Bausch Health Companies Inc. · TSX:BHC
Bausch Health Companies — Valeant Pharmaceuticals International — Investor Day (June 2012)
112 slides from Bausch Health Companies's investor day presentation, Jun 21, 2012
Slide 1: Valeant Pharmaceuticals International, Inc. Investor Day
Exhibit 99.1 Valeant Pharmaceuticals International, Inc. Investor Day June 21, 2012
Slide 2: Valeant's Investor Day Agenda
Valeant’s Investor Day Agenda Today’s Schedule Opening Remarks - Mike Pearson Financial Discussion – Howard Schiller Business Overview – Rajiv De Silva Emerging Markets Europe – Pavel Mirovsky South East Asia/South Africa – Andrew Howden Specialty Pharmaceuticals U.S. Dermatology – Dave Mullarkey Gl
Slide 3: Introductions: Panel Participants
Introductions Panel Participants John Connolly – GM Russia/CIS/Adriatic Region Julie Kang – GM Podiatry Alissa Hsu Lynch – GM U.S. Consumer Products Carlos Picosse – GM Brazil Javier Rovalo – Chairman – Latin America Tom Schlader – President, Canada Dan Spira – GM Australia Janet Vergis – CEO, OraPh
Slide 4: Introductions: Guests In Attendance
Introductions Guests In Attendance Ronald Farmer – Board Member Robert Power – Board Member Norma Provencio – Board Member Katharine Stevenson – Board Member Robert Chai-Onn – General Counsel Brian Stolz – Chief Human Capital Officer Tanya Carro – Corporate Controller Grace Lin – Treasurer 3
Slide 5: Important Information
Important Information Forward-looking Statements This presentation may contain forward-looking statements, including, but not limited to, statements regarding our financial guidance (including quarterly trends) with respect to revenues, non-GAAP cash earnings per share and adjusted cash flow from op
Slide 6: Opening Remarks
Opening Remarks J. Michael Pearson Chairman and Chief Executive Officer Investor Day June 21, 2012
Slide 7: Agenda
Agenda Overview Our Strategic Principles How they have changed over the past 4 years Our people and our compensation Update on our OraPharma acquisition Objectives for today 6
Slide 8: Valeant Pharmaceuticals Overview
Valeant Pharmaceuticals Overview Focused, multinational specialty pharma company $2.4B in 2011 revenue and ~7,000 employees Headquartered in Montreal, Canada (NYSE/TSX: VRX) International footprint Specialty Pharma (U.S., Canada, Australia, New Zealand) Branded Generics – Central and Eastern Europe;
Slide 9: Establishing a Track Record of Performance
Establishing a Track Record of Performance ($ in millions) Revenue Free Cash Flow $995 $866 $728 $1,532 $1,651 $520 $1,414 $2,755 $377 $820 $2,463 $366 $843 $757 $1,928 $353 $306 $182 $690 $657 $830 $184 $167 $71 FY 2007A FY 2008A FY 2009A FY 2010A FY 2011A LTM 31- FY 2007A FY 2008A FY 2009A FY 2010
Slide 10: Revenue Mix
Revenue Mix Total Revenues 2010 Total Revenues 2012 Fcst 21% 32% 3% US US Canada Canada 50% Australia Australia 11% 65% Emerging Markets Emerging Markets 7% 11% Product Revenues 2010 Product Revenues 2012 Fcst 9% 14% 20% Rx Rx Branded Generics Branded Generics 27% OTC 59% OTC 71% 9
Slide 11: Our Strategic Principles
Our Strategic Principles 1. Only compete in attractive market segments • Geographies • Payors • Competition • Therapeutic areas • Product forms 2. Highly disciplined business development driven • Undermanaged company assets growth strategy • In line vs. pipeline • Cash on cash returns >20% • Don’t b
Slide 12: How our Strategy has Changed
How our Strategy has Changed (Lessons learned) Avoid primary care tail products in the U.S. (Wellbutrin) Greater discipline on integration costs Bias to private company deals Bias towards business development vs. share repurchase Bias towards asset vs. company acquisitions Cash flow from operations
Slide 13: Our People and Our Compensation
Our People and Our Compensation Growth strategy requires continual development / upgrading of talent Culture / motivated workforce is critical to excellent execution Compensation system geared to rewarding long term shareholder value 12
Slide 14: Notable New Additions To Our Team in Last 12 Months
Notable New Additions To Our Team in Last 12 Months Howard Schiller (CFO) – Goldman Pavel Mirovsky (President Valeant Europe) – CEO Polpharma Andrew Howden (CEO iNova) – AstraZeneca Brian Stolz (Chief Human Capital Officer) – GhSmart Tage Ramakrishna (Chief Medical Officer) – Progenics Pharmaceutica
Slide 15: 2012 Survey Results - Focus on Our People
2012 Survey Results - Focus on Our People People like working here – 92% agree or strongly agree that they are satisfied with their jobs People believe in our continued growth – 95% agree or strongly agree that Valeant is on the right track for continued growth 90% of our employees would recommend V
Slide 16: Compensation for Senior Leadership
Compensation for Senior Leadership Annual Comp Target 50% of benchmark for base salary Target top quartile with bonus Revenue – 25% (zero if Cash EPS not met) Cash EPS – 75% Equity Comp 3 year front loaded equity >15% TRS to vest Up to 2-3 times multiple - based on 30-45% TRS 15
Slide 17: OraPharma, a Valeant Company
OraPharma, a Valeant Company Market Characteristics Business Overview U.S. dental market (products) - Founded in 1996 ~$17B Became subsidiary of J&J in 2002 ~$ 5B Periodontal Market Acquired by Water Street Healthcare Partners in 2010 Fragmented with no big pharma Most recognized name in Dental pres
Slide 18: Why OraPharma?
Why OraPharma? Strategic Criteria Financial Criteria Niche Market Base Case Avoid big pharma 36% tax rate Cash pay / no government With cost synergies reimbursement U.S. only Durable assets IRR > 20% Upside Case Ability to expand into other Lower tax rate geographic markets Promotion of Valeant prod
Slide 19: Today's Meeting Objectives
Today’s Meeting Objectives 1. Addressing Investors’ Financial Concerns Our progress on building a cash flow generating machine Demystifying organic growth calculations Clarifying normal rhythm of our earnings and how annual guidance should be anticipated on a quarterly basis Providing insight into r
Slide 20: Today's Meeting Objectives (Continued)
Today’s Meeting Objectives (Continued) 2. Address Investor Questions Around Our Emerging Markets Business Underlying performance in Europe Our strategy in South East Asia and South Africa 3. Address Questions Around Underlying U.S. Dermatology Performance 4. Update On How We Are Spending $100M/year
Slide 21: What I Am Excited About
What I Am Excited About Overall performance of the business continues to be strong – both operationally and financially In the last year, we have become a major player in two of our key segments – Central and Eastern Europe and dermatology We have added 8 new growth platforms (South East Asia, South
Slide 22: Opening Remarks
Opening Remarks J. Michael Pearson Chairman and Chief Executive Officer Investor Day June 21, 2012
Slide 23: Financial Discussion
Financial Discussion Howard Schiller Executive Vice President, Chief Financial Officer Investor Day June 21, 2012
Slide 24: Topics to Cover
Topics to Cover Financial Performance Established track record of financial performance We have a growing, profitable business model Organic Growth Both the base business and acquired businesses are growing, although there will be quarter - quarter fluctuations in growth rate March 31st , 2012 LTM b
Slide 25: Growing, Profitable Business Model
Growing, Profitable Business Model Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Reported Revenues ($M) $452 $494 $467 $515 $565 $609 $601 $688 $856 Sale Cloderm/5FU/IDP111 -$36 -$66 Milestones -$40 Revenues excl. certain one-time items $452 $494 $467 $515 $529 $569 $601 $688 $790 Revenue Gr
Slide 26: What Is Management Focused On?
What Is Management Focused On? Integration and operational excellence Organic Growth Synergy realization Gross margin improvement Working capital efficiencies Talent Development Developing a bench; next generation leaders Business Development Deployment of capital is most important decision Maintain
Slide 27: Organic Growth
Organic Growth Q1, 2012 LTM SSS Organic Growth = 8% 14% 12% 13% 10% 10% 7% 7% 6% 4% 4% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 As Reported Same Store Sales * Same Store Sales only include acquisitions in their first full quarter of comparison 5
Slide 28: Organic Growth
Organic Growth Q1, 2012 LTM SSS Organic Growth = 8% 24% 23% 15% 14% 14% 12% 13% 12% 10% 10% 7% 7% 6% 4% 4% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 As Reported Same Store Sales Same Store Sales w/o Neuro & Other * Same Store Sales only include acquisitions in their first full quarter of comparison 6
Slide 29: Progress on 2012 Synergy Program
Progress on 2012 Synergy Program Run rate Run rate expected by Year- expected by mid- end year $230+ million* Run Rate May 3, 2012 $200 million Run Rate Feb 23, 2012 $165 million $135 million * Includes acquisitions announced and closed in 2012 7
Slide 30: Synergy Capture
Synergy Capture Timing of Synergy Scenario Recent Examples Synergy Capture Business is folded into Valeant Ortho, Dermik, University Medical, Eyetech, Immediate infrastructure in first Quarter Afexa, Atlantis Business is "bolt-on" to Valeant Europe (PharmaSwiss, Sanitas), Brazil Day one and integrat
Slide 31: Synergy Capture: Ortho/Dermik Example
Synergy Capture Ortho/Dermik Example Total Dermik Total Pre- Total Post VRX Derm & Ortho Synergy Synergy Headcount 213 472 685 499 OpEx $84.5 M $151.3 M $235.8 M $125.1 M Total synergies of $110.7M achieved in Q1, 2012 9
Slide 32: Business Development
Business Development Characteristics of our acquisitions Markets with attractive growth rates Durability of earnings We don’t bet on science Rigorous Financial Modeling Target of 20+% IRR at statutory tax rates Target cash payback within 5 to 6 year range Acquisition and restructuring costs are mode
Slide 33: Summary of 2012 YTD BD Efforts
Summary of 2012 YTD BD Efforts Large number of smaller deals Low risk, high IRR deals In aggregate, added approximately $400 million or more than 10% to run rate revenue Decentralized structure allows for faster, more efficient integration Deals spread among regions and businesses 4 in U.S. (none in
Slide 34: Restructuring Costs & Synergies
Restructuring Costs & Synergies (Includes deals through Q1, 2012) Restructuring, Integration Restructuring, Integration & Projected & Acquisition Related Acquisition Related Costs Annualized Costs % of Projected $M Purchase Price (Q4 10 - Q1 12) Synergies Annualized Synergies Biovail N/A 204.1 350.0
Slide 35: Our Approach to Guidance
Our Approach to Guidance Provide revenue, Cash EPS, and adjusted cash flow from operations on an annual basis Updates to our annual guidance are provided quarterly We don’t included future deal forecasts – we only include BD that is closed or announced We don’t include the effect of potential change
Slide 36: Changes to Our Quarterly Earnings Presentation
Changes to Our Quarterly Earnings Presentation Earnings call moving to 8 a.m. ET Gain/loss from asset sales: GAAP EPS – Will be moved to Other Income Cash EPS – Will be excluded FX gain/losses will continue to be included, but if significant, Cash EPS will be shown with and without Cash EPS will be
Slide 37: Annual Financial Guidance for 2012
Annual Financial Guidance for 2012 “One-timers” Included: As of June 21, 2012 $66M – Sale of 5FU/IDP111 (Q1) Revenue = $3.4 - $3.6 billion $45M – Retigabine milestone (Q2) $111M $0.15 – Sale of 5FU/IDP111 (Q1) Cash EPS = $4.45 - $4.70 $0.08 – Fx Gain (Q1) $0.14 – Retigabine milestone (Q2) $0.37 > $1
Slide 38: Cash EPS Trends
Cash EPS Trends (excluding certain “one-timers” and acquisitions) 40% 2011 Actuals 33% 31% 25%27% 26% 27% 30% 23%21% 24% 23% 2012 Budget 21% 19% 20% 2012 10% Consensus Estimate 0% Q1 Q2 Q3 Q4 80% 2011 Actuals 56% 60% 53% 60% 47% 2012 Budget 44% 40% 40% $1.86 $2.13 2012 * ($3.99) 20% Consensus Estima
Slide 39: Cash EPS
Cash EPS (excluding certain “one-timers”) $1.28 $1.10 $1.03 $1.03 $0.96 $0.96 $0.91 $0.90 $0.88 $0.80 Q1 Q2 Q3 Q4 FY Consensus Estimate at Avg 2011A / 2012B Phasing Q1, 2012 Actuals Consensus Estimate, March 22nd 2012 Consensus Estimate, Current *All figures above exclude the GSK milestone nd **FY c
Slide 40: Q2 Currency Impact
Q2 Currency Impact 10% AUD 5% BRL CAD 0% EUR -5% MXN PLN -10% RUB -15% RSD ZAR -20% 11/03/11 Q1 Avg April 2012 May 2012 6/7/2012 Spot Avg Avg Spot Based on internal forecasts as of Q1’12 earnings call, declining currencies are expected to have a negative Q2 impact of $0.03 Cash EPS and $15M revenue
Slide 41: Q2 Currency Impact 2012 vs. 2011
Q2 Currency Impact 2012 vs. 2011 “Year over Year Declining Rates” AUD BRL CAD EUR MXN PLN RUB RSD ZAR 0% -5% -10% -15% -20% -25% -30% Compared to Q2’11 exchange rates, declining currencies have a negative Q2’12 impact of $55 - $60 million revenue and $0.05 - $0.06 Cash EPS 19
Slide 42: Adjusted (Non-GAAP) Cash Flow from Operations
Adjusted (Non-GAAP) Cash Flow from Operations GAAP Cash Flow from Operations, adjusted for: Cash Payments Relating to Restructuring/Integration/Acquisition costs, Legal Settlements, and IPR&D payments One time working capital changes relating to business development activity (where A/R and Inventory
Slide 43: Q1 Restructuring, Integration and Acquisition Related Costs
Q1 Restructuring, Integration and Acquisition Related Costs Q1 Amount Expense Type Paid (millions) Comments Facility Closure Costs 22.6 Relatesto closureof Mississauga facility. $12.4 M wasaccruedfor in previous quarters. Acquisition Related Costs 19.8 Includes payments for legal fees and advisory s
Slide 44: Topics to Cover
Topics to Cover Financial Performance Established track record of financial performance We have a growing, profitable business model Organic Growth Both the base business and acquired businesses are growing, although there will be quarter - quarter fluctuations March 31st , 2012 LTM base business or
Slide 45: Financial Discussion
Financial Discussion Howard Schiller Executive Vice President, Chief Financial Officer Investor Day June 21, 2012
Slide 46: Questions?
Questions? J. Michael Pearson Howard Schiller
Slide 47: Business Overview
Business Overview Rajiv De Silva President, Valeant Pharmaceuticals International, Inc. Chief Operating Officer, Specialty Pharmaceuticals Investor Day June 21, 2012
Slide 48: Executive Summary
Executive Summary Pharmaceutical market gives Valeant a large canvas upon which to implement a unique strategy $700B+ IMS reported, but likely $1-2 trillion when adjacent categories and unreported sales are included Highly fragmented, with a substantial component in private companies Fundamental shi
Slide 49: Future Growth Will be Most Attractive in Emerging Markets
Future Growth Will be Most Attractive in Above median Below median Emerging Markets Projected pharma GDP growth Projected GDP spend growth 1 1 1 (2008-2011) growth (2012-16) (2012-2016, CAGR) Asia (ex Japan) 7% 7% 12% Latin America 3% 4% 11% Africa 2% 4% 10% Central & Eastern Europe 1% 3% 8% US & Ca
Slide 50: Investment Focus
Investment Focus Niche markets that fit strategy Dermatology Podiatry U.S. Ophthalmology Dentistry Orphan Avoid primary care Broad presence given legacy Biovail / Valeant capabilities Canada Aggressive in-licensing to leverage infrastructure Build Consumer business Broad presence given legacy iNova
Slide 51: Valeant Has Grown by Focusing on High Growth Countries / Niche Markets
Valeant Has Grown by Focusing on High Growth Countries / Niche Markets Valeant stock price* (Adjusted Close – $USD); selected deals **Adjusted for Valeant/Biovail merger. Line denotes share price plus the special dividend paid to Legacy Valeant shareholders related to the Biovail merger. 4
Slide 52: Business Unit Overview
Business Unit Overview U.S. Canada / Australia Emerging Markets Central / Latin Asia / Eastern America Africa Europe Rx Dermatology Canada Poland Mexico South East Consumer Australia Russia / CIS Brazil Asia Aesthetics Serbia South Africa Podiatry Balkans / Other Dentistry Ophthalmology Neurology /
Slide 53: Case Study: U.S. Podiatry PEDiNOL, A Valeant Company
Case Study: U.S. Podiatry PEDiNOL, A Valeant Company Market Characteristics Business Overview ~$1B U.S. market (2011) Founded in 1925 Fragmented with no big pharma ~$50M* in sales presence Most recognized name in 3-5% growth projected podiatry: PEDiNOL ~25 person highly respected 17,000+ podiatrists
Slide 54: Latin America Overview
Latin America Overview Mexico Population: ~115M Healthcare spend: $605 / Capita / Year Pharmaceutical market: ~$20B Cash pay: 75% of total spend Brazil Population: ~195 M Healthcare spend: $990 / Capita / Year Pharmaceutical market: ~$25B Cash pay: 70% of total spend 7
Slide 55: Valeant Brazil—Overview
Valeant Brazil—Overview Market Characteristics Business Overview Market size ~ $25B 2012 revenues of ~$150M High growth outlook ~10-12% Legacy Valeant Branded Gx Well regulated environment OTC Affluent segment of population Dermatology with high disposable income Acquired Branded Gx High proportion
Slide 56: Valeant Mexico—Overview
Valeant Mexico—Overview Market Characteristics Business Overview Market size ~$20B 2012 revenues of ~$210M Strong growth outlook ~7% Legacy Valeant Government reimbursement Branded Generics broadly in place, but largely a OTC cash pay market Bedoyecta – Vitamin B High proportion of out-of- Tecnofarm
Slide 57: Further Opportunities for Expansion Exist in Latin America
Further Opportunities for Expansion Exist in Latin America Valeant market Valeant not present Expansion Opportunity Projected Rx/OTC Growth CAGR (2012-16) 15 Paraguay Venezuela Argentina 10 Brazil Ecuador Nicaragua Bolivia Colombia Mexico Peru Chile 5 El Salvador Guatemala Costa Rica Honduras 0 0 1
Slide 58: Business Overview
Business Overview Rajiv De Silva President, Valeant Pharmaceuticals International, Inc. Chief Operating Officer, Specialty Pharmaceuticals Investor Day June 21, 2012
Slide 59: Emerging Markets – Central and Eastern Europe
Emerging Markets – Central and Eastern Europe Pavel Mirovsky President, Valeant Europe Investor Day June 21, 2012
Slide 60: Geographic Footprint CEE, Russia, CIS
Geographic Footprint CEE, Russia, CIS Population = 340 million people Pharmaceutical Market = $31B Territory of 8,567,284 square miles 2
Slide 61: PharmaSwiss and Sanitas Acquisitions Have Created a Broad Eastern European Footprint
PharmaSwiss and Sanitas Acquisitions Have Created a Broad Eastern European Footprint Valeant market Valeant not present Expansion Opportunity Projected Rx/OTC Growth CAGR (2012-2016) 16 14 Kazakhstan 12 10 Ukraine Belarus Romania Russia 8 Bulgaria Turkey 6 Serbia Poland Latvia 4 Slovenia Czech Repub
Slide 62: Business Strategy
Business Strategy Business model consistent with Valeant philosophy Durable branded generic business Rich pipeline, rapidly growing number of new launches Operational and market access excellence Aggressive, but disciplined, BD and M&A activities Execute synergies – on time and in full Out-pace both
Slide 63: Where We Rank in The CEE Market
Where We Rank in The CEE Market Rank Company Market Share 1. Novartis 7.9% 2. Sanofi-Aventis 7.0% 3. Roche 4.7% 4. Teva 3.8% 5. GSK 3.7% 6. Servier 3.7% 7. Pfizer 3.3% 8. Bayer 2.9% 9. KRKA 2.7% 10. Abbott 2.7% …….. 15. Valeant Pharmaceuticals 2% 5
Slide 64: Business Summary
Business Summary Region Revenues # Sales Reps % Govt (2012e) Reimbursement Poland ~$200 M 325 ~30% Serbia ~$100 M 90 ~45% Russia/CIS/ ~$200 M 525 ~20% Adriatics Central Europe ~$135 M 215 ~40% All Other ~$65 M 0 Partnered Total Valeant ~$700 M 1155 (85%*) ~30% Europe * % of total headcount, excludin
Slide 65: Product Mix - CEE
Product Mix - CEE 2012e OTC, 29% Specialty, 34% Primary, 37% Drivers of Change: Reduced dependence on very competitive cardiovascular segment Significant penetration into dermatology Entry to niche segments as ophthalmology and gastro-enterology Significant growth in oncology driven in Ex-Yugo and B
Slide 66: Poland
Poland The new pharmaceutical law has had a dramatic short term negative impact on Polish market 2012 forecast predicts no growth for retail market first time in 20 years Week 1-10: (18.8%) in value, Week 11-20: ~(4%) Full year expected at zero growth 2011/2012 Valeant one of few companies that cont
Slide 67: Branded Generics Example: 250+ launches per year planned in Central and Eastern Europe
Branded Generics Example: 250+ launches per year planned in Central and Eastern Europe Example Product Indication Market Benzydamine lozenges / Spray Throat inflammation Multiple markets Ketoprofen ER tablets / Spray Inflammatory pain Multiple markets Mometasone / Cream, Solution Skin inflammation M
Slide 68: Business Development Opportunities
Business Development Opportunities Purchasing Dossiers ~$70,000 expense per dossier (on average) Representation business Eisai oncology In-licensing products Ipsen GI, dermatology, oncology Small acquisitions Chemo Iberica’s diabetes drugs in Russia Mid-size acquisitions Gerot Lannach (Russia/CIS) N
Slide 69: 5 Year Aspirations
5 Year Aspirations Become a top 10 pharma in CEE (>5% market share, >$2 B turnover) Focus on Russia, Russia, Russia, Poland, Ukraine, Kazakhstan, explore MENA potential Shift focus to OTC, niche markets (dermatology, ophthalmology) and enter biosimilars Maintain double digit organic growth, coupled
Slide 70: Emerging Markets – Central and Eastern Europe
Emerging Markets – Central and Eastern Europe Pavel Mirovsky President, Valeant Europe Investor Day June 21, 2012
Slide 71: Emerging Markets - South East Asia and South Africa
Emerging Markets - South East Asia and South Africa Andrew Howden CEO, iNova Valeant, South East Asia, South Africa and Australia Investor Day June 21, 2012
Slide 72: Valeant Asia / Africa Pacific Footprint
Valeant Asia / Africa Pacific Footprint Valeant presence Distributor or licensing partner South Korea – A$2.6m, Japan – A$6.7m, China – A$1.0m, 2 Partners 2 Partners 2 Partners Taiwan – A$0.6m, 1 Partner Vietnam – 2 Partners Philippines – A$6.1m, 5 employees + sales outsourced Thailand – A$6.8m, Hon
Slide 73: Our Focus Has Been on High Growth Markets With Opportunities for Future Expansion
Our Focus Has Been on High Growth Markets With Opportunities for Future Expansion Valeant market Valeant partners Expansion Opportunity Projected Rx/OTC Market Growth CAGR (2012-16) 15 Vietnam India China 10 Indonesia Malaysia Hong Kong South Africa 5 Thailand Singapore Philippines South Korea Taiwa
Slide 74: Business Summary - Established and Growing Businesses in Key Asian Markets
Business Summary - Established and Growing Businesses in Key Asian Markets Region # Sales Reps Key Products % Govt Reimbursement Difflam, Duromine, Nuelin, <10% Malaysia 17 DuroTuss <30% Thailand 29 Norgesic, Nuelin 38 0% Philippines Difflam, Norgesic 0% Singapore 5 Difflam, DuroTuss, Duromine 4 Dif
Slide 75: Valeant Growth Exceeds Market Growth in Asian Markets
Valeant Growth Exceeds Market Growth in Asian Markets Valeant YTD MAT Market YTD MAT Country Growth Growth Q1’12 Q1’12 Thailand +24% +3% Philippines +23% +6% Malaysia +24% +12% Singapore +8% +3% Hong Kong +15% +10% Source: IMS 5
Slide 76: Branded Generics Showing Strong Growth Across Asian Market
Branded Generics Showing Strong Growth Across Asian Market Sales (USDm) APAC Sales breakdown by originator 80,000 CAGR Why Brand Matters 72,211 • In mature markets 63,787 unbranded generics 19,173 Unbranded Gx 21% represent fastest 60,000 54,767 15,958 growing segment 46,274 12,721 • Brand is associ
Slide 77: Consumers in Asia Pacific Show a High Propensity to Self-medicate
Consumers in Asia Pacific Show a High Propensity to Self-medicate – Strong OTC Segments Asia Pac OTC Market Value CAGR Value share, percent (2007 - 2011), % Vitamins & Minerals 15.8 ~4 Non-narcotic Analg. 7.4 ~5 Dietetics 6.3 ~6 Cold Preps 5.1 ~4 Chinese Medicines 4.4 ~20 Allergy 3.3 ~6 Expectorants
Slide 78: Product Focus Remains With Weight Control, Dermatology, Cough, Throat and Pain Products
Product Focus Remains With Weight Control, Dermatology, Cough, Throat and Pain Products 2012e Specialty, 18% OTC, 52% Primary, 30% Drivers of Change: Focus on sales and marketing as a competitive advantage Build key account management Difflam, Durotuss and Duromine key growth drivers (throat, cough
Slide 79: Key Market / Environmental Factors South Africa
Key Market / Environmental Factors South Africa High growth market - +5-10% Consistent market growth through volume and price increases Established brands, growing pharmacy segment with strong OTC brands Introduction of the National Health Insurance (NHI) to enable broader access to healthcare and m
Slide 80: Valeant Is One Of The Fastest Growing Pharmaceutical Businesses in South Africa
Valeant Is One Of The Fastest Growing Pharmaceutical Businesses in South Africa 40 Valeant growth evolution vs. leading South African companies International MNCs Average MAT Q1 2011 PPG= 6.6% S.Africa MNCs 30 LUPIN AZ CIPLA Valeant 25 LILLY MERCK KGAA 20 BI Sanofi SA ASPEN ROCHE J&J 15 ABBOTT J&J N
Slide 81: Five-Year Aspirations
Five-Year Aspirations Rank in top 10 in key markets – South Africa, Thailand, Philippines, Indonesia, Malaysia Target of $500m sales Enter new markets and establish brands in Indonesia and Vietnam Aggressive acquisition plans to speed growth Launch global Valeant brands in Asia and Africa – CeraVe,
Slide 82: Emerging Markets - South East Asia and South Africa
Emerging Markets - South East Asia and South Africa Andrew Howden CEO, iNova Valeant, South East Asia, South Africa and Australia Investor Day June 21, 2012
Slide 83: Questions?
Questions? Panel: Pavel Mirovsky Andrew Howden Javier Rovalo Carlos Picosse John Connolly
Slide 84: U.S. Rx Dermatology
U.S. Rx Dermatology David Mullarkey Senior Vice President & General Manager, Valeant Dermatology Investor Day June 21, 2012
Slide 85: U.S. Rx Dermatology Business Overview
U.S. Rx Dermatology Business Overview Top tier U.S. Dermatology business – Top 3 in U.S. – 5 year sales growth CAGR of ~59% -- fastest growing top Derm company Focused on three key segments – Acne – Dermatitis – Anti-virals Strong Pipeline/Expansion Opportunities – Efinaconazole (IDP-108) – Potentia
Slide 86: U.S. Dermatology Market Dynamics
U.S. Dermatology Market Dynamics General – Large (~$9B), but low growth market – Low big Pharma presence – Fragmented competition/many small players Prescribers – Relatively focused target list – Relationship-oriented/industry-friendly – Growing influence of PA’s/nurses Coverage – Relatively low gov
Slide 87: Valeant Is Now Top Tier Rx Dermatology Player
Valeant Is Now Top Tier Rx Dermatology Player 2008 - Top 15 (Based on Gross Sales) 2011 - Top 15 Galderma Medicis* GSK (Stiefel) Galderma Medicis Valeant Nycomed Sandoz/Novartis Graceway GSK (Stiefel) Warner Chilcott Warner Chilcott Astellas Ortho derm Allergan Dermik Leo Valeant #3 Allergan Astella
Slide 88: Valeant Segment Strategy
Valeant Segment Strategy Market/Environment Strategy – Co-pay programs mandatory – Convert BenzaClin to – Increased cost of access within Acanya Acne managed care plans – Focus on ~$3.2B – Continued growth of PA/NP Acanya/RAM/Atralin influence lifecycle management – Continued increase in non-Rx – Ma
Slide 89: Key Current Products – Focus of Growth
Key Current Products – Focus of Growth 6
Slide 90: Valeant U.S. Dermatology Growth
Valeant U.S. Dermatology Growth ~67% CAGR Note: Includes entire Valeant U.S. Dermatology segment 7
Slide 91: Key Changes in Rx Dermatology Business Over Time
Key Changes in Rx Dermatology Business Over Time 2008 2012 8
Slide 92: Maintaining Growth During Acquisitions in U.S. Dermatology
Maintaining Growth During Acquisitions in U.S. Dermatology 2012 vs. 2011 Volume Growth 44% 40% 40% 38% 37% 33% 29% 30% MAT May 20% 18% 2012 9% 10% 3% 3% 0% VRX Retinoid Acanya Atralin Zovirax/Xerese* CeraVe** Franchise *Zovirax/Xerese volume in TRx grams; **CeraVe scan volume growth Source: Wolters
Slide 93: Promotional Efforts Turning the Elidel Growth Curve
Promotional Efforts Turning the Elidel Growth Curve Elidel YOY TRx Growth All Prescribers Elidel YOY TRx Growth Dermatologists Source: Wolters Kluwer Health May 2012 10
Slide 94: Key Priorities for 2012
Key Priorities for 2012 Successfully integrate Ortho, Dermik and Coria and create high- performing field sales organization optimizing multiple brands Create growth brands out of Elidel and Xerese Grow retinoid portfolio of Retin-A-Micro/Atralin Convert BenzaClin business prior to patent expiry “Int
Slide 95: U.S. Rx Dermatology
U.S. Rx Dermatology David Mullarkey Senior Vice President & General Manager, Valeant Dermatology Investor Day June 21, 2012
Slide 96: R&D Update
R&D Update Susan Hall, Ph.D Senior Vice President, Global R&D Investor Day June 21, 2012
Slide 97: R&D Operating Principles
R&D Operating Principles Lower risk / niche Diverse portfolio opportunities Major focus on lifecycle management Lean operating Extensive topicals model expertise driver of supplemented with internal innovation partnerships Leverage R&D globally 1
Slide 98: R&D – Excellent Productivity Track Record
R&D – Excellent Productivity Track Record As measured by: R&D spend Disciplined R&D budget and 2010 2011 2012e associated FTEs relative to revenue (proposed) U.S. $36.5 M $57.4 M $70 - $85 M Successful rapid integration of products that are acquired Non U.S. $19.1 M $8.3 M $20 - $25 M Executing on n
Slide 99: Diverse Portfolio Driving The Business
Diverse Portfolio Driving The Business Examples Targeted NCE development efinaconazole (IDP-108) Novel therapies utilizing currently approved products IDP-118 Potiga XR New formulations and delivery technologies Acanya, Atralin, Elidel, New indications / market expansions opportunities Zovirax lifec
Slide 100: Efinaconazole (IDP-108) / Onychomycosis (1/2)
Efinaconazole (IDP-108) / Onychomycosis (1/2) Onychomycosis is a progressive fungal infection of the nail bed Caused mostly by dermatophyte fungi, but also yeasts or molds Represents 50% of all nail disorders & frequently involves several nails Current treatment challenges are many Need for medicati
Slide 101: Efinaconazole (IDP-108) / Onychomycosis (2/2)
Efinaconazole (IDP-108) / Onychomycosis (2/2) Submission to FDA 3Q 2012; other countries planned - Canada, Brazil, Mexico, Central Europe Valeant has rights to North & South America and EU countries W. Europe submission requires evaluation vs. an already approved product – active partnering discussi
Slide 102: CeraVe Premium Line of Skincare Products
CeraVe ® Premium Line of Skincare Products Designed to restore and repair the skin barrier for healthier skin Innovation-driven approach: Meeting patient / consumer needs with superior formulations designed to restore and repair the skin barrier All new products have driven incremental sales due to
Slide 103: Brazil: Regederm
Brazil Regederm®: Treatment & healing of wounds Launched in Brazil, April 2012 Prescription product Indicated for the acceleration of wound healing and tissue regeneration properties Gel cream formulation – consists of bioactive protein fractions of latex serum derived from the rubber tree Mechanism
Slide 104: R&D Update
R&D Update Susan Hall, Ph.D Senior Vice President, Global R&D Investor Day June 21, 2012
Slide 105: Questions?
Questions? Panel: Dave Mullarkey Alissa Hsu Lynch Tom Schlader Susan Hall Ryan Weldon Dan Spira Julie Kang
Slide 106: Appendix
Appendix VALEANT Pharmaceusieals intarnatianal, Ine
Slide 107: GAAP EPS vs. Cash EPS
GAAP EPS vs. Cash EPS Adjustments: Non-Cash Items Amortization Intangible Assets Deferred Financing Costs Debt Discounts Inventory Step Up (Acquisition related) Contingent Consideration Fair Value Adjustment (Acquisition related) Stock Based Compensation Fair Value Step Up (Acquisition related) Defe
Slide 108: Restructuring, Integration and Acquisition Related Costs
Restructuring, Integration and Acquisition Related Costs “Acquisition-related Restructuring and Integration Costs”: Employee severance and/or relocation Contract termination costs Costs to consolidate or close facilities (including manufacturing) Other associated costs: Duplicative labor during tran
Slide 109: Presentation of Non-GAAP Adjustments
Presentation of Non-GAAP Adjustments Alliance Amortization of product Contingent Restructuring, deferred financing assets & Stock-based consideration acquisition- Amortization & costs, debt (Gain) Loss on Inventory pp&e step- compensation fair value related and other Legal other non-cash discounts a
Slide 110: Pro Forma Adjusted Income (Non-GAAP)
Pro Forma Adjusted Income (Non-GAAP) Legacy Biovail Legacy Valeant Combined $M Q1 10 Q2 10 Q3 10 Q1 10 Q2 10 Q3 10 Q1 10 Q2 10 Q3 10 GAAP Net income (loss) from Continuing Operations $ (3.2) $ 34.0 $ (207.9) $ 35.6 $ 32.2 $ (176.0) $ 32.4 $ 66.2 $ (383.9) Non-GAAP adjustments: Inventory step-up - -
Slide 111: Organic Growth Summary
Organic Growth Summary Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 Q1, 2012 LTM (Q1, 2012) CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change Product sales, as reported $570 $418 37% $654 $489 34% $768 $500 54% Acquisitions (add to PY) $67 $120 $211 Exchange -$16 $14 $
Slide 112: Integrating New Acquisitions – Ortho Dermatologics/Dermik
Integrating New Acquisitions – Ortho Dermatologics/Dermik – Introductions/communications – Share integration timelines Day 1 – Announce senior management team – Town hall – company name, cultural introduction. – Transition critical control functions to Valeant (e.g., order-to-cash, contract approval
Valeant Pharmaceuticals International — Investor Day (June 2012) on 6ix