Introduction to DOC Generici Jefferies Conference November 18-19, 2015

Transcription

1 Introduction to DOC Generici Jefferies Conference November 18-19, 2015

2 INTRODUCTION TO DOC GENERICI The generics market in Italy DOC Generici: Leading Independent player 1

3 A LAND OF OPPORTUNITY Italy Europe 19.0% 81.0% 48.0% 52.0% BRANDS BRANDS GENERIC MEDICINES GENERIC MEDICINES Source: Report OCSE «Health at a Glance 2015» PENETRATION STILL SIGNIFICANTLY BEHIND EUROPEAN AVERAGE 2

4 GENERICS: 19.7% PENETRATION OF ITALIAN RETAIL PHARMA MARKET IN % Generics: Market Share units % 25.3% 26.4% 27.6% 25% Generics: Market Share Ex-Factory sales % 23.2% Generics: Market Share Off Patent MKT % 20% 17.7% 18.5% 19.7% 16.0% 15% 12.1% 13.6% 10% 5% 0% 9.6% 10.3% 8.0% 10.8% 10.0% 6.9% 9.3% 5.9% 8.1% 4.1% 6.8% 3.4% 5.6% 6.0% 5.4% 2.5% 4.7% 1.1% 3.1% 3.5% 0.7% 1.4% 1.8% 2.1% Sept 15 YTD Note: Retail market. Source: IMS Health Sell-in 3

5 MARKET SHARE BY VOLUME OF BRANDS AND GENERICS IN SELECTED EUROPEAN COUNTRIES Volume market shares (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% ITALY FRANCE SPAIN GERMANY UK INN or company-branded generics Never protected brands and branded generics Off-patent original brands Protected brands Source: IMS

6 HIGHLY CONCENTRADED MARKET: TOP 5 PLAYERS WITH OVER 87% OF MARKET SHARE Commentary Market shares of top 5 players in the Italian generics retail market Size of the market and double digit growth has attracted the top generics players worldwide; 26% 24% Teva, Mylan, Doc, Stada and Sandoz represent 87% of the market in Italy and the market has been historically highly concentrated with these top five players controlling over 85% in the last five years 13 players account for the remaining 13% of the market and of these no company has more than 4% market share, a result of limited opportunities for smaller players to grow organically 22% 20% 18% 16% 14% 12% 14.4% 15.1% 15.3% 21.0% 20.4% 15.6% 15.6% 15.6% 15.0% 14.8% 2010A 2011A 2012A 2013A 2014A Sept 2015 Teva Mylan DOC Generici EG (Stada) Sandoz 5

7 REGULATORY ENVIRONMENT 1 Regulatory Area No discounts to pharmacies on reimbursed products Overview In 2009 deregulated discounts to pharmacies were banned and replaced by a fixed 8% fee Key success factors: market presence, brand awareness, customer service, timely launch of products and efficient sales force 2 Prices One-to-one negotiations with AIFA (generic price based on the value of the originator) Price list by product updated monthly: the lowest price then becomes the reference reimbursed price for all the equivalent products Pharmaceutical Governance Introduction of reference price by therapeutic class Review of the Pharmaceutical Governance Implementation of national separated sales budget for public pharmaceutical retail and hospital expenditure Each company is assigned a budget based on same growth rate and actual NHS sales of previous year Payback to the NHS is required if national budget exceeded, based on excess of each company s budget Reference price revised in September 2015 with an annual impact on the entire generic sector in the range of 25 Mio ex-factory Review of the Pharmaceutical Governance with the aim of reducing litigations and of guaranteeing sustainability Capital based companies can purchase pharmacies (pending law) 6

8 BEHAVIOUR OF KEY STAKEHOLDERS Stakeholder Overview 1 Pharmacist Obligation to inform patient about generic products, deliver products with price aligned to reference price (unless doctor/patient oppose it ) 8% additional margin vs originators 2 Medical doctors Obligation for doctors to indicate the INN of the molecule instead of the brand on the prescriptions for both new chronic treatments and acute diseases 3 Consumer Patient pays the difference between price of originator and its interchangeable generic(s) 7

9 Originator current ex-factory value ( /Mio) OUTLOOK: NEW WAVE OF PATENT EXPIRATIONS DRIVE GENERICS GROWTH FROM 2017 IN ITALY Year of Patent Expiration 8

10 INTRODUCTION TO DOC GENERICI The generics market in Italy DOC Generici: Leading independent player 9

11 DOC: THE LEADING INDEPENDENT GENERIC COMPANY IN ITALY The only large independent player in Italian market First sales in 2001 from the birth of the generic market Sales 2014: Mio/ (+3.7% vs. 2013) EBITDA 2014: 58.4 Mio/ (+3.7% vs. 2013) EBITDA MARGIN 2014: 36% (2013: 36%) Acquired by Charterhouse in 2013 Market Share 2014: 15.6% (2013: 15.6%) PRE TAX CASH CONVERSION : 85% on average ORGANIZATION: 70 employees 94 exclusive agents 10

12 DOC: KEY FEATURES OF THE BUSINESS MODEL A branded strategy with professional endorsement by doctors, pharmacists and consumers. A network of European R&D and manufacturing suppliers (business light model). A high proportion of variable and discretionary costs (more than 60%, excluding COGS) 11

13 LONG-STANDING AND DIVERSIFIED SUPPLIER BASE Production by geography in 2015 (volume) Supplier Length of relationship Supply value in 2014 ( m) Medis 10 years 7.5 Esteve 10 years 4.8 Chemo 10 years 3.8 Apotex 18 years 2.7 Pharmathen 10 years 2.4 Major developers and suppliers 22.2m Synthon 10 years 1.0 Italy (41%) Rest of Europe (47%) Canada (7%) SPL 10 years 4.2 Fine Foods 6 years 3.7 Lachifarma 5 years 3.2 Bouty 6 years 2.8 Doppel 15 years 2.3 Italian contract manufactures 16.2m 12

14 FLEXIBLE COST BASE OPEX % net sales ( m) Cost efficient operational platform 20.1% 21.3% 21.8% 23.7% 2014A overheads ( 9.0m) G&A, 5.3m Regulatory, 1.8m Operations, 1.2m Licencing & BD, 1.0m A 2012A 2013A 2014A Distribution Sales and Marketing Overheads 2014A Sales & Marketing ( 27.3m) Salaries and social contibutions, 2.7m Agents, 11.1m Trade marketing & Promotion, 11.7m Other, 1.9m Flexible cost structure with high proportion of variable and discretionary costs representing c.60% of total opex (excl. COGS) 13

15 A STRONG TRACK RECORD OF REVENUE GROWTH Net Sales Evolution (2000 LTM Sep 2015), EURm Revenue growth CAGR: 11% Sept 2015 LTM Ban of commercial discounts Prescription by INN 14

16 CONSISTENT HISTORICAL GROWTH EBITDA and EBITDA Margin 33.5% 37.2% 35.6% 33.1% 35.9% 35.9% 36.2% Market Shares (Value) 2010: 14,4% 25.2% : 15,1% : 15,3% * 2013: 15,6% 2014: 15,6% Sept LTM Revenue EBITDA EBITDA Margin Sep 2015: 15,6% * before overspending 15

17 STRONG CASH FLOW GENERATION Evolution of Capex ( m) Commentary Capex % % 2% 2% 2% 2% 1% Low Capex requirements A 2013A 2014A Sept LTM 2015 Sales Net Capex %(sales) 0% Evolution of pre-tax Free Cash Flow 1 ( m) % 85% % 2012A 2013A 2014A Sept 2015 LTM Pre-tax Free Cash Flow Cash Conversion 1. EBITDA Change in Working Capital Capex % 120% 100% 80% 60% 40% 20% 0% Commentary Outstanding cash flow conversion 16

18 THE FUTURE: THE PATENT CLIFF DRIVES A SIGNIFICANT OPPORTUNITY FOR THE CORE BUSINESS. NPD - New Molecules Launched over 108 new products since Recent launches continue to gain revenue momentum with a current pipeline of 58 products In 2017 a significant number of patents will expire, representing a great opportunity of new product launches Total 17

19 THE FUTURE: COMPLEMENTARY PROJECTS AT DIFFERENT STAGE OF EXECUTION Launch of doctor-driven nutritionals in the metabolic area Fixed combinations in the cardiovascular area Opthalmology as a therapeutic area Semi-exclusivity for selected biosimilars with retail potential 18

20 CONCLUSIONS A market leading position. Leading independent player in the Italian company-branded generics market One of the most recognised generic brands in Italy Flexible cost structure and asset light business model Strong financial performance and cash generation.providing a compelling competitive position for future growth.. Uniquely positioned to exploit the growth of the Italian generics market 19