Management report 

The Management Report has been prepared for the consolidated financial results of J. Molner AS, The J. Molner Company OÜ, The J. Molner Company LLC and Nordisk Element LLC (hereinafter the “Group “) for the 12 months of 2024.  

Throughout 2024, Group continued expanding its presence in the pharmaceutical industry, focusing on the development of its own generic drugs and providing analytical chemistry and method development services to third-party clients. The company primarily served customers in the United States and Europe, strengthening its position in the global market.

Key Business Developments in 2024
Product Launches & Approvals:

• Lidocaine HCL Topical Solution USP, 4% launched in the U.S. market in November 2024
• Received approval from the U.S. Food and Drug Administration (FDA) for the supplemental application to the ANDA for Desoximetasone Ointment USP, 0.05%

Strategic Partnerships:

• Product development agreement signed with a U.S. pharmaceutical company, securing:
  - Development of two new formulations
  - Elimination of future royalties on three key products
• Agreement with the U.S. Centers for Medicaid and Medicare Services (CMS), enabling broader access to generic medications market

Important notes: 

• The Group's business is not seasonal. 
• The Group's activities are not accompanied by significant environmental and social impacts. 
• Interest rates did not change significantly during the financial year and the period of preparation of the annual report. 

Risk Factors
The company operates in a highly regulated and competitive pharmaceutical industry, which presents potential challenges:

• Regulatory risks – Compliance with U.S. Food and Drug Administration (FDA) and Health Canada regulations is crucial for future approvals
• Market risks – Generic drug pricing pressures and competition from larger pharmaceutical companies
• Operational risks – Supply chain disruptions or delays in product development could impact revenue growth

Revenue
The Group’s consolidated total revenue increased by 272% year-on-year, reaching EUR 2,294,628 in 2024 (2023: EUR 617,563). Growth reflects increased demand for the company’s development expertise and research services. Revenue increase is also supported by the successful launch of Hydrocortisone Butyrate Lotion, 0.1% in November 2023, which contributed to full year of sales in 2024. Additionally, in November 2024, the company introduced Lidocaine Hydrochloride Topical Solution USP, 4%, further expanding its product portfolio.  

Direct costs
In 2024, direct costs amounted to EUR 1,935,768, representing 84% of revenue (2023: EUR 324,958, 53% of revenue).
Pass-through costs totaled EUR 1,102,892 in 2024 (2023: EUR 0). Excluding pass-through revenue and costs, the direct cost ratio would have been 70% of sales in 2024.

Other operating expenses
Operating expenses increased by 39%, reaching EUR 1,128,559 in 2024 (2023: EUR 811,948). The increase was primarily driven by higher regulatory and legal costs related to entering the U.S. pharmaceutical market, including FDA fees, pharmacovigilance, and legal consultations. The second largest contributor to operating expenses was employee-related costs, reflecting the growth in headcount.

Employee expense
Over the past year, the J. Molner team expanded from an average of 27 employees in 2023 to 33 in 2024. As a result, personnel expenses increased significantly, reaching EUR 1,614,070 in 2024 (2023: EUR 1,059,938). This growth is primarily due to the strategic expansion of the research and development team, aimed at increasing in-house product development capacity and meeting the rising demand for research and development services from customers.

To reflect the investment in own product development, J. Molner capitalized 23% (EUR 370,211) of personnel costs in 2024 (2023: 44%, EUR 466,772).

Interest Expenses
The Group’s interest expenses increased by 116% in 2024, reaching EUR 339,729 (2023: EUR 157,022). The rise in expenses is attributable to the growth in loan obligations, driven by the need to finance the development of the company’s proprietary products.

Other income and expenses
Other operating income and expenses reflect movements from currency rate fluctuations. Other operating income amounted to EUR 80,814 (2023: EUR 21,079) and other operating expenses in 2024 amounted to EUR 57,282 (2023: EUR 24,584).

Financial Ratios

The consolidated interim accounts

Consolidated statement of financial position

(In Euros) 

Consolidated income statement

(In Euros)

Consolidated statement of cash flows

(In Euros)

Consolidated statement of changes in equity

(In Euros)

In the year 2024, the voluntary reserve increased in the amount of EUR 3,059,945 and the option reserve of 40,344 euros are reflected in changes in other reserves.