Ger van Jeveren, CEO
Marieke Palstra, IR
Roadshow London
17-18 February 2015
Global presence
2
Global presence
USA
Europe
South Africa
Colombia
Brazil
China
Fagron Group
7 sites – GMP, FDA
9 sites – GMP, FDA, ISO9001
3 sites
4 sites
4 sites – GMP, FDA, ISO9001
Purchase & quality office
28 sites
5,000 pharmaceutical raw materials
3
Fagron
Global market leader in pharmaceutical compounding
2,239 employees, incl. >300 pharmacists, in 30 countries
19 compounding facilities, 6 facilities under development,
5 conditioning sites, 3 purchase and audit offices
10% of annual turnover comes from innovations that were
introduced in the past two years
2014: turnover of € 447.1 million and REBITDA margin of
26.5%
Listed on Euronext Brussels and Amsterdam since 2007
Market capitalisation of € 1.1 billion
4
Business model
FCS
Fagron Trademarks
Fagron Compounding Essentials
Raw materials
Excipients
Equipment
Supplies
Sterile, Aseptic and Non
sterile compounding
Fagron Advanced Derma
SyrSpend® SF
Fagron Aseptic Pack
7
Major achievements in 2014
• Gross margin of 64.5%
• EBITDA-margin of
25.4%, an increase of
340bps
• Divestment of Arseus Dental and
Arseus Medical
• US private placement of US$ 185
million
• Refinancing of € 220 million
syndicated loan facility
• Successful rebranding of Arseus
into Fagron
• Fagron publicly listed on Euronext
Amsterdam and Brussels since
1 January 2015
• Organic turnover
growth at constant
rates of 11.5%
• Total turnover growth of
30.4%
• Disposal of € 10.9
million non-strategic
OTC and Industry
activities
8
What is pharmaceutical compounding?
9
Patient
Tailor-made
medication
Compounded in community and hospital pharmacies or by Fagron
Compounding Services, always based on a pharmaceutical formulation
Formulations developed by Fagron
and/or compounding pharmacists
based on APIs which are out of patent Alternative dosage
forms
Alternative dosage
strengths
Combination
therapy
Key drivers of pharmaceutical compounding
Unique selling points
Prescriber/Pharmacist
“Yes, compounding
pharmacists enhance
medication compliance
and save lives… every
single day!”
10
Drug shortages
Discontinued drugs
High-quality and cost effective alternative
Less side effects
More individualised approach
Tailor-made
Enhance patient compliance
New and unavailable therapeutic needs
Increased awareness through internet
Win-win-win strategy
Prescriber
Pharmacist
Patient
11
Process from prescription to patient – Europe
Patient
REIMBURSEMENT
Prescriber
Hospital
pharmacy
Pharmacy
12
Process from prescription to patient – US
Patient
NON STERILE:
REIMBURSED/CASH
Prescriber
Hospital/
clinic
Non-sterile
FCS facility
FDA registered
503B sterile FCS
facility STERILE: CASH 13
Process from prescription to patient – Brazil
100% CASH MARKET
14
Patient
Prescriber
Pharmacy
Win-win-win strategy
Prescriber
Pharmacist
Patient
15
Patient
organisations
Government
Insurance companies
Financial highlights
Consolidated turnover S2 2014 and FY 2014
X 1,000 euros 2014 2013 Total
growth
Tot. growth
CER Org.
growth
Org.
growth
CER
Fagron 438,479 334,985 30.9% 33.0% 9.7% 11.5%
HL Technology 8,577 7,726 11.0% 9.5% 11.0% 9.5%
Total 447,056 342,711 30.4% 32.5% 9.7% 11.5%
X 1,000 euros S2 2014 S2 2013 Total
growth
Tot. growth
constant* Org.
growth
Org.
growth
constant **
Fagron 234,348 176,828 32.5% 31.0% 10.4% 9.1%
HL Technology 3,559 3,317 7.3% 4.9% 7.3% 4.9%
Total 237,908 180,145 32.1% 30.5% 10.4% 9.1%
17
Consolidated - Gross Margin
194.7
288.2
0
50
100
150
200
250
300
2013 2014
49.2%
48.1%
18
• Increased by 770bps to 64.5% of
turnover
• Focus on high margin products, FCS
and Fagron™
• Continuous savings in procurement
• Phased-out industry sales
56.8%
64.5%
Consolidated - REBITDA
79.1
118.5
0
20
40
60
80
100
120
2013 2014
49.2%
49.8%
19
• Increase of 340bps to 26.5% of
turnover
• Continuous focus on OPEX
• Growing expenses in R&D
• In 2014 total amount of R&D is € 30
million
• Fagron does not activate R&D costs
23.1%
26.5%
Consolidated - Depreciation & Amortisation
8.9
19.0
0
2
4
6
8
10
12
14
16
18
20
2013 2014
49.2%
113.4%
20
• Increase in D&A of € 10.1 million:
€ 4.7 million PPA
€ 2.6 million PPE
€ 2.8 million write down of
inventory and receivables (phase
out of non profitable distributions
and industry sales)
Consolidated – EBIT
66.3
94.3
0
10
20
30
40
50
60
70
80
90
100
2013 2014
49.2%
42.2%
21
• Increase of 42.2% to € 94.3 million
(170bps to 21.1% of turnover)
• EBIT lift (EBIT growth/sales growth)=
1.39
Consolidated – Taxes
7.0
26.7
00
05
10
15
20
25
30
2013 2014
49.2%
22
• Increase of € 19.7 million, mainly due
to high corporate tax rate in the US
• Effective tax rate amounted to 38.2%
• Cash tax rate is 16.3% and below our
guidance of 20%
Consolidated – Adjusted net profit
44.3 46.7
62.0
00
10
20
30
40
50
60
70
2013 2014 2014adjusted
49.2%
5.4%
23
• Increase of 5.4% from € 44.3 million
to € 46.7 million
• Negatively impacted by high tax rate
• Net profit corrected for paid taxes
would be € 62 million (increase of
40.0%)
40.0%
Net financial debt – S1 and S2
327
411
289
449
0
50
100
150
200
250
300
350
400
450
500
2013 2014S1 S2
24
• Negatively impacted by USD
conversion (effect is € 22.2 million)
• Covenant = 3.18 compliant with
maximum ratio of 3.25
Net debt bridge
25
449
289 107
197
21 19 22 1 1 25
22
00
50
100
150
200
250
300
350
400
450
500
Balance sheet: Assets
47.5 60
400.6
575.3
28.3
22.4
15.8
5.1
33.0
48.2
40.3
63
0
100
200
300
400
500
600
700
800
900
Dec 2013 Dec 2014
Assets/liabilities held forsale*
OWC
Other fixed assets
Deferred tax assets
Intangible assets
Tangibles
* Excluding net debt for discontinued operations. 26
Balance sheet: Liabilities
27
155.2 156.9
13.5 14.9 4.5 6.2
289.2
448.7
2.5
3.1
100.7
139.7
0
100
200
300
400
500
600
700
800
900
Dec 2013 Dec 2014
Other WC
Financial instruments
Net financial debt
Deferred tax
Provisions
Equity
Strongly improved cash flow generation
28
In € 1,000 2014 2013 Change
Operating cash flow 93.9 46.0 +104%
- Interest -24.7 -19.4 +27%
- CAPEX -12.5 -5.2 +140%
Free cash flow 56.7 21.4 +165%
EBITDA 113.4 75.2 +51%
EBITDA/FCF 50% 28% +2,200bps
Strongly improved cash conversion
Due to increasing EBITDA, good working capital management and decreasing
paid taxes = ‘Operational excellence’
Fagron
FINANCIAL HIGHLIGHTS
Sales Fagron CAGR
30 CAGR: Compound Annual Growth Rate
137 151
179
243
290
335
438
2008 2009 2010 2011 2012 2013 2014
20%
Organic and total turnover growth
9.4%
5.9% 7.2% 6.5%
10.9%
13.7% 11.5%
24.2%
10.5%
18.3%
35.8%
21.8%
20.3%
33.0%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2008 2009 2010 2011 2012 2013 2014
Total growth at constant rates
Organic growth at constant rates
31
Sales per segment
2014 2013 Total growth Organic
growth
Fagron Compounding
Services 147,780 58,210 153.2% 19.8%
Fagron Trademarks 45,652 33,630 39.8% 28.4%
Fagron Compounding
Essentials 245,047 243,145 3.3% 4.7%
Total Turnover 438,479 334,985 33.0% 11.5%
32
Without the disposal of € 10.9 million of Industry
Sales, organic growth of Fagron Compounding
Essentials would have been 9.7%
Fagron Compounding Services
Business model: FCS
34
Sterile
Aseptic
Non sterile Tablets, capsules, liquids,
crèmes/ointments
IV-Bags, ampoules, vials
TPN, cytostatics, syringes,
cassettes, easypumps
Fagron Compounding Services facilities worldwide
Belgium
Bornem
(non-sterile & aseptic)
France
Paris (non-sterile)
Marseille (non-sterile)
South Africa
Johannesburg (non-
sterile)
Cape Town
(non-sterile and sterile)
George
(non-sterile and sterile)
Greece
Trikala (non-sterile)
Colombia
Bogotá (non-sterile)
Bogotá (non-sterile)
Cali (non-sterile)
Medellin (non-sterile)
Netherlands
Oud Beijerland (non-sterile & aseptic)
Helmond (non-sterile & sterile)
Hoogeveen (non-sterile & aseptic)
Oldenzaal (non-sterile & aseptic)
Goes (non-sterile, sterile & aseptic)
North America
Wichita, Kansas (sterile & aseptic)
St. Louis, Missouri (non-sterile)
Arlington Heights, Illinois (non-sterile)
Tamarac, Florida (non-sterile)
35
Fagron Compounding Services
36
Warehouse incoming goods Clean utilities Transfer into clean room
Clean utilities in clean room Batch record administration Transfer to aseptic area
Fagron Compounding Services
37
Prepare for compounding Compounding Visual analyses
Packaging Microbiology analyses Complete batch record
Fagron Compounding Services – products
38
Elastomeric pump Cassettes
Fagron Aseptic Pack Prefilled syringes
Fagron Compounding Services – products
39
Intravitreal eye injections antibiotic prophylaxis
IV bag Cytostatics
40
YES, WE IMPROVE THE QUALITY OF
LIFE OF PATIENTS, EVERY SINGLE DAY
Fagron Trademarks
SyrSpend® SF
SUPERIOR SUSPENDING TECHNOLOGY
Development of SyrSpend® SF
Invented by Fagron USA
SyrSpend® SF was designed as an ideal
suspending vehicle1
Technology patented in US
Developed to compete with the leading commercially available
suspending bases
Designed with focus on use in vulnerable patients
Fagron continually performs physical, chemical and microbiological
stability studies on SyrSpend® SF / API combinations
SyrSpend® SF is used by Sanofi and Astellas for clinical trials
1 Thompson JE. A Practical Guide to Contemporary Pharmacy Practice, Lippincott Williams & Wilkins, Baltimore, Md., 1998, p. 28.1 43
Suspensions
Suspensions are heterogeneous mixtures containing
solid particles in a liquid phase
Suspensions are extensively used because
1. Most APIs are partly or totally insoluble in water
2. Some APIs are chemically instable in solution
3. Suspensions cause less taste issues
If left untouched suspensions will eventually settle,
forming a solid ‘cake’ on the bottom
SyrSpend® SF’s active suspending technology prevents
caking
Solution
Suspension
44
What makes SyrSpend® SF unique
SyrSpend® SF is based on modified food starch, which gives it its
unique features
Active suspending technology:
• High viscosity at rest keeps the API safely suspended
• Low viscosity when shaken eases rehomogenisation
Ensuring high dosing accuracy and consistency throughout treatment
Avoidance of ingredients, such as methylcellulose or sorbitol, that can
cause allergic reactions and gastrointestinal side effects
Broad compatibility with APIs, as starch is practically inert for chemical
reactions
Pleasant neutral flavour and mouth-feel
45
SyrSpend® SF for any situation
SyrSpend® SF Alka is an unique product in the market!
46
Packs contain
SyrSpend® SF (dry, for reconstitution) in a validated dispensing
container
Pre-weighed API powder
Oral syringe
Tip extender
Press-in bottle adapter
Compounding instructions
Convenient packs
47
Fagron Advanced Derma
LEADING ADVANCED DERMATOGICAL CARE
Total solution for dermatology
A total solution for
Tailor-made prescription compounding
Basic skin care
Based on
Vehicle design according to the latest
scientific insights into the safety and
tolerance of topically applied ingredients
Different bases for different skin types
Suitability for vulnerable, sensitive skin
Optimal compatibility with APIs and DCIs
Compounding and prescribing formulary
49
Ingredient safety
Various classic dermatological/cosmetical
products contain undesirable ingredients
Harmful effects confirmed by scientific
knowledge (e.g. allergic reactions)
Use by vulnerable patient groups
Fagron Advanced Derma is free of harmful
ingredients
50
Unique advanced vehicles
51
Especially suitable for Especially suitable for Especially suitable for
Resources for prescribers
Indication-specific formularies
52
Resources for pharmacists
Vehicle-specific formularies
53
Prescribers worldwide: compounding prescriptions based on Fagron vehicles
54
R&D
55
Development
Realisation
Launch of
solution
Patient, pharmacist
& prescriber
Global R&D pipeline
56
Launch Global Concepts
FAD phase 2
Pain, phase 1
SDD
FAD phase 3
Obese
Alopecia
Global formulations App
May Jun Jul Jan Feb Mar Apr Aug
2015
Sep Oct Nov Dec Feb
2016
Aug
Psoriasis
Quality management
The unique quality of Fagron
Fagron is taking every step necessary to
provide the best Quality for more than
200,000 customers worldwide:
Fagron has a China/India Office fully
dedicated to Quality
Fagron realised 1,200 Supplier Qualifications
in Global QIS by end 2014
Fagron performed 350 Audits by certified
Fagron Auditors by end 2014
58
Assure high quality of
raw materials from China
and India by performing
supplier qualifications
and on-site audits
Fagron China/India quality and procurement office
59
Quality control in entire supply chain
A guaranteed high quality across the entire supply chain
60
Global quality intelligence system
Global QIS is a 24/7 worldwide accessible system, which ensures a
harmonised way of performing supplier qualifications (SQ’s) and
completing audit reports
By tracking OOS and complaints worldwide and linking them to the
producer, Fagron performs vendor management
Global QIS provides a complete quality overview from producer to end-
customer
SQ’s
WC’s
Audits
Recalls
Warnings
QC
data Technical
files Com-
plaints
61
Stability & compatibility studies
Different studies performed with
Fagron Trademark products
Stability studies (shelf life: physical
and microbial stability)
Physical compatibility studies with
API (appearance, colouring or visual
viscosity)
Chemical compatibility studies with
API (quantitative degradation in API)
In vitro absorption studies
62
Outlook
63
Outlook 2015
Fagron expects a turnover of at least € 500
million with an REBITDA margin of 26% in 2015
64
Thank you
Disclaimer
66
This presentation may contain forward-looking statements with respect to Fagron’s future
(financial) performance and position. Such statements are based on current expectations,
estimates and projections of Fagron and information currently available to the company.
Fagron cautions readers that such statements involve certain risks and uncertainties that
are difficult to predict and therefore it should be understood that many factors can cause
actual performance and position to differ materially from these statements. Fagron has no
obligation to update the statements contained in this presentation, unless required by law.
The FY14 are not audited numbers and therefore final 2014 numbers may deviate from the
numbers presented.
A more comprehensive discussion of the risk factors affecting Fagron’s business can be
found in the company’s latest Annual Report, which can be found on the company's
corporate website, www.fagron.com.