Perrigo Company plc · NYSE:PRGO
Perrigo — Investor Day (September 2009)
120 slides from Perrigo's investor day presentation, Sep 29, 2009
Slide 1: Perrigo Investor Day
Perrigo Investor Day New York, NY September 29, 2009 Quality, Affordable Healthcare Products
Slide 2: Forward Looking Statements
Forward Looking Statements Certain statements in this presentation are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created thereby. These statements relate to future events or the Company’s future
Slide 3: Introduction
Introduction Joseph C. Papa – Chairman & CEO Quality, Affordable Healthcare Products
Slide 4: Agenda
Agenda 1. Introduction and Overview – Joe Papa, Chairman & CEO 2. CHC Business Review – Jeff Needham, Senior VP, Commercial Business Development 3. Rx Business Review – Sharon Kochan, Executive VP, U.S. Generics 4. API and PDI Business Review – Rafi Lebel, Executive VP and President, Perrigo Israel
Slide 5: Since September 2007
Since September 2007 Remains the same • Mission: A global leader in quality, affordable healthcare • Executive Team • Focus on Five Pillars • ROIC Based Decision Making • Business Strategy 5 Quality, Affordable Healthcare Products
Slide 6: Business Strategy
Business Strategy • A global, integrated health care products company • Leader in Store Brand OTC/Nutrition and Generic Rx Topicals with unsurpassed Quality and Customer Service • Specialty API with vertical integration opportunities • Best in class innovation – developing, filing, and partnering to
Slide 7: Since September 2007 – Continued
Since September 2007 – Continued Changes • Transforming Perrigo – Move from a big small company to small big company – $2 billion in sales – Relentless focus on quality, process improvements and R&D – New product launch success • Decision to close Perrigo Germany API • Decision to divest Israel Cons
Slide 8: Quality
Quality • Over 12% of our 7,000+ global workforce works in quality • Over $60 million dollars were invested into quality during Fiscal 2009 • Reductions in deviations due to improved quality processes have had a direct and positive impact on our margins Deviations Indexed to 100 38% reduction in dev
Slide 9: Customer Service
Customer Service • New initiatives and focused execution resulted in significant improvements to customer service during fiscal 2009 Customer Service Trend r ry ne y r ly ch ril r er t ay be be be s ar Ju Ap ua gu ob Ju ar M m nu m em M br Au ct ve ce Ja Fe O pt No De Se 9 Quality, Affordable Health
Slide 10: Innovation
Innovation • 35+ new products this year – Polyethylene Glycol – Guaifenesin – Miconazole – 4 generic Rx products • Channel innovation –Over-the-counter Rx (ORx) • Rx-to-OTC switch products ($10 billion over the next 5 years) – Proton pump inhibitors – Non-sedating antihistamines – Alli® 10 Quality,
Slide 11: Low Cost
Low Cost New and ongoing initiatives • Global sourcing initiatives: Amending ANDA’s to include additional suppliers providing increased pricing leverage • Vertical integration of Cetirizine • Lean Sigma Initiatives – Nearly 400 Lean Sigma certified employees – Continued focus on incorporating and ex
Slide 12: People
People • Acquiring the best technical people on a global scale • Constant improvements to training and development • Voted “Best of the Best” places to work in West Michigan • Excellent safety record Headcount by Location - FY09 Global Department Summary Michigan 3,361 New York 437 Global Department
Slide 13: Macroeconomic Factors
Macroeconomic Factors • Weak economy continues to drive consumers to the realization of the store brand value proposition • Retailers focusing on store brands to drive sales and earnings • Healthcare reform - Quality, affordable healthcare is theme of the current administration • Increased FDA scrut
Slide 14: Perrigo Competitive Advantage
Perrigo Competitive Advantage • Perrigo value proposition – Marketing and promotional design and implementation that drive retailer and store brand penetration – Label management – Perrigo supports retailers through regulatory changes • Topical Rx leadership • Perrigo’s focus on new products – Numer
Slide 15: Store Brand Acceptance
Store Brand Acceptance What Shoppers Will Do When the Recession Ends Shoppers Who Will Keep Buying SB 91.0% All Other Shoppers 9.0% 15 Source: “Store Brands and the Recession: What Happens When the Recovery Kicks In?”, PLMA Summer 2009 Quality, Affordable Healthcare Products
Slide 16: Cough, Cold, Flu – Season Update
Cough, Cold, Flu – Season Update • Early data on the current cough, cold, flu season shows nearly a 16% increase season-to-date as compared to the same period last year • Leading indicator – Increased oral electrolyte solutions sales • Our current structure provides an additional 15% – 20% of capaci
Slide 17: Fiscal 2010 Outlook
Fiscal 2010 Outlook The Right Company, in the Right Place, at the Right Time • Consumer Healthcare – Omeprazole – Competitor is delayed coming to market – H1N1 outbreak – Vitamins • Rx Pharmaceutical – Quality issues at competitors – ORx • API – New products – Cost management 17 Quality, Affordable
Slide 18: Global Consumer Healthcare
Global Consumer Healthcare Jeff Needham, Senior VP, Commercial Business Development Quality, Affordable Healthcare Products
Slide 19: Perrigo Consumer Healthcare is Comprised of Business Segments
Perrigo Consumer Healthcare is Comprised of 6 Business Segments Perrigo CHC Size By Segment - FY09 Mexico, $52M UK, $127M Canada, $14M U.S. Contract, $92M U.S. Nutrition, $194M U.S. OTC, $1,160B 19 Quality, Affordable Healthcare Products
Slide 20: Perrigo Consumer Healthcare
Perrigo Consumer Healthcare U.S. OTC – U.S. Nutrition – U.S. Contract – Mexico – Canada - U.K. Perrigo Michigan Perrigo Canada Perrigo U.K. • Employee: 2,721 • Primarily OTC • Critical mass/scale • Employee: 490 • Production of 25B tablets a year • Manufacturer of OTC product • Mass customization •
Slide 21: Consumer Healthcare
Consumer Healthcare Global Sales of over $1.6 Billion and over 9,400 SKU’s Revenue ($ Mill) QUARTERLY PERFORMANCE $500 $450 $400 $350 $300 FY'06 FY'07 $250 FY'08 $200 FY'09 $150 $100 $50 $0 Q1 Q2 Q3 Q4 21 Quality, Affordable Healthcare Products
Slide 22: Perrigo competes in US categories with a total market size of nearly $30 billion
Perrigo competes in US categories with a total market size of nearly $30 billion Store Brand Share of OTCs Perrigo Share of Store Brand OTCs Market Size: Perrigo $22.7B SB OTC OTCs Branded 25% 70% OTC 75% Store Brand Share of Nutrition Perrigo Share of Store Brand Nutrition Market Size: $7.3B SB Per
Slide 23: Perrigo Key Labels & Customers
Perrigo Key Labels & Customers 23 Quality, Affordable Healthcare Products
Slide 24: The Magic of Store Brand
The Magic of Store Brand Quality, Affordable Healthcare Products
Slide 25: The Magic of Store Brands…Even More Magical Given Our Newer OTC Products
The Magic of Store Brands…Even More Magical Given Our Newer OTC Products… $57.27 Cost $23.50 $71.59 Retail Price $52.99 $14.32 $ Profit $29.49 20% % Profit $56% Consumer Savings 59% Big Dollar Profit for Retailers 25 Quality, Affordable Healthcare Products
Slide 26: Magic of Store Brands: Perrigo Savings to Consumers 1994-2008
Magic of Store Brands Perrigo Savings to Consumers 1994-2008 Perrigo has saved consumers over an estimated $10 billion dollars during the last 15 years Savings to the Consumer $’s in millions $1,200 $1,000 $800 $600 $400 $200 $0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2
Slide 27: Store Brands Drive Retailer Profit
Store Brands Drive Retailer Profit Contribution of Store Brand to a Retailer’s Total Category Sales ($) Vol (Units) Profit ($) 90 80 70 60 Percent 50 40 30 20 10 0 Analgesics Cough/Cold Vitamins Smoking Cessation 27 Quality, Affordable Healthcare Products
Slide 28: Consumer Healthcare Market & Share Growth
Consumer Healthcare Market & Share Growth 2009 1990 Averaged one percentage point market 25% 10% share increase per year 75% 90% National Brand Store Brand 2008 Total OTC Sales Value at Retail approximated $23 Billion Source: IRI and Perrigo Company Estimates 28 Quality, Affordable Healthcare Produc
Slide 29: All Category Update – IRI FDMx & Perrigo
All Category Update – IRI FDMx & Perrigo 52 Weeks Category National Brand Store Brand 14.9% OTC -2.4% 1.5% 6.9% Analgesics -1.3% 0.6% Cough, Cold, 15.5% -1.3% Allergy, Sinus 2.1% 26.9% Gastrointestinal -5.3% 1.5% 5.1% Smoking Cessation -5.5% -0.8% 8.1% Nutrition 7.7% 7.9% Source: IRI FDMx Thru June
Slide 30: Two Recent Case Studies of SB New Product Success – Cetirizine & Omeprazole
Two Recent Case Studies of SB New Product Success – Cetirizine & Omeprazole Quality, Affordable Healthcare Products
Slide 31: Omeprazole: How to Successfully Gain Share Against an Established Brand
Omeprazole: How to Successfully Gain Share Against an Established Brand Background – • Prilosec OTC® was an established brand selling $750M annually – 2003: Goes over the counter, with marketing “powerhouse” Procter & Gamble – 2004: #1 OTC Heartburn Medicine – 2005: #1 Recommended doctor recommended
Slide 32: Power of Perrigo – The Omeprazole Launch
Power of Perrigo – The Omeprazole Launch 32 Quality, Affordable Healthcare Products
Slide 33: Perrigo Omeprazole is a $325M Retail Brand
Perrigo Omeprazole is a $325M Retail Brand, with a +40% SB Share Within the First Year! Perrigo Store Brand Omeprazole Volume Share - FDMx 45% 41.3% 40.8% 39.4% 40.3% 40% 38.4% 37.8% 35.8% 36.2% 36.7% 34.7% 33.9% 34.5% 35% 31.2% 30.8% Volume Share 30% 27.5% 25% 22.0% 20% 15% 10% 4.1% 5% 0% 6/08 3/08
Slide 34: Cetirizine: Store Brands Can Win When Launched Alongside a New Brand
Cetirizine: Store Brands Can Win When Launched Alongside a New Brand Background – • Zyrtec® and Store Brand Cetirizine launched concurrently • Zyrtec® launched and supported by mega marketer Johnson & Johnson • Store Brand Cetirizine launched and marketed by Perrigo 34 Quality, Affordable Healthcare
Slide 35: Power of Perrigo—The Cetirizine Launch
Power of Perrigo—The Cetirizine Launch On-shelf Bonus & Economy signage Sizes Pharmacy Store Brand Market Share Introduction Kits Brand Promotion Drives 20% Store Brand Awareness 80% Print Ads Perrigo Other Off-shelf Displays 35 Quality, Affordable Healthcare Products
Slide 36: Store Brand Cetirizine is a $150M Retail Business
Results? Store Brand Cetirizine is a $150M Retail Business, Outselling the Brand Store Brand Cetirizine 10MG Volume Share - FDMx 60% 53.1% 53.2% 51.2% 49.0% 50.0% 49.4% 50% 45.9% 46.0% 47.4% 47.3% 43.8% 42.6% 42.0% 37.7% 38.5% Volume Share 40% 35.6% 30% 27.0% 20% 12.6% 10% 0% 8 8 8 8 8 8 8 8 8 8 8 8
Slide 37: Keys to Success of the Store Brand Business
“Keys to Success” of the Store Brand Business Quality, Affordable Healthcare Products
Slide 38: Why Perrigo is the Store Brand Leader?
Why Perrigo is the Store Brand Leader? Store Brand Leadership Store Brand Expert • Perrigo helped to create the Store • R&D product development Brand market in the 1980’s • Regulatory • Perrigo has greater product breadth • Quality/compliance than any other company, including • Low cost branded comp
Slide 39: Mass Customization – How One Brand Yields More than 475 Store Brand SKUs
Mass Customization – How One Brand Yields More than 475 Store Brands SKUs 10 Sizes 45 Promotional Configurations 1 Formula 17 Case Pack Combinations 51 Customer Unique Packages 39 Quality, Affordable Healthcare Products
Slide 40: Perrigo Marketing Expertise
Perrigo Marketing Expertise • First to market with new products • Best In Class Retail Marketing Programs • Consumer knowledge and insights • Recognized by our customers for our Category Management skills 40 Quality, Affordable Healthcare Products
Slide 41: Best In Class Retail Marketing: Retailers Promoting Store Brand
Best In Class Retail Marketing: Retailers Promoting Store Brand CVS Walgreens Kroger Wal-Mart 41 Quality, Affordable Healthcare Products
Slide 42: Recent Growth Drivers
Recent Growth Drivers Quality, Affordable Healthcare Products
Slide 43: More Consumers are Purchasing Store Brands
More Consumers are Purchasing Store Brands % of Consumers That are Frequent SB Shoppers 55% 41% 12% 1991 2006 2008 43 Source: 2009 PLMA Consumer research report Quality, Affordable Healthcare Products
Slide 44: Perrigo Continues to Gain Store Brand Share in U.S. categories
Perrigo Continues to Gain Store Brand Share in U.S. categories Perrigo Share of Store Brand Perrigo Share of Store Brand OTC - 2006 OTC - 2009 Competition Competition 35% 30% Perrigo 65% Perrigo 70% 44 Quality, Affordable Healthcare Products
Slide 45: International Sales Have Grown As Well
International Sales Have Grown As Well Perrigo CHC International Sales Growth Since 2006 70.0% 70.3% 53.6% 46.1% Mexico U.K. Canada Total 45 Quality, Affordable Healthcare Products
Slide 46: Perrigo is the Switch Leader
Perrigo is the Switch Leader Perrigo has participated in 80% of the drugs that have switched from Rx to OTC 1976 Brompheniramine maleate (Dimetane) 1991 Miconazole nitrate (Monistat 7) 1976 Chlorpheniramine maleate (Contac) 1992 Clemastine fumarate (Tavist) 1976 Oxymetazoline HCl (Afrin) 1994 Naprox
Slide 47: Perrigo has Made Key Strategic Acquisitions
Perrigo has Made Key Strategic Acquisitions d . c re Lt In A. c h c a re ies , S . , In alt hca o r b a, n g s He e alt el) r at ) D i l di r a L m td. l H Bru n abo JBL tios ba) Ho l ph u n e ( .L ( ora (Di nico Br J.B b Ga La U January June September October November 2008 2008 2008 2008 2008 Acqui
Slide 48: Looking to the Future
Looking to the Future Quality, Affordable Healthcare Products
Slide 49: A Number of Current Tailwinds Give Us Cause for Optimism
A Number of Current Tailwinds Give Us Cause for Optimism… Store Brand Share Point Gain - Latest Year Dollars* • Strong major retailer focus driving stronger-than-average SB shares 2.6 pts 1.8 pts Top-5 Perrigo U.S. Customers Growing Store Brand Share Faster than Total Marketplace • 2009 Cough/Cold s
Slide 50: National Status Map – Week Ending 9-19-09
National Status Map – Week Ending 9-19-09 Same week last season The information, material and content contained in this report, including, without limitation, the format hereof, is confidential and proprietary to SDI and provided only for the use of each of its authorized customers in the ordinary c
Slide 51: We're Well-Positioned in the Consumer Healthcare Marketplace
We’re Well-Positioned in the Consumer Healthcare Marketplace… • Consumer and Retailer Commitment to “Quality, Affordable Healthcare” • We’re Growing Market Share Within the Store Brand Segment – and Within the Total Category • Our Expertise in Mass Customization Makes Us Uniquely Focused – Breadth a
Slide 52: New Products Drive Growth
New Products Drive Growth 52 Quality, Affordable Healthcare Products
Slide 53: ANDAs Will Continue to Drive Growth
ANDAs Will Continue to Drive Growth Branded Est. Launch Project Category National Brand Sales Year I BU K softgel Analgesic Adv il Liquidgel $ 250 2009 Nico Lozenge - Cherry NRT Commit $ 28 2009 Polyethylene Glycol 3350 GI Miralax $ 167 2009 Nico Coated Gum - Cinnamon NRT Nicorrette $ 42 2009 Lopera
Slide 54: Adjacent Category Opportunities will Expand Our U.S. Footprint
Adjacent Category Opportunities will Expand Our U.S. Footprint Diet Liqds/Powders, Contraceptives, $0.7 $0.9 Adult Diagnostic Test Kits, Incont., $1.3 $0.6 Eye Care, $1.9 Family Planning, $0.5 First Aid Accessories, $2.0 Sanitary Napkins/Tampons, $2.9 Infant Nutrition, Categories Where $5.9 Perrigo
Slide 55: Global OTC Market - 2008
Global OTC Market - 2008 RO Latin W North America America 7.0% 26.5% Australasia 1.9% Japan 10.7% Indian Subcontinent 2.1% E & SE Asia 14.3% Western C & E Europe Europe 24.4% 6.8% Global OTC Market in 2008 was $86.6Billion (MSP) with a CAGR of 4.3% (2004-2008) 55 Quality, Affordable Healthcare Produ
Slide 56: International Market Development
International Market Development • Expand Perrigo’s global footprint into new countries and regions • Grow from existing global CHC markets • Grow from both organic and inorganic strategies 56 Quality, Affordable Healthcare Products
Slide 57: OTCs Via Rx is an Emerging Growth Market
OTCs Via Rx is an Emerging Growth Market Avg. Rx Avg. ORx Dollars Cost/Tab Cost/Tab Rx Generic 65%aa PPI $23.1B $4.68 $.53 Generics Antihistamine $2.49B $1.61 $.25 “own” 65% volume Rx Rx Brand 35% Antihistamine share of w/Decongestant $834M $1.41 $.45 the Rx Market Grand Totals $26.4B $3.74 $.48 –BU
Slide 58: Perrigo CHC is Well Positioned to Drive Future Growth
Perrigo CHC is Well Positioned to Drive Future Growth ORx Acquisitions Adjacent Categories Expanded Global Footprint – New International Markets ANDA / New Product Pipeline Organic Store Brand Growth – Consumers Continue to Embrace Store Brands Perrigo Growth Platform 58 Quality, Affordable Healthca
Slide 59: Rx Pharmaceuticals
Rx Pharmaceuticals Sharon Kochan, Executive VP, U.S. Generics Quality, Affordable Healthcare Products
Slide 60: Rx Business Overview
Rx Business Overview Portfolio of extended topical and specialized prescription generic products predominantly for the US market FY09 – Total sales $164 million, operating income $29 million Investing over 10% of sales in R&D Significant investment in quality – almost 10% of COGS for apprais
Slide 61: Key Players in the US Generic Market
Key Players in the US Generic Market US Generic Market: Highly Fragmented US Extended Topical Generic Market: 25.0% $200 23.3% $177 Market Share Adjusted WAC Dollars ($M) $160 20.0% $160 $152 17.3% $128 15.0% $120 $101 10.0% $80 $71 $69 7.9% 8.1% 7.2% 7.1% 5.5% $45 $44 $41 5.0% 3.7% $40 3.0% 2.8% 2.
Slide 62: Total US Brand Opportunities in the Extended Topical Space: $31.8B
Total US Brand Opportunities in the Extended Topical Space: $31.8B $ in Billions Source: WK Health (July 2009), WAC Dollars 62 Quality, Affordable Healthcare Products
Slide 63: Strategy
Strategy Perrigo’s Five Pillars – An unwavering focus Portfolio and pipeline above and beyond standard generics Maintain leadership in the extended topical space, including foams, nasal sprays, inhalers, patches and more Leverage Perrigo’s OTC portfolio in the growing ORx/Managed Care market
Slide 64: Generic OTCs Drive 'ORx'
Generic OTCs Drive ‘ORx’ Rx-to-OTC Market Landscape Doctors continue to trust and prescribe Rx-to-OTC products post switch Various Health Plans and programs see the cost saving and other benefits OTCs provide its members Perrigo’s ORx Strategy Set-up and register generic OTCs for reimbursement
Slide 65: Strengths
Strengths Topical Leadership Ideally positioned to leverage Perrigo’s OTC portfolio and pipeline - ORx Favorable cGMP standing Proven ability to develop various sophisticated and challenging topical products Proficient at executing strategic alliances and acquisitions 65 Quality, Affordabl
Slide 66: Key Products - Perrigo US Market Share
Key Products- Perrigo US Market Share Tretinoin Cream/Gel 56% Mometasone Cream 51% Mupirocin Ointment 37% Clobetasol Foam 52% Ketoconazole Shampoo 66% Triamcinolone Cream/Oint 34% Mesalamine Enema 62% Erythromycin, Benzoyl Peroxide 49% Permethrin Cream 80%+ 80% Clindamycin Pledgets 80%+ 80% Erythrom
Slide 67: Approval Track Record
Approval Track Record 8 product launches in FY08: Clobetasol Propionate foam, Ciclopirox topical solution, Salicylic Acid cream, Salicylic Acid lotion, Cetirizine syrup, Cetirizine tablets, Cetrizine-D tablets, Omeprazole tablets 3 product launches in FY09: Salicylic Acid shampoo, Hydroquinone t
Slide 68: Quantitative Pipeline Snap Shot
Quantitative Pipeline Snap Shot 16 ANDAs are currently pending FDA approval Annual brand sales of approximately $2B 7 confirmed first-to-file ANDAs (plus Triamcinolone Nasal Spray) Additional 5 first-to-market (most likely) 5 Products in Active Clinical Studies 5 Ongoing P.IV Litigations: Be
Slide 69: Business Development – Beyond Organic Growth
Business Development – Beyond Organic Growth Acquisitions Glades Topical Portfolio License in Levocetirizine Syrup and Tablets (generic to Xyzal®) First-To-File from Synthon BPO & Clinda Gel (generic to Duac®) First-To-File from KV License Out Centany Ointment to Medimetriks Pharmaceuticals
Slide 70: Business Development
Business Development Seeking ROIC accretive transactions that: Enhance our leadership position in the extended topical space Product line acquisitions License in / Distribution arrangements Co-development Outright acquisitions of topical players Position Perrigo as a significant generic prov
Slide 71: Positioned for Growth
Positioned for Growth Based on our current organic pipeline and secured agreements with 3rd parties, we are on track to: Double our operating income in 2-3 years Triple our operating income in 4-5 years 71 Quality, Affordable Healthcare Products
Slide 72: Active Pharmaceutical Ingredients (API)
Active Pharmaceutical Ingredients (API) Rafi Lebel, Executive VP and President, Perrigo Israel Quality, Affordable Healthcare Products
Slide 73: API Business Overview
API Business Overview • Perrigo is focused on complex API products • Products sold to Pharmaceutical companies in more than 25 countries • FY09 Sales to third parties $136M, Operating Income $15M • Perrigo quality; 24 successful cGMP audits including US FDA in China and EU-IMOH in Israel in FY09 • G
Slide 74: Our Strategic Direction
Our Strategic Direction • Complex, high potency APIs – Differentiation – Highly regulated markets – Intellectual Property – PIV opportunities • Complete Solution – Customer Service – Vertical integration – Finished Dosage Form as line extensions to our API’s • Global Operation - Moving towards a glo
Slide 75: Global Presence – FY09 Sales by Region
Global Presence – FY09 Sales by Region West Europe 52% East Europe 9% North America 25% Israel Far East, Japan, 4% Asia Pacific 7% Latin America Manufacturing Site 3% Sales Subsidiary 75 Quality, Affordable Healthcare Products
Slide 76: Global API Market
Global API Market Total generic API sales of nearly $10 billion $’s in billions $3.2 $3.8 North America $2.9 Western Europe Asia-Pacific Perrigo Competition • Teva • Ranbaxy • Farmhyspania • Sun • Matrix (Mylan) • Grunenthal • Cipla • Polpharma • Wockhardt • Sterling • Dipharma • Dr. Reddy • Esteve
Slide 77: Commercial Landscape
Commercial Landscape Top Customers Top Products Midazolam • Cephalon API Therapeutic Use • Dr. Reddy (Betapharm) Cetirizine* Non-sedative antihistamine • Fresenius (APP) Donepezil* Anti Alzheimer, Cognition enhancer Moxonidine • Hi Tech Antihyperlipoproteinemic Fenofibrate • Mylan Flumazenil Benzodi
Slide 78: FY10 Strategic Focus
FY10 Strategic Focus • Launch products with higher barriers to entry/gross margins • Collaborate with customers on unique high value projects • Optimize global manufacturing costs (Israel, Germany & India) • Process improvements throughout the supply chain • Vertical Integration • Reduce our cost st
Slide 79: New Product Pipeline
New Product Pipeline Near Term – FY 10 Therapeutic Use Cisatracurium (Nimbex®) Intermediate duration neuromuscular blocking agent Imiquimod* (Aldara®) Immune response modifier Temozolomide* (Temodal®, Temodar®) Antineoplastic, alkylating agent Tioconazole* (Vagistat-1®) Anti vaginal candida infectio
Slide 80: Key Takeaways
Key Takeaways • Complex APIs in regulated markets offer higher margin profits • Perrigo is well positioned by having market leadership, high quality and by being first to market • Reliable long term strategic partner for pharmaceutical companies • Global operations offer high quality products from l
Slide 81: Pharmaceuticals & Diagnostics Israel (PDI)
Pharmaceuticals & Diagnostics Israel (PDI) Rafi Lebel, Executive VP and President, Perrigo Israel Quality, Affordable Healthcare Products
Slide 82: PDI Business Overview
PDI Business Overview • Importing, manufacturing, marketing and selling branded Rx & OTC pharmaceuticals, generic Rx, and diagnostics in Israel since 1961 • Majority of sales derived from the sale of branded products to Israeli HMO’s, government and chains • Supply chain partners: Solvay, Nycomed, T
Slide 83: Key Takeaways
Key Takeaways • Leading Pharmaceutical & Diagnostics player in $1 billion Israeli market • Increasing sales and operating income by launching new products developed by Perrigo & supply chain partners • Leveraging Perrigo CHC portfolio in Israel • Leveraging the development and manufacturing capabili
Slide 84: Break – Q&A
Break – Q&A Quality, Affordable Healthcare Products
Slide 85: Global Operations and Supply Chain
Global Operations and Supply Chain John Hendrickson, Executive VP, Global Operations and Supply Chain Quality, Affordable Healthcare Products
Slide 86: Core Operations/Supply Capabilities = Competitive Barriers
CORE OPERATIONS/SUPPLY CAPABILITIES = COMPETITIVE BARRIERS Broad product capabilities Global manufacturing and scale Mass customization processes Quality & Cost Focus Focus on future demands 86 Quality, Affordable Healthcare Products
Slide 87: Broad Operational and Supply Capabilities
Broad Operational and Supply Capabilities Tablets Capsules Solutions Suspensions Sprays (Nasal) Suppositories Creams/ointments Powders Lozenge Foam Aerosols Gums 87 Quality, Affordable Healthcare Products
Slide 88: Global Operation/Supply Footprint
Global Operation/Supply Footprint Michigan: OTC/Rx/Nutrition Production; England: OTC Production; Sourcing, R&D Sourcing, R&D India: API Production, Sourcing, R&D New York: OTC/Rx Productio China: API Production, Sourcing South Carolina: Vitamin Production; Israel: Rx/API Production; Sourcing, R&D R
Slide 89: Broad Manufacturing Scale
Broad Manufacturing Scale Facilities Solid dose Liquids Semi-Solids API 11 Plants North 39 Billion Tablets 235 Million Units America 80 Million Units 2 Plants Europe 4 Billion Tablets 65 Million Units 1.5 tons 4 Plants Middle/ 1 Billion Tablets 10 Million Units 10 Million Units 2.1 tons Far East Tot
Slide 90: Mass Customization
MASS CUSTOMIZATION One Branded Item Yields More Than 450 Store Brand SKUs 51 customers Unique packaging 10 sizes 20, 24, 50, 65, 100, 120, 165, 250, 500, 750 count Ibuprofen Tablet 45 promotional configurations Twin packs, bonus sizes, displays 17 case pack combinations Nearly 12,000 SKUs = High Bar
Slide 91: Flexible Packaging Operations
Flexible Packaging Operations Potential future network and production volumes Facility Solid dose Liquids Semi-Solids North America 60 Packaging Lines 38 Packaging Lines 16 Packaging Lines 9 Plants Europe 24 Packaging Lines 4 Packaging Lines 8 Packaging Lines 2 Plants Israel 3 Plants 2 Packaging Lin
Slide 92: Mass Customization Complexity = High Barrier to Entry
Mass Customization Complexity = High Barrier to Entry Allegan, Michigan Site Data 2,400 Customer Orders/week 27,000 Order Line Items Filled/week 2,000 Production Work Orders/week 60 SKU Labeling Conversions/week 3,500 QC Tests/week 2+ New Product Launches/month 92 Quality, Affordable Healthcare Prod
Slide 93: Perrigo Operational and Supply Strengths
Perrigo Operational and Supply Strengths • Quality integrated into operational systems • Cost focused throughout the supply chain • High volume supply partners with global footprint • Integrated API production for some key items • Great partners on ingredients, finished products and contracted servi
Slide 94: Are we ready?
New Business Environment “Competition in the next century will not be among companies… … it will be among supply chains” - Fortune Magazine Are we ready? 94 Quality, Affordable Healthcare Products
Slide 95: Overview SC Strategy Linkage
Overview SC Strategy Linkage BUSINESS Supply Chain “5 Pillar” SUPPLY CHAIN STRATEGIES Strategy FOCUS A global, integrated health care Integration of products company compliance/quality QUALITY Leader in Store Brand Superior customer OTC/Nutrition and Generic Rx SERVICE service Topicals with unsurpas
Slide 96: Global Supply Chain/Operations Focus
Global Supply Chain/Operations Focus • Integration of Compliance/Quality processes throughout the operations – Best-in-Class change-over operations – Full integration of “CAPA” strategies – Value Stream alignment of Quality processes • Deliver customer service that exceeds expectations – Full integr
Slide 97: Global Supply Chain/Operations Focus
Global Supply Chain/Operations Focus • Continued focus on direct Materials – Global Procurement expansion – API Integration of knowledge • Production Network Optimization – Facility manufacturing integration – Leverage global network capacity and capability – Increased packaging flexibility • Labor/
Slide 98: Global Supply Chain/Operations Focus
Global Supply Chain/Operations Focus • Inventory/working capital reduction – Increased supplier integration – Lean-Sigma process expansion – increased velocity – Forecasting/demand planning processes – Strategic allocation to maximize ROIC 98 Quality, Affordable Healthcare Products
Slide 99: Summary – Global Capabilities
SUMMARY – Global Capabilities Quality is our Highest Priority Customer Service Low Cost Provider and Supply Integration New Product/Life Cycle Management People = Supply Chain Value 99 Quality, Affordable Healthcare Products
Slide 100: We are ready!
New Business Environment “Competition in the next century will not be among companies… … it will be among supply chains” - Fortune Magazine We are ready! 100 Quality, Affordable Healthcare Products
Slide 101: Global Finance
Global Finance Judy Brown, Executive VP and CFO Quality, Affordable Healthcare Products
Slide 102: Performance vs. Internal Goals
Performance vs. Internal Goals Legend: At or above goal - from Continuing Operations Below goal $ in millions Perrigo Long-Term Financial Goals 3 Year FY07 Actual FY08 Actual FY09 Actual Status Over any rolling 3 year period: CAGR Revenue: + 6 – 8 % $ 1,368 $ 1,730 $ 2,007 16% 1 EPS : + 10 – 12 % $
Slide 103: Revenue Performance
Revenue Performance -from Continuing Operations • Top line growth fueled by $2,400 both organic and inorganic = 19% activities AG R $2,007 $2,000 C e nue $1,730 • Four year organic CAGR of Rev in USD millions 09 - 20 $1,600 20 05 16% $1,368 $1,294 • Sales base diversification $1,200 $1,007 continues
Slide 104: Perrigo GM% and OI% Performance
Perrigo GM% and OI% Performance – from Continuing Operations • Margin expansion led by $500M of cumulative new products over the 35% 30.9% 29.9% last 3 years 30% 27.2% • New product launches 25% offset by loss of Rx non- 20% product revenue during 13.3% FY’08 & FY’09 15% 12.5% 8.3% • Operating margi
Slide 105: Distribution, Selling, General & Administration Expenses
Distribution, Selling, General & Administration Expenses – from Continuing Operations $270 18% • Lowered DSG&A as a $255 % of sales despite four $246 17% $250 acquisitions in FY’09 16% $230 • Strong internal cost 15% controls have led to 14.0% 14.2% leveraged DSG&A % to Sales $210 Millions 14% spend
Slide 106: Operating Cash Flow and EBITDA
Operating Cash Flow and EBITDA – Reported Basis – includes Discontinued Operations $350 • Cash flow strong and growing despite weak $301 economy $300 • FY’09 operating cash $267 $258 flow was 148% of net $244 income $250 • FY’10 projected cash $200 flow from operations of $163 between $220 million a
Slide 107: Cash Flow Management – Working Capital Turns Improvements
Cash Flow Management – Working Capital Turns Improvements • 28% improvement in total 5 working capital turns over the past three years 4 4.6 despite increased complexity of product 3.8 portfolio and supply chain 3 3.6 • DSO improved 12% from 2 64 days in FY07 to 57 days in FY09 1 • DPO improved 25%
Slide 108: A Journey of Continuous Improvement
A Journey of Continuous Improvement • Acquisition of Qualis • Acquisition of • Acquisition of JB • Investment in API Expanding Our Reach • Exit of Leiner from Galpharm & Brunel Labs India plant OTC space • Collaboration with • Acquisition of Diba • Expand Indian R&D • Rx acquisition of Cobrek (Mexic
Slide 109: Future Planning Horizons
Future Planning Horizons - Organic Growth Only $ in millions FY'10 Guidance FY '11 - FY '13 YOY improvements Organic Growth Perrigo Long-Term Financial Goals (as of Aug 19) (3 year CAGR) Revenue Growth 4 - 6% 5–8% EPS Growth 7 – 13 % 10 – 16 % Operating Cash Flow - annual target > 125% NI > 125% NI
Slide 110: Return on Invested Capital (ROIC)
Return on Invested Capital (ROIC) - from Continuing Operations 60 50 • Foundational basis for 40 Rx management decision making ROIC PDI • Critical tool used to evaluate % 30 20 CHC business unit/operating location API 10 performance, prioritize CAPEX 0 CP and R&D projects 0 10 20 30 40 50 60 70 Oper
Slide 111: Debt Profile
Debt Profile Maturities Debt to Capital $150 $125 $125 36% $515 35% $492 $75 27% $278 $17 $934 $922 73% $755 64% 65% FY10 FY12 FY13 FY15 FY18 Total debt* = $492 mil FY07 FY08 FY09 Total Debt* Shareholders’ Equity FY09 Rate Structure Floating Leverage 31% 25% FY07 FY08 FY09. Fixed EBITDA $163 $267 $3
Slide 112: Liquidity Mobilization Potential
Liquidity Mobilization Potential $1,035 Debt Capacity at 6/27/09* • Based on EBITDA at 6/27/09, Perrigo could ~$220 access ~$550 of add’l capacity additional debt* • Pretax global cash raises $325 the potential dry powder immediately $200 Undrawn Revolver available to the ~$800-850 range $125 Undraw
Slide 113: Uses of Cash
Uses of Cash • Continued reinvestment in the businesses – CAPEX projected to be between $55 -70 million in FY’10 – Expected future normalized CAPEX = Depreciation Expense ≈ $65 million • Annual dividend • Share repurchase – Current 10b5-1 plan offsets dilution factors – Have reentered the market, pu
Slide 114: Solidly Positioned for the Future
Solidly Positioned for the Future • Strong, well capitalized balance sheet • ROIC focus embedded into DNA of organization • Well controlled cost structure • Accountability for performance against commitments • Increased use of global shared services to optimize controls, drive standardization and fu
Slide 115: Questions
Questions Quality, Affordable Healthcare Products
Slide 116: Appendix
Appendix Quality, Affordable Healthcare Products
Slide 117: Reconciliation of Non-GAAP Measures – Table I
Table I PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES Appendix (in thousands, except per share amounts) (unaudited) Fiscal Year* 2009 2008 2007 2006 Net sales $ 2,006,862 $ 1,729,921 $ 1,368,351 $ 1,294,160 Reported gross profit $ 595,997 $ 517,728 $ 367,184 $ 369,375 Inventory step-ups 2,923
Slide 118: Reconciliation of Non-GAAP Measures – Table I, continued
Table I, continued PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited) Appendix Fiscal Year* 2009 2008 2007 2006 Reported income from continuing operations $ 141,098 $ 140,197 $ 72,834 $ 68,462 Inventory step-up - Unico (6) 645 - - - Inventory ste
Slide 119: Reconciliation of Non-GAAP Measures – Table II
Table II PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (in thousands, except per share amounts) (unaudited) Appendix 2009 Fiscal Year 2008 2007 2006 Reported net income $ 144,049 $ 135,773 $ 73,797 $ 71,400 Inventory step-up - Unico (6) 645 - - - Inventory step-up - Diba (2) 1,082 - - - Invent
Slide 120: Reconciliation of Non-GAAP Measures – Table III
Appendix Table III PERRIGO COMPANY RECONCILIATION OF NON-GAAP MEASURES (dollars in thousands) (unaudited) Fiscal Year 2009 2008 2007 Net cash from operating activities $ 258,345 $ 244,315 $ 127,441 Changes in operating assets and liabilities, net of asset and business acquisitions (9,373) (23,543) 1