Galenica Ag · SIX:GALE
Galenica — Investor Presentation (March 2020)
51 slides from Galenica's investor presentation, March 2020
Slide 1: Galenica Group Investor Presentation
Galenica Group Investor Presentation March 2020 Galenica - the first choice for health, beauty and wellbeing
Slide 2: Agenda
Agenda 1 History 3 2 Galenica at a glance 6 3 Business Sectors 11 4 Financial track record 16 5 Business update 2019 18 6 Financial results 2019 29 7 Market update 2019 42 8 Regulatory projects update 2019 45 9 Outlook for 2020 49 March 2020 © Galenica Group 2
Slide 3: Building the leading Swiss healthcare platform over 90 years
1 Building the leading Swiss healthcare platform over 90 years Organic and Creation of Foundation of Acquisition of acquisition-led Amavita uniform Acquisition of Galenica as a Merfen® and expansion of brand in Bahnhof wholesaler Vita-Merfen® pharmacies network Switzerland Apotheke Acquisition of Ex
Slide 4: History of resilient growth and margin improvement
1 History of resilient growth and margin improvement Logistics, HealthCare Information Galenica & Retail1,4 2009-19 2009–19 CAGRs sales CAGR 3.0% Retail market sales2 1.7% Galenica net sales 3.0% Galenica EBIT3 11.5% 2009-19 EBIT CAGR3 11.5% 6 3’165 3’301 6.0% 3’141 2’915 3’009 2’766 2’826 2’603 2’6
Slide 5: History of share price since IPO
1 History of share price since IPO 70 CHF 64.95 65 60 Initial trade 55 price 7 April 2017 50 CHF 43.00 45 IPO offer price CHF 39.00 40 35 30 12/2018 12/2019 28.02.20 7.4.2017 12/2017 Galenica SPI March 2020 © Galenica Group 5
Slide 6: Galenica is the leading healthcare provider in Switzerland
2 Galenica is the leading healthcare provider in Switzerland 2019 net sales CHF3’301 million 2019 EBIT1 CHF167 million Health & Beauty Services Retail Products & Brands Market position2 #1 Consumer Health market position2 #1 Market position2 #1 2019 net sales 2019 EBIT 2019 net sales 2019 EBIT (pre
Slide 7: Operating in a stable and attractive Swiss healthcare market
Operating in a stable and attractive Swiss healthcare market 2 with favourable long-term fundamentals Resilient, stable Swiss healthcare retail sector2 Pharmaceutical market in Switzerland (2019)1 CHF bn (based on ex-manufacturer price) 2019-23 CAGR 1.5%3 By value−CHF6.1bn By volume−187 million pack
Slide 8: Experienced management team with proven track record
2 Experienced management team with proven track record Marc Werner − CEO from 1st April 2020 CEO − 23 years industry experience − Joined Galenica 2020 − Previously, Head Marketing & Sales division and Member of the Group Executive Board at Swisscom Felix Burkhard − CFO since 2017 CFO − 29 years indu
Slide 9: Galenica: The first choice for health, beauty and wellbeing
2 Our ambition and self-perception Galenica: The first choice for health, beauty and wellbeing. March 2020 © Galenica Group 9
Slide 10: Our Strategy - the power of Leverage drives sustained value creation
2 Our Strategy - the power of 3 drives sustained value creation Products & Brands − Leverage leading positions to promote Develop and launch own and partner higher margin and exclusive products brands and products for pharmacies Leverage − Further expand and optimise retail 2017 2016 Retail network
Slide 11: The largest pharmacy retailer in Switzerland
3 The largest pharmacy retailer in Switzerland Retail Network of chains (# of pharmacies as of 31 December 2019) Webshop Competitive positioning—#1 market position4 − Largest branded pharmacy network by By number of pharmacies5 Total # of pharmacies as of 2018 number of pharmacies in Switzerland 1
Slide 12: Ongoing pharmacy network consolidation and optimisation
3 Ongoing pharmacy network consolidation and optimisation Retail Proven track record of delivering synergies Widely spread pharmacy network covers every through streamlining of business processes and Region in Switzerland creating value through acquisitions and network optimisation Marketing IT
Slide 13: Diversified product portfolio for health, beauty and wellbeing
3 Diversified product portfolio for health, beauty and wellbeing Retail Galenicare’s retail product offering in % of sales1 12% 37% 18% 53% 17% 4% 12% Beauty Nutrition, Personal OTC medicines Prescription medicines and Patient Care of which originals of which generics 1 Sales YTD December 2019, incl
Slide 14: Leading role in Consumer Health with broad and innovative product portfolio
Leading role in Consumer Health 3 with broad and innovative product portfolio Products & Brands Portfolio Competitive position: #1 Consumer Healthcare1 market position Consumer Health ORAL PAIN & Skincare brands REMEDIES5 Market share2 (%) No. 1 35% market share2 5.9 5.3 5.2 TOPICAL PAIN Exclusive p
Slide 15: Leader in pre-wholesale and wholesale distribution
Leader in pre-wholesale and wholesale distribution, supported 3 by an innovative healthcare information business Services Services Competitive positioning - #1 market position1 − Pre-wholesale outsourced storage and distribution Pre-wholesale market share % Wholesale market share % − Logistics servi
Slide 16: Long-term track record of sustainable growth and attractive cash generation
Long-term track record of sustainable growth and 4 attractive cash generation … Logistics, HCI & Retail1,4 Galenica 2009–19 CAGRs Retail market sales2 1.7% Galenica net sales 3.0% Net sales (CHFm) Galenica EBIT3 11.5% 3’141 6 3’165 3’301 Above market growth 2’826 2’915 3’009 2’603 2’661 2’766 2’46
Slide 17: Strong performance in both segments
4 … demonstrating strong performance in both segments Health & Beauty Services Retail Health & Beauty Logistics and HCI Services 10.4% 4.0% 0.6% 2.4% Net sales (CHFm) 2’329 2’362 1 2’372 2’441 2’105 2’158 2’171 2’245 1’621 1’393 1’437 1’479 1 1’525 1’246 1’335 838 2009A … Health 2013A 2014A & Beauty
Slide 18: 2019 in figures: Result improved – dividend increased
2019 in figures 5 Result improved – dividend increased Galenica Group: In CHF million Strong sales growth Sales: 3,301.0 +4.3% EBIT1): 166.9 +8.3% Profitability enhanced Net profit2): 134.2 +7.7% Dividend increased Dividend3): CHF 1.80 per share (+5.9%) 1) Excluding the effects of IAS 19 and I
Slide 19: Strategy: Galenica is well equipped
Strategy 5 Galenica is well equipped… Leverage RETAIL PRODUCTS & BRANDS − Unique logistics Support − Largest market access SERVICES Expansion Innovation Efficiency − Own products March 2020 © Galenica Group 19
Slide 20: Omni-Channel networked with all healthcare market participants
Omni-Channel 5 …and networked with all healthcare market participants across all channels Local pharmacy Products Patient / Patient & Brands Industry Retail Digital Services At home March 2020 © Galenica Group 20
Slide 21: Expansion 2019 Retail: expansion of all channels
Expansion 2019 5 Retail: expansion of all channels +11 own pharmacies in 2019! − Own pharmacies: 356 − Total network: 513 > 60,000 products available online! Acquisitions of Bichsel Group and Curarex Swiss March 2020 © Galenica Group 21
Slide 22: Expansion 2019 Retail
5 Expansion 2019 Retail Majority Holdings Minority Holdings Total own (mainly Amavita, (mainly Coop Vitality) Pharmacies Sun Store) 1.1.2019 266 79 345 Acquisitions +9 +2 + 11 Openings +2 +6 +8 Restructurings -6 -2 -8 31.12.2019 271 85 356 March 2020 © Galenica Group 22
Slide 23: Expansion 2019 Products & Brands: Partnerships and portfolio further developed
Expansion 2019 5 Products & Brands: Partnerships and portfolio further developed March 2020 © Galenica Group 23
Slide 24: Outlook expansion 2020 Retail: further strengthen all channels
Outlook expansion 2020 5 Retail: further strengthen all channels 20?? 2019 > 100,000* 2018 > 60,000* 2017 40,000* 10,000* 356 375 337 345 POS POS POS POS * Number of products online March 2020 © Galenica Group 24
Slide 25: Outlook expansion 2020 Products & Brands
Outlook expansion 2020 5 Products & Brands: … it doesn't stop there! March 2020 © Galenica Group 25
Slide 26: Innovation 2019/2020: Documedis, the bridge to e-health
Innovation 2019/2020 5 Documedis®: the bridge to e-health − Integration of Documedis® into software systems of pharmacies, physicians and care homes − CDS check in three additional hospitals − 2020: Documedis® interface to EPR (electronic patient record) March 2020 © Galenica Group 26
Slide 27: Efficiency Services: investments for the future
Efficiency 5 Services: investments for the future − New ERP solution at Alloga and Galexis − Modernisation of Lausanne-Ecublens distribution centre at Galexis Galexis – Lausanne-Ecublens distribution centre March 2020 © Galenica Group 27
Slide 28: Long-term outlook: From multi-channel to omni-channel
Long-term outlook 5 From multi-channel to omni-channel … multi-channel omni-channel March 2020 © Galenica Group 28
Slide 29: Sales growth above market and profitability further enhanced
Galenica Group 6 Sales growth above market and profitability further enhanced Net sales (in million CHF) EBIT adjusted1) (in million CHF) +4.3% +8.3% +2.2% +6.4% 3’301 +8.3% +8.3% 3’165 154.1 166.9 1’566 49%1’599 51% 1’600 48%1’701 52% 49% 85.8 51% 74.9 49% 79.2 51% 81.1 4.8% 5.0% 4.9% 5.1% 5.0% 5.1
Slide 30: EBITDA and EBIT adjustments
Galenica Group 6 EBITDA and EBIT adjustments1) EBITDA (in million CHF) EBIT (in million CHF) 2019 2018 2019 2018 EBITDA 260.3 154.0 EBIT 169.5 113.0 Adjustment IAS 19 0.1 41.0 Adjustment IAS 19 0.1 41.0 Adjustment IFRS 16 -50.0 - Adjustment IFRS 16 -2.7 - EBITDA adjusted 210.4 195.1 EBIT adjusted 16
Slide 31: Profitability significantly improved
Galenica Group 6 Profitability significantly improved EBIT und EBIT margin adjusted1) (in CHF million / %) 5.1% Galenica Group +8.3% 4.9% 7.6% +12.1% 7.2% 1.8% +1.1% 1.9% March 2020 © Galenica Group 2019 2018 1) Excluding effects of IAS19 and IFRS16, details of the adjustments in the Annual Report 2
Slide 32: Health & Beauty segment: Strong EBIT margin improvement
Health & Beauty segment 6 Strong EBIT margin improvement Net sales (in million CHF) EBIT adjusted1) (in million CHF) +6.3% +12.1% +4.8% +7.7% +11.0% +13.0% 51% 48% 52% 49% 49% 51% 49% 51% 7.3% 7.2% 7.2% 7.7% 7.6% 7.6% EBIT Margin (ROS) 1) Details of the adjustments in the Annual Report 2019, pages 9
Slide 33: Retail Business sector: Strong impact of expansion on sales growth
Retail Business sector 6 Strong impact of expansion on sales growth Net sales (in million CHF) +6.0% +4.3% +7.5% 1’431 1’516 49% 735 48% 790 52% 696 51% 726 H1 H2 2018 H1 H2 2019 Elements of growth: Expansion1) : +2.6% +5.1% +6.1% +5.6% Organic2) : +0.5% -0.7% +1.4% +0.4% thereof impact of price cut
Slide 34: Products & Brands Business sector: Pleasing sales growth above market
Products & Brands Business sector 6 Pleasing sales growth above market Net sales (in million CHF) +11.3% 102 92 20 +11.0% International sales 18 +11.1% +11.5% 74 82 +11.4% Sales in the Swiss Market 49 53% 54 53% 48 47% 43 47% H1 H2 2018 H1 H2 2019 Sales growth of 11.4% in the Swiss Market thanks t
Slide 35: Services Business sector: Strong sales growth in H2 2019
Services Business sector 6 Strong sales growth in H2 2019 Net sales (in million CHF) EBIT adjusted1) (in million CHF) +2.9% +1.1% +1.3% +4.5% +1.2% +0.9% 44.2 44.7 50% 50% 49% 51% 22.3 51% 21.9 49% 22.6 51% 22.1 49% 1.9% 1.8% 1.9% 1.9% 1.8% 1.8% H1 H2 2018 H1 H2 2019 EBIT Margin (ROS) impact of pric
Slide 36: Financial result and taxes
Galenica Group 6 Financial result and taxes Financial result (in million CHF) Taxes (in million CHF) Tax rate excluding 17.6% 18.2% one-off effects2) -1.9 -3.2 36.8 -0.2 -2.1 -2.9 56.2 -6.1 2018 2019 -19.5 -29.7 -8.4 -38.1 2018 2019 Financial result adjusted1) Taxes excluding one-off effects2) Effec
Slide 37: Comparable net profit improved
Galenica Group 6 Comparable net profit improved Net profit (in million CHF) -15.1% One-off deferred tax effects1) +7.7% Net profit comparable, adjusted2) and excluding one-off effects of deferred taxes1) Effects of IAS19 and IFRS162) 1) Details of taxes and one-off effects of deferred taxes, in the
Slide 38: Investments in efficiency projects
Galenica Group 6 Investments in efficiency projects Investments in million CHF % of net sales 1.6% 1.6% Cash conversion1) 74% 75% 53.0 50.0 Investments in intangible assets 18.9 22.6 Investments in tangible assets 34.2 27.4 2018 2019 1) Calculated as (EBITDA adjusted-CAPEX)/EBITDA adjusted, EBITDA a
Slide 39: Solid free cash flow
Galenica Group 6 Solid free cash flow1) in million CHF 2019 2018 Dev. Cash flow from operating activities before working capital changes 237.4 181.0 +56.4 Payment of lease liabilities -47.6 - Cash flow from operating activities before working capital changes adjusted 189.8 181.0 +8.8 Working capital
Slide 40: Balance sheet strengthened
Galenica Group 6 Balance sheet strengthened (in million CHF) Debt coverage1) 2.0x 2.1x Debt coverage adjusted2) 1.5x 1.5x Equity adjusted3) Effect of IFRS163) Net debt adjusted3) IAS19 and IFRS16 effects on equity3) 1) Net debt / EBITDA, Annual Report 2019, page 99 2) Net debt adjusted / EBITDA adju
Slide 41: Value based management
Galenica Group 6 Value based management1) (in million CHF) 2019 2018 Dev. % Invested Capital 1'417.2 1'311.8 +8.0% Average Invested Capital 1'364.5 1'279.8 +6.6% 2) Return on Invested Capital (ROIC) 9.8% 9.7% Net Operating Profit after Tax (NOPAT) 133.3 124.0 +7.5% Cost of Capital3) (WACC 6.25%) -85
Slide 42: Swiss pharmaceutical market by channel 2019
7 Swiss pharmaceutical market by channel 2019 Value (ex-factory): CHF 6’136.5 million Volume (packs): 187.1 million CHF +165.2 million / +2.8% +0.5 million / +0.3% Hospitals Hospitals 9.0% 1’561.8 million 16.8 million 3.4% +6.1% -1.2% 25.4% Drugstores 43.7% Drugstores 60.7 million 6.3 million 22.7%
Slide 43: Generics growth (in volume) in the pharmacy channel 2019
7 Generics growth (in volume) in the pharmacy channel 2019 Market with Total Packs reimbursable generics potential 75.2 million / +0.9% 5.8% by health insurance 56.4 million 19.2% +0.2% Patent protected products 4.4 million / -2.2% Products with expired patent 20.3 million / -6.6% 27.0% protection w
Slide 44: Consumer healthcare market 2019
7 Consumer healthcare market 2019 3.3% OTC 12.1% +2.2% Personal CHF million care -0.7% 2’515 22.5% +1.0% Patient non-medication products -0.7% 62.1% care -1.3% Nutrition +1.0% Source: Pharma Trend for pharmacies and drugstores in Switzerland, streetprices March 2020 ©Galenica © 2020 IQVIA Group 44
Slide 45: Authorities: measures and projects
8 Authorities: measures and projects Reduction in drug 2017 2018 2019 prices Change of category of 2019 OTC products1) Sales margin SBR IV extended until the end of 2021 SBR IV SBR V Generics prices „Reference price system“ from 2022? 1) Swissmedic categories C, D March 2020 © Galenica Gro
Slide 46: Price reduction rounds 2017 to 2019
Price reduction rounds 2017 to 2019 8 Annual savings per channel at public and ex-factory price in million CHF 2017 2018 2019 225 44.6 185 41.0 64.8 Hospitals 122 52.4 13.4 101 Physicians 30.9 12.1 ? Pharmacies 24.6 14.8 ? 13.3 Open 25.5 116.1 objections 92 19.9 91.3 78.0 64.6 74 51.6 40.5 Public pr
Slide 47: Reclassification of OTC's
8 Reclassification of OTC’s Category A Category B Category C Category D Category E prescription without prescription pharmacy only pharmacy & drugstore sale in all shops repetition with a prescription with a prescription without prescription without prescription without prescribtion ~15% ~85% ~85% ~
Slide 48: Swiss Pharmaceutical market – composition of drug prices
8 Swiss Pharmaceutical market – composition of drug prices Fixed margin elements help to offset price reductions Composition of the price of a prescription/ reimbursable drug: c.3/4 of the retail margin secured by fixed elements ~ 8 %1 LOA – Retail FOPH defines price and margin - Margin covers ~ 8%
Slide 49: Outlook 2020
9 Outlook 2020 Galenica Group net sales +1% to +3% EBIT (excluding the effects of IAS19 & IFRS16) +3% to +6% Dividend for 2020 at least at prior-year level March 2020 © Galenica Group 49
Slide 50: Disclaimer
Disclaimer Disclaimer Galenica Certain statements, beliefs and opinions in this presentation are forward-looking, which reflect the Company’s or, as appropriate, the Company’s directors’ current expectations and projections about future events. By their nature, forward-looking statements involve a n
Slide 51: Galenica Group - Contact information
Galenica Group - Contact information Investor Relations Media Felix Burkhard Christina Hertig CFO Galenica Head Corporate Communication Tel.: +41 58 852 85 29 Tel.: +41 58 852 85 17 Mail: investors@galenica.com Mail: media@galenica.com March 2020 © Galenica Group 51