Galenica Ag · SIX:GALE
Galenica — Investor Presentation (August 2021)
49 slides from Galenica's investor presentation, August 2021
Slide 1: Galenica Group Investor Presentation
Galenica Group Investor Presentation August 2021 (Updated January 2022) Galenica – Health and wellbeing wellbeing are are at at the the heart heart of of what what we we do. do.
Slide 2: Agenda
Agenda 1 History 3 2 Galenica at a glance 7 3 Main business areas 9 4 Strategy and organisation update 16 5 Financial results H1 2021 23 6 Market update 39 7 Regulatory projects update 43 8 Outlook for 2021 47 August 2021 © Galenica Group 2
Slide 3: Building the leading Swiss healthcare platform over 90 years
1 Building the leading Swiss healthcare platform over 90 years Creation of Relaunch Foundation of Organic and Acquisition of Amavita uniform Vita-Merfen® Galenica as a acquisition-led Merfen® and expansion of brand in wholesaler Vita-Merfen® pharmacies network Switzerland Acquisition of Acquisition
Slide 4: History of resilient growth and margin improvement
1 History of resilient growth and margin improvement… Logistics, HealthCare Galenica Information & Retail1,4 2010-20 2010–20 CAGRs sales CAGR 3.3% Retail market sales2 2.0% Galenica net sales 3.3% Galenica EBIT3 8.7% 2010-20 3’480 EBIT CAGR3 8.7% 3’165 3’301 6.0% 3’141 2’915 3’009 2’766 2’826 2’603
Slide 5: Demonstrating strong performance in both segments
1 … demonstrating strong performance in both segments Products & Care Logistics & IT Retail Products & Care1 Logistics and HCI Logistics & IT1 4.6% 3.9% 1.5% 3.2% Net sales (CHFm) 2’625 2’329 2’362 2’372 2’441 2’158 2’171 2’245 1’621 1’683 2’064 1’393 1’437 1’479 1’525 1’246 1’335 1’090 2010 … 2013
Slide 6: History of share price since IPO
1 History of share price since IPO Initial trade price 7 April 2017 CHF 43.00 IPO offer price CHF 39.00 75 CHF 68.80 70 ◆ 65 60 55 50 45 40 35 7.4.2017 12/2017 12/2018 12/2019 12/2020 30.07.2021 30 Galenica SPI August 2021 © Galenica Group 6
Slide 7: Galenica is the leading healthcare provider in Switzerland
2 Galenica is the leading healthcare provider in Switzerland 2020 net sales CHF3’480 million 2020 EBIT1 CHF169 million Products & Care Logistics & IT 2020 net sales 2020 EBIT1 2020 net sales 2020 EBIT1 (pre eliminations of intercompany positions) (pre eliminations of intercompany positions) CHF1’683
Slide 8: 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 (2020)1 CHF bn (based on ex-manufacturer price) 2020-25 CAGR 2.0%3 By value−CHF6.3bn By volume−183 million pack
Slide 9: The largest pharmacy retailer in Switzerland
3 The largest pharmacy retailer in Switzerland Retail (B2C) Local Pharmacies Net sales 2020: CHF 1’163m Pharmacies at home Net sales 2020: CHF 355m Network of chains (# of pharmacies as of 30 June 2021) Market position: market leading mail-order pharmacy in Switzerland4 by number of pharmacies1 Tota
Slide 10: Ongoing pharmacy network consolidation and optimisation
3 Ongoing pharmacy network consolidation and optimisation Retail (B2C) ✓ 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 Marketi
Slide 11: Diversified product portfolio for health, beauty and wellbeing
3 Diversified product portfolio for health, beauty and wellbeing Retail (B2C) Amavita and Sun Store product offering in % of sales1 10% 21% 38% 54% 15% 4% 12% Beauty Nutrition, Personal OTC medicines Prescription medicines and Patient Care of which originals of which generics 1) Share of net sales 2
Slide 12: Leading role in Consumer Health with broad and innovative product portfolio
Leading role in Consumer Health 3 with broad and innovative product portfolio Professionals (B2B) Products & Brands Net sales 2020: CHF 112m Service for Professionals Net sales 2020: CHF 61m Consumer Health Market position1 #1 ORAL PAIN REMEDIES3 − One-stop shop No. 1 − Prepared drugs in blisters en
Slide 13: Executing our strategy to further expand our product portfolio
3 Executing our strategy to further expand our product portfolio Professionals (B2B) May 2021: Acquisition of Pharma business of Dr. Wild & Co AG September 2021: Acquistion of Spagyros AG Market leading Vitamin D portfolio in Switzerland Phytotherapy Gemmotherapy Spagyrics Homoeopathy Other strong b
Slide 14: Acquisition of Lifestage Solutions AG completes portfolio
Acquisition of Lifestage Solutions AG completes Galenica’s 3 portfolio as fully integrated healthcare provider Professionals (B2B) Significant synergies with Galenica ✓ Optimisation of logistics and Sourcing ✓ More attractive product and • To be Strategic partner of choice for nursing care organisat
Slide 15: Leader in pre-wholesale and wholesale distribution
Leader in pre-wholesale and wholesale distribution, supported 3 by an innovative healthcare information business Logistics & IT Wholesale Net sales 2020: CHF 2’530m Logistics & IT Services Net sales 2020: CHF 98m Market position1 #1 Market position Alloga1 #1 Market position HCI Solutions1 #1 Wholes
Slide 16: Galenica Strategy
4 Galenica Strategy August 2021 © Galenica Group 16
Slide 17: Definition of strategic programmes
4 Definition of strategic programmes Strategic programmes Omni-Channel IMPLEMENT market Care STRATEGY IN A Professionals FOCUSED, TARGETED AND SWIFT MANNER. Efficiency inside Transformation & organisational development August 2021 © Galenica Group 17
Slide 18: Strategic programmes Targets
Strategic programmes 4 Targets Omni-Channel Care Professionals − Best customer experience, − First point of contact − Partner of first choice anytime and anywhere − Health services − Leader in e-health − Online and offline channels − Preferred cooperation partner − Product range Efficiency Transform
Slide 19: Management structure Galenica Group
4 Management structure Galenica Group * Executive Committee ** extended Executive Comittee August 2021 © Galenica Group 19
Slide 20: Executive Committee
2 4 Executive Committee Marc Werner − CEO since 2020 CEO − 24 years industry experience − Joined Galenica in 2020 − Previously, Head Marketing & Sales division and Member of the Group Executive Board at Swisscom Felix Burkhard − CFO since 2017 CFO − 30 years industry experience of which 26 years at
Slide 21: Extended Executive Committee
2 4 Extended Executive Committee Lukas Ackermann − Since 2021 Member of the Extended Executive Committee IT & Digital Services − 22 years health care experience − Joined Galenica in 2020 as Managing Director of HCI Solutions − Previously, General Manager of amétiq Ltd. Marianne Ellenberger − Since 2
Slide 22: New reporting structure
New reporting structure 4 Strong alignment to customer focus combined with high transparency August 2021 © Galenica Group 22
Slide 23: Galenica Group Strong sales growth
Galenica Group 5 Strong sales growth COVID-19 Lack of Net sales (in million CHF) initiatives1) flu season2) 1’857 +9.9% +4.2% -1.8% Galenica Group 1’690 919 Products & Care +13.6% +5.7% -2.7% 809 1’378 Logistics & IT +7.4% +4.1% -1.4% 1’283 H1 2020 H1 2021 1) Impact of COVID-19 initiatives includes
Slide 24: H1 2021 Pleasing increase of profitability
H1 2021 5 Pleasing increase of profitability EBITDA (in million CHF) EBIT (in million CHF) +13.4% 309.5 +20.3% 213.3 129.3 146.6 82.3 99.0 2020 H1 2020 H1 2021 2020 H1 2020 H1 2021 August 2021 © Galenica Group 24
Slide 25: H1 2021 EBITDA and EBIT adjustments
H1 2021 5 EBITDA and EBIT adjustments1) EBITDA (in million CHF) EBIT (in million CHF) H1 H1 H1 H1 2021 2020 Abw. % 2021 2020 Abw. % EBITDA adjusted 124.7 105.3 +18.4% EBIT adjusted 101.4 83.6 +21.3% Adjustment IAS 19 -3.9 -2.4 Adjustment IAS 19 -3.9 -2.4 Adjustment IFRS 16 25.7 26.4 Adjustment IFRS
Slide 26: Significant improvement of profitability
Galenica Group 5 Significant improvement of profitability EBIT and EBIT margin adjusted1) COVID-19 Lack of (in million CHF / %) initiatives2) flu season2) 101.4 5.5% 5.5% Galenica Group +21.3% +20 million -10 million 83.6 4.9% 4.9% 76.2 8.3% 8.3% Products & Care +23.2% +15 million -9 million 7.6% 61
Slide 27: Retail (B2C): Sales growth driven by COVID-19 initiatives
Retail (B2C): Sales growth driven by COVID-19 initiatives and strong 5 sales increase of Pharmacies at Home sector Net sales (in million CHF) 1’518 +30.9% +14.4% Pharmacies at home 355 834 729 166 218 1’163 563 617 +9.6% Local Pharmacies 2020 H1 2020 H1 2021 August 2021 © Galenica Group 27
Slide 28: Local pharmacies: sales losses more than compensated by COVID-19 initiatives
Local pharmacies: sales losses related to lack of flu season more than 5 compensated by impact of COVID-19 initiatives Local Pharmacies Net sales (in million CHF) Positive impact of COVID-19 initiatives: +7.5%2) +9.6% 1’163 Continued impact 563 617 due to lack of flu season: -1.4%3) 2020 H1 2020 H1
Slide 29: Pharmacies at Home: strong growth of Mediservice
5 Pharmacies at Home: strong growth of Mediservice in the area of rare diseases Pharmacies at Home Net sales (in million CHF) Online sales 2) doubled year-on-year +30.9% 355 218 Additional 166 sales in the area of rare diseases + 44 million 2020 H1 2020 H1 2021 Elements of growth (%): Expansion1) 8.
Slide 30: Professionals (B2B): growth thanks to Verfora expansion
5 Professionals (B2B): growth thanks to expansion of Verfora product portfolio Net sales (in million CHF) 173 -1.5% Services for +5.4% Professionals 62 (as of H2 2021) 84 89 29 29 112 55 60 +9.1% Products & Brands 2020 H1 2020 H1 2021 August 2021 © Galenica Group 30
Slide 31: Products & Brands: losses compensated by portfolio expansion
Products & Brands: significant losses due to absence of cough & colds 5 compensated by expansion of product portfolio Net sales Products & Brands (in million CHF) Main new products 112 +9.1% 24 55 60 13 -0.8% International 87 13 41 46 +12.3% Swiss Market 2020 H1 2020 H1 2021 Elements of growth (%):
Slide 32: Logistics & IT: strong sales growth driven by wholesale
5 Logistics & IT: strong sales growth driven by wholesale Net sales (in million CHF) 2’625 +7.4% 98 +4.4% Logistics & IT Services 1’283 1’378 2’530 48 51 1’237 1’329 +7.4% 2020 H1 2020 H1 2021 Wholesale August 2021 © Galenica Group 32
Slide 33: Wholesale: strong sales growth driven by self-tests
Wholesale: strong sales growth driven by COVID-19 self-tests and 5 market share gains in physician segment Net sales (in million CHF) 2’530 +7.4% Positive impact 685 of COVID-19 initiatives: +4.1%2) Physicians 1’237 1’329 +10.5% Pharmacies 337 372 1’665 Others +6.9% 817 873 180 +0.3% Continued impac
Slide 34: H1 2021 Financial result and taxes
H1 2021 5 Financial result and taxes Financial result (in million CHF) Taxes (in million CHF) -1.1 -1.2 Tax rate 17.2% 17.0% 17.7% -2.4 -1.2 -1.2 -2.3 -2.3 -13.6 -17.1 -2.4 -35.9 -4.7 2020 H1 2020 H1 2021 2020 H1 2020 H1 2021 Financial result adjusted 1) Effects of IAS19 and IFRS16 1) 1) Details of
Slide 35: Net profit growth in line with EBIT development
Galenica Group 5 Net profit growth in line with EBIT development (in million CHF) +19.9% 172.7 34.8 Net profit adjusted1) 79.6 66.3 138.0 68.4 82.5 +20.6% Effects of IAS19 and IFRS161) -2.1 -3.0 2020 H1 2020 H1 2021 1) Details of the adjustments of IAS19 and IFRS16 effects, in the Half-year Report 2
Slide 36: H1 2021 Investments
H1 2021 5 Investments (in million CHF) 1.6% 1.5% 1.3% % of net sales 57.0 20.5 Investments 26.7 24.7 in intangible assets 36.5 10.4 5.8 Investments 16.2 18.9 in tangible assets 2020 H1 2020 H1 2021 August 2021 © Galenica Group 36
Slide 37: Strong operating cash flow
Galenica Group 5 Strong operating cash flow (in million CHF) H1 2021 H1 2020 Change Cash flow from operating activities before working capital changes 138.7 118.7 +20.0 Payment of lease liabilities -24.9 -24.4 Cash flow from operating activities before working capital changes adjusted 113.8 94.3 +19
Slide 38: H1 2021 Solid balance sheet
H1 2021 5 Solid balance sheet (in million CHF) Debt coverage adjusted2) 1.7x 1.9x 1.6x 1’114 1’053 948 8 Equity adjusted3) Effect of IFRS 163) 629 623 557 Net debt adjusted3) 1’110 1’034 223 1’105 228 218 IAS 19 and IFRS 16 406 effects on equity3) 354 395 -57 -86 2020 H1 2020 H1 2021 1) Net debt / E
Slide 39: Swiss pharmaceutical market: development by channel YTD June 2021
6 Swiss pharmaceutical market: development by channel YTD June 2021 Value (ex-factory): CHF 3’201.5 million Volume (packs): 86.9 million CHF +106.4 million / +3.4% -7.1 million / -7.5 % Hospitals Hospitals 8.9% 822.2 million 7.7 million 3.2% +2.3% -9.8% 25.7% Drugstores 42.4% Drugstores 28.5 million
Slide 40: Swiss pharmaceutical market monthly development
6 Swiss pharmaceutical market monthly development Value (ex-factory) YTD June 2021: CHF 3’201.5 million CHF +106.4 million / +3.4% Source: APO/SD/DRO/SPI Index, Swissmedic A, B, C, D Medicines Swissmedic lists A, B, C, D, sold from suppliers and wholesalers to hospitals, physicians and drugstores Au
Slide 41: Generics growth in the pharmacy channel 2020
6 Generics growth (in volume) in the pharmacy channel 2020 Market with Total Packs reimbursable generics potential 76.9 million / +1.8% 5.7% by health insurance 56.2 million 21.2% Patent protected products 4.4 million / +12.6% -0.2% Products with expired patent 20.3 million / +2.2% 26.4% protection
Slide 42: Consumer healthcare market: decline in 2021
Consumer healthcare market: decline in 2021 driven by absence of 6 seasonal colds and lack of flu epidemic Consumer healthcare market YTD June 2021 (w/o COVID-19 self-tests) 3.5% OTC -6.3% OTC overall market -6.30% 13.0% Cough remedies -44.60% Personal care +2.9% Cold & flu remedies -33.20% CHF mill
Slide 43: Authorities: outlook regulation
7 Authorities: outlook regulation Reduction in drug ✓ ✓ ✓ 2018 2019 2020 2021 2022 ..… prices Generics prices „Reference price Political discussion ongoing system“ Distribution margin SBR IV extended, SBR IV → SBR V new proposal under discussion OTC products1): Political discussion about ✓ category
Slide 44: Price reduction rounds 2017 to 2020
Price reduction rounds 2017 to 2020 7 Annual savings per channel at public and ex-factory price in million CHF 2017 2018 2019 2020 225 ▪ Price review by FOPH delayed due to COVID-19 44.6 ▪ 55% of products in scope are 185 reviewed as of 31.12.2020 ▪ Remaining 45% of products will be reviewed in 2021
Slide 45: Swiss Pharmaceutical market – composition of drug prices
7 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 FOPH defines price and margin - Margin covers ~ 8%
Slide 46: Proposal of new SBR V contract and distribution margin model
7 Proposal of new SBR V contract and distribution margin model ▪ Price-related surcharge = 3% SBR IV ▪ Surcharge per pack = CHF 9.45 service fees SBR V service fees ▪ Product margin cap = CHF 300.– New LOA V tariff model Distribution → Under the proposal submitted by Curafutura and Pharmasuisse, mar
Slide 47: Mid-term Guidance
8 Mid-term Guidance − Expected market growth in the next few years: +1% to +2% − Galenica plans to grow faster than the market thanks to − consistent implementation of the strategic programmes, − further expansion and optimisation of the pharmacy network and the Verfora product portfolio. − Followin
Slide 48: Contact information Investor Relations
Galenica Group - Contact information Investor Relations Felix Burkhard CFO Tel.: +41 58 852 85 29 Julian Fiessinger Head of Investor Relations and Corporate Finance Tel.: +41 58 852 85 37 Mail: investors@galenica.com August 2021 © Galenica Group 48
Slide 49: 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