Pharmaceuticals & Cosmetics Sector Poland

Transcription

1 Pharmaceuticals & Cosmetics Sector Poland January 2016 Produced by: PL_3254_0013_Jan 2016_MP-NY

2 Table of Contents I. Sector Overview 1. Sector Highlights 2. Economic Importance 3. Healthcare Spending Historical and Forecast 4. Disease Profile 5. Healthcare Resources 6. Health Perceptions and Spendings 7. Ageing Society II. Pharmaceuticals 1. Pharmaceutical Sector Highlights 2. Pharmaceutical Market 3. Production and Investments 4. Pharmaceutical Manufacturers 5. Pharmaceutical Segments 6. Prescription vs OTC 7. Exports and Imports 8. Dietary Supplements 9. Pharmacies 10.Medicine and Supplements Use 11.Forecast III.Cosmetics 1. Cosmetic Sector Highlights 2. Cosmetics Market Production 3. Cosmetics Market Indicators 4. Main Cosmetics Segments 5. Main Cosmetics Segments Market Shares 6. Sales 7. Exports & Imports 8. Forecast IV.Main Players 1. M&A Activity 2. Top Ten Sector Companies 3. Pelion Healthcare Group 4. Pelion Healthcare Group (cont d) 5. Neuca 6. Neuca (cont d) 7. Farmacol 8. Farmacol (cont d) 9. Glaxosmithkline 10.Rossmann - 2 -

3 I. Sector Overview - 3 -

4 Sector Highlights Recent Development The value of Poland s pharmaceutical market came to PLN 29.8bn, while the cosmetics market was estimated to have exceeded PLN 20bn in Both sectors are believed to be the sixth largest in Europe. In 2014, the two markets combined represented 2.9% of Poland s GDP. As the average Pole spends EUR 139 annually on pharmaceuticals and USD 110 on cosmetics, both well below Western countries figures, there is still room for growth. Drivers & Constraints The ageing population is expected be the chief driver of growth of the pharmaceutical market. That market will also continue to be heavily influenced by the government policy as the 2012 drug reimbursement law proved by resulting in a fall in sales that year. The planned government policy of subsidising pharmaceuticals for people over 75 years of age could boost prescription drug sales. The cosmetics market is not as heavily dependent on the government policy as the pharmaceutical one, it relies more on the income and the economic situation of the households and with the Polish economy expected to perform well in the coming years, the outlook for the households is rather positive. Forecast Both the pharmaceutical and the cosmetics markets are expected to witness growth in the coming years. The former is expected to have a CAGR of over 4% until The cosmetics market is also expected to grow although most of its categories will see a CAGR of 1-2% in the next four years after

5 Economic Importance Key Sector Indicators GDP, real value, PLN bn 1, , , , ,724.7 GDP, % change y/y Pharmaceutical market - revenue, PLN bn Pharmaceutical market, % change y/y Pharmaceutical market, % of GDP Manufacture of pharmaceutical products, GVA,, PLN bn Manufacture of pharmaceutical products, % of GDP Cosmetics market - revenue, PLN bn Cosmetics market, % change y/y Cosmetics market, % of GDP FDI in Manufacture of Pharmaceuticals, EUR mn * - Due to the lack of official data for the value of the cosmetics market in 2014, we have estimated this figure on the basis of GDP dynamics and PMR's long-term forecast for the sector. Source: Statistics office; CEIC - 5 -

6 Healthcare Spending Historical and Forecast Health spending (PLN bn) Health spending forecast (PLN bn) Private Private Govern ment Govern ment 20 Total 20 Total e 2016f 2017f 2018f 2019f Comments According to the latest OECD calculations, Poland s total expenditure on health in 2013 came to 6.4% of its GDP, the third lowest among the countries surveyed (only Mexico and Turkey had lower figures). By comparison, regional peers Czech Republic and Hungary spent 7.1% and 7.4% respectively of their GDP on healthcare. In Germany and France the figure was around 11%. Also, Poland lags behind other countries in terms of government expenditure on healthcare, which represented 4.5% of the GDP in 2013, according to the latest available data. Source: BMI Research - 6 -

7 Diseases Profile Incidence of selected less common diseases Cases of Inflluenza ,164,405 3,313, ,054 1,156,357 1,460, Tetanus Measles AIDS Incidence of selected common diseases Incidence of other selected diseases ,891 6,263 22,885 25,115 25,421 38,548 7,509 8,478 7,542 7,250 6,698 Bacterial meningitis and/or encephalitis Viral meningitis ,290 4,197 18,267 13,940 Scarlet fever Rubella 2,754 2,585 2,779 2,436 2,508 1,813 1,167 1,040 1,268 1, Mumps New cases of tuberculosis Source: Statistics office - 7 -

8 88,429 88,328 88,250 88,217 89,678 92,089 94,204 98, , , , , , , , ,280 Healthcare Resources Individual Medical and Dental Practices Outpatient Clinics (thou) 5,333 3,518 4,960 4,749 4, ,594 1,479 1,330 1,145 1, Medical Stomatological Hospitals Beds in inpatient care (thou) Total hospital beds Long term care beds Source: Statistics office - 8 -

9 Health Perceptions and Spending Self-Perceived Health* Reasons for Not Visiting a Medical Specialist (%)* Female Male Rural areas Urban areas Total very bad bad fair good very good *in % of a given group of households Long period of waiting for visit 49.8% Lack of money 22.9% Lack of time 5.8% Lack of referral to specialist 5.2% Waiting for symptoms to disappear 5.7% Other 10.6% * in % of a given group of households Long-Standing Health Problems* Total Urban areas Rural areas Male Female yes no Average per capita monthly expenditure on health (PLN) Out-patient services Other medical products, equipment Pharmaceutical products Total health expenditure Source: Statistics office - 9 -

10 Ageing Society Life Expectancy at Birth Male Female Women s Fertility Rate (children per woman) Population Age Structure (mn) e 2020f 2030f 2040f Source: OECD (above, bottom left); Statistics office (bottom right)

11 II. Pharmaceuticals

12 Pharmaceutical Highlights Recent Development The value of the pharmaceutical market came to PLN 29.9mn at the end of 2015, up 4.8% y/y, according to Pharma Expert. The IMS Health latest available estimates, which are for 2013, show that the Polish market was the sixth largest one in Europe. The EUR 139 per capita annual expenditure on drugs in Poland remains one of the lowest in Europe, according to a 2015 report by DNB Bank and Deloitte. The state reimbursement for drugs in Poland is also one of the lowest in Europe. Generic drugs hold a dominant position on the market representing around 70% of all sales as of the end of 2015, a figure that is based on various estimates. Pharmaceutical wholesalers, driven by falling margins in their business, started entering higher margin segments of the market. Prime examples of this trend are Pelion s acquisition of the Natura drugstore chain or Neuca s acquisitions of outpatient clinics. Drivers & Constraints The increasing life expectancy in Poland (at 77 years in 2013) combined with a birth rate well below the replacement level are expected to lead to the ageing of the Polish population. The only age group that will be growing in the next decades will be the 65 plus age group. This process will be the main driver for the pharmaceutical market as it is the older age groups that use medicines most frequently. Growing wealth and health consciousness are also expected to contribute to a rise in sales. Also the planned government policy of providing free of charge pharmaceuticals for citizens over 75 years of age could increase prescription drug sales, just as the drug reimbursement policy of 2012 led to a slump in pharmaceutical and especially prescription drug sales. However, as of the beginning of 2016, forecasts by DNB Bank and Deloitte expect the pharmaceutical market growth rate to slow down manly due to a halt in pension growth, which directly affects prescription drug sales. Government Policy In 2015, two amendments to the 2012 Pharmaceutical Law were introduced. One is the so-called counterfeit goods amendment, obliging wholesale units to apply a quality system determining obligations, processes and risk management regarding their operations, and the other aims at preventing the reverse distribution chain. Also the new Polish government, created in November 2015 by the Law and Justice party, plans to put into force its election promise of providing free of charge pharmaceuticals for people over 75 years of age. The list of the free medicines will be updated every two months. The pharmaceuticals will be funded directly from the state budget and not from the National Health Fund. In 2016, PLN 495mn will be earmarked for funding the medicines for the elderly. By 2025, this figure should reach PLN 1.2bn. Forecast In 2016, pharmaceutical sales are expected to increase by 1.1% y/y compared to a growth of over 4% in 2014, due to an expected stagnation in prescription drug sales caused by slower pension growth. BMI Research expects the total pharmaceutical sales to grow by a CAGR of 4.6% until OTC drug sales are forecast to grow by a CAGR of 4.6 % in that period, prescription drugs by 4.8%. Also generic drugs will continue to dominate the landscape, growing by a CAGR of 4.4% until Patented drugs are expected to grow at a faster rate in , but their share in total pharmaceutical sales will not exceed 32% from the current around 30%

13 Pharmaceutical Market BMI Research: Pharmaceutical Sales (PLN bn) Comments Pharma Expert: Pharmaceutical Sales (PLN bn) According to a sector report by DNB Bank and Deloitte, the average Pole spends EUR 139 on pharmaceutical products per year. This is the third lowest figure in the EU, followed only by Latvia and Romania. By comparison, Germans spend an average EUR 510 per capita and Hungarians EUR 247. Expenditure on medicines represents 1.4% of GDP and 21% of all healthcare spendings in Poland. According to the statistics office, 31,400 people held pharmacist licences in 2014, up by 900 in comparison to According to the statistics office, there were 335 pharmaceutical producers in Poland at the end of 2013, up from 310 the previous year. In 2014, there were 68 companies with over 49 employees operating in the pharmaceutical manufacturing segment Source: BMI Research (above); Pharma Expert (bottom)

14 Production and Investments Sold production of domestic pharmaceutical firms (PLN bn) Production of basic pharmaceuticals and preparations (tonnes) ,507 1,147 1,113 1,217 1,243 1,079 1, Investment outlays (PLN mn) Sulphonamides Packed farmaceutical herbs Comments In Q1-Q the sold production of pharmaceutical products came to PLN 9.799mn, up by 2.4% y/y. Investment outlays surged by 54.3% y/y to PLN 310.3mn in Q1-Q Of these, PLN 206.6mn were invested in machinery. During the period, PLN 130.7mn worth of investments in the pharmaceutical manufacturing sector were started Source: Statistics office

15 Pharmaceutical Manufacturers Financial results of pharmaceutical producers (PLN bn) Employment (thou persons) Number of companies Net financial result Financial result on economic activity Costs of obtaining revenues from total activity Revenues from total activity Total firms Firms with more than 49 employees Source: Statistics office

16 Pharmaceutical Segments Generic drug sales (PLN bn) Patented drug sales (PLN bn) BMI: Prescription & OTC drug sales (PLN bn) Prescription drugs OTC drugs Comments According to DNB Bank and Deloitte s report, 85% of all pharmaceuticals sold in Poland are generic drugs. They represent 70% of the market in terms of value. According to the latest IMS Health estimates, which are for 2013, the prices of generic drugs in Poland were some 30% lower than the EU average. The cardiac pharmaceuticals segments was worth PLN 4.3bn in 2014, according to PMR Research. The research firm expects the segment to be worth PLN 5.6bn in The growth will be mainly driven by demand due to demographic factors and epidemiological factors indicate that the incidence of cardiac diseases among the population is increasing. Source: BMI Research

17 Prescription vs OTC Value of Prescription & OTC Drug Segments (PLN bn) Average Drug Retail Price (PLN) OTC Rx Full-price drugs Rx Reimbursed drugs * Retail price: average Reimbursed drug OTC drug 2015 figure is for November Segment-wise Drug Sales (%) Comments Dec 2012 Dec 2013 Dec 2014 Nov-15 OTC drugs Full-price drugs Reimbursed drugs According to PMR Research, the OTC drugs market is forecast to grow by a CAGR of 4% y/y until The data for the first five months of 2015 could lead to a 6.5% y/y growth rate in the whole of In 2014, the value of the OTC market came to PLN 9.7bn, according to PMR Publishing. The OTC drug sales were mainly driven by three categories primarily diet supplements as well as gastric products and skin care products. The latter two wil dominate pharmacy sales while diet supplements are also available in non-pharmacy sales channels. Both gastric products and skin care products are expected to grow by a CAGR of around 7% until Poles have to pay on average 38% of the reimbursed drug cost from their own funds-the highest figure in the EU, according to BMI Research. Pharma Expert estimated the value of drug reimbursement in 2015 at PLN 7.9bn, which was 3.6% higher than in Source: Pharma Expert

18 Exports and Imports Pharmaceutical exports and imports (PLN bn) Pharmaceutical exports and imports forecast (PLN bn) Exports Imports Imports Exports Comments According to the statistics office, the main importers of compound medicaments for retail sale from Poland in 2014 were Spain (PLN 1.695bn), Russia (PLN 0.883bn), France (PLN 0.857bn) and Germany (PLN 0.823bn). The largest exporters of drugs to Poland were Germany (PLN 2.586bn), followed by France (PLN 1.36bn), the UK (PLN 1.3bn) and the Netherlands (PLN 1.009bn). Source: Statistics office (left); BMI Research (right)

19 Dietary Supplements Sales Volume (mn units) Sales Value (PLN bn) H1/2012 H2/2012 H1/2013 H2/2013 H1/2014 H1/2015 Market Value Forecast (PLN bn) H1/2012 H2/2012 H1/2013 H2/2013 H1/2014 H1/2015 Comments According to PMR Research, the growth of the diet supplements market will be mainly driven by non-pharmacy sales. Between , the pharmacy sales of diet supplements fell by 2 pps. PMR claims that the diet supplements segment will grow by a CAGR of 8% in e 2016f 2017f 2018f 2019f 2020f Source: IMS Health (top); PMR Research (bottom)

20 1,161 1,185 1,220 1,284 1,309 11,297 11,713 11,999 12,221 12,438 Pharmacies Number of Pharmacies and Pharmaceutical Outlets Number of Persons per Pharmacy (thou) Pharmacies Pharmaceutical Outlets Whole of Poland Rural areas Average Monthly Revenue per Pharmacy in 2015 (PLN) Comments Jan Feb March April May June July Aug Sept Oct Nov Dec Average revenue in PLN ths According to Pharma Expert, the number of pharmacies by the end of 2015 came to 14,748, up by 2.69% y/y. Pharmacies margins fell by 3.8% y/y and the average margin in 2015 came to 25.77%. As Pharma Expert officials claim, falling margins and financial results could lead to increased M&A activity. Source: Statistics office (above); Pharma Expert (bottom)

21 Medicine and Dietary Supplements Use Persons Using Medicines and Diet Supplements, Q (%) Retail Sales Structure in Shops and Gas Stations (%) Persons Using Medicines and Diet Supplements, Q (%) Alcoholic beverages Cosmetics and toilet goods 0-1 years old 1-2 years 3-6 years 7-16 years over 70 years old Pharmaceutical and medical articles Source: Statistics office

22 Forecast Pharmaceutical Sales (PLN bn) Patented Drug Sales (PLN bn) e 2016f 2017f 2018f 2019f 2015e 2016f 2017f 2018f 2019f Generic Drug Sales (PLN bn) Prescription & OTC Medicine Sales (PLN bn) 2019f 2018f f 2016f e e 2016f 2017f 2018f 2019f Prescription drugs OTC drugs Source: BMI Research

23 III. Cosmetics

24 Cosmetics Highlights Recent Development According to PMR Research, the value of the Polish cosmetics market exceeded PLN 20bn in 2015, while the Polish Ministry of Economy sees the market as worth EUR 3.4bn. Hair products is the largest single segment of the market representing over a third of all cosmetic sales. The average Pole spends USD 110 on cosmetics annually, half the sum spent by the average American, according to data from a report by Bank of America Merill Lynch. Despite the presence of the largest cosmetics producers on the Polish market, domestic producers are abundant and have significant market shares in many product categories. Also the strength of the domestic cosmetics producers is proven by the trade figures as Poland has a positive trade balance of cosmetic products. Rossmann dominates the drugstore/cosmetics store market with over 1,100 stores by end The planned Polish competition for the leading market position suffered a setback when Kerdos Group, the operator of the Daily chain, which planned to have 350 stores in 2017, filed for bankruptcy in November Prior to that the main shareholder of the firm sold his stake in the firm. The bankruptcy motion was withdrown the following month, as the company reached an agreement with a creditor, but the trading of the firm s shares on the Warsaw Stock Exchange was halted. Drivers & Constraints The main factors influencing spendings on cosmetics products is the economic situation of the individuals. The positive outlook for the Polish economy (over 3% GDP growth expected in the coming years), falling unemployment and growing wages could all contribute to a potential growth in spendings on cosmetics products. Also Poles are becoming more conscious with regards to beauty and cosmetics products, which can be seen in the growing sales of men s cosmetics and dermocosmetics. As PMR points out, discount supermarket chains have made a strong entry on the cosmetics and beauty products market in recent years winning over 11% of the cosmetics retail market in However, since price is their major competitive advantage, this could negatively affect the financial performance of traditional drugstores and drugstore chains, as well as the value of some of the cosmetics market categories. Forecast PMR Research s 2014 forecast for the sector s development envisioned the value of the cosmetics market reaching PLN 23bn in 2016 although the figure is likely to be lower as suggested by the growth rate in recent years. In 2013, the figure was below PLN 20bn, reached PLN 20bn in 2014 and just surpassed that figure in According to Euromonitor International, all cosmetics market segments are expected to grow in the next three years (until 2019) although the growth rate will be in low figures, especially for the largest segments. Skin care and hair care products are expected to grow by a CAGR of 2% and 1%, respectively, in Colour cosmetics is expected to be the most dynamically growing of the main sector categories with a CAGR of 4% until

25 Cosmetics Market Production of selected cosmetic products (tonnes) 110,706 87,857 91,987 86, , , , , ,778 Cosmetics market breakdown by value (2012) 151, Soap, organic surface-active products Shaving accessories and men's cosmetics 10.5% Make-up products 9.7% Perfumes 13.5% Skin products 17.0% Hair care products Body and face cosmetics 8.9% Deodorants 8.3% Hair products 18.5% Teeth care products 7.6% Other 6.0% Comments According to the Economy Ministry, the Polish cosmetics market was worth over EUR 3.4bn in PMR Research estimates the value of the market at over PLN 20bn (over EUR 4.7 mn) in 2015 and, in 2014 it expected it to reach PLN 23mn (EUR 5.14 mn) by end According to a report by Bank of America Merill Lynch, Poles spend USD 110 per capita on cosmetics annually. The world average is USD 64 and the U.S. per capita expenditure is USD 240. Poles spendings are higher than those of Hungarians, Czechs and other regional peers. In Q1-Q3 2015, hair care products output came to 112,000 tonnes, while the production of soap and organic surface active products reached 115,000 tonnes. Men s cosmetics market was estimated to have grown by 2% y/y in 2014 reaching EUR 349.5mn. It was expected to grow by 1.9% y/y in The Polish market is characterised by the strong position of local firms. There are around 100 large and mid-size as well as over 300 small and micro cosmetics firms in the country. The Polish firms are particularly strong in the skin and face cosmetics segments, where they hold an over 50% market share. The most renowned Polish cosmetic firms are: Dr Irena Eris, Oceanic, Ziaja, Dax Cosmetics, Joanna. The dermocosmetics market has experienced significant growth in recent years. Euromonitor estimates that it was worth PLN 570mn in 2007 and in 2016 its value is expected to reach PLN 1.436bn. By 2020, the market should be worth PLN 1.809bn. Source: Statistics office, Euromonitor International (bottom)

26 Cosmetics Market Indicators Sold production of cosmetics market (PLN bn) Company indicators Manufacture of soap, detergents, perfumes and toilet preparations (PLN bn) Number of economic entities Average employment (thou) Average monthly pay (PLN thou) Comments In Q1-Q the sold production of cosmetic products (soap, detergents, perfumes and toilet preparations in statistics office terms) came to PLN 8.08bn, which was 5.7% higher in comparison to Q1-Q Average employment in the period came to 21,900, up 4% y/y. Average monthly gross wage was 1.2% lower y/y and came to PLN 4, Source: Statistics office

27 Main Cosmetics Segments Hair care products sales (PLN bn) Skin care products sales (PLN bn) Fragrances sales (PLN bn) Colour cosmetics sales (PLN bn) Source: Euromonitor International

28 Main Cosmetics Segments Market Shares Hair cosmetics, 2014 Skin care, 2014 Procter & Gamble 17.3% Unilever Joanna 4.1% Polska 7.3% Nivea Polska 2.9% Rosmann 2% Others 29.5% Ziaja 4.40% Oceanic 4.5% Irena Eris 6.0% Others 47.9% L'Oreal Polska 18.2% Henkel Polska 18.8% Nivea Polska 6.4% Avon Cosmetics Polska 7.1% Cederroth Polska 7.4% L'Oreal Polska 16.4% SiroScan 7.3% Sarantis Polska 4.0% Chanel 4.0% La Rive 4.6% Fragrances, 2014 Oriflame Polska 3.90% Others 36.9% Colour cosmetics, 2014 Procter & Estee Lauder Gamble 4.0% Poland 5.0% Oriflame Poland 4.8% Avon Cosmetics Polska 12.8% Cosnova 3.40% Others 36.5% Avon Cosmetics Polska 18.4% Coty Polska 21.2% L'Oreal Polska 14.5% Coty Polska 18.9% Source: Euromonitor International

29 Sales PoS Where Customers Buy Cosmetics Most Often (%) Tesco Jan 2015 Drogerie Natura Biedronka 9 10 Jan Jan Avon Rossmann Direct Selling Main Players, 2014 (%) Direct Sales of Cosmetics (PLN bn) Comments In November 2014, Kerdos Group, the operator of the Daily chain, which consisted of around 170 drugstores at the beginning of 2015 and had plans to have a chain of 350 by the end of 2017, submitted a bankruptcy motion. The firm could not pay its debts to ING Bank. Earlier last year the firm failed to secure financing for the planned expansion of its chain in Luxembourg. A visible trend on the market is the consolidation of traditional drugstores, which are joining franchise and partnership chains organised by cosmetics distributors. According to PMR, at the end of 2015 around 2,100 drugstores should be part of such chains in comparison to 1,800 in end With discount supermarket chains expanding on the cosmetics sale market (growing by 2 pp in to 11.6% share) PMR expects that the price war started by the discount chains could lead to falling margins, lower profitability and falling value of many product categories. Source: PMR Research (above left); Euromonitor International

30 Exports & Imports Essential Oils, Perfumes, Cosmetic Preparations Soap, Washing Preparations Export (PLN bn) Import (PLN bn) Export (PLN bn) Import (PLN bn) Comments According to the statistics office, in 2014 the largest recipients of Polish cosmetics were Germany and Russia. The former was the largest importer of perfumes and toilet water, while the latter was the main importer of beauty and make-up products, hair care and perfume, cosmetics and toilet preparations. As far as import goes, Poland mainly bought cosmetics products from Germany, which was the leader of the soap, oral and dental hygiene, hair, beauty and make-up as well as cosmetics and toilet products. France was the largest provider of perfume and toilet water products. The economy ministry said that Polish cosmetic products are exported to over 130 countries worldwide with around 40% of the export sold in the CEE region. The main importers of Polish cosmetics are Russia (15.3%), the UK (12.1%) and Germany (11.9%). Source: Statistics office

31 Forecast Cosmetics segment forecast (PLN bn) f Colour Cosmetics Skin Care Sun Care Oral Care Wipes Hair Care Bath & Shower Fragrances Men's Grooming Deodorants Baby & Child Products Source: Euromonitor International

32 IV. Main Players

33 M&A Activity M&A deals in 2015 n/a Date Target Company Deal Type Buyer Seller EUR (mn) Stake % Apteka Gemini Hutter Acquisition Warburg Pincus Olgierd Semik Hutter, (Market estimate) Piotr Sebastian Hutter Mabion SA Minority purchase Institutional investors n/a 3.98 (official data) Kerdos Group Open market purchases Undisclosed buyers Kamil Kliniewski 2.14 (DW estimate) Apteka pod Lwem, Apteka Marzeń, Farmako, MX Holding, Helios Farmacja Acquisition Penta Investments n/a n/a Bioton Block trade Harbin Gloria Pharmaceuticals n/a (DW estimate) Bioton Tender offer NovoTek Pharmaceuticals n/a 12.7 (official data) Sequoia Minority stake purchase Grupa Maspex Wadowice Paan Capital n/a Bioton Block trade Yanming Wang - private investor n/a 9.52 (DW estimate) Nowe Acquisition Tadeusz Iwanowskiprivate investor, n/a n/a n/a Excalibur Capital Bioton Minority stake purchase CEE Equity Partners Prokom Investments, Troqueera Enterprise Ltd (DW estimate) Bioton Block trade CEE Equity Partners Altus TFI 7.94 (DW estimate) 6.00 Michał Sołowow-private NanoVelos Minority stake purchase investor n/a n/a n/a Production plant in PZ Cussons in Wrocław Acquisition Undisclosed buyer PZ Cussons plc n/a Pneumolan business of Novascon Acquisition Walmark Novascon Pharmaceuticals n/a Source: DealWatch

34 Top 10 Sector Companies Top Firms According to 2014 Revenue (PLN bn) Top Employers in Pharmaceutical/cosmetics Sectors Company Segment Sales revenue Pelion distribution Company Rossmann Supermarkety Drogeryjne Polska Number of employees 9,389 Neuca distribution Pelion 8,453 Rossmann Supermarkety Drogeryjne Polska retail TZMO Group 6,296 Farmacol distribution Neuca 3,630 GlaxoSmithKline Pharmaceuticals production Farmacol 2,672 (in 2013) TZMO Group production Avon Operations Polska 1,824 Avon Operations Polska production/ retail Polpharma 1,778 Bayer production Sanofi Group in Poland 855 Grupa Sanofi Aventis production 1.8 Bayer 784 ZF Polpharma production GlaxoSmithKline Pharmaceuticals 608 Source: Rzeczpospolita Lista

35 ,079 1,836 1,683 1,530 1,507 1,970 1,872 1,918 2,102 2,040 2,570 2, ,799 6,570 6,686 6,323 7,326 7,699 Pelion Healthcare Group Financial Results (PLN mn) Highlights Pelion Healthcare Group is a Polish pharmaceuticals wholesaler and retailer. The group's history began in 1990, when the pharmaceuticals wholesaler Medicines was set up in Lodz. In 1998, Medicines debuted on the Warsaw Stock Exchange (WSE). In 2001, the company underwent restructuring and developed a new organisational model and distribution concept. Since then, all the group's companies have been operating under the common brand of PGF (Polska Grupa Farmaceutyczna). In 2011, the group underwent another restructuring process and changed its name to Pelion Q1-Q3/2015 Revenue Net profit EBITDA Balance Sheet (PLN mn) The group currently operates through four business lines, each run by a separate company: wholesale (PGF S.A., Pharmapoint Sp. z o.o.); hospital supplies (PGF Urtica Sp. z o.o.); retail (CEPD N.V.); services for manufacturers (Pharmalink Sp. z o.o.). Pelion is the second biggest pharmaceuticals distributor (after Neuca), but its retail operations (pharmacies) place in on the number one spot in terms of revenue. Pelion expects the wholesale pharmacy market to grow at the rate of 3-6% in 2015 after growing by 5.1% in In Q1- Q3/2015 the wholesale market to pharmacies grew by 8.9% y/y and the hospitals wholesale market increased by 4.4% y/y Q1-Q3/2015 Assets Equity Debt In 2014, Pelion's subsidiary CEPD took over Polbita, the owner of the Natura drugstore network. The deal is an example of the trend that pharmaceutical wholesalers enter new market segments as margins in their core business decrease. Source: Company

36 Pelion Healthcare Group (cont d) Revenue by segments, Q1-Q3/2015 (PLN mn) Margins (%) Retail sales 1, Q1-Q3/ Services for producers Wholesale 4, Other operations EBITDA Gross margin on sales Source: Company

37 ,079 1,836 1,970 1,683 1,530 1,507 1,872 1,918 2,102 2,040 2,570 2, ,132 6,389 5,687 5,795 5,231 6,569 Neuca Financial Results (PLN mn) Highlights The company was founded in 1990 under the name of Torfarm. In 2004, Torfarm debuted on the Warsaw Stock Exchange (WSE). In 2009, Torfarm took over peer Prosper. In 2010, the company was renamed to Neuca. Neuca is the leader of the Polish wholesale medicines distribution market with a market share of 28.9% in Q1-Q3/2015 vs. 27.7% in the correspodning period of Q1-Q3/2015 Revenue EBIT Net profit Balance Sheet (PLN mn) The group is active in the following business areas: wholesale to pharmacies, private brands management (Synoptis Pharma company with its own Nursea and Apteo brands) and services on the wholesale market (NEKK advertising agency, ILC IT company). In April 2014, Neuca carried out a PLN 196mn acquisition by buying the wholesale arm of ACP Pharma from the Mediq holding. Together with this company, Neuca took over its three subsidiaries: Cefarm Rzeszow, HealthMore and Lago. The company expected the wholesale pharmacy market to grow by 4% in According to its estimates, the wholesale market for the pharmacies grew by 6.5% y/y in the first nine months of Neuca expects a net profit growth of PLN 100mn in 2015 from PLN 93.4mn in In Q1-Q3/2015, it realised 79.2% of the planned whole year net profit Q1-Q3/2015 The company has also undertaken steps to enter new sectors that offer higher margins than its wholesale core business. It is building its outpatient clinic chain. In the first nine months of 2015, Neuca acquired nine clinic operators and also a supplements producer. Neuca spent PLN on takeovers in Q1-Q3/2015. Assets Equity Debt Source: Company

38 Neuca (cont d) Month September September Neuca s 2015 Acquisitions Target Company Śląskie Centrum Osteoporoza Medica Pro Familia Stake (%) Transaction value (PLN Profile mn) Clinic, Diagnostics Clinic September Medicus Grójec Clinic September BS-Suple Supplement s producer September HPS Clinic June Bioscience R&D Q1-Q3/ Margins (%) Revenue by segments, Q1-Q3/2015 (PLN mn) Net profit EBIT Gross margin on sales Clinics, clinical research, telemedicine May Polimedica Alfa Clinic March Diabdis R&D March Clinport Clinic February Unipolimed Clinic Wholesale 5664 IT services Marketing services Own brands Source: Company

39 812 1, ,010 1,051 1,127 1,153 1,340 1,226 1,480 1,849 1,934 2,178 2,493 2, ,102 5,115 4,844 4,896 4,437 5,361 Farmacol Financial Results (PLN mn) Highlights Farmacol is a Polish pharmaceuticals and cosmetics wholesaler and retailer. The company has been operating since Farmacol debuted on the Warsaw Stock Exchange (WSE) in Q1-Q3/2015 In , Farmacol acquired the Cefarm distributors: Kielce, Wroclaw, Szczecin and Warszawa, as well as a few smaller distributors. Revenue EBIT Net profit Balance Sheet (PLN mn) Farmacol Group is active in the following business areas: wholesale of pharmaceuticals (92% of total revenue; mostly wholesale shipments to pharmacies outside of the group), retail sales - pharmacies operates by Farmacol subsidiaries, accommodation - hotel Belweder in Ustron, the Beskid Mountains Q1-Q3/2015 In February 2015, Cefarm Warszawa, a subsidiary of Farmacol, acquired Nasza Apteka for PLN 8.2mn. The acquired firm operates a total of four pharmacies in Nowy Sącz and Stary Sącz. Assets Equity Debt Source: Company

40 Farmacol (cont d) Revenue by Segments, Q1-Q3/2015 (PLN mn) Margins (%) Wholesale Retail Hotel/restaurant operations Net profit EBIT Gross margin on sales Source: Company

41 GlaxoSmithKline Pharmaceuticals Financial Results (PLN mn) 3, , , , ,257.9 Highlights GlaxoSmithKline Pharmaceuticals is the largest pharmaceuticals manufacturer in Poland. The company is 100% owned by Glaxo Group Limited. Other subsidiaries in Poland are as follows: GSK Commercial, GSK Services (both owned directly by GSK Pharmaceuticals) and GlaxoSmithKline Consumer Healthcare (owned by Setfirst Limited) Revenue Net profit Balance sheet (PLN bn) GSK has been present in Poland since 1978 and in 1998, the company purchased local pharmaceuticals producer Polfa Poznan. In 2013, it employed over 1,500 in Poland of which over 900 were working in the Poznan plant. To date, GSK has invested nearly USD 475mn in Poland. According to IMS Health, in 2012 GSK had a 5.6% market share in the Polish pharmaceutical market Assets Equity GSK Pharmaceuticals is present in over 150 countries. In 2014, the group's pharmaceutical and vaccines sales grew by 5% to GBP 3.2bn in emerging markets and by 1% to GBP 0.9bn in Japan. Europe was flat at GBP 4bn. This was offset by U.S. sales declining by 10% to GBP 5bn. The pharmaceutical and vaccines sales totalled GBP 18.7bn. Source: Company

42 ,099 1,229 1,467 1,621 1,822 1,957 Rossmann Financial Results (PLN mn) Highlights 3,320 3,609 4,213 4,791 5,425 Rossmann is the leader of the Polish cosmetics distribution market with a 28.4% share. The company's first drugstore in Poland was opened in 1993 in Lodz. Rossmann opened its 1,000th drugstore at the end of January 2015 and at the end of 2015 it operated 1,103 stores. The firm s target is to reach 1,600 drugstores by the end of The company employs over 15,500 people in Poland Revenue Net profit Balance Sheet (PLN mn) Rossmann has invested a total of PLN 1.55bn since it entered the Polish market in Rossmann s drugstores are visited by 675,000 customers per day. The company offers 2,000 Polish and foreign brands, including 35 private labels. Rossmann has a 50,000 sq m logistics centre near Łódź as well as two warehouses in Poland with 25,000 sq m each. Rossmann launched its e-store in November Products may be delivered to the buyer's home or received in drugstores in Lodz or at any fuel station run by PKN Orlen Assets Equity Debt Rossmann Poland is a part of the group of Germany s Rossmann GmbH and Hong Kong-based A.S. Watson, which includes 11,000 pharmacies in 33 countries in Europe and Asia. The group employs over 100,000 workers across the world. Source: Company

43 Contact: Corporate Headquarters 6-8 Bouverie Street London EC4Y 8DD UK Voice: Fax: Americas Headquarters 225 Park Avenue South New York, New York US Voice: Fax: Asia Headquarters Eucharistic Congress Bldg. No. III 4th Floor, 5 Convent Street Mumbai India Voice: Fax: Disclaimer: The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional Investor PLC take no responsibility for decisions made on the basis of these opinions. A Euromoney Institutional Investor company. About EMIS Insight EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation and profiles of the leading sector companies provided by locally-based analysts. About EMIS Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in EMIS works from over 15 offices around the world to deliver electronic information products, by subscription, to institutional customers globally. EMIS provides hard-to-get information covering more than 100 emerging markets. Its flagship products are EMIS Intelligence and EMIS Professional. EMIS clients include top investment banks, corporations, law firms, consultants, investment and insurance companies, universities and libraries, multilateral organisations, and others