~400 SIGNIFICANT CLIENTS ~700 PRODUCTS 70+ COUNTRIES 75% OF ALL DOSAGE FORMS 21% ALL OUTSOURCED FDA APPROVALS IN LAST DECADE 95%+ RFT/OTD

Transcription

1 ~400 SIGNIFICANT CLIENTS ~700 PRODUCTS 70+ COUNTRIES JP Morgan Healthcare Conference Click to edit Master title style San Francisco, CA Click to edit July Master 11, 2016 text January 9, 2016 styles 75% OF ALL DOSAGE FORMS 95%+ RFT/OTD 21% ALL OUTSOURCED FDA APPROVALS IN LAST DECADE 1

2 DISCLAIMERS Forward-Looking Statements This presentation contains forward-looking statements which reflect the current beliefs and expectations of Patheon s management regarding the company s future growth, results of operations, performance (both operational and financial) and business prospects and opportunities. The statements in this press release that are not historical facts may be forward-looking statements. Readers can identify these forward-looking statements by the use of words such as outlook, believes, expects, potential, continues, may, will, should, seeks, approximately, predicts, intends, plans, estimates, anticipates or the negative version of these words or other comparable words. Such forward looking statements are subject to various risks and uncertainties, which could cause actual results to differ from those indicated in these forward looking statements. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forwardlooking statements, please refer to the "Risk Factors" section of the prospectus included in the company s registration statement, in the form last filed with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by applicable law. Accordingly, readers should not place undue reliance on forward-looking statements as a prediction of actual results. Presentation of Financial Information The historical financial data included in this presentation has been derived from Patheon's consolidated financial statements. Patheon was formed in The Netherlands on December 24, 2013, in the form of a Dutch cooperative with excluded liability for its members (coöperatie met uitgesloten aansprakelijkheid), by a partnership between JLL and DSM in connection with the acquisition of Patheon Inc., a Canadian company listed on the Toronto Stock Exchange, for approximately $1.4 billion in cash (the LBO ). In June 2016, Patheon converted from the Dutch cooperative into a Dutch limited liability company (naamloze vennootschap) and its corporate name was changed to Patheon N.V. Following the LBO, which was consummated on March 11, 2014, Patheon Inc. and DPP became Patheon s wholly owned indirect subsidiaries. From an accounting standpoint, Patheon Inc. was the acquirer and as such all financial information prior to March 11, 2014 is related to Patheon Inc. Since the LBO, Patheon has made several acquisitions and dispositions, which have been reflected in Patheon's consolidated financial statements. Unless otherwise noted, historical financial data related to Legacy Patheon excludes the acquisitions since the LBO. The historical financial information contained in this presentation includes financial information that is not presented in accordance with U.S. generally accepted accounting principles (GAAP), including but not limited to Adjusted EBITDA and certain ratios and other metrics derived there from. These non-gaap financial measures are not measures of financial performance in accordance with GAAP and may exclude certain items that are significant to understanding and assessing Patheon s financial results. Therefore, these non GAAP financial measures may be considered in addition to GAAP financial information, but should not be used as substitutes for, or in isolation from, the corresponding GAAP measures. Non GAAP measures in this presentation may be calculated in a way that is not comparable to similarly titled measures reported by other companies. Please refer to the Appendix of this presentation for a reconciliation of the non-gaap financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP. Use of Non-GAAP Financial Matters We define Adjusted EBITDA as income (loss) from continuing operations before repositioning expenses (including certain product returns and inventory write-offs recorded in gross profit), interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition and integration costs (including certain product returns and inventory write-offs recorded in gross profit), gains and losses on sale of capital assets, Biologics earnout income and expense, income taxes, impairment charges, remediation costs, depreciation and amortization, stock-based compensation expense, consulting costs related to our operational initiatives, purchase accounting adjustments, acquisition-related litigation expenses and other income and expenses. Adjusted EBITDA margin is Adjusted EBITDA divided by net revenue. Our management uses Adjusted EBITDA as one of several metrics to measure the Company s operating performance. Adjusted EBITDA is also a component of the performance objectives used to determine the short and long-term incentive portions of executive compensation. We believe that providing this non-gaap financial measure to investors as a supplement to the comparable U.S. GAAP measures in evaluating the performance of our operations provides greater transparency to the information used by the Company s management in its financial and operational decision-making. This non-gaap financial measure does not have a standard meaning, so it may not be comparable to similarly-titled measures presented by other companies and should not be considered in isolation or as a substitute for U.S. GAAP financial measures of performance. Reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure is included in the appendix to this presentation The Company does not provide a reconciliation of forward-looking non-gaap financial measures to their comparable GAAP financial measures because it could not do so without unreasonable effort due to the unavailability of the information needed to calculate reconciling items and the variability, complexity and limited visibility of the adjusting items that would be excluded from the non-gaap financial measures in future periods. When planning, forecasting and analyzing future periods, the Company does so primarily on a non-gaap basis without preparing a GAAP analysis as that would require estimates for various cash and non-cash reconciling items that would be difficult to predict with reasonable accuracy. For example, equity compensation expense would be difficult to estimate because it depends on the Company s future hiring and retention needs, as well as the future fair market value of the Company s common stock, all of which are difficult to predict and subject to constant change. It is equally difficult to anticipate the need for or magnitude of a presently unforeseen one-time restructuring expense or the values of end-of-period foreign currency exchange rates. As a result, the Company does not believe that a GAAP reconciliation to forwardlooking on-gaap financial measures would provide meaningful supplemental information about the Company s outlook. 2

3 CATEGORY LEADER: HIGHLY PREDICTABLE, GLOBAL BUSINESS $1.9B 2016 Revenue $395M 2016 Adj. EBITDA DSS PDS DPS Products Clients Scientists and Technicians Drugs (Developed or Manufactured) Of All Outsourced FDA Approvals Over Locations Serving 70 Countries ~700 ~400 ~25% 600+ Of Top % 26 3

4 LARGE ATTRACTIVE MARKET WITH SIGNIFICANT GROWTH DRIVERS R&D DRIVERS COMMERCIAL DRIVERS 12,300 Number of drugs in the development in 2015, versus ~6,000 in ,300 Companies with active development pipeline in 2015, versus ~ 1,200 in 2001 $160B Global pharma and biotech R&D spend by 2020 RX DRIVERS: Increased: insured population globally middle-class in emerging markets Incidence of chronic disease 8.1B Projected global population in 2025, versus ~7.3B today 1B Projected population over 60 in 2025 $1T Global Rx sales by BOTH R&D AND COMMERCIAL DRIVERS WILL CONTINUE TO ACCELERATE THE GROWTH OF CDMO INDUSTRY

5 DEMAND FOR OUTSOURCING CONTINUES CDMO Outsourcing: ~5% CAGR ~30% Penetrated Today Flexibility Growing Customer Outsourcing Supply Chain Simplification More than 100 Tech Transfers in 2016 More than 50 product launches Technical Expertise and Know-How Increase in # of New Molecules ~ 470 new contracts, including Boehringer Ingelheim, Amgen, Grünenthal Breadth of Capabilities Heightened Regulatory Burdens Increasingly Complex Molecules Increasing number of strategic dialogues with clients SECTOR TRENDING TOWARDS HISTORICAL CRO TRAJECTORY 5

6 $40B+ GLOBAL OUTSOURCING OPPORTUNITY Only Patheon Integrates the Supply Chain Approximate Market Sizes $40+ BILLION MARKET $2B $4B $20B $15B Pharmaceutical Development Market Size: ~$2B Drug Substance Development Market Size: ~$4B Drug Substance Commercial Market Size: ~$20B Drug Product Market Size: ~$15B / 6 PHARMACEUTICAL DEVELOPMENT SERVICES (PDS) DRUG SUBSTANCE SERVICES (DSS) DRUG PRODUCT SERVICES (DPS)

7 PATHEON START HERE, STAY HERE Video Drug Development: Bioreactors - St Louis Laboratory footage from - Groningen, Netherlands, and Cincinnati Low solubility products - Ferentino Drug Product: Pre-filled syringe -Monza Solid dose - Cincinnati Sterile fill finish - Ferentino 7

8 LEADER IN LAUNCHING NEW PRODUCTS 92 NDA Approvals from NDA Approvals in x More than the next closest competitor in the last decade ~16% of all NDAs approvals in 2016 ~21% Of all outsourced FDA approvals over the last decade NDA approvals in x More than the next closest competitor in 2015 LONGER PRODUCT LIVES LOCKING IN PRODUCTS EARLY IN THE GROWTH YEARS 8

9 PURPOSE BUILT, PERFORMANCE DRIVEN HIGH PERFORMANCE Delivering quality and reliability BREADTH OF SERVICES End-to-end offering serving all customer segments STRENGTHEN CORE OPERATIONS SELL BUSINESS DIFFERENTLY SCALE AND GLOBAL CAPACITY Flexible network to address growing increasingly complex customer needs ENTER LOGICAL ADJACENCIES DRIVE INDUSTRY CONSOLIDATION CREATED THE ONLY SINGLE SOURCE, END-TO-END SERVICE PROVIDER 9

10 PILLARS OF GROWTH ORGANIC GROWTH Leader in All Segments Addressing 75% of all dosage forms High Quality Performance 95%+ RTF/OTD End-to-End Provider ~1/3 DPS launches originate from PDS New Product Launches ~70 launched in 2015 NEW CLIENT MODELS Condo Model Reduces investment to create manufacturing capacity Flex Capacity Provides scale and flexible capabilities Managed Networks Improves asset utilization OneSource Integrated manufacturing capability CONSOLIDATION Fragmented Marketplace 650+ companies Proven Track Record Integration playbook drives consistent value captures Expanding Capabilities Capturing business earlier in value chain and/or retain it Increased Scale Creating enterprise value through rapid synergy realization 8%-9% ANNUAL GROWTH OUTPACING INDUSTRY STRATEGIC DEALS WITH ROCHE, AMGEN, FLEXION, PACIRA HIGHLY ACCRETIVE ACQUISITIONS 10

11 CUSTOMER NEEDS DRIVE M&A STRATEGY EXPAND CAPABILITIES Enhance breadth and differentiation to amplify market opportunity Capture business earlier in value chain and retain it (stickiness) Find assets that will increase our differentiation by adding capabilities and technologies INCREASE CAPACITY Increase scale to enhance cost competitiveness Create enterprise value through rapid synergy realization Acquire greater share of wallet with large customers creating broader strategic relationships Drive value through new business models DRIVING PERFORMANCE: DELIVERING QUALITY & RELIABILITY 11

12 CAPABILITY AND CAPACITY: ACQUIRE STATE OF THE ART API FACILITY Florence, South Carolina STRONG BENEFITS State of the art facility Expanded API capacity in North America SIGNIFICANT OPPORTUNITY Multi-year manufacturing agreement with Roche Investment by Patheon Margin Enhancement Opportunities Immediate Capacity Utilization Long-Term Growth 200 professionals, supporting Solid State Chemistry, Micronization and Commercial Spray Drying 12

13 THE PERFORMANCE JOURNEY Outpacing Market With 10% Revenue Growth 2017F $2B Revenue 85% of revenue locked in 23% Adj. EBITDA Margin $1.9B Revenue 21% Adj. EBITDA Margin $1.8B Revenue 21% Adj. EBITDA Margin $1.7B Revenue 14% Adj. EBITDA Margin $1.6B Revenue 12% Adj. EBITDA Margin $748M Revenue 12% Adj. EBITDA Margin $648M Revenue 4% Adj. EBITDA Margin 13 Note: Please see the Appendix for a reconciliation of certain figures presented to amounts previously reported in our SEC filings.

14 DRIVING ABOVE-MARKET PERFORMANCE IN 2017 ABOVE-MARKET REVENUE GROWTH STRONG CLIENT DEMAND SOLID MARGIN PROFILE 10% CAGR $2B+ New Business Wins 200 bps expansion 14

15 15 Appendix

16 ADJUSTED EBITDA BRIDGE FY 2011 FY 2016 FY11 FY12 FY13 FY14 FY15 FY16 (Loss)income from continuing operations (16.1) (106.7) (32.6) (117.1) Depreciation and amortization Repositioning expenses Acquisition and integration costs Interest expense, net Impairment charge Provision for(benefit from) income taxes (3.7) (24.0) Refinancing expenses Operational initiatives related consulting costs IPO costs Acquisition-related litigation expenses Stock-based compensation expense Remediation costs Purchase accounting adjustments Gain on sale of investments (16.2) - Other (4.7) (0.5) (3.6) (0.5) 4.1 (1.6) 16 Adjusted EBITDA

17 PRO FORMA REVENUE RECONCILIATION Revenue FY11 FY12 FY13 FY14 FY15 As Reported $698M $748M $991M $1,483M $1,774M Plus: Pre-Acquisition DPP $522M $174M Pre-Acquisition Banner $28M Pre-Acquisition Gallus $48M $67M Pre-Acquisition Irix $36M $51M $25M Pre-Acquisition Agere $5M $7M $4M Less: Contract Cancellation Fee ($50M) BLS Spin-Off ($34M) ($40M) ($38M) As Presented Pro Forma $648M $748M $1,594M $1,742M $1,765M 17

18 PRO FORMA ADJUSTED EBITDA RECONCILIATION Adjusted EBITDA FY11 FY12 FY13 FY14 FY15 As Reported $79M $87M $143M $248M $375M Plus: Pre-Acquisition DPP $38M $2M Pre-Acquisition Gallus $7M $3M Pre-Acquisition Irix $4M $10M $6M Pre-Acquisition Agere $1M $2M $1M Less: Contract Cancellation Fee ($50M) Pre-Acquisition Banner ($4M) BLS Spin-Off ($4M) ($14M) ($14M) As Presented Pro Forma $29M $87M $185M $252M $367M As Presented Pro Forma Margin 4% 12% 12% 14% 21% 18