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Brazil Pharma Analyst’s Meeting – APIMEC
December 2012
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Disclaimer
This document may contain forward-looking statements in relation to the Company and its subsidiaries which reflect the current
outlook and/or expectations of the Company and its management for its performance and its business and in relation to future
events. These forward-looking statements are subject to risk and uncertainty in respect of factors which cannot be controlled or
precisely estimated by the Company, such as market conditions, competitive environment, currency fluctuations and changes in the
inflation rate, alterations in regulatory and governmental bodies and other factors affecting the Company's operations. As a result, the
Company's future results may show material differences from these projections.
The reader is warned not to take any investment decision exclusively on the basis of these forward-looking statements. The forward-
looking statements do not represent and should not be interpreted as a guarantee of future performance. The Company does not
undertake to publish any revision of these forward-looking statements, or to update them in the face of events or circumstances
which may arise after the date of this document.
This document contains operational information and other proforma management information which is internal to the Company and
not derived directly from the financial statements. This information has not been specially reviewed by the Company’s independent
auditors and may involve assumptions and estimates adopted by the management. This information should not be considered as
sufficient in isolation for any investment decision and should be read in conjunction with the Company’s financial information that has
been subject to limited review or audit and which is filed with the Securities Commission (CVM).
No responsibility will be accepted by the Company and its subsidiaries, or by their board members, officers, agents, employees,
advisers or representatives, for any loss or prejudice arising from the use of the information presented or contained in this document,
or for any damage resulting, corresponding or specific thereto. Data included in this document was obtained by means of internal
research, market surveys, information in the public domain and business publications; the Company has not confirmed the reliability
of this data with the respective sources.
Company
Overview
Guararapes store. Recife, PE
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Leadership National footprint through strong regional brands
Brazil Pharma is one of the leaders in the Brazilian pharmaceutical market, present in all the regions of Brazil through its chain of owned stores and franchises
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North 109
Northeast 244
Midwest 121
Southeast
South 207
REGIONS
Owned stores
10
1
108 20
15
21
11
198
7
75
116
1
9
237 Owned stores
116 Owned stores
121 Owned stores
369 Franchises
207 Owned stores
05 Distribution centers
Footprint 1,050 stores
89
86
Brazil Pharma national footprint
National Footprint Largest drugstore chain in number of stores
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Dez
2009
Jul
2010
Out
2010
Dez
2010
IPO
Mar
2011
Fev
2012
Mar
2012
Jun
2011
A History of Growth & Integration
186 years of
history
Abr
2012
Jun
2012
Foundation
Acquisition
Inauguration
CSC
Acquisition
Acquisition
Acquisition
Acquisition
Acquisition
Joint Venture
Follow
on
Regional Leadership DNA National Leadership: Integration
Since 1975
Since 1995
Since 1945
Since 1994
Since 1965
Since 1994
Dec
2009
Jul
2010
Oct
2010
Dec
2010
Mar
2011
Feb
2012
Mar
2012
Jun
2011
Apr
2012
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Shareholder’s Structure
BTG Pactual + FIPs Managers Operating Partners Free Float
35.7% 44.6% 19.3% 0.4%
100% 100% 100% 100% 100% 100%
Note: As of December, 2012
40%
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Experienced Management
Rodrigo Silveira
Operations
Sara Rezende
CFO
Carlos Dutra
Commercial Director
André Sá
CEO Financial Market 13 years
Renato Lobo
Director of Investor Relations Financial Market 18 years
Flavio Sanchez
Shared Service Center Director
Management Experiência
Financial Market 6 years
Industry/Pharma Retail 20 years
Industry/Pharma Retail 19 years
Experience
Gabriel Guioto
Director of People & Management Financial Market 13 years
Retail/Integration 16 years
Fronts of
Integration
Logistics
Jadir Tavares
Procurement
Renato Stefanoni
Trade Marketing
Rovilson Apolinário
Operations N/NE
Ricardo Kitamura
Operations NE(Bahia)
Wesley Barbosa
Operations MW
Emílio Azevedo
Operations S
Delmar Raguzzoni
Commercial Integration
Carlos Dutra
Integration of Operations
Rodrigo Silveira
33 years 20 years 7 years 18 years 12 years 12 years 10 years 20 years 20 years
Projects
Juliana Amaral
IT
Rogério Segala
SSC
Alessandra Araújo
SSC -
Administrative Integration
Flávio Sanchez
6 years
SAP Project
Eduardo Portela
11 years
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Dream
Mission
People
• To be the best Drug Store Chain in the country helping create a healthier world
• Provide health and well-being for our customers
• Create Long-term partnerships with our suppliers
• To have 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
Dream, Mission and Our People
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To be the
first
choice
INVESTORS
SUPPLIERS TALENTS
To be the first choice to our public is one of the principal strategic business guidelines of the Company
To be the first choice:
Sector
Overview
Edivaldo Antunes, Sant’Ana DC employee. Camaçari, BA
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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
Source: IMS Health.
Drivers Micro Momentum
Regional
brands
Fragmented
market
Sector
formalization
Drivers Macro
Income
growth
Population
aging
Generic
medicines
14.4 15.8 17.7
20.3 23.0
6.3 7.0
8.0
9.7
11.2
2.9
3.6
4.5
6.2
8.8
23.6
26.4
302
36.2
43.0
2007 2008 2009 2010 2011
Branded OTC Generic
CAGR ‘07-11
Medicine: 16.2%
Generics: 31.2%
Branded: 12.4%
OTC: 15.5%
Sales performance in the Brazilian pharmaceutical market from 1996-2011 (R$ Billion)
Industry Performance A Growth and Accelerating History…
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Source: Pro Genéricos e BTG Pactual Research.
Penetration of generics..
In the Brazilian market - Share in medicine (% of income)
With higher margins, the generic medicine have been gaining market share but has still lower participation compared
to other countries
Drivers Macro: Income growth and the opportunity for selling more generic drugs
9% 11%
13% 14% 15% 17%
22%
2005 2006 2007 2008 2009 2010 2011
60% 60% 60%
45% 35%
30% 22%
Germany USA England Canada France Spain Brazil
51% 46% 39% 40% 35% 25%
34% 36% 46% 45% 49% 53%
15% 18% 15% 15% 16% 21%
2005 2006 2007 2008 2009 2010
Strong social ascension...
Population distribution by social classes (%)
A/B
C
D/E
Little explored potencial
Average spending on medication (USD per capita, 2011)
45
65
79
352
722
982
China
Mexico
Brazil
Europe
Japan
USA
12x
In other countries - Share in medicine (% of income)
Low penetration
in Brazil when
compared to
other countries
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Souce:IBGE, FGV.
The aging population should bring growth in number of prescriptions and medicine sales per capita
3.7%
5.1%
10.3%
15.5%
19.6%
22.9% 22.9%
0-18 19-44 45-54 55-64 65-74 75-84 >85
The process of Brazilian aging... ...contributing to the increase on medication spending
Medical prescription by age range (%)
Drivers Macro: Opportunity to growth due population aging
80% of all medical prescriptions
are directed to people over 55
years-old
Million 2011 2030 CAGR
Total population 189 233 1,4%
Population over 40 years old 51 70 2,1%
% total population 27% 30%
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Source: Itaú BBA Research.
Great opportunity for consolidation
Independents losing market-share for large drugstore chains
Market share by channel – number of stores, 2011 (%)
Top 5 retail chains market share
Medicine revenues, pharmaceutical market (%)
Drivers Micro: Fragmented market. Opportunity to capture share of independent chains
62.0% 59.9% 55.1% 51.5% 49.1% 48.3% 47.9%
16.1% 17.0% 20.1% 22.6% 22.2% 22.7%
17.4%
5.5% 6.3% 6.5% 6.2% 6.5% 6.4% 5.5%
16.4% 16.8% 18.3% 19.7% 22.2% 22.6% 29.2%
2005 2006 2007 2008 2009 2010 2011
92.3% 91.7% 91.2% 90.8% 90.6% 89.3%
88.0%
5.1% 5.5% 5.8% 6.0% 6.0% 6.8%
6.6%
0.7% 0.8% 0.9% 1.0% 1.0% 1.2%
0.9%
1.9% 2.0% 2.1% 2.2% 2.4% 2.7% 4.5%
2005 2006 2007 2008 2009 2010 2011
29.2% 34.0%
66.0% 78.0%
70.8% 66.0%
34.0% 22.0%
Brazil Mexico USA Chile
Top 5 Others
Brazilian market still very
fragmented
Market Share by channel – Income, 2011 (%)
Abrafarma Top 6 to10
Abrafarma Top 5
Independents
Supermarkets / Other chains
Brazil Pharma
Business Model
Big Ben store. Belém do Pará, PA
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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 Regional Footprint … With a leadership position in four out of five regions…
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Source: IMS Health; Estudo Setorial Valor Econômico, Company.
Above 30 stores
Between 1 to 15 stores
Between 15 to 30 stores
Without presence
...with less competition
Footprint – Number of owned stores
Growth: Opportunity to growth in the fastest-growing regions with less competition
The regions where Brazil Pharma operates growth about 2bps above the national market average
We operate in the fastest-growing regions...
Pharmaceutical market (ex) southeast (R$ Billion)
+19.8%
+14.2%
CAGR
‘07-11
+18.5%
+16.6%
2.6 2.9 3.4 4.1 4.8
3.5 4.0 4.8
5.8 6.9
1.0 1.1
1.3 1.5
1.7
1.6 1.8
2.1
2.8
3.3
2007 2008 2009 2010 2011
South Northeast North Mid-west
+18% p.y.
...when compared to the main chains...
Market growth - CAGR (2007-2011)
14% 16% 18%
SP Brazil BRPH Regions
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Strong organic growth
Organic Growth (# owned stores)
Brazil Pharma Abrafarma
Branded Generics HPC
Profitable sales Mix
(3Q12)
Maturation of owned stores
(3Q12)
Competitive Advantages
Source: Brazil Pharma and IMS.
333
90
95
109 54 681
2009 3Q12Openings 2011
Openings 9M12
Openings 2010
Openings 2009
14.2%
17.2%
13.7%
54.9%
Stores < 12 months
Stores > 12 < 24 months
Stores > 24 < 36 months
Stores > 36 months
64.9%28.5%
11.7%
37.1%
45.9%
17.0%
Contracted growth: 45.1% were not yet at a
mature stage
2.0 2.6
3.1
2010 2011 2012E
+23% p.y.
Strong sales growth
Grow 23% per year from 2010-12
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Footprint at IPO and 12 months later
663 Points of sale 302 Owned Stores
361 Franchises
Platform @ IPO Actual Platform
1,050 Points of sale 681 Owned stores
369 Franchises
(1) Includes 11 stores acquired from Estrela Galdino on April , 2012 and added to Sant’Ana’s store count in 2Q12.
(1Q11) (3Q12)
Distribution Center
Owned stores
Franchises
Increase of National Footprint Strong delivery performance since the IPO in June/2011…
207 Owned Stores
369 Franchises
237 Owned Stores
121 Owned Stores
116 Owned Stores ¹
89 Owned Stores
60 Owned Stores
153 Owned Stores
361 Franchises
Carlos Alberto. Sant’Ana store, Salvador, BA.
Value Drivers
Integration & Retail Management
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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
Operational Structure … Excellent regional companies into a unique excellent national company…
Source: Brazil Pharma
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Becoming 100% Integrated … Applying management excellence to pharmaceutical retail: 4 fronts
3.Training & Culture
• Expand sales training program
• Spread Brazil Pharma culture to
all platforms
• Ensure excellence for customer
service
• Train regional leaders
1.Administrative
(SSC)
• Unify and integrate
back -offices of networks in
single center
• Standardize controls and
practices
• Cut costs and streamline
administrative processes
• Unify systems - SAP project
2.Commercial
• Integrated purchases and profit
from mix
• Strengthen relationships with
industry
• Maximize logistics intelligence
from DCs
• Standardize store layout and
apply consumer intelligence
4.Operations
• Consolidate leadership in our
markets
• Expansion - identify points and
analyze new markets
• Monitor sales targets and
performance
• Monitor local market practices
and competition's moves
Focusing on integrating our regional networks and bringing in retail management expertise
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Opened in March 2012, the purpose of the SSC is to integrate back-office activities across platforms,
activities initially run separately placed under same management
SSC Aim - More from Less
Plug-in more activities in SSC leveraging effort to boost productivity
PAS Sant’ana
PAS Corporate and Farmais
PAS Mais Economica
Future: PAS Big Ben and Guararapes
Shared Services Center - SSC Integration Front .. back-office of platforms
MAPPING
PLUG-IN
CONTINUOUS IMPROVEMENT
1
2
3
Plugging platform into SSC. Mirroring:
activities running in parallel - SSC and
platform - for 60 days, to mitigate errors;
Understanding needs of platform, design of
scope and processes;
Through quality tools, constant pursuit of
improvements in process and productivity
gains.
Plug-in Stages
PAS Rosário
Admission to Termination
Calculation and Collection
Calculating Results
Administrative-Financial
Administrative Support
IT Support P
AS
Cen
ter
Sh
ared
Ser
vice
s -
SSC
• SSC in Brasilia, DF
• 6 Service Outposts (PAS) executing
local activities
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PHONE
WEBPAGE
Collaborator contacts Brazil Pharma for
registration of Income Tax for its new
dependent, health plan and odontologicall
plan for the child
Child birth !!
Opening call
Advanced Service Station
Collaborator delivers the child birth
certificate
Update of benefits and database from the
collaborator
Share Service Center
Central Service
Shared Service Center – SSC Requirement through Central Service– Real-world example
1 2
3 4
HR Activities – Employee Registry
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2011 2012 2013
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Preparation / implementation Estabilization
SAP Back Office
Big Ben/Guararapes
Farmais, Corporate
and Rosário
Sant’Ana Plug-in
“as is”
Concluded Planned Go live
Continuous improvement- Project Adding Value
Mais Econômica
Adminstrative - SSC SSC Integration schedule
Integration progress in accordance
to schedule
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Integrated
Commercial – Purchases Business Intelligence ... ongoing integration front
Segregated
Purchasing Departments
Integrated
Purchasing Department
• A purchasing department for each platform
• Purchases made separately based on policies specific
to each regional
• Unified structure and commercial conditions
• Strengthening relationship with industry
• Negotiating nationwide campaigns
• Ensuring profitable mix: fewer SKUs and maximize
profitability by category, manufacturer, tax situation
Single Purchasing Department model with regional cell to
understand local needs
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2012 2013
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
Commercial – Purchasing Commertial Integration schedule
Rosário
Sant’Ana
Mais Econômica
Big Ben/
Guararapes
Concluded Planned Go live
Process improvements and obtaining synergies
Systems and Registry improvements
Integration progress in accordance
to schedule
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5 distribution centers strategically located in order to support our regional operations
North – 1 DC
• Belém do Pará, PA
Storage: 50,000 SKUs
Distribution centers Supply of owned stores
Commercial - Logistics Distribution centers …
South – 1 DC
• Canoas, RS
Storage: 12,000 SKUs
Midwest – 1 DC
• Brasilia, DF - New DC inaugurated in Oct/12
Storage: 13,000 SKUs
Northeast – 2 DCs
• Jaboatão dos Guararapes, PE
Storage: 13 thousand SKUs
• Salvador, BA - New DC inaugurated in Nov/12
Storage: 15,000 SKUs
Fast delivery capacity and stock replacement
Purchases direct from the industry supply our platforms:
Better purchasing conditions
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Commercial - Logistics Distribution Centers ... improvement and integration fronts
Refurbish and build new DCs:
Managing stock and break discontinuity:
Efficient store replenishment Camaçari, BA
Jaboatão dos Guararapes, PE Canoas, RS
• Physical space adequate for company growth mission:
inaugurating two new DCs in 4Q12 and new projects in
progress;
• Standardization of operating processes across all
distribution centers - systems, indicators, stock control.
• Operational excellence for storage, transportation and
security, with focus on productivity.
Switch photo
Operational excellence to support sales growth
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Trade Marketing Constantly working to improve the consumer experience...
Non-renovated stores Renovated store
Effort of adjusting mix and layout to maximize sales and provide better
consumer experience
Complete renovation: store facade and interior
Partial renovation: adjust gondolas and category management
(intelligence for organization depending on consumption stimulus )
Store Sant’Ana, Salvador Shopping. Salvador, BA
Store Guararapes. Recife, PE
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Trade Marketing Tools for optimizing store space: higher profitability and sales
Check-out display: high turnover products to encourage
impulse purchases
Gondola point: clusterizing stores by customer profile to
maximize potential of product exposure
Work with the industry to afford more exposure for products and adjust layout to provide better consumer
experience
Dermocosmetics space to display premium products
Category management : intelligence organization
depending on consumption drive
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Training & Culture Training and tools provided
• Correct each sales team's major deviations or productivity
problems;
• Educational, training and professional development
programs;
• Training to offer our clients the same consumer experience
whichever platform they are visiting;
• Integrating methods: endorsement of store facades,
uniform, attendance and sales force compensation.
Brazil Pharma Sales Training Program - created in 2012
Focus on sales has generated robust and tangible results
10%
90%
13%
87%
MULTIPLICADOR
LOJA
Multiplier share of sales
Portion of Sales (%)
Before course After course
Think about this
MULTIPLIER
STORE
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Training & Culture Culture roadshow
• Dimension of Brazil Pharma structure, proud to be part of the
group;
• Delivery of the Culture plaque: symbol of Brazil Pharma presence
in each store and guideline for employees conduct;
• Promote high management – employee proximity: every employee
can reach the Company’s top leadership.
Stores visits with management to disseminate our values all over Brazil
84 stores visited since the beginning of
the project in July/2012
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Stores managed by solid team with experience in retail and knowledge of local market dynamics
Operations Regional Expertise
• Consolidate leadership in our markets
• Identify points and analyses of new markets
• Monitor sales targets and performance
• Monitor local market practices and competition's moves
EMILIO JOSE DE AZEVEDO
WESLEY BARBOSA
RICARDO KITAMURA
DELMAR RAGUZZONI
Sande Alexandra. Guararapes store, Recife, PE
9M12 – Financial
Highlights
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28.3 29.9 30.5 28.8 31.4 31.3
1Q11 2Q11 3Q11 1Q12 2Q12 3Q12
10.0%12.4%
8.6%
16.2%13.8% 15.1%
1Q11 2Q11 3Q11 1Q12 2Q12 3Q12
5.8%8.9%
6.1%
12.1%9.1% 7.8%
1Q11 2Q11 3Q11 1Q12 2Q12 3Q12
Sales Profile¹
Sales Mix
(% of Gross Revenues)
Average Ticket
(R$)
(1) Proforma information, except when otherwise indicated.
Same-Store Sales (SSS)
(Total - %)
(Mature Stores - %)
31.6% 37.5% 36.5% 37.1%
47.5% 46.1% 46.4% 45.9%
21.0% 16.4% 17.1% 17.0%
2011 (Non-proforma)
1Q12 2Q12 3Q12
Non-Medicine Branded Generics
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Financial Highlights¹ 9M12
(1) Information on a proforma basis; (2) Adjusted EBITDA– excludes non-recurring expenses ; (3) Adjusted Net Profit - excludes non-recurring expenses, brand and intangible assets
amortization and non-recurring IR & Social Contribution effect.
Gross Profit and Gross Margin
(R$ Million | % of Gross Revenues)
Gross Revenues
(R$ Million)
673.6 719.0 699.3 746.8 804.4
3Q11 4Q11 1Q12 2Q12 3Q12
211.3 226.8 211.0 224.5 247.1
31.4% 31.5% 30.2% 30.1% 30.7%
3Q11 4Q11 1Q12 2Q12 3Q12
Adjusted EBITDA and EBITDA Margin 2
(R$ Million | % of Gross Revenues)
44.0 43.6 36.9 46.3 52.3
6.5% 6.1%5.3%
6.2% 6.5%
3Q11 4Q11 1Q12 2Q12 3Q12
23.9 32.010.1 24.3 26.9
3.6% 4.4%1.4%
3.3% 3.3%
3Q11 4Q11 1Q12 2Q12 3Q12
Adjusted Net Profit and Adjusted Net Margin3
(R$ Million | % of Gross Revenues)
Leticia, Phamacist, and Vanessa, stockist. Mais Econômica, Canoas, RS
Farmais
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Brazil Pharma
• Capturing market share in places where operation would not be justified for our own stores
• Expansion with little capital investment
• Market perception for regions in which we do not yet operate
Farmais Largest chain of franchises in Brazil's pharmaceutical retailing
Franchisee
• Professionalization of point of sale and retail expertise
• Better buying conditions - ensure profitability of business
Strengthening brand
visibility for
consumers
• Purchases made under conditions negotiated for the entire Brazil Pharma
chains (over 1,000 stores) - better margin
• More attractive rates for financial products
• Team specializing in retail management know-how and trade marketing to
boots store sales and product visibility
• Managing stocks and optimizing regionalized mix
• Legal and Accounting Support
• Marketing campaigns with renowned artists
Strengthening
perceived value for
franchisee
Strengthening Brand
Target 2013: Farmais nationwide
penetration
Kely Regina. Rosário store, Brasília, DF
BPHA3 in the Capital Market
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217 / 217 / 217
204 / 215 / 234
Performance BPHA3 Performance BPHA3 since IPO¹-YTD
Share/price after Stock split
Performance BPHA3 IPO¹-YTD
(Index 100: 06/24/11)
R$ 13,10
BPHA3 152
IBOV 94
+54,2% IPO-YTD
Source: Bloomberg. Close of trading 06/12/12. BPHA3 R$13.10; Ibovespa 57,656 points. . 1- IPO Brazil Pharma: 06/24/2012.
Ibovespa
IPO BRPH¹: (5.5%)
2012 YTD: 1.6%
Brazil Pharma
IPO BRPH¹: 52.0%
2012 YTD: 54.2%
Average daily volume (2012): R$5.3 million
Shareholders’ yearly dividends at least 25% of adjusted net income for the year.
R$ 1,298,805.29 R$ 0.007 share Dividends Year / base 2011 Vote Date
04/30/2012
End of Minimum Lot
BPHA3 IPO by 12/25/12
Dividend Policy
End of trading restrictions with
minimum lot of 10,000 shares
10,000 100 shares
R$ 0,00
R$ 2,00
R$ 4,00
R$ 6,00
R$ 8,00
R$ 10,00
R$ 12,00
R$ 14,00
R$ 16,00
0,0
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Brazil Pharma IBOV
Renato Lobo
Investor Relations Director
Otavio Lyra
Investor Relations Manager
Marina Sousa
Investor Relations Coordinator
Phone: +55 (11) 2117- 5299
E-mail: [email protected]
IR Website: ww.brph.com.br
IR CONTACT
Centro de Serviços Compartilhados - CSC, Brasília, DF
BRAZIL PHARMA S.A.
