annual report 2020 - vifor pharma · 2021. 3. 3. · sales of our blockbuster i.v. iron product...

VIFORPHARMA

ANNUALREPORT2020

Our mission is to help patients around the world with severe and chronic diseases lead better, healthier lives.

Isabella, age 4, was born with kidney failure. Read more about Isabella’s story on page 38.

Patients are at the center of everything we do. Over the last three decades, we have proven our ability to identify and serve therapeutic areas with high unmet medical need. Our continued success is underpinned by a strong, highly diversified product portfolio and an exciting pipeline.“S T E F A N S C H U L Z E

CHIEF EXECUTIVE OFFICER

“

T A B L E O F C O N T E N T S

Vifor Pharma Ltd. Annual Report 20206

8 Letter to shareholders10 Financial highlights 12 Company highlights14 Our company22 Performance overview24 2021 Outlook and financial guidance

92 Group structure and shareholders94 Structure of the share capital96 The Board of Directors101 Management and areas of responsibility104 Shareholders’ rights to participate106 Change of control and protective

measures106 Vifor Pharma Group compliance network

C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

152 Consolidated statement of income153 Consolidated statement of comprehensive income154 Consolidated statement of financial position155 Consolidated statement of changes in equity156 Consolidated statement of cash flows158 Notes to the consolidated financial statements204 Statutory auditor’s report

G O V E R N A N C E

P O R T F O L I O

H I G H L I G H T S

R E M U N E R A T I O N

F I N A N C E

P E O P L E

R E S P O N S I B I L I T Y

2 2 2 U P C O M I N G D A T E S

2 2 3 C O N T A C T I N F O R M A T I O N

I R O N D E F I C I E N C Y

51 Ferinject®/Injectafer®59 Maltofer®N E P H R O L O G Y

62 Mircera®62 Retacrit®63 Venofer® 64 Vadadustat 65 Velphoro®66 Rayaldee® 67 Avacopan68 CCX14069 ANG-377770 DifelikefalinC A R D I O - R E N A L

72 Veltassa® O T H E R I R O N T H E R A P I E S

76 VIT-2763

2 8 O U R P A T I E N T S

4 0 O U R P E O P L E

8 0 H I G H L I G H T S

126 Chairwoman’s overview128 Philosophy and approach to remuneration130 Governance134 Board and Executive remuneration139 Remuneration awarded in 2020 and 2019146 Overview of executive remuneration in

2020 and 2019147 Outlook: no changes in remuneration

model for 2021148 Statutory auditor’s report

107 Management information and monitoring tools of the Board of Directors

108 Auditors109 Information policy112 Members of the Executive Committee 118 Members of the Board of Directors

F I N A N C I A L S T A T E M E N T S O F V I F O R P H A R M A LT D .

212 Statement of income213 Statement of financial position 214 Notes to the financial statements 220 Statutory auditor’s report

Vifor Pharma Ltd. Annual Report 2020 7

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S T E F A N S C H U L Z E


J A C Q U E S T H E U R I L L A T

CHAIRMAN OF THE BOARD

OF DIRECTORS

Two words encapsulate the performance of Vifor Pharma Group in 2020: continuity and adaptability.“

L E T T E R T O S H A R E H O L D E R SH I G H L I G H T S

“

D E A R S H A R E H O L D E R S ,

Despite the extraordinary challenges of COVID-19, our employees and partners ensured Vifor Pharma’s therapies continued to reach the patients who depend on them without disruption. We are proud of these efforts and would like to thank our employees for their ongoing dedication to helping patients, caregivers and communities around the world during the pandemic.

In challenging market conditions, we contin-ued to grow our leadership position in iron deficiency and nephrology. Our strategy to expand our nephrology portfolio in recent years has been very successful. The planned read-outs of our own clinical trials and those of our partners occurred despite COVID-19 restrictions. We progressed with launch preparations for our pipeline of innovative new therapies, formed exciting new partner-ships, and expanded our global presence.

The Ferinject®/ Injectafer® business was significantly impacted by the pandemic, with i.v. iron utilization highly correlated with the intensity of lockdown measures during the course of the year. Infusion centers were temporarily closed, elective surgeries can-celled, and high risk patient populations postponed visits to physicians and administra-tion sites for infusions. Direct contact with healthcare providers to discuss the benefits of products such as Veltassa® was not possible. Clinical trials were re-evaluated and patient recruitment and office visits were adjusted in line with regulatory guidance, as we sought to protect patients and caregivers involved.


Despite this backdrop, and the related impact of a much stronger Swiss franc against the US Dollar, Vifor Pharma Group reported contin-ued strong profit growth. EBITDA was almost 19% higher at CHF 575.8 million, helped by disciplined cost control. Excluding the 2019 one-off IAS19 income, the rise in EBITDA was 36% at constant exchange rates. Revenues were up 3.7% at constant exchange rates compared to prior year but down 1% on a reported basis to CHF 1,705.6 million.

Sales of our blockbuster i.v. iron product Ferinject®/ Injectafer® returned quickly to projected growth levels in the summer after declines in Q2, as COVID-19 restrictions eased in many markets. With a second wave of COVID-19 again slowing sales towards year-end, the strong recovery demonstrated in Q3 provides high confidence that growth will return to expected levels as soon as restrictions ease. Venofer® benefited from strong US growth, particularly in the hospital sector, and Velphoro® became a global leader in the calcium-free phosphate binder market. Ferinject® was launched in Japan and re-ceived regulatory submission acceptance in China.

Although the market hasn’t grown in line with our expectations, Veltassa® continued to be a global leader in the hyperkalemia market. It was launched in Canada and received favour-able reimbursement decisions in many European countries, as well as support for an important label change, confirming its ability to enable RAAS (renin-angiotensin-al-dosterone system) inhibitor treatment in a key cohort of patients.

Major progress was made in building Vifor Pharma’s leadership in our strategic core areas of expertise, reinforced by the success-ful divestment of OM Pharma.

Following positive phase-III results, we expanded our license for difelikefalin (KORSUVATM) in the US and our partner Cara Therapeutics filed for US approval. A new

collaboration was established in China with Fresenius Kabi AG for Ferinject® as well as Veltassa®. Avacopan, a promising new therapy for rare kidney diseases, was submitted for approval in Europe.

By acquiring rights to ANG-3777, we are expanding our leading nephrology presence into transplantation and acute kidney injury. Positive trial results for vadadustat for anemia in CKD patients on dialysis, and progress in the phase-II trial of VIT-2763 in beta-thalas-semia added to confidence in our pipeline.

Our strong momentum will continue in 2021. Potential approvals include Ferinject® in China, difelikefalin (KORSUVATM) in the US and avacopan in Europe, with respective market launches in preparation. We’re looking forward to readouts from the key trials of ANG-3777.

We want to thank everyone at Vifor Pharma and our partners for facing the unprecedent-ed challenges of 2020 with flexibility and imagination, and to thank all our shareholders for their continued support and confidence.

With a portfolio of innovative nephrology treatments on track to be launched from the end of 2021 onwards, the continuing expan-sion of our global presence, and a reputation as a go-to industry partner for in- and out- licensing, we can look to the future with great confidence and optimism.

Yours sincerely,

Stefan Schulze Chief Executive Officer

Jacques Theurillat Chairman of the Board of Directors

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1,705.6NET SALES

EBITDA

575.8

4.99CHF

CORE EARNINGS¹ PER SHARE FROM CONTINUING OPERATIONS

+28.7%

Core earnings are defined as reported earnings after minorities adjusted for proportionate amortization and impairment of intangible assets.

1

423.8MILLION CHF

CASH FLOW FROM OPERATING ACTIVITIES

–101.0 MILLION CHF

77.1%

EQUITY RATIO

+1.4 P.P.

–1.1% (+3.7% AT CONSTANT EXCHANGE RATES)

+18.7% (+29.4% AT CONSTANT EXCHANGE RATES)

MILLION CHF

MILLION CHF

F I N A N C I A L H I G H L I G H T S 2 0 2 0


MIRCERA®/ RETACRIT® NET SALES

VENOFER® NET SALES

524.3

136.2

552.2TOTAL FERINJECT®/ INJECTAFER® NET SALES



+2.9% (+8.4% AT CONSTANT EXCHANGE RATES)

MILLION CHF

MILLION CHF

MILLION CHF

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C O M P A N Y H I G H L I G H T S 2 0 2 0

2020 has been a successful year. Through new partnerships, global expansion and innovative treatment therapies, we have continued to help patients worldwide.

Successful sale of OM Pharma

S E P T E M B E R

Gregory Oakes appointed as President North America

S E P T E M B E R

Vifor Pharma and Cara Therapeutics sign license agreement for i.v. difelikefalin in US

O C T O B E R

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VFMCRP & ChemoCentryx announce EMA accepts to review MAA for avacopan

N O V E M B E R

Vifor Pharma and Fresenius Kabi form joint venture in China

F E B R U A R Y

Lee Heeson appointed as President International

F E B R U A R Y

Vifor Pharma Group reports continued growth in H1 2020

A U G U S T

Dr Klaus Henning Jensen appointed as Chief Medical Officer

J A N U A R Y

20

20


VFMCRP and Cara Therapeutics announce positive results from global KALM-2 pivotal phase-III trial of difelikefalin injection

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Vifor Pharma and Angion sign license agreement for ANG-3777 in DGF and CSA-AKI

N O V E M B E R

VFMCRP and Fresenius Kabi expand collaboration in nephrology in China with Veltassa® agreement

N O V E M B E R

Full results from AFFIRM-AHF study presented at AHA

N O V E M B E R

Iron Deficiency Day 2020 highlights global impact on health and gender inequality

N O V E M B E R

Stefan Schulze appointed Chief Executive Officer

92nd Annual General Meeting Jacques Theurillat elected as the new Chairman of the Board of Directors

Etienne Jornod appointed Honorary Chairman

Vifor Pharma announce Akebia’s positive top-line results from INNO2VATE studies, a global phase-III program of vadadustat

M A Y

M A Y

M A Y

20

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Topline results from the ACCOLADE trial for avacopan

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O U R C O M P A N YH I G H L I G H T S

O U R C O M P A N Y

At Vifor Pharma, patients are at the center of everything we do, and we go where only few go to find the right treatment solutions for them. Over the last three decades, we have proven our ability to identify and serve key therapeutic areas with significant unmet medical need, successfully building on our experience and track record to create new markets.

We are the third largest Swiss pharmaceutical company and a global leader in the treatment of iron deficiency. We have established a leading position in the nephrology market

and aim for global leadership in the segment of cardio-renal therapies. Our continued success is underpinned by a strong, diversi-fied portfolio of commercial products and an exciting pipeline.

We are proud to be a partner of choice for pharmaceuticals and innovative patient- focused solutions worldwide. By leveraging our unique competitive strengths to in-license promising new products and compounds, we continue to build strong partnerships and alliances to drive our vision forward.

We strive to help patients around the world with severe and chronic diseases lead better, healthier lives.

O U R M I S S I O N

O U R V I S I O N

To be global leader in iron deficiency, nephrology and cardio-renal therapies.


Sarah is an ANCA-vasculitis and chronic kidney disease patient Read more about Sarah’s story on page 34.

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O U R C O M P A N YH I G H L I G H T S

O U R S T R A T E G Y

Vifor Pharma is dedicated to identifying and supporting under-served therapeutic areas. As pioneers in iron-based therapies, we have, and continue to demonstrate strong scientific, regulatory and commercial expertise to identi-fy opportunities that help create, develop and mature markets. We understand what it means to take calculated risks, and to determine the next best breakthrough for our patients and our innovative medical treatments.

As a respected industry partner, our unique business model enables us to target specific geographies and achieve direct access to patients through the capabilities, skills and infrastructure of our global partnerships. We have product license agreements with both large healthcare and small biotechnology companies, and constantly review opportuni-ties to further broaden our portfolio. Our pioneering spirit and our partnership-driven business model go hand-in-hand: we identify the biggest opportunities of unmet medical needs, and together with our partnerships make a positive difference for patients.

Our ability to work successfully with key partners across the world has enabled us to strengthen ties with patients, healthcare professionals and payers – to drive innovation, build awareness and allow patients access to the treatments they need and deserve. We know that our most valuable resource in helping patients is our people, and so seek to cultivate a unique, resilient and agile culture, bringing our values of Entrepreneurship, Respect and Teamwork to life. By listening to the patients we serve, and enabling our employees to achieve their full potential, we can accomplish our vision of becoming global leader in iron deficiency, nephrology and cardio-renal therapies.

We recognize our wider responsibilities as a global pharmaceutical company and are committed to conducting business with

integrity. By engaging with patients, valuing our employees, caring for the environment and supporting communities, we demonstrate our determination to lead by example and to remain at the forefront of our industry.

During the COVID-19 pandemic, we demon-strated the spirit of innovation, flexibility and forward-thinking on which Vifor Pharma has built its success. It underlined our commit-ment to putting patient health and quality of life at the heart of everything we do. We rapidly implemented measures to protect patients by securing continuity of product supplies, at the same time as ensuring the health and wellbeing of our employees and partners, and the communities in which we operate. We are proud of the dedication of our colleagues in manufacturing, quality control, supply chain and many other func-tions, whose hard work ensured our medicines continued to reach patients and healthcare providers in such challenging conditions. We also took steps to protect patients and caregivers involved in clinical trials, fully complying with regulatory guidance.

Vifor Pharma worked closely with the Europe-an Federation of Pharmaceutical Industries and Associations (EFPIA) and other partners to help meet the health challenges of COVID-19. Our Patient Advocacy team offered support and guidance to patient organizations, and we launched a global fund to support patient groups, with particular emphasis on improv-ing patients’ health and quality of life while restrictions were in place.

O U R M A R K E T S

Around one in three people worldwide is affected by iron deficiency1 and the market for therapies has grown substantially over the past 25 years. Vifor Pharma is committed to driving further growth by raising awareness of the symptoms and serious health conse-quences of iron deficiency, ensuring that many


more patients receive appropriate treatment. Nephrology is also a large and expanding market, with chronic kidney disease (CKD) affecting more than one in ten of the global population1. Vifor Pharma and our joint company Vifor Fresenius Medical Care Renal Pharma (VFMCRP) are dedicated to meeting the significant unmet needs of patients living with comorbidities linked to CKD. The car-dio-renal patient population is a natural extension of our existing therapy area focus in both nephrology and cardiology. Vifor Pharma is well positioned to unlock significant growth potential, by addressing underserved co-mor-bidities such as iron deficiency and hyperkale-mia in cardio-renal patients.

O U R B U S I N E S S M O D E L

Partnering and in-licensing is the cornerstone of Vifor Pharma’s growth strategy. Our therapies are sold in more than 100 countries through our own commercial expertise in key markets and best-in-class partnerships that increase our global reach. Working with others also enables us to continually expand our innovative portfolio of iron deficiency,

1 PLOS ONE. 2016 Jul 6;11(7):1–18.

nephrology and cardio-renal therapies, acquiring and in-licensing novel late-stage assets and creating mutually beneficial joint ventures. This approach complements our own early-stage R&D capabilities in iron chemistry and biology.

We have formed successful collaborations with leading pharmaceutical companies including American Regent, Inc., Daiichi Sankyo Co. Ltd, F. Hoffmann-La Roche AG, Fresenius Medical Care AG & Co KGaA, Fresenius Kabi AG, Janssen Pharmaceuticals, Inc., Kissei Pharmaceutical Co., Ltd, Pfizer, Inc., and Zeria Pharmaceutical Co., Ltd, and with innovative biotechs such as Akebia Therapeu-tics, Inc., Angion Biomedica Corp., Cara Therapeutics, Inc., Chemo Centryx, Inc., Evotec SE and OPKO Health Inc.

Our leading position in nephrology is built on our unique joint company VFMCRP, which for over ten years, has combined Vifor Pharma’s extensive and growing portfolio of nephrolo-gy medicines with Fresenius Medical Care’s global leadership in dialysis clinics and services. VFMCRP’s distinctive model in turn makes it a highly attractive commercial partner for companies with innovative ne-phrology therapies.

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O U R T H E R A P Y A R E A S


Vifor Pharma has pioneered the development of iron-based products and established itself as a global leader in the treatment of iron deficiency. Our leadership is built on our scientific, regulatory and commercial exper-tise, resulting in the creation of globally-trust-ed brands including Venofer® and Maltofer® and our strategic growth driver Ferinject®, known as Injectafer® in the US.

Iron is a fundamental mineral needed to produce hemoglobin, a protein in red blood cells that carries oxygen around the body, and a key element of energy metabolism. Iron plays a vital role in the process by which cells make energy. Human cells require iron in order to convert energy from food, and low iron means less energy can be produced. This is often why people feel tired and fatigued.

If iron levels fall too low and are not repleted, the body is unable to produce adequate amounts of hemoglobin and healthy red blood cells. Iron Deficiency is a highly preva-lent and potentially very serious condition that can have a significant negative impact on health and wellbeing. Iron deficiency and iron deficiency anemia affect those suffering from chronic diseases such as chronic heart failure, chronic kidney disease (CKD) and inflammato-ry bowel diseases. Women of reproductive age, and those who are pregnant or have recently given birth, are especially suscepti-ble. Despite high prevalence and potentially serious consequences, iron deficiency and iron deficiency anemia remain under-diag-nosed and under-treated.

Vifor Pharma believes there are significant opportunities to further expand the use of our intravenous and oral iron products, both in key therapy areas and geographically. With our partners, we are committed to increasing awareness of iron deficiency and iron deficien-cy anemia and the impact on people’s lives.

We are continuously strengthening our medical education activities to better inform clinicians about treatment options. We are also generating extensive clinical data in areas of high unmet medical need, including those with major growth potential such as chronic heart failure, CKD and patient blood manage-ment (PBM). Iron deficiency and iron deficien-cy anemia management plays a key role in PBM. It is a fast-growing field, designed to improve surgical and medical outcomes by optimally managing and preserving a patient’s blood.

N E P H R O L O G Y

Vifor Pharma is committed to helping nephrol-ogy patients around the world by offering the widest range of innovative products and solutions for conditions related to declining renal function. These include renal anemia management; mineral and bone disease management; kidney protection; and condi-tions associated with kidney impairment and its treatment. Our highly diversified portfolio includes Ferinject®/Injectafer®, Veltassa®, Venofer®, Mircera®, Retacrit®, vadadustat, Velphoro®, Rayaldee®, Invokana®, avacopan, difelikefalin and most recently ANG-3777.

CKD is common among adults, with preva-lence of up to 13.4%2 and rising as the popula-tion ages. Diabetes and hypertension are the main contributors to the risk factors for CKD, which cannot be reversed. Medication is often used to treat complications and slow further kidney damage.

Our presence in the global nephrology market is primarily through the unique joint company VFMCRP, combining our pharmaceuticals expertise with the skills and infrastructure of Fresenius Medical Care, the world’s leading

2 Hill NR et al PLOS ONE, DOI:10.1371/journal.pone.0158765

H I G H L I G H T S


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Rayaldee®

vadadustat

avacopan

difelikefalin

ANG-3777

I R O N D E F I C I E N C Y N E P H R O L O G Y C A R D I O - R E N A L

L E A D I N G P O R T F O L I O

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O U R T H E R A P Y A R E A S

provider of products and services for people with chronic kidney failure. The collaboration gives Vifor Pharma access to an extensive patient pool, with patient management systems ensuring the best outcomes for patients as well as improving standards of care for future generations.

C A R D I O - R E N A L

Vifor Pharma aims to become a significant provider of cardio-renal therapies, initially through Ferinject®/Injectafer® and Veltassa®.

Cardio-renal addresses the interplay between the heart and kidneys, where the condition or treatment of one organ can impact the other. A multi-specialty approach involving cardiolo-gists, nephrologists and internal medical physicians is key to delivering optimal out-comes for patients. Co-morbidities, such as iron deficiency and hyperkalemia, are recog-nized as common and important clinical issues for cardio-renal patients.

Ferinject®/Injectafer® has a proven record in the treatment of iron deficiency and iron deficiency anemia in heart failure3 and CKD4. Iron deficiency affects approximately 50% of people with heart failure and up to 70% of those with CKD. Iron deficiency increases morbidity and mortality risk in cardio-renal patients. Treatment of iron deficiency in cardio-renal patients5 with Ferinject® has resulted not only in improvement to symp-toms, quality of life and exercise capacity6, but also significantly reduces the risk of subsequent hospitalizations in patients with heart failure.7

3 Klip IT et al Am Heart J. 2013 Apr;165(4): 575–582.e34 Fishbane S et al Clin J Am Soc Nephrol 2009 Jan:

4(1): 57–615 Klip IT Eur J Heart Fail 2014 doi:10.1002/ejhf.846 Ponikowski P Eur J Heart Fail 2015 doi: 10.1002/ejhf.2297 Anker, S.,D. (2018). Effects of ferric carboxymaltose on

hospitalisations and mortality rates in iron-deficient heart failure patients: an individual patient meta-analysis. Eur J Heart fail. 20(1):125-133. doi: 1002/ejhf.823

In the AFFIRM-AHF study, despite narrowly missing statistical significance on the primary endpoint, treatment of iron deficiency in cardio-renal patients with Ferinject® was associated with a reduced risk of subsequent hospitalizations in stabilized patients hospital-ized for acute heart failure.

Vifor Pharma is focused on the treatment of hyperkalemia with Veltassa®, the first therapy for the condition approved in the US and Europe. Hyperkalemia is a significant market opportunity for Vifor Pharma, with an esti-mated three million patients affected in both the US8 and Europe9, and a further one million in Japan10.

Hyperkalemia, or abnormally elevated levels of potassium in the blood, is a serious prob-lem for cardio-renal patients. It can lead to cardiac arrhythmias, cardiac arrest and death, with a mortality rate of up to 30%. Recurrent hyperkalemia occurs frequently in CKD patients who also suffer from hypertension or diabetes, with or without heart failure.11 It is often triggered by treatment with RAASi (renin-angiotensin-aldosterone system) inhibitors, a cornerstone of treatment for conditions12 including hypertension and heart failure. As a consequence, RAASi therapy is often reduced or discontinued, compromising cardio-renal protection. A key goal of treat-ment with Veltassa® is to enable patients to remain on RAASi therapy by managing their chronic hyperkalemia.

8 USRDS 2013 ADR, CDC.9 De Nicola et al Nephrol Dial Transplant (2016) House

AJKD Vol 72 | Iss 2 | August 2018. 31: 335–33610 Saito Y et al. PLoS ONE 12 (9): e0184402. 2008

ESC Heart Failure 2016; 3: 145–151 31: 335–33611 Einhorn LM et al Arch Intern Med. 2009;169(12):

1156–116212 Ponikowski P Eur J Heart Fail 2015 doi: 10.1002/ejhf.229


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P E R F O R M A N C E O V E R V I E W

K E Y P R O F I T O R L O S S F I G U R E S 1

Vifor Pharma Group reported net sales of CHF 1,705.6 million, a decline of 1.1% com-pared to the previous year, or an increase of 3.7% at constant exchange rates (CER). The growth was impacted by COVID-19 restrictions which mainly affected Ferinject®, with patients requested not go to hospitals, temporary closures of administration sites and delays in elective surgeries.

EBITDA increased to CHF 575.8 million compared to CHF 485.0 million in the previous year, an increase of 18.7%, or 29.4% at CER. The growth was driven by a combination of the growth in net sales at CER, cost containment measures, and the increase in other income from partnering activities and the disposal of non-core products. In the second half of 2019, the Group made changes to its defined benefit pension plan (IAS 19) which resulted in a positive one-off EBITDA impact of CHF 22.4 million in 2019. Excluding the IAS 19 impact, the EBITDA grew by 35.7% at CER compared to prior year.

Other income grew to CHF 96.4 million from CHF 37.0 million in the previous year. The increase was primarily related to the partner-ing of Ferinject® in China, Veltassa® in China and Canada, Velphoro® in Canada, and the disposal of non-core products in Spain and Portugal.

Cost of sales amounted to CHF 701.2 million compared to CHF 700.8 million in the previous year, resulting in a gross profit margin of 61.1% compared to 60.2% in the previous year. The margin improvement was driven by the higher contribution from other income.

Marketing and distribution expenses amounted to CHF 403.8 million compared to CHF 435.7 million in the previous year, down 7.3%. The additional investments in pre-launch activities for our pipeline products were more than offset by cost containment measures.

1 On 30 September 2020, the Group completed the sale of OM Pharma. Therefore OM Pharma is presented as a discontinued operation and the prior period profit or loss figures are restated accordingly.

Investments in research and development amounted to CHF 250.0 million compared to CHF 212.0 million in the previous year. The increase was attributable to the impairment of the CCX140 intangible asset of CHF 56.2 million. Excluding this impairment, investment in research and development declined by 8.6%, mainly driven by a temporary COVID-19 halt in the enrolment of patients to the Veltassa® DIAMOND clinical trial.

General and administration expenses amounted to CHF 155.7 million compared to CHF 137.6 million in the previous year. The increase was mainly attributable to higher legal costs from patent litigations of CHF 9.8 million, as well the portion of the previously mentioned changes the Group made to its defined benefit pension plan in 2019. This contributed to one-time lower general and administration costs of CHF 4.3 million in the prior year.

The average number of full-time employees (FTE) amounted to 2,429 in 2020, compared to 2,438 in 2019. This slight reduction was achieved despite the investments required to support the forthcoming launches of the pipeline products.

Depreciation, amortization, and impair-ment amounted to CHF 284.4 million com-pared to CHF 209.1 million in the previous year. Of these amounts, CHF 192.1 million and CHF 173.8 million, respectively, are recorded under cost of sales. The increase of CHF 75.3 million compared to 2019 is due to the aforementioned impairment of the CCX140 intangible asset of CHF 56.2 million, higher amortization related to product intangible assets of CHF 7.1 million and higher deprecia-tion of production equipment and IT infra-structure of CHF 5.3 million.

The net financial result amounted to an expense of CHF 22.7 million, compared to CHF 15.0 million in the previous year. The increase of financial expenses compared to previous year is mainly due to unrealized USD foreign currency losses on cash positions of CHF 21.2 million.

H I G H L I G H T S


Tax expense amounted to CHF 27.1 million compared to CHF 38.1 million in the previous year. The decrease is mainly due to the fact that the deferred tax assets at the end of 2019 needed to be revalued as a consequence of the Swiss tax reform. This resulted in a negative tax expense of CHF 12.5 million in 2019. The effective tax rate amounted to 10.2% in 2020 (2019: 14.6%).

Net profit attributable to non-controlling interests decreased from CHF 114.7 million to CHF 98.9 million, mainly due to the propor-tionate impact of impairing the CCX140 intangible asset which was partly offset with a higher contribution from other income.

Net profit after minorities increased to CHF 359.6 million compared to CHF 159.1 million in the previous year. The significant increase was mainly driven by the post-tax gain on sale of OM Pharma of CHF 190.6 million.

Core earnings per share from continuing operations amounted to CHF 4.99, an increase of 28.7% compared to CHF 3.88 in 2019 mainly due to strong operational performance. Core earnings are defined as reported earnings after minorities adjusted for propor-tionate amortization and impairment of intangible assets of CHF 185.0 million in 2020 (2019: CHF 143.5 million).

O M P H A R M A S A L E

On 30 September 2020 the sale of OM Pharma was successfully completed for a purchase consideration of CHF 435.0 million, leading to a post-tax gain on sale of CHF 190.6 million. In addition, an earn out agreement was entered into with the buyer granting Vifor Pharma the right to participate in 20% of the potential future value increase of the OM Pharma business. The earn out asset was recognized in the balance sheet at a fair value of CHF 50.0 million, this was calculated on a probability adjusted net present value basis.

C A S H F L O W S

Cash flow from operating activities amounted to CHF +423.8 million compared to CHF +524.8 million in the previous year.

The decrease is mainly due to investments in networking capital, namely increased trade receivables from phasing of payments due from major customers and a planned inventory build.

Cash flow from investing activities amounted to CHF +52.4 million. The cash inflow of CHF 400.0 million from the sale of OM Pharma was largely reinvested in upfront and milestone payments for in-licensing agreements of CHF –193.5 million as well as the Priority Review Voucher of CHF –107.7 million.

Cash flow from financing activities amount-ed to CHF –268.4 million and was mainly influenced by dividend distributions of CHF –219.6 million, whereof CHF –90.0 million was paid to Fresenius Medical Care and CHF –129.6 million was distributed to share-holders of Vifor Pharma.

F I N A N C I A L P O S I T I O N

Vifor Pharma Group achieved a net cash position of CHF 190.6 million at the end of 2020 compared to a net cash position of CHF 5.7 million at the end of 2019. The increase is mainly from the aforementioned strong operating cash flow and sale of OM Pharma, more than offsetting the dividend distributions and investments.

Goodwill and intangible assets amounted to CHF 2,454.5 million at the end of 2020 compared to CHF 2,584.5 million at the end of 2019, representing 47.1% of total assets (2019: 52.4%). The decrease is mainly due to the disposal of intangible assets of CHF 156.6 million with the sale of OM Pharma.

Financial assets amounted to CHF 725.7 million at the end of 2020 compared to CHF 510.7 million at the end of 2019. The increase is mainly due to the fair value gain on our equity investments in ChemoCentryx, Inc. as well as the additional investment in Cara Therapeutics as part of the license agreement which was announced in October.

With CHF 4,017.6 million of shareholders’ equity, Vifor Pharma Group had a strong equity ratio of 77.1% at the end of 2020 (2019: 75.7%).

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2 0 2 1 O U T L O O K A N D F I N A N C I A L G U I D A N C E

C O L I N B O N D

CHIEF FINANCIAL OFFICER

In 2021, at constant exchange rates, net sales are expected to grow at a low-to-mid single digit rate and EBITDA to grow at a high single digit rate.”

“

H I G H L I G H T S


Market access The approval of Ferinject® in China is expected in the second half of 2021. Launch of difelikefalin (KORSUVATM) is expect-ed in the US, upon approval in the second half of 2021. VFMCRP plans to submit its marketing authorization application in Europe in the first half of 2021. The European Medicines Agency (EMA) approval for avacopan in Europe is expected in the second half of 2021. If approved, it will be the first orally administered C5aR1 inhibi-tor for the treatment of patients with AAV. Our partner Akebia plans to submit a New Drug Application to the FDA for vadadustat by mid-Q2 2021, for the treatment of anemia due to CKD for adult patients on dialysis, and not on dialysis.

Clinical trials Vifor Pharma expects to complete recruitment in a phase-II trial of VIT-2763 in non-transfusion- dependent beta-thalassemia in the second half of 2021. Additionally, a phase-II trial in sickle cell disease will be initiated in H1 2021. A phase-II proof-of-concept trial of ANG-3777 for the treatment of cardiac surgery-associated acute kidney injury is underway, with data read-out expected in H2 2021. Clinical readout of a phase-III trial of ANG-3777 in delayed graft function (DGF) is expected at the end of 2021.

Business development

In line with our ambition to strengthen our product pipeline, we aim to complete at least two in-licensing deals, product acquisitions or corporate transactions in 2021.

F I N A N C I A L G U I D A N C E

In 2021, at constant exchange rates, net sales are expected to grow at a low-to-mid single digit rate, and EBITDA to grow at a high single digit rate.1

1 The COVID-19 pandemic continues to impact economic conditions and patient access to our treatments; therefore Vifor Pharma’s guidance assumes a progressive improvement of patients’ access to the Company’s treatments as of H2 2021

O U T L O O K : C O N T I N U E D G R O W T H I N N E T S A L E S A N D E B I T D A

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P E O P L E


2 8 O U R P A T I E N T S

4 0 O U R P E O P L E

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O U R P A T I E N T S

By understanding the needs of people affected by the diseases we aim to treat, we can innovate solutions which are better suited to improving outcomes, delivering value to healthcare systems, and enabling better access to care.”

K L A U S J E N S E N

CHIEF MEDICAL OFFICER

“


At Vifor Pharma, everything starts with the patient. Our mission is to help patients around the world with severe and chronic diseases lead better, healthier lives. To achieve this, our approach to working with patients and patient advocacy groups is constantly evolving. Patients are increasingly influential in shaping our healthcare systems and standards of care, and at every stage of the pharmaceutical product lifecycle, from clinical research to regulatory filing and market access.

Departments and teams at Vifor Pharma benefitted from the insights of patients and patient organizations throughout 2020. Their perspectives helped shape our programs and strategies to ensure we continue to deliver patient-centric solutions. During the year, we placed particular emphasis on four areas where we believe direct engagement with patient representatives will be beneficial: Human Resources, Clinical Development, Patient Access and Disease Awareness.

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H U M A N R E S O U R C E S

Making our organization more patient centric begins with our own people. Through work-shops and conversations involving our Human Resources team and patients across Europe, we have been able to reflect the patient perspective in our recruitment processes and internal management academies.

C A R O L I N A P O N C H I O N E HEAD OF VIFOR EXECUTIVE SEARCH AND EMPLOYER BRANDING

D A N I E L S M I T H BOARD MEMBER OF PUMPING MARVELOUS, UK

Working with patient representatives, we developed interview questions designed to highlight the attitude of potential employees to including patient insights in their work. These questions are now a routine part of our recruiting.”

I was impressed by the way Vifor Pharma listened to patients, and it’s fantastic to see our advice being put into practice in the recruit-ment process.”

“

“


P A N O S E N G L E Z O S PRESIDENT OF THE THALASSEMIA INTERNATIONAL FEDERATION AND FATHER OF A PATIENT WITH THALASSEMIA

Patient input was reflected in changes to the design and entry criteria of a phase-II trial of our Ferroportin-Inhibitor in beta-thalassemia, helping facilitate enrolment. We learned about patients’ preferences for drug formulations and received feedback on unmet needs that will help shape the broader clinical development program.”

Understanding what patients need is the driving force of any successful research program. By talking with researchers at Vifor Pharma, we hope to help ensure a longer, brighter and pain-free future for those we care for.”

C L I N I C A L D E V E L O P M E N T

Involving patients in the early stages of researching and developing new therapies has a critical role to play in improving health-care. Vifor Pharma increasingly seeks to listen to the views of patients to ensure therapies meet their needs and priorities, and that clinical trials are designed to support regula-tory approval, cost-benefit assessments and future clinical use.

F R A N K R I C H A R D CLINICAL RESEARCH, MEDICAL

“

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U R S I N A W I T T EGLOBAL BRAND TEAM LEAD, VELPHORO® AND DIFELIKEFALIN

F E Z A W A NKIDNEY DISEASE PATIENT, ADVOCATE

P A T I E N T A C C E S S

Vifor Pharma seeks to provide timely access to our innovative products to as many patients suffering from chronic diseases as possible. To achieve this, we must ensure the unmet need addressed by our products is properly understood by healthcare systems, physicians and payers. We work closely with patients to understand the impact on their quality of daily life. This in turn enables us to communicate their needs to regulators and others as part of their decision-making process.

Chronic kidney disease-associated pruritus is a debilitating itching condition which isn’t yet prioritized by physicians and payors. But it’s a high priority for patients as it can lead to sleep loss, fatigue, depression and higher risk of infections. By talking to patients, we can understand how it affects them and the way they talk about its severity.”

Pruritus has been one of the most challenging aspects of living with chronic kidney disease. I was very happy to have the opportunity to speak directly about my experience to Vifor Pharma, which is working on a treatment.”

“

“


P H I L I P P E W I D M E R GENERAL MANAGER, SWITZERLAND

D A V I D H A N S - U . H A E R R Y EXECUTIVE COMMITTEE MEMBER, PATIENT FOCUSED MEDICINES DEVELOPMENT

Knowing what matters to patients is essential for us to develop services and solutions to help them. We strongly support initiatives to fully integrate the patient voice into our decision-making.”

Listening to patients helps ensure R&D is tailored to their needs and priorities and makes products more relevant for regulators and payors. Patients are also great ambassadors for making sure medicines are used in the best possible way, which in turn improves patient safety, care management and clinical outcomes.”

D I S E A S E A W A R E N E S S

Vifor Pharma strives to raise awareness of the diseases we seek to treat through our portfolio and pipeline. Our goal is to support newly-diagnosed patients and to educate key influencers and the general public about the impact of these diseases on patients’ lives. We supported a number of disease awareness platforms across our focus therapy areas in 2020.

“

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I love bringing people together, and I cherish every moment with my loved ones.”

M Y S T O R Y

“

Learn more about Sarah’s story Viforpharma.com/patient-stories


S A R A H , E N G L A N DUNDERSTANDING MY ANCA-ASSOCIATED VASCULITIS AND CHRONIC KIDNEY DISEASE

I started to feel unwell around the time I was studying for my final exams at school. I was being sick, sleeping up to 18 hours a day, and had constant headaches. My symptoms were originally put down to the stress of exams, but as my condition deteriorated, it was clear I needed urgent medical care. After numerous tests in hospital, doctors realized I had just 4% kidney function remaining and had end stage renal failure. I would need life-saving dialysis and eventually a kidney transplant. I was just 18 years old at the time.

I was diagnosed with two rare conditions , one of which is ANCA-associated vasculitis (AAV). They caused irreversible damage to my kidneys. At the time I didn’t really understand my diagnosis or appreciate the severity of what was happening to me. It's only now that I

am older that I really appreciate the long term impact that AAV can have, and what the diagnosis means for me.

I’ve been on immunosuppressive therapy and taking corticosteroids for years, and those therapies have complications for my health. I worry all the time. I think about what would happen if my AAV were to affect another area of my body, or what if my kidneys were to fail again? My experience has completely changed my life. It’s affected my relationships, my family, and even my career path.

I have, however, also been presented with some amazing opportunities. I’ve met won-derful people in the kidney disease communi-ty who have been through similar experiences to me. My passion in life is bringing people together to have fun, drink and eat good food. There have been times in the past when I didn’t know if I was going to make it through, so today I cherish every moment with family and loved ones. I especially love being able to spend time with my young nephew.

It’s only now that I’m older that I appreciate the long term impact AAV can have.”

“

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M Y S T O R Y

N I C K , U SMANAGING MY HYPERKALEMIA

Several years ago my primary care physician noticed that I had some deterioration in my kidney function and referred me to a nephrol-ogist. I was diagnosed with stage three chronic kidney disease. In addition to that, I also have Idiopathic pulmonary fibrosis (IPF) – so when I’m active I have to be on oxygen.

A few years after my kidney disease diagnosis, my doctor told me during a routine check-up that my blood potassium levels had risen outside of the normal range. I had developed hyperkalemia. My kidneys were no longer removing the excess potassium in my body which had the potential to lead to other serious health issues. I was prescribed medication to help control my high potassium levels, which I now take on a regular basis with lunch or early dinner. My doctor checks my potassium levels on a regular basis now, and my results are much better than they used to be. It’s a weight off my mind, and I can focus on doing the things I enjoy.

I live in a retirement community in Southern Arizona with my lovely wife. We’ve got so much to do. We like to keep active with numerous activities, different clubs, and taking time to play golf – it’s a great place to live. We’ve been married for 39 years and have four children, ten grandchildren and one great-grandchild. I’ve been through many health issues in recent years and my wife has been remarkably supportive, I couldn’t love her more.

My potassium level results are much better now than they used to be.”

“


We live in a great place. We like to keep active with numerous activities, especially golf!”

“

Learn more about Nick’s story Viforpharma.com/patient-stories

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M Y S T O R Y

Learn more about Emma and Isabella’s story Viforpharma.com/patient-stories

I have so many hopes and aspirations for her in the future.”

“


E M M A A N D I S A B E L L A , E N G L A N DBORN WITH KIDNEY FAILURE

My daughter, Isabella, was born with kidney failure four years ago. My husband and I thought we were having a perfectly healthy little girl. Unfortunately, when she was born it was clear that there was something seriously wrong. The doctors told us that she would have to start dialysis straight away, if she were to have any chance of surviving.

Chronic kidney disease has a huge variety of symptoms which can manifest in patients in different ways. Particularly distressing for us, was Isabella’s intense itching which left her bleeding at times and feeling incredibly uncomfortable. We were constantly terrified that she was going to scratch at her life saving dialysis lines and feeding tubes. We felt completely powerless to help her.

An effective treatment would have been revolutionary for us.”

“

Our health practitioners acknowledged the itching (chronic kidney disease-associated pruritus) was a serious problem, but the treatment options offered for Isabella’s condi-tion were not very effective. As the months went by, we were left feeling quite desperate. I’m sure if Isabella were able to tell us at the time, she would have pleaded with us to make the itching go away. An effective treatment would have been revolutionary for us, to take away that added stress on top of everything else we were dealing with.

Today, Isabella is a healthy four year old. She is now nearly two years post-kidney transplant and is doing remarkably well. I want her to grow into an independent young woman who is able to look after herself and follow her dreams, even if there are health challenges she will always face.

I have so many hopes and aspirations for her in the future, which is something I didn’t want to think about a few years ago. I just couldn’t think about the future.

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O U R P E O P L E

M I C H A E L P U R I

CHIEF HUMAN RESOURCES OFFICER

2020 confirmed our resilience and adaptability as a business. We’ve built on our culture and strong values to continue to meet the needs of patients, and we’re fully prepared for the next stage of growth.”

“


Our employees are our greatest resource as we strive to help patients around the world with severe and chronic diseases lead better, healthier lives. By enabling our employees to achieve their full potential and by listening carefully to the patients we serve, we are confident we can expand our global leader-ship position in iron deficiency and achieve our goal of becoming a global leader in nephrology and cardio-renal therapies.

2020 was a year of unprecedented challenges. We demonstrated our ability to rise to these challenges and deliver on our strategy by having the right foundations in place for sustained success:

– A unique, entrepreneurial culture to attract and retain the best talent

– Strong leadership to deliver success – A clear alignment of our key functions

complemented by simplified structures

– Continuous growth and development opportunities to motivate employees and expand on capabilities

– Support and guidance through ongoing dialogue and performance management to help employees maximize their potential.

– A diverse and inclusive culture enhanced by open communication and collaboration.

A Y E A R O F R E S I L I E N C E A N D R A P I D C H A N G E

Vifor Pharma successfully addressed the multiple and complex challenges of the COVID-19 global pandemic during 2020. Our teams around the world adapted quickly to a rapidly evolving work environment, ensuring a sustained supply of therapies to the patients who depend on us. Our company has emerged stronger than ever, a testament to the robust foundations we have put in place and continue to build on to ensure sustained success.

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O U R P E O P L E

Vifor Pharma implemented extensive measures to reduce the risk of infection for our employ-ees and supported communities to fight the pandemic. We actively monitored the potential impact on all our activities with guidance from local authorities, national governments and specialist bodies including the World Health Organization and US Centers for Disease Control and Prevention.

Vifor Pharma took all necessary precautions to ensure a safe and healthy work environment by putting our established business continuity plans into action, implementing a work from home policy wherever possible. Production sites remained operational, with measures taken to limit the number of employees on site for those required to ensure production and supply of products for patients in need.

We ensured our employees had the right support and tools to continue working and to help them adapt to a digital workplace. Our Learning & Development teams developed a program of webinars, including “How to effectively run remote meetings”, “Managing performance remotely”, and “The psychology of remote working” to help familiarize employ-ees with their new work environment. To support wellbeing, we created a community platform where all employees were able to share stories and upload pictures to stay connected wherever they were in the world.

The pandemic validated the need to seek constant progress to remain connected through information technology and to plan ahead. During the year, our IT infrastructure was further strengthened and we are rolling out enhanced capabilities needed to be more responsive, efficient and effective. We continue to improve our ability to connect remotely, and better collaborate with each other as well as with patients, suppliers, healthcare professionals and partners.

P R E P A R I N G F O R T H E N E X T S T A G E O F G R O W T H

During 2020, we evolved our organizational structure to increase efficiency, clarity and accountability at our headquarters, affiliates and production sites. In September 2020, the company’s strategic focus on iron deficiency, nephrology and cardio-renal therapies was further strengthened by the successful sale of OM Pharma. We are confident that, by having clear alignment of our key functions comple-mented by simplified structures, Vifor Pharma is now better equipped to deliver on our ambitious targets.

We continued to increase our customer facing medical capability by investing in medical education and disease state awareness. We have realigned our Medical Affairs, Market Access and Marketing functions to better serve the needs of our customers. The Medical Affairs function was further strengthened by the appointment of Dr. Klaus Jensen in January 2020 as Chief Medical Officer and a member of the Executive Committee.

The commercial structure was enhanced and organized into two clearly defined areas, US and International, each headed by an Executive Committee member as president. Lee Heeson took on the role of President International and member of the Executive Committee in February 2020, and Gregory Oakes was appointed as President North America and member of the Executive Committee, in September 2020.

In line with our ambitious global growth plans, we were excited to open new affiliates in Russia and China in 2020, with plans to also establish a new affiliate in Brazil. Each new affiliate office follows a global design concept based on our newly renovated global head-quarters. This concept incorporates a multi-space office environment with a modern


DIFFERENT NATIONALITIES AT HEADQUARTERS IN ZURICH

OF EMPLOYEES ARE BASED IN SWITZERLAND

EMPLOYEES AT VIFOR PHARMA WORLDWIDE

DIFFERENT NATIONALITIES WORKING GLOBALLY FOR THE VIFOR PHARMA GROUP

OF MANAGEMENT POSITIONS ARE FILLED BY WOMEN

72

2,600

41

46%*

48%

APPROX.

*up from 44% in 2019

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43Vifor Pharma Ltd. Annual Report 2020

O U R P E O P L E

design, including flexible working stations, collaborative spaces, and brighter offices. This facilitates a healthy work environment, with opportunities for greater interactivity and teamwork.

O N E V I F O R P H A R M A

Through its history, development, and entre-preneurial business model, Vifor Pharma offers employees an attractive alternative to employ-ment at traditional pharmaceutical companies. With a distinctive focus on iron deficiency, nephrology, and cardio-renal therapies, the company strives to build leadership through a profound understanding of the markets and the needs of patients, healthcare provid-ers and payers, as well as through high quality partnerships.

Our values – Entrepreneurship, Teamwork and Respect – are lived by each employee every day. We believe this is critical to identifying different options to bring the best treatments to patients. We seek to create an environment where employees are agile, capable of making decisions, and not afraid to step out of boundaries. By making sure our values guide every thing we do, wherever we work for Vifor Pharma in the world, we ensure we are all part of the unique culture that makes us One Vifor Pharma. The Senior Leadership Team, which drives our strategic objectives, works alongside the Executive Committee as a role model for living our values and supporting our culture.

To sustain success, we are fully committed to constantly developing the skills of our people. We offer flexible and tailored learning for personal development to ensure we have the right tools and expertise to deliver real value to patients and customers, and to maximize the opportunities for our business.

E N T R E P R E N E U R S H I P

T E A M W O R K

R E S P E C T

We seek to provide optimal development opportunities through job rotation, mentor-ing, coaching and formal learning. We continued to improve learning and develop-ment through our dedicated Vifor Pharma Academy, covering areas of Leadership, Finance, Manufacturing, Marketing, Sales, Market Access, and Medical. New areas of expertise are added regularly, and the Academy’s structure enables us to share knowledge across the organization in a systematic way.


My team and I faced the challenges of 2020 with entrepreneurial spirit, finding new ways of working with patients, caregivers and healthcare professionals during the global pandemic.“

“

U R S I N A W I T T E

GLOBAL BRAND TEAM LEAD

VELPHORO® AND DIFELIKEFALIN

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46 Vifor Pharma Ltd. Annual Report 2020

As part of our Patient Academy initiatives in 2020, we are launching an initiative inviting patients to interview senior leaders and be interviewed by them in turn. This will enable our employees to really understand the needs of patients – reenergizing and incentivizing our teams and helping shape their decisions. Patient-centric questions developed with the help of patients were introduced into the recruitment process in 2020 to inspire poten-tial candidates and help them to better understand our company vision and mission.

In 2020, Vifor Pharma ranked 14th best “Drugs and Biotechnology” company within the Forbes 2020 World’s Best Employer List, and 315th best company globally. In addition, Vifor Pharma ranked second in the list of “The Best Employers in Switzerland 2020” within the pharmaceutical industry, and was awarded gold in the 2019/2020 Best Recruiter awards within the Pharmaceutical Category for Switzerland. These recognitions, which are based on survey results from current and future employees from around the world and nationally, highlight that our people are feeling supported, motivated, and excited for the future of our company.

C R E A T I N G A D I V E R S E A N D I N C L U S I V E E N V I R O N M E N T

At Vifor Pharma, we strive constantly to embody the diversity of the patients we serve, both through the composition of our work-force and by creating an inclusive and sup-portive environment that respects every one of our people. As an equal opportunity employer, diversity of cultures, religions, nationalities, genders, age groups and personal backgrounds is a valuable source of talent and creativity, and ultimately helps us to deliver the best performance for our business.

14R A N K E D

#

Best Drugs and Biotechnology company

R A N K E D

1#In the Pharmaceutical Category for Switzerland

R A N K E D

2#Best Employer in Switzerland

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P O R T F O L I O



51 Ferinject®/Injectafer®59 Maltofer®

N E P H R O L O G Y

62 Mircera®62 Retacrit®63 Venofer® 64 Vadadustat 65 Velphoro®66 Rayaldee® 67 Avacopan68 CCX14069 ANG-3777 70 Difelikefalin


72 Veltassa® O T H E R I R O N T H E R A P I E S

76 VIT-2763

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O U R P O R T F O L I O

B A R B A R A A N G E H R N

CHIEF BUSINESS OFFICER

We were delighted to present full data from the AFFIRM-AHF study at the American Heart Association Scientific Sessions congress in 2020. The study helps to highlight the importance of detecting and managing iron deficiency in patients after acute heart failure.”

“



F E R I N J E C T ® / I N J E C T A F E R ®

Ferinject®/Injectafer® (ferric carboxymaltose) is a world-leading intravenous (i.v.) iron therapy with market approval in 83 countries and 49.5% share by value in the i.v. iron segment of the iron market1 by value in 20202. In the US and Belgium, Ferinject® is commer-cialized under the brand name Injectafer®. The product’s blockbuster status was con-firmed in 2020, despite the global impact of the COVID-19 pandemic.

Ferinject®/ Injectafer® continues to address the significant unmet medical need for treatment of patients with iron deficiency and iron deficiency anemia in key therapy areas, including chronic heart failure, patient blood management (PBM), nephrology, gastroenter-ology, oncology and women’s health. Affect-ing up to one third of the global population, iron deficiency and iron deficiency anemia are serious conditions with a wide range of debilitating symptoms which can result in a significant impact on patients’ quality of life.

1 Without prejudice to market definition.2 Unlike volume data, value data are unrepresentative of

competitive dynamics because they sum different types of prices for different medicines.

More than 16 million patient years of experi-ence have helped to establish Ferinject®/ Injectafer® as a trusted brand, with clinical benefits demonstrated by its efficacy and safety data3. To deliver i.v. iron to the body, Ferinject®/Injectafer® is designed as a complex nanomedicine consisting of nano-particles, with an iron core wrapped by a carbohydrate shell. These nanomedicines are even bigger and more complex in structure than biologics. The term “Non-Biological- Complex-Drugs” (NBCDs) was therefore introduced for this category of medicines.

In contrast to small molecules or biologics, nanomedicine products have a physico- chemical structure which is hard to character-ize and best defined by the manufacturing process. In addition to the chemical composi-tion of Ferinject®/Injectafer®, the particles’ physical properties define its interaction with the human body and therefore its therapeutic benefit. This complex set of physical chemical characteristics is dependent on Vifor Pharma’s well-established proprietary manufacturing process, and as a consequence, clinical data developed with Ferinject®/ Injectafer® cannot just be extrapolated to other i.v. iron complexes.

Nanomedicines are recognized by regulatory authorities, including the FDA in the US, as harder-to-copy complex products with potential regulatory or scientific issues which should be addressed during the approval procedure for follow-on products.4,5 Euro pean Regulatory Authorities acknowledged the complexity of nanomedicines and recently applied the hybrid pathway to grant marketing

3 Scott Drugs. 2018 Mar;78(4):479–493. doi: 10.1007/s40265-018-0885-7.

4 U.S. Food and Drug Administration: Statement from FDA Commissioner Scott Gottlieb, M.D., on 2019 efforts to advance the development of complex generics to improve patient access to medicines. Available at https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-2019- efforts-advance-development-complex-generics

5 EMA/CHMP/SWP/620008/2012

FERINJECT®/INJECTAFER® SHARE BY VALUE IN THE I.V. IRON SEGMENT OF THE IRON MARKET

49.5%

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https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-2019-efforts-advance-development-complex-generics


authorization for follow-on products of nanomedicines.6 This “hybrid” regulatory pathway authorization depends partly on the results of tests on the reference medicine, and partly on new data.7

I M P A C T O F C O V I D - 1 9

In 2020, countries around the world imposed social and economic restrictions in response to the COVID-19 pandemic, impacting all industry sectors including healthcare. Thanks to business continuity plans and inventory procedures, Vifor Pharma was able to ensure uninterrupted supply of key medicines while keeping its employees, communities and partners safe.

The pandemic resulted in fewer patients visiting healthcare providers, temporary closures of administration sites for i.v. iron infusion and delays in elective surgeries. During the course of the year, key therapy areas were impacted to varying degrees, with treatment for patients with life-threatening conditions or requiring emergency proce-dures prioritized over those with non-life threatening conditions.

Treatment for women with peri- and postpartum iron deficiency anemia remained largely unaffected, as did treatment for essential medical procedures, such as non- dialysis CKD patients and those undergoing oncologic therapy. Major elective surgeries were reduced in 2020, impacting Ferinject® sales in Patient Blood Management (PBM). Treatment of iron deficiency and iron deficiency

6 Klein, K., Stolk, P., De Bruin, M. L., Leufkens, H. G. M., Crommelin, D. J. A., & De Vlieger, J. S. B. (2019). The EU regulatory landscape of non-biological complex drugs (NBCDs) follow-on products: Observations and recommendations. European Journal of Pharmaceutical Sciences. 15;133:228–235.

7 ema.europa.eu/en/human-regulatory/marketing-authori-sation/generic-hybrid-medicines

anemia in chronic heart failure patients was impacted to a similar extent. As a consequence, overall sales of Ferinject®/ Injectafer® were below expectations to continue strong growth in the high double digit millions, in both hospital and retail settings. With a strong correlation between i.v. iron utilization and the intensity of lockdown measures in 2020, we expect a return to pre-pandemic growth rates as soon as restrictions are lifted.

N E T S A L E S I N 2 0 2 0

Net sales of Ferinject®/Injectafer® decreased to CHF 552.2 million in 2020, down –1.6% from CHF 561.0 million in the previous year, and growing 3.0% at constant exchange rates.

Sales returned to growth in Q3 after declines in Q2, as COVID-19 restrictions eased in many markets improving patient access to infusions. In the final quarter of the year, sales were again impacted by heightened restrictions across much of Europe following a second wave of infections. I.v. iron utilization was highly correlated with the intensity of lockdown measures throughout 2020, and recovery is expected as COVID-19 restrictions are lifted.

I N - M A R K E T S A L E S I N 2 0 2 0

Vifor Pharma closely monitors in-market sales to determine actual growth rates of Ferinject®/Injectafer®. The latest available data showed global in-market sales of CHF 1.005 billion in 2020, up 0.1% from the previous year. In-market sales of Injectafer® in the US were CHF 448.3 million in 2020, down from CHF 502.4 million in 2019.


https://www.ema.europa.eu/en/human-regulatory/marketing-authorisation/generic-hybrid-medicines

F E R I N J E C T ® / I N J E C T A F E R ® A P P R O V E D I N 8 3 C O U N T R I E S W O R L D W I D E

16MILLIONPATIENT YEARS OF EXPERIENCE(APPROX.)

P A T I E N T S

1.005BILLIONFERINJECT®/INJECTAFER® GLOBAL IN-MARKET SALES

M A R K E T S A L E S

83

I R O N P R O D U C T S

Vifor Pharma has been a pioneer in the development of iron-based products and has established itself as a global leader in the treatment of iron deficiency and iron deficiency anemia.

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I N J E C T A F E R ® ( U S )

In the US, Injectafer® continues to be a market leader by volume in the treatment of iron deficiency anemia in hematology, oncology and gastroenterology, with growth potential in areas of heart failure, women’s health and nephrology. Vifor Pharma’s US partner American Regent, Inc., a Daiichi Sankyo Group company, recorded net sales of USD 415.5 million in 2020, a slight decline of –6.6% compared to the prior year. This was due to state and federal lockdown restrictions and limitations on infusion procedures due to the pandemic. As a result, Vifor Pharma reported net sales of CHF 138.3 million in 2020.

Injectafer® continued to demonstrate utiliza-tion in iron deficiency anemia in all key therapy areas of internal medicine, gastro enterology and nephrology. There is still a significant opportunity for market growth in the US, and American Regent has continued work to build future growth in multiple therapeutic areas, including heart failure and women’s health.

T H E R A P Y A R E A S W I T H H I G H U N M E T N E E D

Chronic Heart FailureVifor Pharma continues to invest in additional clinical studies to demonstrate the efficacy and safety of Ferinject®/Injectafer® treatment in different patient groups. One in every two chronic heart failure patients has iron deficien-cy or iron deficiency anemia, associated with reduced quality of life, reduced exercise capacity and increased risk of hospitalization. With the majority of heart failure patients with the condition either not diagnosed or inade-quately treated, this therapy area is a key focus for ongoing further campaigns to increase disease awareness and utilization of Ferinject® as a guideline recommended treatment.8

A major milestone for Vifor Pharma in 2020 was the successful completion of the AFFIRM-AHF study. In November, results from the AFFIRM-AHF trial were presented at the 2020 American Heart Association (AHA) Scientific Sessions virtual congress. Simulta-neously, results were also published in the peer-reviewed medical journal “The Lancet”.

8 Ponikowski P, et al. Eur Heart J. 2016;37(27):2129−2200.


The study evaluated the effect of Ferinject® on heart failure hospitalizations and cardio-vascular mortality in iron-deficient patients after hospital stabilization for acute heart failure (AHF). Recently admitted patients with AHF are among the most fragile patients, with poor prognosis and frequent re-admissions to hospital. The study reported a clinically significant reduction in hospital readmissions due to heart failure among patients treated with Ferinject® compared to placebo. After 52 weeks, patients who received iron supple-mentation were 26% less likely to be re-admit-ted to hospital for heart failure compared to placebo, after only one or two injections of Ferinject® [RR 0.74; 95% CI 0.58-0.94; p=0.013]. Overall, AFFIRM-AHF narrowly missed the conventional 5% statistical significance on the primary composite endpoint, but numerically reduced total cardiovascular death and heart failure re-hospitalization events by 21% [RR 0.79; 95% CI 0.62-1.01; p=0.059]. Total mortali-ty and death from cardiovascular causes were similar between groups [RR 0.96; 95% CI 0.70-1.32]. The COVID-19 pandemic resulted in signifi-cant disruption to the healthcare systems, with a 40% reduction in heart failure hospitaliza-tions in Europe between March and June 2020. Heart failure patients are particularly at risk from COVID-19. Therefore, as the trial was partially conducted during the COVID-19 pandemic, a sensitivity analysis to account for the impact of COVID-19 on the study results was pre-specified prior to study unblinding. The pre-specified analysis revealed a statisti-cally significant difference in favor of Ferinject® on the composite endpoint of cardiovascular mortality and hospitalization for heart failure.

This is the first study demonstrating the benefits of iron supplementation initiated in stabilized patients hospitalized for AHF. The study showed that administration of Ferinject® in stabilized AHF patients with iron deficiency

significantly reduces the risk of subsequent HF hospitalizations, and highlights the need for AHF patients to be more frequently screened for iron deficiency.

FAIR-HF29 is an investigator-initiated study led by the University Medical Center Hamburg- Eppendorf in Germany as sponsor and supported by the German Centre for Cardio-vascular Research, and by two research grants from Vifor Pharma to these institutions. The objective of the study is to show that treat-ment of patients with systolic heart failure and iron deficiency with i.v. iron (Ferric Carboxy-maltose, FCM) versus placebo (i.v. NaCl) can reduce the rate of the combined endpoint of recurrent heart failure hospitalizations and cardiovascular death during at least 12 months of follow up.

Vifor Pharma’s US partner American Regent is also conducting one of the largest studies of i.v. iron in heart failure, the HEART-FID study. HEART-FID is a double-blind, multicenter, prospective, randomized, placebo-controlled study to assess the efficacy and safety of Injectafer® in the treatment of patients with heart failure with reduced ejection fraction in iron deficiency patients. Enrolment in this study continued in 2020, and is expected to be completed in 2022.10

Patient Blood ManagementPatient blood management (PBM) is key therapy area with high growth potential. It is designed to improve surgical and medical patient outcomes by optimally managing and preserving patients’ blood. Proactive identification and treatment of iron deficiency anemia in patients scheduled for elective surgery has been asociated with a reduced need for blood transfusion, reduced the

9 Clinicaltrials.gov10 Randomized Placebo-controlled Trial of FCM as

Treatment for Heart Failure With Iron Deficiency (HEART-FID) (2019). Available at https://clinicaltrials.gov/ct2/show/NCT03037931

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https://clinicaltrials.gov/ct2/show/NCT03037931

https://clinicaltrials.gov/

length of hospital stay, and improved medical outcomes. Vifor Pharma aims to be a key partner for hospitals to support PBM imple-mentation and to make it a standard of care practice. It is estimated that about 1.9 million patients could benefit from PBM in the EU’s five largest countries.

Vifor Pharma is conducting a real-world evidence study analyzing the clinical and economic impact of implementing PBM measures with Ferinject®. Approximately 31,000 patients are enrolled from four Europe-an countries, including the UK, Germany, Italy and Spain. Vifor Pharma plans to generate definitive evidence to show the beneficial impact of Ferinject® on a number of clinical and Health economics and outcomes research (HEOR) indicators. Preliminary results are expected at the end of 2021. Following results, the expectation is to launch a multi-channel campaign for disseminating the benefits of PBM, addressing multiple stakeholders such as HCPs, payers and hospital managers.

The COVID-19 pandemic reduced the number of patients undergoing elective surgeries in 2020. It also resulted in a dramatic reduction in blood donations around the world, poten-tially putting the lives of patients who needed blood at risk. This has led to organizations including the European Centre for Disease Control (ECDC), the Society for the Advance-ment of Blood Management (SABM) and the American Society of Anesthesiologists (ASA)11 recommending PBM principles be followed. They have also highlighted anemia manage-ment and iron replacement therapies as key interventions to overcome blood shortages caused by the pandemic. Vifor Pharma continuously emphasizes the importance of implementing PBM to improve clinical outcomes by optimally managing patients’ blood and works to educate governments and healthcare providers of its value.

11 Off-label in the US

In February 2020, the World Health Organiza-tion released an updated strategic action framework to advance universal access to safe blood, including PBM as one of their six strategic objectives. In addition, the European Commission announced plans to revise the EU Blood Directive in 2021. Vifor Pharma will continue to highlight the importance of including PBM in the directive. In the UK, pre-operative iron deficiency screening and treatment was promoted by the NHS’ Com-missioning for Quality and Innovation.

Nephrology Vifor Pharma launched an accredited online medical education campaign via Medscape in 2020, to raise awareness of the risks associat-ed with iron deficiency and the benefits of i.v. iron treatment in patients with non-dialysis dependent chronic kidney disease (ND-CKD). Attendance and program completion by nephrologists exceeded the company’s set target and the industry benchmark for online CME programs. A continuing Medical Educa-tion (CME) Satellite Symposium at the virtual European Renal Association-European Dialysis and Transplant Association (ERA-EDTA) meeting in June 2020 was supported by Vifor Pharma. The symposium educated nephrologists about treating iron deficiency early in patients with CKD and concomitant heart failure.

Medical education continued throughout 2020, and included medical publications and a multichannel digital campaign in selected European countries. In the second half, Vifor Pharma launched two more online CME modules, further emphasizing the importance of treating iron deficiency in ND-CKD patients. The company continues to invest in real-world evidence generation to show improved health economic outcomes in patients treated with Ferinject® compared to patients treated with either oral iron or low-dose iron, including ongoing studies in France and Italy.



Women’s Health Vifor Pharma supported Women Political Leaders Global Forum in 2020 with the launch of a gender-sensitive information toolkit addressing the impact of iron deficiency and iron deficiency anemia in women. An analysis of current disease burden and management strategies shows insufficient awareness of the issue and inadequate resources dedicated to dealing with it. In nearly all countries, iron deficiency and iron deficiency anemia remain a moderate to severe health risk, dispropor-tionately affecting women. Up to 50% of pregnant women are iron-deficient, and 42% of pregnant women and 30% of non-pregnant women live with iron deficiency anemia.

The toolkit was launched at the Reykjavik Global Forum – Women Leaders 2020 during a session on Driving Equality for a Healthy Society. Vifor Pharma was proud to participate in this event, which marked one of the most important conferences aimed at improving

gender equality in 2020. The Vifor Pharma- sponsored session saw the participation of patient advocates, physicians and policy makers, who discussed ways of improving standards of care for women impacted by bleeding disorders and during pregnancy.

Other disease awareness initiativesOn Iron Deficiency Day, 26 November 2020, Vifor Pharma’s annual international awareness initiative was promoted in 27 countries around the world. Running for the sixth year, this global campaign is designed to educate patients, key opinion leaders, healthcare pro viders and the general public to #TakeIronSeriously and understand the symptoms and treatment options for iron deficiency and iron deficiency anemia. Vifor Pharma partnered with a range of international organizations, including the European Kidney Health Alliance, The Heart Failure Policy Network, Croi, Global Heart Failure Hub and the Anemia Community.

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G E O G R A P H I C E X P A N S I O N

ChinaIn February 2020, Vifor Pharma announced a strategic partnership with Fresenius Kabi in China, expanding its existing alliance with the Fresenius Group and gaining improved access to the second largest pharmaceutical market in the world. As part of the agreement, Vifor Pharma and Fresenius Kabi created a joint company to focus on marketing, market access and medical affairs activities for Vifor Pharma’s i.v. iron portfolio. The joint company is 55% owned by Vifor Pharma and 45% by Fresenius Kabi.

The focus of the partnership is on PBM to benefit both patients and the healthcare system in China, with an estimated 3-5 million patients undergoing elective surgery each year. Fresenius Kabi will be fully responsible for the sales of Vifor Pharma’s i.v. iron portfolio, covering more than 20,000 anesthesiologists and 25,000 surgeons in more than 2,000 large scale hospitals to support PBM, as well as working with healthcare professionals for other indications including nephrology.

There is a high unmet medical need for Vifor Pharma’s i.v. iron products in China, which has the world’s largest iron deficiency anemia population, with an estimated prevalence of 20%. Following positive phase-III trial results, a New Drug Application (NDA) for Ferinject® was filed and the submission was accepted by China’s National Medical Products Administra-tion in June 2020.

JapanIn Japan, our partner Zeria Pharmaceutical Co., Ltd. was granted reimbursement in August 2020, and launched Ferinject® commercially in September.

Recent data estimates the number of patients diagnosed with iron deficiency anemia in Japan at 4.9 million a year. Of these, some


STRATEGIC PARTNERSHIP WITH FRESENIUS KABI IN CHINA

WITH PARTNER ZERIA PHARMACEUTICAL

GEOGRAPHICEXPANSION

2.2 million patients are treated with oral and i.v. iron preparations by specialists in gynecology, gastroenterology, cardiovascular and kidney internal medicine.12 Until recently, only one low-dose i.v. iron formulation has been avail-able in Japan, limiting treatment options and highlighting a significant unmet medical need.

Despite launching during pandemic-related restrictions, with limited hospital access and a decline in the number of patients visiting practitioners, positive feedback has been received from early prescribers who recognize the clinical benefits of Ferinject® on their patients. This signals high satisfaction and further adoption in the market. The fast correction of both haemoglobin and ferritin, the reduction of symptoms and limited number of administrations, are considered revolutionary in a country where iron deficien-cy anemia has often been considered chronic or inevitable. Ongoing investment is being made in medical education to raise aware-ness of the importance to treat and correct iron deficiency anemia, and expectations on patients’ quality of life and well-being.

12 Japan Medical Data Center (JMDC) P-Market (April 2018-March 2019).


M A LT O F E R ®

Maltofer® is the originator oral iron polymaltose complex (IPC), and plays an important role in the management of patients with iron defi-ciency. Registered in 79 countries, Maltofer® is a widely accepted and well-tolerated therapy for infants, children, adolescents and pregnant women. It is a market leading oral iron product in a fragmented market, with over 3,000 global suppliers. In 2020, the products global share by value13 was 7.8% in the oral iron segment of the iron market14.

In 2020, net sales of Maltofer® increased by 4.7% compared to the prior year to CHF 62.8 million. This increase was primarily driven by strong growth in Saudi Arabia and Australia.

A new global campaign called “Your Iron Counts” was launched in the second half of 2020, with the intention to empower women during pregnancy and in postpartum to take their iron levels seriously, and to encourage physicians to monitor iron levels consistently. The campaign is expected to positively impact the product’s performance.

13 Unlike volume data, value data are unrepresentative of competitive dynamics because they sum different types of prices for different medicines.

14 Without prejudice to market definition.

MALTOFER® GLOBAL SHARE BY VALUE IN THE ORAL IRON SEGMENT OF THE IRON MARKET

7.8%

COUNTRIES

79REGISTERED IN

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N E P H R O L O G YO U R P O R T F O L I O

Our leading position in nephrology is built on our unique joint company VFMCRP, which combines Vifor Pharma’s extensive and growing portfolio of nephrology medicines with Fresenius Medical Care’s global leadership in dialysis clinics and services.“

“

D R . C H R I S T O P H S P R I N G E R

CHIEF STRATEGY OFFICER


N E P H R O L O G Y

Vifor Pharma’s highly diversified nephrology portfolio is built around five primary disease areas, focusing on distinct comorbidities and complications in chronic kidney disease (CKD) patients. This includes renal anemia manage-ment, mineral and bone disease management, kidney protection and improvement, CKD- associated complications, acute kidney injury and transplantation.

Our expanding presence in the global nephrology market is primarily built around the unique joint company Vifor Fresenius Medical Care Renal Pharma (VFMCRP), which for the last ten years, has combined Vifor Pharma’s expertise in pharmaceuticals with the skills and infrastructure of Fresenius Medical Care. Fresenius Medical Care has access to almost 350,000 patients in its global network of over 4,000 dialysis clinics, and is the world’s leading provider of products and services for people with chronic kidney failure. The joint company’s objective is to provide a portfolio of products and innovative services addressing the major therapeutic needs of CKD patients, focusing on the nephrologist as the main specialist.

In 2020, the overall impact of COVID-19 on our commercial products in the nephrology portfolio was low. Dialysis and other potentially life-saving procedures have remained essen-tial for millions of chronic kidney disease patients worldwide who have continued to receive treatment. Our priority has been to maintain continuity of product supply to serve the patients who depend on us, and to progress ongoing clinical trials in a safe environment for both patients and caregivers

in accordance with health authorities’ guid-ance and recommendations. We have contin-ued to support our partner Fresenius Medical Care, to ensure delivery of dialysis to late stage CKD patients during the pandemic.

The portfolio of products which encompasses the five primary disease areas is detailed below:

R E N A L A N E M I A M A N A G E M E N T

E R Y T H R O P O I E S I S - S T I M U L A T I N G A G E N T ( E S A ) P O R T F O L I O

VFMCRP commercializes products for the treatment of anemia in patients with chronic kidney disease. The joint company’s ESA portfolio includes both short-acting and long-acting ESAs to offer customers a full range of treatment options to support patient needs.

Erythropoietin (EPO), a natural hormone produced by the kidneys, is essential for the regulation of red blood cell production. In CKD patients, kidney dysfunction often results in a deficit in the production of EPO, leading to a decline in the production of healthy red blood cells, and consequent anemia. In these cases, treatment with exogenous erythropoie-tin analogues or ESAs is recommended. While short-acting ESAs are typically administered two to three times per week, long-acting ESAs have been designed to have a much longer- lasting effect, allowing for dosing once or twice a month.

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DIALYSIS CLINICS IN THE US

SUPPLIED TO OVER

3,500

MIRCERA® NET SALES

478.4MILLION CHF

N E P H R O L O G Y

M I R C E R A®

Mircera® (methoxy polyethylene glycol-epoe-tin beta) is a long-acting ESA licensed from F. Hoffmann-La Roche AG in 2015 to treat symptomatic anemia associated with CKD. Mircera® is a core element of Vifor Pharma’s renal anemia strategy and is currently sup-plied to over 3,500 dialysis clinics in the US and its territories.

Net sales of Mircera® decreased by –8.6% to CHF 478.4 million in 2020 from CHF 523.4 million in 2019 and decreasing –3.6% at constant exchange rates. This decrease was mainly due to price consolidation in the mid-sized and independent market in the US, however its impact was partially offset by the addition of new customers in this space. An additional negative impact can be attributed to exchange rate fluctuations.

R E T A C R I T ®

Retacrit® (epoetin alfa-epbx) is a short-acting ESA approved by the US FDA in May 2018 for all indications of its reference drug, epoetin alfa. It is the first biosimilar ESA approved for use in the United States. Vifor Pharma licensed rights from Pfizer Inc. in 2015 to commercialize Retacrit® in certain channels, including the US dialysis and the majority of the non-hospital market.

Vifor Pharma’s net sales of Retacrit® grew to CHF 45.8 million in 2020, as more customers continued to adopt Retacrit® as their pre-ferred short-acting ESA. Following availability of multi-dose vials in late 2020, additional incremental growth is expected.


product17. The complex structure, surface, composition, and sophisticated manufactur-ing of Venofer® define its individual behavior and therefore clinical outcome. It is therefore considered a non-biologic complex drug (NBCD). This is in contrast to small-molecule drugs where the physico-chemical structure cannot be fully characterized and is best defined by their proprietary manufacturing process. Emerging scientific evidence 18, 19, 20,

21, 22 has demonstrated that follow-on prod-

17 U.S. Food and Drug Administration: Statement from FDA Commissioner Scott Gottlieb, M.D., on 2019 efforts to advance the development of complex generics to improve patient access to medicines. Available at https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-2019-ef-forts-advance-development-complex-generics

18 Di Francesco, T., Sublet, E., Borchard, G. (2019). Nanomed-icines in clinical practice: Are colloidal iron sucrose ready-to-use intravenous solutions interchangeable? European Journal of Pharmaceutical Sciences. 131, 69–74.,

19 Rottembourg, J., Kadri, A., Leonard, E., Dansaert, A., Lafuma, A. (2011). Do two intravenous iron sucrose preparations have the same efficacy? Nephrology Dialysis Transplantation. 26, 3262–3267.,

20 Agüera, M.L, Martin-Malo, A., Alvarez-Lara, M. A.,Gar-cia-Montemayor, V. E., Canton, P., Soriano, S., Alijama, P. (2015) Efficiency of original versus generic intravenous Iron formulations in patients on Haemodialysis. PLOS ONE. 10, e0135967.

21 Lee, E. S., Park, B. R., Kim, J.S., Choi, G.Y., Lee, J. J., Lee, I. S. (2013) Comparison of adverse event profile of intravenous iron sucrose and iron sucrose similar in postpartum and gynecologic operative patients. Current Medical Research and Opinion. 29, 141–147.,

22 Bailie, G. R., et al. (2015) Data from the Dialysis Outcomes and Practice Patterns Study validate an association between high intravenous iron doses and mortality. Kidney International. 87, 162–168.,

V E N O F E R ®

Venofer® (iron sucrose [iron (III)-hydroxide sucrose complex]) is the originator intrave-nous (i.v.) iron sucrose product, used for i.v. treatment of iron deficiency when oral iron preparations are ineffective or cannot be used. Robust clinical data and clinical experi-ence make Venofer® the trusted and preferred iron sucrose treatment in iron therapy for anemic dialysis patients. It continues to be a leading i.v. iron brand in terms of volume worldwide, with over 30 million patient years of experience by the end of 2020.

Reported net sales of Venofer® increased to CHF 136.2 million in 2020, up 2.9% from CHF 132.4 million in 2019 and growing 8.4% at constant exchange rates. Sales of Venofer® totaled CHF 68.2 million in 2020 in the US, where it is a market-leading i.v. iron in hemo-dialysis. Global in-market sales data for Venofer® represent 22.3% share by value15 of the i.v. iron segment of the iron market16.

Venofer® is a nanomedicine recognized by the US FDA as a harder-to-copy complex

15 Unlike volume data, value data are unrepresentative of competitive dynamics because they sum different types of prices for different medicines.

16 Without prejudice to market definition.

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https://www.fda.gov/news-events/press-announcements/statement-fda-commissioner-scott-gottlieb-md-2019-efforts-advance-development-complex-generics

ucts can have a different efficacy and safety profile, as well as a different clinical perfor-mance, compared with Venofer®. In light of this scientific evidence, European regulatory agencies are no longer providing generic mar-keting authorizations for i.v. iron follow-on products, but approve them as nanosimilars.23 As a result, these iron sucrose similars cannot be assumed to be therapeutically equivalent to Venofer® without data to demonstrate therapeutic equivalence between Venofer® and iron sucrose similars.

V A D A D U S T A T I N D E V E L O P M E N T

Vadadustat is an investigational oral hypox-ia-inducible factor prolyl hydroxylase (HIF-PH) inhibitor in development by Akebia Therapeu-tics, Inc., a NASDAQ-listed, US bio-pharma-ceutical company. Vadadustat is in develop-ment for the treatment of anemia due to chronic kidney disease (CKD).

Pursuant to a License Agreement with Akebia, Vifor Pharma has been granted an exclusive license to sell vadadustat to Fresenius Kidney Care dialysis centers and to specific third-party dialysis organizations that together account for approximately 60% of the dialysis patients in the US. The license is subject to vadadustat’s approval by the US FDA, the earlier of reim-bursement under Transitional Drug Add-on Payment Adjustment (TDAPA) or inclusion in the Centers for Medicare and Medicaid (CMS) End-Stage Renal Disease Prospective Payment System (ESRD PPS), and a milestone payment from Vifor Pharma. If granted for vadadustat, the TDAPA is expected to be in effect for a two-year period, after which the product would be expected to be reimbursed under the ESRD PPS.

23 Public Assessment Report (2018) Sucrofer 20 mg iron/ml, Solution for injection/infusion (iron sucrose). Medicines & Healthcare products Regulatory Agency

Akebia recently completed the global phase-III clinical development program for vadadustat. In May 2020, Akebia announced positive top-line results from INNO2VATE, its phase-III program which evaluated the safety and efficacy of vadadustat versus darbepoetin alfa for the treatment of anemia due to CKD in adult patients on dialysis. Within INNO2VATE, vadadustat achieved the primary and key secondary efficacy endpoints, demonstrating non-inferiority to darbepoetin alfa as mea-sured by a mean change in haemoglobin between baseline and the primary evaluation period (weeks 24 to 36) and secondary evaluation period (weeks 40 to 52). Vadadustat also achieved its primary safety endpoint, defined as time-to-first occurrence of major adverse cardiovascular events (MACE), and achieved key secondary safety endpoints including expanded MACE, cardiovascular MACE, cardiovascular mortality, and all-cause mortality.

In September 2020, Akebia announced results from its global phase-III PRO2TECT program, evaluating vadadustat’s safety and efficacy versus darbepoetin alfa for the treatment of anemia due to CKD in adult patients not on dialysis. Vadadustat achieved the PRO2TECT program’s primary and key secondary efficacy endpoints; however, vadadustat did not meet the program’s primary safety endpoint. Pursuant to the License Agreement with Akebia Therapeutics, Vifor Pharma does not have rights to sell the product outside of the dialysis setting.

Akebia plans to submit to the FDA a New Drug Application (NDA) for vadadustat in mid-Q2 2021, for the treatment of anemia due to CKD for adult patients on dialysis and not on dialysis.

N E P H R O L O G Y


M I N E R A L A N D B O N E M A N A G E M E N T

V E L P H O R O ®

Velphoro® (Polynuclear Iron (III)–Oxyhydroxide, Sucroferric Oxyhydroxide) is a non- calcium, iron-based, chewable phosphate binder approved for the control of phosphate levels in the blood in adults with chronic kidney disease (CKD) on dialysis. Launched in 30 countries, over 100,000 patients are now estimated to benefit from Velphoro® on a yearly basis. In 2020, Velphoro® became a global leader by value in the calcium-free phosphate binder market.24

Velphoro® remained strong with net sales of CHF 177.7 million in 2020, a slight decrease

24 Monthly IQVIA MIDAS panel, INSIGHT Health & DN, GERS, DLI, Farminform | 03.2020

of –2.2% from CHF 181.7 million in 2019 and growing 3.6% at constant exchange rates. Reported net sales were impacted by order patterns of a major customer in the US. Overall, in-market growth continues, with global in-market sales up by 24.8% to CHF 439.3 million in 2020, mainly driven by the US and Japan. While face-to-face contacts with physicians were significantly reduced during the pandemic, the brand maintained momentum with continued promotion and customer contacts via virtual channels.

In the first half of 2020, Velphoro® was launched in Canada by our partner Otsuka Canada Pharmaceutical Inc., and in South Korea by our partner Fresenius Medical Care Korea Ltd. In the second half of the year, Velphoro® was launched in Saudi Arabia. VFMCRP is working towards regulatory approvals in a number of South East Asian markets, with launches planned in 2021. In China, a phase-III clinical trial is expected to be completed by end of 2021, with commer-cial launch planned for H2 2023.

Growing real-world evidence continues to demonstrate the benefits of Velphoro® for patients, with approximately twice as many achieving and maintaining target serum phosphate levels with half the pill burden, when switched from other phosphate binders. This was confirmed in a two-year retrospective study published in the “Kidney Medicine“ in March 2020.25 The real-life data also suggests a 25% reduction in the risk for hospitalization (incidence rate per 100 patient-years).

The European Post Authorization Safety Study VERIFIE, which assessed the safety and effectiveness of Velphoro® post launch, was successfully completed in 2019. The study results also confirmed safety and effectiveness of Velphoro® in a real-life setting by doubling

25 Coyne, D. W., et al. (2020) Sucroferric Oxyhydroxide in Maintenance Hemodialysis: A Retrospective, Compara-tive Cohort Study. Kidney Medicine.

GLOBAL IN-MARKET SALES UP

VELPHORO® –LEADER IN GLOBAL PHOSPHATE BINDER MARKET

VELPHORO® LAUNCHED IN CANADA AND SOUTH KOREA.

24.8%

1#

GEOGRAPHICEXPANSION

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the patients with controlled phosphate levels 12 months after initiation. Related updates to the risk management plan and the Summary of Product Characteristics were approved by the European regulatory authorities in May 2020. Post balance sheet reporting February 2021, the results were published in “Clinical Kidney Journal.”

In the US, additional patents have been listed in the Orange Book with expiration in 2028 and 2034, further strengthening the IP protection for Velphoro®. In 2018, Abbreviated New Drug Applications (ANDAs) were filed with the US Food and Drug Administration (FDA) for generic versions of Velphoro®. All disputes have been settled with the exception of one generic company, for which a trial took place in January 2021 with respect to VFMCRP’s 2030 expiring patent. A further trial is due to follow in 2022 with respect to VFMCRP’s 2028 patents. So far, no FDA approval has been issued for any generic copy.

In the European Union, Velphoro® received an extension of the indication for use in pediatric patients, and linked with this, one additional year of marketing protection with exclusivity until August 2025.

R A Y A L D E E ®P R E - C O M M E R C I A L

Rayaldee® is an orally administered, extended- release26 formulation of calcifediol, a pro-hormone of the active form of vitamin D3, for the treatment of secondary hyperparathy-roidism (SHPT) in patients with chronic kidney disease (CKD) with vitamin D insufficiency. VFMCRP obtained the rights from OPKO Health Inc. for this indication in Europe and selected markets outside the US.

26 Rayaldee® is approved with the terminology “extended- release” in the US and as “prolonged-release” in the EU.

SHPT is a chronic progressive disease which increases in severity as CKD worsens. It is characterized by excessive secretion of parathy-roid hormone (PTH) by the parathyroid glands in response to low blood calcium levels (hypocalcemia), with resultant hyperplasia of these glands. It is estimated to affect between 40% and 82% of patients with stage three or four CKD.27 Prolonged elevations in PTH levels increase the risk of bone disease, fractures, vascular and soft tissue calcification, and therefore morbidity and mortality.28, 29, 30 Furthermore, hyperplasia of the parathyroid glands leads to increasing autonomy of parathy-roid tissues, resulting in sustained elevations in PTH, and is also accompanied by treatment resistance.31 There is currently no established standard of care for the treatment of SHPT in non-dialysis (ND-CKD) patients across Europe.

Rayaldee®’s unique extended-release formulation of calcifediol (ERC) raises serum 25-hydroxyvitamin D gradually to levels needed in CKD patients for the control of SHPT, and lowers blood levels of PTH. At the same time, it has an inconsequential effect on serum calcium and phosphate levels. This allows for the early and efficient management of SHPT without exposing the patient to significant risk of hypercalcemia and hypo-phosphatemia.

27 Levin, A., Bakris, G. L., Molitch, M., Smulders, M., Tian, J., Williams, L. A. & Andress, D. L. (2007). Prevalence of abnormal serum vitamin D, PTH, calcium, and phosphorus in patients with chronic kidney disease: Results of the study to evaluate early kidney disease. Kidney International, 71(1), 31–38.

28 Cunningham J, Locatelli F, Rodriguez M. Secondary hyperparathyroidism: pathogenesis, disease progression, and therapeutic options. Clin J Am Soc Nephrol. 2011;6(4):913−921.

29 Nigwekar SU, Tamez H, Thadhani RI. Vitamin D and chronic kidney disease-mineral bone disease (CKD-MBD). Bonekey Rep. 2014;3:498.

30 Lishmanov A, Dorairajan S, Pak Y, et al. Elevated serum parathyroid hormone is a cardiovascular risk factor in moderate chronic kidney disease. Int Urol Nephrol. 2012;44(2):541−547.

31 Rodriguez M, Nemeth E, Martin D. The calcium-sensing receptor: a key factor in the pathogenesis of secondary hyperparathyroidism. Am J Physiol Renal Physiol. 2005;288(2):F253−264.

N E P H R O L O G Y


A recent study32 in the US found that clinical effectiveness and safety in a real-world setting is consistent with data reported from random-ized clinical trials. In contrast to nutritional and active vitamin D, only ERC was associated with a statistically significant decrease in PTH. In addition, patients treated with ERC saw the greatest increase in serum 25-hydroxyvitamin vitamin D levels, without a statistically signifi-cant impact on key safety outcomes (serum calcium and phosphate).33

During H2 2020, Rayaldee® received national marketing authorizations in selected European countries, including Germany, Spain, Italy and Switzerland. Vifor Pharma plans to initiate launch of Rayaldee® in late 2021/early 2022.

K I D N E Y P R O T E C T I O N

A V A C O P A NU N D E R R E G U L A T O R Y R E V I E W

Avacopan is an orally-administered, highly selective inhibitor of C5aR1 (the complement C5a receptor1), which is central to the underly-ing inflammatory cycle that drives blood vessel damage in ANCA-associated vasculitis (anti-neutrophil cytoplasmic auto-antibody-as-sociated vasculitis) or AAV. It is currently being developed for the treatment of orphan and rare renal diseases including AAV and C3 glomerulopathy (C3G). Previous studies have shown the clinical and patient experience benefits of selectively blocking C5aR1, which is responsible for pathophysiological pro-in-flammatory responses.

VFMCRP has a licensing agreement with ChemoCentryx, Inc., to commercialize avacopan outside the US. Following positive

32 Germain MJ, et al. Poster presented at ERA-EDTA Virtual Congress, 6–9 June 2020.

33 Germain M, et al. Real-world assessment: clinical effectiveness and safety of vitamin D therapies in ND-CKD patients. Presented at ERA-EDTA virtual annual meeting 2020.

topline data from the pivotal phase-III ADVOCATE trial in the treatment of AAV at the end of 2019, VFMCRP filed a Marketing Authorization Application (MAA) for the treatment of patients with AAV with the European Medicines Agency (EMA) in October 2020.

In November 2020, the EMA accepted to review the MAA for avacopan for the treat-ment of patients with AAV, granulomatosis with polyangitis (GPA) and microscopic polyangiitis (MPA), a group of rare and severe autoimmune diseases with high need for targeted therapies. The EMA is reviewing the application under the centralized marketing authorization procedure. Approval is expect-ed in H2 2021. If approved, avacopan will receive marketing authorization in all EU mem-ber states, followed by launch in late 2021/ early 2022. Avacopan would be the first orally administered C5aR1 inhibitor for the treat-ment of patients with AAV.

In December 2020, VFMCRP and ChemoCentryx, Inc. announced top-line data from the ACCOLADE clinical study, the largest, randomized, blinded, placebo-con-trolled phase-II trial in the ultra-rare kidney disease C3G to date. Avacopan demonstrated statistically significant improvement in renal function as measured by eGFR compared to placebo over 26 weeks of blinded treatment. The change from baseline to week 26 in C3 glomerulopathy histologic index (C3G HI) for disease activity (primary endpoint) was not statistically different between the two treat-ment groups, while the C3G HI for disease chronicity, measuring progression of fibrosis, showed significant benefit for avacopan versus placebo. Avacopan also appeared safe and well-tolerated in patients with C3G. VFMCRP plans to discuss the registration pathway with regulatory agencies in the EU.

Post balance sheet reporting March 2021, Kissei Pharmaceutical Co., Ltd. submitted the

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Japanese new drug application for the treatment of AAV.

AAV awareness and collaboration VFMRCP is committed to understanding the significant unmet medical need and patient burden of AAV. In 2020, the company contin-ued to work with key stakeholder organiza-tions, including non-governmental patient alliances and national vasculitis patient groups across Europe. The joint company is also supporting a number of activities together with the European Vasculitis Society, research-ers and national vasculitis professional groups which address key topics such as medical education, clinical registry initiatives and investigator-initiated research studies. Additionally, a managed access program continued to be rolled out in 2020, allowing ADVOCATE sites in certain countries to request continued treatment with avacopan for specific AAV patients on the basis of their medical benefit-risk assessment.

VFMCRP advanced its publication activities for AAV in 2020 with numerous scientific presen-tations related to clinical outcomes, burden of disease and related healthcare costs at virtual national and international conferences. Further scientific data was disseminated, with high-profile presentations by investigators at the virtual European ERA-EDTA nephrology and EULAR rheumatology congresses in June 2020. Additional presentations addressing the disease burden followed in November 2020 at the ASN and ACR.

An online HCP disease education platform – understandaav.com, has been expanded through multiple European languages, attracting more than 50,000 visitors since launch in early 2020. This powerful initiative has highlighted the importance of anticipat-ing new forms of multichannel engagement, especially during the global pandemic.

As a member of the European Organization for Rare Diseases (EURORDIS) Round Table of Pharmaceutical Companies, VFMCRP has engaged in a voluntary, early dialogue-based approach with payers and patient groups through the Mechanism of Coordinated Access to Orphan medicinal Products (MoCa). In 2020, VFMCRP provided support to vasculitis patient advocacy groups through the umbrella organization Vasculitis Interna-tional. Our collaboration with the community has led to the co-creation of the SEE ME | HEAR ME disease awareness initiative created by and for patients and carers. Since its launch on Rare Disease Day in February 2020, the vasculitis community digital platform – myancavasculitis.com, has had more than 30,000 visitors.

In May 2020, VFMCRP marked the first World Vasculitis Awareness Day together with vasculitis experts and patient representatives, promoting media outreach to raise awareness of the disease management challenges and unmet needs across Europe.

C C X 1 4 0D I S C O N T I N U E D CCX140 is an orally-administered small molecule that is a highly potent and selective inhibitor of the chemokine receptor CCR2. In May 2020, Vifor Fresenius Medical Care Renal Pharma (VFMCRP) and ChemoCentryx, Inc., reported top-line data of the phase-II LUMINA-1 study, which enrolled 46 focal segmental glomerulosclerosis (FSGS) patients with moderate-to-severe protein loss in primary or genetic FSGS.

CCX140 did not demonstrate a meaningful reduction in proteinuria relative to the control group after 12 weeks of blinded treatment. In light of top-line data from the phase-II LUMINA-1 study, CCX140 development in FSGS has been discontinued.

N E P H R O L O G Y


https://www.myancavasculitis.com/

https://www.understandaav.com/

A C U T E K I D N E Y I N J U R Y

A N G - 3 7 7 7I N D E V E L O P M E N T

In November 2020, Vifor Pharma and Angion Biomedica Corp. (Angion) signed a world-wide license agreement, excluding Greater China, for the commercialization of late-stage development product ANG-3777. The product is currently being developed for treatment of delayed graft function (DGF) and cardiac surgery-associated acute kidney injury (CSA-AKI). ANG-3777 is a first-in-class small molecule engineered to mimic the biological activity of hepatocyte growth factor (HGF), activating critical pathways in the body’s natural organ repair process following an acute organ injury.

The agreement further expands Vifor Pharma’s nephrology product pipeline into transplanta-tion and acute kidney injury, leveraging our established infrastructure and significant commercial expertise. ANG-3777 is a highly promising, innovative treatment with a unique mode of action addressing a significant unmet need in DGF and CSA-AKI. There are currently no effective or approved therapies for either of these critical conditions.

Under the terms of the agreement, Vifor Pharma will receive an exclusive global license, excluding China, Taiwan, Hong Kong and Macau, for all ANG-3777 nephrology indications. Angion will be responsible for conducting the ongoing nephrology-focused clinical development programs. Angion and Vifor Pharma will share responsibilities for regulatory filings in the licensed territories, and Vifor Pharma will be responsible for all commercialization activities related to nephrology indications in all licensed territo-ries. Addressable patients with DGF is estimated to be about 26,000 and approxi-mately 110,000 with CSA-AKI in the US and EU5 combined each year.

The ongoing clinical trials of ANG-3777 include a placebo-controlled phase-III registration trial in transplant-associated acute kidney injury, also known as DGF, and a phase-II proof-of-concept trial for the treatment of AKI associated with cardiac surgery involving cardiopulmonary bypass surgery. Data read-out for the phase-III trial in DGF is expected at the end of 2021. Data read-out for the phase-II trial in CSA AKI is expected in H2 2021.

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C H R O N I C K I D N E Y D I S E A S E A S S O C I A T E D C O M P L I C A T I O N S

D I F E L I K E F A L I NF I L E D I N T H E U S

Difelikefalin, developed by Cara Therapeutics Inc., is a peripherally-restricted kappa opioid receptor agonist which targets the body’s peripheral nervous system. It has been developed as a treatment for chronic kidney disease-associated pruritus (CKD-aP), and has been specifically designed to mitigate side effects typically observed with opiates. Moderate-to-severe CKD-aP is a debilitating systemic itch that impacts up to 40% of dialysis patients around the world.34

CKD-aP is a condition associated with poor quality of life, reduced social interactions and depression. It is also identified as an independent predictor of mortality among hemodialysis patients. There are no approved therapies in Europe or the US for the treat-ment of CKD-aP, with current treatment options (not indicated for the treatment of CKD-aP) linked to limited efficacy and/or unfavorable toler ability.

In April 2020, VFMCRP and Cara Therapeutics announced positive results from the KALM-2 global pivotal phase-III trial, confirming the positive outcome of the KALM-1 study published in 2019. The study showed statisti-cally significant improvement in primary and key secondary endpoints. Difelikefalin was generally well tolerated, with a safety profile consistent with that seen in KALM-1 and in the rest of the clinical program in hemodialysis patients with CKD-aP.

Cara Therapeutics and VFMCRP signed an initial license agreement in May 2018 to develop and commercialize difelikefalin for the treatment of CKD-aP in hemodialysis and peritoneal dialysis patients worldwide, excluding the US, Japan and South Korea. In

34 Rayner HC, et al. Clin J Am Soc Nephrol 2017;12:2000–7.

the US, Cara Therapeutics and VFMCRP agreed to promote difelikefalin to Fresenius Medical Care North America (FMCNA) dialysis clinics under a profit-sharing arrangement.

In October 2020, Vifor Pharma and Cara Therapeutics signed a license agreement for the commercialization of difelikefalin injection for the treatment of CKD-aP in the US dialysis market for non-Fresenius Medical Care clinics under a profit-sharing arrangement. Under the terms of the agreement, Cara will receive an upfront milestone payment and an equity investment from Vifor Pharma, which now has an 8.3% stake in the company. Commercializa-tion rights for difelikefalin in the full dialysis segment will enable Vifor Pharma to expand its nephrology presence in the US, with non-FMC dialysis clinics representing approxi-mately 66% of the total market. The FDA has conditionally accepted KORSUVA™ as the trade name for difelikefalin injection.

Cara Therapeutics submitted the New Drug Application (NDA) in the US for difelikefalin for the treatment of moderate-to-severe CKD-aP in December 2020. Subject to approval, US launch is expected in H2 2021. VFMCRP is planning to submit its initial MAA in Europe in early 2021, followed by applications in Canada, Switzerland and Australia in H2 2021 through consortium filing. Approval in Europe is expected in Q2 2022, followed by first European launches in mid-H2 2022. Subject to approvals, difelikefalin would be the first medicine indicated for the treatment of CKD-aP in the US and Europe.

Market preparations were undertaken during 2020, with a focus on disease education and stakeholder engagement to ensure aware-ness of the unmet need, burden of disease and the value of difelikefalin for dialysis patients with CKD-aP. Based on the principles of value- based medicine, VFMCRP is now investigating how the quality of life of dialysis patients with CKD-aP can be improved, including diagnosis, treatment and evaluation of outcome measures.

N E P H R O L O G Y


G R E G O R Y O A K E S PRESIDENT NORTH AMERICA

Difelikefalin is an important, innovative new therapeutic that has the potential to address a significant unmet need. We are committed to making it available to dialysis patients, who urgently need an effective therapy.“

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C A R D I O - R E N A LO U R P O R T F O L I O

V E LT A S S A®

Veltassa® (patiromer), is the first product to offer effective35 and well-tolerated36 long-term treatment of hyperkalemia (elevated blood potassium levels) in chronic kidney disease (CKD) and chronic heart failure patients.

Hyperkalemia is a serious medical condition characterized by elevated levels of potassium in the blood and can be associated with life-threatening consequences. Patients with CKD and heart failure, especially those treated with RAAS (renin-angiotensin-aldosterone system) inhibitors are at particular risk of developing hyperkalemia. As a consequence, RAASi therapy, the cornerstone of treatment for CKD and heart failure, is often reduced or discontinued, compromising cardio-renal protection. Veltassa® enables patients to remain on RAASi therapy by effectively managing their chronic hyperkalemia.

In 2020, Vifor Pharma continued to create awareness of the unmet medical need for the treatment of patients with hyperkalemia and the new option to chronically manage hyperkalemia, permitting patients to stay on an optimal dose of their life-saving RAASi medications. Growth is expected to be driven by further clinical data from ongoing life cycle management activities and disease awareness initiatives.

R E P O R T E D N E T S A L E S

Net sales of Veltassa® decreased by –10.6% to CHF 118.3 million in 2020 from CHF 132.3 million in 2019, –5.1% at constant exchange rates.

Veltassa® has experienced steady and sustained growth since FDA approval alaunch in 2015, helping to drive the global expansion

35 Agarwal R, et al. Lancet 2019;394:1540–50.36 Veltassa® EU SmPC 2019

of the potassium binder market from CHF 185.6 million in 2016 to CHF 431.0 million in 2020. Overall, the market has not grown to expectations, which in 2020 is in part due to the impact of the global COVID-19 pandemic, and market access headwinds in the US. Vifor Pharma continues to be a market share leader among nephrologists and cardiologists.

Vifor Pharma continues to create disease awareness to accelerate market growth, establish positive clinical differentiation and improve up-take of prescriptions. Through ongoing clinical studies, we hope to demon-strate strong outcome data with the opportu-nity to accelerate growth and further improve product distinction to establish acceptance for RAASi enabling concept.

L I F E C Y C L E M A N A G E M E N T A N D I N V E S T I N G I N T H E F U T U R E O F V E LT A S S A®

Vifor Pharma is committed to investing in data generation programs to drive evidence-based care using Veltassa® in chronic kidney disease (CKD) and heart failure (HF) patients. After the positive results of the phase-II AMBER study in resistant hypertension and CKD, Vifor Pharma undertook a major investment in the DIAMOND phase-IIIb study. This reflects the company’s belief in the potential of Veltassa® in treating hyperkalemia and enabling life-saving medications in CKD and heart failure patients. DIAMOND is an out-come-driven study in patients with chronic heart failure, designed to support the further use of Veltassa® by effectively controlling blood potassium levels, and evaluating whether this will lead to optimized RAASi therapy, thereby improving survival and reducing hospitalization.

The study is a global, multicenter, double- blind, placebo-controlled trial aiming to enroll approximately 2,400 patients in over 400 sites.


PLATINUM is a randomized, double-blinded, placebo-controlled phase-IV study with 300 patients enrolled. The study is designed to evaluate the efficacy and safety of Veltassa® in combination with standard of care treat-ment in emergency department (ED) patients with hyperkalemia. The key primary endpoint evaluates the need of additional potassium- related medical interventions at six hours after initial treatment with insulin, glucose and albuterol to shift potassium to the cells. Given the lack of consistency in hyperkalemia treatment in the ED and the high cost associat-ed with ED stay and emergency hemodialysis, there is a need for the development and systematic evaluation of a treatment protocol to maintain normalized potassium levels after emergency treatment, by the removal of potassium from the body with a potassium binder. Topline results are expected in H1 2022.

In November 2020, the EMA approved two significant additions to the SmPC for Veltassa®. This included results of the phase-II AMBER study, providing novel evidence on Veltassa®

DIAMOND will include patients with heart failure (with or without CKD) and either current hyperkalemia at screening, or a history of hyperkalemia in the past year, leading to a reduction or discontinuation of RAASi therapy. The primary endpoint of the study is the time to first occurrence of cardiovascular death or cardiovascular hospitalization. In the first half of 2020, Vifor Pharma temporarily halted enrolment of new patients, and in agreement with the study steering committee, to minimize risk of COVID-19 to the patients in the study. In June 2020, recruitment was re-ini-tiated. By the end of the year, the majority of participating countries had opened planned trial sites, or re-opened the temporarily halted sites. Several initiatives to facilitate the safe recruitment of patients to the trial have been implemented. All study patients are expected to be enrolled in the trial by the end of 2021, however the impact of the pandemic on recruitment and trial operations worldwide remains uncertain. Vifor Pharma’s first priority remains the safety and well-being of the patients in the trial.

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RAASi enabling in a relevant population of patients with resistant hypertension and CKD. AMBER results showed that administration of Veltassa® significantly increased the propor-tion of patients who remained on spironolac-tone and reduced the risk for hyperkalemia during spironolactone therapy. The precau-tions for storage were also clarified, allowing the room temperature storage period to also be applied to settings such as hospitals, where product is not stored by patients themselves. This provides increased convenience for HCPs, limiting the competitive disadvantage of refrigerated storage requirements.

Due to the sophisticated structure of patiromer complex active pharmaceutical ingredient and its complex route of delivery as a locally acting gastro intestinal drug, Veltassa® belongs to the FDA’s Harder-to-Copy Complex Products category and is considered a Non-Biologic Complex Drug (NBCD). These are in contrast to small molecules drugs were the physico- chemical structure cannot be fully character-ized and are best defined by their pro prietary manufacturing process.

G L O B A L E X P A N S I O N , R E I M B U R S E M E N T A N D R E G U L A T O R Y A P P R O V A L S

In January 2020, Veltassa® received reim-bursement approval in Finland, followed by Portugal and Switzerland. Our partner, Otsuka Canada Pharmaceutical Inc., launched Veltassa® in Canada in May 2020. Formulary access in England, Wales and Northern Ireland was fully achieved as a result of the National Institute for Health and Care Excellence (NICE) technology appraisal guidance in February 2020.

In Japan, Vifor Pharma has a licensed Veltassa® to Zeria Pharmaceutical Co., Ltd., granting Zeria exclusive rights to develop the necessary clinical data to support Veltassa®’s

regulatory and reimbursement approval. In line with Vifor Pharma’s commitment to make Veltassa® available to patients worldwide, a phase-II trial was initiated in Japan in 2019 and completed enrolment during the first half of 2020. The study remains on track with read-out expected in H1 2021.

In November 2020, Vifor Fresenius Medical Care Renal Pharma (VFMCRP) and Fresenius Kabi announced an agreement to develop, register and distribute Veltassa® for the treatment of hyperkalemia in the People’s Republic of China. Under the agreement, Fresenius Kabi will have the exclusive right to distribute and sell Veltassa® across China. By bringing Veltassa® to China, VFMCRP and Fresenius Kabi will deliver a treatment that will enable patients to remain on RAASi therapy by managing their chronic hyperkalemia. A local phase-III study in China is planned to start in Q3 2021, with expected read-out in H1 2024. Following positive trial results, a New Drug Application (NDA) would be filed for regulatory approval in mid-2024.

REIMBURSEMENT APPROVAL IN FINLAND, PORTUGAL AND SWITZERLAND

GLOBAL EXPANSION

VFMCRP AND FRESENIUS KABI PARTNERSHIP BRINGS VELTASSA® TO CHINA



Fresenius Kabi is a global healthcare company that specializes in medicines and technologies for infusion, transfusion and clinical nutrition. Veltassa® will benefit from Fresenius Kabi’s market-leading nephrology patient access in China alongside Velphoro® and Venofer®. There is a high prevalence of CKD and heart failure in China37 and hyperkalemia is one of the most common complications associated with these two conditions. As a result there is a high demand for an effective, proven hyperkalemia treatment.

37 Zhang et al. Lancet. 2012 Mar 3;379(9818):815-22; Guo et al. Int J Environ Res Public Health 2016; 13: E770; Guo et al. Curr Cardiol Rev. 2013 May; 9(2): 112–122.

O T H E R D I S E A S E A W A R E N E S S I N I T I A T I V E S

In line with our commitment to expand awareness, Vifor Pharma is proud to support people living with hyperkalemia and to partner with the American Association of Kidney Patients (AAKP), the largest and oldest fully independent kidney patient organization in the US. In May 2020, AAKP initiated a national educational “Are You O-K+” campaign aimed at increasing awareness of hyper-kalemia. This national campaign, supported by Vifor Pharma as an inaugural sponsor, is also known as National High Potassium Awareness Day.

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V I T- 2 7 6 3 I N D E V E L O P M E N T

Beta-thalassemia is an inherited rare blood disorder that reduces the production of functional haemoglobin in red blood cells, which can lead to a lack of oxygen in many parts of the body and potentially cause anemia. Beta-thalassemia is often treated with blood transfusions, which may lead to excess levels of iron in the body, known as iron overload. The condition is estimated to affect around 25,000 patients in both the US and Europe. In June 2019, both the FDA and the EMA granted orphan drug designations for VIT-2763 in beta-thalassemia.

Following positive phase-I study results, Vifor Pharma initiated a phase-II trial in non-trans-fusion-dependent beta-thalassemia (NTDT) with the first patient first visit in Q2 2020. The main objective of this randomized, controlled, multinational trial is to investigate the safety, tolerability and efficacy of VIT-2763 in NTDT patients.

In addition, VIT-2763 has shown promising results in a preclinical model of sickle cell disease (SCD), a condition where formation of aberrant haemoglobin causes a variety of complications, including painful vaso-occlu-sive crisis and organ damage.

SCD is a group of inherited red blood cell disorders, and is a genetic condition present at birth. In this disease, red blood cells carry abnormal haemoglobin, which makes them prone to rupture, causing adhesion of sickle cells and inflammatory cells to the blood vessels. This ultimately leads to an obstruction of blood flow and organ damage. VIT-2763 blocks the ferroportin protein, which transports iron from inside the cells into the blood-stream. As iron is needed for the formation of haemoglobin, this relative decrease in iron availability is expected to reduce the concen-tration of abnormal haemoglobin in red blood cells and prevent ensuing unfavorable events. Ferroportin inhibition is expected to allow better blood flow and to improve both the symptoms and clinical outcomes of the disease. There are an estimated 150,000 patients in both Europe and the US living with the condition. Post balance sheet reporting January 2021, the FDA granted orphan drug designation for VIT-2763 in SCD, and the EMA issued a positive opinion on an orphan designation for the same.

Activities for a phase-II trial in SCD have been initiated, with the aim to start recruitment in 2021.

Vifor Pharma is using its expertise in understanding the chemistry and biology of iron to develop VIT-2763, the first oral ferroportin inhibitor with the potential to treat diseases with ineffective erythropoiesis and iron overload, such as beta-thalassemia.

O U R P O R T F O L I O


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R E S P O N S I B I L I T Y


C O R P O R A T E R E S P O N S I B I L I T Y

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2020 was a year of unprecedented challenges. Vifor Pharma implemented a number of measures to secure medicine supply for patients, protect the wellbeing of our employees and their families, and contribute to minimizing the negative effects of the pandemic on patients, healthcare providers and communities.”

L E E H E E S O N

PRESIDENT INTERNATIONAL

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As a global pharmaceutical company, we recognize and address global challenges and stakeholder expectations, aiming to do our part for a better and more sustainable future. We are convinced this supports our long-term success as a company. In 2020, we continued to focus on having a positive impact on our stakeholders and the communities in which we operate.

Our Corporate Responsibility approach is structured around five pillars, allowing us to address our responsibilities practically and efficiently, while being conscious of our stakeholders’ expectations.

We conduct business with

INTEGRITY

We focus on

PATIENTS

We value our

EMPLOYEES

We care about the

ENVIRONMENT

We engage with our

COMMUNITY

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TRANS-PARENCY

SOCIAL ENGAGEMENT

SCIENCE& HEALTH

KNOWLEDGE

PATIENTNEEDS &SUPPORT

ACCESS TOHEALTHCARERESOURCE

EFFICIENCY

MINIMI-SATION OFEMISSIONS

WORKPLACE& WELL-BEING

EMPLOYEE POTENTIAL

BUSINESS BEHAVIOUR

FOCUS AREA

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FOCUS AREA

VIFOR PHARMA RELEVANCE

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VIFOR PHARMA RELEVANCEVIFOR PHARMA RELEVANCE

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STAKEHOLDER RELEVANCESTAKEHOLDER RELEVANCE

STAKEHOLDER RELEVANCE

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FOCUS AREA

Informed stakeholders

Better and healthier patient lives

Adequate treatment for underserved

patients

Attractive job and developmentopportunities

Safe, healthyand pleasant

workplaces

Protectedresources

Mitigatedclimate change

Strengthenedcommunities

and aid

Fair business and competition

Ethical business improves corporate culture, reputation and helps prevent legal disputes

INTEGRITYCOMMUNITY

PATIENTSENVIRONMENT

EMPLOYEES

Promoting scienceand health knowledgehelps the acceptance of

our business and enhances visibility

Transparencybuilds trust amongstakeholders and

fosters integrity whenworking with third

parties

Better access tohealthcare creates

opportunities toreach morepatients and

to driveinnovation

Efficient use ofresources reduces

both waste andcosts

Minimising emissionshelps prevent

negative effectsof climate changeand reputational

damage

Social engagementbuilds community

trust, enhances ourreputation and

motivates employees

A skilled and diverseworkforce fostersinnovation and improvesbusiness performance

A healthy and motivatedworkforce improves

performance and leads tobetter retention rates

Engaging with patients helps us to

understand their health needs and improve patient

solutions

Educated andinformed society

D R I V I N G A M O R E S U S T A I N A B L E B U S I N E S S


C O N D U C T I N G B U S I N E S S W I T H I N T E G R I T Y

Ethical behavior is essential to us. We comply with laws, regulations and industry standards, and address potential misconduct. We respect the rights and integrity of our stake-holders, particularly patients and employees. We want to be seen as a reliable partner committed to transparency. This allows us to improve corporate culture and build trust among stakeholders.

Our integrity standards are defined in our Code of Conduct and Business Ethics to which all our employees must adhere. We expect our suppliers and business partners to follow comparable standards, as specified in the Suppliers Code of Conduct. This includes the protection of human rights, no tolerance for corruption and bribery, and respect for established labor standards. We have numer-ous guidance documents and transparency provisions in place to guide our employees in fostering ethical business practices.

In 2020, we largely automated compliance- related processes that were previously manual or paper-based. This coincided with the shift of many activities into the digital space due to the COVID-19 pandemic. We also success-fully analyzed core elements of our business to determine areas in which human rights aspects could potentially be of relevance. While the analysis did not show any critical areas, we aim to build on the insights gained and introduce measures such as raising awareness of human rights.

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CLINICAL DEVELOPMENT

DISEASE AWARENESS

PATIENT SUPPORT PROGRAMS

PATIENT ACCESS


F O C U S I N G O N P A T I E N T S

At Vifor Pharma, we are committed to listening to patients’ voices by including them along the life cycle of our products, from early develop-ment to patient access. This helps us to better understand their needs and develop mean-ingful treatment solutions. We run specific access and financial assistance programs for eligible patients to enhance patient access to our medicines. Through appropriate stake-holder engagement, we strive to advocate on behalf of patients to improve and expand access to treatments.

Through the Vifor Pharma Patient Academy, our employees learn from patient representa-tives about the disease burden and the importance of involving patients’ insights in key strategic decisions. When engaging directly with patients, we follow strict engage-ment protocols and apply standardized remuneration principles. Patient safety is absolutely key. We have strict drug safety and reporting processes in place, ensuring that patients using our products benefit safely from them. Scientific activities are performed in a patient-centric manner and according to internationally established standards.

In 2020, the Vifor Pharma Patient Academy has further evolved. We now have a number of patients who are actively supporting us and providing input to our internal processes. The Patient Academy underscores the importance of involving patients’ interests in key strategic decisions, from clinical development programs to the development of patient support programs.

PATIENTS ACTIVELY SUPPORTING US IN INTERNAL PROCESSES

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W E L I S T E N TO T H E PAT I E N T V O I C E A LO N G T H E E N T I R E

L I F E C YC L E O F O U R P R O D U C T S


V A L U I N G O U R E M P L O Y E E S

At Vifor Pharma, we want our employees to grow and develop in their roles. We are an equal opportunity employer, committed to inclusion and diversity, supporting rising talent in the best way possible. We offer attractive workplaces, with a safe, healthy and flexible working environment. Fostering a skilled and diverse workforce drives innova-tion and improves output. A strong focus on safety and wellbeing supports our goal of minimizing absences and optimizing retention rates.

As set out in our Code of Conduct, it is our aspiration to keep our workplaces free from harassment and discrimination, while strict safety measures are designed to protect our employees from harm. We have a number of employee development programs in place, the centerpiece being the Vifor Pharma Academy. In addition, the Learning Manage-ment System is a harmonized approach to our capability development. A dedicated Talent Management System identifies potential future successors for key roles.

In 2020, Vifor Pharma progressed in several employee ratings. This shows the success of our efforts to provide our employees with attractive job opportunities and foster our Vifor Pharma culture. We are committed to demonstrating gender pay equality, and are complaint with the Swiss Gender Equality Act which came into effect in 2020. We also demonstrated our commitment to inclusivity, renewing our collaboration with Valida, an external partner in Switzerland in 2020 who is specialized in integrating handicapped people into the labor market. Through this collaboration, we were delighted to welcome several new employees into the organization.

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C A R I N G A B O U T T H E E N V I R O N M E N T

We strive to reduce the environmental impact of our activities and create a sustainable business through the use of renewable resources wherever possible. We focus on the efficient use of resources and seek to reduce emissions at our production sites, while continuously improving our environmental performance. This helps to mitigate climate change and its effects, while helping us to drive our business forward in a less carbon- intensive future.

Our commitment includes implementing targeted efficiency measures. All our pro-duction sites are certified by ISO 14001, the international standard for environmental management. Our Environmental Policy harmonizes and standardizes our approach to environmental management throughout the company, streamlining processes and the implementation of specific measures. We expect our supply partners to apply compara-ble environmental standards and measures. Vifor Pharma’s Environment Committee coordinates and implements related activities.

In 2020, we launched a solar energy initiative across all our production sites. The Lisbon site led the way and completed its second photo-voltaic plant on the roof of its office building, consisting of 270 solar panels. The newly installed panels produce an additional 82.35 kWp of power, which now covers 12% of the site’s total electricity consumption. We also successfully piloted a change in transport for one of our cold chain products, switching from air to sea freight which reduced CO2 emissions by more than 100 tons in 2020.

SOLAR PANELS INSTALLED ON LISBON SITE

270

SOLAR ENERGY INITIATIVE

NEWLY INSTALLED PANELS PRODUCE

OF POWER FOR THE LISBON SITE

82+ KWP

LAUNCH OF OUR


E N G A G I N G W I T H O U R C O M M U N I T Y

At Vifor Pharma, we support meaningful projects that result in improvements for the communities in which we operate. Assistance is provided according to emerging needs. Being a science-driven company, we also promote scientific knowledge and a better understanding of healthcare. This focused approach to community engagement pro-vides assistance where it is most meaningful, while fostering society’s trust in science and improving health literacy. Essentially, this helps us to build community trust, while motivating our employees.

When selecting charitable projects, we follow internal guidelines, in particular revised eligibility rules for charitable donations, to ensure our corporate giving yields the greatest impact and serves proper needs. We follow all applicable laws, regulations and industry standards, and have measures in place to avoid potential conflicts of interest.

In 2020, Vifor Pharma and its employees supported a wide range of community engagement activities around the world. One example was the General Manager of Vifor Pharma Australia participating in a “CEO Sleepout” to raise money and fight poverty. Initiatives to raise awareness and support patient communities was a significant theme in 2020. In June, colleagues completed the first virtual Kidney Walk. Teams around the world took part in walks in forests, mountains, cities and villages to raise awareness of chronic kidney disease (CKD). In November, Vifor Pharma teams in UK and Ireland came together for a 5-mile sponsored walk in aid of Iron Deficiency Day 2020. Over 70 colleagues took part in the walk and proceeds were donated to local food banks and homeless shelters to provide iron rich foods.

Beach cleaning day at Vifor Pharma Portugal

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G O V E R N I N G A N D M A N A G I N G O U R R E S P O N S I B I L I T I E S

Business decisions may have an impact on stakeholders, the communities we work in or sometimes on the environment. Thus, we have important responsibilities related to our extensive business activities.

The Board of Director’s Governance, Nomina-tion and Sustainability Committee ensures that considerations related to environmental, social and corporate sustainability are integrated into the decision-making processes on business strategy, key investments and performance. The Executive Committee approves both the measures and operational structure related to Corporate Responsibility. Vifor Pharma’s interdisciplinary Responsibility Committee oversees and coordinates the relevant activities. Providing support on local level, a network of ambassadors is tasked with embedding our Corporate Responsibility principles at national affiliates and production sites.

O U T L O O K

Vifor Pharma will continue to advance its efforts of conducting business in a responsi-ble and sustainable manner. We aim to further embed our Corporate Responsibility princi-ples throughout the organization and to gain insights from relevant stakeholder interac-tions. We will also seek support along the value chain for our efforts to conduct business in a responsible and sustainable way. We further aim to improve the way we disclose data and information around our non-financial performance and the wider implications of our business to our key stakeholders.

Our annual Responsibility Highlights Reports provide more detailed information and key data about Vifor Pharma’s main activities and achievements related to Corporate Responsi-bility. They are available on our corporate website.


T A K I N G R E S P O N S I B I L I T Y I N R E S P O N S E T O C O V I D - 1 9

2020 was dominated by the COVID-19 pandemic. For Vifor Pharma it was a matter of responsibility to respond to this unprecedented situation. We implemented a number of measures to secure medicine supply for patients, protect the wellbeing of our employees and their families, and contribute to minimizing the negative effects of the pandemic on patients and communities.

Employees from various functions worked hard to ensure our medicines continued to reach patients and healthcare providers in these challenging times. We took all necessary steps to protect the safety of patients and caregivers in our clinical trials. We launched a global fund to support ten patient associations, inviting grant applications for initiatives focused on the challenges of the pandemic.

COVID-19 also impacted blood donations, leading to increased blood scarcity. Vifor Pharma continued to support hospitals around the world implementing a practice called Patient Blood Management (PBM), which helps minimize the use of blood transfusions.

Our employees also found ways to support: At our Fribourg site, we collected healthcare kits including sanitary gowns, masks and disinfectant and donated them to a local disability center. An entire production line was repurposed to manufacture disinfectants that was shared with neighboring companies.

We are proud of the efforts and initiatives by our employees. All these combined efforts have helped minimize the consequences of the pandemic for patients who depend on our products and the communities in which we live and work.

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G O V E R N A N C E


92 Group structure and shareholders94 Structure of the share capital96 The Board of Directors101 Management and areas of responsibility104 Shareholders’ rights to participate106 Change of control and protective measures106 Vifor Pharma Group compliance network107 Management information and monitoring tools

of the Board of Directors108 Auditors109 Information policy112 Members of the Executive Committee118 Members of the Board of Directors

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S T R U C T U R E O F T H E G R O U P

Vifor Pharma Ltd., headquartered at Rechen-strasse 37, 9014 St. Gallen, Switzerland, is a corporation under Swiss law. As a holding company, Vifor Pharma Ltd. owns all the companies in Vifor Pharma Group directly or indirectly. Vifor Pharma Group consists of Vifor Pharma and Vifor Fresenius Medical Care Renal Pharma, the joint company with Fresenius Medical Care. The Group’s structure and the consolidated subsidiaries and associates are shown in the financial state-ments 2020 on pages 202 to 203. Articles of Association, Organizational Regulations and charters of the Committees of the Board of Directors can be accessed at viforpharma.com/governance. Vifor Pharma Ltd.’s shares are listed on SIX Swiss Exchange; shares of the individual Group companies are not publicly traded.

S H A R E H O L D E R S

As of 31 December 2020, Vifor Pharma had 18,738 shareholders registered in the share register, six of which according to documents submitted to Vifor Pharma Ltd. and the SIX Swiss Exchange were major shareholders holding more than 3% of the voting rights in Vifor Pharma Ltd. at the respective latest notification date:

– Patinex AG, Freienbach, Switzerland, and BZ Bank Aktiengesellschaft, Freienbach, Switzerland (beneficial owners: Martin and Rosmarie Ebner, Wilen, Switzerland), with 13,250,000 registered shares.

– BNP PARIBAS SA, Paris, France, with 5,143,408 registered shares.

– Priora Suissa AG, Freienbach, Switzerland, and Priora Investment Ltd., Dubai, UAE (beneficial owners: Remo and Manuela Stoffel, Dubai, UAE), with 4,613,000 registered shares.

G R O U P S T R U C T U R EA N D S H A R E H O L D E R S

C O R P O R A T E G O V E R N A N C E

– Alecta pensionsförsäkring, ömsesidigt, Stockholm, Sweden, with 2,100,000 registered shares.

– UBS Fund Management (Switzerland) AG, Basel, Switzerland, with 1,986,015 regis-tered shares.

– BlackRock, Inc., New York, USA, with 1,824,186 own registered shares, and additional 1,233,758 voting rights as delegate for a third party.

No other shareholder has announced a crossing of the 3% threshold of voting rights. The transactions disclosed to the stock exchange Disclosure Office pursuant to Art. 120 et seq. of the Financial Markets Infrastructure Act (FinfraG) is available on the Disclosure Office website of the SIX Swiss Exchange: https://www.ser-ag.com/de/resources/notifications-market-participants/significant-shareholders.html#/

C R O S S S H A R E H O L D I N G S

Vifor Pharma Ltd. has no cross shareholdings in companies outside the Vifor Pharma Group.

E V E N T S A F T E R T H E B A L A N C E S H E E T D A T E

There are no changes to report.


https://www.ser-ag.com/de/resources/notifications-market-participants/significant-shareholders.html#/

https://www.viforpharma.com/en-gb/investors/corporate-governance

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Chairman

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Annual General Meeting of Vifor Pharma Ltd.

V I F O R P H A R M A G R O U P G O V E R N A N C E 1

1 As of 1 January 2020 2 Appointed as of 1 January 2020 3 Appointed as of 2 February 2020

Governance, Nomination and Sustainability Committee

Remuneration Committee

Audit and Risk Committee

Scientific Committee US Committee

Chief Financial Officer

President North America

President International3

Chief Human Resources Officer

Chief Strategy Officer

Chief Business Officer

Governance Ethics Compliance Data Privacy

Chief Medical Officer2

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S T R U C T U R E O F T H E S H A R E C A P I T A L


S H A R E C A P I T A L

Vifor Pharma shares (securities no. 36474934, ticker symbol VIFN) are listed on the SIX Swiss Exchange. As of 31 December 2020, 64,855,162 registered shares were outstand-ing (not including treasury shares). The market capitalization amounted to CHF 9,035,000,000.

A U T H O R I S E D C A P I T A L

According to Art. 3a of the Articles of Associa-tion, the Board of Directors is authorized to increase the share capital of CHF 650,000 by a maximum of CHF 65,000 at any time up to and including 14 May 2022 by issuing no more than 6,500,000 fully paid registered shares, with a par value of CHF 0.01 each.

Should the Board of Directors decide to exercise its authority to increase the share capital, all existing shareholders would be entitled to exercise subscription rights corresponding to their then current share-holdings. The Board of Directors may only decide to restrict or deny the subscriptions rights of shareholders and to allocate them to third parties if the new shares are to be used for the purposes set forth in Art. 3a para. 3 lit. a) to c) of the Articles of Association.

C O N D I T I O N A L C A P I T A L

Vifor Pharma has no conditional capital.

C H A N G E S I N T H E C A P I T A L I N R E C E N T Y E A R S

Information about changes in the share capital, reserves and distributable profit over the past few years can be found on page 171 of the financial statements 2020. Please see previous annual reports for information about prior years.

P A R T I C I P A T I O N C E R T I F I C A T E S

Vifor Pharma has no participation certificates.

D I V I D E N D C E R T I F I C A T E S

Vifor Pharma has no dividend certificates.

R E G I S T R A T I O N A N D V O T I N G R I G H T S

Pursuant to Art. 6 of the Articles of Associa-tion, each registered share entitles the holder to one vote at the Annual General Meeting. The Board of Directors may refuse registration of voting rights in the shareholders’ register if purchasers do not declare explicitly, upon request, that they have acquired the shares in their own name and for their own account.

The Board of Directors is also authorized, after hearing the individuals concerned, to cancel any entries with voting rights in the sharehold-ers’ register that were obtained on the basis of incorrect information.

On 31 December 2020, the fully paid share capital of Vifor Pharma Ltd. amounted to CHF 650,000, divided into 65,000,000 publicly listed registered shares with a nominal value of CHF 0.01 each.


A N N U A L G E N E R A L M E E T I N G

Registration of nomineesA nominee may apply for registration with voting rights up to a limit of 2% of the share capital entered in the commercial register without disclosing the name, address and the number of shares of the person for whose account the nominee holds 0.5% or more of the share capital as set forth in the commercial register.

Shares in excess of this limit can only be registered if the nominee in question dis closes the name, address and number of shares of the person for whose account the nominee holds 0.5% or more of the share capital entered in the commercial register. During the financial year 2020, agreements of this nature were in force with four nominees.

Legal entities and partnerships, other groups of persons or joint owners who are interre-lated through capital ownership, voting rights, common management or are otherwise linked, as well as individuals or legal entities or partnerships that act in concert to circumvent this provision, shall be treated as one single entity.

C O N V E R T I B L E B O N D S A N D O P T I O N S

Vifor Pharma has no outstanding convertible bonds, nor has it issued any traded options.

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T H E B O A R D O F D I R E C T O R SC O R P O R A T E G O V E R N A N C E

The duties of the Board of Directors are based on the Swiss Code of Obligations, the Vifor Pharma Ltd. Articles of Association and its Organizational Regulations. Pursuant to the Articles of Association, the Board of Directors consists of a minimum of five and a maximum of 12 members. It consisted of seven members as of the end of 2020. In selecting the mem-bers of the Board of Directors, care is taken to ensure that competency for the Vifor Pharma Group’s areas of activity are duly represented and that the necessary specialized expertise is available. As announced on 2 February 2021, Board members Dr. Gianni Zampieri and Gilbert Achermann decided not to stand for re-elec-tion at the next Annual General Meeting. With the aim of further strengthening its expertise in R&D, clinical development and research/ medical affairs, the Board intends to propose Dr. Alexandre LeBeaut for election to the Board at the Annual General Meeting on 6 May 2021. Further information on the candidate will be included in Vifor Pharma’s notice of the upcoming Annual General Meeting.

The Board of Directors reviews its functional effectiveness once a year (alternating by year either through a self-assessment performed

by the Board of Directors or independent evaluation by an external expert). The Articles of Association of Vifor Pharma Ltd. (Art. 17 para. 3) restrict the ability of its directors to act on the board or senior management of other profit-oriented companies, limiting such outside board activity to five mandates in listed and seven mandates in non-listed companies. None of the members has reached the limit. All members of the Vifor Pharma Board of Directors are considered to be independent directors by the company and none of its members had an operational management function at Vifor Pharma or at any of the companies in the Group in the year under review or at any time during the previous three years.

D I S C L O S U R E O F P O T E N T I A L C O N F L I C T S O F I N T E R E S T

No member of the Vifor Pharma Board of Directors has any significant relations with the Vifor Pharma or any of its subsidiaries.

The Vifor Pharma Board of Directors determines the strategic goals and general ways and means to achieve them while har-monizing strategy, risks and financial resources; and appoints and oversees the managers responsible for conducting the company’s businesses. The Board of Directors reviews and assesses on a regular basis the sustainability and ecological impact of its strategic planning and investment decisions from a Corporate Responsibility perspective. It also designs the company’s corporate governance profile and puts it into practice.


E L E C T I O N A N D T E R M O F O F F I C E

Each member of the Board of Directors, its Chairman, each member of the Remuneration Committee as well as the independent proxy are elected individually by the Annual General Meeting for a term of office of one year, i.e., from one Annual General Meeting to the end of the next. Members may be re-elected. The Articles of Association do not stipulate a limit regarding terms of office.

T H E B O A R D O F D I R E C T O R S A N D I T S C O M M I T T E E S I N 2 0 2 0

The Board of Directors is made up of the Chairman, one or more Vice Chairpersons and the other members. Apart from the Chairman, who is elected by the Annual General Meeting in accordance with the Articles of Association, the Board constitutes itself. Specifically, it appoints from amongst its members, if necessary, a Vice Chairperson who also assumes the role of a “Lead Director”. Since 1 January 2019, Dr. Romeo Cerutti serves as Deputy Chairman of the Board.

During the year under review, the Board of Directors formed the following committees from its members:

– Governance, Nomination and Sustainability Committee

– Remuneration Committee – Audit and Risk Committee – Scientific Committee – US Committee

Each committee has its own charter setting out its duties and responsibilities. The committee charters are published on viforpharma.com/corporate-governance.

In November 2020, the Board of Directors decided to adjust the structure of its commit-tees for 2021. The Scientific Committee will include BD&L aspects broadly (including

financial terms) and, thus, its scope will be enlarged. At the same time, the name of the committee will be changed to Innovation Committee. Its initial members are Michel Burnier (Chair), Kim Stratton, Sue Mahony and in the event that he is elected as member, Dr. Alexandre LeBeaut. In view of the impor-tance of the US aspects, those matters will be discussed by the entire Board; the US Committee will be discontinued. The other Committees remain unchanged.

I N T E R N A L O R G A N I Z A T I O N

The Board of Directors may pass binding resolutions for the company with respect to all matters that are not expressly reserved for the authority of the Annual General Meeting either by law or the Articles of Association. The Chairman calls a meeting of the Board of Directors at least once a quarter, prepares and leads the meetings. The individual agenda items are set by the Chairman. He decides on a case-by-case basis whether to involve additional individuals in the meetings of the Board of Directors. Executive Committee members usually participate at least in part of every meeting to report on ongoing business and to explain in more detail the documenta-tion submitted to the Board of Directors in light of the decisions to be taken.

Any member of the Board of Directors may propose, in writing, items to be included in the agenda or may request that a meeting of the Board of Directors be convened, briefly giving reasons for doing so. Board members receive the documentation they need to prepare for the agenda items in a timely manner, usually at least ten days before the meeting in question. Decisions are taken by the entire Board of Directors. Minutes of the meeting are kept to document all discussions and resolutions. The Chairman and the CEO represent the interests of the Group towards third parties in important matters.

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In addition to meetings and the associated flow of information (documentation on individual agenda items, reports), the Board of Directors is also informed on a regular basis about the Group’s activities and challenges and on the current state and general develop-ment. Furthermore, the Board of Directors is often consulted by the members of the Executive Committee in its role as advisory body. As part of its risk management, the Board of Directors receives from the Executive Committee an overview of the most important risks, along with preventive measures to be implemented Group-wide as part of the risk management process. It evaluates and takes decisions on this overview of risks and measures, which is provided when circum-stances require it, but at least once a year. Further information on this topic can be found on pages 107 and 108.

C O M M I T T E E S

Committees of the Board of Directors prepare the business of the Board on particular topics and submit recommendations to the entire Board of Directors. Except for the Remunera-tion Committee, the committees have no decision-making authority of their own. They meet as often as business requires and report to the Board of Directors on activities and results. They draw up their own agendas and keep minutes of meetings. Each committee has its own charter governing its duties and responsibilities. Apart from the Remuneration Committee, which obtains analytical support from external consultants from time to time as separately disclosed in the Remuneration Report, and the attendance of the auditors at the meetings of the Audit and Risk Commit-tee, the Committees of the Board did not invite external consultants to attend their meetings in 2020.

Governance, Nomination and Sustainability CommitteeThe Governance, Nomination and Sustainabil-ity Committee ensures the management and monitoring of the Group’s business activities by the Board of Directors (overall manage-ment and ultimate supervision pursuant to Art. 716a of the Swiss Code of Obligations). In addition, the Governance, Nomination and Sustainability Committee has the following duties in particular:

– Supports the establishment of best prac tices in corporate governance across the Group with a view to ensuring that shareholders’ and other important stakeholders’ rights are protected.

– Develops the values, short- and long-term objectives and strategy of the Group in close cooperation with the CEO for submis-sion to the Board of Directors.

– Takes provisional decisions and intervenes in urgent cases where a decision of the Board of Directors cannot be obtained in a timely manner.

– Draws up selection criteria for the nomina-tion of members of the Board of Directors, its Committees and the Executive Commit-tee and reviews the relevant succession plans.

– Evaluates and makes proposals for the appointment and dismissal of members of the Board of Directors, its Committees and the Executive Committee.

– Ensures the application of governance rules on conflicts of interest and, if required, exclusion from the decision-making process by the Board of Directors and its Committees.

– Ensures that considerations related to environmental, social and corporate sustainability are fully integrated into the decision process on business strategy, key investments and performance


Remuneration CommitteeThe Remuneration Committee is made up of three members elected directly by the Annual General Meeting, who must be independent. The Remuneration Committee carries out the following duties in particular:

– Proposes a remuneration strategy for the Group and the members of the Executive Committee to the Board of Directors.

– Proposes the maximum possible remunera-tion (total amount) for the members of the Executive Committee and the Board of Directors to be decided upon by the Annual General Meeting.

– Proposes targets and assesses their achievement for determination of the variable compensation of the members of the Executive Committee and management of the Vifor Pharma Group.

– Proposes to the Board of Directors the salaries and remuneration for the members of the Board of Directors and the commit-tees as well as the CEO.

– Decides on the remuneration for the other members of the Executive Committee within the scope of the guidelines adopted by the Annual General Meeting.

Audit and Risk CommitteeThe Audit and Risk Committee carries out the following duties in particular:

– Verifies compliance with internal and external regulations by carrying out random checks.

– Checks the performance and independence of the external auditor and approves its fees.

– Evaluates and submits its nomination for external auditor to the Board of Directors for the Annual General Meeting.

– Reviews together with the external auditors the scope and method of the audit.

– Defines the internal audit programs, including compliance and IT security, and

checks the audit reports and the status reports on the implementation of measures.

– Analyses at least once a year the scope of internal control systems, the auditing projects and processes affected, the results of internal audits and the implementation of recommendations by the Executive Com-mittee.

– Reviews with the external auditors the Group’s compliance with accounting policies and standards.

– Assesses the organization and processes for risk management and compliance.

– Reviews, if necessary together with the external auditors, the risks that could affect the Group’s result and the measures planned for reducing those risks.

– Issues guidelines, instructions or clarifica-tions in connection with the Code of Conduct.

– Assesses the financial structure, the development of investments and acquisi-tions, and the influence of currency fluctua-tions and measures to be taken.

– Monitors the Group’s financial situation and financial controls.

– Receives regular information from the Executive Committee concerning major changes that could affect the Group’s financial situation.

Scientific CommitteeThe Scientific Committee acts as an advisory body to the Chairman and the Board of Directors in matters of R&D strategy, business development, the innovation process and pipeline, clinical studies, protection of intellectual property; and in the assessment, selection and prioritization of target markets and therapeutic areas. It also gives its view on acquisitions and proposals aimed at strength-ening the technology base of the Group or accelerating market penetration. As set forth above, the name of the committee will change to Innovation Committee in 2021.

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US CommitteeIn 2019 and 2020, the US Committee acted as an advisory body to the Chairman and the Board of Directors in matters of strategy and relevant medical and commercial operational activities, as well as the selection of target markets and therapeutic fields for an optimal market penetration in the US. In view of the importance of the US aspects, as of 2021 those matters will be discussed by the entire Board; the US Committee is discontinued.

F R E Q U E N C Y O F M E E T I N G S O F T H E B O A R D O F D I R E C T O R S A N D I T S C O M M I T T E E S I N 2 0 2 0

In 2020, the Board of Directors held five meetings. The Governance, Nomination and Sustainability Committee met twice, the Remuneration Committee five times, the Audit and Risk Committee five times, the Scientific Committee twice, and the US Committee met four times. Besides the official scheduled meetings the members of the Board of

Directors also exchanged their views with other members and with the Chairman both in dedicated ad-hoc committees and also individually through numerous video and telephone conferences. In principle, all the members participate in all the meetings of the Board of Directors. Excluding absences due to sickness or to avoid conflicts of interest, the members participated in 100% of the meet-ings of the Board of Directors, 100% of the meetings of the Governance, Nomination and Sustainability Committee, 100% of the meetings of the Remuneration Committee, 93% of the meetings of the Audit and Risk Committee, 100% of the meetings of the Scientific Committee, and 100% of the meetings of the US Committee.

On average, and with the exception of the annual two day strategy retreat, a Board meeting held in 2020 lasted one full day, an average committee meeting duration across all Board committees was between two and four hours.


M A N A G E M E N T A N D A R E A S O F R E S P O N S I B I L I T Y

The Board of Directors is legally responsible for the overall management and ultimate supervision of the Group. It has the duties provided for under Art. 716a, para. 1 of the Swiss Code of Obligations; it cannot be deprived of these duties, nor can it delegate them. In addition, it may pass resolutions with respect to all matters that are not reserved for the authority of the Annual General Meeting either by law or the Articles of Association.

In particular, the Board of Directors is respon-sible for approving or passing resolutions on:

– The values, objectives and strategy of the Group.

– The essential framework of the Group’s activities.

– The Group’s planning, budget and projec-tions.

– Selection and deselection of the members of the Committees, the CEO and the other members of the Executive Committee.

– The organization of the remuneration system.

The Board of Directors has delegated the management of the company in accordance with the Organizational Regulations. Since the Annual General Meeting of 14 May 2020, Jacques Theurillat has succeeded Honorary Chairman Etienne Jornod as the Chairman of the Board of Directors and leads the Group through a transition from a management structure with an Executive Chairman and a Chief Operating Officer to a non-executive Chairman and a CEO. As non-executive Chairman he has certain, clearly defined duties that are set out below in more precise detail. Stefan Schulze, CEO of Vifor Pharma, assumes responsibility for operational management and heads the Executive

Committee. The Board of Directors maintains close contact with the CEO and the other members of the Executive Committee and invites them to attend its meetings when relevant items are to be discussed. At each meeting, the members of the Executive Committee are invited to report on their areas of responsibility and to discuss important business matters with the Board. Other members of senior or executive management of companies within the Group are also regularly invited to report on their activities or present their projects.

D U T I E S O F T H E C H A I R M A N

As non-executive Chairman, Jacques Theurillat is responsible for leading the Board of Directors in the ultimate direction of the company and in defining the ongoing strate-gic development of the Group, in its existing business as well as in further alliances and acquisitions. Accordingly, the Chairman and the other members of the Board of Directors are in constant exchange with the CEO and the Executive Committee and are closely involved in the implementation of the most important strategic projects of the Group.

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In addition, as Chairman of the Board of Directors, Jacques Theurillat has the overall responsibility for the Group’s corporate culture, a competitive factor of importance in the labor market.

The Vifor Pharma Group honors and preserves its heritage from its home market of Switzerland, which it considers a competitive advantage. Currently, more than 1,250 of just over 2,600 Vifor Pharma Group employees are based in Switzerland.

D U T I E S O F T H E C E O

The CEO, Stefan Schulze, is responsible for implementing the strategic and operational objectives approved by the Board of Direc-tors, for preparing (together with the CFO) budgets and ensuring that they are met; and for developing relationships with customers, suppliers and authorities. He implements Group values putting the patients’ needs at the core (including safety, quality and the Code of Conduct). Together with the other members of the Executive Committee, he issues binding guidelines for Vifor Pharma Group companies and functions.

The CEO leads the Executive Committee and reports to the Board of Directors, he supports the Chairman on important strategic decisions and prepares the information for the meetings of the Board of Directors. At these meetings, the CEO and other members of the Executive Committee inform the Board of Directors and submit strategic, HR-related and financial business to the Board for consultation and decision-making.

E X E C U T I V E C O M M I T T E E

The strategic instructions and resolutions of the Board of Directors are implemented by the Executive Committee under the leadership of the CEO taking a holistic approach reflecting the sustainability and social principles of Corporate Responsibility described on pages 80 to 89.

The Board sets appropriate objectives, approves the budget and continually monitors compliance with set targets. Monitoring is based on monthly reports to the Board which include key figures and reporting on import-ant events and developments, and on the planning cycle.

In the first quarter, the results for the previous year are compared with the budget for that year. In the second quarter, the current financial year is evaluated by means of a “last-estimate 1”, and a medium-term plan for the next three years is drawn up. In the third quarter, the results for the first half year are prepared and reviewed, and in the fourth quarter the expected annual result “last- estimate 2” is determined and the budget for the following year agreed.

The Articles of Association of Vifor Pharma Ltd., (Art. 19 para. 3) restrict the ability of the members of the Executive Committee to act on the board or as a member of senior management of other profit-oriented compa-nies, limiting such activity to only one man-date in listed and three mandates in non-listed companies, both being subject to prior approval by the Governance and Nomination Committee.

As of the date of this report, the Executive Committee of Vifor Pharma Group comprised eight members representing the functions set forth in the Group governance overview


on page 93. The professional experience and educational background of the members of the Executive Committee can be found on pages 112 to 123.

In September 2020, Patrick Treanor left the Vifor Pharma Group. Effective 1 September 2020, he was succeeded as EVP, President North America and member of the Executive Committee, by Gregory Oakes.

G E N E R A L S E C R E T A R Y

Dr. Andreas Walde (born 1962, Swiss citizen, lawyer qualified to practice at the Bar) serves as General Secretary and Secretary to the Board of Directors. He reports directly to the Chairman and, amongst other duties, ensures corporate governance, ethics, compliance and data privacy compliance across the Vifor Pharma Group. The independence of the compliance network and the Data Protection Officer is assured by their reporting line directly to the General Secretary, and thereby ultimately only to the Board of Directors. Together with the Chief Human Resources Officer he monitors and supports sustain-ability activities throughout Vifor Pharma Group to implement and continuously improve the corporate responsibility princi-ples set by the Board of Directors and the Executive Committee.

Further information on the other duties of the Board of Directors, Chairman, Executive Committee and General Secretary can be found in the Organizational Regulations published on the Vifor Pharma website viforpharma.com/corporate-governance.

I N F O R M A T I O N A N D M O N I T O R I N G T O O L S

The Board of Directors monitors the Executive Committee and supervises its working practices. The Vifor Pharma Group has a comprehensive electronic information management system. The Board of Directors is informed on a monthly basis about the Group’s financial and operating performance. In addition, operating performance, opportu-nities and risks are discussed in depth at Board meetings attended by members of the Executive Committee.

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S H A R E H O L D E R S ’ R I G H T ST O P A R T I C I P A T E


Each share recorded as a share with voting rights in the shareholders’ register entitles the holder to one vote at the Annual General Meeting. Shareholders are also entitled to dividends and have other rights pursuant to the Swiss Code of Obligations. Results of the ballots taken at the Annual General Meetings are made available on the Vifor Pharma website viforpharma.com/agm within one week after each meeting, followed by the meeting minutes shortly thereafter.

P R O X Y V O T I N G

A registered shareholder may be represented at the Annual General Meeting on the basis of a written power of attorney by an appointed representative or the independent proxy to whom instructions may be given in writing or electronically. There are no rules that deviate from legal provisions relating to attendance of the Annual General Meeting. Instructions to the independent proxy holder may be given in writing and – since 2014 – also electronically. The e-voting platform used by Vifor Pharma is provided by ShareCommService AG, Switzer-land. The invitation to the Annual General Meeting, which will be sent to all shareholders no later than 20 days before the meeting, includes the required login information to create a personal user profile. For the upcom-

ing Annual General Meeting, the instructions must be received by the independent proxy holder on or before 5 May 2021.

C O V I D - 1 9 I M P A C T O N T H E A N N U A L G E N E R A L M E E T I N G

Based on Art. 6a of Ordinance 2, issued by the Swiss Federal Council, regarding measures to combat the coronavirus (COVID-19), share-holders were not permitted to attend the Annual General Meeting of 14 May 2020 in person. Shareholders exercised their rights exclusively through the independent proxy and 69% of the share capital was represented and the shareholders agreed to the Board of Directors’ recommendations for all proposed resolutions.

For the Annual General Meeting of 6 May 2021, the Board of Directors has decided to again put the health of Vifor Pharma’s share-holders and employees at its first priority and, therefore, not to permit shareholders to attend the upcoming Annual General Meeting in person. This decision has been taken in November 2020 in light of the then current, continuously concerning situation and in accordance with the Ordinance 3 of 19 June 2020 on measures to combat the coronavirus (COVID-19) as issued by the Swiss Federal

The Annual General Meeting is held each year within five months of the close of the financial year. Extraordinary General Meetings are called as often as necessary by a decision of the Annual General Meeting or Board of Directors, at the request of the auditors or at the written request of shareholders repre-senting on aggregate not less than 7% of the share capital entered in the commercial register.


https://www.viforpharma.com/en-gb/investors/shareholder-information/annual-general-meeting

Council on the basis of Art. 8 of the new COVID-19 Act of 25 September 2020. Share-holders will be able to exercise their rights at the Annual General Meeting through the independent proxy according to the process as set forth above (proxy voting).

Q U O R U M S U N D E R T H E A R T I C L E S O F A S S O C I A T I O N

In addition to the cases cited in Art. 704 of the Swiss Code of Obligations, approval by at least two-thirds of the votes represented and the absolute majority of the nominal capital represented is required in the following cases:

– A change in the provisions relating to restrictions on the transfer of registered shares, Art. 15 para. 1 lit. c) of the Articles of Association.

– Conversion of registered shares into bearer shares and vice versa, Art. 15 para. 1 lit. d) of the Articles of Association.

C O N V E N I N G O F T H E A N N U A L G E N E R A L M E E T I N G

The Articles of Association do not differ from legal regulations with regard to the convening of the Annual General Meeting and the setting of the agenda. The Annual General Meeting is convened by the Board of Directors at least 20 days before the date of the meeting. The shareholders are invited to attend by a notice placed in official publications. The meeting may also be convened by sending a letter to all the registered shareholders at the ad-dresses entered in the shareholders’ register. The notice of a meeting shall state the items on the agenda, the proposals of the Board of Directors and the requests of any sharehold-ers who have called for a General Meeting to be convened or for a particular item to be included on the agenda.

I N C L U S I O N O F I T E M S O N T H E A G E N D A

Shareholders who together represent not less than 0.5% of the share capital entered in the commercial register may request that an item be included on the agenda. They must submit such requests in writing no later than 40 days before the scheduled date of the meeting. The items to be included on the agenda must be specified along with the motion on which the shareholder requests a vote.

S H A R E H O L D E R S ’ R E G I S T E R

There are no regulations in the Articles of Association regarding a deadline for entry in the shareholders’ register. However, for practical reasons the shareholders’ register remains closed to entries for several days prior to an Annual General Meeting. This will be the case from 1 May 2021 onwards. Accordingly, shareholders entered in the shareholders’ register by 30 April 2021 may exercise their voting rights at the Annual General Meeting of 6 May 2021. The date for the 2022 Annual General Meeting, as well as further relevant information, will be timely announced on Vifor Pharma Group’s website viforpharma.com/investors.

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https://www.viforpharma.com/en-gb/investors


Change of control and protective measures

The obligation to make a public offer pursuant to Art. 125 et seq. of the Financial Markets Infrastructure Act (FinfraG) has not been changed in the Articles of Association. The employment contracts of the members of the Executive Committee and the members of senior management also contain no provisions to this effect. Remuneration components based on shares of Vifor Pharma Ltd. would terminate in the case of an acquisition and vesting period restrictions on pre-existing awards would be removed.

M A N A G E M E N T C O N T R A C T S

No management contracts exist as specified under point 4.4 of the SIX Swiss Exchange Directive on Information Relating to Corpo-rate Governance.

Vifor Pharma Group compliance network

Vifor Pharma Group operates in a highly regulated international environment. In all of its business dealings it is committed to highest standards of integrity and transpar ency to ensure legal and ethical behavior across the Group. This means following all laws and regulations applicable to its business activities, especially those designed to protect patients and improve the quality of medicines and healthcare services.

To foster a robust compliant attitude in a consistent way throughout Vifor Pharma Group, a network of compliance officers throughout the Group, assisted by global functions and operational management, maintain and enhance the compliance structure, efficiency and transparency of processes, provide advice and standardized compliance trainings across our functions and local organizations, and work continuously to maintain a high level of compliance awareness.

Data privacy compliance is fundamentally important to the Vifor Pharma Group, espe-cially considering the industry in which it oper-ates. Complying with data privacy require-ments is central to respectful interaction with patients, employees, customers and business partners. The Group Data Protection Officer oversees the data privacy compliance pro-gram and supports the business to implement robust and pragmatic measures for upholding data privacy.


M A N A G E M E N T I N F O R M A T I O N A N D M O N I T O R I N G T O O L SO F T H E B O A R D O F D I R E C T O R S

Vifor Pharma has a risk management process in place which enables the Board of Directors, the Executive Committee as well as the relevant management of Group companies to identify potential risks in a timely manner and take the preven-tive measures necessary. The goal of this process is to identify and assess significant risks at all management levels and to manage them while making conscious use of the opportunities the process provides.

R I S K M A N A G E M E N T P R O C E S S

As part of risk management throughout the Vifor Pharma Group, the Group companies conduct a risk assessment at least once a year. This standardized process is based on a risk grid, in which the most important strategic and operational risks and their possible financial effects are identified in line with pre-defined criteria and then evaluated in accordance with the probability of their occurrence and their effect. Such risks are monitored as part of the overall Group risk matrix.

The Board of Directors of the Vifor Pharma Group receives an overview of the most important risks from the Executive Committee as required but at least once a year. The Board evaluates the overview, adding information as needed, and where required takes decisions on any preventive measures necessary, which must then be implemented Group-wide as part of the risk management process.

Vifor Pharma defines risk as the possibility that an event or an action will lead to immediate financial loss or other negative consequences. Vifor Pharma risk management defines three basic objectives.

– Creating a framework for effective risk man-agement within the Vifor Pharma Group that will be embedded in existing manage-ment and planning processes and will therefore effectively strengthen risk awareness at all management levels.

– Creating and guaranteeing a lean and pragmatic risk management system that will effectively protect business operations and the Group’s profit-earning ability.

– A credible presentation to stakeholders that Vifor Pharma is managing its risks effectively.

Risk management at the Group level revolves around strategic risks that could have signifi-cant consequences for the Group. Opera-tional risk management is specifically defined and managed by the individual operating Group companies, although it is recognized that events in individual companies can clearly have an influence on the strategic risks to the Group. Risks are managed at the appropriate level by the management hierarchy that is best suited for this purpose. This approach ensures that action is taken in an efficient manner and that experience is broadly reinforced through-out the Vifor Pharma Group.

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The systematic overview of the key risks enables the Board of Directors to coordinate with the chosen strategy, prioritize risk, allocate resources and specify any action required. The Executive Committee and other management who are responsible for the Group companies are familiar with the risks of the overall Group, specific therapeutic area or their Group company. They successfully implement any measures decided upon and are responsible for the efficient operation of the risk management process. They also draw attention, however, to new risks which have become apparent or to any other change in the risk situation and, in addition to imple-menting measures to prevent or minimize such elements, ensure that these are incorpo-rated into the risk management process. Additional information about the manage-ment of financial risks can be found in the notes to the consolidated financial statements on pages 181 to 185.

I N T E R N A L C O N T R O L S Y S T E M

As part of its risk management system, the Vifor Pharma Group operates an internal control system (ICS) to provide reliable internal and external financial reporting and to prevent false information and errors about business transactions. The ICS provides the necessary processes and controls to ensure that risks relating to the quality of the com-pany’s financial reporting can be detected and managed in a timely manner. A thorough review of the existence of the processes and controls of the Vifor Pharma Group ICS is carried out annually by the external auditors at the time of the interim audit. The results of these reviews are reported to the Audit and Risk Committee and appropriate measures are taken by management to continually improve the company’s processes with regard to bookkeeping, accounting and financial reporting.

I N T E R N A L A U D I T

Internal Audit carries out audits of operational and strategic risk management and the ICS in accordance with the audit plan determined by the Audit Committee. It carries out reviews, analyses and interviews across the Group and helps business operations to meet set targets by ensuring an independent assessment of the effectiveness of the internal control processes. Internal Audit regularly produces reports on its audits and reports directly to the Audit and Risk Committee in writing. The activities of Internal Audit are conducted through contracts issued to external service providers.

Auditors

The statutory auditors of Vifor Pharma Group are elected annually by the Annual General Meeting for a duration of one year. For 2020 the mandate has been entrusted to Ernst & Young Ltd., Bern, Switzerland. Ernst & Young Ltd. have been the Group’s auditors since 1992. In accordance with statutory requirements, the mandate of the lead auditor is limited to a maximum of seven years. Martin Mattes, certified accountant, a partner at Ernst & Young, is in charge of the audit since 2017. The fees paid to the Group’s auditors Ernst & Young Ltd. in 2020 for their audit of Vifor Pharma Ltd. and companies within the Vifor Pharma Group totaled CHF 1,196,000. The fees paid to Ernst & Young Ltd. and their close collabora-tors for other services rendered to Vifor Pharma Ltd. and its subsidiaries in the period under review amounted to CHF 301,000. They break down as follows:

– Tax and legal advice: CHF 241,000 – Other advisory services (compliance

reviews): CHF 60,000


In 2020, the auditors attended two meetings of the Audit and Risk Committee. Moreover, they presented their report at the meeting of the Board of Directors on 5 March 2020. The auditors are regularly informed of new projects by the Board of Directors. The auditors’ activities are reviewed at least once a year by the Audit and Risk Committee. The criteria that are of particular importance in these reviews are: competence in reporting, understanding of the complex structure of the Group, the quality of reporting, compliance with deadlines, independence and costs. The involvement of the auditors in the financial elements of due diligence reviews for acquisi-tions and in the related legal advice improves the efficiency of the process.

Information policy

The Vifor Pharma Group and its affiliate companies have an active, transparent policy for informing all their stakeholder groups. Consistency and credibility are two funda-mental principles that are reflected in factual, comprehensive and objective communication.

A D H O C P U B L I C I T Y

Important and price-relevant events are communicated in a timely manner via elec-tronic media and in accordance with the directive on ad-hoc publicity of the SIX Swiss Exchange. Any employees affected are informed first, to the extent that this is possi-ble in the specific situation and allowed by law.

P E R I O D I C P U B L I C A T I O N S

Vifor Pharma reports its half-year and full-year results in business reports (published in print and/or online formats and at media events). A list of the latest publications is available online under viforpharma.com/media where all relevant information and documents, including media releases, investor updates, as well as presentations held at investor or analyst conferences can be found. The Vifor Pharma Group publishes a printed short version of the annual report, which is sent to the shareholders by mail upon request. The invitation to the Annual General Meeting as well as corporate notices are sent to share-holders electronically or by mail and published in the “Schweizerisches Handelsamtsblatt”.

I N T E R N E T

Publications, media releases and other supplementary information published by Vifor Pharma Group can be found on the Vifor Pharma Media Relations webpage viforpharma.com/media. Corporate governance documents can be found at viforpharma.com/governance and Corporate Responsibility documentation, including the Vifor Pharma Group Code of Conduct, is made accessible under viforpharma.com/responsibility.

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https://www.viforpharma.com/en-gb/media

https://www.viforpharma.com/en-gb/media

https://www.viforpharma.com/en-gb/responsibility

C O M M I T T E E S A N D M E E T I N G A T T E N D A N C E I N 2 0 2 0

Members of the Board of Directors1 First elected

Governance, Nomination and Sustainability Committee


Audit and Risk Committee

Scientific Committee

US Committee

Jacques Theurillat, Chairman 2018 Chair2

Gilbert Achermann2 2020 Chair2

Prof. Hon. Dr. Michel Burnier 2010 Member Chair

Dr. Romeo Cerutti 2015 Member Member Member

Dr. Sue Mahony 2019 Chair Chair

Kim Stratton 2019 Member Member Member

Dr. Gianni Zampieri 2017 Member Member

Dr. Andreas Walde, General Secretary

Ernst & Young Ltd., Group auditor

Etienne Jornod, Honorary Chairman

Number of meetings in 2020 2 5 5 2 4

1 Former Executive Chairman and member of the Board of Directors Etienne Jornod did not stand for re-election to the Board of Directors at the Annual General Meeting of 14 May 2020.

2 Since the Annual General Meeting 2020.



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We strive to make a real difference in people’s lives. As the Executive Committee, this is our driving force and our motivation to do what we do.”

C O R P O R A T E C O V E R N A N C E

M E M B E R S O F T H E E X E C U T I V E C O M M I T T E E

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S T E F A N S C H U L Z ECHIEF EXECUTIVE OFFICER

B A R B A R A A N G E H R N CHIEF BUSINESS OFFICER

C O L I N B O N D CHIEF FINANCIAL OFFICER

L E E H E E S O NPRESIDENT INTERNATIONAL

D R . K L A U S H E N N I N G J E N S E N CHIEF MEDICAL OFFICER

M I C H A E L P U R ICHIEF HR OFFICER

D R . C H R I S T O P H S P R I N G E RCHIEF STRATEGY OFFICER

G R E G O R Y O A K E S PRESIDENT NORTH AMERICA

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Stefan Schulze was appointed Chief Executive Officer of Vifor Pharma Group in 2020. Prior to that he was President of the Executive Com-mittee and COO of Vifor Pharma Group since 2017. He joined the Vifor Pharma Group as CEO of Vifor Fresenius Medical Care Renal Pharma Ltd. in 2014, having spent 22 years at Fresenius Group in various roles including Executive Vice President Sales and Marketing Fresenius AG, Germany; President and General Manager of Fresenius HemoCare’s Adsorber Technology Business Unit, Germany; President Fresenius HemoCare, USA, and Senior Vice President Business Development Fresenius Medical Care North America, Germany and USA. He is a qualified industrial engineer from the Technical University of Berlin, and a member of the Board for EFPIA.

Barbara Angehrn joined Vifor Pharma Group as Chief Business Officer in November 2018. She has extensive international, commercial and business development experience in specialty pharma. She joined Vifor Pharma Group from STEPSTONE Pharma, where she was the founder and CEO. Prior to this, she held various senior roles at Exelixis, Onyx and Amgen International. She graduated in finance and capital markets at the University of St. Gallen MBA, Switzerland.

B A R B A R A A N G E H R N

CHIEF BUSINESS OFFICER

BORN 1974, SWISS AND SERBIAN CITIZEN


CHIEF EXECUTIVE OFFICER OF

VIFOR PHARMA GROUP

BORN 1965, GERMAN CITIZEN


Lee Heeson joined Vifor Pharma Group in 2020 as President International. He joined the company from Celgene, where he was President, Worldwide Markets, responsible for the Inflammation & Immunology (I&I) franchise in all ex-US markets. He led the execution and geographic expansion for psoriasis drug Otezla, the launch preparation for investigational immunomodulatory drug Ozanimod and represented ex-US commercializa-tion on the I&I Executive Committee. Prior to that, Lee held positions at Galderma, Schering-Plough, Allergan and Lorex Synthelabo (now Sanofi), working across multiple therapeutic areas and geographies, including Europe, Latin America, the US and Japan. He holds a Chartered Institute of Marketing Diploma from Plymouth Business School and a BA (Hons) of International Business from Sheffield Hallam University, both in the UK.

L E E H E E S O N

PRESIDENT INTERNATIONAL

BORN 1970, BRITISH CITIZEN

Colin Bond joined Vifor Pharma Group as CFO in 2016, after six years as CFO of the MDAX/TecDAX listed biotech company Evotec AG. He has held CFO roles at Jet Aviation Group, Ecolab (EMEA) and Novelis Europe. In his early career he worked as a pharmacist, auditor and management consultant for Procter & Gamble, Arthur Andersen and PricewaterhouseCoopers. He is an FCA Chartered Accountant and holds a MRPharmS from the Royal Pharmaceutical Society of Great Britain; an MBA from the London Business School and a BSc in Pharmacy from University of Aston. Since 2013, he has been a Board member and Chairman of the Audit Committee of Siegfried AG. Since 2016, in his capacity as representative of the Vifor Pharma Group, he is a member of the Board of Directors of BioPharma Credit plc.

C O L I N B O N D

CHIEF FINANCIAL OFFICER

BORN 1960, BRITISH AND SWISS CITIZEN

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Michael Puri joined Vifor Pharma Group in 2015 as Head of Global Human Resources. He joined the company from GrandVision where he was the Global Head of Human Resources and a member of the Global Executive Team. Prior to this, he was Senior Director of Global Talent Development at UCB, and Vice-Presi-dent of Human Resources Europe at Staples. He holds a Bachelor’s degree in Economics from the University of Nantes and a Master’s in Strategic Marketing from the IESM Manage-ment School of Grenoble.

Dr. Klaus Henning Jensen joined Vifor Pharma Group in 2020 as Chief Medical Officer. Prior to joining Vifor Pharma, he was the Global Therapeutic Area Head Diabetes, Cardiovascular & Metabolism Development at Sanofi. He has held several leading positions at Novo Nordisk; including Head of Clinical, Medical & Regulatory (UK and Ireland), Vice President Medical & Science, Vice President Medical Affairs and CEO at Tekmedico. He trained as a physician (M.D.) at the University of Copenhagen in Denmark, and holds an Executive MBA from the Copen-hagen Business School in Denmark.

M I C H A E L P U R I

CHIEF HUMAN RESOURCES OFFICER

BORN 1969, BELGIAN CITIZEN

D R . K L A U S H E N N I N G J E N S E N

CHIEF MEDICAL OFFICER

BORN 1973, DANISH CITIZEN



Gregory Oakes joined Vifor Pharma Group in 2020, as President North America. Previously, he was Corporate Vice Presi-dent, Global Integration Lead for Otzela at Amgen, and prior to that he was Corpo-rate Vice President and US General Manager at Celgene. He has also held several executive positions at Novartis in the US. He began his career at Schering- Plough (Merck) where he worked in executive roles both in the US and Europe. He has a Master of Business Administra-tion (MBA) at Clemson University, Clemson, SC and Bachelor of Science (BSc) in Marketing and Business Administration at Edinboro University, Edinboro, PA, both in the US.

G R E G O R Y O A K E S

PRESIDENT NORTH AMERICA

BORN 1968, US CITIZEN

Dr. Christoph Springer was appointed Chief Strategy Officer of the Vifor Pharma Group in 2018. He first joined Vifor (International) Ltd. in 1997, working in the anemia division for three years. He then spent seven years at AMGEN, first as GM Switzerland, followed by commer-cial roles at AMGEN International Inc. In 2007, he returned to the Vifor Pharma Group as Global Head of Anemia TA Marketing. In 2011, he was appointed Deputy CEO of VFM-CRP Ltd. and later became Head of Global Business Development of Vifor Pharma Group in 2016. He has a Master’s in Natural Sciences from the Swiss Federal Institute of Technology (ETH), a PhD in Molecular Biology from Georg-August University in Germany, and an MBA from George Washington University in the US.

D R . C H R I S T O P H S P R I N G E R

CHIEF STRATEGY OFFICER

BORN 1968, SWISS CITIZEN

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CHAIRMAN OF THE BOARD

OF DIRECTORS

We are committed to ensuring Vifor Pharma’s success story continues, bringing innovative treatments to market and expanding strong partnerships to address underserved therapeutic areas.”

C O R P O R A T E C O V E R N A N C E

M E M B E R S O F T H E B O A R D O F D I R E C T O R S

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J A C Q U E S T H E U R I L L A TELECTED IN 2018

G I L B E R T A C H E R M A N NELECTED IN 2020

P R O F. H O N . D R . M I C H E L B U R N I E R ELECTED IN 2010

D R . R O M E O C E R U T T I ELECTED IN 2015

D R . S U E M A H O N YELECTED IN 2019

K I M S T R A T T O N ELECTED IN 2019

D R . G I A N N I Z A M P I E R I ELECTED IN 2017

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Jacques Theurillat was elected as Chairman of the Board of Directors for Vifor Pharma Group in 2020, and has been a member of the Board of Directors since 2018. He is a Swiss Attor-ney-at-law, with a Bachelor of Law degree from both Madrid and Geneva Universities. From 1987 to 2006, he held various positions at Serono, including CFO, Deputy CEO and Board member. He also serves on the Board of Directors at Mundipharma Ltd., CNH Industrial N.V. and ADC Therapeutics SA., and is a partner at the Sofinnova Crossover Fund in Paris.


INDEPENDENT DIRECTOR, CHAIRMAN


Gilbert Achermann was elected to the Board of Directors in 2020. He has held positions as CEO of the Straumann Group, Co-CEO and Chairman of the Board of Vitra/ Vitrashop Group, Chairman of the Board of Directors of Siegfried Group and Vice President of the Board of Directors of H. Moser & Cie. He is currently Chairman of the Board of Directors of Straumann Group, and is a member of the Board of Directors of Bank Julius Baer Group, Ypsomed Group, and ITI International Team of Implantology. In addition, he is on the Super-visory Board of IMD Business School Lausanne and a member of the Chairman Committee of HKBB Handelskammer beider Basel. He holds an Executive MBA from the International Institute for Management Development (IMD) in Lausanne, and a Bachelor Degree in Business & Accounting from the University of Applied Science in St. Gallen, Switzerland.

G I L B E R T A C H E R M A N N

INDEPENDENT DIRECTOR



Prof. Michel Burnier joined the Board of Directors in 2010. He is a Swiss-registered Doctor of Internal Medicine and Nephrology. He is currently a Lecturer at the University of Lausanne, where he was the head of the Service of Nephrology and Hypertension until July 2019. He is currently on the Board of Galenica AG and is a member of the Swiss Society of Nephrology (former President), the Scientific Council of the European Society of Hypertension (former Treasurer) and the Swiss Society of Hypertension (former President). He was a member of the Medicines Committee of the Swiss Association of Pharmacists until 2001, served on the boards of Swissmedic from 2002 to 2010 and Speedel Holding Ltd from 2007 to 2009.

Dr. Romeo Cerutti joined the Board of Directors in 2015, and since January 2019 has served as Vice-Chairman. He holds a doctorate in law from the University of Fribourg, and a Master’s degree from the University of California. He is formerly an Attorney-at-law at Latham and Watkins and at Homburger Rechtsanwälte. Later, he was the Head of Corporate Finance at Lombard Odier Darier Hentsch & Cie, and a partner of the Group Holding. He was General Counsel to the Credit Suisse Private Banking Division from 2006 to 2009. He is General Counsel and member of the Executive Board of Credit Suisse Group Ltd., Credit Suisse Ltd, and a member of the Board of Trustees of the Swiss Finance Institute, where he is Chairman. He is also a member of the legal committee of the Swiss-American Chamber of Commerce.

P R O F. H O N . D R . M I C H E L B U R N I E R



D R . R O M E O C E R U T T I

INDEPENDENT DIRECTOR, VICE-CHAIRMAN

BORN 1962, SWISS AND ITALIAN CITIZEN

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Kim Stratton was elected to the Board of Directors in 2019. She was CEO of Orphazyme A/S in 2019 and 2020 and has been a Non- Executive Director at Novozymes since 2017. She was formerly Head International at Shire, and has held leading positions at Novartis as Head Global External Affairs, Head Global Respiratory & Dermatology Franchise, Head US Franchise, GM Portugal, and COO UK.

Dr. Sue Mahony was elected to the Board of Directors in 2019. She has a BSc and PhD in pharmacy, an MBA from the London Business School, and has been awarded an honorary doctorate degree from Aston University in the UK. She is a member of the boards of Assem-bly Biosciences, Horizon Therapeutics plc and Zymeworks Inc. She has broad experience in the pharmaceutical industry and has held senior roles at Schering-Plough, Amgen, Bristol-Myers Squibb and Eli-Lilly. She was formerly President of Lilly Oncology.

K I M S T R A T T O N


BORN 1962, AUSTRALIAN CITIZEN

D R . S U E M A H O N Y


BORN 1964, US AND BRITISH CITIZEN



Dr. Gianni Zampieri was elected to the Board of Directors in 2017. He joined Vifor Pharma Group in 1996 as CEO of Vifor Ltd. He became Head of the Galenica Group Pharma Division, Head of Industrial Operations of the Vifor Pharma Group in 2008, and CEO of OM Pharma in 2010. In 2011, he was appointed Deputy CEO of Vifor Pharma Group and in 2012, Deputy CEO and Head of Pharma Operations. From May 2016 to May 2017 he was the CEO of Vifor Pharma. Prior to joining Vifor Pharma Group, he held various strategic planning positions at Hoffmann-La Roche and Novartis. He holds a PhD from the Swiss Federal Institute of Technology (ETH) and completed the Senior Executive Program at Stanford University in the US.

D R . G I A N N I Z A M P I E R I



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126 Chairwoman’s overview128 Philosophy and approach to remuneration130 Governance134 Board and Executive remuneration139 Remuneration awarded in 2020 and 2019146 Overview of executive remuneration in 2020 and 2019147 Outlook: changes in remuneration model for 2021148 Statutory auditor’s report

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C H A I R W O M A N ’ S O V E R V I E WR E M U N E R A T I O N

S U E M A H O N Y

CHAIRWOMAN OF THE

REMUNERATION COMMITTEE

The remuneration programs of Vifor Pharma are designed to support our corporate strategy and to ensure a sustainable performance towards our future objectives.”

“


Vifor Pharma’s remuneration philosophy aims to attract and retain highly talented and ethical individuals who help us ensure the long-term competitiveness and success of our business, to meet the needs of patients, to look after the interests of our stakeholders and the environment in order to deliver on the strategy and to sustain profitable growth. This report sets out the remuneration policies for the Board of Directors and Executive Commit-tee which are designed to help them achieve these goals.

A year of unprecedented challenges for countries and companies around the world has underlined the importance of a strong and transparent remuneration framework. Notwithstanding, as in previous years, Vifor Pharma’s philosophy and approach to remu-neration has remained stable: we reward entrepreneurial behavior that drives sustain-able performance and long-term value creation. The negative effect of the sales growth below the set targets in this challeng-ing year has been mitigated by an EBITDA exceeding the targets due to management’s careful contingency planning and cost control.

2020 also saw major changes to the composi-tion of the Board of Directors, with the former Executive Chairman (now Honorary Chairman) Etienne Jornod, passing on his tasks and responsibilities after over 40 years of remark-able service to Jacques Theurillat, as Chairman, and Stefan Schulze, as Chief Executive Officer. This change is also reflected in the remunera-tion structure and will lead to a reduction of the remuneration for the Board of Directors and an increase of the remuneration of the Executive Committee. The full effect of which will become visible as from 2021 onwards. Apart from the reduction of such shift, the remuneration of the Board of Directors remained unchanged.

In the past year Vifor Pharma has been able to attract highly regarded talents in a compet-itive market. The Executive Committee was substantially strengthened in 2020 with the recruitment of Lee Heeson as President International, Dr. Klaus Henning Jensen as

Chief Medical Officer and Gregory Oakes as President North America.

The Remuneration Committee considers Vifor Pharma appropriately positioned to enable it to compete successfully with its peers and to support its ambitious growth plans. Nonethe-less, are we constantly scrutinizing our remuneration and promotion processes to foster equitable career flows for both women and men when it comes to pay equity, leader-ship development training and organizational culture.

Our Chairman, the members of the Board of Directors as well as the Executive Committee continue to demonstrate their personal commitment, alignment with the shareholders’ interest and their confidence in Vifor Pharma Group by being remunerated significantly in blocked shares. On the following pages, we explain how the different remuneration programs for the Board of Directors, the Chairman of the Board of Directors and the Executive Committee are designed to ensure sustainable success and to protect the interests of our shareholders.

Yours sincerely,

Sue Mahony Chairwoman of the Remuneration Committee

We reward entrepreneurial behaviour that drives sustainable performance and long-term value creation.”

“

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To reflect their different roles on delivering the strategy, the Board of Directors (Board) and the Executive Committee are remuner-ated through different programs.

Board members receive a fixed remuneration, independent of operational performance, to underscore their focus on corporate strategy, supervision, governance and sustainability.

To strengthen the alignment with sharehold-ers’ interests, Board members, including the non-executive Chairman of the Board, receive all or part of their remuneration in the form of restricted shares. Members of the Executive Committee are remunerated according to the principles below.

A T T R A C T I O N A N D R E T E N T I O N

We aim to attract and retain highly talented, entrepreneurial, effective individuals who comply with the highest ethical standards and who can help us promote the well-being of patients, protect the interests of our share-holders and drive the long-term success of our company.

S T R A T E G I C A N D S H A R E H O L D E R A L I G N M E N T

Our remuneration principles are in line with our vision and strategy, both in terms of driving performance and of delivering the returns expected by our shareholders. Vifor Pharma’s remuneration system is part of a sustainable, long-term development policy to support the strategic goals defined

by the Board, who recognizes that under certain circumstances, achieving economic success may require a longer period of time. In order to strengthen the alignment of executives and shareholders, members of the Executive Committee receive part of their remuneration in restricted shares and are subject to a minimum shareholding require-ment. Selected members of senior manage-ment involved in long-term company projects may also be invited to participate in the share-based Long-Term Incentive Program.

P A Y- F O R - P E R F O R M A N C E A L I G N M E N T

In addition to their fixed salary, members of the Executive Committee receive variable remuneration to reflect the operational performance of the company as well as their individual contributions.

F A I R N E S S

We strive to remunerate our employees fairly in the highly competitive market environment.

C L A W - B A C K P R O V I S I O N S

Correct and ethical behaviour is the foun-dation of our activities. Should any wilful misconduct or fraud lead to a restatement of the accounts of Vifor Pharma, bonus and long-term incentives awarded or paid during the past three years to members of the Executive Committee directly involved in such activities may be withheld or be subject to reimbursement.

P H I L O S O P H Y A N D A P P R O A C H T O R E M U N E R A T I O N

The company’s philosophy and approach to remuneration have remained stable in recent years.


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S H A R E H O L D E R S ’ E N G A G E M E N T

Our shareholders have been given a greater voice on remuneration matters in recent years. The Articles of Association that outline the principles of remuneration are approved by the Annual General Meeting. In addition, shareholders annually elect the members of the Remuneration Committee for the coming period of office and approve the maximum aggregate remuneration amounts each year for the Board and the Executive Committee prospectively for the next business year. Furthermore, shareholders may express their opinion on the remuneration report in a consultative vote at the Annual General Meeting. The remuneration report describes the remuneration principles and programs as well as the governance framework related to the remuneration of the Board and Executive Committee. The report also provides details on the remuneration awarded to the members of the Board and of the Executive Committee in the reporting year.

P R O V I S I O N S I N T H E V I F O R P H A R M A A R T I C L E S O F A S S O C I A T I O N : S U M M A R Y

The responsibilities of the different deci-sion-making bodies in determining remunera-tion and the guiding principles are defined in the Vifor Pharma Articles of Association. The Articles of Association form the basis for our remuneration strategy and policy for the Board and the Executive Committee. They are also the basis for any recommendation or proposal that the Remuneration Committee formulates. Key provisions of the Articles of Association on remuneration are summarized in the table below and can be found online at viforpharma.com/governance.

R E S P O N S I B I L I T I E S O F T H E D I F F E R E N T B O D I E S I N D E T E R M I N I N G R E M U N E R A T I O N

Vifor Pharma’s remuneration and reporting comply with:

– the Swiss Code of Obligations, – the Swiss Federal Ordinance against

excessive compensation in publicly listed corporations (VegüV),

– the standards on corporate governance of SIX Swiss Exchange and

– the Swiss Code of Best Practice for Corpo-rate Governance of Swiss national federa-tion, economiesuisse.

The Board is responsible for designing the remuneration policy and programs and for determining individual remuneration for the members of the Board and the Executive Committee. Furthermore, the Board is accountable for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the VegüV. The Remuneration Committee approves the individual remuneration of EC members other than the CEO. For the remuneration of the CEO and the Board, the Remuneration Committee acts in an advisory capacity while the Board retains the decision authority on matters relating to remuneration except for the maximum aggregate remuneration amounts for the Board and for the Executive Committee, which are approved by sharehold-ers at the Annual General Meeting. The responsibilities of the different bodies regarding remuneration matters are detailed in the table on page 132.

G O V E R N A N C E



T H E R E M U N E R A T I O N C O M M I T T E E

The Remuneration Committee supports the Board in defining the principles of the remu-neration policy and in determining the remuneration awarded to members of the Board and the Executive Committee within the maximum aggregate amount of remunera-tion approved by shareholders at the Annual General Meeting. The Remuneration Commit-tee supports the Board in designing participa-tion and incentive programs and in all other tasks related to remuneration of the Board and the Executive Committee. The Board may delegate further duties and powers to the Remuneration Committee. The Chair of the Remuneration Committee reports to the Board after each meeting on its activities and

formulates appropriate recommendations. The Chairman of the Board is invited regularly to meetings in an advisory capacity.

The Chairwoman of the Remuneration Commit-tee may also invite other Executives, such as the CEO, as appropriate. Agenda items and matters directly affecting the Chairman of the Board, the CEO or other Executives are deliberated in their absence.

The Remuneration Committee meets as often as business requires, but at least quarterly accord-ing to the annual remuneration planning cycle described on page 133. In the 2020 business year, the Committee held five meetings, each lasting between one and three hours.

Topic Article Summary


19 a The Remuneration Committee generally comprises three members who are elected individually by the shareholders at the Annual General Meeting for a period of one year. The Remuneration Committee supports the Board in establishing and reviewing the remuneration strategy, principles and programs, in preparing the proposals to the Annual General Meeting on remuneration matters and in determining the remunera-tion of the Board and of the members of the Executive Committee.

“Say-on-pay” votes 19 b par. 1

Shareholders approve the maximum possible amount of remuneration of the Board and the Executive Committee for the following financial year.

Remuneration principles

19 b par. 2

Remuneration of the members of the Board consists of fixed remuneration only. Remuneration of the members of the Executive Committee consists of fixed and variable elements. Variable remuneration may comprise short-term and long-term components. Remuneration may be paid in cash, shares or other benefits.

Supplementary amount for new Executive Commit-tee members

19 b par. 6

If the maximum approved remuneration amount is not sufficient to also cover the remuneration of newly promoted/hired members of the Executive Committee, the maximum possible remuneration amount for such newly promoted/hired members may exceed the average of existing members excluding the CEO by up to 25% as a supplementary amount to cover the remuneration of such new Executive Committee member(s). For a newly promoted/hired CEO the supplementary amount is 40% of the maximum possible remuneration amount of his or her predecessor.

Credits and loans 19 b par. 8

Credits and loans may not be granted to members of the Board and only up to 50% of the annual base salary for members of the Executive Committee.

P R O V I S I O N S O N R E M U N E R A T I O N I N T H E V I F O R P H A R M A A R T I C L E S O F A S S O C I A T I O N : S U M M A R Y

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U S E O F B E N C H M A R K S A N D E X T E R N A L A D V I S O R S

The remuneration of the Board and the Executive Committee is benchmarked based on public information, recognized market data providers, data published by non-profit organi zations focused on socially responsible investment and active share ownership, and on our Remuneration Committee members’ experience and expertise from similar compa-nies.

The remuneration of the Board is bench-marked from time to time (every two to four years) against a group of listed companies on the SIX Swiss Exchange of comparable size, including market capitalization. The latest analysis was conducted in 2020 based on the following 14 companies: Adecco, Barry Callebaut, Clariant, DKSH, Dufry, Geberit,

Georg Fischer, Kühne + Nagel, Lindt, Logitech, OC Oerlikon, Sonova, Straumann and Temenos.

The remuneration of the Swiss-based Execu-tive Committee members is compared with the remuneration of Executive Committee members in comparable European pharma-ceutical companies and Swiss listed compa-nies, as well as with the remuneration of executives in Swiss subsidiaries of internation-al pharmaceutical companies. The remunera-tion awarded to the Executive Committee member based in the United States is com-pared to the data of pharmaceutical compa-nies in the San Francisco Bay Area (no specific peer group). A company is regarded as similar if it is comparable to Vifor Pharma in terms of sector, structure and complexity, size (sales, market capitalization and number of employ-ees), geographic presence and profitability.

CEORemuneration

Committee Board of Directors Shareholders

Remuneration policy and incentive plans Proposes Approves

Maximum remuneration amount of EC Proposes Recommends Approves

CEO remuneration Proposes Approves

Individual remuneration of EC members other than the CEO

Proposes Approves Informs

Is informed

Performance objectives and assessment of CEO Proposes Approves

Performance objectives and assessment of EC other than the CEO

Proposes Approves Informs

Is informed

Shareholding requirements of CEO and EC Proposes Approves

Maximum remuneration amount of the Board Proposes Recommends Approves

Individual remuneration of Board members Proposes Approves

Remuneration report Proposes Approves Consultative vote

R E S P O N S I B I L I T I E S R E G A R D I N G R E M U N E R A T I O N D E C I S I O N S


Biocare, Novartis, Novo Nordisk, Roche, Shire, Smith & Nephew, Sonova, Syngenta, Tecan, Zoetis

External consultants may provide analytical support to the Remuneration Committee in the development of the remuneration strategy and of the review of short-term and long-term incentive programs, cash and equity-based remuneration and salary levels.

In 2019, Mercer and Willis Towers Watson carried out a benchmark study on the remu-neration levels of the Executive Committee. Agnès Blust Consulting AG carried out the benchmark of the Board remuneration and was mandated on certain other executive remuneration matters in 2020. Those compa-nies hold no other mandates with Vifor Pharma Ltd.

The composition of the benchmarking peer groups is disclosed below.

Peer group of Swiss listed companies – Barry Callebaut, Clariant, EMS-Chemie,

Galenica, Idorsia, Lindt, Lonza, Siegfried, Sika, Sonova, Straumann, Swiss Prime Site, Tecan, Ypsomed

Peer group of European pharmaceutical companies – Grifols, Hikma, Indivior, Ipsen, Lundbeck,

Orion, Recordati, Sonova, Swedish Orphan Biovitrum, UCB

Peer group of Swiss subsidiaries of interna-tional pharmaceutical companies – Allergan, Beckman Coulter, Catalent

Pharma Solutions, Clariant, CSL, John-son & Johnson (former Actelion), Leica Microsystems, Lonza, Nestlé, Nobel

Q1 Q2 Q3 Q4

Annual Shareholder Meeting ×

Remuneration policy and incentive plans × ×

Maximum aggregate remuneration amount for Board to be submitted to shareholders’ vote

×

Maximum aggregate remuneration amount for Executive Committee to be submitted to shareholders’ vote

×

Performance achievement of Executive Committee (mid-year assessment) ×

Performance achievement of Executive Committee (final assessment) of the previous year

×

Performance objectives for the Executive Committee for the following year ×

Variable remuneration of Executive Committee (short-term bonus for the previous business year and vesting level of the Long Term Incentive for the preceding three years)

×

Remuneration Report on the previous business year to be submitted to shareholders’ consultative vote

×

A N N U A L R E M U N E R A T I O N P L A N N I N G C Y C L E

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Remuneration of the Board of Directors

The Board sets the remuneration for its members in order to attract and retain a mix of Swiss and international high-calibre individuals with global experience. Board members do not receive variable perfor-mance-based remuneration or options, and are not eligible to company paid pension benefits, which underscores their focus on corporate strategy, supervision and gover-nance.

Each Board member receives an annual fee for the Board membership, as well as additional fees for the functions as chair and/or member of a Board committee. The level of remunera-tion for each role is determined based on the skill set, experience and time required for the function as described below.

Net amounts in CHF*

Board chair 900,000

Board member 140,000

Board vice-chair 50,000

Committee chair 30,000

Committee member 10,000

* The social security contributions are fully paid by the company (employer and employee contributions).

Remuneration is paid 50% in cash and 50% in shares, which are blocked for five years. Board members may elect to be remunerated fully in shares. The remuneration amount to be paid in shares (50% or 100% of the total remunera-tion) is divided by the average share price during the last month preceding the election less a 25% discount. Board members are subject to a minimum shareholding require-ment: They must build-up and hold the equivalent of at least their annual remunera-tion in shares within two years of their first election to the Board.

Remuneration for the former Executive Chairman

The former Executive Chairman, Etienne Jornod, did not stand for re-election at the 2020 Annual General Meeting. His remunera-tion for the term until the 2020 Annual General Meeting is included in this Remuneration Report. Since 2012, Etienne Jornod has been remunerated almost exclusively in registered shares for his responsibilities and duties as Executive Chairman of the Board. The agree-ment between the Board and Etienne Jornod was that, conditionally upon his reelection by shareholders at the Annual General Meeting, his annual share-based remuneration would remain unchanged until 2020. His annual share-based remuneration was therefore held constant at CHF 3,670,000 and awarded at the end of each business year in form of shares, which are blocked for five years. In addition, Etienne Jornod also received a cash remuner-ation of CHF 150,000 per annum to cover his pension and social security contributions and of CHF 120,000 per annum to compensate for the allocation of the share-based remunera-tion in arrears introduced in 2016 and the introduction of a five year lock-up period on newly allocated shares.

B O A R D A N D E X E C U T I V ER E M U N E R A T I O N



Remuneration for the Executive Committee

In order to reward performance and promote the Executive Committee members’ loyalty and long-term engagement, the remuneration system comprises an annual base salary, an annual short-term bonus, a long-term incentive and customary benefits. The ratio between fixed and variable remuneration may vary depending on criteria such as position level, scope and responsibility of the role (eg, impact on organisation, profit and loss, budget and team, headcount).

A N N U A L B A S E S A L A R Y

The annual base salary constitutes the fixed pay that reflects the scope and responsibilities of the function, the required skills and the profile of the incumbent (qualifications and previous experience). The annual base salary is determined according to typical market practice (external benchmarks) and the Vifor Pharma Group’s internal salary structure. An annual base salary around the median of the benchmark is considered competitive. The annual base salary is reviewed annually in line with market salary trends, the company’s ability to pay based on its financial perfor-mance and the evolving experience of the incumbent.

V A R I A B L E R E M U N E R A T I O N ( I N C E N T I V E S )

Executive Committee members are eligible for an annual short-term bonus to reward the company’s overall financial results and individual contributions during a given business year. They may also be invited to participate in an annual Long-Term Incentive Program (LTI) that recognizes and rewards the achievement of company goals over several

years, such as specific long-term financial objectives or the integration of a new business (eg, Relypsa). The short-term bonus and the LTI are variable, performance-based income. This incentive system is designed to ensure that the participants’ actions, behaviour and decisions support the fulfilment of the company’s goals and its sustainable success.

These incentive schemes constitute indepen-dent remuneration elements and are therefore weighted and calculated individually. The ratio between the annual base salary and the variable elements of remuneration is deter-mined by the Remuneration Committee based on function level. The maximum payout level of both the short-term bonus and the LTI is capped at 200% of target.

S H O R T-T E R M B O N U S

The purpose of the annual short-term bonus is to reward the company’s financial perfor-mance and individual contributions during a given business year. The target bonus is defined once a year at the beginning of a performance period and constitutes the amount to be paid out to the extent that all performance objectives have been fully achieved (100% payout). The target bonus amounts to 90% of the annual base salary for the CEO and up to 60% of the annual base salary for the other members of the Executive Committee.

The annual short-term bonus is based on the annual financial performance of the company, weighted at 75%, and on the individual contributions of the Executive Committee member, weighted at 25%. The financial performance consists of Net Sales weighted 40% and EBITDA weighted 60%. Those performance metrics have been chosen as they combine top-line growth with bottom- line profitability and thus are well aligned with the strategy of profitable growth. The

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individual performance objectives consist of either quantitative or qualitative goals (eg, strategic, operational or project-based objectives including safety, compliance and corporate responsibility). For each objective, the Remuneration Committee determines a minimum level of performance (threshold) below which the payout is zero, a target level of performance for which the payout amounts to 100% and a maximum level of performance (cap) above which the payout is capped at 200%. The evaluation of an Executive Commit-tee member’s individual performance is conducted at the end of the year and includes a qualitative assessment of whether they have carried out their duties in line with company values and expected leadership behaviours.

Specific performance targets are not pub-lished as they are considered commercially sensitive information.

The short-term bonus is allocated annually after the full-year results have been published. Executive Committee members receive 32% of their annual short-term bonus in Vifor Pharma shares, which are subject to a block-ing period of five years. Such shares are allocated at the average share price for the month of December of the year prior to payment of the annual short-term bonus, minus 25% discount. The remaining 68% of the annual short-term bonus is paid out in cash. If the Board in exceptional cases awards a discretionary bonus for extraordinary performance, the bonus would usually be paid out in cash only.

L O N G -T E R M I N C E N T I V E P R O G R A M ( LT I )

The LTI recognizes and rewards Executive Committee members for the achievement of specific long-term objectives, such as long-term financial targets or the successful integration of a major acquisition. The LTI is designed to align management and company interests over the medium and long terms to ensure sustainable value for patients, custom-ers and shareholders. LTI participants also have the opportunity to benefit from the long-term appreciation of Vifor Pharma’s overall value through the development of the share price, which strengthens their personal investment in the company and gives them a compelling reason to stay at Vifor Pharma. The LTI is a long-term equity plan whose value is influenced by the Group’s operating performance and the Vifor Pharma share price. The LTI is awarded in form of perfor-mance share units (PSUs) that vest and are converted into Vifor Pharma Ltd. shares at the end of a three-year vesting period. The Remuneration Committee defines the target amount for an LTI award as a percentage of the annual base salary for each member of the Executive Committee at the beginning of a three-year vesting period. The target amount for Executive Committee members ranges from 40% to 60% of annual base salary (except for the President North America for whom the grant size amounts to 120%). For the CEO, the Board determines the LTI target amount. It corresponds 80% of the annual base salary.

The number of PSUs granted at the beginning of a vesting period depends on the target amount and on the average Vifor Pharma Ltd. share price during the final month prior to allocation. The number of PSUs is subject to the achievement of a performance conditions during the vesting period. The Return on Investment Capital (ROIC) was chosen as performance indicator because it expresses



how well the company is generating cash relative to the capital it has invested in its business and is a simple and easily accessible metric for management on all levels. The target level for the three-year vesting period that is determined is generally substantially above the weighted average cost of capital.

The PSUs granted under the LTI are subject to full or partial forfeiture in the event of termina-tion of employment. In the cases of death or disability, a pro-rata vesting applies on the date of termination. In case of change of control, eg, if the shares were to be delisted, outstanding PSUs may vest in full immediately.

Vifor Pharma maintains a long-term incentive plan pursuant to which Relypsa employees may be granted restricted share unit awards in shares of Vifor Pharma Ltd. On 30 June 2020, 43,920 such restricted share units were granted. For the following years, further grants of up to 100,000 restricted share units per year may be made. These restricted share units vest in three annual tranches. Awards may not be transferred, other than by will or the laws of descent and distribution, and may be proportionately adjusted in the event of any change in the capitalization of Vifor Pharma Ltd.

P E N S I O N S A N D O T H E R E M P L O Y E E B E N E F I T S

Vifor Pharma offers additional benefit plans that are designed to protect and support employees around the uncertainties of life. These benefits including retirement, disability and death plans are country-specific and are designed in accordance with local legal requirements and competitive market prac-tices. Members of the Executive Committee based in Switzerland are covered by the pension scheme for all Vifor Pharma employ-ees in Switzerland. The Vifor Pharma pension plan in Switzerland was adjusted in 2020 to

align calculatory pay-out with increased statisticial longevity. It exceeds the legal requirements stipulated by the Swiss Federal Law on Occupational Pension Schemes (BVG) and is in line with what other listed companies of similar size in Switzerland offer. The Presi-dent North America is covered by a compara-ble pension scheme in the United States. Independent of their remuneration, employees, including Executive Committee members, are entitled to acquire up to 100 of Vifor Pharma Ltd. shares per year under the share acquisition plan. These shares, which may be acquired at a 30% discount on the market price, are blocked for three years.

Other benefits may include an expense allowance, a company car and reimbursement for one-time expenses relating to relocation, tax and legal advice (eg, in order to move to Switzerland) for the Executive Committee and selected management members. The fair value of these other benefits is part of the remuneration and disclosed in the table on page 142. Members of the Executive Commit-tee do not receive additional benefits.

E M P L O Y M E N T C O N T R A C T S

Members of the Executive Committee are employed under contracts of unlimited duration and subject to a maximum notice period of 12 months during which also non-compete obligations apply. No additional compensation is awarded for the non-com-pete period. They are not entitled to severance, termination or change-of-control payments, except the special vesting provisions under the LTI as described above.

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M I N I M U M S H A R E H O L D I N G R E Q U I R E M E N T S

The members of the Executive Committee are required to own at least 75% of their annual base salary and annual target short-term bonus in Vifor Pharma Ltd. shares within five years of their appointment to the Executive Committee.

H O W P S U S A R E C O N V E R T E D I N T O S H A R E S U N D E R T H E LT I P R O G R A M

Target amount

=

=

×

Vifor Pharmashare price

Number of PSUs awarded

Final number of shares delivered

Number of PSUs

awarded

% of target achievement

during three-year period

B E G I N N I N G O F C Y C L E

E N D O F C Y C L E

O P T I O N S A N D L O A N S

Vifor Pharma does not issue any tradeable options. The Vifor Pharma Articles of Associa-tion do not allow loans or credits to members of the Board; loans and credits to members of the Executive Committee are permitted up to 50% of an individual annual base salary.



R E M U N E R A T I O N O F T H E B O A R D O F D I R E C T O R S

Since the Annual General Meeting last year the new Chairman has taken up his role as non-executive Chairman. The tasks of the former Executive Chairman have been divided between the new Chairman and the newly promoted CEO. Their increased role and responsibility is also reflected in their respec-tive remuneration and described below for the Board of Directors and for the Executive Committee respectively.

The overall remuneration of the Board of Directors for 2020 amounted to CHF 5,876,000. It remained on the same level as the previous year and remained unchanged for all Directors other than the Chairman. It is within the maximum amount of CHF 6,500,000 approved by the shareholders for the year 2020. The lower level of remuneration of the former Executive Chairman due to pro-rated payments was partially offset by the contrac-tual obligations due to him as an executive of the Company. In addition, the overall remu-neration for the Board of Directors includes a higher remuneration of the non-executive Chairman (including for his tenure in the Board before being elected Chairman) and for significantly increased workload during the

COVID-19 crisis overlapping with the transi-tion from an Executive Chairman supported by a COO to a non-executive Chairman supported by a CEO.

The remuneration for Board and Committee memberships other than the role of the Chairman remained unchanged from previous years. The remuneration amount, which was delivered in shares was converted at the average share price for the month of Decem-ber 2019, ie, CHF 176.30, minus a 25% dis-count. For the new board member the average share price was determined for the month of April 2020, ie, CHF 141.66, minus a 25% discount.

R E M U N E R A T I O N O F T H E E X E C U T I V E C O M M I T T E E

The remuneration system and programs for the Executive Committee remained essentially unchanged in 2020. Overall, the total aggre-gate remuneration of the Executive Commit-tee for 2020 was CHF 13,127,000. This amounted to 77.2% of the maximum aggre-gate amount of CHF 17,000,000, approved by the shareholders for the year 2020. This was an increase of 18.8% compared to previous year, mainly for the following reasons:

R E M U N E R A T I O N A W A R D E D I N 2 0 2 0 A N D 2 0 1 9

In accordance with the Articles of Association, Vifor Pharma shareholders vote prospectively, ie, one year in advance, on the maximum aggregate remuneration for members of the Board and of the Executive Committee for the next business year. In order to allow for a comparable basis with this prospective vote, remuneration paid or attributed in 2020, and that of the previous year, is presented on the same basis perspective of cost to the company.

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P E R F O R M A N C E A C H I E V E M E N T F O R T H E S T I I N 2 0 2 0


– The CEO, promoted from the former position as COO as of 14 May 2020, received a higher annual base salary and an increase in short-term bonus and LTI grant value compared to the prior year to reflect his increased responsibilities of the new role and to align with market practice.

– The remuneration of selected Executive Committee members was increased in order to adjust to market levels already applied for members who joined in 2020. These individual increases in 2020 amounted to an average of 9% on annual base salary.Additionally the target short-term bonus for the selected members was set to 60% at target and the LTI target amount was set to between 40% and 60% of the annual base salary.

– The financial performance achieved under the short-term bonus, which accounts for 75% of the payout, reached 42.5% of the maximum potential (previous year: 81.9%). For the individual portion of the bonus, which accounts for 25% of the payout, the average performance achievement was 42.5% of the maximum potential (previous

year: 72%), resulting in an overall bonus payout of between 41.9% and 44.4% of the maximum potential (previous year: 76.5% to 81.5%).

– Remuneration includes contractual obliga-tions to the former member of the Execu-tive Committee, Patrick Treanor.

The variable portion (excluding social security) of the total remuneration for the Executive Committee who were in office at the end of the year in 2020 was 49.5% (2019: 46.9%). For the CEO it was 55.1% (2019: 59.6%).

The allocation of Performance Share Units (PSUs) under the Long-Term Incentive Pro-gram (LTI) was defined on the basis of the average Vifor Pharma Ltd. share price during the month of May 2020 of CHF 148.94. The performance achievement under the LTI 2018–2020 that vested at the end of 2020 was 108.4%, based on an average ROIC of 8.1% over the three years 2018, 2019 and 2020.

Financial Goals (75% weight)

Net Sales (40% weight)

EBITDA (60% weight)

Individual Goals (25% weight)

Minimum0%

Target100%

Maximum200%


O P T I O N S , L O A N S A N D C R E D I T S

As of 31 December 2020, no member of the Executive Committee or the Board of Direc-tors held tradable options or was granted any loan or credit from the company. There was no outstanding loan to any member of the Board of Directors or the Executive Committee.

F O R M E R M E M B E R S O F T H E B O A R D O F D I R E C T O R S A N D E X E C U T I V E C O M M I T T E E

Vifor Pharma continued to pay contractually agreed remuneration in the reporting period to the former Executive Chairman (as disclosed) and to a former member of the Executive Committee Patrick Treanor, who resigned on 30 September 2020 as disclosed in the remuneration table for the Executive Committee on page 142. Otherwise, Vifor Pharma did not pay any remuneration to former members of the Board of Directors or the Executive Committee.

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R E M U N E R A T I O N O F E X E C U T I V E C O M M I T T E E M E M B E R S I N 2 0 2 0 1

In thousand CHF TotalOf which

Stefan Schulze, CEO

Base salary 5,078 876

Bonus in cash 1,682 449

Bonus in shares 952 2 282

Long-Term Incentive Program 3,621 701

Social security costs 684 161

Contributions to pension funds 748 117

Other remuneration 362 15

Executive Committee member remuneration 13,127 3 2,601

Maximum Remuneration approved by the Annual Shareholder Meeting for 2020 17,000

Within approval limit Yes

1 All remuneration amounts are gross amounts (excluding pension fund and social security contributions).2 Includes the 25% discount on the share price at alloction.3 Remuneration for the eight members of the Executive Committee who were in office in 2020, including TCHF 1,341 remuneration to the former

member of the Executive Committee, Patrick Treanor.

E X E C U T I V E C O M M I T T E E M E M B E R S S H A R E H O L D I N G S A N D O U T S T A N D I N G P E R F O R M A N C E S H A R E U N I T S ( P S U )

Number of registered shares

held as at 31.12.2020 1

Number of PSU granted in 2020

Total number of PSUs outstanding 2

Stefan Schulze 12,200 4,707 26,073

Barbara Angehrn 747 2,179 6,070

Colin Bond 7,607 2,272 9,898

Lee Heeson 100 4,032 4,032

Klaus Jensen 100 3,679 3,679

Gregory Oakes — 3,009 3,009

Michael Puri 7,998 1,071 6,691

Dr. Christoph Springer 31,823 1,481 7,451

1 Registered shares held by related parties of members of the Executive Committee are also included in the totals disclosed above.2 Upon vesting, each Performance Share Unit (PSU) will be converted to registered shares within a range of 0 and 2 depending on the target

achievement.


R E M U N E R A T I O N O F T H E V I F O R P H A R M A B O A R D O F D I R E C T O R S I N 2 0 2 0 1

Registered shares

In thousand CHF Role(s) Fee in cashFee equivalent

in sharesOther

remuneration 2 TotalHeld as at

31.12.2020Allocated

for 2020

Etienne Jornod, Executive Chairman (until Annual Shareholder Meeting 2020) 3 CG 63 1,529 1,733 4 3,325 n/a 12,427

Executive member of the Board of Directors 63 1,529 1,733 3,325 n/a 12,427

Jacques Theurillat, Chairman (as of Annual Shareholder Meeting 2020) CG 5 660

6 480 — 1,140 1,581 2,723

Gilbert Achermann (as of Annual Shareholder Meeting 2020) CA 57 80 17 154 — 534

Michel Burnier CS, R — 240 23 263 9,460 1,362

Romeo Cerutti VC, A, G,

R — 293 33 326 7,967 1,664

Sue Mahony CR, CU 100 133 — 233 661 757

Kim Stratton A, S, U 85 113 26 224 562 643

Gianni Zampieri G, S 80 107 24 211 20,483 606

Non-executive members of the Board of Directors 982 1,446

7 123 2,551 40,714 8,289 8

Remuneration of the members of the Board of Directors 1,045 2,975 1,856 5,876 40,714 20,716


Within approval limit yes

1 All remuneration amounts are net amounts. The Company does not pay any pension contributions to members of the Board.2 Other remuneration includes the employer’s and employee's contribution to social security. 3 Etienne Jornod received TCHF 500 for consultancy services rendered to various entities of Vifor Pharma group after May 15, 2020.4 Includes contractual obligations and payments in line with employee regulations.5 CA and S until AGM 2020 included in remuneration pro rata.6 Includes TCHF 300 compensating extraordinary workload during the Covid-19 crisis overlapping with the transition period.7 Includes the 25% discount on the share price at alloction.8 Allocated in February 2021.

Registered shares held by related parties of members of the Board of Directors are included in the declaration of the number of shares they hold. A: Membership in the Audit and Risk Committee; CA: Chair of the Audit and Risk Committee; CG: Chair of the Governance Committee; CR: Chair of the Remuneration Committee; CS: Chair of the Scientific Committee; CU: Chair of US Committee; G: Membership in the Governance Committee; R: Membership in the Remuneration Committee; S: Membership in the Scientific Committee; U: US Committee; VC: Vice-Chairperson

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R E M U N E R A T I O N O F E X E C U T I V E C O M M I T T E E M E M B E R S I N 2 0 1 9 1

In thousand CHF TotalOf which

Stefan Schulze, COO

Base salary 5,512 666

Bonus in cash 1,785 575

Bonus in shares 979 361

Long-Term Incentive Program 1,427 466

Social security costs 576 139

Contributions to pension funds 494 105

Other remuneration 277 41

Executive Committee member remuneration 11,050 2 2,353


Within approval limit Yes

1 All remuneration amounts are gross amounts (excluding pension fund and social security contributions).2 Remuneration for the eight members of the Executive Committee who were in office in 2019, including TCHF 2,715 remuneration and

contractual obligations to two former EC members David Bevan and Dario Eklund.

E X E C U T I V E C O M M I T T E E M E M B E R S S H A R E H O L D I N G S A N D O U T S T A N D I N G P E R F O R M A N C E S H A R E U N I T S ( P S U )


held as at 31.12.2019 1

Number of PSU granted in 2019

Total number of PSUs outstanding 2

Stefan Schulze 6,664 3,699 23,803

Barbara Angehrn 85 1,332 3,891

Colin Bond 3,687 2,032 14,874

Michael Puri 2,898 1,246 11,811

Dr. Christoph Springer 24,133 1,332 12,535

Patrick Treanor — 1,235 2,303

1 Registered shares held by related parties of members of the Executive Committee are also included in the totals disclosed above.2 Upon vesting, each Performance Share Unit (PSU) will be converted to registered shares within a range of 0 and 2 depending on the target

achievement.


R E M U N E R A T I O N O F T H E V I F O R P H A R M A B O A R D O F D I R E C T O R S I N 2 0 1 9 1

Registered shares

In thousand CHF Role(s) Fee in cashFee equivalent

in sharesOther

remuneration

2 TotalHeld as at

31.12.2019Allocated

for 2019

Etienne Jornod, Executive Chairman CG 150 3,670 684 3 4,504 286,711 27,366

Executive member of the Board of Directors 150 3,670 684 4,504 286,711 27,366

Michel Burnier CS, R — 180 12 192 8,619 2,051

Romeo Cerutti VC, A, G,

R — 220 18 238 5,460 2,507

Sue Mahony (as of Annual Share-holder Meeting 2019) CR, CU 67 67 11 145 — 661

Kim Stratton (as of Annual Share-holder Meeting 2019) A, S, U 57 57 9 123 — 562

Jacques Theurillat CA, S 90 90 15 195 555 1,026

Gianni Zampieri G, S — 160 13 173 49,539 4 1,823

Daniela Bosshardt (until Annual Shareholder Meeting 2019) CR, S 75 — 6 81 n/a n/a

Sylvie Grégoire (until Annual Shareholder Meeting 2019) G, S 67 — 6 73 n/a n/a

Fritz Hirsbrunner (until Annual Shareholder Meeting 2019) A, R 67 — 4 71 n/a n/a

Non-executive members of the Board of Directors 423 774 94 5 1,291 64,173 8,630 6

Remuneration of the members of the Board of Directors 573 4,444 778 5,795 350,884 35,996


Within approval limit yes

1 All remuneration amounts are net amounts.2 Other remuneration includes the employer’s contribution to social security and pension fund. In addition, the employer pays the employee’s

amount for the social security costs amounting to TCHF 223.3 Includes TCHF 20.9 resulting from change in remuneration structure to maintain economic value despite change in payment structure and

TCHF 238.3 for holidays not taken and TCHF 120 to compensate for the allocation of the share-based remuneration in arrears introduced in 2016 and the introduction of a 5-year lock-up period on newly allocated shares.

4 Includes the share-based portion of Dr. Zampieri’s PSUs that were awarded during his tenure as a member of the Coporate Executive Committee and that were subsequently converted into shares.

5 To the extent that board members chose to elect remuneration in equity this amount is increased by 25%. 6 Allocated in February 2020.

Registered shares held by related parties of members of the Board of Directors are included in the declaration of the number of shares they hold. A: Membership in the Audit and Risk Committee; CA: Chair of the Audit and Risk Committee; CG: Chair of the Governance Committee; CR: Chair of the Remuneration Committee; CS: Chair of the Scientific Committee; CU: Chair of US Committee; G: Membership in the Governance Committee; R: Membership in the Remuneration Committee; S: Membership in the Scientific Committee; U: US Committee; VC: Vice-Chairperson

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5,512

C E O / C O O R E M U N E R A T I O N I N 2 0 1 9 A N D 2 0 2 0

in thousand CHF

E X E C U T I V E C O M M I T T E E R E M U N E R A T I O N I N 2 0 1 9 A N D 2 0 2 0

in thousand CHF

77.2%75%

59%78%

22.8%

25% 41%

22%3,621

1,427

701466

2,6342,764

7319361,7941,347

293285

5,078

876666

2019 (eight members) 2019 20202020 (eight members)

17,000

14,800

13,127

11,050

4,400

3,000

2,601

2,353

Per cent of maximum potential not paid or allocated

Per cent of maximum potential paid or allocated

LTI STI Social insurance and

other remuneration Annual base salary

Potential maximum

Potential maximum

Potential maximum

Potential maximum1

Paid or allocated

Paid or allocated

Paid or allocated

Paid or allocated1

1 Pro rata calculation for COO and CEO position.


O V E R V I E W O F E X E C U T I V E R E M U N E R A T I O N I N 2 0 2 0 A N D 2 0 1 9

In line with the Articles of Association, the maximum aggregate amount of remuneration for members of the Board and of the Executive Committee will be submitted to shareholders for approval prospectively for the business year following the Annual Shareholder Meet-ing. This approval process sets an upper limit to the maximum possible remuneration amount and accounts for all variable elements

including in particular the short-term bonus and the LTI (blocked shares and PSUs are valued at the grant date). The chart above shows a comparison between remuneration awarded and remuneration approved by shareholders for the Executive Committee and the COO/CEO for the years 2019 and 2020.


In 2020, the Remuneration Committee conducted its annual review of the compensa-tion system of the Executive Committee. The committee concluded that the compensation structure itself is fit-for-purpose and well aligned with the shareholders' interests and with market practice. However, it also estab-lished that that the performance measurement under the long-term incentive needed some further consideration: ROIC has been used as single performance metrics in the long-term incentive plan for several years, which has its roots in the history of the plan. Considering the performance conditions of the short-term bonus, which include Net Sales and EBITDA and are well-aligned with the business strategy of profitable growth, the Remuneration Committee decided to introduce a relative performance component in the long-term incentive in the form of relative Total Share-holder Return. The committee also decided to add at least one additional performance metric to the long-term incentive: This discussion is still ongoing and the perfor-mance concept is currently being finalized. Further details will be provided in the 2021 Remuneration Report.

O U T L O O K : C H A N G E S I N R E M U N E R A T I O N M O D E L F O R 2 0 2 1

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Ernst & Young Ltd Schanzenstrasse 4a P.O. Box CH-3001 Berne

Phone +41 58 286 61 11 Fax +41 58 286 68 18 www.ey.com/ch

To the General Meeting of Vifor Pharma Ltd., St. Gallen

Berne, 24 February 2021

Report of the statutory auditor on the remuneration report We have audited the remuneration report of Vifor Pharma Ltd. for the year ended

31 December 2020. The audit was limited to the information according to articles 14–16 of the Ordinance against Excessive Compensation in Stock Exchange Listed Companies (Ordinance) contained on pages 142 to 143 of the remuneration report.

Board of Directors’ responsibility The Board of Directors is responsible for the preparation and overall fair presentation of the remuneration report in accordance with Swiss law and the Ordinance. The Board of Directors is also responsible for designing the remuneration system and defining individual remuneration packages.

Auditor’s responsibility Our responsibility is to express an opinion on the remuneration report. We conducted our audit in accordance with Swiss Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the remuneration report complies with Swiss law and articles 14–16 of the Ordinance. An audit involves performing procedures to obtain audit evidence on the disclosures made in the remuneration report with regard to compensation, loans and credits in accordance with articles 14–16 of the Ordinance. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatements in the remuneration report, whether due to fraud or error. This audit also includes evaluating the reasonableness of the methods applied to value components of remuneration, as well as assessing the overall presentation of the remuneration report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Opinion In our opinion, the remuneration report for the year ended 31 December 2020 of Vifor Pharma Ltd. complies with Swiss law and articles 14–16 of the Ordinance.

Ernst & Young Ltd

Martin Mattes Pascal Solèr Licensed audit expert Licensed audit expert (Auditor in charge)


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F I N A N C E



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152 Consolidated statement of income153 Consolidated statement of comprehensive income154 Consolidated statement of financial position155 Consolidated statement of changes in equity156 Consolidated statement of cash flows157 Notes to the consolidated financial statements204 Statutory auditor’s report


in million CHF Notes 20202019

Restated*

Net sales 1, 2 1,705.6 1,725.0

Other income 1, 2 96.4 37.0

Cost of sales (701.2) (700.8)

Gross profit 1,100.8 1,061.2

Marketing and distribution (403.8) (435.7)

Research and development (250.0) (212.0)

General and administration (155.7) (137.6)

Operating profit (EBIT) 291.4 275.9

› Financial income 17.5 11.8

› Financial expenses (40.2) (26.9)

Net financial result 5 (22.7) (15.0)

Share of net result from joint venture (4.0) -

Profit before income taxes (EBT) 264.7 260.9

Income taxes 6 (27.1) (38.1)

Profit from continuing operations 237.6 222.8

Profit from discontinued operations 8 220.9 50.9

Net profit 458.6 273.8

Attributable to:

› Shareholders of Vifor Pharma Ltd. 359.6 159.1

› Non-controlling interests 98.9 114.7

Earnings per share in CHF

Basic earnings per share 7 5.54 2.45

Diluted earnings per share 7 5.53 2.45

Earnings per share from continuing operations in CHF

Basic earnings per share 7 2.14 1.67

Diluted earnings per share 7 2.13 1.66

* For details on the restatement relating to the disposal of OM Pharma refer to note 8

C O N S O L I D A T E D S T A T E M E N T O F I N C O M E


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in million CHF Notes 2020 2019


Hedging transactions

› Change in fair value 19 11.1 (5.9)

› Realized in profit or loss 19 (6.6) 4.0

Translation differences (90.6) (6.1)

Items that will be reclassified subsequently to profit or loss (86.1) (8.0)

Remeasurements of the net defined benefit asset/liability 24 (4.5) 11.9

Change in fair value of equity securities measured through OCI 19 156.7 301.4

Income taxes 6 (22.7) (43.6)

Items that will not be reclassified to profit or loss 129.4 269.6

Other comprehensive income 43.3 261.6

Total comprehensive income 501.9 535.4

Attributable to:

› Shareholders of Vifor Pharma Ltd. 382.2 385.1

› Non-controlling interests 119.6 150.3

C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E


C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N

in million CHF Notes2020

31.12.2019

31.12.

Cash and cash equivalents 730.0 544.9

Financial assets 19, 20 8.3 0.3

Trade and other receivables 14, 19 487.7 471.9

Income tax receivables 4.7 7.2

Inventories 15 339.8 348.6

Prepaid expenses and accrued income 38.4 34.2

Current assets 1,609.0 1,407.1

Property, plant and equipment 13 240.8 282.4

Right-of-use assets 17 62.0 68.6

Intangible assets 12 2,454.5 2,584.5

Investments in joint venture 23.1 -

Financial assets 19, 20 717.4 510.3

Deferred tax assets 6 65.7 39.7

Employee benefit assets 24 39.2 41.7

Non-current assets 3,602.7 3,527.3

Assets 5,211.7 4,934.4

Financial liabilities 19 8.9 0.9

Lease liabilities 17 14.1 16.8

Trade and other payables 19 162.1 107.9

Income tax payables 102.5 89.3

Accrued expenses and deferred income 249.1 321.4

Provisions 16 7.3 4.9

Current liabilities 544.0 541.3

Financial liabilities 19, 20 552.8 566.6

Lease liabilities 17 55.8 59.9

Deferred tax liabilities 6 30.7 20.4

Employee benefit liabilities 24 10.4 10.5

Provisions 16 0.4 0.4

Non-current liabilities 650.1 657.8

Share capital 0.7 0.7

Reserves 3,569.2 3,316.9

Equity attributable to shareholders of Vifor Pharma Ltd. 3,569.8 3,317.6

Non-controlling interests 447.8 417.8

Shareholders' equity 4,017.6 3,735.3

Liabilities and shareholders' equity 5,211.7 4,934.4


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C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y

in million CHFShare

capitalTreasury

sharesRetained earnings

Foreign currency

translation reserves

Fair value reserves Total

Non- controlling

interestsTotal

equity

1 January 2019 0.7 (18.4) 3,249.6 (182.1) 1.4 3,051.2 312.5 3,363.7

Net profit - - 159.1 - - 159.1 114.7 273.8

Other comprehensive income - - 234.0 (6.1) (1.9) 226.0 35.6 261.6

Total comprehensive income - - 393.1 (6.1) (1.9) 385.1 150.3 535.4

Dividends - - (129.7) - - (129.7) (45.0) (174.7)

Transactions on treasury shares - 4.7 (8.5) - - (3.7) - (3.7)

Share-based payments - - 14.8 - - 14.8 - 14.8

31 December 2019 0.7 (13.7) 3,519.3 (188.1) (0.6) 3,317.6 417.8 3,735.3

1 January 2020 0.7 (13.7) 3,519.3 (188.1) (0.6) 3,317.6 417.8 3,735.3

Net profit - - 359.6 - - 359.6 98.9 458.6

Other comprehensive income - - 108.7 (90.6) 4.4 22.6 20.7 43.3

Total comprehensive income - - 468.4 (90.6) 4.4 382.2 119.6 501.9

Dividends - - (129.6) - - (129.6) (90.0) (219.6)

Transactions on treasury shares - (5.4) (12.8) - - (18.2) - (18.2)

Share-based payments - - 17.7 - - 17.7 - 17.7

31 December 2020 0.7 (19.0) 3,863.0 (278.7) 3.9 3,569.8 447.8 4,017.6


C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S

in million CHF 20202019

Restated*

Profit from continuing operations 237.6 222.8

Income taxes 27.1 38.1

Depreciation, amortization and impairment 284.4 209.1

Change in provisions and employee benefit assets and liabilities 7.2 (22.3)

Net financial result 22.7 15.0

Other non-cash items (5.8) 22.1

Change in trade and other receivables (84.9) 40.1

Change in inventories (20.9) (70.3)

Change in trade and other payables 39.4 (34.1)

Change in other net current assets (60.8) 83.4

Interest received 2.2 4.0

Interest paid (5.9) (7.0)

Income tax paid (39.6) (28.1)

Cash flow from discontinued operations 21.2 52.1

Cash flow from operating activities 423.8 524.8

Investments in property, plant and equipment (68.5) (40.3)

Investments in intangible assets (316.1) (88.2)

Investments in joint venture and subsidiaries (10.4) (0.2)

Investments in financial assets and securities (43.4) (3.7)

Proceeds from property, plant and equipment 4.2 0.7

Proceeds from intangible assets 31.0 2.2

Proceeds from financial assets and securities 82.9 4.3

Net proceeds from disposal of OM Pharma (discontinued operations) 378.4 -

Cash flow from discontinued operations (5.8) (7.4)

Cash flow from investing activities 52.4 (132.5)

Dividends paid (219.6) (174.7)

Purchase of treasury shares (28.9) (11.7)

Sale of treasury shares 4.0 2.5

Proceeds from financial liabilities - 0.5

Repayment of financial liabilities (0.9) (37.0)

Payment of lease liabilities (22.7) (18.0)

Cash flow from discontinued operations (0.1) (0.1)

Cash flow from financing activities (268.4) (238.5)

Effects of exchange rate changes on cash and cash equivalents (22.7) (9.3)

Increase in cash and cash equivalents 185.1 144.6

Cash and cash equivalents as at 1 January 544.9 400.3

Cash and cash equivalents as at 31 December 730.0 544.9



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A B O U T T H E S E N O T E S

The contents and structure of the notes to these consolidated financial statements have been designed to help users find and understand the most relevant information. Information is included in the financial statements to the extent it has been considered material and relevant to the understanding of the Group’s performance.

Accounting policies and key accounting judgments and estimates applied to the preparation of the financial statements are shown where the related account balance, transaction or event is discussed.

To assist in identifying key accounting judgments, we have highlighted them with the following symbol:

Key judgments and estimates

Certain information (new and revised accounting standards, presentation currency and translation of foreign currencies, etc.) has been placed at the end of the document and cross-referenced where appropriate. Due to rounding, numbers presented throughout this report may not add up precisely to the totals provided. Totals are calculated using the underlying amount rather than the presented rounded number.

C H A N G E S I N P R E S E N T A T I O N

As detailed in note 8, OM Pharma is presented as discontinued operations, and the prior period consolidated statement of income and cash flows have been restated accordingly, in addition to numerous notes to the consoli-dated financial statements.

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

Performance and strategic assets

Group structure

Assets and liabilities

Capital and financial risks

Employee remuneration

Other disclosures

1 Net sales and other income

2 Operating segment

3 Product intangibles and licensing agreements

4 Expenses by nature and reconciliation to EBITDA

5 Financial result

6 Income taxes

7 Earnings per share

8 Discontinued operations

9 Non-controlling interests

10 Changes in consolidated shareholders’ equity

11 Share capital and number of shares

12 Intangible assets

13 Property, plant and equipment

14 Trade and other receivables

15 Inventories

16 Provisions

17 Leases

18 Risk management

19 Financial instruments

20 Fair value measurement

21 Personnel costs

22 Key management personnel

23 Share-based payments

24 Employee benefit plans

25 New and revised accounting standards

26 Presentation currency and translation of foreign currencies

27 Commitments and contingent liabilities

28 Related party transactions

29 Group companies

30 Subsequent events



These are the consolidated financial statements of Vifor Pharma Ltd. and its subsidiaries (together referred to as “Vifor Pharma Group” or “the Group”). Vifor Pharma Group is a pharmaceutical company focused on the develop-ment, manufacture and commercialization of pharmaceutical products.

The consolidated financial statements of Vifor Pharma Group have been prepared in accordance with IFRS as issued by the International Accounting Standard Board (IASB), as well as the interpretations of the IFRS Interpretations Commit-tee and the provisions of Swiss law. The consolidated financial statements have been presented on a historical cost basis, except for items which are required to be accounted for at fair value or where the Group has elected to do so.

The Board of Directors authorized the 2020 consolidated financial statements for publication on 24 February 2021. The 2020 consolidated financial statements will be submitted for approval to the Annual General Meeting on 6 May 2021.

K E Y E V E N T S A N D T R A N S A C T I O N S

The financial position and performance of the Group was particularly affected by the following events and transac-tions during the reporting period:

(i) Sale of OM PharmaOn 18 September 2020, the Group announced the successful sale of 100% of the share capital of OM Pharma to Optimus Holding Ltd. The deal closed on 30 September 2020 for a purchase consideration of CHF 485.0 million which includes a cash payment of CHF 400.0 million, a non-current loan receivable of CHF 35.0 million and an earn-out receivable with an estimated fair value of CHF 50.0 million. Vifor Pharma Group realized an after tax gain of CHF 190.6 million on the sale, refer to note 8 for further details on discontinued operations (OM Pharma) and the gain on sale calculation.

(ii) Vifor Pharma Group and Cara Therapeutics signed US license agreement for intraveneous iron KorsuvaOn 20 October 2020, the Group secured US commercial rights for intraveneous iron Korsuva in non-Fresenius Medical Care dialysis clinics under a profit-sharing arrangement with Cara. Under the terms of the agreement, Cara received an upfront payment of USD 100.0 million. The payment was capitalized and added to the cost of the existing intangible asset.

The Group also paid USD 50.0 million to Cara, of which USD 41.7 million relates to the equity investment, increasing Vifor Pharma Group ownership interest in Cara to 8.3% as at the reporting date. The remaining USD 8.3 million is attributable to the license agreement and was added to the cost of the intangible asset. The Cara shares are recognized as financial assets and measured at fair value through other comprehensive income.

(iii) Vifor Pharma Group and Angion signed global license agreement for ANG-3777On 9 November 2020, the Group announced that it had acquired a worldwide license, excluding Greater China, to the late-stage product ANG-3777 from Angion Biomedica Corp (“Angion”) in nephrology indications. The agree-ment included an upfront payment of USD 30.0 million and an equity investment of USD 30.0 million. The upfront payment was capitalized as an intangible asset. As part of the USD 30.0 million equity investment, Vifor Pharma Group purchased a convertible note in the amount of USD 5.0 million from Angion. The remaining USD 25.0 million were set to be invested as part of Angion’s initial public offering in February 2021. For more information on the subsequent event, refer to note 30.

(iv) Mircera® commercialization rightsAs previously disclosed, the Group has signed an agreement with Fresenius Medical Care for the extension of the Mircera® commercialization rights for sales outside of the Fresenius Kidney Care clinics until 31 December 2020. In 2020, the Group exercised options for an additional USD 50.0 million whereof USD 20.0 million are only payable in January 2021, to further extend the rights until 31 August 2022. The payments were added to the cost of the intangible assets and will be amortized over the additional 20-month license term.



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Performance and strategic assets

This section provides insight into the Group’s performance in the current year as well as an overview of the key strategic assets:

– Net sales amounted to CHF 1,705.6 million (-1.1% compared to the previous year) – Product-related intangible assets amount to CHF 1,339.1 million as at 31 December 2020 – EBITDA was CHF 575.8 million (+18.7% compared to the previous year) – Basic earnings per share from continuing operations was CHF 2.14 (+28.3% compared to the previous year)

1 N E T S A L E S A N D O T H E R I N C O M E

Net salesThe table below shows the disaggregation of net sales by brand.


Restated*

Ferinject®/Injectafer® 552.2 561.0

Venofer® 136.2 132.4

Maltofer® 62.8 60.0

Mircera® 478.4 523.4

Retacrit® 45.8 16.4

Velphoro® 177.7 181.7

Veltassa® 118.3 132.3

Other Rx brands 77.1 60.4

Third-party production 57.0 57.3

Net sales 1,705.6 1,725.0


Net sales arise from product distribution agreements and usually contain a single performance obligation (the sale of products). Control is transferred and sale is recognized when the products are shipped to the customers (which include wholesalers, hospitals, clinics and partners). The amount of consideration received and revenue recognized is based on contractually agreed prices and may vary with changes in marketing incentives and other discounts paid or provided to the customers. The Group estimates consideration for these arrangements using a most likely amount approach on a contract-by-contract basis. Consideration is not typically constrained because the net consideration receivable is usually known when the obligation to transfer products is satisfied.



Other incomeThe Group obtains royalties, milestone and upfront payments from third parties for the granting of license rights to products.


Restated*

Royalties, milestone and upfront payments 56.1 29.3

Gains on disposal of assets 31.1 2.3

Other operating income 9.3 5.4

Other income 96.4 37.0


Royalties, milestone and upfront payments includes royalty income from sales of CellCept® of CHF 14.2 million (2019: CHF 21.7 million). The CellCept® royalty period is over as at the reporting date and no royalties are expected to be received relating to the year 2021 and onwards.

Out-license agreements typically contain one or two distinct performance obligations: – License for the right to use our product-related rights – Other services provided by Vifor Pharma Group to support the regulatory approval, launch and marketing-relat-

ed activities in the licensed territory (if considered distinct from the license)

License: When the contracts are entered into, the license is typically usable as it exists and the customer can benefit from rights independently of further activities which may be performed by Vifor Pharma Group. Such licenses are assessed as right to use and revenue related to the license is recognized at a point in time when the contract is signed. Milestone payments based on future contingent events are recognized in revenue when the related event is certain to occur and when it is highly probable that no significant reversal of revenue will be required. Sales-based royalties are recognized in revenue once the underlying sales have occurred. If the customer can only benefit from the license in combination with further services performed by Vifor Pharma Group, the license revenue is recog-nized over the period in which the services are provided.

Other services: These may be considered distinct from the license rights if the licensee can independently benefit from the services, and vice versa, can independently benefit from the license. Revenue allocated to these services is recognized over the period in which the services are provided.

IFRS 15 – Revenue from Contracts with CustomersNet sales and other income is, in all material respects, comprised of revenue from contracts with customers, thus is in scope of IFRS 15 with the exception of the disposal of legacy non-core products in Spain and Portugal for a total gain of CHF 31.0 million.


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2 O P E R A T I N G S E G M E N T

Financial information is presented in a manner consistent with the internal reporting provided to the Board of Directors (Chief Operating Decision Maker). It is reported to the Board of Directors on an aggregated basis for evaluating financial performance and allocating resources, and the Group reports a single operating segment.

Geographic areasRevenues are attributed to countries (or regions) based on the country where the sale originates, as presented in the following table:

in million CHF

2020 Switzerland

Europe (excluding

Switzerland) USA Rest of world Group

Net sales 125.9 398.9 990.9 189.9 1,705.6

Other income 19.1 34.9 0.9 41.5 96.4

Total 145.1 433.9 991.7 231.3 1,802.1

Non-current assets 1 1,919.9 124.0 733.2 3.3 2,780.4

2019 Restated*

Net sales 117.7 409.9 1,034.2 163.2 1,725.0

Other income 24.3 4.1 1.4 8.6 37.0

Total 142.0 414.0 1,035.6 171.8 1,762.0

Non-current assets 1 1,990.0 131.6 810.7 3.3 2,935.6

1 Without financial assets, deferred tax assets and employee benefit assets* For details on the restatement relating to the disposal of OM Pharma refer to note 8

Significant customersRevenue or trade receivables derived from significant customers that amount to 10% or more of Vifor Pharma Group’s total are shown below.

2020 2019

in million CHF Revenue Trade receivables Revenue Trade receivables

Customer 1 507.9 75.8 510.3 43.4

Customer 2 214.7 50.4 224.2 57.0



3 P R O D U C T I N T A N G I B L E S A N D L I C E N S I N G A G R E E M E N T S

in million CHFCarrying amount

31.12.2020Carrying amount

31.12.2019

Amortization period (in use)/Approval stage

(not yet in use)

Product intangibles (in use)

Veltassa® 719.6 798.0 14 years

Mircera® 133.1 163.3 10 years

Retacrit® 53.4 39.9 10 years

Other products related 1 43.4 49.6 1-15 year(s)

Subtotal 949.5 1,050.8

Product intangibles (not yet in use)

Rayaldee® 53.5 50.6 Precommercial

Avacopan 149.7 149.7 Precommercial

Vadadustat 4.7 4.7 Precommercial

Difelikefalin 154.4 55.5 Precommercial

CCX140 2 - 56.2 Impaired

ANG-3777 27.6 - Phase II & III

Subtotal 389.9 316.7

Total 1,339.4 1,367.5

1 These assets relate mainly to rights and products obtained as part of the 2015 acquisition of FMC Nephrologica Deutschland and other product-related rights

2 Refer to note 4 for additional details on the impairment booked

Veltassa®As a result of the acquisition of Relypsa, Inc. in September 2016, the Group obtained worldwide rights to the potassium binder Veltassa®. At the reporting date, the intangible asset had a remaining useful life of 9.7 years.

Mircera®In May 2015, Vifor Pharma Group and F. Hoffmann-La Roche (“Roche”) entered into an exclusive license agreement for the commercialization of Roche’s drug Mircera® in the US and its territories. Under this license agreement Roche manufactures and supplies Mircera® to Vifor Pharma Group in return for upfront and milestone payments, supply reimbursements, as well as tiered royalties on Mircera® sales in the US and its territories. At the reporting date, the intangible asset had a remaining useful life of 4.4 years.

In 2020, the Group agreed to make additional payments to Fresenius Medical Care totalling USD 50.0 million, whereof USD 20.0 million are only payable in January 2021, for the extension of the Mircera® commercialization rights for sales outside of the Fresenius Kidney Care clinics until 31 August 2022. These payments were capitalized and will be amortized over the additional 20-month license term.

Retacrit®In December 2015, Vifor Pharma Group and Hospira, Inc. (acquired by Pfizer in September 2015) entered into an exclusive license agreement for the commercialization and distribution of Retacrit® in the US dialysis market and non-hospital nephrology office market. Amortization of this asset began in November 2018, concurrent with the first commercial sales.

In June 2020, Pfizer received FDA approval for the multiple-dose vials of Retacrit® for the treatment of anaemia due to CKD in dialysis and non-dialysis dependent patients. Under the terms of the license agreement, Vifor Pharma


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Group paid USD 20.0 million to Pfizer. The payment was capitalized and will be amortized over the assets remaining useful life. At the reporting date, the intangible asset had a remaining useful life of 7.9 years.

Rayaldee® In May 2016, Vifor Pharma Group and OPKO Health, Inc. entered into an exclusive agreement for the development and commercialization of OPKO’s drug Rayaldee® in Europe, Canada, Mexico, Australia, South Korea and certain other international markets for the treatment of secondary hyperparathyroidism (SHPT) in patients with chronic kidney disease (CKD) and vitamin D insufficiency. In addition, OPKO has granted VFMCRP an option to acquire rights to the US market for treatment of dialysis patients. Amortization of the asset will start with the first commer-cial sales.

AvacopanIn May 2016, Vifor Pharma Group and ChemoCentryx, Inc. (“CCX”) entered into an exclusive agreement for the development and commercialization of CCX’s orally administered Complement 5a Receptor (C5aR) inhibitor avacopan for orphan and rare renal diseases in Europe, Canada, Mexico, Central and South America and South Korea. In 2018 the agreement was expanded to include China, effectively giving the Group rights in all markets outside the US. Amortization of the asset will start with the first commercial sales.

VadadustatIn May 2017, Vifor Pharma Group and Akebia Therapeutics, Inc. (“Akebia”) entered into an exclusive license agree-ment granting Vifor Pharma Group the right to sell vadadustat to Fresenius Medical Care North America dialysis clinics in the US upon approval by the US FDA and inclusion in a bundled reimbursement model or reimbursement using the Transitional Drug Add-On Payment Adjustment. Under the terms of the agreement, Vifor Pharma Group made a USD 50.0 million equity investment, of which USD 4.7 million is attributable to the license agreement and was capitalized as an intangible asset. The remaining amount paid was allocated to the initial value of the equity investment (financial asset).

DifelikefalinIn May 2018, Vifor Pharma Group and Cara Therapeutics (“Cara”) entered into an exclusive license agreement granting Vifor Pharma Group the right to sell and commercialize Difelikefalin injection for the treatment of chronic kidney disease-associated pruritus (CKD-aP) in haemodialysis patients worldwide, excluding the US, Japan and South Korea. In the US, Vifor Pharma Group and Cara will promote Difelikefalin to Fresenius Medical Care North America dialysis clinics under a profit-sharing arrangement. Under the terms of the agreement, Vifor Pharma Group paid a total of USD 70.0 million, of which USD 55.4 million is attributable to the license agreement and was capital-ized as an intangible asset. The remaining amount paid was allocated to the initial value of the equity investment (financial asset).

In October 2020, the Group secured US commercial rights for intraveneous iron Korsuva (Difelikefalin) in non-Frese-nius Medical Care dialysis clinics under a profit-sharing arrangement with Cara. Under the terms of the agreement, Cara received a total of USD 150.0 million, of which USD 108.3 million is attributable to the license agreement and was capitalized as an addition to the existing intangible asset. The remaining amount paid was allocated to the initial value of the equity investment (financial asset).

ANG-3777In November 2020, Vifor Pharma Group and Angion Biomedica Corp. (“Angion”) entered into a license agreement for ANG-3777 in nephrology indications. The Group acquired a worldwide license, excluding Greater China. Under the terms of the agreement, Angion received an upfront payment of USD 30.0 million. The payment was capitalized as an intangible asset and amortization of the asset will start with the first commercial sales.



4 E X P E N S E S B Y N A T U R E A N D R E C O N C I L I A T I O N T O E B I T D A

Expenses are presented by function in the statement of income and are presented by nature as follows:


Restated*

Cost of materials 396.7 408.3

Personnel expenses 466.3 449.5

Marketing and advertising expenses 107.9 119.7

Other operating expenses 255.4 299.4


Total 1,510.7 1,486.1


In May 2020, Vifor Pharma Group and ChemoCentryx, Inc. announced topline data from the phase-II LUMINA-1 study of CCX140 in focal segmental glomerulosclerosis (FSGS) which did not meet its primary endpoint. Develop-ment of CCX140 in FSGS will not be pursued. Vifor Pharma Group subsequently impaired the related intangible asset with a carrying amount of CHF 56.2 million. It is included in the line depreciation, amortization and impair-ment, as shown above, and in the function research and development as presented in our consolidated statement of income.

Depreciation, amortization and impairment is allocated to expenses presented by function as follows:


Restated*

DepreciationAmortization and

impairment Depreciation Amortization

Cost of sales 22.9 169.3 15.9 157.9

Marketing and distribution 13.5 2.1 8.5 1.6

Research and development 4.5 58.6 2.5 -

General and administration 12.0 1.5 20.7 1.9

Total 53.0 231.4 47.7 161.4


Reconciliation from EBIT to EBITDA


Restated*



EBITDA 575.8 485.0



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5 F I N A N C I A L R E S U LT


Restated*

Interest income 2.3 2.6

Securities and other financial income 15.1 9.2

Financial income 17.5 11.8

Interest expense (7.7) (9.0)

Other financial costs (0.9) (4.7)

Net foreign exchange loss (31.6) (13.2)

Financial expense (40.2) (26.9)

Net financial result (22.7) (15.0)


6 I N C O M E T A X E S

The Vifor Pharma Group is subject to corporate income taxes in the various jurisdictions in which the Group operates. Income tax expense comprises of current and deferred taxes on profit, including current and potential withholding taxes on the income distributions from subsidiaries and tax adjustments from prior years.

Key judgments and estimates: Vifor Pharma Group operates in multiple jurisdictions with complex legal and tax regulatory environments and the taxes and associated tax exposure thereof are recognized in the Group’s tax expense and reflect the Group’s management best estimate based on the facts and circumstances at the balance sheet date. The calculation of the Group’s tax expense involves a degree of estimation, judgment and interpreta-tion of tax legislation in the various jurisdictions with respect to certain items. Additionally, the assumptions regarding future realization, and therefore the recognition of deferred taxes, may change due to future operating performance and other factors.

Income taxes are recognized in profit or loss, unless the underlying income relates to items recognized directly within equity or other comprehensive income. Current income tax is the expected taxes payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Deferred taxes are taxes on temporary differences between the value of assets and liabilities in the tax accounts and the carrying amounts included in the Group’s consolidated financial statements.

Deferred taxes are measured using tax rates that are expected to be applied to temporary differences when they reverse, based on the legislation enacted or substantively enacted at the reporting date. Deferred tax assets, including tax-loss carry forwards and expected tax credits, are only recognized if it is probable that future profits will be available against which the assets mentioned can be offset.

Deferred tax liabilities for withholding taxes are recognized for subsidiaries in situations where the income is to be paid out as dividend in the foreseeable future and for undistributed earnings of unconsolidated companies to the extent that these withholding taxes are not expected to be refundable or deductible, except where Vifor Pharma Group is able to control the timing of the distribution and no dividend distribution is planned or likely in the foreseeable future.



Analysis of tax expense for the year


Restated*

Current income tax on profit for the year (41.2) (33.5)

Income tax of prior periods (6.9) (1.0)

Deferred income tax 21.0 (3.6)

Income taxes (27.1) (38.1)


Income tax reconciliationAlthough Vifor Pharma Group operations are subject to income taxes in various foreign jurisdictions and the statutory income tax rate varies per country, the Group applies its domestic Swiss tax rate to determine the tax expense as it is considered to be more meaningful than using a weighted average statutory income tax rate.

The table below presents the reconciliation of Vifor Pharma Group’s expected tax expense based on the Swiss domestic tax rate to the income tax expense for the years ended 31 December 2020 and 2019.


Restated*

Profit before income taxes 264.7 260.9

Tax expense at expected rate of 14.5% (2019: 17.4%) (38.4) (45.4)

Different tax rates 1.5 1.0

Factors affecting expense:

Effects from income that is taxable at a lower rate or tax-free 14.2 19.9

Effects of changes in tax rates (0.1) (12.5)

Recognition of deferred taxes from prior periods 6.1 1.1

Subsequent recognition of loss carry forwards from prior periods - 0.2

Items from prior periods and other items 1 (10.5) (2.4)

Income taxes (27.1) (38.1)

1 Including non-recoverable withholding taxes, non-deductible expenses, and movements on uncertain tax positions* For details on the restatement relating to the disposal of OM Pharma refer to note 8

A tax income of CHF 14.1 million resulting from the Swiss tax reform1 in the prior year was allocated to the discontin-ued operations leading to higher 2019 restated income taxes. The total net impact of the deferred tax revaluation from the change in statutory Swiss tax rates amounted to CHF 1.7 million, of which CHF -12.0 million was recognized in profit from continuing operations and CHF 14.1 million in profit from discontinued operations, and the recogni-tion of CHF -0.4 million in other comprehensive income.

1 On 19 May 2019, Swiss voters approved the Federal Act on Tax Reform and AHV Financing (TRAF) which entered into force on 1 January 2020.


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Deferred tax assets and liabilitiesThe components of deferred tax assets (DTA) and deferred tax liabilities (DTL) are included in the following line items on the face of the consolidated statement of financial position.

2020 2019

in million CHF DTA (DTL)Net DTA /

(DTL) DTA (DTL)Net DTA /

(DTL)

Deferred taxes on temporary differences

› Current assets 28.5 (1.5) 27.0 17.0 (7.0) 10.0

› Property, plant and equipment - (5.3) (5.3) - (8.1) (8.1)

› Right-of-use assets - (9.4) (9.4) - (10.1) (10.1)

› Intangible assets 1.8 (4.7) (3.0) 10.2 (22.3) (12.2)

› Financial assets 0.4 (61.5) (61.1) 0.7 (44.5) (43.7)

› Lease liabilities 10.3 - 10.3 11.7 - 11.7

› Other temporary differences 12.9 (6.3) 6.5 15.2 (5.0) 10.2

Deferred taxes on temporary differences 53.9 (88.9) (35.0) 54.9 (97.0) (42.2)

Tax-loss carry forwards 70.0 - 70.0 61.5 - 61.5

Net DTA/(DTL) 123.9 (88.9) 35.0 116.4 (97.0) 19.3

Offsetting of DTA with (DTL) (58.2) 58.2 (76.7) 76.7

Recognized in the statement of financial position 65.7 (30.7) 39.7 (20.4)

The movements in net DTA / (DTL) can be explained as follows:

in million CHF 2020 2019

1 January 19.3 54.0

Recognized in income taxes in profit or loss

› Net change of temporary differences 12.7 (11.8)

› Fiscal realization of recognized tax-loss carry forwards (4.4) (1.9)

› Tax-loss carry forwards taken into account for the first time or no longer taken into account 12.8 21.4

› Effects of changes in tax rates (0.1) (12.5)

Recognized in income tax in profit or loss — discontinued operations (0.0) 14.0

Recognized in other comprehensive income (22.7) (43.6)

Disposal from scope of consolidation 18.5 -


31 December 35.0 19.3



Summary of tax-loss carry forwards and tax credits

2020 2019

in million CHFTax-loss carry

forwardsTax

effectTax-loss carry

forwardsTax

effect

Tax-loss carry forwards 817.8 87.5 804.0 81.2

Of which capitalized as DTA 153.0 43.2 149.8 22.1

Of which netted with DTL 327.5 26.7 275.1 39.4

Unrecognized tax-loss carry forwards 337.3 17.5 379.1 19.7

There were unrecognized tax-loss carry forwards of CHF 337.3 million as at 31 December 2020 (2019: CHF 379.1 million) related to non-capitalized tax-loss carry forwards for US state taxes. These expire in 10-20 years depending on the state in which the losses originate in. Additionally, there were unrecognized US tax credits of CHF 6.1 million (2019: CHF 6.4 million), expiring in more than 5 years.

7 E A R N I N G S P E R S H A R E

2020 2019

Number of shares 65,000,000 65,000,000

Average number of treasury shares (135,680) (140,799)

Average number of outstanding shares 64,864,320 64,859,201

Share-based payments 163,690 190,872

Theoretical average number of outstanding shares (diluted) 65,028,010 65,050,073


Restated*

Net profit — attributable to shareholders of Vifor Pharma Ltd. 359.6 159.1

Earnings per share in CHF

Basic earnings per share 5.54 2.45

Diluted earnings per share 5.53 2.45

Earnings per share from continuing operations in CHF



Earnings per share from discontinued operations in CHF





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Group structure

This section provides further insights into the Group’s equity structure, including financial information of discontinued operations relating to OM Pharma and the joint company VFMCRP.

8 D I S C O N T I N U E D O P E R A T I O N S ( O M P H A R M A )

On 30 September 2020, the Group completed the sale of 100% of the share capital of OM Pharma. The post-tax gain on sale amounted to CHF 190.6 million.

in million CHF2020

30.09.

Purchase consideration 485.0

Cash 400.0

Vendor loan 35.0

Fair value earn-out consideration 50.0

Carrying amount of net assets disposed (273.5)

Gross gain on sale 211.5

Cost to sell (9.3)

Gain on sale before income taxes and reclassification of translation differences 202.3

Reclassification of translation differences (0.7)

Income taxes (11.0)

Gain on sale after income taxes 190.6

Refer to notes 19 and 20 for further classification and measurement details relating to the vendor loan and the earn-out consideration.

The table below shows the financial performance of OM Pharma as well as the net profit from the discontinued operations.

in million CHF2020

1.1.—30.9.2019

1.1.—31.12.

Net sales 114.9 152.3


Operating expenses (86.6) (104.6)


Depreciation and amortization (4.7) (6.0)

EBITDA 40.6 55.0

Financial result (0.6) (0.4)

Profit before income taxes (EBT) 35.3 48.7

Income taxes (5.0) 2.2


Gain on sale after income taxes 190.6 -

Net profit from discontinued operations 220.9 50.9



The net profit from discontinued operations of CHF 220.9 million is fully attributable to shareholders of Vifor Pharma Ltd.

The table below shows the financial position of OM Pharma at the disposal date.

in million CHF2020

30.09.

Cash and cash equivalents 21.6

Trade accounts receivable 41.6

Inventories 31.3

Other current assets 6.6

Property, plant and equipment 72.5

Intangible assets 105.8

Goodwill 50.8

Total assets 330.2

Current liabilities 28.5

Deferred tax liabilities 18.5

Other non-current liabilities 9.7

Total liabilities 56.7

Fair value of net assets 273.5

9 N O N - C O N T R O L L I N G I N T E R E S T S

Vifor Fresenius Medical Care Renal Pharma (VFMCRP) is the only Group company with significant non-controlling interests. The company is registered in St. Gallen, Switzerland. Vifor Pharma Group owns 55% of the share capital and voting rights, while Fresenius Medical Care (FMC) holds 45% of the share capital and voting rights. The minori-ty shareholder has extensive protection rights. In the event of disagreement, Vifor Pharma Group has the casting vote within a defined escalation process. Condensed financial information of VFMCRP is shown below:


Current assets 630.2 354.3

Non-current assets 688.0 738.7

Current liabilities 253.4 89.4

Non-current liabilities 74.0 78.6

Equity before appropriation of earnings 990.8 925.0

Net sales 729.4 731.4




Other comprehensive income 46.0 79.2

Cash flow from operating activities 293.5 324.1


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VFMCRP paid a dividend of CHF 200.0 million in 2020 (2019: CHF 100.0 million), of which CHF 90.0 million (2019: CHF 45.0 million) was paid to FMC.

1 0 C H A N G E S I N C O N S O L I D A T E D S H A R E H O L D E R S ’ E Q U I T Y

At the Annual General Meeting (AGM) held on 14 May 2020, a resolution was passed to pay a dividend of CHF 2.00 per registered share (previous year: CHF 2.00 per share), representing a total amount of CHF 129.6 million for the financial year 2019 (previous year: CHF 129.7 million). This was paid to the shareholders on 20 May 2020.

In the reporting period 207,118 treasury shares (2019: 77,900 treasury shares) were bought at an average price of CHF 139.75 (2019: CHF 150.21) and 168,507 treasury shares (2019: 127,496 treasury shares) were used for share-based payments.

The Board of Directors intends to submit a proposal to the AGM on 6 May 2021 to pay a dividend of CHF 2.00 per registered share, corresponding to about CHF 130.0 million for the financial year 2020.

1 1 S H A R E C A P I T A L A N D N U M B E R O F S H A R E S

Vifor Pharma Group has fully paid-up share capital of CHF 650,000, divided into 65,000,000 publicly listed regis-tered shares with a par value of CHF 0.01 each. All shares have the same capital rights with the exception of the treasury shares which are not entitled to dividend payments.

According to Art. 3a) of Vifor Pharma Group’s Articles of Association, the Board of Directors may raise the share capital of CHF 650,000 by 10%, i.e., an amount of CHF 65,000 (6,500,000 shares), at any time until 14 May 2022.

Number of shares Total shares

Vifor Pharma Ltd.Treasury

sharesOutstanding

shares

as at 31.12.2018 65,000,000 (155,823) 64,844,177

Change 49,596 49,596

as at 31.12.2019 65,000,000 (106,227) 64,893,773

Change (38,611) (38,611)

as at 31.12.2020 65,000,000 (144,838) 64,855,162

The treasury shares are reserved for share-based payments to employees and the Board of Directors.



Assets and liabilities

This section highlights the primary assets used and liabilities incurred to support the Group’s operating activities. Assets and liabilities relating to the Group’s financing activities are covered in section “Capital and financial risks”. Deferred tax assets and liabilities are shown in note 6 with the current-year tax expense.

1 2 I N T A N G I B L E A S S E T S

Intangible assets include acquired trademarks, patents, licenses, technologies purchased or other assets without physical substance. These items are measured at cost less accumulated amortization and/or impairment. The cost of an intangible asset acquired in a business combination corresponds to its fair value determined at acquisition.

Amortization is charged on a straight-line basis over the estimated economic or legal useful life, whichever is shorter. The amortization period for trademarks, patents, licenses and technologies ranges from 1 to 20 year(s). The amortization period and method are reviewed at least at each financial year-end.

in million CHF

Trademarks, patents, licenses, technologies with

finite useful lives

Trademarks and technologies with

indefinite useful lives

Acquired software and internally

developed software Goodwill Total

Net carrying amounts as at 31.12.2018 1,468.4 104.1 9.2 1,094.3 2,676.0

Addition 1 58.0 - 15.5 - 73.5

Disposal - - (0.0) - (0.0)

Amortization (158.4) - (3.0) - (161.3)

Amortization from discontinued operations (0.3) - (0.2) - (0.5)

Translation differences (0.2) - (0.1) (2.8) (3.2)


Cost 2,058.5 104.1 41.0 1,091.5 3,295.0

Accumulated amortization (690.9) - (19.6) - (710.5)


1 Additions in intangible assets include also intangible assets capitalized in the current period, but paid in previous periods or payable in future periods, and therefore do not reconcile to the position investments in intangible assets shown in the statement of cash flows


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in million CHF

Trademarks, patents, licenses,

technologies with finite

useful lives

Trademarks and

technologies with indefinite

useful lives

Acquired software and

internally developed

softwarePriority Review

Voucher Goodwill Total

Net carrying amounts as at 31.12.2019 1,367.5 104.1 21.4 - 1,091.5 2,584.5

Addition 1 197.5 - 29.1 107.7 - 334.3

Amortization (165.7) - (9.5) - - (175.2)

Amortization from discontinued operations (0.2) - (0.1) - - (0.3)

Impairment (56.2) - - - - (56.2)

Disposal from scope of consolidation (1.4) (104.1) (0.2) - (50.8) (156.6)

Translation differences (2.1) - (0.0) - (73.9) (76.0)

Net carrying amounts as at 31.12.2020 1,339.4 - 40.6 107.7 966.8 2,454.5

Cost 2,191.7 - 65.2 107.7 966.8 3,331.4

Accumulated amortization and impairment (852.3) - (24.5) - - (876.9)

Net carrying amounts as at 31.12.2020 1,339.4 - 40.6 107.7 966.8 2,454.5

1 Additions in intangible assets include also intangible assets capitalized in the current period, but paid in previous periods or payable in future periods, and therefore do not reconcile to the position investments in intangible assets shown in the statement of cash flows

Trademarks, patents, licenses, technologies with finite useful livesThe Group has entered into in-licensing agreements or similar arrangements which require certain milestone payments dependent on the achievement of agreed objectives or performance targets as defined in the contracts. Such payments for rights are recognized as intangible assets when they become probable. Refer to note 3 for further details of the key agreements.

Key judgments and estimates: the estimated payment amounts correspond to the present value of expected payments determined by considering possible scenarios. These estimates could change significantly over time and could significantly affect the carrying amount of intangible assets and related amortization expense as well as the corresponding liability.

Trademarks and technologies with indefinite useful livesThe unpatented technology assets with a carrying amount of CHF 104.1 million in 2019 were disposed of with the sale of OM Pharma.

Priority Review VoucherThe Priority Review Voucher qualifies as an intangible asset with an indefinite useful life. Its recoverable amount is measured at fair value less costs of disposal.

GoodwillGoodwill is recognized at cost on the acquisition date and corresponds to the difference between the consider-ation transferred and the fair value of assets, liabilities and contingent liabilities identified in the purchase price allocation. Goodwill is capitalized and included in intangible assets. After initial measurement, goodwill is recog-nized at cost less any accumulated impairment.

Goodwill is allocated to a single CGU (cash generating unit), Vifor Pharma Group, consistent with the level at which management monitors the balance. The CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.



Research and developmentExpenditure on research and development is recognized directly in profit or loss as incurred. The costs of development cannot be capitalized since the regulatory risks and the considerable periods of time before a product is launched do not allow a reliable estimate to be made of the economic benefit, which would be necessary for capitalization.

Impairment assessmentIntangible assets with finite useful lives are amortized and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Intangible assets with indefinite useful lives, those not yet ready for use, and goodwill are not amortized but tested for impairment annually or more frequently if there are indications of impairment.

If the recoverable amount (higher of fair value less costs of disposal and value in use) is lower than the carrying amount, the carrying amount is reduced to the recoverable amount by recording an impairment charge.

Key judgments and estimates: to determine the value in use, the future cash flows are discounted on a pre-tax basis and require the use of various assumptions (such as growth rate, discount rate and budgeted margins) all subject to significant judgment. Impairments are recognized in profit or loss under depreciation and amortization and disclosed separately. The weighted average cost of capital (WACC) is used to determine the applicable pre-tax discount rate. Goodwill is evaluated on the basis of the medium-term plans for the next three years approved by the Board of Directors. Cash flows beyond the planning horizon are extrapolated using a perpetual growth rate.

The growth rates and pre-tax discount rates below were used.

2020 2019

in million CHFCarrying

amountGrowth

rateDiscount

rateCarrying

amountGrowth

rateDiscount

rate

Goodwill 966.8 1.6% 8.4% 1,091.5 1.6% 8.4%

Trademarks and technologies 1 n/a n/a n/a 104.1 1.6% 8.4%

1 Entirely disposed with the disposal of OM Pharma

Apart from the aforementioned CCX140 product intangible impairment of CHF 56.2 million, no impairment of indefinite-life intangible assets, intangible assets not yet in use or goodwill was identified based on the impairment testing for 2020 and 2019.

As part of the goodwill impairment testing, Vifor Pharma Group performed a sensitivity analysis taking into account reasonably possible changes in the assumptions used to calculate the discounted cash flows, such as higher discount rates, lower EBITDA, lower gross margins and lower perpetual growth rates. The sensitivity analysis did not reveal situations where the carrying amount of the CGUs would exceed its recoverable amount.


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1 3 P R O P E R T Y, P L A N T A N D E Q U I P M E N T

Property, plant and equipment are measured at cost less accumulated depreciation and impairment. Depreciation is charged on a straight-line basis over the assets’ useful lives as follows:

in years Useful life

Buildings 10-50

Manufacturing systems and warehouse equipment 5-15

Furniture, fittings, IT equipment and vehicles 3-10

in million CHF

Real estate used for commercial

operationsAssets under construction

Other property, plant and

equipmentInvestment properties

Total property, plant and

equipment

Net carrying amounts as at 31.12.2018 115.4 50.4 104.2 4.1 274.0

Addition 1 9.0 32.4 8.5 - 49.9

Disposal (0.0) - (4.2) - (4.2)

Reclassification 3.8 (21.0) 17.2 - -

Depreciation (5.5) - (25.7) (0.0) (31.2)

Translation differences (0.1) (0.6) (0.2) - (0.8)


Cost 221.6 61.3 293.7 4.4 581.0

Accumulated depreciation (102.1) - (196.2) (0.3) (298.6)



Addition 1 6.3 58.2 9.7 - 74.2

Disposal - - (4.2) - (4.2)

Reclassification 9.9 (48.0) 38.1 - -

Depreciation (5.8) - (28.6) (0.0) (34.4)

Depreciation from discontinued operations (2.5) - (1.8) - (4.3)

Disposal from scope of consolidation (48.5) (2.5) (17.8) (3.6) (72.5)

Translation differences (0.1) (0.3) (0.2) - (0.5)


Cost 163.1 68.8 293.4 0.8 526.1

Accumulated depreciation (84.3) - (200.7) (0.3) (285.3)


1 Additions in property, plant and equipment include also property, plant and equipment capitalized in the current period, but paid in previous periods or payable in future periods, and therefore do not reconcile to the position investments in property, plant and equipment shown in the statement of cash flows.

Other property, plant and equipment consists of manufacturing systems, warehouse equipment, furniture, fittings, IT equipment and vehicles.



1 4 T R A D E A N D O T H E R R E C E I V A B L E S

Trade receivables are carried at amortized cost. The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECLs) which uses a lifetime expected loss allowance for all trade receivables, refer to note 19 (i) for further details.


Trade receivables 415.5 429.7

Bad debt allowances (4.3) (15.4)

Other receivables 76.5 57.7

Trade and other receivables 487.7 471.9

Maturity profile of trade receivables

2020 2019

in million CHFGross trade receivables

Bad debt allowances

Gross trade receivables

Bad debt allowances

Not past due 365.5 (0.0) 330.8 (2.7)

Past due:

› 1–30 days 16.4 (0.0) 25.5 (0.1)

› 31–60 days 10.4 (0.1) 21.5 (0.1)

› 61–90 days 5.4 (0.0) 9.0 (0.0)

› more than 90 days 17.8 (4.2) 42.9 (12.5)

Total 415.5 (4.3) 429.7 (15.4)

Change in bad debt allowances for trade receivables


1 January (15.4) (14.3)

Addition (1.9) (5.5)

Use 0.7 3.9

Reversal - 0.5

Disposal from scope of consolidation 12.3 -

31 December (4.3) (15.4)


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1 5 I N V E N T O R I E S

Inventories are carried at the lower of cost or net realizable value. Cost includes all direct manufacturing costs and a proportion of manufacturing overheads. The standard cost method is primarily used to determine cost.

in million CHFRaw

materialsSemi-finished

and finished goods Total

Gross carrying amounts as at 31.12.2018 82.7 212.8 295.5

Change in stock (13.6) 84.1 70.5

Translation differences (0.8) (0.4) (1.2)


Adjustments as at 31.12.2018 (2.7) (11.0) (13.8)

Addition (1.4) (5.2) (6.6)

Use 1.1 3.1 4.1

Translation differences 0.1 - 0.1


Net carrying amounts as at 31.12.2019 65.3 283.3 348.6


Disposal from scope of consolidation (16.1) (21.6) (37.6)

Change in stock (45.3) 81.3 35.9

Translation differences 0.3 (2.0) (1.7)



Addition (0.7) (10.6) (11.4)

Use 0.6 1.9 2.5

Disposal from scope of consolidation 0.8 2.7 3.5

Translation differences - - -



Adjustments to inventory mainly relate to products rejected in quality control, products presenting a risk of expiry or those with low rotation.



1 6 P R O V I S I O N S

Provisions are recorded when Vifor Pharma Group has a present legal or constructive obligation towards a third party as a result of a past event, when the amount of the obligation can be reliably estimated and an outflow of economic resources is probable.


1 January 5.3 2.0

Addition 6.6 4.0

Use (1.2) (0.6)

Disposal from scope of consolidation (3.0) -

Translation differences - (0.1)

31 December 7.7 5.3

› Current provisions 7.3 4.9

› Non-current provisions 0.4 0.4

Provisions are recognized for the estimated cost on damage, liabilities related to sureties, customer complaints, litigation risks, restructuring costs and ongoing legal proceedings. A separate asset is recognized if some or all of the expenditure required to settle a provision is virtually certain to be reimbursed by a third party.

1 7 L E A S E S

The Group mainly leases office space and vehicles. Leases are recognized as a right-of-use asset and a correspond-ing lease liability at the date at which the leased asset is available for use. The right-of-use asset is depreciated over the shorter of the assets useful life and the lease term on a straightline basis.

Key judgments and estimates: in determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the lease is reasonably certain to be extended. Potential future cash outflows of CHF 35.7 million (2019: CHF 38.3 million) have not been included in the lease liabilities because it is not reasonably certain that the leases will be extended.

The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the lessee. Assets and liabilities arising from a lease are initially mea-sured on a present value basis. Lease liabilities include the net present value of the following lease payments: – fixed payments (including in-substance fixed payments), less any lease incentives receivable – variable lease payments that are based on an index or a rate – the exercise price of a purchase option if the lessee is reasonably certain to exercise that option

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following: – the amount of the initial measurement of the lease liabilities – any lease payments made at or before the commencement date less any lease incentives received


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The Group has elected not to separate lease and non-lease (service) components for leases of vehicles.

Payments associated with certain short-term leases and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Leases of low-value assets comprise mainly IT-equipment and small items of office furniture.

Lease liabilities

in million CHF Lease liabilities

Carrying amounts as at 01.01.2019 79.1

Addition 14.5

Lease payments (18.0)

Unwinding of discount 1.9

Translation differences (0.7)


Current lease liabilities 16.8

Non-current lease liabilities 59.9


in million CHF Lease liabilities


Addition 16.5

Lease payments (22.7)

Unwinding of discount 1.8

Translation differences (2.3)

Disposal from scope of consolidation (0.1)


Current lease liabilities 14.1

Non-current lease liabilities 55.8


The maturity profile of the lease liabilities is disclosed in note 18.2 Capital and liquidity management.



Right-of-use assets

in million CHF Operating buildings Vehicles Total


Addition 2.4 12.2 14.6

Depreciation (10.4) (6.3) (16.7)

Depreciation from discontinued operations - - -



Cost 88.6 23.5 112.1

Accumulated depreciation (33.9) (9.6) (43.4)


in million CHF Operating buildings Vehicles Total


Addition 10.8 3.4 14.3

Depreciation (11.0) (7.6) (18.6)

Depreciation from discontinued operations - (0.1) (0.1)


Disposal from scope of consolidation - (0.1) (0.1)


Cost 91.1 20.4 111.5

Accumulated depreciation (38.4) (11.1) (49.5)



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Capital and financial risks

The Group is exposed to various market and financial risks. This section outlines these key risks and how they are managed by the Treasury department in line with the hedging policy approved by the Board of Directors, as well as internal guidelines on cash and liability management. It is Vifor Pharma Group’s policy not to enter into any speculative financial arrangements and to match maturities in hedging relationships. Together, the risk management and monitoring measures described below are designed to limit negative impact on the financial statements.

1 8 R I S K M A N A G E M E N T

18.1 Credit riskVifor Pharma Group is exposed to credit risk from its financial assets, primarily cash and cash equivalents and receivables. Other financial assets include loans and certain derivative financial instruments. Credit risks arise when a customer or a third party fails to meet its contractual obligations and causes Vifor Pharma Group a financial loss. Credit risks are minimized and monitored by restricting business relations to known, reliable partners. All derivative financial instruments, money market investments and current account deposits are placed with financial institutions whose credit ratings are usually at least investment grade and are contained within strict predetermined limits. Given the very high standards and creditworthiness applied to the commercial and financial partners, the default risks to which Vifor Pharma Group are exposed are estimated to be limited.

Corporate policy ensures that credit checks are performed for customers who are supplied on credit. Financial assets are subject to active risk management procedures to identify concentrations of credit risks. They are continu-ally monitored and credit risks are reviewed in the process of reporting to management. Necessary allowances are made for expected credit losses (ECLs) in accordance with Group accounting policy on the measurement of outstanding receivables, as detailed in note 19 (i).

Financial assets subject to credit risk



Derivative financial instruments 3.9 0.3

Trade and other receivables 487.7 471.9

Loans and other financial assets 40.4 0.7

Total 1,262.0 1,017.8

Trade receivables past due are analyzed on an ongoing basis and written off when there is no reasonable expecta-tion of recovery.



18.2 Capital and liquidity management The objective of capital management is to ensure the continuity of operations, increase enterprise value on a sustainable basis, provide an adequate return to investors and provide the financial resources to enable invest-ments in areas that deliver future benefits for patients and further returns to investors.

To ensure that Vifor Pharma Group has sufficient cash to meet its payment obligations on time, while maintaining the flexibility to take advantage of market opportunities and optimum investment conditions, liquidity is monitored and managed centrally. The Treasury department is responsible for raising current and non-current loans as well as for decisions on investments. Vifor Pharma Group’s investment grade credit ratings provide access to debt funding at beneficial terms.

The Treasury department monitors the cash flows using rolling liquidity planning. This takes into account the maturities of the financial instruments as well as the cash flows from operating, investing and financing activities. In this way, Vifor Pharma Group ensures that its liquidity position considers its requirements at all times.

A reconciliation of the net debt position is shown in the table below.

in million CHF Financial liabilitiesLease

liabilities

Cash and cash

equivalentsNet asset (+) Net debt (–)

Net debt as at 31.12.2018 (608.5) - 400.3 (208.2)

Cash flows 36.4 18.0 153.9 208.2

Foreign exchange adjustments 0.6 0.7 (9.3) (8.0)

Other non-cash movements 4.1 (95.4) - (91.3)

Net debt as at 31.12.2019 (567.5) (76.7) 544.9 (99.3)

excluding non-interest bearing financial liabilities (539.2) - 544.9 5.7

Net debt as at 31.12.2019 (567.5) (76.7) 544.9 (99.3)

Cash flows 0.9 22.7 207.8 231.5

Foreign exchange adjustments 1.2 2.3 (22.7) (19.2)

Other non-cash movements 3.7 (18.2) - (14.5)

Net debt as at 31.12.2020 (561.7) (69.9) 730.0 98.4

excluding non-interest bearing financial liabilities and lease liabilities (539.5) - 730.0 190.6

As at the reporting date, there were no drawn amounts on the syndicated credit facility of CHF 300.0 million the Group entered into in June 2017. The loan agreement contains standard covenants. As at the reporting date, the Group was in compliance with all covenants.


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Maturity profile of financial liabilities and derivative financial instruments 2020

in million CHF

Carrying amount

Total undiscounted

cash flowsup to

12 months1 to 5 years

Maturities more than

5 years

Trade and other payables 162.1 162.1 162.1 - -

Other current financial liabilities 8.8 8.8 8.8 - -

Lease liabilities 69.9 74.8 15.3 45.8 13.7

Bond 464.5 472.0 3.5 468.5 -

Other financial liabilities 88.0 89.3 9.5 79.9 -

Interest rate swap (net position) 0.3 0.8 (0.1) 0.9 -

› cash inflow (1.7) (1.0) (0.7) -

› cash outflow 2.6 0.9 1.6 -

Foreign exchange forwards (net position) (3.8) (3.8) (3.8) - -

› cash inflow (105.2) (105.2) - -

› cash outflow 101.5 101.5 - -

Total 789.8 804.1 195.4 595.1 13.7

Maturity profile of financial liabilities and derivative financial instruments 2019

in million CHFCarrying

amount

Total undiscounted

cash flowsup to

12 months1 to 5 years

Maturities more than

5 years

Trade and other payables 107.9 107.9 107.9 - -

Lease liabilities 76.7 82.5 18.0 48.7 15.8

Bond 464.2 475.5 3.5 472.0 -

Other financial liabilities 102.0 105.0 0.4 104.6 -

Interest rate swap (net position) 0.4 0.4 (0.1) 0.5 -

› cash inflow (1.6) (0.5) (1.1) -

› cash outflow 2.0 0.4 1.6 -

Foreign exchange forwards (net position) 0.6 0.6 0.8 (0.2) -

› cash inflow (189.7) (187.9) (1.8) -

› cash outflow 190.3 188.7 1.6 -

Total 751.8 771.8 130.5 625.5 15.8

The maturity analysis presented above presents contractually agreed undiscounted cash flows including interest. Wherever the contractually agreed payment amount is liable to change before maturity as a result of variable interest rates, the payment amounts based on the relevant interest rates on the reporting date are disclosed.



18.3 Interest rate riskInterest rate risks arise from changes in interest rates that may have a negative impact on Vifor Pharma Group’s financial position and results. Fluctuations in interest rates lead to changes in interest income and interest expense on floating-rate assets and liabilities and thus affect the financial result. The financial assets and liabilities subject to interest rate risk are almost exclusively floating-rate current bank deposits, debts and loans. Vifor Pharma Group does not have any fixed-rate financial liabilities classified as fair value through profit or loss. As such, changes in interest rates have a limited effect on profit or loss.

Vifor Pharma Group manages the risk of changes in interest rates by modifying the ratio of fixed to floating-rate liabilities and through interest rate swaps. Interest rate risk is managed centrally in order to limit the effects of interest rate fluctuations on the financial result. The Treasury department is responsible for operational risk man-agement in connection with interest rates. The risks are monitored and management is periodically informed of the current situation.

Had the market rate been 50 basis points higher or lower at the reporting date, the consolidated profit before income taxes would have been CHF 1.0 million higher or CHF 1.3 million lower (2019: CHF 0.7 million higher or CHF 0.7 million lower). OCI would remain unchanged (2019: unchanged).

18.4 Currency (market) riskDerivatives, namely currency forwards, are selectively used to hedge the risk of fluctuation in exchange rates. The table below shows the unhedged net financial assets and net financial liabilities per currency pair as well as the sensitivity per currency pair to changes in exchange rates for monetary financial assets and monetary financial liabilities. The sensitivity analysis is based on assumptions of reasonable changes in exchange rates.

Exchange rate risks of monetary financial instruments and sensitivity analysis

2020 2019

in million CHFNet

exposure SensitivityEffect on

profit or lossNet

exposure SensitivityEffect on

profit or loss

USD/CHF 349.38% 27.9

514.46% 30.9

(8%) (27.9) (6%) (30.9)

EUR/CHF 7.54% 0.3

60.84% 2.4

(4%) (0.3) (4%) (2.4)


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18.5 Other market riskOther market risks include changes in share prices and the general economic environment. Non-current assets comprise securities (strategic investments) which are publicly traded as well as investments in venture funds which are not publicly traded. The value of the publicly traded securities depends on the share price quoted on the corresponding stock exchange. The value of the venture funds depends on the net asset value of the underlying investments and not directly on a share index.

Potential changes in fair value are assessed on the stock markets or independently of the stock markets and separately for each fund based on the earnings power and prospects of the respective investment. A change in value of +/–15% of the equity securities and investments in venture funds would have had a positive or negative effect of CHF 84.7 million on OCI and CHF 10.0 million on profit before income taxes (EBT), respectively (2019: CHF 67.5 million on OCI and CHF 9.0 million on EBT).

1 9 F I N A N C I A L I N S T R U M E N T S

Financial assets include cash and cash equivalents, trade and other receivables, loans, securities (strategic invest-ments and venture funds), a non-current earn-out receivable obtained as part of the OM Pharma sale consideration, and certain derivative financial instruments. Cash and cash equivalents include cash, sight deposits at financial institutions and time deposits with an original term of three months or less. Cash and cash equivalents are mea-sured at nominal value.

On 30 September 2020 and as part of the received non-cash purchase consideration from the sale of OM Pharma, Vifor Pharma Group granted a vendor loan of CHF 35.0 million to OM Pharma. The loan carries a non-cash interest of 3% and has a term of seven years, subject to certain conditions.

Financial liabilities include the bond issued in 2018, advances on current bank accounts, trade payables, loans, certain derivative financial instruments, lease liabilities, a contingent consideration liability from a past business combination, and may include deferred milestone payments for the acquisition of intangible assets. Refer to the accounting policy for the initial recognition and measurement of lease liabilities in note 17 as this is not in the scope of IFRS 9.

Carrying amounts of financial instruments 2020

in million CHF

Financial assets at fair

value through profit or loss

Financial assets at

amortized cost

Equity securities at

fair value through OCI

Financial liabil-ities at fair


Financial liabilities at

amortized cost Total

Cash and cash equivalents - 730.0 - - - 730.0

Current financial assets 1 8.3 - - - - 8.3

Trade and other receivables - 487.7 - - - 487.7

Non-current financial assets 116.9 36.0 564.6 - - 717.4

Current financial liabilities 1 - - - (0.1) (23.0) (23.0)

Trade and other payables - - - - (162.1) (162.1)

Non-current financial liabilities 1 - - - (9.4) (599.2) (608.6)

Total 125.2 1,253.7 564.6 (9.5) (784.3)

1 Includes derivatives designated in hedging relationships, initially measured through OCI (CHF 3.9 million in current financial assets, CHF -0.1 million in current financial liabilities and CHF -0.3 million in non-current financial liabilities).



Carrying amounts of financial instruments 2019

in million CHF



Financial assets at

amortized cost





Financial liabilities at

amortized cost Total

Cash and cash equivalents - 544.9 - - - 544.9

Current financial assets 1 0.3 - - - - 0.3

Trade and other receivables - 471.9 - - - 471.9

Non-current financial assets 59.8 0.7 449.9 - - 510.3

Current financial liabilities 1 - - - (0.9) (16.9) (17.8)

Trade and other payables - - - - (107.9) (107.9)

Non-current financial liabilities - - - (12.8) (613.7) (626.5)

Total 60.1 1,017.5 449.9 (13.7) (738.5)

1 Includes derivatives designated in hedging relationships, initially measured through OCI (CHF 0.3 million in current financial assets and CHF -0.9 million in current financial liabilities).

Net gain/(loss) on financial instruments 2020

in million CHF



Financial assets at

amortized cost





Financial liabilities

at amortized cost Total

Income from securities 2.6 - - - - 2.6

Change in fair value 12.4 - - 3.4 - 15.8

Net gain/(loss) on foreign exchange (5.8) (26.3) - 0.1 0.4 (31.6)

Other financial result - 0.2 - - (1.0) (0.7)

Interest income - 2.3 - - - 2.3

Interest expense - - - - (7.7) (7.7)

Expected credit losses and bad debts - (1.3) - - - (1.3)

Net gain/(loss) recognized in profit or loss 9.2 (25.1) - 3.5 (8.2) (20.6)

Net gain/(loss) recognized in OCI 1 11.1 156.7 167.8

1 OCI includes changes in value of hedge transactions (foreign exchange forwards) and the strategic investments (publicly traded securities).

Net gain/(loss) on financial instruments 2019

in million CHF



Financial assets at

amortized cost






at amortized cost

Restated* Total

Income from securities 2.8 - - - - 2.8

Change in fair value 4.8 - - (0.2) - 4.6

Net gain/(loss) on foreign exchange (1.2) (12.7) - 0.4 0.3 (13.2)

Other financial result 0.2 0.5 - - (0.2) 0.4

Interest income - 2.6 - - - 2.6

Interest expense - - - - (9.0) (9.0)

Expected credit losses and bad debts - (8.3) - - - (8.3)

Net gain/(loss) recognized in profit or loss 6.6 (17.8) - 0.2 (9.0) (20.0)

Net gain/(loss) recognized in OCI 1 301.4 (5.9) 295.5

1 OCI includes changes in value of hedge transactions (foreign exchange forwards) and the strategic investments (publicly traded securities)* For details on the restatement relating to the disposal of OM Pharma refer to note 8.


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Measurement of financial assets and liabilitiesFinancial assets and liabilities are initially recognized at fair value including transaction costs, with the exception of financial assets and liabilities measured at fair value through profit or loss, for which transaction costs are recog-nized directly in profit or loss. Financial assets are generally derecognized when the contractual rights to the cash flows expire, and liabilities when they have been settled.

For subsequent measurement Vifor Pharma Group distinguishes between the following types of financial assets and liabilities:

(i) Financial assets at amortized costThis category primarily consists of non-derivative financial assets held to collect contractual cash flows represent-ing principal and interest only. They include, but are not limited to, trade receivables and loans to third parties. These types of financial instruments are recognized in the statement of financial position at amortized cost using the effective interest rate method less accumulated impairment measured using the expected credit loss (ECL) model. Trade receivables are initially measured based on the transaction price determined in accordance with the revenue standard (IFRS 15). Uncollectible loans and receivables are only derecognized if a certificate of loss has been issued.

To measure the ECL using the IFRS 9 simplified approach, trade receivables are assessed both on an individual basis and for groups with comparable credit risk profiles. The ECL rates are based on historical credit losses experienced and are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. On that basis, the bad debt allowance for trade receivables is determined.

(ii) Financial assets and liabilities at fair value through profit or lossThese assets and liabilities are measured as such if they are acquired or incurred principally for the purpose of selling or repurchasing it in the near term, or if the investments do not meet the definition of equity instruments. These assets consist of derivative financial instruments, investment fund units (venture funds), a convertible note and the non-current earn-out receivable obtained as part of the OM Pharma sale consideration. The liabilities consist of derivative financial instruments and a contingent consideration liability from a past business combination.

The resulting realized and unrealized changes in fair value are recognized directly in profit or loss (financial result) for the relevant reporting period.

Derivative financial instruments are initially and subsequently measured at fair value. Depending on their maturity, derivative financial instruments with a positive or negative fair value are either classified within current or non-cur-rent financial assets or liabilities.

Derivative financial instruments 2020

Expiry date of contract values

in million CHFPositive

fair valueNegative fair value

Contract value to 12 months 1 to 5 years

Foreign exchange forwards 3.9 0.1 101.3 101.3 -

Interest rate swap - 0.3 175.0 - 175.0

Derivative financial instruments 3.9 0.4 276.3 101.3 175.0

In order to manage the ratio of fixed and floating debt in its portfolio, the Group entered into a fixed-to-floating interest rate swap which has the same interest payment dates as the underlying debt instrument.



Derivative financial instruments 2019

Expiry date of contract values

in million CHFPositive

fair valueNegative fair value

Contract value to 12 months 1 to 5 years

Foreign exchange forwards 0.3 0.9 189.7 187.9 1.8

Interest rate swap - 0.4 75.0 - 75.0

Derivative financial instruments 0.3 1.3 264.7 187.9 76.8

Cash flow hedgingCash flow hedges are hedges against changes in cash flows due to fluctuations in the foreign exchange of a forecasted transaction. Vifor Pharma Group uses hedge accounting for selected transactions if the hedge relation-ship is expected to be highly effective throughout the entire term and the formal documentation requirements are met at inception, i.e., documentation contains the strategy, objectives, identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and details of how the hedging instrument’s effectiveness will be assessed.

The effective portion of changes in the fair value of cash flow hedging instruments is recognized in OCI. If the underlying hedged transaction is no longer expected, the cumulative unrealized gain or loss in OCI is reclassified to profit or loss.

Vifor Pharma Group selectively hedges expected future cash flows in USD and EUR against foreign currency risks by means of foreign exchange forwards. The contract volume amounted to CHF 103.3 million (2019: CHF 157.9 million) as at the reporting date with a (net) positive fair value of CHF 3.9 million (2019: negative fair value of CHF 0.6 million).

(iii) Financial assets at fair value through OCIThese assets consist of equity instruments designated on initial recognition to be measured as such, rather than profit or loss, as the Group considers these investments to be strategic in nature. With this irrevocable election, all fair value changes, excluding dividends that are a return on investment, will be included in OCI. There is no recy-cling of amounts from OCI to profit or loss on derecognition, nor are there impairment requirements when there is a significant or prolonged decline in fair value.

The strategic investments consist of listed shares in ChemoCentryx, Inc. purchased in 2016 and 2018, Akebia Therapeutics, Inc. purchased in 2017, and Cara Therapeutics, Inc. purchased in 2018 and 2020. The fair value of these investments as at the reporting date was CHF 501.0 million (2019: CHF 409.5 million), CHF 8.8 million (2019: CHF 21.9 million) and CHF 54.8 million (2019: CHF 18.4 million), respectively.

(iv) Financial liabilities at amortized costThese liabilities consist of trade and other payables as well as the financial liabilities shown below. They are mea-sured using the effective interest rate method.


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Current Non-current Current Non-current

Bank debts - 75.0 0.1 75.0

Bond - 464.5 - 464.2

Lease liabilities 14.1 53.6 16.8 59.9

Current portion of non-current financial liabilities 8.9 - - -

Derivative financial instruments 0.1 0.3 0.9 0.4

Other financial liabilities - 13.0 - 27.0

Total 23.0 606.4 17.8 626.5

Bank debts: the loan amounts to CHF 75.0 million and matures on 1 July 2024.

Bond: in September 2018, Vifor Pharma Group issued a bond in the amount of CHF 465.0 million. The bond carries a 0.75% fixed coupon with a tenor of four years, maturing on 13 September 2022. The bond is traded on the SIX Swiss Exchange under securities no. 42819427 (ISIN CH0428194275).

Other financial liabilities: consists of a non-current contingent consideration liability from a past business combina-tion and may contain deferred milestone payments for the acquisition of intangible assets. Refer to note 27 for further details.

2 0 F A I R V A L U E M E A S U R E M E N T

With the exception of the bond in non-current financial liabilities, the carrying amounts of financial assets and liabilities approximate their fair values.

2020 2019

in million CHF Carrying amount Fair value Carrying amount Fair value

Bond (Level 1) 464.5 470.0 464.2 473.4

Fair value hierarchyFinancial instruments are measured using the following hierarchies for determining the fair value:Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either

directly (as prices) or indirectly (derived from prices)Level 3: unobservable inputs for the asset or liability

Vifor Pharma Group is invested in venture funds. These funds are structured as closed-ended funds for which the Group has undertaken a defined capital commitment which is called over the investment term. Vifor Pharma Group and the other investors are usually bound to their fund units throughout the entire term; consequently there is no active market for units in these funds, although a transaction cannot be ruled out in principle. The funds themselves are likewise usually invested in venture funds with the same attributes (fund of funds).

Vifor Pharma Group determines the fair values for the venture funds using the net asset values. The net asset values for the funds are based on the net asset values reported to them by the respective investments; net asset values are not usually determined based on publicly available input data, or only to an insignificant extent.

There were no transfers between Level 1 and Level 2 in the financial year, or any transfers into or out of Level 3.



Financial assets measured at fair value


Publicly traded securities Level 1 569.0 449.9

Derivative financial instruments Level 2 3.9 0.3

Convertible note Level 3 4.4 -

Venture funds Level 3 66.9 59.8

Earn-out receivable Level 3 50.0 -

Total 694.2 510.0

Earn-out receivable: as part of the consideration received for the sale of OM Pharma, Vifor Pharma Group received an earn-out related to potential future value gains on 20% of the OM Pharma equity interest. The earn-out will become due as part of a trade sale, IPO or based on a future EBITDA-multiple after a period of seven years (in the year 2028 based on the OM Pharma financial statements of 2027). This consideration is classified as a financial asset and is measured at fair value.

Convertible note: Vifor Pharma Group purchased a convertible note in the amount USD 5.0 million from Angion as part of the worldwide license agreement signed in November 2020. Upon closing of Angion’s initial public offering in February 2021, the note was converted into 433,143 shares of common stock, as agreed under the terms of the license agreement. For more information on the subsequent event, refer to note 30.

Sensitivity analysis of unobservable inputs used in the fair value measurement (net present value) of the earn-out consideration:

2020

in million CHF Sensitivity Effect on fair value

Expected future EBITDA5.0% 6.0

(5.0%) (6.1)

Discount rate1.0% (3.3)

(1.0%) 3.5

The sensitivity analysis on the expected future EBITDA is calculated based on the internal Vifor Pharma Group average EBITDA forecast of OM Pharma for the years 2026 and 2027. There is no significant inter-relationship between these two inputs that materially affects the fair value of the earn-out consideration.


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Fair value of venture funds


1 January 59.8 55.6

Investments 0.8 0.6

Disposal (0.2) (0.2)

Gain recognized in profit or loss 12.3 5.1


31 December 66.9 59.8

Financial liabilities measured at fair value


Derivative financial instruments Level 2 0.4 1.3

Contingent consideration liabilities from business combinations Level 3 9.1 12.4

Total 9.5 13.7

For the contingent consideration that qualifies as a financial instrument, it is remeasured to fair value and any difference is recognized in other income or expenses. The fair value is measured based on the expected cash flows, the probability of occurrence and the current market interest rates.

Fair value of contingent consideration liability


1 January 12.4 12.2

Unrealized (gains) and losses included in profit or loss (3.2) 0.8


Payments (cash out) - (0.2)

31 December 9.1 12.4

As part of the 2015 acquisition of FMC Nephrologica Deutschland, the Group continues to record a contingent consideration liability. The liability falls due in the years 2021 to 2024, if certain earnings targets are achieved.



Employee remuneration

This section provides insight into Vifor Pharma Group’s employee remuneration arrangements and should be read in conjunction with the remuneration chapter as included in Vifor Pharma Group’s 2020 Annual Report.

2 1 P E R S O N N E L C O S T S


Restated*

Salaries and wages 350.2 345.4

Social security costs and pension expenses 70.0 41.5

Other personnel costs 46.1 62.6

Personnel costs 466.3 449.5

* Figures for 2019 represent the continuing operations of the Group.

Personnel costs include an expense for defined benefit plans of CHF 23.8 million (2019: income of CHF 8.0 million) and an expense for share-based payments of CHF 20.6 million (2019: CHF 22.2 million), refer to notes 23 and 24.

2 2 K E Y M A N A G E M E N T P E R S O N N E L

Remuneration of the Board of Directors and the Executive Committee


Salaries and wages 9.2 8.1

Social security costs and pension expenses 1.9 1.8

Share-based payments 7.4 6.9

Total 18.5 16.8

2 3 S H A R E - B A S E D P A Y M E N T S

Vifor Pharma Group has both equity- and cash-settled share-based payment plans. The fair value of the employee services received in exchange for the grant of shares, or cash, is recognized as an expense. The total amount to be expensed is determined for equity-settled plans by reference to the fair value of the equity instruments on the grant date and for cash-settled plans by reference to the fair value of the equity instruments at each reporting date until settlement. When measuring the grant date fair value only those conditions which are linked to the price of Vifor Pharma Group’s shares (market conditions) are taken into account, along with any non-vesting conditions.

The expense is recognized over the vesting period as part of personnel expense. For equity-settled plans an increase in shareholders’ equity is recorded for the best estimate of the number of shares Vifor Pharma Group expects to vest, while for cash-settled plans a liability is recognized to the extent the cash-settled awards are expected to vest. Changes in those estimates are immediately recognized in profit or loss.

23.1 Share plan for the former Executive ChairmanFor his service rendered from 1 January 2017 to 31 May 2020 Etienne Jornod was remunerated exclusively in Vifor Pharma Group shares, all blocked until 2020. The remuneration was a fixed amount (2020 – pro rata temporis: CHF 1.53 million, 2019: CHF 3.67 million) as approved at the Annual General Meeting (AGM). The number of shares granted was determined based on the average share price in January and February of the preceding year (2019:


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123.05, 2018: 134.11) resulting in a payout of 12,427 shares for 2020 (2019: 27,366). The fair value of the shares at the AGM date is only relevant for the computation of the related share-based payment expense. The fair value on the last measurement date (i.e., the AGM date in 2019) amounted to CHF 133.3.

23.2 Remuneration for members of the Board of DirectorsThe members of the Board of Directors receive annual remuneration. The remuneration is a fixed amount which the members can choose to receive in full (100%) or in part (50%) as registered shares of Vifor Pharma Group. The amount settled in shares is paid out with a discount of 25%.

The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%.

23.3 Share plan for members of senior managementAccording to the participation plan, members of senior management receive their performance-related bonus partly in cash and partly in registered shares of Vifor Pharma Group. The proportion of cash to shares is set out in the regula-tions and is based on the salary grade of the recipient. In addition, all members of senior management are obliged to hold a number of shares of the Group. The amount to be settled in shares is paid out with a discount of 25%.

The fair value of the shares granted is equivalent to the amount to be paid out in shares plus the discount of 25%.

23.4 Long-term incentive (LTI) plansMembers of the Executive Committee and certain members of senior management participate in LTI plans for the allocation of performance units. The number of these performance units is based on the extent to which defined long-term performance targets are attained. The performance objectives are based on ROIC. An LTI plan always runs for a vesting period of three years. At the beginning of each financial year, a new LTI plan with a new vesting period of three years is issued. At the start of the vesting period a defined number of performance units are individually allocated. Different vesting conditions apply for beneficiaries eligible after 1 January 2019. Beneficia-ries eligible before 1 January 2019 who leave the Group before the end of the vesting period are entitled to a pro rata allocation of performance units calculated based on the months of service completed during the three-year vesting period. LTI plans for beneficiaries becoming eligible after 1 January 2019 only vest after a three-year service period and no allocations are made to beneficiaries leaving the Group before the vesting date has been reached.

The number of performance units allocated is dependent on the defined percentage of the annual salary incorpo-rated into the LTI plan as well as the share price at the grant date. At the end of the vesting period, performance units are settled by delivering registered shares of Vifor Pharma Group. 60,223 performance units (2019: 43,250 performance units) were granted to beneficiaries at a fair value of CHF 161.60 (2019: CHF 96.35) at the beginning of the reporting period for the 2020–2022 LTI plan.

23.5 RSU plan RelypsaTo stay in line with US market practice, a Restricted Stock Unit (RSU) Programme was implemented for Relypsa employees. The Relypsa RSU Plan was introduced in 2018 and has a vesting period of three years. The RSUs are equally allocated to three different service periods of one year, two and three years, and the employees have the choice to settle the transaction in cash or with the issue of equity instruments. At the beginning of each financial year, a new Relypsa RSU Plan with a new vesting period of three years is issued. Participants have a non-forfeitable right to a portion of awards only upon satisfaction of the vesting conditions. These conditions include continued service on the applicable vesting date (service condition). This RSU plan is considered a cash-settled share-based payment plan.

At the end of the vesting period, performance units are either settled in cash or by delivering registered shares of Vifor Pharma Group. 43,940 RSUs (2019: 70,304 RSUs) were granted to beneficiaries in 2020.

At the reporting date, the carrying amount of the liability arising from this cash-settled share-based payment plan amounts to CHF 6.3 million (2019: CHF 7.2 million) and is included in accrued expenses.



23.6 Employee share planEmployees of Vifor Pharma Group are entitled to buy a fixed number of registered shares of Vifor Pharma Group at a preferential price. Employees who, at the time of the purchase offer, are not under notice and have an employ-ment contract of unlimited duration are entitled to acquire shares. The purchase price for the registered shares is calculated at the time of the purchase offer based on the average price for the previous month less a 30% discount.

In the reporting period, employees purchased 40,942 registered shares of Vifor Pharma Group (2019: 40,058 registered shares) at a preferential price of CHF 97.85 (2019: CHF 101.65), representing a price discount of CHF 41.94 (2019: CHF 43.56) per registered share.

Share-based payment expense


Restated*

Share plan for the Executive Chairman 1.7 4.1

Remuneration for members of the Board of Directors 1.4 0.8

Share plan for members of senior management 5.0 4.6

Long-term incentive plan (LTI) 7.9 4.3

Employee share plan 1.7 1.6

Relypsa RSU plan 2.9 6.7

Total 20.6 22.1

* Figures for 2019 represent the continuing operations of the Group.

The expenses related to the cash-settled share-based plans amount to CHF 2.9 million in 2020 (2019: CHF 6.7 million) and relate entirely to the Relypsa RSU plan. The remaining expense relates to the Group’s equity-settled plans.

2 4 E M P L O Y E E B E N E F I T P L A N S

24.1 Defined benefit planThe employees of Vifor Pharma Group participate in the employee benefits plans provided by the Group. Vifor Pharma Group has both defined contribution and a fully funded defined benefit plan based on local conditions and legal requirements. Plans are legally separate and are managed separately from Vifor Pharma Group’s assets by an independent pension fund.

All employees and beneficiaries of the Vifor Pharma Group in Switzerland are insured with the Vifor Pharma Group Pension Fund. The pension plan covers the risks of the economic consequences of old age, disability and death in accordance with the Swiss Federal Occupational Retirement, Survivors and Disability Pension Plans Act (BVG/LPP). The benefits target is 70% of the most recent base salary as at statutory retirement age for employees with a full insurance history of 35 years. The pension plan is structured in the legal form of a foundation. All actuarial risks are borne by the foundation and regularly assessed by the Board of Trustees (consisting of employee and employer representatives) based on an annual actuarial appraisal prepared in accordance with BVG/LPP. The calculations made in these appraisals do not apply the projected unit credit method required by IFRS. If the calculations made in accordance with the provisions of BGV/LPP reveal a funded status of less than 100%, suitable restructuring measures would be introduced.

The most recent actuarial valuation was prepared as at 31 December 2020. The underlying assumptions reflect the economic circumstances. The pension funds’ assets are invested in accordance with local investment guidelines. Vifor Pharma Group pays its contributions to the pension funds in accordance with the regulations defined by the funds. The final funded status pursuant to BVG/LPP is not available until the second quarter of the subsequent year.


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The projected funded status as at 31 December 2020 (unaudited) is 127.0% (2019: 128.6%, audited).

Key judgments and estimates: Vifor Pharma Group’s defined benefit obligation (DBO) is assessed annually by an independent pension actuary using the projected unit credit method. This method considers employees’ service in the periods prior to the reporting date and their future expected salary development. In addition, actuaries make use of statistical data such as employee turnover and mortality to calculate the DBO. These valuations involve making assumptions about the discount rate, future salary and pension developments, mortality and future employee turnover. As detailed in note 24.2, mortality assumptions are based on BVG 2015 applying the CMI model. Vifor Pharma Group considers the discount rate to be the key assumption.

Any surplus (deficit) in the funded defined benefit plan – when the fair value of plan assets exceeds (is less than) the present value of the DBO – is recorded as a net defined benefit asset (liability). Vifor Pharma Group only recognizes a net defined benefit asset if it has the ability to use the surplus to generate future economic benefits that will be available to the entity in the form of a reduction in future contributions. If Vifor Pharma Group does not have the ability to use the surplus or it will not generate any future economic benefit, the Group discloses the effect of this asset ceiling in the notes.

The components of defined benefit cost are service cost, net interest on the net defined benefit asset (liability) and remeasurement of the net defined benefit asset (liability). Service cost is a component of personnel costs and comprises current service cost, past service cost (including gains and losses from plan amendments) and gains and losses from plan settlements. Net interest is determined by multiplying the net defined benefit asset (or liability) by the discount rate at the beginning of the reporting period. Net interest is included in the financial result.

Actuarial gains (losses) result from changes in actuarial assumptions and differences between actuarial assump-tions and actual outcomes. Actuarial gains (losses) resulting from remeasuring the defined benefit plans are recognized immediately in comprehensive income as remeasurements of the net defined benefit asset (liability). This includes any differences in the return on plan assets (excluding interest, based on the discount rate) and, if applicable, the impact of a change in the asset ceiling. Remeasurement of the net defined benefit asset (liability) are never reclassified through profit or loss.

24.2 Long-service awardsVifor Pharma Group rewards employees for long service with jubilee benefits. These long-term benefits to employ-ees are also measured using the projected unit credit method and included in employee benefit liabilities. These obligations are unfunded. Changes in obligations are recorded as personnel costs and interest expense as part of the financial expense, in line with the defined benefit plans.



Swiss defined benefit plan and long-service awards

2020 2019

in million CHFDefined

benefit planLong-service

awards TotalDefined


awards Total

Plan assets at fair value 538.8 - 538.8 547.1 - 547.1

Present value of defined benefit obligation (499.6) (10.4) (510.0) (505.4) (10.5) (515.9)

Net carrying amount 39.2 (10.4) 28.8 41.7 (10.5) 31.2

› of which recognized in assets 39.2 - 39.2 41.7 - 41.7

› of which recognized in liabilities - (10.4) (10.4) - (10.5) (10.5)

Change in the present value of the defined benefit obligation

in million CHF 2020 2019Defined


awards TotalDefined


awards Total

1 January (505.4) (10.5) (515.9) (445.4) (9.0) (454.4)

Current service costs (25.9) (2.1) (28.0) (16.5) (1.2) (17.8)

Past service costs - - - 27.2 - 27.2

Interest cost (0.7) (0.0) (0.7) (3.7) (0.1) (3.8)

Actuarial loss (32.5) (0.8) (33.3) (64.6) (0.9) (65.4)

Employee contributions (13.7) - (13.7) (9.2) - (9.2)

Benefits paid 12.2 0.6 12.8 6.8 0.6 7.4

Disposal from scope of consolidation 66.3 2.6 68.8 - - -

31 December (499.6) (10.4) (510.0) (505.4) (10.5) (515.9)

Change in fair value of plan asset


1 January 547.1 450.3

Interest income 0.8 3.9

Remeasurement gains 27.9 71.5

Employee contributions 13.7 9.2

Employer contributions 21.4 19.2

Benefits paid (12.2) (6.8)

Administration cost (0.5) (0.3)

Disposal from scope of consolidation (59.3) -

31 December 538.8 547.1


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Net defined benefit cost


Current service cost 25.9 16.5

Net interest (0.1) (0.1)

Past service cost - (27.2)

Administration cost 0.5 0.3

Net defined benefit expense (income) 26.3 (10.5)

› thereof discontinued operations 3.0 (2.5)

Remeasurement of net defined benefit liability/asset


Actuarial gain/(loss)

› Changes in financial assumptions (6.0) (62.2)

› Experience adjustments (26.5) (2.3)

Remeasurement of plan assets 27.9 71.5

Change in asset ceiling - 4.9

Remeasurements of net defined benefit liability/asset recognized in OCI (4.5) 11.9

› thereof discontinued operations (2.2) (6.9)

In 2019, the Group modified the pension plan to adapt to the changed environment and to be in line with the new market conditions. The Board of Trustees approved a gradual reduction in the conversion rate over a 5-year transition period starting from 1 January 2021. The adjusted conversion rate had a positive impact on past service cost in the amount of CHF 27.2 million in 2019, of which CHF 4.5 million was allocated to the discontinued opera-tions.



Investment structure of plan assets


Cash and cash equivalents 12.5 2.3% 27.2 5.0%

Debt instruments 96.7 18.0% 102.0 18.6%

Equity instruments 265.2 49.2% 254.9 46.6%

Real estate 133.4 24.8% 128.8 23.5%

Other investments 31.0 5.7% 34.2 6.2%

Fair value of plan assets 538.8 100.0% 547.1 100.0%

Current return on investments 4.2% 15.5%

The Board of Trustees is responsible for investing the plan assets. It defines the investment strategy and determines the long-term target asset structure taking account of the legal requirements, objectives set, the benefit obligations and the foundations’ risk capacity. The Board of Trustees delegates implementation of the investment policy in accordance with the investment strategy to an investment committee, which also comprises of trustees from the Board of Trustees. Plan assets are managed by external asset managers in line with the investment strategy.

Instrument Explanation

Cash and cash equivalents Deposited with financial institutions with a minimum A credit rating.

Debt instrumentsQuoted prices in active markets. Invested in instruments with a minimum BBB credit rating.

Equity instruments Investments in equity funds and direct investments.

Real estateBoth residential and commercial properties. If real estate is held directly, it is valued by an independent expert.

Other investments

Hedge funds, insurance-linked securities (ILS), private equity, infrastructure, mixed investments and receivables. Investments in hedge funds are classified as alternative investments. Quoted prices in an active market are not available for hedge funds investments.

The pension funds manage the assets of 1,195 active members of Vifor Pharma Group (2019: 1,375) and 236 pensioners (2019: 224).

Basis for measurement

Weighted average in % 2020 2019

Discount rate 0.10 0.17

Salary development 1.00 1.00

Mortality (mortality tables)BVG 2015 GT — CMI

modelBVG 2015 GT — CMI

model

Turnover BVG 2015 BVG 2015


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24.3 Sensitivity analysisThe discount rate was identified as the key actuarial assumption. Potential changes in the discount rate would affect the defined benefit obligation as at 31 December 2020, as follows:

in million CHF 2020 2019Basis for

calculation DBOBasis for

calculation DBO

Discount rate

+0.25% 488.8 +0.25% 495.0

–0.25% 533.2 –0.25% 538.4

Cash outflows for pension payments and other obligations can be budgeted reliably. The pension obligations have an average duration of 17.5 years (2019: 17.2 years). The benefit plans collect regular contribution payments. The employer contributions to the pension funds are estimated at CHF 19.8 million for 2021. The investment strategy requires the safeguarding of liquidity at all times.



Other disclosures

This section provides information on other items which require disclosure to comply with International Financial Reporting Standards (IFRS) and Swiss law, however, are not considered critical in understanding the financial performance or position of the Group

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. Shares in Vifor Pharma Group are traded on the SIX Swiss Exchange under securities no. 036474934 (ISIN CH0364749348).

2 5 N E W A N D R E V I S E D A C C O U N T I N G S T A N D A R D S

As at the reporting date, various new and amended standards have been issued with effective dates in the financial year 2020 or later. These standards and interpretations have not been early adopted and are not expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

2 6 P R E S E N T A T I O N C U R R E N C Y A N D T R A N S L A T I O N O F F O R E I G N C U R R E N C I E S

The functional currency of the Group companies is the currency of the primary economic environment in which they operate. The functional currency of the parent entity, Vifor Pharma Ltd., is CHF. Transactions in foreign currencies are translated at the exchange rate effective on the transaction date. Monetary items are retranslated into the functional currency using exchange rates as at the reporting date. The resulting exchange gains and losses are recognized in profit or loss.

Assets and liabilities of foreign subsidiaries are translated into CHF using year-end exchange rates. Income and expenses and cash flows are translated using the average exchange rate for the year. Exchange differences arising from net investments in foreign operations are recognized directly in comprehensive income and reported sepa-rately as foreign currency translation reserves.

Translation differences on equity-like loans that form part of the net investment in a foreign operation are recog-nized in comprehensive income, provided that repayment of these loans is neither planned nor likely to occur in the foreseeable future.

Exchange ratesThe table below shows the exchange rates against the CHF of the main currencies of relevance for the consolidated financial statements.

Exchange rates against CHF

Year-end rate 2020

Year-end rate 2019

Average rate 2020

Average rate 2019

1 USD 0.88 0.97 0.94 1.00

1 EUR 1.08 1.09 1.07 1.12


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2 7 C O M M I T M E N T S A N D C O N T I N G E N T L I A B I L I T I E S

27.1 CommitmentsVifor Pharma Group entered into various obligations regarding the purchase of services, goods and equipment as part of its ordinary business operations.

As disclosed in note 3, Vifor Pharma Group has entered into strategic arrangements with various companies in order to gain access to potential new products. Potential future payments may become due based on the achieve-ment of certain milestones as defined in the collaboration agreements. The maximum amount of unrecognized potential future commitments for such payments amounts to CHF 3,020.9 million (2019: CHF 1,847.5 million). These amounts are undiscounted and are not risk-adjusted, meaning that they include all such possible payments that can arise assuming all products currently in development are successful and all possible objectives and performance objectives are met.

Prior to the acquisition by Vifor Pharma Group, Relypsa has signed non-cancellable purchase commitments with contract manufacturers or service providers which serve as commercial manufacturers and suppliers of the active pharmaceutical ingredient for Veltassa® and provide manufacturing services in relation to Veltassa®. The purchase commitments as at 31 December 2020 amount to CHF 165.0 million and fall due in the years 2021 to 2026 (2019: CHF 177.6 million).

The Group also has non-cancellable purchase commitments with contract manufacturers for the supply of Mircera®. The purchase commitments as at 31 December 2020 amount to CHF 140.8 million and fall due in the year 2021 (2019: CHF 171.6 million).

Vifor Pharma Group entered into payment obligations for the investments in venture funds measured at fair value through profit or loss up to a maximum of CHF 11.4 million (2019: CHF 13.4 million).

On 9 November 2020, Vifor Pharma Group signed a global license agreement to ANG-3777 from Angion Biomedica Corp (“Angion”). Beside the upfront payment of USD 30.0 million and the purchase of a convertible note in the amount of USD 5.0 million, Vifor Pharma Group committed to invest an additional USD 25.0 million as part of Angion’s initial public offering, which happened in February 2021. For more information on the subsequent event, refer to note 30.

Furthermore, there are guarantees to third parties of CHF 2.0 million (2019: CHF 2.7 million). There were no assets pledged to secure own liabilities in both periods reported.

27.2 Contingent liabilitiesCertain Group companies are involved in administrative proceedings, legal disputes and investigations relating to their business activities. The results of ongoing proceedings cannot be predicted with certainty. Management has established appropriate provisions for any expenses likely to be incurred. These projections, however, are also subject to uncertainty. Vifor Pharma Group does not expect the results of these proceedings to have a significant impact on the consolidated financial statements.



2 8 R E L A T E D P A R T Y T R A N S A C T I O N S

Related parties include the pension fund, members of the Board of Directors of Vifor Pharma Group, members of the Executive Committee and major shareholders, as well as the companies controlled by them. Refer to note 22 for remuneration of the Board of Directors and Executive Committee.

During the reporting period, Vifor Pharma Group acquired no Vifor Pharma Group shares from members of the Board of Directors and the Executive Committee (2019: nil).

2 9 G R O U P C O M P A N I E S

Country Entity CityNominal value (in thousands)

Vifor Pharma Group — 100% equity interest

Switzerland Vifor Ltd. Villars-sur-Glâne CHF 2,250

Vifor (International) Ltd. St. Gallen CHF 2,000

Vifor Pharma Ltd. (public holding company) St. Gallen CHF 650

Vifor Pharma Participations Ltd.1 St. Gallen CHF 1,000

Vifor Pharma Finance Ltd.1 St. Gallen CHF 2,000

Vifor Pharma Management Ltd. Glattbrugg CHF 100

Vifor Pharma Technology Ltd. St. Gallen CHF 100

Vifor Pharma Innovation Ltd. St. Gallen CHF 100

Vifor Pharma Services Ltd Meyrin CHF 100

Aspreva Pharmaceuticals Ltd. St. Gallen CHF 2,700

Cophar Ltd (in liquidation) Villars-sur-Glâne CHF 700

United States Relypsa, Inc.1 Redwood City USD 0.001

Austria Vifor Pharma Österreich GmbH Vienna EUR 100

Belgium Vifor Pharma België NV Antwerp EUR 61

France Vifor France S.A.S. Paris La Défense EUR 50

Germany Vifor Pharma Deutschland GmbH Munich EUR 50

Great Britain Vifor Pharma UK Ltd. Staines-upon-Thames GBP 0.001

Italy Vifor Pharma Italia S.r.l. Rome EUR 10

Netherlands Vifor Pharma Nederland B.V. Breda EUR 18

Portugal OM Pharma, S.A. Amadora-Lisbon EUR 5,000

Romania Vifor Pharma Romania S.R.L Cluj-Napoca RON 258

Spain Vifor Pharma España, S.L. Barcelona EUR 200

Sweden Vifor Pharma Nordiska AB Solna SEK 200

Canada Aspreva International Ltd. Victoria CAD -

Argentina Vifor Pharma America Latina S.A. Buenos Aires ARS 1,310

Australia Vifor Pharma Pty Ltd. Melbourne AUD 0.001

Brazil Vifor Pharma Brasil Ltda. São Paolo BRL 10

Singapore Vifor Pharma Asia Pacific Pte. Ltd. Singapore SGD 100

1 Directly held by Vifor Pharma Ltd.


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Country Entity CityNominal value (in thousands)

Vifor Fresenius Medical Care Renal Pharma (VFMCRP) — 55% equity interest held

Switzerland VFMCRP Ltd.1 St. Gallen CHF 1,000

Vifor Fresenius Medical Care Services Ltd. St. Gallen CHF 100

GermanyFresenius Medical Care Nephrologica Deutschland GmbH Bad Homburg EUR 225

Belgium VFMCRP België NV Antwerp EUR 61

France VFMCRP France S.A.S. Paris La Défense EUR 10

Great Britain VFMCRP UK Ltd. Staines-upon-Thames GBP 1

Italy VFMCRP Italia S.r.l. Milan EUR 10

Netherlands VFMCRP Nederland B.V. Breda EUR 1

Spain VFMCRP España, S.L. Barcelona EUR 3

Other material interests held

China

Vifor Fresenius Kabi (Beijing) Pharmaceutical Consult-ing Co. Ltd. — 55% held by Vifor Pharma Participations Ltd. Beijing USD 550

GermanyNephTera GmbH — 50% held by Vifor (International) Ltd. Hamburg EUR 12.5

1 Directly held by Vifor Pharma Ltd.

3 0 S U B S E Q U E N T E V E N T S

Concurrent to Angion Biomedica Corp's ("Angion") successful initial public offering (IPO) in February 2021, Vifor Pharma Group bought 1,562,500 Angion shares in a private placement at an offering price of USD 16.00 per share for a total consideration of USD 25.0 million. In addition, the convertible note was converted into 433,143 shares of common stock, resulting in a gain on conversion of USD 1.9 million.

No other significant transactions or events occurred between 31 December 2020 and 24 February 2021, the date on which the consolidated financial statements were authorized for publication, that would need to be disclosed.




Phone: +41 58 286 61 11 Fax: +41 58 286 68 18 www.ey.com/ch



Statutory auditor’s report on the audit of the consolidated financial statements

Opinion We have audited the consolidated financial statements of Vifor Pharma Ltd. and its subsidiaries (the Group), which comprise the consolidated statement of income, consolidated statement of comprehensive income, consolidated statement of financial position, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended 31 December 2020, and notes to the consolidated financial statements, including a summary of significant accounting policies. In our opinion, the consolidated financial statements (pages 152 to 203) give a true and fair view of the consolidated financial position of the Group as at 31 December 2020, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS) and comply with Swiss law.

Basis for opinion We conducted our audit in accordance with Swiss law, International Standards on Auditing (ISAs) and Swiss Auditing Standards. Our responsibilities under those provisions and standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the provisions of Swiss law and the re-quirements of the Swiss audit profession, as well as the International Code of Ethics for Pro-fessional Accountants (including International Independence Standards) of the International Ethics Standards Board for Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is provided in that context. We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial


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2

statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the consolidated financial statements.

Carrying value of goodwill, other intangible assets with indefinite useful lives and product intangibles not yet in use

Area of focus As of 31 December 2020, the Group has goodwill of CHF 966.8 million, other intangible assets with indefinite useful lives of CHF 107.7 million and product intangibles not yet in use of CHF 389.9 million, together representing 28% of the Group’s total assets. Per Note 12, goodwill, other intangible assets with indefinite useful lives and product intangi-ble assets not yet in use are tested for impairment at least annually. In performing the impairment analysis management applies considerable judgment in respect of future market and economic conditions, such as economic growth, expected inflation rates, demographic developments, expected market share, revenue and margin development. Changes in these assumptions might lead to a change in the carrying value of goodwill, other intangible assets with indefinite useful lives and product intangibles not yet in use. We focused on this area given the significant judgment and complexity of valuation methodologies applied in the assessment process.

Our audit response

We assessed and tested the assumptions, weighted average cost of capital (WACC), methodologies and technical input parameters for the valuation model applied by the Group. We involved our internal valuation specialists to assist us with these audit procedures. In addition, we evaluated the cash flow projections for the cash generating units (CGUs) by performing a retrospective assessment of the accuracy of management’s past projections and analysing management’s business forecasts considering the current Covid-19 environment. In particular, we focused on the sensitivity in the available headroom of the CGUs and whether changes in assumptions could cause the carrying amount to exceed its recoverable amount. Our audit procedures did not lead to any reservations regarding the carrying value of goodwill, other intangible assets with indefinite useful lives and product intangibles not yet in use.



3

Recognition of other income (out-licensing agreements)

Area of focus The Group’s other income amounted to CHF 96.4 million (of which CHF 56.1 million related to out-licensing agreements) for the year ended 31 December 2020. A description of the key accounting policy for recognition of other income is included in Note 1. Due to the complexity and judgment involved in out-licensing agreements, there is a risk that revenues from the license to use a right for a product, i.e. milestone payments based on future contingent events or sales-based royalties are recognised in the wrong period.

Our audit response

In addition to substantive analytical procedures performed both at Group and local level to understand how other income has trended over the year, we performed a detailed testing on transactions, ensuring revenues from license agreements were recognised in the correct accounting period. We analysed the adequacy of the accounting treatment for significant license agreements and assessed if they are in line with the Group’s accounting policy. Our audit procedures did not lead to any reservations concerning the recognition of other income.

Discontinued operations / sale OM Pharma

Area of focus In September 2020, Vifor group completed the sale of OM Pharma to Optimus Holding Ltd. for a total consideration of CHF 485.0 million, resulting in a net post-tax gain on sale in the amount of CHF 190.6 million. The effective date of the sale was 30 September 2020. We considered the accounting treatment in the financial statements of this event as a key audit matter because of the size and complexity of the transaction. The business generated sales of CHF 114.9 million and operating profit (“EBITDA”) of CHF 40.6 million for the 9 months ending 30 September 2020.

Our audit response

We obtained the sales documents and related contracts and agreed the elements of the gain calculation to them. We agreed the cash consideration to bank statements, vendor loan to underlying documentation and assessed the assumptions for the fair value of the earn-out consideration. We reperformed the calculations for mathematical accuracy, considering the transaction costs and vouched them to supporting evidence. For the disposed operations, we audited the allocated revenues and costs for the nine months period up to 30 September 2020, including the comparative period. We further audited the correct presentation of the transaction in the income statement and notes including comparative period. Our audit procedures did not lead to any reservations relating to the correctness of the gain on sale recognized and the disclosures of the discontinued operation in the consolidated financial statements.


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Recognition of intangible assets from license agreements, including contingent liabilities

Area of focus The Group capitalised intangible assets from license agreements in the amount of CHF 1’339.4 million and disclosed contingent liabilities of CHF 3’020.9 million for the year ended 31 December 2020. A description of the key accounting policy for intangible assets from license agreements, including contingent liabilities is included in Note 3 and in Note 27, respectively. Due to the complexity involved in the analysis of licensing agreements, there is a risk of incorrect capitalisation of intangible assets and accounting for contingent liabilities from these agreements.

Our audit response

We assessed the company’s analysis of the recognition criteria for significant new license agreements and tested if recognition of intangible assets is in accordance with the Group’s accounting policy. We also assessed the completeness of the disclosure of the contingent liabilities relating to these license agreements. Our audit procedures did not lead to any reservations relating to the recognition of intangible assets from license agreements.

Other information in the annual report The Board of Directors is responsible for the other information in the annual report. The other information comprises all information included in the annual report, but does not include the consolidated financial statements, the stand-alone financial statements, the remuneration report and our auditor’s reports thereon. Our opinion on the consolidated financial statements does not cover the other information in the annual report and we do not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information in the annual report and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibility of the Board of Directors for the consolidated financial statements The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true and fair view in accordance with IFRS and the provisions of Swiss law, and for such internal control as the Board of Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable,



5

matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Swiss law, ISAs and Swiss Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. A further description of our responsibilities for the audit of the consolidated financial statements is located at the website of EXPERTsuisse: http://www.expertsuisse.ch/en/audit-report-for-public-companies. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements In accordance with article 728a para. 1 item 3 CO and the Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of consolidated financial statements according to the instructions of the Board of Directors. We recommend that the consolidated financial statements submitted to you be approved.

Ernst & Young Ltd



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F I N A N C E


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212 Statement of income213 Statement of financial position 214 Notes to the financial statements 220 Statutory auditor’s report




Investment income 124.5 139.7

Financial income 70.4 36.4


Income 195.8 177.5

Personnel costs (6.0) (6.5)

Financial expenses (18.3) (14.7)

Depreciation and amortization (55.0) (55.0)

Other expenses (2.7) (2.3)

Expenses (82.0) (78.5)

Profit for the year before taxes 113.8 99.0

Direct taxes - -

Profit for the year 113.8 99.0

S T A T E M E N T O F I N C O M E


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in million CHF 31.12.2020 31.12.2019

Assets


Receivables

› Third parties 0.3 1.3

› Group companies 875.6 222.9

Prepaid expenses and accrued income 0.1 0.2

Current assets 1,453.0 683.7

Financial assets 1,198.7 1,445.6

Investments 908.3 963.3

Non-current assets 2,107.0 2,408.9

Assets 3,560.0 3,092.6

Liabilities and shareholders’ equity

Short-term interest-bearing liabilities

› Third parties - -

› Group companies 640.7 159.0

Other short-term liabilities


Accrued expenses and deferred income 3.5 2.8

Short-term liabilities 646.3 162.9

Long-term interest-bearing liabilities


Long-term liabilities 540.3 540.4

Liabilities 1,186.6 703.3

Share capital 0.7 0.7

Legal retained earnings

› General legal retained earnings 40.0 40.0

› Reserve for treasury shares 14.2 6.8

Treasury shares (0.6) (0.9)

Voluntary retained earnings

› Other reserves 2,204.8 2,243.2

› Profit carryforward 0.6 0.6

› Profit for the year 113.8 99.0

Shareholders’ equity 2,373.4 2,389.3

Liabilities and shareholders’ equity 3,560.0 3,092.6

S T A T E M E N T O F F I N A N C I A L P O S I T I O N



P R I N C I P L E S

The financial statements of Vifor Pharma Ltd. with registered office in St. Gallen, Switzerland, have been prepared in accordance with Title 32 Commercial Accounting and Financial Reporting of the Swiss Code of Obligations. Where not prescribed by law, the significant accounting and valuation principles applied are described below.

D E P R E C I A T I O N A N D A M O R T I Z A T I O N

Depreciation and amortization include amortization on participations of CHF 55.0 million (2019: CHF 55.0 million).

F I N A N C I A L A S S E T S

Financial assets include long-term loans to Vifor Pharma Group companies of CHF 1,198.7 million (2019: CHF 1,445.5 million).

I N V E S T M E N T S I N S U B S I D I A R I E S A N D A S S O C I A T E S

The list of investments is shown in note 28 of the Vifor Pharma Group consolidated financial statements.

L O N G -T E R M I N T E R E S T- B E A R I N G L I A B I L I T I E S

The interest-bearing liabilities are recognized at nominal value.

in million CHF 31.12.2020 31.12.2019

Bank debts BCF Loan 75.3 75.4

Bond 0.75% (13 September 2018 — 13 September 2022) ISIN CH0428194275 465.0 465.0

Long-term interest-bearing liabilities 540.3 540.4

D E R I V A T I V E F I N A N C I A L I N S T R U M E N T S

Derivative financial instruments are measured at the lower of cost or market value. Provisions are recorded for contingent losses on pending transactions at the balance sheet date.

Vifor Pharma selectively hedges expected cash flows in USD and EUR against foreign currency risks by means of foreign exchange forwards. The contract volume amounted to CHF 103.3 million (2019: CHF 157.9 million) as at 31 December 2020 with a positive fair value of CHF 3.9 million (2019: negative fair value of CHF 0.6 million).

Vifor Pharma entered into an interest rate swap to hedge the interest rate risks in connection with long-term liabilities. The contract volume amounted to CHF 175.0 million (2019: CHF 75.0 million) with a negative fair value of CHF 0.3 million (2019: negative fair value of CHF 0.4 million) as at 31 December 2020.

S H A R E C A P I T A L

At 31 December 2020, the share capital of Vifor Pharma amounted to CHF 650,000, divided into 65,000,000 publicly listed registered shares with nominal value of CHF 0.01 each.

N O T E S T O T H E F I N A N C I A L S T A T E M E N T S


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A U T H O R I Z E D C A P I T A L

According to Article 3a) of Vifor Pharma’s Articles of Association, the Board of Directors may raise the share capital of CHF 650,000 by 10%, i.e., an amount of CHF 65,000 (6,500,000 shares), at any time until 14 May 2022.

S U B O R D I N A T E D L O A N S

At the end of 2020, subordinated loans to Group companies amounted to CHF 350.5 million (2019: CHF 200.5 million).

C O N T I N G E N T L I A B I L I T I E S

At the end of 2020, total contingent liabilities amounted to CHF 410.2 million (2019: CHF 1,585.3 million). Vifor Pharma issued guarantees to Group companies of CHF 367.2 million (2019: CHF 1,541.9 million), guarantees to third parties of CHF 0.6 million (2019: CHF 0.8 million) as well as CHF 42.4 million (2019: CHF 42.7 million) for guarantees to secure intraday transactions in connection with the zero balance cash pooling.

T R E A S U R Y S H A R E S

Vifor Pharma Ltd. registered shares owned by the company or by subsidiaries:

Number in million CHF

As at 31 December 2018 1 155,823 8.6

1st quarter 2019Bought 14,030 1.9

Sold (9,468) (0.1)

2nd quarter 2019Bought 21,010 2.8

Sold (50,550) (6.3)

3rd quarter 2019Bought 220 0.0

Sold —

4th quarter 2019Bought 42,640 7.0

Sold (67,478) (6.2)

As at 31 December 2019 2 106,227 7.7

1st quarter 2020Bought 30,000 3.6

Sold (39,264) (4.0)

2nd quarter 2020Bought 147,000 21.4

Sold (88,301) (12.2)

3rd quarter 2020Bought 66 0.0

Sold —

4th quarter 2020Bought 30,052 3.9

Sold (40,942) (5.7)

As at 31 December 2020 3 144,838 14.8

1 Thereof 47,463 shares owned by subsidiaries2 Thereof 34,701 shares owned by subsidiaries3 Thereof 94,369 shares owned by subsidiaries



M A J O R S H A R E H O L D E R S


% of share capital

As at 31 December 2020

Patinex AG, Switzerland, and BZ Bank Aktiengesellschaft, Switzerland 1 13,250,000 20.4

BNP Paribas SA, France 2 5,143,408 7.9

Priora Suisse AG, Switzerland, and Priora Investment Ltd., United Arab Emirates 3, 4 4,613,000 7.1

Alecta pensionsförsäkring, Sweden 2,100,000 3.2

UBS Fund Management (Switzerland) AG, Switzerland 1,986,015 3.1

As at 31 December 2019

Patinex AG, Switzerland, and BZ Bank Aktiengesellschaft, Switzerland 1 13,250,000 20.4

Priora Services AG, Switzerland 2, 3 8,300,000 12.8

BNP Paribas SA, France 4 3,011,359 4.6

Alecta pensionsförsäkring, Sweden 2,100,000 3.2

1 Beneficial owners: Martin and Rosmarie Ebner, Switzerland2 Including lending transaction of 4,500,000 shares, date of return set on 27 January 20213 Beneficial owners: Remo and Manuela Stoffel, United Arab Emirates4 Options not considered

No other shareholder has announced a crossing of the 3% threshold of registered shares.

F U L L -T I M E E Q U I V A L E N T S

The average number of full-time equivalents amounted to <10 (2019: <10).

N E T R E L E A S E O F H I D D E N R E S E R V E S

There was no material release of hidden reserves in 2020 (2019: nil).


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Shareholdings of the members of the Board of Directors and the members of the Executive Committee

S H A R E H O L D I N G S O F T H E M E M B E R S O F T H E B O A R D O F D I R E C T O R S

Registered shares Registered shares

Number of registered sharesHeld as at

31.12.2020allocated

for 2020Held as at

31.12.2019allocated

for 2019

Etienne Jornod, Executive Chairman (until Annual Shareholder Meeting 2020) 1 n/a 12,427 286,711 27,366

Shares of the executive member of the Board of Directors n/a 12,427 286,711 27,366

Jacques Theurillat, Chairman (as of Annual Shareholder Meeting 2020) 3 1,581 2,723 555 1,026

Gilbert Achermann (as of Annual Shareholder Meeting 2020) — 534 — —

Michel Burnier 9,460 1,362 8,619 2,051

Romeo Cerutti 7,967 1,664 5,460 2,507

Gianni Zampieri 20,483 606 49,539 1,823

Sue Mahony 661 757 — 661

Kim Stratton 562 643 — 562

Shares of the non-executive members of the Board of Directors 2 40,714 8,289 64,173 8,630

Shares of the members of the Board of Directors 40,714 20,716 350,884 35,996

Registered shares held by related parties of members of the Board of Directors are included in the declaration of the number of shares they hold.

1 Etienne Jornod received CHF 0.5 million for consultancy services rendered to various entities of Vifor Pharma group after 15 May 2020.2 Allocated in February 2021.3 CA and S until AGM 2020 included in remuneration pro rata.



S H A R E H O L D I N G S O F T H E M E M B E R S O F T H E E X E C U T I V E C O M M I T T E E

Number of registered sharesHeld as at

31.12.2020Held as at

31.12.2019

Barbara Angehrn 747 85

Colin Bond 7,607 3,687

Gregory Oakes — —

Klaus Jensen 100 —

Lee Heeson 100 —

Michael Puri 7,998 2,898

Stefan Schulze 12,200 6,664

Chris Springer 31,823 24,133

Registered shares held by related parties of members of the Executive Committee are also included in the totals disclosed above.

Information relating to the number and value of participations rights of the members of the Board of Directors and the members of the Executive Committee are disclosed in the remuneration chapter, as included in Vifor Pharma’s 2020 Annual Report.

Shareholders’ equity

Shareholders’ equity developed as follows:

in million CHFShare

capital

General legal

retained earnings

Reserve for treasury shares 1

Treasury shares

Free reserve

Available earnings

Shareholders’ equity

As at 31 December 2018 0.7 40.0 7.2 (1.4) 2,252.8 120.6 2,419.8

Transfer to free reserve 0.0 (10.0) 10.0 0.0

Dividends (130.0) (130.0)

Adjustment to the reserve for treasury shares (0.4) 0.5 0.4 0.5


As at 31 December 2019 0.7 40.0 6.8 (0.9) 2,243.2 99.6 2,389.3

Transfer to free reserve 0.0 (31.0) 31.0 0.0

Dividends (130.0) (130.0)

Adjustment to the reserve for treasury shares 7.4 0.3 (7.4) 0.3


As at 31 December 2020 0.7 40.0 14.2 (0.6) 2,204.8 114.4 2,373.4

1 Owned by subsidiaries


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Appropriation of available earnings for the year ending 31 December

The Board of Directors intends to submit the following proposal for the appropriation of available earnings at the Annual General Meeting on 6 May 2021:


Proposal to the Annual General Meeting

Balance brought forward 0.6 0.6


Available earnings 114.4 99.6

Appropriation of available earnings

Transfer from free reserves 16.0 31.0

Dividends (130.0) (130.0)

Balance to be carried forward 0.4 0.6




Phone +41 58 286 61 11 Fax +41 58 286 68 18 www.ey.com/ch



Report of the statutory auditor on the financial statements As statutory auditor, we have audited the financial statements of Vifor Pharma Ltd., which

comprise statement of income, statement of financial position and notes (pages 212 to 219), for the year ended 31 December 2020.

Board of Directors’ responsibility The Board of Directors is responsible for the preparation of the financial statements in accordance with the requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the financial statements for the year ended 31 December 2020 comply with Swiss law and the company’s articles of incorporation.


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Report on key audit matters based on the circular 1/2015 of the Federal Audit Oversight Authority Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. We have determined that there are no key audit matters to communicate in our report.

Report on other legal requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our independence. In accordance with article 728a para. 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the Board of Directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.

Ernst & Young Ltd



U P C O M I N G D A T E SV I F O R P H A R M A

K E Y C O R P O R A T E D A T E S I N 2 0 2 1 3 March 2021 Annual Report 2020 Analyst conference: full-year results 2020 — 6 May 2021 Annual General Meeting— 5 August 2021 Half-year Report 2021


ImprintVifor Pharma Group

This report is available to download at viforpharma.com

In the case of any discrepancy in the interpretation of the short version of the English, French or German texts of this report, the English text of the full version shall be authoritative.

March 2021 © Vifor Pharma Ltd.

Legal disclaimerNo part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, without previous written approval by the Vifor Pharma Group. All Vifor Pharma Group’s intellectual rights, including copyright, are reserved by the Vifor Pharma Group.

All other trademarks are the property of their respective owners.

Vifor Pharma Ltd.Rechenstrasse 379014 St. GallenSwitzerland Vifor Pharma GroupVifor Pharma Management Ltd. Flughofstrasse 61 8152 GlattbruggSwitzerland

Phone +41 58 851 80 00Mail [email protected]

MEDIA CONTACT [email protected]

INVESTOR CONTACT [email protected]

viforpharma.com

C O N T A C T I N F O R M A T I O N

https://www.viforpharma.com/


Vifor Pharma GroupVifor Pharma Management Ltd. Flughofstrasse 618152 GlattbruggSwitzerland

Phone +41 58 851 80 00 Mail [email protected] Web viforpharma.com


annual report 2020 - vifor pharma · 2021. 3. 3. · sales of our blockbuster i.v. iron product...

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