Developing an NZ based Pharmaceutical Company

1. Developing an NZ based Pharmaceutical Company

2. What is AFT? • 100% NZ privately owned (Atkinson Family Trust) and NZ based Pharmaceutical Company. • Avoided external shareholders but still have board structure • Trading History • NZ - Aug 1998 in NZ • Australia 2005 • Malaysia/SE Asia - 2008 • NZ: Overall – 18th biggest Pharma. Second biggest NZ owned Pharma • Group Sales for Mar 2010 year will be over $35 mill • Not just a distributor as AFT owns a significant portfolio of IP (trademarks, patents) and licenses. Both Patented, Branded & Generics • Involved in drug development

3. AFT Key Aims • Grow Sales • Diversify sales base away from “just” NZ • Live local, do business global • Generate a significant amount of gross profit from AFT owned IP and products • To be the first NZ based/owned company to develop a drug through to Phase III and license it globally

4. AFT Year on Year Consistent Sales Growth

5. AFT Export Progress

6. AFT Milestones • 1998 – started in NZ in the spare room with $50k • 2000 share deal in South Africa • Shareholding in Swazipharm • Shareholding in Westbury Trading • Shareholding in Specpharm • 2002 – acquired first AFT products (crystacide, coco-scalp & zostrix) • 2002 – court proceeding from GSK, patent litigation • 2004 – started Australian plans and exited South Africa • 2004 – started drug development, filed first 2 global patents • 2006 – JV agreement with an EU based company for line extension development • 2008 – Dec08, launch in Malaysia of first AFT licensed products • 2009 – Global licensing negotiations for key development • 2009 – Negotiations to purchase novel IP for development

7. Some Key Steps • Get started (work in progress!) • NZ & Australia (AFT) • Regional e.g. SE Asia (license) • ROW (license) • Diversify Operations • Increase channels to leverage licenses (pharmacy, grocery…) • Increase customers (different countries) • Leverage existing global network - AFT works very globally (NZ, Aust, Malaysia, India, South Africa, Cyprus, Greece, Spain, Italy, Sweden, UK, Ireland, Canada) • Increase value added activities • Value lies in drug licenses (not bricks & mortar). Not understood by mainstream banks • Made in NZ not relevant. Control of the IP is!!

8. Some Key Learning's! • Starting with limited capital • Difficult!!!! • Have to balance long term strategic niceties with short term opportunities • Strategic corporate thinking alone = bankruptcy • However at least still your own boss  ! • Golden Finance Rules • Rule #1 – cash is king • Rule #2 – cash still king • Rule #3, don’t forget rule #1 & 2 and add in banking covenants  • Build everything off cashflow forecasts (P&L, Balance sheet etc) • Leverage outside expertise • External board & experts • Incubator effect does seem to be working in NZ for AFT

9. Business in South Africa

10. The Development Path • Innovation • Spot gaps in the market • Research IP side – trademarks, right to market & IP protection • Needs marketing or it becomes a “best kept secret” • Develop own products for ANZ and other markets • Small guys often are closer to the market and have good ideas • Turn Problems into Opportunities • Keep an open mind despite being busy! • Make the decision you want to grow but YOU drive this (not others!!) • Anything legal that avoids competition is significant • Patent is a good example! • Something difficult to make is another e.g. Crystacide

11. AFT Office - $8 mill turnover

12. AFT own products - Maxiclear

13. AFT advertising - TV

14. NZ Trade Fair – Auckland 2008

15. Some AFT results – little guy beats big guy(s)

16. More staff – AFT Team Aussie

17. 1st Aussie Trade Fair – Darling Harbour

18. AFT Dinner time in KL

19. AFT Dinner time – Goa Beach Shack

20. AFT Making friends in Foreign Lands !

21. Is drug development $ all in NCEs?

22. Some AFT Examples • Acquire existing busines BUT only if price is right! Look to then leverage • Register in more countries (Zostrix, Coco-Scalp, Crystaderm) • This part is often very profitable • Develop line extensions (Zostrix) • Purchase early phase R (R&D) • Don’t underestimate the D part of R&D!! • Develop from Scratch • Maxigesic • Maxiclear Hayfever & Sinus

23. AFT First Licensing Sales Results • Launched first licensed products into Malaysia • Malaysian sales first 2 months = RM78K but penetration only 9% retail pharmacy market & 4% GP market so plenty of upside • Using the whole AFT promotional platform modified for local conditions • Roll out launch throughout SE Asia • Singapore • Indonesia • Thailand • Vietnam • Philippines • Cambodia

24. AFT Development Program Example • Phase I studies • Phase II Studies • 300 pts • 43 pts • Phase III • Pivotal study 135 pts – 150 pts - 150 pts • Phase IIIb • 500-1000 pts • Dossier writing, expert reports (experts from Tennessee to Taupo) ……….

25. CONCLUSIONS • Build on current progress and grow AFT sales further • Why not $50-100 mill? • Complete existing drug development projects • Achieve aim of being first NZ Pharma to license a Phase III drug • Use as a template for new drug development projects • Leverage existing learnings and networks • Can be done in NZ or controlled from NZ

26. “Dorothy there’s no place like home” – with apologies to the Wizard of Oz