Alvotech
_____________________
Annual report and Report of the
Réviseur d’entreprises agréé as of
31 December 2024 and 2023 and for the
years ended 31 December 2024 and 2023
____________________
Alvotech
9, rue de Bitbourg
L-1273 Luxembourg
Grand Duchy of Luxembourg
RCS Luxembourg B 258.884
Alvotech
_____________________
Annual report and Report of the
Réviseur d’entreprises agréé as of
31 December 2024 and 2023 and for the
years ended 31 December 2024 and 2023
_____________________
Table of Contents
Endorsement by the Board of Directors 2-8
Report of the Réviseur d’entreprises agréé 9-13
Consolidated Statements of Profit or Loss and Other Comprehensive Income or Loss 14
Consolidated Statements of Financial Position 15-16
Consolidated Statements of Cash Flows 17-18
Consolidated Statements of Changes in Equity 19
Notes to the Consolidated Financial Statements 20-69
Corporate Governance Report 70-76
Non-Financial Disclosure 77-125
Alvotech
Société Anonyme
(the “Company”)
Registered Office: 9, rue de Bitbourg, L-1273 Luxembourg
R.C.S. Luxembourg B 258.884
Management report to the General Meeting of Shareholders
Dear shareholders,
We hereby wish to submit to you the financial statements of the Company and the Alvotech Group
(“Alvotech” or the “Group”) for the financial year ending on 31 December 2024. The present report
relates to the consolidated accounts in accordance with article 1720-1 (3) of the law of 10 August 1915 on
commercial companies, as amended.
I. Business developments for the financial year ended 31 December 2024
In February 2024, the Company announced that the U.S. Food and Drug Administration (FDA) has
approved Simlandi (adalimumab) injection, the AVT02 interchangeable biosimilar to Humira. Teva
Pharmaceuticals International GmbH (“Teva”) is Alvotech’s strategic partner for the exclusive
commercialization of Simlandi in the United States. In April 2024, the Company signed an agreement
with Quallent Pharmaceuticals ("Quallent") allowing the interchangeable biosimilar to be distributed
under Quallent's private label in the U.S. Additionally, The Company extended its European commercial
partner, STADA Arzneimittel AG (“Stada”), commercial rights to AVT02 to Commonwealth of
Independent States (CIS) countries in Central Asia in June 2024.
On 26 February 2024, Alvotech announced it had received and accepted an offer from investors outside
the U.S. for the sale of 10,127,132 Ordinary Shares, for an approximate gross value of $166 million, at a
purchase price of $16.41 per share, or ISK 2,250, at the foreign exchange rate on 23 February 2024. The
shares were to be delivered to investors from previously issued treasury shares held by Alvotech´s
subsidiary Alvotech Manco. As of 31 December 2024, the settlement of the sale offers resulted in
9,213,333 Ordinary Shares delivered to investors upon the payment of $150.5 million, the net proceeds of
the transaction totaling $144 million.
The FDA approved AVT04, a biosimilar to Stelara (ustekinumab), for the U.S. in April 2024 enabling a
commercialization starting on or after 21 February 2025. Alvotech launched AVT04 in Canada with its
commercial partner JAMP Pharma ("Jamp"), on 1 March 2024 and started commercialization in Japan
with Fuji Pharma ("Fuji") in May 2024. In July 2024, the Company launched Uzpruvo, the first approved
AVT04 biosimilar to Stelara across select European countries, with its commercial partner Stada. The
Company extended Stada’s commercial rights to AVT04 to CIS countries in Central Asia in June 2024. In
October 2024, the FDA approved SELARSDI (ustekinumab) in a new presentation, 130 mg/26 ml
solution in a single-dose vial for intravenous infusion. This approval paves the way for SELARSDI to
2
further align its label with the indications of the reference product Stelara in the U.S. at launch, which is
expected in the first quarter of 2025.
In April 2024, the Company announced positive topline results from a confirmatory clinical study for
AVT05, a proposed biosimilar for Simponi and Simponi Aria (golimumab). In November 2024, the
European Medicines Agency (EMA) accepted a Marketing Authorization Application (MAA) for
AVT05. The approvals process is anticipated to be completed in the fourth quarter of 2025.
In May 2024, the Company announced its collaboration with Dr. Reddy's Laboratories SA, ("Dr.
Reddy"), for the commercialization of AVT03, a proposed biosimilar to Prolia (denosumab) and Xgeva
(denosumab), in the U.S., Europe and UK. Dr. Reddy’s commercialization rights are exclusive for the
U.S., and semi-exclusive for Europe and the UK. In June 2024, the Company extended its partnership
with Stada who will assume marketing license for AVT03 in Europe through semi-exclusive rights,
including Switzerland and the UK, as well as exclusive rights in selected markets in Central Asia and the
Middle East. In July 2024, the Company announced positive topline results from a confirmatory patient
study for AVT03. In October 2024, the EMA accepted a MAA for AVT03.
In June 2024, the Company entered into an exclusive partnership agreement with Mercury Pharma Group
Limited (“Advanz”) regarding the supply and commercialization of AVT06 (aflibercebt), its proposed
biosimilar to Eylea in Europe, except for Germany and France where the rights are semi-exclusive. In
August 2024, the European Medicines Agency (EMA) has accepted a Marketing Authorization
Application for AVT06.
The Company announced in June 2024 that all holders of the Tranche A and some holders of the Tranche
B of the 2022 Convertible Bonds exercised their right to conversion into ordinary shares at the fixed
conversion price of $10.00 per share on the last scheduled conversion date prior to maturity, which is 1
July 2024. Similarly, some holders of the Aztiq Convertible Bonds decided to exercise similar conversion
right into ordinary shares at the same conversion price. Based on the used exchange rate, a total of
approximately 22.1 million new shares were issued on 1 July 2024, corresponding to approximately
$220.7 million of aggregate value of these bonds with accrued interest. The holders of the 2022
Convertible Bonds and the Aztiq Convertible Bonds that did not exercise their right to conversion,
obtained repayment from the Group in July 2024, upon the closing of the senior secured first lien term
loan facility of $965.0 million, led by GoldenTree Asset Management (the "Secured Loan Facility").
On 11 July 2024, the Company announced the closing of its previously executed Secured Loan Facility.
The closing has allowed Alvotech to refinance outstanding debt obligations, reduce the cost of capital and
improve its overall debt maturity profile. The Secured Loan Facility, for $965.0 million in aggregate
principal amount, matures in July 2029. The first tranche is a first lien $900.0 million term loan which
bears an interest rate of Secured Overnight Funding Rate (SOFR) plus 6.5% per annum. The second
tranche is a $65.0 million first lien, second out term loan, which bears an interest rate of SOFR plus
10.5% per annum. This resulted in the concurrent settlement of its existing debt obligations.
In September 2024, the Company announced the initiation of a confirmatory patient study for AVT16, a
biosimilar candidate to Entyvio (vedolizumab).
The Consolidated Statement of Financial Position total assets amount to 1,221.4 million United States
dollars (USD).
The financial year ending on 31 December 2024 has produced a loss of 231.9 million USD.
3
In addition to its operating results, as calculated in accordance with IFRS, the Group uses Adjusted
EBITDA when monitoring and evaluating operational performance. Adjusted EBITDA is defined as
profit or loss for the relevant period, as adjusted for certain items that Alvotech management believes are
not indicative of ongoing operating performance. Alvotech believes that this non-IFRS measure assists
its shareholders because it enhances the comparability of results each period, helps to identify trends in
operating results and provides additional insight and transparency on how management evaluates the
business. Alvotech’s executive management team uses this non-IFRS measure to evaluate financial
measures to budget, update forecasts, make operating and strategic decisions, and evaluate performance.
This non-IFRS financial measure is not meant to be considered alone or as a substitute for IFRS financial
measures and should be read in conjunction with Alvotech’s consolidated financial statements prepared in
accordance with IFRS. Additionally, this non-IFRS measure may not be comparable to similarly titled
measures used by other companies. The most directly comparable IFRS measure to this non-IFRS
measure is loss for the year.
The following table reconciles loss for the year to Adjusted EBITDA for the years ended 31 December
2024 and 2023, respectively:
USD in thousands
2024 2023
Loss for the
year………………………………………………………………………..
(231.9) (551.7)
Income tax benefit 14.3 (99.3)
Total net finance 223.0 262.3
Loss on extinguishment of financial liabilities …..……………………... 69.4 -
Depreciation and amortization 31.3 24.2
Impairment and loss of sale of property, plant and equipment.. - 0.4
Impairment of intangible assets ……………………………………………. - 1.8
Charge related to contract termination ………….………………………… - 18.5
Incentive plan expense ……………………………………………………. 7.6 18.1
Share of net loss of joint venture ………………………………………..……. - 7.1
Impairment loss on investment in joint venture ……………………….. - 21.5
Loss on sale of interest in joint venture ………………..…………………. 3.0 -
Exchange rate differences …………………………………….. (8.1) 5.2
Recovery related to contract termination ..………………………………. (1.1) -
Transaction costs
0.8 0.9
Adjusted EBITDA…………………………………………………………. 108.3 (291.0)
We suggest the following allocation of the result:
USD (million)
Result brought forward from the previous year (2,205.8)
Result for the year (231.9)
Distribution of dividends 0
Result to be carried forward to the following financial year (2,437.7)
4
As of 31 December 2024, the Company had $51.4 million in cash and cash equivalents and the Company
had borrowings of $1,068.6 million, including $32.7 million of current portion of borrowings, as of 31
December 2024.
Product revenue: Product revenue was $273.5 million for the year ended 31 December 2024, compared
to $48.7 million for the year ended 31 December 2023. Revenue for the year ended 31 December 2024,
consisted of product revenue from sales of AVT02 in select European countries and Canada, launch of
AVT02 in the U.S., and the launches of AVT04 in Canada, Japan and select European markets.
License and other revenue: License and other revenue was $216.2 million for the year ended
31 December 2024, compared to $42.7 million for the year ended 31 December 2023. The license and
other revenue of $216.2 million was primarily attributable to the recognition of a $6.6 million research
and development milestone due to the approval of AVT04 in Europe, $6.8 million due to the MAA
submission with the EMA for AVT03, $12.1 million relative to the MAA submission with the EMA for
AVT05, $15.5 million due to the MAA submission with the EMA for AVT06, $16.8 million relative to
CTA submission for AVT16, $39.1 million due to the CES completion of AVT03, and $56.4 million due
to the CES completion of AVT05. This also included $5.4 million relative to the product launch of
AVT04 in Japan, $6.9 million relative to the achievement of sales target of AVT02 in Europe and
Canada, $10.0 million relative to the product launch of AVT04 in Europe, $18.8 million relative to the
product launch of AVT02 in the U.S., and a net milestone revenue of $20.4 million for the execution of
out-license contracts during the year ended 31 December 2024.
Cost of product revenue: Cost of product revenue was $185.3 million for the year ended 31 December
2024, compared to $160.9 million for the year ended 31 December 2023. This is the result of sales in the
period, including the launches of AVT02 in the U.S., AVT04 in Canada, Japan and select European
countries, tempered by lower production-related charges and lower costs associated with FDA inspection
readiness.
Research and development expenses: Research and development expenses were $171.3 million for the
year ended 31 December 2024, compared to $210.8 million for the year ended 31 December 2023. The
decrease was primarily driven by a one-time charge of $18.5 million relating to the termination of the co-
development agreement with Biosana for AVT23 recognized during the year 2023, a decrease of $6.3
million primarily related to programs which reached commercialization (i.e., AVT02 and AVT04
programs), a decrease of $25.0 million related to programs for which the clinical phase is substantially
completed (i.e. AVT03, AVT05, and AVT06), and overall lower headcount and other R&D expenses of
$8.2 million, partially offset by a $20.0 million increase in direct program expenses mainly due to AVT16
that is advancing through clinical phase.
General and administrative expenses: General and administrative expenses were $65.7 million for the
year ended 31 December 2024, compared to $76.6 million for the year ended 31 December 2023. The
decrease in G&A expenses was primarily attributable to $4.5 million in lower third-party services, lower
insurance premiums and headcount, coupled with a $6.0 million decrease in expenses for share-based
payments.
Net Loss: Net loss was $231.9 million, or $(0.87) per share on a basic and diluted basis, for the year
ended 31 December 2024 as compared to net loss of $551.7 million, or $(2.43) on a basic and diluted
basis, for the year ended 31 December 2023.
5
II. Future developments
On 27 January 2025, the Company announced filing acceptance of U.S. Biologics License Applications
(BLA) for AVT05, a proposed biosimilar to Simponi and Simponi Aria (golimumab). The FDA review
process for these applications is anticipated to be completed in the fourth quarter of 2025.
On 18 February 2025, the Company announced that the FDA has accepted for review a BLA for AVT06,
Alvotech’s proposed biosimilar to Eylea (aflibercept), a biologic used to treat eye disorders, including
diseases which can lead to vision loss or blindness. The process to obtain regulatory approval is
anticipated to be completed in the fourth quarter of 2025.
On 21 February 2025, the Company announced the availability of SELARSDI (ustekinumab) injection in
the U.S., a biosimilar to Stelara (ustekinumab), for the treatment of psoriatic arthritis, plaque psoriasis,
Crohn’s disease, ulcerative colitis, pediatric plaque psoriasis and pediatric psoriatic arthritis.
On 18 March 2025, the Company announced the FDA acceptance of BLA for AVT03, a proposed
biosimilar to Prolia and Xgeva (denosumab).
On 20 March 2025, the Company announced the acquisition of Xbrane Biopharma AB's ("Xbrane")
research and development operations and a biosimilar candidate, further expanding the Company's
development capabilities, and establishing a footprint in the Swedish life science sector. Xbrane retains
other pre-clinical development programs and will focus on the commercialization of this portfolio. The
purchase price for the acquisition amounts to approximately SEK 275 million (approximately
$27 million) and will be payable in cash at closing for SEK 102.2 million and by assumption of SEK
172.8 million in debt and accounts payable. The creditors have agreed to accept payment for SEK
152.8 million of the debt with Alvotech equity shares. Closing of the acquisition is expected to occur in
April 2025 and is contingent on approvals from the relevant authorities and Xbrane's shareholders. The
Company also announced that it intends to explore the possibility of a listing of Swedish Depository
Receipts (SDR), equity share equivalents, on Nasdaq Stockholm, in the future.
At this point, the Board of Directors is confident that the appropriate level of funding will be available
from these sources to meet the business needs in 2024 and beyond. See further information in note 1.4.
III. Business risks and their mitigation
This section contains a summary of the main risks that the Group may face during the normal course of its
business. Detailed information on the Group’s risks relating to financial instruments, risk management
objectives and policies can be found in note 27.
Please note however, that
• This section does not purport to contain an exhaustive list of the risks faced by the Group, as the
Group may be significantly affected by risks that it has not identified, or not considered as
material;
• Some risks faced by the Group, whether they are mentioned in this section or not, may arise from
external factors beyond the Group’s control;
• Where means of mitigation are mentioned in this section, such mention does not constitute a
guarantee that the means of mitigation will be effective (in whole or in part) to remove or reduce
the effect of the risk.
6
The Group’s business model is built around the development, manufacturing and commercialization of
biosimilar medicine. Development of biosimilar medicine is subjected to numerous risks, as the product
travels through different stages of development, scale-up, clinical, regulatory to name a few. On the
commercial side the Group is faced with an ever-changing competitive landscape, as well as pricing
pressure for its products.
IV. Additional disclosures
Alvotech is committed to strong and transparent corporate governance. Our corporate governance
framework, along with our internal controls and policies, is intended to support sustainable financial
performance and long-term value creation for all of our stakeholders including shareholders, patients,
employees and other stakeholders. Further information on corporate governance can be found in these
financial statements and on the Groups website at www.alvotech.com.
Information about sustainability and non-financial reporting is disclosed in these financial statements,
where information about operations, environment, social environment and governance can be found.
In our opinion, the Consolidated Financial Statements of Alvotech as of 31 December 2024 and for the
year then ended with the file name 222100DCZBOWV5DZ8372-2024-12-31-en.xhtml is prepared, in all
material respects, in compliance with the ESEF Regulation.
Pursuant to Article 68 of the law of 19 December 2002 regarding the trade and companies' register and
the accounting as well as annual accounts of companies, as amended, the board of directors hereby
declares:
1. To the best of our knowledge, we are not aware of any events which would have a
material bearing on the accounts since the end of the previous financial year. Information
on subsequent events can be found in note 29.
2. The Group's likely foreseeable future development is stable.
3. Research and development expenses consist primarily of costs incurred in connection
with Alvotech’s research, development and pre-commercial manufacturing activities
prior to the commercialization of its biosimilar products. Expenditures related to research
and development activities are generally recognized as an expense in the period in which
they are incurred. Due to significant regulatory uncertainties and other uncertainties
inherent in the development of pharmaceutical products, Alvotech did not capitalize any
research and development expenses as internally developed intangible assets during the
year. Research and development activities will continue to be central to Alvotech’s
business model and will vary significantly based upon the success of its programs.
Product candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of development, primarily due to the
increased size and duration of later-stage clinical trials. The Group conducts research and
development activities at its subsidiaries in Iceland, Germany and Switzerland.
4. In March 2024 Alvotech issued 13,000,000 new shares which were transferred to a group
company, Alvotech Manco ehf. On 31 December 2024 Alvotech Manco ehf. owned
22,905,618 treasury shares in Alvotech.
5. The Group does not have established branches.
7
We kindly ask you to grant discharge to the directors for the exercise of their mandates during the
financial year ended on 31 December 2024.
Done in Luxembourg on 26 March 2025,
For the Board of Directors:
Robert Wessman
Title: CEO & Chairman
8
TotheShareholdersof
AlvotechS.A.
9,ruedeBitbourg
L-1273Luxembourg
REPORTOFTHEREVISEURD’ENTREPRISESAGREE
ReportontheAuditoftheConsolidatedFinancialStatements
Opinion
WehaveauditedtheconsolidatedfinancialstatementsofAlvotechS.A.anditssubsidiaries(the“Group”),whichcomprisethe
consolidatedstatementoffinancialpositionasatDecember31,2024,andtheconsolidatedstatementofprofitorlossandother
comprehensiveincomeorloss,consolidatedstatementofchangesinequityandconsolidatedstatementofcashflowsforthe
yearthenended,andnotestotheconsolidatedfinancialstatements,includingmaterialaccountingpolicyinformationandother
explanatoryinformation.
Inouropinion,theaccompanyingconsolidatedfinancialstatementsgiveatrueandfairviewoftheconsolidatedfinancial
positionoftheGroupasatDecember31,2024,andofitsconsolidatedfinancialperformanceanditsconsolidatedcashflowsfor
theyearthenendedinaccordancewithIFRSAccountingStandardsasadoptedbytheEuropeanUnion.
BasisforOpinion
WeconductedourauditinaccordancewiththeEURegulationN°537/2014,theLawofJuly23,2016ontheauditprofession
(Lawof23July2016)andwithInternationalStandardsonAuditing(ISAs)asadoptedforLuxembourgbytheCommissionde
SurveillanceduSecteurFinancier(CSSF).OurresponsibilitiesundertheEURegulationNo537/2014,theLawofJuly23,2016and
ISAsasadoptedforLuxembourgbytheCSSFarefurtherdescribedinthe“Responsibilitiesoftheréviseurd’entreprisesagrééfor
theAuditoftheConsolidatedFinancialStatements”sectionofourreport.WearealsoindependentoftheGroupinaccordance
withtheInternationalCodeofEthicsforProfessionalAccountants,includingInternationalIndependenceStandards,issuedby
theInternationalEthicsStandardsBoardforAccountants(IESBACode)asadoptedforLuxembourgbytheCSSFtogetherwith
theethicalrequirementsthatarerelevanttoourauditoftheconsolidatedfinancialstatements,andhavefulfilledourother
ethicalresponsibilitiesunderthoseethicalrequirements.Webelievethattheauditevidencewehaveobtainedissufficientand
appropriatetoprovideabasisforouropinion.
Deloitte Audit
Société à responsabilité limitée 20
Boulevard de Kockelscheuer L-1821
Luxembourg
B.P. 1173
L-1011 Luxembourg
Tel: +352 451 451
www.deloitte.lu
9
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the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.
KeyAuditMatter HowtheKeyAuditMatterWasAddressedintheAudit
IncomeTaxes—DeferredTaxAssets—RefertoNotes2.14
and10totheConsolidatedFinancialStatements
TheGrouprecognizesdeferredtaxassetsfordeductible
temporarydifferencesarisingfromunusedtaxlosses,
amortization,depreciation,reservesandemployeebenefitsin
accordancewithIAS12,IncomeTaxes.
TheGroup’sdeferredtaxassetsbalanceasofDecember31,
2024was$298million.Thedeferredtaxassetsbalanceis
reviewedattheendofeachreportingperiodandrecognizedto
theextentthatitisprobablethatsufficienttaxableprofitswill
beavailabletoallowallorpartoftheassettoberecovered.The
majorityofthedeferredtaxassetrecognizedrelatestotax
lossesthathaveariseninIceland,wherebyitisprobablethat
futureforecastedtaxableprofitsassociatedwithproductand
out-licensingrevenue,drivenbymanagement’sassumptionsfor
unitpriceandmarketshare,willbeavailabletooffsetthe
cumulativetaxlossesasof31December2024.
Giventhedeterminationthatitisprobablethattherewillbe
sufficienttaxableprofitsgeneratedinthefutureagainstwhich
thedeferredtaxassetscanbeutilizedrequiresmanagementto
makesignificantjudgementsandestimatesrelatedtotaxable
profits,performingauditprocedurestoevaluatethe
reasonablenessofmanagement’sestimatesandassumptions
relatedtotaxableprofitsrequiredahighdegreeofauditor
judgmentandanincreasedextentofeffort,particularlyrelated
tounitpriceandmarketshareassumptions.
Ourauditproceduresrelatedtothedeterminationofwhether
sufficient taxable profits will be generated in the future
against which the deferred tax assets can be utilized,
particularly as it pertains to estimates for unit price and
marketshare,includedthefollowing,amongothers:
• We evaluated the unit price and market share
assumptions to determine if such assumptions are
consistentwithinternalandexternaldataaswellas
relevant existing market information, industry and
otherexternalfactorssuchas:
o Internalbudgets.
o Historicaltaxableprofits.
o Analyst and industry reports for the Company
anditspeercompanies.
• We evaluated management’s ability to accurately
estimatetaxableprofits by comparingactualresults
tomanagement’shistoricalestimates.
• Weassessedunitpriceandmarketshareassumptions
utilized within the future forecasts for potential
manipulation or bias by considering contradictory
evidence.
Otherinformation
TheBoardofDirectorsisresponsiblefortheotherinformation.Theotherinformationcomprisestheinformationstatedinthe
consolidatedmanagementreportandtheCorporateGovernanceStatementbutdoesnotincludetheconsolidatedfinancial
statementsandourreportoftheréviseurd’entreprisesagrééthereon.
Ouropinionontheconsolidatedfinancialstatementsdoesnotcovertheotherinformationandwedonotexpressanyformof
assuranceconclusionthereon.
Deloitte Audit
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Luxembourg
B.P. 1173
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Tel: +352 451 451
www.deloitte.lu
10
Inconnectionwithourauditoftheconsolidatedfinancialstatements,ourresponsibilityistoreadtheotherinformation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thisfact.Wehavenothingto
reportinthisregard.
ResponsibilitiesoftheBoardofDirectorsandThoseChargedwithGovernancefortheConsolidatedFinancialStatements
TheBoardofDirectorsisresponsibleforthepreparationandfairpresentationoftheseconsolidatedfinancialstatementsin
accordancewithIFRSAccountingStandardsasadoptedbytheEuropeanUnion,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,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.
TheBoardofDirectorsisresponsibleforpresentingandmarkinguptheconsolidatedfinancialstatementsincompliancewith
therequirementssetoutintheDelegatedRegulation2019/815onEuropeanSingleElectronicFormatasamended(“theESEF
Regulation”).
ThosechargedwithgovernanceareresponsibleforoverseeingtheGroup’sfinancialreportingprocess.
Responsibilitiesoftheréviseurd’entreprisesagrééfortheAuditoftheConsolidatedFinancialStatements
Theobjectivesofouraudit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areportoftheréviseurd’entreprisesagréé
thatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedin
accordancewiththeEURegulationN°537/2014,theLawofJuly23,2016andwithISAsasadoptedforLuxembourgbytheCSSF
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.
AspartofanauditinaccordancewiththeEURegulationN°537/2014,theLawofJuly23,2016andwithISAsasadoptedfor
LuxembourgbytheCSSF,weexerciseprofessionaljudgmentandmaintainprofessionalskepticismthroughouttheaudit.We
also:
• Identifyandassesstherisksofmaterialmisstatementoftheconsolidatedfinancialstatements,whetherduetofraudor
error,designandperformauditproceduresresponsivetothoserisks,andobtainauditevidencethatissufficientand
appropriatetoprovideabasisforouropinion.Theriskofnotdetectingamaterialmisstatementresultingfromfraudis
Deloitte Audit
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Tel: +352 451 451
www.deloitte.lu
11
higherthanforoneresultingfromerror,asfraudmayinvolvecollusion,forgery,intentionalomissions,
misrepresentations,ortheoverrideofinternalcontrol.
• Obtainanunderstandingofinternalcontrolrelevanttotheaudit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Group’sinternal
control.
• Evaluatetheappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesandrelated
disclosuresmadebytheBoardofDirectors.
• ConcludeontheappropriatenessofBoardofDirectorsuseofthegoingconcernbasisofaccountingand,basedonthe
auditevidenceobtained,whetheramaterialuncertaintyexistsrelatedtoeventsorconditionsthatmaycastsignificant
doubtontheGroup’sabilitytocontinueasagoingconcern.Ifweconcludethatamaterialuncertaintyexists,weare
requiredtodrawattentioninourreportoftheréviseurd’entreprisesagréétotherelateddisclosuresintheconsolidated
financialstatementsor,ifsuchdisclosuresareinadequate,tomodifyouropinion.Ourconclusionsarebasedontheaudit
evidenceobtaineduptothedateofourreportoftheréviseurd’entreprisesagréé.However,futureeventsorconditions
maycausetheGrouptoceasetocontinueasagoingconcern.
• Evaluatetheoverallpresentation,structureandcontentoftheconsolidatedfinancialstatements,includingthe
disclosures,andwhethertheconsolidatedfinancialstatementsrepresenttheunderlyingtransactionsandeventsina
mannerthatachievesfairpresentation.
• Obtainsufficientappropriateauditevidenceregardingthefinancialinformationoftheentitiesandbusinessactivities
withintheGrouptoexpressanopinionontheconsolidatedfinancialstatements.Weareresponsibleforthedirection,
supervisionandperformanceoftheGroupaudit.Weremainsolelyresponsibleforourauditopinion.
Ourresponsibilityisalsotoassesswhethertheconsolidatedfinancialstatementshavebeenpreparedinallmaterialrespects,in
compliancewiththerequirementslaiddownintheESEFRegulation.
Wecommunicatewiththosechargedwithgovernanceregarding,amongothermatters,theplannedscopeandtimingofthe
auditandsignificantauditfindings,includinganysignificantdeficienciesininternalcontrolthatweidentifyduringouraudit.
Wealsoprovidethosechargedwithgovernancewithastatementthatwehavecompliedwithrelevantethicalrequirements
regardingindependence,andtocommunicatewiththemallrelationshipsandothermattersthatmayreasonablybethoughtto
bearonourindependence,andwhereapplicable,actionstakentoeliminatethreatsorsafeguardsapplied.
Fromthematterscommunicatedwiththosechargedwithgovernance,wedeterminethosemattersthatwereofmost
significanceintheauditoftheconsolidatedfinancialstatementsofthecurrentperiodandarethereforethekeyauditmatters.
Wedescribethesemattersinourreportunlesslaworregulationprecludespublicdisclosureaboutthematter.
ReportonOtherLegalandRegulatoryRequirements
Wehavebeenappointedasréviseurd’entreprisesagréébytheBoardofDirectorsonJune7,2024andthedurationofour
uninterruptedengagement,includingpreviousrenewalsandreappointments,is3years.
Deloitte Audit
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Boulevard de Kockelscheuer L-1821
Luxembourg
B.P. 1173
L-1011 Luxembourg
Tel: +352 451 451
www.deloitte.lu
12
Theconsolidatedmanagementreportisconsistentwiththeconsolidatedfinancialstatementsandhasbeenpreparedin
accordancewithapplicablelegalrequirements.
TheaccompanyingCorporateGovernanceStatementispresentedonpages70to76.TheinformationrequiredbyArticle68ter
paragraph(1)lettersc)andd)ofthelawofDecember19,2002onthecommercialandcompaniesregisterandonthe
accountingrecordsandannualaccountsofundertakings,asamended,isconsistentwiththeconsolidatedfinancialstatements
andhasbeenpreparedinaccordancewithapplicablelegalrequirements.
WehavecheckedthecomplianceoftheconsolidatedfinancialstatementsoftheGroupasatDecember31,2024withthe
relevantstatutoryrequirementssetoutintheESEFRegulationthatareapplicabletofinancialstatements
FortheGroupitrelatesto:
- FinancialstatementspreparedinavalidxHTMLformat;
- TheXBRLmarkupoftheconsolidatedfinancialstatementsusingthecoretaxonomyandthecommonruleson
markupsspecifiedintheESEFRegulation.
Inouropinion,theconsolidatedfinancialstatementsoftheGroupasatDecember31,2024,havebeenprepared,inallmaterial
respects,incompliancewiththerequirementslaiddownintheESEFRegulation.
Weconfirmthattheauditopinionisconsistentwiththeadditionalreporttotheauditcommittee.
Weconfirmthattheprohibitednon-auditservicesreferredtointheEURegulationN537/2014werenotprovidedandthatwe
remainedindependentoftheGroupinconductingtheaudit.
ForDeloitteAudit,Cabinetderévisionagréé
LudovicMosca,Réviseurd’entreprisesagréé
Partner
March26,2025
Deloitte Audit
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Luxembourg
B.P. 1173
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Tel: +352 451 451
www.deloitte.lu
13
Consolidated Statements of Profit or Loss and Other Comprehensive Income or Loss for the years ended 31 December
2024 and 2023
USD in thousands, except for per share amounts Notes 2024 2023
Product revenue 5 273,472 48,699
License and other revenue 5 216,210 42,735
Other income 2,296 1,948
Cost of product revenue (185,309) (160,856)
Research and development expenses (171,312) (210,827)
General and administrative expenses (65,713) (76,559)
Operating profit / (loss) 69,644 (354,860)
Share of net loss of joint venture 26 — (7,153)
Impairment loss on investment in joint venture
— (21,519)
Loss on sale of interest in joint venture 26 (2,970) —
Finance income 7 80,145 4,823
Finance costs 7 (303,165) (267,157)
Exchange rate differences 8,161 (5,183)
Loss on extinguishment of financial liabilities 21 (69,378) —
Non-operating loss (287,207) (296,189)
Loss before taxes (217,563) (651,049)
Income tax (expense) / benefit 10 (14,301) 99,318
Loss for the year (231,864) (551,731)
Other comprehensive loss
Item that will be reclassified to profit or loss in subsequent periods:
Exchange rate differences on translation of foreign operations (690) (86)
Total comprehensive loss (232,554) (551,817)
Loss per share
Basic and diluted loss for the year per share 11 (0.87) (2.43)
The accompanying notes are an integral part of these Consolidated Financial Statements.
14
Consolidated Statements of Financial Position as of 31 December 2024 and 2023
USD in thousands
Non-current assets
Notes
31 December
2024
31 December
2023
Property, plant and equipment 12 284,546 236,779
Right-of-use assets 13 125,198 119,802
Goodwill 14 11,330 12,058
Other intangible assets 15 20,621 19,076
Contract assets 5 22,710 10,856
Interest in joint venture 26 — 18,494
Other long-term assets 3,615 2,244
Restricted cash 16 — 26,132
Deferred tax assets 10 298,360 309,807
Total non-current assets 766,380 755,248
Current assets
Inventories 17 127,889 74,433
Trade receivables 160,217 41,292
Contract assets 5 67,304 35,193
Other current assets 18 48,064 31,871
Receivables from related parties 24 118 896
Cash and cash equivalents 16 51,428 11,157
Total current assets 455,020 194,842
Total assets 1,221,400 950,090
The accompanying notes are an integral part of these Consolidated Financial Statements.
15
Consolidated Statements of Financial Position as of 31 December 2024 and 2023
USD in thousands
Equity
Notes
31 December
2024
31 December
2023
Share capital 19 2,826 2,279
Share premium 19 2,007,058 1,229,690
Other reserves 20 17,272 42,911
Translation reserve (2,218) (1,528)
Accumulated deficit (2,437,709) (2,205,845)
Total equity (412,771) (932,493)
Non-current liabilities
Borrowings 21 1,035,882 922,134
Derivative financial liabilities 27 210,224 520,553
Lease liabilities 13 112,137 105,632
Contract liabilities 5 80,721 73,261
Deferred tax liability 10 1,811 53
Total non-current liabilities 1,440,775 1,621,633
Current liabilities
Trade and other payables 67,126 80,563
Lease liabilities 13 9,515 9,683
Current maturities of borrowings 21 32,702 38,025
Liabilities to related parties 24 8,465 9,851
Contract liabilities 5 15,980 59,183
Taxes payable 204 925
Other current liabilities 25 59,404 62,720
Total current liabilities 193,396 260,950
Total liabilities 1,634,171 1,882,583
Total equity and liabilities 1,221,400 950,090
The accompanying notes are an integral part of these Consolidated Financial Statements.
16
Consolidated Statements of Cash Flows for the years 31 December 2024 and 2023
USD in thousands
Cash flows from operating activities
Notes 2024 2023
Loss for the period (231,864) (551,731)
Adjustments for non-cash items:
Long-term incentive plan expense — 78
Depreciation and amortization 12 31,301 24,210
Impairment of other intangible assets 15 — 1,779
Impairment loss on investment in joint venture 26 — 21,519
Change in allowance for receivables (946) 18,500
Change in inventory reserves 17 (3,483) 8,341
Share-based payments 22 7,626 18,033
Loss on disposal of property, plant and equipment — 365
Loss on sale of interest in joint venture 26 2,970 —
Share of net loss of joint venture 26 — 7,153
Finance income 7 (80,145) (4,823)
Finance costs 7 303,165 267,157
Exchange rate difference (8,161) 5,183
Loss on extinguishment of financial liabilities 22 69,378 —
Income tax benefit 10 14,301 (99,318)
Operating cash flow before movement in working capital 104,142 (283,554)
Increase in inventories 17 (49,973) (11,304)
(Increase) in trade receivables (119,063) (8,320)
Decrease / (increase) in receivables with related parties 24 20 881
(Increase) in contract assets 5 (45,192) (17,393)
(Increase) in other assets (7,125) (802)
(Decrease) increase in trade and other payables (13,695) 31,772
(Decrease) / increase in contract liabilities 5 (31,446) 35,396
(Decrease) / increase in liabilities with related parties (7,871) 1,280
(Decrease) in other liabilities (14,299) (5,182)
Cash used in operations (184,502) (257,226)
Interest received 4,617 3,649
Interest paid (54,921) (57,254)
Income tax paid (2,037) (1,354)
Net cash used in operating activities (236,843) (312,185)
17
Cash flows from investing activities
Acquisition of property, plant and equipment 12 (53,661) (33,234)
Disposal of property, plant and equipment — 133
Acquisition of intangible assets 15 (3,339) (13,239)
Restricted cash in connection with debt extinguishment 16 26,132 —
Proceeds from the sale in joint venture 26 12,000 —
Net cash generated from (used in) investing activities (18,868) (46,340)
Cash flows from financing activities
Repayments of borrowings 21 (749,082) (99,367)
Repayments of principal portion of lease liabilities 13 (10,197) (8,269)
Proceeds from new borrowings 21 896,263 278,831
Transaction cost from new borrowings (4,236) (9,004)
Gross proceeds from equity offering 19 150,451 136,879
Fees from equity offering (5,812) (4,141)
Proceeds from warrants 27 4,843 6,390
Stock options exercised 76 —
Proceeds from loans from related parties 24,500 —
Repayment of loans from related parties (9,500) —
Net cash generated from financing activities 297,306 301,319
Increase / (decrease) in cash and cash equivalents 41,595 (57,206)
Cash and cash equivalents at the beginning of the year 16 11,157 66,427
Effect of movements in exchange rates on cash held (1,324) 1,936
Cash and cash equivalents at the end of the period 16 51,428 11,157
Supplemental cash flow disclosures (Note 28)
The accompanying notes are an integral part of these Consolidated Financial Statements.
18
Consolidated Statements of Changes in Equity for the years ended 31 December 2024 and 2023
USD in thousands
Share
capital
Share
premium
Other
reserves
Translation
reserve
Accumulated
deficit Total equity
At 1 January 2023 2,126 1,058,432 30,582 (1,442) (1,654,114) (564,416)
Loss for the period — — — — (551,731) (551,731)
Foreign currency translation differences — — — (86) — (86)
Total comprehensive loss — — — (86) (551,731) (551,817)
Capital contribution 118 132,618 — — — 132,736
Vested earn-out shares 6 8,300 — — — 8,306
Penny warrants exercised 25 27,159 — — — 27,184
Public warrants exercised 6 7,612 — — — 7,618
Recognition of share-based payments — — 16,985 — — 16,985
Settlement of RSUs with shares 8 5,095 (5,781) — — (678)
Settlement of SARs with shares (10) (9,526) (4,231) — — (13,767)
Recognition of equity component of
convertible bonds — — 5,356 — — 5,356
At 31 December 2023 2,279 1,229,690 42,911 (1,528) (2,205,845) (932,493)
Loss for the period — — — — (231,864) (231,864)
Foreign currency translation differences — — — (690) — (690)
Total comprehensive loss — — — (690) (231,864) (232,554)
Capital contribution 92 144,547 — — — 144,639
Vested earn-out shares 198 310,703 — — — 310,901
Penny warrants exercised 17 24,293 — — — 24,310
Public warrants exercised 4 6,691 — — — 6,695
Recognition of share-based payments — — 6,486 — — 6,486
Stock options recognised — — 276 — — 276
Settlement of RSUs with shares 15 5,890 (10,981) — — (5,076)
Settlement of options with shares 0 105 (29) — — 76
Conversion of convertible bonds 221 285,139 (21,391) — — 263,969
At 31 December 2024 2,826 2,007,058 17,272 (2,218) (2,437,709) (412,771)
The accompanying notes are an integral part of these Consolidated Financial Statements.
19
1. General information
Alvotech (the “Parent” or the “Company” or “Alvotech”) is a Luxembourg public limited company (société
anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office
at 9, rue de Bitbourg, L-1273 Luxembourg, Grand Duchy of Luxembourg and is registered with the Luxembourg
Trade and Companies’ Register under number B 258884. The Company was incorporated on 23 August 2021. These
consolidated financial statements were approved by the Group’s Board of Directors, and authorized for issue, on 26
March 2025.
The Company and its subsidiaries (collectively referred to as the “Group”) are a global biotech company specialized
in the development and manufacture of biosimilar medicines for patients worldwide. The Group has commercialized
a certain biosimilar product and has multiple biosimilar molecules.
1.1 Capital Reorganization
On 15 June 2022 (the “Closing Date”), the Company consummated the capital reorganization with Alvotech
Holdings S.A. and OACB (the “Business Combination” or “Capital Reorganization”) pursuant to the business
combination agreement, dated as of 7 December 2021, as amended by an amendment agreement dated 18 April
2022 and 7 June 2022 (the “Business Combination Agreement”), by and among the Company, Oaktree Acquisition
Corp. II (“OACB”) and the Predecessor. The closing of the Business Combination resulted in the following
transactions:
• OACB merged with and into the Company, whereby (i) all of the outstanding ordinary shares of OACB
(“OACB Ordinary Shares”) were exchanged for ordinary shares of Alvotech (“Ordinary Shares”) on a
one-for-one basis, pursuant to a share capital increase of Alvotech and (ii) all of the outstanding warrants
of OACB ceased to represent a right to acquire OACB Ordinary Shares and now represent a right to be
issued one Ordinary Share, with Alvotech as the surviving company in the merger. Prior to the merger
OACB shares were redeemed, resulting in $9.8 million of cash proceeds from the OACB trust account;
• Alvotech redeemed and canceled the initial shares held by the initial sole shareholder of Alvotech
pursuant to a share capital reduction of Alvotech;
• The legal form of Alvotech changed from a simplified joint stock company (société par actions
simplifiée) to a public limited liability company (société anonyme) under Luxembourg law; and
• The Predecessor merged with and into the Parent, whereby all outstanding ordinary shares of the
Predecessor (“Predecessor Ordinary Shares”) were exchanged for Ordinary Shares, pursuant to a share
capital increase of Alvotech, with Alvotech as the surviving company in the merger.
Concurrently with the execution of the Business Combination Agreement, OACB and Alvotech entered into
subscription agreements (“Subscription Agreements”) with certain investors (the “PIPE Financing”). On 15 June
2022, immediately prior to the closing of the Business Combination, the PIPE Financing was closed, pursuant to the
Subscription Agreements, in which subscribers collectively subscribed for 17,493,000 Ordinary Shares at $10.00 per
share for an aggregate subscription price equal to $174.9 million.
As part of the Business Combination, Predecessor shareholders were granted a total of 38,330,000 Ordinary Shares
subject to certain vesting conditions (“Predecessor Earn Out Shares”). Former OACB shareholders were granted a
total of 1,250,000 Ordinary Shares subject to certain vesting conditions (“OACB Earn Out Shares”). Additionally, as
part of the Business Combination the Company assumed the 10,916,647 outstanding warrants (“OACB Warrants”),
on substantially the same contractual terms and conditions as were in effect immediately prior to the Business
Combination. See Note 28 for further details.
The Business Combination was accounted for as a capital reorganization. Under this method of accounting, OACB
was treated as the “acquired” company for financial reporting purposes, with Alvotech Holdings S.A. being the
accounting acquirer and accounting predecessor. Accordingly, the capital reorganization was treated as the
equivalent of Alvotech issuing shares at the closing of the Business Combination for the net assets of OACB as of
the Closing Date, accompanied by a recapitalization. The capital reorganization, which was not within the scope of
IFRS 3 since OACB did not meet the definition of a business in accordance with that guidance, was accounted for
within the scope of IFRS 2. In accordance with IFRS 2, Alvotech recorded a one-time non-cash share listing expense
of $83.4 million, recognized as a general and administrative expense, based on the excess of the fair value of
Notes to the Consolidated Financial Statements
20
Alvotech shares issued, at the Closing Date, over the fair value of OACB’s identifiable net assets acquired. The fair
value of shares issued was estimated based on a market price of $9.38 per share as of 15 June 2022.
Shares (in 000s) OACB Shareholders Class A Shareholders 976,505 Class B Shareholders 5,000,000 OACB Earn Out Shares 1,250,000 Total Alvotech Shares issued to OACB shareholders 7,226,505 Fair value of Shares issued to OACB as of 15 June 2022 $56,060 Fair value of OACB Earn Out Shares issued to OACB as of 15 June 2022 9,100 Estimated fair market value 65,160 Adjusted net liabilities of OACB as of 15 June 2022 (18,251) Difference – being the share listing expense 83,411
In connection with the Business Combination and PIPE Financing, the Company incurred $28.5 million of
transaction costs, which represent legal, financial advisory, and other professional fees in connection with the
Business Combination and PIPE Financing, during the year ended December 31, 2022. Of this amount, $5.6 million
represented equity issuance costs related to PIPE Financing that were capitalized in share premium. The remaining
$22.9 million was recognized as general and administrative expense.
1.2 Information about subsidiaries and joint ventures
Issued and paid capital Proportion of ownership Principal (presented in Place of and voting power held by Entity name activity whole shares)establishment Alvotech 2024 2023 Alvotech hf. Biopharm. 4,356,613 Iceland 100.00% 100.00% Fasteignafélagið Sæmundur hf. Real estate 6,068,029 Iceland 100.00% 100.00% Alvotech Manco ehf. Group Serv. 215,390 Iceland 100.00% 100.00% Alvotech Swiss AG Biopharm. 153,930 Switzerland 100.00% 100.00% GlycoThera Holding S.à.r.l. Holding Co 15,000 Luxembourg 100.00% —% Glycothera Analytics GmbH (formerly Alvotech Hannover Biopharm. GmbH)29,983 Germany 100.00% 100.00% Glycothera Development GmbH (formerly Alvotech Germany Biopharm. GmbH)31,182 Germany 100.00% 100.00% Alvotech Biosciences India Pvt Biopharm. Limited 96,113 India 100.00% 100.00% Alvotech USA Inc Group Serv. 10 USA 100.00% 100.00% Alvotech UK Limited Group Serv. 135 UK 100.00% 100.00% Alvotech Malta Limited Group Serv. 13,533 Malta 100.00% 100.00% Alvotech Spain, S.L. Group Serv. 3,114 Spain 100.00% —% Alvotech & CCHN Biopharm. Biopharmaceutical Co. Ltd*0 China —% 50.00%
* Alvotech & CCHN Biopharmaceutical Co. Ltd. unconsolidated joint venture was sold during 2024 (see Note 26).
Notes to the Consolidated Financial Statements
21
1.3 Information about shareholders
Significant shareholders of the Company are Aztiq Pharma Partners S.à r.l. (Aztiq) and Alvogen Lux Holdings S.à
r.l. (Alvogen), with 33.5% and 29.8% ownership interest as of 31 December 2024, respectively. The remaining
36.7% ownership interest is held by various entities, with no single shareholder holding more than 2.4% ownership
interest as of 31 December 2024.
1.4 Going concern
The Group has primarily funded its operations with proceeds from the issuance of ordinary shares and the issuance
of loans and borrowings to both related parties and third parties. The Group has incurred recurring losses since its
inception, including net losses of $231.9 million, $551.7 million, and $513.6 million for the years ended
31 December 2024, 2023, and 2022, respectively, and had an accumulated deficit of $2,437.7 million as of
31 December 2024 and $2,205.8 million as of 31 December 2023. The Group has not generated positive operational
cash flow, largely due to the continued focus on biosimilar product development and expansion efforts.
As of 31 December 2024, the Group had cash and cash equivalents of $51.4 million and current assets less current
liabilities of $261.6 million.
On 26 February 2024, Alvotech announced it had received and accepted an offer from investors outside the U.S. for
the sale of 10,127,132 Ordinary Shares, for an approximate gross value of $166 million, at a purchase price of
$16.41 per share, or ISK 2,250, at the foreign exchange rate on 23 February 2024. The shares were to be delivered to
investors from previously issued treasury shares held by Alvotech´s subsidiary Alvotech Manco. As of 31 December
2024, the settlement of the sale offers resulted in 9,213,333 Ordinary Shares delivered to investors upon the payment
of $150.5 million, the net proceeds of the transaction totaling $144 million.
The Company announced in June 2024 that all holders of the Tranche A and some holders of the Tranche B of the
2022 Convertible Bonds exercised their right to conversion into ordinary shares at the fixed conversion price of
$10.00 per share on the last scheduled conversion date prior to maturity, which is 1 July 2024. Similarly, some
holders of the Aztiq Convertible Bonds decided to exercise similar conversion right into ordinary shares at the same
conversion price. Based on the used exchange rate, a total of approximately 22.1 million new shares were issued on
1 July 2024, corresponding to approximately $220.7 million of aggregate value of these bonds with accrued interest.
The holders of the 2022 Convertible Bonds and the Aztiq Convertible Bonds that did not exercise their right to
conversion, obtained repayment from the Group in July 2024, upon the closing of the senior secured first lien term
loan facility of $965.0 million, led by GoldenTree Asset Management (the "Secured Loan Facility").
On 11 July 2024, the Company announced the closing of its previously executed Secured Loan Facility. The closing
has allowed Alvotech to refinance outstanding debt obligations, reduce the cost of capital and improve its overall
debt maturity profile. The Secured Loan Facility, for $965.0 million in aggregate principal amount, matures in July
2029. The first tranche is a first lien $900.0 million term loan which bears an interest rate of Secured Overnight
Funding Rate (SOFR) plus 6.5% per annum. The second tranche is a $65.0 million first lien, second out term loan,
which bears an interest rate of SOFR plus 10.5% per annum. This resulted in the concurrent settlement of its existing
debt obligations.
Additionally, the Group continues to focus its efforts on the launch and commercialization of its existing biosimilar
programs, as follows:
• In February 2024, the Company announced that the U.S. Food and Drug Administration (FDA) has
approved Simlandi (adalimumab) injection, the AVT02 interchangeable biosimilar to Humira. Teva
Pharmaceuticals International GmbH (“Teva”) is Alvotech’s strategic partner for the exclusive
commercialization of Simlandi in the United States. In April 2024, the Company signed an agreement with
Quallent Pharmaceuticals ("Quallent") allowing the interchangeable biosimilar to be distributed under
Quallent's private label in the U.S. Additionally, The Company extended its European commercial partner,
STADA Arzneimittel AG (“Stada”), commercial rights to AVT02 to Commonwealth of Independent States
(CIS) countries in Central Asia in June 2024.
• The FDA approved AVT04, a biosimilar to Stelara (ustekinumab), for the U.S. in April 2024 enabling a
commercialization starting on or after 21 February 2025. Alvotech launched AVT04 in Canada with its
commercial partner JAMP Pharma ("Jamp"), on March 1, 2024 and started commercialization in Japan
with Fuji Pharma ("Fuji") in May 2024. In July 2024, the Company launched Uzpruvo, the first approved
Notes to the Consolidated Financial Statements
22
AVT04 biosimilar to Stelara across select European countries, with its commercial partner Stada. The
Company extended Stada’s commercial rights to AVT04 to CIS countries in Central Asia in June 2024. In
October 2024, the FDA approved SELARSDI (ustekinumab) in a new presentation, 130 mg/26 ml solution
in a single-dose vial for intravenous infusion. This approval paves the way for SELARSDI to further align
its label with the indications of the reference product Stelara in the U.S. at launch, which is expected in the
first quarter of 2025.
• In April 2024, the Company announced positive topline results from a confirmatory clinical study for
AVT05, a proposed biosimilar for Simponi and Simponi Aria (golimumab). In November 2024, the
European Medicines Agency (EMA) accepted a Marketing Authorization Application (MAA) for AVT05.
The approvals process is anticipated to be completed in the fourth quarter of 2025.
• In May 2024, the Company announced its collaboration with Dr. Reddy's Laboratories SA, ("Dr. Reddy"),
for the commercialization of AVT03, a proposed biosimilar to Prolia (denosumab) and Xgeva
(denosumab), in the U.S., Europe and UK. Dr. Reddy’s commercialization rights are exclusive for the U.S.,
and semi-exclusive for Europe and the UK. In June 2024, the Company extended its partnership with Stada
who will assume marketing license for AVT03 in Europe through semi-exclusive rights, including
Switzerland and the UK, as well as exclusive rights in selected markets in Central Asia and the Middle
East. In July 2024, the Company announced positive topline results from a confirmatory patient study for
AVT03. In October 2024, the EMA accepted a MAA for AVT03.
• In June 2024, the Company entered into an exclusive partnership agreement with Mercury Pharma Group
Limited (“Advanz”) regarding the supply and commercialization of AVT06 (aflibercebt), its proposed
biosimilar to Eylea in Europe, except for Germany and France where the rights are semi-exclusive. In
August 2024, the European Medicines Agency (EMA) has accepted a Marketing Authorization Application
for AVT06.
• In September 2024, the Company announced the initiation of a confirmatory patient study for AVT16, a
biosimilar candidate to Entyvio (vedolizumab).
The Group expects to fund its activities through a combination of utilizing the existing cash, the projected cash
generation from milestone collections and product revenues under agreements with its commercial partners, and the
current funding arrangements it has access to. Due to the relatively recent launch of AVT02 and AVT04 products on
which the Group is currently reliant for cash flow generation, the recent debt refinancing as set out above, and the
anticipated future launches of AVT03, AVT05, AVT06, which are undergoing regulatory approval, there is still
some level of uncertainty associated with the timing of future cash flow generation. This may mean that the Group
ultimately might need to rely on other financing arrangements in the future, such as successive capital increases or
debt financings that are not wholly within the control of the Group. If such funding is unavailable, then management
may be required to delay, limit, reduce or terminate one or more of its research or product development programs or
future commercialization efforts to free up sufficient cash. However, as the Group’s cash flow projections indicate
there will be sufficient cash flow generation over the next twelve months without the need for additional financing,
such uncertainty does not represent a material uncertainty which gives rise to significant doubt over going concern.
In conclusion, based on the existing cash on hand, funding received to date, and projected future cash flows,
management concluded that the Group has the ability to continue as a going concern for at least one year after the
date that the consolidated financial statements are issued. As such, the consolidated financial statements have been
prepared on a going concern basis.
2. Summary of significant accounting policies
2.1 Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance and in compliance with
IFRS® Accounting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), which
comprise all standards and interpretations approved by the IASB, and as adopted by the European Union ("EU").
All amendments to IFRSs issued by the IASB that are effective for annual periods that begin on or after 1 January
2024 have been adopted as further described within the footnotes to the consolidated financial statements. The
Group has not adopted any standards or amendments to standards in issue that are available for early adoption.
Notes to the Consolidated Financial Statements
23
The consolidated financial statements have been prepared on a historical cost basis, except for certain financial
assets and financial liabilities which have been measured at fair value. Historical cost is generally based on the fair
value of the consideration given in exchange for goods and services. The consolidated financial statements are
presented in U.S. Dollar ("USD") and all values are rounded to the nearest thousand unless otherwise indicated.
2.2 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by
the Company and its subsidiaries. Control is achieved when the Company:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.
When the Company has less than a majority of the voting rights of an investee, it has power over the investee when
the voting rights are sufficient to give it the practical ability to direct the relevant activities of the investee
unilaterally. The Company considers all relevant facts and circumstances in assessing whether or not the Company’s
voting rights in an investee are sufficient to give it power, including:
• the size of the Company’s holding of voting rights relative to the size and dispersion of holdings of the other
vote holders;
• potential voting rights held by the Company, other vote holders or other parties;
• rights arising from other contractual arrangements; and
• any additional facts and circumstances that indicate that the Company has, or does not have, the current
ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at
previous shareholders’ meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
Company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statements of profit or loss and other comprehensive income or loss
from the date the Company gains control until the date when the Company ceases to control the subsidiary. The
Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes
to one or more of the three elements of control.
All intra-group transactions, balances, income and expenses are eliminated in full in consolidation.
2.3 Investments in joint ventures
To the extent the Group concludes that it does not control, and thus consolidate, a joint venture, the Group accounts
for its interest in joint ventures using the equity method of accounting. As such, investments in a joint venture are
initially recognized at cost and the carrying amount is subsequently adjusted for the Group’s share of the profit or
loss of the joint venture, as well as any distributions received from the joint venture. The Group carries its ownership
interest in a joint venture as “Investment in joint venture” on the consolidated statements of financial position. The
Group’s profit or loss includes its share of the profit or loss of the joint venture and, to the extent applicable, other
comprehensive income or loss for the Group includes its share of other comprehensive income or loss of the joint
venture. The Group’s share of a joint venture’s profit or loss in a particular year is presented as “Share of net loss of
joint venture” in the consolidated statements of profit or loss and other comprehensive income or loss.
The carrying amount of equity-accounted investments is assessed for impairment as a single asset. Impairment
losses are incurred only if there is objective evidence of impairment as a result of loss events that have an impact on
estimated future cash flows and that can be reliably estimated. Losses expected as a result of future events are not
recognized. The Group recognized an impairment loss of $21.5 million related to its investment in the joint venture
for the year ended 31 December 2023; the interests in the joint venture were sold during the year 2024, resulting in a
net loss of $3.0 million (refer to Note 26).
Notes to the Consolidated Financial Statements
24
2.4 Critical accounting judgments and key sources of estimation uncertainty
The preparation of the consolidated financial statements in conformity with IFRS requires Group management to
make judgments, estimates and assumptions about the reported amounts of assets, liabilities, income and expenses
that are not readily apparent from other sources.
The estimates and associated assumptions are based on information available when the consolidated financial
statements are prepared, historical experience and other factors that are considered to be relevant. Judgments and
assumptions involving key estimates are primarily made in relation to the measurement and recognition of revenue,
the valuation of derivative financial liabilities, and the valuation of deferred tax assets.
Existing circumstances and assumptions may change due to events arising that are beyond the Group’s control.
Therefore, actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of
the revision and future periods if the revision affects both current and future periods.
2.5 Segment reporting
The Group operates and manages its business as one operating segment based on the manner in which the Chief
Executive Officer, the Group’s chief operating decision maker, assesses performance and allocates resources across
the Group.
2.6 Revenue recognition
Product revenue
The Company recognizes revenue from the sale of its biosimilar product to commercial partners, identified as the
customer, when control is transferred, and the performance obligations have been satisfied. This is when the title
passes to the customer, which is upon shipment of the product. At that point, the commercial partner has full
discretion over the channel and price to sell the products. Revenue is recognized based on the net selling price from
the commercial partners, which is considered to be the transaction price and includes estimated rebates, returns and
chargebacks, and other forms of variable consideration recognized by the customer. Variable consideration is
accounted for by the Company only to the extent that it is highly probable that a significant reversal in the revenue
recognized will not occur. Variable consideration, which includes any adjustments to the net selling price, is
estimated based on the most likely amount method on a contract-by-contract basis.
Out-licensing revenue
A significant part of the Group’s revenue is generated from long-term out-license contracts which provide the
customer with an exclusive right to market and sell products in a particular territory once such products are approved
for commercialization. These contracts typically include the Group’s promises to continue development of the
underlying compound and to provide supply of the product to the customer upon commercialization. The Group
concludes that the license, development services and commercial supply are separate performance obligations. This
is because customers generally have the capabilities to perform the necessary development, manufacturing and
commercialization activities on their own or with readily available resources and have the requisite expertise in the
industry and the territory for which the license has been granted. Further, the intellectual property is generally in a
later phase of development at the time the license is granted such that any subsequent development activities
performed by the Group are not expected to significantly modify or transform the intellectual property. The fact that
the Group is contractually obligated to perform development activities for and provide commercial supply to the
customer does not impact this conclusion. The Group’s promise to provide commercial supply to its customers is
contingent upon the achievement of regulatory approval in the particular territory for which the license has been
granted.
The consideration to which the Group is entitled pursuant to these contracts generally includes upfront payments and
payments based upon the achievement of development and regulatory milestones. All contracts include a potential
refund obligation whereby the Group must refund the consideration paid by the customer in the event of a technical
failure or the occurrence of certain other matters that result in partial or full cancellation of the contract. As such, the
entire transaction price is comprised of variable consideration, which is estimated using the most likely amount
method due to the binary nature of the outcomes under these contracts. Such variable consideration is included in the
Notes to the Consolidated Financial Statements
25
transaction price only when it is highly probable that doing so will not result in a significant reversal of cumulative
revenue recognized when the underlying uncertainty associated with the variable consideration is subsequently
resolved. The Group does not account for a significant financing component since a substantial amount of
consideration promised by the customer is variable and the amount or timing of that consideration varies on the basis
of a future event that is not substantially within the control of either party. Certain contracts also include
commercialization milestones upon the first commercial sale of a product in a particular territory, as well as
royalties. Commercialization milestones and royalties are accounted for as sales-based royalties; therefore, such
amounts are not included in the transaction price and recognized as performance revenue until the underlying sale
that triggers the milestone or royalty occurs.
Upfront payments, when applicable, are received in advance of transferring control of all goods and services.
Therefore, a portion of upfront payments is recorded as a contract liability upon receipt. Due to the existence of
refund provisions, upfront payments and certain development milestone payments are generally included in the
transaction price upon submission of the first clinical trial application to the respective regulatory agency, since it is
at this point in time that a significant reversal of cumulative revenue recognized related to such payments is no
longer highly probable. Other development and regulatory milestones may not be included in the transaction price
until such milestones are achieved due to the degree of uncertainty associated with achieving these milestones.
Contract liabilities are presented on the consolidated statements of financial position as either current or non-current
based upon forecasted performance. In certain contracts, the Group may transfer control of goods and services, and
thus recognize revenue, prior to having the right to invoice the customer. In these circumstances, the Group
recognizes contract assets for revenue recognized, and subsequently reclasses the contract asset to trade receivables
upon issuing an invoice and the right to consideration is only conditional on the passage of time. Contract assets are
presented on the consolidated statements of financial position as either current or non-current based upon the
expected timing of settlement.
The standalone selling prices of the development services and the license to intellectual property are not directly
observable and, therefore, are estimated. The standalone selling price of the development services is estimated based
on the expected costs to be incurred during the development period, using various data points such as the underlying
development budget, contractual milestones and performance completed at the time of entering into the contract
with a customer. The standalone selling price of the license is estimated using the residual approach on the basis that
the Group licenses intellectual property for a broad range of amounts and has not previously licensed intellectual
property on a standalone basis. Therefore, the Group first allocates the transaction price to the development services
and subsequently allocates the remainder of the transaction price to the license. If the product is still in early phase
of development and the constraint on variable consideration has not been resolved, all the transaction price is
allocated to the development service.
The standalone selling price of the commercial supply is directly observable and the stated prices in the Group’s
supply contracts reflect the standalone selling price of such goods.
The licenses to intellectual property are right of use licenses on the basis that the ongoing development work
performed by the Group does not significantly affect the intellectual property to which the customer has rights.
Therefore, control of the license transfers to the customer at the point in time when the right to use the license is
granted to the customer. The license is generally granted to the customer at the time the contract is executed with the
customer.
The Group satisfies its performance obligation related to the development services over time as the Group’s
performance enhances the value of the licensed intellectual property controlled by the customer throughout the
performance period. The Group recognizes revenue using a cost-based input measure since this measure best reflects
the progress of the development services and, therefore, the pattern of transfer of control of the services to the
customer. In certain instances, the Group may subcontract services to other parties for which the Group is ultimately
responsible. Costs incurred for such subcontracted services are included in the Group’s measure of progress for
satisfying its performance obligation. Changes in the total estimated costs to be incurred in measuring the Group’s
progress toward satisfying its performance obligation may result in adjustments to cumulative revenue recognized at
the time the change in estimate occurs.
Upon the achievement of regulatory approval and the commencement of commercial sale of its products, the Group
will satisfy its performance obligation related to commercial supply at the point in time when control of the
manufactured product is transferred to the customer. Transfer of control for such goods will occur in accordance
with the stated shipping terms.
Notes to the Consolidated Financial Statements
26
The Group does not incur incremental costs of obtaining a contract with a customer that would require
capitalization. Costs to fulfill performance obligations are not incurred in advance of performance and, as such, are
expensed when incurred.
Other revenue
Other revenue primarily consists of clinical trial support services rendered by the Group for its customers, which is
recognized as the service is provided. Revenue for such services is presented in the consolidated statements of profit
or loss and other comprehensive income or loss net of any discounts.
2.7 Cost of product revenue
Cost of product revenue includes the cost of inventory sold, labor costs, manufacturing overhead expenses and
reserves for expected scrap, as well as shipping and freight costs and royalty costs related to in-license agreements.
2.8 Research and development expenses
Research and development expenses primarily consist of personnel costs, material and other lab supply costs,
facility costs and internal and external costs related to the execution of studies and other development program
advancement initiatives. Such expenses also include costs incurred in preparation for commercial launch, such as
designing and developing commercial-scale manufacturing capabilities and processes, quality control processes,
production asset validation and other related activities. The costs also include amortization, depreciation and
impairment losses related to software, property, plant and equipment, and right-of-use assets used in research and
development activities and pre-commercial manufacturing and quality control activities.
An internally generated intangible asset arising from the Group’s development is recognized only if the Group can
demonstrate: the technical feasibility of completing the intangible asset so that it will be available for use or sale; the
intent to complete the intangible asset and use or sell it; how the intangible asset will generate probable future
economic benefits; the availability of adequate technical, financial and other resources to complete the development
and to use or sell the intangible asset; and the ability to measure reliably the expenditure attributable to the intangible
asset during its development.
The amount initially recognized for internally-generated intangible assets is the sum of the expenditures incurred
from the date when the intangible asset first meets the aforementioned recognition criteria. If an internally-generated
intangible asset cannot be recognized, the related development expenditure is charged to profit or loss in the period
in which it is incurred.
Expenditures related to research and development activities are recognized as an expense in the period in which they
are incurred. The Company did not capitalize any development expenses as intangible assets during the years ended
31 December 2024 and 2023 as not all the criteria in paragraph 57 of IAS 38 have been met.
2.9 General and administrative expenses
General and administration expenses primarily consist of personnel-related costs, including salaries and other related
compensation expense, for corporate and other administrative and operational functions including finance, human
resources, information technology and legal, as well as facility-related costs. These costs relate to the operation of
the business and are not related to research and development initiatives.
Expenditures related to general and administration activities are recognized as an expense in the period in which
they are incurred.
2.10 Finance income and finance cost
Finance income consists of changes in the fair value of derivative financial liabilities and interest income. Interest
income from a financial asset is recognized when it is probable that the economic benefits will flow to the Group
and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial
recognition.
Notes to the Consolidated Financial Statements
27
Finance cost consists of changes in the fair value of derivative financial liabilities, interest expense related to lease
liabilities and borrowings, accretion of borrowings and amortization of deferred debt issue costs.
2.11 Foreign currency translation
The consolidated financial statements are presented in U.S. Dollars, which is the Group’s presentation currency. The
Group maintains the financial statements of each entity within the Group in its respective functional currency. The
majority of the Group’s expenses are incurred in U.S. Dollars and Icelandic Krona, and the majority of the
Company’s cash and cash equivalents are held in a combination of Icelandic Krona, Euros and U.S. Dollars.
Transactions in currencies other than the Group’s presentation currency (foreign currencies) are recognized at the
rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at
fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair
value was determined. Non- monetary items that are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences on monetary items are recognized in profit or loss in the period in which they
arise.
Exchange differences arising on translation of a foreign controlled subsidiary are recognized in other comprehensive
income or loss and accumulated in a translation reserve within equity. The cumulative translation amount is
reclassified to profit or loss if and when the net investment in the foreign controlled subsidiary is disposed.
2.12 Fair value measurements
The Group measures certain financial liabilities at fair value through profit or loss (FVTPL) at each reporting period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure the fair values of such financial liabilities, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.
Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation
techniques, as follows:
• Level 1: quoted prices in active markets for identical assets and liabilities;
• Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (e.g.,
prices) or indirectly (e.g., derived from prices); and
• Level 3: inputs for the asset or liability that are unobservable.
The carrying amounts of cash and cash equivalents, restricted cash, trade receivables, other current assets, contract
assets, trade and other payables and other current liabilities in the Group’s consolidated statements of financial
position approximate their fair value because of the short maturities and nature of these instruments.
For liabilities that are measured at fair value on a recurring basis, the Group determines whether transfers have
occurred between levels in the fair value hierarchy by reassessing the inputs used in determining fair value at the end
of each reporting period.
2.13 Goodwill and other intangible assets
Goodwill and business combinations
Acquisitions are first reviewed to determine whether a set of assets acquired constitute a business and should be
accounted for as a business combination. If the assets acquired do not meet the definition of a business, the Group
will account for the transaction as an asset acquisition. If the definition of a business combination is met, the Group
will account for the transaction using the acquisition method of accounting. The consideration transferred in a
business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of
the assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the
equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognized
in the consolidated statements of profit or loss and other comprehensive income or loss as incurred.
Notes to the Consolidated Financial Statements
28
Goodwill represents the excess of the purchase price of the business combination over the Group’s interest in the net
fair value of the identifiable assets, liabilities, contingent liabilities, the amount of any noncontrolling interests in the
acquiree and the fair value of the acquirer’s previously held equity interest in the acquiree. Goodwill is reviewed for
impairment at least annually, and whenever there is an indication that the asset may be impaired. An impairment loss
is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs of disposal and value in use. The value in use calculation is
performed using discounted expected future cash flows. The discount rate applied to these cash flows is based on the
weighted average cost of capital and reflects current market assessments of the time value of money.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
business combination occurs, the Group reports provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the measurement period, or as additional assets or
liabilities are recognized, to reflect new information obtained about facts and circumstances that existed at the
acquisition date that, if known, would have affected the amounts recognized at that date.
The Group did not complete any business combinations during the years ended 31 December 2024 and 31 December
2023.
Other intangible assets
Other intangible assets consist of software, customer relationships, and intellectual property rights. Intangible assets
acquired in a business combination are identified and recognized separately from goodwill if they satisfy the
definition of an intangible asset and their fair values can be reliably measured. The cost of intangible assets is their
fair value at the acquisition date.
Intangible assets with finite useful lives are reported at cost less accumulated amortization and accumulated
impairment losses. Amortization is recognized on a straight-line basis over an asset’s estimated useful life. The
estimated useful life and amortization method are reviewed at each balance sheet date, with the effect of any changes
in estimate being accounted for on a prospective basis. Intangible assets that are subject to amortization are reviewed
for impairment whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. The following useful lives are used in the calculation of amortization:
Software 3-10 years Customer relationships 7 years Intellectual property rights*10 years
• From launch date
Certain of the Group’s intellectual property rights have been pledged to secure borrowings as further described in
Note 21.
Intangible assets with indefinite useful lives are reviewed for impairment at least annually, and whenever there is an
indication that the asset may be impaired. An impairment loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less
costs of disposal and value in use. The value in use calculation is performed using discounted expected future cash
flows. The discount rate applied to these cash flows is based on the weighted average cost of capital and reflects
current market assessments of the time value of money.
2.14 Income tax
Income tax includes the current tax and deferred tax charge recorded in the consolidated statements of profit or loss
and other comprehensive income or loss.
Current tax
The current tax expense is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as
reported in the consolidated statements of profit or loss and other comprehensive income or loss because it excludes
items of income or expense that are taxable or deductible in other years and items that are never taxable or
Notes to the Consolidated Financial Statements
29
deductible. The Group’s current tax expense is calculated using tax rates that have been enacted or substantively
enacted by the end of the reporting period.
Accruals for tax contingencies are made when it is not probable that a tax authority will accept the tax position,
based upon management’s interpretation of applicable laws and regulations and the expectation of how the tax
authority will resolve the matter. Accruals for tax contingencies are measured using either the most likely amount or
the expected value amount depending on which method the entity expects to better predict the resolution of the
uncertainty.
Deferred tax
Deferred tax is provided in full for all temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit,
except to the extent the temporary difference arises from:
• The initial recognition of an asset or a liability in a transaction that is not a business combination and that
affects neither the taxable profit nor accounting profit;
• The initial recognition of residual goodwill (for deferred tax liabilities only); or
• Investments in subsidiaries, branches, associates and joint ventures, where the Group is able to control the
timing of the reversal of the temporary difference and it is not probable that it will reverse in the foreseeable
future.
The tax value of tax loss carry-forwards is included in deferred tax assets to the extent that these are expected to be
utilized against future taxable income. The deferred taxes are measured according to the respective territorial current
tax rules and tax rates assumed in the year in which the assets are expected to be utilized.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates and tax laws that have been enacted or substantively
enacted by the end of the reporting period. The measurement of deferred tax liabilities and deferred tax assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the balance sheet
date, to recover or settle the carrying amount of the assets and liabilities.
Deferred tax liabilities are generally recognized for all taxable temporary differences. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. The carrying amount of deferred
tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is charged or credited to the consolidated statements of profit or loss and other comprehensive income
or loss, except when the tax arises from a business combination or it relates to items charged or credited directly to
equity, in which case the deferred tax is also taken directly to equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority
and the Group intends to settle its current tax assets and liabilities on a net basis in that taxation authority.
2.15 Property, plant and equipment
Property, plant and equipment is recognized as an asset when it is probable that future economic benefits associated
with the asset will flow to the Group and the cost of the asset can be measured in a reliable manner. Property, plant
and equipment which qualifies for recognition as an asset are initially measured at cost.
The cost of property, plant and equipment includes an asset’s purchase price and any directly attributable costs of
bringing the asset to working condition for its intended use.
Depreciation is calculated and recognized as an expense on a straight-line basis over an asset’s estimated useful life.
The estimated useful lives, residual values and depreciation method are reviewed at each balance sheet date, with the
Notes to the Consolidated Financial Statements
30
effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the
calculation of depreciation:
Facility 40 years Facility equipment 5-20 years Computer equipment 3 years Leasehold improvements 3-15 years Furniture and fixtures 5 years
Certain of the Group’s property, plant and equipment assets have been pledged to secure borrowings as further
described in Note 21. Significant disposals of pledged assets are subject to lender approval. Upon disposal or
retirement of an asset, the difference between the sales proceeds, if applicable, and the carrying amount of the asset
is recognized in the consolidated statements of profit or loss and other comprehensive income or loss at the time of
disposal or retirement.
At the end of each reporting period, or sooner if events triggering an interim impairment assessment occur, the
Group reviews the carrying amounts of its property, plant and equipment to determine whether there is any
indication that the value of such assets are impaired. Triggering events that warrant an interim impairment
assessment include, but are not limited to, the technical obsolescence of equipment or failure of such equipment to
meet regulatory requirements. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss and the carrying amount of the asset is reduced to its recoverable
amount, which is the higher of fair value less costs of disposal and value in use.
2.16 Inventories
Inventories, which consist of raw materials and supplies, work in progress and finished goods are stated at the lower
of cost or net realizable value. Net realizable value is the expected sales price less completion costs and costs to be
incurred in marketing, selling and distributing the inventory. Cost is calculated using the weighted average cost
method or the first-in, first-out method, depending on the nature of the inventory.
Inventories include direct costs for raw materials and supplies and, as applicable, direct and indirect labor and
overhead expenses that have been incurred to bring inventories to their present location and condition.
If the net realizable value is lower than the carrying amount, a write-down of inventory is recognized for the amount
by which the carrying amount exceeds net realizable value.
The Group’s inventories have been pledged to secure borrowings as further described in Note 21.
2.17 Financial assets
Recognition of financial assets
Financial assets are recognized when the Group becomes a party to the contractual provisions of the instrument.
Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition
or issue of financial assets, other than financial assets measured at FVTPL, are added to or deducted from the fair
value of the financial assets, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets at FVTPL are recognized immediately in profit or loss. There were no transaction
costs related to the acquisition of financials assets in 2024 and 2023. All of the Group’s financial assets are
measured at amortized cost as of 31 December 2024 and 2023.
Financial assets measured at amortized cost
Financial assets measured at amortized cost are debt instruments that give rise to contractual cash flows that are
solely payments of principal and interest on the principal amount outstanding. The Group’s financial assets
measured at amortized cost are trade receivables, certain other current assets, receivables from related parties,
restricted cash and cash and cash equivalents.
Interest income is recognized by applying the effective interest rate, except for short-term receivables when the
effect of discounting is immaterial.
Notes to the Consolidated Financial Statements
31
Impairment of financial assets
The Group recognizes a loss allowance for expected credit losses ("ECL") on its trade receivables and other debt
instruments that are measured at amortized cost. In addition, although contract assets are not financial assets, a loss
allowance for ECL are also recognized for such assets. ECL is based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an
approximation of the original effective interest rate. The amount of ECL is updated at each reporting date to reflect
changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognizes lifetime ECL for trade receivables and contract assets. The expected credit losses on
these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience,
adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the
current as well as the forecasted direction of conditions at the reporting date, including time value of money where
appropriate.
The Group writes off a financial asset when there is no reasonable expectation of recovery, such as information
indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery. A trade
receivable or contract asset that is considered uncollectible is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognized in profit or loss. The Group did not write off any trade receivables
or contract assets during the years ended 31 December 2024 and 2023 except for the Biosana related asset which
was fully reserved (see Note 18).
The Group estimates impairment for related party receivables on an individual basis. No impairment is recognized
for restricted cash or cash and cash equivalents as management has estimated that the effects of any calculated ECL
would be immaterial.
Derecognition of financial assets
The Group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Group recognizes its retained interest in the asset as well as an associated liability.
If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group
continues to recognize the financial asset and also recognizes a collateralized borrowing for the proceeds received.
On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognized in other
comprehensive income or loss and accumulated in equity is recognized in profit or loss.
2.18 Financial liabilities
Financial liabilities
The Group’s financial liabilities consist of trade and other payables, certain other current liabilities loans and
borrowings, lease liabilities, derivative financial instruments, long-term incentive plans, share appreciation right
plans and other long-term liability to a related party. All financial liabilities are initially measured at fair value.
Loans and borrowings are recorded net of directly attributable transaction costs and less the value attributable to any
embedded derivative financial instruments, if applicable.
The Group derecognizes financial liabilities when, and only when, the Group’s obligations are discharged,
cancelled, substantially modified or have expired. Additionally, management elected, as part of its accounting
policy, to recognize the difference between the carrying amount of the financial liabilities and the fair value of the
consideration paid for the extinguishment in the consolidated statement of profit or loss and other comprehensive
income or loss.
Financial liabilities subsequently measured at amortized cost
After initial recognition, financial liabilities other than derivative financial instruments and awards issued pursuant
to long-term incentive plans are subsequently measured at amortized cost using the effective interest method. The
effective interest method is a method of calculating the amortized cost of a financial liability and of allocating
Notes to the Consolidated Financial Statements
32
interest expense over the relevant period. The effective interest rate is the rate that discounts all estimated future cash
payments through the expected life of the financial liability, or a shorter period if appropriate, to the amortized cost
of a financial liability. The effective interest rate includes the effects of any discount or premium on acquisition of
the financial liability, as well as any fees or costs incurred upon acquisition.
Financial liabilities subsequently measured at FVTPL
Derivative financial instruments
Certain rights and features pursuant to borrowing arrangements and other contracts may provide the counterparty
with one or more financial instruments that need to be evaluated and potentially accounted for separately by the
Group. These financial instruments are either embedded in a host instrument or are treated as a separate financial
instrument if they are contractually transferable independent from the host instrument. Such rights and features
pursuant to the Group’s contracts with both third parties and related parties include earn out rights, conversion rights
and warrant rights.
Equity conversion features within host debt instruments that meet the definition of a derivative and have economic
and risk characteristics that are not closely related to the host instrument are embedded derivatives that are separated
from the host instrument and accounted for separately. As part of the accounting for embedded derivatives or
separate financial instruments, management considers the appropriate accounting classification under IAS 32.
Embedded derivatives and separate financial instruments that meet the fixed-for-fixed criteria are classified as equity
and initially measured at fair value. Warrant rights that provide the holder with an option to purchase ordinary shares
at a specified price or pursuant to a specified formula are generally separate derivative financial instruments that are
accounted for as derivative liabilities. Earn Out Shares grant the holder with a variable number of Ordinary Shares
based on certain vesting conditions tied to the stock price and are accounted for as derivative liabilities. In the event
that the fair value of any derivative liabilities, determined using unobservable inputs, exceeds the transaction price of
a borrowing arrangement, the Group records a deferred loss at the inception of the borrowing arrangement for the
difference between the fair value of the derivative liabilities and the transaction price of the borrowing arrangement.
Such deferred losses are recognized over the term of the related borrowing arrangement using the straight-line
method of amortization. The deferred loss is netted against derivative financial liabilities on the consolidated
statements of financial position. Amortization of the deferred loss is recognized as a component of “Finance costs”
in the consolidated statements of profit or loss and other comprehensive income or loss.
The Group recognized derivative liabilities related to the Predecessor Earn Out Shares, OACB Earn Out Shares and
assumed OACB warrants. Additionally, the Group recognized an embedded derivative for the conversion feature
associated with the Tranche A Convertible Bonds, as further described in Note 27. These features are liability-
classified, rather than equity-classified, because the Group is obligated to issue a variable number of ordinary shares
to the holder upon conversion or exercise of the feature. Therefore, these derivative liabilities were initially recorded
at fair value and remeasured to fair value at each reporting period with gains and losses arising from changes in the
fair value recognized in finance income or finance costs, as appropriate.
The fair values of the derivative liabilities were determined using a valuation approach that incorporated a range of
inputs that are both observable and unobservable in nature. The inputs used in the initial and subsequent fair value
measurements predominantly relate to (i) the price of the Group’s Ordinary Shares (ii) the volatility of the Group’s
Ordinary Shares, (ii) a risky discount rate corresponding to the credit risk associated with the repayment of the host
debt instruments, and (iii) the probabilities of each derivative being exercised by the holder and the timing of such
exercises. The probabilities are determined based on all relevant internal and external information available and are
reviewed and reassessed at each reporting date.
The Group will derecognize any derivative liabilities if and when the rights are exercised by the holders or the time
period during which the rights can be exercised expires.
Long-term incentive plans
Management Incentive Plan
The Group can issue share options, restricted share units (“RSUs”), and other share-based awards under the
Company’s new incentive plan (the “Management Incentive Plan”) which was approved by the Board in June 2022.
Awards issued under the Management Incentive Plan are accounted for in accordance with IFRS 2. Share-based
Notes to the Consolidated Financial Statements
33
payments are classified as equity-settled share-based payments as the Company intends to settle the awards with
equity and has the commercial substance to do so. Share-based payments are measured at the grant date fair value of
the instruments issued and recognized over the expected vesting periods. The number of shares expected to vest are
reviewed and adjusted at the end of each reporting period such that the amount of expense recognized shall be based
on the number of equity instruments that will eventually vest.
2.19 Litigation and other contingencies
The Group may, from time to time, become involved in legal proceedings arising out of the normal course of its
operations. For instance, as a developer and manufacturer of biosimilars, the Group may be subject to lawsuits
alleging patent infringement or other similar claims filed by the reference product sponsor. Similarly, the Group may
utilize patent challenge procedures to challenge the validity, enforceability or infringement of the reference product
sponsor’s patents. Other parties may also file patent infringement claims against the Group alleging that the Group’s
products or manufacturing process techniques infringe their patents.
The Group establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable
outcome is probable and the loss is reasonably estimable. When such conditions are not met for a specific legal
matter, no reserve is established. Although management currently believes that resolving claims against the Group,
including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the
liquidity, results of operations, or financial condition of the Group, these matters are subject to inherent uncertainties
and management’s view of these matters may change in the future. It is possible that an unfavorable outcome of a
lawsuit or other contingency could have a material impact on the liquidity, results of operations, or financial
condition of the Group.
Significant judgment is required in both the determination of probability of loss and the determination as to whether
the amount of loss can be reasonably estimated. Accruals are based only on information available at the time of the
assessment, due to the uncertain nature of such matters. As additional information becomes available, management
reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which
could materially affect the Group’s results of operations in a given period.
The Group maintains liability insurance coverages for various claims and exposures. The Group’s insurance
coverage limits its maximum exposure on claims; however, the Group is responsible for any uninsured portion of
losses. Management believes that present insurance coverage is sufficient to cover potential exposures.
2.20 Leases
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognizes a
right-of-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee,
except for those with a lease term of twelve months or less and leases of low value assets. For these leases, the
Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease
unless another systematic basis is more representative of the time pattern in which economic benefits from the leased
assets are consumed. The Group’s leased assets consist of various real estate, fleet and equipment leases.
Right-of-use assets reflect the initial measurement of the lease liability, lease payments made at or before the lease
commencement date and any initial direct costs less lease incentives that may have been received by the Group.
These assets are subsequently measured at cost less accumulated depreciation, impairment losses and
remeasurements of the underlying lease liability. Right-of-use assets are depreciated over the shorter of the lease
term and the useful life of the underlying asset. If a lease transfers ownership of the underlying asset to the Group or
the lease includes a purchase option that the Group is reasonably certain to exercise, the related right-of-use asset is
depreciated over the useful life of the underlying asset. Depreciation starts at the commencement date of the lease.
Lease liabilities are initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the
Group uses its incremental borrowing rate, which is the rate of interest that the Group would need to pay to borrow,
on a collateralized basis, an amount equal to the lease payments over a similar term in a similar economic
environment based on information available at the commencement date of the lease. The lease payments included in
the measurement of the lease liability comprise fixed payments (including in-substance fixed payments) less any
incentives, variable lease payments that depend on an index or rate, expected residual guarantees and the exercise
price of purchase options reasonably certain to be exercised by the Group.
Notes to the Consolidated Financial Statements
34
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability, using the effective interest method, and by reducing the carrying amount to reflect payments made during
the lease term. The Group remeasures the lease liability if the lease term has changed, when lease payments based on
an index or rate change or when a lease contract is modified and the modification is not accounted for as a separate
lease.
Variable payments that do not depend on an index or rate are not included in the measurement of the lease liability
and the right-of-use asset. The related payments are recognized as an expense in the period in which the event or
condition that triggers those payments occurs.
As a practical expedient, lessees are not required to separate non-lease components from lease components, and
instead account for any lease and associated non-lease components as a single lease component. The Group has used
this practical expedient.
2.21 Loss per share
Holders of the Predecessor Earn Out Shares and OACB Earn Out Shares have equal dividend and participation
rights to the ordinary shareholders. However, these participating securities are classified as liabilities and as such,
the shares held are not included in the weighted average number of ordinary shares outstanding in the basic loss per
share calculation.
The calculation of basic loss per share is based on the loss for the year attributable to ordinary shareholders of the
Group and the weighted average number of ordinary shares outstanding during the period.
Diluted loss per share is computed by dividing the loss for the year attributable to ordinary shareholders of the
Group by the weighted average number of ordinary shares outstanding in the basic loss per share calculation, both of
which are adjusted for the effects of all dilutive potential ordinary shares. Antidilutive effects of potential ordinary
shares, which result in an increase in earnings per share or a reduction in loss per share, are not recognized in the
computation of diluted loss per share.
3. New accounting standards
Management has assessed that new or amended IFRS Accounting Standards and interpretations issued by the IASB
and endorsed by the EU effective on or after 1 January 2024 has not had a significant effect on the Consolidated
financial statements, specifically:
– Amendments to IFRS 16 Leases: Lease Liability in a Sale and Lease back;
– Amendment to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current and Non-current Liabilities with Covenants; and
– Amendment to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier
Finance Arrangements.
New or amended IFRS Accounting Standards and interpretations issued by the IASB that have not yet become
effective are generally not adopted until they become effective and endorsed by the EU. Management does not
anticipate any significant impact on the consolidated financial statements in the period of initial application from the
adoption of these new standards and amendments, apart from IFRS 18 Presentation and Disclosure in Financial
Statements which replaces IAS 1 effective from 1 January 2027. The new IFRS 18 is expected to change the
presentation of the statements of profit or loss and other comprehensive income or loss and to differentiate between
earnings from operating activities, investment activities and financing activities. IFRS 18 will also add additional
disclosures but will not change any accounting policies on recognition and measurement, hence it will not change
reported net results. Management is currently assessing the impact of this new standard.
4. Segment reporting
As disclosed in Note 2, the Group operates and manages its business as one operating segment.
A significant portion of the Group’s revenue is generated from long-term out-license contracts which provide the
customer with exclusive or semi-exclusive rights to a particular territory, which generally span multiple countries or
a particular continent, as well as the Group’s promises to continue development of the underlying compound and to
Notes to the Consolidated Financial Statements
35
provide supply of the product to the customer upon commercialization. Therefore, based on the nature of the
customer agreements, revenue information is not currently available on a country-by-country basis.
Revenue from customers based on the geographic market in which the revenue is earned, which predominantly
aligns with the rights conveyed to the Group’s customers pursuant to its out-license contracts, is as follows:
2024 2023 Europe 157,587 63,510 USA 273,036 9,430 Rest of World 59,059 18,494 489,682 91,434
Non-current assets, excluding financial instruments and deferred tax assets, based on the location of the asset is as
follows:
2024 2023 Europe 451,066 415,659 USA 6,407 5,094 Rest of World 10,547 6,194 468,020 426,947
Revenue from transactions with individual customers that exceeds ten percent or more of the Group’s total revenue
is as follows:
2024 2023 Revenue % Total Revenue % Total Customer A 144,384 29.5% 9,430 10.3% Customer B 72,105 14.7% 46,954 51.4% Customer C 26,094 5.3% 8,876 9.7% Customer D 72,339 14.8% 16,556 18.1% Customer E 101,862 20.8% — —%
5. Revenue
Disaggregated revenue
The following table summarizes the Group’s revenue from contracts with customers, disaggregated by the type of
good or service and timing of transfer of control of such goods and services to customers during the years ended
31 December 2024 and 2023:
2024 2023 Product revenue (point in time revenue recognition) 273,472 48,699 License revenue (point in time revenue recognition) 75,813 7,775 Performance revenue (point in time revenue recognition) 42,391 4,402 Development and other service revenue (over time revenue recognition) 98,006 30,558 489,682 91,434
Notes to the Consolidated Financial Statements
36
Performance revenue is disaggregated from license revenue as the Company reached significant performance
milestones during the year. Those were previously reported under license revenue in 2023.
Reassessment of measure of progress
Subsequent changes to the estimate of the transaction price are recorded as adjustments to revenue in the period of
change. The Group updates the measure of progress estimates on a quarterly basis. The quarterly changes in
estimates did not result in material adjustments to the Group’s previously reported revenue or trade receivables
during the years ended 31 December 2024 and 2023.
Contract assets and liabilities
A reconciliation of the beginning and ending balances of contract assets and contract liabilities is shown in the table
below:
Contract Contract Assets Liabilities 31 December 2022 28,656 93,932 Contract asset additions 19,634 — Amounts transferred to trade receivables (2,412) — Derecognition of contract liability — (42,089) Customer prepayments — 100,555 Revenue recognized — (23,101) Foreign currency adjustment 171 3,147 31 December 2023 46,049 132,444 Contract asset additions 133,756 — Amounts transferred to trade receivables (88,564) — Derecognition of contract liability — (331) Customer prepayments — 51,255 Revenue recognized — (82,454) Foreign currency adjustment (1,227) (4,213) 31 December 2024 90,014 96,701
The net increase in contract assets as of 31 December 2024 is due to the revenue recognized when the performance
obligation has been met which is offset by transfer of amounts to trade receivables on the basis that the Group’s right
to that consideration is no longer contingent on its performance. The net decrease in contract liabilities as of
31 December 2024 is due to revenue recognized when the performance obligation has been met which is offset by
customer prepayments in advance of the Group’s performance. As of 31 December 2024, $22.7 million and $67.3
million are recorded as non-current contract assets and current contract assets, respectively. Non-current contract
assets will materialize over the next 2 to 3 years. As of 31 December 2024, $80.7 million and $16.0 million are
recorded as non-current contract liabilities and current contract liabilities, respectively. Non-current contract
liabilities will be recognized as revenue over the next 2 to 5 years as either services are rendered or contractual
milestones are achieved, depending on the performance obligation to which the payment relates.
Remaining performance obligations
Due to the long-term nature of the Group’s out-license contracts, the Group’s obligations pursuant to such contracts
represent partially unsatisfied performance obligations at year-end. The revenues under existing out-license contracts
with original expected durations of more than one year are estimated to be $265.5 million. The Group expects to
recognize the majority of these revenues over the next 5 years.
Notes to the Consolidated Financial Statements
37
6. Salaries and other employee expenses
The average number of individuals employed by the Group during the years ended 31 December 2024 and 2023 was
1,011 and 999, respectively. The aggregate salary and other employee expenses incurred by the Group for these
employees were as follows:
2024 2023 Salary expense 109,042 107,067 (1)Defined contribution plan expense 11,168 11,518 Long-term incentive plan expense 198 78 Share-based payments (see Note 22) 7,626 18,033 Other employee expense 19,998 19,718 Temporary labor 5,994 8,495 154,026 164,909
(1)
Defined contribution plan expense consists of costs incurred by the Group for employees of certain
subsidiaries that are required by local laws to participate in pension schemes. These pension schemes are not
sponsored or administered by the Group. Pursuant to the requirements of the schemes, the Group is required
to contribute a certain percentage of its payroll costs to the pension schemes. Such contributions are charged
to the consolidated statements of profit or loss and other comprehensive income or loss as they are incurred in
accordance with the rules of the pension schemes.
Salaries and other employee expenses are included within the consolidated statements of profit or loss and other
comprehensive income or loss as follows:
2024 2023 Cost of product revenue 77,241 76,908 Research and development expenses 37,652 44,339 General and administrative expenses 39,133 43,662 Total salary and other employee expenses 154,026 164,909
7. Finance income and finance costs
Finance income earned for the years ended 31 December 2024 and 2023 are as follows:
2024 2023 Changes in the fair value of derivatives 75,528 — Interest income from cash and cash equivalents 4,577 4,547 Other interest income 40 276 80,145 4,823
Finance costs incurred for the years ended 31 December 2024 and 2023 are as follows:
2024 2023 Changes in the fair value of derivatives (see Note 27) (145,564) (132,333) Interest on debt and borrowings (147,373) (129,327) Interest on lease liabilities (see Note 13) (6,614) (3,840) Amortization of deferred debt issue costs (3,614) (1,657) (303,165) (267,157)
Notes to the Consolidated Financial Statements
38
8. Depreciation, amortization and impairment
Depreciation, amortization and impairment expenses incurred during the years ended 31 December 2024 and 2023
are as follows:
2024 2023 Depreciation and impairment of property, plant and equipment (see Note 12) 17,105 14,353 Depreciation of right of use assets (see Note 13) 13,377 8,913 Amortization and impairment of intangible assets (see Note 15) 819 2,723 31,301 25,989
Depreciation, amortization and impairment expenses are included within the consolidated statements of profit or loss
and other comprehensive income or loss as follows:
2024 2023 Cost of product revenue 18,683 15,582 Research and development expenses 8,359 6,886 General and administrative expenses 4,259 3,521 Total depreciation, amortization and impairme nt expense 31,301 25,989
9. Audit fees
2024 2023 Financial Statement audit fees 3,335 2,876 Other fees, including tax services 279 462 Total fees 3,614 3,338
Financial Statements audit fees consist of fees for the audit of our annual financial statements and other professional
services provided in connection with the statutory and regulatory filings or engagements, including fees for the
review of our interim financial information.
Other fees, including tax services, include fees for review of our current and historical financial information
included in our SEC registration statements, fees for tax compliance, tax advice, and tax planning.
Notes to the Consolidated Financial Statements
39
10. Income tax
Taxation recognized in the consolidated statements of profit or loss and other comprehensive income or loss during
the years ended 31 December 2024 and 2023 is as follows:
2024 2023 Current tax Direct taxes - current 1,149 1,307 Direct taxes – prior year (48) (60) Total current tax 1,101 1,247 Deferred tax Current 7,284 (89,847) Prior year 5,916 (10,719) Total deferred tax 13,200 (100,565) Total income tax charge / (benefit) 14,301 (99,318)
The prior year deferred tax impact of $5.9 million mainly relates to foreign currency impact on losses denominated
in Icelandic krona.
The factors affecting the tax charge during the year ended 31 December 2024 relate to the utilization of the deferred
tax asset on accumulated tax losses previously recognized . The factors affecting the tax benefit during the year
ended 31 December 2023 relate to the recognition of a deferred tax asset on accumulated tax losses, as management
assessed that it was probable that the accumulated tax losses would be fully utilized in the coming years.
There were no accruals for tax contingencies during the years ended 31 December 2024 and 2023.
The effective tax rate for the year of -6.6% (2023: 15.3%) is lower than the applicable Luxembourgish statutory rate
of corporation tax. The reconciling items between the statutory rate and the effective tax rate are as follows:
2024 2023 Tax rate 24.9% 24.9% Effect of tax rate in foreign jurisdictions 0.8% (3.4%) Permanent Differences (17.4%) (6.7%) Non-recognition of tax losses (12.2%) (1.5%) Other items (2.8%) 1.9% Effective tax rate (6.6%) 15.3%
The movement in net deferred taxes during the years ended 31 December 2024 and 2023 is as follows:
2024 2023 Balance at 1 January 309,754 209,187 Deferred tax credited to profit or loss (13,205) 100,567 Balance at 31 December 296,549 309,754 Deferred tax assets 298,360 309,807 (Deferred tax liabilities) (1,811) (53)
Notes to the Consolidated Financial Statements
40
2024 2023 Deferred Tax Assets and Liabilities DTA (DTL) DTA (DTL)Intangible Assets 751 — (1,131) (8) Tangible Assets 530 (849) (1,967) (10) Inventory Reserves 1,384 — 1,829 — Bad Debt Reserves 3,483 — 3,700 — Employee Benefits 4,611 — 5,652 — Provisions and accruals — (679) (410) — Other (275) (283) 760 (35) Taxable Losses 287,874 — 301,375 — Total Deferred Taxes 298,360 (1,811) 309,807 (53)
Where there is a right of offset of deferred tax balances within the same tax jurisdiction, IAS 12 requires these to be
presented after such offset in the consolidated statements of financial position. The closing deferred tax balances
included above are after offset; however, the disclosure of deferred tax assets by category below are presented
before such offset.
The amount of deferred tax recognized in the consolidated statements of financial position as of 31 December 2024
and 2023 is composed of:
2024 2023 Deferred tax assets attributable to tax loss carryforwards 287,874 301,375 Deferred tax assets attributable to other temporary differe nces 10,760 11,941(Deferred tax liabilities) attributable to other t emporary differences (2,085) (3,562)Net deferred tax assets / (liabilities) 296,549 309,754
A deferred tax liability has been recognized in relation to ordinary timing differences arising from depreciation and
other provisions. A deferred tax liability of $2.1 million and $3.6 million has been recognized as of 31 December
2024 and 2023, respectively.
A deferred tax asset has been recognized in relation to ordinary timing differences arising from amortization,
depreciation, reserves, employee benefits and tax losses carried forward in the Group. The deferred tax asset on tax
losses relates to tax losses arising in Iceland, and management considers probable that future forecasted profit
associated with product, license and other revenue will be available to offset the cumulative tax losses as of
31 December 2024. In assessing the probability of recovery, management has reviewed the Group's long-term plan,
for the years 2025-20230, that has been used for the going concern assessment and the goodwill and fixed asset
impairment testing. This long-term plan anticipates successful completion of biosimilar programs currently in the
pipeline and execution of future commercial launches that will support profitability in the near future. The forecasts
included in the long-term plan are evaluated to incorporate potential uncertainty associated with the amount and
timing of expected future revenues, driven by factors such as potential competition and the inherent risk associated
with biosimilar product development.
No deferred tax asset is recognized on tax losses arising in Luxembourg as their recoverability is unlikely to be
realized.
A net deferred tax asset of $296.5 million and $309.8 million is recognized as of 31 December 2024 and 2023,
respectively.
Notes to the Consolidated Financial Statements
41
These tax losses expire as follows:
2025-2027 118,340 2028-2030 392,857 Later 969,441 Indefinite — Total 1,480,638
As of 31 December 2024, the Group has total unused tax losses of $1,480.6 million which is comprised of $1,439.4
million of accumulated tax losses in Iceland and $41.2 million accumulated tax losses in Luxembourg.
11. Loss per share
Basic loss per share is computed by dividing loss for the year by the weighted average number of ordinary shares
outstanding during the period.
Diluted loss per share is computed by adjusting the calculation of basic loss per share for the effects of dilutive
potential ordinary shares from financial instruments that may be converted or exercised into ordinary shares of the
Group. For the years ended 31 December 2024 and 2023, 31,432,382 and 86,745,377, respectively, potential
ordinary shares pursuant to the RSUs, Senior Bond Warrants, Aztiq Convertible Bond, 2022 Convertible Bonds,
OACB Warrants, Predecessor Earn Out Shares, and OACB Earn Out Shares (as defined and discussed in Notes 21
and 27) were excluded in the calculation of diluted loss per share, since the effect of doing so would result in a
reduction of loss per share and thus be antidilutive.
The calculation of basic and diluted loss per share for the years ended 31 December 2024 and 2023 is as follows (in
thousands, except for share and per share amounts):
2024 2023 Earnings Loss for the year (231,864) (551,731) Number of shares Weighted average number of ordinary shares outstanding 267,924,570 227,256,469 Basic and diluted loss per share (0.87) (2.43)
Notes to the Consolidated Financial Statements
42
12. Property, plant and equipment
Property, plant and equipment consists of facility, facility equipment, furniture, fixtures and leasehold
improvements, and computer equipment. Movements within property, plant and equipment during the years ended
31 December 2024 and 2023 are as follows:
Furniture, fixtures and Facility leasehold Computer Facility Equipment improvements equipment Total Cost Balance at 1 January 2024 115,000 176,718 10,878 2,312 304,908 Additions — 61,633 3,517 98 65,248 Translation difference — (880) (94) (22) (996) Balance at 31 December 2024 115,000 237,471 14,301 2,388 369,160 Depreciation Balance at 1 January 2024 3,234 59,497 3,815 1,583 68,129 Depreciation 2,875 13,189 776 265 17,105 Translation difference — (579) (22) (19) (620) Balance at 31 December 2024 6,109 72,107 4,569 1,829 84,614 Net carrying amount Balance at 31 December 2024 108,891 165,364 9,732 559 284,546
Furniture, fixtures and Facility leasehold Computer Facility Equipment improvements equipment Total Cost Balance at 1 January 2023 115,000 145,150 9,598 1,959 271,707 Reclassification of assets — 2,771 (112) (7) 2,652 Additions — 29,351 1,500 518 31,369 Disposals — (1,233) (23) (136) (1,392) Translation difference — 679 (85) (22) 572 Balance at 31 December 2023 115,000 176,718 10,878 2,312 304,908 Depreciation Balance at 1 January 2023 359 46,002 3,233 1,519 51,113 Reclassification of assets — 3,330 (112) (7) 3,211 Depreciation 2,875 10,572 676 230 14,353 Disposals — (737) (22) (136) (895) Translation difference — 330 40 (23) 347 Balance at 31 December 2023 3,234 59,497 3,815 1,583 68,129 Net carrying amount Balance at 31 December 2023 111,766 117,221 7,063 729 236,779
On 12 December 2024 the Group entered into a settlement with Fasteignafélagið Eyjólfur hf. with respect to
Alvotech hf.'s equipment located in the leased premises and operated by Alvotech hf., which had been acquired by
Faseignafélagið Eyjólfur hf. This resulted in an amendment of the lease agreement (see Note 13). The settlement
amount was $14.8 million.
Notes to the Consolidated Financial Statements
43
The Group pledged $284.5 million and $127.4 million of property, plant and equipment as collateral to secure bank
loans with third parties as of 31 December 2024 and 2023, respectively.
13. Leases
The Group’s leased assets consist of facilities, fleet and equipment pursuant to both arrangements with third parties
and related parties. The carrying amounts of the Group’s right-of-use assets and the movements during the years
ended 31 December 2024 and 2023 are as follows:
2024 2023 Right-of-use assets Balance at 1 January 119,802 47,501 Adjustments for indexed leases 6,283 7,354 New leases 41,506 74,109 Cancelled leases (476) (139) Remeasurement due to acquisition of equipment (27,902) — Reclassification — (443) Depreciation (13,377) (8,913) Translation difference (638) 333 Balance at 31 December 125,198 119,802
The Group entered into a lease agreement with Fasteignafélagið Eyjólfur hf. in April 2023 for a new facility in
Iceland with remaining lease terms of approximately 14 years as of 31 December 2024. The building is 140,000
square feet. The construction was completed in 2024 and the final details are expected to be finalized in 2025. The
lease amount is in substance fixed and is based on construction cost. On 12 December 2024 the Group entered into a
settlement with Fasteignafélagið Eyjólfur hf. with respect to Alvotech hf.'s equipment located in the leased premises
and operated by Alvotech hf., which had been acquired by Faseignafélagið Eyjólfur hf. This resulted in an
amendment of the lease agreement which resulted in a partial termination of the right-of-use asset amounting to
$27.9 million and remeasurement of the lease liability reducing the liability by $28.3 million. The Group recognized
$0.4 million income due to this remeasurement in the consolidated statements of profit or loss and other
comprehensive income or loss. The related right-of-use asset as of 31 December 2024 amounts to $78.7 million.
The Group’s right-of-use assets as of 31 December 2024 and 2023 are comprised of the following:
2024 2023 Right-of-use assets Facilities 117,931 110,692 Fleet 268 389 Equipment 6,999 8,721 125,198 119,802
Notes to the Consolidated Financial Statements
44
At the commencement date of the lease, the Group recognizes lease liabilities measured at the present value of lease
payments to be made over the lease term. The Group’s lease liabilities and the movements during the years ended
31 December 2024 and 2023 are as follows:
2024 2023 Lease liabilities Balance at 1 January 115,315 40,532 Adjustments for indexed leases 6,325 7,405 New leases 41,584 72,882 Cancelled leases (484) (167) Installment payments (10,725) (7,260) Remeasurement due to acquisition of equipment (28,252) — Foreign currency adjustment (1,695) 1,932 Translation difference (416) (9) Balance at 31 December 121,652 115,315 Current liabilities (9,515) (9,683) Non-current liabilities 112,137 105,632
The amounts recognized in the consolidated statements of profit or loss and other comprehensive income or loss
during the years ended 31 December 2024 and 2023 in relation to the Group’s lease arrangements are as follows:
2024 2023 Depreciation expense from right-of-use assets Facilities (11,922) (7,631) Fleet (161) (180) Equipment (1,294) (1,102) Total depreciation expense from right-of-use assets (13,377) (8,913) Interest expense on lease liabilities (6,614) (3,840) Foreign currency difference on lease liability (1,695) (1,932) Gain/(loss) from extinguishment of lease agreement 375 (28) Total amount recognized in profit and loss (21,311) (14,713)
The maturity analysis of undiscounted lease payments as of 31 December 2024 and 2023 is as follows:
2024 2023 Less than one year 16,731 14,637 One to five years 58,722 51,053 Thereafter 101,703 89,682 177,156 155,372
The Group’s lease liabilities as of 31 December 2024 and 2023 do not include short-term leases and low value
leases. During these years the Group expensed $0.2 million and $0.7 million, respectively, in relation to such leases.
Notes to the Consolidated Financial Statements
45
14. Goodwill
The Group’s goodwill balances as of 31 December 2024 and 2023 are as follows:
2024 2023 Balance as of 1 January 12,058 11,643 Translation difference (728) 415 Balance as of 31 December 11,330 12,058
Goodwill is recognized at the Group level and allocated to group of cash-generating units, which represents the
lowest level at which goodwill is monitored. The recoverable amount of the cash-generating unit is determined
based on a value in use calculation which uses cash flow projections based on the financial forecast for the period
2025-2030 which reflect the recent business developments of the Group and has been approved by management and
the Board of Directors. The Group determined that the terminal growth rate and the discount rate are the key
assumptions used in determining the current estimate of value in use.
Cash flows beyond 2031 have been extrapolated using a negative 5% terminal rate in both the 2024 and 2023 value
in use calculations, respectively. A discount rate of 24.3% (2023: 25.0%) per annum was used in determining the
current estimate of value in use. Since the recoverable amount of the cash-generating unit was substantially in excess
of its carrying amount as of 31 December 2024 and 2023, management believes that any reasonably possible change
in the key assumptions on which the recoverable amount of the cash-generating unit is based would not cause the
carrying amount of the cash-generating unit to exceed its recoverable amount.
There were no goodwill impairment charges recognized in the consolidated statements of profit or loss and other
comprehensive income or loss in any prior periods.
15. Other Intangible assets
Other intangible assets consist of software, customer relationships, and licensed intellectual property rights.
Movements in intangible assets during the years ended 31 December 2024 and 2023 are as follows:
Intellectual Customer property Software relationships rights Total Cost Balance at 1 January 2024 17,073 2,271 6,000 25,344 Additions 2,409 — — 2,409 Translation difference (248) (137) — (385) Balance at 31 December 2024 19,234 2,134 6,000 27,368 Amortization Balance at 1 January 2024 3,997 2,271 — 6,268 Amortization 819 — — 819 Translation difference (203) (137) — (340) Balance at 31 December 2024 4,613 2,134 — 6,747 Net carrying amount Balance at 31 December 2024 14,621 — 6,000 20,621
Additions during the year ended 31 December 2024 were primarily the implementation of our new SAP system.
Notes to the Consolidated Financial Statements
46
Intellectual Customer property Software relationships rights Total Cost Balance at 1 January 2023 13,684 2,181 15,000 30,865 Reclassification of assets 1,002 — — 1,002 Additions 4,094 — 6,000 10,094 Impairment (1,779) — — (1,779) Retirement — — (15,000) (15,000) Translation difference 72 90 — 162 Balance at 31 December 2023 17,073 2,271 6,000 25,344 Amortization Balance at 1 January 2023 3,343 1,870 — 5,213 Amortization 626 318 — 944 Translation difference 28 83 — 111 Balance at 31 December 2023 3,997 2,271 — 6,268 Net carrying amount Balance at 31 December 2023 13,076 — 6,000 19,076
Additions during the year ended 31 December 2023 were primarily comprised of licensed intellectual property rights
from Kashiv as detailed below.
Expense for amortization of the Group’s intangible assets is included within the consolidated statements of profit or
loss and other comprehensive income or loss as follows:
2024 2023 Cost of product revenue — 318 Research and development expenses 21 8 General and administrative expenses 798 618 819 944
At 31 December 2024 the Group performed a review of its intangible assets and determined that there was no
impairment in 2024. At 31 December 2023, the Group determined certain software development had been
abandoned. In assessing recoverable amount, the Group determined the market for resale was non-existent.
Management therefore determined to fully impair the assets, resulting in an impairment charge of $1.8 million
during the year ended 31 December 2023. The impairment charge for the year ended 31 December 2023 was
recognized as an expense within “General and administrative expense”.
At 31 December 2023, following the termination of the agreement with Biosana, the Group derecognized
$15.0 million of other intangible assets relating to intellectual property rights for the co-development and
commercialization of AVT23. A corresponding receivable was recognized to reflect the claim against Biosana (see
Note 18 for further information).
Alvotech entered into an exclusive product licensing and supply agreement with Kashiv for the development and
commercialization of AVT23 in September 2023. Under the terms of the agreement, Kashiv granted Alvotech an
exclusive right for AVT23 which will be produced using Kashiv’s proprietary process technology and
commercialized by Alvotech in specific territories. In exchange, Alvotech made an upfront payment of $3.0 million
upon the signing of the agreement, with an additional $3.0 million due upon the beginning of Phase 3 which
coincides with the clinical trial application ("CTA") submission.
In addition, Alvotech may be obligated to pay Kashiv up to an aggregate of $25 million (including the $6 million
upfront payments mentioned above), payable upon the achievement of various development and regulatory
milestones, as well as certain tiered royalty payments up to an aggregate of $15 million based on commercial sales
of AVT23. The agreement terminates 10 years after the launch of AVT23 and is subject to certain customary
termination rights.
Notes to the Consolidated Financial Statements
47
16. Cash and cash equivalents
Cash and cash equivalents include both cash in banks and on hand. Cash and cash equivalents as of 31 December
2024 and 31 December 2023 are as follows:
31 December 31 December 2024 2023 Cash and cash equivalents denominated in US dollars 36,930 1,466 Cash and cash equivalents denominated in other currencies 14,498 9,691 51,428 11,157
Restricted cash
Restricted cash relates to cash that may only be used pursuant to certain of the Group’s borrowing arrangements (see
note 21). Therefore, these deposits are not available for general use by the Group. Movements in restricted cash
balances during the years ended 31 December 2024 and 31 December 2023 are as follows:
31 December 31 December 2024 2023 Balance at 1 January 26,132 25,187 Interest income 740 945 Release during the period (26,872) — Balance at 31 December — 26,132
Notes to the Consolidated Financial Statements
48
17. Inventories
The Group’s inventory balances as of 31 December 2024 and 31 December 2023 are as follows:
31 December 31 December 2024 2023 Raw materials and supplies 53,566 51,524 Work in progress 81,243 33,068 Finished goods — 244 Inventory reserves (6,920) (10,403) Total Balance 127,889 74,433
The increase in inventory from 31 December 2023 to 31 December 2024 is due to the expansion of the commercial
launch of certain of the Group’s biosimilar products.
The Group recognized $117.9 million and $42.8 million within cost of goods sold during the years ended
31 December 2024 and 2023, respectively.
During the years ended 31 December 2024 and 2023, write-down of inventories amounted to $6.9 million and
$10.4 million, respectively, due to product expiration and results from quality control inspections.
There was a reversal of inventory write-downs of $8.9 million during the year ended 31 December 2024. There was
no reversal of inventory write-downs during the year ended 31 December 2023.
18. Other current assets
The composition of other current assets as of 31 December 2024 and 31 December 2023 is as follows:
31 December 31 December 2024 2023 Value-added tax 17,719 8,801 Prepaid expenses 23,984 22,035 Proceeds receivable from sale of joint venture (Note 26) 5,950 — Other short-term receivables 411 1,035 48,064 31,871
During the year 2023, the Group terminated the co-development agreement with Biosana for AVT23 and
derecognized $15.0 million of other intangible assets and $3.5 million of prepaid development costs. A receivable of
$18.5 million was recognized under other current assets which was fully reserved due to the uncertainty that it
would be collected. In 2024, the Group collected $1.1 million of the receivable, which was recognized through
profit and loss during the year.
Notes to the Consolidated Financial Statements
49
19. Share capital
Share capital and share premium of the Group’s Ordinary Shares issued as of 31 December 2024, and 2023 are as
follows (in thousands, except for share amounts):
2024 2023 Share Share capital and capital and share share Shares premium Shares premium Ordinary Shares 301,805,677 2,009,884 266,821,844 1,231,969 Total share capital and share premium 301,805,677 2,009,884 266,821,844 1,231,969
The authorised capital, excluding the share capital, is set at $59.0 million, consisting of 5,901,355,465 shares, each
having a nominal value of $0.01.
On 26 February 2024, Alvotech announced it had received and accepted an offer from investors outside the U.S. for
the sale of 10,127,132 Ordinary Shares, for an approximate gross value of $166 million, at a purchase price of
$16.41 per share, or ISK 2,250, at the foreign exchange rate on 23 February 2024. The shares were to be delivered to
investors from previously issued treasury shares held by Alvotech´s subsidiary Alvotech Manco. As of 31 December
2024, the settlement of the sale offers resulted in 9,213,333 Ordinary Shares delivered to investors upon the payment
of $150.5 million, the net proceeds of the transaction totaling $144 million.
The Company announced in June 2024 that all holders of the Tranche A and some holders of the Tranche B of the
2022 Convertible Bonds exercised their right to conversion into ordinary shares at the fixed conversion price of
$10.00 per share on the last scheduled conversion date prior to maturity, which is 1 July 2024. Similarly, some
holders of the Aztiq Convertible Bonds decided to exercise similar conversion right into ordinary shares at the same
conversion price. Based on the current exchange rate, a total of approximately 22.1 million new shares were issued
on 1 July 2024, corresponding to approximately $220.7 million of aggregate value of these bonds with accrued
interest. The holders of the 2022 Convertible Bonds and the Aztiq Convertible Bonds that did not exercise their right
to conversion, obtained repayment from the Group in July 2024, upon the closing of the Secured Loan Facility of
$965.0 million.
Notes to the Consolidated Financial Statements
50
Movements in the Group’s Ordinary shares, share capital and share premium during the years ended 31 December
2024 and 2023 are as follows (in thousands, except for share amounts):
Predecessor Ordinary Ordinary Share Share Shares Shares capital premium Total Balance at 1 January 2023 252,160,087 — 2,126 1,058,432 1,060,558 Capital contribution 11,834,061 — 118 132,618 132,736 Vested earn-out shares— — 6 8,300 8,306 Penny warrants (Note 27)2,479,962 — 25 27,159 27,184 Public warrants (Note 27)553,552 — 6 7,612 7,618 Settlement of RSUs with shares (Note 22)838,919 — 8 5,095 5,103 Settlement of SARs with shares(1,044,737) — (10) (9,526) (9,536) Balance at 31 December 2023 266,821,844 — 2,279 1,229,690 1,231,969 Capital contribution 9,213,333 — 92 144,547 144,639 Vested earn-out shares— — 198 310,703 310,901 Penny warrants (Note 27)1,718,845 — 17 24,293 24,310 Public warrants (Note 27)419,660 — 4 6,691 6,695 Settlement of RSUs with shares (Note 22)1,549,290 — 15 5,890 5,905 Settlement of options with shares 9,127 — 0 105 105 Conversion of convertible bonds (Note 21)22,073,578 — 221 285,139 285,360 Balance at 31 December 2024 301,805,677 — 2,826 2,007,058 2,009,884
No dividends were paid or declared during the years ended 31 December 2024 and 2023.
At 31 December 2024 and 2023 Alvotech Manco ehf., a subsidiary of Alvotech hf., owned 22,995,363 and
22,905,618 Ordinary Shares in Alvotech. Such shares are intended for the future issuance of Ordinary Shares under
the Management Incentive Plan and other equity offerings.
20. Other reserves
The composition of other reserves as of 31 December 2024 and 2023 is as follows:
2024 2023 Equity component of convertible bonds — 21,391 Share based payments 17,272 21,520 17,272 42,911
Notes to the Consolidated Financial Statements
51
21. Borrowings
The Group’s debt consists of interest-bearing borrowings from financial institutions and third parties. Outstanding
borrowings, net of transaction costs and debt discounts, presented on the consolidated statements of financial
position as current and non-current as of 31 December 2024 and 31 December 2023 are as follows:
31 December 31 December 2024 2023 Senior Bonds — 549,411 2022 Convertible Bonds — 155,914 Aztiq Convertible Bonds — 80,663 Alvogen Facility — 76,556 Senior Secured First Lien Term Loan Facility 990,744 — Other borrowings 77,840 97,615 Total outstanding borrowings, net of debt issue costs 1,068,584 960,159 Less: current portion of borrowings (32,702) (38,025) Total non-current borrowings 1,035,882 922,134
Senior Secured First Lien Term Loan Facility
On 7 June 2024, the Company entered into a $965.0 million senior secured first lien term loan facility, enabling the
Company to improve cost of capital, address upcoming debt maturities in 2025 and add incremental cash to the
statement of financial position. Upon the closing of the Secured Loan Facility, the Company was required to settle
its existing debt obligations.
On 10 July 2024, the Company closed its previously executed Secured Loan Facility. The closing has allowed
Alvotech to refinance outstanding debt obligations on 10 July 2024 and 11 July 2024, reducing the cost of capital
and improving its overall debt maturity profile. The Secured Loan Facility, for $965.0 million in aggregate principal
amount, matures in July 2029. The first tranche is a first lien $900.0 million term loan which bears an interest rate of
SOFR plus 6.5% per annum (the "First Tranche Facility"). The second tranche is a $65.0 million first lien, second
out term loan, which bears an interest rate of SOFR plus 10.5% per annum (the "Second Tranche Facility"). This
resulted in the concurrent settlement of its existing debt obligations as described below.
The refinancing resulted in net cash proceeds of $140.5 million after transaction costs paid of $32.6 million. The
Group has pledged key assets, including trade receivables, inventory, bank accounts, equity interests in its
subsidiaries, intellectual property, equipment (1st lien pledge), and the manufacturing facility (2nd lien pledge) as
collateral to secure the Secured Loan Facility.
Under the terms of the Secured Loan Facility, the First Tranche Facility includes payments of 0.25% of aggregated
principal amount at the closing date that are due quarterly with a final maturity in July 2029 and the Group can
elect payment-in-kind interest for any quarterly payment due on or before 30 June 2025, provided that if such
election is made, the annual interest rate will increased by 0.75%. The Second Tranche Facility is a bullet loan
with a final maturity in July 2029 and payment-in-kind interest.
The Group has the option, at any time, to prepay all or any part of the First Tranche Facility in exchange for the
payment of the redemption premium pursuant to the terms of the Secured Loan Facility agreement at the time of
such prepayment. The Group can elect to prepay the Second Tranche Facility once the First Tranche Facility has
been repaid in full.
The Group is in compliance with all representations and non-financial covenants required by the Secured Loan
Facility agreement.
As of 31 December 2024, the carrying amount of the Secured Loan Facility is $990.7 million.
Notes to the Consolidated Financial Statements
52
Conversion of the 2022 Convertible Bonds and the Aztiq Convertible Bonds
On 26 June 2024, the Company announced that all holders of the Tranche A and some holders of the Tranche B of
the 2022 Convertible Bonds exercised their right to conversion into ordinary shares at the fixed conversion price of
$10.00 per share on the last scheduled conversion date prior to maturity, which is 1 July 2024. Similarly, some
holders of the Aztiq Convertible Bonds decided to exercise similar conversion right into ordinary shares at the same
conversion price. Based on the transaction date exchange rate, a total of approximately 22.1 million new shares were
issued on 1 July 2024, corresponding to approximately $220.7 million of aggregate value of these bonds with
accrued interests. The holders of the 2022 Convertible Bonds and the Aztiq Convertible Bonds that did not exercise
their right to conversion obtained repayment from the Group in July 2024 upon settlement of the Secured Loan
Facility.
A loss on extinguishment of financial liabilities of $58.3 million related to the conversion of existing debt
obligations was recorded during the year ended 31 December 2024, including the following:
• Conversion of all the Tranche A and some of the Tranche B of the 2022 Convertible Bonds with a principal
value of $195.2 million, and $0.6 million of accrued interest, resulting in a loss on extinguishment of
$56.3 million; and
• Conversion of some of the Aztiq Convertible Bonds with a principal value of $24.5 million, and
$0.4 million of accrued interest, resulting in a loss on extinguishment of $2.0 million.
Refinancing of existing debt obligations
As described above, the Company refinanced its outstanding debt obligations following the close of the Secured
Loan Facility. This resulted in the extinguishment of the Senior Bonds, the Alvogen Facility, and a portion of other
outstanding borrowings.
A loss on extinguishment of financial liabilities of $10.7 million related to the refinancing of existing debt
obligations was recorded during the year ended 31 December 2024, including the following:
• Repayment of the Senior Bonds with a principal value of $550.8 million, and $4.7 million of accrued
interest, resulting in a loss on extinguishment of $1 million;
• Repayment of the unconverted 2022 Convertible Bonds with a principal value of $43.7 million, and
$0.5 million of accrued interest, resulting in a loss on extinguishment of $2.9 million; and
• Repayment of the unconverted Aztiq Convertible Bonds with a principal value of $72.4 million, and
$1.0 million of accrued interest, resulting in a loss on extinguishment of $6.8 million.
Facility loans
The Group assumed the Facility loans as part of the asset acquisition for the manufacturing facility in Reykjavik. On
9 December 2022, the Group extinguished the assumed loans from Arion banki hf., with an outstanding balance of
$30.9 million, with two new loans from Landsbankinn hf. for $48.8 million, with variable interest rate. The
refinancing resulted in net cash proceeds of $17.2 million after transaction costs paid. The Group has pledged the
facility as collateral to secure these loans (1st lien pledge), as further described in Note 12.
These two loans were denominated in Icelandic Krona and included a conversion clause to convert them into
USD. The conversion of these two loans took place in March 2023.
Under the terms of the loan agreements after conversion, the first loan includes annuity payments that are due
monthly with a final maturity in December 2029 and a variable interest rate of SOFR plus a margin of 4.75%. The
second loan is a bullet loan with a final maturity in December 2027 and a variable interest rate of SOFR plus a
margin of 3.75%
Notes to the Consolidated Financial Statements
53
The Group determined that conversion to USD of the two loans was a substantial modification to loan agreements
and accounted for the transaction as an extinguishment. No gain or loss was recognized as part of the
extinguishment.
As part of securing the Secured Loan Facility in June 2024, the two loans have been merged into one loan with
annuity payments that is due monthly with a final maturity in February 2030 and a variable interest rate of SOFR
plus a margin of 4.05%.
As of 31 December 2024, the carrying amount of the Facility loans is $45.8 million, compared to $48.5 million as of
31 December 2023.
Other borrowings
On 22 February 2022, the Group entered into a credit facility agreement with Landsbankinn hf., which was amended
in July 2024, with the ability to draw down an amount up to $18.3 million. The credit facility is in place to help
finance equipment purchases in the future. Per the terms of the credit facility, the agreement expires on 1 September
2025 and the borrowings have a variable interest rate of USD SOFR plus a margin of 4.95%. As of 31 December
2024, the outstanding balance on the credit facility was $18.3 million, compared to $7.8 million as of 31 December
2023.
On 22 February 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $3.2
million. The loan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity
payments are due monthly with a final maturity in February 2030. The loan has a variable interest rate of USD
SOFR plus a margin of 4.25%. As of 31 December 2024, the outstanding balance on the loan was $2.2 million,
compared to $2.5 million as of 31 December 2023.
On 5 August 2022, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of $1.8
million. The loan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity
payments are due monthly with a final maturity in February 2030. The loan has a variable interest rate of USD
SOFR plus a margin of 4.25%. As of 31 December 2024, the outstanding balance on the loan was $1.3 million,
compared to $1.6 million as of 31 December 2023.
On 4 August 2023, the Group entered into a loan agreement with Landsbankinn hf. for a principal amount of
$11.5 million. The loan is in place to help finance equipment purchases. Per the terms of the loan agreement, annuity
payments are due monthly with a final maturity in July 2030. The loan has a variable interest rate of USD SOFR
plus a margin of 4.25%. As of 31 December 2024, the outstanding balance on the loan was $9.7 million, compared
to $11.0 million as of 31 December 2023.
The Group is in compliance with all representations and non-financial covenants required by these agreements. In
addition, the Group has pledged equipment as collateral to secure these borrowings, as further described in Note 12.
Movements in the Group’s outstanding borrowings during the year ended 31 December 2024 are as follows:
2024 Borrowings, net at 1 January 960,159 Recognition of deferred debt issue costs(32,601) Accretion/derecognition of borrowings discount 13,127 Loss on extinguishment 69,047 Proceeds from new borrowings 1,064,958 Bonds converted to equity(220,736) Repayments of borrowings(874,412) Accrued interest 88,206 Amortization of deferred debt issue costs 3,614 Foreign currency exchange difference(2,777) Borrowings, net at 31 December 1,068,584
Notes to the Consolidated Financial Statements
54
The table below details the changes in the Group’s liabilities arising from financing activities, including both cash
and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future
cash flows will be, classified in the Group’s consolidated cash flow statement as cash flows from financing
activities.
Fair value Financing Capitalize changes, Foreign 31 1 January Cash flows d loan cost including Other exchange Conversion December 2024(a)changes accretion changes (b)impact to equity 2024 2022 Convertible Bonds and Aztiq Convertible Bonds 236,577 (116,108) 761 80,829 21,454 (2,777) (220,736) — Senior Bonds 549,411 (550,755) — 1,344 — — — — Senior Secured First Lien Term Loan Facility — 927,899 2,852 59,993 990,744 Other borrowings 97,615 (19,760) — — (15) — — 77,840 Alvogen Facility 76,556 (83,330) — — 6,773 — — — Borrowings, net 960,159 157,945 3,614 82,174 88,205 (2,777) 1,068,584
(a) This represents the proceeds from the Secured Loan Facility and the repayments of the existing borrowings in
the cash flow statement as described above.
(b) Other changes include interest accruals and effects of interest payments including $60 million PIK interest
from the Secured Loan Facility and $15.1 million of PIK interest converted to equity following the settlement
of existing debt obligations.
Fair value Financing Capitalized changes, Other Foreign 31 1 January Cash flows loan cost including changes exchange December 2023(a)changes accretion(b)impact 2023 2022 Convertible Bonds and Aztiq Convertible Bonds 98,234 145,358 1,657 (36,071) 27,603 (204) 236,577 Senior Bonds 530,506 — — 888 18,017 — 549,411 Other borrowings 71,242 25,102 — — (8) 1,279 97,615 Alvogen Facility 64,588 — — — 11,968 — 76,556 Borrowings, net 764,570 170,460 1,657 (35,183) 57,580 1,075 960,159
(a) The cash flows from bank loans, loans from related parties and other borrowings make up the net amount of
proceeds from borrowings and repayments of borrowings in the cash flow statement.
(b) Other changes include interest accruals and payments.
The weighted-average interest rates of outstanding borrowings for the years ended 31 December 2024 and
31 December 2023 are 12.4% and 12.73%, respectively.
Contractual maturities of principal amounts on the Group’s outstanding borrowings as of 31 December 2024 are as
follows:
31 December 2024 Within one year 32,702 Within two years 14,590 Within three years 14,784 Within four years 14,996 Thereafter 992,539 1,069,611
Notes to the Consolidated Financial Statements
55
22. Share-based payments
On 1 December 2022, the Remuneration Committee authorized and the Group granted RSUs to employees,
executives, and directors, granting rights to Ordinary Shares once vesting conditions are met. Compensation expense
for RSUs is determined based upon the market price of the Ordinary Shares underlying the awards on the date of
grant and expensed over the vesting period, which is generally a 1 to 4-year period, with a 1-year cliff vesting period
and either subsequent monthly vesting or annual vesting, resulting from participants completing a service condition.
Movements in RSUs during the years ended 31 December 2024 and 2023 are as follows:
2024 2023 Weighted Weighted Average Average RSUs Fair Value RSUs Fair Value Outstanding at 1 January 3,745,781 $7.04 6,979,482 $6.72 New grants during the period 673,425 $11.66 820,602 $8.79 Forfeited during the period (589,482) $7.98 (1,587,929) $7.11 Vested during the period (1,487,906) $6.99 (2,466,374) $6.67 Outstanding at 31 December 2,341,818 $8.17 3,745,781 $7.04
The Group recognized $7.6 million and $18.0 million of share-based payment expense during the years ended
31 December 2024 and 2023, respectively, as follows:
2024 2023 Cost of product revenue 941 3,319 Research and development expenses 1,879 3,991 General and administrative expenses 4,806 10,723 7,626 18,033
23. Litigation
The Group was involved in four litigations (all now dismissed) in the United States adverse to AbbVie arising out of
the development of Alvotech’s AVT02 product, and the filing of a biologics license application with the U.S. Food
and Drug Administration seeking regulatory approval (the “AbbVie Litigations”).
Alvotech entered into the AbbVie U.S. Agreement with AbbVie Inc. and AbbVie Biotechnology Ltd with respect to
AVT02 for the U.S. market. Pursuant to the settlement component of the AbbVie U.S. Agreement, the parties agreed
to stipulate to the dismissal of all claims, counterclaims and potential claims in the four U.S. litigations, with each
party to bear its own fees and costs. The parties further agreed to release each other from certain claims and
demands.
The Group incurred approximately $0.0 million and $0.0 million in legal expenses during the years ended
31 December 2024 and 2023, respectively, in preparation for, and/or in relation to, these litigations. Aside from this
matter, the Group is not currently a party to any material litigation or similar matters.
24. Related parties
Related parties are those parties which have considerable influence over the Group, directly or indirectly, including a
parent company, owners or their families, large investors, key management personnel and their families and parties
that are controlled by or dependent on the Group, such as affiliates and joint ventures. Key management personnel
Notes to the Consolidated Financial Statements
56
include the Group’s executive officers and directors, since these individuals have the authority and responsibility for
planning, directing and controlling the activities of the Group. Interests in subsidiaries are set out in Note 1.
Transactions with related parties
A related party transaction is a transfer of resources, services or obligations between the Group and a related party,
regardless of whether a price is charged. The Group engages with related parties for both purchased and sold
services, loans and other borrowings and other activities.
Lease agreements with related parties
The Group entered into a lease agreement with Fasteignafelagid Eyjolfur hf. in April 2023 for a new facility in
Iceland with remaining lease terms of approximately 14 years as of 31 December 2024. The building is 140,000
square feet. The construction was completed in 2024 and the final details are expected to be finalized in 2025. Lease
liabilities as of 31 December 2024 amount to $80.6 million.
The Group entered into six separate lease agreements with Flóki Fasteignir ehf. in 2024 for apartment buildings in
Iceland used for temporary housing of employees and third-party contractors. The remaining lease terms
approximate 10 years, on average, as of 31 December 2024. Lease liabilities as of 31 December 2024 for the new
leases amount to $1.5 million.
The Group entered into office sublease sharing agreement with Alvogen UK Ltd. in August 2023. The agreement
was effective from 1 January 2023 and shall terminate upon the expiration or termination of the lease. The office is
approximately 5,500 square feet and the group leases 30% of the premises, containing approximately 1,645 square
feet of space. Lease liabilities as of 31 December 2024 amount to $0.5 million.
The Group entered into an art lease agreement with Flóki-Art ehf. in January 2023, as a result of the Share Purchase
Agreement pursuant to which the Group rent pieces of art located in Sæmundargata 15-19, Reykjavik. The
remaining lease term for the leased asset is 14 years as of 31 December 2024. Lease liabilities as of 31 December
amount to $0.4 million.
The Group provides and receives certain support services through arrangements with Aztiq, Alvogen, and Adalvo
Ltd. (Adalvo). Services provided to Alvogen consist of finance, administrative, legal and human resource services.
Services received from Alvogen primarily consist of marketing, salary processing, and information technology
support services. Services received from Adalvo primarily consist of legal, regulatory, supply chain management,
and portfolio and market intelligence services.
Purchased service includes rental fees and service expenses, as described above. Rental fees and service expenses
with related parties are presented as “General and administrative expenses” or “Research and development
expenses” in the consolidated statements of profit or loss and other comprehensive income or loss, depending on the
nature of the service performed and expense incurred by the Group. Rental liabilities from lease arrangements with
related parties are presented as a component of “Lease liabilities” on the consolidated statements of financial
position. Service payables are presented as “Liabilities to related parties” on the consolidated statements of financial
position.
Interest includes interest expense on borrowings. Interest expenses on loans from related parties are presented as
“Finance costs” in the consolidated statements of profit or loss and other comprehensive income or loss. Borrowings
are presented as “Borrowings” and “Current maturities of borrowings” on the consolidated statements of financial
position. See Note 21 for further details on the borrowing arrangements with related parties.
Sold service includes services provided to related parties, as described above. Income from related parties for such
services are presented as “Other income” in the consolidated statements of profit or loss and other comprehensive
income or loss. Amounts receivable for such activities are presented as “Receivables from related parties” on the
consolidated statements of financial position. The Group has not recorded bad debt provisions for its receivables
from related parties.
Notes to the Consolidated Financial Statements
57
Related party transactions as of 31 December 2024 are as follows:
Purchases /Payables/ interest Sold service Receivables borrowings Alvogen Lux Holdings S.à r.l. – Sister company (a) 9,754 — — — ATP Holdings ehf. - Sister company (a) 4,926 — — — Aztiq Consulting ehf. – Sister company 192 — — 2 Flóki-Art ehf. - Sister company 52 — — 410 Alvogen Iceland ehf. - Sister company 25 — — — Alvogen ehf. - Sister company — 132 18 — Alvogen UK - Sister company 233 — — 76 Alvogen Finance B.V. - Sister Company 565 — — — Alvogen Inc. - Sister company 355 — 3 619 Adalvo Limited - Sister company 265 220 97 149 L41 ehf. - Sister company 53 — — — Flóki Invest ehf - Sister company 696 32 — 60 Alvogen Spain SL - Sister company — — — 14 Norwich Clinical Services Ltd - Sister company 906 — — 177 Fasteignafélagið Eyjólfur ehf - Sister company 28,456 — — 87,946 Flóki fasteignir ehf. - Sister company 2,300 — — 10,937 48,778 384 118 100,390
(a) The full amount of purchased service relates to interest expenses from long-term liabilities which have been
extinguished (see Note 21).
Notes to the Consolidated Financial Statements
58
Related party transactions as of 31 December 2023 are as follows:
Purchased service / Payables/ interest Sold service Receivables borrowings Alvogen Lux Holdings S.à r.l. – Sister company (a) 11,968 — — 76,556 ATP Holdings ehf. - Sister company (a) 9,193 — — 49,560 Aztiq Consulting ehf. - Sister company 178 69 — 54 Flóki-Art ehf. - Sister company 88 — — 422 Alvogen Iceland ehf. - Sister company 19 1 — 484 Alvogen ehf. - Sister company — 152 16 — Alvogen UK - Sister company 273 — — 581 Alvogen Finance B.V. - Sister company 3,382 — — 65 Lotus Pharmaceuticals Co. Ltd. - Sister company (b) — 29 29 7,440 Lotus International Pte. Ltd. - Sister company — 2 — — Alvogen Emerging Markets - Sister company 108 — — — Alvogen Inc. - Sister company 305 — — 284 Alvotech and CCHT Biopharmaceutical Co., Ltd. (c) — — 758 539 Adalvo Limited - Sister company 402 189 86 337 Adalvo UK - Sister company — 49 — — Flóki Invest ehf. - Sister company 680 4 — 251 Floki Holdings S.à r.l. – Sister company 40 — — — Alvogen Malta Sh. Services - Sister company — — 7 — Alvogen Spain SL - Sister Company 14 — — 15 Norwich Clinical Services Ltd - Sister company 642 — — 170 Fasteignafélagið Eyjólfur ehf - Sister company (d) 3,807 102 — 69,732 Flóki fasteignir ehf. - Sister company 1,682 — — 11,466 32,781 597 896 217,956
(a) The full amount of purchased service relates to interest expenses from long-term liabilities and the full
amount of payables / loans are interest-bearing long-term liabilities including discount and accretion (see
Note 21).
(b) Payables to Lotus Pharmaceuticals Co. Ltd. consists of an other current liability. This other current liability
is presented as “Liabilities to related party” on the unaudited condensed consolidated interim statements of
financial position.
(c) The amount receivable from Alvotech & CCHN Biopharmaceutical Co., Ltd. relates to amounts due for
reference drugs used in research and development studies and certain consulting fees incurred by the Group.
(d) Refer to Note 13 for the details of the new lease.
Notes to the Consolidated Financial Statements
59
Commitments and guarantees
The Group does not have any contractual commitments with its related parties other than the receivables, loans and
payables previously disclosed.
Key management personnel
At 31 December 2024 and 2023 there were no loans to the members of the Board of Directors and the CEO. In
addition, there were no transactions carried out between the Group and members of the Board of Directors nor the
CEO in the years ended 31 December 2024 and 2023. The Board of Directors’ remuneration is shown in the table
below.
Board of Directors’ fee for the year and shares at year end (board fees in thousands and shares in whole amounts). 2024 Pension Other long-Shares at Board fees contribution term benefits year-end**Robert Wessman, Chairman of the board* — — — —Richard Davies, Vice-Chairman 156 — 183 1,163,422 Ann Merchant, Board Member 112 — 183 21,164 Árni Harðarson, Board Member* — — — —Faysal Kalmoua, Board Member* — — — —Hjörleifur Pálsson, Board Member (from 7 June 2024) 41 — — 2,350 Linda McGoldrick, Board Member 92 — 183 21,164 Lisa Graver, Board Member 68 — 183 21,164 Tomas Ekman, Board Member* — — — — 469 — 732 1,229,264
* Waived their board compensation (both cash and equity)
** Direct share ownership
2024 Salaries and Pension Termination Other long- term Key employees benefits contribution benefits benefits Robert Wessman CEO 2,176 147 — — Other Executive Team Members (10) 5,332 362 125 13,844 7,508 509 125 13,844
Notes to the Consolidated Financial Statements
60
Board of Directors’ fee for the year and shares at year end (board fees in thousands and shares in whole amounts). 2023 Pension Other long-Shares at Board fees contribution term benefits year-end**Robert Wessman, Chairman of the board* — — — —Richard Davies, Vice-Chairman 156 — 104 1,143,713 Ann Merchant, Board Member 113 — 104 10,582 Árni Harðarson, Board Member* — — — —Faysal Kalmoua, Board Member* — — — —Linda McGoldrick, Board Member 81 — 104 10,582 Lisa Graver, Board Member 71 — 104 10,582 Tomas Ekman, Board Member* — — — — 421 — 416 1,175,459
* Waived their board compensation (both cash and equity)
** Direct share ownership
2023 Salaries and Pension Termination Other long- term Key employees benefits contribution benefits benefits Robert Wessman CEO 1,491 26 — — Other Executive Team Members (9) 5,020 346 52 9,456 6,511 372 52 9,456
25. Other current liabilities
The composition of other current liabilities as of 31 December 2024 and 31 December 2023 is as follows:
31 December 31 December 2024 2023 Unpaid salary and salary related expenses 14,465 31,340 Accrued interest 428 3,333 Accrued vacation leave 6,631 6,075 Employee incentive plan — 659 Accrued royalties 15,858 5,001 Accrued profit sharing 12,604 — Accrued other expenses 9,418 16,312 59,404 62,720
26. Interests in joint ventures
In September 2018, Alvotech hf., a subsidiary of the Group, entered into a joint venture agreement with Changchun
High & New Technology Industries (Group) Inc. (the “joint venture partner”, "CCHN") to form a newly created
joint venture entity, Alvotech & CCHN Biopharmaceutical Co., Ltd. (the “joint venture” or “JVCO”). The purpose
Notes to the Consolidated Financial Statements
61
of the JVCO is to develop, manufacture and sell biosimilar products in the Chinese market. The JVCO’s place of
business is also the country of incorporation.
Ownership interest Carrying Amount Place of Name of entity business 2024 2023 2024 2023 Alvotech & CCHN Biopharmaceutical Co., Ltd. China —% 50% —% 18,494
In June 2024, Alvotech hf. sold its share in the joint venture for a gross proceeds of $18.0 million (less $1.3 million
in transaction costs). The sale resulted in a net loss of $3.0 million, including accumulated translation difference,
recognized during the year ended 31 December 2024. The total gross proceeds was $18.0 million, and the unpaid
portion of $6.0 million is classified as other short-term assets.
The following table provides the change in the Group’s interest in a joint venture during the years ended
31 December 2024 and 2023:
2024 2023 Balance at 1 January 18,494 48,568 Share in losses — (7,153) Sale of shares in joint venture (18,494) — Translation difference — (1,402) Balance at 31 December — 18,494
Notes to the Consolidated Financial Statements
62
27. Financial instruments
Accounting classification and carrying amounts
Financial assets as of 31 December 2024 and 2023, all of which are measured at amortized cost, are as follows:
31 December 31 December 2024 2023 Cash and cash equivalents 51,428 11,157 Restricted cash — 26,132 Trade receivables 160,217 41,292 Other current assets 6,361 1,035 Receivables from related parties 118 896 Other long-term assets 213 336 218,337 80,848
Financial liabilities as of 31 December 2024 and 2023 are as follows:
31 December 31 December 2024 2023 Borrowings (measured at amortized cost) 1,068,584 960,159 Derivative financial liabilities (measured a t FVTPL) 210,224 520,553 Trade and other payables (measured at amortized cost) 67,126 80,563 Lease liabilities (measured at amortized c ost) 121,652 115,315 Liabilities to related parties (measured at a mortized cost) 8,465 9,851 Other current liabilities 58,903 61,873 1,534,954 1,748,314
It is management’s estimate that the carrying amounts of financial assets and financial liabilities carried at amortized
cost approximate their fair value, with the exception of, in 2024, the Secured Loan Facility, and, in 2023, the Senior
Bonds, Aztiq Convertible Bond, 2022 Convertible Bonds, and Alvogen Facility, since any applicable interest
receivable or payable is either close to current market rates or the instruments are short-term in nature. Material
differences between the fair values and carrying amounts of these borrowings are identified as follows:
31 December 2024 Carrying Amount Fair Value Senior Secured First Lien Term Loan Facility 990,744 969,077 990,744 969,077
31 December 2023 Carrying Amount Fair Value Senior Bonds 549,411 559,867 Aztiq Convertible Bond 80,663 84,756 2022 Convertible Bonds 155,914 217,419 Alvogen Facility 76,556 82,060 862,544 944,102
Notes to the Consolidated Financial Statements
63
Fair value measurements
The following tables illustrate the fair value measurement hierarchy of the Group’s financial instruments measured
at fair value on a recurring basis as of 31 December 2024 and 31 December 2023:
31 December 2024 Level 1 Level 2 Level 3 Total Predecessor Earn Out Shares — 179,300 — 179,300 OACB Warrants 30,924 — — 30,924 30,924 179,300 — 210,224
31 December 2023 Level 1 Level 2 Level 3 Total Senior Bond Warrants 19,715 — — 19,715 Tranche A Conversion Feature — — 118,830 118,830 Predecessor Earn Out Shares — 349,900 — 349,900 OACB Earn Out Shares — 6,200 — 6,200 OACB Warrants 25,908 — — 25,908 45,623 356,100 118,830 520,553
The Group did not recognize any transfer of assets or liabilities between levels of the fair value hierarchy during the
year ended 31 December 2024.
During the year ended 31 December 2024, Senior Bond Warrant holders elected to exercise their warrants. As a
result, 1,718,845 Ordinary Shares were issued in exchange for the exercising of the penny warrants. The Company
received an immaterial amount of cash and recognized the transaction as an extinguishment of the derivative
financial liabilities. The difference between the equity issued and carrying value of the derivative financial liabilities
was recognized in the consolidated statements of profit or loss and other comprehensive income or loss.
The Tranche A Conversion Feature was extinguished upon the conversion of the Tranche A 2022 Convertible Bonds
on 1 July 2024 (refer to Note 21 for further details).
In February 2024, the second tranche of OACB Earn Out Shares vested resulting in the issuance of 625,000
Ordinary Shares. The issuance of Ordinary Shares for the second tranche was accounted for as an extinguishment of
a financial liability in the consolidated statements of profit or loss and other comprehensive income or loss.
Predecessor Earn Out Shares
In February 2024, the first tranche of Predecessor Earn Out Shares vested resulting in the issuance of 19,165,000
Ordinary Shares. The issuance of Ordinary Shares for the first tranche was accounted for as an extinguishment of a
financial liability in the consolidated statements of profit or loss and other comprehensive income or loss.
The Predecessor Earn Out Shares had a fair value of $179.3 million as of 31 December 2024, resulting in
$130.5 million of finance costs for the year ended 31 December 2024.
The fair value of the Predecessor Earn Out Shares was determined using Monte Carlo analysis that incorporated
inputs and assumptions as further described below. The inputs and assumptions associated with the valuation of the
Notes to the Consolidated Financial Statements
64
instruments are determined based on all relevant internal and external information available and are reviewed and
reassessed at each reporting date.
The following table presents the assumptions and inputs that were used for the model in valuing the Predecessor
Earn Out Shares:
31 December 31 December 2024 2023 Number of shares 19,165,000 38,330,000 Share price $13.23 $11.48 Volatility rate 52.0 % 55.0 %Risk-free rate 4.26 % 3.97 %
OACB Warrants
During the year ended 31 December 2024, holders of the OACB Warrants exercised their warrant rights for an
exercise price of $11.50 for the rights to one Ordinary Share per warrant. The exercises resulted in the issuance of
419,660 Ordinary Shares and cash proceeds of $4.8 million. The Company recognized the transaction as an
extinguishment of the derivative financial liabilities. The difference between the equity issued and carrying value of
the derivative financial liabilities was recognized in the consolidated statements of profit or loss and other
comprehensive income or loss.
The OACB warrants had a fair value of $30.9 million as of 31 December 2024. The fair value of the warrants was
derived from the publicly quoted trading price at the valuation date. The change in fair value of the OACB Warrants
resulted in $6.9 million of finance costs for the year ended 31 December 2024.
Capital management
The capital structure of the Group consists of equity, debt and cash. For the foreseeable future, the Board of
Directors will maintain a capital structure that supports the Group’s strategic objectives through managing the
budgeting process, maintaining strong investor relations and managing the financial risks of the Group, as further
described below. No changes were made in the objectives, policies or processes for managing capital during the
years ended 31 December 2024 and 2023.
Financial risk management
The Group’s corporate treasury function provides services across the organization, coordinates access to domestic
and international financial markets, monitors and manages the financial risks relating to the Group’s operations
through internal risk reports which analyze exposures by degree and magnitude of risks. These risks include market
risk (including interest rate risk and foreign currency risk), credit risk and liquidity risk.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of fluctuations in market interest rates primarily
relates to the cash in bank and borrowings that are subject to floating interest rates.
The following table provides an interest rate sensitivity analysis for the effect on loss before tax. The analysis
assumes that all other variables, such as foreign currency exchange rates, remain constant.
2024 2023 Variable-rate financial instruments +100 (9,873) (89) Variable-rate financial instruments -100 9,873 89
Notes to the Consolidated Financial Statements
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Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
because of changes in foreign exchange rates. The Group uses the U.S. dollar as its reporting currency and conducts
business on a global basis in various currencies. As a result, the Group is exposed to foreign currency exchange
movements, primarily in European, Icelandic and UK market currencies, as well as in the Swiss franc.
Below are the foreign currencies that have the most significant impact on the Group’s operations.
Closing rate Average rate Change 2024 2023 2024 2023 EUR 1.038 1.105 1.082 1.091 (6.0%) GBP 1.251 1.275 1.278 1.266 (1.8%) ISK 0.007 0.007 0.007 0.007 (2.0%) CHF 1.103 1.188 1.136 1.156 (7.2%) INR 0.012 0.012 0.012 0.012 (2.6%)
The Group’s assets and liabilities that are denominated in foreign currencies as of 31 December 2024 are as follows:
Net Assets Liabilities assets EUR 49,968 23,847 26,121 GBP 315 3,669 (3,354) ISK 3,162 154,048 (150,886) CHF 2,522 2,837 (315) INR 881 536 345
The Group’s assets and liabilities that are denominated in foreign currencies as of 31 December 2023 are as follows:
Net Assets Liabilities assets EUR 36,568 46,303 (9,735) GBP 69 3,479 (3,410) ISK 3,247 144,812 (141,565) CHF 335 7,488 (7,153) INR 167 536 (369)
A reasonable possible strengthening or weakening of the Group’s significant foreign currencies against the U.S.
dollar would affect the measurement of financial instruments denominated in a foreign currency and affect profit or
loss and equity by the amount shown in the sensitivity analysis table below. The analysis assumes that all other
variables, such as interest rates, remain constant.
EUR GBP ISK CHF INR Year ended 31 December 2024-10% weakening (2,612) 335 15,089 32 (35) + 10% strengthening 2,612 (335) (15,089) (32) 35 Year ended 31 December 2023-10% weakening (974) (341) (14,156) (715) (37) + 10% strengthening 974 341 14,156 715 37
Notes to the Consolidated Financial Statements
66
Credit risk
Credit risk is the risk that a counterparty will not fulfill its contractual obligations under a financial instrument contract,
leading to a financial loss for the Group. The maximum credit risk exposure for the Group’s financial assets as of
31 December 2024 and 2023 is as follows:
2024 2023 Cash and cash equivalents 51,428 11,157 Restricted cash — 26,132 Trade receivables 160,217 41,292 Other assets 6,692 2,267 218,337 80,848
The Group’s cash and cash equivalents are deposited with high-quality financial institutions. Management believes these
financial institutions are financially sound and, accordingly, that minimal credit risk exists. The Group has not experienced
any losses on its deposits of cash and cash equivalents and restricted cash yet monitors the credit rating of these financial
institutions on a periodic basis.
Other assets primarily consist of other current assets, as described in Note 18, and contract assets recognized in connection
with the Group’s performance pursuant to its contracts with customers, all of which are large multinational pharmaceutical
companies. In 2023, the Group recognized a receivable of $18.5 million in other current assets following the termination of
the co-development agreement with Biosana which was fully reserved as of 31 December 2023 due to the uncertainty of its
collection (see Note 18). In 2024, the Group collected $1.1 million of the receivable, which was recognized through profit
and loss during the year. There are no other significant amounts past due as of 31 December 2024 and 2023 and the Group
concludes that any expected credit losses with respect to these assets, except as described above, is immaterial.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset. The Group also monitors the level of expected cash
inflows on trade and other receivables together with expected cash outflows on trade and other payables.
Contractual maturities of financial assets and liabilities as of 31 December 2024 are as follows:
Within one One to two year years Thereafter Total Financial assets Non-interest bearing 166,696 — — 166,696 Variable-interest bearing 51,428 213 — 51,641 Total financial assets 218,124 213 — 218,337 Financial liabilities Non-interest bearing 126,029 — — 126,029 Derivative liabilities — 210,224 — 210,224 Variable-interest bearing - Borrowings 75,235 127,313 1,470,805 1,673,353 Total financial liabilities 201,264 337,537 1,470,805 2,009,606
Notes to the Consolidated Financial Statements
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Contractual maturities of financial assets and liabilities as of 31 December 2023 are as follows:
Within one One to two year years Thereafter Total Financial assets Non-interest bearing 43,223 — — 43,223 Variable-interest bearing 11,157 — 26,468 37,625 Total financial assets 54,380 — 26,468 80,848 Financial liabilities Non-interest bearing 142,436 — — 142,436 Fixed-interest bearing - Borrowings 66,309 1,101,185 — 1,167,494 Derivative liabilities — 520,553 — 520,553 Variable-interest bearing - Borrowings 44,995 10,198 65,826 121,019 Total financial liabilities 253,740 1,631,936 65,826 1,951,502
Refer to Note 13 for the maturity analysis of the Group’s undiscounted lease payments.
28. Supplemental cash flow information
Supplement cash flow information as of 31 December 2024 and 2023 is included below. (see Note 21 for non-cash
movements in borrowings).
Non-cash investing and financing activities 2024 2023 Acquisition of property, plant and equipment in trade payables and other current liabilities 13,917 2,266 Acquisition of intangibles in trade payables and other current liabilities — 930 Right-of-use assets obtained through new leases 41,506 74,109 Sale of joint venture 5,950 — Settlement of borrowings through refinancing 118,330 — Settlement of transaction cost through refinancing 28,365 — Equity issued through conversion of borrowings 263,969 — Settlement of RSUs with shares 5,076 678 Settlement of SARs with shares — 13,767
Notes to the Consolidated Financial Statements
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29. Subsequent events
The Group evaluated subsequent events through 26 March 2025, the date that the consolidated financial
statements were available to be issued.
On 27 January 2025, the Company announced filing acceptance of U.S. Biologics License Applications (BLA)
for AVT05, a proposed biosimilar to Simponi and Simponi Aria (golimumab). The FDA review process for
these applications is anticipated to be completed in the fourth quarter of 2025.
On 18 February 2025, the Company announced that the FDA has accepted for review a BLA for AVT06,
Alvotech’s proposed biosimilar to Eylea (aflibercept), a biologic used to treat eye disorders, including diseases
which can lead to vision loss or blindness. The process to obtain regulatory approval is anticipated to be
completed in the fourth quarter of 2025.
On 21 February 2025, the Company announced the availability of SELARSDI (ustekinumab) injection in the
U.S., a biosimilar to Stelara (ustekinumab), for the treatment of psoriatic arthritis, plaque psoriasis, Crohn’s
disease, ulcerative colitis, pediatric plaque psoriasis and pediatric psoriatic arthritis.
On 18 March 2025, the Company announced the FDA acceptance of BLA for AVT03, a proposed biosimilar to
Prolia and Xgeva (denosumab).
On 20 March 2025, the Company announced the acquisition of Xbrane Biopharma AB's ("Xbrane") research
and development operations and a biosimilar candidate, further expanding the Company's development
capabilities, and establishing a footprint in the Swedish life science sector. Xbrane retains other pre-clinical
development programs and will focus on the commercialization of this portfolio. The purchase price for the
acquisition amounts to approximately SEK 275 million (approximately $27 million) and will be payable in cash
at closing for SEK 102.2 million and by assumption of SEK 172.8 million in debt and accounts payable. The
creditors have agreed to accept payment for SEK 152.8 million of the debt with Alvotech equity shares. Closing
of the acquisition is expected to occur in April 2025 and is contingent on approvals from the relevant authorities
and Xbrane's shareholders. The Company also announced that it intends to explore the possibility of a listing of
Swedish Depository Receipts (SDR), equity share equivalents, on Nasdaq Stockholm, in the future.
Notes to the Consolidated Financial Statements
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Corporate Governance Report for 2024
This corporate governance report (the “Report”) covers the period from 1 January 2024 through 31 December 2024
of Alvotech, a société anonyme, incorporated and existing under the laws of the Grand Duchy of Luxembourg,
registered with the Luxembourg Trade and Companies' Register under number B258884, having its registered office
at 9, rue de Bitbourg, L-1273 Luxembourg, Grand Duchy of Luxembourg (“Alvotech” or the “Company”).
Alvotech was incorporated on August 23, 2021 for the sole purpose of completing a business combination between
Alvotech Holdings S.A., Oaktree Acquisition Corp. II and Alvotech. The business combination closed on 15 June
2022 and, concurrently with the closing, the current Directors of Alvotech S.A. were appointed.
The ordinary shares and warrants of Alvotech are listed on The Nasdaq Stock Market LLC (“Nasdaq US”) under
the symbol “ALVO” and “ALVOW”, respectively, since 16 June 2022. Alvotech’s ordinary shares are also listed on
the Nasdaq Iceland Main Market under the ticker symbol “ALVO” since 8 December 2022 and, prior to that, on the
Nasdaq First North Growth Market since 23 June 2022 until their admission to trading to the Nasdaq Iceland Main
Market. This Report will be a part of the financial statements for the year ended 31 December 2024 and has been
approved by the board of directors of the Company (the “Board of Directors” or “Board”) and reviewed by its
Audit Committee.
As regards general meetings of shareholders, at an ordinary general meeting, there is no quorum requirement, and
resolutions are adopted by a simple majority cast vote. Abstentions are not considered “votes”.
Resolutions at an extraordinary general meeting are required for any of the following matters, among others (i) an
increase or decrease of the authorized or issued capital, (ii) a limitation or exclusion of preferential subscription
rights, (iii) approval of a statutory merger or de-merger (scission), (iv) Alvotech’s dissolution and liquidation, (v)
any and all amendments to Alvotech´s articles of association and (vi) change of nationality. Pursuant to Alvotech´s
articles of associations, for any resolution to be considered at an extraordinary general meeting of shareholders, the
quorum shall be at least one half of Alvotech´s issued share capital unless otherwise mandatorily required by law. If
the said quorum is not present, a second meeting may be convened, for which Luxembourg Company Law does not
prescribe a quorum. Any extraordinary resolution shall be adopted at a quorate general meeting, except otherwise
provided by law, by at least a two-thirds majority of the votes validly cast on such resolution by shareholders.
Abstentions are not considered “votes”.
An annual general meeting of shareholders (“AGM”) shall be held in the Grand Duchy of Luxembourg within 6
months of the end of the preceding financial year.
Each Ordinary Share entitles the holder thereof to one vote. Neither Luxembourg law nor Alvotech´s articles of
association contain any restrictions as to the voting of Ordinary Shares by non-Luxembourg residents. The
Luxembourg Company Law distinguishes ordinary general meeting of shareholders and extraordinary general
meetings of shareholders with respect to the required quorums and majorities.
Alvotech is committed to recognizing general principles aimed to ensure good corporate governance. Our approach
to corporate governance is further described in this report.
Alvotech’s corporate governance consists of a framework of principles and rules, including its Articles of
Association, the 6
th
edition from February 2021 of the Guidelines on Corporate Governance issued by the Iceland
Chamber of Commerce, Nasdaq Iceland and the Confederation of Icelandic Employers (the “Guidelines”). The
Guidelines are accessible on the website www.leidbeiningar.is.
The Board of Directors also adopted a Code of Business Conduct and Ethics (the “Code”) applicable to the
directors, officers, employees and other team members that complies with the rules and regulations of Nasdaq US,
Nasdaq Iceland Main Market, and the SEC. Alvotech’s relevant policies, rules and procedures can be found on
Alvotech’s website.
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Alvotech’s regulatory framework for corporate governance practices consists of the law applicable to listed
companies in Luxembourg as well as other applicable law and regulations, including those imposed by Nasdaq
Iceland Main Market and Nasdaq US available at their respective websites.
The Board of Directors is committed to excellence in corporate governance by complying with the applicable
regulatory standards and international best practices in the field of corporate governance.
All directors of the Company must act honestly, with due skill and care in the best interests of the Company and the
group. All directors must adhere to the highest standards of honest and ethical conduct, including taking proper and
due actions to avoid any conflicts of interest in his or her dealings with the Company or the group, or dealings with
other parties that may relate to or affect the group of Alvotech, its interest and assets.
Internal Control & Risk Management
The Board has the role to ensure that Alvotech maintains sound and effective internal controls to safeguard the
shareholders investment and the Company’s assets, and conducts an annual review of the effectiveness of Alvotech’s
internal control systems. The Audit and Risk Committee is responsible, among other things, for establishing
procedures for the confidential anonymous submission of complaints (a whistleblowing mechanism).
The Board of Directors is responsible for overseeing Alvotech’s risk management process. The Board of Directors
focuses on Alvotech’s general risk management strategy, the most significant risks, and oversees the implementation
of risk mitigation strategies by management. The audit and risk committee is also responsible for discussing
Alvotech’s policies with respect to risk assessment and risk management. The Board of Directors believes its risk
oversight function has not negatively affected the Board’s leadership structure. As part of the steady expansion of
Alvotech´s risk management processes, the Company has launched several initiatives. Each initiative is contributing
to achieving the company´s objectives regarding efficacy and efficiency of operations, reliability of financial
reporting and compliance with applicable laws and regulations. The Company has identified certain key risks that
are given special attention and monitored.
Audit, accounting and risk
The Board of Directors adopted the Audit and Risk Committee Charter. The Chief Executive Officer of the
Company ensures that the directors are provided with accurate information on Alvotech´s finances, development,
operations and risk assessments on a regular basis and the Audit and Risk Committee assists the Board in fulfilling
its oversight responsibilities in the financial reporting process and the system of internal controls. The Board of
Directors ensures that internal procedures for risk management are revised at least annually.
The financial statements are published on an annual, semi-annual and quarterly basis as applicable, subject to and in
accordance with applicable publication requirements under Icelandic and/or Luxembourg and/or U.S laws.
The AGM appoints the independent auditor (réviseur d´entreprises agréé) and shall determine their office, in
accordance with Alvotech´s Articles of Association. The Board´s proposal to the AGM is based on the Audit and
Risk Committee´s recommendation on the selection of an audit firm and the statutory auditors and shall determine
their office, which may not exceed six years, in accordance with Alvotech´s Articles of Association. The Board´s
proposal to the AGM is based on the Audit and Risk Committee´s recommendation on the selection of an audit firm.
Deloitte Audit (20, Boulevard de Kockelscheuer L-1821, Luxembourg, Grand Duchy of Luxembourg) is appointed
as the independent auditor (réviseur d´entreprises agréé) of Alvotech and in recent years conducted external audits
in accordance with the Luxembourg law of 23 July 2016 on the audit profession (the “Audit Law”). In accordance
with article 51 of the Audit Law and by way of derogation from Article 17 (1) of Regulation (EU) No 537/2014, the
maximum duration of a statutory audit of a public-interest entity may be of 20 years, where a public tendering
process for the statutory audit is conducted in accordance with paragraphs 2 to 5 of Article 16 of the above-
mentioned regulation.
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Compliance
Alvotech has a Compliance function. The General Counsel of the company is the Compliance Officer and is
responsible for the Code, the training of employees and business ethics. Under the Icelandic law no. 60/2021 on
actions against market abuse a Securities Compliance Officer has been appointed to oversee the compliance in
accordance with the abovementioned law and in compliance with the Company´s Insider Trading policy. The
Securities Compliance Officer is responsible for assessing and monitoring if Alvotech, its directors, officers and
employees are in compliance with the laws and regulations that apply to a company listed on the Nasdaq Iceland
Main Market. The Compliance Officer monitors if the company is in compliance with other applicable law and the
Company´s Business Code of Conduct.
Code of Business Conduct and Ethics
The Board of Directors adopted a Code of Business Conduct and Ethics for Alvotech´s directors, officers and
employees. The Code sets out Alvotech´s code of business conduct and ethics, consisting of the principal business,
ethical, moral and legal standards which Alvotech´s directors, officers and employees are required to observe. The
aim of the Code is a further testament to Alvotech´s commitment to sustainability, to having oversight and managing
relevant environment, social and government risks and opportunities in Alvotech´s operations and value chain.
Sustainability
Alvotech has adopted a Sustainability Policy that is focused on making its operations exemplary in the
pharmaceutical environment based on established international environmental, social and governance (“ESG”)
criteria.
Diversity
Alvotech’s Equality Policy, first issued in January 2021, sets out clear principles to ensure equal conditions and
opportunities for all employees, regardless of gender, age, religion, nationality, or other personal characteristics. An
annual Equality Report is published, which among other metrics, details the gender distribution across all levels of
management. Alvotech has made meaningful progress toward greater gender balance and continues to implement
initiatives that promote diversity, equity and inclusion.
Board Committees
Alvotech has five committees of the Board of Directors (an audit and risk committee, a compensation committee, a
nominating and corporate governance committee, a strategy committee and a corporate sustainability committee).
All the committees are constituted of members of the Board based on their expertise, skills and experience, relevant
to that Committee and in accordance with the rules set for each committee by the Board. The charters outlining the
rules of procedure for each of the Board Committees are accessible on Alvotech’s website.
Audit and Risk Committee
The members of Alvotech’s audit and risk committee are Dr. Linda McGoldrick (Chair), Ann Merchant, Hjörleifur
Pálsson and Richard Davies. Each member of Alvotech’s audit and risk committee qualifies as independent directors
according to the rules and regulations of the SEC and Nasdaq with respect to audit and risk committee membership.
In addition, all audit and risk committee members meet the requirements for financial literacy under applicable SEC
and Nasdaq rules and at least one of the audit and risk committee members qualifies as an “audit and risk committee
financial expert,” as such term is defined in Item 407(d) of Regulation S-K under the United States Securities Act of
1933, as amended. The committee held 7 formal meetings in 2024. The audit and risk committee is responsible for,
among other things:
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• appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered
public accounting firm;
• discussing with our independent registered public accounting firm their independence from management;
• reviewing, with our independent registered public accounting firm, the scope and results of their audit;
• approving all audit and permissible non-audit services to be performed by our independent registered
public accounting firm;
• overseeing the financial reporting process and discussing with management and our independent registered
public accounting firm the annual financial statements that we file with the SEC;
• overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
• reviewing our policies on risk assessment and risk management;
reviewing related party transactions; and
• establishing procedures for the confidential anonymous submission of concerns regarding questionable
accounting, internal controls or auditing matters.
Compensation Committee
The committee members are Richard Davies (Chair), Árni Harðarson and Tomas Ekman. Mr. Davies qualifies as an
independent director according to the rules and regulations of the SEC and Nasdaq with respect to compensation
committee membership, including the heightened independence standards for members of a compensation
committee. The committee held 4 formal meetings in 2024. The compensation committee is responsible for, among
other things:
• reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing
and approving, (either alone or, if directed by the board of directors, in conjunction with a majority of the
independent members of the board of directors) the compensation of our chief executive officer;
• overseeing an evaluation of the performance of and reviewing and setting or making recommendations to our
board of directors regarding the compensation of our other executive officers;
• reviewing and approving or making recommendations to our board of directors regarding our incentive
compensation and equity-based plans, policies and programs;
• reviewing and approving all employment agreement and severance arrangements for our executive officers;
• making recommendations to our shareholders regarding the compensation of our directors; and
• retaining and overseeing any compensation consultants.
Corporate Sustainability Committee
The members of Alvotech’s ESG committee are Ann Merchant (Chair), Árni Hardarson and Dr. Linda McGoldrick.
The committee held 6 formal meetings in 2024. The ESG committee is responsible for, among other things:
• reviewing, monitoring and setting strategy in the area of corporate responsibility;
• overseeing Alvotech’s activities in the area of corporate responsibility that may have an impact on the
Company’s reputation and operations;
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• periodically assess the Alvotech’s compliance obligations;
• monitor and review matters of health and safety and report findings to the broader board; and
• review and evaluate environmental, social and political issues and trends and their relevance to Alvotech’s
business and make recommendations to the board regarding those trends and issues.
Nomination and Corporate Governance Committee
The members of Alvotech’s nominating and corporate governance committee are Richard Davies (Chair), Dr. Linda
McGoldrick and Ann Merchant. The nominating committee is responsible for, among other things:
• identifying individuals qualified to become members of our board of directors, consistent with
criteria approved by our board of directors;
• overseeing succession planning for our Chief Executive Officer and other executive officers;
• periodically reviewing our board of directors’ leadership structure and recommending any proposed
changes to our board of directors;
• overseeing an annual evaluation of the effectiveness of our board of directors and its committees;
and
• developing and recommending to our board of directors a set of corporate governance guidelines.
Strategy Committee
The Strategy committee is responsible for, among other things, reviewing, monitoring and setting strategy for the
business of Alvotech. The members of Alvotech’s Strategy committee are Faysal Kalmoua (Chair), Lisa Graver and
Róbert Wessman.
The structure and composition of the Board of Directors
Alvotech’s Board of Directors is currently composed of nine members. In accordance with Alvotech’s Articles of
Association, the Board is not divided into classes of directors. Eight of the directors were appointed at the closing of
the business combination on 15 June, 2022, to serve as director until the end of the general meeting of shareholders
called to approve Alvotech’s annual accounts for the 2024 financial year. Hjörleifur Pálsson was appointed at the
AGM on 6 June, 2024, to serve until the end of the AGM called to approve Alvotech’s annual accounts for the 2025
financial year. There are no limitations on the duration of the board membership. The composition of the board shall
at any time be diverse, regarding educational and professional background, gender and age.
The board undertakes Alvotech´s affairs in between shareholders´ meetings unless otherwise provided by law or
Alvotech´s Articles of Association. The board is responsible for setting Alvotech´s general strategy. The board has a
supervisory role in overseeing that Alvotech´s organization and activities are at all times in accordance with the
relevant law, regulation and good business practices. The board met 12 times last year. The Board conducts a regular
evaluation of its own performance, as well as reviewing the contribution required from a director to perform his or her
duties to the Company, and whether he or she is spending sufficient time performing them. The rules of procedure for
the Board, outlined in Alvotech’s Corporate Governance Rules, can be found on Alvotech’s website. Details
regarding the Directors’ ownership of Company shares are available in the Company’s Form 20-F filed with the SEC.
Members of the Board of Directors
Robert Wessman, Chairman and CEO, is the founder of Alvotech and has served as Executive Chairman and member
of the board of directors of Alvotech since January 2019. He served as a Director on the board of Fuji Pharma from
2018 to 2023. He serves as chairman of the board of directors of Lotus Pharmaceuticals since 2018 and since May
2009, he has served as a member of the board of directors of Aztiq and as a member of the board of directors of Aztiq
GP, the general partner of Aztiq Fund I SCSp, a Luxembourg alternative investment fund, and the parent company of
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Aztiq. Mr. Wessman is also the founder and main partner of the Aztiq group. Mr. Wessman founded Alvogen in July
2009, and served as its Executive Chairman and Chief Executive Officer until June 2022. He continues to serve as
Alvogen’s chairman since July 2022. Between 1999 and 2008, Mr. Wessman served as the Chief Executive Officer of
Actavis. He has a Bachelor of Science degree in Business Administration from the University of Iceland. Mr.
Wessman is not considered independent of Alvotech or its day-to-day managers, nor of the Company’s major
shareholders.
Richard Davies, Director and Deputy Chairman, has served as Deputy Chairman of Alvotech’s board from June
2022. He was previously the Chairman of Alvotech’s board, and as one of Alvotech’s directors since January 2019.
Since November 2018, he has served as Chief Executive Officer of Auregen Bio Therapeutics SA. Prior to joining
Auregen Bio Therapeutics, Mr. Davies served as Chief Executive Officer of Bonesupport AB between 2016 and
2018, as Senior Vice President and Chief Commercial Officer of Hospira Inc. between 2012 and 2015, and in various
leadership roles at Amgen Inc between 2003 and 2012. Mr. Davies holds an MBA from the University of Warwick
and Bachelor of Science in applied chemistry from the University of Portsmouth. Mr. Davies is considered
independent of Alvotech, its day-to-day managers and its major shareholders.
Tomas Ekman, Director, has served as one of Alvotech’s directors since January 2019. Since November 2014 he has
served as a partner at CVC Capital Partners where he is a member of the CVC Nordics team and is based in
Stockholm. Prior to joining CVC in 2014, Mr. Ekman was a partner and Managing Director at 3i, responsible for its
Nordic business. Mr. Ekman holds MSc degrees from the University of Strathclyde and Chalmers University of
Technology, and an MBA from IMD, Switzerland. Mr. Ekman is considered independent of Alvotech and its day-to-
day managers but is not considered independent of the Company’s major shareholders.
Faysal Kalmoua, Director, has served as one of Alvotech’s directors since June 2020. Mr. Kalmoua has also served
as a partner of the Aztiq group since June 2022. Between April 2020 and June 2022, Mr. Kalmoua served as
Executive Vice President of Portfolio, Business Development and Research and Development for Alvogen. Between
November 2015 and March 2020, Mr. Kalmoua served as Executive Vice President of Portfolio for Alvogen, Inc.
Prior to joining Alvogen, Mr. Kalmoua served in various management positions for Synthon for nearly 16 years. Mr.
Kalmoua holds a master’s degree in chemistry from the Radboud University Nijmegen and an executive MBA from
Instead. Mr. Kalmoua is not considered independent of Alvotech or its day-to-day managers, nor of the Company’s
major shareholders.
Ann Merchant, Director, has served as one of Alvotech’s directors since June 2022. Since January 2024, Ann has
served as one of Biodexa Pharmaceuticals PLC directors. Since 2018, she has served as Vice President for
MorphoSys, and as Head of Global Supply Chain since January 2019 and Head of External Operations since April
2022. Prior to joining MorphoSys, from September 2011 to August 2018, Ms. Merchant served as the President for
Schreiner Medipharm. Between 1994 and 2011, Ms. Merchant held various roles at Amgen, including Vice President,
Head of International Supply Chain and Site Head between 2007 and 2011. Ms. Merchant holds an MBA from the
Henley Business School and a Bachelor of Science in Languages from Georgetown University. Ms. Merchant is
considered independent of Alvotech, its day-to-day managers and its major shareholders.
Arni Hardarson, Director, has served as one of Alvotech’s directors since June 2022. Mr. Hardarson is a co- founder
and partner of the Aztiq group. Between 2009 and June 2022, he served as Deputy to the Chief Executive Officer and
General Counsel of Alvogen. Prior to joining Alvogen, Mr. Hardarson was Vice President of Tax and Structure at
Actavis, and as partner, member of the executive management committee, and served as a head of tax and legal at
Deloitte. Mr. Hardarson holds a Master’s degree in law from the University of Iceland. Mr. Hardarson is considered
independent of Alvotech and its day-to-day managers but not considered independent of the Company’s major
shareholders. Lisa Graver, Director, has served as one of Alvotech’s directors since June 2022. Ms. Graver has
served in various leadership positions for Alvogen since June 2010, including as President of Alvogen Inc, a
subsidiary of Alvogen, since August 2015, as Executive Vice President and Deputy to the Chief Executive Officer of
Alvogen Inc. since February 2013, and as Vice president Intellectual Property of Alvogen since June 2010. Prior to
joining Alvogen, Ms. Graver was Vice President Intellectual Property and Senior Director Intellectual Property at
Actavis Inc. between 2006 and 2008. Ms. Graver holds a BSc in Biology from Lakehead University and a law degree
from the Case Western Reserve University School of Law. Ms. Graver is considered independent of Alvotech and its
day-to-day managers but is not considered independent of the Company’s major shareholders.
Dr. Linda McGoldrick, Director, has served as one of Alvotech’s directors since June 2022 and as the Chairman of
the Audit Committee. In 1985, Dr. McGoldrick founded, and currently serves as Chairman and Chief Executive
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Officer of, Financial Health Associates International, a strategic consulting company specializing in healthcare and
life sciences. Since January 2020, she has served as the Chief Executive Officer for 2Enable Health LLC. Prior to
joining 2Enable Health LLC, Dr. McGoldrick served as interim CEO at Zillion between June 2019 and December
2019. Over her professional career, Dr. McGoldrick has served in a number of leadership roles, including Senior Vice
President and National Development Director for the Healthcare and Life Sciences Industry Practices at Marsh-MMC
Companies, International Operations and Marketing Director of Veos plc, and Managing Director Europe for Kaiser
Permanente International. In 2018, Dr. McGoldrick was appointed by the Governor of Massachusetts to serve on the
state’s Health Information Technology Commission. Dr. McGoldrick has served as a director of numerous publicly
traded and private held companies and non-profit organizations in the U.S., UK and Europe, including as director for
Compass Pathways since September 2020. In 2012, Dr. McGoldrick was named as one of the Top 100 Corporate
Directors of Fortune 100 Companies by the Financial Times. Dr. McGoldrick holds a Master’s Degree in Healthcare
from the University of Pennsylvania, an MBA from Wharton, and a PhD in Philosophy from Worcester Polytechnic
Institute. Dr. McGoldrick is considered independent of Alvotech, its day-to-day managers and its major shareholders.
Hjörleifur Pálsson, Director, has served on the board of directors and on the audit and risk committee at Alvotech SA
since June 7th, 2024. From 2015 Mr. Pálsson has served as a member of the board of directors at Brunnur
vaxtarsjóður slhf., from 2016 as a member of the board at Ankra ehf. (Feel Iceland), from 2022 as a member of the
board of directors and as the chairman of the remuneration committee at Festi hf., and from 2023 as a member of the
board at Brandr Global ehf. From 2019 Mr. Pálsson has been a member of the audit committee at Landsbankinn and
from 2021 he has been the chairman of the Audit committee at Harpa tónlistar- og ráðstefnuhús ohf. From 2014 to
2022 he was the chairman of the board of directors and the board of trustees at Reykjavik University. He served as a
member of the board of directors at Sýn hf. (Vodafone Iceland) from 2013 to 2022, thereof as a chairman for four
years. From 2015 to 2024 he served on the board of Directors and as a chairman of the audit committee and a member
of the remuneration committee at Lotus Pharmaceutical & Co., Ltd., a global pharmaceutical company listed at the
Taiwan stock exchange. Mr. Pálsson graduated with a cand oecon. degree from the University of Iceland in 1988. He
was granted a license as a State Authorized Public Accountant in Iceland in 1989 and practiced as such until 2001.
From 2001 to 2013 he was the VP of Finance and CFO at Össur hf., a global Medical Device company listed at
NASDAQ Iceland and NASDAQ Copenhagen. Mr. Pálsson is considered independent of Alvotech, its day-to-day
managers and its major shareholders.
Business ethics and Code of Conduct
Alvotech sets high standards for all employees and directors. We also adhere to ethical commitments in every aspect
of our business, with respect to our employees as well as outside stakeholders, including contractors, suppliers,
commercial partners, government authorities and the public. These commitments are spelled out in our Code of
Corporate Conduct and Ethics, which applies to all our employees, including our senior executive officers and
directors. We apply our Code of Conduct both in internal and external relations and give preference in our business
dealings to those who adhere to comparable ethical standards.
It is the duty of the Board of Directors to serve as fiduciary for shareholders and to oversee the management of the
company. To fulfill its responsibilities and to discharge its duties prudently, the Board of Directors follows the
procedures and standards that are set forth in guidelines and charters. These documents are subject to modification
from time to time as the Board of Directors deems appropriate in the best interests of Alvotech or as required by
applicable laws and regulations.
The Code of Conduct and other charters are accessible on Alvotech’s website at https://investors.alvotech.com/
corporate-governance/documents-charters
Information on Infringements of Laws and Regulations
No remarks were received concerning major violations of laws or regulations in 2024.
Approved by the board on: 26 March 2025
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Non-Financial Disclosure
Introduction
Advancing sustainability through transparency and action
At Alvotech, we recognize the increasing importance of sustainability in the global healthcare industry.
Sustainability, a balance of environmental, social, and economic considerations, remains important for our long-term
success and for the stakeholders that we serve. One of the key decisions to locate Alvotech’s development and
manufacturing operation in Iceland, was the abundance renewable energy and availability of clean water, robust
system of government, and a general commitment to advance gender equality and fairness, values which are
considered a bedrock of society. As we continue our rapid growth, we are taking important steps to integrate
sustainability considerations into our business strategy and decision-making processes.
This sustainability report marks our first year moving towards adapting to the Corporate Sustainability Reporting
Directive (CSRD), a European regulation designed to enhance corporate transparency, comparability, and
accountability in sustainability disclosures. While the CSRD has not taken effect in Iceland (which is a member of
the European Economic Area, but not of the European Union) or in Luxembourg, we have paid close attention to the
directive and the discussions taking place at the European Union level. Alvotech is preparing to adhere to the CSRD
framework, strengthening its sustainability reporting to align with evolving expectations and market standards.
In 2024, we took significant steps towards constructing a more structured approach to sustainability. Key milestones
included conducting a Double Materiality Assessment (DMA) and further assessment of our greenhouse gas
emissions. These efforts have laid the foundation for a more robust sustainability strategy and will help to inform
our continuous improvements.
Regulatory uncertainty around the CSRD
In 2024, Alvotech dedicated significant efforts to preparing for compliance with the CSRD, aligning its
sustainability reporting with evolving European regulatory requirements. As a publicly listed company on stock
markets in Iceland and the United States, that is incorporated under Luxembourg law with all major operations based
in Iceland, Alvotech operates in fairly a complex regulatory landscape.
While the CSRD has been transposed into national law in some EU countries, including Sweden, the Netherlands,
and Denmark, it has yet to be adopted in other markets, such as Germany, Spain, and Luxembourg, where Alvotech
is incorporated. The fragmented implementation of the CSRD has created legal asymmetry within the European
market, where companies are subject to differing compliance obligations depending on their jurisdiction.
Alvotech remains committed to aligning with the evolving sustainability market practice and enhancing its
sustainability disclosures despite these regulatory uncertainties. Looking ahead to 2025, Alvotech will continue to
monitor these regulatory developments while refining and streamlining its sustainability infrastructure to ensure
compliance with the evolving CSRD framework.
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A year of progress, a future of commitment
Some of Alvotech’s sustainability efforts are still at an early stage, which simply reflects the rapid growth of
Alvotech from being focused on R&D to having multiple biosimilars launched in multiple major markets. In fact,
2024 was a pivotal year in our scale-up as well as in advancing our understanding of key sustainability impact areas.
While Alvotech has historically disclosed metrics for sustainability performance, we acknowledge the need to
conduct a more comprehensive Scope emissions assessment including our supply chain, to give us a more
comprehensive view of our indirect environmental impact. We now have a clearer picture of the emissions footprint
of our value chain. While we are still refining our data, this baseline will enable more informed decision-making in
the years ahead.
Similarly, our DMA has helped us identify and prioritize the ESG topics most relevant to our business. Key focus
areas include climate change, resource use and circular economy, own workforce, consumers and end-users, and
business conduct. These topics will guide our sustainability efforts as we work toward measurable progress.
Looking ahead to 2025, one of our key priorities is setting measurable and credible targets across these material
topics. Alvotech is strategically evaluates climate targets to ensure they align with our operational realities and
business growth trajectory. Our focus in the coming year will be to refine our sustainability data, enhance reporting
accuracy, and lay the groundwork for setting ambitious but achievable targets.
We are committed to continuous improvement and embedding sustainability more effectively into our operations
over time. By aligning with the CSRD framework, at least on a preliminary basis while the regulation is being
revised at the EU level, Alvotech is taking an important step toward greater accountability, structured sustainability
management, and long-term value creation for all stakeholders.
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1. General Information ESRS 2 - General Disclosures
1.1. Basis for preparation
General basis for preparation (ESRS 2 BP-1)
The format and content of this sustainability reporting has been adapted to prepare for the CSRD and the European
Sustainability Reporting Standards (ESRS) under the requirements of the CSRD. Mandatory disclosures based on
the CSRD are included in this report, while best efforts have been made to adhere to other relevant standards and
frameworks applicable to our operations, such as the GHG Protocol. The following information outlines the general
basis for preparation:
1. Scope of preparation: The sustainability statement covers the period from 1 January 2024 to 31 December
2024 and has been prepared and consolidated, encompassing all entities included in Alvotech’s financial
statements. The scope of consolidation is aligned with that of the financial reporting under Directive
2013/34/EU.
2. Subsidiary exemptions: No subsidiaries have been exempted from individual or consolidated
sustainability reporting under Articles 19a(9) or 29a(8) of Directive 2013/34/EU. Therefore, all subsidiaries
are included in the scope of this sustainability statement.
3. Coverage of the value chain: The report includes upstream and downstream value chain impacts to the
extent data is currently available:
a. Upstream: Focused on suppliers and production partners, covering areas such as greenhouse gas
emissions and resource use.
b. Downstream: Includes impacts related to distribution, patient accessibility, and end-user safety
for biosimilar medicines.
While efforts were made to gather comprehensive value chain data, certain data points remain incomplete
due to limitations in supplier engagement. These areas will be expanded upon in subsequent reporting
cycles as part of Alvotech’s phased implementation plan.
4. Use of omission options:
a. Intellectual property: No specific information corresponding to intellectual property, know-how,
or innovation results relevant to meeting the objective of an applicable disclosure requirement has
been omitted from this report.
b. Negotiations and impending developments: Alvotech has not used the option to omit
information on impending developments or matters in negotiation under Articles 19a(3) or 29a(3)
of Directive 2013/34/EU.
Disclosures concerning specific circumstances (ESRS 2 BP-2)
1. Time horizons: Alvotech has adopted the standard definitions for short- (the reporting period in the
financial statements), medium- (up to 5 years), and long-term (more than 5 years) horizons outlined in
ESRS 1 Section 6.4. No deviations from these definitions were applied in this report.
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2. Value chain estimations: Alvotech has had to rely on estimations and modeling of the value chain impact,
due to the limited availability of primary data for the metrics that include upstream and downstream value
chain data. The following disclosures provide additional details:
a. Identified metrics: Greenhouse Gas emissions: Data was estimated mainly using emission factors
from publicly available databases or other references from standard literature, as a limited amount
of supplier-specific ESG reports were available.
b. Basis for preparation: The value chain analysis followed a structured methodology to integrate
upstream and downstream data. The basis for the calculation is the total dollar spend on goods or
services multiplied by an emission factor, primarily sourced from databases such as Eco Invent or
Carbon Minds, as well as information published by the IEA, IPCC, U.S. Environmental Protection
Agency (EPA) and UK Department for Environment, Food & Rural Affairs.
c. Accuracy and limitations:
i. Level of accuracy: The estimates are considered moderately accurate, as data relied
heavily on sector averages (from the above-mentioned data sources) and proxy
assumptions for some suppliers and downstream partners.
ii. Limitations: Challenges included limited access to primary data from smaller suppliers
and commercialization partners outside mandatory reporting obligations. These gaps are
targeted for improvement in future cycles.
d. Planned actions for improvement: Alvotech is planning to design a roadmap to improve value
chain data quality through:
i. Expanding supplier engagement to encourage ESG reporting alignment with CSRD
standards.
ii. Leveraging digital tools to streamline data collection and enhance traceability.
iii. Transitioning from reliance on proxies to collecting granular, supplier-specific data by
2028. 1.2. Governance
The role of the governance bodies (ESRS GOV-1)
Alvotech’s governance structure includes two key bodies: the Board of Directors, which serves as the supervisory
body, and the Corporate Leadership Team (CLT), which acts as the management body. The Board of Directors
provides strategic oversight and ensures accountability, while the CLT is responsible for executing day-to-day
operations and implementing Alvotech’s strategy.
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Image 1: Alvotech’s governance structure.
Board of Directors Composition and diversity
Indicator 2024
Percentage of women on the Board of Directors 33%
Percentage of independent board members 78%
Corporate Leadership Team (CLT) Composition and diversity
Indicator 2024
Percentage of women in the Corporate Leadership Team 33%
Governance of impacts, risks and opportunities
Alvotech’s governance framework for managing IROs integrates the roles of its two primary governance bodies, the
Board of Directors and the CLT. The Board of Directors oversees the identification, management, and monitoring of
material sustainability IROs. It provides strategic guidance and ensures accountability for progress toward
sustainability objectives. The CLT is responsible for managing IROs daily, implementing the Board-approved
sustainability strategy, and reporting on progress.
Delegation of sustainability management responsibilities
Alvotech’s Board of Directors has appointed a Corporate Sustainability Committee, which serves as a dedicated
subcommittee of the Board. It oversees the integration of sustainability into business operations, sets sustainability
priorities and targets, and monitors progress against material topics.
In 2024 Alvotech also intends to form a Corporate Sustainability Steering Group at the CLT and management level.
The working group will monitor future compliance with sustainability regulations and standards. The committee will
comprise members from seven key functions: HR, Finance, Commercial, Operations, R&D, Strategy, and Legal.
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Starting in 2025, the working group will meet monthly to coordinate sustainability reporting efforts, monitor
regulatory developments, and address cross-functional challenges.
Setting targets and monitoring progress
Establishing a structured process for target-setting is a priority for Alvotech and is being actively developed as part
of its sustainability governance enhancements. The process for defining and monitoring sustainability targets will
follow these principles:
● The Board of Directors shall approve long-term sustainability targets, such as emissions reductions,
resource efficiency goals, and diversity metrics.
● The Corporate Sustainability Committee and the Board of Directors shall receive quarterly reports on
sustainability performance, including progress on targets.
● The CLT shall track operational performance against these targets and identify corrective actions when
needed.
Expertise and skills in sustainability
Alvotech has established mechanisms to build and access expertise to ensure effective oversight of sustainability
matters.
The Board of Directors and the CLT include members with direct experience in the pharmaceutical industry, global
markets, and sustainability, ensuring relevant experience for overseeing IROs.
Sustainability governance (ESRS GOV-2)
During the reporting period, the following processes were implemented to ensure that Alvotech’s Board of Directors
and CLT were informed about sustainability matters.
● With the CLT's endorsement, an external consultant carried out a double materiality assessment in Q3 of
2024, and the results were presented to the Corporate Leadership Team at the quarterly meeting.
● The Corporate Sustainability Committee receives formal sustainability updates periodically, as necessary
for critical issues or decisions.
● Interim sustainability oversight has been managed directly by the Investor Relations function but is in the
process of being transitioned into the Finance Department, with a dedicated resource.
Integration of sustainability-related performance in incentive schemes (ESRS GOV-3)
Alvotech does not have an established mechanism for integrating sustainability-related performance into incentive
schemes. This is primarily due to the absence of formalized sustainability targets, which are currently under
development as part of Alvotech’s ongoing enhancements to its governance and sustainability framework.
Statement on due diligence (ESRS GOV-4)
Alvotech is committed to implementing a robust due diligence process to identify, assess, prevent, mitigate, and
address sustainability-related impacts, risks, and opportunities. While fully formalizing this process is underway,
Alvotech has taken initial steps to align its practices with the principles outlined in ESRS 1 Chapter 4. These efforts
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include the development of internal policies and frameworks to integrate due diligence into core business operations
and decision-making.
The due diligence process at Alvotech is reflected across various sections of this sustainability statement. The
following mapping highlights where the main aspects and steps of the process are disclosed:
Due Diligence Aspect Description Reference
Embedding due diligence in
governance, strategy and
business model
Explanation of how governance bodies integrate
sustainability-related due diligence into strategic
oversight, decision-making, and risk management
processes.
1.2. Governance
1.3. Strategy and
Business Model
Engaging with affected
stakeholders
Summary of stakeholder engagement efforts, including
surveys, focus groups, and ongoing dialogues with
employees, suppliers, and key stakeholders.
1.4. Stakeholder
engagement
Identifying and assessing
negative impacts on people
and the environment
Overview of the DMA process and methodology for
identifying material impacts, risks, and opportunities.
1.5. Materiality
assessment
1.6. Material impacts,
risks and opportunities
Taking action to address
negative impacts on people
and the environment
Description of initiatives to mitigate material impacts,
including emissions reduction, resource efficiency
programs, and diversity and inclusion strategies.
2. Environmental
Information
3. Social Information
4. Governance
Information
Tracking the effectiveness
of the efforts
Explanation of monitoring mechanisms and plans for
improvement in tracking effectiveness.
2. Environmental
Information
3. Social Information
4. Governance
Information
Risk management and internal controls over sustainability reporting (ESRS GOV-5)
Alvotech has established foundational processes to ensure the accuracy, reliability, and transparency of its
sustainability reporting. While these systems are still evolving to meet the requirements of the ESRS, the following
key elements describe the current approach to managing risks and ensuring effective internal controls over
sustainability reporting.
● Risk management. Key risks related to sustainability reporting are identified, including data quality issues,
incomplete value chain data, and compliance with ESRS requirements. Identified risks are assessed based
on their potential impact on reporting accuracy, reliability, and regulatory compliance. Measures to address
identified risks include strengthening data collection processes, engaging external consultants for reporting
guidance, and conducting regular audits of sustainability data.
● Internal controls. The Corporate Sustainability Working Group includes representatives from seven key
functions and is assigned sustainability reporting responsibilities. The Corporate Sustainability Committee
oversees the reporting process and ensures alignment with ESRS requirements.
1.3. Strategy and business model (ESRS SBM-1)
The following key elements outline Alvotech’s general strategy related to sustainability matters:
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1. Products and services. Alvotech focuses on developing and manufacturing biosimilar medicines, which
provide affordable alternatives to branded biologics.
○ Developing and manufacturing biosimilars requires expertise and specialized technology.
Development times for biosimilars and costs are elevated compared to generic medicines, but
biosimilars are typically offered at a discount to existing biologic medicine.
○ Alvotech expands global access to biosimilars, reducing costs and minimizing costs, strives to
minimize environmental footprint and promote health equity.
○ Alvotech currently markets two biosimilars in over 25 markets globally, aiming for three
biosimilar candidates to be approved in 2025.
2. Markets and customers. Alvotech expands access to biosimilars, reducing healthcare costs and improving
patient outcomes, especially in underserved markets. With 19 global partners, the Company covers major
markets and has secured approvals in over 50 countries.
3. Employees. Alvotech is committed to fostering a diverse and inclusive workplace as part of its broader
sustainability objectives.
Image 2: Business model, upstream and downstream.
Business model and value chain
● Business model inputs. To ensure quality and flexibility, the manufacturing process relies on single-use
plastics, as cleaning reusable equipment requires more chemicals and water, increasing the carbon
footprint. Alvotech continually evaluates these processes with a sustainability focus, prioritizing
partnerships with responsible suppliers.
● Business model outputs. Alvotech delivers biosimilar medicines designed to increase patient access while
reducing healthcare costs. Benefits include improved affordability and accessibility of treatments and
strengthened stakeholder trust through sustainable growth.
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● Value chain. Alvotech’s value chain spans upstream suppliers to downstream distributors and end-users.
○ Upstream: Global suppliers provide raw materials and components, with sustainability
considerations embedded in the selection process.
○ Downstream: Alvotech collaborates with pharmaceutical distributors and healthcare providers to
ensure biosimilars reach patients effectively.
1.4. Stakeholder engagement (ESRS SBM-2)
Stakeholder engagement is a cornerstone of Alvotech’s strategy, enabling it to align with stakeholder expectations,
drive informed decision-making, and build trust across diverse groups. Feedback from stakeholder engagement is
consistently presented to the CLT to ensure it informs strategic and operational decisions.
The following table provides an overview of the engagement process for each key stakeholder group identified by
Alvotech.
Stakeholder Group Engagement Organization Purpose
Incorporation of
outcome
Management Engaged regularly - Quarterly
management
meetings
- Direct consultation
for strategic matters
To align strategic
objectives and
operational goals
- Feedback loops to
document and
analyze input
- Action plans for
strategic alignment
- Transparent
reporting
Employees Engaged regularly - Employee surveys
- open forum
- Direct
communication
To ensure job
satisfaction,
performance
improvement, and
wellbeing
- Iterative
improvements in
policies
- Monitoring
engagement metrics
- Implementing
wellbeing programs
Investors Engaged regularly - Investor relations
meetings and events
- Advisory panels
- Financial reporting
To provide
transparency on
financial and non-
financial
performance
- Tracking and
addressing investor
feedback
- Incorporating
insights into
strategy
Board of Directors Engaged regularly - Regular board
meetings
- Strategic
workshops
To ensure
governance practices
align with strategic
and regulatory
requirements
- Implementation of
board directives and
resolutions
- Regular review of
governance
effectiveness
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Suppliers Engaged regularly - Supplier portals
and surveys
- Direct
communication
To foster
partnerships, ensure
compliance, and
improve supply
chain resilience
- Developing
supplier action plans
- Monitoring
compliance and
performance
indicators
Customers Engaged regularly - Customer
feedback systems
- Focused surveys
- Direct
consultations
To enhance product
offerings, customer
satisfaction, and
loyalty
- Utilizing feedback
for product
improvement
- Tracking customer
satisfaction metrics
Alvotech conducted a comprehensive DMA in 2024, engaging key stakeholder groups. The process included the
distribution of uniform surveys to stakeholders, which were designed to:
1. Gather quantitative data: Stakeholders were asked to priorities and rank pre-defined material impacts, risks,
and opportunities.
2. Encourage open feedback: Stakeholders were allowed to provide suggestions in addition to ranking
provided topics.
3. Ensure anonymity: Responses were collected anonymously to encourage honesty and transparency.
The surveys were quantitative data input, with results weighed by stakeholder groups to reflect their relevance and
impact on Alvotech’s strategy and business model. This approach ensured stakeholders' views and interests were
systematically analyzed and incorporated into Alvotech’s decision-making processes.
Based on the stakeholder engagement, no amendments to Alvotech’s strategy or business model were identified as
necessary.
1.5. Double Materiality Assessment process (DMA) (ESRS IRO-1)
Identifying and assessing material impacts, risks, and opportunities
In 2024, Alvotech conducted its first DMA under ESRS 1 to determine the company's most material ESG topics.
This assessment aligns with the CSRD requirements and reflects best practices in sustainability reporting.
The assessment evaluated two dimensions of materiality:
● Impact materiality considers how Alvotech’s operations affect society and the environment—both
positively and negatively.
● Financial materiality assesses how sustainability-related topics create risks and opportunities that could
influence a company’s business, financial performance, and long-term resilience.
The process was guided by the implementation insights of the European Financial Reporting Advisory Group
(EFRAG). It included quantitative and qualitative thresholds to ensure a structured and objective evaluation of
material topics. It is also built on previous assessments, internal expertise, and engagement with key stakeholders.
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Interaction with Alvotech’s strategy and business model
The DMA findings link Alvotech’s sustainability priorities to its long-term business strategy. As a
biopharmaceutical company specializing in biosimilars, Alvotech is vital in increasing access to affordable, high-
quality medicines. This strategy contributes to positive social impacts, particularly in healthcare affordability, patient
safety, and equitable treatment access.
However, the assessment identified key environmental and social challenges in Alvotech’s operations, including the
carbon footprint of manufacturing, reliance on single-use plastics, and the energy demands of the production
process. Acknowledging these impacts, Alvotech remains committed to reducing its environmental footprint while
upholding its high safety and quality standards.
From a financial materiality perspective, the assessment underscored regulatory risks, including evolving
compliance obligations under the CSRD and opportunities in supply chain sustainability, energy efficiency, and
product innovation. Additionally, workforce-related topics such as employee engagement, diversity, and
professional development were identified as material to Alvotech’s ability to attract and retain top talent in a
competitive industry.
The insights gained from the DMA now serve as a foundation for Alvotech’s sustainability strategy and roadmap.
These insights help policy development, target-setting, and investment decisions as the Company continues to
integrate sustainability considerations into its broader business operations. The assessment also helps Alvotech align
with global sustainability frameworks and investor expectations, ensuring the Company remains agile and well-
prepared for future regulatory and market changes.
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Image 3: Outcomes of the double materiality assessment.
Methodologies and assumptions
The DMA was structured as a stepwise process:
a. Stakeholder engagement: Key stakeholders, including employees, management, suppliers, and
commercialization partners, were engaged via surveys and meetings to gather insights into Alvotech’s
impacts and dependencies.
b. Internal data assessment: Company-specific data, policies, and strategic documents were analyzed to
assess internal perspectives on risks, opportunities, and impacts.
c. Industry benchmarks: External datasets, including ENCORE, S&P Global, and Sustainability Accounting
Standards Board (SASB) frameworks and peer analysis, validated findings and provided context.
d. Aggregation and validation: The results were aggregated using a weighted scoring system (60% internal
data, 20% stakeholder feedback, 20% industry benchmarks) and validated in workshops with senior
leadership.
Process to identify, assess, prioritize, and monitor impacts
The DMA process considered both impact materiality and financial materiality.
● Scope and focus areas: Impacts were assessed across Alvotech’s operations, tier-1 suppliers and
commercialization partners. Topics were prioritized based on heightened risks related to activities, business
relationships, and geographies.
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● Impact assessment criteria: Impacts were ranked based on severity (scale, scope, irremediability) and
likelihood. Negative impacts, such as single-use plastic consumption, were prioritized for mitigation and
positive impacts, such as equitable access to medicines, were assessed for their relative scale and
importance.
● Stakeholder consultation: Surveys tailored to stakeholder groups gathered input on 37 sub-topics and 14
statements aligned with ESRS. Stakeholder inputs informed the prioritization of material sustainability
matters.
● Materiality thresholds: Thresholds for materiality were 3.5/5 for impact and financial materiality. Topics
scoring above this threshold were deemed material for reporting purposes.
Process to identify and manage risks and opportunities
The DMA process also identified key sustainability-related risks and opportunities:
● Connections between impacts and dependencies: The analysis mapped how Alvotech’s operations
influence sustainability topics, affecting financial and reputational risks. Examples include risks related to
supply chain dependencies and opportunities to expand access to affordable healthcare.
● Risk and opportunity evaluation: Risks were assessed for their likelihood and magnitude of financial or
reputational impact. Opportunities were evaluated based on their alignment with strategic priorities and
maturity of execution plans.
Decision-making, internal control procedures and input parameters
The DMA process included structured decision-making and internal controls:
● Workshops: Conducted with the leadership representatives at key stages to align hypotheses, review
findings, and validate results.
● Control procedures: Internal governance ensured the accuracy and reliability of the assessment process,
with input from multidisciplinary teams.
The assessment relied on:
i) data from internal reports, policies, and ESG analyses
ii) inputs from stakeholder engagement and external benchmarks and
iii) assumptions tailored to Alvotech’s business model and sustainability context.
Process changes and future revisions
The DMA will serve as a baseline for subsequent reporting periods.
The DMA results will be reviewed annually to reflect evolving sustainability challenges, regulatory developments,
and stakeholder expectations.
1.6. Material impacts, risks, and opportunities (ESRS SBM-3)
The 2024 DMA identified Alvotech’s key material topics, highlighting critical environmental, social, and
governance issues that align with Alvotech’s sustainability and business priorities. These topics reflect areas where
Alvotech has the most significant impacts and dependencies, guiding its strategy to address risks and leverage
opportunities effectively. Below is an overview of the identified material topic.
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Material topic IRO
Up
stream Own ops
Down
stream
Short
-term
Medium-
term
Long
-term
E1 Climate change
Climate change mitigation
Negative
impact Yes Yes No Yes Yes Yes
Energy Positive impact No Yes No Yes Yes Yes
E5 - Circular economy
Resource inflows
Negative
impact No Yes No Yes Yes Yes
S1 - Own workforce
Working conditions
Positive and
negative
impact No Yes No Yes Yes Yes
Equal treatment and
opportunities for all Positive impact No Yes No Yes Yes Yes
S4 - Consumers and end-users
Personal safety Opportunity No Yes Yes Yes Yes Yes
Social inclusion Opportunity No No Yes Yes Yes Yes
G1 - Business conduct
Corporate culture
Positive and
negative
impact No Yes No Yes Yes Yes
Supplier relationships Risk No Yes No Yes Yes Yes
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2. Environment
E1 Climate Change
2.1.1. Material impacts, risks and opportunities (ESRS 2 IRO-2, SBM-3, E1.IRO-1)
Alvotech evaluated climate-related factors most significant to its operations and stakeholders as part of its
materiality assessment. Climate change mitigation and energy emerged as critical material topics, reflecting the
Company’s commitment to addressing the challenges and opportunities posed by a rapidly changing climate.
The identification of these topics is closely linked to Alvotech’s operational context. Based in Iceland, Alvotech
benefits from a unique advantage- access to a renewable energy infrastructure powered predominantly by
geothermal and hydroelectric sources. This minimizes its direct emissions (Scope 1 and 2), allowing the Company to
focus its climate efforts on reducing indirect emissions (Scope 3) across its value chain.
Alvotech aims to strengthen its environmental performance by prioritizing these material topics, preparing for
evolving regulatory and stakeholder expectations, and contributing to global sustainability goals. The Company is
committed to advancing initiatives in these areas and developing formal policies to support its long-term climate
strategy.
Material topics related to climate change mitigation and energy
Material topic IRO
Up
stream
Own
ops
Down
stream
Short
-term
Medium
-term
Long
-term
E1 Climate change
Climate change mitigation
Negative
impact Yes Yes No Yes Yes Yes
Energy
Positive
impact No Yes No Yes Yes Yes
Climate risk analysis (ESRS 2 IRO-1)
A key strategic advantage of Alvotech’s operations in Iceland is the country´s fully closed electrical grid, which
relies heavily on renewable geothermal energy. This significantly reduces the Company’s dependence on non-
renewable energy for the operation and makes it possible for Alvotech to aim for and have a relatively low carbon
footprint. However, as part of the global pharmaceutical value chain, Alvotech also faces indirect climate-related
risks and opportunities, primarily linked to its Scope 3 emissions.
Key climate risks
Value chain dependencies (Scope 3 emissions):
● Upstream risks: The pharmaceutical industry relies on raw materials and manufacturing processes that may
be affected by climate regulations, disruptions in supply chains due to extreme weather events, or increased
costs of transportation and logistics associated with carbon pricing.
● Downstream risks: Alvotech’s products may face climate-related pressures from customers and regulators
demanding greater transparency and lower emissions across the value chain.
Regulatory and market risks: Global and regional climate policies, such as carbon pricing, emissions reduction
targets, and supply chain sustainability requirements, could impact Alvotech’s operations and cost structure,
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particularly if suppliers or partners operate in high-emission regions. Investors and stakeholders increasingly
prioritize sustainability, which could influence market access and investment opportunities if climate-related
disclosures are inadequate.
Physical risks: While Iceland’s climate is relatively stable, global supply chain disruptions caused by extreme
weather events such as flooding, hurricanes, or droughts could affect the availability and cost of raw materials,
manufacturing inputs, or logistics services. The worst impacts from climate-related weather hazards will likely
materialize in the medium- and long-term and are currently not considered financially material to Alvotech.
Key climate opportunities
Renewable energy advantage: Alvotech benefits from a renewable energy infrastructure in Iceland, primarily
geothermal and hydroelectric power. This positions the company favorably compared to peers in regions with higher
reliance on fossil fuels. A low-carbon energy source can provide a competitive advantage in meeting emissions
reduction expectations, particularly for Scope 1 and 2 emissions.
Sustainable product innovation: Climate-conscious stakeholders and customers drive demand for sustainable
pharmaceuticals. By integrating sustainability into product design, packaging, and distribution, Alvotech may
enhance its market positioning.
Efficiency gains: Climate adaptation measures, such as optimizing energy use, transitioning to low-emission
transport, and leveraging circular economy principles (e.g., recycling materials or reducing waste), may drive cost
savings and environmental benefits for the Company.
Strengthening supplier engagement, adopting sustainable practices throughout the value chain, and aligning with
emerging climate regulations will be critical for mitigating risks and leveraging opportunities. Proactive climate-
related disclosures and sustainability initiatives will further enhance Alvotech’s reputation and resilience in a
climate-conscious global market.
Strategy and business model resilience (ESRS 2 SBM-3)
Alvotech’s resilience analysis evaluates its ability to address identified climate-related risks, such as supply chain
disruptions, regulatory compliance, and market demands for sustainable practices. The scope includes direct
operations and key upstream and downstream value chain elements.
● Methodology and analysis. Alvotech is in the early stages of integrating climate scenario analysis into its
strategic planning. The Company recognizes the importance of this approach and is committed to
integrating scenario analysis into future strategic planning processes. Climate-related risks are assessed
qualitatively, ensuring alignment with the Company’s strategic priorities and operational capabilities.
● Preliminary results. Transition risks, particularly regulatory compliance and stakeholder expectations for
Scope 3 emissions management were identified as highly important and increasing in significance. Physical
risks, such as extreme weather events, were considered moderate but manageable. This assessment
considers Alvotech’s reliance on Iceland’s renewable energy infrastructure, which is highly stable and less
vulnerable to weather-related disruptions than conventional energy sources. Alvotech has also implemented
robust operational planning measures, including contingency strategies for supply chain resilience, to
mitigate the potential impacts of such events on its operations.
● Strategic adjustments. Alvotech prioritizes enhanced engagement with suppliers and stakeholders to
manage Scope 3 emissions better. The company is committed to improving its climate risk resilience by
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investing in long-term sustainability initiatives and exploring the integration of formal climate scenario
analysis in the near future.
2.1.2. Climate Mitigation (ESRS 2 IRO, E1-1, E1-3, E1-4, E1-6)
2.1.2.1. Management approach (ESRS 2 MDR-P, E1-2)
Alvotech acknowledges the importance of addressing climate change mitigation as part of its commitment to
sustainability. Alvotech remains committed to aligning its future climate-related initiatives with international
standards and best practices. The Company will continue to leverage Iceland’s renewable energy infrastructure to
minimize its direct climate impacts and engage suppliers and partners to minimize its indirect climate impacts.
Alvotech recognizes climate change as a critical global challenge requiring immediate and collective action. Guided
by the principles of the Paris Agreement, Alvotech envisions a low-carbon future and is committed to minimizing
the environmental impact of the operations while advancing sustainable healthcare solutions, considering the growth
trajectory. Alvotech commitments:
● Continuous monitoring and improvement: The aim is to reduce emissions intensity per production unit
while supporting the growth trajectory. This will be achieved through baseline assessments, enhanced
models, and integrating best practices into the operations.
● Reducing greenhouse gas emissions: Baseline assessment is underway but key actions include engaging
suppliers, optimizing transportation, and adopting renewable energy solutions.
● Science-based targets: The aim is to establish credible and impactful reduction targets supported by
validated frameworks and robust data.
● Collaboration and innovation: The Company will work with suppliers and partners to integrate
sustainability into procurement practices and adopt low-carbon solutions.
● Governance and transparency: These principles are central to Alvotech’s sustainability commitments.
The Board of Directors oversees the climate change policy, supported by the Corporate Sustainability
Committee.
2.1.2.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, E1-3, E1-5)
Alvotech does not operate in, nor is it associated with, activities or sectors identified as having a high climate
impact. As a pharmaceutical company, Alvotech’s operations primarily involve research, development, and
production activities with a relatively low direct environmental footprint.
GHG emission 2024 (tCO2e)
Scope 1 emission
39.8
Scope 1 emissions from fuel use
14.3
Scope 1 emissions from refrigerants
25.5
Scope 2 emissions
231
Scope 2 emissions from electricity use
205
Scope 2 emissions from thermal energy use
26
Scope 3 emissions
574
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Scope 3 emissions from business travel
386
Scope 3 emissions from waste
170
Scope 3 emissions from fuel and energy use
4
Future plans and targets (ESRS 2 MDR-T, E1-1, E1-4)
Alvotech recognizes the critical importance of addressing climate change and is committed to advancing
sustainability by managing and reducing its climate impact. As part of the alignment with CSRD, the Company has
comprehensively assessed its greenhouse gas emissions profile and identified material sustainability topics through a
DMA. This foundational work has been instrumental in shaping the sustainability strategy and prioritizing areas for
action.
At this stage, Alvotech has opted not to commit to specific climate targets for the following reasons:
1. Operational context and scale-up phase. Alvotech is in a significant growth phase, marked by increased
manufacturing activities, product development, and global expansion. This context introduces complexities
and uncertainties that require careful consideration to ensure future commitments are aligned with
operational realities and support the Company’s long-term business goals.
2. Need for validation and credibility. Alvotech has completed foundational steps, including comprehensive
GHG emissions analysis and stakeholder engagement. The Company is now enhancing data quality and
planning third-party validation to align with internationally recognized frameworks. Prematurely
announcing targets without completing this process could undermine the robustness and credibility of
Alvotech's commitments.
3. Strategic flexibility. Alvotech prioritizes directional goals that provide strategic adaptability as it refines its
approach. This allows the Company to develop actionable, measurable and impactful commitments while
fostering innovation and operational resilience to support the evolving sustainability strategy.
While specific targets are not being disclosed now, Alvotech is taking deliberate steps to establish the necessary
foundations for setting meaningful and credible climate goals. These include:
● Developing a comprehensive emissions baseline. Alvotech has completed a comprehensive GHG
emissions baseline and is enhancing its understanding of emissions across the value chain. This involves
refining data accuracy, identifying key emission hotspots, and ensuring robust methodologies to support
meaningful reduction strategies.
● Evaluating decarbonization levers. Identifying actionable strategies, such as supplier engagement,
production insourcing, and transportation optimization, to reduce emissions per output unit.
● Strengthening governance and oversight. Sustainability is embedded within Alvotech’s governance
framework, led by the Corporate Sustainability Committee, which includes senior management and cross-
functional teams. The committee ensures alignment with regulatory requirements, tracks progress and
effectively supports decision-making processes to advance Alvotech’s goals.
Alvotech is committed to transparency and continuous improvement. The Company will update progress in future
reporting cycles, including developing specific emissions reduction targets. These targets will reflect the insights
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gained through ongoing work and align with Alvotech’s broader sustainability strategy and evolving CSRD
requirements.
This approach allows the Company to remain flexible and thoughtful in its sustainability journey, ensuring that the
commitments are credible and aligned with the dynamic nature of Alvotech's business and regulatory landscape.
2.1.3. Energy (ESRS 2 IRO, E1-5)
2.1.3.1. Management approach (ESRS 2 MDR-P)
Alvotech recognizes the importance of sustainable energy practices as part of its mission to deliver environmentally
responsible healthcare solutions. Leveraging Iceland’s 100% renewable energy infrastructure
1
alongside energy
sources in other regions, the Company aims to expand renewable energy adoption across all operations.
Alvotech commitments:
● Energy efficiency and innovation: The aim is to continue to optimize energy use and improve
performance across operations. This will be achieved by adopting advanced technologies, preventive
maintenance, upgrading systems, and incorporating innovative designs.
● Renewable energy adoption: The Company prioritizes using renewable energy, leveraging Iceland’s
infrastructure and exploring opportunities in its global value chain.
● Employee engagement: Alvotech will foster a culture of energy awareness by educating and empowering
employees to adopt energy-saving practices.
● Collaboration with partners: The Company will collaborate with suppliers and stakeholders to embed
energy-efficient practices across the value chain and drive sustainability initiatives.
● Governance and transparency: These principles are central to Alvotech’s sustainability commitments.
The Board of Directors oversees the Energy policy, supported by the Corporate Sustainability Committee.
2.1.3.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, E1-5)
Iceland's energy grid is primarily powered by geothermal and hydroelectric energy, allowing Alvotech to maintain a
minimal carbon footprint from its energy usage. The company leverages this renewable energy source to support its
manufacturing and operational activities, aligning with its broader sustainability strategy.
Energy consumption metrics 2024
Total energy usage (MWh) 17170
Total energy consumption from nuclear sources 0%
Total energy consumption from renewable sources, disaggregated by: 97%
Total energy consumption from fossil fuel sources
3%
Consumption of purchased electricity, heat, steam and cooling from
renewable sources
38%
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1
According to official data, the Icelandic energy grid is combined of energy that is 99.9% from renewable energy sources, as a tiny
amount of fossil fuel is used to run backup generation in remote areas.
Future plans and targets (ESRS 2 MDR-T)
As Alvotech continues its growth journey, energy efficiency and sustainable energy use remain key focus areas.
While specific energy-related targets are not yet established, the Company is actively working to optimize energy
consumption across its operations and explore opportunities to set measurable targets in the future.
Accounting policies—emissions
Alvotech follows the ESRS E1 and the GHG Protocol, ensuring compliance with the CSRD. Alcotech's accounting
policy statement outlines how emissions are measured, reported, and assured.
Scope 1 is reported. Emissions come from fuel combustion (cars) and fugitive refrigerants
Scope 2 emissions are reported using location- and market-based methods, incorporating national grid averages
(IEA, national authorities) and supplier-specific data where available. Residual mix factors are applied when
supplier-specific data is missing. Alvotech is exploring renewable energy procurement, with Icelandic grid mix
factors used as necessary.
Scope 3 emissions data documentation is being developed. For 2024, out of the nine categories applicable to
Alvotech, data is available for category 3, fuel and energy related activities. In 2024, a mapping effort was
conducted to estimate the largest Scope 3 categories for Alvotech, which are: purchased goods and services (81% of
total Scope 3 emissions), capital goods, transport (upstream and downstream), energy-related activities, waste,
business travel, employee commuting, and end-of-life product treatment.
Energy consumption is reported in megawatt-hours (MWh), distinguishing between fossil and renewable sources.
Alvotech is enhancing its reporting processes in preparation for third-party limited assurance by strengthening
methodologies, ensuring consistency, and benchmarking against external consultant reports, the International Energy
Agency (IEA), and EXIOBASE. The assurance process will focus on improving emission factors, refining
methodologies, and maintaining consistency across reporting periods.
E5 Resource Use and Circular Economy
2.2.1. Material impacts, risks and opportunities (ESRS 2 IRO-1)
Alvotech employs a preliminary approach to identifying and assessing material impacts, risks, and opportunities
related to resource use and circular economy. This process focuses on resource inflows, resource outflows, and
waste management within its operations and value chain.
Screening methodology: Alvotech has conducted an internal assessment to screen its operations and activities for
potential impacts, risks, and opportunities associated with resource use. Key aspects of the screening process
include:
● Focus on resource efficiency: Evaluating material inputs, particularly in manufacturing processes, to
identify areas for improved efficiency and reduced waste.
● Value chain assessment: Review upstream and downstream activities to pinpoint areas with significant
resource dependency or potential waste reduction opportunities.
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● Informal benchmarking: Leveraging available industry benchmarks and best practices to guide the
assessment while planning to formalize this process.
Engagement with affected communities: As part of its focus on resource use and circular economy, Alvotech has
not identified any affected communities within the scope of its activities. The Company remains open to expanding
its stakeholder engagement efforts as it develops resource-use strategies and policies.
As a result of this assessment, resource inflows were identified as the area with the most material impact for
Alvotech. This includes the sourcing and utilization of raw materials required to produce biosimilar pharmaceuticals.
Material impacts related to resource inflows and circular economy
Material topic IRO
Up
stream
Own
ops
Down
stream
Short
-term
Medium
-term
Long
-term
E5 - Resource use and circular economy
Resource inflows
Negative
impact No Yes No Yes Yes Yes
2.2.2. Resource inflow (ESRS 2 IRO, E5-1, E5-2, E5-3)
2.2.2.1. Management approach (ESRS 2 MDRP)
Alvotech recognizes the need to integrate circular economy principles and responsible resource management
throughout its operations and value chain. Alvotech strives to reduce material use, optimize resource efficiency, and
minimize waste generation while delivering high-quality healthcare solutions.
Alvotech commitments:
● Circular economy integration: The aim is to embed circular economy principles into the operations,
focusing on minimizing waste, maximizing material reuse, and regenerating natural systems.
● Resource optimization: The Company prioritizes renewable, recycled, and reused materials to reduce
reliance on non-renewable resources and enhance resource efficiency.
● Eco-design and innovation: Alvotech integrates sustainability into product and process design to improve
lifecycle performance and minimize environmental impacts.
● Collaboration and partnerships: Ongoing work with suppliers and stakeholders to drive innovation and
adopt sustainable resource management practices.
● Governance and transparency: These principles are central to Alvotech’s sustainability commitments.
The Board of Directors oversees the resource use and circular economy policy, which is supported by the
Corporate Sustainability Committee.
2.2.2.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T)
Resource inflows are a material topic for Alvotech, representing a critical operational dependency and an
opportunity for sustainability leadership. Alvotech aims to minimize its environmental footprint while maintaining
the high standards of quality required in biosimilar production.
Biosimilar production relies on biologic and non-biologic materials to ensure the final products' safety, efficacy, and
quality. These materials, from raw inputs to packaging components, play a pivotal role in manufacturing and
represent key areas for optimizing sustainability.
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1. Biologic materials: Alvotech uses advanced biotechnological processes involving host cells such as
Chinese Hamster Ovary (CHO) cells to produce biosimilar proteins. Further, nutrient-rich media support
the growth and productivity of these cells, requiring careful management to optimize yields.
2. Non-biologic materials: Stabilizers, surfactants, and buffering agents are integral to the formulation and
stability of biosimilars. In addition, packaging materials such as specialized glass vials, pre-filled syringes,
and medical-grade plastics ensure drug safety and delivery efficiency.
3. Purification materials: Chromatography resins and filters are critical for removing impurities during
manufacturing but are predominantly single-use and resource-intensive.
Addressing resource inflows presents Alvotech with challenges and opportunities to enhance its sustainability
performance. Alvotech aims to balance operational needs with environmental responsibility by focusing on resource
efficiency and sustainable sourcing, ensuring long-term resilience and reduced ecological impact.
1. Resource efficiency:
● Challenges: Biosimilar production's resource-intensive nature, particularly in upstream processes,
presents challenges for minimizing waste and optimizing input utilization.
● Opportunities: Alvotech is exploring strategies to enhance the efficiency of fermentation media
use and reduce reliance on single-use purification materials.
2. Sustainable sourcing:
● Raw materials: Partnering with suppliers that adhere to sustainable practices can reduce the
environmental footprint of inputs like excipients and packaging. Packaging: Investigating
alternatives such as lightweight materials, biodegradable plastics, and modular designs can lower
the impact of secondary and tertiary packaging.
3. Energy and water:
● Leveraging Iceland’s renewable energy resources already minimizes production's energy impact.
However, further water recycling and energy efficiency innovations can strengthen Alvotech’s
environmental performance.
Future plans and targets (ESRS 2 MDR-T)
As Alvotech continues to expand and strengthen operations during its active growth phase, it focuses on optimizing
resource inflows to align with its sustainability objectives. The Company is committed to continuous improvement
in resource management practices. Establishing specific targets will be further evaluated to enhance transparency
and performance, with more details provided in future reporting cycles.
2.2.3. Waste management (ESRS 2 IRO-1)
2.2.3.1. Management approach (ESRS 2 MDR-P)
Alvotech recognizes the importance of reducing its environmental footprint through sustainable waste management
practices. Possible performance opportunities are in waste generation and recycling optimization, especially to
ensure the responsible disposal of all waste. Embedding sustainable waste practices into its operations is a step to
contribute to a circular economy and advance its mission of delivering high-quality healthcare solutions.
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While many components of Alvotech devices can be recycled individually, there is no established recycling
infrastructure for pharmaceutical waste in many of their markets. Hence, the Company conservatively assumes zero
recyclable content in many products.
Alvotech commitments:
● Waste minimization and prevention: The aim is to reduce waste at its source by optimizing processes and
adopting eco-efficient designs.
● Reuse and recycling: To priorities the reuse of materials and maximize recycling efforts to reduce reliance
on non-renewable resources.
● Sustainable disposal: The Company shall ensure responsible waste management and safely handle
hazardous materials while limiting landfill use to non-recyclable, inert materials.
● Circular economy principles: Integrating circular economy strategies into waste management practices
and supporting sustainable solutions.
● Governance and transparency: These principles are central to Alvotech’s sustainability commitments.
The Board of Directors oversees the waste management policy, supported by the Corporate Sustainability
Committee.
2.2.3.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T)
Alvotech takes a proactive approach to waste management by categorizing, monitoring, and managing all waste
generated from its operations in compliance with applicable laws and regulations. The Company has identified 17
categories of hazardous, general, and plastic waste as the largest contributors. Hazardous waste is collected and
safely disposed of by a certified third-party provider.
To ensure the proper handling and disposal of all waste, Alvotech has implemented several targeted initiatives
across its operations. Additionally, employees receive comprehensive training upon onboarding to promote
consistent and correct waste management practices throughout the facilities.
Waste metrics (tonnes) 2024
Total amount of non-hazardous waste, 330.2
Total amount of hazardous waste, 111.2
Waste to landfill
6
Recycled waste
131364
Composted waste
22377
Waste to Incineration
259222
Future plans and targets (ESRS 2 MDR-T)
Targets are in place to minimize waste and ensure that wastewater complies with regulatory limits of biomass
residue. Recently, Alvotech re-evaluated its definition of “hazardous waste” and analyzed its production flow to
identify opportunities to recycle more single-use plastic that had not been contaminated. This resulted in a
considerable amount of single-use plastic being recycled instead of incinerated.
Accounting policies—waste management and circular economy
Alvotech follows ESRS E5 (Resource Use and Circular Economy) under the CSRD to ensure responsible waste
management, resource efficiency, and circular economy principles.
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Total waste generated is measured based on weight receipts from certified waste management providers. Under the
EU Waste Framework Directive, it includes both hazardous and non-hazardous waste. Waste from non-Icelandic
sites is estimated using operational data and waste intensity benchmarks.
Waste treatment and diversion methods include recycling, reuse, and energy recovery, with incineration used for
materials that cannot be repurposed. Non-hazardous waste is processed locally, though some materials are exported
for disposal due to regulatory constraints.
The percentage of non-recycled waste represents the proportion of total waste directed to landfills or incineration
with energy recovery. Alvotech seeks to reduce landfill dependency through enhanced waste segregation, material
redesign, and supplier engagement.
Recyclable content in products and packaging is assessed using life cycle analysis (LCA) tools, ensuring compliance
with circular economy guidelines. Packaging material recyclability is evaluated against industry benchmarks and EU
packaging regulations.
Resource efficiency initiatives focus on minimizing single-use plastics, increasing secondary material use, and
exploring material innovation to improve circularity. Due to regulatory constraints in pharmaceuticals, reducing
virgin plastic use in production remains challenging, though efforts are ongoing to optimize material efficiency.
Radioactive waste is safely handled, stored, and transferred to licensed waste management facilities in compliance
with regulatory requirements.
Alvotech's waste reduction strategy to enhance circular economy performance includes increased recycling capacity,
improved supplier collaboration, and sustainable product design. It actively integrates waste minimization principles
into procurement and manufacturing operations.
Compliance and assurance processes ensure accurate waste tracking, external verification, and regulatory alignment.
Waste accounting methodologies follow third-party standards and are benchmarked against industry best practices.
EU Taxonomy
The EU Taxonomy Regulation (2020/852/EU) entered into force at the EU level on July 12, 2020, and applies to
Alvotech starting with the fiscal year 2023. The regulation establishes an EU framework for classifying
environmentally sustainable economic activities, requiring firms to disclose information on how and to what extent
their business is associated with these activities. Based on that framework, companies can assess and communicate
whether their activities have the potential to be considered sustainable (taxonomy eligible) and which of these
activities can be classified as sustainable (taxonomy eligible & aligned). Companies must disclose the percentage of
economic activity that can be considered eligible and aligned regarding the share of turnover, capital expenditures
(CapEx) and operating expenses (OpEx).
Alvotech has identified economic activities which may be considered under the framework based on the six official
environmental objectives, which are climate change mitigation, climate change adaptation, sustainable use and
protection of water and marine resources, transition to a circular economy, pollution prevention and control and
protection and restoration of biodiversity and ecosystems. To be classified as sustainable, an activity must contribute
to at least one of these objectives and not cause significant harm to any other five. Furthermore, the activity must
meet minimum human rights safeguards and have no negative social impact. Additionally, the EU has instituted
specific technical screening criteria for each of the six environmental objectives.
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For 2024, Alvotech assessed which economic activities were eligible and aligned. The assessment results showed
that one economic activity was eligible to report for the fiscal year 2024: ‘1.2 manufacture of medicinal products’ by
contribution to the environmental objective of ‘pollution prevention and control’. Furthermore, the Company
evaluated whether they could classify turnover, CapEx and OpEx for this economic activity as ‘taxonomy aligned’.
The Company has not made sufficient progress in assessing alignment with the technical screening criteria and,
therefore, does not report these activities as eligible or aligned. Still, Alvotech aspires to report at least some of these
activities aligned for fiscal year 2025.
Accounting policies for this disclosure
Turnover consists of total revenues from product sales and milestone payments from long-term out-license
commercial contracts under IFRS 15. The turnover KPI is calculated as the share of taxonomy-eligible turnover
divided by total turnover.
Total CapEx includes additions to fixed and intangible assets, excluding goodwill, finance leases, and business
combination-related expenditures, under IAS 38 and the EU Taxonomy Delegated Regulation 2023/2486/EU. The
CapEx KPI is calculated as taxonomy-eligible CapEx divided by total CapEx.
Total OpEx consists of direct R&D costs related to process improvements and manufacturing innovation, following
the EU Taxonomy’s narrower OpEx definition, which excludes general administrative expenses, amortisation, and
impairments. The OpEx KPI is calculated as Taxonomy-eligible OpEx divided by total OpEx.
About the KPIs
All turnover is considered part of ‘1.2 manufacture of medicinal products’ under the pollution prevention and
control environmental objective. However, only certain CapEx activities qualify, primarily expenditures related to
expanding production capacity (e.g., facility equipment and cleanroom infrastructure). CapEx for furniture, fixtures,
leasehold improvements, and IT infrastructure is excluded, as they do not contribute to sustainability objectives
under the EU Taxonomy.
For OpEx, the EU Taxonomy defines eligibility more narrowly than standard financial reporting, requiring direct
links to manufacturing processes. Due to this restriction, no OpEx is considered eligible or aligned in 2024.
Alvotech follows the Taxonomy KPI calculation guidelines outlined in Annex V to the Commission Delegated
Regulation 2023/2486/EU to ensure accuracy and regulatory alignment. No double counting occurs, and no further
disaggregation is required.
Alignment with EU Technical Screening Criteria
For the year 2024, Alvotech assessed eligibility but did not fully align with the technical screening criteria. While
one eligible activity was identified, further evaluation is required to confirm alignment with specific performance
thresholds, Do No Significant Harm (DNSH) requirements, and minimum social safeguards.
The economic activity was eligible to report on for the fiscal year 2024: ‘1.2 Manufacture of Medicinal Products’ by
contribution to the environmental objective of ‘Pollution prevention and control’.
Alvotech does not classify any activities as enabling or transitional under the EU Taxonomy framework. However,
alignment assessments will continue in 2025 to report aligned activities that meet technical criteria. None of the
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activities disclosed here is classified as enabling or transitional, as the economic activities do not substantially
contribute to ‘Climate Change Adaptation’, ‘Water’, ‘Circular Economy’, or ‘Biodiversity’.
2023
For detailed EU Taxonomy disclosure, please see Appendix.
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3. Social
S1 Own Workforce
3.1.1. Material impacts, risks, and opportunities (ESRS 2 IRO-1, IRO-2, SBM-2)
Alvotech recognizes its workforce as a key group of affected stakeholders and strongly emphasizes respecting their
interests, views, and rights. While the Company’s operations primarily focus on developing and manufacturing
biosimilars, its business strategy is directly informed by workforce considerations to foster a safe, equitable, and
supportive working environment.
Alvotech is committed to managing its workforce's material impacts, risks, and opportunities by implementing
targeted action plans, allocating appropriate resources, and continuously improving its practices to foster a safe,
inclusive, and supportive workplace. Alvotech dedicates significant resources to manage workforce-related material
impacts, risks, and opportunities:
● Human resources function: Led by the Vice president (VP) of People and Culture, the HR team oversees
policy implementation, engagement processes, and monitoring of workforce-related risks and opportunities.
● Training and development: To enhance workforce resilience and satisfaction, investments in professional
development, safety training, and well-being programs are prioritized.
● Monitoring and reporting systems: Resources are allocated to grievance handling, tracking workforce
metrics (e.g. turnover rates, safety incident reports), and reporting progress to senior leadership for
continuous improvement.
Connection between workplace impacts and Alvotech’s strategy and business model (ESRS 2 SBM-3)
The material impacts, risks, and opportunities identified with Alvotech’s workforce are closely connected to its
strategy and business model. Alvotech employs a highly skilled research, manufacturing, and corporate operations
workforce. The Company’s operational standards, which emphasize health and safety, professional development,
and fair working conditions, impact employees and non-employees. Employees are individuals who either have
permanent or temporary employment agreements with Alvotech. In contrast, non-employees are individuals hired to
perform certain work within a predefined timeframe. They are not considered to have a form of employment with
Alvotech, e.g. consultants and third-party contractors.
1. Positive impacts:
● Reskilling and upskilling: The Company invests in professional training programs, equipping
employees with skills to adapt to evolving industry demands.
● Wellbeing programs: Wellbeing initiatives promote a supportive work environment, improving
job satisfaction and productivity.
● Positive regional impact: Alvotech’s operations create opportunities for skilled employment in its
locations.
2. Risks and opportunities:
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● Workforce restructuring: While no significant restructuring has occurred, Alvotech is
committed to minimizing disruption through proactive workforce planning, reskilling, and
upskilling programs.
● Retention of skilled talent: The Company’s reliance on specialized workforce skills presents a
risk in competitive labor markets. To mitigate this, Alvotech prioritizes career development
opportunities and competitive compensation packages.
Alvotech recognizes that certain groups within its workforce, such as third-party contractors or temporary workers,
may face greater risks of harm due to less direct oversight from Alvotech. In such cases, Alvotech relies on the
employers of these contractors to uphold appropriate standards of care, compliance, and workplace safety.
Engagement with own workforce (ESRS S1-2)
Alvotech values workforce engagement as a key factor in decision-making and impact management. By actively
involving employees, the Company ensures that their perspectives, concerns, and expectations are integrated into its
policies and practices.
1. Alvotech engages directly with its workforce through multiple channels, including:
● Employee surveys: Conducted twice a year to gather feedback on workplace satisfaction, well-
being, and professional growth opportunities.
● Open forum meetings: Participants can directly ask leadership questions about the discussion
topic.
● Performance and development discussions: One-on-one dialogues between employees and their
managers ensure continuous communication regarding individual goals, development needs, and
challenges.
Alvotech actively engages with the Labour Unions in Iceland, representing most of its workforce, to negotiate wages
and other employment terms in collective wage agreements, ensuring alignment on key workplace matters. This
interaction reflects Alvotech’s commitment to fostering open communication and collaboration with workers’
representatives as part of its broader focus on employee well-being and inclusion. Alvotech respects its employees’
right to associate freely and to join or refrain from joining labor unions and workers’ councils without fear of
discrimination or retaliation.
2. Engagement occurs across key stages of workforce management and decision-making, including:
● Policy development and updates: Employee feedback gathered through surveys informs updates
to workforce-related policies, such as equality, compensation, and professional development.
● Annual performance reviews: Structured, recurring conversations ensure continuous two-way
dialogue on workforce needs and growth opportunities.
● Workplace initiatives: Engagement occurs while implementing well-being, safety, and diversity
initiatives to address employee needs effectively.
The type and frequency of engagement include structured annual processes (e.g., surveys, performance reviews),
open forum discussions, and ongoing feedback mechanisms.
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3. The human resource's function, led by the VP of People and Culture, ensures effective workforce
engagement. The VP oversees workforce feedback collection, analysis, and integration into decision-
making processes to enhance policies, workplace initiatives, and organizational strategy.
4. Alvotech assesses the effectiveness of workforce engagement through the following mechanisms:
● Engagement survey results: Survey data is analyzed to identify trends, gaps, and areas for
improvement. Follow-up actions are implemented to address concerns raised by employees.
● Participation and feedback metrics: Employee participation rates in surveys and open forum
discussions are monitored as indicators of engagement levels.
● Outcome monitoring: Alvotech evaluates the outcomes of its workforce initiatives, such as
improved satisfaction scores, reductions in turnover rates, and enhanced employee well-being, to
ensure engagement feedback translates into tangible results.
In 2024, Alvotech's engagement score from the employee survey was 3.87 on a scale of 1-5, and the participation
rate was 86%.
3.1.2. Working conditions (ESRS 2 IRO-2, S1-1, S1-2, S1-3, S1-4, S1-6, S1-7, S1-8)
3.1.2.1. Management approach (ESRS 2 MDR-P)
Alvotech is committed to maintaining a supportive and transparent work environment where all employees feel
empowered to raise concerns and have them addressed effectively. The Company has established processes and
channels to ensure that material negative impacts on its workforce are identified, remedied, and monitored to foster
trust and accountability.
1. Alvotech has a structured approach to remedy situations where it has caused or contributed to material
negative impacts on its workforce. The Company’s processes ensure:
● Prompt investigation and resolution: All reported concerns are investigated independently and
promptly to determine the root cause and identify appropriate corrective measures.
● Effectiveness of remedies: The effectiveness of remedies is assessed through follow-up with
affected individuals to ensure their concerns have been resolved. Outcomes are also reviewed to
prevent the recurrence of similar issues.
2. Alvotech provides multiple channels through which employees can raise their concerns, ensuring
accessibility, confidentiality, and trust:
● Direct communication: Employees are encouraged to speak up and raise concerns through their
direct supervisors, union representatives or the HR team.
● Anonymous hotline: Alvotech has implemented a dedicated anonymous hotline, enabling
employees to report concerns confidentially. To ensure objectivity, this hotline is available 24/7
and managed by SpeakUp®, a reporting tool provided by an external service provider on
Alvotech's behalf.
● Reporting portal for harassment and bullying: Alvotech has set up a reporting portal for
harassment and bullying complaints via a platform managed confidentially by the HR team. While
employees are encouraged to report under their name, anonymous reports are also possible.
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● Grievance and complaints mechanism: A formal grievance-handling process is in place to
address workforce-related concerns promptly and fairly. Employees can submit complaints
directly to the HR team through the anonymous hotline or other established reporting mechanisms.
3. To ensure employees are aware of and can utilize these channels effectively:
● Workplace communication: Employees are regularly informed about reporting channels through
onboarding programs, periodic communications, and dedicated training sessions.
● Leadership advocacy: Supervisors and managers are trained to encourage open communication
and support employees using the appropriate channels without fear of retaliation.
4. Alvotech tracks and monitors workforce concerns to ensure issues are addressed effectively, and processes
remain trusted:
● Issue tracking and resolution: The HR team or relevant compliance personnel log, track, and
monitor all reported concerns. They also review each case's status to ensure timely resolution.
● Assessing trust and awareness: Regular feedback is gathered through employee surveys and
engagement initiatives to assess awareness of the reporting channels and levels of trust in their
effectiveness. Participation rates and employee sentiment serve as indicators of trust and
reliability.
● Retaliation prevention: Alvotech has clear policies to protect individuals, employees, and
workers’ representatives who raise concerns. The Bullying & Harassment Policy, Whistleblowing
Policy, and Code of Conduct explicitly prohibit retaliation, ensuring employees can use these
mechanisms without fear of adverse consequences.
3.1.2.2. Performance and targets (ESRS 2 MDRA, MDRM, MDRT, S1-5)
Alvotech reports its workforce data under the ESRS S1-6 disclosure requirements, providing insights into employee
composition and turnover. Unless otherwise noted, the data is compiled based on headcount at the end of the
reporting period. Full-time equivalent (FTE) is defined as the equivalent of one full-time employee working a
standard workweek, adjusted for part-time schedules where applicable.
Workforce composition for 2024
2
Category Total Male Female Other
Total headcount 1068 51% 49% 0
Permanent employees 969 515 496 0
Temporary employees 39 18 21 0
Working Students 18 11 7 0
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2
FTEs of permanent, temporary and working students as of 31 December 2024.
Turnover metrics for 2024
Employees who left during the reporting period 126 employees resigned
Employee turnover rate (%) during the reporting period 12.40%
Alvotech engaged 35 non-employees as part of its workforce during the reporting period. Most non-employees are
contractors with specialized expertise.
Learning and development (ESRS S1-13)
Alvotech provides employees with access to training and career development opportunities to enhance their skills,
align with industry demands, and support personal and professional advancement.
During the reporting period, 79% of Alvotech employees participated in regular performance and career
development reviews.
Employee participation in performance and career development reviews in 2024
Gender Percentage
Male 74%
Female 83%
Other NA
During the reporting period, employees received an average of 3 hours of training. A breakdown by gender was not
available at the time of reporting. However, when on-the-job training is included, which covers job-specific skills,
regulations, and standards, the average training hours per employee increase to 67 hours. This figure does not
account for additional training to enhance broader competencies, such as leadership skills.
Work-life balance (ESRS S1-15)
Alvotech supports work-life balance by ensuring equitable access to family-related leave for all employees. Through
national social policies or collective bargaining agreements, 100% of Alvotech’s employees are entitled to family-
related leave. Alvotech promotes gender equity in family-related leave by fostering a culture where all employees
feel supported in balancing family and work responsibilities.
During the reporting period, 100% of employees entitled to family-related leave used it, and this is further broken
down by gender.
Utilization of family-related leave by gender for 2024
Gender Percentage
Female 81.9%
Male 18.1%
Other NA
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Plans and targets (ESRS 2 MDR-T, S1-5)
Alvotech aims to continue strengthening its commitment to the Alvotech ‘Five Rules of Engagement’, which
embodies the Company’s core principles while fostering and building upon our one-team culture. A key focus will
be on implementing actionable steps informed by insights from employee engagement surveys, ensuring initiatives
align with workforce needs and expectations.
3.1.3. Equal treatment and opportunities for all (ESRS 2 IRO-2, S1-1, S1-9, S1-10, S1-12, S1-13)
3.1.3.1. Management approach (ESRS 2 MDR-P)
Alvotech actively promotes equality, diversity, and inclusion through several key policies:
● Equality policy & Equal pay policy: These policies ensure equal opportunities for all employees,
regardless of gender, race, age, or other characteristics. Alvotech prohibits any form of discrimination in
recruitment, compensation, career progression, and professional development.
● Bullying & harassment policy and response procedure: This policy provides a framework for
preventing, mitigating, and addressing incidents of harassment or discrimination in the workplace. It
includes procedures for reporting, investigating, and remediating concerns to ensure swift action and
accountability.
While Alvotech has not identified specific groups within its workforce at particular risk of vulnerability, the
Company remains committed to fostering an inclusive work environment where all individuals are treated with
respect and provided equal opportunities.
3.1.3.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, S1-5)
Diversity (ESRS S1-9)
Alvotech values diversity and inclusion as fundamental principles guiding its workforce management. The Company
is committed to fostering an equitable workplace where individuals from diverse backgrounds can thrive.
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Gender distribution at top management for 2024
Gender Number Percentage
Male 8 33%
Female 4 67%
Other NA NA
Age distribution of employees for 2024
Age group Percentage
Under 30 years old 18%
30-50 years old 72%
Over 50 years old 10%
Alvotech aims to foster an inclusive workplace where individuals of all abilities can thrive. The Company actively
supports the inclusion of people with disabilities across its workforce. As of the reporting period, 0% of Alvotech’s
employees identified as people with disabilities. This percentage is disclosed in compliance with applicable legal
requirements and respects privacy and data protection standards.
Adequate wages (ESRS S1-10)
Alvotech is committed to providing fair and equitable compensation to all employees. The ompany strives to align
wages with applicable benchmarks in each country of operation, supporting the financial well-being of its
workforce.
Remuneration and pay gap (ESRS S1-16)
Alvotech actively monitors and reports on its gender pay gap and remuneration ratios to ensure alignment with its
Equality and Equal Pay policies and promote equitable treatment of all employees.
● Gender pay gap:
3
During the reporting period, the average pay levels of female and male employees
resulted in a gender pay gap of 0.6% (audited externally), calculated as the difference between the average
pay of female employees and the average pay of male employees, expressed as a percentage of the average
pay of male employees.
● Annual total remuneration ratio:
4
The total remuneration ratio of the highest-paid individual to the
median annual total remuneration for all employees (excluding the highest-paid individual) was 20.4. This
ratio reflects Alvotech’s efforts to balance executive remuneration with fair compensation for the wider
workforce.
Future plans and targets (ESRS 2 MDRT, S1-5)
Alvotech is committed to fostering an inclusive and equitable workplace where equal treatment and opportunities
are prioritized. The Company focuses on continuous improvement through regular assessment and enhancement of
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3
The gender pay gap is calculated using gross annual pay, excluding bonuses and other non-salary benefits, to provide a
consistent comparison.
4
The remuneration ratio is based on total annual remuneration, including salary, bonuses, and other financial benefits.
policies, processes, and practices to promote diversity, equity, and inclusion. Alvotech remains dedicated to creating
an environment where all individuals feel valued, respected, and supported in achieving their full potential.
3.1.4. Health and safety (ESRS 2 IRO, S1-1, S1-9, S1-10, S1-12, S1-13)
3.1.4.1. Management approach (ESRS 2 MDR-P)
Alvotech is committed to ensuring a safe work environment for its employees. It has a comprehensive
environmental, health and safety (EHS) policy and management system in place that safeguards its employees’
health and well-being:
● Environmental health and safety policy promotes safety, well-being and sustainability across Alvotech’s
operations. It ensures compliance with applicable laws, aims for zero harm, manages risks, reduces
environmental impact, and fosters a culture of accountability. The policy emphasizes continuous
performance monitoring to protect people and the environment through leadership-driven improvements.
3.1.4.2. Performance and targets (ESRS 2 MDRA, MDRM, MDRT, S1-5)
Alvotech has several key initiatives and training to ensure the health and safety of its employees:
● Safety training programs are mandatory for all employees at the start of employment and are monitored
by a supervisory body. The training programs vary according to each employee’s role within the
organization. Additional training material developed independently and in cooperation with an external
occupational health service on specific topics is available and accessible to employees via Alvotech’s
intranet. A designated safety week is held once a year where working conditions are re-assessed, awareness
is enhanced, open lectures are provided, and refresher training programs on, e.g. fire safety and first
response, are conducted.
● An incident reporting system: A system is in place for incident reporting, and an EHS portal is available
and accessible to employees. The portal is widely available and advertised via QR codes throughout
Alvotech’s facilities. Employees can use the portal to report accidents and near misses, submit ideas, and
raise related topics. The reports are overseen by the EHS manager, who ensures that all matters are
investigated and addressed appropriately.
● A safety committee. A special committee is in place, with representatives across the organization meeting
regularly to discuss EHS matters and ensure continuous improvement.
Further, managers regularly inspect all organizational areas, departments, and facilities. A supervisory body ensures
that these inspections are conducted monthly.
Health and safety metrics for 2024
Metric 2024
Percentage of employees covered by Alvotech’s health and safety management
system
100%
Number of fatalities as a result of work-related injuries or work-related ill health 0
Number of recordable work-related accidents 5
Total rate of recordable work-related accidents (%) 6.8
Number of cases of recordable work-related ill health 0 (From EHS perspective)
Number of days lost to work-related injuries and fatalities from work-related
accidents, work-related ill health and fatalities from ill health
6 days
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Risk assessments are conducted for all job roles within the Company, assessing potential risks of sound, manual
handling of heavy loads, and chemical use. A risk assessment is carried out for all pregnant employees, and roles are
adjusted to mitigate potential risks.
Future plans and targets (ESRS 2 MDRT, S1-5)
Alvotech is in the early stages of its sustainability journey and is actively developing measurable targets across
material topics. The Company aims to finalize key targets in the next reporting cycle and will provide updates in
future CSRD reports to ensure transparency and accountability.
3.1.5. Work-related rights (ESRS 2 IRO-2, S1-1, S1-11)
3.1.5.1. Management approach (ESRS 2 MDR-P)
Alvotech has implemented policies and procedures to protect the human rights and labor rights of its workforce,
including explicit measures to prevent forced labor, compulsory labor, and child labor:
1. Human Rights Policy: Alvotech has established a human rights policy that reflects its commitment to
upholding the rights of its workforce through principles of non-discrimination, fair treatment, and equal
opportunities. While the Company’s policy incorporates key elements aligned with internationally
recognized human rights frameworks, such as the UN Guiding Principles on Business and Human Rights,
Alvotech is currently evaluating the extent of this alignment to identify areas for enhancement.
2. Child and Forced Labor Policy: Alvotech maintains a dedicated policy prohibiting all forced,
compulsory, and child labor across its operations and value chain. Regular internal reviews and supply
chain due diligence ensure adherence to this policy.
3. Code of Conduct: The code of conduct outlines expectations for ethical conduct, including respect for
human rights, fair treatment, and non-discrimination. Compliance with the code of conduct is monitored
through audits and reporting mechanisms.
3.1.5.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, S1-5)
Policy implementation and risk management (ESRS 2 SBM-3)
Alvotech has identified no operations at significant risk of incidents of forced labor or child labor across its facilities
or geographic areas of operation.
● Forced Labor Risk Assessment: Internal reviews and supply chain due diligence confirm that Alvotech’s
manufacturing operations do not present forced or compulsory labor risks.
● Child Labor Risk Assessment: Alvotech’s policies prohibit child labor across its operations and value
chain, and no such risks have been identified.
Alvotech has established mechanisms to promptly and effectively address human rights impacts. Employees can
report concerns related to human rights, labor rights, and discrimination through confidential reporting channels,
ensuring independent investigations and the implementation of corrective actions. Additionally, the annual employee
survey serves as a valuable tool for identifying instances of harassment, discrimination, and human rights issues.
A key finding from the 2024 employee satisfaction survey led to efforts to update the Company's bullying,
harassment, and violence policy, as well as its response procedures. Furthermore, Alvotech’s policies explicitly
prohibit retaliation against individuals who raise concerns, fostering a culture of trust and transparency within the
workforce.
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Collective bargaining agreements and social dialogue (ESRS S1-8)
Most of Alvotech’s employees are based in Iceland and are covered by a collective bargaining agreement through
membership with their respective Labor Unions. This represents approximately 79% of the ompany’s total
workforce. The unions negotiate collective agreements for their members, which apply to employees in specific
sectors or professions.
In the EEA, Alvotech has collective bargaining agreements in Iceland. As Iceland represents a significant portion of
Alvotech’s workforce, these agreements play a key role in defining working conditions and terms of employment.
Alvotech does not have operations outside the EEA that include collective bargaining agreements. Alvotech
determines their working conditions and terms of employment in alignment with the Company’s Equality Policy for
employees not covered by collective bargaining agreements, Compensation Policy, and other labor-related policies.
These employees benefit indirectly from the standards and principles established by collective agreements applicable
to their counterparts in Iceland, ensuring consistency and fairness across the workforce.
Collective bargaining agreements do not influence the working conditions and terms of employment for non-
employees, such as contractors. These are determined through individual contracts that comply with Alvotech’s
ethical and labor standards.
Alvotech does not currently have an agreement with its employees for representation by a European Works Council
(EWC), a Societas Europaea (SE) Works Council, or a Societas Cooperativa Europaea (SCE) Works Council.
Social protection (ESRS S1-11)
Alvotech is committed to ensuring that social protection programs adequately cover all employees. The Company
provides benefits through public programs and employer-sponsored initiatives to protect employees against income
loss during major life events, including sickness, unemployment, employment injury, acquired disability, parental
leave, and retirement.
Future plans and targets (ESRS 2 MDR-T, S1-5)
Alvotech remains committed to upholding worker-related rights, including preventing child labor, forced labor, and
other unethical practices. Alvotech will maintain and enforce its existing policies and practices to ensure compliance
with these standards.
Accounting policies—own workforce
Alvotech follows ESRS S1 (Own Workforce) under the CSRD to ensure transparent reporting on workforce
composition, turnover, diversity, health and safety, and employee well-being.
The workforce composition is based on headcount at the end of the reporting period, segmented by employment type
(permanent, temporary, non-guaranteed hours) and gender. FFTE is calculated based on contracted work hours and
adjusted for part-time schedules.
Turnover is reported as the number of employees who left during the period, with the turnover rate calculated as
leavers divided by the average headcount. Only voluntary resignations are counted in employee-initiated turnover.
Performance reviews track the percentage of employees receiving structured performance evaluations, disaggregated
by gender.
Family-related leave is the percentage of eligible employees who accessed leave benefits, categorized by gender.
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Diversity metrics include gender representation across leadership levels and age distribution across workforce
categories.
Health and safety reporting covers employees under Alvotech’s health and safety system, work-related injuries, lost
workdays, and total incident rates. Data is based on workplace incident records, ensuring compliance with EU
Occupational Health and Safety (OHS) standards.
Discrimination, harassment, and human rights incidents are tracked by total reported cases, with separate data for
grievances and penalties where applicable.
Remuneration metrics include the gender pay gap, calculated as the percentage difference between male and female
average salaries, and the total remuneration ratio, comparing the highest-paid salary to the median employee salary.
󰳴
S4 Consumers and end-users
3.2.1. Material impacts, risks and opportunities (ESRS 2 IRO-1, S4-4)
Alvotech’s business model as a developer and manufacturer of biosimilar drugs inherently positions it to generate
positive impacts for end-users while addressing key risks. These impacts, risks, and opportunities are shaped by
biosimilars' critical role in increasing accessibility to affordable healthcare solutions globally.
Alvotech’s contribution to healthcare is primarily through its development of biosimilars, which by definition create
competition in markets previously dominated by one supplier, and thus greatly increase the availability of
affordable, high-quality alternatives to originator biologics. This supports greater healthcare access for patients and
caretakers globally. Biosimilars also reduce financial burdens on healthcare systems and payers, fostering equity in
healthcare delivery.
However, risks such as non-compliance with regulatory standards or quality assurance failures could potentially
negatively impact end-users. Alvotech mitigates these risks through extremely stringent internal quality controls and
strong external regulatory oversight.
Opportunities for Alvotech lie in continuously building upon the existing trust and stellar reputation it already has
with healthcare providers, regulators, and end-users by consistently delivering high-quality, competitively priced
products. Alvotech also aims to address the needs of underserved populations. For example, the upcoming launch of
a biosimilar for women with osteoporosis, a historically underserved demographic, reflects Alvotech’s commitment
to fostering inclusivity and broadening access.
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Alvotech has identified two material topics for consumers and end-users, outlined below.
Material topic IRO
Up
stream
Own
ops
Down
stream
Short
-term
Medium
-term
Long
-term
S4 - Consumers and end-users
Personal safety Opportunity No Yes Yes Yes Yes Yes
Social inclusion Opportunity No No Yes Yes Yes Yes
Interaction of material topics with strategy and business model (ESRS 2 SBM-2, SBM-3)
Consumers and end-users are central to Alvotech’s mission of improving global healthcare accessibility through
biosimilars. Alvotech integrates the interests, views, and rights of these key stakeholders into its strategy and
business model in the following ways:
● Alvotech is committed to respecting the rights of its consumers and end-users, as outlined in internationally
recognized frameworks such as the UN Guiding Principles on Business and Human Rights. This
commitment underpins Alvotech’s policies, operations, and product development strategies, ensuring that
the safety, well-being, and privacy of end-users are protected at all stages of the product lifecycle.
● Alvotech actively seeks input from regulators, commercial partners and healthcare providers to inform its
product design, quality standards, and post-market monitoring practices. This engagement ensures that
Alvotech addresses its end-users’ needs and concerns, including access to affordable medications and
safety expectations.
● Alvotech’s business model is designed to address the growing demand for affordable biologic treatments.
By focusing on developing biosimilars, Alvotech aligns its operations with the interests of end-users who
require cost-effective, high-quality alternatives to expensive conventional drugs.
Alvotech's operations and value chain impact diverse groups of consumers and end-users, including those with
specific vulnerabilities and dependencies. These impacts are assessed through a materiality process to ensure
Alvotech’s strategy and business practices align with stakeholder needs and minimize risks.
Alvotech’s biosimilars are developed as highly regulated, safe alternatives to conventional drugs. Alvotech ensures
that its products meet stringent regulatory standards and do not inherently harm consumers or increase risks of
chronic diseases. Instead, biosimilars often improve healthcare accessibility, reducing costs for patients managing
chronic conditions.
Alvotech's consumers rely heavily on accurate product labelling, usage instructions, and educational materials to
ensure the safe and effective use of biosimilars. Alvotech adheres to international guidelines for product
transparency, ensuring all information, including potential risks and benefits, is communicated to healthcare
professionals and end-users.
Alvotech’s focus on affordability and accessibility benefits vulnerable groups, such as financially disadvantaged
individuals who face barriers to accessing expensive treatments.
Engagement with consumers and end-users (ESRS S4-2)
Alvotech does not engage directly with consumers or end-users of its biosimilar products. Instead, it relies on its
commercial partners, who manage the distribution and marketing of its products, to gather insights and feedback
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from end-users. These partners act as intermediaries, providing valuable input that informs Alvotech’s approach to
managing actual and potential impacts on consumers and end-users.
3.2.2. Safety of end-users (ESRS 2 IRO-2, S4-4, S4-1)
3.2.2.1. Management approach (ESRS 2 MDR-P, S4-2, S4-3)
Alvotech ensures end-users' safety by embedding quality assurance at every stage of the product lifecycle.
Alvotech employs stringent quality control procedures before biosimilars reach the market.
● Analytical characterization: A comprehensive analysis of the reference biologic to identify its molecular
and functional attributes. This guides the development of biosimilars that meet strict similarity standards.
● Custom manufacturing process development: A proprietary process replicates the reference biologic's
attributes while ensuring product integrity.
● Iterative testing: Continuous testing ensures the biosimilar matches the reference biologic’s quality,
safety, and efficacy.
● Regulatory compliance: Biosimilars undergo rigorous evaluation by regulatory authorities, including the
FDA and EMA, ensuring adherence to global safety and efficacy standards.
After market entry, comprehensive pharmacovigilance systems monitor drug safety in the U.S., where Alvotech is
the market authorization holder, directly overseeing these systems. Partners manage the systems in other regions,
with Alvotech overseeing and reviewing data. End-users can report adverse effects through hotline numbers and
other contact details provided in product packaging.
● Data protection and privacy: Alvotech adheres to robust data protection standards, safeguarding patient
privacy. Employees receive mandatory training on data privacy and pharmacovigilance relevance,
reinforcing compliance and trust.
3.2.2.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, S4-2, S4-5)
Alvotech manages end-user safety by combining pre-market quality assurance with post-market pharmacovigilance.
The Company tracks the number of adverse events reported and resolved, as well as the outcomes of regulatory
inspections and audits related to product safety.
Alvotech currently has two approved products on the market:
1. AVT02 (adalimumab): A high-concentration, low-volume biosimilar to Humira® for autoimmune diseases
and
2. AVT04 (ustekinumab): A biosimilar to Stelara® for inflammatory conditions.
Both are used to treat various autoimmune conditions in adults and children.
Nine more molecules are in the pipeline, and Alvotech aims to get approval for three biosimilar candidates in 2025:
1. AVT03 (denosumab): Biosimilar candidate to Prolia®/Xgeva®, treatments for bone diseases,
2. AVT05 (golimumab): Biosimilar candidate to Simponi®/Simponi Aria® in immunology, and
115
3. AVT06 (aflibercept): Biosimilar candidate to Eylea® in ophthalmology.
Following that, Alvotech aims to gain further approval for at least one product every 12-18 months, including
AVT23 (omalizumab), a biosimilar candidate to Xolair® for respiratory conditions; AVT29 (aflibercept) a high dose
biosimilar candidate for Eylea HD; AVT16 (vedolizumab), a Biosimilar candidate to Entyvio® for immunology;
and AVT33 (pembrolizumab), a biosimilar candidate to Keytruda® for oncology.
Alvotech also has three undisclosed biosimilar candidates (AVT19, AVT28, and AVT41) in earlier development
stages.
Human rights commitments
Alvotech is committed to upholding the human rights of its consumers and end-users by embedding ethical practices
and consumer protection principles throughout its operations. Alvotech incorporates elements of human rights policy
frameworks, such as the UN Guiding Principles on Business and Human Rights, the ILO Declaration on
Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises, into its practices
to ensure safety, equity, and respect for consumer rights.
Alvotech provides mechanisms to address potential human rights impacts, including:
● Grievance channels: Established mechanisms such as pharmacovigilance systems enable consumers and
end-users to report concerns.
● Remediation processes: Alvotech ensures that reported issues are investigated and resolved promptly in
compliance with regulatory and ethical standards.
● Whistleblower protection: Policies safeguard individuals reporting concerns from retaliation, fostering
trust and transparency.
Future plans and targets
Alvotech is in the early stages of its sustainability journey and is actively developing measurable targets across
material topics. The Company aims to finalize key targets in the next reporting cycle and will provide updates in
future CSRD reports to ensure transparency and accountability.
3.2.3. Social inclusion of end-users (ESRS 2 IRO-2, S4-4)
3.2.3.1. Management approach (ESRS 2 MDR-P, S4-2, S4-3)
Alvotech is committed to promoting social inclusion by addressing healthcare disparities and expanding access to
biosimilars for underserved populations. The Company’s upcoming launch of a biosimilar for women with
osteoporosis exemplifies this commitment, providing treatment options for a historically underserved demographic.
Through these efforts, Alvotech aligns its operations with the UN Sustainable Development Goals and supports
equitable healthcare access.
Collaboration with partners and healthcare systems is central to Alvotech’s strategy. These partnerships help foster
inclusivity and support the equitable distribution of healthcare solutions globally, ensuring that its biosimilars reach
underserved regions and populations.
116
3.2.3.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T, S4-5)
Alvotech continues to expand its biosimilar portfolio to address unmet medical needs, focusing on vulnerable
populations and underserved markets. Through strategic partnerships, the Company ensures its products are
accessible to marginalized groups, promoting social inclusion.
Alvotech monitors the timely introduction of new biosimilars to track progress and evaluates their geographic reach
in underserved markets. Looking ahead, the Company plans to formalize policies that address the needs of
vulnerable groups and strengthen collaborations to extend the availability of biosimilars worldwide.
Future plans and targets
Alvotech is in the early stages of its sustainability journey and is actively developing measurable targets across
material topics. The Company aims to finalize key targets in the next reporting cycle and will provide updates in
future CSRD reports to ensure transparency and accountability.
Accounting policies—consumers and end-users
Alvotech follows ESRS S4 (Consumers and End-Users) under CSRD, reporting on material consumer-related
topics. Personal safety ensures safe and effective medicinal products relevant to operations and downstream
activities across all timeframes. Social inclusion focuses on accessible healthcare solutions, primarily in downstream
activities, with long-term impact.
117
4. Governance
G1 Business Conduct
4.1. Material impacts, risks, and opportunities (ESRS 2 IRO-1)
Alvotech employs a structured and comprehensive approach to identify and assess material impacts, risks, and
opportunities related to business conduct. This process is integrated into Alvotech’s broader governance framework
to ensure that all potential business conduct issues are proactively addressed.
Key criteria and methodology
The identification and assessment process are underpinned by the following criteria, which are systematically
applied across Alvotech:
1. Location: Business conduct assessments are tailored to reflect the regulatory and cultural nuances of the
regions where Alvotech operates. This ensures that location-specific risks, such as differing legal
frameworks and societal expectations, are thoroughly evaluated.
2. Activity: The analysis includes a detailed review of all operational activities, focusing on areas with
heightened dependencies, such as procurement, supplier relationships, and interactions with
commercialization partners. Activities involving significant financial transactions or third-party
engagements receive additional scrutiny.
3. Sector: Operating within the biopharmaceutical sector, Alvotech considers specific risks, such as
compliance with healthcare regulations, ethical marketing practices, and data protection in its business
conduct assessments. The sector’s stringent standards inform the design of robust internal policies and
controls.
4. Transaction structure: Alvotech evaluates transaction structures to identify potential ethical and
compliance risks. This includes due diligence in counterparties, monitoring of financial transactions for
transparency, and ensuring that agreements align with the Company’s ethical principles.
As a result of this process, Alvotech has identified two material topics related to business conduct, outlined below.
Material topics in business conduct: impacts, risks, and opportunities
Material topic IRO
Up
stream
Own
ops
Down
stream
Short
-term
Medium-
term
Long
-term
G1 - Business Conduct
Corporate culture
Positive and
negative
impact No Yes No Yes Yes Yes
Supplier relationships Risk No Yes No Yes Yes Yes
118
4.2. Business conduct governance (ESRS G1.GOV-1)
Role of the management and supervisory Bodies
At Alvotech, the CLT, the management body, and the Board of Directors, the supervisory body, share
complementary roles in governing business conduct.
The CLT implements business conduct policies operationally, ensuring alignment with the Company’s strategic
goals and regulatory requirements. They set ethical standards, oversee compliance initiatives, and foster a culture of
integrity across all operations. By monitoring adherence to these principles, the CLT ensures that business conduct
policies are effectively integrated into day-to-day activities and decision-making processes.
The Board of Directors, in its supervisory capacity, provides strategic oversight and guidance on business conduct. It
ensures that the policies established by the CLT are robust and aligned with global best practices. It also evaluates
the effectiveness of these policies, ensuring they adequately address the evolving regulatory and ethical landscape.
Expertise in business conduct
Alvotech’s leadership expertise is instrumental in maintaining high standards of business conduct. Members of the
CLT bring extensive operational experience in compliance, risk management, and corporate governance, equipping
them to handle complex ethical challenges. The Board of Directors complements this with its strategic perspective,
leveraging expertise in oversight, stakeholder engagement, and governance frameworks.
Alvotech is committed to implementing professionalism and excellence by enforcing high recruiting standards. In
2024, the Company also created targeted training programs for employees to enhance expertise and strengthen in-
house leadership capabilities continuously.
4.3. Corporate culture (ESRS G1-1)
4.3.1. Management approach (ESRS 2 MDR-P)
Alvotech is committed to fostering a culture of integrity and ethical business practices through a framework of
policies and governance.
● Code of Conduct: Alvotech establishes ethical principles and behavioral expectations for all employees
and external stakeholders. It outlines the Company’s commitment to legal compliance, anti-corruption and
bribery, whistleblowing, and fostering a culture of ethical decision-making. The code also mandates
transparency and promotes accountability in all operations.
● Whistleblower Protection Policy: The dedicated policy ensures whistleblowers can report concerns safely
and anonymously, with robust protection against retaliation.
Alvotech has established rules and measures to address anti-corruption and anti-bribery practices. The Company is
working to further align these with the United Nations Convention against Corruption principles, demonstrating its
ongoing commitment to ethical business practices.
119
4.3.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T)
Mechanisms for identifying, reporting, and investigating concerns
Alvotech is committed to upholding its Code of Conduct, which sets ethical standards for all employees and
partners. The Company has established clear mechanisms for identifying, reporting, and investigating concerns
about unlawful behavior or breaches of the Code of Conduct. These mechanisms include:
● Reporting Channels: Concerns about suspected or actual impropriety can be reported through designated
confidential channels, ensuring the protection of the reporting party. These channels are accessible to both
internal and external stakeholders.
● Investigation Procedures: Each reported concern is investigated promptly and independently, ensuring
fairness and objectivity in addressing the matter.
Protection of whistleblowers
Alvotech provides a safe environment for whistleblowers to report concerns without fear of retaliation. Key
measures include:
● Internal whistleblower reporting channels: Employees and stakeholders can access confidential and
secure reporting mechanisms.
● Protection against retaliation: Policies in compliance with Directive (EU) 2019/1937 protect
whistleblowers from retaliation.
Procedures for investigating business conduct incidents
Alvotech has established procedures for investigating incidents of misconduct, including corruption and bribery. A
dedicated compliance team conducts investigations promptly, independently, and objectively, ensuring unbiased
outcomes.
No specific functions within Alvotech have been identified as having a high risk for corruption or bribery. Regular
reviews ensure that any emerging risks are promptly addressed.
In 2024, Alvotech received no business conduct incidents or complaints and didn’t start any investigation.
Animal welfare
As a biosimilars-focused Company, Alvotech does not conduct animal testing during standard development unless
specifically requested by law or Competent Authorities. During 2024, no animal testing was conducted. Generally, if
such animal testing were to be conducted, Alvotech fully embraces the 3Rs principles of animal research while
developing its products, adhering to strict ethical standards and industry best practices. The 3Rs principle is a
recognized standard for the ethical use of animals in product development and research (Russell and Burch, 1959).
Training on business conduct
Alvotech’s business conduct training programs are mandatory for all employees at the start of employment and are
monitored by the HR team. They provide education on the Company’s ethical standards and policies. In 2024,
Alvotech introduced new training sessions to its employees.
120
During the reporting period, employees received an average of 3 hours of training. However, when on-the-job
training covers job-specific skills, regulations, and standard is included, the average training hours per employee
increases to 67 hours. This figure does not account for additional training to enhance broader competencies, such as
leadership skills.
Future plans and targets
Alvotech is in the early stages of its sustainability journey and is actively developing measurable targets across
material topics. The Company aims to finalize key targets in the next reporting cycle and will provide updates in
future CSRD reports to ensure transparency and accountability.
4.4. Supplier relationships and payment practices (ESRS G1-2)
4.4.1. Management approach (ESRS 2 MDR-P)
Alvotech recognizes the critical role of its supply chain in achieving sustainable operations and is actively
developing policies and practices to manage supplier relationships responsibly. While work is ongoing, several
foundational elements are in place to address supplier-related risks and promote sustainability:
● General due diligence: Alvotech updates its supplier due diligence procedures, including social and
environmental considerations.
● Quarterly business reviews: In 2024, Alvotech started incorporating sustainability considerations into its
agenda in its regular supplier meetings. It aims to have quarterly business reviews with its top 10 suppliers,
during which they will ask for information about ESG factors.
● Supplier code of conduct: Alvotech aims to implement a code of conduct for its suppliers in 2025.
● Country and company screening: Alvotech currently focuses on sourcing suppliers operating in countries
with robust regulatory frameworks and established industry standards while avoiding suppliers from
jurisdictions with heightened risks related to governance, corruption, or environmental practices.
● Payment practices: Emphasis is placed on ensuring timely payments, particularly for smaller vendors who
may be more vulnerable to late payments. A complaints channel is available for suppliers to raise concerns
about payment delays.
4.4.2. Performance and targets (ESRS 2 MDR-A, MDR-M, MDR-T)
Approach to supplier relationships
Alvotech adopts a strategic approach to managing supplier relationships, balancing operational needs with
sustainability considerations. Key elements of this approach include:
● Alvotech recognizes that its supply chain may pose risks related to operational disruptions, compliance
challenges, and sustainability impacts. To mitigate these risks:
● A preliminary supplier screening process is conducted to identify potential risks tied to geographic regions,
governance practices, or supplier capacity.
● Proactive measures are taken to exclude partnerships with suppliers operating in jurisdictions with
heightened risks, such as weak governance frameworks or low environmental compliance standards.
121
● Alvotech seeks to build collaborative relationships with its suppliers by fostering open communication,
aligning on shared goals, and emphasizing long-term partnerships that promote mutual success.
● Social and environmental criteria in supplier selection
Alvotech integrates social and environmental criteria into its supplier selection process to ensure alignment with its
commitment to sustainable practices.
● Sustainability disclosure requirements: Suppliers are increasingly engaged in disclosing their social and
environmental indicators. This ensures greater transparency and alignment with Alvotech’s sustainability
objectives.
● Focus on ethical practices: Alvotech prioritizes suppliers who strongly adhere to labor rights, ethical
sourcing, and environmental stewardship.
● Continuous improvement: Alvotech actively encourages suppliers to adopt improved sustainability
practices through engagement, feedback, and capacity-building efforts.
Future plans and targets
Alvotech is in the early stages of its sustainability journey and is actively developing measurable targets across
material topics. The Company aims to finalize key targets in the next reporting cycle and will provide updates in
future CSRD reports to ensure transparency and accountability.
Accounting policies—business conduct
Alvotech follows ESRS G1 (Business Conduct) under CSRD, ensuring transparent reporting on governance, ethics,
compliance, and supplier relationships. This policy defines how business conduct-related metrics are measured and
reported.
Corporate culture is monitored through policy adherence, employee training, and business conduct incident tracking.
Supplier relationships are assessed through due diligence, compliance screening, and engagement initiatives, with
data on the percentage of suppliers screened and engaged.
Whistleblowing and compliance monitoring ensure confidential reporting mechanisms with substantiated cases
leading to corrective actions.
Anti-corruption and bribery compliance is tracked through mandatory employee training and incident reporting, with
internal audits ensuring regulatory adherence.
Payment practices are measured by average days to pay invoices and alignment with standard payment terms to
ensure fair supplier treatment.
122




















Financial year 2024 Substantial contribution criteria DNSH criteria (Does not significantly harm)   
Economic Activities (1)
Codes (2)
Turnover (3)
Proportion of
turnover (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water (7)
Pollution (8)
Circular Economy
(9)
Biodiversity (10)
Climate Change
Mitigation (11)
Climate Change
Adoptation (12)
Water (13)
Pollution (14)
Circular Economy
(15)
Biodiversity (16)
Minimum
Safeguards (17)
Proportion of
Taxonomy Aligned
(A.1) or eligible
(A.2)
turnover,year N-1
(18)
Category enabling
activity (19)
Category
transitional
activity (20)

USD
million
%
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y; N;
N/
EL
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES              
 
A.1 Environmentally sustainable activities (Taxonomy-aligned)
         
 
Turnover of environmentally
sustainable activities
(Taxonomy-aligned)

0 0% 0%             0%  T
Of which enabling

0
0%
0%
0%
0%
0%
0%
0%







0%
E

Of which transitional

0
0%
0%












0%

T
A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
    
 
   
EL; N/
EL
EL; N/
EL
EL;
N/EL
EL; N/
EL
EL;
N/EL
EL;
N/EL        
 
1.2. Manufacture of medicinal
products
PPC
1.2 491.978 100% N/EL N/EL N/EL N/EL N/EL N/EL        100%
 
Turnover of Taxonomy-eligible
but not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2.)
 491.978 100% 0% 0% 0% 100% 0% 0%        100%
 
Turnover of Taxonomy-eligible
activities (A.1. + A.2.)
 491.978 100% 0% 0% 0% 100% 0% 0%        100%
 
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
             
 
Turnover of Taxonomynon-
eligible activitiy
 0 0%              
 
TOTAL
 491,978 100%              


                   
123
Financial year 2024 Substantial contribution criteria DNSH criteria (Does not significantly harm)   
Economic Activities (1)
Codes (2)
CapEx (3)
Proportion of
turnover (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water (7)
Pollution (8)
Circular Economy
(9)
Biodiversity (10)
Climate Change
Mitigation (11)
Climate Change
Adoptation (12)
Water (13)
Pollution (14)
Circular Economy
(15)
Biodiversity (16)
Minimum
Safeguards (17)
Proportion of
Taxonomy Aligned
(A.1) or eligible
(A.2) turnover,year
N-1 (18)
Category enabling
activity (19)
Category
transitional
activity (20)

USD
million
%
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL Y/N Y/N Y/N Y/N Y/N Y/N Y/N
% E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
             
 
A.1 Environmentally sustainable activities (Taxonomy-aligned)
       
 
CapEx of environmentally
sustainable activities
(Taxonomy-aligned)
 0 0% 0% 0% 0% 0% 0% 0%
       %
 
Of which enabling

0
0%
0%
0%
0%
0%
0%
0%
       0%
E
T
Of which transitional

0
0%
0%





       0%

T
A.2 Taxonomy eligible but not aligned environmentally sustainable activities (not Taxonomy-aligned activities) (g)
Manufacture of medicinal
products
  
EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
EL; N/
EL
       %
% 
CapEx of Taxonomy eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2)
0% 

    
       
 
CapEx of Taxonomy-eligible activities (A.1. + A.2.)
             


A. CapEX of Taxonomy-eligible
activities (A.1+A.2)
 61,633 94% 0% 0% 0% 94% 0% 0%          
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
             
 
CapEx of Taxonomynon-eligible
activitiy
 3615 6%
             
 
TOTAL

65.248
100%
             


   
             
 








































124
Financial year 2024 Substantial contribution criteria DNSH criteria (Does not significantly harm)   
Economic Activities (1)
Codes (2)
OpEx (3)
Proportion of
turnover (4)
Climate Change
Mitigation (5)
Climate Change
Adaptation (6)
Water (7)
Pollution (8)
Circular Economy
(9)
Biodiversity (10)
Climate Change
Mitigation (11)
Climate Change
Adoptation (12)
Water (13)
Pollution (14)
Circular Economy
(15)
Biodiversity (16)
Minimum
Safeguards (17)
Proportion of
Taxonomy Aligned
(A.1) or eligible
(A.2) turnover,year
N-1 (18)
Category enabling
activity (19)
Category
transitional activity
(20)

USD
million
%
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y; N;
N/ EL
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. Taxonomy-Eligible Activities
             
 
A.1 Environmentally sustainable activities (Taxonomy-aligned)
       
 
OpEx of environmentally
sustainable activities
(Taxonomy-aligned)
 0 0% 0%             0%
 
Of which enabling
 0 0% 0% % % % % %        0%
E
T
Of which transitional
 0 0% 0% 5            0%

T
A.2. Taxonomy-eligible but not environmentally sustainable
activities (not Taxonomy-aligned activities
EL N/
EL
EL N/
EL
EL N/
EL
EL N/
EL
EL N/
EL
EL N/
EL        
 
Manufacture of medicinal
products
P 1.2 0 0% N/EL N/EL N/EL N/EL N/EL N/EL        0%
 
OpEx of Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned activities)
(A.2.)
 0 0% 0% 0% 0% 0% 0% 0%        0%
 
OpEx of Taxonomy-eligible
activities (A.1. + A.2.)
 0 0% 0% 0% 0% 0% 0% 0%        0%
 
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
             
 
CapEx of Taxonomy non-eligible
activitiy
 171,312
100%              
 
TOTAL  171,312
100%              
 
125
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