Kiitoksia puheenjohtaja.
Thank you very much, Chairperson, and good afternoon to everybody from my part as well. Good afternoon to all of you here at the Messukeskus and to you who are participating online. It's wonderful to see so many of the shareholders here present. Now, let me go through the previous financial year, 2023, and prospects for this year and also the Orion strategy and financial objectives. Then when I finish my presentation, you are free to put forward questions pertaining to the presentation itself or to other matters pertaining to the company's activities. So here is the disclaimer clause before the presentation. Let me introduce to you my executive management board in alphabetical order, as always. First of all, Satu Ahomäki. She is responsible for the generics and consumer health in Finland, Scandinavia, Eastern Europe, and our business-to-business activity. Then we have Olli Huotari.
Corporate functions which cover patents, asiat, lakitoiminnot, yhteiskunnalliset legal matters, social ja muutamia hyvin laajat matters, just to mention a few. It's a very large responsibility that he has. And then Juhani Kankaanpää. He's responsible for our global operations, our manufacturing sites, acquisitions, and security. And then we have Jari Karlson. He's our CFO, he'll be there until 30th of April this year. And today Jari is participating in his 22nd annual general meeting. I don't know if anybody amidst us has participated in so many AGMs, and so that means that Jari has seen the development of our company from a small Nordic company to a global company. And at this stage, I would like to thank Jari very warmly for his participation in Orion activities. And then we have a new member, Julia Macharey. She's heading our people and culture activities.
This is a new activity in our management board. This is something that we want to develop because, after all, we direct our work through people. We have to adapt to cultural changes. Julia came from Valmet, where she was also responsible for people and culture activities. And then Virve Laitinen, corporate strategy and program management, IT activities as well. And then Niklas Lindstedt, animal health. Then we have Outi Vaarala. Meidän tutkimus ja tuotekehitys, innovative medicines, research and development. Actually, I misspoke the alphabetical order, but I was supposed to mention Hao Pan first. He's responsible for branded products, and he's based in the UK.
The European Sales Organization and also the APAC area. And then a new member, René Lindell, hän tulee Rovio-yhtiöstä. Rovio company, where he was a CFO, so he will start his responsibilities on the 1st of May, so he didn't quite make it to this particular meeting. Now let's move on, and let us take a look at the year 2023. And before I go through these figures, it's good to remind ourselves that our reference period, 2022, was a bit different. As you can remember, we signed our cooperation agreement for prostate cancer cooperation with MSD, a big corporation, and we received EUR 290 million as a signing fee. That's a gross fee, and this is something that you don't receive every year. So this is something we have to keep in mind when we compare things between 2023 and 2022.
Now, net sales in 2023 was EUR 1,189.7 million. This was a decrease of 11.3%. Now when I look through these different business activities, you will see what led to this decrease in numbers. Keeping in mind our reference year and when we made the calculation, keeping in mind this upfront payment, it means that our net sales grew 7%, which is a very good result. Now then operating profit, EUR 274 million, with the minus of 37.5%. We have to remember here as well that we had this considerable upfront payment from 2022. Then if we deduct the net impact of that agreement and another factor from 2023, the fund of the Orion Pension Fund, which was transferred, so that leads us to an increase in operating profit of 5%.
So we can look at the absolute numbers in comparison to the previous year, but also without these two specific items. Now, a clear difference in last year was that our cash flow was smaller. We received less cash than at the end of the previous year, and this is linked to the smaller operating profit. And there is the new phenomenon which will continue when there is an increase in Nubeqa. When its sales are increasing globally, we receive royalties from our partner Bayer, and that booking of the royalty takes its time, how much we will get from that from Bayer, and what are the payment periods. So that means that our receivables from our partners increase as the net sales of Nubeqa grow. That means that also Nubeqa-related inventories will increase.
So we will have bigger inventories of the final product and also materials that are used for its manufacturing, and this all has an impact on the cash flow. This is a new phenomenon, a new dynamics in the cash flows of the company, and as such, they are not worrisome because money is still coming in. This is all linked to the payment conditions. And there is an overall increase in inventories, not just linked to Nubeqa, but also other products. During the pandemic, we understood that we have to keep up a certain level of inventory so that we can prepare ourselves for difficulties. And also, we are happy that we have these inventories in this present situation of industrial action. Now, if we look at the development of the net sales, you can see on this slide something I already told you.
The biggest difference is created by the net impact of the agreement, EUR 201.2 million, and then another significant factor, Simdax and dexmedetomidine sales, have decreased. They already have 10 generic competitors globally, and therefore their prices have decreased and also volumes to a certain extent. And then something that we weren't prepared for is item 3, minus EUR 25 million. This is linked to the entacapone products. Here, our partners had inventories for these products, and then they started to release those products from their warehouses, and that led to a certain decrease in prices. So the markets didn't act as we expected. And then the biggest factor, EUR 32.3 million, is linked to our withdrawal from the Russian business, and this is the result we achieved in June. And to my knowledge, Orion is the only pharma company which has exited from the Russian markets, and sometimes this raises questions.
Sometimes we are asked, "Why did we do this?" But I think this is a very clear decision for a Finnish company, and we have given our reasons very clearly to those who have asked them. And then on the positive side, Nubeqa royalties have increased clearly, EUR 95.4 million, and then other products, column 5 here, EUR 58.1 million. So we can see both positive and negative matters going on throughout the year. And also, a similar picture can be seen in the operating profit, especially column 2, EUR 70.7 million product sales margin and product mix change. So here, Simdax and Dexdor are very significant factors. And then EUR 30.7 million from the transfer pension funds, B fund, to a private pension company. And then we have a strong balance sheet, and especially for this reason, we are not worried about our assets and cash flow situation.
We are in a strong financial situation, which means that if we want to, we can make investments in our manufacturing sites and also, for instance, new product rights. This balance sheet allows that. Now let us take a look at our different business activities, first of all, Innovative Medicines. This is a growing field in 2022, and we can see that the EUR 228 million upfront payment recorded in 2022 can be seen here. But if you look at the sales booked with Nubeqa, you can see how the increase is going, and it's taking place globally very fast. And we were also able to achieve a EUR 30 million sales milestone for Nubeqa, and that includes certain milestone payments. And ganaxolone molecule received authorization for the treatment of very severe ill children, and this is an oral suspension for children.
It's a different type of medication compared to Nubeqa, and now we are then carrying out negotiations on the prices and marketing in Europe. And then on the basis of those agreements, we will carry out launching activities. And then if we look at our branded products, Easyhaler, asthma inhaler, Parkinson's disease products, and hormone Easyhaler jatkaa voittokulkua Easyhaler continued a solid growth. Its sales increased by 11%, and this is a carbon neutral product, a sustainable product, and here we've been able to combine the customer needs and environmental requirements. It's very sought after in the UK, also in Germany, and of course, health authorities want to reduce the carbon footprint of these types of products. And then entacapone products, the year was a bit weaker due to the release of stocks. And then we have Divina series.
Here, also, decline is due to the discontinuation of business operations in Russia. So especially this product suffered from this exit from Russia. And then generics and consumer health, a slight minus as we saw in the branded products. However, if we take away the impact of Simdax and Dexdor, which I mentioned already, and if we only look at the generics in Finland and in Nordic countries and in Eastern Europe, then the growth here was 4%, which is an excellent level of growth considering the price competition that we have in this field. And discontinuation of Russian operations had a huge impact in this activity. So taking that all into consideration, the result is a very good one. And then animal health and other. They are combined here. In the animal health side, our partners released their inventories that had an impact on this.
Now we know that inventories are being refilled again. Of course, in the domestic animal side and pet side, we can see that people try to cut down on their expenses. They will not take their animals readily to vets. Also in the production animal side, we can see that the energy crisis has had its impact. That means that when costs increase, then this business activity is hit by it. Now here you can see a list of our top 10 products. There are quite a few figures on the red side. As I mentioned, the discontinuation of the Russian business, which we made a decision that we took very readily, that had an impact. Then the release of inventories by our partners and the generic products. Especially the Russian situation and the inventory situation, those are now over.
They will not have an impact on us anymore. There's one interesting message from this slide. When we look at these innovative medicines, they cover 20% of our net sales, and last year they only covered 9%. So it has more than doubled since. So this is linked to the clear increase of Nubeqa sales. The other products have decreased a bit, but the situation is improving. And then R&D portfolio näkyy täällä. Here you can see our portfolio. So the projects that are in the clinical phase, which are tested on humans. Quite sure. If I remember this correctly, perhaps Jari can remember it. But I think that such a versatile pipeline is quite significant. We have four phase three researches going on for prostate cancer, and darolutamide and ODM-208 molecule with MSD. This research is going on as well.
So the Bayer aims at being able to use darolutamide at an earlier stage with patients, and ODM-208 aims to be able to use this as soon as the research has been finalized in a couple of years. Then we have phase two research going on with insomnia, and then phase one we research the molecule ODM-111 for pain relief. And this is quite a new mechanism. It doesn't cause dependency as opioids, but we expect this to have as much impact as opioids would have, and therefore try to decrease the use of opioids. Then we brought into a new tumor molecule, so we have here the ODM-212 for solid tumors. This is an ongoing research going, and I cannot say at the moment for which particular tumors it would be used for.
This impact mechanism is quite new for us and quite new globally. So these are partly innovative treatments, partly validated already by our partners. And of course, we strive to bring in new projects from our preclinical portfolio to this research stage. So that was 2023. And now a few words of corporate responsibility. Here we have four important factors. First of all, patient safety as a top priority, which means that medicines are available at the right time for a competitive price and with high quality. And then secondly, better environment. Also ethics. This is linked to the management of our supply chains. We operate in many parts of the globe, and we receive raw materials in different parts of the world. And of course, the care for the well-being professionals. I would like to emphasize two particular figures here. First of all, energy savings: 11,459 MWh.
This is a huge saving. There are many reasons behind this, one of them being the fact that both in Espoo and in Turku we have started using district heating centrals, where the koko kampuksen heat and energy that we produce in our manufacturing is then reused otherwise. And this has led to significant energy savings. We have also other projects. For instance, in the greenhouse gas emissions, we try to use gas instead of fuel. At the Hanko site, we have also made use of solar energy. So we have done quite a lot already, and we aim to do a lot more. And the goal is that by 2030, Orion would be a carbon-neutral company. There we go. It just took a while. On sustainability. A few words more.
Perhaps you have already seen in the press something about the EU's Corporate Sustainability Reporting Directive, CSRD, which has been adopted. And we have prepared ourselves for this already for a couple of years, which means that for the financial year 2024, we can operate within the requirements of this directive. So this serves both companies and investors so that everybody can see how we have to operate within sustainability requirements. And then taxes. About 90% of our tax footprint is created in Finland. So this covers both taxes borne and also taxes collected, which means dividends and also employer charges and salaries, etc. Now let us move on to 2024 and our outlooks and estimates. Our net sales would be EUR 1,340 million-EUR 1,410 million. This is the range. So our operating profit would be between EUR 270 million and EUR 310 million now.
The basis for the outlook can be seen here. Of course, first of all, we have the increased Nubeqa sales. Then at the operating profit side, we can see that we will receive another milestone payment from Bayer. Also this is linked to our increasing investments in R&D more than we have invested in the previous years. I will tell you a bit about that when I talk about our strategy. This is the right time to build for the future, all the way up to 2030 since we have clear increased sales. Of course, we want to invest in sales and marketing, taking into account the geographical extension of our activities. Easyhaler product portfolio is increasing. Entacapone will remain the same. More treatments are necessary, but the prices will come down.
Generics and consumer health will continue to grow, except for Simdax and dexmedetomidine. We also can see growth this year for animal sedatives. A few words about the R&D costs. It's good to keep in mind that these research projects are very long in time, and they are also very expensive. They are costly. Here you can see the research projects that are ongoing. Perhaps it's good to remember that the expenditure linked to phase one, then we talk about tens of millions of EUR in expenditure. When we move on to phase two research, then we talk about EUR 50 million-EUR 200 million, depending on the indication area, whether we talk about pain related to tumors, depending on how many patients we have here and what type of metrics are utilized in the research.
When we move on to phase three research, then the expenditure makes a significant leap because the phase takes a long period in tumor research, for instance. We are talking about very extensive researches. We might have 1,500 patients involved. Of course, phase three doesn't cover only one particular research. It's a whole program of research. We might have several sets of 1,000 or 1,500 patients. Here we talk about anything between EUR 100 million and EUR 1,000 point something million as expenditure. Now at the end of this year, we will start to new phase two researches in pain treatment, which means increase in expenditure for this year. We would also hope that we can have new research projects in our preclinical pipeline. Here is something that we have, this preclinical pipeline development. Jotka on nyt biologisia lääkkeitä.
Eli tähän asti me on kehitetty. And the first few ones you can see, there are biological medicines. Ja nyt siirrytään sitten biologisiin. Ja niillä on semmoinen ero aikaisempiin. And these are different in the way that here the actual product is already developed before the human testing. So that means that the cost will be accrued already in the early phase of this research stage. So as you can see, we are doing a lot in this preclinical development phase. Now sitten let's move on to something totally different. We have now gone through the years 2023 and 2024 and our research pipeline. And now I would like to talk to you about our strategy. We have updated our strategy with the management and with the board, and we have tried to consider what is at stake here, what is the direction we want to take.
Now here you can see our mission. All companies have their mission, why they exist. First of all, we are inspired by the fact that we have a Nordic heritage. We operate globally. We base our activities to trust and confidence. And this is something how Orion is seen outside of Finland. So we want to support people all around the world. So we operate globally. And we want to help people to live their full lives. And this actually covers all our business operations: innovative medicines, generics, and consumer health. And this means that we can offer answers to the needs of our customers. We can offer a large product portfolio also to the health authorities to offer products for them. We then develop innovative medicines for rare diseases and conditions, try to find solutions here. And this is something that we want to export.
In the chemical industry side, Orion was last year the fastest growing operator. Our role is very important within our customers and also inside our company. As a new dimension here, we have this geographical growth. We started from Finland, then we went to Nordics, then to Europe in 2010, and then forward to the Asian and Pacific countries. Last year, we established a research and development unit in the U.S.A.., which is a small unit concentrating on marketing these types of products. Of course, the U.S.A., they cover more than 40% of all pharmaceutical markets worldwide. In order for us to grow there, we have to be able to understand better how they operate. We are very happy with our operations in Japan. We want to operate. We want to have the rights for Stalevo, Parkinson's disease medication.
Similarly, as we have done here, we want to enlarge our portfolio in Japan around the Parkinson's disease medication. Here you can see the map of our operations. So our sales operations marked in blue, the whole of Europe. Some Asian countries and Pacific. Now there is still a lot to be done when we remember that the U.S., China, and Japan are the biggest operators. Then there is Germany, some European countries. Then we can also talk about Canada and Brazil. So in this sense, this new strategy tries to solve this situation: how Orion can conquer these new markets, especially the U.S. You can also see our R&D operations: the U.K., U.S., Espoo, Turku, and India, and Shanghai. With the back office operations. Miksi juuri nyt tällainen strategia? Why now this type of strategy?
First of all, necessary that we guarantee growth also in the 2030s. Nubeqa myötä, Easyhalerin kasvun myötä. Nubeqa is growing, Easyhaler is growing, and generics mean this all means that we have the means to invest in growth and innovation. Tuotekehitys portfolio. Also R&D capabilities and quality have been validated. Nubeqa is now Orion's biggest product, and it's the fourth biggest product for Bayer globally. So Orion is capable of developing great products. ODM-208 is in phase three, and there are other great validated projects undergoing. So we have great assets. We have good cash flow that we can use to build future. And all our activities have shown their resilience also in difficult times, and they have been able to establish growth platforms. There is also synergy between these product lines.
If synergy products go to Japan, they then form a base in Japan for innovative medicines that could be then developed there and launched there. As I stated, in the 2030s, we will be facing the end of the patent for Nubeqa. It means that we have to act now. Here our basic pillars: three of them. We want to build a customer-driven portfolio. We want to expand into new geographies and strengthen our partnerships. And we want to develop our competencies in safety and sustainability and in our production chains. In production and supply chains, we know that competition is tough. We have to increase our trustworthiness in that sector as well. Now we have divided our strategy into three time periods, and they somewhat overlap and intertwine. It's always easier to communicate and arrange one's thoughts in this way.
First of all, we want to strengthen and expand. We are now in this stage. We strengthen European APAC markets with Easyhaler and Nubeqa. And then we move on to Japan, and hopefully we will be able to get new products there. And then secondly, it's time to build and invest into our development projects. Hopefully we can enhance our sales and marketing in Europe and then move swiftly forward to the 2030s. Of course, 2030, it sounds like it's a bit far away. But when I showed you the time period that it takes to develop a new product, 5-10 years. So this means that we really have to accelerate here and move forward swiftly. We have also updated our financial targets up until 2028. Here we have some new elements, but also some ones that you recognize.
First of all, net sales should be on the average 28% annually. This might change. It could be under 8% at certain points. Now, especially linked to the Nubeqa payment milestone. So we get these leaps during certain years. And then operating profit should go faster than the net sales. We want to maintain our equity ratio at the level of 50%. And then a new element here is the ROE. And this means that we have to really consider very carefully where we want to invest in the future. And then dividends. We will cap the payout ratio to 50%-100%. So these are the frames. This is the framework within which we aim to operate within the next five years and carry out our strategy. And of course, here we have to look at how we allocate our capital. Here we have clear priorities.
First of all, internal R&D pipeline, then dividends. And then CapEx. We have to invest in our own manufacturing sites, increasing our own capacity. And how to acquire commercial assets, which we are doing continuously, and also how we can acquire R&D assets to our R&D portfolio. And then finally, here is mentioned mergers and acquisitions. Of course, this is not a must, but if we want to support this strategy and create possibilities in new markets, new countries, or bringing those capabilities that we do not have either on the commercial side or product development side, well, that means that we have to have a very clear path as to how M&As can support our strategy and Orion's growth. I want to thank you all very warmly. This was my presentation.