Recordati S.p.a. · MIL:REC
Recordati — Investor Day (May 2019)
37 slides from Recordati's investor day presentation, May 9, 2019
Slide 1: Group development strategy and objectives for the period 2019-2021
Group development strategy and objectives for the period 2019‐2021 LONDON ‐ 9 MAY 2019
Slide 2: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 2
Slide 3: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 3
Slide 4: Company profile
Company profile Recordati An international specialty pharmaceutical group (€ 1,352.2 million sales in 2018 and today 4,142 employees) Specialty & Primary care – 84% of revenue • Recordati is an important European player in specialty & primary care and OTC and a partner of choice for new product lice
Slide 5: Company profile: 2018 financial highlights
Company profile Recordati 2018 Financial highlights today • Revenue € 1,352.2 million, up 5.0% • EBITDA € 499.1 million or 36.9% of sales, up 9.8% • Operating income (EBIT) € 442.2 million or 32.7% of sales, up 8.8% • Net income € 312.4 million or 23.1% of sales, up 8.2% • Net debt € 588.4 million 2
Slide 6: Company profile: history of growth and diversification
Company profile A history of growth, geographical expansion and Specialty & Primary care 84% of revenue business diversification 78% of EBITDA Focus on Europe • A mainly Italian company until the end of the nineties • International expansion strategy started in earnest in 1999 • Expansion through or
Slide 7: Strong margin expansion over the past five years
Company profile Strong margin expansion over the past five years 7
Slide 8: Company profile - past performance: history of strong performance vs targets
Company profile ‐ past performance History of strong performance vs targets 2015 Plan 2015 2017 Plan 2017 2019 Plan 2019 current (Feb 2013) Actual (Feb 2015) Actual (Feb 2017) targets (million Euro) Revenue 1025 ‐ 1075 1047.7 ±1150 1288.1 ±1450 1430 ‐ 1450 margin EBITDA 317.0 ±500 520 ‐ 530 35.3% Op
Slide 9: Support of our new controlling shareholder - CVC Overview
Support of our new controlling shareholder – CVC Overview On 29 June 2018, CVC announced the acquisition of a 51.8% controlling stake in Recordati for €3.03bn CVC and Recordati Mutual Commitment for Long‐Term CVC Overview Strategy and Performance • World leader in private equity and credit with $75b
Slide 10: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 10
Slide 11: First quarter 2019 highlights
First quarter 2019 highlights • Revenue € 383.0 million, up 4.5% • EBITDA € 143.9 million or 37.6% of sales, up 7.1% • Operating income (EBIT) € 126.0 million or 32.9% of sales, up 4.5% • Net income € 92.1 million or 24.1% of sales, up 6.4% • Net debt € 555.7 million, compared to net debt of € 588.4
Slide 12: Main product sales
Main product sales Corporate products including drugs for rare diseases account for 65.7% of revenue (million Euro) 1Q 2019 1Q 2018 Change % Zanidip® (lercanidipine) 37.4 36.5 2.5 Zanipress® (lercanidipine+enalapril) 14.2 17.9 (20.6) Urorec® (silodosin) 27.8 26.7 4.2 Livazo® (pitavastatin) 13.2 12.4
Slide 13: A diversified product portfolio
A diversified product portfolio Other corporate products 12.7% Seloken®/Logimax® 6.0% Drugs for rare diseases 14.7% Livazo® 3.4% Urorec® 7.3% Zanipress® 3.7% OTC 18.6% Zanidip® 9.8% Subsidiaries’ local product portfolios 19.8% Pharmaceutical chemicals 3.1% Ortoton® (methocarbamol) ‐ Germany 3% Other
Slide 14: Composition of revenue by geography
Composition of revenue by geography (million Euro) 1Q 2019 1Q 2018 Change % Italy 80.2 76.5 4.8 France 37.9 34.1 11.0 Germany 36.1 33.4 8.1 Russia, other CIS countries and Ukraine 28.3 32.1 (11.8) U.S.A. 26.3 25.6 3.0 Spain 22.8 21.2 7.4 Turkey 22.0 22.8 (3.6) Portugal 11.0 10.2 7.7 Other CEE countr
Slide 15: Geographical breakdown of pharmaceutical revenue
Geographical breakdown of pharmaceutical revenue Other international sales 15.7% (sales to licensees, exports, sales in ROW) Italy 21.6% North Africa 3.1% Other W. Europe 4.7% France 10.2% Other CEE 5.2% Portugal 3.0% Turkey 5.9% Germany 9.7% Spain 6.1% Russia, other CIS U.S.A. 7.1% and Ukraine 7.7%
Slide 16: First quarter 2019 results
First quarter 2019 results (million Euro) 1Q 2019 1Q 2018 Change % Revenue 383.0 366.5 4.5 Gross Profit 266.5 257.2 3.6 as % of revenue 69.6 70.2 SG&A Expenses 111.8 108.1 3.5 as % of revenue 29.2 29.5 R&D Expenses 29.2 27.7 5.4 as % of revenue 7.6 7.5 Other Income (Expense), net 0.5 (1.0) n.s. as %
Slide 17: First quarter 2019 results: operating segments
First quarter 2019 results Operating Segments Treatments for rare EBIT diseases 21.6% Revenue Treatments for rare diseases 14.7% Specialty & primary care 78.4% Treatments for rare diseases 20.3% EBITDA Specialty & primary care 85.3% Margin on sales: Specialty & primary Treatments for rare diseases:
Slide 18: Net financial position
Net financial position 31 Mar 2019 31 Dec 2018 Change (million Euro) Cash and short‐term financial investments 184,7 198.0 (13.3) Bank overdrafts and short‐term loans (23.8) (16.9) (6.9) Loans – due within one year (77.9) (135.3) 57.4 Loans – due after one year* (638.7) (634.2) (4.5) NET FINANCIAL P
Slide 19: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 19
Slide 20: Company strategy
Company strategy Group Objectives • Continuation of successful strategy • Steady organic growth from well diversified portfolio • Enhanced by accretive or strategic acquisitions in both SPC & Rare Diseases Specialty & Primary Care Rare Diseases • Maintain steady volume‐led growth from cash • Continu
Slide 21: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions • Specialty & primary care and OTC • Treatments for rare diseases • Current pipeline 5. Acceleration of growth 6. Financial projections 21
Slide 22: Current portfolio specialty and primary care: lercanidipine franchise
Current portfolio specialty and primary care, sales development – key assumptions Lercanidipine franchise • Sales of Zanidip® expected to remain stable at around € 120 million going forward 200 180 • Sales of Zanipress® to remain stable at around € 60 million going forward 160 140 • Considering both
Slide 23: Current portfolio specialty and primary care: Urorec
Current portfolio specialty and primary care, sales development – key assumptions 120 • Urorec® launched in 39 markets • Average market share 12.4%* of BPH 100 market in 15 main countries • In 2018 sales exceeded € 100 million 80 • Generic versions expected to enter the € millions 60 market beginnin
Slide 24: Current portfolio specialty and primary care: Seloken and Logimax
Current portfolio specialty and primary care, sales development – key assumptions 120 • Seloken®/Seloken® ZOK and Logimax® European rights acquired from 100 AstraZeneca in July 2017 • Acquired sales significantly accretive to 80 margins € millions 60 • Sales of this franchise have contributed to str
Slide 25: Current portfolio specialty and primary care: Livazo
Current portfolio specialty and primary care, sales development – key assumptions 60 • Livazo® launched in 8 markets • Average market share 8.4%* of statins 50 market in 6 main countries • Expect sales to continue to grow double 40 digit in 2019 € millions 30 • Generic versions could enter the marke
Slide 26: Current portfolio specialty and primary care: Reagila
Current portfolio specialty and primary care, sales development – key assumptions • Reagila® approved for the treatment of 40 schizophrenia in July 2017 35 • Solid clinical profile. Data shows efficacy 30 in addressing negative symptoms 25 • First launches during 2018 € millions 20 • Launches to con
Slide 27: Other corporate products
Current portfolio specialty and primary care, sales development – key assumptions Other corporate products • Includes 23 products of which 9 are OTC corporate brands • Sales expected to grow mid single digit over the plan period 27
Slide 28: Current portfolio OTC, sales development
Current portfolio OTC, sales development – key assumptions OTC business 300 • OTC business to account for 18% of sales in 2021 (16% in 2018) 250 • Corporate brands generate 55% of OTC sales. Key 200 brands: Procto‐Glyvenol®, Hexaspray®, Casenlax®, Lacdigest® € millions 150 • Life‐cycle management of
Slide 29: Current portfolio treatments for rare diseases, sales development
Current portfolio treatments for rare diseases, sales development – key assumptions Treatments for rare diseases • Overall sales of current portfolio expected to 350 grow double digit annually over the period • Initial launches of Ledaga® included. EU 300 Commission approval released following EMA’s
Slide 30: Research and Development: current pipeline
Current pipeline Research and Development • Plan includes around 8 to 9% of sales to be allocated to R&D activities Speciality and Primary Care Treatments for rare diseases • Advance projects in current development pipeline • Focus on the development of products in • Development of a treatment for r
Slide 31: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 31
Slide 32: Acceleration of growth: Group M&A strategy, specialty & primary care
Acceleration of growth – Group M&A strategy and focus areas Specialty & primary care • New product licensing opportunities to be pursued in specialty care Licensing • Seen as partner of choice, gaining access to attractive patented products • Favourable terms in terms of upfront consideration vs. ri
Slide 33: Acceleration of growth: Group M&A strategy, rare diseases
Acceleration of growth – Group M&A strategy and focus areas Treatments for rare diseases • Acquire worldwide licenses, preferably late stage opportunities • Develop partnerships with research institutions, drug discovery companies and other rare Licensing disease companies • Seen as partner of choic
Slide 34: Index
Index 1. Company profile 2. First quarter 2019 results 3. Strategy 4. Development of current portfolio – key assumptions 5. Acceleration of growth 6. Financial projections 34
Slide 35: Financial projections - assumptions
Financial projections ‐ assumptions • Continuation of successful strategic approach • Specialty and primary care business to represent 75 to 80% of revenue in 2021 Group Evolution • Rare disease business to represent 20 to 25% of revenue in 2021 • Bolt‐on acquisitions with acceptable valuations incl
Slide 36: Financial projections: 2019 targets and plan for 2021
Financial projections 2019 targets and plan for 2021 2018 2019 2021 Plan CAGR (million Euro) Actual Targets Including M&A 2018‐2021 Revenue 1,352.2 1,430 ‐ 1,450 ±1,700 7.9% EBITDA 499.1 520 – 530 ±650 9.2% margin on sales 36.9% ±38% EBIT (Operating income) 442.2 460 – 470 ±560 8.2% margin on sales
Slide 37: Company declarations, disclaimers and profile
Company declarations, disclaimers and profile DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANY’S FINANCIAL REPORTS The manager responsible for preparing the company’s financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154‐bis of the Consolidated Law on Finan