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CJSC ALOR INVEST Corporate Finance Department 1

Pharmsynthez A Leader of the Russian Life Science IPO Flash note

Lead Manager, Listing Agent

CJSC «ALOR INVEST

October, 2010

2010

From idea to pharmacy


– a new pharmaceutical star Life Science IPO

One of the best Russian Life Science companies will go public at the Russian stock market at the end of November. JSC Pharmsynthez, the fast-growing, innovative pharmaceutical company, is going to offer an additional share issue worth 30% of increased share capital at MICEX and raise 450-600 million RUR. We believe that Pharmsynthez shares will attract investors, interested in investments in Life Science industry and in diversification of their investment portfolios. This offer has unique features. Pharmsynthez is the first Russian bio-pharmaceutical company going public with innovative drugs having high potential of commercialization in the US and EU pharmaceutical markets. Pharmsynthez investment highlights:

Steady growth of original patented drugs sales and its geographic expansion;

Launching of innovative drugs in high demand in Russia and foreign countries (EU and USA);

Financial and technological synergy effect and new markets supply through the acquisition of foreign biopharmaceutical companies;

Integration in international process of drugs’ development;

Transparency and high level of corporate management;

Pharmsynthez is one of the key participant of national program “Pharma-2020”;

Company is able to finance high potential drug development itself;

High qualification of R&D team.

IPO purposes:

Business development acceleration based upon long-term growth of the Russian pharmaceutical industry and state support programs;

Fulfillment of R&D projects and their commercialization in the RF;

Launch of the original patent drugs at EU and the USA markets;

Enhancing the company’s transparency and public image before the planned entry to NASDAQ

Enhancing the company’s transparency and public image before the planned entry to NASDAQ.

IPO success drivers:

Unsatisfied investment demand for Life Science companies in the RF

Long-term profitability of Health companies above benchmark indexes (for example, S&P)

One of the few segments with fast and significant growth of companies capitalization

Two digits growth of the Russian pharmaceutical industry

Rapid growth of capitalization after the successful termination of innovative drugs clinical trials

Additional growth opportunities based on the Company strategy

Transparency and professional corporate governance

One of the shareholders is a management company with extensive experience in innovative companies development (including Life Science)

Readiness to interact with minority shareholders and pay dividends

IPO features

Stake (additional issue) 30%/ 22 million shares

IPO volume 450-600 million RUR

IPO date November, 24 2010

Lead manager CJSC ALOR INVEST

Place MICEX/IIM sector

Price range 20.6-27.7 RUR

Price setting date 19-23 of November 2010

Fair capitalization 1,445-1,952 million RUR


The two-step method was used for valuation of company. Firstly, cash flows from existing products were estimated through DCF, M&A and comparables approaches. Secondly, anticipated cash flows of R&D product portfolio were estimated (BlackScholes model). As a result we got the range of fair value of business.

Valuation approach Weight, % Value of operations, mn RUR

Value of innovative product portfolio, mn RUR

Total value, mn RUR

DCF valuation 50% 1324,4 366 1690,4

M&A 25% 732,3 366 1098,3

Comparables approach 25% 654,9 366 1020,9

Fair value range

Weighted average equity value, mn RUR 1375

value per share, RUR

27.77

Minimum (comparables based ) equity value, mn RUR

1021

value per share, RUR 20.62 Based on this estimation the recommended price range for investors is 20.62-27.77 RUR. Offering in the recommended range allows raising 30% (22 million) of additional capital from 450 to 600 million RUR

1324,4

732,3

654,9

366

366

366

DCF valuation (weight 50%)

M&A (weight 25%)

Multipliers valuation (weight 25%)

Value of operations

Value of innovative product portfolio

Year Sales, EBITDA,

Multipliers (based on average price

- 24.2 RUR)

Mn RUR Mn RUR P/S EV/EBITDA

2010E 271.6 65.81 4.41× 18.2×

2011F 333.8 100.63 3.59× 11.9×

2012F 344.8 198.12 3.47× 6.05×

2013F 673.4 364.15 1.78× 3.29×

Valuation summary


Investment program and investment requirements:

sales expansion and introduction of existing original drug portfolio to new markets;

acquisition of attractive foreign bio-pharmaceutical companies to get synergy, new technologies and a base for expansion into the foreign markets;

R&D of innovative drugs, which are not made in the Russian Federation for treatment of expensive nosology;

construction of officinal medicine production facilities to increase business margins.

JSC Pharsynthez is a Russian pharmaceutical company in the Life Science segment. Its unique specialization in contract R&D and manufacturing and promoting innovative drugs, as well as its contract-based R&D potential distinguish the Company among other few Russian bio-pharmaceutical companies. Pharmsynthez brands are well-known among the target group and are used for treatment of cancer, gynecology diseases, immunodeficiency and tuberculosis.

The Company is situated in the Leningrad region. Before 2007 it was a member of the pharmaceutical holding “Baltic Pharmaceutical Society”. After the buy-out by the leading international funds, the new shareholders identified a strategy aimed at fast growth and innovative development based on the Western best practices in the life science and pharmaceutical industries and on the Company’s technological and scientific potential.

The Company management and shareholders have developed a high-technology business focusing on unique innovative products development. They believe that the Company has excellent prospects at the fast-growing pharmaceutical markets in the RF, CIS, EU and the USA.

Pharmsynthez has traditionally operated in the following areas:

manufacture of original patented high-tech active pharmaceutical substances and sale of finished pharma products

upon their production by outsourced manufacturers on a contract basis;

exclusive distribution of a number of foreign drugs;

custom R&D and custom manufacturing services both for Russian and western customers;

development and launch of a number of innovative drugs in Russia, Europe and USA.

Use of investments 2011-2012

Amount, million RUR.

Share, %

Construction of officinal medicine

production facilities 130 21.7

Building of own medical

representatives' network 40 6.7

Acquisition of European

pharmaceutical companies 270 45

Funding of the 2 stage of Virexxa® and

MyeloXEN® clinical trials in EU 160 26.6

TOTAL 600 100

The Company and IPO The Company and IPO


1996

•Organization of Pharmavit Holding, which united a number of pharmaceutical commercial and production companies. The Holding possessed about 27% of internal pharmaceutical market, and the largest shareholder was the Baltic Pharmaceutical Company (BPC). Later Pharmsynthez was formed within the frames of Pharmavit.

1996-2001

•Construction of NPK ZAO Pharmsynthez. In 2001 ZAO Pharmsynthez, a unique and the first in Russia R&D and Production Complex was put into service, designed for innovations in the fine organic synthesis.

2004

•Pharmsynthez Establishment. In 2004 BPC sold the pharmaceutical assets to the largest distributor – SIA International. Pharmsynthez starts shaping into an independent organization and establishes contacts with the North American and European Companies (UGM Engineering Ltd. (Canada), AsysChem Inc. (USA), Kemira Chemicals (Finland)) and with the leading R&D groups of Russia (The Shemyakin M.M. and Ovchinnikov Yu.A. Academicians Institute for Bio-Organic Chemistry (The Russian Academy of Sciences), The Petrov N.N. Oncology R&D Institute), Great Britain (Lipoxen Plc.), France, Germany and Israel (Assaf Harofe).

2005

•Transfer to the International Pharmaceutical Practice Rules. The Company follows the Quality Management System compliant with the international standards from 2005.

2006

•Introduction of the Quality Management. In 2006 Pharmsynthez introduced the Quality Management System GOST R ISO 9001-2001 and GOST 52249-2004.

2007

•New owners and new drugs appear. In 2007 Pharmsynthez buys an investment fund, established by Firebird Management LLC and Danske Capital. The shareholders focus on the development of innovative drugs portfolio and original pharmaceuticals, based on the best western life science and pharmaceuticals practices. That year Pharmsynthez obtained an exclusive right for the distribution of gynecological drugs – Prostenongel and Misoprostol.

2008

•Licensing of exclusive technology and transfer to the GMP standards. In 2008 Pharmsynthez licensed the platform technology for the production of nucleosides and nucleoside analogues, which allows the company to enter the market of next generation drugs and successfully produce such drugs as Fludarabin, Cladribin and Ribavirin. Also, the company was pre-audited for the GMP standards compliance.

2009

•Start of development of therapeutic vaccine for multiple sclerosis. In 2009 Pharmsynthez concluded a government contract for the development of exclusive technology for the production of MyeloXEN, a Glatiramer acetate analogue for multiple sclerosis.

2010

•The company goes public and prepares for IPO issue. In 2010 Pharmsynthez changes the business legal structure for an open joint stock company and prepares for the public offering, enhancing operational transparency and engaging independent members of the Board of Directors with extensive experience in the life science.

Background


Pharmsynthez revenues are divided into 4 main segments. They include:

manufacturing of original substances and FPP sales to distributors (the RF, SIC);

exclusive distribution (some foreign drugs);

contract R&D and manufacturing for Russian and foreign partners;

From 2012 – R&D and commercialization of innovative drugs needed at the Russian market and in demand at the markets of EU and the USA.

In the previous five years Pharmsynthez revenues, generated primarily through the sales in the RF, demonstrate a

steady growth. In 2009 revenues amounted to RUR 228M, surpassing the 2006 level by more than 1.5 times. The

current portfolio, including original substances and exclusive distribution drugs, yields about 70% of the revenues.

Contracted R&D, including contracted R&D within Pharma-2020 governmental program (MyeloXEN and

PulmoXEN) accounts for about 30% of revenues.

The largest sales share of Pharmsynthez falls with the end of the year, since the volume of sales depend on the season and the period of governmental contracts execution.

Profitability of Pharmsynthes is rather high. EBITDA in pre-crises years reached 30%. In addition, Pharmsynthez

actually borrowed no money from external sources, using own funds for its operations. Consequently, interest

payments are low, ensuring relatively high net income profitability, which before the crises accounted for 10%.

In 2008 Pharmsynthez revenue growth was as low as only 4%, which resulted from small sales at the end of the year. In addition, the cost of finished pharma products is boosted by the absence of own production lines and the use of tolling system.

Implementation of investment program, construction of finished pharma production lines, in particular, will enable Pharmsynthez increasing profitability of sales for 30%, which will surpass the average industry rates.

In addition, Pharmsynthez demonstrates opportunities for products export, first of all, to the CIS, where Pharmsynthez is already present (Azerbaijan, Ukraine and Kazakhstan) by its current drugs. Launching innovative drug program will allow Pharmsynthez entering USA and European markets.

Main data, million RUR. 2006 2007 2008 2009

Revenue structure

Existing portfolio 88% 77% 91% 69%

Contract manufacturing 11% 22% 8% 0%

Contract R&D 0% 0% 0% 31%

Other 0% 0% 1% 0%

Financial data

Sales 147.65 172.50 179.95 228.40

EBITDA 39.72 50.46 39.79 35.28

EBIT 21.84 32.34 20.95 16.39

EBT 15.20 24.74 5.61 6.23

EAT 14.66 16.87 2.12 14.04

BV 240.54 263.80 265.85 270.42

DuPont analysis components

Return on sales (ROS) 9.9% 9.8% 1.2% 6.1%

Asset turnover - 0.5 0.5 0.6

Own capital multiple - 1.53 1.43 1.45

ROE - 7.0% 0.8% 5.3%

EBIT margin 14.8% 18.7% 11.6% 7.2%

IC turnover - 0.7 0.7 0.8

1-tax 96.5% 100.0% 84.6% 100.0%

ROIC - 12.3% 9.3% 5.7%

EBITDA margin 26.9% 29.3% 22.1% 15.4%

Leverage

Capital leverage 0.1 0.0 0.1 0.1

Financial solvency

SR+LR Debt / EBITDA 0.6 0.2 0.6 0.6

EBIT / % 560 233 13 5

Finance


Pharmsynthez drug portfolio can be subdivided into 5 main groups. They are:

drugs based on the original substances (Sehydrin®, Neovir®, Pencrofton®, Fenazid®);

drugs of exclusive distribution (Prostenongel®, Misoprostol®, Neostim®, Glaumax®);

therapy vaccines (MyeloXEN®1, HIVirin®);

latest anti-tumor and anti-viral drugs, produced by biocatalisis (Fludarabin®, Kladribin® and Ribavirin®. These drugs are planned for launch in 2011-2013);

original patented drugs marketed in foreign countries (Virexxa®, MyeloXEN® and PulmoXEN®).

Offering certain special drugs, Pharmsynthez holds a unique market standing in the RF.

Sehydrin, for instance, essentially improves the quality of oncology patients life without any toxic effects on the

human body. There are no Sehydrin analogues. 18-fold growth of sales for 7 years proves high demand for the

drug among doctors and patients.

Neovir, is building up market share in the RF anti-viral drugs market against its analogues, including Cycloferon

which has annual sales of $13M and a 20% share of the market. The growing demand for Neovir is due to its

superior quality and improved pharmacological results, with faster and more durable responses to lower doses,

with fewer side effects, compared to its analogues.

Neovir and Sehydrin are included in the RF state procurement programs of preferential drug provision for certain

categories of people.

Fenazid is an anti-tuberculosis drug, listed in the Socially Significant Diseases Treatment Standard. The value of

anti-tuberculosis drugs in the RF market is currently estimated at $30M. Special production methods of Fenazid

allow administration of the drug to the elderly people and patients suffering mental disorders. Fenazid competes

with Izoniazid, taking up about 10% of the market. However lesser toxic effects on a human body facilitates growth

of demand for the drug and gradual replacement of Izoniazid.

In 2009 Pharmsynthez launched Neostim sales as a drug for oncology patients. Conventional competitors of

Neostim are Neipogen, Granocyt, Grasalva, Leikostim, Granogen, Neipomax. However improved tolerance and

efficiency of the drug in comparison with the competing drugs provide a basis for forecasting successful sales

growth in future. Apart from that, in 2005 - 2009 the size of the RF analogue drug market experienced more than

3-fold increase, growing from $5M up to $16M. Some estimates forecast 15% of the market share for the packed

drug by 2012.

1 Within the frames of the governmental contract.

Drugs ATC Sales Share in sales

of FPP (2009)

CAGR sales start-

2009 Indications

group start

Original

1.Sehydrin® L 2002 19% 51% oncology patients of III, IV stages

2.Fenazid® J 2002 11% 15% complex treatment of tuberculosis patients

3.Neovir® L 2002 42% 14% antiviral agent

4.Pencrofton® G 2002 25% 42% gynaecology

Distribution

1.Neostim® L 2009 0,04% - leukopenia, cytomegaloviral retinitis, HIV-infection

2.Misoprostol® A 2007 0,4% 34% gynaecology

3.Prostenongel® G 2007 2% 11% gynaecology

4.Glaumax® S 2010 - - ophthalmology

Drugs Portfolio

0

20

40

60

80

2002 2003 2004 2005 2006 2007 2008 2009

Sales of existing drugs, mn RUR

Neovir PencroftonFenazid SehydrinMisoprostol ProstenongelNeostim


The drug portfolio for the future includes innovative therapy vaccines and drugs of Biobetters category:

MyeloXEN®, PulmoXEN® and HIVirin® for disseminated sclerosis therapy, mucoviscidosis and HIV, respectively, as

well as development of innovative technologies for the production of Kladribin, Fludarabin and Ribavirin for

oncology treatment and infectious diseases.

Therapy vaccines are developed within the frames of the “Pharma-2020” strategy. Our production method will

significantly improve the quality and pharmaceutical properties of the drugs, which, coupled with the pricing

advantages of Pharmsynthez, will facilitate replacement of foreign-made drug analogues in the Russian market and

promote Pharmsynthez plans to enter USA and European markets.

The market of oncologic, respiratory diseases, disseminated sclerosis and HIV market is one of the most sizeable

due to the high incidence of these diseases globally. However there are not so many efficient drugs for the above

diseases.

Currently there is only one drug for mucoviscidosis – Pulmozim,– produced by Roche, a Swiss company. In 2009

global sales of the drug amounted to $480M. In Russia hospital acquisitions satisfy only 8% of demand in

Pulmozim. Based on the above we consider future sales of PulmoXEN in the national market quite promising. In

addition, given that Pulmozim is widely spread globally (USA, Japan, countries of Western and Eastern Europe,

Asia, Latin America, Africa and Middle East) we expect successful entry of the drug to the international market.

In the market for treatments for disseminated sclerosis, Copaxone is one of best selling drugs at the moment,

produced by TEVA, an Israeli company. In 2009 global sales of Copaxone amounted to $2.83 bln, including $1.917

bln in USA and $0.9 bln for the rest of the world. Pharmsynthez is now developing an improved Copaxone

analogue – MyeloXEN. Exclusive technology will allow for critical improvement of the drug qualities and

enhancement of its efficiency. It opens challenging opportunities for Pharmsynthez to distribute MyeloXEN both in

Russia and in the USA and European markets.

In 2011 the Russian market will see the introduction of the only pilled drug for the disseminated sclerosis –

Movektro® of Merck production, containing Kladribin. The pilled form of the drug will avoid the need for painful

injections and flu-like side-effects, related with the administration of certain traditional drugs for disseminated

sclerosis. In 2012 Pharmsynthez is planning to launch an improved Kladribin analogue. Given low level of

competition and advantages of the drug form we expect it to be in great demand in the target group.

0

500

1 000

1 500

2 000

2 500

3 000

2003 2004 2005 2006 2007 2008 2009

Global sales of substitutes for PulmoXEN andMyeloXEN, $ mn

Pulmozyme®

Copaxone®

Drugs Phase

Start

Use Sale forecast in RF in 2015, $ mln

RF

sales

(plan)

Virexxa® 2 2013 antitumor drug 15.8

Ribavirin - 2012 antiviral agent (except HIV) 1.8

Fludarabin - 2012 antitumor drug 2.4

Kladribin - 2012 drug for disseminated sclerosis 0.5

MyeloXEN® 1 2013 disseminated sclerosis therapy 21

HIVirin® - 2013 HIV therapy 2.1

PulmoXEN® 1 2013 mucoviscidosis 6

Prospective portfolio


Pharmsynthez also operates in the field of fine organic synthesis and possesses unique production lines, allowing completion of the entire production cycle, starting from laboratory development of molecules to finished pharma products production and marketing. Pharmsynthez has a strong R&D arm and the Company focuses at the development of own active pharmaceutical substances, which will replace expensive imported analogues.

Advantages of Pharmsynthez drugs include enhanced properties, resulting from the use of innovative production

technologies, which decrease toxicity of drugs, making them more attractive than competitive products.

Pharmsynthez’ excellence in R&D and Quality Assurance, combined with its lower cost base, gives it an ability to

compete with much larger global companies with large R&D budgets not only in the home market but also

potentially in international markets.

Company Competitive drug Pharmsynthez

drug Note

Global companies Roche (Switzerland) Pulmozim® PulmoXEN® global companies manufacturing recognizable and popular brands. Have a strong R&D base and extensive

promotion opportunities. Pharmsynthez’ products have a higher efficiency than its peers’ products. The price edge will allow it to increase affordability of the drugs for consumers.

Merck KGaA (USA) Movectro® Cladribine

TEVA (Israel) Copaxone® MyeloXEN®

Local manufacturers

Polysan Cyclopherone Neovir Cyclopherone is a popular drug in the market due to its price. However, the possibility of side effects occurrence is so high that the demand is gradually shifting towards Neovir.

ChemRar

innovative drug development for treatment

of AIDS, central nervous system diseases, cancer

and hepatitis C

HIVirin®, Fludarabin, Kladribin, Sehydrin

some of drug developments are financed by Rosnano; at present the company is looking for a co-investor

SKTB Technolog - - manufacture fine organic synthesis products, composite materials and devices, drug substances, polymeric compositions, etc.; have a highly diversified business, pharmaceutics is a non-core business.

Competitive environment


The company has a number of advantages over its competitors and a substantial development potential thanks to

unique production facilities and well-developed innovative drugs portfolio. Nevertheless, Pharmsynthez, like any

other drug producer, faces certain risks related mainly to external factors.

S (Strengths) W (Weaknesses)

Technology leader among small pharma producers (four unique drug substance production lines)

Elaborate development strategy and investment program for rapid business growth

Portfolio of effective production technologies for HVA-generics in socially important nosologies (biocatalytic synthesis)

R&D portfolio of high-margin innovative BioBetters vaccines and drugs

Nucleoside analog substances planned for production by the company are not currently manufactured in Russia

Highly qualified senior management/shareholders and strong research team (including R&D)

Recognizable and popular drug brands with the quality exceeding their peers

Sales geography stretches beyond the RF borders

Joint production of two innovative vaccines under the state contract within the framework of the RF pharmaceutical strategy up to the year 2020.

European GMP and ISO 9001:2008

Quality reference list in custom R&D/Manufacturing (including western clients)

Efficient strategy of drugs launch in EU and US markets (use of orphan status advantage)

International pre-registration clinical test of Virexxa® is underway (along with application for orphan status with EMEA and FDA)

No own FPP production

Efficient promotion and distribution system is undeveloped

Lacking experience in drugs launch and promotion in EC and US markets

O (Opportunities) T (Threats)

Significant cut of expenses and increased margin as a result of construction of own FPP production lines (and, in addition, release of current capital)

Development of medical representatives chain

Introduction of Vierexxa® in the EU

Successful clinical tests of 3 innovative drugs and 3 vaccines

Inclusion of existing and new drugs into Governmental Procurement Program (increase of procurement volumes)

Export of HVA-generics

Sale of licenses for innovative drugs production to foreign pharmaceutical companies

Building up a client base, interested in enzymatic synthesis of the latest nucleosides (development of new high margin products)

Additional governmental contracts for the development of a number of additional products

Access to the new markets (Europe, USA) and new promising innovative technologies/patents and drug portfolios through successful acquisitions (2 selected companies)

Financial and production synergy with the companies acquired in future

Escalated competition with both western and Russian pharmaceutical companies

Risk of negative clinical tests results

Risk of terminated cooperation with the government and absence of orders and financial support for new developments

Administrative and legal obstructions in CIS and EU

Decrease of growth rates (<10% per annum) in RF pharma market caused by low demand of people and the government

SWOT-analysis


Share capital structure

Amber Trust II

Amber Trust II is a €150 mln buyout/private equity fund for global institutional high caliber investors. It was launched in January 2005. Objective of the Fund is to generate long term capital growth, focusing on investments primarily in the Baltic States and neighboring regions, including Russia. Amber Trust II S.C.A. is registered in Luxemburg and is regulated by the Luxemburg Financial Sector Surveilance Commission (Luxembourg’s Commission de Surveillance du Secteur Financier). Founders of the Fund are Firebird Management LLC and Danske Capital AS.

Firebird Management LLC (www.fbird.com)

Firebird manages nine funds, making investments in emerging markets shares. Primary targets are CIS, the Baltic States, Eastern Europe and other emerging markets. List of investors include large financial institutions and «high net worth» persons, primarily from the USA, Europe and Asia.

Danske Capital AS

Danske Capital AS is a global management company, operating in the market of North East European countries. Danske Capital AS has over 120 business units located in Denmark, Luxemburg, Sweden, Norway, Finland, Estonia and Lithuania. As of the end of 2009 Danske Capital AS managed more than €66 bln both institutional investors globally and retail clients.

Firebird Management LLC and Danske Capital AS, focusing, first of all, at the East European countries, declared Pharmsynthez as the only investment prospective Russian life science assets.

3rd level2nd level1st level

Pharmsynthez (100%)

EphaG (99.99%)

Amber Trust 2 (75%)

Western investor poolMC Firebird

Management

Angport Ltd (17%)

Dmitry Genkin (100%)

TOP-management

(8%)

Management (0.01%)

Shareholders


Genkin Dmitry Dmitrievich – Chairman of the Board of Directors, a Shareholder

Graduated from St.-Petersburg State Medical Academy. Over 15 years work experience in drug

production and new drugs development.

Since 1993 headed a number of largest pharmaceutical companies, including Pharmvit (with about

27% of the Russian pharmaceutical market), Lipoxen PLC (Great Britain), FDS Pharma LLP (Great

Britain). In addition, Genkin is a member of the Supervisory Board of EPhaG AS and OAO Institute of

Human Stem Cells.

In 1998 was awarded a silver medal of the Russian Natural Science Academy. In 2006 Lipoxen PLC, the company he

founded, won the British Prize as the Best Life Sciences Entrepreneur.

Romanov Vadim Dmitrievich – General Director, Member of the Board of Directors

Graduated from St.-Petersburg Pediatric Academy. Over 20 years experience in drug production.

In 1992-1994 was an Assistant Chairman of the Health Committee of St.-Petersburg Mayor’s Office,

headed children’s diagnostics center, becoming later Pharmavit General Director. Currently is a

member of EPhaG AS Management Board and Pharmsynthez General Director.

Avtushenko Sergey Sergeevich – Director for Innovations

Graduated from St.-Petersburg State Medical Academy. 15 years work experience in drug

production and new drugs development. Since 1993 holds top positions in ZAO ASGL R&D Labs,

headed Pharmsynthez, was a member of Pharmavit Management Board. Currently is Pharmsynthez

Director for Innovations.

Scherbinin Michael Borisovich – Deputy Director for Innovations

Graduated from the Lensoviet Leningrad Technologies Institute with a degree of Chemical Process

Engineer majoring in Chemistry and Technology of Nitrogen Organic Compounds (ХТОСА).

Candidate of Chemical Sciences. Author of over 80 scientific articles and surveys in the leading

national and foreign magazines, 4 student text books. Coauthor of 7 inventions and 2 RF patents for

drug production methods. Since 1983 is a scientific editor of the Organic Chemistry Magazine issued

by the Russian Academy of Sciences.

Over 30 years was a member of XTOCA Department of the Lensoviet Leningrad Technologies Institute (currently

St.-Petersburg State Institute), starting from the junior scientific associate up to the Head of Physical and Chemical

Analysis Labs. In addition, was a sector head of Technologist, a special design and technology office of the

Institute.

Since 1998 was the Head of Pharmsynthez Analytical Group. In 2002 became the Quality Control Center Head and

in 2008 was appointed a Head of the Chemical Scientific Group. Currently is the Deputy Director for Innovations.

Senior Management


Genkin Dmitry Dmitrievich – Chairman of the Board of Directors

Romanov Vadim Dmitrievich – General Director

Howard Fisher – an Independent Member of the Board of Directors

Holder of MBA with the University of Chicago, bachelor – with The Wharton School, University of Pennsylvania. Held top management positions in Silverback Asset Management, SCO Financial Group. Is a president and co-founder of HSF Business Advisors LLC, strategic consulting company (New York).

Supervises over the international projects of Pharmsynthez, and, among other things, expansion of Pharmsynthez

to foreign markets and acquisition of pharmaceutical and R&D companies in EU countries, Israel and USA.

Miroslav Ravich – an Independent Member of the Board of Directors

Graduated from the University of Belgrade, Yugoslavia (bachelor and master of medical sciences in clinical pharmacology and therapy). Holder of a Candidate of Medical Sciences with the Medical College of St. Bartholomew's Hospital, University of London and a diploma in clinical pharmacology. Was a CEO of Antisoma Research Limited, LipoNova AG and Affimed Therapeutics AG. Id a founder and Managing Director of Pharma Integra Limited and co-founder and CEO of MGB Biopharma Limited.

Member of British Pharmacological Society, Member of American Society for Clinical Pharmacology and a Member

of American Society for Clinical Oncology. Supervises over international clinical research projects of Pharmsynthez,

since innovative drugs were transferred to foreign countries.

Indrek Kasela

Graduated from the University of Tartu (Bachelor of Law) and New York University (Master of Law). Member of Supervisory Board of large Baltic businesses, including AS Premia Foods, Salva Kindlustuse AS, AS Toode, Elke Grupi AS, AS PKL, EPhaG AS. Since 2003 is a partner of Amber Trust Fund. Responsible for the development of Fund operations in Estonia, Latvia and Russia.

Erik Haavamyae

Graduated from Tallinn Technical University (cum laude diploma in economics). Since 2004 is a Member of Supervisory Board of large Baltic businesses, including AS Premia Foods, Saaremere Kala AS, Vettel OU, AS Toode, etc. Member of AS EPhaG Management Board.

Steven Gorelik

MBA with the Columbia Business School, Bachelor with the Carnegie Mellon University. Holder of CFA. Since 2006 is a Portfolio Manager of Firebird Management, and since 2007 is a member of AS EPhaG Supervisory Board.

Board of Directors


The financial crisis did not seriously affect the global pharmaceutical market. It kept growing, although during the months of recession the growth rate has somewhat reduced. In 2009 we saw the growth rate recovery up to the pre-crisis level. Experts believe that this growth will continue in 2010. This forecast is based on macroeconomic factors. According to IMS Health CAGR the growth should be from 5% to 8% during 2009- 2014. It means that in 2014 the market volume may reach the value from $1,069 bln to $1,230 bln.

We think that the so-called «pharmerging markets»2 and some East-European countries are very attractive. As growth rates of developed markets have been decreasing each year, multinational pharmaceutical corporations are looking more closely at developing markets. These markets have become their strategic priority for the coming decades.

The companies with a captured market share in these markets will benefit from this rapid growth. In pharmerging markets the pharmaceutical product consumption per capita is significantly lower than in the developed markets. This implies that sales volumes in these regions will increase significantly with the growth of national wealth, better availability of medical services in distant territories, better access to medical services.

The consumption in Poland and Romania in the recent past is similar to the current consumption in Russia. We believe that the consumption in Russia will increase rapidly and reach the East-European level in 5–7 years.

Although the USA is still the biggest pharmaceutical

market in the word, its share in the total market growth is decreasing. Pharmerging markets, and Russia among them, have taken the leading positions for this parameter.

2The IMS Health term to specify a group of countries with the biggest growth rates in the pharmaceutical market. This group

includes China, India, Brazil, Russia, Mexico, Turkey, South Korea.

Global pharmaceutical market

9,1% 9,1%

7,7% 7,4%6,8% 6,9%

5,4%

7,0%

0%

2%

4%

6%

8%

10%

0

100

200

300

400

500

600

700

800

900

2002 2003 2004 2005 2006 2007 2008 2009

Global pharma market (including audited IMS and unaudited markets)

Market volume ($US bn) Growth, %

27,0%

16,4%

23,3%

15,1% 15,3% 15,1% 16,5%

0%

5%

10%

15%

20%

25%

30%

0

5

10

15

20

25

30

FPP retail market volume, 2009 (2008)

Market volume, $US bn CAGR, 2005 - 2009 (2004 - 2008)

18

64

10

82

13

9

18

4

12

7

020406080

100120140160180200

Drug consumption per person, $US

2005 (2004)

2009 (2008)

11% 15%21%

20%

16%21%

30%51%8%

13%

15% 13%

3%

1%

4%4%

8%

5%16%

11%

15%

16% 15%52%

27%

9%

-19%

-20%

0%

20%

40%

60%

80%

100%

2006 2007 2008 2009

Country share in market growth

Rest of the world "Pharmerging" Rest of Europe Canada

Japan EU5 USA


Russian pharmaceutical market demonstrates a long-term growing trend with the average annual growth rate of 23% since 2003. It went quite successfully through the crisis of 2009. While the country’s GDP went down by 8%, the commercial sales of drugs increased by 22%.

Starting from 2005 the government has become the main contributor to the market growth, launching a program of preferential drug provision for certain categories of people. Government Procurement CAGR for 4 years amounted to 22%.

Most aggressively growing groups of drugs, according to ATC classification included respiratory and anti-tumor drugs and immunomodulators. The average sales growth rates in the groups in 2004-2009 amounted to 16.77% and 19.07%, correspondingly, surpassing all other drugs and market in total. The companies, developing the above drugs, can earn super-profits.

Our market remains extremely dependent on imported products. The share of imported drugs in terms of cost is 76%. Given the growth rates of bi-currency basket cost in the years of crisis, the cost of drugs also increased and the pricing structure of FPP market changed. As a result, the share of expensive drugs (above RUR 150 per package) increased within 2 years from 41.7% in 2007 to 56.8% in 2009.

The trends of expensive drugs share growth was also highlighted, nevertheless the growth rates were more moderate and were related primarily

with the growth of wealth of people.

Although the Russian pharma market is experiencing fast growth currently, it lags far behind pharma markets of developed countries, like USA and Europe. According to IMS Health, in 2009 per capita consumption of drugs in Russia was $82 vs $704 in USA and $343 in Europe on the average. Nevertheless this index is demonstrating the fastest growing rates as compared to other countries – in 3 years per capita consumption of drugs has grown for 39% in Russia vs 10%-28% in Europe and only 7.2% in USA.




Russian pharmaceutical market

0

100

200

300

400

500

600

2003 2004 2005 2006 2007 2008 2009

Volume of the Russian pharmaceutical market by segments, mn RUR

Commercial sector of FPP

Commercial sector of SFP

State sector of FPPCagr=23%

-8%

-16%

-8%

-15%

-6%

-2%

-49%

-19%

11%

22%

GDP

Construction

Wholesales and retail sales

Hotels and restaurants

Power generation

Agriculture

Car sales

Mobile phone sales

Food market sales

Drugs sold in pharmacies

General dynamics of economics sectors

11,7% 12,8% 16,5%9,0% 11,1%

13,2%21,0% 22,2%

27,1%

36,5% 35,3%29,1%

21,7% 18,6% 14,0%

0%

20%

40%

60%

80%

100%

2007 2008 2009

Pricing structure of the market

Over RUR 500 RUR 300-500 RUR 150-300RUR 50-150 Max. RUR 50

704622

498459

411346

277223

82 6619

0

100

200

300

400

500

600

700

800

Per capita consumption of drugs in Russia and developed countries, $US/yr


Russian pharmaceutical market growth factors:

Long-term growth of state procurement of drugs (not less than 5% per year)

Growth based on medical care insurance reform (coverage and insurance amount will increase)

Growth of the Russian drugs share in the state purchases and incentives for their development and manufacturing (local drugs share growth by 50% in value terms by 2020)

Long-term GDP growth by over 4% per year

Growth of real income of population by over 10% per year (50% for middle class)

Senior people share growth (+≈3-4% for 10 years)

Growth of the average drug package price by minimum 3-5% due to expenses of industry transition to GMP

Growth of disease incidence in socially important nosology

Pharma-2020, the national program of industry development, with significant funding (aims are infrastructure, manufacturing, R&D)

In total, the above actions, at the background of growing wealth of people and enhanced capabilities of pharma sector, will increase the market size and per capita consumption of drugs. As a result, in 3-5 years the annual per capita consumption of drugs will reach the level of Eastern Europe ($150-200). In a long term perspective, it may reach the level of western European countries ($300-400).

Market growth drivers

Key Pharma-2020 Events

Transfer to GMP 36,0

Drug development 106,4

Infrastructure and training

35,2

State financing, bln RUR

76%

50%

24%

50%

2009 г. 2020 г.

Target market structure

Local drugs

Imported drugs

2012

• Deployment of Hi-Tech production lines in the territory of RF

2017

• Replacement of generic imported drugs

• Purchase of licenses

• Guarantee of the national drug

2020

• Development of innovative patented drug analogues

• Development of innovative drugs having no

Key activities of Pharma-2020

0

200

400

600

800

1 000

1 200

1 400

1 600

2008 2009 2015 2020

Russian pharma market, bln RUR


NASDAQ Biotechnology Index includes about 180

companies, engaged in the development of

innovative drugs and methods for their delivery to

the human body. The index covers the shares of

companies, whose price depends on the drugs,

improved formulas for which are developed by

Pharmsynthez, like TEVA Pharmaceutical, Biogen

Idec, etc.

For 3 years the biotechnology Index dynamics

demonstrates the best results vs the average

market parameters.

Shares of TEVA Pharmaceutical, 25% of revenues of

which are yielded by the sale of Copacson ®, a

disseminated sclerosis drug, exceed S&P500 thick

market index during entire term trading in the

shares of the company.

The national pharma market, although scarcely

represented in the stock markets and consisting

primarily of generic drug manufacturers, also

demonstrate aggressive dynamics as compared to

the indexes.

There is no direct analogue of Pharmsynthez in the

Russian market yet. Pharmsynthez is the first bio

pharmaceutical company, possessing an innovative

portfolio of drugs, which is entering a public

market. The risks related to the investments into

the shares of the company depend on the results of

clinical tests, which may greatly affect volatility of

shares. However, based on the experience of

Western publically traded bio pharmaceutical

companies and the above factors contributing the

Russian pharma market growth, we consider that

Pharmsynthez possesses all characteristics

necessary to ensure above-the-market

capitalization growth rates.

TEVA Shares Dynamics vs S&P 500

Pharmstandard and Veropharm Shares Dynamics vs RTS

Stock market and biotechnology

40%

50%

60%

70%

80%

90%

100%

110%

120%

Sep

tem

ber

-07

Mar

ch-0

8

Sep

tem

ber

-08

Mar

ch-0

9

Sep

tem

ber

-09

Mar

ch-1

0

Sep

tem

ber

-10

NASDAQ Biotechnology

S&P 500

S&P Healthcare

0%

20%

40%

60%

80%

100%

120%

140%

160%

Sep

tem

ber

-07

Mar

ch-0

8

Sep

tem

ber

-08

Mar

ch-0

9

Sep

tem

ber

-09

Mar

ch-1

0

Sep

tem

ber

-10

TEVA

S&P500

Biotechnology Index vs S&P500

0%

20%

40%

60%

80%

100%

120%

140%

160%

Sep

tem

ber

-07

Mar

ch-0

8

Sep

tem

ber

-08

Mar

ch-0

9

Sep

tem

ber

-09

Mar

ch-1

0

Sep

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-10

Pharmstandart

Verofarm

RTS Index


Forecast Revenue for Current Product Portfolio, M, RUR

Forecast Revenue for Current Business Sectors, M, RUR

Budgeted Income Statement for Current Portfolio and Business Lines

Mln RUR 2009 2010F 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F

Net sales 228,4 271,6 333,8 344,8 673,4 895,8 1115,1 1292,9 1468,0 1628,4 1738,8

Product cost (154.6) (179.1) (218.3) (133.4) (262.1) (340.0) (419.0) (485.9) (553.1) (618.7) (671.5)

Gross margin 73.84 92.47 115.51 211.36 411.22 555.79 696.18 807.02 914.90 1 009.72 1067.23

R&D (0.00) (9.80) (12.00) (15.00) (15.00) (15.00) (15.00) (15.00) (15.00) (15.00) (15.00)

Marketing (26.01) (33.10) (39.91) (38.83) (71.27) (91.15) (111.24) (124.08) (137.23) (150.97) (166.81)

SG&A (31.44) (20.20) (22.17) (24.38) (26.82) (29.50) (32.45) (35.70) (39.27) (43.20) (47.52)

EBITDA 35.28 65.81 100.63 198.12 364.15 487.21 605.61 701.40 793.62 871.82 910.23

Depreciation of fixed assets (18.67) (36.22) (58.97) (64.75) (65.80) (66.85) (67.90) (68.95) (70.00) (71.05) (72.10)

Goodwill depreciation (0.223) (0.22) (0.22) (0.22) (0.22) (0.22) (0.22) (0.22) (0.22) (0.22) (0.22)

EBIT 9.26 27.97 41.43 133.15 298.13 420.14 537.49 632.23 723.40 800.55 837.91

Interest expenses (3,0) 0 0 0 0 0 0 0 0 0 0

Interest income 0 0.08 0.09 0.10 0.15 2.64 8.27 15.37 23.78 33.35 43.88

Pre-tax income 6.23 28.04 41.52 133.25 298.29 422.78 545.76 647.60 747.18 833.90 881.79

Income taxes 7.82 (5.61) (8.30) (26.65) (59.66) (84.56) (109.15) (129.52) (149.44) (166.78) (176.36)

Net income 14.04 22.44 33.22 106.60 238.63 338.22 436.61 518.08 597.75 667.12 705.43

Minority interest 0 0 0 0 0 0 0 0 0 0 0

Net profit 14.04 22.4 33.2 106.6 238.6 338.2 436.6 518.1 597.7 667.1 705.4

Free cash flow calculation for existing portfolio and business sectors

Mln RUR 2010F 2011F 2012F 2013F 2014F 2015F 2016F 2017F 2018F 2019F

EBIT 27.97 41.43 133.15 298.13 420.14 537.49 632.23 723.40 800.55 837.91

Income taxes (5.6) (8.3) (26.7) (59.7) (84.1) (107.5) (126.5) (144.7) (160.2) (167.6)

EBIAT 22.33 33.10 106.48 238.46 336.07 429.95 505.74 578.68 640.39 670.28

(+) Depreciation of fixed assets 36.22 58.97 64.75 65.80 66.85 67.90 68.95 70.00 71.05 72.10

(+) Depreciation of intangible assets 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22 0.22

(-) Capital expense (350,00) (105,00) (10,50) (10,50) (10,50) (10,50) (10,50) (10,50) (10,50) (10,50)

(-) Working capital growth (14.2) (45.7) 25.9 (105.1) (68.2) (68.0) (56.1) (55.6) (52.4) (38.6)

(+) Increase of other long-term liabilities 0.07 0.07 0.07 0.07 0.07 0.07 0.07 0.08 0.08 0.08

(+) Increase of other long-term assets (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5) (0.5)

Net cash flow -305.83 -58.76 186.42 188.42 324.03 419.18 507.87 582.31 648.34 693.02

0

100

200

300

400

500

600

700

800

20

09

20

10

F

20

11

F

20

12

F

20

13

F

20

14

F

20

15

F

20

16

F

20

17

F

20

18

F

20

19

F

-- Neovir

-- Fenazid

-- Sehydrin

-- Pencrofton

-- Prostenongel

-- Misoprostol

-- Neostim

-- Glaumax

0

500

1 000

1 500

2 000

2 500

20

09

20

10

F

20

11

F

20

12

F

20

13

F

20

14

F

20

15

F

20

16

F

20

17

F

20

18

F

20

19

F

Current portfolio (incl. Virexxa)Contracted R&D and productionR&D contracts

R&D portfolio

Financial Pro-Formas

TEVA Shares Dynamics Index vs S&P500


The method applied for Pharmsynthez evaluation has become classical for pharmaceutical or bio-pharmaceutical

companies' evaluation in Western markets. Along with pharmaceutical products sold in the market with clear

market prospects, companies also have patents for innovative drugs and/or original molecular formula. The two-

step method is used for adequate valuation of such companies. Firstly, cash flows from existing products are

estimated. Secondly, anticipated cash flows of R&D product portfolio are estimated.

We have used the standard methods for the first step: DCF, multiples, M&A. For the second step we used one of the option based models, specifically the BlackScholes model. We believed this model to be the best and accurate way for new drugs valuation. As a result we got the range of fair value of business. The price of one additional share will be set based on the fair value range of one existing share (49.5 million shares). Share capital value, million RUR Share,%

DCF (weight 50%) 50% 1324.4

M&A (weight 25%) 25% 732.32

Multiples (weight 25%) 64.2% 654.93

Average operating value 73.4% 1,009.01

+Non-operating assets (subsidiaries) 0

+Innovative product portfolio 26.6%(35.8%) 366

Fair value (weighted) 100% 1,375

Fair value of one share, (49.5 million), RUR 27.77

Fair value (multiples) 100% 1,021

Fair value of one share, (49.5 million), RUR 20.62

Additional issue, total: million shares / % УК 22 30%

DCF In our evaluation we used the data as of the end of 2009 and excluded the data of 2010. Revenue estimation includes detailed valuation of prospects by each existing product. We used a conservative scenario to avoid the Company assets overstatement. Also we want be sure the Company management will be able to meet the targets set in this forecast.

Multipliers We chose Western life science companies with similar activities, product portfolio and revenues. Mainly these companies are from the developed countries. At the same time we did not want to be distant from the Russian reality and compared the Company with other local pharmaceutical companies. Although it is difficult to consider them as real counterparts, we included them in our evaluation of final value.

DCF (basis - 2009 reports) 20.0%

Free Cash Flow discounted value 688.43

Terminal value (2% growth) 634.26

Operating value of company 1,322.68

(-) Aggregate Debt (3.4)

(+) Cash 5.1

(-) Minority share 0

Own capital value 1,324.40

FCF discounted value as % to operating value of company

52%

Terminal value of company as % to operating value of company

48%

WACC 19.9%

Risk free rate (Russia, 2028) 6.16%

Return on investments, RTS-index 18.02%

Non leveraged Beta (Drugs) 0.99

Tax rate 20%

D/E 5.2%

Leveraged Beta 1.031

E/(E+D) 95%

CAPM 18.4%

Cost of debts 11.0%

Risk premium 2%

The Company and IPO Company evaluation (pre-money)


In multiplier-based valuation we used the following methods:

1. We compared the Company by P/S and EV/EBITDA ratios with more that 50 biopharmaceutical and more than 300

pharmaceutical companies operating at emerging markets.

2. We chose the companies with similar profiles and product ranges and comparable levels of sales and

capitalizations. We made comparison only by P/S because most of these companies had negative EBITDA.

3. We chose some Russian companies which cannot be considered as real counterparts because they mostly

manufacture generic drugs and have bigger market capitalization. There are no companies of biopharmaceutical

and pharmaceutical sectors in Russia.

Approach Equity capital evaluation, million RUR Weight, %

№1 725.95 40

№2 660.10 40

№3 578.74 20

Total 654.93 100

Approach №1. Industry rates. Average value is 725.95 million RUR.

Industry (Emerging Markets) P/S EV/EBITDA Biopharmaceuticals (1) 5.43 22.49 Pharmaceuticals (2) 3.09 10.3 weight 1 0.4 weight 2 0.6 Average 4.0× 15.2× Multipliers P/S EV/EBITDA Pharmsynthez 228.4(S) 35.3 (EBITDA) Multipliers 4.0× 15.2×

Evaluation of P and EV 913.6 536.6

Equity capital evaluation 913.6 538.3

We assigned 40% and 60% weights to the Company actitivities in bio – and traditional pharmacuetical sectors respectively. Approach №2. Comparables multipliers (biopharmaceutical companies in general).

The companies used for evaluation (evaluation by P/S, because EBITDA<0).

Company P/S Gentium SpA 5.47× Medigene AG 2.27× Entremed Inc 4.98× GenVec Inc 4.52× Trubion Pharmaceuticals Inc 5.03× Lpath Inc 2.50× Average 2.89×

Approach №3. Relative Russian comparables multipliers. Average value is 578.74 million RUR.

Company P/S EV/EBITDA Pharmstandart 3.78× 9.12× Veropharm 2.89× 9.64× Average 3.64× 9.19×

Multipliers P/S Pharmsynthez 228.4 (S) Multipliers 2.89× Equity capital evaluation 660.1

Company evaluation (pre-money) Multiples based valuation Multipliers based valuation


M&A Global mergers and acquisitions of life science companies are growing and can be used as a representative factor in evaluation. We used some recent transactions to show how the buyers estimate fast growing target companies in figures.

M&A Target Price/ S Target Price/EBITDA Pharmsynthez 228.4 (S) 35.3 (EBITDA) Multipliers 4.51× 12.31× Equity capital evaluation 1030.1 434.54

Average value is 732.32 million RUR.

BlackScholes (All R&D-portfolio costs 366 million RUR) This model is standard. The main variables are specified. The forecast horizon is 15 years, because some new tougher rivals might arise in the future in spite of patent protection. The total cost of Pharmsyntez's R&D portfolio includes the cost of six innovative drugs. Innovative drugs sales forecast, $ million

Drugs Evaluation, $ million

PulmoXEN® 0.624

MyeloXEN® 5.738

HIVirin® 3.911

Kladribin 0.260

Fludarabin 0.702

Ribavirin 0.580

11.815 0

10

20

30

40

50Kladribin

Fludarabin

Ribavirin

PulmoXEN

HIVirin

MyeloXEN

Company evaluation (pre-money)


Address:

Myasnitskaya str., 26a/1, Moscow, 101000, Russia

Telephones and e-mails:

Multichannel phone number:

+7 (495) 980 2498

+7 (800) 100 2332

Hotline for clients:

+7 (800) 100 4060

Trading department:

+7 (495) 983 0089

Fax:

+7 (495) 98-024-99

E-mail:

[email protected]

Web-site:

www.alor.ru

Mailing address:

Central Post Office, PO box "ALOR", Moscow, 101000, Russia

Corporate Finance Department

Maksim Dremin

Head of Department

[email protected]

Artem Orlov

Head of Strategic Investment and Consulting Department

[email protected]

Analytics department

Stanislav Fomenko

Head of Department [email protected]

Dmitry Lyutyagin

Deputy Head [email protected]

Dmitry Ramazanov

Head of Stock Market Analysis [email protected]

Marina Irkli Deputy Head of Stock Market Analysis

[email protected]

Oleg Zotikov

Senior analyst [email protected]

Dmitry Mashkin

Promotion Director [email protected]

This analytical report of CJSC ALOR INVEST is provided for informational purposes only. The Company is not responsible for the accuracy, completeness or credibility of information herein. The Company is not responsible for any direct or indirect losses arising from recommendations herein. This document does not contain any recommendations to buy or sell any securities and does not constitute an offer or solicitation of an offer of CJSC ALOR INVEST. CJSC ALOR INVEST and/or its affiliates, employees, directors and analysts may buy or sell any securities, mentioned herein. CJSC ALOR INVEST and its affiliates may act as a market maker or underwriter with respect to any securities of any company mentioned herein, may trade these securities on client's behalf and perform any other actions not specifically prohibited by the Russian law. CJSC ALOR INVEST and/or its affiliates may be interested in providing any investment banking and other services to the companies mentioned herein. All rights for this report are reserved by CJSC ALOR INVEST. This report may not be reproduced and/or disseminated by any means, except with the prior written permission of CJSC ALOR INVEST.

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