Presentation semi-annual results 2013-2014 · Diabetes Direct Business 1.2 -2.5 147.3 Other -0.5 0.8 39.0 Operating profit 2.44.6 91.2 12 Ypsomed Holding AG | Presentation of 2013/14

Ypsomed – Presentation of 2013/14 Semi-Annual Results

Burgdorf, 5 November 2013

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Important Notice

The information contained in this document has not been independently verified and no representation or warranty, express or implied, is made to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained herein. None of Ypsomed Holding AG, its advisors or representatives, or their respective affiliates shall have any liability whatsoever for any loss whatsoever arising from any use of this document, or its content, or otherwise arising in connection with this document. This document does not constitute, or form part of, an offer to sell or a solicitation of an offer to purchase any shares and neither it nor any part of it shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.

This document contains forward-looking statements which involve risks and uncertainties. These statements may be identified by such words as “may”, “plans”, “expects”, “believes” and similar expressions, or by their context. These statements are made on the basis of current knowledge and assumptions. Various factors could cause actual future results, performance or events to differ materially from those described in these statements. No obligation is assumed to update any forward-looking statements.

Ypsomed Holding AG | Presentation of 2013/14 semi-annual figures 2

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Agenda

1. Introduction

2. Finance

3. Operational business

4. Outlook

5. Questions and answers


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Ypsomed is reversing the trend


Total sales

Sanofi sales

2002/03 today tomorrow

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Key figures1st HY 2013/14

In million CHF 1st HY 2013/14 1st HY 2012/13 Delta in %

Sales of goods and services 131.5 119.7 9.8

thereof Delivery Devices 68.4 69.1 -1.0

thereof Diabetes Direct Business 55.3 42.7 29.6

Thereof Other 7.7 7.9 -2.5

Gross profit 30.6 27.4 12.0

Gross profit in % 23.3% 22.8%

Operating profit 4.6 2.4 91.2

Operating profit in % 3.5% 2.0%

Net profit 4.6 2.0 125.8

Net profit in % 3.5% 1.7%

Research and development expenditures, total 11.2 10.2 9.6

Investments in fixed assets 10.1 8.1 24.9

Equity ratio in % 62.9% 63.6%

Employee headcount 989 1‘020 -3.0


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Overview of the first half of the 2013/14 business year Ypsomed Delivery Systems

Delivery of the first batches of the Lupisulin pen for the Indian pharmaceutical company Lupin Ltd.

Tonghua Dongbao Pharmaceutical Co., Ltd. is launching the value, reusable Sulin pen on the Chinese market.

Launch of the Biosulin pen in South Africa by MJ Biopharm / Bioswiss.

Excellent foundations for profitable growth: customer project enquiries continue to increase.

Investments of CHF 10.1 million in new production plant such as automated pen assembly equipment and injection moulding tools.


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Overview of the first half of the 2013/14 business year mylife™ Diabetescare The operating result (EBIT) is positive for the first time since the implementation of

the diversification strategy and expansion of diabetes care.

One of the main drivers for the strong growth in the retail business has been the high demand for the tubeless insulin pump mylife™ OmniPod®.

Growth rates compared with the same period last year:

- mylife™ OmniPod® more than doubled at 117%

- 24% in business associated with blood glucose meters

- 8% in the specialist diabetes retailer DiaExpert

Disinvestment of DiaExpert: We began this process in May 2013 and expect it to be completed within the next 6-8 months.


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Outlook for mylife™ YpsoPump®


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Agenda

1. Introduction

2. Finance


4. Outlook



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Strong growth in the Diabetes Direct Business, driven by the mylife™ OmniPod®

In million CHF 2013/14 2012/13 Δ in %

Delivery Devices 68.4 69.1 -1.0

Diabetes Direct Business 55.3 42.7 29.6

Other 7.7 7.9 -2.5

Sales of goods and services 131.5 119.7 9.8


Net sales comprises: sales proceeds from delivery of goods, provision of research, development, industrialization and marketing services.

The Delivery Devices segment comprises the product groups pen systems, pen needles and other injection moulds manufactured by Ypsomed.

The Diabetes Direct Business segment covers the direct trade in a range of diabetes products via DiaExpert, including sales of mylife™ Pura®, mylife™ Unio®

blood glucose monitoring systems and mylife™ OmniPod® insulin patch pumps.

Other contains the precision-turned parts business segment (Ypsotec AG) and currently unused real estate for operational purposes.

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Operational profit nearly doubled

In million CHF 2013/14 in % 2012/13 in %

Sales of goods and services 131.5 100.0 119.7 100.0

Cost of goods and services sold -100.8 -76.7 -92.4 -77.2

Gross profit 30.6 23.3 27.4 22.8

Marketing and sales expenses -20.3 -15.5 -19.4 -16.2

Administration expenses -6.7 -5.1 -6.4 -5.3

Other operating income 2.1 1.6 2.0 1.6

Other operating expenses -1.0 -0.8 -1.1 -0.9

Operating profit 4.6 3.5 2.4 2.0


Gross profit up due to better purchasing terms, especially in the retail business.

Operating profit nearly doubled thanks to very good results in DDB, especially due to demand for the mylife™ OmniPod®.

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Diabetes Direct Business (DDB) now profitable following investment phase In million CHF 2013/14 2012/13 Δ in %

Delivery Devices 3.9 5.7 -30.8

Diabetes Direct Business 1.2 -2.5 147.3

Other -0.5 -0.8 39.0

Operating profit 4.6 2.4 91.2


For the future, we expect growth in sales and rising profitability in the "Delivery Devices" segment, thanks to newly launched pen systems and numerous customer enquiries and projects.

The DDB segment is now profitable after many years of market investment. The main driver is the mylife™ OmniPod®, but there has also been rapid growth in other products.

Positive signals from the market and efficiency savings in production should help ensure that the "Other" segment returns to profit in future.

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EBITDA up

In million CHF 2013/14 in % 2012/13 in % Δ in %

Operating profit 4.6 3.5 2.4 2.0 91.2

Depreciation of fixed assets 9.2 7.0 9.7 8.1 -4.8

Amortization / Impairment of intangible assets 2.6 2.0 2.6 2.1 -

EBITDA 16.5 12.6 14.7 12.3 12.4


Depreciation and amortisation at same level as the previous year.

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Financial result has positive effect on net profit

Financial income includes an adjustment on non-trading assets of CHF 1.0 million.


In million CHF 2013/14 in % 2012/13 in % Δ in %

Operating profit 4.6 3.5 2.4 2.0 91.2

Financial income 1.9 1.5 1.0 0.8 98.8

Financial expenses -1.5 -1.2 -1.0 -0.8 -59.3

Profit before income taxes 5.0 3.8 2.4 2.0 106.7

Income taxes -0.4 -0.3 -0.4 -0.3 -

Net profit 4.6 3.5 2.0 1.7 125.8

Earnings per share in CHF

(basic and diluted) 0.36 0.16

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High levels of liquid assets


In million CHF 30.09.2013 in % 31.03.2013 in %

Assets

Cash and cash equivalents 14.9 4.3 9.6 2.8

Trade receivables 29.9 8.5 31.2 9.1

Other current assets 5.4 1.6 4.5 1.3

Prepayments and accrued income 7.5 2.1 6.2 1.8

Current income taxes 0.1 0.0 0.1 0.0

Inventories 52.5 15.0 56.6 16.6

Customer machinery 1.2 0.3 0.6 0.2

Total current assets 111.4 31.9 108.7 31.8

Financial assets 9.4 2.7 8.3 2.4

Deferred income tax assets 8.3 2.4 7.9 2.3

Fixed assets 162.4 46.5 161.7 47.3

Intangible assets 57.8 16.5 55.1 16.1

Total non-current assets 237.9 68.1 233.1 68.2

Total assets 349.3 100.0 341.8 100.0

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Solid financing structure


In million CHF 30.09.2013 in % 31.03.2013 in %

Liabilities and equity

Financial liabilities 66.5 19.0 64.5 18.9

Trade payables 16.8 4.8 16.7 4.9

Prepayments from customers 2.7 0.8 2.1 0.6

Current income tax payable 1.4 0.4 2.0 0.6

Other payables 2.3 0.7 2.2 0.6

Accrued liabilities and deferred income 16.1 4.6 13.4 3.9

Provisions 0.6 0.2 0.6 0.2

Total current liabilities 106.4 30.5 101.4 29.7

Non-current liabilities to major shareholder 20.0 5.7 20.0 5.9

Other non-current financial liabilities 1.7 0.5 1.7 0.5

Provisions 1.0 0.3 1.0 0.3

Deferred income tax liabilites 0.5 0.2 0.4 0.1

Total non-current liabilities 23.3 6.7 23.1 6.7

Total equity 219.6 62.9 217.4 63.6

Total liabilities and equity 349.3 100.0 341.8 100.0

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Ypsomed continues to invest in production sites in Switzerland


In million CHF 2013/14 2012/13

Cash Flow from operating activities 20.9 8.8

Purchases of financial assets - -0.3

Purchases of fixed assets -10.1 -8.1

Disposal of fixed assets 0.4 0.3

Purchases of intangible assets -5.3 -4.7

Cash Flow from investing activities -15.0 -12.8

Repayment of financial liabilities to major shareholder - -4.5

Proceeds from borrowings 2.0 14.5

Distribution of capital reserves -2.5 -2.5

Cost due to approved increase in share capital - -0.0

Cash Flow from financing activities -0.5 7.5

Effect of foreign currency translation -0.0 0.1

Total Cashflow 5.3 3.5

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Agenda

1. Introduction

2. Finance


4. Outlook



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Update on market and products

Injection systems – Ypsomed Delivery Systems

Diabetes care – mylife Diabetescare


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Injection systems


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Newly launched pen systems in the first half of 2013/14

21 Ypsomed Holding AG | Presentation of 2013/14 semi-annual figures

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Market for injection systems Biosimilars

There are now a number of insulin biosimilars on the market in China, India and semi-regulated markets, made by local producers in vials (with no pen). Most local providers are converting to cartridges and pens.

Insulin biosimilars will not be available in Western Europe and the USA before 2015. This is because the expense of clinical trials and the lengthy EMA/FDA approval process and associated costs represent major hurdles.

There are a total of more than 30 biosimilars for other drugs, such as Humira/anti-TNF, GLP-1, hGH, FSH or PTH, in preparation worldwide. Some of these will be coming on to local or international markets over the next 3-5 years. Some of them are biobetters.


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Market for injection systems Original products

New drugs primarily for treating autoimmune diseases such as polyarthritis, psoriasis, Crohn’s/IBD (Inflammatory Bowel Disease) or asthma. Injection systems are also required in oncology.

Not only are biobetters being developed but also new, long-lasting and more effective drugs in the traditional areas of treatment for self-injection: these include drugs for growth disorders, fertility treatment, multiple sclerosis, hepatitis and osteoporosis, as well as diabetes using new insulins and GLP-1s.

The specifications for the autoinjector or pen are increasing because, with the new drugs, patients no longer administer injections daily, but weekly or monthly. The high price of these drugs is also a factor. Therefore, the device has to be extremely user-friendly, to avoid handling errors.


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Reusable injection systems


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Existing and potential customer projects for original products for reusable injection systems


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Existing and potential customer projects for biosimilars for reusable injection systems


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Single-use injection systems


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Existing and potential customer projects for original products for single-use injection systems


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Existing and potential customer projects for biosimilars for single-use injection systems


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Autoinjectors


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Existing and potential customer projects for original products for autoinjectors


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Existing and potential customer projects for biosimilars for autoinjectors


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Update on market and products

Injection systems – Ypsomed Delivery Systems

Diabetes care – mylife Diabetescare


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Diabetes care


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mylife™ Diabetescare product portfolio Overview of the main products


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The complexity of European healthcare systems presents a challenge for the organisation of distribution


Sales via subsidiaries

Sales via distributors

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The German system as an example of the complexity of European healthcare systems


• Healthcare funding system: Private health

insurance schemes (with tendency to

consolidate)

• Reimbursement of costs: Full reimbursement

of costs, usually a small excess, trend towards

flat-rate provision

• Marketing system: Doctors, pharmacies and

direct sales for diabetes aids

• Decision-makers: Doctors & patients. Fund

has little scope for intervention, therefore

expensive

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The French system as an example of the complexity of European healthcare systems


• Healthcare funding system: State social

security

• Reimbursement of costs: Full

reimbursement of costs

• Marketing system: For insulin pumps and

accessories, via state accredited

intermediaries (préstataires). Everything else

via pharmacies, direct sales are not permitted

• Decision-makers: Intermediaries and

pharmacists. Doctors have very little influence,

so prices are subject to competition

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The UK as an example of the complexity of European healthcare systems


• Healthcare funding system: State social

security. Since 2012, decentralised budget

responsibility in the different regions

• Reimbursement of costs: Full reimbursement

of costs; the number of pumps p.a. depends on

the funds available regionally

• Marketing system: Direct contracts with clinics

(pumps) and Clinical Commissioning Groups/

CCG (strips, needles). Few direct sales

• Decision-makers: Regionally over 200 CCGs in

a bidding process. Doctors, pharmacists,

patients and wholesalers are circumvented

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Investment in retail pays off Trends in EBIT for the retail business DDB


Estimate for 2nd half of 2013/14 year. Scale is only an approximation of reality.

2. HY 1. HY 2. HY 1. HY 2. HY 1. HY 2. HY 1. HY 2. HY 1. HY 2. HY

2008/09 2009/10 2010/11 2011/12 2012/13 2013/14

Launch mylife™ Pura®

Launch mylife™ OmniPod®

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Agenda

1. Introduction

2. Finance


4. Outlook



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Outlook – financial year 2013/14

Growth in sales in the mylife™ Diabetescare business and the new pen systems that have been launched in various markets, and those due to be launched, make us very confident.

We are expecting growth in sales of about 10% and profit before interest and taxes (EBIT) of approx. CHF 10 million.


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Important dates

General meeting 1 Juli 2014

Presentation of annual figures 2013/14 27 Mai 2014


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Agenda

1. Introduction

2. Finance


4. Outlook



Questions and answers

Presentation semi-annual results 2013-2014 · Diabetes Direct Business 1.2 -2.5 147.3 Other -0.5 0.8 39.0 Operating profit 2.44.6 91.2 12 Ypsomed Holding AG | Presentation of 2013/14

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