Acquisizioni in Europa per un traguardo a 1.000 miliardi Milano, 10 Maggio 2000

Acquisizioni in Europa Acquisizioni in Europa per un traguardo a 1.000 miliardiper un traguardo a 1.000 miliardi

Milano, 10 Maggio 2000Milano, 10 Maggio 2000

Acquisizioni in Europa per un traguardo a 1.000 miliardiAcquisizioni in Europa per un traguardo a 1.000 miliardi

Relatori:Relatori:• Giovanni RecordatiGiovanni Recordati Chairman and Chief Executive OfficerChairman and Chief Executive Officer

• Fritz SquindoFritz Squindo Chief Financial OfficerChief Financial Officer

• Walter BevilacquaWalter Bevilacqua Vice President and Director Corporate DevelopmentVice President and Director Corporate Development

11

Fritz SquindoFritz SquindoChief Financial OfficerChief Financial Officer

22

Where we come from: 1997-1999 HIGHLIGHTSWhere we come from: 1997-1999 HIGHLIGHTS

33

55

CAGRCAGR1997-19991997-1999

18.9%18.9%

23.2%23.2%

20.0%20.0%

8.0%8.0%

7.5%7.5%

7.4%7.4%

18.8%18.8%

19981998

416.1416.1

213.3213.351.3%51.3%

74.274.217.8%17.8%

34.134.18.2%8.2%

38.238.29.2%9.2%

22.622.65.4%5.4%

51.551.5

19971997

372.3372.3

185.5185.549.8%49.8%

66.666.617.9%17.9%

31.931.98.6%8.6%

33.433.49.0%9.0%

20.120.15.4%5.4%

41.941.9

19991999

526.3526.3

281.7281.753.5%53.5%

95.995.918.2%18.2%

37.237.27.1%7.1%

38.638.67.3%7.3%

23.223.24.4%4.4%

59.159.1

1997-1999 HIGHLIGHTS1997-1999 HIGHLIGHTS

Net SalesNet Sales

Gross ProfitGross Profitas % of salesas % of sales

1997-1998 reclassified for comparison purposes1997-1998 reclassified for comparison purposes

Operating Income Before R&DOperating Income Before R&Das % of salesas % of sales

Operating Income Operating Income as % of salesas % of sales

Pretax IncomePretax Incomeas % of salesas % of sales

Net IncomeNet Incomeas % of salesas % of sales

Cash FlowCash Flow

(billion lira)(billion lira)

Where we are:Where we are: RESULTS Q1 2000RESULTS Q1 2000P&L TRENDSP&L TRENDSSALES & MARGINS BY BUSINESS SALES & MARGINS BY BUSINESS

AREAAREACAPITAL EMPLOYEDCAPITAL EMPLOYED

66

77

127.3127.3

66.766.752.4%52.4%

20.020.015.7%15.7%

6.96.95.4%5.4%

8.78.76.8%6.8%

5.35.34.2%4.2%

14.314.3

19991999

13.113.110.4%10.4%

147.8147.8

86.186.158.3%58.3%

34.934.923.6%23.6%

17.317.311.7%11.7%

21.121.114.3%14.3%

14.114.19.6%9.6%

23.223.2

20002000

17.617.611.9%11.9%

16.1%16.1%

29.1%29.1%

74.1%74.1%

150.9150.9%%

142.2%142.2%

164.6%164.6%

62.2%62.2%

DeltaDelta

33.8%33.8%

RESULTS Q1 2000RESULTS Q1 2000

Net SalesNet Sales






Cash FlowCash Flow

Q1 (billion lira)Q1 (billion lira)

R&D ExpensesR&D Expensesas % of salesas % of sales

88

20002000Q1Q1

58.358.3

34.634.6

23.623.6

11.911.9

11.711.7

19991999Q2-Q4Q2-Q4

53.953.9

34.834.8

19.019.0

11.411.4

7.67.6

P&L TRENDSP&L TRENDS(as % of Net Sales)(as % of Net Sales)

Gross ProfitGross Profit

SG&A SG&A (a)(a)

Operating IncomeOperating Income

R&DR&D

Operating Income before R&DOperating Income before R&D

19991999Q1Q1

52.452.4

36.736.7

10.310.3

5.45.4

15.715.7

(a) Includes amortization of goodwill(a) Includes amortization of goodwill

99

127.3127.3

66.766.752.4%52.4%

20.020.015.7%15.7%

6.96.95.4%5.4%

8.78.76.8%6.8%

5.35.34.2%4.2%

14.314.3

19991999

13.113.110.4%10.4%

147.8147.8

86.186.158.3%58.3%

34.934.923.6%23.6%

17.317.311.7%11.7%

21.121.114.3%14.3%

14.114.19.6%9.6%

23.223.2

20002000

17.617.611.9%11.9%

16.1%16.1%

29.1%29.1%

74.1%74.1%

150.9150.9%%

142.2%142.2%

164.6%164.6%

62.2%62.2%

DeltaDelta

33.8%33.8%

RESULTS Q1 2000RESULTS Q1 2000

Net SalesNet Sales






Cash FlowCash Flow

Q1 (billion lira)Q1 (billion lira)

R&D ExpensesR&D Expensesas % of salesas % of sales

Where we are:Where we are: RESULTS Q1 2000RESULTS Q1 2000P&L TRENDSP&L TRENDSSALES & MARGINS BY BUSINESS SALES & MARGINS BY BUSINESS

AREAAREACAPITAL EMPLOYEDCAPITAL EMPLOYED

1010

1111

Q1-99Q1-99

90.790.7

4.14.14.5%4.5%

SALES & MARGINS BY BUSINESS AREASALES & MARGINS BY BUSINESS AREA

Q1-00Q1-00Q1-00Q1-00

Net SalesNet Sales

Operating MarginOperating Margin

39.039.0108.8108.8

5.65.613.5%13.5%

11.711.710.8%10.8%

Q1-99Q1-99

36.636.6

2.82.87.7%7.7%

PHARMACEUTICALSPHARMACEUTICALS PHARMA CHEMICALSPHARMA CHEMICALS

DeltaDelta DeltaDelta

+ 20.0%+ 20.0%

+ 185.4%+ 185.4% + 100.0%+ 100.0%

+ 6.6%+ 6.6%


1212

1999199931/1231/12

103.3103.3

233.5233.5

(36.5)(36.5)

300.3300.3

86.986.9

213.4213.4

300.3300.3

126.6126.6

216.7216.7

(35.5)(35.5)

307.8307.8

77.777.7

230.1230.1

CAPITAL EMPLOYEDCAPITAL EMPLOYED

Net Working Capital Net Working Capital for Operationsfor Operations

Net Non-current AssetsNet Non-current Assets

Reserves for Long - termReserves for Long - termLiabilitiesLiabilities

FINANCING OF FINANCING OF CAPITAL EMPLOYEDCAPITAL EMPLOYED

Net DebtNet Debt

Shareholders’ EquityShareholders’ Equity


307.8307.8

2000200031/0331/03(billion lira)(billion lira)

Where we are going: Where we are going: 2000-2003 TARGETS2000-2003 TARGETS

1313

NET SALES & OPERATING MARGINNET SALES & OPERATING MARGIN


1414

2000-2003 TARGETS2000-2003 TARGETS

2000200019991999

Net SalesNet Sales


EPS (lira)EPS (lira)

Operating IncomeOperating Incomeas % of salesas % of sales

526.3526.3

281.7281.753.5%53.5%

37.237.27.1%7.1%

593.5593.5

329.9329.955.6%55.6%

931931

R&DR&Das % of salesas % of sales

58.758.711.2%11.2%

65.365.311.0%11.0%

61.661.610.4%10.4%

15421542

20032003

10001000

56156156.1%56.1%

10010010.0%10.0%

13013013.0%13.0%

30923092

CAGRCAGR1999-20031999-2003

17.4%17.4%

18.8%18.8%

14.2%14.2%

36.7%36.7%

35.0%35.0%


1515

EVOLUTION OF NET SALES & OPERATING EVOLUTION OF NET SALES & OPERATING MARGINMARGIN

0100200300400500600700800900

1000

1999 2000 2001 2002 2003

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%


526 594

825905

1000

Net SalesNet SalesNet SalesNet Sales Operating MarginOperating MarginOperating MarginOperating Margin

7.1%7.1%

10.4%10.4%11.0%11.0%

12.1%12.1%13.0%13.0%

1616

182182

386386

(30)(30)

538538

157157

381381

538538

2003200319991999

103103

233233

(36)(36)

300300

8787

213213

300300

136136

424424

(39)(39)

521521

277277

244244

521521

20002000

169169

397397

(33)(33)

533533

208208

325325

533533

20022002

151151

408408

(36)(36)

523523

246246

277277

523523

20012001

EVOLUTION OF CAPITAL EMPLOYEDEVOLUTION OF CAPITAL EMPLOYED

Net Working Capital Net Working Capital for Operationsfor Operations

Net Non-current AssetsNet Non-current Assets

Reserves for Long - termReserves for Long - termLiabilitiesLiabilities

FINANCING OF FINANCING OF CAPITAL EMPLOYEDCAPITAL EMPLOYED

Net DebtNet Debt

Shareholders’ EquityShareholders’ Equity



Walter BevilacquaWalter BevilacquaVice President and Director Corporate Vice President and Director Corporate

DevelopmentDevelopment

1414

How we are going to get How we are going to get there:there:

1818

THE STARTING POINTTHE STARTING POINTDRIVERS OF GROWTHDRIVERS OF GROWTHRECORDATI IN 2003RECORDATI IN 2003BEYOND 2003BEYOND 2003

1919

THE STARTING POINTTHE STARTING POINT

CAGRCAGR1997-19991997-1999

Net SalesNet Sales

Gross ProfitGross Profit

+18.9%+18.9%

+23.2%+23.2%

GrowthGrowth1999-20001999-2000

+16.1%+16.1%

+29.1%+29.1%

•A new level of sales & profitabilityA new level of sales & profitability

•Concentration on core activities and key Concentration on core activities and key productsproducts

2020

DRIVERS OF GROWTHDRIVERS OF GROWTH

Stronger, more efficient market Stronger, more efficient market presencepresence

ZanidipZanidip®®

AcquisitionsAcquisitions

Licensed-in productsLicensed-in products

R&D PipelineR&D Pipeline

2121



ZanidipZanidip®®




2222

EFFICIENT MARKET PRESENCEEFFICIENT MARKET PRESENCE

• Italy, Spain: work done in 1998-1999Italy, Spain: work done in 1998-1999

• France, Portugal: 2000-2001France, Portugal: 2000-2001

Jan-FebJan-Feb19991999

Growth over prior year; Growth over prior year; valuevalue MarketMarket RecordatiRecordati

Jan-FebJan-Feb20002000 TrendTrend

108108109109

Market share; valueMarket share; value Relative (to Roche)Relative (to Roche) AbsoluteAbsolute

6.2%6.2%9.9%9.9%

13.6%13.6%23.8%23.8%

23.3%23.3%1.31%1.31%

25.3%25.3%1.43%1.43%

(Italy, Market Audits)(Italy, Market Audits)

Source: IMSSource: IMS

2323

STRONG MARKET PRESENCESTRONG MARKET PRESENCE

What is market share good for:What is market share good for:- efficient local operations- efficient local operations

- share of voice for new product - share of voice for new product introductionintroduction

- attractive in-licensing partner- attractive in-licensing partner

Where is Recordati?Where is Recordati?- strong in Italy- strong in Italy

- France covered with acquisition- France covered with acquisition

- build-up planned in Portugal, Spain- build-up planned in Portugal, Spain

2424



ZanidipZanidip®®




2525

ZANIDIPZANIDIP®® ITALY ITALY• Excellent performance where it has been Excellent performance where it has been introducedintroduced


ZanidipZanidip®® 3.73.7


7.17.1

Growth %Growth %

9191

NorvascNorvasc®®

Recordati licenseesRecordati licensees

Relative market share of Relative market share of ZanidipZanidip®® to: to: NorvascNorvasc®®

Rest of classRest of class•Room to grow thereRoom to grow there

2.42.4 3.23.2

34.434.4 40.040.0

3434

1616

18.018.08.08.0

Rest of classRest of class 86.086.0 88.888.8 33

11.011.04.34.3

164164185185

TrendTrend

(billion lira)(billion lira)ItalyItaly

Source: IMSSource: IMS

2626

ZANIDIPZANIDIP®® INTERNATIONAL EXPANSION INTERNATIONAL EXPANSION

•World pharmaceutical markets, 1999World pharmaceutical markets, 1999

$ bn$ bn

USUSJapanJapanFrance, France, GermanyGermanyItaly, Uk, SpainItaly, Uk, Spain

% of % of worldworld(billion lira)(billion lira)

•ZanidipZanidip®® launched in: launched in:

4141232314141212

86.86.00

47.47.66

29.29.99

24.24.11

19991999Q1Q1

20002000Q1Q1

20032003Q4Q4

US, JapanUS, JapanFrance, GermanyFrance, GermanyItaly, Uk, SpainItaly, Uk, SpainOther countriesOther countries

Source: ScripSource: Scrip

----55

----1010

-- 2626

2727



ZanidipZanidip®®




2828

BOUCHARABOUCHARA

(FF million)(FF million)

All data preliminary and subject to audit; transaction subject to contractAll data preliminary and subject to audit; transaction subject to contract

(a) Bouchara fiscal year ending 30 September (a) Bouchara fiscal year ending 30 September

19991999(a)(a)

10%10%

- Export- Export

Net debtNet debtNet worthNet worth 250250

750750Purchase Price (preliminary)Purchase Price (preliminary)

Operating MarginOperating Margin

Net SalesNet Sales

ManufacturingManufacturing

Total SalesTotal Sales

350350110110

590590

Pharmaceuticals - FrancePharmaceuticals - France

131300

460460

--

2929

BOUCHARABOUCHARAPharmaceuticals France, 1999 Pharmaceuticals France, 1999 (a)(a)

(a) Bouchara fiscal year ending 30 September (a) Bouchara fiscal year ending 30 September

UnitsUnits(millions)(millions)

Rank Rank in classin class

RevenuesRevenues(FF millions)(FF millions)

Rank Rank in classin class

(Source BOUCHARA, (Source BOUCHARA, GERS)GERS)

Therapeutic areaTherapeutic areaCough & ColdCough & Coldof which - Exomucof which - Exomuc

- Neo- codion- Neo- codion- Isofra- Isofra

Antibiotics & Anti-infectivesAntibiotics & Anti-infectivesof which - Amodexof which - Amodex

- Panfurex- Panfurex

CNSCNS

CardiovascularCardiovascular

OtherOther

TotalTotal

5.35.38.88.83.83.8

5.35.31.51.5

32.932.9

331122

3322

21421495956565

8822

2929

5959

350350

2121

1616

1414

2424

332222

5522

3030

ACQUISITIONS & LICENSED-IN PRODUCTSACQUISITIONS & LICENSED-IN PRODUCTS

In the target numbers:In the target numbers:- Bouchara- Bouchara

- New licenses, 30 billion lira- New licenses, 30 billion lira

Not in the target numbers:Not in the target numbers:- Acquisitions in Portugal, - Acquisitions in Portugal,

SpainSpain

- Additional licenses- Additional licenses

3131

UPSIDE, otherUPSIDE, other

Not in the target numbers:Not in the target numbers:

- Zanidip- Zanidip®® in US, Japan in US, Japan

3232

RECORDATI IN 2003RECORDATI IN 2003

Net salesNet salesPharmaceutiPharmaceuticalscals

ItalItalyy

Pharmaceutical Pharmaceutical ChemicalsChemicals

Other Other CountriesCountries

2003200319991999 CAGRCAGR

365365

161161

10001000

783783

526526

217217

260260

266266

390390

610610

17.4%17.4%

21.0%21.0%

7.7%7.7%

10.7%10.7%

23.1%23.1%

3333

BEYOND 2003BEYOND 2003OperationsOperations

•Established market Established market participant in:participant in:

19991999

ItalyItaly

20032003

•International growth of ZanidipInternational growth of Zanidip®® continuescontinues•New New productsproducts

- licenses- licenses- own R&D- own R&D

--

--

FranceFrance

SpainSpain

PortugalPortugal

3434

BEYOND 2003BEYOND 2003R&DR&D

The future of ZanidipThe future of Zanidip®®::- fixed association- fixed association

- atherosclerosis / LVH- atherosclerosis / LVH

- total gene expression studies- total gene expression studies

Urogenital R&D target Urogenital R&D target indications:indications:

- urge incontinence /overactive bladder- urge incontinence /overactive bladder

- benign prostatic hypertrophy- benign prostatic hypertrophy

- female sexual dysfunction (possibly)- female sexual dysfunction (possibly)

Acquisizioni in Europa Acquisizioni in Europa per un traguardo a 1.000 miliardiper un traguardo a 1.000 miliardi

Milano, 10 Maggio 2000Milano, 10 Maggio 2000

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Acquisizioni in Europa per un traguardo a 1.000 miliardi Milano, 10 Maggio 2000