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COMPANY PROFILE NOVEMBER 2007

COMPANY PROFILE NOVEMBER 2007. DISCLAIMER. 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.

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COMPANY PROFILE NOVEMBER 2007

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  1. COMPANYPROFILENOVEMBER 2007

  2. DISCLAIMER 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. 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 Employs 3,100 people Specializes mostly in prescription (RX) drugs Successful market player in oncology #1 by production and sales of adhesive bandages in Russia and Ukraine COMPANY IN BRIEF • IPO in April 2006 • Current market cap. $mln. • Trading at RTS and MICEX Tickers: VRPH (RTS) and VFRM (MICEX) • About 49% are currently in the free float 3

  4. PRODUCT GROUPS Sales in 9m 2006, US$m Sales in 9m 2007, US$m Rx Products, 53% Rx Products, 55% Adhesive Bandages, 22% Adhesive Bandages, 19% $ 68.3m $ 90.1m Traditional Products, 16% Traditional Products, 17% OTC Products, 9% OTC Products, 9% Gross Profit in 9m 2006, US$m Gross Profit in 9m 2007, US$m Rx Products, 63% Rx Products, 66% Adhesive Bandages, 21% Adhesive Bandages, 17% $ 42.9m $ 56.5m Traditional Products, 9% Traditional Products, 9% OTC Products, 7% OTC Products, 8% 4 Company accounts

  5. FAST-GROWING MARKET • Increase in consumer welfare and demand for expensive drugs • Commercial sector of the retail market was $5,8 bln. in 9m 2007, that shows 18 % rise y-o-y • Federal Reimbursement Program (“FRP”) was reduced by 31% in 9m 2007 vs 9m 2006 to $1.16 bln. • Growing rate of diseases and epidemics Pharmaceuticals market in retail prices, US$ billion, VAT included CAGR of 12,5%2006-2010E 14% 13% 12% 11% 36% 35% 19,6 17.2 15.2 13,6 12.3 9.0 6.7 2004 2005 2006 2007П 2008П 2009П 2010П Source: DSM Group, Pharmexpert 9m 2007

  6. MARKET STRUCTURE Market Structure Imported VS Domestic drugs, US$ Pharmacy, 71% Import, 78% Market statistics • Imported drugs account for approximately ¾ of the market in value terms according to DSM Group • Prescription drugs account for 63% of sales in value terms and 36% in volume terms • Most of the sales are effected through pharmacies or hospitals, FRP sales accounted for 11% of the market $ 8,2 bln. 100% Hospital, 14% FRP, 11% BAD, 4% Local, 22% Rx VS OTC, in US$ terms Rx VS OTC, in number of packs sold Rx, 63% Rx, 36% 100% 100% OTC, 37% OTC, 64% Source: DSM Group, Pharmexpert, RMBC 9m 2007

  7. TOP RUSSIAN PRODUCERS 7 Source: Pharmexpert, 9m 2007

  8. FRP SALES 9m 2006 9m 2007 - 17% FRP sales = $5.2 mln FRP sales = $4.3 mln. FRP sales FRP sales other sales other sales 8 Source: Company data

  9. PRODUCTION FACILITIES VORONEZH Built in 1934 Production: ampoules, zinc oxyde & all types of plasters Employees: 1,371 POKROV Built in 1998 Production: flacons (lyophilized & liquid forms) Employees: 256 3 plants in the European part of Russia 2,731 factory employees as of September 30, 2007 Flexible manufacturing facilities that allow: • cost-efficient production of both small and large batches • quick shifts from one product to another BELGOROD Built in 1968 Upgrade in 2001 Production: ampoules, tablets, capsules, dragee Employees: 1,104 9

  10. PRODUCT GROUPS • Fast-growing segments • Rx products Sales CAGR 03-06: 57% • OTC products Sales CAGR 03-06: 27% Sales in 9m 2007, US$m Rx Products, 55% Adhesive Bandages, 19% $ 90.1m Traditional Products, 17% OTC Products, 9% Cash-cows • Traditional products Sales CAGR 03-06: 7% • Adhesive bandages Sales CAGR 03-06: 4% Gross Profit in 9m 2007, US$m Rx Products, 66% Adhesive Bandages, 17% $ 56.5m Traditional Products, 9% OTC Products, 8% 10 Company accounts

  11. PRESCRIPTION (RX) PRODUCTS • Utilize and leverage existing sales force and develop it in accordance with the portfolio development. • Target clinical specialists and opinion leaders in complex therapeutic areas rather than general practitioners. • Build corporate reputation through targeted education of medical professionals. • Bringing modern off-patent drugs to market • Rely on RX products selling via retail channels • Improvement of product management functions through decentralization 11

  12. HOSPITAL PRODUCTS Veropharm 1,27 % 9m 2007 76,9% 23,1% Veropharm 1,13 % 21,4% 9m 2006 78,6% 0 10 20 30 40 50 60 70 80 90 100 Import % Local % 12 Source: Pharmexpert, 9m 2007

  13. SHARE of HOSPITAL PRODUCTS 13 Source: Pharmexpert, 9m 2007

  14. +10% +39% +46% +24% RELY ON RX VIA RETAIL CHANNELS OTHER PRODUCTS sales US$m RX sales US$m 46,2 52,8 49,9 41,9 40,3 36,0 35,9 32,4 2005 2006 9m2006 9m2007 2005 2006 9m 2006 9m2007 14 14 * According to management accounts

  15. +63% +28% +44% +65% RETAIL PRODUCTS LEADINGINGROWTH Products that sell through retail channels and have a wide, diversified customer base are growing faster than hospital products that have a more concentrated customer base HOSPITAL Rx sales US$m PHARMACY Rx sales US$m 38.8 13.6 16,9 26.9 8.3 32,6 25,4 10,2 15 15 9m2006 9m2007 2005 2006 2005 2006 9m2006 9m2007 * According to management accounts

  16. 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 16

  17. 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

  18. 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

  19. SMART BANDAGES • Bactericidal category - launched • Bleed category – to be launched 19

  20. Timur TCHIBILYAEV R&D Director Alexander TSVIGUN Technology& Manufacturing Director Evgeniy DREGNIN Sales Director Herman INOZEMTSEV Marketing Director Svetlana KUTUKOVA HR Director MANAGEMENT STRUCTURE Anton PARKANSKY Chief Executive Officer Marina PENKOVA Chief Financial Officer Oleg KUZNETSOV Director of hospital Rx Department Stanislav STUKALSKY Adhesive Bandages BU Director Evgeniy DREGNIN Traditional BU Director Ivan KONOPLYANNIKOV Pharmacy BU Director 20

  21. FINANCIALS & ANALYSIS IFRS – FY 2006, FY 2005, FY 2004 audited by Deloitte

  22. SHARE PRICE M.CAP $MLN (as at as per RTS) • IPO in April 2006 • Shares placed at $28 per share • Ticker: VRPH (RTS) VRFM (MICEX) • About 49% are currently in the free float 22

  23. CAGR = 30% CAGR = 36% CAGR = 34% CAGR = 33% SELECTED FINANCIALS Sales EBITDA 28,9 100,5 92,1 24,5 24,0 79,4 59,6 16,4 92% 85% 2004 2005 2006 9m 2007 2004 2005 2006 9m 2007 Gross Profit Net Income 18,4 60,1 16,0 55,4 15,7 47,0 10,1 32,2 92% 85% 23 23 2004 2005 2006 9m 2007 2004 2005 2006 9m 2007 In USD Millions

  24. SALES & GROSS PROFIT • Growth in Rx hospital portfolio • Increase in higher-margin products sales • FRP sales amounted to 12% in 2005; 6% in 2006 Sales Gross profit 24 24 In USD Millions

  25. SALES & GROSS PROFIT 9m 2007 Sales • Growth in Rx hospital portfolio • Increase in higher-margin products sales • FRP sales amounted to 5% in 9m2007 Gross profit 25 25 In USD Millions

  26. SALES ANALYSIS 21.1 (21.0%) RX 19.5 (24.6%) Adhesive bandages 52.8 (52.6%) 100.5 79.4 36.0 (45.4%) 16.7 (16.7%) 15.2 (19.2%) Traditional 7.2 (9.0%) 8.4 (8.3%) OTC 1.4 (1.8%) Others 1.5 (1.4%) 2005 2006 26 26 In USD Millions % as percentage of Sales

  27. SALES ANALYSIS RX (19.0%) Adhesive bandages (21.5%) 92.1 (54.2%) 70.7 Traditional (50.8%) (16.4%) (16.0%) OTC (8.4%) (8.3%) Others (3.4%) (2.0%) 9m 2006 9m 2007 27 27 In USD Millions % as percentage of Sales

  28. COST OF SALES (8%) (7%) 40.4 (8%) (22%) (24%) (40%) 32.4 (2%) 27.4 (26%) (41%) (46%) (3%) (2%) (2%) (2%) (3%) (6%) (6%) (6%) Raw materials and goods for resale Salaries and wages Repairs and maintenance Depreciation of manufacturing assets Other • Cost structure remained without significant changes • COS increased by y-o-y in 2006 28 28 In USD Millions % as percentage of Sales

  29. COST OF SALES (9%) (8%) (23%) 36.7 (40%) 29.1 (22%) (2%) (41%) (1%) (2%) (2%) (7%) (5%) Raw materials and goods for resale Salaries and wages Repairs and maintenance Depreciation of manufacturing assets Other • Cost structure remained without significant changes • COS increased byy-o-y 29 29 In USD Millions % as percentage of Sales

  30. Salaries and wages Commercial expenses and Advertising Travel and transportation Other SG&A (8%) (4%) (12%) (2%) (10%) (11%) (14%) (34%) (14%) 19.5 (2%) (32%) (33%) (2%) (13%) (12%) (9%) • SG&A increased by y-o-y in 2006 • Promotion expenses associated with newly launched products increased 30 30 In USD Millions % as percentage of Sales

  31. Salaries and wages Commercial expenses and Advertising Travel and transportation Other SG&A (10%) (13%) (9%) (13%) 33.6 24.6 (36%) (35%) (2%) (2%) (11%) (11%) • SG&A increased by y-o-y • Promotion expenses associated with newly launched products increased 31 31 In USD Millions % as percentage of Sales

  32. EBITDA & NET INCOME • EBITDA increased by y-o-y in 2006 • Net income increased by y-o-y in 2006 EBITDA Net income 32 32 In USD Millions

  33. EBITDA & NET INCOME 9m 2007 • EBITDA increased by y-o-y • Net income increased by y-o-y EBITDA Net income 33 33 In USD Millions

  34. CASH FLOW 2006 3,1 19,4 30,3 2,1 0,7 5,0 Operating cash flow before Changes in INV Changes in AR Changes in AP Income taxes paid & OCF working capital changes Interest paid 2005 3,9 14,9 23,1 4,8 5,8 3,3 Operating cash flow before Changes in INV Changes in AR Changes in AP Income taxes paid & OCF working capital changes Interest paid 34 34 In USD Millions

  35. CASH FLOW 9m 2007 9m 2006 35 35 In USD Millions

  36. BALANCE SHEET CL DEBT OTHER EQ CA NCA 36 36 2005 2006 9m2007 In USD Millions

  37. Address: bld.3, Barabanniy side-street Moscow, 105062 Tel.: +7 (495) 792-5330 Fax: +7 (495) 792-5328 E-mail: info@veropharm.ru www.veropharm.ru 37

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