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FEBRUARY 2009PHILIPP HAAS – CHAIRMAN
VEYSI NURBAKI – CFO
2009: YEAR OF THE TURN AROUND
� Business Overview - History
� Company Vision and Mission
� Strategy
� Contract Manufacturing as Strategic Initiative
Agenda
22
� Contract Manufacturing as Strategic Initiative
� January 2009 Sales Performance
� Restructuring
� Outlook 09
� EastPharma NAV
Business Overview - History
1958
Establishment of Deva by 27 founding shareholders
1986 2006
IPO of Deva shares on the Istanbul Stock Exchange
Takeover of Deva by GEM Global Equities Management S.A. Establishment of EastPharma Ltd
33
2006 – 2008TRANSFORMATION PROCESS
New Headquarters at Halkalı district of Istanbul
IPO of EastPharma shares on the London Stock Exchange
Successful Acquisition of Saba Pharmaceuticals
Investments started: 4 new factories in Cerkezkoy and Kosekoy
Disposal of non-core assets and cash injection
Business Overview - History
44
2007
New Headquarters at Halkalı district of Istanbul
Business Overview – Construction of New Plants
Penicillin Building in Çerkezköy
New state of the art facilities target to have
FDA and EMEA approvals
55
Penicillin Building in Çerkezköy
Business Overview – Construction of New Plants
66
Business Overview – Construction of New Plants
Cephalosporin Building in Çerkezköy
77
Cephalosporin and Main Production Buildings in Çerkezköy
Business Overview – Construction of New Plants
88
Business Overview – Construction of New Plants
Main Production Building and Training Center in Çerkezköy
99
Business Overview – Construction of New Plants
Injectables Building in Köseköy
1010
2008
APA and in-licensing agreement with Hoffmann La Roche for 16 products
Appointment of new management team: GM, COO, CFO
Business Overview - History
1111
Restructuring in sales and marketing department
Production started in: - Penicilin Plant in Cerkezkoy- Cephalosporin Plant in Cerkezkoy- Injectables Plant in Kosekoy
New production capacity: over 300mn boxes p/a
Company Vision and Mission
Vision:
To become the leading pharmaceutical company in Turkey and to develop export business to selected markets world wide.
A leading branded pharmaceutical company in Turkey
1212
world wide.
Mission:
To provide the local and international markets with high quality, low-cost and modern generic pharmaceutical drugs.
Strategy - in Sales and Profit
PHASE I:PHASE I:PHASE I:PHASE I:
Growth in the Growth in the Growth in the Growth in the
PHASE II: PHASE II: PHASE II: PHASE II:
Contract Contract Contract Contract
PHASE III:PHASE III:PHASE III:PHASE III:
Exports to Exports to Exports to Exports to
regulated markets regulated markets regulated markets regulated markets
1313
Growth in the Growth in the Growth in the Growth in the Turkish marketTurkish marketTurkish marketTurkish market
and move to higher and move to higher and move to higher and move to higher
margin productsmargin productsmargin productsmargin products
Contract Contract Contract Contract manufacturing manufacturing manufacturing manufacturing
as strategic as strategic as strategic as strategic initiativeinitiativeinitiativeinitiative
regulated markets regulated markets regulated markets regulated markets
with higher marginswith higher marginswith higher marginswith higher margins
and stronger and stronger and stronger and stronger currencycurrencycurrencycurrency
Cost of transition*:
- Moving of machinery, installation, validation: ~ $ 20 mn
- Delay in opening of new factories: ~ $ 16 mn
- De-stocking activity at the wholesalers: ~ $ 50 mn
Heavily Distorted 08 Figures
1414
- Lost sales due to stock-outs, planned and unplanned: ~ $ 4 mn
- Total severance payments: ~ $ 10 mn
Total: ~ $ 100 mn
* Preliminary estimates of the effects including the opportunity costs of our extraordinary items for 2008
Historical IMS Sales Performance
Unit Sales (Thousand):
68.778
70.775
76.602
FY 2006 FY 2007 FY 2008
1515Source: IMS (FY ‘08 figure includes Roche products sales, which were in the market as of July 2008 under Deva portfolio)
TL Sales (Thousand):
FY 2006 FY 2007 FY 2008
293.201
368.580
461.734
FY 2006 FY 2007 FY 2008
January 2009 - IMS Sales Performance
� Turkish pharma market grew 3.5% on a monthly basis in TRY terms
� EastPharma grew 15.8% on a monthly basis in TRY terms
1616Note: IMS figures measure the total effective gross sales from wholesalers to pharmacies and include free goods. Net sales are
approx. half of gross sales.
100% BUDGET REALISATION IN JANUARY 2009
Sales Capabilities and Regional Sales Office Coverage
GeorgiaGeorgiaGeorgiaGeorgia
AzerbaijanAzerbaijanAzerbaijanAzerbaijan
1717
� 17 Regions in Turkey with 23 offices
� 819 Medical Representatives
Broad Sales Force Across Turkey:
“CHANGE” STARTED WITH RESTRUCTURING
1818
New Management Team
New COO: Dr Carlo Durer
Extensive experience in the manufacturing function of Roche and Sandoz in many countries, lead the establishment of several manufacturing plants
1919
New CFO: Veysi Nurbaki
Strong experience in finance, control and budgeting in all aspectsof the pharmaceutical industry and SAP. Joined from Sandoz Turkey (a subsidiary of Novartis).
Restructuring in Sales and Marketing Department
Principles of Reorganisation:
� Flatter organisation, fast decision making process
� No middle management level:
� Business Unit Directors (BUD) report directly to the General Manager
2020
Manager
� Consolidated business units
� Business structures based on different business principles
� Differences on customer base
� Differences on prescription generating models
Restructuring in Sales and Marketing Department
HEAD OF EXECUTIVE COMMITEE
2121
Business Unit Director 1
Pharmacy
Business Unit Director 2
Acute Diseases
Business Unit Director 3
Chronical Diseases
� Recruitment of senior directors with industry experience:
� New Business Support Director
� New Commercial Director
Restructuring in Sales and Marketing Department
2222
� New Marketing and Sales Support Director
Outlook 09 - Increase Quality of Business Performance
� In Production Processes:
� Regular supply of products
� Gradually lowering production costs
� Developing contract manufacturing as new business
2323
� In Management Processes:
� Developing management information tools
� SAP
� Open culture
� Team work
Outlook 09 - Increase Quality of Business Performance
� Model of selling:
� No consignment
� Gradually lowering sales discounts, free goods
� More cost effective use of marketing mix resources
2424
� Field Force “A Selling Machine”
� Activity planning and control tools – SFE
� Field force manager model
� New bonus scheme
� Intensive training and development
Outlook 09 - Increase Quality of Business Performance
� Extending customer base:
� Hospital doctors
� Specialists (Cardiologist, Gastroenterologist, Psychiatrist etc)
� More widespread coverage
2525
� Cost efficiency:
� Secondary API sourcing project
� Cost cutting incentive and culture
� Looking under every stone
Outlook 09 – Products to be launched in 09
� 10 new products to be launched in 09
� Agressive In-licensing and registration activity:
� In-licencing negotiations ongoing for over 20 products
� Registration activities ongoing for over 7 products
2626
Outlook 09
� Net sales of TRY 500 mn
(approx. $ 300 mn at the budget exchange rate of 1.6970)
� Ebitda of TRY 100 mn
2727
(approx. $ 60 mn at the budget exchange rate)
EastPharma – Deep Value
EASTPHARMA’S MARKET VALUE IS ONLY 34% OF ITS NAV!
EastPharma Ltd.
CASH & CASH QUIVALENTSUS$70mn
-US$12mn pledged to Deva Holding-US$50mn advanced payment for Deva Holding’s capital increase
DEVA HOLDINGUS$234mn
SABA PHARMAUS$45mn
(DCF based valuation)
ROCHE LICENSINGAGREEMENT
Transaction price: US$47mn
International portion:
2828
NAV: US$382mn (US$5.64/share)MCAP: US$129 @$1.90/share Discount= 66%
Deva Holding’s capital increase-US$7mn free cash
US$234mn (DCF based valuation) International portion:
US$32.5mn
C SHARESUS$183mn
(Market value of the
shares held by EP)
A & B SHARESUS$51mn
(Calculated based on swap
ratios in terms of C share price)
All prices are as of February 10th, 2009
This presentation has been prepared by EastPharma Ltd (the “Company”) solely for its use at the presentation to investors to be made in September 2007. By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations.This document is not a prospectus. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company.This presentation is being supplied to you solely for your information. This presentation and its contents are confidential and may not be further copied, distributed or passed on to any other person or published or reproduced directly or indirectly, in whole or in part, by any medium or in any form for any purpose. The information contained in this presentation must be kept confidential and must not be used for any other purpose. Neither this presentation nor any copy of it nor the information contained in it may be taken or transmitted in or into the United States, Canada, Japan or Australia, or distributed, directly or indirectly, in or into the United States, Canada or Australia, or distributed or redistributed in Japan or to any resident thereof. Any failure to comply with these restrictions may constitute a violation of United States, Canadian, Japanese or Australian securities laws. The distribution of this presentation in other jurisdictions may be restricted by law, and persons into whose possessions this presentation comes should inform themselves about, and observe, any such restrictions.This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose, and it is intended for distribution in the United Kingdom only to and is directed only at: (i) persons who have professional experience in matters relating to investments falling within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) persons falling within Article 49(2)(a) to (d) of the Order; or (iii) to those persons to whom it can otherwise lawfully be distributed (all such persons together being referred to as “relevant persons”). This document must not be acted upon by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.The information in this presentation is given in confidence and the recipients of this presentation should not base any behaviour in relation to qualifying investments or relevant
Important Notice - Disclaimer
IR Contact Details:
Philipp Haas – Chairman ([email protected])
Veysi Nurbaki– CFO ([email protected])
Idil Bora – IR Manager ([email protected])
THANK YOU FOR YOUR INTERESTTHANK YOU FOR YOUR INTEREST
2
The information in this presentation is given in confidence and the recipients of this presentation should not base any behaviour in relation to qualifying investments or relevant products (as defined in Financial Services and Markets Act 2000 (as amended) (“FSMA”) and the Code of Market Conduct (made pursuant to FSMA) which would amount to market abuse for the purposes of FSMA on the information in this presentation until after the information has been made generally available. Nor should the recipient use the information in this presentation in any way which would constitute “market abuse”.This presentation has been prepared by, and is the sole responsibility of, the Company. The information set out herein has not been verified by the Company or any other person. No representation or warranty, express or implied, is or will be made by the Company or any of its affiliates, directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, the Company, their advisors and their respective affiliates, directors, officers or employees do not and will not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this presentation or its contents or otherwise arising in connection therewith. The Company’s securities have not been nor will they be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United States except to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Company’s securities have not been nor will they be registered under the applicable securities laws of any state or jurisdiction of Australia, Canada or Japan and, subject to certain exceptions, may not be offered or sold within Australia, Canada or Japan or to or for the benefit of any national, resident or citizen of Australia, Canada or Japan.Certain statements in this presentation constitute “forward-looking statements”. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar meaning, reflect the Directors’ beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing business or other market conditions and the prospects for growth anticipated by the management of the Company. These and other factors could adversely affect the outcome and financial effects of the plans and events described herein. As a result, you are cautioned not to place undue reliance on such forward-looking statements. The Company and their advisors and each of their respective members, directors, officers and employees disclaim any obligation to update the Company’s view of such risks and uncertainties or to publicly announce the result of any revision to the forward-looking statements made herein, except where it would be required to do so under applicable law.
Idil Bora – IR Manager ([email protected])
Email : [email protected]
D. Phone : +90 212 6929326
This presentation has been prepared by EastPharma Ltd (the “Company”) solely for its use at the presentation to investors to be made in 2009. By attending the meeting where this presentation is
made, or by reading the presentation slides, you agree to be bound by the following limitations.
This document is not a prospectus. This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of
the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a
recommendation regarding the securities of the Company.
This presentation is being supplied to you solely for your information. This presentation and its contents are confidential and may not be further copied, distributed or passed on to any other person or
published or reproduced directly or indirectly, in whole or in part, by any medium or in any form for any purpose. The information contained in this presentation must be kept confidential and must not
be used for any other purpose. Neither this presentation nor any copy of it nor the information contained in it may be taken or transmitted in or into the United States, Canada, Japan or Australia, or
distributed, directly or indirectly, in or into the United States, Canada or Australia, or distributed or redistributed in Japan or to any resident thereof. Any failure to comply with these restrictions may
constitute a violation of United States, Canadian, Japanese or Australian securities laws. The distribution of this presentation in other jurisdictions may be restricted by law, and persons into whose
possessions this presentation comes should inform themselves about, and observe, any such restrictions.
This document and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose, and
it is intended for distribution in the United Kingdom only to and is directed only at: (i) persons who have professional experience in matters relating to investments falling within the definition of
“investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); or (ii) persons falling within Article 49(2)(a) to (d) of the
Order; or (iii) to those persons to whom it can otherwise lawfully be distributed (all such persons together being referred to as “relevant persons”). This document must not be acted upon by persons
who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons.
Disclaimer
3030
The information in this presentation is given in confidence and the recipients of this presentation should not base any behaviour in relation to qualifying investments or relevant products (as defined in
Financial Services and Markets Act 2000 (as amended) (“FSMA”) and the Code of Market Conduct (made pursuant to FSMA) which would amount to market abuse for the purposes of FSMA on the
information in this presentation until after the information has been made generally available. Nor should the recipient use the information in this presentation in any way which would constitute
“market abuse”.
This presentation has been prepared by, and is the sole responsibility of, the Company. The information set out herein has not been verified by the Company or any other person. No representation or
warranty, express or implied, is or will be made by the Company or any of its affiliates, directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the
information or opinions contained in this presentation and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, the Company, their advisors and their respective
affiliates, directors, officers or employees do not and will not accept any liability whatsoever for any loss howsoever arising, directly or indirectly, from use of this presentation or its contents or
otherwise arising in connection therewith.
The Company’s securities have not been nor will they be registered under the United States Securities Act of 1933, as amended (the “Securities Act”) and may not be offered or sold in the United
States except to qualified institutional buyers (as defined in Rule 144A) in reliance on Rule 144A or another exemption from, or in a transaction not subject to, the registration requirements of the
Securities Act. The Company’s securities have not been nor will they be registered under the applicable securities laws of any state or jurisdiction of Australia, Canada or Japan and, subject to certain
exceptions, may not be offered or sold within Australia, Canada or Japan or to or for the benefit of any national, resident or citizen of Australia, Canada or Japan.
Certain statements in this presentation constitute “forward-looking statements”. These statements, which contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar
meaning, reflect the Directors’ beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other
factors, changing business or other market conditions and the prospects for growth anticipated by the management of the Company. These and other factors could adversely affect the outcome and
financial effects of the plans and events described herein. As a result, you are cautioned not to place undue reliance on such forward-looking statements. The Company and their advisors and each of
their respective members, directors, officers and employees disclaim any obligation to update the Company’s view of such risks and uncertainties or to publicly announce the result of any revision to
the forward-looking statements made herein, except where it would be required to do so under applicable law.