1
Basel, 8 October, 2009
Gert Hoogland, MD, MBA ‘85D (INSEAD) – Founder and CEO Pharmaplan Pty Ltd
SOUTH AFRICAAn Insider's perspective
22
South Africa Today The good The bad The ugly
The SA Pharma Market
Pharmaplan Pty Ltd
Agenda
33
Spectacular Beauty
44
Infrastructure
55
Tri-Nations Champions
66
Soccer World Cup 2010
77
Key market features against other major emerging markets
Description South Africa
Brazil Russia Turkey Kenya Nigeria Argentina India
Population
- Number (million) 48.8 189.34 142.4 75.2 37.5 146.2 39.4 1110.4
- Growth rate 0.50% 1.40% -0.17% 1.30% 2.70% 1.50% 1.00% 1.40%
- Median age (years) 24.2 28.3 38.3 29.0 18.6 18.9 29.7 25.1
- Below poverty line 50% 31% 16% 20% 50% 70% 23% 25%
GDP
- GDP (US$ billion) 283 1,849 2,097 854 61 296 526 2,966
- GDP per capita
(US$)
9,700 9,500 14,800 12,000 1,700 2,100 13,100 2,600
- Real growth in GDP 5.1% 5.4% 8.1% 4.6% 7.0% 6.2% 8.7% 9.0%
US exchange rate * 7.92 1.74 24.31 1.25 67.43 117.54 3.12 42.42
Inflation 6.5% 3.6% 9.0% 8.7% 9.7% 5.4% 8.8% 6.4%
Sovereign credit
rating (S&P)
BBB+ BBB- BBB+ BB- B BB- B BBB-
Source: CIA World Factbook, The Economist Intelligent Unit, Standard Bank Group Economics, Credit Suisse
* Average from 01/01/08 until 04/11/08
88
Economic indicators
11.5% 11.0% 10.5%
12.5%
14.5% 15.0%
10.5%
12.5% 12.5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
2003 2004 2005 2006 2007 2008F 2009F 2010F 2011F
3.1%
4.9% 5.0%5.4% 5.1%
3.1%
-1.5%
3.0% 3.2%
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
2003 2004 2005 2006 2007 2008F 2009F 2010F 2011F
Prime lending rates Average annual CPI
Economic overview of South Africa Real GDP growth The economy has developed from being commodity based into a
relatively well-diversified service-driven economy The largest contributor to GDP is the services sector, comprising finance,
insurance, real estate and business services The South African Reserve Bank (SARB) has increased interest rates six
times since the beginning of 2007, driven by monetary policy which targets an inflation band of 3% to 6%
Economic activity is experiencing a slowdown (in midst of global markets and domestic issues) following unprecedented growth over the past several years
As result of higher monetary policy and credit-lending criteria, household demand has decreased (following a period of easy access to credit in recent times)
With a large measure of macro stability achieved, the aim of economic policy is to lower unemployment and poverty through raising the growth potential of the economy
– The Government continues to target 6% real GDP growth by 2010
– Significant infrastructure capital expenditure is planned from 2008 enabling an improvement in real GDP growth ahead of the World Cup in 2010
5.8%
1.4%
3.4%4.6%
7.1%
11.9%
7.8%6.4%
5.7%
0%
2%
4%
6%
8%
10%
12%
14%
2003 2004 2005 2006 2007 2008F 2009F 2010F 2011F
Source: Standard Bank Research Economics Macro-Economic Forecast
99
South Africa Today The good The bad The ugly
The SA Pharma Market
Pharmaplan Pty Ltd
Agenda
1010
Societal Challenges
Source: Standard Bank Research Economics Macro-Economic Forecast
Unemployment Inequity / BEE Service Delivery Skills exodus / Skills Gap Housing / sanitation / education Public versus Private Sector issues
1111
South Africa Today The good The bad The ugly
The SA Pharma Market
Pharmaplan Pty Ltd
Agenda
1212
Crime
# 1 Colombia: 0.617847 # 2 South Africa : 0.496008
= 25,000 = 68 murders/day
# 3 Jamaica: 0.324196 # 4 Venezuela: 0.316138 # 5 Russia: 0.201534 # 6 Mexico: 0.130213 # 7 Estonia: 0.107277 # 8 Latvia: 0.10393 # 9 Lithuania: 0.102863 # 10 Belarus: 0.0983495
Murders per 1,000 inhabitants
Source: Nationmaster.com
1313
Healthcare Challenges
HIV / AIDS 5,5 million MTC transmission 300,000 p.a. HIV / AIDS deaths 345,000 p.a. Tuberculosis 482,000 Tuberculosis deaths 105,000 p.a.
NHI – Public/Private partnerships
1414
South Africa Today The good The bad The ugly
The SA Pharma Market
Pharmaplan Pty Ltd
Agenda
1515
SA Pharmaceutical market…
2009 >20 bn ZAR
Private market• Ethical & Proprietary•Dispensing Dr• Private Hospitals
15 bn ZAR
10 bn ZAR
1 bn ZAR
4 bn ZAR
Public market 5 bn ZAR
Source: IMS May 2009
1616
SA Demographics
8 m lives insured (Private)
16 m lives employed, not
insured(Emerging Market –
MHC)26 m lives not employed, not insured
(Public Healthcare)
1717
Top companies
Aspen Adcock – Ingram Sanofi Aventis Novartis Pfizer
# 28 (corrected for uncaptured sales # 21)
Pharmaplan
Astra-Zeneca Johnson &
Johnson Roche Glaxo Cipla
Generic
Generic
Hybrid
Hybrid
Hybrid
R&D based
R&D based
R&D based
Hybrid
Generic
1818
South Africa Today The good The bad The ugly
The SA Pharma Market
Pharmaplan Pty Ltd
Agenda
1919
Pharmaplan Vision
To be South Africa's Premier Specialist Pharmaceutical
Company
"There are currently 12 specialist driven products in the top 30 and 17 in the top
50" Scrip '05
2020
But … RSA also needs -
Representation of Top NICHE generic suppliers in South(ern)
Africa
“It is therefore very crucial for us to ensure that access to affordable, safe, effective and
quality drugs is established”Dr. Manto Tshabalala
Msimang, Minister of Health, Keynote address, 10 September 2001
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Pharmaplan Hybrid Model
• Medium sized R&D based international suppliers
• Complemented by "niche" generic suppliers
“Provide new therapeutic entities by making financial headroom resulting from generic
substitution of out-of-patent products”
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Head Office – Midrand
2323
Distribution & Logistics
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Features and Benefits… Ideal partner for small to medium
sized specialized, pharmaceutical companies― Niche, boutique
Shared trading infrastructure across principals― Cost effective
Dedicated marketing and sales forces― Principal directed product positioning
Integrated pharmaceutical agency offering― Registration, Marketing, Launch,
Distribution, Regulatory, Finance Regional (SADC) agency offering
― Allows principals to concentrate on key countries
2525
Pharmaplan Coverage
Source: www.sa-venues.com
2626
Starting out in 1997 …
2727
Specialty Focus
Neurology
Radiology Dermatology
Gastro-Enterology
Oncology Psychiatry
Clinical nutrition Cardiology Pain Management
Anaesthesiology Allergology Gynaecology
2828
Today
2929
South Africa – Pharmaceutical Market Key Players
-5
0
5
10
15
20
25
30
35 32%
11%14%14%
20%
26%
-3%
4%6%
8%
The key players in the pharma market are growing at a healthy rate
Source: IMS Health-May 2009 MAT – Conversion rate pharmaplan 2007=6.5 conversion rate 2009= 7.4 $22.5 Mn to $39.2 Mn
2007-2009 CAGR of major Pharma companies
May MAT 2009 Market share of major Pharma companies
Pharm
apla
n
Cip
la-M
edpro
Astra
Zeneca
Sanofi A
ventis
Asp
en
Gla
xoSm
ithK
line N
ovartis
Roch
e
Adco
ck In
gra
m
Pfize
r
30%
4%4%
4%5% 5%
6%
7%
8%
11%
14%
Pfizer
Novartis
Sanofi Aventis
Adcock Ingram
Aspen
REST
2%
Pharmaplan
Johnson & JohnsonCipla-Medpro AstraZeneca
Roche
GlaxoSmithKline
3030
Pharmaplan sales growth = 2x market growth
100,000
200,000
300,000
400,000
500,000
600,000
2008
2007
97,285
2006
(+28%)160,207(+37%)
125,27291,302
(+40%)224,395
2009
(+34%)300,000
2010
2003
2005
2004
0201
2
(+15%)440,000
2011
(+13%)496,000
49,466
(+28%)384,000
Sales history (ZAR '000)
3131
Summary … 12 years of exceptional organic growth
(>25% CAGR in top and bottom line) In-depth knowledge of both R&D
and generic Rx markets Focused on Specialty Pharma and Hospital
Business Fastest growing and largest private pharma
company in South Africa, now entering SADC countries
Interested in attracting new niche-based Principals and value adding equity partner(s)
3232
Recommended reading
Zumanomics Raymond Parsons
Lancet series on South African Healthcarewww.lancet.com
NAPM website www.napm.co.za
3333
Thank youDr Gert Hoogland, MD, MBA (INSEAD)Executive DirectorTel: +27 (0) 11 652 0950Fax: + 27 (0) 11 652 0953Mobile: +27 (0) 82 900 0728
Pharmaplan (Pty) Ltd106 – 16th RoadMidrand 1685South Africa2000
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