Galenica Ag · SIX:GALE
Galenica — Investor Presentation (April 2019)
48 slides from Galenica's investor presentation, April 2019
Slide 1: Galenica Group Investor Presentation
Galenica Group Investor Presentation April 2019
Slide 2: Agenda
Agenda 1 History 3 2 Galenica at a glance 6 3 Business Sectors 11 4 Financial track record 16 5 Business update 2018 18 6 Financial results update 2018 28 7 Market update 2018 37 8 Regulatory projects 41 9 Outlook 46 March 2019 − © Galenica 2
Slide 3: Building the leading Swiss healthcare platform over 90 years
1 Building the leading Swiss healthcare platform over 90 years Foundation of Creation of Acquisition of Amavita uniform Acquisition of Galenica as a Merfen® and brand in Bahnhof wholesaler Vita-Merfen® Organic and Switzerland Apotheke acquisition-led expansion of Acquisition of Expansion of IPO of p
Slide 4: History of resilient growth and margin improvement
1 History of resilient growth and margin improvement Logistics, HealthCare Information & Retail1,4 Galenica 2008–18 CAGRs 2008-18 3.4% Retail market sales2 1.9% sales CAGR Galenica net sales 3.4% Galenica EBIT3 14.7% 2008-18 6 EBIT CAGR3 14.7% 3'141 3'165 6 6.0% 2'915 3'009 2'766 2'826 2'526 2'603 2
Slide 5: April 2017: Outstanding IPO of Galenica Santé
1 7 April 2017: Outstanding IPO of Galenica Santé Largest IPO in Europe in H1 2017 and first sizeable 100% subsidiary IPO since years Multiple oversubscription with pricing at the top end of the price range at CHF 39.00 HF 13% RoW 15% PB Broadly diversified 30% US 48.75m 12% 48.75m allocation
Slide 6: Galenica is the leading healthcare provider in Switzerland
2 Galenica is the leading healthcare provider in Switzerland 2018 net sales CHF3’165m 2018 EBIT1 CHF154m Health & Beauty Services Retail Products & Brands Market position2 #1 Consumer Health market position2 #1 Market position2 #1 2018 net sales 2018 EBIT 2018 net sales 2018 EBIT (pre eliminations o
Slide 7: Operating in a stable and attractive Swiss healthcare market
Operating in a stable and attractive Swiss healthcare market 2 with favourable long-term fundamentals Resilient, stable Swiss healthcare retail sector2 Pharmaceutical market in Switzerland (2018)1 CHF bn (based on ex-manufacturer price) 2018-22 CAGR 1.7%3 By value−CHF6.0bn By volume−187 million pack
Slide 8: Experienced management team with proven track record
2 Experienced management team with proven track record Jean-Claude Clémençon − CEO since IPO CEO − 29 years industry experience of which 23 years at Galenica Group − Joined Galenica Group in 1995 − Previously, Head of Retail Business Sector, Head of Logistics and HCI at Galenica Group, Head of Manuf
Slide 9: Galenica: The first choice for health, beauty and wellbeing
2 Our ambition and self-perception Galenica: The first choice for health, beauty and wellbeing. March 2019 − © Galenica 9
Slide 10: Our Strategy - the power of Leverage drives sustained value creation
2 Our Strategy - the power of 3 drives sustained value creation Products & Brands − Leverage leading positions to promote − Develop and launch own and partner higher margin and exclusive products brands and products for pharmacies Leverage − Further expand and optimise retail Retail 2016 2017 networ
Slide 11: The largest pharmacy retailer in Switzerland
3 The largest pharmacy retailer in Switzerland Retail Network of chains (# of pharmacies as of 31 December 2018) Webshop Competitive positioning—#1 market position4 − Largest branded pharmacy network by By number of pharmacies5 Total # of pharmacies as of 2017 number of pharmacies in Switzerland 1
Slide 12: Ongoing pharmacy network consolidation and optimisation
3 Ongoing pharmacy network consolidation and optimisation Retail Proven track record of delivering synergies Widely spread pharmacy network covers every through streamlining of business processes and Region in Switzerland creating value through acquisitions and network optimisation Marketing IT
Slide 13: Diversified product portfolio for health, beauty and wellbeing
3 Diversified product portfolio for health, beauty and wellbeing Retail GaleniCare’s retail product offering in % of sales1 12% 37% 19% 52% 17% 11% 4% Beauty Nutrition, Personal OTC medicines Prescription medicines and Patient Care of which originals of which generics 1 Sales YTD December 2018, incl
Slide 14: Leading role in Consumer Health with broad and innovative product portfolio
Leading role in Consumer Health 3 with broad and innovative product portfolio Products & Brands Portfolio Competitive position: #1 Consumer Healthcare1 market position OTC Consumer Health ORAL PAIN & Skincare brands REMEDIES5 Market share2 (%) No. 1 33% market share2 5.7 5.3 5.3 TOPICAL PAIN Exclusi
Slide 15: Leader in pre-wholesale and wholesale distribution
Leader in pre-wholesale and wholesale distribution, supported 3 by an innovative healthcare information business Services Services Competitive positioning - #1 market position1 − Pre-wholesale outsourced storage and distribution Pre-wholesale market share % Wholesale market share % − Logistics servi
Slide 16: Long-term track record of sustainable growth and attractive cash generation
Long-term track record of sustainable growth and 4 attractive cash generation … Logistics, HealthCare Information & Retail1,4 Galenica 2008–18 CAGRs Retail market sales2 1.9% Galenica net sales 3.4% Net sales (CHFm) Galenica EBIT3 14.7% 3'009 3’141 7 3'165 7 Above market growth 2'766 2'826 2'915 2
Slide 17: … demonstrating strong performance in both segments
4 … demonstrating strong performance in both segments Health & Beauty Services Retail Health & Beauty Logistics and HCI Services Net sales (CHFm) 17.5% 3.5% 0.8% 2.2% 2'245 2'329 2'362 1 2'372 1 2'076 2'158 2'171 1'393 1'437 1'479 1 1'525 1 1'246 1'335 557 2008A … 2013A Health 2014A & Beauty 2015A 2
Slide 18: Pleasing development in all Business sectors 2018
5 Pleasing development in all Business sectors 2018 Despite additional drug price Galenica Group: reductions In million CHF Solid sales growth Sales: 3,165.0 + 0.8% Above-average EBIT growth EBIT1): 154.1 + 9.1% Net profit1): 124.7 + 9.5% Dividend increase of 3% Dividend2): CHF 1.70 per share
Slide 19: Further progress on all three development axes
5 Further progress on all three development axes Expansion Innovation Efficiency March 2019 © Galenica Group 19
Slide 20: Expansion Retail
5 Expansion Retail Majority Holdings Minority Holdings Total own (mainly Amavita, (mainly Coop Vitality) Pharmacies SunStore) 1.1.2018 260 77 337 Aquisitions +8 +2 + 10 Openings - +3 +3 Restructurings -2 -3 -5 31.12.2018 266 79 345 March 2019 − © Galenica Group 20
Slide 21: Expansion 2018: product portfolio and partnerships expanded
Expansion 5 2018: product portfolio and partnerships expanded No. 1 in the Swiss Consumer Healthcare market Product portfolio New partnerships − Algifor® − Spagyros − Perskindol® − Oenobiol − Anti-Brumm® March 2019 © Galenica Group 21
Slide 22: Expansion 2019: develop partnerships and portfolio
Expansion 5 2019: develop partnerships and portfolio (from January 2019) March 2019 © Galenica Group 22
Slide 23: Innovation 2018: Omni-Channel expanded
Innovation 5 2018: Omni-Channel expanded Online pharmacy − All formats − 40,000 products − Incl. product information − Know-how expansion March 2019 © Galenica Group 23
Slide 24: Innovation: supporting patients
Innovation: supporting patients 5 The right medicine at the right time in the right dosage CDS Polymedication check check ePRESCRIPTION eMediplan March 2019 © Galenica Group 24
Slide 25: Innovation: fast, simple, safe, everywhere
Innovation: fast, simple, safe, everywhere 5 Providing personal care to patients at home with new technologies Mediservice personally cares for 10,000 patients − At home − By phone − Via e-mail − And now also with video therapy support March 2019 © Galenica Group 25
Slide 26: Efficiency Retail: standardisation shows effect
Efficiency 5 Retail: standardisation shows effect − Triapharm® − Central back office − Direct invoicing − Generics substitution rate in Retail: 70%! March 2019 © Galenica Group 26
Slide 27: Efficiency Services: investing in the future
Efficiency 5 Services: investing in the future − New ERP solution at Alloga and Galexis − Modernisation of Galexis distribution centre at Lausanne-Ecublens Galexis – Lausanne-Ecublens distribution centre − Introduction of new blister machines at Medifilm − Solar energy production at Alloga Alloga –
Slide 28: 2018: Galenica Group Solid, sustainable business performance
2018: Galenica Group 6 Solid, sustainable business performance Net sales1 (in million CHF) EBIT adjusted2 (in million CHF) +0.8% +9.1% +3.9% 3 -2.3% +0.9% +0.6% +7.5% +10.6% 3 49% 51% 49% 51% 49% 51% 49% 51% 4.5% 4.5% 4.5% 4.8% 5.0% 4.9% EBIT Margin (ROS) Highlights: Solid sales growth despite pri
Slide 29: 2018: Health & Beauty Pleasing EBIT margin increase
2018: Health & Beauty 6 Pleasing EBIT margin increase Net sales1 (in million CHF) EBIT (in million CHF) +3.1% s +10.7% s +2.5% +3.7% +9.5% +11.9% 49% 51% 49% 51% 49% 51% 50% 50% 6.8% 6.7% 7.3% 7.2% 7.2% 6.7% EBIT Margin (ROS) Highlights: Pleasing EBIT margin increase by 50 bp to 7.2% 1 Restatement
Slide 30: 2018: Retail Strong impact of expansion on sales growth
2018: Retail 6 Strong impact of expansion on sales growth (+8 POS) Net sales1 (in million CHF) +3.1% +2.6% +3.6% 49% 51% 49% 51% Elements of growth: Expansion2 : +1.3% +3.8% +2.6% Organic3 : +1.3% -0.2% +0.5% thereof impact of price cuts4: -1.2% -2.0% -1.6% Highlights: Strong growth of generics (+
Slide 31: 2018: Products & Brands Pleasing sales growth above market
2018: Products & Brands 6 Pleasing sales growth above market Net sales1 (in million CHF) +2.7% s -0.1% +6.0% 54% 53% 47% 46% Highlights: P&B sales in Swiss Market 73.7 million CHF, +3.8% Sales of international business 18.0 million CHF, -1.6% +1.2% growth in Swiss consumer healthcare market2 1
Slide 32: 2018: Services segment Stable results despite price cuts
2018: Services segment 6 Stable results despite price cuts Net sales1 (in million CHF) EBIT (in million CHF) +0.4% s +1.4% 3 -12.5% +0.9% +0.0% -22.1% 3 +2.8% +0.0% 49% 51% 50% 50% 50% 50% 51% 49% 1.9% 1.8% 1.8% 1.9% 1.8% 1.9% impact of price cuts2: -1.9% -2.9% -2.4% EBIT Margin (ROS) Highlights:
Slide 33: 2018: Net profit above expectations
6 2018: Net profit above expectations (in million CHF) +24.2% One-off effects +9.5% Comparable net profit1 Effects of IAS19 1 Excluding effects of IAS19 and one-off effects March 2019 − © Galenica Group 33
Slide 34: 2018: Investments
6 2018: Investments (in million CHF) % of sales 1.8% 1.6% Cash conversion1 70%2 74% Investments in intangible assets Investments in property, plant and equipment 1 (EBITDA-CAPEX)/EBITDA, EBITDA excluding effects of IAS 19; CAPEX includes investments in intangible assets and property, plant and equip
Slide 35: 2018: Pleasing free cash flow
6 2018: Pleasing free cash flow (in million CHF) Divestment of assets and disposal of subsidiaries Cash flow from operating activities Investments in assets Purchase of subsidiaries March 2019 − © Galenica Group 35
Slide 36: 2018: Balance sheet strengthened
6 2018: Balance sheet strengthened (in million CHF) Debt coverage1 1.6x 1.5x % of total assets 50% 48% Equity 17% 16% Net debt 1 Net debt / EBITDA adj., excl. effects of IAS 19 March 2019 − © Galenica Group 36
Slide 37: Swiss pharmaceutical market 2018 − stable growth
7 Swiss pharmaceutical market 2018 − stable growth Market1 Value CHFm Share Change Market1 Value CHFm Share Change Total: 5’969.2 100% 0.8% Retail2: 4’501.7 100% 1.0% 2.2% 1.2% -0.9% 2.2% Hospitals: 1’467.5 24.6% RX3: 3’763.4 83.6% 5.5% 1.4% 1.4% OTC4: 738.3 16.4% -0.3% Physicians: 1’475.1 24.7% 1.9
Slide 38: Price reductions 2017 and 2018 Annual savings per channel
Price reductions 2017 and 2018 7 Annual savings per channel at public price and ex-factory in CHF 1st round 2017 2nd round 2018 225.5 Hospitals 44.6 184.7 35.3 Hospitals Physicians 41.0 64.8 99.9 Physicians Hospitals 11.6 52.4 Physicians 81.4 16.1 26.1 Hospitals 10.4 Pharmacies Physicians Pharmacies
Slide 39: 2018: Strong growth in high-priced medications
2018: Strong growth in high-priced medications 7 2 therapeutic areas are generating over 95% of total market growth Ex-factory value: CHF 1,664.6 million (CHF +127.9 million / +8.3%) Cancer Autoimmune diseases 2017 2018 Source: APO/SD/DRO/SPI Index Swissmedic registered articles Data as at December
Slide 40: Generics 2018: strong growth in the pharmacy market
7 Generics 2018: strong growth in the pharmacy market 74.5 million packs reimbursable by health insurance (+1.7 million / +2.4%) Market with 6.0% generics potential Patent protected 4.5 million / -5.3% 56.2 million products 18.5% +2.4% Products with expired 21.7 million / -0.4% patent protection wit
Slide 41: Swiss Pharmaceutical market Authorities: measures and projects
Swiss Pharmaceutical market 8 Authorities: measures and projects Reduction in drug prices 2018 2019 2020 Category change of OTC products1) 2019 Distribution margin LOA IV LOA V 2020 Generics prices Amendment of Health from 2021 … Insurance Act (KVG) 1) Swissmedic categories C, D March 2019 ©
Slide 42: Reduction of drug prices 2018 – 2020
8 Reduction of drug prices 2018 – 2020 in Originally Effective Effective Effective Subsequent million announced savings savings savings increase CHF (average) 2018 2019 2020 2017 80 190 225 2018 80 100 – open 2019 80 open – – open Total 240 Source: Various press releases from the Federal Office of P
Slide 43: Reclassification of OTC's
8 Reclassification of OTC’s Category A Category B Category C Category D Category E prescription without prescription pharmacy only pharmacy & drugstore sale in all shops repetition with a prescription with a prescription without prescription without prescription without prescribtion ~15% ~85% ~85% ~
Slide 44: Category change of OTC products Strengthening of the specialist retail trade
Category change of OTC products 8 Strengthening of the specialist retail trade Less than 10% of products will leave the specialist retail trade! DE CHF 13 million List D CHF 575 million CB CHF 30 million CD CHF 142 million Source: IQVIA, ex-factory, MAT 10/2018 March 2019 © Galenica Group 44
Slide 45: Swiss Pharmaceutical market – composition of drug prices
8 Swiss Pharmaceutical market – composition of drug prices Fixed margin elements help to offset price reductions Composition of the price of a prescription/ reimbursable drug: c.3/4 of the retail margin secured by fixed elements ~ 8 %(1) LOA – Retail ~ 8% Per prescription / line service fees FOPH de
Slide 46: Galenica Group - Outlook 2019
9 Galenica Group - Outlook 2019 – updated per April 30th, 2019 Galenica Group sales slightly above prior-year level − Health & Beauty sales +3% to +6% − Services sales at around the prior-year level EBIT (excluding the effects of IAS 19 and IFRS 16) +4% to +7% about 2 million CHF additionally du
Slide 47: Disclaimer
Disclaimer Disclaimer Galenica Certain statements, beliefs and opinions in this presentation are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their nature, forward-looking statements involve a n
Slide 48: Galenica Group - Contact information
Galenica Group - Contact information Investor Relations Media Felix Burkhard Christina Hertig CFO Galenica Head Corporate Communication Tel.: +41 58 852 85 29 Tel.: +41 58 852 85 17 Mail: investors@galenica.com Mail: media@galenica.com March 2019 − © Galenica 48