Apresentação Institucional Abril/2017

Institutional Presentation April/2017

Disclaimer

This release contains forward-looking statements that are exclusively related to the prospects of the business, its operating

and financial results, and prospects for growth. These data are merely projections and, as such, based exclusively on our

management's expectations for the future of the business and its continued access to capital to fund its business plan. These

forward-looking statements substantially depend on changing market conditions, government regulations, competitive

pressures, the performance of the Brazilian economy and the industry, among other factors, as well as the risks shown in our

filed disclosure documents, and are therefore subject to change without prior notice.

As a goal to maintain a correlation with the Financial Statements prepared by its external auditors, the considerations and

comments contained herein are prepared on a consolidated viewpoint of the economic group Hypermarcas, and not

necessarily individualized by the various legal entities that compose the group.

In addition, unaudited information herein reflects management's interpretation of information taken from its financial

statements and their respective adjustments, which were prepared in accordance with market practices and for the sole

purpose of a more detailed and specific analysis of our results. Therefore, these additional points and data must also be

analyzed and interpreted independently by shareholders and market agents, who should carry out their own analysis and

draw their own conclusions from the results reported herein. No data or interpretative analysis provided by our management

should be treated as a guarantee of future performance or results and are merely illustrative of our directors' vision of our

results.

Our management is not responsible for compliance or accuracy of the management financial data discussed in this report.

which must be considered as for informational purposes only, and should not override the analysis of our audited

consolidated financial statements for purposes of a decision to invest in our stock, or for any other purpose.

2

Agenda

• Overview

• Brazil Pharma Market

• Our Business

• Financials

3

#1 Hypermarcas Aché NC Farma

#2 Sanofi Eurofarma Hypermarcas

#3 Takeda Sanofi Sanofi

#4 Pfizer Novartis Cimed

#5 J&J Hypermarcas Eurofarma

Business overview

39% 30%

31%

Net Rev: R$3.3 bn

Gross Margin: 74.3%

Rankin

g

Key f

acts

Branded

Prescription

Branded

Generics

Consumer

Health

Revenue Breakdown Branded

Prescription¹

Consumer

Health

Branded

Generics²

Focus in Brazil Long experience

Fast growing/

resilient market Diversified portfolio

SOURCE: Company financials – 2016; IMS Health Feb 2017; Hypermarcas. ¹ Ex-patents. ² Branded Generics includes Similars

and Generics.

4

Agenda

• Overview


• Our Business

• Financials

5

Pharma market

SOURCE: IMS Health (May 2016)

2014 Trends 2019

1st United States

2nd China

3rd Japan

4th Germany

5th France

6th USD24 bn

7th Italy

1st United States

2nd China

3rd Japan

4th Germany

5th USD36 bn

6th France

7th Italy

• Aging

• Underdeveloped health

system

• Treatments’ low levels

• Generics low

penetration of generics

(25% of market)

• Peak in economically

active population

6

Main Markets Growth

SOURCE: IMS Health (Average Expected Growth)

1%

1%

3%

3%

4%

5%

6%

6%

7%

7%

8%

8%

9%

12%

France

Japan

Italy

Spain

Germany

RoW

UK

Global

China

Russia

USA

EM

Brazil

India

Forecasted 2016-21 CAGR

7

50% 52% 54% 56% 58%

50% 48% 46% 44% 42%

2012 2013 2014 2015 2016

58% 61% 64% 65% 67%

42% 39% 36% 35% 33%

2012 2013 2014 2015 2016

Local Players Gains Market Share

Mult

inati

onals

Value

(R$)

Volume

(Units)

SOURCE: IMS Health 2016 8

Low levels of per capita consumption

SOURCE: Organization for Economic Co-operation and Development (OECD), 2012

3,484

1,109

1,577

3,289

3,649

4,288

4,811

8,745

OECD

Brazil

Chile

UK

Japan

France

Germany

USA

Healthcare Expenditure per Country (USD/year)

7.9x

9

Latin American Market

Brazil USD24.3 bn

53%

Mexico USD9.7 bn

21%

Argentina USD3.8 bn

8%

Colombia USD3.8 bn

8%

Chile USD2.2 bn

5% Others

USD2.3 bn 5%

SOURCE: Latin American Markets IMS Health (2014)

The largest market in a fragmented region: Latin America

Locals are dominant and

focused in their markets

Absence of strong regional

leaders

10

Fast ageing of population

SOURCE: IBGE (2010)

Population 60+ (MM people)

CAGR

2.8%

14 20

29

42

54

66 74

8% 10%

14%

19%

24%

29%

34%

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

80

90

2000 2010 2020 2030 2040 2050 2060

1mm

p.y.

11

Potential for higher drug consumption

SOURCE: IBGE (Consumer Expenditure Survey 2008-09); Values readjusted by inflation (IPCA) to February 2017.

Prescription Drugs Expenditure (R$ per month / family)

200.4

193.6

130.9

97.4

71.4

58.6

45.4

70+

60-69

50-59

40-49

30-39

20-29

10-19

4.4x

12

Retail pharma market

Business

Segment

Product

Category

Demand

Driver

Market

Size

Patents

Branded

Prescription

Trade

Direct

to Consumer

5.9%

54.9%

11.5%

22.2%

• RX with/without

prescription retention

• OTX

• Dermocosmetics

R$28.5B Physicians

• Over-the-counter

• Nutritionals

• Related products

R$5.9B Consumer

• Innovative patent protected R$3.0B Physicians

• Generics (API)

• Similars R$11.5B Pharmacist

SOURCE: IMS Health PPP Feb 2017 13

Retail pharma market

# Companies to reach 42% of market share Pharma Retail

(% Sales)

42% 58%

Larger

Retail

Chain

Smaller Retail

Chain &

Independent

SOURCE: IMS Health World Review Conference 2016 (May 5, 2016; Dinâmicas e Perspectivas do Mercado Farmacêutico da

América Latina e do Brasil); IMS PMB-PPP February 2016; Hypermarcas. Larger retail chains are the Abrafarma members.

75 K Point of Sales

(POS)

67 K POS 6 K POS

Larger Retailers (28)

*

Manufacturer (6)

14

High entry barriers

Strict Regulator

• Long approval

process (3-5 years)

• Strict control of

manufacturers,

products and

retailers

Fragmented Distribution

• Continental country

(27 states; >200mm people)

• ~70k point of sales

• 28 larger chains

• ~230 distributors

Powerful Local Brands

• All generics are branded at

retail as in most of the World

(ex-US & Canada)

1960 2016

15

Resilient growth

2.0 2.3

2.5 2.8

3.3

3.7

2011 2012 2013 2014 2015 2016

CAGR 2011-16: 11.2% CAGR 2011-16: 13.2%

28.1 30.9

34.0 37.1

42.1

47.7

2011 2012 2013 2014 2015 2016

SOURCE: IMS Health – PMB-PPP (December 2016) 16

Agenda

• Overview


• Our Business

• Financials

17

39% 30%

31%

Business overview

* Excluding patents

SOURCE: IMS Health – PMB Feb 17 LTM; Hypermarcas – 2016

Rank

Market

Share

Growth

Opportunities

Consumer

Health

Branded

Generics

Branded

Prescription*

#1

#2

#5

14.8%

14.7%

4.6%

• Launch new product

concepts through brand

extensions

• Improve retail space

• Increase market

presence, especially at

retails chains

• Improve portfolio

coverage especially at

high value products

• Leverage on physicians

visit network

• Launch new products

with untapped demand

Revenue Breakdown

Branded

Prescription

Branded

Generics

Consumer

Health

18

Hypermarcas strategic development

2007 - 2010 2012 - 2015 2017 - 2020

Shareholder

Value

Industry

Consolidation

Business

Restructuring

Pharma

Focus

Cycle 1

Cycle 2

Cycle 3

19

Key objectives of strategic phases

Industry

Consolidation

Business

Restructuring

Pharma

Focus

2007 - 2011 2012 - 2016 2016 - 2020

• Acquisition of outstanding assets (brands/companies) at attractive valuations

1970s 1953 1959 1943 1970

20


Industry

Consolidation

Business

Restructuring

Pharma

Focus

2007 - 2011 2012 - 2016 2016 - 2020

• Developed “outstanding” Go-to-Market platform

• Operations

• Marketing

• Distribution

• Implemented successful product / market strategies

with continuous market share gains

• Successfully executed business portfolio “Churn”

21

45% 59%

100%

55% 41%

2010 2013 2016

Successfully executed business portfolio “churn”

• Materially

improved

capital

structure

• Concentrated

on the most

attractive

Pharma

business

HPC

Pharma

Sale of

Home Care

& Food

Sale of

Cosmetics,

Condoms &

Diapers

SOURCE: Hypermarcas (Net Revenue breakdown) 22

Developed the best Go-to-Market platform

• Largest and most productive

Brazilian manufacturing site

• Highest production volume

• Lowest cost producer

• Most horizontal

distribution

- Mom&Pops

- Regional

- Chains

• Largest field

force at store level

(>70% direct access)

• Most productive

sales force at physicians

• Lowest cost media buying

Distribution

Operations

Marketing

Most Productive

Lowest Cost

Best Distribution

23

3.30

2.99

2.66

2.46

1.71

Aché

Teuto

Medley

EMS

Hypermarcas

Brazilian peers

1.4x

1.6x

1.7x

1.9x

COGS per Unit (R$)

SOURCE: Companies’ Financials 2015; IMS Health PMB – Units 24

Player 1

Player 2

Player 3

Player 4

Brazilian peers

0.8

0.9

1.2

1.9

Productivity R$ MM/Rep per Year

SOURCE: IMS Health – PMB-PPP Oct 16 25

Player 1

Player 2

Player 3

EBIT Margin

Brazilian peers

SOURCE: Companies' Financials 2015.

12.1%

12.5%

13.9%

27.8%

29.9%

União Química

EMS

Eurofarma

Aché

Hypermarcas

26

Player 1

Player 2

Player 3

Player 4

Market Share Evolution

7.5% 8.0%

8.5% 9.2%

9.8% 10.4%

2010 2011 2012 2013 2014 2015

SOURCE: IMS Health – PMB-PF Feb 17 LTM 27


Industry

Consolidation

Business

Restructuring

Pharma

Focus

2007 - 2011 2012 - 2016 2016 - 2020

• Focus on most attractive Pharma sector, leveraging on superior

competitive advantage

• Accelerate organic growth through more assertive “business

innovation”

• Further improve sales & marketing execution capabilities

28

Concentrated on most attractive Pharma business

Hig

h

Low

Low High

Pharma Business

Attractiveness • Aging of population

• Resiliency

• Untapped demand

Competitive Position

• #1 with leadership in many markets

• Diversified portfolio

• Most productive Go-to-Market platform

Accelerate growth

• Leverage on

“outstanding” platform

• Explore underpenetrated

markets

• Widen product offering

29

Segment the business in “Strategic Business Units” (SBUs)

Segment Name Market Size

“Direct to

Consumer”

#1

14.8% share

• Brand portfolio

• Merchandising

capabilities

• Media Buying

Success Factor

“Medical

Community”

“Trade”

#5

4.6% share

• Product

innovation

• Sales Force

Productivity

#2

14.7% share

Consumer Health

Branded Prescription

Branded Generics

Hyper Position

R$5.9 B

R$28.5 B

R$11.5 B

• Commercial

policy flexibility

• “Fast copier”

• Distribution

network

SOURCE: IMS PMB Feb 17 LTM 30

New Organizational Structure

31

• Offer opportunities based

on deep knowledge of

global technology

• Efficient innovation process

and execution

• Vertical integration of sales

More focused field teams

• Define innovation needs

based on market insights

and business strategy

Innovation Capabilities

Business Development Innovation Center

(Hynova / Lumina)

Consumer

Health

Branded

Prescription

Branded

Generics

6.8%

4.4%

4.2%

3.3%

4.1%

3.0% 2.7%

2.3% 2.9%

2.4%

63.8%

Diversified revenue base

SOURCE: Company data, 2016

Other

products

(Branded Presc.)

(Branded Generic)

(Branded Presc.)

(Branded Presc.)

(Branded Presc.)

(Consumer Health)

(Branded Presc.)

(Consumer Health)

(Consumer Health)

Top 10

Brands:

~36% sales

(Consumer

Health)

32

Increasing importance of innovation

17.2%

16.0%

18.8%

23.0%

24.3%

2012 2013 2014 2015 2016

Innovation (% Net Revenue) Target: 30%

SOURCE: Hypermarcas Sell-in (% Net Revenues; products launched over the past 5 years) Feb 17 33

Logistics

Operation

15%

(113 clients /

17 distributors)

Diversified distribution

• Continental country

(27 states; 204mm people)

• 28 larger chains

• ~230 distributors

Fragmented distribution

31%

Direct

Channel

(51 clients)

Indirect

Channel

(69 clients)

54%

Distributor/

Wholesaler

Retailer

Warehouse

Distrib

uto

r

deliv

ers

Hyperm

arc

as

takes

ord

ers

75,300 Stores

Hypermarcas reaches 100% of POS in Brazil

SOURCE: Company Data, 2016 (Feb 17) 34

Large scale production facility

323,000 m2 land 120,000 m2 constructed area 3,700 employees

Distribution

Center

Solids/

Raw

Materials

Quality

Control

Aerosol

Efervecent

Dermo Liquids

Semisolids

Injectables

R&D

Penicilin Solids

Semisolids

Liquids

R&D

35

High production capacity

SOURCE: Hypermarcas, per year

Tablets,

capsules,

coated tablets,

pills and

effervescent

10 billion

Injectable and

ophthalmic

45 million

Aerosols

11 million

Liquids,

creams, oils,

ointments,

lotions and

jellies

276 million

Occupancy

Rate

65%

36

Innovation: New Center

• Located in Alphaville – São Paulo

• Total area of 4,000 m2

• Research with consumers and physicians

• Development of new products

37

Innovation: Availability of new active substances by country

NOTE: New molecules launched between 2010 and 2014. Availability of molecules in 2015.

SOURCE: IMS Institute for Healthcare Informatics, Dec 2015

128

108 102

88 83 79

73 67

61 60 58

41

USA Germany Great Britain Italy Japan Spain Canada France South Korea Mexico Polonia Brazil

170 new

substances

(2010-14)

Business development - sourcing

R&D

Availability in December/2015

38

1,621

467

1,154

Innovation: Significant R&D activity worldwide

High potential for partnering in innovative products

Late stage

development or

recently launched

products

Yes No

“Go-to-Market”

presence in Brazil

• Fixed dose

combinations

• Extended release

• Inhalation devices

• Transdermal patches

• Nano-tech

• Quick release

• Sub-lingual

• ODT

• Oral films

• Others

70%

SOURCE: Thomson Reuters (Cortellis) and Hypermarcas 39

Innovation: growth of Brazilian pharma companies

NOTE: ¹ Adjusted by inflation. ² Considers products launched before 2008. ³ Considers products launched between 2008-2015

SOURCE: IMS Health - PMB Retail

• Negative

performance of

legacy portfolio

• Growth comes

from new products

-0.8% 7.9%

1

CAGR

11.9

-0.3

3.0

14.6

2012 Legacy New products 20152 3

40

Launch

preparation

Development and /

or Negotiation

Business Case Building

Idea Generation

Creation Order

41

Executives Directors (individually)

Innovation Comittee

Business Committee

CEO (Meetings as needed)

Process Leader

Innovation

Manager

Innovation

Management

OD: P&D

--

ON: Business

development

Product

Manager and

Project Manager

(PMO)

Order of Devel. or Negotiation

ODs and ONs Priorization

Release Order

Sell – in

Product strategy review

Approval / revision forum

Executive Committee

Monitoring Committee

Innovation: professional process

Branded Prescription

Products

Strategy

Demand Driver

• Drugs promoted to

Physicians (OTC / RX)

• Intensify therapeutic

classes expansion

• Physician prescription

39% 30%

31%

Branded

Prescription

Branded

Generics

Consumer

Health

Revenue Breakdown

42

Ranking

#1

#2

#3

#4

#5 4.6%

5.4%

6.3%

6.7%

9.6%

11%

18%

17%

12%

19%

21%

Market Share Growth YoY

Total Market

Company

Branded Prescription Market Positioning

SOURCE: IMS Health – PMB-PPP Feb 17 LTM 43

1.9

0.8

0.9

1.2

750

1,300

1,900

2,300

NC - Farma

Eurofarma

Aché

Team size

# representatives

Productivity

R$ MM/Rep per Year

Branded Prescription Productivity of medical reps team

SOURCE: IMS Health – PMB-PPP Oct 16 44

Player 1

Player 2

Player 3

• Antihypertensives

• Antidepressants

• Antibiotics

• Analgesics

• Anti-inflammatory

• Photoprotection

• Moisturizing

• Anti-aging Skincare

11%

Skincare 21%

Chronic 63%

Chronic 29%

Acute 26%

Acute 50%

MARKET HYPERMARCAS

R$27.6bn R$1.3bn

Growth

YoY

Growth

YoY

+14%

+13%

+11%

+28%

+11%

+28%

Market

Relevance

Relevance

+13% Acute

Chronic

Skincare

+18%

Therapeutic class examples

Branded Prescription Portfolio Composition

SOURCE: IMS Health – PMB Dec 16 45

Rank Company Market Share Growth YoY

#1 16.9% 19%

#2 9.0% 10%

#3 9.0% 11%

Total 100.0% 13%


#1 7.8% 21%

#2 7.3% 12%

#15 2.2% 33%

Total 100.0% 13%


#1 33.5% 19%

#2 13.3% 28%

#3 11.9% 3%

Total 100.0% 11%

Acute

Chronic

Skincare

Branded Prescription Portfolio & competitive position

SOURCE: IMS Health – PMB Dec 16 46

Marketing / Conceptual

• New treatment concept: attack

(50,000 ui) and maintenance

(7,000 ui & 1,000 ui)

Pharmaceutical Form

• Pills

• Gel caps

4 5 5 7 8 9 9 10 12 12 10 9 9 8 7 7 8 7 7 7 8 7

4

12 20 20

25

36 41 39 41

48

41

8 18

3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

SOURCE: IMS Health

Sell-out PPP R$ MM

Type of

innovation

Hyper

Marketing / Conceptual

• Importance of

Hypovitaminosis D

treatment

• Medical visitation

Pharmaceutical Form

• Liquid

Pharmaceutical Form

Soft Gel Caps

• Modernity &

innovation

• Easy swallowing

• Size reduction

• Exclusivity

7,000/50,000UI

• Preferred by 70%

patients

Drops Pills Gel caps

Branded Prescription Taking Addera D3 to a new leve

cm

47

2011 2012 2013 2015 2016 2014

66 64

48 46

48

44

32

27 28

21

13

SOURCE: IMS Health - PMB Retail PF (Feb/17) & internal analyses

Infa

nt

A

dult

Consumer

• Media campaign

• Packaging relaunch

• Unique identity

• + Impact

• + Visibility

• Launch of blister x 3

POS

• 50% increase in channel investments

Medical demand

• Valuing prescription and shielding

• Co-promotion: 2 teams

POS

• Better exposure

• Winter campaign with flu-symptom drugs

Alivium demand evolution – Sell-out (R$ MM)

11% 3%

-7% -3% 5% 0%

27%

Growth

YoY

Branded Prescription Alivium positive conversion

19 22

19 20 20 22

20 22

4

5

4 4 4

5 9 9

1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

Liquid Pills

48

31

29 27

24 24 23

27

23

-1%

1%

17%

19%

27%

SOURCE: IMS Health – PMB Oct’16

¹ Dermocosmetics market growth: 8.9%

Highest Growth Rates (LTM Oct/16 - PPP)

• Innovation

- Fast launches

- Attractive/innovative

products

• Diversification

- Portfolio renewal

(cleansing, moisturizing, anti-

aging)

- Entrance in new markets

• Execution

- Expansion of demand team

- Focus on POS execution

Branded Prescription Skin Care – Important growth driver

49

1%

11%

1%

10%

12%

1%

3%

5%

Ophthalmics

Orthopaedics

Psychiatry

Dermatology

Peadiatrics

Cardiology

Gynecology

General Practice

Market share (% R$ PF)

93%

87%

74%

85%

74%

78%

55%

69%

SOURCE: IMS Health (Oct/2016); Hypermarcas

Main

visited specialties Current

portfolio

Future pipeline

opportunities

Branded Prescription Portfolio optimization by therapeutic classes

Visitation coverage (% of prescriptions – R$ PF)

50

Products

Strategy

Demand Driver

• OTC

• Sweeteners

• Intensify brand extensions

• Mass media

39% 30%

31%

Branded

Prescription

Branded

Generics

Consumer

Health

Revenue Breakdown

Consumer Health

51

52

Ranking Company Market Share Growth

YoY

#1

#2

#3

#4

#5

Total CH

Sell-out

SOURCE: IMS Health – PMB-PPP Fev 17 LTM

14.7%

14.3%

6.7%

5.9%

5.7%

Consumer Health Market positioning

9.6%

8.1%

5.9%

6.4%

1.8%

6.3%

53

Cosmetics Food

Dermo-

cosmetics Nutra-

ceuticals

Nutri-

tionals

Pharmaceuticals

• Safe and well tolerated

• Simple dosages

• Fast relief of minor symptoms

• Ease of access

• Good distribution

• Wide range of options

• Affordable prices

Self Care

Universe Characteristics

POS Communication

Education & Knowledge

Consumer Health Business scope

54

2012 2013 2014 2015 2016

6.7%

SOURCE: IMS PMB-PPP Feb 17

• More stable market

• Unfavorable regulation

• Products

• POS

• Hyper portfolio focused on

more mature categories

CAGR

12-16

Consumer Health 9.7%

Consumer Health Hypermarcas sell-out evolution

41%

89%

37%

6% 22%

5%

MARKET HYPERMARCAS

Growth

YoY

6.4%

-9.6% 16.2%

18.7%

10.8%

11.1%

Share of the

Market

Share

10.3% 9.7%

Main Markets

Development

Mature Attack

Mature Leadership

• Vitamins & Supplements

• Nutraceutics

• Probiotics

• Antispasmodics

• Muscle relaxant

• Antiflatulants

• Analgesics

• Gastro

• Flu Symptoms

Development

Mature Attack

Mature Leadership

Mature market,

Hyper share >14%

Mature market,

Hyper share <5%

Dynamic market,

Hyper share <5%

Growth

YoY

SOURCE: IMS Health – PMB Oct 16

Consumer Health Portfolio composition

55

Development

Rank Company Market Share

#1 17.6%

#2 13.7%

#3 10.8%

#6 3.6%

Total 100.0%

Mature Attack


#1 13.6%

#2 12.0%

#3 9.5%

#11 2.7%

Total 100.0%

Mature Leadership


#1 29.8%

#2 19.0%

#3 12.9%

#4 10.6%

Total 100.0%

Development

Mature

Attack

Mature

Leadership


Consumer Health Portfolio & competitive position

56

SOURCE: IMS Health PMB – PPP LTM Out’16.

Gastro 32.2%

Tranquilizers 35.0%

Antihemorrhoids 36.2%

Laxatives 41.3%

Flu Symptoms 73.0%

Antiseptics 75.2%

Market Size (R$ MM)

387

41

249

23

73

654

Brands Market Share 1st

Consumer Health Mature products – Hyper leadership market

57

Topical Pain Relief

Antispasmodics

Supplements

Infant Vitamins

Nutritionals

Adult Vitamins

Market Hypermarcas

Portfolio Extension

SOURCE: IMS Health – PMB Oct’16

Consumer Health Innovation

58

SOURCE: IMS Health – PMB Feb 17

Consumer Health New products concepts through brand extensions

Concept

• High awareness

• Stronger formulation

• Product concept: “Good even for migraines”

29.3 28.2 29.7 31.7

14.3

31.5

2013 2014 2015 2016

Sell-Out (R$ million)

124%

63.2

44.0

59

SOURCE: IMS Health – PMB Feb 17

Consumer Health New products concepts through brand extensions

116 128

133

7

20

2014 2015 2016

Benegrip Benegrip Multi

32%

Mkt share

+ 0.5 p.p.

Sell-Out (R$ million)

153

135

60

Specialist Team CH

Focus on execution

Resources Optimization

Grow Weighted Distrib.

Verticalization of the Sales & Merchandising

Teams Convert Market Share in POS space via block

exposure of brands

Consumer Health Distribution

61

Pilot Project – Extrafarma

Before After

Category Management – Education & Expansion


Consumer Health Distribution

62

Products

Strategy

Demand Driver

• Generics (Large Chains)

• Similars (Independent)

• Defend & grow selectively

• Pharmacist recommendation

39% 30%

31%

Branded

Prescription

Branded

Generics

Consumer

Health

Revenue Breakdown

Branded Generics

63

#1

#2

#3

#4

#5

SOURCE: IMS Health – PMB - PPP LTM Feb/17

Similars & Generics

Companies

Market

Share

CAGR

2012-16

25.3%

6.0%

6.9%

8.4%

13.6%

21.3%

17.7%

-7.3%

13.1%

8.1%

Branded Generics Outstanding position with solid evolution

64

888

1,049

1,192

1,435 1,553

2012 2013 2014 2015 2016

SOURCE: IMS Health – PMB - PPP Feb 17

CAGR 15%

R$ MM

Branded Generics Sell-out demand evolution

65

SOURCE: IMS Health – PMB - PPP Feb 17

Similars Generics

288

359

419

550 602

2012 2013 2014 2015 2016

CAGR 20%

600

690 773

886 951

2012 2013 2014 2015 2016

CAGR 12%

R$ MM

Branded Generics Sell-out demand evolution

66

Generics Similars

SOURCE: IMS Health - PMB- PF LTM Feb/17

Market

Share

#1 19.2%

#2 17.3%

#3 14.4%

#4 5.7%

#5 5.5%

Market

Share

#1 28.0%

#2 13.7%

#3 11.8%

#4 10.9%

#5 8.0%

Branded Generics Ranking by market segment

67

SOURCE: IMS Health - PMB

1st Sildenafil

3rd generics market

Orlistat

5th generics market

Torsilax

4th biggest market

Neosoro

1st product

by units

Doralgina

5th OTC market

Losartan 1st generics market

Generics Similars

Branded Generics Leadership in main molecules

68

70%

5%

6%

7% 88%

Total Under

development

2021-23

Launches

2019-20

Launches

2017-18

Current

portfolio

Strategy: • 1st to market

• High-barrier markets

• High-potential markets

SOURCE: IMS Health – PMB – PF LTM Jun/16

Branded Generics Pipeline opportunities

69

2nd generic version of the market

Launched in 2016

Reference: Lasix

Line extension

1st half 2017

Reference: Sotacor

Escitalopram Furosemide

Sotalol


Launched in 2016

Reference: Selozok


1st half 2017

Reference: Nebilet

Metoprolol Succinate

Neolefrin

Biggest “controlled drugs” market

Launched in 2016

Reference: Lexapro

Branded Generics Main short-term launches

70

Nebivolol

Biggest OTC-Similar market

Launched in 2016

Reference: Naldecon

Market

Relevance

53%

25%

23%

46%

21%

33%

SOURCE: IMS Health - ED

Large

chains

Mid-sized

chains

Independent retail

Branded Generics Channel opportunities

71

SOURCE: IMS Health – PMB-PPP LTM Jun/16

21.5%

17.5%

14.4% 14.0%

9.3%

NORTHNORTHEASTSOUTHEASTMIDWESTSOUTH

Market Share

14.5%

Branded Generics Regional opportunities

72

Brand awareness and use

27%

54%

80%

96% Knows

Tried

Uses Regularly

Uses frequently

Brand with lowest level of rejection

¹ Average of 5 largest competitors

SOURCE: Nationwide quantitative survey

87%

44%

68%

24%

AVG

leaders¹

Branded Generics Well-known brand with loyal consumers

73

Base Inventory

Price Point

Exposure Training

Field team:

• +100 employees

Coverage:

• ~20% POS

• ~50% of sell-out demand

Branded Generics POS execution

74

Price, base inventory & exposure reviewed

SOURCE: IMS Health – MDTR (Moving quarterly average , Sell-out – PMB PF)

Doralgina sell-out evolution – National large chains

+26%

Branded Generics POS execution – Doralgina

75

The Brazilian Family’s Medicine

“ We dedicate all of our efforts to provide more health and

wellness so that everyone can fully enjoy happy moments with

their families”

TV | Radio | Print media | Digital | PDV

Branded Generics Action plan: new media campaign

76

Agenda

• Overview


• Our Business

• Financials

77

78

2015 ∆ 2016

Net Revenues 2,956.6. 100.0% 3,288.7. 100.0% 11.2% - .

Gross Profit 2,210.1. 74.8% 2,442.0. 74.3% 10.5% -0.5 p.p.

Marketing Expenses (766.0) -25.9% (810.1) -24.6% 5.8% 1.3 p.p.

Selling Expenses (383.5) -13.0% (413.5) -12.6% 7.8% . 0.4 p.p.

G&A Expenses (157.9) -5.3% (153.8) -4.7% -2.6% 0.6 p.p.

Other Expenses* (16.0) -0.5% (25.0) -0.7% 56,3% -0.2 p.p.

Depreciation & Amortization 66.4. 2.2% 64.2. 2.0% -3.4% 0.2 p.p.

EBITDA* 950.3. 32.1% 1,106.4. 33.6% 19.2% 1.5 p.p.

Financial Result (515.9) -17.4% (192.1) -5.8% -62.8% -11.6 p.p.

Taxes (22.5) -0.8% (202.4) -6.2% 798.9% -5.4 p.p.

Net Income 345.5. 11.7% 674.5. 20.5% 95.2% 8.8 p.p.

2016 Results

* It excludes reimbursement agreement signed with the Company’s former Corporate Relations officer 78

Net Debt Reduction (R$ million)

Net Debt / EBITDA¹ Debt Profile

3.9x

3.1x 2.9x

2.6x

1.7x

-1.6x

-0.3 x

2011 2012 2013 2014 2015 LTMProforma

K Red.,Divid. &Buyback

3T15

Gross Debt 907.6

Cash (1,348.0)

Net Debt (440.4)

Hedge (351.5)

Net Debt after Hedge (792.0)

4Q16

¹ Until 2015, Adjusted EBITDA (EBITDA before non-recurring expenses and other non-cash expenses)

² Buybacks considers a average of R$ 28.00/share.

Diapers Deal (1,000.0)

Cap. Red., Divid. & Buybacks² 1,511.4

Proforma Net Debt (280.6)

79

Dividends

R$0.50

R$0.60²

R$0.05¹

Paid in 2016 Paid in 2017

R$0.65

R$0.50

30%

Ps.: 2017 YTD. Dividend Yield calculated with average stock price; 2017 refers to Feb 16, 2017 YTD. ¹ To be paid in Feb 24, 2017. ² To be paid after the approval on 2017 Annual Shareholders Meeting.

Dividend Yield: 1.9% 2.4%

80

R$ 0

.65

Dividends & Capital Reduction

R$ 0.50 R$0.60

R$ 0.05

R$1.30

Paid in 2016 Paid in 2017

¹ Paid in Feb 24, 2017. ² To be paid after the approval on 2017 Annual Shareholders Meeting.

Capital Reduction

Dividends

30%

R$1.95

81

Company’s Main Tax Shields (1/4)

EV/EBITDA P/E Cash flow Returns Net income Possible analysis impacts

Tax Shield Summary

Source: Hypermarcas

¹ Federal tax credits are usable to pay any federal tax payment

R$ Million Expense for

Tax only Tax Rate Cash Value* Origin

Goodwill 1,299 34% 442 - Acquisitions; Amortizable for tax purporses only

- It does NOT impact the PnL, only the Cash Flow

Income Losses 965 - Negative pretax due to Goodwill amortization

Recoverable Taxes 208 - Withholding tax from investments

- Credits from Acquisitions

Total 1,615

* Cash impact sum of tax shields

82


EV/EBITDA P/E Cash flow Returns

Source: Hypermarcas

Net income Possible analysis impacts

Goodwill Amortization

• Acquisitions

• Reduces Pretax for Tax Purposes only (i.e. an extra expense for tax calculation)

• Difference between P&L and Fiscal Authorities calculation is deffered

• Earnings Release (Table with Remaining Goodwill Amortization for Tax Purposes)

(R$ million)

2017 701

2018 452

2019 145

Total 1,299

Expense for Tax Purposes only It does NOT impact P&L

Tax Rate 34%

Tax Shield 442

Reason

Information source

Effect

4Q16

83


Source: Hypermarcas

Tax Credits from Income tax losses carry-forward

(R$ Thousand) December 31,

2016

• Explanatory Note 23(a) – Quarterly Financial Statements


• Lower pretax due to goodwill

amortization

• It is actually an Tax credit (not another expense as goodwill amortization)

• It pays up to 30% of Federal taxes due in a given year

Tax Credit

Reason

Information source

Effect 964,873

- 68,155 67,093 58,468 21,398

130,899

1,310,886

84


Recoverable Taxes


• Withholding tax from financial investments

• Tax credits from acquisitions

• It is actually a Tax credit (not another expense as Goodwill Amortization)

• Can be used to offset Federal tax payments

• Balance sheet (Recoverable Taxes)

• Explanatory Note 13 – Quarterly Financial Statements

Reason

Information source

Effect

Tax Credit

December 31,

2016

Federal Taxes¹ 207,896

128,679 254,537 79,217

462,433

Source: Hypermarcas; it includes continuing and discontinued operations

85

20%

15% 65%

Igarapava Participações S.A.

Maiorem S.A. de C.V

Other Controlling Shareholders

Founder

Free Float

Maiorem

Ownership and listings

¹ March 27, 2017 LTM

² March 27, 2017

³ March 27, 2017

SOURCE: BM&F Bovespa; Hypermarcas

Listings

• Sao Paulo Stock Exchange: - HYPE3

- BRHYPEACNOR0

• Indexes with Hypermarcas:

• Ibovespa Index Ranking³: 30/58

• Trade volume¹: 2.8 MM shares/day

• ADR (HYPMY)²: 6.4 MM shares outstanding

• Market Cap³: R$18.34 B (USD5 B)

Ownership structure

Controlling

Group

35%

86

Phone: +55 (11) 3627-4242

[email protected]

http://www.hypermarcas.com.br/ir

87

mailto:[email protected]

http://www.hypermarcas.com.br/ir

Apresentação Institucional Abril/2017

Investor Relations

Transcript of Apresentação Institucional Abril/2017