Investors’ Day at Olainfarm September 14, 2007 Company Presentation.
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Transcript of Investors’ Day at Olainfarm September 14, 2007 Company Presentation.
![Page 1: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/1.jpg)
Investors’ Day at Olainfarm
September 14, 2007
Company Presentation
![Page 2: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/2.jpg)
OlainFarm: at a glance
- 35 years since established, 10 years since privatized
- Produces both FDFs and full cycle APIs
- Annual sales have more than doubled over the past 3 years
- Strong and seasoned management team
- ISO 14001 (2001:2007), FDA (USA - APIs only, 2002) and GMP (EU 2004:2007)
Major shareholders:- Olmafarm (sole shareholder is OlainFarm’s Chairman of the Board Valerijs Maligins) - Juris Savickis
![Page 3: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/3.jpg)
Governing Structure
• Shareholders meeting
• Council- Supervisory body, which represents the shareholders' interests between the Shareholders’ meetings- Consists of 5 members, elected by shareholders for 3
years- Elects and dismisses members of the Board
• Board- Executive body, which manages and represents the
company- Responsible for commercial activities of the company- Composed of 5 members (recently reduced down from 7), elected for 3 years
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Main Markets
Unconsolidated Sales by Market, H1 2007, % by Value
Great Britain
8%
Ukraine
12%
Kazakhstan
13%
Latvia
21%
Russia
28%
Other
4%
Bulgaria
1%Georgia
1%
Lithuania
2%
Poland
2%Belarus
8%
- Main focus on home market and the CIS
- Central and Western Europe growing mainly through APIs and intermediates
- Diversification of markets
- Over 200 medical representatives in key markets
- Sales to 25 countries, subsidiary in Russia
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Main Markets (continued)
- On average the sales growfaster than markets (about 15%)
- Branding has slowed growthin Russia in terms of sales, not profit
- Specific products influenced significant growth in the UK and Kazakhstan
- Very limited exposure to Russian DLO Program (about200 000 LVL)
Sales development in Top 5 Markets ' 000 LVL
2067%
-10%
8%
24%
21%
974%
407%
42%
20%
4%
Ls 0
Ls 500
Ls 1 000
Ls 1 500
Ls 2 000
Ls 2 500
Ls 3 000
Russia Latvia Kazakhstan Ukraine Great Britain
1H 05
1H 06
1H 07
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Key Products
Sales by Products 1H 2007 % by value
Fenkarol13%
Furamag/Furagin/Furasol11%
Neiromidin11%
Noofen/Fenibut11% PASA Sodium salt
10%
MAG7%
Remantadin6%
Adaptol5%
Etacizin4%
Other22%
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- Antihistamine
- Sold as Bikarfen or Gistafen in selected markets
- Limited clinical tests conducted to strengthen sales
- Sales of antihistamines in our markets: approx 105 M LVL
- Maximum sales: 4.2 M LVL p.a.
Key Products - Fenkarol
Fenkarol/Bikarfen/Gistafen 6 months sales
Ls 0
Ls 200 000
Ls 400 000
Ls 600 000
Ls 800 000
Ls 1 000 000
Ls 1 200 000
1H 2003 1H 2004 1H 2005 1H 2006 1H2007
![Page 8: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/8.jpg)
Noofen/Fenibut 6 months sales
Ls 0
Ls 200 000
Ls 400 000
Ls 600 000
Ls 800 000
Ls 1 000 000
Ls 1 200 000
1H 2003 1H 2004 1H 2005 1H 2006 1H2007
- Nootropic drug
- Sold as Fenibut in Russia and as Noofen elsewhere
- Cost efficient synthesis
- Participation in Russian DLO.Program discontinued in 2007, which caused slight drop in sales
- Total sales of this product group in our markets: 140 M LVL
- Maximum sales: 4.5 M LVL p.a.
Key Products - Fenibut
![Page 9: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/9.jpg)
Neiromidin 6 months sales
Ls 0
Ls 200 000
Ls 400 000
Ls 600 000
Ls 800 000
Ls 1 000 000
Ls 1 200 000
1H 2003 1H 2004 1H 2005 1H 2006 1H2007
- Cholinesterase inhibitor
- Cost efficient chemical synthesis - Total sales of this product group in our markets: approx 300 M LVL as this is a multi-purpose drug for CNS related indications
- Maximum sales: 7 M LVL p.a.
Key Products - Neiromidin
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Key Products - Furagin
Furamag/Furagin/Furasol 6 months sales
Ls 0
Ls 200 000
Ls 400 000
Ls 600 000
Ls 800 000
Ls 1 000 000
Ls 1 200 000
1H 2003 1H 2004 1H 2005 1H 2006 1H2007
- Nitrofurantoine derivative, anti-infective drug
- In process of replacement of Furagin with Furamag
- In sachets sold as Furasol
- Olainfarm is the only stable API producer in traditional markets
-Total sales of this product group in our markets: 70 M LVL
- Maximum sales: 4.5 M LVL p.a.
![Page 11: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/11.jpg)
Key Products – PASA Sodium Salt
PASA Sodium Salt 6 months sales
Ls 0
Ls 100 000
Ls 200 000
Ls 300 000
Ls 400 000
Ls 500 000
Ls 600 000
Ls 700 000
Ls 800 000
Ls 900 000
Ls 1 000 000
1H 2003 1H 2004 1H 2005 1H 2006 1H2007
- Anti tuberculosis drug, helps to treat resistant forms of tuberculosis
- So far sold solely to governmental programs, thus sales are difficult to forecast
- World market approx. 300 M EUR
- Maximum sales: 5 M LVL p.a., limited by current production capacities
- Files are being prepared for WHO registration, allowing for worldwide sales
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New Products – Current Status
Meldonium - Generic drug for treatment of cardio vascular diseases,
original among TOP 15 best selling drugs in Russia and TOP 3 best seller in Ukraine
- Current status: Registration files are being finished, bioequivalence tests started in Ukraine
- Expected launch: 2008
Expected sales in 2012 - LVL 4.5 mln
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statNew Products – Current Status
Olvazol ®
- Patent protected next generation of Meldonium
- Fast acting drug for prophylaxis and treatment of ischemic heart and brain injury and infarction
- Current status: undergoing stability tests, clinical pilot trials to be started by the end of 2007.
- Expected launch: 2009
Expected sales in 2012 - LVL 4.5 mln
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New Products – Current Status
R-Fenibut
- Pure enantiomeric form of known drug, at least 2x more effective than a
parent drug, thus requires ½ of dosage or less- Fewer side effects- Current status: scale-up and fine-tuning of technology under way, clinical
pre-trials to be started before the end of 2007- Expected launch: 2009
Expected sales in 2012 - LVL 3.2 mln
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New Products – Current Status
R-Fenotropil
- New patented molecule, at least 2x more effective as parent drug, thus requires ½ of dosage or less and has fewer side effects
- Current status: scale-up and fine-tuning of technology under way, pre-clinical trials to be started before the end of 2007
- Expected launch: 2009
Expected sales in 2012 - LVL 4.0 mln
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New Products – Current Status
Memantine
- Widely used for treatment of Alzheimer’s disease, running out of patent protection
- Olainfarm developed technology for worldwide sales
- Exclusive co-operation with a multinational company, Olainfarm will sell Memantine in CEE, CIS and Middle East
- Current status: registration by partner started in Germany, Canada; Olainfarm is finishing file to be submitted for registration early 2008
- Expected launch: 2009 (limited markets)
Expected sales in 2012: LVL 7.5 mln (subject to patent protection)
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New Products – Current Status
New Generics Program for Baltics
- First stage includes five new first generics for the Baltic states, two for treatment of fungus, two for CNS diseases and one cardiovascular medicine
- Three of the five will be registered through Baltic MRP procedure
- Currens status: registration under way
- Expected launch: 2008
Expected sales in 2012 - LVL 2.1 mln
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Estimated Sales, LVL '000
15 156 18 808 22 79627 127
31 99437 013
42 825190
1 6505 200
11 900
18 850
28 300
1 540
2 725
3 600
4 800
6 000
7 200
8 640
0
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
90 000
2006 2007F 2008F 2009F 2010F 2011F 2012F
API & Intermediates
New FDFExisting FDF
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- Existing FDF products:- more marketing effort, branding, additional comparative tests; - strengthened network of medical representatives; - new forms and dosages of products;- new markets within FSU countries; - natural market growth; - price increases.
- New FDF products:- higher added value;- patent protected.
- APIs and intermediates - improved recognition of Olainfarm in the global market;- UK already among top markets.
Where will the growth come from?
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Historic performance
Sales, Net Profit and EBITDA '000 LVL
5294
7368
10678
12985
16704
9491
16632 778 732
1 6582 508
3 4512 982
-797-3491 0261 148
-2000
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2002 2003 2004 2005 2006 2007 H1
Sales
Net Profit EBITDA
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Seasonality
Quaerterly Seasonality of Sales, EBIT, EBITDA, Net Profit '000 LVL
39543788
3640
5320
4900
4550
160326 280
630420
691 802 770
14001190
910
22238
78
440 485247
840
0
1000
2000
3000
4000
5000
6000
2006Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2
Sales
EBIT
EBITDA
Net profit
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Historic performance - Margins
Seasonality of Margins
17,48%
21,17% 21,20%
26,30%
24,30%
20%
4,05%
8,61%7,70%
15,80%
12,90%
9,20%
0,56%
6,28%
2,14%
8,27%
9,90%
5,43%
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
2006Q1 2006 Q2 2006 Q3 2006 Q4 2007 Q1 2007 Q2
EBITDA Margin
EBIT Margin
Net margin
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Historic Performance - Assets Asssets, LVL
25%36%
41% 40%37% 37%
16%14%
9%10%
5%
1%
18%
19%15%
16%
23%
22%
18%
31%
31%33%
42%
47%
7%0%
1%0%
2%
4%
0
5000000
10000000
15000000
20000000
25000000
30000000
2002 2003 2004 2005 2006 2007 1H
Other, inc. Cash
Debtors
Inventory &WIP
Intangibleassets
Fixed assets
![Page 24: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/24.jpg)
Historic Performance - Equity and Liabilities
Equity & Liabilities LVL
59%54%
51%48%60%73%
25%
28%
27%30%23%
7%
3%
5%
7%8%9%
11%
13%
13%
15%15%
8%
10%
0
5000000
10000000
15000000
20000000
25000000
30000000
2002 2003 2004 2005 2006 2007 1H
Payables
Tax liabilities
Interest bearing debt
Equity and reserves
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Share performance in 2007
-- Olainfarm-- OMX Riga
![Page 26: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/26.jpg)
Share performance in 2007
-- Olainfarm-- OMX Nordic EUR GI
![Page 27: Investors’ Day at Olainfarm September 14, 2007 Company Presentation.](https://reader036.fdocuments.net/reader036/viewer/2022062515/56649d0a5503460f949ddb7a/html5/thumbnails/27.jpg)
Investment Alternatives in 2007
Since January 1, 2007:
- DAX +12.55%
- Nikkei 225 -7.83%
- S&P 500 +2.36%
- CAC40 -2.11%
- FTSE 100 -0.54%
- SSMI -1.4%
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IPO of June 2007
- 876 023 shares subscribed; 2 584 267.85 LVL raised
- Post issue number of shares: 14 085 078
- Raised amounts allowed to proceed with smaller items of CAPEX program, including warehousing and some production units
- Ampouling facility project postponed, not abandoned
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Considerations for Further Activities
- Partial issue allowed to attract some leverage;
- Considerable CAPEX needs remain for 2008 and further years, especially as new products get launched into market;
- Limited possibilities for further significant leverage;
- Board and the Council to elaborate proposals by the end of this year.
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