Swedish-American Life Science Summit 2008 Biotech under Dire Conditions Aug 20, 2008 Thomas von Koch.

Swedish-American Life Science Summit 2008

Biotech under Dire Conditions

Aug 20, 2008

Thomas von Koch

® 2008 EQT – All Rights ReservedStrictly private and Confidential

Entrepreneurs with an industrial orientation and a strong will to drive change

Part of the Wallenberg network

Strong record of delivering superior returns to investors over time

Founded in 1994, over €12Bn in capital raised

3 business lines

– Buy-out in Europe and Greater China

– Mezzanine

– Special Opportunities

178 people

13 offices

EQT today: Northern European private equity fund with local knowledge

New York1 Partners3 Other Professionals

Hong Kong2 Partners7 Other Professionals

Helsinki1 Partner6 Other Professionals

Copenhagen 3 Partners5 Other Professionals

Oslo1 Partner2 Other Professionals

Stockholm12 Partners18 Other Professionals

Munich7 Partners14 Other Professionals

Zurich1 Partner

Frankfurt 2 Partners5 Other Professionals

Shanghai3 Professionals


Approx. 30 divestments (1997 – 2008)Analysis of value creation in all EQT Equity’s exits

% of equity created

5%

46%

Label

32%

17%

Sales growth

Margin expansion

Strategic re-positioning

Debt pay down

Value Driver


Proof of industrial model

Yearly growth during ownership period in all investments held more than 1 year

Sales13%

Sales13%

EBITDA20%

EBITDA20%

Number of employees

12%

Number of employees

12%


Opportunities exist across segments, so far EQT has made acquisitions in Medtech mainly

Pharmaceuticals

Large cap pharma

Niche pharma

Biotech

Medtech*

Diagnostic & Monitoring

PI&D, Consumables

& Supplies

Service providers

Primary Acute carePost- sub-acute care

B2B healthcare services (& intermediaries)

Healthcare IT CXOsProduct

distributionPhysician

Practice MgmtDisease

ManagementOther


”


50

84 91

155

99

59 45

93

149

235

245

133

27

31

46

90

77

28 35

86

94 77

90

26

0

50

100

150

200

250

300

350

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1H08

US Europe

Private Equity fundraising still strong – albeit slowing down

US

D (

Bill

ion

)

Source: US Data: Private Equity Analyst, Europe Data: EVCADoes not include Real Estate or Fund of Funds

BO = 64%

BO = 90%


Asset Managers over-allocated to PE

PE Managers performance rapidly deteriorating

Risk/ Reward for asset class in current market not appealing

Fundraising – Dire Future

PE Fund Managers will hold on to their money


Current financing situation- deal volume and deal count

0

5

10

15

20

25

30

35

40

45

50

0

10

20

30

40

50

60

70

80Q4

Q1

Deal count

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Q2

Q3

Source: Thomson Financial, JP Morgan

Volume (in €bn) Deal count


300 Bn USD of LBO debt “stuck” in banks’ balance sheets

All LBO debt trading below nominal value

London/ NY bank syndication markets closed – uncertain when/ if they will open

Very hard to make transactions in excess of 1 Bn Euro

Debt Market Closed

Very few LBO transactions will be made


Not a functioning debt market

No exit market available

– IPO closed

– PE semi-closed

– Industrial buyers window closing

Business cycle in decline

Deal Activity Collapsing


MBA Incorporado Nmas 1 Private Equity 2008 S. Europe 184

Verna Group II Bank of Scotland 2008 UK & Ireland 72

Molnlycke Health Care III Investor & Morgan Stanley 2007 Scandinavia 2 704

Dako EQT 2007 Scandinavia 943

Laboratorios Indas Vista Capital 2007 S. Europe 361

Barloworld Scientific Nova Capital 2007 UK & Ireland 112

Craegmoor Healthcare II Advent International 2008 UK & Ireland 424

Healthcare Homes Bowmark Capital 2008 UK & Ireland 109

BUPA Hospitals Cinven 2007 UK & Ireland 2 083

USP Hospitales II Cinven 2007 S. Europe 672

Gambro Healthcare Bridgepoint 2007 Scandinavia 596

Medi-Partenaires II LBO France 2007 France 567

Care Principles II Delta Three 2007 UK & Ireland 400

Healthcare at Home II Hutton Collins 2007 UK & Ireland 373

Mater Private II CapVest 2007 UK & Ireland 347

Casa Reha III HgCapital 2007 Germanic 346

Ultralase 3i 2007 UK & Ireland 254

Integrated Dental Holdings Merrill Lynch 2008 UK & Ireland 427

Active Pharmaceutical Ingredients (API) 3i 2008 Scandinavia 289

Premier Research Group ECI Partners 2008 UK & Ireland 87

Alliance Medical III Dubai International Capital 2007 UK & Ireland 912

Oasis Healthcare Duke Street 2007 UK & Ireland 130

Penn Pharmaceuticals LDC 2007 UK & Ireland 98

Synerlab AXA PE 2007 France 90

During last 18 months 24 major PE deals have been made in European healthcare

MED

TEC

H*

HEA

LTH

CA

RE

PR

OV

IDER

S

PH

AR

MA

, B

IOTEC

H &

O

TH

ER

H

EA

LTH

CA

RE

COMPANY BUYER YEAR REGION DEAL SIZE (€M)

Note: * Medtech includes medical devices and supplies; Includes all LBO transactions involving European targets valued >$75M by European- and foreign-based firms

Source: Bain European Private Equity database


Private market almost closed

Buy out liquidity low/ Venture Capital worse

Trend of PE money becoming public activist money

Trend of PE money becoming debt oriented money. Todayequity returns for taking junior debt risk

Risk Aversion – where will the money go?


Risk aversion at a high point

Nuclear melt down in financial markets must be resolved

Negative business cycle sentiment must turn

Only positive Healthcare is a defensive sector

Concluding remarks

It will take time until Private Equity is back to normal

Swedish-American Life Science Summit 2008 Biotech under Dire Conditions Aug 20, 2008 Thomas von Koch.

Documents

professionals slide

confidential slide

offices eqt

eqt equitys

koch slide

money slide

private equity analyst

confidential opportunities