Slide 1: Starting a new growth cycle
Starting a new growth cycle 2011 First quarter results Objectives for 2011 2011-2013 2013 Milan, 6 May 2011
Slide 2: A strategy of growth and geographical expansion
A strategy of growth and geographical expansion • A mid sized pharmaceutical company with a European focus (2800 employees, of which 1400 field force) • R&D in the cardiovascular and urology fields and in treatments for Profile rare diseases • Marketing operations in the main Western European market
Slide 3: 2011 First quarter results
2011 First quarter results 3 & RECORDATI
Slide 4: First quarter 2011 highlights
First quarter 2011 highlights Starting a new growth cycle • Revenue € 197.8 million,, up p 6.4%. • Operating income (EBIT) € 44.3 million or 22.4% of sales, up 2.9%. • Net income € 31.4 million or 15.9% of sales,, up p 4.8%. • Acquisition of Procto‐Glyvenol® for the markets of Central and Eastern Eu
Slide 5: Composition of revenue
Composition of revenue New emerging markets, a significant driver of growth (million Euro) 1Q 2011 1Q 2010 Change % Italy 60.6 55.6 9.1 France 32.6 36.9 (11.6) Germany 16.0 15.5 3.3 Portugal 9.1 8.1 11.7 S i Spain 83 8.3 69 6.9 20 2 20.2 United Kingdom 2.1 2.5 (15.9) Other Western European countries
Slide 6: A growing presence in emerging markets
A growing presence in emerging markets Portugal 4.8% Spain 4.4% UK 1.1% Germany 8.4% Other W. European countries 2.6% Russia, Turkey, other CEE 11.1% France 17.2% Other international sales 18.4% (sales to licensees and exports) Italy 32.0% Data: First quarter 2011 Pharmaceutical revenue € 189.6 m 6
Slide 7: Main product sales
Main product sales Significant growth of new corporate products and orphan drugs (million Euro) 1Q 2011 1Q 2010 Change % Zanidip® (lercanidipine) 35.5 44.2 (19.7) Zanipress® (lercanidipine+enalapril) 8.8 6.4 37.0 Urorec® (silodosin) 38 3.8 ‐ ns n.s. Other corporate products 14.9 13.5 10.6 Orphan dru
Slide 8: A richer product portfolio
A richer product portfolio Zanipress 4.5% Urorec 1.9% Other corporate products 7.5% Zanidip 18.0% Orphan drugs 9 9.1% 1% Pharmaceutical chemicals 4.2% Subsidiaries local product Subsidiaries’ Other revenue 2.7% portfolios 52.1% Entact®/Elopram® 6% (escitalopram/citalopram) ‐ Italy Peptazol® (pantopr
Slide 9: First quarter 2011 results
First quarter 2011 results Back to sales and profit growth (million Euro) 1Q 2011 1Q 2010 Change % Revenue 197.8 185.9 6.4 Gross Profit 130.9 126.2 3.8 as % of revenue 66 2 66.2 67 9 67.9 SG&A Expenses 70.9 65.8 7.9 as % of revenue 35.8 35.4 R&D Expenses 15.6 16.4 (4.9) as % of revenue 7.9 8.8 Other
Slide 10: Financial position and Shareholders' equity
Financial position and Shareholders’ equity A very strong balance sheet (million Euro) 31 Mar 2011 31 Dec 2010 Change Cash and short‐term financial 200 1 200.1 161 7 161.7 38 4 38.4 investments Bank overdrafts and short‐term loans (5.9) (3.5) (2.4) Loans – due within one year (16.0) (16.3) 0.3 Loans
Slide 11: 2011-2013 Business Plan
2011-2013 Business Plan 11 & RECORDATI
Slide 12: Sales development: growth to accelerate from 5% to 8%
Sales development Sales growth to accelerate from 5% to 8% over the 2011‐2013 period From € 728 m in 2010 to € 875 m in 2013 • Key growth drivers: • New corporate products: d Urorec® ® (silodosin) ( l d ) Livazo® (pitavastatin) • New N growing i markets k t • Orphan drug business Based on existing b
Slide 13: Corporate products will increase from 32% to 41% of sales
Sales development Corporate products will increase from 32% to 41% of sales by 2013 9.2% of sales will be generated by orphan drugs in 2013 Livazo 6.8% 6 8% Zanipress 4.4% Zanipress 7.4% Urorec 6.7% Other corporate products 7.5% Zanidip 20.4% Other corporate Orphan p drugs g 8.1% Zanidip 11.5% produ
Slide 14: Sales in Russia, Turkey and other CEE countries
Sales development Sales in Russia, Turkey and other CEE countries will grow by CAGR of 16.5% and account for 13% of sales in 2013 “We expect the pharmerging markets to continue their rapid expansion next year and remain strong sources of growth……” (IMS Senior VP Murray Aitken, Oct 2010) Portugal 5.2
Slide 15: New corporate products: Urorec/Silodyx (silodosin)
New corporate products Urorec®/Silodyx™ (silodosin) • Highly g y selective α1A receptor p antagonist g indicated for the treatment of symptoms associated with benign prostatic hyperplasia 70 (BPH). 59 60 • Fast onset of action. High efficacy. Very good 50 42 cardiovascular safety. milions 40 • LLaun
Slide 16: New corporate products: Livazo/Alipza (pitavastatin)
New corporate products Livazo®/Alipza® (pitavastatin) • Highly effective HMG‐CoA reductase 70 inhibitor indicated for the treatment of 60 60 h hypercholesterolaemia. h l t l i 50 € milions • Low risk of drug‐drug interactions due to 40 30 metabolic pathway. 30 20 • Launched in Spain, further launche
Slide 17: Lercanidipine franchise
Lercanidipine franchise Zanipress® (lercanidipine+enalapril) Zanidip® (lercanidipine) 200 180 • SSales l off Zanidip® Z idi ® tto erode d progressively i l 180 168 162 166 160 over time. 140 • Sales of Zanipress® to grow as promotional 120 ons € milio effort switched from Zanidip® 100 80 • Zanipress
Slide 18: New growing markets: Russia, Ukraine and other C.I.S.
New growing markets Russia, Ukraine and other C.I.S. markets Russia has the largest pharmaceutical market in the CEE region, region forecast to grow at a CAGR of 11.6% in the period 2010‐2014. (Jefferies) • Rusfic in Russia and FIC Médical in the other 50 CAGR 16.7% 44 45 CIS countries to become exc
Slide 19: New growing markets: Turkey
New growing markets T k Turkey Turkey remains one of the most promising pharmaceutical markets in Central and Eastern Europe in the long term. (Research and Markets) Pharmaceutical market CAGR estimated at 10‐13% over the 2009‐2014 period. (IMS) 45 CAGR 14.6% 41 40 36 • Yeni Recordati delivering exc
Slide 20: Turkey: a new growth opportunity
A new growth opportunity T k Turkey İş Girişim Sermayesi, Sermayesi a Turkish private equity fund, fund announced the initiation of negotiations for the acquisition by Recordati of its shares in Dr. F. Frik Ilaç. (Disclosure made by İş Girişim Sermayesi on April 27, 2011 ) • Dr. F. Frik İlaçç is a f
Slide 21: Orphan Europe: a worldwide business
Orphan drugs Orphan Europe ‐ A worldwide business Huge market potential: 5,000 5,000‐7,000 7,000 rare diseases identified for which only 72 orphan drugs are approved. Progressive country introduction of rare disease plans and access to diagnostic tests will stimulate the market for orphan drugs. • S
Slide 22: Gross profit margin evolution
Financial projections Gross profit margin evolution 70,0 ~67,0 ~66,5 ~65,5 , ~65,0 65,0 % of sales 65,0 60,0 55,0 50,0 2010 2011 2012 2013 • Reduction of gross margin due to different product mix • Going forward gross margin to stabilize at around 64‐65% of sales and to grow in absolute value due to
Slide 23: SG&A expenses evolution
Financial projections SG&A expenses evolution 39 ~37,0 ~35,7 ~36,0 % of saales 36 ~35,0 , 33 30 2010 2011 2012 2013 • Variable selling expenses increase to support new product launches • Development of sales organizations in growing markets • Going forward SG&A expenses to continue to reduce as % of
Slide 24: R&D expenses
Financial projections R&D expenses • R&D expenditure is program driven • R&D is estimated to remain in the range of 8 8‐9% 9% of sales and includes the completion of clinical trials relating to the current pipeline NAME ORIGINATOR INDICATION DEVELOPMENT STATUS Filed in EU CARBAGLU® Recordati Organic
Slide 25: 2011 targets, 2012-2013 plan
Financial projections 2011 targets, 2012‐2013 plan Net income to grow by around 10% in 2012 and 2013 2010 2011 2012 2013 (million Euro) Actual Targets Plan Plan Revenue 728 1 728.1 ~ 750 ~ 810 ~ 875 Operating income (EBIT) 154.8 ~160 ~ 170 ~ 185 Net Income 108.6 ~110 ~120 ~132 Based on existing busi
Slide 26: Expected cash flow generation
Financial projections Expected cash flow generation 2011 2012 2013 (million Euro) Targets Plan Plan Cash flow ~130 ~140 ~150 CAPEX (tangible assets) ~10 ~10 ~10 Investment in intangible assets ~40 ~25 ~25 Expected free cash flow generation ~80 ~105 ~115 Dividend pay‐out ratio as % of net 50% 50% 50%
Slide 27: Company declarations, disclaimers and profile
Company declarations, disclaimers and profile DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANY’S FINANCIAL REPORTS The manager responsible for preparing the company’s financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154‐bis of the Consolidated Law on Finan