Specialty pharma meets M&A competence
INVESTOR RELATIONSInvestor Presentation per December 2018
CHEPLAPHARM AT A GLANCE
Company Snapshot Strong Historic Growth
Recently Closed Acquisitions Brand Diversification by Area (2018P)
Family‐owned company with > 25 years of pharma sector expertise
Buy and Build strategy
M&A know‐how and track record with > 80 products acquired
Branded specialty pharma / niche products in over 120 countries
Value creation via scalable platform and Life‐Cycle‐Management
Asset light business model with strong scientific backbone
Revenue growth from < € 1m in 1998 to ca € 226m in 2017
80122
226188
3868
134115
2015A 2016A 2017A YTD Sep 2018
Sales EBITDA
56% 59%47%
29%
15%
13%
8%
7%
7%
5%
11%
2%
2%2%
Opthalmology
ObesityCardiology
Infection Medicine
Emergency Medicine
Gastroenterology
OncologyHaematologyAddiction Medicine
Sleeping DisorderAll Other
61%
02/201804/2018 01/2018
Average age: ca 25 years
09/2018
07/2018
09/2018 09/201809/2018
% EBITDA margin
2018P
2
47%
31%
22%
PORTFOLIO OVERVIEW
Sales by Products (2018P)
CHEPLAPHARM is well diversified across products and geographies, providing global reach to Big Pharma
Sales by Geography (2018P)
Niche vs. Legacy (2018P)
2018P
Business Footprint
• Business in more than 120 countries
• Vast network of distribution partners globally
• Valuable business partner to Big PharmaNiche
Legacy
15%
15%
12%
8%7%6%
5%
5%
4%
11%
2%
2%
2%
1%
2%
2%
2%Atacand/Plus
Dilatrend
Visudyne
Xenical
Cymvene
Deursil/Ursolvan
Heminevrin/Distraneurin
Fungizone
AnexateVePesid
Vesanoid
SotalexRohypnol
Questran
EtopophosKonakion MM All Other
2018P 50%
7%
28%
6%5% 4%
Latin America and Caribbean
Europe ex Germany
Asia and Oceania
North America
Germany
Africa
2018P
Branded Products with competitionBranded Products with unique competitionBranded Products with limited/partial competition
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ORGANISATIONAL STRUCTURE
4
100%
HelmMedical GmbH
RubiePharmArzneimittel GmbHSanavita GmbH
CHEPLAPHARM Arzneimittel GmbHMoody´s B1 / S&P B both stable outlook
RubiePharmVertriebs GmbH
Glenwood LLCCHEPLAPHARMFrance SAS
Walter RitterGmbH & Co KG
WR Pharmaceuticals Vertriebs GmbH
Deal Sourcing & Due Diligence
Life‐Cycle ManagementKey value levers: (i) overhead cost and complexity reduction, (ii)
optimization of production costs, (iii) active pricing strategy and (iv) well‐established partners for production / D&M
ProductionResearch & Development
5
Distribution & Marketing
BUY – INTEGRATE – BUILD / OPTIMIZEDisciplined identification of right acquisition targets, integration into outsourced supply chain
and optimization via professional Life‐Cycle Management
No R&D activities & associated risks
Focus on inorganic growth acquiring branded original off‐patented niche or legacy products from Big Pharma
CHEPLAPHARM is principally shifting distribution & marketing to its own external exclusive distribution network or taking over agreements by assignmentCHEPLAPHARM’s clear focus and key competence is Life‐Cycle Management creating added value vs Big Pharma
Lean set‐up given outsourced manufacturing and distribution activities to trusted, qualified and long‐standing 3rd parties
CHEPLAPHARM‘S BUSINESS MODEL
UNIQUE, LOW RISK BUSINESS MODEL
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Acquisition of “tried and tested” pharmaceuticals with sticky customer base, long‐phase out periods and high brand awareness requiring no / less marketing
Post‐Patent Phase Management ofproduct Life‐Cycle
Optimization ofcost structure
• Limited competition,no relevant generics
• Unlikely to be replacedby new treatment guidelines
• Stable to little growing sales and cash flows
TimeCash
Development Phase Patent Phase
CHEPLAPHARM’s Business Model
Niche product ‐ Lower volume – typically no or limited competition (solid and stable sales)Legacy product ‐ Higher volume – generic competition (price competitive)
CHEPLAPHARM advantages:• Limited or no competition• 10+ years out of patent• Stable sales• Low risk due to “tried & tested” pharmaceuticals
• Stable market share following generics competition
• High brand loyalty being able to retain customers
• Stable to slightly declining sales and cash flows
1
2
Key characteristics
Nicheproducts
Legacy products
2
1
LIMITED COMPETITION MARKET SEGMENT / BARRIERS TO ENTRY
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Strong relationships to Big Pharmas and reliability being key for any upcoming transaction representing a significant barrier to entry for potential new market players
M&Atrack record and regulatory competence
Fast ‐ Flexible ‐Reliable
Package Deals
Global distribution
And many more…!
DISCIPLINED M&A STRATEGY –INVESTMENT CRITERIA (EXCERPT)
Track record of carefully adding new products to the portfolio based on stringent selection criteria that have been successful for 15 years
Remainingeconomic life
• > 10 years
Presence of “Pull effect” • Secures survival as cash cow • Brands should be established in the market and should have a high degree of familiarity
Track record • Established products with proven track record (at least 15‐20 years history)
Market position • Either niche position (USP of API and/or indication) with growth opportunity or extremely cheap and offer attractive ROI (legacy deal)
Production • Production must be ensured in the long‐term
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Balanced productportfolio
• Incremental sales contribution from a single acquired product of max. €100m
0
200
400
600
800
1000
1200
1 2 3 4 5 6 7
CREATING VALUE FROMLIFE‐CYCLE MANAGEMENT
Life‐Cycle Value of
Big Pharma
Life‐Cycle Value of
CHEPLAPHARM
Overhead Reduction
Reduction ofProduction Costs
Active Price Strategy
Reduction ofcomplexity
Others
Schematic presentation for illustration purposes only
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Life‐Cycle Management comprises several measures with regular optimization of production costs being the most important value lever
Life‐Cycle Management provides additional upside, i.e. neither included in investment decision nor in
CHEPLAPHARM’s business plan
Basis for investment decision (ROI calculation)
STRONG AND SUSTAINABLE EBITDA MARGINSREFLECTING INVESTMENT POLICY
Strong operational track record proven by stable EBITDA margins across the cycle Fluctuation in EBITDA margin mostly driven by M&A activity and related Transitional
Service Agreements (TSAs), i.e. in years of stronger M&A activity such as 2013, 2016 and 2017, margins are slightly overstated due to TSA accounting effects
However, through the cycle, EBITDA margins have been fairly stable around 50%
10
7 8 11 12
26 2738
68
134
57%
48% 50% 52%
61%
48% 46%
56% 59%
0%
20%
40%
60%
80%
100%
0
30
60
90
120
150
2009 2010 2011 2012 2013 2014 2015 2016 2017
€m
EBITDA EBITDA margin
Average
SUMMARY ‐ KEY CREDIT HIGHLIGHTS
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Unique, low risk business model with easy scalability
Strong acquisition track record and global distribution
Limited competition market segment
Diversified sales base and high revenue visibility
Limited capex requirements resulting in significant cash generation
Highly qualified management with proven operational and M&A track record
1
2
3
4
5
6
Specialty pharma meets M&A competence
APPENDIX
COMMENTS FROM THE RATING AGENCIES
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“ CHEPLAPHARM runs a profitable and cash flow generative business model
…. good therapeutic and geographic diversity
…. successful track record and established relationships with leading global pharma companies ”
“ CHEPLAPHARM will be able maintain its profitability metrics, supported by management's focus on lifecycle management activities
The main strengths of the company is its established track record of careful productselection ….
…. the company has been able to generate average EBITDA margins of about 55% ”
Konakion®Roche
Lariam®Roche
Inhibace®Roche
Cymevene®Roche
Visudyne®Novartis
Streptosil®Boehringer Italia
UCB PackageUCB
Aldactone®Sanofi
Reisegold®Teva
Halbmond®Teva
Sanofi PackageSanofi
Rohypnol®Roche
Vesanoid®Roche
Distraneurin® / Heminevrin®AstraZeneca
Baldrian Dispert®Vemedia
0
30
60
90
120
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
CORPORATE DEVELOPMENT
Klosterfrau PackageKlosterfrau
Anexate®Roche
Calcivit® Hexal
Building the platform Acceleration of growth
Xenical® Roche
Dilatrend®Roche
Product acquiredSeller
Legend:Vesanoid Japan®Roche
Sotalex®BMS
Num
bero
fcou
ntrie
s covered
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Questran®BMS
Atacand®AstraZeneca
Fungizone®BMS
Etopophos®BMS
VePesid®BMS
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
VERY BROADLY DIVERSIFIED ACROSSPRODUCTS ANDMARKETS (% OF SALES)
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Highly diversified portfolio as a result of always acquiring global rights to products
Atacand®/Plus 15.0% Xenical® 14.8% Dilatrend® 11.9% Cymevene® 7.9% Visudyne® 6.9%
Germany 2.9% Australia 1.7% Italy 1.9% Japan 2.5% China 1.4%Romania 2.8% USA 1.5% Austria 0.9% France 0.6% Japan 1.3%Spain 1.6% Russia 1.0% Spain 0.9% South Korea 0.5% France 0.7%Switzerland 1.5% Canada 0.9% Turkey 0.8% USA 0.4% Italy 0.3%France 1.3% UK 0.6% Mexico 0.6% Turkey 0.3% Hong Kong 0.3%Greece 1.1% Spain 0.6% Japan 0.6% Russia 0.2% Spain 0.3%Finland 0.6% Malaysia 0.6% South Korea 0.6% Taiwan 0.2% UK 0.3%Italy 0.5% China 0.5% Taiwan 0.4% Italy 0.2% Taiwan 0.3%Belgium 0.4% Saudi Arabia 0.5% Thailand 0.3% Thailand 0.2% Canada 0.2%Other 2.3% Philippines 0.5% Belgium 0.3% UK 0.2% Netherlands 0.2%
Others 6.3% Others 4.7% Others 2.5% Others 1.8%
Deursil®/Ursolvan® 5.8% Fungizone® 5.2% Konakion® 4.7% Vesanoid® 3.6% Questran® 2.4%
Italy 4.4% France & FOT 3.4% France 0.9% Canada 0.3% France & FOT 0.8%France 0.0% Japan 0.4% Germany 0.5% Germany 0.2% UK 0.4%Switzerland 0.3% Algeria 0.4% Italy 0.3% Italy 0.2% Italy 0.3%Tunisia 0.0% Germany 0.2% UK 0.3% France 0.2% Brazil 0.2%Others 0.0% GPS Sales 0.2% Spain 0.2% Spain 0.2% Germany 0.1%
Others 0.6% South Africa 0.2% Brazil 0.2% Mexico 0.1%Morocco 0.2% South Korea 0.2% Others 0.5%Belgium 0.2% UK 0.2%Turkey 0.2% Argentina 0.2%Algeria 0.2% Australia 0.1%Others 1.5% Others 1.5%
OVERVIEW TOP 10 PRODUCTS
Atacand®/Plus Xenical® Dilatrend® Cymevene® Visudyne® Deursil® /
Ursolvan® Fungizone® KonakionMM® Vesanoid® Anexate® Vesanoid® Questran®
2018PSales 15% 15% 12% 8% 7% 6% 5% 5% 4% 2% 2% 2%
Segment Cardiology Obesity Cardiology Virology Ophthal‐mology
Gastro‐enterology Oncology Haemato‐
logy Oncology Emergency Medicine Oncology Cardiology
ApplicationHeart failure,
hyper‐tension
Obesity
Heart failure, hyper‐tension,
stable anginapectoris
Treatment and
prophylaxis of
cytomegalo‐virus (CMV) disease
Retinaldisease: age‐
relatedmacular de‐generation (AMD)
Dissolution of small gallstones
Antifungal / supportive oncology
Haemor‐rhage; Vit K Deficiency Bleeding in new‐born
Acute leukemia
Post‐anaestheticrecovery period
Acute leukemia
Cholesterol reducer for hypercholest
eremia
Rx / OTC Rx Rx Rx Rx Rx Rx Rx Rx/OTC Rx Rx Rx Rx
Intro 1997 1997 1990 1994 1999 1980 1971 1955 1994 1987 1994 1965(1980s)
PatentExpiry 2012 2009 1999 2002 2009(1) 2002 2003 2008 2002 2008 2002(4) Never
patented
KeyCountries
Germany, Romania, Switzerland
Australia, USA, UK, Canada
Japan, Austria, Italy,
Korea
Japan, Korea, Hong‐kong, Italy, Russia
Japan, China, France, Italy,
SpainItaly, France
France, Japan, Algeria, Germany
France, Germany, Italy, UK
Canada,Germany, Italy, Korea,
Brazil
Japan, Brazil, Germany, Korea
Canada,Germany, Italy, Korea,
Brazil
France, UK, Italy, Brazil,Germany
USP
Genericmarket hassettled
quickly withthe productavailable in more than125 markets
Strong brand, first line therapy according to
several national clinical practice guidelines
API is listed in the WHO
list of essential medicines; first line therapy
according to several
guidelines
First Line therapy in major medical guidelines
Stable since many years
as the second line therapy with
niche‐position, no generic
competition
Strong brand, leading market position
(especially in Italy);
dominant therapeutic strategy in guidelines
Ampho‐tericin B is included in the WHO list of essential medicines
Strong brand for routine life saving VitK prophylaxis in neonates, with limited competition
Strong brand in a niche
market with limited
competition
Strong brand with long history and quality „made in Europe“
Strong brand in a niche
market with limited
competition
First‐line therapy for diarrhea and
for management of pruritus in
primary biliary
cholangitis , second line as mono‐therapy
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CONTACT
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Request further information
HEADQUARTER ǀOFFICE Germany
CHEPLAPHARM Arzneimittel GmbH
Ziegelhof 24
17489 Greifswald
Internet: www.cheplapharm.com
Jens Remmers
Head of Investor Relations
Tel.: +49 (0) 3834 8539‐145
Email: investor‐[email protected]
Jens Rothstein
Chief Financial Officer
Tel.: +49 (0) 3834 8539‐122
DISCLAIMER
The information contained in this Document does not purport to be all‐inclusive or to contain all information that is required to properly evaluate a potential transaction. Any recipient of this Document should therefore conduct its own independent analysis of the Company and the data contained or referred to in this Document. The Company, does not expect to update or otherwise revise this Document or other materials supplied herewith.
The Company does not make any representation or warranty as to the accuracy or completeness of any of the information contained herein or with regard to otherwritten or verbal information submitted or made available to the recipient. The Company accepts no liability for possible errors or omissions in this Document. Inparticular, the Company makes no representation or warranty with respect to any financials (including without limitation management projections) that may becontained in this Document. Where this Document contains forward‐looking statements, these statements involve risks and uncertainties, and the Company's actualresults may differ significantly. Such information should therefore not be construed as a representation or prediction that the Company will achieve or is likely toachieve any particular results.
The recipient of this Document must not construe any of the contents of this Document as legal, business, or tax advice. Each recipient should therefore consult hisown attorney, business advisor and tax advisor as to legal, business, tax and related matters concerning this Document.
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