AGP Limited Corporate Briefing Session 08 th August 2019

1. AGP Limited Corporate Briefing Session08th August 2019

2. Table of Contents Financial Performance Jan-Jun-19 Analysis of Variances in Half Year Profit & Loss Financial Performance 2016-2019 Corporate Information & Structural Changes Pharma Sector Overview Regulatory and Pricing Environment and Updates Imports from India in Recent Times Challenges & Future Outlook Note: Actual results may vary from any forecast / expectations / opinions which may have been shared in this presentation / session.

3. AGP Limited – Financial Performance Jan-Jun-19 • AGP limited (“AGPL”) posted net profit of PKR 743 Mn for the period of Jan-Jun 2019 translating into EPS of PKR 2.65 • Interim dividend ofPKR 1.25/share • Revenue grew by 10.2% in 1st half 2019. • Ignoring the impact of a one-off government order, sales grew by 20%, of which 8.2% is volumetric increase • The company’s Gross Margin improved to 58% (55% last year) Specialty Areas Revenue Growth (PKR mn) 22% 23% 10.2% Net Profit Margin • Return on • Equity Revenue Growth

4. Analysis of Variances - Profit & Loss Jan-Jun-19 (PKR in Mn)

5. Financial Performance

6. Rigix – Billion Rupee Brand CAGR of 19% Rigix has crossed PKR 1 Bn brand in latest IMS report * Sales are Ex-Distributor (Local) at Trade Price (in PKR Mns) Source : IMS Q2-2019

7. AGP – Corporate Information AGP Limited - Pattern of Shareholding in Jun-19 AitkenStuart Pakistan (Pvt.) Limited 50.53% Tariq Moinuddin Khan 0.21% Muller & Phipps Pakistan (Private) Limited 13.54% Baltoro Growth Fund 9.57% Aspin Pharma Limited 4.79% High-Q Pharmaceuticals (Private) Limited 4.35% Bank Alfalah Limited 3.68% General Public & Institutions 13.32% Board of Directors Tariq Moinuddin Khan Chairman Nusrat Munshi CEO & Executive Director Kamran Nishat Director (Muller & Phipps) Mahmud Yar Hiraj Director (Baltoro) M. Kamran Mirza Director (AiktenStuart) Naved Abid Khan Independent Director Zafar Iqbal Sobani Independent Director Sharia Compliance Entity Rating Entity Rating: Long-TermA+ (Upgraded May-19) Short-TermA1 Outlook Stable Meezan Bank Limited have reviewed the accounts of AGP and found them to be in compliance with Karachi Meezan Islamic Index – 30 Criteria set out by Pakistan Stock Exchange “The ratings reflect AGP's strong business fundamentals. The pharmaceutical industry has witnessed a higher rate of sustained growth over the years. While product pricing has been a challenge, the new CPI-linked pricing criteria has allowed an increase in prices with respect to inflation, indicating a positive sign. At the same time, AGP's core profitability is strong; any downward revision in margins must remain range-bound.” Extract from PACRA’s Rating Report May-19

8. AGP Ownership Structure • For the purposes of better organizational management and pooling of business risks, scheme for rearrangement, restructuring and reorganization of OBS group was undertaken. • Under the Scheme of Arrangement sanctioned by the Court, shares of AGP Limited held with OBS Pakistan (Private) Limited have been amalgamated with and into AitkenStuart Pakistan (Private) Limited. • Consequent to the above, it is pertinent to mention that the ultimate beneficial ownership of AGP Limited remains the same. Pre Scheme of Arrangement Existing Group Structure West End 16 Pte. Ltd. (Singapore) 50% Mr. Tariq Khan 50% Mrs. Adeela Tariq West End 16 Pte. Ltd. (Singapore) 50% Mr. Tariq Khan 50% Mrs. Adeela Tariq 70% Ownership 70% Ownership OBS Healthcare (Pvt.) Ltd. OBS Healthcare (Pvt.) Ltd. 30% Mr. Tariq Khan 30% Mr. Tariq Khan 90% Ownership 100% Ownership OBS Pakistan (Pvt.) Ltd. AitkenStuart Pakistan (Pvt) Ltd 10% Mr. Tariq Khan 50.53% Ownership 50.53% Ownership AGP Limited AGP Limited 0.21% Mr. Tariq Khan 4.79% Aspin (Associate) 44.47% Others 0.21% Mr. Tariq Khan 4.79% Aspin (Associate) 44.47% Others

9. Sector Overview Sales in PKR Bn Growth +/- Source : IMS Q2-2019

10. Major Industry Players Sales in PKR Bn AGP Limited stands at 23rd position with revenue of around PKR 5.3Billion (excluding institutional sales and exports).

11. Regulatory and Pricing Environment and Updates • Pharma Industry operates in a heavily regulated environment, stringent and closely monitored and administered by Drug Regulatory Authority of Pakistan (DRAP). • New molecules can take up to 12-18 months to register and generics take up to 3 years. Slow registration processes and bottlenecks are hindering new product launches. • Although Pharma companies are contributing 1% of their PBT to government for conducting R&D, much of this is going towards meeting administrative expenses of DRAP rather than R&D • Resolve is needed on the part of the government to end the counterfeit menace which is believed to be as high as 45% • Pricing matters have been addressed to some extent through a revised pricing policy. • The Drug Regulatory Authority of Pakistan (DRAP) has granted a one-off price increase of 15% in Jan-19 to mitigate the impact PKR devaluation of 26% in 2018. • DRAP concluded the proceedings on all hardship case and applying the Drug Pricing Policy issue in June 2018. AGP had 6 hardship cases, of which 5 were decided in AGP’s favor. • Subsequently, at the request of DRAP and in the interest of the patients, AGP voluntarily forfeited a around 1/3rd of the increase granted for 2 products (Magnus and Kefzol).

12. Imports from India in Recent Times • In light of the emergent strained relationship with India, AGP at the beginning of the current year undertook a detailed analysis of its supplies from India. Findings are as under: • Raw Materials: • Currently, 24% of raw materials (in value) are imported from India which is approximately 11% of total COS of 2019 • AGP maintains 45 days of finished goods inventory with the distributor, 15 days of finished goods inventory at the warehouse and 90 days of raw material inventory, to mitigate the risk of material shortages due to short term disruptions. • AGP has already developed alternative sources for 80% of the raw materials currently imported from India. Alternative sources for the remaining are under developmental phase. In the event that we need to shift to alternative sources, our gross margins will fall by 1.3%. • Finished Imports • AGP currently imports Mylan products from India. Mylan has agreed to supply through alternative routes, if necessary. AGP currently has 6 months of average inventory for Mylan products

13. Challenges & Future Outlook • The Pak Rupee has seen a devaluation of over 15.6% since December 2018 while key interest rates are increased by 325 basis points since January 2019. We believe that this pattern may continue in the short term with lower and slower intensity. The devaluation and inflationary impact is partially mitigated by the annual price increase linked to CPI index • The Company is moving to import in Chinese Yuan to manage the devaluation impact. • AGP launched 8 new products in 2018 and has plans to launch at least 4 new products in the second half of 2019. • The Company is pursuing to aggressively expand its product offerings in the growing segment of the Nutraceutical market. • Construction of new office building is also in progress and is expected to be completed in the first quarter of 2020, making space for future plant expansion at plant 1. • Spending on pharmaceutical drugs remains low compared to our International counterparts and the regional average, paving way for growth prospects. • The Company remains optimistic about the future outlook of the business given the essential nature of the industry, internal economies of scale, strength and growth of current product mix along with a strong new product pipeline.

14. Challenges & Future Outlook - Nutraceutical Plant • Nutraceuticals is a growing segment with several players entering the market in the recent past. It is a relatively less regulated segment with market forces determining product pricing • With 2 years of experience in this segment, AGP has witnessed a fair contribution to top line from the sale of products such as Novafol, Cofif Syrup range, All-D Drops, Carodek and Protégé Sachets • During the half year ended, the Company purchased of an existing Nutraceutical product manufacturing facility as opposed to the previous plan of building a new plant. This will lead Company to an early entry in the market resulting in saving valuable time of 15-18 months, mitigate foreign exchange exposure risk and lead to possible savings in capital expenditure. • AGP is already marketing nutraceutical products through 3rd party tolling and will shift to own manufacturing once the plant is commissioned and operational. AGP has plans to launch at least 3 new products in the next 12 months. The estimated total cost is of PKR 220 million versus PKR 250 million for building the facility.

15. Q&AThank you