupe. In 2005, he was elected to the Board of Direc-

tors of Grand Casino Baden. Mr. Isler has been a member

of the Board of Trustees of the move>med Foundation, which

is involved in the field of sports, since 2005. In 2008, Mr. Isler

was elected to the Board of Directors of the listed investment

company New Value. Furthermore Mr. Isler is head of the

Bergdietikon municipal council.

Anton Kräuliger, Vice-Chairman of the Board of Directors

of Ypsomed Holding AG (member since 2007). After complet-

ing his studies at ETH Zurich with a degree in Mechanical

Engineering, Mr. Kräuliger joined the family business in 1971

and in 1978 took over the majority shareholding in Lyss AG

(today Metalyss AG), a metal foundry and fittings factory.

He developed this company into the leading fittings group

on the Swiss market, the Similor Group. Within the scope of

the sale of the fittings division to Madison Private Equity

Holding AG in 2002 and 2005, Mr. Kräuliger repurchased

the Industrial Division, which today is combined into Metalyss

AG once more. Between 1993 and 2004, Mr. Kräuliger was

a member of the Board of Directors of the listed Bernese

Kantonalbank BEKB | BCBE and continues to be an active

member of several Boards of Directors including serving as

Chairman of the Board of Directors of Metalyss AG (since

1978), Chairman of the Board of Directors of Sécheron SA

(since 2005) as well as a member of the Board of Directors

of the parent company Sécheron- Hasler Holding AG (since

2005). Anton Kräuliger is also owner of Moospinte AG, a

restaurant in Wiggiswil / Münchenbuchsee. As a member of

the City Council for the town of Kappelen he is director of

the Finance Department.

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Dr. h. c. Willy Michel Prof. Dr. rer. pol. Dr. h. c. mult. Norbert Thom

Anton Kräuliger Gerhart Isler123

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Interrelated companies

Dr. h. c. Willy Michel, Chairman of the Board of Directors of

Ypsomed Holding AG, is also Vice-Chairman of the Board

of Directors of BV Holding AG, which is listed on the BX Bern

eXchange. On March 31, 2011, BV Holding AG held a total

of 22 500 shares in Ypsomed Holding AG (previous year:

22 500 shares), representing a shareholding of 0.18 % (previ-

ous year: 0.18 %).

Dr. h. c. Willy Michel, Chairman of the Board of Directors of

Ypsomed Holding AG, is also a member of the Board of

Directors of Adval Tech Holding AG, a company listed on

the SIX Swiss Exchange and with headquarters in Nieder-

wangen. In June 2007, Ypsomed AG and Adval Tech Holding

AG signed an agreement on strategic cooperation in tool

construction with a fixed contract term of 5 years. The objec-

tive of this cooperation is to bring together the respective

strengths and core competencies of both companies and to

use them for the efficient manufacturing of high-quality prod-

ucts. As part of this agreement Ypsomed buys from time to

time tools manufactured by Adval Tech or its group companies

at fair market prices based on industry standard conditions

and existing competitive offers.

How the Board of Directors operates

The Board of Directors holds regular meetings four times per

year at which it accepts management’s written report and the

verbal comments of the CEO, deliberates and also decides on

management proposals. The auditors participate in the May

meeting of the Board of Directors at which they give informa-

tion on the comprehensive report and on other questions. The

Board of Directors meets on one additional occasion per year

for two to three days within the context of a strategy meeting

with management. Occasionally the Board of Directors makes

additional decisions by correspondence. The agendas for the

meetings are set by the Chairman in agreement with the CEO;

any member may ask for points to be included on the agenda.

The members receive the agenda and the necessary basis for

decision-making generally 7 to 10 days before each meeting.

Any member of the Board of Directors may request information

about any aspect of the Group’s affairs. Votes and resolutions

within the Board of Directors are taken by majority decision;

if the vote is tied, the Chairman, or in his absence the Vice-

Chairman, has the deciding vote. Votes may not be taken by

proxy. Meetings of the Board of Directors are regularly at-

tended by the CEO and the CFO and, depending on the

business to be discussed, by other members of management.

Simon Michel, the son of Dr. h. c. Willy Michel and who is a

member of management, also takes part in Board of Directors’

meetings with an advisory role.

Given the size and composition of the Board of Directors, it

may advise and decide on all matters in plenary. However,

pursuant to the Organizational Policy, it may delegate some

of its powers to a committee of the Board of Directors on a

case-by-case basis. The Board of Directors appointed a com-

mittee of the Board of Directors in the form of a one-man

committee consisting of the Chairman of the Board of Direc-

tors. In addition, a monitoring committee was recently estab-

lished consisting of three members of the Board of Directors,

but not the Chairman of the Board of Directors. The members

of the monitoring committee are Anton Kräuliger, Gerhart

Isler and Prof. Norbert Thom. Furthermore, the Chairman of

the Board of Directors routinely meets with the CEO several

times a month to discuss individual business operations.

In the year under review, the Board of Directors met a total

of four times and passed several resolutions by correspond-

ence. During the Board of Directors’ meeting in May 2010,

the lead auditor participated. The Board of Directors’ addi-

tionally met in January 2011 for 2.5 days as part of the

strategy meeting with executive management. With the excep-

tion of Prof. Thom, who was unable to participate in one

meeting, all members of the Board of Directors‘ participated

in all Board of Directors’ meetings, in the General Meeting

of Shareholders of June 2010, and in the strategy meeting

of January 2011.

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Regulations concerning authority

The Board of Directors has certain non-transferable and

irrevocable duties under Swiss corporate law. It has the high-

est decision-making power in the company, under restriction

of those matters on which shareholders must decide in

accordance with the law. In particular, it defines company

policy, the mission statement – consisting of a mission and a

vision – and the strategic direction of the Ypsomed Group,

sets its targets and priorities, and allocates the resources for

achieving the targets set. The Board of Directors defines the

organization of the Ypsomed Group, supervises business

activities, controls the finance and accounting divisions and

is responsible for appointments and dismissals as well as the

supervision of the individuals entrusted with management

duties. It is responsible for the Annual Report, issues the Code

of Conduct, approves the budget and the mid-term planning

for executive management and also monitors the business

activities of the Group companies. The Board of Directors

approves individual business affairs. This includes, in par-

ticular, decisions on the purchase or sale of companies and

properties as well as the conclusion of contracts regarding

strategic cooperation and contracts with other financial sig-

nificance. The committee of the Board of Directors appointed

by the Board of Directors in the form of a one-man committee

consisting of the Chairman of the Board of Directors approves

individual business affairs. This includes, in particular, deci-

sions on benchmark figures of a cooperation outside of

previous business activities, with the principle of a coopera-

tion being reserved for the whole Board of Directors, as well

as benchmark figures relating to financially significant coop-

eration agreements within the context of usual business

activities; it approves, furthermore, securities obligations and

employment contracts with members of management. The

members of the monitoring committee discuss individually at

least once a year with the persons in charge for internal

control system, risk management, compliance and internal

audit planning, and report on their findings to the entire Board

of Directors. The responsibilities of the Board of Directors,

the appointed one-man committee and the other decision-

making bodies within the Ypsomed Group are fixed in the

assignment of authority.

Otherwise, the Board of Directors has delegated responsibil-

ity for running the company to the CEO and management.

Instruments for information about and control of management

The Ypsomed Group’s information and control instruments,

which are at the disposal of the Board of Directors, consist

of written management reporting, which is produced quar-

terly (management review, quarterly reports), and financial

reporting, which is based on Group accounting in accord-

ance with IFRS, comprising comprehensive consolidated

accounts (profit & loss statement, balance sheet, cash flow

statement) with a budget comparison as well as selected

management statistics. Furthermore, the Board of Directors

uses strategic planning documents as management instruments

for steering the company. Responsibility for risk management

and monitoring rests with management, which reports on

these matters periodically to the Board of Directors, but at

least once a year. In addition to these documents, further

selected financial figures are at management’s disposal on

a monthly basis. Minutes of management meetings are also

at the disposal of the Chairman of the Board of Directors.

The Internal Auditing function, for which the Board of Directors

is directly responsible, is commissioned with the constant ex-

pansion of the documented, internal control system. The audit-

ing plans are based on a risk-oriented procedure that relates

to business processes and are geared towards the following

goals and tasks: reviewing the fulfillment of business goals

and objectives; evaluation of the effectiveness of risk manage-

ment, control and corporate management processes; optimiza-

tion of business processes; improvement of controls and

processes with regard to the information systems; verification

of controls and processes for accounting systems; confirmation

and guarantee of authorized business transactions; safeguard-

ing of assets; support with regard to complying with legal and

regulatory requirements; and reviewing significant or particu-

lar business cases and transactions. The Board of Directors

can determine additional areas to be reviewed.

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Niklaus Ramseier, Chief Financial Officer (CFO)

Executive ManagementThe CEO and the executive management team are responsible for the operational management of the Ypsomed Group

within the scope of the guidelines laid down by the Board of Directors.

Name Nationality Year of birth Position Acting for Ypsomed (or pre-2003 for Disetronic) since

Richard Fritschi Swiss 1960 CEO 2006

Simon Michel Swiss 1977 Senior Vice President Marketing & Sales 2006

Niklaus Ramseier Swiss 1963 Chief Financial Officer (CFO) 2002

Yvonne Müller Swiss 1969 Senior Vice President Human Resources 2003

Dr. Beat Maurer Swiss 1958 Senior Vice President Legal & Intellectual Property,Secretary of the Board

1992


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Dr. Beat Maurer, Senior Vice President Legal & Intellectual Property

Richard Fritschi, Chief Executive Officer (CEO) Simon Michel, Senior Vice President Marketing & Sales

Yvonne Müller, Senior Vice President Human Resources

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Organisation of Ypsomed

CEOR. Fritschi

Finance & ITCFO

N. Ramseier

Legal & IPB. Maurer

Marketing & SalesS. Michel

Human ResourcesY. Müller

Board of Directors


Richard Fritschi, CEO, at Ypsomed since September 2006,

previously active in the field of medical technology for sev-

eral years, for example as President Europe / Australasia of

Zimmer GmbH, Winterthur (from 2003 until 2005), President

Europe / Asia / South America at Sulzer Orthopädie / Sulzermed-

ica, Winterthur (from 2001 until 2003), and Sales Manager

of Sulzer Orthopädie / Sulzermedica, Winterthur (from 1999

until 2001). At the beginning of his professional life he worked

in the field of finance (latterly as CFO of Allo Pro / Sulzer

Orthopädie, Baar / Winterthur from 1991 until 1999), and

he worked in England and France for a long time. He is Vice

President of the Board of Directors of Vetropack AG in Bülach

(since 2006, Member of the Board of Directors since 2005),

Chairman of the Board of Directors of Cornaz AG-Holding

in Oberrieden (since 2009, Member of the Board of Directors

since 2004), Member of the Board of Directors of Reinhard

Fromm Holding AG in Steinhausen (since 2008) and a

holder of Board of Director mandates with several unlisted

companies. Education: degree in Business Science / Control-

ler SIB as well as the Advanced Management Program

“General Management” at the Harvard Business School.

Richard Fritschi is a member of the Board of Management of

the Medical Cluster organization and of the Board of Direc-

tors of Medtech Switzerland, both based in Bern. He is also

a member of the Foundation Board of the Competence

Center for Medical Technology (CCMT) Foundation, which

is also headquartered in Bern.

Simon Michel, Senior Vice President Marketing & Sales, with

Ypsomed since October 2006. Member of management since

2008 and responsible for Marketing & Sales. From 2003 until

2006, he worked for Orange Telecommunications in Zurich

and Lausanne where he was responsible for, among other

things, the introduction and marketing of UMTS. He has been

on the Board of Directors at Sphinx Werkzeuge AG since 2006

and on the executive committee of the local trade and industry

association since 2008. Simon Michel has studied Economics

at the University of St. Gallen and completed a Masters with

a focus on Media and Communications Management.

Niklaus Ramseier, CFO, with Ypsomed (pre-2003 with Dis-

etronic) since 2002, prior to that Head of Finance and Control-

ling for the industrial services product line of the Von Roll Group

(from 1995 until 2002) and various advisory and accounting

functions within a trust and auditing company. Education: Swiss

certified expert for accounting and controlling.

Yvonne Müller, Senior Vice President Human Resources,

with Ypsomed since 2003, prior to that responsibility for

training at BEKB (from 2002 until 2003) and for human

resources at X-Media and Scout24 (from 2000 until 2002)

as well as at IKEA (from 1996 until 2000). Education:

graduate human resources specialist.

Beat Maurer: Dr. iur., attorney-at-law, Senior Vice President

Legal & Intellectual Property, Secretary to the Board of Direc-

tors of Ypsomed Holding AG, with Ypsomed (pre-2003 with

Disetronic) since 1992, prior to that tax and legal consultant

with a trust and auditing company. Education: degree in Law

from the University of Freiburg, studied at the Free University

of Berlin, doctorate in Law from the University of Bern and

admitted to the bar in the Canton of Bern. Beat Maurer has

been a judge specializing in issues relating to intellectual

property law at the commercial court of the Canton of Bern

since 2002. He is also a member of the Board of Directors of

FASMED, the Federation of Swiss Medical Devices Trade and

Industry Associations, based in Muri near Bern.

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Management contractsThere are no management contracts.

Board of Directors’ remunerationThe members of the Board of Directors draw a remuneration

that is discussed and established by the complete Board of

Directors. A decision on the amount and form of the remu-

neration is made at the discretion of the Board of Directors

during a plenary session. All remunerations are paid in cash.

Share or option plans do not exist. If compared with the

remuneration paid by other listed companies of a similar size

from the Mittelland region, the amount of the total remunera-

tion of the Board of Directors should lie in the middle of the

range (for reference figures, see actual values out of annual

reports and the journal “Handelszeitung” no. 46 from

November 17, 2010, p. 20f.).

The Board of Directors’ remuneration (consisting of a fixed

amount, a variable amount and an attendance fee) is set

anew each year by the Board of Directors. The variable

amount depends on achieved vs. budgeted targets based on

two-thirds of the consolidated EBIT margin and one-third of

the consolidated sales. The fixed sum amounts to CHF 150 000

(prior year: CHF 150 000) for the Chairman of the Board of

Directors and CHF 90 000 (prior year: 90 000) per member

of the Board of Directors; the variable sum amounts to at

most CHF 50 000 (prior year: CHF 50 000) for the Chairman

of the Board of Directors and CHF 30 000 (prior year:

CHF 30 000) for each member. The attendance fee amounts

to CHF 1 500 per meeting (prior year: CHF 1 500). The Board

of Directors’ remuneration and attendance fees are paid to

the members of the Board of Directors following the General

Meeting of Shareholders.

In addition, for consulting services, the Chairman of the Board

of Directors (respectively his company Techpharma Manage-

ment AG) receives a flat fee of CHF 140 000 + VAT (prior

year: CHF 140 000).

The relationship to affiliated persons is described in the sec-

tion Board of Directors, Members of the Board of Directors,

page 124.

Information relating to all actual remuneration paid to present

and former members of the Board of Directors in the 2010/11

business year as stipulated by Art. 663b bis of the Swiss

Code of Obligations can be found in the Notes to the 2010/11

financial statement, page 109.

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Management remunerationRemuneration for members of management consists of a base

salary and a variable amount depending on the success of

the company and the achievement of individual goals as well

as an individual one-off bonus of a maximum of CHF 25 000

to be paid in exceptional cases. If compared with the remu-

neration paid by other listed companies of a similar size from

the Mittelland region, the amount of the total remuneration

should lie in the middle of the range. In addition to actual

reference values, in particular the Ethos studies regarding

remuneration of executive bodies from 2006 until 2010 were

referred to when calculating the remuneration. The variable

salary amount for the CEO is at most CHF 500 000 (net) and

for the remaining members of management it is at most 31.25 %

of their annual salary (gross). The variable salary amount

depends on achieved vs. budgeted targets based on 50 %

of the consolidated EBIT margin and 25 % each of the con-

solidated sales and the achievement of individual targets.

The amount of the base salary is approved annually as a

whole by the Board of Directors in its sole discretion; indi-

vidual adjustments are made at the CEO’s request by the

Chairman of the Board of Directors in his sole discretion. The

gradation of the variable salary is adjusted annually at the

CEO’s request through the Chairman of the Board of Directors

and is based on the budget that has been approved by the

complete Board of Directors. All remunerations are paid in

cash. Share or option plans do not exist.

The payment of lump sum expenses is based on the expense

regulation approved by the Canton of Bern; according to

this, lump sum expenses only cover effective expenses and

are thus not reported separately. Likewise, additional pay-

ments (such as discounts for purchasing Reka vacation checks,

etc.) are not listed as long as they do not exceed a total

amount of CHF 2000 per person per year.

No severance payments have been agreed upon with direc-

tors, nor have any long-term contracts of more than 12 months

duration been signed with members of management.

In the year under review, Maurice Meytre, Dr. Manfred Mäder

and Dr. Christoph Rindlisbacher resigned from management.

Since January 1, 2011, Maurice Meytre has been CEO of

Ypsotec AG, a subsidiary of Ypsomed Holding AG.

No severance payments were paid to former directors in the

year under review.

Information relating to the actual remuneration paid directly

and indirectly to members of management and former mem-

bers of management in the 2010/11 business year as stipu-

lated by Art. 663b bis of the Swiss Code of Obligations can

be found in the Notes to the 2010/11 financial statement,

page 110.

Allocation of shares in the year under review

No shares were allocated in the year under review.

Share ownership

Information relating to the actual shares held directly and indi-

rectly by members of the Board of Directors, management and

affiliated persons in the 2010/11 business year as stipulated

by Art. 663c of the Swiss Code of Obligations can be found

in the Notes to the 2010/11 financial statement, page 110.

There were no options issued by the company on equities of

Ypsomed Holding AG or Group companies.

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Shareholders’ rights of participation

Voting right restrictions and representation

All shareholders who are entered in the Share Register with

voting rights are entitled to vote at the General Meeting of

Shareholders. Shareholders may arrange to be represented

at the General Meeting of Shareholders by written proxy. In

exercising his voting rights, no shareholder may directly or

indirectly amalgamate more than 5 % of the total voting rights

in the form of his own shares and those he is representing.

Legal entities and partnerships that are related to one another

through capital ownership or voting rights or by virtue of a

common management or otherwise, as well as natural persons,

legal entities or partnerships that adopt a coordinated ap-

proach in order to circumvent the restrictions on voting rights,

will be considered as one person. However, the restriction

on voting rights will not apply to the exercise of voting rights

by the company representative, a depositary representative

or the specially designated independent shareholder repre-

sentative, nor to Dr. h. c. Willy Michel because more than 5 %

of all voting rights were registered to him in the Share Reg-

ister at the time the Articles of Association were drawn up

(Art. 16 of the Articles of Association).

Quorums according to the Articles of Association

Unless otherwise stipulated by law or by the Articles of

Association, the General Meeting of Shareholders will adopt

resolutions and conduct votes on the basis of an absolute

majority of the votes cast, excluding blank and invalid votes.

The Chairman will also vote and, if the vote is tied, he will

have the deciding vote. The quorums laid down in the Articles

of Association reflect statutory quorums.

Convening the General Meeting of Shareholders

The General Meeting of Shareholders will be convened by

way of a letter to the shareholders who are entered in the

Share Register at least 20 days prior to the meeting as well

as by publishing a notice in the Swiss Official Gazette of

Commerce (SHAB).

Agenda items

Shareholders holding shares with a nominal value of at least

CHF 1 million have the right to request that a specific matter

be put on the agenda by specifying the items of the agenda

and the proposals. Such requests must be submitted in writing

to the Chairman of the Board of Directors at least 45 days

before the meeting.

Entries in the Share Register

Entries in the Share Register will be made until six days prior

to the General Meeting of Shareholders.

Change of control and blocking mechanismsIn the event of a public takeover bid, the bidder is required

pursuant to Art. 32 of the Swiss Stock Exchange Act to make

an offer for all of the company’s listed shares as soon as it

acquires shares directly, indirectly or in concert with third

parties, which along with the shares already held exceed the

threshold of 49 % of the voting rights of the company, wheth-

er exercisable or not (Art. 10 Articles of Association).

There are no change-of-control clauses with members of the

Board of Directors, management and / or other personnel.

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Auditors

Term of mandate of auditors and term of the lead auditor

On June 27, 2007, the General Meeting of Shareholders of

Ypsomed Holding AG selected Ernst & Young AG, Bern, as

auditors for the first time. The lead auditor, Mr. Christian

Schibler, has been in office at Ypsomed Holding AG since

June 2007 and will be replaced in 2014 at the latest due to

the rotation obligation. The auditors are each appointed for

a term of one year by the General Meeting of Shareholders,

the last time being on the occasion of the 2010 General

Meeting of Shareholders.

Auditing fees

The total auditing fees charged by the auditor for Ypsomed

Holding AG and its Group companies in the course of the year

under review amount to TCHF 297. Ypsomed Holding AG and

its Group companies were invoiced TCHF 44 for additional so

called non-auditing services in respect to tax advisory and

interpretation of IFRS and disclosure requirements.

Instruments for supervision and control of auditing

The complete Board of Directors undertakes the supervision

and control of the auditor. The lead auditor is in attendance

during the discussion and acceptance of the consolidated

and annual financial statements by the Board of Directors.

The auditor compiles a comprehensive report annually for

the attention of the Board of Directors, and it is discussed by

the Board of Directors with the lead auditor in attendance.

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Information policy

Ypsomed Holding AG maintains an open and transparent

communication policy towards shareholders, potential inves-

tors, financial analysts, the media, and customers, based on

the principle of equality. The company uses the following in-

struments: annual report, half-year report, presentation of

the annual results to the media and financial analysts ahead

of the shareholders’ meeting, as well as briefing the media

on important events. Responsibility for communication with

investors rests with the Chairman of the Board of Directors,

who may delegate this duty to the CEO.

The following banks monitor the development of the Ypsomed

Group:

Bank am Bellevue, Zürich (www.bellevue.ch),

Dr. Sandra Künzle

BZ-Bank, Wilen (www.bzbank.ch),

Urban Fritsche

CAI Cheuvreux, Zürich (www.cheuvreux.ch),

Thomas Bernhardsgrütter

Credit Suisse, Zürich (www.credit-suisse.com),

Christoph Gretler

Helvea SA, Zürich (www.helvea.com),

Daniel Jelovcan

Kepler Equities, Zürich (www.kepler-equities.com),

Florian Gaiser

Vontobel, Zürich (www.vontobel.com),

Christoph Gubler

Zürcher Kantonalbank, Zürich (www.zkb.ch),

Sibylle Bischofberger Frick

On our website at www.ypsomed.com (under Company/Inves-

tor) any interested person can access up to date and market

relevant information (pull system) without charge. Furthermore

any interested person can register at www.ypsomed.com/

ch/unternehmen/investoren/122.html (push system) to be

added to an e-mailing list to receive the described publications

about the company (push system). The official publication

organ of Ypsomed Holding AG is the Swiss Official Gazette

of Commerce (SOGC). Company publications which poten-

tially relevance to the share price are usually communicated

at the end of daily trading. Such publications are initially

reported to the SIX Swiss Exchange Regulation and thereafter

installed on the above mentioned website and simultaneously

communicated to a number of national newspapers, elec-

tronic information systems and to persons registered on the

e-mail distribution list.

Stock listingThe registered shares of Ypsomed Holding AG are traded at

the SIX Swiss Exchange and at the BX Bern eXchange.

Ticker symbols:

YPSN (Telekurs)

YPSN.S (Reuters)

YPSN SW (Bloomberg)

Securities numer 1939 699

ISIN CH 001 939 699 0

Key forthcoming dates28 June 2011General Meeting of Shareholders, Bern

3 November, 2011Press conference and presentation of the

half-year figures 2011/12, Solothurn

22 May 2012Press conference and presentation of the

annual results 2011/12, Burgdorf

ContactYpsomed Holding AG

Daniel Kusio, Head of Investor & Public Relations

Ursula Rytz, Head of Communication Services

Phone +41 34 424 41 43

Telefax +41 34 424 41 55

www.ypsomed.com

[email protected]


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Glossary

Ampule / CartridgeA drug reservoir containing the drug to be administered used with, for example, reusable pens. Some substances need pens with two-chamber cartridges, which contain lyophilized drug and diluent that are mixed automatically in the pen before use. (See also Cartridge)

AmylinHormone produced together with insulin in the pancreas. Like insulin, it is no longer produced in the case of a functional inability of the pancreas. According to latest research, amylin complements the effect of insulin in the treatment of diabetes and allows the blood sugar level to be control-led more effectively.

AnemiaAnemia means an insufficiency of blood. This can manifest itself in a reduction in hemoglobin concentration (red blood pigment), in the hema-tocrit (measurement of blood thickness, packed cell volume) and / or in the number of erythrocytes (red blood cells) in the blood compared with the age norm. Among its effects is a reduction in the transport capacity for oxygen in the blood. The classic symptoms include loss of energy and rapid fatigue as well as pallor, fatigue, breathlessness and palpitations (the heart beats irregularly, faster or more forcefully than it should in rela-tion to the level of activity demanded of it). Anemia can have a number of different causes.

Auto-injectorIn auto-injectors, needle insertion into the skin and / or injection of the drug are automatic, usually being driven by means of a spring mechanism.

Biomolecule injectablesDrugs manufactured using biotechnology. Such biomolecules cannot be delivered using traditional methods (e. g. orally) because they would be destroyed by the digestive tract and thus require the injectable route of administration.

BiosimilarThe term “biosimilar” refers to a protein-based mimetic drug that has been produced using biotechnology and which is approved after the expiration of the patent period of an original active substance. Unlike the classic drugs defined in terms of molecular structure, the active substances of these novel biotechnology products are not completely identical to the original active substance and therefore require more extensive approval and monitoring procedures than the classic generics. The main reasons for these differences are the different organisms (for example E. coli bac-teria) on which the target protein is expressed, and the different methods applied, such as separation and cleansing.

Blood sugar (blood glucose)Blood sugar means, in general, the level of glucose in the blood. Glucose is an important source of energy for the body and represents a significant measured value in medicine. If the blood sugar is high over a sustained period of time (hyperglycemia), diabetes mellitus typically exists. In inten-sified insulin therapy, the blood sugar or blood glucose should be mea-sured at least four times a day so that the amount of insulin administered can be adjusted to actual requirements. A person’s insulin requirements change over the course of the day due to the varying levels of hormones that influence blood sugar, the consumption of food, physical activity or febrile infectious diseases.

Blood sugar monitoring (blood glucose monitoring)Diabetics normally measure their blood sugar levels themselves using a portable blood sugar monitor. To carry out the measurement, a small blood sample must first be placed on a test strip. Through an enzymatic reaction with the test strip, the blood sugar is converted into a measur-able product that is then measured on the basis of a photometric or an electrochemical process and displayed by the monitoring device. In the case of intensive insulin therapy, the measuring of the blood sugar takes place a minimum of four times daily.

CannulaSee Pen needle.

CartridgeA drug reservoir containing the drug to be administered used with, for example, reusable pens. Some substances need pens with two-chamber cartridges that contain a lyophilized drug and diluent that are mixed automatically in the pen before use. (See also Ampule / Cartridge)

CM (Contract Manufacturing)Contract Manufacturing refers to the assigning of several or individual stages in the manufacture of a product to a contractor (outsourcing manu-facturing). There are cost benefits for the OEM / ODM manufacturer as the infrastructure is not just utilized for a single product line / assembly line or product, but for several manufacturers or products. The specialization of the contractor with specific infrastructure leads to larger production volumes (numbers of units). Thus both parties benefit.

ComplianceIn medicine we talk about the compliance of the patient. This means that, in many illnesses, for healing to occur the patient must have a cooperative attitude. In the medical sense, compliance can therefore be described as sticking to one’s therapy, taking one’s medicine as prescribed; in short, following the doctor’s recommendations. Compliance is particularly important for diabetics with regard to taking their medicine, following a diet or making lifestyle changes.

CO2 equivalentIndicator of the greenhouse gas potential of substances in the earth’s atmosphere, such as methane (CH4), nitrous oxide (N2O), HCFC / CFC or sulfur hexafluoride (SF6). The greenhouse effect of carbon dioxide serves as a reference value. Calculations use factors as defined in IPC C2001.

Depot formulation“Depot form / formulation” is synonymous with the terms “long-acting” or “sustained release formulation”; in other words, the fact that the substance that is taken orally or with an injection is released into the bloodstream in a delayed manner e. g. in order to achieve a longer duration of effect or to permit an active ingredient to be supplied on a continuous basis.

Ypsomed – Glossary

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Diabetes mellitusDiabetes mellitus is a chronic metabolic disorder involving increased blood sugar levels. In people with diabetes mellitus, the blood sugar is no longer absorbed from blood cells in the requisite quantity for the production of energy. As a result, there is excess glucose in the blood (hyperglycemia / excess sugar), which is then excreted in part through the kidneys. In Type 1 diabetes mellitus, the body produces insufficient insulin, if any insulin at all (absolute insulin deficiency), because most or all of the insulin-producing cells in the pancreas have become damaged by an autoimmune disease. It generally manifests itself in persons up to 35 years old and requires the regular subcutaneous administration (injection) of insulin. Type 1 diabetes mellitus accounts for about 10 % of all case of diabetes mellitus and, thanks to its clear principal symptoms, is generally correctly diagnosed and treated by physicians. In Type 2 diabetes mel-litus, which is much more common, the pancreas continues to produce insulin, however its effectiveness is reduced by an insulin resistance (insulin insensitivity) of the somatic cells. As a rule, this leads to an increased release of insulin (hyperinsulin anemia) in order to compensate for the deficient insulin effectiveness. Risk factors, such as being overweight or lack of exercise, promote the development of Type 2 diabetes, therefore it frequently has the designation of an illness of affluence. Type 2 diabetes mellitus is generally diagnosed in people over the age of 40 and who are overweight. As a first step, it is often successfully treated by follow-ing a healthy diet and by getting more physical exercise. In later phases, tablets and insulin injections may be considered. According to estimates, about half of all people who currently have Type 2 diabetes mellitus are unaware of that fact. If both types of diabetes are not diagnosed at an early stage or if they are inadequately treated, this can lead to serious secondary diseases affecting the kidneys, nerves, eyes or blood vessels.

Dual chamber ampuleThe dual chamber ampule was developed primarily for lyophilized substances. Dual chamber technology enables efficient use of the active substance through careful product reconstitution. The dual chamber technology was thus designed specifically for sensitive drugs that are preserved through freeze drying. One of the two chambers contains the lyophilized active substance (freeze-dried active substance) and the other contains the solvent. The two are mixed together only immediately before use. This “all-in-one” design facilitates both a higher degree of accuracy in dosage and easier handling.

EIP (Environmental impact points)Quantitative expression of environmental impact in the form of a measure-ment based on the principle of ecological scarcity. Environmental impact points are determined on the basis of the extent to which environmental quality targets for air, water, soil and resources have been met.

EPO (erythropoietin)Natural hormone mainly produced by the kidney that regulates the forma-tion of red blood cells (erythrocytes) in the bone marrow.

FDA (Food and Drug Administration)US health agency.

FSH (follicle-stimulating hormone)FSH is a germ line hormone (a hormone excreted by the anterior pituitary gland and placenta) that stimulates follicle growth in females and activates sperm-forming cells in males. FSH is used for treating infertility.

GLP-1Glucagon-like peptide-1 (GLP-1) is a peptide hormone formed in the intestines that plays an important part in glucose metabolism as part of the “incretin effect” – the insulin response of beta cells in the pancreas to the supply of sugar through the intestines and the blood. GLP-1 is released directly into the bloodstream when food is eaten. It is broken down within minutes by the enzyme dipeptidyl peptidase-4 (DPP-4) and therefore must be constantly produced. It stimulates the production of insulin in the pan-creas and slows the emptying of the stomach contents into the intestine, thereby suppressing hunger pangs and thirst. It also reduces glucagon levels. Glucagon helps the release and synthesis of glucose from the liver. In this way, secretion in sufficient quantities or subcutaneous injection of GLP-1 prevents excessively high levels of blood sugar.

Greenhouse gasesGases in the air that contribute to climate change (global warming) and that may be of either natural or anthropogenic origin. They emit thermal radiation corresponding to their temperature (infrared radiation) that acts as atmospheric counter-radiation and heats the surface of the earth in addition to the heat from sunlight. On the other hand, greenhouse gases also absorb some of the infrared radiation given off by the earth that would otherwise escape into space.

hGH (human growth hormone – somatotropin)One of the body’s natural hormones used today primarily to treat growth disorders.

HeparinMedication with anticoagulation properties. An anticoagulant is a sub-stance that delays or stops blood clotting.

HyperglycemiaHyperglycemia (excess sugar) is an increased blood sugar value (glucose value) with clinical values above 110 mg / dl (6.1 mmol / l) on an empty stomach or above 140 mg / dl (7.8 mmol / l) two hours after eating. The cause of the hyperglycemia is a relative or absolute insulin deficiency (dia-betes mellitus). This has the effect that the glucose cannot be transported from the blood into the cells and at the same time glucose is released from the liver, for example. The result: blood sugar increases. The body attempts to excrete the blood sugar through the kidneys, thereby losing vital amounts of liquid, and affected parties react with strong thirst and frequent urination. Slight increases in blood sugar remain unnoticed for the most part because the initial symptoms, such as fatigue and lethargy, are not recognized as resulting from high levels of blood sugar. A complete insulin deficiency and a prolonged increase in blood sugar may lead to nausea, vomiting, a smell of acetone on the breath, the appearance of glucose and acetone in the urine and finally to a life-threatening diabetic coma. Insulin is administered and the intake of liquids is increased for the treatment of hyperglycemia.

HypoglycemiaHypoglycemia is low blood sugar with a blood sugar value of less than 40 mg / dl (2.2 mmol / l) without the presence of symptoms. Hypoglycemia can occur in all diabetics who are treated with sulfonylurea, glinide or insulin. Low blood sugar can occur when the factors reducing blood sugar (e. g. insulin, tablet effectiveness, physical activity) outweigh the factors increasing blood sugar (e. g. food intake, sugar regeneration in the liver). The symptoms include, among other things, trembling and sweating, increased appetite, headaches, weakness, a loss of concentration and blurred vision. It can be treated by the immediate administration of glucose or drinking fruit juice. Severe hypoglycemia can lead to unconsciousness and requires immediate medical attention.


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IncretinsIncretins are hormones produced in the small intestine (peptide hormones) that are released after food is eaten and stimulate insulin secretion by the pancreas. At the same time, they prevent the insulin antagonist, glucagon, from being released. Patients with Type 2 diabetes release lower levels of incretin than healthy individuals. The incretins GLP-1 (glucagon-like peptide-1) and GIP (gastric inhibitor peptide) are of particular interest in the treatment of diabetes. There are two new classes of drugs that act on incretin metabolism: the “incretin mimetics” that imitate the action of incretins, and the “DPP-4 inhibitors” that delay the breakdown of endog-enous incretins.

InjectionAdministration of liquid substances with a syringe.

Injection systems / injection devicesInjection systems or injection devices include self-injection devices such as pens and auto-injectors as well as pen needles.

InsulinA vital peptide hormone that is produced by the pancreas in the beta cells of the islets of Langerhans. The primary effect of insulin is the fast reduction of the blood sugar concentration in that it supports the transport of glucose from the blood into the cells’ interior. Insulin was first discov-ered in 1921 by two Canadians, Dr. Frederick Banting and Charles Best, and has since been used to treat diabetes. Today, it is produced mainly by means of biotechnological processes and must be either injected or infused. It cannot be administered orally because the peptide hormone insulin would be destroyed by gastric acid.

Insulin analogsInsulin analogs are insulins with a modified amino acid sequence that have an altered metabolization compared with human insulin. The motivation for developing insulin analogs was to improve the ability to control the insulin treatment. In the case of normal insulin, the effect sets in after about 30 minutes, and the maximum effect is reached after 1 to 2 hours. Through the exchange of certain amino acids, the metabolization (pharmacokinet-ics) of the insulin can be altered without affecting its action, i. e. binding to the insulin receptors.

Insulin pumpInsulin pumps are small, battery-operated devices (about the size of a pager or cell phone) that can replace regular insulin injections for patients manag-ing diabetes. They contain an insulin ampoule / cartridge with fast-acting insulin. The insulin is delivered at regular intervals into the subcutaneous fatty tissue of the body by means of a catheter, for which the cannula is under the skin. The catheter and cannula are changed every 1 to 3 days. The infusion pump allows for an almost normal adjustment of blood sugar by continuously delivering small doses of insulin, preprogrammed by the patient, around the clock, even while a patient sleeps. In addition, the patient can deliver additional insulin doses at the touch of a button in order to be able to cover additional insulin requirements, for example at meals. The treatment with an insulin pump requires the patient to continue to take regular blood sugar measurements so that the insulin dose can be adjusted, if necessary.

Insulin patch pumpsPatch pumps represent a new generation of pumps; patch pumps are dis-posable pumps usable for up to three days, after which they are disposed of. They consist of a plastic case containing the insulin reservoir, and, with a small cannula that is placed under the skin, are adhered directly to the body. The tubing system connecting the pump and body is therefore no longer required. The pump system is operated via a remote control that is carried externally. The first patch pump available on the American market was the Omnipod®, which will be distributed in Europe from June 2010 as the mylife OmniPod.

Interferon alphaInterferons play an important role as messengers and cues for different defense mechanisms in the immune system. They are released by cells that are afflicted with viruses. In this way, defense cells of the immune system, such as macrophages, natural killer cells and cytocidal T lymphocytes, are activated. In addition, interferons inhibit the growth and the division of healthy as well as malignant cells. Alpha interferon is used for the treatment of acute and chronic hepatitis C infections.

Lantus®

Lantus® from Sanofi-Aventis is a long-acting insulin analog injected one to two times daily that lowers glucose levels for up to 24 hours. Lantus® is a basal insulin in that it provides for a slow and steady release of insulin.

Monoclonal antibodiesMonoclonal antibodies are highly specialized and targeted antibodies – active protein molecules that are produced by the immune system in response to a foreign substance (e. g. foreign bodies, pathogens) and can render it harmless – that are created synthetically using biotechnological processes. What is special about them is that they are able to activate the body’s own natural defense mechanisms to combat a disease. Until now, monoclonal antibodies have been used in cancer therapy in particular and for the suppression of adverse immune reactions, e. g. in cases of psoriasis. This may also involve autoimmune diseases or even the preven-tion of rejection reactions after organ transplants.


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ODM (Original Design Manufacturer)A company is described as an Original Design Manufacturer (ODM) if it undertakes make-to-order production for another company. An ODM manufactures products commissioned by other companies, some of which it develops itself. The products are then sold under the buying company’s brand name. This method enables a customer of an ODM to offer branded products without having to run its own factory for this product. “Design” is significant in the definition of an ODM, as an ODM also carries out the planning and design of the parts produced. This is in contrast to a CM (Contract Manufacturer), which only undertakes the make-to-order production.

OncologyThe branch of medicine / science concerned with the prevention, diagnosis, treatment, follow-up care and study of cancer / tumor diseases.

Pen (injection pen)Injection device that externally looks like a fountain pen or ballpoint pen. The dose of medication prescribed by a doctor is set by adjusting a dosage knob and is injected from a cartridge through a cannula (pen needle) into the body.

Pen needle (cannula)A fine hollow needle for one-time use attached to the tip of the injection pen in order to inject the drug into the body. Ypsomed’s pen needles feature a click-on mechanism that makes the pen needle easy to attach to the pen.

PsoriasisPsoriasis is a non-communicable autoimmune disorder that affects the skin, resulting in lesions over various areas of the body. The most common form (accounting for 80 % of all cases) is plaque psoriasis, characterized by red, raised skin covered with scales.

® / ™

The ® or ™ symbols, when used in this document, indicate that the relevant name is a registered trademark of the relevant pharma partner of Ypsomed or Ypsomed itself.

Rheumatoid arthritisRheumatoid arthritis (also chronic polyarthritis) is the most common condi-tion that leads to inflammation in the lining of the joints. Most commonly, the chronic condition develops episodically, with an episode lasting typically between several weeks and a few months. The pain recedes between individual episodes. The cause of the condition has not been fully explained although it is thought to result from an autoimmune condition.

Self-injection devicesWhen used in this document, self-injection devices include pens (dispos-able, reusable and semi-disposable pens), auto-injectors, motor-driven injection systems, safety products, and needle-free technology.

Subcutaneous(from Lat. sub = under, cutis = skin, abbr. s. c.)A subcutaneous injection is an injection into the fatty tissue under the skin. Using pens or other injection systems, drugs can, for example, be administered intramuscularly, subcutaneously or intravenously.

ThrombosisThrombosis is the presence or accumulation of a blood clot (thrombus) in a blood vessel. In principle, thrombosis can develop in all vessels (arter-ies, veins). Colloquially, however, we commonly refer to thrombosis of the deep leg veins even when we mean phlebothrombosis. Arterial thrombosis occurs significantly less frequently. An embolism is a dangerous complica-tion of thrombosis. In this case, the thrombosis has detached from its point of origin in the vessel and is transported (embolism) in the body through the blood flow. Should the embolism block a narrow point in the vascular system, the tissue behind the affected location will no longer be properly supplied with blood and will be damaged. This is called an infarction. Infarctions can damage all organs (myocardial infarction, apoplexy, pulmonary embolism).


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Editor:Ypsomed Holding AG, Burgdorf

Concept & Design:KOMET Werbeagentur AG BSW, Bernwww.komet.ch

Photos:Maurice Haas, Zurich

Printing:Stämpfli Publikationen AG, Bern

The Group publishes Annual Reports in English and German. The German version is legally binding.

Disclaimer

This annual report contains certain forward-looking statements. These can be identified by terms such as “should”, “accept”, “expect”, “anticipate”, “intend” or similar terms and phrases. The actual future results may differ materially from the forward-looking statements in this annual report, due to various factors such as legal and regulatory developments, exchange rate fluctuations, changes in market conditions, as well as the activities of competitors, the non-introduction or delayed introduction of new products for various reasons, risks in the development of new products, interruptions to production, the loss of or inability to obtain intellectual property, litigation and administrative proceedings, adverse publicity and news coverage.

The people pictured are taken partly from agency photographs; their biographies and testimonials are fictitious.

Links to third party websites and other references to the information of third parties are offered as a courtesy; we accept no responsibility for any third party information.

All product names mentioned in this report are trademarks owned by or licensed to the Ypsomed Group. Third-party trademarks are marked with ® combined with the product name.

Ypsomed Holding AG

Brunnmattstrasse 6

Postfach

3401 Burgdorf

Switzerland

Phone +41 34 424 41 11

Fax +41 34 424 41 22

www.ypsomed.com

[email protected]

annual report 2010/11 ypsomed holding ag

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