INVESTOR RELATIONS - INVESTOR RELATIONS Investor Presentation per November 2019. AT A GLANCE Company

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Transcript of INVESTOR RELATIONS - INVESTOR RELATIONS Investor Presentation per November 2019. AT A GLANCE Company

  • Specialty pharma meets M&A competence

    INVESTOR RELATIONS

    Investor Presentation per November 2019

  • AT A GLANCE

    Company Snapshot Profitable Growth

    Recently Closed Acquisitions Brand diversification by area

    Family-owned company with > 25 years of pharma sector expertise

    Buy and Build strategy

    M&A know-how and track record with > 90 products acquired

    Branded specialty pharma / niche products in over 120 countries

    Value creation via scalable platform and Life-Cycle-Management

    Asset light business model with strong scientific backbone

    Revenue growth < € 1m in 1998 to c. € 292m in 2018

    80 122

    228

    292

    38 68

    134 167

    2015A 2016A 2017A 2018A

    mEUR Sales* EBITDA

    56% 59%47%

    Gastroenterology

    Adiposity

    Cardiology

    Infection Medicine

    Haematooncology

    Other Therapeutic Areas

    Ophthalmology

    Haematology

    Oncology

    Addiction Medicine

    57%

    09/201809/2018 09/2018

    Average age: c. 25 years

    01/2019

    09/2018

    09/2019 01/201910/2019

    % EBITDA margin

    2

    Sleeping Disorder

    Emergency Medicine

    1) Pro Forma

    *Mix of Net sales and sales/profit generated during the transitional phase of acquired products

    29%

    15%

    13%

    8%

    7%

    7%

    7%

    5%

    2% 2% 2% 3%

    2018

    PF¹

  • 15%

    9%

    7%

    5%

    2% 2%14%

    7% 3%

    3% 2% 1%

    9%

    6%

    6%

    5% 4%

    15%

    15%

    12%

    8%7%

    6%

    5%

    5%

    4%

    1% 11%

    Atacand/Plus Xenical

    Dilatrend Cymevene

    Visudyne Deursil/Ursolvan

    Fungizone Konakion

    Vesanoid/Tretinoin Questran

    Distraneurin Anexate

    VePesid Rohypnol

    Sotalex Etopophos

    Lexotan Dormicum

    All other

    ea. 2%

    3

    PORTFOLIO OVERVIEW

    TOP 3 = 42% Legacy

    Niche

    Europe

    Japan

    Korea

    China

    Taiwan

    Hong Kong

    Rest of Asia

    Asia & Oceania (30%)

    Other Regions (16%)

    Italy

    France

    Germany

    Spain

    Switzerland

    UK

    Europe (54%)

    Rest of Europe Oceania

    Latin America and Caribbean

    North America

    Africa Asia &

    Oceania

    Other Regions

    Sales by Products

    Sales by Geography

    CHEPLAPHARM is well diversified across products and geographies,

    providing global reach to Big Pharma

    47%

    31%

    22%

    Niche vs. Legacy

    Business Footprint

    • Business in more

    than 120 countries

    • Vast network of

    distribution

    partners globally

    • Secured supply

    and production

    network

    1) Pro Forma

    2018

    PF¹

    2018

    PF¹

    2018

    PF¹

  • 4

    FIGURES AS PER 12/2018

    > 90 Products

    > 10 Therapeutic

    Areas

    > 900 Acquired

    Marketing

    Authorisations

    > 24m Packs of

    pharmaceutical

    products p.a.

    > 250 Employees from

    15 Nationalities

    > 130 Distribution

    partners globally

    167m€ EBITDA*

    *Exceptional items not

    considered

    30 Yrs of experience

    within the

    management

    292m€ Sales*

    *Mix of Net sales and TSA

    related sales

  • Deal Sourcing &

    Due Diligence

    Life-Cycle Management

    Key value levers: (i) overhead cost and complexity reduction, (ii) optimization of production costs, (iii) active pricing strategy and (iv)

    well-established partners for production / D&M

    Production Research &

    Development

    5

    Distribution

    & Marketing

    BUY – INTEGRATE – BUILD / OPTIMIZE

    Disciplined identification of right acquisition targets, integration into outsourced supply chain and optimization via professional Life-Cycle Management

    No R&D activities & associated risks

    Focus on inorganic growth acquiring branded original off-patented niche or legacy products from Big Pharma

    CHEPLAPHARM is principally shifting distribution & marketing to its own external exclusive distribution network or taking over agreements by assignment

    CHEPLAPHARM’s clear focus and key competence is Life-Cycle Management creating added value vs Big Pharma

    Lean set-up given outsourced manufacturing and distribution activities to trusted, qualified and long-standing 3rd parties

    BUSINESS MODEL

  • UNIQUE, LOW RISK BUSINESS MODEL

    6

    Acquisition of “tried and tested” pharmaceuticals with sticky customer base, long-phase out

    periods and high brand awareness requiring no / less marketing

    Post-Patent Phase Management of

    product Life-Cycle

    Optimization of

    cost structure

    • Limited competition, no relevant generics

    • Unlikely to be replaced by new treatment guidelines

    • Stable to little growing sales and cash flows

    TimeC a sh

    Development Phase Patent Phase

    CHEPLAPHARM’s

    Business Model

    Niche product - Lower volume – typically no or limited competition (solid and stable sales)

    Legacy product - Higher volume – generic competition (price competitive)

    CHEPLAPHARM

    advantages:

    • Limited or no competition

    • 10+ years out of patent

    • Stable sales

    • Low risk due to “tried &

    tested” pharmaceuticals

    • Stable market share following generics competition

    • High brand loyalty being able to retain customers

    • Stable to slightly declining sales and cash flows

    1

    2

    Key characteristics

    Niche

    products

    Legacy

    products

    2

    1

  • LIMITED COMPETITION MARKET SEGMENT / BARRIERS TO ENTRY

    7

    Strong relationships to big pharmas and reliability being key for any upcoming transaction

    representing a significant barrier to entry for potential new market players

    M&A

    track record

    and

    regulatory

    competence

    Fast - Flexible -

    Reliable

    Package

    Deals

    Global

    distribution

    And many more…!

  • FROM SIGNING TO TRANSITION

    ✓ Signing of the Asset Purchase Agreement (APA) and ancillary contracts like TSA, PVA and MSQA/ TMA

    8

    ✓ Payment of the purchase price when APA becomes effective

    ✓ Immediate start of integration process

    ✓ Start of preparing Business Transfer Plan

    ✓ Transfer of all IP and know-how

    ✓ Transition to exclusive CP cooperation partner network (in terms of distribution and CMO)

    ✓ Transition period lasts according to agreement with seller

    Signing Closing Transition

  • 0

    200

    400

    600

    800

    1000

    1200

    1 2 3 4 5 6 7

    CREATING VALUE FROM LIFE-CYCLE MANAGEMENT

    Life-Cycle

    Value of

    Big Pharma

    Life-Cycle Value

    of

    CHEPLAPHARM

    Overhead

    Reduction

    Reduction of

    Production Costs

    Active Price

    Strategy

    Reduction of

    complexity

    Others

    Schematic presentation for illustration purposes only

    9

    Life-Cycle Management comprises several measures with regular optimization of

    production costs being the most important value lever

    Life-Cycle Management provides additional upside,

    i.e. neither included in investment decision nor in

    CHEPLAPHARM’s business plan

    Basis for investment decision

    (ROI calculation)

  • SUMMARY - KEY CREDIT HIGHLIGHTS

    10

    Unique, low risk business model with easy scalability

    Strong acquisition track record and global distribution

    Limited competition market segment

    Diversified sales base and high revenue visibility

    Limited capex requirements resulting in significant cash generation

    Highly qualified management with proven operational and M&A track record

    1

    2

    3

    4

    5

    6

  • Specialty pharma meets M&A competence

    APPENDIX

  • ORGANISATIONAL STRUCTURE

    12

  • COMMENTS FROM THE RATING AGENCIES

    13

    “ CHEPLAPHARM runs a profitable and cash flow generative business model

    …. good therapeutic and geographic diversity

    …. successful track record and established relationships with leading global pharma

    companies ”

    “ CHEPLAPHARM will be able maintain its profitability metrics, supported by

    management's focus on lifecycle management activities

    The main strengths of the company is its established track record of careful product

    selection ….

    …. the company has been able to generate average EBITDA margins of about 55% ”

    “With EBITDA margins projected at around 50% over the rating horizon, the

    company ranks among the most profitable in Fitch’s low non-investment grade

    portf