Aspen Pharmacare Holdings Limited · JSE:APN

Aspen Pharmacare — H1 2012 Earnings Presentation

58 slides from Aspen Pharmacare's earnings presentation, March 2012

  1. Slide 1: Interim Results December 2011

    Interim Results 31 December 2011

  2. Slide 2: Highlights of the six months

    Highlights of the six months  27th consecutive reporting period of unbroken earnings growth  Offshore businesses drive earnings growth  Contribution to revenue and earnings shifts to offshore lead  Asia Pacific business the stand out performer  Sigma acquisition in Australia fully integrated 

  3. Slide 3: Financial Performance Headlines

    Financial Performance Headlines Revenue +31% to R7.5 billion From continuing operations Operating Profit +28% to R2.0 billion From continuing operations Normalised diluted headline EPS +22% to 308.1 cents From continuing operations Cash generated from operating activities +76% to R1.2 billion

  4. Slide 4: Abridged Statement of Comprehensive Income

    Abridged Statement of Comprehensive Income From continuing operations 6 months ended 6 months ended Change 31 Dec 2011 31 Dec 2010 R million R million Revenue 7 505 5 745 +31% Cost of Sales (3 929) (3 195) Gross Profit 3 576 2 550 +40% Net operating expenses (1 572) (1 019) Other operating income 99

  5. Slide 5: Comparison of earnings per share measures

    Comparison of earnings per share measures 6 months ended 6 months ended Change 31 Dec 2011 31 Dec 2010 Cents Cents Basic EPS 343.6 267.1 +29% Adjusted for: - Discontinued operations Basic EPS from continuing operations 307.4 257.2 +20% Adjusted for: - Impairments - Profits on disposals - Capital ins

  6. Slide 6: Change in segmental contribution

    Change in segmental contribution 6 months ended December Revenue 2010 Revenue 2011 Sub Saharan Africa 11% Asia Pacific Asia Pacific South Africa 36% South Africa 14% 54% 36% International Sub Saharan International 21% Africa 10% 18% EBITA 2010 EBITA 2011 Sub Saharan Sub Saharan Asia Pacific Africa 7

  7. Slide 7: EBITA Margin Percentage Trend

    EBITA Margin Percentage Trend EBITA margin percentage 35.0% 30.0% 27.2% 26.9% 27.1% 26.4% 26.9% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% FY2008 FY2009 FY2010 FY2011 H12012 Effective margin protection EBITA - Operating profit before amortisation from continuing operations adjusted for specific non-trading i

  8. Slide 8: South African Business Performance

    South African Business Performance 6 months ended December 2011 2010 Change H1 Themes R’m R’m  Impacted by unfavourable one – off Revenue 2 908 3 268 -11% issues originating in H2 2011 EBITA 841 1 014 -17%  Core pharmaceutical business performed well EBITA Margin 28.9% 31.0%  Volume and cost pres

  9. Slide 9: Asia Pacific Business Performance

    Asia Pacific Business Performance 6 months ended December 2011 2010 Change H1 Themes R’m R’m  Merging of Sigma business successfully Revenue 2 859 840 +240% executed EBITA 736 133 +453%  Synergies and efficiencies being realised  First procurement savings realised EBITA Margin 25.7% 15.8%  Growi

  10. Slide 10: International Business Performance

    International Business Performance 6 months ended December 2011 2010 Change H1 Themes R’m R’m  Latam in-market revenue up 23% Revenue 1 443 1 369 +5%  All Latam subsidiaries growing EBITA 455 390 +17%  Rest of World revenue flat  Global brands transition cycle EBITA Margin 31.5% 28.5% favourable

  11. Slide 11: Sub Saharan Africa

    Sub Saharan Africa 6 months ended December 2011 2010 Change H1 Themes R’m R’m  Strong performance in Nigeria and Revenue 835 666 +25% French West Africa EBITA 136 111 +23%  East Africa flat EBITA Margin 16.3% 16.7% H2 Outlook  Continued momentum  New product launches from Aspen pipeline  Full o

  12. Slide 12: Operating Cash Flows

    Operating Cash Flows 6 months ended 31 December 2011 2010 Change R millions R millions Cash operating profit 2 308 1 808 +28% Changes in working capital (497) (875) Cash generated from operations 1 811 933 +94% Net finance costs paid (302) (119) Tax Paid (298) (127) Cash generated from operating act

  13. Slide 13: Abridged Balance Sheet

    Abridged Balance Sheet 31 December 2011 30 June 2011 Assets R millions R millions Non current assets 19 644 17 423 • Tangible fixed assets 3 915 3 651 • Goodwill 5 264 4 627 • Intangible assets 10 224 8 917 • Other non-current assets 241 228 Current assets 6 770 5 921 Cash 3 331 3 039 Assets held fo

  14. Slide 14: Borrowings

    Borrowings R’m Net borrowings – 1 July 2011 6 348 Debt 34% 1 July 2011 Cash generated from operations (1 211) Equity 66% Cash outflow from investing 529 Capital distribution 458 Exchange rate changes 470 Other (2) Debt 31% 31 December 2011 Net borrowings – 31 December 6 592 Equity 2011 69% Net inter

  15. Slide 15: Distribution of Fund Managers

    Distribution of Fund Managers 31 December 2011 30 June 2011 South Africa South Africa 57% Europe 21% 54% Europe 19% Asia Pacific 1% Asia Pacific 3% Middle East 1% Middle East 1% North America 20% North America 23%

  16. Slide 16: South African Pharmaceutical Market

    South African Pharmaceutical Market The legislated environment SEP  Increase of 2,14% approved 1 March 2012 Assume Rand stays at current levels Anticipate some margin contraction • Cost increases above SEP increase International Benchmarking  Understanding is that this is not intended as a blunt i

  17. Slide 17: South African Pharmaceutical Market

    South African Pharmaceutical Market Total Private market as at Dec 2011 R25.34bn (Dec 2010: R23.01bn) • Aspen Growth 4,62% Other R0.86bn (0.78bn) • Generic Branded Generics R5.77bn (4.89bn) Ethical/Branded R12.16bn (R11.76bn) OTC R6.55bn (R5.58bn)

  18. Slide 18: South African Pharmaceutical Market

    South African Pharmaceutical Market The Private Market  South African Private market continues to grow at 10,13% Generics /OTC growing at about 16% Ethicals at about 3%  Generics enjoy 62% volume share and 32% value share  Performs comparably with other EMs  Absolute volume increases as more hav

  19. Slide 19: Aspen Interim Results Analysed

    Aspen Interim Results Analysed In 2011  Aspen had a strong first nine months  Seretide, Truvada pre-patent  Previous ARV tender was ending Aspen had a greater share Government made huge buy-in Pricing on patented Viread greater than generic Tenofovir Pharma sales down R250m versus H1 2011

  20. Slide 20: Aspen Interim Results Analysed

    Aspen Interim Results Analysed The Drivers Public sector sales R383m Impact of donor ARVs Private Market ARVS R70m Impact of Truvada Branded 13%  Truvada, Seretide and Flixonase  Excluding above growth of 5% in branded Generics 16%  Continuation of strong organic volume growth from prior year  D

  21. Slide 21: What is our focus?

    What is our focus? Understanding of state ARVs Deal with Seretide/Truvada impact Maintain generic/OTC momentum

  22. Slide 22: Understanding of state ARVs

    Understanding of state ARVs  Significant uptick in volumes Donor fund stock exhausted  Forecast for state ARV sales Significantly up on H1 Seeing a surge in orders Volumes H2 last year Public Sector ARVs will increase in H2

  23. Slide 23: In Defence of Seretide and Truvada

    In Defence of Seretide and Truvada ETHICAL MAT_VALUE SHARE TREND 14.00% 12.00% 10.00% SANOFI ASPEN PFIZER 8.00% ASTRAZENECA MERCK & CO 6.00% ROCHE NOVARTIS BAYER 4.00% ADCOCK INGRAM JOHNSON & JOHNSON 2.00% 0.00% Cowboys don’t cry. They just blink for a while

  24. Slide 24: In Defence of Seretide and Truvada

    In Defence of Seretide and Truvada SERETIDE & FOXAIR UNIT PERFORMANCE 60 000 50 000 40 000 30 000 20 000 10 000 0 January February March April May June July August September October November December FOXAIR SEREFLO HFA SERETIDE SERETIDE & FOXAIR SERETIDE PY AVERAGE

  25. Slide 25: In Defence of Seretide and Truvada

    In Defence of Seretide and Truvada SERETIDE & FOXAIR VALUE PERFORMANCE 16 000 000 14 000 000 12 000 000 10 000 000 8 000 000 6 000 000 4 000 000 2 000 000 0 January February March April May June July August September October November December FOXAIR SEREFLO HFA SERETIDE SERETIDE & FOXAIR SERETIDE PY

  26. Slide 26: In Defence of Seretide and Truvada

    In Defence of Seretide and Truvada Improving Access SERETIDE FOXAIR MONTHLY UNIT TREND 70 000 60 000 50 000 40 000 FOXAIR SERETIDE 30 000 SEREFLO HFA 20 000 10 000 0

  27. Slide 27: Truvada – No longer the lone ranger- Tribuss launched

    Truvada – No longer the lone ranger- Tribuss launched Patient Numbers Number of patients on treatment 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 7 8 9 10 11 12 July August September October November December TRUVADA ASPEN TENOF&EMTRIC TRIBUSS (ex factory sales)

  28. Slide 28: Truvada- defence through Tribuss

    Truvada- defence through Tribuss Back in the saddle Value of Treatment 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 7 July 8 August 9 September 10 October 11 November 12 December TRUVADA ASPEN TENOF&EMTRIC TRIBUSS (ex factory sales)

  29. Slide 29: Continue Current Generic/OTC momentum

    Continue Current Generic/OTC momentum MAT Value share (Generics) MAT Value Share of the Generics Market Dec 2011: R5.77 bn (Dec 2010 : R4.89bn) Existing Competitors Pharmaplan Pfizer 3% Mylan 2%Dr Reddys 2% 2% Watson 1% Sanofi Servier Aspen Daiichi Sankyo 4% 3% 31% Lupin 4% Asian 5% Competitors Nova

  30. Slide 30: Continue OTC/Generic momentum

    Continue OTC/Generic momentum MAT Value Growth (Generics) 70% 60% 50% 40% SANOFI PHARMAPLAN 30% LUPIN LABORATORIES 20% ASPEN CIPLA MEDPRO 10% ADCOCK INGRAM DAIICHI SANKYO 0% SERVIER NOVARTIS -10% PFIZER -20% -30% -40% Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 2011 Aug 2011 Sep 2011 O

  31. Slide 31: Continue OTC/Generic momentum

    Continue OTC/Generic momentum The Aspen Pipeline Still the industry’s top performer  More value and more molecules Tribuss launched in December 2011  First launch of a generic 3 in 1 once a day ARV tablet into SA market  Most successful launch of an Aspen product Aspen Meropenem and Foxair materi

  32. Slide 32: South Africa's Largest Pipeline

    Continue OTC/Generic momentum New Launch Income - IMS SOUTH AFRICA’S LARGEST PIPELINE VALUE < 24 MONTHS ASPEN ADCOCK SANOFI PFIZER NOVARTIS CIPLA MERCK & CO JOHNSON & ROCHE BAYER INGRAM MEDPRO JOHNSON

  33. Slide 33: Effective Launch

    Continue OTC/Generic momentum Effective Launch ATRIPLA LAUNCH UPTAKE Tribuss launch volume average first two months Units 1 2 3 4 5 6 7 8 9 10 11 12 Months from Launch

  34. Slide 34: SA Pharmaceutical Market (continued)

    SA Pharmaceutical Market (continued) Sales Prospects – Pharmaceutical Division  H2 budgeted to outperform H1  H2 to exceed H2 last year If achieved commendable given advantages of Q3 last year Demonstrates fundamental strength of base business  By year end all material one-offs flushed from syste

  35. Slide 35: SA Consumer Market

    SA Consumer Market Focus on Infant Milk Formulas  Loss of Pfizer license with over R250m in sales Infacare Gold has reclaimed just over 20% of value and 30% of volume  Aspen launching new products Nutri-Kids launch April 2012 • Growing up milk formulas for over 3 years  It was hoped that tender v

  36. Slide 36: SA Consumer Market (continued)

    SA Consumer Market (continued) Prospects  Division has been overshadowed by the Pharmaceutical business  It is core to us and is receiving focus Dedicated new management team Pipeline, products and developments prioritised and process now the same as in pharmaceutical Innovative formulas and produ

  37. Slide 37: Asia Pacific

    Asia Pacific Australian Legislative Environment PBS reforms – biggest price cuts in history Price Disclosures mandatory  Manufacturer forced to disclose discounts given to pharmacy  Weighted average used to determine future net sell price  If average under 10% - no reductions  Reductions permane

  38. Slide 38: Asia Pacific

    Asia Pacific Australian Legislative Environment (Continued) Manufacturers neutral?  Theoretically discounts only cut and retain in store net sell price Reality  Expect manufacturers to discount further off reduced price  Desperate customers/desperate competitors  Illogical as could stimulate add

  39. Slide 39: Aspen Australia Performance

    Aspen Australia Performance Rand’s Millions 5718 H1 Annualised 3091 1278 915 709 396 509 235 309 7 65 109 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

  40. Slide 40: Aspen Australia Performance

    Aspen Australia Performance  Sales nearly in line with South Africa already Potential to outpace South Africa in H2  Primary growth driver for the entire Group  Synergies being realised through integration process and reductions in costs  Consolidations include Manufacture – 3 sites to be closed

  41. Slide 41: Value of the Australian Market

    Value of the Australian Market Market A$ 13,7 Billion Market Growth at 4.8% Pfizer 12.5% AstraZeneca 8.5% Other 39.2% Novartis 5.8% Sanofi 5.4% GSK 4.8% MSD 4.5% Lilly 2.6% Abbott 2.8% Aspen 4.1% Alphapharm 3.1% Janssen Cilag 3.3% Roche 3.4%

  42. Slide 42: Volume of Scripts generated

    Volume of Scripts generated Percentage Share 1 ASPEN 0.9 2 *GENERIC 1.1 1.3 3 GLAXOSMITHKLINE 1.6 1.3 9.0 14.6 4 SANOFI-AVENTIS 1.6 1.7 5 PFIZER 1.8 1.7 6 ASTRAZENECA 12.2 7 ALPHAPHARM 2.1 2.2 8 MSD 2.8 9 BOEHRINGER INGELHM 3.3 10 SERVIER 10.8 11 MUNDIPHARMA 6.6 12 NOVARTIS 13 CSL 6.7 8.8 14 BAYER S

  43. Slide 43: Aspen holds 24% of generic volume in Australia

    Aspen holds 24% of generic volume in Australia Number 1 in Australia Australia: Top Generic Players (SU millions) Australia total generic market =6300 million SU Sanofi 486 Reckitt Benckiser 135 Sandoz 543 Alphapharm 1 470 Others 853 Aspen 1 526 MSD 162 Apotex 735 Inova 89 Astrazeneca 88 Ascent 189

  44. Slide 44: The Aspen Team

    The Aspen Team Rated most effective and highly regarded of sales teams Continue to overperform  Recognised by independent survey  Strategy to invest in experience paying dividends Factors  Professional behaviour  Info quality  Relationship building  Ability to handle questions  Persuasiveness

  45. Slide 45: Prospects in Australia

    Prospects in Australia Aspen now has an appealing platform  Broad range  Covers branded, generics, OTC Capability has attracted license partners  MSD and Novartis Lilly signed distribution deal with Aspen effective December  Zyprexa - $150m pre-patent sales Authorised generic included Aspen can

  46. Slide 46: Australian Pipeline

    Australian Pipeline Therapeutic category 2012 2013 2014 2015-2017 TOTAL A$ 000's TOTAL IMS Value 1 558 696 646 261 507 784 481 319 3 194 060 Analgesia 39 363 110 893 150 256 Antibacterial 1 141 29 267 30 408 Antifungal 11 994 14 553 26 547 Antihistamine - Antiviral 33 819 33 819 CNS 245 130 126 564

  47. Slide 47: Aspen in Asia Pacific

    Aspen in Asia Pacific Asia  Australia has 20 million people  Asia has many more  Asia is a focus area for us People and growth Relevant quality affordable pipeline Target Markets Markets identified for front-end Aspen representation  Philippines  Thailand  Malaysia  Vietnam  China  Japan 

  48. Slide 48: Aspen in Asia Pacific (Continued)

    Aspen in Asia Pacific (Continued) Philippines  Aspen Philippines started operations January 2012  Headcount in February 2012 – 90  Started with existing Aspen range Already concluded one deal with a multinational Two further opportunities under negotiation  MNCs recognise Aspen as a proven opera

  49. Slide 49: Sub Saharan Africa (excluding South Africa)

    Sub Saharan Africa (excluding South Africa) Relative Regional Growth Rates Sales R835m SSA Southern Africa (excluding 25% Anglo Plane 14% South Africa) West Africa 35% West Africa 30% Southern Africa 20% East Africa 31% East Africa Flat French West Africa 20%

  50. Slide 50: Sub Saharan Africa (excluding South Africa)

    Sub Saharan Africa (excluding South Africa)  Strong regional performance  West Africa has been exceptional FWA – Political instability last year Nigeria – additional representation  East Africa Growth muted Significant currency depreciation  Shelys Aspen to acquire the remaining 40% from the min

  51. Slide 51: LATAM

    LATAM  Regional growth at 23%  Building sustainable business off solid platforms  Tender driven commodity generics were Nearly 100% of sales Sales R544m Now less than 10% Mexico 21%  Full focus on branded/commercial products Brazil 28% Mexico 17% Brazil 62% ROLA 17% Venezuela 39%  Pipeline now

  52. Slide 52: Demonstration of Capability

    Demonstration of Capability Performance of New Product Launch INSUNORM 25000 20000 15000 10000 5000 0

  53. Slide 53: Performance with Global Brand

    Performance with Global Brand Demonstration of Capability Zyloric annual Units Sales 900 852 850 2007 677 800 Pre-Transition 2008 681 750 Pre-Transition 700 677 681 673 2009 Packs 673 (000's) Pre- Transition 650 591 2010 591 Pre-Transition 600 2011 852 550 Aspen 2007 2008 2009 2010 2011 Pre - Transi

  54. Slide 54: Brazilian Product Pipeline

    Brazilian Product Pipeline IMS 2010 Value Launch Year Currency (mn) 2012 2013 2014 2015 to 2018 Grand Total R$ 542 286 1,402 1,636 3,866 USD 319 168 825 963 2,275

  55. Slide 55: Operational Highlights

    Operational Highlights Port Elizabeth  Solids manufacturer  Additional capacity successfully installed Capacity doubled Commercial production Trial work on going Global and Australian realignments commencing East London  Semi-solids and phase 1 liquids operational  Phase 2 liquid construction ha

  56. Slide 56: Summary and Prospects

    Summary and Prospects  Financial indicators all positive Robust cash flows  Aspen has transformed into a global business Performing Globally  SA demonstrated resilience of base business Stronger H2 expected from Pharma ARVs to increase Generic growth juggernaut continues Pipeline to drive growth

  57. Slide 57: Summary and Prospects

    Summary and Prospects SSA Markets growing organically Attracted to quality offering Pipeline rolling out Latam All major markets growing Brazil transformed from a commodity business Promotional capability demonstrated Aspen focus area  Operational delivery creating competitive advantages Internatio

  58. Slide 58: Questions

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