CFR Pharmaceuticals Corporate Presentation

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CFR Pharmaceuticals
Corporate Presentation
March, 2014
This presentation may contain forward-looking statements or forward-looking information (“forwardlooking statements”). These statements are based on certain factors and assumptions with respect to
future events and financial trends affecting our business, including with respect to: exchange rates;
expected growth, results of operations, performance, business prospects and opportunities; and effective
income tax rates. While the company considers these factors and assumptions to be reasonably based on
information currently available, they may prove to be incorrect. Several factors could cause our actual
results to differ substantially from those anticipated in our forward-looking statements, including, but not
limited to: competition in our industry and markets; an ability to develop and commercialize additional
pharmaceutical products; changes in the prices of raw materials or products; varying levels of acceptance
of our products by the medical community; impacts of any production problems or product safety issues;
exchange rate fluctuations; significant economic or political developments in the regions in which we
operate and particular developments affecting the pharmaceutical industry; changes in the regulation of
the pharmaceutical industry in the regions in which we operate; and other risks that could affect our
financial condition, liquidity or results of operations.
The words “believe”, “may”, “will”, “aim”, “estimate”, “continue”, “anticipate”, “intend”, “expect” and
similar words are intended to identify forward-looking statements. Forward-looking statements speak
only as of the date they were made and the company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise, except
as required by law.
In light of the risks and uncertainties described above, the forward-looking statements and circumstances
discussed in this presentation might not occur and are not guarantees of future performance.
In addition, you should not interpret statements regarding past trends or activities as assurances that
those trends or activities will continue in the future.
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Table Of Contents
1.
Company Overview
2.
Year 2013 Highlights
3.
Financial Results
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COMPANY OVERVIEW
WHO WE ARE TODAY: THE ONLY
PURE-PLAY SPECIALTY PHARMA
LISTED COMPANY IN LATIN AMERICA
WHAT WE DO
•
We develop off-patent and locally unpatented value
added branded generics, focused on specialty
Product
Development
products
•
UK
~1,000 products and 150 new formulations under
development
•
~650 INNs under approximately 3,100 registrations
•
14 specialized manufacturing facilities in Chile,
Vietnam
Argentina, Colombia, Peru, Canada and UK
Manufacturing
•
Capability to manufacture all pharmaceutical forms,
complex formulations and drug delivery systems
•
~84% of sales manufactured in-house
•
The strongest sales force in the region
Commercialization
USD mn
•
Nearly 2,300 medical reps
•
More than 140,000 physicians visited every
Revenue
month
•
(1)
(2)
Facilities
Strong reputation in the medical community
2009 2010 2011 2012 2013
313
378
491
571
768
Adj. EBITDA(1)
61
96
99
100
170
Adj. Net Income(2)
43
65
91
80
96
EBITDA as reported in 2013: US$ 122.2 million. Adjusted for M&A expenses, exchange rate fluctuations, Uman Pharma minority effect and other non-recurring items
Net income attributable to equity holders of the parent as reported in 2013: US$ 58.3 million . Adjusted for M&A expenses, exchange rate fluctuations and other non-recurring items
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FOCUSED ON EMERGING MARKETS… THE DOMINANT
THEME IN GLOBAL PHARMA...
Rising incomes expected to drive pharma spend as
% of GDP off a low base
Emerging markets are driving global pharma growth
USA
2.4%
Venezuela
69.5%
67.3%
64.8%
62.7%
60.7%
58.6%
’12-’17
CAGR
1%
2.3%
Argentina
1.3%
Ecuador
1.3%
Brazil
1.0%
Uruguay
0.9%
CENAM(1)
30.5%
32.7%
35.2%
37.3%
39.3%
41.4%
’12-’17
CAGR
11%
Mexico
2013E
2014E
Emerging markets
2015E
2016E
0.7%
Chile
0.6%
Colombia
0.6%
Peru
2012A
0.8%
2017E
0.0%
Developed markets
0.5%
0.5%
1.0%
1.5%
2.0%
2.5%
% of GDP
(1)
CENAM includes Panama, Costa Rica, Nicaragua, Honduras, El Salvador,
Guatemala and Dominican Republic
Source: IMS, BMI
Source: IMS Health
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3.0%
CFR’S 90 YEARS OF DISCIPLINED GROWTH
AND EXPANSION
PHASE I – CONSOLIDATE
LOCAL CHILEAN POSITION
1922 - 1990

Founded by Nicolás
Weinstein Rudoy in 1922
PHASE II – EXPAND VIA
GREENFIELDS AND JVs AND
CONSOLIDATE JVs
1990 - 2010





Argentina
Bolivia
Colombia
Ecuador
Mexico
PHASE III – TRANSFORM
INTO A GLOBAL EMERGING
MARKETS PLAYER
2010 ONWARDS





Peru
Thailand
Venezuela
Vietnam
CENAM(1)
Corporate

Incorporation of CFR

IPO
Acquisitions and investments

Allergy Therapeutics Strategic Investment

Acquisition of Northia and Fada
(Argentina)

Acquisition of Domesco (Vietnam)

Acquisition of Uman (Canada)

Acquisition of Lafrancol (Colombia)
SUCCESSFUL CONSOLIDATION AND INTEGRATION OF 10 ACQUISITIONS SINCE 2007
(1) CENAM includes Panama, Costa Rica, Nicaragua, Honduras, El Salvador, Guatemala and Dominican Republic
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SUSTAINED GROWTH WITH DIVERSIFIED
REVENUES
REVENUES (US$ million)
REVENUE BREAKDOWN BY DIVISION(1)
Specialty Pharma
768
571
491
313
378
313
345
2009
2010
227
21.5%
56
96
62.9%
34
395
515
541
2011
2012
11.2%
Health & Wellness
Other
2013
Inorganic
TOP TEN BRANDS REVENUE BREAKDOWN(2)

Rapid population growth increasing purchasing power
and increasing life expectancy will act as drivers of
demand for pharmaceuticals, in particular to address
chronic diseases

Diversification by therapeutic areas with focus on
difficult-to-substitute, high growth business segments

Limited concentration of revenues by product, which
are also commercialized in several markets

Focus on chronic treatments and difficult-tosubstitute (low elasticity products)
10 main
products
16.0%
(1)
(2)
US$ 768
mn
4.5%
Organic
> 1,000
products
85.5%
Complex Therapeutics
US$ 768
mn
As of December 2013
As of December 2013, including Lafrancol
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YEAR 2013 HIGHLIGHTS
YEAR 2013 HIGHLIGHTS
Strong Growth Supported by Organic and Inorganic Growth

Solid growth in constant currency and recurring basis:

On a constant currency basis, revenues increased by 46.4% (35.5% as
reported)

Organic revenues increased 16.6% on a constant currency basis (5.2% as
reported)

Recurring EBITDA(1) for the year 2013 increased 70.4% to US$170.4
million, or 20.5% over sales (26.0% to US$ 122.2 million as reported)

We realized all the short term synergies of the acquisition of Lafrancol, and we
started to implement the long term revenue synergies

We successfully turn around Argentinean performance

We continue investing in organic growth

We launched 246 products in the year 2013
(1)
Adjusted for M&A expenses, exchange rate fluctuations, Uman Pharma minority effect and other non-recurring items
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INTEGRATION OF LAFRANCOL
Successful Implementation of Short-Term Synergies

Acquisition of Lafrancol was concluded on December 12, 2012

Total synergies were estimated between US$150 to US$200 million in NPV

Short-term Synergies were fully implemented in 2013:
 Original plan was to generate ~US$10 million of annual synergies
 Actual synergies achieved in 2013 reached US$15.5 million
 Full year synergies from 2014 will be ~US$18 million

Long-term revenue synergies will be implemented in the following years
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INTEGRATION OF LAFRANCOL
Successful Implementation of Short-Term Synergies

Short-term Synergies implemented in 2013:
 Divisional structure by business area  Type of customers
 Integration of product portfolios of Lafrancol and Synthesis
 Creation of integrated strategic support areas
 Consolidation of our approach to the commercial channel
 Optimization of the back-office structure
 Decompressing critical product lines in Chile
 Full capacity utilization of R&D unit in Colombia
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INTEGRATION OF LAFRANCOL
Successful Implementation of Short-Term Synergies
Market share (Colombia)
10,0%
9,0%
8,0%
Lafrancol Cfr (373)
Tecnoquimicas Corp (300)
7,0%
Sanofi Corp. (371)
6,0%
Pfizer Corp (115)
Bayer Corp. (99)
5,0%
Glaxosmithkline (103)
4,0%
Abbott (74)
Nestle (18)
3,0%
Msd (100)
2,0%
J+j Corp. (86)
1,0%
Procaps Corp (208)
dic-13
nov-13
oct-13
sep-13
jul-13
ago-13
jun-13
may-13
abr-13
feb-13
mar-13
ene-13
dic-12
oct-12
nov-12
sep-12
ago-12
jul-12
jun-12
may-12
abr-12
mar-12
feb-12
ene-12
0,0%
Note: Lafrancol CFR: includes both subsidiaries in Colombia, Lafrancol and Synthesis
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ARGENTINA TURNAROUND
From Negative EBITDA in 2012, to High Single-Digit EBITDA Margin in 2013
Turnaround Drivers
EXPORTS
Strong expansion on CFR Markets (+61% exports)
PRICING
Focus on pricing to mitigate inflation in B2B (no
price control)
RETAIL FUSION
(FADA– NORTHIA)
Focus on synergies and efficiencies: 11 Reps and
40 productive FTE reduction
ONCO BUSINESS
DEVELOPMENT
Re- focus Onco business into profitable mid-high
price Tier
EFFICIENCY
PROJECTS
Improve purchasing and logistics processes.
Reduce absentism
PROFITABILITY
ANALYSIS BY
PRODUCT
Focusing on high margin products
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INVESTMENTS IN ORGANIC GROWTH
Launching New Divisions and Rolling Out our Portfolio

Roll-out of our Cardiopharm
 Central America, Peru, Chile and Colombia
 Addition of sales force
 Acceleration of growth
 Sales of US$ 39.9 million (26.0% growth)

Roll-out of Neumobiotics
 Chile, Peru, Colombia, Paraguay and Bolivia
 Addition of sales force
 Sales of US$ 37.7 million (38.8% growth)
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SELECTED LAUNCHES OF 2013
Supporting Organic Growth

Ibone D ® (Ibandronic acid + Vitamin D) in
Colombia, a unique combination in the world for
the loss of bone mass

Acotol ® (Dienogest + Ethinylestradiol) in Chile, a
latest-generation contraceptive, which has been
the most successful launch in Gynopharm Chile

Noval® / Marilow ® (Nomegestrol + Estradiol) in
Colombia and Chile respectively, another latestgeneration with one of the best safety profiles

Reage ® (Botulimun Toxin type A) in Chile,
Colombia and Peru, with which we entered the
aesthetics area, one of the fastest-growing
segments in the pharmaceutical market.
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LEADING REGIONAL FOOTPRINT… WHICH WE ARE
INCREASINGLY ROLLING OUT ACROSS OUR MARKETS
COUNTRY PRESENCE
Women’s
health
Neurology,
Psychiatry
Dialysis, Transplants,
Oncology,
Injectables
OTC,
Personal care
General
practitioner
products
Cardiology
Pulmonology,
Otorhinolaryngology
Gastroenterology
Ophthalmology
Argentina
Bolivia
CENAM(1)
Chile
Colombia
Ecuador
Perú
Venezuela
Vietnam
Others
CFR presence:
Strong presence
Emerging presence
No presence
CFR’S STRATEGY IS TO INCREASE SCALE OF DIVISIONS ACROSS ITS
CURRENT MARKETS TO DRIVE FUTURE EXPANSION, LEVERAGING ON
INFRASTRUCTURE TO DELIVER HIGHER PROFITS
(1)
Central America (CENAM) includes Panama, Costa Rica, Nicaragua, Honduras, El Salvador, Dominican Republic and Guatemala.
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CFR IS IN A KEY POSITION TO CONSOLIDATE MARKETS…
LEVERAGING ITS PLATFORM TO DRIVE ORGANIC GROWTH
Our ability to create value through synergies extracted from...
Supplying
Commercialization
• Increased purchasing power
• Increased productivity of reps by improving
• Better selection of suppliers and access to
portfolio
information on new products
• Increased bargaining power with the trade
• Increased size of target market
Development
• Better position for tenders
• Better access to pipeline (global vs. local)
Overhead
• Improved registration capabilities
• Reduction of fixed cost by sharing and optimizing
• Increased productivity and new product capacities
services
through specialized teams
• Better access to credit and reduction of financial fee
• Better use of local regulatory plant approvals
Production
• Increased efficiency and scale
• Reduction of need for contract manufacturing
• Reduction of stock-out
• Allocation of best equipments between plants
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YEAR 2013
FINANCIAL RESULTS
REVENUES
Strong Growth Supported by Organic and Inorganic Businesses
Revenues (US$ million)
Revenue By Segment 2013
+34.5%
(+46.4% c.c)
Specialty Pharma
21.5%
226.5
56.1
+5.2%
(+16.6% c.c.)
514.8
Complex
Therapeutics
541.4
62.9%
11.2%
Health & Wellness
4.5%
YE 2012
Organic


Others
YE 2013
Inorganic
Strong growth in Peru and Cenam
Growth in Venezuela and Argentina despite currency
devaluations
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RECURRING EBITDA
Strong Performance Compared to 2012 due to Integration and Synergies
Recurring EBITDA(1) (US$ million)

Recurring EBITDA for the year 2013
increased 70.4% to US$170.4 million
 Adcock expenses
 FX
 Acquisition of Lafrancol
 Uman Pharma minority stake

Recurring EBITDA margin reached
20.5% due mainly to:
 Strong margin in Colombia
 Complex Therapeutics turn
around
 Strong performance of Peru
 Delivery from our investments in
organic growth: Cenam and two
new business lines
+70.4%
170
100
YE 2012
Rec. EBITDA Margin
17.6%
(1)
YE 2013
Rec. EBITDA Margin
20.5%
Adjusted by M&A activity expenses, Uman Pharma, exchange rate fluctuations and other non-recurring items.
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RECURRING PROFIT
Significant Growth Despite Higher Financial Expenses
Recurring Profit (Attributable to owners of
parent)(1) (US$ million)
+21.2%
96

Net financial expenses increased
US$22.5 million, to US$(29.9) million
due to Lafrancol financing

Exchange rate difference decreased
compared to high base in 4Q 12

Recurring Profit increased despite the
above by 21.2%
80
YE 2012
(1)
YE 2013
Adjusted by M&A activity expenses, Uman Pharma, exchange rate fluctuations and other non-recurring items.
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