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Brazil Pharma
BTG Pactual LatAm CEO Conference - New York
October 2012
The Opportunity
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7.008.30 9.40 10.30 11.20 11.60
13.1014.80
17.2019.20
21.5023.60
26.40
30.20
36.00
43.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sales Performance in the Brazilian Pharmacy Retail Industry from 1996-2011 (R$ Billion)
Industry Performance A Growth and Accelerating History…
Source: IMS.
Drivers Micro Timing
Regional Brands Fragmented Formalization
Drivers Macro
Income Growth Population Aging Generics Drugs
4
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Brazil Pharma vs Competitors (2011)
Competitors Focus
Drugstores per region (2011)
More dense
Less dense
Market Growth - CAGR (2007-2011)
Geographic Concentration … still concentrated in the Southeast
There is low competition on the regions outside the Southeast.
Source: IMS.
The Company
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86
Brazil Pharma footprint and clusters
North 104
Northeast 242
Midwest 118
Southeast
South 201
REGIONS Owned stores
10
1
103 20
15
19
10
193
7
75
114
1
8
232 Owned stores
114 Owned stores
118 Owned stores
352 Franchises
201 Owned stores
05 Distribution centers
Footprint 1.017 Stores
89
Source: Brazil Pharma
National Footprint Largest drugstore chain outside the Southeast…
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Source: Brazil Pharma, Abrafarma
Note: (1) Ranking by number of owned stores as of Dezember 31, 2011 considering the four largest Drugstore chains in Brazil; (2) n/a: Other chains do not have operations in the region
Drugstore ranking per Region
Number of Stores 1
4o
2o
1o
Northeast
n/a (2)
3o
North
n/a (2)
n/a (2)
Southeast
n/a (2)
Mid-west
n/a (2)
South
n/a (2)
Strong Local Knowledge … With a leadership position in four out of five regions…
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Strong Organic Growth Capacity
Organic Growth (# owned stores)
Brazil Pharma Abrafarma
Branded Generics HPC
Profitable Sales Mix
(2Q12)
Geography: More Growth and Less Competition
(CAGR07’-11’)
Maturation of Owned Stores
(2Q12)
Brazil Pharma competitive advantages
Competitive Advantages … Taking benefits of this.
Source: Brazil Pharma and IMS
Performance
Since IPO
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Footprint at and 12 months later the IPO
663 Points of sale 302 Owned Stores
361 Franchises
Platform @ IPO Actual Platform
201 Owned stores
352 Franchises
232 Owned stores
118 Owned stores
114 Owned stores
1,017 Points of sale 665 Owned stores
352 Franchises
89 Owned stores
60 Owned stores
153 Owned stores
361 Franchises
(1) Sant’Ana’s Distribution Center suffered a fire on December 2011. A new distribution center will be inaugurated in the second half of 2012 ; (2) Includes 11 stores acquired from Estrela
Galdino on April 2012 and added to Sant’Ana’s store count in June 30, 2012.Therefore they generated no revenues in 2Q12.
1
(1Q11) (2Q12)
Distribution Center
Owned stores
Franchises
Increasing Footprint Since IPO Strong delivery since the IPO…
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Incresing operational efficiency and stores productivity
Notes: (1) Considers total stores and distribution centers employees.
(2) Considers total employees (store, distribution centers and administrative).
3,7 6,4
22,6 20,4
BRPH @ IPO (1Q11)
34,4 54,9
BRPH 2Q12
1,5 3,0
-10%
+74%
+98%
+60%
Store EBITDA / employee1
(R$ thousand)
# of store employees
per store
Sales per store / employee
(R$ thousand)
EBITDA / employee2
(R$ thousand)
Operational Performance Since IPO … not only in growth, but also on the performance
3,8 3,5 -8% # of administrative + distribution
center employees per store
Stores Performance
Administrative Performance
Source: Brazil Pharma
Focus on Integration
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Great regional companies into a Excellent National Company
2012 2013E 2014E 2016E2015E1945 1965 1975 1994
IPO
1994 2009 20111995
186 years of
History
Brazil Pharma History 186 accumulated years of experience…
Source: Brazil Pharma
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Source: Brazil Pharma
One Company, One Culture … becoming just one Company…
Our dream is what moves our People
Dream
Mission
People
• To be the best Drug Store Chain of the country helping create a healthier world
• Provide health and well-being for our customers
• Create Long-term partnerships with our suppliers
• To be the best working climate to develop our talents
• To be profitable to our Shareholders
• Attitude to go beyond
• Etics in all we do
• Proud to belong
• Focus on results
• Meritocracy to recognize our talents
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Holding
OperationsAdministrative
(SSC)Commercial
Corporate
#1 for Suppliers #1 for Customers #1 for Talents
Dis
tin
ct
Co
mp
an
ies
Un
iqu
eC
om
pa
ny
Corporate Structure … With a simple and aligned structure …
Source: Brazil Pharma
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Operationally Integrated … becoming 100% integrated
Operations Administrative (SSC) Commercial
Corporate
Joint negotiation
Team centralization
Continuos improvement
1
2
3
1. Platforms operate separately but with
strict Corporate guidelines;
2. Centralization of Procurement
department: unification of regional talents
into one single team;
3. Commercial intelligence: relationship
with the industry, sales mix improvement,
scale in campaigns, standardization of
DC’s and Logistics.
Management Team
Training and Regional
Leardeships
Continuos improvement
1
2
3
Mapping
Plugging-in
Continuos improvement
1
2
3
1. Management Team to monitor the
Operations’ Team of each regional platform:
Culture dissemination and performance
monitoring;
2. Training and formation of Regional
leaderships;
3. Centralized operation’s management.
1. Requirements understanding, drawing
the scope and processes;
2. Plug-in platforms into the SSC.
3. Through quality tools, in the quest for
constant improvement in its processes
and productivity gains.
Source: Brazil Pharma
Peers
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171
306
6.0%5.9%
1 2
703
1,060
24.8%20.5%
1 2
874
1,36730.8%
26.4%
1 2
665
807
1 2
Brazil Pharma: Comparing With The Peers Solid track record, with improvements to come on maturation and integration
LTM 2Q12 EBITDA¹ and EBITDA Margin
(R$ million, % of Gross Revenues
LTM 2Q12 Selling, General, Administrative and
Other Expenses¹ and % of Gross Revenue
(R$ million, % of Gross Revenues)
LTM 2Q12 Gross Profit and Gross Margin
(R$ million, % of Gross Revenues)
Stores (as of June 30th, 2012)
1- Adjusted figures according to each company’s criteria.
1
Farmais
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Why to expand the footprint?
# Stores by Sales
category
Average sales of
each store
R$
thousand/month
Total sales of
each category
R$ MM/year
Categories in which Own
BPRPH Platforms act
Potential categories for
FARMAIS
Addressable market
•10,062 stores
• Average turn-over ~R$
140 thousand/month
• Total turn-over ~R$ 1,4
Bi / month ~R$ 16,8 Bi
/ year
11,172 41,052
Source: IMS internal bases, by distribution study. Data related to medications
Market size
64,281
Stores
Market size
R$ 37,437
million
Appendix Company’s Structure
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Shareholder’s Structure
BTG Pactual + FIPs Managers Operating Partners Free Float
35.7% 39.4% 24.5% 0.4%
100% 100% 100% 100% 100% 100%
Note: Considering 15 millions shares to be issued from Sant’ana’s incorporation.
Appendix
Operations
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Non-renovated store
Trade Marketing Constantly working on improving consumption experience...
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Renovated store
Trade Marketing Constantly working on improving consumption experience...
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Logistics ...Operational excellence supporting sales and growth
New DC – Distrito Federal Situated at Brasília Services Midwest region; Storage area: 5,000 m²; Ceiling: 8 mts; 3.6 thousand pallet position; Production capacity of 200,000 units/day; Storage capacity: up to 13,000 SKU; Operates with WMS system.
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New DC – Bahia Situated in Camaçari
Logistics ...Operational excellence supporting sales and growth
Services Bahia state, may also service Sergipe state Storage area: 9,000 m²; Ceiling:12 mts; 6,000 pallet positions (reaching up to 8.6 thousand); Production capacity of 400,000 units/day; Storage capacity: up to 15,000 SKU; Operates with WMS system.
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