Brazil pharma including big ben and santana - may 2012 10.05

Institutional Presentation

May 2012

The Sector

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Sales Performance in the Brazilian Pharmacy Retail Sector from 1996-2011 (R$ Billion)

Pharmacy Retail: A Growth History…

Sources: IBGE. Farmácia Popular. Health. OMS IMS. Brazil Central Bank

Micro Drivers Timing

Regional

Brands

Fragmented

Market Formalization

Macro Drivers

Income Growth Population Aging Generic Drugs

1997 – 2000

1997: Asian Crisis

1998: Russian Crisis

1999: Real Depreciation

2000: Internet Bubble burst

2001 - 2002

2002: Crisis pre-Lula election

2001: Argentine Default

2003 – 2005

2003-04: First years of

Lula´s election

2004: Mensalão scandal

2006 – 2007

2006: Second Lula election

2008 – 2011

2008: Subprime Crisis

2010: Greece Debt Crisis

CAGR 03-11 Generics: 37%

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2 / 79 / 159 Market Share and Players Footprint

Source: IMS Health. Companies web site. Brazil Pharma

Brazil Pharma is located in strategic regions with low competition. high growth perspectives and large

complementarities to top players.

Revenues

Breakdown per

State

Raia +

Drogasil

Drogaria

S. Paulo +

Pacheco

Brazil

Pharma

São Paulo 31%

Rio de Janeiro 14%

Minas Gerais 10%

Rio Grande do Sul 8%

Paraná 6%

Goiás + DF 5%

Bahia 4%

Santa Catarina 4%

Pernambuco 3%

Ceará 3%

Pará 2%

Others 11%

Pharmacy Retail: ... With Consolidation Opportunity

South

East

Region

Other

Regions

Brazil Pharma Focus

Peers Focus

The Company

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30.7%

56.9%

12.4%

Geographic Location Strong Organic Growth Capacity (# Stores)

Brazil Pharma: Ready to Grow

Largest Pharmacy Retail Company in Brazil outside the Southeast

Profitable Mix (1Q12 Sales Mix)

Brazil Pharma

Branded

Generics

Non-Medicines

86

107 own stores

237 own stores

355 franchises

198 own stores

4

1

102 20

15

92 7

8

191

7

1

7

87

101 own stores

101

71

71

86

16

221

292

378

643

2009 2010 2011 1Q12

Abrafarma

998 points of sale

643 own stores 355 franchises

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(1) Including Sant’ana acquisition that is still pending shares incorporation

Brazil Pharma: The Shareholders

BTG is our main Shareholder

Farmais Rosário

Distrital

Mais

Econômica

100% 100% 100%

Big Ben

100%

Sant’ana(1)

100%

Operating

Partners

23%

Free Float

39%

BTG

Pactual

38%

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Experienced management with more than 25 years in the pharmacy retail industry on average

Brazil Pharma: Our People

André Sá

CEO

Marcelo Doubek

CFO

Renato Lobo

Investor Relations

Management

Board of Directors

Marcelo Kalim

Board Member

Carlos Fonseca

Board Member

Roberto Martins

Board Member

José Luiz Depiere

Board Member

2

2

n/a

36

# Years

Pharmacy Retail

n/a

n/a

20

14

25

# Years

Financial Industry

12

14

18

n/a

15

14

22

n/a

n/a Artur Grynbaum

Independent Board Member

Experience

Álvaro Silveira

Board Member

Carlos Dutra

Comercial Director 20 n/a

Financial Expertise

Retail Expertise

Manufacturing Expertise

Pharmacy Retail

Experience

Entrepreneurship

Experience

Gilberto Portela

Head of Institutional Relations 30 n/a

Álvaro Silveira Jr.

Head of Midwest Operations

Wilson José Lopes

Head of South Operations

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25

n/a

n/a

Raul Aguilera

Head of North and Northeast Operations 25 n/a

José Santana

Head of Bahia Operations 30 n/a

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110

45

100

200

245

Set/09 - Abr/10 Mai/10 - Jan/10 Jul/10 - Jan/11 Fev/11 - Set/11 Out/11 - Dez/11 Jan/12 - Fev/12

Proved Historical Success Since its foundation in 2009. Brazil Pharma has been successfully implementing its growth strategy based in

acquisitions and organic growth.

Revenue evolution ( Average Monthly in R$ mm)

Foundation

Farmácia dos

Pobres´

points-of-sale

Acquisiton

Guararapes and

RNF Merger

(RNF) Rede

Nordeste de

Farmácias´

points-of-sale

Acquisition

Launching the

Multiplus

Fidelity

program (GRD)

Mais

Econômica

Acquisition

Grupo Rosário

Distrital (GRD)

Acquisition

384 397

465

468

506

663

Sep

2009

Aug

2010

Oct

2010

May

2010

Jun

2010

Jan

2011

Mar

2011

Nov

2011

681

IPO

Jul

2010

Jun

2011

498

Big Bem

Acquisition

824

(1) Pro forma as 30/12/2011 (2) Pro-forma as 31/03/2012

Total number of stores (own stores + franchisees)

Feb

2012

Farmais

Acquisition

Sant’ana

Acquisition

986(1)

Sep/09-Apr/10 May/10-Jan/10 Jul/10-Jan/11 Feb/11-Sep/11 Oct/11-Dec/11 Jan/12-Feb/12

998(2)

Apr

2012

Debentures

Issuance

Beauty’in

Acquisition

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Brazil Pharma: Strategies to Create Value

Organic Growth

Opening of new stores

to consolidate local

leadership and enter

new states

Operational

Efficiency

Strong synergy to come

through integration

Market Consolidation

Highly fragmented

market with

opportunities for

consolidation

Differentiation

Product development.

private label and loyalty

programs

Integration / Stabilization

Restructuring Governance

G&A Synergies

Training. Career Plan and Remuneration

Improvements prioritization

Monitoring of process indicators

Implementation of culture and services

Scalability

Operational Consolidation

Migration of new processes

Operational efficiency

Organic Growth

Geographic presence in all regions boosts the

opportunity to grow organically

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30.7%

56.9%

12.4%

26%

74%

Competitive Geographic Position with Differenced Mix

Brazil Pharma Focus / Competitors Drugstores per region

Brazil

Pharma Focus

Competitors Focus

More dense

Less dense

Located in strategic regions

Lower competition. giving higher gross margin

High growth with higher Real Estate opportunity

Complementarity with Large Networks

Favorable Mix to capture the potential of generics in Brazil

Higher HPC participation gives higher profitability per m2

Brazil Pharma Abrafarma

Branded Generics

Medicines Sales Mix 1Q12

Total Sales Mix 1Q12

Branded

Generics

Non-Medicines

Brazil Pharma Abrafarma

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Brazil

4o

2o

1o

3o

North

n/a (2)

n/a (2)

Northeast

n/a (2)

Mid-West

n/a (2)

Southeast

n/a (2)

South

n/a (2)

(1). Number of Stores Number of Stores Revenue

2011 Abrafarma Ranking

1

The New Brazil Pharma Brazil Pharma consolidates its leadership position in four of the five regions of Brazil. becoming the

largest retail pharmacy. excluding Southeast. (1)

(1)Ranking by number of own stores as on September 30. 2011. considering the four largest drugstore chains in Brazil; and

(2)n/a: other chains do not have operations in the region.

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Gross Revenue

(R$ million; Pro-forma)

Results Consistency with Margin Stability

Gross Profit and Gross Margin

(R$ million)

EBITDA and EBITDA Margin

(R$ million)

Stores Maturation

131 20%

75 12%

101 16%

336 52%

Stores with less than 12 months

Stores with 12 months to 24 months

Stores with 24 months to 36 months

Stores with more than 36 months(mature)

Own Store Growth

# of own stores (pro forma)

71

71

86

16

221

292

378

643

2009 2010 2011 1Q12

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Brazil Pharma: Comparing With The Peers

Solid track record in sales. Gross Margin and EBITDA

1Q12 EBITDA and EBITDA Margin

(R$ million. % of Gross Revenues)

1Q12 Selling & General Administrative and Other

Expenses and % of Gross Revenue

(R$ million. % of Gross Revenues)

1Q12 Gross Profit and Gross Margin

(R$ million. % of Gross Revenues)

Own Stores (as of March 31 2012)

Integration Process

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Operations Administrative

(SSC) Procurement

Corporate

Finance

Accounts Payable

Human Resource

Accounting

IT

Legal department

Sales (pricing. mix.

location

New stores

Logistics

Purchase process

Relationship with

manufactures

Service Level

Working Capital

G&A Reduction Sales increase

Operational efficience

Gross margin Benefits

We have three operations areas:

(i) Procurement

(ii) Sales and Operations

(iii) Back Office

Brazil Pharma: Integration Process

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On March 5. 2012 we opened our Shared Services Center. which will integrate the

back office areas of operations. allowing the integration and optimization of

activities. processes and implementation of a unified management system

SSC Brazil Pharma

Operational and Financial Highlights 1Q2012

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553.1

699.3

1Q11 pro forma 1Q12

Gross Revenue

(R$ million)

SSS (Same-Store Sales)

+26.4%

240.0 274.1

305.2 323.2

699.3

1Q11 2Q11 3Q11 4Q11 1Q12

Sales and SSS Growth

SSS and Sales acceleration during 2012

pro forma pro forma

pro forma pro forma

SSS SSS Mature(36 months)

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2 / 79 / 159 Gross Profit and Gross Margin

(R$ million, % of Gross Margin)

Selling, General and Administrative Expenses

(SG&A)¹ and % of Gross Revenue

(R$ million)

+27.0%

Gross Profit and Expenses • Gross margin reduction due to the sales mix and acquisitions

• SG&A reduction as percentage of the Gross Revenue due to a more productive and mature portfolio

pro forma

78.9 94.1 102.1

121.1

211.0

32.9% 34.3% 33.5% 37.5%

30.2%

1Q11 2Q11 3Q11 4Q11 1Q12

Gross Profit Gross Margin

pro forma

66,7 79.0 81.0 98.7

174.2

27.8% 28.8% 26.6%

30.5%

24.9%

1Q11 2Q11 3Q11 4Q11 1Q12

SG&A % Gross Revenue

pro forma

140.7

174.2

25.4% 24.9%

1Q11 1Q12 pro forma pro forma

(1) These figures exclude expenses with stock options of R$1.5 million and non-recurring expenses for each period. In 1Q12,

non-recurring expenses comprised R$1.8 million with M&A transactions and non-recurring revenue totaled R$21.7 million,

related to insurance payments from the fire in the Sant’ana distribution center, variable compensation in the amount of R$1.5

million and expenses on issuance of the debentures in the amount of R$ 0.1 million.

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Net Income and Net Margin (% of Gross Revenue) 1

(R$ million)

EBITDA and EBITDA Margin 1

(R$ million, % of Gross Revenue)

+45.1%

EBITDA and Net Income EBITDA margin and net margin pressured by recent acquisitions

pro forma

pro forma

(1) Net income before minority interest and adjusted to exclude non-recurring expenses in the period expenses, brand and key money amortization, taxes over insurance revenue and employees SOP’s

(1) exclude expenses with stock options of R$1.5 million and non-recurring expenses for each period. In 1Q12, non-recurring expenses are: R$1.8 million with M&A transactions and non-recurring revenue of R$21.7 million,

related to insurance payment from the fire in the Sant’ana distribution center, variable compensation in the amount of R$1.5 million and expenses on issuance of the debentures in the amount of R$ 0.1 million.

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Debt

* R$150 million to be paid in stock issuance for Sant’ana acquisition

R$ million 1Q12 4Q11

Loans and financing 344.5 64.4

Current 241.3 22.4

Non-current 103.2 42

Accounts payable

for the acquisition

of investments 497.2 54.4

Current 184.8* 17.7

Non-current 312.4 36.7

Total debt 841.7 118.8

Cash and cash

equivalents 122.9 263.6

Net debt (net cash) 718.8 (144.8)

Debt

Debt affected by recent acquisitions. Debentures improving debt profile in 2Q12

Breakdown by Indexes

On April, we concluded a R$250 million debenture issuance

Two series of four and five years, yielding CDI+1.705% and CDI+1.775%, respectively,

which was assigned Aa3.br (national scale) and Ba2 (global scale) risk ratings by

Moody’s.

Debentures Issue

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Contact Details

Investor Relations

Renato Lobo IR Officer

Mara Boaventura

IR Manager

[email protected]

(55 11) 2117 -5200

www.brazilpharma.com.br/ri

Brazil Pharma S.A.

Rua Gomes de Carvalho. 1629

6th and 7th floors

CEP 04547-006

São Paulo. SP. Brazil