investor relations - cheplapharm.com€¦ · investor relations investor presentation per november...
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Specialty pharma meets M&A competence
INVESTOR RELATIONS
Investor Presentation per November 2019
AT A GLANCE
Company Snapshot Profitable Growth
Recently Closed Acquisitions Brand diversification by area
Family-owned company with > 25 years of pharma sector expertise
Buy and Build strategy
M&A know-how and track record with > 90 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 < € 1m in 1998 to c. € 292m in 2018
80122
228
292
3868
134167
2015A 2016A 2017A 2018A
mEUR Sales* EBITDA
56% 59%47%
Gastroenterology
Adiposity
Cardiology
Infection Medicine
Haematooncology
Other Therapeutic Areas
Ophthalmology
Haematology
Oncology
Addiction Medicine
57%
09/201809/2018 09/2018
Average age: c. 25 years
01/2019
09/2018
09/2019 01/201910/2019
% EBITDA margin
2
Sleeping Disorder
Emergency Medicine
1) Pro Forma
*Mix of Net sales and sales/profit generated during the transitional phase of acquired products
29%
15%
13%
8%
7%
7%
7%
5%
2%2% 2% 3%
2018
PF¹
15%
9%
7%
5%
2%2%14%
7%3%
3%2%1%
9%
6%
6%
5%4%
15%
15%
12%
8%7%
6%
5%
5%
4%
1%11%
Atacand/Plus Xenical
Dilatrend Cymevene
Visudyne Deursil/Ursolvan
Fungizone Konakion
Vesanoid/Tretinoin Questran
Distraneurin Anexate
VePesid Rohypnol
Sotalex Etopophos
Lexotan Dormicum
All other
ea. 2%
3
PORTFOLIO OVERVIEW
TOP 3 = 42%Legacy
Niche
Europe
Japan
Korea
China
Taiwan
Hong Kong
Rest of Asia
Asia & Oceania (30%)
Other Regions (16%)
Italy
France
Germany
Spain
Switzerland
UK
Europe (54%)
Rest of Europe Oceania
Latin America and Caribbean
North America
AfricaAsia &
Oceania
Other Regions
Sales by Products
Sales by Geography
CHEPLAPHARM is well diversified across products and geographies,
providing global reach to Big Pharma
47%
31%
22%
Niche vs. Legacy
Business Footprint
• Business in more
than 120 countries
• Vast network of
distribution
partners globally
• Secured supply
and production
network
1) Pro Forma
2018
PF¹
2018
PF¹
2018
PF¹
4
FIGURES AS PER 12/2018
> 90Products
> 10Therapeutic
Areas
> 900Acquired
Marketing
Authorisations
> 24mPacks of
pharmaceutical
products p.a.
> 250Employees from
15 Nationalities
> 130Distribution
partners globally
167m€EBITDA*
*Exceptional items not
considered
30Yrs of experience
within the
management
292m€Sales*
*Mix of Net sales and TSA
related sales
Deal Sourcing &
Due Diligence
Life-Cycle Management
Key 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 / OPTIMIZE
Disciplined 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 assignment
CHEPLAPHARM’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
BUSINESS MODEL
UNIQUE, LOW RISK BUSINESS MODEL
6
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 of
product Life-Cycle
Optimization of
cost structure
• Limited competition,
no relevant generics
• Unlikely to be replaced
by 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
Niche
products
Legacy
products
2
1
LIMITED COMPETITION MARKET SEGMENT / BARRIERS TO ENTRY
7
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&A
track record
and
regulatory
competence
Fast - Flexible -
Reliable
Package
Deals
Global
distribution
And many more…!
FROM SIGNING TO TRANSITION
✓ Signing of the Asset Purchase Agreement (APA) and ancillary contracts like TSA, PVA and MSQA/ TMA
8
✓ Payment of the purchase price when APA becomes effective
✓ Immediate start of integration process
✓ Start of preparing Business Transfer Plan
✓ Transfer of all IP and know-how
✓ Transition to exclusive CP cooperation partner network (in terms of distribution and CMO)
✓ Transition period lasts according to agreement with seller
Signing Closing Transition
0
200
400
600
800
1000
1200
1 2 3 4 5 6 7
CREATING VALUE FROM
LIFE-CYCLE MANAGEMENT
Life-Cycle
Value of
Big Pharma
Life-Cycle Value
of
CHEPLAPHARM
Overhead
Reduction
Reduction of
Production Costs
Active Price
Strategy
Reduction of
complexity
Others
Schematic presentation for illustration purposes only
9
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)
SUMMARY - KEY CREDIT HIGHLIGHTS
10
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
ORGANISATIONAL STRUCTURE
12
COMMENTS FROM THE RATING AGENCIES
13
“ 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 product
selection ….
…. the company has been able to generate average EBITDA margins of about 55% ”
“With EBITDA margins projected at around 50% over the rating horizon, the
company ranks among the most profitable in Fitch’s low non-investment grade
portfolio….
We project free cash flows (FCF) at or above EUR 100 million
a year….”
CONTACT
14
Request further information
HEADQUARTER
CHEPLAPHARM Arzneimittel GmbH
Ziegelhof 24
17489 Greifswald
Internet: www.cheplapharm.com
Jens Remmers
Head of Investor Relations
Tel.: +49 (0) 3834 8539-145
Email: [email protected]
Jens Rothstein
Chief Financial Officer
Tel.: +49 (0) 3834 8539-122
DISCLAIMER
15
These materials (the “Document”) contain confidential information regarding Cheplapharm Arzneimittel GmbH (the "Company"). This Document is
subject to the terms of the Confidentiality Agreement entered into between the Company and the recipient. Therefore, by accepting this Document,
the recipient agrees that recipient will return this Document together with any copies thereof to the Company upon request.
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 intend 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 other written or verbal information submitted or made available to the recipient. The Company accepts no liability for possible errors or
omissions in this Document. In particular, the Company makes no representation or warranty with respect to any financials (including without
limitation management projections) that may be contained in this Document. Where this Document contains forward-looking statements, these
statements involve risks and uncertainties, and the Company's actual results may differ significantly. Such information should therefore not be
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The recipient of this Document must not construe any of the contents of this Document as legal, business, or tax advice. Each recipient should
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