Aspen Pharmacare Holdings Limited · JSE:APN

Aspen Pharmacare — H1 2014 Earnings Presentation

81 slides from Aspen Pharmacare's earnings presentation, May 2014

1. Slide 1: Interim Results 2014

   Interim Results 2014 for the six months ended 31 December 2013

2. Slide 2: Highlights

   Highlights +33% Revenue increased to R12.0 billion +16% Operating profit increased to R2.9 billion +23% Normalised diluted headline EPS increased to 467 cents +9% Cash generated from operations increased to R2.2 billion +152% Net borrowings increased to R26.2 billion 2

3. Slide 3: Abridged Statement of Comprehensive Income

   Abridged Statement of Comprehensive Income CONTINUING OPERATIONS H1 2014 H1 2013 % R'million R'million change Revenue 11 976 8 997 +33% Cost of Sales (6 399) (4 630) Gross profit 5 577 4 367 +28% Operating expenses (2 570) (1 803) Other operating income 52 41 Operating profit before amortisation 3 0

4. Slide 4: Comparative reconciliation of earnings per share

   Comparative reconciliation of earnings per share ` H1 2014 H1 2013 % Cents Cents change Basic EPS from continuing operations 423.4 369.3 +15% Impairments 0.1 1.6 Other 0.7 0.2 Headline EPS from continuing operations 424.2 371.1 +14% Restructuring costs 1.8 3.0 Transaction costs 44.1 5.5 Foreign curr

5. Slide 5: Segmental contribution

   Segmental contribution Gross revenue by region Normalised EBITA* by region 100% 100% 7% 6% 5% 6% 11% 10% 10% 11% 90% 90% 21% 23% 80% 18% 18% 80% 24% 22% 26% 33% 70% 70% 8% 60% 14% 60% 36% 35% 34% 36% 50% 50% 33% 31% 40% 40% 30% 30% 62% 53% 20% 36% 37% 20% 39% 36% 30% 30% 10% 10% 0% 0% H1 2011 H1 201

6. Slide 6: Group operating margin

   Group operating margin 15 000 28% 30% 27% 27% 27% 12 930 12 500 25% 25% 10 000 9 695 Margin % R'million 20% 8 046 7 500 6 144 15% 5 000 4 570 10% 2 500 5% - 0% H1 2010 H1 2011 H1 2012 H1 2013 H1 2014 Gross revenue Group EBITA margin 6

7. Slide 7: Revenue bridge

   Revenue bridge 15 000 13 750 1 652 12 930 12 500 908 11 250 404 9 695 271 10 000 8 750 R'million 7 500 6 250 5 000 3 750 2 500 1 250 - H1 2013 South Africa Sub-Saharan Asia Pacific International H1 2014 Africa 7

8. Slide 8: EBITA margin % bridge

   EBITA margin % bridge 30.0% 27.18% -2.51% +0.19% -2.14% +2.13% 24.85% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% H1 2013 South Africa Sub-Saharan Asia Pacific International H1 2014 Africa 8

9. Slide 9: Exchange rate mix

   Exchange rate mix Average rate Average rate Revenue 6 months to 12 months to December 2013 Rate benefit December 2013 June 2013 Variance % R'million R'million Rand/USD 10.16 8.93 13.8% 729 88 Rand/EUR 13.73 11.60 18.4% 1 599 248 Rand/AUD 9.29 9.12 1.9% 3 880 74 Rand/JPY 0.10 0.10 0.0% 74 0 Rand/BRL

10. Slide 10: Abridged Group statement of financial position - Assets

    Abridged Group statement of financial position - Assets As at As at 31 December 2013 30 June 2013 ASSETS R'million R'million Non-current assets 49 741 29 645 Property, plant and equipment 6 058 4 343 Intangible assets 36 334 18 933 Goodwill 6 183 5 973 Contingent environmental indemnification asset

11. Slide 11: Abridged Group statement of financial position - Capital

    Abridged Group statement of financial position - Capital As at As at 31 December 2013 30 June 2013 EQUITY AND LIABILITIES R'million R'million Share capital and reserves 25 168 22 799 Non-current liabilities 38 349 9 758 Borrowings 31 545 8 924 Contingent environmental liability 725 - Unfavourable co

12. Slide 12: Prepayments

    Prepayments H1 2014 Currency million R’billion Notre Dame de Bondeville site 1.6 GBP 100 Notre Dame de Bondeville inventory 1.8 EUR 113 South African infant nutritional transaction 0.4 USD 43 with Nestlé Sundry other 0.2 Various Total 4.0 12

13. Slide 13: Borrowings

    Borrowings Capital composition Net adjusted borrowings of R31.8* billion 100% 90% 24% 29% 33% 34% 80% International South Africa 52% 56% 54.8% 29.5% 70% 60% 50% 40% 76% Asia Pacific 71% 67% 66% 15.7% 30% 48% 44% 20% 10% 0% Net borrowings FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 H1 2014* Cash Equity B

14. Slide 14: Financial liabilities

    Financial liabilities H1 2014 Undiscounted Currency million R’million million 10 year inventory loan 1 315 EUR 88 EUR 190 Deferred payable – Merck 650 USD 62 USD 67 Deferred payable - Arixtra 720 USD 68 USD 71 Total 2 685  Fair value recognition of financial liabilities  Liabilities recorded at pr

15. Slide 15: Environmental contingency

    Environmental contingency  Moleneind API site at Oss requires soil decontamination  Merck has indemnified Aspen against this pre-existing condition  As site owner, Aspen may be liable to the authorities  Liability is contingent on failure by Merck under the indemnity  Per IFRS 3, the contingent

16. Slide 16: Unfavourable contract

    Unfavourable contract  IFRS 3 requires assumed contracts which are not market-related to be recognised as an asset or liability  10 year contract to supply APIs to Merck is unfavourable: ◦ Margin not market related ◦ Investment required by Aspen to deliver is not reflected in the supply price  Li

17. Slide 17: Movement in working capital

    Movement in working capital As at As at As at 31 December 2013 31 December 2013 31 June 2013 R'million incl. Acquisitions Acquisitions excl. Acquisitions Inventories 9 274 4 940 4 333 4 101 Trade receivables 5 592 1 071 4 520 4 089 Prepayments and other receivables 1 331 349 982 1 375 Trade creditor

18. Slide 18: Abridged Group statement of cash flows

    Abridged Group statement of cash flows H1 2014 H1 2013 % R'million R'million change Cash operating profit 3 278 2 856 +15% Changes in working capital (1 113) (867) Cash generated from operations 2 165 1 989 +9% Net finance costs paid (297) (230) Tax paid (692) (443) Net cash generated from operating

19. Slide 19: Investment in property, plant and equipment

    Investment in property, plant and equipment  Expansion projects 1 800 ◦ High containment suite in Port 1 600 Elizabeth (completion FY 2015) 1 400 ◦ Fine Chemicals upgrade and extension in Cape Town (completion FY 2015) 1 200 ◦ Moleneind site upgrade (completion FY 2016) R'million 1 000 800 ◦ Global

20. Slide 20: Institutional shareholding

    Institutional shareholding 100% 90% 80% 70% Southern Africa 60% North America 50% Europe 40% Asia Pacific Middle East 30% 20% 10% 0% Jun-10 Jun-11 Jun-12 Jun-13 Dec-2013 20

21. Slide 21: Sub-Saharan Africa

    Sub-Saharan Africa Revenue R’million H1 2014 H1 2013 % change South Africa 3 837 3 566 8% Rest of Sub-Saharan Africa 1 394 990 41% Total 5 231 4 556 15% Africa’s number 1 pharmaceutical company 21

22. Slide 22: South Africa: SA pharmaceutical market

    South Africa SA pharmaceutical market  Private and Public sector ◦ Impacted by currency depreciation  Public sector most affected ◦ Steep fall in currency without pull back ◦ Formula not catching up ◦ ARVs running losses − Have very high import component  SEP increase at 5.82% ◦ Does not cover in

23. Slide 23: South Africa: Private pharmaceutical market

    South Africa Private pharmaceutical market Total Private market value as at Dec 2013 R28.6bn (2012: R27.2bn) Other R.8bn (R.8bn) Market growth rates: Generic R7.5bn • Total market 5.1% (R6.6bn) Ethical/ Branded • Ethical/Branded 0.2% R12.4bn (R12.3bn) • Generic 14.1% • OTC 5.5% OTC Source: IMS DATA

24. Slide 24: IMS scoreboard as at December 2013

    South Africa IMS scoreboard as at December 2013 Aspen MAT Aspen MAT Market MAT Evolution Value Share Growth Growth Index Total 16.5% 11.2% 5.1% 105 Ethical 10.2% 9.7% 0.2% 109 Generic 30.9% 16.0% 14.1% 101 OTC 12.7% 5.4% 5.5% 100 Source: IMS DATA DEC 2013 Aspen – South Africa’s lead supplier & outpa

25. Slide 25: SA pharmaceutical market value and growth

    South Africa SA pharmaceutical market value and growth MAT Relative Performance 20% ASPEN ADCOCK INGRAM 15% SANOFI M PFIZER A 10% T NOVARTIS G 5% CIPLA R O W JOHNSON & T 0% JOHNSON H MERCK & CO -5% ASTRAZENECA BAYER -10% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Source: IMS DATA DEC 2013 MAT VALUE SHAR

26. Slide 26: Aspen South Africa

    South Africa Aspen South Africa Revenue R’million H1 2014 H1 2013 % change Pharma 3 203 3 008 Adjusted Pharma base 2 678 2 417 11% Tender ARVs 525 591 -11% Consumer 634 558 14% Total 3 837 3 566 8%  Strong performance in private market pharmaceutical and consumer  Tender ARVs declining Improving s

27. Slide 27: Total market MAT value trends

    South Africa Total market MAT value trends MAT value share trend MAT value growth trend – Top 5 18% 14% ASPEN 12% 16% ADCOCK INGRAM 10% 14% ASPEN SANOFI 8% 12% NOVARTIS PFIZER 6% 10% NOVARTIS 4% ADCOCK INGRAM 8% CIPLA 2% SANOFI 6% JOHNSON & JOHNSON 0% PFIZER MERCK & CO 4% -2% ASTRAZENECA 2% -4% BAYE

28. Slide 28: Generics MAT value trends

    South Africa Generics MAT value trends MAT value share trend MAT value growth trend – Top 5 35% 60% ASPEN 30% CIPLA 50% ADCOCK INGRAM 25% 40% NOVARTIS LUPIN LABORATORIES 20% 30% ASPEN LUPIN LABORATORIES SANOFI NOVARTIS 15% 20% DAIICHI SANKYO ADCOCK INGRAM 10% 10% PHARMAPLAN CIPLA SERVIER 0% 5% DR RE

29. Slide 29: Branded/Ethical MAT value trends

    South Africa Branded/Ethical MAT value trends MAT value share trend MAT value growth trend – Top 5 12% 15% ASPEN SANOFI 10% 10% PFIZER ASPEN 8% ASTRAZENECA 5% MERCK & CO MERCK & CO 6% PFIZER 0% NOVARTIS SANOFI ROCHE 4% -5% BAYER ASTRAZENECA 2% JOHNSON & -10% JOHNSON NOVO NORDISK 0% -15% Apr-13 Oct-1

30. Slide 30: Aspen performance in South Africa

    South Africa Aspen performance in South Africa  Aspen is South Africa’s number 1 pharmaceutical company ◦ Number 1 in generics, and now ◦ Number 1 in BRANDED  Aspen has grown market share in both generic and branded products ◦ 4 of the top 5 generics are Aspen products  Aspen’s share of the South

31. Slide 31: Prospects - New launch income

    South Africa Prospects - New launch income  Pipeline still SA’s best ◦ Many multinationals engaging Aspen − Market pressure taking its toll Source: IMS DATA DEC 2013 <24 Months South Africa’s best pipeline 31

32. Slide 32: South Africa: Summary and prospects

    South Africa Summary and prospects  Aspen well positioned within SA market ◦ SA’s go to company in both Public and Private sector ◦ Increased market shares ◦ Unit growth  Rand depreciation ◦ Margins under pressure ◦ Public and Private ◦ Not offset by volumes and productivity increases  In discuss

33. Slide 33: Sub-Saharan Africa Performance

    Sub-Saharan Africa Performance Relative Regional Revenue Gross sales R1 394m (2012: R990m) Growth Rates West +33% Africa West Africa East Africa 54% 37% Southern +34% Africa East +57% Africa Southern Africa 9% SSA sales growth = +41% 33

34. Slide 34: Sub-Saharan Africa Performance

    Sub-Saharan Africa Performance  Strong H1 performance in all regions ◦ Realisation of commercial strategies  Collaboration ◦ 40 products launched ◦ Solid performance of base business ◦ Major contributor to sales and profit  Shelys ◦ Transformed into a private market focussed business ◦ Growing In

35. Slide 35: Sub-Saharan Africa: Summary and prospects

    Sub-Saharan Africa Summary and prospects  Growing middle class  Increasing need for quality medication  Increased investment in sales representation and distribution capabilities  Additional investment in the Beta (Kenya) factory to increase output  Further representative expansion into new ter

36. Slide 36: Asia Pacific: Sustained performance

    Asia Pacific Revenue by customer geography R’million H1 2014 H1 2013 % change Australia and New Zealand 3 987 3 217 24% Asia 311 255 22% Total 4 298 3 472 24% Sustained performance 36

37. Slide 37: Australian market - MAT as at December 2013

    Asia Pacific Australian market - MAT as at December 2013 Market value: AUD14.07bn  Volumes +1.0%  Price cuts have been steeper than Others 52% anticipated ◦ Accelerated to bi-annual from 2014 (was annual with supplementary) Pfizer ◦ New base price is being discounted 7% AZ 6% Market value growth -

38. Slide 38: Australian pharmaceutical market

    Asia Pacific Australian pharmaceutical market Total market value as at December 2013 AUD14.07bn (2012: AUD14.17bn) Generic* AUD 2.6bn (AUD 2.4bn) Market growth rates: • Total market -0.6% • Ethical/Branded -3.9% • Generic* +8.4% Branded OTC AUD 8.6bn (AUD 8.9bn) AUD 2.9bn • OTC +2.1% (AUD 2.9bn) Sou

39. Slide 39: Australia - Leading manufacturers by scripts written

    Asia Pacific Australia - Leading manufacturers by scripts written Scripts written by GP's Others Aspen  Aspen sells over 100 million packs 26.3m 32.5m 19% annually 24% Aspen: Generic Mundipharma 3.3m 17.0m Owned 16.5% 3% 13% Boehringer Distributed 2.8% Ingelheim 4.1m Total 19.3% 3% MSD 4.4m 3% GSK

40. Slide 40: Australia's largest generic company by value - 16%

    Asia Pacific Australia’s largest generic company by value - 16% Aspen AUD250m 16% Total value: AUD1.53bn +3.4% Alphapharm (Mylan)  Market growth low despite AUD203m Others 13% significant patent expiries in AUD360m 23% past 2 years.  Major patent expirations, negated by: Apotex ◦ Average retail di

41. Slide 41: Australia - Performance

    Asia Pacific Australia - Performance Revenue - Australia and New Zealand R’million H1 2014 H1 2013 % change Base 2 672 2 532 6% Contract manufacturing 279 335 Ex-GSK classic brands 348 38 Zyprexa and discontinued brands 244 312 Nutritionals 444 - Total 3 987 3 217 24%  Australia business has grown

42. Slide 42: Australia - Financial impact of price disclosure

    Asia Pacific Australia - Financial impact of price disclosure  3 rounds of cuts in 2013 Aspen Industry Aspen # Industry # Month Average Average Molecules Molecules Cut Cut Apr-13 44 62 20.3% 25.2% Aug-13 31 41 22.2% 25.3% Dec-13 7 7 33.8% 33.8%  Price cuts effect gross sales ◦ Saving to Government

43. Slide 43: Australia - Price disclosure and reimbursement price cuts

    Asia Pacific Australia - Price disclosure and reimbursement price cuts  Aspen continues to successfully reduce dollar discounts to trade ◦ Relieves impacts of price cuts ◦ Net sales effected less than gross sales  Negative impact on pharmacists ◦ Estimated at AUD80 000 per store p/a  Impact furth

44. Slide 44: Australia – Ex-GSK classic brands

    Asia Pacific Australia – Ex-GSK classic brands  In order to get the opportunity and create value with these transactions ◦ Delta between Aspen vs Originator performance is needed  Sales decline rates reducing under Aspen focus ◦ Certain brands re-entering growth stage  Portfolio performing ahead

45. Slide 45: Australia: Valtrex - rate of decline rapidly reducing

    Asia Pacific Australia: Valtrex - rate of decline rapidly reducing Units Growth 10% 5% 0% -5% -10% Growth -15% -20% -25% -30% -35% -40% -45% Oct-13 Apr-13 Jul-13 Dec-12 Nov-13 Dec-13 May-13 Aug-13 Sep-13 Jan-13 Mar-13 Jun-13 Feb-13 MAT Unit Growth Monthly Unit Growth 45

46. Slide 46: Australia: Lamictal - from decline to growth

    Asia Pacific Australia: Lamictal - from decline to growth Units Growth 20% 15% 10% 5% Growth 0% -5% -10% -15% -20% Oct-13 Apr-13 Jan-13 Jun-13 Jul-13 Dec-12 Nov-13 Dec-13 May-13 Aug-13 Sep-13 Mar-13 Feb-13 MAT Unit Growth Monthly Unit Growth 46

47. Slide 47: Australia: Zyban - now showing unit growth

    Asia Pacific Australia: Zyban - now showing unit growth Units Growth 25% 20% 15% 10% Growth 5% 0% -5% -10% Oct-13 Apr-13 Jan-13 Jun-13 Jul-13 Dec-12 Sep-13 Nov-13 Dec-13 May-13 Aug-13 Mar-13 Feb-13 MAT Unit Growth Monthly Unit Growth 47

48. Slide 48: Ex-GSK OTC brands: Cartia - unit growth under Aspen

    Asia Pacific Ex-GSK OTC brands: Cartia - unit growth under Aspen Units 1 400 000 1 200 000 1 000 000 800 000 MAT 600 000 400 000 200 000 0 Aug-12 Sep-12 Aug-13 Sep-13 Oct-13 Oct-12 Apr-13 May-13 Jul-13 Nov-12 Dec-12 Nov-13 Dec-13 Feb-13 Jan-13 Mar-13 Jun-13 MAT Units Similar scenario for the OTC ran

49. Slide 49: Australia - Nutritionals business S-26 infant milk range

    Asia Pacific Australia - Nutritionals business “S-26 infant milk range”  S-26 acquisition concluded April 2013  All staff on Aspen premises and in Aspen system  Distribution of S-26 through Aspen warehouse and Aspen controlled distribution channels  Sales for the 6 months to December 2013 - R444

50. Slide 50: Australian S-26 market share

    Asia Pacific Australian S-26 market share (excluding informal exports)  Domestic market hard to measure ◦ Distorted by informal exports to China 50

51. Slide 51: Australian Operations

    Asia Pacific Australian Operations  Site closures tracking to plan  Croydon site sold for AUD10m ◦ Settlement in June 2014  Baulkham Hills closure slated for H2 2014  14 more products to Aspen Port Elizabeth ◦ Significant savings 51

52. Slide 52: Australia - Summary and prospects

    Asia Pacific Australia - Summary and prospects  Market declining ◦ Price cuts punitive  Aspen performing ◦ Pulling back rebates ◦ Reducing cost of goods  Aspen capability and strong market positioning demonstrated ◦ Trend lines have already improved on acquired products ◦ Other multinationals eng

53. Slide 53: Asia - Revenue by customer geography

    Asia Pacific Asia - Revenue by customer geography Revenue R’million H1 2014 H1 2013 % change Asia 311 255 22% Revenue by country Philippines Rest of Asia 28% 9% Indonesia 2% Thailand 6% Japan Hong Kong 24% 10% Taiwan Malaysia 9% 12% 53

54. Slide 54: Asia - Performance

    Asia Pacific Asia - Performance  Philippines ◦ Sales growth of +71% − Licensing opportunities with MNCs contributed towards growth ◦ Started OTC team ◦ Headcount at 111  Malaysia ◦ Sales growth of +30% ◦ Reps increased to 17 from 10 ◦ New product launches to drive future growth  Taiwan ◦ Sales gr

55. Slide 55: Asia - Ongoing assessment of region

    Asia Pacific Asia - Ongoing assessment of region  Japan is current focus ◦ Local operating entity registered ◦ Business license in progress ◦ 2 employees ◦ Looking for key staff ◦ Merck/GSK acquisitions to facilitate market entry ◦ Challenging market ◦ Targeted for full trading this year − Preferen

56. Slide 56: Latin America

    International Latin America Revenue R’million H1 2014 H1 2013 % change Brazil 413 380 9% Spanish Latam 418 371 13% Nutritionals 371 - Total 1 202 751 60% We’re getting mass and momentum 56

57. Slide 57: Latin America - Country heads

    International Latin America - Country heads Silvio Gasbarrino VENEZUELA Carlos Abelleyra REGIONAL CEO & MEXICO Ana Claudia Alvarez CARICAM Alexandre Franca BRAZIL Jose Beltran ANDEAN Pablo Quintana ARGENTINA 57

58. Slide 58: Brazil – Market & performance

    International Brazil – Market & performance Brazilian market USD’billion MAT Dec 2013 MAT Dec 2012 % change Total 26.9 25.4 6% Branded 20.6 19.7 4% Generic 6.4 5.7 11% Source: IMS PMB – MAT Dec/13  Generics a small part of the market but driving growth  Aspen is 54th – climbing the ladder but so m

59. Slide 59: Brazil: Top branded products – Insunorm & Imuran

    International Brazil: Top branded products – Insunorm & Imuran 2 500 000  Sustained growth in challenging market 2 000 000 MAT Units 1 500 000 1 000 000 500 000 0 Mar-13 Mar-12 May-12 Jul-12 May-13 Jul-13 Sep-12 Nov-12 Sep-13 Nov-13 Jan-12 Jan-13 7 000 Insunorm Units 6 500 6 000 5 500 5 000 4 500 P

60. Slide 60: Brazil: Top OTC products – Calman + MOM

    International Brazil: Top OTC products – Calman + MOM 1 500 000 1 450 000 1 400 000 1 350 000 1 300 000 1 250 000 1 200 000 1 150 000 1 100 000 Feb-13 Mar-13 Apr-13 May-13 Jul-13 Oct-13 Dec-12 Nov-13 Dec-13 Jan-13 Jun-13 Aug-13 Sep-13 4 400 000 4 300 000 MAT Units Calman 4 200 000 4 100 000 4 000 00

61. Slide 61: Spanish Latin America - Performance

    International Spanish Latin America - Performance Revenue R’million H1 2014 H1 2013 % change Adjusted Pharma business 370 292 27% Ex-GSK OTC brands 48 79 (40%) Nutritionals business 371 - Total 789 371 113%  Exceptional performance - double digit growth excluding Nutritionals ◦ Mexico and Venezuela

62. Slide 62: Latin American Nutritionals – Strategic approach

    International Latin American Nutritionals – Strategic approach Revenue bridge 2010-2012 250 227.6 -49.9 200 +11.8 186.6 -2.9 USD'million 150 100 50 - 2010 Actual Mexico Colombia Rest of Latam 2012 Actual  In transition from Wyeth to Pfizer ◦ Pfizer changed the marketing approach in Mexico and Colom

63. Slide 63: Approach to the Nutritionals business - Mexico

    International Approach to the Nutritionals business - Mexico Organisational Focus From Retail To Detail  Maternities sales team retrenched  Aspen prescription driven approach  Pfizer retail focus and retail people  Employ experienced sales force ◦ Secures prescription support ◦ Consistent with f

64. Slide 64: Approach to the Nutritionals business - Mexico

    International Approach to the Nutritionals business - Mexico Marketing & Medical approach: From Consumer To Healthcare Professional  Direct to mother/family focus  Paediatrician/neo-natologist focus  Campaign based on 3rd stage branding  Build strong brand loyalty with cartoon characters paediat

65. Slide 65: Approach to the Nutritionals business - Mexico

    International Approach to the Nutritionals business - Mexico Commercial: From Buying Space To Owning Space  Push strategy  Pull strategy ◦ Discounting to create stock pressure and ◦ Mother will purchase the Nutritionals shelf dominance prescribed by a professional  Consumer advertising focusing o

66. Slide 66: Mexico Nutritionals: Stage 1 – Prescription gap

    International Mexico Nutritionals: Stage 1 – Prescription gap December - Stage 1 (0-6m) 2013 Stage 1 Stage 1 gap has widened – critical trend to reverse 66

67. Slide 67: Mexico Nutritionals: Stages 2 & 3 – Transition & carry over

    International Mexico Nutritionals: Stages 2 & 3 – Transition & carry over Loyalty from stage 1 and stage 2 will drive stage 3 67

68. Slide 68: Transactions update: The Merck products

    Transactions update The Merck products  Sales achieved in 2013 about R2bn* Revenue by product class  High margin products ◦ Limited competition Women's ◦ Respond to promotional activity Other health & hormonals ◦ Particularly Latam 10% 66%  Exciting niche opportunity for Aspen ◦ Supported by in-h

69. Slide 69: Transactions update: Anticoagulants

    Transactions update Anticoagulants: Arixtra, Fraxiparine, Orgaran and Heparin  Achieved sales +/-R5.7 billion and gross margin of 50%  GSK manufacturing facility on track to transfer 1 May 2014 Therapeutic class  Supported by dedicated sales and marketing staff ◦ Over 400 transferring employees ◦

70. Slide 70: Anticoagulants: Focussed approach – eyes on the prize

    Transactions update Anticoagulants: Arixtra, Fraxiparine, Orgaran and Heparin Key objective - Increase our share of this therapeutic area globally  Increase margin on Fraxiparine  Increase global sales of Fraxiparine  Defend Arixtra aggressively  Grow Arixtra in emerging markets  Secure suffici

71. Slide 71: Fraxiparine – Addressing margins and costs

    Transactions update Fraxiparine – Addressing margins and costs Fraxiparine  Heparin about half of total cost ◦ Addressing Heparin cost through Oss ◦ Oss processes also being improved ◦ Margin improvement to total product of more than 10% expected ◦ Take 1 year to flush old costs out of system  Add

72. Slide 72: Arixtra/Heparin – Defending, growing and launching

    Transactions update Arixtra/Heparin – Defending, growing and launching Arixtra  Authorised generic strategy in the USA ◦ Majority of market retained  European launch of competitor delayed ◦ API impurities  Aspen has full ownership and control over total value chain ◦ No royalties, and no API or F

73. Slide 73: Orgaran – The big opportunity

    Transactions update Orgaran – The big opportunity Orgaran  Used for H.I.T – has potential to match Fraxiparine/Arixtra  Sales compromised by limited availability of API  Aspen in process of addressing API ◦ 72 step process reduced to between 8 – 12 steps ◦ Robustness being improved ◦ Capability t

74. Slide 74: Transactions update: Acquired API business

    Transactions update Acquired API business  Sales for the quarter – R1 billion ◦ Sales of R77m for the quarter to GSK for heparin  Complex manufacture including ◦ Peptides, steroid/hormones with numerous chemical steps ◦ Biochemicals including − Urine extraction − Heparin from mucosa pigs’ stomach

75. Slide 75: Transactions update: Acquired API business

    Transactions update Acquired API business  Significant work being undertaken ◦ Address safety issues on Moleneind ◦ Cover Merck’s requirements ◦ Security of supply ◦ Competitiveness of supply ◦ Sustainable model for all sites  Oss will be supplier of ◦ Increased Heparin to Aspen ◦ Fondaparinux int

76. Slide 76: Aspen Group: Summary and prospects

    Aspen Group Summary and prospects  Aspen has performed in spite of challenges ◦ SA currency ◦ Australia pricing  South Africa growing in private market ◦ No. 1 in Generics AND Branded  Australia protecting margins ◦ Rebate cuts, cost of goods and reversing trends  International/Rest of the World

77. Slide 77: Summary and prospects

    Aspen Group Summary and prospects  Anticipate significant increment sales over H1 sales  In addition to incremental operating income from the above ◦ Synergistic future income opportunities include: − Addressing API platform ineffiencies/synergies − Reduction of heparin input costs − Orgaran globa

78. Slide 78: Aspen Group: Summary and prospects

    Aspen Group Summary and prospects  Aspen has made numerous recent acquisitions  Significant impact on H2 results R’billion Theoretical H2 sales Theoretical annualised sales Acquired API business 1.8 3.6* Merck products** 1.0 2.0 Anti-coagulants 2.9 5.7 Nutritionals 1.6 3.3 Total 7.3 14.6 Less: Sal

79. Slide 79: Q&A

    Q&A 79

80. Slide 80: Glossary

    Glossary Acronym Meaning Acronym Meaning ANVISA Agência Nacional de Vigilância Sanitária, the Brazilian Health IMS IMS Health, an independent provider of healthcare information Surveillance Agency, a regulatory body of the Brazilian government and other services responsible for the regulation and ap

81. Slide 81: Disclaimer

    Disclaimer Cautionary regarding forward-looking statements This presentation has been prepared by Aspen Pharmacare Holdings Limited based on information available to it as at the date of the presentation. This presentation may contain prospects, projections, future plans and expectations, strategy a

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