INVESTOR RELATIONS - Cheplapharm · 2020. 12. 10. · Email: investor‐[email protected] Jens Rothstein Chief Financial Officer Tel.: +49 (0) 3834 8539‐122. DISCLAIMER

Specialty pharma meets M&A competence

INVESTOR RELATIONSInvestor Presentation per May 2019

AT A GLANCE

Company Snapshot Profitable Growth

Recently Closed Acquisitions Brand diversification by area 

Family‐owned company with > 25 years of pharma sector expertise

Buy and Build strategy

M&A know‐how and track record with > 90 products acquired

Branded specialty pharma / niche products in over 120 countries

Value creation via scalable platform and Life‐Cycle‐Management

Asset light business model with strong scientific backbone

Revenue growth < € 1m in 1998 to  c. € 292m  in 2018  

80122

228292

38 68134

167

2015A 2016A 2017A 2018A

Sales EBITDA

56% 59%47%

Gastroenterology

Adiposity

Cardiology

Infection Medicine

Haematooncology

Other Therapeutic Areas

OphthalmologyHaematology

Oncology

Addiction Medicine

57%

07/201809/2018 04/2018

Average age: c. 25 years

09/2018

09/2018

01/2019 09/201801/2019

% EBITDA margin

2

29%

15%

13%8%

7%

7%

7%

5%

2%2% 2% 3%

2018 PF¹

Sleeping Disorder

Emergency Medicine

1) Pro Forma, including Net sales and TSA related sales

15%

9%

7%

5%

2%2%14%

7%3%

3%2%1%

9%

6%

6%

5%4%

15%

15%

12%

8%7%6%

5%

5%4%

1%11% Atacand/Plus Xenical

Dilatrend Cymevene

Visudyne Deursil/Ursolvan

Fungizone Konakion

Vesanoid/Tretinoin Questran

Distraneurin Anexate

VePesid Rohypnol

Sotalex Etopophos

Lexotan Dormicum

All other

ea. 2%

3

PORTFOLIO OVERVIEW

TOP 3 = 42% Legacy

Niche

EuropeJapanKorea

China

Taiwan

Hong Kong

Rest of Asia

Asia & Oceania (30%) 

Other Regions (16%)

Italy

France

Germany

Spain

Switzerland

UK

Europe (54%) 

Rest of Europe Oceania

Latin America and Caribbean

North America

AfricaAsia & Oceania

Other Regions

Sales by Products 

Sales by Geography 

CHEPLAPHARM is well diversified across products and geographies, providing global reach to Big Pharma

47%

31%

22%

Niche vs. Legacy  

Business Footprint

• Business in more than 120 countries

• Vast network of distribution partners globally

• Secured supply and production network

1) Pro Forma, including Net sales and TSA related sales

2018 PF¹

2018 PF¹

2018 PF¹

4

FIGURES AS PER 12/2018

> 85Products

> 10Therapeutic

Areas

> 900AcquiredMarketing 

Authorisations

> 24mPacks of

pharmaceuticalproducts p.a.

> 250Employees

from15 Nationalities

> 130Distribution 

partners globally

167m€EBITDA*

*Exceptional items not considered

30Yrs of experience

within themanagement

292m€Sales*

*Mix of Net sales and TSA related sales

Deal Sourcing & Due Diligence

Life‐Cycle ManagementKey value levers: (i) overhead cost and complexity reduction, (ii) 

optimization of production costs, (iii) active pricing strategy and (iv) well‐established partners for production / D&M

ProductionResearch & Development

5

Distribution & Marketing

BUY – INTEGRATE – BUILD / OPTIMIZEDisciplined identification of right acquisition targets, integration into outsourced supply chain 

and optimization via professional Life‐Cycle Management 

No R&D activities & associated risks

Focus on inorganic growth acquiring branded original off‐patented niche or legacy products from Big Pharma

CHEPLAPHARM is principally shifting distribution & marketing to its own external exclusive distribution network or taking over agreements by assignmentCHEPLAPHARM’s clear focus and key competence is Life‐Cycle Management creating added value vs Big Pharma

Lean set‐up given outsourced manufacturing and distribution activities to trusted, qualified and long‐standing 3rd parties

BUSINESS MODEL

UNIQUE, LOW RISK BUSINESS MODEL

6

Acquisition of “tried and tested” pharmaceuticals with sticky customer base, long‐phase out periods and high brand awareness requiring no / less marketing

Post‐Patent Phase Management ofproduct Life‐Cycle

Optimization ofcost structure

• Limited competition,no relevant generics

• Unlikely to be replacedby new treatment guidelines

• Stable to little growing sales and cash flows

TimeCash

Development Phase Patent Phase

CHEPLAPHARM’s Business Model

Niche product ‐ Lower volume – typically no or limited competition (solid and stable sales)Legacy product ‐ Higher volume – generic competition (price competitive)

CHEPLAPHARM advantages:• Limited or no competition• 10+ years out of patent• Stable sales• Low risk due to “tried & tested” pharmaceuticals

• Stable market share following generics competition

• High brand loyalty being able to retain customers

• Stable to slightly declining sales and cash flows

1

2

Key characteristics

Nicheproducts

Legacy products

2

1

LIMITED COMPETITION MARKET SEGMENT / BARRIERS TO ENTRY

7

Strong relationships to big pharmas and reliability being key for any upcoming transaction representing a significant barrier to entry for potential new market players

M&Atrack record and regulatory competence

Fast ‐ Flexible ‐Reliable

Package Deals

Global distribution

And many more…!

FROM SIGNING TO TRANSITION

Signing of the Asset Purchase Agreement (APA) and ancillary contracts like TSA, PVA and MSQA/ TMA

8

Payment of the purchase price when APA becomes effective

Immediate start of integration process

Start of preparing Business Transfer Plan

Transfer of all IP and know‐how Transition to exclusive CP 

cooperation partner network (in terms of distribution and CMO)

Transition period lasts according to agreement with seller

Signing Closing Transition

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7

CREATING VALUE FROMLIFE‐CYCLE MANAGEMENT

Life‐Cycle Value of

Big Pharma

Life‐Cycle Value of

CHEPLAPHARM

Overhead Reduction

Reduction ofProduction Costs

Active Price Strategy

Reduction ofcomplexity

Others

Schematic presentation for illustration purposes only

9

Life‐Cycle Management comprises several measures with regular optimization of production costs being the most important value lever

Life‐Cycle Management provides additional upside, i.e. neither included in investment decision nor in 

CHEPLAPHARM’s business plan

Basis for investment decision (ROI calculation)

SUMMARY ‐ KEY CREDIT HIGHLIGHTS

10

Unique, low risk business model with easy scalability

Strong acquisition track record and global distribution

Limited competition market segment

Diversified sales base and high revenue visibility

Limited capex requirements resulting in significant cash generation

Highly qualified management with proven operational and M&A track record

1

2

3

4

5

6

Specialty pharma meets M&A competence

APPENDIX

ORGANISATIONAL STRUCTURE

12

100%

RubiePharmArzneimittel GmbHSanavita GmbH

CHEPLAPHARM Arzneimittel GmbHMoody´s B1 / S&P B 

RubiePharmVertriebs GmbH

Glenwood LLCCHEPLAPHARMFrance SAS

Walter RitterGmbH & Co KG

WR Pharmaceuticals Vertriebs GmbH

COMMENTS FROM THE RATING AGENCIES

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“ CHEPLAPHARM runs a profitable and cash flow generative business model

…. good therapeutic and geographic diversity

…. successful track record and established relationships with leading global pharma companies ”

“ CHEPLAPHARM will be able maintain its profitability metrics, supported by management's focus on lifecycle management activities

The main strengths of the company is its established track record of careful productselection ….

…. the company has been able to generate average EBITDA margins of about 55% ”

CONTACT

14

Request further information

HEADQUARTER

CHEPLAPHARM Arzneimittel GmbH

Ziegelhof 24

17489 Greifswald

Internet: www.cheplapharm.com

Jens Remmers

Head of Investor Relations

Tel.: +49 (0) 3834 8539‐145

Email: investor‐[email protected]

Jens Rothstein

Chief Financial Officer

Tel.: +49 (0) 3834 8539‐122

DISCLAIMER

15

These materials (the “Document”) contain confidential information regarding Cheplapharm Arzneimittel GmbH (the "Company"). This Document issubject to the terms of the Confidentiality Agreement entered into between the Company and the recipient. Therefore, by accepting this Document,the recipient agrees that recipient will return this Document together with any copies thereof to the Company upon request.

The information contained in this Document does not purport to be all‐inclusive or to contain all information that is required to properly evaluate apotential transaction. Any recipient of this Document should therefore conduct its own independent analysis of the Company and the data containedor referred to in this Document. The Company, does not intend to update or otherwise revise this Document or other materials supplied herewith.

The Company does not make any representation or warranty as to the accuracy or completeness of any of the information contained herein or withregard to other written or verbal information submitted or made available to the recipient. The Company accepts no liability for possible errors oromissions in this Document. In particular, the Company makes no representation or warranty with respect to any financials (including withoutlimitation management projections) that may be contained in this Document. Where this Document contains forward‐looking statements, thesestatements involve risks and uncertainties, and the Company's actual results may differ significantly. Such information should therefore not beconstrued as a representation or prediction that the Company will achieve or is likely to achieve any particular results.

The recipient of this Document must not construe any of the contents of this Document as legal, business, or tax advice. Each recipient shouldtherefore consult its own attorney, business advisor and tax advisor as to legal, business, tax and related matters concerning this Document.