COMPANY PROFILE SEPTEMBER 2010

Transcription

1 COMPANY PROFILE SEPTEMBER 2010

2 DISLAIMER THIS PRESENTATION IS NOT AN ADVERTISEMENT OF SECURITIES IN ANY JURISDICTION. NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA OR JAPAN. This document includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the fact that they do not only relate to historical or current events. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, expected, plan, goal believe, or other words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, a number of which are beyond Company s control. As a result, actual future results may differ materially from the plans, goals and expectations set out in these forward-looking statements. Any forward-looking statements made by or on behalf of the Company speak only as at the date of this announcement. Save as required by any applicable laws or regulations, the Company undertakes no obligation publicly to release the results of any revisions to any forward-looking statements in this document that may occur due to any change in its expectations or to reflect events or circumstances after the date of this document. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States or to US persons unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities will be made in the United States. This communication is being distributed only to and is directed only at (a) persons outside the United Kingdom, (b) persons who have professional experience in matters relating to investments, i.e., investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"), and (c) high net worth companies, unincorporated associations and other bodies to whom it may otherwise lawfully be communicated in accordance with Article 49 of the Order (all such persons together being referred to as "relevant persons"). The securities are available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be available only to or will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this communication or any of its contents. 2

3 COMPANY IN BRIEF $60 $50 $40 $30 $20 $10 $0 Founded in 1997 by Pharmacy Chain 36.6 and its shareholders One of the largest Russian generic drug manufacturers Operates three production facilities in Belgorod, Voronezh, and Pokrov IPO in April 2006 Employs about 2,080 people at the Current market cap. $ mln. Trading at RTS and MICEX Tickers: VRPH (RTS) and VFRM (MICEX) About 48% are currently in the free float Specializes mostly in prescription (RX) drugs Successful market player in oncology #1 by production and sales of adhesive bandages in Russia and Ukraine 3

4 PRODUCT GROUPS Sales 2009 Sales 2008 Rx Products, 69% Rx Products, 66% Adhesive Bandages, 17% OTC Products, 12% 4,395.2 mln RUR Adhesive Bandages, 18% OTC Products, 9% mln RUR Traditional Products, 2% Traditional Products, 7% Gross Profit 2009 Gross Profit 2008 Rx Products, 72% Rx Products, 72% Adhesive Bandages, 15% OTC Products, 12% 2,939.1 mln RUR Adhesive Bandages, 16% OTC Products, 9% 2,836.5 mln RUR Traditional Products, 1% Traditional Products, 3% 4

5 PRODUCT GROUPS Sales 1H 2010 Sales 1H 2009 Rx Products, 70% Rx Products, 69% Adhesive Bandages, 17% OTC Products, 12% 2,673.2 mln RUR Adhesive Bandages, 19% OTC Products, 9% 2,300.1 mln RUR Traditional Products, 1% Traditional Products, 3% Gross Profit 1H 2010 Gross Profit 1H 2009 Rx Products, 74% Rx Products, 74% Adhesive Bandages, 14% OTC Products, 11% 1,959.8 mln RUR Adhesive Bandages, 16% OTC Products, 9% 1,582.4 mln RUR Traditional Products, 1% Traditional Products, 1% 5

6 MARKET REVIEW Pharmaceuticals market in retail prices 16% bln RUR CAGR* ( E) = 19% * Compound Annual Growth Rate 34% % % % % % CAGR (05-12) Commercial sector=19% CAGR (05-12) FRP=21% CAGR (05-12) Hospital sector=15% F 2011F 2012F Source: IMS Health,

7 MARKET STRUCTURE Market statistics In H the share of domestic production increased by 0.3% as compared the same period in year before. Delivery in pharmacy in H in comparison with H decreased by 0.4% and reached 70%. Hospital sales share decreased by 0.8% and reached 9% in H Public delivery system FRP in H in comparison with H increased by 1.1% and reached 17%. Source: IMS HEALTH, 1H 2010 Market Structure 292 bln RUR Rx vs OTC, in RUR terms 100% Pharmacy, 70% Hospital, 9% FRP, 17% BAD, 4% Rx, 62% OTC, 38% Imported vs Domestic drugs, in RUR terms 100% Rx vs OTC, in number of packs sold 100% Import, 84% Local, 16% Rx, 34% OTC, 66% 7

8 RATING OF DOMESTIC CORPORATIONS in the pharmaceutical market of Russia sales production in money terms Rating Share Increase Company 1H 10/09 1H H H H PHARMSTANDART 16% 20.0% 19.6% 2 2 STADA 13% 6.5% 6.5% 3 4 AKRIKHIN-PHARMA 10% 5.4% 5.5% 4 3 EVALAR 1% 5.2% 5.8% 5 6 VEROPHARM 27% 4.3% 3.9% 6 7 VALENTA 16% 3.9% 3.8% 7 5 PHARM-CENTER 6% 3.8% 4.0% 8 8 MICROGEN 24% 3.2% 2.9% 9 9 FARMASOFT 28% 2.1% 1.9% MOSCHIMF.PREP. RF 52% 2.0% 1.5% Source : IMS Health, Database «Retail, hospital audits and FRP in the pharmaceutical market of Russia» 8

9 RATING OF DOMESTIC CORPORATIONS in the FRP market of Russia sales production in money terms Rating Increase Share Company 1H H H 10/09 1H H LEKKO 528,098% 20.3% 0.01% 2 5 PHARMSTANDART 227% 16.3% 10.0% 3 36 BIOCAD 72,318% 13.0% 0.04% 4 2 VEROPHARM 73% 12.8% 14.8% 5 1 PHARM-SINTEZ MOSC -28% 6.6% 18.4% 6 3 STADA -9% 6.3% 13.8% 7 5 VALENTA 9% 5.1% 10.1% 8 6 AKRIKHIN-PHARMA -5% 4.5% 8.3% 9 8 OBOLENSK FP 13% 2.5% 5.2% 10 7 ORGANIKA -21% 1.6% 2.8% Source : IMS Health, Database «FRP in the pharmaceutical market of Russia» 9

10 FRP SALES 1 st half st half 2009 FRP sales = mln RUR FRP sales = 35.7 mln RUR 2,673.2 mln RUR 4% 96% 2,300.1 mln RUR 1.6% 98.4% 10

11 PRODUCTION FACILITIES 3 plants in the European part of Russia 1,649 factory employees as of September 30, 2010 Flexible manufacturing facilities that allow: cost-efficient production of both small and large batches quick shifts from one product to another VORONEZH Built in 1934 Production: all types of plasters Employees: 636 BELGOROD Built in 1968 Upgrade in 2001 Production: ampoules, tablets, capsules, dragee, flacons (lyophilized & liquid forms) Employees: 685 POKROV Built in 1998 Production: flacons (lyophilized & liquid forms) Employees:

12 TOP-SELLERS BY PRODUCT GROUPS Prescription drugs (RX) Cerepro (Choline alfoscerate) - 9% * Irunin (Itraconazole) - 7% Tautax (Docetaxel) - 6% Paclitaxel-LENS (Paclitaxel) - 6% Bylumid (Bycalutamid) - 6% Traditional Products (TP) Pyridoxine (Pyridoxine) - 56% Vero-Dexamethasone (Dexamethasone) - 20% Vero-Ciprofloxacin (Ciprofloxacin) - 7% Vero-Loperamide (Loperamide) - 5% Paracetamol (Paracetamol) - 4% Over-the-counter drugs (OTC) Xylen (Xylomethazoline) 48% Slabilen (Sodium picosulfate) 29% Motilak (Domperidone) 16% Ginecotex vaginal tabl. (Benzalkonium chloride) 2% Veromistine (Benzyldimethyl-myristoikaminopropylammonium monohydrate) 2% Plaster (PL) Bactericidal plaster 48% Fixation plaster 30% Corn plaster 14% Pepper plaster 8% * share in sales of group (for 1 st half 2010) 12

13 rx DEVELOPMENT AND LAUNCH OF NEW PRODUCTS Anti-Tumor 27 Central Nervous system 14 Digestives 8 Blood 7 Gynecology and urology 6 Musculoskeletal system 5 Hormones 3 Cardiovascular system 2 Antibacterial 2 Dermatoses 1 Respiratory system 1 otc We have launched 83 pharmaceuticals in the past 7 years To achieve success of our products, we maintain active promotion within 18 months from launch Total 76 Dermatoses 1 Antiviral 1 Dietary supplement 1 pl Total 3 Medical products 9 Total 9 13

14 PRESCRIPTION (RX) PRODUCTS o Utilize and leverage existing sales force and develop it in accordance with the portfolio development. o o Target clinical specialists and opinion leaders in complex therapeutic areas rather than general practitioners. Build corporate reputation through targeted education of medical professionals. o o o Bringing modern off-patent drugs to market Rely on RX products selling via retail channels Improvement of product management functions through decentralization 14

15 RATING OF DOMESTIC CORPORATIONS in the hospital market of Russia sales production in money terms Rating Increase Share Company 1H H H 10/09 1H H PHARM-CENTER 12% 12.2% 12.9% 2 1 ABOLMED 2% 11.5% 13.4% 3 4 ESCOM NPK 66% 10.5% 7.5% 4 3 MICROGEN 25% 9.3% 8.9% 5 5 VEROPHARM 42% 8.4% 7.0% 6 9 PHARMSTANDART 29% 3.7% 3.4% 7 6 MOSCOVSK.ENDOCR.ZD -9% 3.6% 4.7% 8 17 ORGANIKA 256% 3.6% 1.2% 9 8 VALENTA 8% 3.5% 3.9% 10 7 AKRIKHIN-PHARMA -7% 3.1% 3.9% Source : IMS Health, Database «Hospital audits in the pharmaceutical market of Russia» 15

16 RATING OF CORPORATIONS in the hospital market of Russia segment of oncology in money terms Rating Share Increase Company Country 1H 10/09 1H H H H ROCHE Switzerland 70% 32.8% 30.3% 2 2 JOHNSON & JOHNSON USA 61% 28.5% 27.7% 3 3 NOVARTIS Different countries 75% 25.5% 22.9% 4 4 MERCK SHARP DOHME Different countries -6% 2.8% 4.7% 5 8 VEROPHARM Russia 54% 2.3% 2.4% 6 5 SANOFI-AVENTIS Different countries 16% 2.3% 3.1% 7 6 BAYER HEALTHCARE Germany 5% 2.1% 3.1% 8 7 LABORATORIO TUTEUR Argentina 5% 1.7% 2.5% 9 10 ASTRAZENECA Great Britain 44% 1.0% 1.1% 10 9 TEVA Different countries -31% 1.0% 2.2% Source : IMS Health, Database «Retail, hospital audits and FRP in the pharmaceutical market of Russia» 16

17 RATING OF CORPORATIONS in the hospital market of Russia segment of oncology in volume terms Rating Share Increase Company Country 1H 10/09 1H H H H VEROPHARM Russia 2.2% 28.9% 30.9% 2 2 EBEWE Austria 14.7% 21.6% 20.5% 3 6 PHARM-CENTER Russia 329.1% 15.2% 3.9% 4 4 TEVA Different countries -20.5% 11.4% 15.7% 5 5 ROCHE Switzerland 68.6% 6.5% 4.2% 6 6 JOHNSON & JOHNSON USA 75.0% 3.9% 2.4% 7 3 DECO Russia -78.4% 3.2% 16.4% 8 10 NOVARTIS Different countries 95.6% 3.2% 1.8% 9 9 PFIZER USA 64.3% 3.1% 2.1% 10 8 VALENTA Russia 52.7% 2.9% 2.0% Source : IMS Health, Database «Retail, hospital audits and FRP in the pharmaceutical market of Russia» 17

18 OTC PRODUCTS Focus on maintenance of existing products, minimizing investment and advertising costs Opportunistically develop only major attractive products as they lose patent protection Focus on building relationships with retail chains Individual product branding Piggy-back on specialist field force if products could be promoted alongside our Rx portfolio 18

19 TRADITIONAL PRODUCTS Zero-cost maintenance of the existing portfolio No new product development Exploiting natural demand for high quality traditional INNs Opportunistic inclusion in reimbursement schemes, where economically justified No active promotion 19

20 RATING OF DOMESTIC CORPORATIONS in the pharmacy market of Russia sales production in money terms Rating Share Increase Company 1H 10/09 1H H H H PHARMSTANDART 10% 22.1% 22.5% 2 3 STADA 17% 7.0% 6.8% 3 2 AKRIKHIN-PHARMA 1% 6.3% 7.0% 4 4 EVALAR 11% 5.6% 5.7% 5 6 VEROPHARM 20% 3.8% 3.5% 6 8 VALENTA 9% 2.8% 2.9% 7 7 PHARM-CENTER 4% 2.8% 3.0% 8 10 MICROGEN 22% 2.6% 2.4% 9 9 FARMASOFT -5% 2.3% 2.7% MOSCHIMF.PREP. 37% 2.3% 1.9% Source : IMS Health, Database «Retail audits in the pharmaceutical market of Russia» 20

21 ADHESIVE BANDAGES Development of value added branded product portfolio in underdeveloped niches (specialty foot care, analgesic, burn care, smoking cessation etc.) Focus on building preferred and exclusive relationships with the retail chains, enabling POS activity, distribution coverage and preferred merchandising positions 21

22 SMART BANDAGES o o Bactericidal category Bleed category 22

23 RATING OF CORPORATIONS on the plaster s market of Russia in money terms Rating Share Increase Company Country 09/ VEROPHARM Russia 5% 47% 45% 2 2 PAUL HARTMANN Germany 6% 16% 15% 3 7 BETASAN BUNT Turkey 33% 5% 4% 4 4 OTECHESTVENNYE LEKARSTVA Russia -9% 4% 5% 5 3 JOHNSON&JOHNSON USA -37% 4% 7% 6 8 UNIPHARM Korea 19% 4% 3% 7 10 PHARMAPLAST Egypt 51% 3% 2% 8 11 CHHD CO LTD Korea 38% 3% 2% 9 5 LABORATOIRES URGO France -44% 3% 4% САЛЬВАМЕД/EVROSIREL Italy -8% 2% 2% Source : IMS Health 23

24 MANAGEMENT STRUCTURE Marina PENKOVA Chief Executive Officer Oleg KUZNETSOV Director of hospital Rx Department Stanislav STUKALSKY Adhesive Bandages BU Director Timur TCHIBILYAEV R&D Director Nadiya MAKSUTOVA Chief Financial Officer Valentina GOLOVINA Manufacturing Director Ilya NILVA Marketing Director Ivan KONOPLYANNIKOV Pharmacy BU Director Svetlana KUTUKOVA HR Director 24

25 FINANCIALS & ANALYSIS IFRS FY 2009, FY 2008, FY 2007, FY 2006, FY 2005, FY 2004 audited by Deloitte 25

26 SHARE PRICE $50 $45 IPO in April 2006 Shares placed at $28 per share Tickers: VRPH (RTS), VFRM (MICEX) About 48% are currently in the free float MARKET CAPITALIZATION $ MLN (as at September 09, 2010 as per RTS) $40 $35 $30 $25 $20 $15 $10 $5 $0 26

27 SELECTED FINANCIALS Sales Gross profit EBITDA Net income In million of roubles 27

28 SALES & GROSS PROFIT 4, ,301.3 Sales In million of roubles Sales 4, ,301.3 growth 2.2% Gross profit 2, ,836.5 growth 3.5% Margin 66.8% 65.9% 2, ,836.5 Gross profit

29 SALES & GROSS PROFIT 2, ,300.1 Sales In million of roubles 1H H 2009 Sales 2, ,300.1 growth 16.2% 1, ,582.4 Gross profit Gross profit 1, ,582.4 growth 23.8% Margin 73.3% 68.8% 1H H

30 EBITDA & NET INCOME In million of roubles 1, ,305.1 Ebitda EBITDA 1, ,305.1 growth 6.4% Margin 31.6% 30.3% Net income 1, growth 20.0% 1, Net income Margin 25.2% 21.5%

31 EBITDA & NET INCOME In million of roubles Ebitda 1H H 2009 EBITDA growth 20.9% Margin 34.3% 33.0% Net income growth 27.9% Margin 27.3% 24.8% Net income 1H H

32 BALANCE SHEET Current liabilities growth -27.0% share in L&EQ 8.8% 14.6% DEBT growth 36.4% share in L&EQ 14.7% 13.0% Equity 5, ,931.5 growth 28.2% share in L&EQ 75.4% 71.1% In million of roubles , , ,039.1 Current liabilities 3,931.5 Debt Current assets Other Equity 1, ,145.1 Non-current assets

33 BALANCE SHEET 1H Current liabilities growth 17.0% share in L&EQ 9.5% 8.8% DEBT growth -21.1% share in L&EQ 10.7% 14.7% Equity 5, ,039.1 growth 14.5% share in L&EQ 79.5% 75.4% In million of roubles 6, , , ,039.1 Current liabilities Debt Current assets Other Equity 1, ,139.7 Non-current assets 33 1H

34 CASH FLOW 1, Operating cash flow before working capital changes Changes in INV Changes in AR Changes in AP Income taxes paid & Interest paid OCF , , Operating cash flow before working capital changes Changes in INV Changes in AR Changes in AP Income taxes paid & Interest paid OCF In million of roubles 34

35 CASH FLOW , H 2010 Operating cash flow before working capital changes Changes in INV Changes in AR Changes in AP Income taxes paid & Interest paid OCF H , Operating cash flow before working capital changes Changes in INV Changes in AR Changes in AP Income taxes paid & Interest paid OCF In million of roubles 35

36 Address: , Moscow, Russia, Ochakovskoe shosse, Moscow, Tel.: +7 (495) Fax: +7 (495)