Annual Report

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Content

Foreword by the Chairman of the Group 4

Facts and Figures 2010 6

The Management Board 8

Sales 2010 10

Research and Development 14

Quality Assurance 21

Plasma Collection 22

Investments for the Future 24

Annual Accounts 2010 26

Key Figures 30

Income Statement 32

Balance Sheet 34

Cash Flow Statement 36

The Auditor’s Statement 37

Contact Details 38

Octapharma will remain

a highly innovative

and successful business

well into the future.

Swiss-based, independent, global plasma fractionator

28 years focus on human proteins

Manufacturing facilities in 5 countries

Sales in more than 80 countries

Sales of 718 million euros in 2010

17% compound annual growth rate since 1995

Company Snapshots

While the first half of the year 2010 was evolving according to plan, the second half developed into an

“annus horribilis”. Our central drug-safety unit informed me during the third quarter of an increase in reported TEE’s

(thromboembolic events), which led to an immediate and very thorough analysis of all octagam® batches which had

been distributed to the market. Fortunately, our R&D group took immediate action and established a Thrombin

Generation Assay (TG assay) test to assess potential coagulation potency in IVIg products, in cooperation with the

health authorities in Europe and the USA, which allowed us to decide on a massive product recall to avoid any

potential patient-risks with octagam®.

This recall was initiated voluntarily by Octapharma on August 20th, under the full responsibility of Octapharma,

and was then followed by a license suspension for octagam® in Europe and a halt of distribution in the US by end

of September.

Needless to say, this has had a significant short term financial impact on Octapharma. Our annual sales dropped

by 29 % compared to their 2009 level, our profitability was reduced by 82 % compared to 2009 and, until recently,

the outlook for 2011 concerning the re-introduction of octagam® was uncertain.

As I am writing this introduction to our Annual Report, Octapharma’s plants are being inspected by European

agencies for the final approval of our new and improved method of manufacturing, subsequent to which we plan

a swift re-introduction of octagam®.

During the last six months, Octapharma has developed not only a test endorsed by all regulatory agencies to exclude

the risk of TEE’s by IVIG’s – we have also developed, and implemented in our manufacturing process, a method to

eliminate all relevant coagulation-factor-related risks with gammaglobulins.

During this period, Octapharma has acted proactively, and at all times with the wellbeing of our patients as our

paramount concern, in order to exclude any safety concerns with our product. We also firmly believe that the

attention given to the issue of TEE’s by all participants in this market, including other manufacturers, will provide

an additional safety margin for all patients receiving IVIG-therapy in the future.

Foreword by Wolfgang Marguerre

– 5 –– 4 –

During the absence of our most important product

octagam®, all other products performed very successfully

in all markets and contributed to the overall-group

profitability for 2010. Our key investment programs in

our plants continued as budgeted during 2010, as did

our key R&D activities involving both our recombinant

and plasma-derived proteins.

Since August 2010 I have had to “reinvent” my company; during these difficult months, I have experienced

an unprecedented team-effort involving the close and effective collaboration of all major departments within

the organization in order to solve this crisis. I would like to take this opportunity to express my sincere gratitude

to all individuals who have shown an unlimited commitment to finding the right way back to the markets with

octagam® within a very short period of time. All departments in Octapharma have been involved in this extremely

important project.

We have all learned a lot during this challenging time, and I have no doubt that we will emerge from this situation

together as a company, with pride, and be much stronger than we were before. I am confident that Octapharma

is extremely well placed to meet the long term challenges of our competitive marketplace, and will remain a highly

innovative and successful business well into the future.

Wolfgang Marguerre

Chairman of the Octapharma Group

2010Facts and Figures

Founded in 1983

Mission “For the safe and optimal use of human proteins“

Employees 4,238

Turnover 718 million euros

Headquarters Octapharma AG, Lachen, Switzerland

Production and Supply Octapharma Pharmazeutika Produktionsges.mbH, Vienna, Austria

Octapharma SA, Lingolsheim, France

Octapharma AB, Stockholm, Sweden

Octapharma S.A. de C.V., Mexico City, Mexico

Octapharma Produktionsgesellschaft Deutschland mbH, Springe, Germany

Octapharma Plasma Inc., Charlotte, USA

Deutsche Gesellschaft für Humanplasma mbH, Langenfeld, Germany

Octapharma GmbH, Dessau, Germany

Research and Development Octapharma Pharmazeutika Produktionsges.mbH, Vienna, Austria

Frankfurter Innovationszentrum, Frankfurt, Germany

Charité Universitätsmedizin Berlin, Germany

Octapharma Biopharmaceuticals GmbH, Munich, Germany

Octapharma AB, Stockholm, Sweden

Corporate Medical, Regulatory Octapharma Pharmazeutika Produktionsges.mbH, Vienna, Austria

Octapharma GmbH, Langenfeld, Germany

International Corporate Marketing Octapharma AG, Lachen, Switzerland

Subsidiaries and Representative Offices 38

Markets Europe, Asia, Russia, Middle East, USA, South America, Canada,

Mexico, Africa, Australia, New Zealand

Brands (registered trademarks) albuminativ®, albunorm®, atenativ®, aunativ®,

gammanorm®, nanofix®, nanotiv®, octafix®, octagam®, octagam 10%®,

octanate®, octanine F®, octanyne®, octaplas®, octaplasLG® , octaplex®,

octavi SD Optimum®, pronative®, rhesonativ®, uniplas®, wilate®

Innovations One of the world’s first factor VIII concentrates – AHF concentrate

(KABI 1965 – through acquisition)

The first albumin-free genetically engineered factor VIII (development

started by KABI in the 1980s – through acquisition)

First company to commercially implement solvent detergent (SD)

technology for virus inactivation (1986)

First SD virus-inactivated, standardised plasma for transfusion (1991)

First liquid, ready-to-use intravenous immunoglobulin with a two year shelf-life

at room temperature (1994)

First virus-inactivated universally applicable transfusion plasma (2004)

First double virus-inactivated von Willebrand factor concentrate product (2005)

Start of clinical trials using the first recombinant FVlll from a human cell line (2010)

– 7 –– 6 –

The Management Board of the Octapharma Group

– 9 –– 8 –

Wolfgang Marguerre

Chairman Octapharma Group

Gerold Rempeters

Corporate Production Officer

Karl Erik Clausen

Chief Financial Officer (retired from office31 March 2011)

Global Management CommiteeInternational Marketing

Reinhard Rettinghaus

General Manager Octapharma Germany,Deutsche Gesellschaft für Humanplasma mbH

Nicholas Jacobson

Corporate Qualityand Compliance Officer

Ulrich Thibaut

Research and Development

Flemming Nielsen

President Octapharma USA, Inc.

Frederic Marguerre

Shareholders‘ RepresentativePresident, Octapharma Plasma Inc USA

Tobias Marguerre

Managing Director Octapharma Nordic AB

Paulo Castro

Sales 2010

The growth drivers in 2010 were the niche plasma products, including

gammanorm (subcutaneous immunoglobulin [SCIg]), wilate® (factor VIII/

/von Willebrand factor [FVIII/vWF]), octaplex® (prothrombin complex

concentrate [PCC]), octaplas® (solvent/detergent [SD] treated fresh

frozen plasma [FFP]) and atenativ® (antithrombin III [ATIII]).

Intensive Care & Emergency Medicine

Octaplex® sales increased 11% as the global market grew owing to

both an increasing recognition of the patient benefits of PCC compared

with FFP and the high regard of the low thrombogenic profile of

octaplex®. With the growing body of global clinical experience,

Octapharma is very well positioned for a future US market entry

(octaplex® is currently in a Phase III trial in the US). Albumin sales

were stable over 2010.

Sales of atenativ®, our ATIII product, grew 14% by increasing market

share. Sales of octaplas® (SD treated plasma for infusion) grew by 5%

in existing markets.

Future growth of octaplas® is anticipated to be driven by specific

market opportunities in North America. Octaplas® has gained

advocates within the blood services, scientific, physician and

government health policy communities for various reasons including

the need to maintain a precautionary approach to managing

pathogen risk in a changing environment.

Our confidence in the future of octaplas® as an important pillar of blood

safety beyond Europe and Scandinavia was shown by the construction

of a second octaplas® production line in Stockholm in 2010. This will

increase capacity and enable smoother global production output.

Immunotherapy

Octagam® and octagam®10% sales were hit hard due to an

unexpected increase in adverse drug reactions (ADRs) that was

identified by the company through routine pharmacovigilance.

In order to retain the trust and confidence in its brands in the

long-term, Octapharma took decisive, responsible and immediate

steps in the interest of patient safety.

The situation was looked upon as an oppportunity to showcase

Octapharma’s scientific leadership in the field of immunotherapy

and therapeutic human proteins. As a result of rapid mobilisation,

dedication and excellent work by Octapharma’s technical, production

and scientific members, the reason for the problem and corrective

measures have been identified. This will enable market re-entry,

with the approval of regulatory authorities world-wide. As a result,

octagam® and octagam®10% should be back soon with the

tolerability our customers have known for years.

Octapharma was and is committed to providing our customers with

the best possible intravenous immunoglobulin (IVIg) preparation and

Stefan Haag MD

Head of IBU

Immunotherapy

“Our specialisation

in immunotherapy

warrants the continuous

improvement and

development of

therapeutic concepts

in numerous medical

areas. It is this long-

term commitment

of Octapharma to

patients requiring

immunoglobulin which

makes a difference.”

– 11 –– 10 –

Niche plasma products growth

consequently intends to manufacture octagam® according to the

latest state of research in plasma fractionation.

The long term experience with the use of octagam® over 17 years

and octagam®10% over two years confirms that the product is

preferred by many physicians worldwide for its quality and tolerability

characteristics. Upon the return of octagam® and octagam®10%,

prospective proof of the tolerability will be provided through

upcoming pharmacovigilance studies for octagam® and octagam®10%.

The excellent contribution and support from both the European and

US regulatory bodies in bringing octagam® and octagam®10% back

to the market is very much appreciated, and this support continues

to be helpful now and in the future.

Sales of our SCIg product (gammanorm) grew by 8% in 2010.

This growth was driven by a general trend towards increasing use

of SCIg as an alternative to IVIg therapy for patients with primary

immune deficiency (PID), an innovative approach that has been well

established for decades in Scandinavia. The good result was also

due to our increased efforts promoting the benefits of SCIg, and in

particular gammanorm, in Europe.

Haematology

Sales of octanate® (vWF-stabilised FVIII) were stable compared

with 2009, demonstrating continued support for octanate® in

immune tolerance induction (ITI) therapy, as new patients starting

ITI treatments replaced existing patients completing their treatments.

Sales of octanate® are 160% higher compared with 5 years ago,

highlighting a general growing trend of ITI patients being treated

with octanate®.

Wilate® (vWF/FVIII) sales were up 153% owing to market entry in

the US and other markets, and increases in existing markets. This

stellar performance led to the investment decision which doubled

production capacity in 2010.

Octapharma estimates it is now the second largest supplier of FVIII/

vWF globally, with a 17% market share across the commercial

suppliers. With two different FVIII/vWF products in our portfolio we

believe there is room for further market share improvement in the

coming years.

Sales of our plasma-derived factor IX (pdFIX) product (octanine® F)

hit a record mainly due to successful large tender wins.

– 13 –– 12 –

Reinhard Rettinghaus

General Manager,

Octapharma Germany

“In responding to the

octagam® situation,

Octapharma showed to

a large and professional

extent what is possible in

terms of cause findings,

options for corrective

measures, final solution,

proper documentation

and the associated

teamwork on all levels

of the organisation.”

Research and Development

Intensive Care & Emergency Medicine

Intensive care and emergency medicine is one of the major

components of the health care system. It is a branch of medicine

concerned with the provision of life support or organ support systems

in patients with acute illnesses or injuries that require immediate

medical attention.

In December the FDA approved Octapharma’s Investigational New

Drug Application for octaplex® as a Fast Track Product for “Reversal

of Anticoagulation Therapy in Patients under Vitamin K Antagonist

Therapy with the Need for Urgent Surgery or Invasive Procedures.”

The FDA had also previously granted orphan drug designation

for octaplex® in this indication.

A new fibrinogen product is currently under development at

Octapharma, addressing further important areas in intensive care

and emergency medicine.

Fibrinogen (factor I) is a soluble plasma glycoprotein that is

converted into fibrin and helps stop bleeding by promoting blood clot

formation. Fibrinogen is used to treat bleeding episodes in people

with congenital fibrinogen deficiency. Although it is a rare disease,

the prevalence of congenital fibrinogen deficiency should not be

underestimated. It varies from silent forms with almost no symptoms

over a long period of time to moderate bleeding to severe events

such as intracerebral bleeding (Lak M et al, Brit J Haematol 1999;

107:204–206).

This new plasma derived product will extend the portfolio of our

existing essential products used in intensive care and emergency

medicine.

Immunotherapy

Octapharma continues to focus on the commitment to provide our

customers with the best possible immunoglobulin products.

Studies important for the future of Octapharma include studies with

octagam®10% for approval in the US. We also seek new promising

indications in neurology including Alzheimer‘s disease. We have

recently successfully completed a Phase II Alzheimer study which takes

us a step closer to a Phase III trial.

Octapharma‘s immunotherapy franchise will continue to work on

multiple sclerosis (MS) and test the validity of a diagnostic tool to

predict responses of relapsing-remitting MS (RR-MS) patients to

octagam®. The validity of this proprietary tool may revolutionise

the way RR-MS patients are treated with immunoglobulin.

Post-marketing studies are planned to further strengthen the body

of evidence of the tolerability of octagam® and octagam®10%.

Andrea Neisser-Svae PhD

Head of IBU Intensive Care

& Emergency Medicine

“Safety, quality and

tolerability are the main

ideas and driving forces

behind each product.

To enter a market with

a new product is always

challenging and exciting

and the success is a

result of communication

and collaboration of

each single person in the

different departments

involved.”

– 15 –– 14 –

Securing the future flow of new and innovative products and therapies

Octapharma‘s commitment and scientific leadership to stay at

the forefront of immunoglobulin therapy was also recently

demonstrated by the implementation of an additional release assay

(thrombin-generation assay [TG assay]) to the production process

of our IVIg octagam®. The TG assay may become an industry safety

standard in the release of IVIg products in the future.

Haematology

Since its foundation in 1983, Octapharma has developed a specialised

expertise with coagulation proteins, and our understanding of

haemophilia and other bleeding disorders are leveraged in our

haematology business to develop innovative and improved ways to

treat haemophilia A, haemophilia B and von Willebrand disease (vWD).

In haemophilia A, the development of FVIII antibody inhibitors during

FVIII replacement therapy represents the most significant medical

complication today in the life-long treatment of haemophilia patients.

As part of our mission to improve patient quality of life and treatment

cost effectiveness, Octapharma is driving and supporting major

initiatives addressing the treatment of patients with FVIII inhibitors.

Haemophilia A replacement therapy with currently available

hamster-cell derived recombinant FVIII (rFVIII) concentrates generates

neutralising FVIII antibody inhibitors in 25–35% of previously

untreated patients (PUPs). An increasing body of evidence strongly

suggests that human derived FVIII, like plasma-derived vWF containing

octanate®, is less immunogenic. In 2009, we published interim data

from our ongoing GCP-study with octanate® in PUPs. The data

confirmed a significantly lower inhibitor rate for octanate®, with only

5% of subjects (2 in 39 PUPs) developing clinically relevant inhibitors.

No inhibitors were observed in PUPs receiving prophylaxis with

octanate®1. The study is still ongoing to further consolidate these

findings with more patients.

Octanate® is also included in ObsITI, the largest running international

study investigating the success rate of ITI for eradication of FVIII

antibodies in patients with inhibitors. Interim data from 15

prospectively observed patients shows a complete ITI success in

80% of the patients.2 Notably, all patients had at least one risk

factor for a poor prognostic ITI outcome. The study is ongoing

and is recruiting patients with inhibitors worldwide. Octapharma

is committed to continuously improving the profile and global

availability of octanate®. A new reduced infusion volume version

(1000 IU in 5 ml) is being introduced to further increase the

convenience for ITI and regular haemophilia A patients. Octanate®

is already available in more than 60 countries and new registrations,

including in North America, are expected for the year 2011.

Octapharma is the first therapeutic protein manufacturer worldwide

to be developing a recombinant FVIII from a human cell-line

(Human-cl rhFVIII) instead of the currently used hamster cell-lines.

Human-cl rhFVIII is produced in genetically modified human

embryonic kidney (HEK) 293F cells. Human-cl rhFVIII is currently

the only rFVIII that has a human glycosylation pattern. The human

glycosylation pattern is designed to avoid potentially immunogenic

epitopes as expressed by hamster cells. The manufacturing of

Human-cl rhFVIII is completely free of animal or human derived added

materials. The goal is to improve the safety and reduce the risk for

FVIII inhibitor development for patients with haemophilia.

A single centre clinical study in PTPs has already been completed in

Moscow. The clinical development plan for Human-cl rhFVIII follows

the requirements of the European guidelines and the FDA. In 2010,

Octapharma initiated multicentre Phase II trials at research centres in

– 17 –– 16 –

Ulrich Thibaut

Board Member R&D

“The Research and

Development organisation

within Octapharma is

securing the future flow

of new and innovative

products by managing

and evolving a highly

attractive pipeline of both

plasma derived as well as

recombinant therapeutic

proteins and products.

It is the high level of

dedication, resilience and

motiviation emerging

from a good team

spirit in cross-functional

development teams that

drives our scientists to the

extraordinary performance

in searching and finding

solutions and thereby

improve the value of our

company.”

Gerold Rempeters

Chief Production Officer

“Due to the turbulence

around octagam®, 2010

was a rather difficult year

for production. However,

based on the excellent

team work within

Octapharma we managed

to solve the technical

root cause of the ADR

issue and succeeded in

implementing a revised

production process

for octagam® which

is currently awaiting

regulatory approval.”

1) Low incidence of factor VIII inhibitors in previously untreated patients during prophylaxis, on-demand treatment, and surgical procedures, with octanate®: Interim report from an ongoing prospective clinical study. A. Klukowska, V. Komrska, M. Jansen, P. Laguna, Haemophilia (2010), 1–8

2) data on file

the US, the UK and Germany. Patient enrolment is well underway

and the start of a paediatric multicentre study is planned for 2011.

We expect to launch this new innovative Human-cl rhFVIII treatment

for haemophilia within the next few years.

Wilate® represents the next generation vWF/FVIII concentrate for

the modern treatment of patients with vWD and is about to become

the market leader in Germany and other markets worldwide. After

receiving the US licensure in December 2009, the FDA granted

orphan drug exclusivity due to wilate‘s second viral inactivation

step not available with other vWD products on the market. Wilate®

provides a high purity vWF and FVIII in the physiological 1:1 ratio.

The vWF is of high quality and includes large vWF-multimers and an

intact vWF triplet structure. Though already licensed for major surgery

in Europe, Octapharma has initiated a global Phase III study in vWD

type 3 patients to further investigate and demonstrate the efficacy

and safety of wilate® in this relatively rare group of patients. Wilate®

is already registered in more than 40 countries. For 2011 we can

expect the approval of the vWD indication in even more markets,

as well as the introduction of the more convenient 500 and 1000 IU

vial sizes which were approved by the FDA in late 2010.

Octanine® F has been used for more than 10 years for the safe and

effective treatment of patients with haemophilia B. The product

has an unsurpassed safety record without any reported case of a FIX inhibitor. We are currently working on the new octanine® F 2000 IU

vial strength, which is intended to come with a reduced infusion

volume of only 5 ml. This is another example of our continuous

commitment to further increase the quality of life of patients with

haemophilia B.

With the first development of a human cell-line for the production

of commercial therapeutic proteins, Octapharma has opened a new

platform for more improved treatments in a variety of haematological

areas. Thus, we are using our expertise with this cell line to develop

the first human cell-derived granulocyte-colony stimulating factor

(G-CSF). Together with a prolonged half-life, this innovative G-CSF

is designed to introduce a new level of G-CSF treatment in patients

with malignancies and chemotherapy induced neutropenia, as well

as newly evolving future G-CSF indications.

– 19 –– 18 –

Olaf Walter MD

Head of IBU Hematology

“In the absence of a cure,

the challenge is to provide

a low immunogenic

FVIII, that prevents the

development of FVIII

inhibitors as the major

reason for uncontrolled

and often life-threatening

bleeding in haemophilia A

patients.”

Paulo Castro,

Board Member &

President of the Global

Management Committee

International Marketing

“The events around

octagam® in 2010

were a stress test for

Octapharma’s commercial

and business operations.

The decisive actions

of the company in

dealing with the situation

inarguably shows its high

level of responsibility,

professionalism and

resilience, with the

speed and quality of the

response validating both

our past success and

positive future outlook.

On the individual level,

the manner that everyone

showed their high level

of self-motivation and

a striking emotional

strength, only allows me

to state that once this

problem is resolved,

the company will have

overtaken the crisis

with the winning

dynamic it has always

demonstrated.”

Strong commitment to quality – from development to marketing of a product

Nicholas Jacobson

Quality and

Compliance Officer

“Production is the

backbone and Quality

is the spirit of a company

manufacturing

pharmaceutical products”

– 21 –– 20 –

Quality Assurance

In the past few years the requirements on quality, and consequently

on compliance, have steadily been increased by the pharmaceutical

industry in accordance with the requirements of the regulatory

authorities.

As Octapharma markets its products worldwide, it is confronted with

the requirements of many different regulatory bodies. To better meet

the growing challenges for production and to ensure product quality,

Octapharma has split the extensive scope of responsibilities of a Chief

Operating Officer into two new and separate functions, namely a

Chief Production Officer and a Quality & Compliance Officer. Both

are members of the Management Board. This reflects the company’s

strong commitment to quality.

When manufacturing medicinal products derived from human plasma,

quality already starts with the procurement of the source material –

in Octapharma’s case at the plasma donor – and ends in a stringent

surveillance of the efficacy and safety of the product when used by

our patients, i.e. pharmacovigilance.

Therefore, all “quality assuring” areas in plasma and auxiliary material

sourcing, in manufacturing, quality control, in sales organisations and

in pharmacovigilance as well as regulatory compliance responsibilities

have been combined under the function of the Quality & Compliance

Officer. This ensures that the quality system is strengthened,

supported and continuously improved throughout the entire life

cycle of a product, from development to marketing.

Plasma Collection

Octapharma operates 62 plasma collection centres in the US and

Europe. Long term supply arrangements with a large network of

non-profit suppliers of recovered plasma in both Europe and the US

are also important contributors to the company’s success.

Octapharma’s plasma collection organisations focus on developing

and operating state-of-the-art plasma centres and developing robust

regulatory and quality systems, which supports the field and plasma

centre regulatory and quality personnel.

In the US, a major Standard Operating Procedure (SOP) revision to

incorporate best practices has been completed and has created a

more efficient and comprehensive regulatory system. The 45 plasma

centres access the new SOP manual and conduct personnel training

through MasterControl, an automated quality software system.

Automation of the quality systems has been a major and ongoing

initiative, and will include automated modules for Change Control,

Deviation, Lookback, Validation and Audit Management when

completed.

The automated FDA-licensed donor management system that serves

our US plasma centres has also been updated, laying a foundation for

the future by leveraging automation and employing highly qualified

and experienced staff to maintain the highest level of quality at our

centres. To further enhance donor centre efficiency eQue, a new

component of the automated donor management system where

the donor electronically enters responses to the medical history

questionnaire, has been implemented.

The US fleet of plasma centres will continue to be inspected by

the Austrian regulatory agency (AGES). By the end of 2011, 42 of

the 45 plasma centres are expected to be EU-certified by AGES,

increasing Octapharma’s capacity and flexibility to serve the EU

and other markets in addition to the US.

The plasma collection centres and not-for-profit partners continue

to collaborate with corporate regulatory and quality assurance teams

to build comprehensive regulatory and quality systems that comply

with all global quality and regulatory requirements.

62 plasma collection centres in the US and Europe

Judy Smith

Executive VP & COO

Octapharma Plasma Inc

“The key to quality and

regulatory compliance

lies in the talent of our

employees. We have

assembled a cadre of

Regulatory and Quality

employees who work

collaboratively to maintain

the highest level of quality

at our centers and are

continuously supported

by our other corporate

departments. Quality and

regulatory compliance

are keys to our ongoing

success, and we will

always strive to improve

in these two areas.”

– 23 –– 22 –

Investments for the Future

In 2010, Octapharma invested more than 67 million Euro in its plants

in Vienna, Lingolsheim, Stockholm and Springe to improve good

manufacturing practice (GMP) standards and to increase the capacity

of fractionation, purification and filling.

Vienna renovated the fractionation area and completed construction

of the new purification area and a new warehouse for production

materials. Lingolsheim purchased land for the plant extension

(logistic platform), installed new buffer tanks for fractionation and

started adapting the aseptic premises for the future installation of

new filling lines and freeze dryers. Stockholm completed construction

of a production line for rFVIII, finalised the new octaplas® line and

constructed an automated packaging line for liquids. Springe extended

the capacity of basic fractionation to achieve an annual throughput

of 1.2 million litres of plasma and completed the new warehouse

and the new administration building.

Work also proceeded according to plan on the development

of the new research and development site, located in the new

Technology Park close to the University Hospital in northern

Heidelberg, Germany. The 10,000 square meter facility will combine

both laboratories and office space for the continued development

of recombinant products.

It will enable the transfer of Octapharma Biopharmaceuticals

facilities from their current base in Munich to Heidelberg in the

first phase of construction as well as future expansion of other R&D

projects. The building itself will consist of five floors with research

laboratories, a pilot plant, offices and conference areas as well as

space for further expansion.

Modern production and research facilities to bring progress to a higher level

– 25 –– 24 –

Frederic Marguerre

Board Member

Shareholders‘

Representative

President,

Octapharma Plasma, Inc.

“The commitment and

loyalty of our employees,

when these qualities

were most needed, to

work together both in

investigating a solution

to the octagam® issue

and maintaining the

forward momentum and

geographic expansion

of the full product range,

shows the strength of

this company.”

Solid financial basis for the Octapharma Group

Annual Accounts

The year 2010 has shown the importance for a solid financial

basis for the Octapharma Group, a position that the company has

established over years of financially responsible management.

The recall of the biggest turnover products, octagam®5% and 10%,

in August and September 2010, along with the associated costs for

the recall, meant that the financial results for the second half of the

year were discouraging.

The total turnover for 2010 finished at 718 million Euro, which is

291 million Euro or 29% below the record year of 2009.

Considering the full impact of the recalls are accounted for in this

turnover figure, the full year 2011 remains solid from the top line.

The implication of the drop in turnover is that Earnings Before

Interest and Tax (EBIT), while still positive, was reduced to 24 million

Euro in 2010 compared with 278 million Euro in the previous year.

The main contributor to this sudden income erosion is the

octagam®5% and 10% recall with an impact of net 190 million Euro

covering the turnover impact as well as the provision for obsolete

inventories.

Management, while acknowledging this difficult development, did

not over-react but continued the priorities of continuing the business

and preparing for the future both in terms of R&D projects and

retaining the required skilled employees. Only the necessary cost

reductions and project deferrals were taken, since management took

the view that the recall and getting back to the market was a short

term setback rather than a medium or even long term issue.

The net income has developed a little better than EBIT owing to

income from foreign exchange gains realised during 2010 and the

profit from an associated company.

– 27 –– 26 –

Flemming Nielsen

President,

Octapharma USA, Inc.

“The future of

Octapharma is built upon

financial strength, vision

and commitment. It is

these qualities that keep

our organisation focused

and committed to the safe

and optimal use of human

proteins. At Octapharma,

the status quo for product

development is never

enough and it is the drive

and determination to

bring progress to a

higher level which sets

this company apart from

the rest.”

The solid basis of the company is further seen in the balance sheet

items. There are almost no intangible assets in the balance sheet. The

development of the last years had been established without creating

goodwill or other intangible assets to be written off which would

have further negatively impacted the result. The plasma centres in

the US have been built up with a high cost burden in the income

statement of 2008–2010, so that they are correctly valued and no

extra depreciation is to be taken now.

The investment in fixed assets has continued with 89 million Euro

in 2010 to ensure that the development of the new products such

as human-cl rh FVIII can take place. Further the general production

capacity is increasing across the production sites.

The drop in turnover resulted in an inventory far above the levels

of previous years with a net inventory of 503 million Euro (an increase

of 173 million Euro) whereas the accounts receivable only decreased

by 50 million Euro to 217 million Euro.

To finance the establishment of plasma centres and the other

investments plus the inventory increase, cash funds have been utilised.

Therefore the cash at the end of 2010 is reduced considerably to

74 million Euro, which is 197 million Euro below last year.

– 29 –– 28 –

The company has ensured three years of committed credit lines

totalling 225 million Euro with the three house banks so adequate

cash is available, thus ensuring Octapharma continues operating

in a normal fashion.

The equity ratio increased to 81% (from 79% in the previous year)

which is the ultimate sign of a financially conservative and solid

company.

The outlook for 2011 mainly depends on the timing of the octagam®

return to the markets. It is expected that the turnover will develop in

a positive way in 2011 owing to volume increases for all products,

whereas the outlook for the net income is even more positive owing

to the absence of the abnormal one off costs experienced in 2010.

– 31 –– 30 –

2010Annual

Report

2010 2009 2008 2007 2006

Profit from operations 24,140 278,320 256,045 237,497 126,850

Net profit for the year 45,807 253,533 231,018 206,751 105,694

Year-end headcount 4,238 3,977 3,037 1,968 1,826

Return on average equity 5% 29% 35% 45% 32%

Profit from operations per employee 6 78 92 130 77

Current ratio 533% 517% 468% 404% 332%

Days of sales in receivables 106 93 101 106 108

Days of purchases in inventory 282 173 135 149 189

Cash flow from operations -62,003 169,433 208,180 209,822 85,406

Expenditures to ensure future prosperity 151,114 175,346 140,549 69,367 43,239

• Research and development 40,347 38,502 25,115 23,582 19,544

• Capital expenditures and

investments in activities110,767 136,844 115,434 45,785 23,695

Key Figures of the Octapharma Group

(Monetary figures in 1,000 EUR)

1,200,000

1,000,000

800,000

600,000

400,000

200,000

0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Net sales in 1,000 EUR

300,000

250,000

200,000

150,000

100,000

50,000

0

Operating income in 1,000 EUR

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Average headcount

– 33 –– 32 –

2010Annual

Report

Income Statement of the Octapharma Group

2010 2009

Gross sales 749,476 1,043,068

Sales deductions -31,676 -34,253

Net sales 717,800 1,008,815

Cost of sales -544,156 -594,012

Gross profit 173,644 414,803

Research and development -40,347 -38,502

Selling and marketing -65,616 -56,618

Regulatory affairs / quality audit -7,620 -7,490

General and administration -38,839 -31,953

Other income 4,196 8,982

Other expenses -1,278 -10,902

Total operating expenses -149,504 -136,483

Operating income 24,140 278,320

Non-operating income and expenses 19,962 10,390

Profit before taxes 44,102 288,710

Income tax 1,705 -35,177

Net profit for the year 45,807 253,533

(All figures in 1,000 EUR)The following summary financial statements, which comprise the summary income statement

as at December 31, 2010, the summary balance sheet and summary cash flow statement for the

year then ended are derived from the financial statements of Octapharma Nordic AB, Stockholm,

for the year ended December 31, 2010 aggregating non-material financial statement captions.

– 35 –– 34 –

2010Annual

Report

31.12.2010 31.12.2009

Liabilities and equity

Trade payables and other payables 65,483 77,197

Payables to related parties 477 194

Income tax payables 11,269 29,732

Accruals and short-term provisions 78,603 65,884

Total current liabilities 155,832 173,007

Deferred income 2,769 2,760

Provisions 45,919 62,113

Deferred tax liabilities 25,866 26,855

Total non-current liabilities 74,554 91,728

Total liabilities 230,386 264,735

Share capital 100 100

Retained earnings 991,878 976,087

Hedging reserve 5,869 2,635

Currency translation adjustment -285 -10,622

Total equity attributable to shareholders 997,562 968,200

Total liabilities and equity 1,227,948 1,232,935

(All figures in 1,000 EUR)

Balance Sheet of the Octapharma Group

31.12.2010 31.12.2009

Assets

Cash and cash equivalents 74,371 270,709

Trade receivables 217,104 266,789

Other receivables 1,744 1,457

Receivables from related parties 0 250

Inventories 503,378 329,894

Other current assets 34,113 25,538

Total current assets 830,710 894,637

Financial investments 2,608 2,714

Deferred tax assets 33,820 20,503

Investments in associates 4,783 6,192

Intangible assets 14,665 15,726

Property, plant and equipment 341,362 291,129

Other non-current assets 0 2,034

Total non-current assets 397,238 338,298

Total assets 1,227,948 1,232,935

(All figures in 1,000 EUR)

Cash Flow Statement of the Octapharma Group

2010 2009

Net profit for the year 45,807 253,533

Depreciation on tangible and intangible assets 74,373 58,631

Change in fair value of non-current assets -16,473 2,112

Share of (profit) loss of associates -720 -1,335

(Profit) loss on sale of property, plant and equipment

238 -74

Changes in long-term liabilities and provisions -16,393 -18,574

Cash flow before changes in working capital 86,832 294,293

Increase / decrease of working capital -148,835 -124,860

Net cash from operating activities -62,003 169,433

Acquisition of property, plant and equipment -89,060 -132,237

Acquisition of intangible assets -21,707 -4,445

Investments in associates, short and long-term financial investments

3,178 1,626

Proceeds from sales of property, plant and equipment and intangible assets

2,214 989

Net cash used in investing activities -105,375 -134,067

Dividends paid -30,000 -30,000

Net cash used for financing activities -30,000 -30,000

Effect of exchange rate fluctuations 1,040 518

Net change in cash and cash equivalents -196,338 5,884

Cash and cash equivalents beginning of period 270,709 264,825

Cash and cash equivalents end of period 74,371 270,709

(All figures in 1,000 EUR)

2010Annual

Report

– 37 –– 36 –

KPMG Ltd AuditBadenerstrasse 172 P.O. Box Telephone +41 44 249 31 31CH-8004 Zurich CH-8026 Zurich Fax +41 44 249 23 19 Internet www.kpmg.ch

REPORT OF THE INDEPENDENT AUDITOR ON THE SUMMARY FINANCIAL STATEMENTS

Octapharma Nordic AB, Stockholm

The accompanying summary financial statements on pages 32 to 36, which comprise the summary balance sheet as at December 31, 2010, the summary income statement and summary cash flow statement for the year then ended, are derived from the audited financial statements of Octapharma Nordic AB, Stockholm, for the year ended December 31, 2010. We expressed an unmodified audit opinion on those financial statements in our report dated March 25, 2011.

The summary financial statements do not contain all the disclosures required by International Financial Reporting Standards (IFRS). Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of Octapharma Nordic AB.

Management’s Responsibility for the Summary Financial Statements

Management is responsible for the preparation of a summary of the audited financial statements on the basis described on page 32 of this report.

Auditor’s Responsibility

Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810, “Engagements to Report on Summary Financial Statements.”

Emphasis of MatterIn our audit report we have included an emphasis of matter paragraph, which refers to a note in the financial statements describing the uncertainty related to the timing of the re-launch of the Octagam products in markets, where the approval has been suspended after the voluntary market withdrawal. Our opinion is not qualified in respect of this matter.

Opinion

In our opinion, the summary financial statements derived from the audited financial statements of Octapharma Nordic AB for the year ended December 31, 2010 are consistent, in all material respects, with those financial statements, on the basis described on page 32 of this report.

KPMG Ltd

Fredy Luthiger Markus Ackermann

Zurich, March 25, 2011

Contact Details

HeadquartersOctapharma AGFrederic MarguerrePaulo CastroUlrich ThibautRoger Mächler (acting CFO)Seidenstrasse 28853 LachenSwitzerlandTel. +41 55 4512121Fax +41 55 4512110frederic.marguerre@octapharma.chpaulo.castro@octapharma.comulrich.thibaut@octapharma.comroger.maechler@octapharma.ch

Australia Octapharma Australia Pty. Ltd.Matt RiordanFrederic MarguerreJones Bay Wharf 42/26-32 Pirrama RoadPyrmont NSW 2009AustraliaTel. +61 2 85725800Fax +61 2 85725890matt.riordan@octapharma.chfrederic.marguerre@octapharma.ch

AustriaOctapharma Pharmazeutika Produktionsgesellschaft m.b.H.Nicholas Jacobson Bernhard KernerOberlaaer Straße 2351100 ViennaAustriaTel. +43 1 610321313Fax +43 1 610329300nicholas.jacobson@octapharma.combernhard.kerner@octapharma.com

Octapharma Handelsgesellschaft m.b.H. Norbert MüllerOberlaaer Straße 2351100 ViennaAustriaTel. +43 1 610321220Fax +43 1 610329103norbert.muller@octapharma.de

Azerbaijan Representative office of Octapharma AG Namik Pashayev 96 Nizami Street, The Landmark III, 4th floor, 1010 Baku Azerbaijan Tel. (+994) 12 498 8172 Fax (+994) 12 493 5931 namik.pashayev@octapharma.com

– 39 –– 38 –

BelgiumOctapharma Benelux S.A./N.V.Laurent de NarbonneRue de stalle 63/41180 BrusselsBelgiumTel. +32 2 3730890Fax +32 2 3744835laurent.de-narbonne@octapharma.com

BrazilOctapharma Brasil Ltda.Samuel Mauricio Av. Ayrton Senna, 1850Sala 118–, Barra da Tijuca22775-001 Rio de Janeiro-RJBrazilTel. +55 21 24303183Fax +55 21 24211691samuel.mauricio@octapharma.com.br

CanadaOctapharma Canada Inc.Sri Adapa171 East Liberty StreetSuite 326Toronto, Ontario M6K 3P6CanadaTel. +1 416 5315533Fax +1 416 5318891sri.adapa@octapharma.ca

ChinaOctapharma BeijingRepresentative OfficeChen Xuyu Matt RiordanSuite 815, Zhongkun Plaza59 GaoLiangQiaoXieJieHaiDianQu, Beijing 100044ChinaTel. +86 10 62169126Fax +86 10 62193528chen.xuyu@octapharma.commatt.riordan@octapharma.ch

Czech RepublicOctapharma CZ s.r.o.Miroslav GresikArgentinská 38170 00 Prague 7Czech RepublicTel. +420 2 66794310Fax +420 2 66794311miroslav.gresik@octapharma.com

DenmarkOctapharma Nordic AB David AnderssonLyngbyvej 20 2100 Copenhagen Denmark Tel. +45 70200354 Fax +45 70251080 david.andersson@octapharma.com

GermanyOctapharma GmbHReinhard RettinghausNorbert MüllerElisabeth-Selbert-Straße 1140764 LangenfeldGermanyTel. +49 2173 9170Fax +49 2173 917111reinhard.rettinghaus@octapharma.denorbert.mueller@octapharma.de

Octapharma GmbHSybille WernerOtto-Reuter-Straße 306847 Dessau-RosslauGermanyTel. +49 340 55080Fax +49 340 5508111sybille.werner@octapharma.de

Deutsche Gesellschaft für Humanplasma mbHHubert FranzaringElisabeth-Selbert-Strasse 1140764 LangenfeldGermany Tel. +49 2173 9170Fax +49 2173 917111hubert.franzaring@octapharma.de

Octapharma Produktionsgesellschaft Deutschland mbHGerold RempetersEldagsener Straße 3831832 SpringeGermanyTel. +49 5041 77918170Fax +49 5041 77918490gerold.rempeters@octapharma.com

Octapharma Biopharmaceuticals GmbHCarola SchröderAm Klopferspitz 19/19a82152 MartinsriedGermanyTel. +49 89 70076960Fax +49 89 70076961carola.schroeder@octapharma.com

GreeceOctapharma Hellas SAGeorge Kalbitzer60, Posidonos Ave.166 75 Glyfada AttikiGreeceTel. +30 210 8986500Fax +30 210 8986044octapharma.hellas@octapharma.gr

FinlandOctapharma Nordic ABJanne NissiläRajatorpantie 41 C01640 VantaaFinlandTel. +358 9 85202710Fax +358 9 85202713janne.nissila@octapharma.fi

FranceOctapharma S.A.S.Frederic Cambecedes70-72 rue du Maréchal Foch67381 LingolsheimFranceTel. +33 3 88788989Fax +33 3 88788978frederic.cambecede@octapharma.fr

Octapharma France S.A.S.Laurent de Narbonne62 bis Avenue André Morizet92100 BoulogneFranceTel. +33 1 41318000Fax +33 1 41318001laurent.de-narbonne@octapharma.com

ItalyOctapharma Italy SpaAbramo BrandiVia Cisanello 14556124 PisaItalyTel. +39 050 549001Fax +39 050 5490030abramo.brandi@octapharma.com

Kazakhstan Representative office of Octapharma AGSvetlana Safarova Dostyk Str. 180, office 42 050051 Almaty Kazakhstan Tel. +7 7273201541 Fax +7 7273201541svetlana.safarova@octapharma.com

MexicoOctapharma S.A. de C.V.Angel SosaCalzada México Tacuba No. 1419Col. Argentina PonienteC.P. 11230 México, D.F.MéxicoTel. +52 55 53995644Fax +52 55 55270527angel.sosa@octapharma.com.mx

New ZealandOctapharma New Zealand LimitedMatt RiordanLumley Center88 Shortland StreetAucklandNew ZealandTel. +61 2 85725800Fax +61 2 85725890matt.riordan@octapharma.ch

NorwayOctapharma ASJohn Erik OernIndustrivegen 232050 JessheimNorwayTel. +47 63988860Fax +47 63988865john.erik.oern@octapharma.no

PolandRepresentative office of Octapharma AGJaroslaw Czarnota39a Domaniewska Street, Building A02-672 WarsawPolandTel. +48 22 2082733Fax +48 22 2082767jaroslaw.czarnota@octapharma.se

PortugalOctapharma Produtos Farmacêuticos, Lda. António Gama da SilvaRua da Graça, 141170-169 LisboaPortugal Tel. +351 21 8160820 Fax +351 21 8160830 antonio.silva@octapharma.pt

Octapharma Gestão Estratégica e Operacional, Lda.Paulo CastroEric BallestrazQuinta do Lamas Lote 5Cave, Zona Industrial da Paiã1675 – 076 PonthinaPortugal Tel. +351 21 8107000Fax +351 21 8107010paulo.castro@octapharma.pteric.ballestraz@octapharma.pt

Latin America UnitEric BallestrazRua da Graça, 141170-169 LisboaPortugal Tel. +351 21 8160820 Fax +351 21 8160830 eric.ballestraz@octapharma.pt

RussiaOctapharma Russia LLCOlga KoniuhovaNorthern Tower, 19th Floor10 Testovskaya StreetMoscow 123317Russian FederationTel. +7 495 6621815Fax +7 495 6621891olga.koniuhova@octapharma.com

Saudi ArabiaRepresentative office of Octapharma AGMaher Abu AlrobAl-Thalia StreetPO Box 301712Riyadh 11372Kingdom of Saudi ArabiaTel. +966 920000406Fax +966 1 2176404maher.abualrob@octapharma.com

SlovakiaOctapharma AG, o.z.z.o.Miroslav GresikZochova 6/8811 03 BratislavaSlovakiaTel. +421 2 54646701Fax +421 2 54418321miroslav.gresik@octapharam.com

South AfricaOctapharma South Africa (Proprietary) LimitedMatt RiordanSean HancockBuilding # 3Design Quarter districtCnr William Nicol and Lesley roads2191 FourwaysTel. +27 76 472 5482Fax +27 11 468 1555matt.riordan@octapharma.chsean.hancock@octaphrama.com

SpainOctapharma S.A.Diego GarciaParque Empresarial de San FernandoEdif. Berlin - planta BajaAv. Castilla 228830 San Fernando de Henares, MadridSpainTel. +34 91 6487298Fax +34 91 6764263diego.garcia@octapharma.es

SwedenOctapharma ABTobias MarguerreOlivier ClairotteElersvägen 40SE-11275 StockholmSwedenTel. +46 8 56643000Fax +46 8 56643010tobias.marguerre@octapharma.seolivier.clairotte@octapharma.se

Octapharma Nordic ABTobias MarguerreElersvägen 40SE-11275 StockholmSwedenTel. +46 8 56643000Fax +46 8 56643010tobias.marguerre@octapharma.se

United KingdomOctapharma LimitedSue GriffinThe Zenith Building26 Spring GardensManchester, M2 1ABUnited KingdomTel. +44 161 8373770Fax +44 161 8373799jo.birch@octapharma.co.uk

USAOctapharma USA, Inc.Flemming Nielsen121 River Street, Suite 1201Hoboken, New Jersey 07030USATel. +1 201 6041130Fax +1 201 6041131flemming.nielsen@octapharma.com

Octapharma Plasma, Inc. Frederic MarguerreJudy Smith3525 Whitehall Park Drive, Suite 500Charlotte, North Carolina 28273USATel. +1 704 6544600Fax +1 704 6544700frederic.marguerre@octapharma.chjudy.smith@octapharmaplasma.com

Octapharma AG · Seidenstrasse 2 · 8853 Lachen · Switzerland · Tel. +41 55 4512121 · Fax +41 55 4512110 · www.octapharma.com

Editorial content: Octapharma AG, Frederic Marguerre · Design, artwork, production: Robert Becker, Concept Design