Galenica Ag · SIX:GALE

Galenica — Investor Presentation (August 2020)

53 slides from Galenica's investor presentation, August 2020

  1. Slide 1: Galenica Group Investor Presentation

    Galenica Group Investor Presentation August 2020 Galenica - the first choice for health, beauty and wellbeing

  2. 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 H1 2020 18 6 Financial results H1 2020 31 7 Market update 43 8 Regulatory projects update 47 9 Outlook for 2020 51 August 2020 © Galenica Group 2

  3. 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

  4. 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

  5. Slide 5: History of share price since IPO

    1 History of share price since IPO 70  CHF 67.95 65 60 Initial trade 55 price 7 April 2017 50 CHF 43.00 45 IPO offer price 40 CHF 39.00 35 30 31.07.20 7.4.2017 12/2017 12/2018 12/2019 Galenica SPI August 2020 © Galenica Group 5

  6. 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

  7. 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

  8. 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

  9. 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. August 2020 © Galenica Group 9

  10. Slide 10: Our Strategy - the power of Leverage

    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

  11. Slide 11: The largest pharmacy retailer in Switzerland

    3 The largest pharmacy retailer in Switzerland Retail Network of chains (# of pharmacies as of 30 June 2020) 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  1’806

  12. 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

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. Slide 18: COVID-19 lows

    COVID-19 “lows” 5 Corona pandemic decelerated our business − Sales − EBIT − New projects − Ongoing projects August 2020 © Galenica Group 18

  19. Slide 19: COVID-19 highs

    COVID-19 “highs” 5 The way we dealt with corona challenges was a highlight − high increase in digital demand THANKS TO THE GREAT − stronger link between online and COMMITMENT OF ALL EMPLOYEES, offline world  Omni-channel! BASIC SUPPLY OF MEDICATIONS − Bichsel classified as a IN SWITZERLAND ASSURED

  20. Slide 20: Conclusion: Results improved despite COVID-19

    Conclusion 5 Results improved despite COVID-19 ! DESPITE COVID-19, WE NET SALES EBIT1) NET PROFIT1) CLEARLY EXCEEDED +5.6% +3.0% +5.3% MARKET GROWTH WITH Galenica Group Galenica Group Galenica Group SALES , AND WE CHF 1,690.4 CHF 83.6 million CHF 68.4 million million FURTHER IMPROVED EBIT AND NET PR

  21. Slide 21: COVID-19: Key figures from March 2020 - Retail

    COVID-19 5 Some key figures from March 2020 - Retail ~ 30 1’700 + 220% COVID-19 infos plexiglas safety online-sales to employees barriers August 2020 © Galenica Group 21

  22. Slide 22: COVID-19: Key figures from March 2020 - Products & Brands

    COVID-19 5 Some key figures from March 2020 – Products & Brands + 717% + 49% + 51% Septo Clean® Eubos® Algifor® sales sales sales August 2020 © Galenica Group 22

  23. Slide 23: COVID-19: Key figures from March 2020 - Services

    COVID-19 5 Some key figures from March 2020 - Services 6x 700’000 + 60% more online-order packages per logistics volumes packages / day day peak August 2020 © Galenica Group 23

  24. Slide 24: Conclusions: The pandemic has clearly demonstrated

    Conclusions 5 The pandemic has clearly … … DEMONSTRATED THE KEY ROLE THAT THE GALENICA GROUP PLAYS IN THE SWISS HEALTHCARE MARKET. … BOOSTED THE USE OF DIGITAL CHANNELS AND CONFIRMED OUR OMNI-CHANNEL STRATEGY. August 2020 © Galenica Group 24

  25. Slide 25: Expansion despite COVID-19

    Expansion 5 Despite COVID-19 we further developed operations 6 1 THE PHARMACY NETWORK new mail- new own pharmacies order WAS EXTENDED BY 6 NEW pharmacy LOCATIONS AND VERFORA STRENGTHENED ITS PARTNERSHIPS AND 3 1 PRODUCT PORTFOLIO. new partner company products acquisition August 2020 © Galenica Group

  26. Slide 26: Business outlook 2020

    5 Business outlook 2020 WE WILL CONTINUE Pharmacy network Expanding digital Broad-based launch TO FURTHER further developing market presence mail-order pharmacy DEVELOP OUR PHARMACY NETWORK AND CONSISTENTLY EXPAND THE DIGITAL MARKET PRESENCE. Integration new Launch of ERP & construction licened prod

  27. Slide 27: New Head Services Business Sector as of 1 September 2020

    5 New Head Services Business Sector as of 1st September 2020 Christoph Amstutz Andreas Koch Head Services Business Sector Head Services Business Sector till 30 August 2020 as of 1st September 2020 August 2020 © Galenica Group 27

  28. Slide 28: Strategic frame and business model

    5 Strategic frame and business model August 2020 © Galenica Group 28

  29. Slide 29: Analysis of strategic framework

    5 Analysis of strategic framework Strategic projects Strategic programmes − Expansion logistics Omni-Channel capacities − New ERP system market Care − New mail-order pharmacy − Expansion online offering Professionals − Primary Care − ……. inside Efficiency Transformation & organisational development

  30. Slide 30: We want to shape the change!

    5 We want to shape the change! Strategic programmes Omni-Channel WHAT market we do Care and … Professionals inside Efficiency Transformation & organisational … HOW development we do it. August 2020 © Galenica Group 30

  31. Slide 31: H1 2020 Strong sales growth

    H1 2020 6 Strong sales growth Net sales (in CHF million) Galenica Group +5.6% Retail +2.9% Products & +1.0% Brands Services +7.9% H1 2019 H1 2020 August 2020 © Galenica Group 31

  32. Slide 32: Retail Business sector: Sales growth driven by expansion

    Retail Business sector 6 Sales growth driven by expansion Net sales (in million CHF) +2.9% 48% Elements of growth: Expansion1): +5.6% +5.1% +4.3% thereof Bichsel Group: +3.2% Organic2): +0.4% -0.7% -1.4% thereof impact of price reductions3): -1.8% -1.9% -1.9% thereof one-time effect of process optim

  33. Slide 33: Products & Brands: Strong growth of international sales

    Products & Brands Business sector 6 Strong growth of international sales Net sales (in million CHF) +1.0% +14.0% International sales 53% -2.6% Sales in the Swiss market  New distribution of Bucco-Tantum®, Omni-Biotic®, launch of Veractiv® and discontinuation of distribution of Ginsana ® and Equazen

  34. Slide 34: Services Business sector: Strong sales growth

    Services Business sector 6 Strong sales growth Net sales (in million CHF) +7.9% 49% impact of price reductions1): -2.3% -2.6% -1.8% One-time effect of adapted invoicing models2): +1.9%  Estimated impact of COVID-19 on sales: +3%  Growth of 5.9% in the pharmacy wholesale market (63% of net sales) 

  35. Slide 35: H1 2020 Solid results

    H1 2020 6 Solid results EBITDA (in million CHF) EBIT (in million CHF) +2.1% -0.6% August 2020 © Galenica Group 35

  36. Slide 36: H1 2020 EBITDA and EBIT adjustments

    H1 2020 6 EBITDA and EBIT adjustments1) EBITDA (in million CHF) EBIT (in million CHF) H1 H1 H1 H1 2019 2020 2019 2020 EBITDA 126.7 129.3 EBIT 82.8 82.3 Adjustment IAS 19 -0.3 2.4 Adjustment IAS 19 -0.3 2.4 Adjustment IFRS 16 -24.6 -26.4 Adjustment IFRS 16 -1.4 -1.1 EBITDA adjusted 101.8 105.3 EBIT a

  37. Slide 37: H1 2020 EBIT growth despite negative COVID-19 impact

    H1 2020 6 EBIT growth despite negative COVID-19 impact EBIT and EBIT margin adjusted1) (in million CHF / %) 4.9% Galenica Group +3.0% 5.1% 7.7% Health & Beauty +2.5% 7.7% 1.8% Services -0.3% 1.9% August 2020 © Galenica Group H1 2019 H1 2020 1) Excluding effects of IAS 19 and IFRS 16, Half-year Repor

  38. Slide 38: H1 2020 Financial result and taxes

    H1 2020 6 Financial result and taxes Financial result (in million CHF) Taxes (in million CHF) Tax rate excluding 3) one-time effects2) 18.2% 18.9% 17.0% -15.1 -13.6 -29.7 -15.1 -13.6 -8.4 -38.1 2019 H1 2019 H1 2020 Financial result adjusted 1) Taxes excluding one-time effects Effects of IAS19 and IF

  39. Slide 39: H1 2020 Pleasing net profit growth

    H1 2020 6 Pleasing net profit growth (in million CHF) 125.3 +2.2% One-time effects of deferred taxes1) 64.9 66.3 Net profit comparable, adjusted2) and 134.2 excluding one-time effects of deferred taxes1) 65.0 68.4 +5.3% Effects of IAS19 and IFRS162) -8.4 -0.1 -2.1 -0.5 2019 H1 2019 H1 2020 1) Detail

  40. Slide 40: H1 2020 Investments

    H1 2020 6 Investments (in million CHF) 1.6% 1.5% 1.6% % of net sales Investments in intangible assets Investments in tangible assets  COVID-19 has delayed the strategic efficiency projects in the Services business sector:  Replacement of the ERP system in Wholesale and Prewholesale - Duration of t

  41. Slide 41: H1 2020 Solid free cash flow

    H1 2020 6 Solid free cash flow1) (in million CHF) H1 2019 H1 2020 Change Cash flow from operating activities before working capital changes 116.0 118.7 +2.7 Payment of lease liabilities -23.4 -24.4 Cash flow from operating activities before working capital changes adjusted 92.6 94.3 +1.7 Working cap

  42. Slide 42: H1 2020 Solid balance sheet

    H1 2020 6 Solid balance sheet (in million CHF) Debt coverage1) 2.1x 2.6x 2.4x Debt coverage adjusted2) 1.5x 2.0x 1.9x Equity adjusted3) Effect of IFRS163) Net debt adjusted3) IAS19 and IFRS16 effects on equity3) 1) Net debt / EBITDA, Half-year Report 2020, page 33 2) Net debt adjusted / EBITDA adjus

  43. Slide 43: Swiss pharmaceutical market by channel YTD June 2020

    7 Swiss pharmaceutical market by channel YTD June 2020 Value (ex-factory): CHF 3’090.6 million Volume (packs): 93.9 million CHF +87.6 million / +2.9% +1.0 million / +1.1% Hospitals Hospitals 8.9% 797.7 million 8.4 million 3.6% +3.5% -2.0% 25.8% Drugstores 43.5% Drugstores 33.1 million 3.4 million 22

  44. Slide 44: Swiss pharmaceutical market monthly development

    7 Swiss pharmaceutical market monthly development Value (ex-factory) YTD June 2020: CHF 3’090.6 million CHF +87.6 million / +2.9% Source: APO/SD/DRO/SPI Index, Swissmedic A, B, C, D Medicines Swissmedic lists A, B, C, D, sold from suppliers and wholesalers to hospitals, physicians and drugstores Aug

  45. Slide 45: Consumer healthcare market YTD June 2020

    7 Consumer healthcare market YTD June 2020 3.5% OTC 12.8% +5.7% Personal CHF million care -5.2% 1’294 20.9% +3.9% Patient non-medication products +0.8% 62.8% care +10.4% Nutrition +6.5% Source: Pharma Trend for pharmacies and drugstores in Switzerland, streetprices August 2020 © ©Galenica Group 2020

  46. Slide 46: 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

  47. Slide 47: 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 August 2020 © Galenica Gr

  48. Slide 48: 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

  49. Slide 49: 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% ~

  50. Slide 50: 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%

  51. Slide 51: Outlook 2020

    9 Outlook 2020  Galenica Group net sales +2% to +5%  EBIT (excluding the effects of IAS19 & IFRS16) approximately on prior year level  Dividend for 2020 at least at prior year level August 2020 © Galenica Group 51

  52. Slide 52: 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

  53. Slide 53: 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 August 2020 © Galenica Group 53

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