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Annual Report 2017


Half-Year Report 2018

8 pages

Annual Report

Full Version, 76 pages

Progress Report and "Evolve" Strategy

2x12 pages

Corporate Governance

8 pages

Remuneration Report

8 pages

Sustainability Report

12 pages

Financial Report

62 pages

Annual Report 2017
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“We will do everything in our power to ensure that the company remains on its successful course.”

Dr. Andreas Casutt
Chairman of the Board of Directors

Dr. Rudolf Hanko
Chief Executive Officer

Net sales


million Swiss francs



million Swiss francs



million Swiss francs

Dear Shareholders

For the 2017 financial year, the Siegfried Group again reported a very sound result. Sales amounted to 750.5 million Swiss francs, corresponding to a growth of 4.6%. Following years of significant acquisitions, Siegfried achieved robust organic growth. Earnings before interest, taxes and amortization (EBITDA) grew significantly by 17.8% to 114.0 million francs, corresponding to an EBITDA margin of 15.2%. The margin is within the targeted range of 15 – 20%. Siegfried achieved net profit of 39.7 million francs, which is clearly above that reported the previous year (27.9 million francs), representing a growth of 42.4%.

Based on the gratifying annual result, the Board of Directors will recommend to the Annual General Meeting a higher distribution to shareholders of 2.40 francs per share from the capital contribution reserves (previous year: 2 francs). Siegfried reports operating cash flow for 2017 after change in net current assets of CHF 84.4 million (2016: CHF 57.1 million). This corresponds to a significant increase of 47.8%. Investments in tangible and intangible fixed assets were lower than for the previous year and amounted to CHF 52.8 million (2016: CHF 68.4 million). Following heavy investments in previous years, investment activity in 2017 has returned to normal.

In the past three years, with three acquisitions, the Siegfried Group achieved the critical size required in the pharmaceutical supplier industry. At the same time, the company completed its entrance into sterile filling and significantly increased the competitiveness of its production network thanks to the new production plant in Nantong (China). Siegfried’s production network today comprises nine sites, of which six are active in the area of drug substance and three in drug product.

By means of the “Evolve” strategy, the Siegfried Group is sharpening its strategic orientation and giving it a concrete form in order to launch the next chapter in the company’s development. Given the ongoing consolidation in the CDMO market, the supplier market to the worldwide pharmaceutical industry, critical size will remain a major topic. Consequently, in addition to continuous organic growth, Siegfried is actively evaluating potential acquisitions to meet the demands of customers. Such acquisitions may concern the production of either drug substances or drug products. However, Siegfried in particular aims to further strengthen its business with drug products, especially in the field of complex solid dosage forms. Our goal is to be able to offer our customers both competencies – chemical and pharmaceutical – from a single source. 

In addition, the “Evolve” strategy strengthens the continued technological expansion of the nine sites worldwide. A significant milestone has been achieved in the year under review by means of developing and expanding capabilities in sterile filling of biologically produced drug substances and the corresponding investments in Irvine and Hameln. The close cooperation with Symphogen, a Danish biotechnology company, represents an initial success in this market segment. Siegfried predominantly produces and sells active pharmaceutical ingredients (APIs) and the corresponding intermediates in the area of drug substances. A quarter of sales is achieved with demanding finished products (drug products). In the year under review, both areas contributed equally toward growth. Sales in the field of exclusive synthesis were reported slightly above the previous year’s level. The close cooperation between customer and outsourcing partner, essential in this business, was further intensified.

Correspondingly, today Siegfried is involved directly in the development of numerous new customer projects. Among others, this includes a significant supplier contract spread across several years with the US pharmaceutical company Keryx. In 2017, our business with portfolio products, which are delivered to various customers, performed well. Sales of drug substances used in addiction treatment, especially, have shown vigorous growth. In the year under review, the business with finished products – which at Siegfried includes sterile filling, tablets and capsules – continued to grow. Capacity growth serving to fill biologically produced active pharmaceutical ingredients (APIs) has been vigorous. Today, this capacity is available at two sites, in Irvine and Hameln. Siegfried will in the coming years significantly strengthen its capacity to produce solid dosage forms, especially in the US market, where the company’s presence today is low.

Siegfried’s production network comprising nine sites on three continents represents the basis for continued organic growth. Siegfried therefore again made targeted investments in existing and new facilities. In the past two financial years, we gave priority to working intensively on streamlining our internal coordination. Our aim is to make available to our customers the technological and regulatory strengths of our individual sites connected with the highest possible level of flexibility. In this regard, close attention was paid to our site in Nantong (China), which is gaining importance in the market owing to its cost-effective structures. The site has been completely approved by the Chinese authorities and has started production. Siegfried anticipates that Nantong will be audited by the US-American regulatory authorities in the course of the current year.

In Hameln, Siegfried invested, and continues to do so, in equipment serving the biological filling of APIs which, as mentioned above, is attracting wide customer interest. Furthermore, we significantly improved the infrastructure for employees. In Zofingen, additional facilities were released in the new production building. Moreover, we installed additional peripheral equipment, which improve the performance parameters of the new building. The new logistics building is scheduled or completion in the 3rd quarter of 2018. The second stage of the new administration building was ready for occupation at the beginning of December 2017. As a result, office space can now be let to third party tenants – mainly companies represented in Pharmapark Siegfried. At the St. Vulbas site, which is located close to Lyon in France, additional investment tranches were authorized in the second half in view of a large customer contract.

Given the vigorous growth of the Siegfried Group in the past three years, management paid particular attention to implementing a coherent corporate culture comprising all sites. In this connection, a state-of-the art Intranet was developed and introduced to meet today’s requirements. In fall 2017, the Executive Committee called together some 60 senior managers from all sites for a further Leadership Convention. Strengths and weaknesses were identified in working groups and measures defined that are now being implemented step by step. It is not only a matter of dealing with weaknesses, but also of maintaining and emphasizing the strengths represented by Siegfried’s management on the basis of nearly 150 years of corporate history.

As a partner of the worldwide pharmaceutical industry, Siegfried places high priority on sustainability in all areas. Consequently, sustainability represents one of the company’s central corporate values. For the first time in its reporting, the Siegfried Group entirely meets the standards of the Global Reporting Initiative (GRI). This does not only enhance the company’s reputation, but also draws together the manifold measures and makes them available internally and externally. A materiality analysis was implemented in a working group, which defined the nine most important issues including product safety, environmental protection, fair working conditions including health and occupational safety, legal conformity, political representation of interests and the local population at the various sites. Both the Executive Committee (ExeCom) and the Board of Directors regularly deal with issues concerning sustainability, especially the considerate handling of natural resources and corporate social responsibility. The sustainability report, which is also available online, shows a high level of awareness for such interrelationships and an advanced range of instruments.

With regard to human resources, the Siegfried Group in the year under review strengthened operating management at various levels, both at the sites and at corporate headquarters, especially in the areas of IT, development and finance. In May 2017 our new Chief Financial Officer, Dr. Reto Suter, assumed his current position. As a service provider we have to address new challenges in a highly competitive market every day. The fact that the Siegfried Group is showing robust and rapid growth based on several acquisitions is due, to a large degree, to the enthusiasm and loyalty shown by our workforce. We would like to take this opportunity to thank our Executive Committee and all employees for the exceptional efforts made at all sites.

The Siegfried Group‘s shareholder base remains very stable (please also refer to the Corporate Governance Report). As reported in the media, important investors have joined Siegfried and significantly increased their shareholding. RAG-Stiftung Beteiligungsgesellschaft GmbH, based in Essen (Germany), in October 2017 exercised its conversion right to a privately issued Siegfried Holding AG convertible bond amounting to CHF 60 million required to partly finance the acquisition of significant segments of BASF’s pharmaceutical supply business in 2015. Consequently, RAGStiftung now holds more than 5% of Siegfried Holding AG’s stock. The conversion did not require a capital increase as it was served by means of treasury shares.

The Siegfried Group’s Honorary Chairman, Dr. Bernard A. Siegfried, passed away at the end of October. He entered the service of the company in 1967 as a representative of the fourth generation of the Siegfried family. In 1977 he was appointed Delegate of the Board of Directors and Chief Executive Officer, and in 1998 he was elected Chairman of the Board with executive functions. He withdrew from his executive functions on the occasion of the 2001 Shareholders’ Meeting and stepped down as Chairman of the Board in 2003. The Board of Directors subsequently appointed him Honorary Chairman of Siegfried Holding AG. He remained an ordinary member of Siegfried’s Board until 2010. Numerous significant development steps were taken in his terms of office. At the start of the 1970s he achieved an opening of the company and the successive replacement of family members at the top management level. It was during this phase that Siegfried’s stock was listed on the Swiss Stock Exchange. Siegfried’s in-house pharmaceutical research was abandoned in the 1980s. The company was subsequently positioned as a supplier to the worldwide pharmaceutical industry, an area in which Siegfried has remained active until today. Without a doubt, Bernard A. Siegfried was a major leader in the long history of the company, and his impressive lifetime achievement will not be forgotten.

Siegfried anticipates sales to continue growing. At constant exchange rates, sales are expected to grow at a mid-single-digit percentage rate in the current financial year. The operating margin (EBITDA) is also expected to continue to improve significantly. The company confirms its expectations: sales of CHF 900 million and EBITDA margin of about 20% in the medium term. We aim to further increase the dividend payout.

In closing, we would like to express our gratefulness to you, dear shareholders, for your support and your loyalty to Siegfried. We will do everything in our power to ensure that the company remains on its successful course.

Dr. Andreas Casutt
Chairman of the Board of Directors

Dr. Rudolf Hanko
Chief Executive Officer