FULL VERSION HALF-YEAR REPORT 2018

Transcription

1 FULL VERSION HALF-YEAR REPORT 2018

2 H AT A GLANCE H1 performance above expectations H1 net sales CHF million, up 23.4% H1 EBITDA CHF million, up 44.5% Guidance raised: at constant exchange rates Vifor Pharma net sales are now expected to grow by more than 15% in 2018 and EBITDA by more than 25% Ferinject Net sales up 29.3% in H1; on track for growth of at least 20% on a full-year basis Vifor Fresenius Medical Care Renal Pharma Mircera growth strong at CHF million, up 38.1% from H Conditional Marketing Authorization Application (phase-ii data basis) for avacopan under review for the treatment of ANCA-associated vasculitis in Europe Agreement signed with Cara Therapeutics to develop and commercialise CR845/difelikefalin injection for haemodialysis patients with pruritus worldwide outside US, Japan, South Korea Veltassa Strong momentum, with net sales of CHF 36.8 million for H (up 51.8% from CHF 24.3 million in H1 2017) European launches in Germany, the UK and Switzerland First successful ex-us reimbursement approval in Sweden and Denmark US FDA approves label change enabling Veltassa to be taken with or without food Exclusive development and marketing licence signed with Zeria Pharmaceutical Co, Ltd. in Japan Company evolution and leadership Jacques Theurillat elected member of the Board of Directors 2 44

3 TABLE OF CONTENTS HALF-YEAR REPORT 04 Executive message 06 Highlights H Our vision and mission 10 Financial overview 12 Key growth drivers and products 26 Outlook 27 Guidance CONSOLIDATED INTERIM FINANCIAL STATEMENTS 30 Consolidated statement of income 31 Consolidated statement of comprehensive income 32 Consolidated statement of financial position 33 Consolidated statement of changes in equity 34 Consolidated statement of cash flows 35 Notes to the consolidated interim financial statements KEY CORPORATE INFORMATION 42 Upcoming dates 43 Addresses 3 44

4 H EXECUTIVE MESSAGE In the first half of 2018, we continued to build on our achievements in 2017, executing against our strategy and delivering improved financial results. These accomplishments were due first and foremost to the dedication of our employees. At Vifor Pharma, we have built a talented team committed to helping patients with severe and chronic diseases to lead better, healthier lives. We believe profoundly that with this organisation we have built the foundations required to become a global leader in iron deficiency, nephrology and cardio-renal therapies. DEAR SHAREHOLDER, With our three strategic growth drivers all performing strongly in H1 2018, revenues grew 23.4% compared to prior year to CHF million, and reported EBITDA was up 44.5% at CHF million compared to CHF million in H As a result of this overperformance, we have decided to raise our guidance. At constant exchange rates Vifor Pharma net sales are now expected to grow by more than 15% in 2018 compared to more than 10% as communicated on 15 March EBITDA is also expected to increase by more than 25% instead of more than 20% that was communicated on 15 March As we work to deliver our 2020 goals, we are fully focused on executing our strategy for Vifor Pharma to become the global leader in iron deficiency, nephrology and cardio-renal therapies. We will achieve this by continuing to do the following: Build market awareness of iron deficiency and iron deficiency anaemia worldwide so that Ferinject /Injectafer achieves its blockbuster potential. Focus on our strong product portfolio and provide innovative, patient-focused solutions to address the needs of dialysis and chronic kidney disease (CKD) patients via Vifor Fresenius Medical Care Renal Pharma (VFMCRP), our joint company with Fresenius Medical Care. Ensure that Veltassa achieves its blockbuster potential by using it to treat chronic hyperkalaemia and enable optimal renin-angiotensinaldosterone-system inhibitor (RAASi) therapy. Ferinject /Injectafer continued to build on its position as the market-leading intravenous (i.v.) iron therapy worldwide through a combination of efficacy, safety and tolerability. As a result, we reconfirm our expectation for year-over-year growth in 2018 to be in excess of 20%. In addition, we remain convinced that Ferinject /Injectafer 4 44

5 will achieve in-market sales of more than CHF 1 billion by 2020 at the latest. We are committed to fully exploiting the potential of Ferinject / Injectafer by focusing on key areas such as heart failure, gastroenterology, nephrology and patient blood management; continuing to strengthen our partner business; executing on our lifecyclemanagement activities; and increasing our global reach, such with our March 2018 submission of a New Drug Application (NDA) in Japan and then a 2019 Japan launch. Our second strategic growth driver, our joint company Vifor Fresenius Medical Care Renal Pharma (VFMCRP), strengthened its position in the nephrology indication due to its unique product offering and its access to the world s largest network of dialysis clinics. Established products such as Mircera continued to grow strongly, while at the same time we made important progress with our pipeline of promising new products. The Conditional Marketing Authorisation (based on phase-ii data) for our innovative C5a receptor inhibitor, avacopan, is currently being reviewed in Europe for the treatment of patients with ANCA-associated vasculitis. We are also on track to file Rayaldee in Europe for treatment of secondary hyperparathyroidism (SHPT) in adult patients with non-dialysis CKD with vitamin D insufficiency in H VFMCRP s aim to strengthen its leadership in nephrology was underlined by our development and licensing agreement with Cara Therapeutics that we concluded in May to commercialise CR845 injection outside of the US, Japan and South Korea for the treatment of CKD disease-associated pruritus in haemodialysis patients. Veltassa continued to grow in accordance with our expectations strengthening our strategic position in cardio-renal therapies and our overall position in the key US market. First-half 2018 net sales increased by 51.8% compared to prior year. However, adjusting for inventory impacts and revenue recognition changes, the increase was 79.6%, which is also reflected in the 81% growth in weekly demand for boxes in the US year on year. As a result, real-world experience demonstrating the efficacy and safety of Veltassa is growing, generating support from clinicians and patients in the US and increasingly in Europe, where Veltassa is being made available in an increasing number of countries following approval in July 2017 (Switzerland in December 2017). The approval in May of this year by the US Food and Drug Administration (US FDA) to improve the label for the use of Veltassa with or without food will result in increased flexibility for many patients seeking to include Veltassa in their daily treatment regimen. We were also pleased to move a step closer to making Veltassa available to hyperkalaemia patients in Japan by concluding a licensing agreement granting exclusive rights to Zeria Pharmaceutical Co, Ltd. to develop Veltassa for the Japanese market. This further strengths our existing relationship with Zeria, our Japanese partner for Ferinject. An exciting development in respect of our pipeline in H was the entry of our ferroportin inhibitor into a phase-i clinical study. Initial data is expected before the end of Finally, we are grateful to our shareholders and once again to our employees for their continued loyalty and support. Very sincerely, Etienne Jornod Executive Chairman of the Board of Directors Stefan Schulze President of the Executive Committee and COO 5 44

6 H HIGHLIGHTS FINANCIAL HIGHLIGHTS Net sales growth 23.4 % H1 net sales in million CHF EBITDA Net profit Equity ratio % % or CHF million in million CHF, up 255.9% or CHF 3,312.9 million Total Ferinject / Injectafer sales Mircera sales grow to Veltassa net sales of in million CHF, up 38.1% 36.8 in million CHF in million CHF Ferinject net sales CHF million Injectafer net sales CHF 59.5 million 6 44

7 BUSINESS HIGHLIGHTS Continued focus on strategic growth drivers Governance Jacques Theurillat elected to the Vifor Pharma Board of Directors Core earnings per share 2.66 CHF Ferinject /Injectafer 29.3 % growth compared to prior year VFMCRP In May, US-FDA approved Pfizer s biologics licence application (BLA) for Retacrit, which will be marketed for the treatment of anaemia due to chronic kidney disease (CKD) in dialysis and non-dialysis patients Veltassa Launches in Europe continue, including in Switzerland, Germany and the UK US FDA approves label change enabling Veltassa to be taken with or without food Veltassa marketing approval for Switzerland for the treatment of hyperkalaemia is announced in January Further strengthening of pipeline through strategic partnerships March: licensing agreement concluded with Japanese company Zeria Pharmaceutical Co, Ltd. to develop and commercialise Veltassa in Japan May: agreement signed with Cara Therapeutics to develop and commercialise CR845/ difelikefalin injection 7 44

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9 VIFOR PHARMA GROUP OUR VISION AND MISSION With the transformation of Vifor Pharma Group into a pharmaceutical company, we have clearly defined our vision and our mission. Our vision Global leader in iron deficiency, nephrology and cardio-renal therapies. The partner of choice for specialty pharmaceuticals and innovative patientfocused solutions. Our mission We strive to help patients around the world with severe and chronic diseases lead better, healthier lives. 9 44

10 H FINANCIAL OVERVIEW KEY PROFIT AND LOSS FIGURES Vifor Pharma Group reported net sales in the first half of 2018 grew to CHF million, an increase of 23.4% in CHF versus the prior year or 23.1% on a constant currency basis. The application of the new revenue recognition standard (IFRS 15) required a reclassification of certain elements between net sales and costs with zero impact on EBITDA. The new standard resulted in lower reported sales in H of CHF 27.7 million and in H of CHF 19.8 million with fully compensating effects in lower costs. EBITDA in H rose to CHF million compared to CHF million in the prior year, an increase of 44.5% or 48.7% in local currency. Cost of sales amounted to CHF million in H compared to CHF million in the prior period. Other income decreased from CHF 56.1 million in H to CHF 41.0 million in H due to an expected decline in CellCept entering the sunset period. Gross profit increased by 21.5% from CHF million in H to CHF million in H with an improved gross profit margin of 63.5% (H1 2017: 62.2%) mainly due to strong Ferinject growth overcompensating the decline in other income. Marketing and distribution expenses amounted to CHF million, up 17.9% compared to prior period. The main drivers were the investments in the European commercial organisations for the continued rollout of Veltassa. First half-year investments in R&D amounted to CHF 91.9 million compared to CHF 86.2 million in the prior period. The increase on prior year was driven by clinical studies in Ferinject, Veltassa and the ferroportin inhibitor. General and administration expenses amounted to CHF 82.3 million compared to CHF 84.4 million in H The decrease is mainly attributable to a recharge of management costs by Galenica Santé top management costs during the first three months of The average number of full-time employees (FTE) for the Group amounted to 2,658 in H1 2018, compared to 2,519 in H The increase of 139 FTEs is to a large extent driven by an expansion of Vifor Pharma s commercial workforce. Amortisation and depreciations amounted to CHF 76.7 million vs. CHF 70.8 million in H and are mainly considered under cost of sales (89% and 87%, respectively) as IP amortisations mainly for Veltassa and Mircera. The financial result in H was CHF 41.8 million positive compared to a financial loss in H of minus CHF 5.2 million. The increase in financial income to CHF 47.5 million compared to CHF 15.0 million in H was mainly attributable to a CHF 42.9 million foreign exchange gain on USD intercompany loans of approximately USD 1,084 million related to the Relypsa acquisition in Until 24 March 2018, these loans were considered equity loans and re-measured through other comprehensive income (OCI). On 24 March 2018 (USD/CHF rate of 0.95), management changed its intent with regards to the settlement of the IC loans, which led to the subsequent revaluation of these loans through P&L. Vifor Pharma effectively settled these loans as of 30 June 2018 (USD/CHF rate of 0.99). Additionally, interest expense was reduced to CHF 5.7 million compared CHF 20.2 million in 2017 due to the repayment of the bridge loan of CHF 1.45 billion in April Tax income of CHF 1.0 million was reported in H due to cash taxes being fully offset by capitalisation of previously unrecognised tax-loss carry forwards in the US and Switzerland

11 Net profit after minorities for H decreased to CHF million compared to CHF 1,093.7 million in the previous year, which included CHF 1,103.3 million from discontinued operations as a result of the IPO of Galenica Santé. Core earnings per share H were CHF Core earnings are defined as reported earnings after minorities adjusted for amortisation of intangible assets to normalise for the significant impact from the acquisition of Relypsa. In H1 2018, attributable amortisation of intangible assets amounted to CHF 54.5 million. CASH FLOWS AND FINANCIAL POSITION Cash flow from operating activities for H amounted to CHF 38.4 million compared to CHF 28.8 million in the prior-year period. Cash flow from investing activities of minus CHF million was mainly due to the agreements signed with Cara Therapeutics amounting to CHF 70.1 million, the milestone payment for the acceptance of the Conditional Marketing Authorization application for avacopan amounting to CHF 49.0 million, commercialisation rights for Mircera and Retacrit amounting to CHF 17.5 million, as well as ordinary capital expenditures of CHF 26.3 million. Cash flow from financing activities of minus CHF million was mainly driven by the repayment of the private placement notes of CHF million and a dividend distribution to Fresenius Medical Care of CHF 45.0 million. Also, the 2017 dividend of CHF million was distributed to shareholders in May The overall cash flow for H was minus CHF million, resulting in a decrease in the cash position from CHF million at the end of 2017 to CHF million as of 30 June SOLID BALANCE SHEET Goodwill and intangible assets at the end of H amounted to CHF 2,710.3 million or 65.5% of total assets of CHF 4,138.9 million, with the majority of these related to the acquisition of Relypsa. Cash and cash equivalents at the end of H amounted to CHF million or 2.8% of total balance sheet assets. Net debt was CHF million resulting in a net-debt-to- EBITDA ratio of 0.38 at the end of H With CHF 3,312.9 million of shareholders equity, Vifor Pharma had a strong equity ratio at the end of H of 80.0%. The return on equity after minorities (from continued operations) amounted to 3.9% in H1 2018, compared to minus 0.4% in H Net sales EBITDA % in million CHF +48.7% in local currency 11 44

12 Key Growth Drivers AT A GLANCE FERINJECT Market-leading product Available worldwide in Defined daily doses N 1 intravenous iron product worldwide 75 countries million VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA Portfolio The most comprehensive portfolio for kidney patients Fresenius Medical Care Partnering with Fresenius Medical Care to ensure the optimal treatment for each patient Collaborations Accessing innovation through strategic partnerships VELTASSA Patent protection Real-world experience Long-term management Patent protected until 2030 and ex-us until 2029 Three years and more than fifty thousand patients real-world experience Sodium-free for long-term hyperkalaemia management 12 44

13 Key Growth Drivers STRONG PERFORMANCE IN H Three strategic growth drivers Vifor Pharma has three strategic growth drivers: Ferinject /Injectafer, the world s leading intravenous (i.v.) iron product The joint company, Vifor Fresenius Medical Care Renal Pharma (VFMCRP), providing innovative pharma solutions to address the needs of chronic kidney disease patients, whether on dialysis or not Veltassa, launched for the treatment of patients with hyperkalaemia in Europe, the United States and Australia Iron deficiency Nephrology Cardio-renal 13 44

14 Key Growth Drivers FERINJECT /INJECTAFER The first of our growth drivers is Ferinject (in the US: Injectafer ), which is the marketleading intravenous (i.v.) iron therapy. By the end of June 2018, the product was approved in 75 countries, with over 7.5 million years of patient experience and over 104 million defined daily doses (DDDs), demonstrating broad market demand and a well-accepted benefit/risk profile of the brand. Vifor Pharma is committed to further building market awareness of the benefits of i.v. iron therapy to patients suffering from iron deficiency in multiple therapeutic areas. Given its current growth trajectory and the significant remaining unmet medical need, Ferinject remains positioned to continue to provide relief from the burden of iron deficiency in multiple patient groups and thereby achieve in-market sales in excess of CHF 1 billion by 2020 at the latest. IN ORDER TO ACHIEVE THIS OBJECTIVE, VIFOR PHARMA HAS DEVELOPED A PLAN CONSISTING OF FOUR KEY COMPONENTS: First, address key iron deficiency indications such as cardiology, gastroenterology, nephrology and patient blood management. Second, expand geographically by launching in key countries such as Japan with our partner, Zeria, in 2019 and in China in Third, further strengthen our collaboration with existing partners such as Daiichi Sanko in the US. Fourth, manage the life cycle by generating clinical data from studies such as AFFIRM-AHF and HEART-FID. REPORTED NET SALES IN H In H1 2018, overall reported net sales of Ferinject increased by CHF 51.9 million (29.3%) to million. Approximately 3.8% of the reported increase in H was due to phasing and timing differences in the ordering patterns of our wholesale customers. Another 3.5% of the reported net sales increase in H was due to the favourable impact on foreign currency rates. On a full-year basis in 2018, we expect the increase in reported net sales of Ferinject / Injectafer versus prior year to be in excess of twenty per cent at constant exchange rates. GLOBAL IN-MARKET SALES We closely monitor in-market sales to determine actual growth rates for the product. The latest available IQVIA data from March 2018 indicates global market sales of Ferinject /Injectafer moving annual total (MAT) of approximately CHF million, an increase of 29.7% versus the prior-year period. In addition, we saw an increase in overall i.v. iron market share to 45.7% compared to 39.8% in the prior year. INJECTAFER (US) Injectafer continues to drive the growth of the US intravenous iron market. US partner Luitpold Pharmaceuticals, Inc., a member of the Daiichi-Sankyo Group, recorded net sales of USD million in H1 2018, an increase of 42.6% compared to H In the US, Vifor Pharma received a portion of Daiichi Sankyo s reported Injectafer net sales, resulting in reported net sales of CHF 59.5 million (USD 61.5 million) in H1 2018, a 38.8% increase compared to CHF 42.9 million (USD 43.1 million) in H

15 IMPORTANT SCIENTIFIC AND MARKET AWARENESS ACTIVITIES OUTSIDE THE US In line with our commitment to further build market awareness, several activities were launched during the first half of 2018 in our cardio-renal patient segment. Among them were global awareness campaigns on iron deficiency in chronic heart failure. Awareness was raised around Ferinject as the recommended treatment option in guidelines for chronic heart failure patients with iron deficiency. Awareness-building activities for other patient groups included publishing research on the cost effectiveness of using Ferinject in pre-operative settings as a component of patient blood management (PBM). PBM revolves around ensuring that patients who may need blood transfusions receive optimal care. The benefits of PBM are manifold, including smaller/fewer transfusions, shorter hospitalisations, better clinical outcomes and reduced cost. A large randomised, controlled trial in acute heart failure, the AFFIRM-AHF trial, continued to investigate the effect of Ferinject on outcomes in patients after stabilisation following an episode of acute heart failure. Morbidity and mortality outcomes with Ferinject versus placebo will also be analysed independently in the FAIR-HF2 investigator-initiated study. American Regent, a member of the Daiichi Sankyo group, is enrolling patients into one of the largest studies of i.v. iron in heart failure, the HEART-FID study. HEART-FID is a double-blind, multi-centre, prospective, randomised, placebo-controlled clinical outcome study to assess the efficacy and safety of Injectafer in the treatment of patients with heart failure, iron deficiency and a reduced ejection fraction. Iron deficiency affects up to half of all heart failure patients. Our partner in Japan, Zeria, submitted a New Drug Application (NDA) for Ferinject to local authorities in March 2018, a key step in building access to the Japanese market. A phase-iii pivotal approval study of Ferinject in China is progressing according to plan. Net sales of Ferinject outside the US in H increased by 26.3% to CHF million compared to CHF million in the first half of the previous year

16 Key Growth Drivers Other key nanoparticle-based iron products VENOFER Venofer, the originator i.v. iron sucrose product, continued to be the leading intravenous iron brand in terms of volume usage worldwide and is the trusted gold standard in iron therapy for dialysis patients. In H1 2018, more than 31 million doses of Venofer equivalent to 100 mg were used worldwide. Overall monitored usage of Venofer now correlates to over 23 million patient years of clinical experience. Venofer is a nanomedicine and recognised by the US FDA as a complex drug with stringent regulatory requirements for the approval of a potential follow-on product. The positive experience of generations of physicians and patients compared to other nanoparticle-based iron products (iron sucrose similars) has helped to secure the position of Venofer in a highly competitive environment of low-dose i.v. iron products. The reliability of Venofer is a key differentiator and one of the main reasons the brand retains strong demand after many decades on the market. In H1 2018, Venofer net sales increased by 11.6% versus prior year to CHF 59.6 million. The majority of Venofer sales continue to be in the US and Canada. Outside North America, Venofer is distributed mainly via our partner network and therefore reported net sales in any single period can be significantly affected by the ordering patterns of our partners. MALTOFER AND OTHER ORAL IRON PRODUCTS Net sales of other iron products totalled CHF 39.8 million in H1 2018, an increase of 14.9% compared to the prior year. This includes sales of the leading oral iron product Maltofer. In H1 2018, net sales of Maltofer increased by 19.7% compared to the prior year to CHF 34.1 million. VIT-2763 IN DEVELOPMENT VIT-2763, the first-ever oral ferroportin inhibitor for preventing iron overload, entered clinical development in March First results from the phase-i study are expected in the second half of VIT-2763 is an orally administered small molecule developed by Vifor Pharma. Intended for daily administration, VIT-2763 has the potential to treat diseases with impaired iron metabolism. Ferroportin is an iron transporter that plays a key role in regulating iron uptake and distribution in the body and thus in controlling iron levels in the blood. At the molecular level, VIT-2763 binds to ferroportin and blocks it to prevent excessive iron release into the blood. Pre-clinical evidence serving as the basis for the clinical development of VIT-2763 revolves around its efficacy for reducing elevated blood and tissue iron levels and for restricting iron uptake in patients suffering from conditions in which iron metabolism is altered. VFMCRP continued to support Kidney Research UK on the PIVOTAL trial, a study to investigate optimised iron deficiency treatment in haemodialysis patients, which includes the use of Venofer. Completion of the study is expected in

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18 Key Growth Drivers VIFOR FRESENIUS MEDICAL CARE RENAL PHARMA (VFMCRP) Our second strategic growth driver is Vifor Fresenius Medical Care Renal Pharma (VFMCRP), our joint company with Fresenius Medical Care. VFMCRP was established in 2010 and is dedicated to addressing the needs of chronic kidney disease patients around the world, whether they are on dialysis or not. The collaboration with Fresenius Medical Care provides VFMCRP access to the world s largest network of dialysis clinics. The joint company has already built a strong product portfolio by concluding commercial, pre-commercial and late-stage in-licensing deals. VFMCRP is well positioned to achieve its goal of being the global leader in nephrology through its focus on renal pharmaceuticals and innovative, patient-focused solutions. MIRCERA Net sales of Mircera increased strongly in H to CHF million, an increase of 38.1% compared to the prior year period. Mircera is a long-acting erythropoiesis-stimulating agent (ESA) that was licensed from Roche in May 2015 to treat symptomatic anaemia associated with chronic kidney disease. Vifor Pharma has exclusive rights to commercialise Mircera in the US and its territories. In September 2017, Vifor Pharma and Roche expanded their collaboration agreement, giving Vifor Pharma access to additional supplies of Mircera for the US market. This increased volume is enabling Vifor Pharma to now meet the needs of new and existing partners and is the key driver of the strong revenue growth of Mircera in the first half of In June 2018, the US FDA approved Mircera for the treatment of paediatric patients 5 to 17 years of age on haemodialysis. VELPHORO Reported net sales of the phosphate binder, Velphoro, decreased by 8.9% in H to CHF 35.8 million. However, adjusting for a year-over-year customer inventory decrease of CHF 10.5 million, net sales would have increased by 22.1% in H compared to prior year. On a full year basis in 2018, we expect the increase in reported net sales of Velphoro versus prior year to be approximately twenty per cent at constant exchange rates. The global rollout of Velphoro continued during H1 2018, including regulatory approval in Canada in January 2018 and in South Korea in March As of 30 June 2018, Velphoro is registered in 41 countries and available in 24. On the back of the important real-world study, Coyne et al (2017), in the US, the use of Velphoro in real-life conditions is also being investigated under the European phase-iv VERIFIE study, including patients in Spain, Germany, France, the Netherlands, the UK, Italy and Greece. Recruitment concluded in April with 1,400 patients enrolled. An interim analysis presented at the European Nephrology Congress in May 2018 confirmed the efficacy and safety of Velphoro in real-life use. Following a licence and supply agreement for the development and commercialisation of Velphoro in China in March 2017, VFMCRP and its partner are initiating a clinical study. The clinical trial was approved by the first ethics committee in China and patient enrolment is expected to begin in August

19 RAYALDEE PRE-COMMERCIAL EX-US VFMCRP obtained rights from OPKO Health in May 2016 to commercialise extended-release calcifediol capsules (US brand name: Rayaldee ) for the treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) and vitamin D insufficiency in Europe, Canada and certain other key markets. VFMCRP obtained regulatory approval for Rayaldee for the treatment of SHPT in CKD stage 3 and 4 with vitamin D insufficiency in Canada in July VFMCRP plans to file a regulatory dossier for Rayaldee in Europe for the treatment of adult patients with SHPT and vitamin D deficiency with non-dialysis CKD (ND-CKD) with vitamin D insufficiency in H RETACRIT On 15 May 2018, the United States Food and Drug Administration approved Pfizer s biologics licence application (BLA) for Retacrit for the treatment of anaemia due to chronic kidney disease (CKD) in patients on dialysis and not on dialysis. Retacrit is now the first and only biosimilar ESA to be approved in the US. Vifor Pharma holds the US commercialisation rights for Retacrit (epoetin alfa-epbx) in the US dialysis market and non-hospital nephrology office market. Adding a short-acting ESA to the portfolio is further strengthening Vifor Pharma s position in the US EPO market in the medium term. The launch of Retacrit in the US is expected in H

20 Key Growth Drivers AVACOPAN/CCX168 IN DEVELOPMENT Avacopan is an orally administered, selective complement 5a receptor (C5aR) inhibitor being developed and investigated by ChemoCentryx. This small molecule is currently in development for orphan and rare renal diseases in which C5aR may play a key therapeutic role, including two forms of anti-neutrophil cytoplasmic auto-antibody-associated vasculitis (ANCA-associated vasculitis; microscopic polyangiitis, MPA, and granulomatosis with polyangiitis, GPA) and C3 glomerulopathy (C3G). In February 2017, following an expansion of their original agreement with US partner and biopharmaceutical company, ChemoCentryx, VFMCRP was granted exclusive rights to market avacopan everywhere outside the US and China, where commercial rights were retained by ChemoCentryx. In 2017, a global phase-iii study, ADVOCATE (for more information visit clinicaltrials.gov), began worldwide patient enrolment. ADVOCATE will evaluate the efficacy of avacopan to induce and sustain remission in patients with active ANCAassociated vasculitis (GPA or MPA) when used in combination with cyclophosphamide followed by azathioprine, or in combination with rituximab. Patient enrolment for this trial was completed in July 2018 except in Japan, where recruitment of patients is ongoing. The Japanese regulatory authority, the Pharmaceuticals and Medical Devices Agency (PMDA), granted our commercial partner for Japan, Kissei Pharmaceutical Co Ltd, permission to include Japanese study subjects in the ADVOCATE trial. On 4 January 2018, VFMCRP and ChemoCentryx announced that the Conditional Marketing Authorisation application (based on available phase-ii data) for avacopan in the treatment of patients with ANCA-associated vasculitis had been accepted for review by the EMA. Under the terms of the kidney health alliance between ChemoCentryx and VFMCRP, the acceptance triggered a milestone payment of USD 50 million to ChemoCentryx. Full marketing authorisation will be filed once the ADVOCATE study is completed at the end of CCX140 IN DEVELOPMENT CCX140 is an orally administered inhibitor of the chemokine receptor known as CCR2. This orphan drug candidate is in development by ChemoCentryx for the treatment of focal segmental glomerulosclerosis (FSGS). FSGS is a disease of the kidneys that can cause nephrotic syndrome, which is associated with protein in the urine, low blood albumin levels and high blood lipids. In December 2016, Vifor Pharma licensed worldwide rights outside the United States and China to develop and commercialise CCX140. Clinical and pharmaceutical development is progressing as planned for FSGS. An early clinical development plan is underway to examine the use of CCX140 in two primary FSGS patient populations

21 VADADUSTAT IN DEVELOPMENT Vadadustat, being developed by US biopharmaceutical, Akebia Therapeutics, Inc., is an oral hypoxia-inducible factor prolyl hydroxylase inhibitor (HIF-PHI) currently in global phase-iii development for the treatment of anaemia due to chronic kidney disease. Vadadustat is an investigational therapy and is not approved by the US Food and Drug Administration (FDA) or any regulatory authority. CR845 INJECTION IN DEVELOPMENT CR845 injection is a powerful itch and inflammation suppressant without the undesirable sideeffects typical of an opioid medicine such as hallucination or opioid addiction. This investigational medicine was designated a breakthrough therapy for CKD-aP in haemodialysis patients by the FDA in June 2017 and shows compelling phase-ii data on safety and efficacy. Cara is conducting a phase-iii study in uremic pruritus to test the efficacy of CR845 injection in haemodialysis patients suffering from moderate-to-severe CKD-aP in the United States; data are expected in If approved, CR845 injection will be the first medicine for this indication outside of Japan. Under the terms of the agreement, Cara Therapeutics received an upfront payment of USD 50 million in cash, and Vifor Pharma made an equity investment of USD 20 million to acquire Cara Therapeutics common stock. Cara Therapeutics will also be eligible to receive additional payments upon achievement of certain regulatory and commercial milestones, as well as tiered royalties on net sales of CR845 injection for CKD-aP in the licensed territories. Cara Therapeutics retains development and commercialisation rights for CR845 injection for the treatment of CKD-aP in the US. Cara Therapeutics will solely promote the product in all non-fmc clinics in the US once approved. VFMCRP and Cara Therapeutics will promote the drug to FMCNA (Fresenius Medical Care North America) dialysis clinics under a profit-sharing arrangement. VFMCRP has also secured the first right of negotiation for using CR845 injection to treat post-operative pain outside of the US, Japan and South Korea. On 23 May 2018, we announced a development and licensing agreement with US biopharmaceutical Cara Therapeutics, Inc, to commercialise CR845 (difelikefalin) injection for the treatment of CKD-associated pruritus (CKD-aP), a highly debilitating disease, in haemodialysis patients worldwide, excluding the US, Japan and South Korea

22 Key Growth Drivers VELTASSA Our third strategic growth driver is Veltassa, a treatment for elevated potassium levels, or hyperkalaemia, a life-threatening and often asymptomatic condition that occurs most frequently in patients with chronic kidney disease and heart failure. In H1 2018, reported net sales of Veltassa CHF 36.8 million compared to CHF 24.3 million in H1 2017, an increase of 51.8% or 56.3% on a constant currency basis. However, adjusting for year-over-year inventory changes at wholesalers the increase was 79.6%, which was reflected in the 81% growth in the weekly demand for sachets in the US. This is because H net sales were elevated by approximately CHF 3 million due to inventory increases at wholesalers, while H net sales were reduced by about CHF 1 million due to lower wholesaler inventory levels. On a full year basis in 2018, we expect the reported net sales of Veltassa to be in the range of USD 90 million. In the US, sales growth in H was driven by an overall increase of market awareness of Veltassa and hyperkalaemia and continued growth in retail. The addressable patient population and our experience with Veltassa since launch confirm our view that the product has blockbuster potential. Veltassa is only half-way through its third year since launch. We are continuing to make significant progress in building market awareness for this new therapy as a means for treating chronic hyperkalaemia. Throughout this process, we constantly compare our experience of success fully launching Ferinject and building market awareness. On 8 May, the US FDA approved a supplemental New Drug Application (snda) to enable the use of Veltassa with or without food, potentially providing patients with greater flexibility in incorporating Veltassa in their daily treatment regimen. The label update was based on results from the phase-iv TOURMALINE study, which showed no statistically significant difference between the groups taking Veltassa with or without food in achieving serum potassium levels within the target range (3.8 to 5.0 meq/l). In the first half of 2018, Veltassa was launched in Germany, the UK and Switzerland. On 18 May the Dental and Pharmaceutical Benefits Agency (TLV) in Sweden issued the first ex-us positive reimbursement decision for Veltassa, followed by launch in June Reimbursement negotiations and launches will continue across Europe throughout 2018 and In March, Vifor Pharma concluded a licensing agreement with Zeria Pharmaceutical Co, Ltd, granting Zeria exclusive right to develop Veltassa for the Japanese market and, once marketing authorisation has been granted, to commercialise it in Japan. The collaboration with Zeria represents an important step in Vifor Pharma s ambition to make Veltassa available to patients worldwide. Having Veltassa and Ferinject commercialised through the same partner represents a substantive step for Vifor Pharma in its goal towards expanding its cardio-renal network and becoming the global leader in cardio-renal therapies. Recruitment for the AMBER study for treatment of patients with resistant hypertension started in 2016 is expected to conclude at the end of 2018, with top-line results in H The EMERALD study, initiated in 2017, to test the safety and efficacy of Veltassa in paediatric patients is progressing as planned. Study protocol development of the DIAMOND outcome-based study for RAASi enabling is ongoing through 2018 with study initiation planned in H

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24 Key Growth Drivers INFECTIOUS DISEASES/OTX We continue to optimise our anti-infectives (infectious diseases/otx) product portfolio to deliver value to a focused group of patients with high unmet medical need. The three leading products in the ID/OTX portfolio are Broncho-, Uro-Vaxom and Doxium. BRONCHO-VAXOM Net sales of Broncho-Vaxom decreased 7.0% (CHF 26.1 million) in H compared to the previous year of CHF 28.1 million. This decrease was primarily due to customers in Europe increasing inventory levels in H The generation of new clinical data, such as in the ORBEX trial or other studies, is currently investigating how Broncho-Vaxom s unique immunomodulating properties can be used to stave off respiratory tract infections in at-risk paediatric populations. This ongoing effort supports our strategy to further strengthen our position in the scientific/regulatory field worldwide. DOXIUM Net sales of Doxium in H were CHF 10.9 million, an increase of 12.2% compared to prior year. The focus was particularly on key emerging pharma markets such as Turkey, Brazil and China. Our partner in China, Merck Serono, a leader in the local diabetes market, increased its promotion of Doxium in the management of diabetes-related micro-vascular complications. The Chinese government authorities selected Doxium as the reference medicine for calciumdobesilate. URO-VAXOM Net sales of Uro-Vaxom in H were CHF 7.7 million, an increase of 16.6% compared to prior year. Overall market profitability and market share have been increasing consistently in recent years. This trend demonstrates the need to prevent recurrent urinary tract infections with a product recommended in international guidelines to reduce the use of antibiotics as recently discussed at the FIUR ( Foro en Infeccionas Urinarias Recurrentes ; English: Forum on Recurring Urinary Tract Infections) scientific congress on antibiotic resistance in May in Mexico City

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26 H OUTLOOK CLINICAL Recruitment will continue in the AFFIRM-AHF phase-iv trial of Ferinject for acute heart failure. The trial is the first study to investigate the effects of i.v. iron therapy on mortality and morbidity of acute heart failure patients. The study is currently in recruitment. Recruitment for the AMBER study of Veltassa for treatment of patients with resistant hypertension started in 2016 and is expected to conclude at the end of 2018, with top-line results at H Study initiation of the DIAMOND outcome-based study for RAASi enabling is planned in H A study to test the safety and efficacy of Velphoro for treating hyperphosphataemia in adults is expected to begin in China in PRODUCT LAUNCHES Veltassa will continue to be launched in selected countries across Europe. PARTNERING We expect to partner the Japanese rights for CCX140 before the end of

27 H GUIDANCE GUIDANCE Due to the strong financial performance of Vifor Pharma in H the guidance for the full year 2018 that was issued on 15 March 2018 in respect of net sales and EBITDA is increased. At constant exchange rates Vifor Pharma net sales are now expected to grow by more than 15% in 2018 compared to more than 10% communicated on 15 March EBITDA is also expected to increase by more than 25% instead of more than 20% that was communicated on 15 March In 2020 net sales are expected to exceed CHF 2 billion and EBITDA to reach a high tripledigit level. For 2018 and 2019, the dividend is expected to be at the same level as for From 2020 onwards, the payout ratio is targeted at 35% of net income

28 H CONSOLIDATED INTERIM FINANCIAL STATEMENTS 28 44

29 TABLE OF CONTENTS 30 Consolidated statement of income 31 Consolidated statement of comprehensive income 32 Consolidated statement of financial position 33 Consolidated statement of changes in equity 34 Consolidated statement of cash flows 35 Notes to the consolidated interim financial statements 29 44

30 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF INCOME in million CHF unaudited figures * Net sales Other income Cost of sales (288.1) (250.4) Gross profit Marketing and distribution (210.9) (178.9) Research and development (91.9) (86.2) General and administration (82.3) (84.4) Operating profit (EBIT) Financial income Financial expenses (5.7) (20.2) Profit before income taxes (EBT) Income tax 1.0 (12.5) Profit from continuing operations Profit from discontinued operations - 1,103.3 Net profit ,147.7 Attributable to: Shareholders of Vifor Pharma Ltd ,093.7 Non-controlling interests Earnings per share in CHF Basic earnings per share Diluted earnings per share Earnings per share from continuing operations in CHF Basic earnings per share 1.82 (0.15) Diluted earnings per share 1.82 (0.15) Earnings per share from discontinued operations in CHF Basic earnings per share Diluted earnings per share * Figures for 2017 are restated; refer to note 5.2 for further details

31 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME in million CHF unaudited figures Net profit ,147.7 Hedging transactions Change in fair value (0.6) 0.4 Realised in profit or loss (0.7) - Translation differences (10.9) (109.5) Items that will be reclassified subsequently to profit or loss (12.2) (109.1) Remeasurements of the net defined benefit liability/(asset) (0.7) 26.3 Change in fair value of financial assets measured through other comprehensive income 1) Income tax (2.6) (5.8) Share of other comprehensive income from joint ventures Items that will not be reclassified to profit or loss Other comprehensive income 0.2 (81.2) Total comprehensive income ,066.5 Attributable to: Shareholders of Vifor Pharma Ltd ,010.4 Non-controlling interests ) As a result of the IFRS 9 adoption, a new line item was included for the fair value adjustments that will not be subsequently reclassified to profit or loss; refer to note 5.2 for further details. The prior period was also adjusted for comparability

32 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF FINANCIAL POSITION in million CHF unaudited figures Cash and cash equivalents Financial assets Trade and other receivables Tax receivables Inventories Prepaid expenses and accrued income Current assets ,093.5 Property, plant and equipment Intangible assets 2, ,651.1 Financial assets Deferred tax assets Employee benefit assets Non-current assets 3, ,032.4 Assets 4, ,125.9 Financial liabilities Trade and other payables Tax payables Accrued expenses and deferred income Provisions Current liabilities Financial liabilities Deferred tax liabilities Employee benefit liabilities Provisions Non-current liabilities Share capital Reserves 3, ,072.4 Equity attributable to shareholders of Vifor Pharma Ltd. 3, ,073.1 Non-controlling interests Shareholders equity 3, ,332.5 Liabilities and shareholders equity 4, ,

33 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY in million CHF unaudited figures Share capital Treasury shares Retained earnings Foreign currency translation reserves Fair value reserves Total Noncontrolling interests Total equity 31 December (23.7) 2,200.7 (75.5) , ,294.5 Net profit - - 1, , ,147.7 Other comprehensive income (109.5) 5.2 (83.4) 2.1 (81.3) Total comprehensive income - - 1,114.6 (109.5) 5.2 1, ,066.4 Dividends - - (129.8) - - (129.8) - (129.8) Transactions on treasury shares - - (18.0) - - (18.0) - (18.0) Share-based payments Changes in non-controlling interests (4.6) (4.6) 30 June (23.7) 3,174.0 (185.0) , , December (17.7) 3,225.6 (155.7) , ,332.5 Adoption of IFRS 9 1) (19.1) January (17.7) 3,244.7 (155.7) 1.1 3, ,332.5 Net profit Other comprehensive income (10.9) (1.3) (9.3) Total comprehensive income (10.9) (1.3) Dividends - - (129.6) - - (129.6) (45.0) (174.6) Transactions on treasury shares (11.5) - - (10.8) - (10.8) Share-based payments Changes in non-controlling interests June (17.0) 3,232.0 (166.6) (0.2) 3, , ) As a result of the IFRS 9 adoption, a reclassification was made of unrealised gains related to financial assets measured at fair value through other comprehensive income, totalling CHF 19.1 million, from fair value reserves to retained earnings as of 1 January Refer to note 5.2 for further details. On 15 May 2018, the Annual General Meeting approved a dividend payment of CHF 2.00 per share (previous year: CHF 2.00 per share), which corresponds to a payment of CHF million for the financial year This was paid to the shareholders on 22 May

34 CONSOLIDATED INTERIM FINANCIAL STATEMENTS CONSOLIDATED STATEMENT OF CASH FLOWS in million CHF unaudited figures Net profit from continuing operations Income tax (1.0) 12.5 Depreciation and amortisation Increase in provisions and employee benefit assets and liabilities Net financial result (41.8) 5.2 Other non-cash items Change in trade and other receivables (103.7) (80.5) Change in inventories (42.9) (17.6) Change in trade and other payables (16.8) 2.7 Change in other net current assets Interest received Interest paid (5.5) (14.5) Other financial payments Income tax paid (39.7) (27.3) Cash flow from discontinued operations - (32.0) Cash flow from operating activities Investments in property, plant and equipment (26.3) (11.8) Investments in intangible assets (143.6) (37.7) Investments in financial assets and securities (18.0) (48.2) Proceeds from property, plant and equipment Proceeds from financial assets and securities Proceeds from assets held for sale - (0.7) Net proceeds from disposal of Galenica Santé (discontinued operations) - 1,778.8 Cash flow from discontinued operations Cash flow from investing activities (185.8) 1,685.6 Dividends paid (174.6) (129.8) Purchase of treasury shares (9.6) (0.8) Sale of treasury shares - (3.9) Proceeds from financial liabilities Repayment of financial liabilities (114.3) (1,494.5) Cash flow from discontinued operations Cash flow from financing activities (163.6) (1,239.5) Effects of exchange rate changes 0.5 (0.9) Increase/(decrease) in cash and cash equivalents (310.6) Cash and cash equivalents as at 1 January Cash and cash equivalents as at 30 June

35 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS These are the consolidated interim financial statements of Vifor Pharma Ltd. ( Vifor Pharma ) and its subsidiaries (together referred to as the Group ). A description of the nature of the Group s operations and its principal activities is included in the accompanying report. KEY EVENTS AND TRANSACTIONS The financial position and performance of the Group was particularly affected by the following transactions during the reporting period: (i) Investment in Cara Therapeutics and licence agreement On 17 May 2018, Vifor Pharma made a USD 14.6 million equity investment in Cara Therapeutics ( Cara ), representing an ownership interest of 3.6%. Simultaneously Vifor Pharma and Cara entered into an exclusive licence agreement for a consideration of USD 55.4 million to sell and commercialise CR845 (Difelikefalin) injection for the treatment of chronic kidney disease associated pruritus (CKD-AP) in haemodialysis patients worldwide, excluding the US, Japan and South Korea. The Cara shares are recognised as financial assets and measured at fair value through other comprehensive income. (ii) Mircera and Retacrit On 29 March 2018, the Group made a USD 10 million payment related to an existing agreement with Fresenius Medical Care for Mircera commercialisation rights. On 30 June 2018, the Group signed an agreement with Fresenius Medical Care for the extension of the Mircera and Retacrit commercialisation rights for the first three months of 2019 for consideration of USD 17.5 million. The agreement includes an option to further extend the rights until the end of The payments are amortised over the extended licence period. ABOUT THESE NOTES AND FINANCIAL STATEMENTS The notes to these consolidated interim financial statements have been organised to help users find and understand the most relevant information. More detailed information (e.g. basis of preparation and scope of consolidation, amendments to IFRS, etc.) has been placed at the end of the document and cross-referenced where necessary

36 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1 OPERATING SEGMENT Financial information is reported in a manner consistent with the internal reporting provided to the Executive Committee (Chief Operating Decision Maker). The financial information is presented to the Executive Committee on an aggregate basis for evaluating financial performance and allocating resources. Vifor Pharma continues to report a single operating segment. 2 REVENUE The Group adopted IFRS 15 Revenue from Contracts with Customers for the first time in 2018 which resulted in lower reported net sales in H of CHF 27.8 million and in H of CHF 19.8 million with fully compensating effects in lower costs. The new standard was adopted using the full retrospective method, as detailed in note 5.2 Amendments to IFRS. The table below shows the disaggregation of net sales by brand, including the reclassifications made from gross to net presentation in the comparative period. in million CHF * Ferinject Venofer Maltofer Mircera Velphoro Veltassa Other Rx brands Broncho-Vaxom Uro-Vaxom Doxium Anti-infectives Third-party production Net sales * Figures for 2017 are restated; refer to note 5.2 for further details

37 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS Geographic areas Revenues are attributed to countries (or regions) based on the country where the sale originates, as represented in the following table: in million CHF Switzerland Europe (excluding Switzerland) USA Rest of World Group Net sales Other income Third-party revenue Net sales* Other income Third-party revenue * Figures for 2017 are restated; refer to note 5.2 for further details. 3 EXPENSES BY NATURE AND RECONCILIATION TO EBITDA Expenses are presented by function in the statement of income and are presented by nature below. in million CHF * Cost of goods and materials Personnel expenses Other operating expenses Depreciation and amortisation Operating expenses * Figures for 2017 are restated; refer to note 5.2 for further details. Amortisation expense is included in cost of sales (CHF 59.1 million; 2017: CHF 52.6 million), general and administration (CHF 1.8 million; 2017: CHF 1.9 million) and marketing and distribution (CHF 0.2 million; 2017: CHF 0.5 million). Depreciation expense is included in cost of sales (CHF 9.4 million; 2017: CHF 9.2 million), general and administration (CHF 4.2 million; 2017: CHF 4.4 million), marketing and distribution (CHF 0.9 million; 2017: CHF 0.9 million) and research and development (CHF 1.2 million; 2017: CHF 1.2 million). Reconciliation from EBIT to EBITDA in million CHF Operating profit (EBIT) Depreciation and amortisation EBITDA

38 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 4 FINANCIAL ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE The Group s financial instruments, measured at fair value at the reporting date, are shown in the tables below. The fair value of financial assets and financial liabilities measured have not changed materially compared to the previous-year financial statements. The valuation methods applied have remained consistent. in million CHF Level 1 Level 2 Level 3 Financial assets measured at fair value Derivative financial instruments Financial assets Financial liabilities measured at fair value Derivative financial instruments Contingent consideration liabilities from business combinations in million CHF Level 1 Level 2 Level 3 Financial assets measured at fair value Derivative financial instruments Financial assets Financial liabilities measured at fair value Derivative financial instruments Contingent consideration liabilities from business combinations OTHER DISCLOSURES Vifor Pharma Ltd. is a Swiss company limited by shares with its head office in St. Gallen. The registered office is at Rechenstrasse 37, 9014 St. Gallen, Switzerland. Vifor Pharma shares are traded on the SIX Swiss Exchange under securities no (ISIN CH ). The Board of Directors authorised the 2018 consolidated interim financial statements for publication on 8 August Basis of preparation and scope of consolidation Except for the adoption of new standards effective as of 1 January 2018 described below, the consolidated interim financial statements have been prepared using the same accounting principles as the annual financial statements for the year ending 31 December 2017 and comply with IAS 34 Interim Financial Reporting. Several other amendments and interpretations apply for the first time in 2018, but do not have an impact on the consolidated financial statements of the Group. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective. The consolidated interim financial statements should be read in conjunction with the consolidated financial statements for the year ending 31 December 2017 as they update previously published information. More detailed information about the accounting policies are given in the notes to the consolidated financial statements for

39 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS 5.2 Amendments to IFRS The Group applies, for the first time, IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. The nature and effect of these changes are disclosed below. IFRS 15 Revenue from Contract with Customers IFRS 15 supersedes IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations, and applies to all revenue arising from contracts with customers that are in scope of the standard. As part of the work performed, the Group has concluded that the new standard does not have an impact on the timing and amounts recognised but that certain reclassifications from gross to net presentation in revenue are required. These reclassifications have no impact to the previously disclosed EBIT, net profit and earnings per share. The impact and further details of these reclassifications are shown below. There is no impact on the balance sheet, statement of changes in equity or cash flow statement in H and in the comparative period. in million CHF as reported Restatement restated Net sales (19.8) Other income Cost of sales (250.4) (250.4) Gross profit (19.8) Marketing and distribution (198.7) 19.8 (178.9) Research and development (86.2) (86.2) General and administration (84.4) (84.4) Operating profit (EBIT) Reclassification from gross to net presentation: the Group has historically presented certain payments made to customers on a gross basis. These are no longer considered to represent consideration for distinct goods or services following the implementation of IFRS 15. Such payments include marketing and distribution arrangements as well as other contributions paid to customers. These payments are recognised as a reduction of net sales and have also been reclassified in the comparative period. The Group has applied the full retrospective method of adoption and thus has restated the comparative period ending 30 June

40 NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS IFRS 9 Financial Instruments IFRS 9 replaces IAS 39 Financial Instruments and introduces new rules for classification and measurement, particularly for financial assets, for impairment of such assets and for hedge accounting. The venture funds previously measured at fair value through other comprehensive income (FVOCI) were reclassified to financial assets at fair value through profit or loss (FVPL) as they do not meet the definition of equity instruments. The strategic investments previously classified as available for sale will continue to be measured at FVOCI as management will utilise the available FVOCI election. The new guidance does not affect the classification and measurement of these financial assets, however, gains or losses realised on the sale of financial assets at FVOCI will no longer be transferred to profit or loss on sale, but instead remain in retained earnings. The reclassification of unrealised gains related to financial assets measured through OCI is shown in the comprehensive income statement as well as the statement of changes in equity, without any impact on total consolidated equity. The adoption of IFRS 9 has introduced new rules to account for impairment losses on receivables. IFRS 9 requires that a forward-looking expected credit loss (ECL) model is applied rather than the incurred loss approach of IAS 39. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that Vifor Pharma expects to receive. The Group has applied the simplified approach and has calculated ECLs based on lifetime expected credit losses and concluded that there is no material impact. 5.3 Contingent liabilities and commitments Vifor Pharma has entered into strategic arrangements with various companies in order to gain access to potential new products. The maximum amount of unrecognised potential future commitments for such payments is USD 1,982.9 million (31 December 2017: USD 1,522.9 million). 5.4 Exchange rates The table below shows the exchange rates against the CHF of the main currencies of relevance for the consolidated financial statements in million CHF Half-year rate Year-end rate Average rate Average rate USD EUR GBP Subsequent events No significant events occurred between 30 June 2018 and 8 August 2018, the date on which the consolidated interim financial statements were authorised for publication

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