Brph day 17.09.12_english

Brazil Pharma Day

September 17th, 2012

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Brazil Pharma Day – Agenda

BRPH - Strategy & Integration 9 am - 9:30 am

• André Sá / Sara Rezende

Commercial 9:45 am - 10:45 am

• Carlos Dutra & team

Shared Service Center - SSC 11 am - 11:30 am

• Flávio Sanchez

People and Management 11:45 am - 12:15 am

• Gabriel Guioto & team

Operations 12:30 am - 13 pm

• Rodrigo Silveira & Operations team

Lunch – FARMAIS 13:15 pm - 14:30 pm

• Renato Lobo

Strategy & Integration

Sector and Company

Performance since IPO

Focus on Integration

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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 Sector from 1996-2011 (R$ Billion)

Drugstores A Growth and Accelerating History

Source: IBGE. Farmácia Popular. Health. OMS IMS. Brazil Banco Central do Brasil

Drivers Micro Timing

Regional Brands Fragmented

Market Formalization and

Consolidation

Drivers Macro

Income Growth Population Aging Generics Drugs

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Brazil Pharma vs Competitors (2011)

Competitors’ focus

Market Growth - CAGR (2007- 2011)

Geographical concentration … Strong concentration in the Southeast Low concentration out of the Southeast region

Source: IMS Health

Pharmacies per region (2011)

High density

Low density

14.0% 16.2%

18.0%

SP Brazil BRPH Regions

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North 104

Northest 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

665 owned stores

352 Franchises

89

Source: Brazil Pharma

1.017 stores

Brazil Pharma: Footprint

Largest Drugstore Chain in Brazil: National Presence

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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

Ranking by region and Drug Store Chain

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)

Brazil Pharma: Leadership Position ...leader in four out of the five regions we operate

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Large Growth Capacity

Organic Growth (# owned stores)

Brazil Pharma: Market Penetration

Brazil Pharma Abrafarma

Branded Generics HPC

Diversified Sales Mix

(2Q12)

Market Growth

(CAGR07’-11’)

Maturation of Owned Stores

(2Q12)

Already contracted Growth

Performance since

IPO

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Brazil Pharma: Market Consolidation Strategic Growth based on M&A and Organic Growth

663 Points of sale 302 Owned Stores

361 Franchises

IPO @ Platform 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

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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%

Operational Performance since the IPO … Not only in growth, but also in performance

3.8 3.5 -8%

Sales Performance

Administrative Performance

# of store employees

per store

Sales per store level employee

(R$ thousand)

EBITDA (ex-G&A) per employee1

(R$ thousand)

Increasing operational efficiency and stores productivity

# of administrative + distribution

center employees per store

EBITDA per employee2

(R$ thousand)

Notes: (1) Considers total stores and distribution centers employees.

(2) Considers total employees (store, distribution centers and administrative).

Focus on Integration Unifying Regional Leaders

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Brazil Pharma: Our History Great regional companies into one excellent National Company

2012 2013E 2014E 2016E2015E1945 1965 1975 1994

IPO

1994 2009 20111995

186 years of

History

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Brazil Pharma: Your first option!

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

Source: Brazil Pharma

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Our Structure – Improvement phases

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


1

2

3

Mapping

Plugging-in


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.

Commercial Department

Building Long-term Partnerships

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Commercial Director

Carlos Dutra

Procurement Manager

Renato Stefanoni

Logistic Manager

Jadir Tavares

Trade.Mkt Manager

Rovilson Apolinário

Estrutura

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Procurement:

Procurement

Centralize operations/negotiation for competitive gains

Acknowledgment as an unique and national Company

Strengthen relationship with suppliers

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Trade Marketing:

Rationalization and optimization of Brazil Pharma sales mix

Use of tools to optimize the stores area (profitability and sales)

Store layout adjustments providing a better consumption experience

Procurement

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Logistics:

Physical space in line with the Company’s vocation to growth

Operational excellence (storage, transportation, safety, productivity)

Standardization of the Distribution Centers’ operational process (systems, indicators, etc.)

Procurement

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Purchase / Trade

Corporate

Purchase

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Corporate

Sell In

Purchase / Corporate Trade

• Orders;

• Negotiation;

• Supllier service;

• Controls;

Corporate Purchase

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Trade

Corporate

Sell In

Sell Out Team / Execution

• Trade Marketing;

• Stores visitation;

• Generation of local demand;

• Campaings;

Prucurement and Local Trade Marketing

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Purchase / Trade

Corporate

Procurement structure


• Orders;

• Negotiation;


• Controls;





• Campaings;

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Corporate

Sell In

Sell Out

Sell Out

Sell Out

Sell Out

Procurement structure


• Orders;

• Negotiation;


• Controls;





• Campaings;

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Analysis:

Purchase: Commercial intelligence

Sales (Market growth vs. sales)

Stores profitability

Profitability per category, manufacturer, product (tax issue, revision of commercial conditions)

Optimized inventory (Distribution center & stores)

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May/12 Jun/12 Jul/12 Aug/12 Sep/12 Oct/12 Nov/12 Dec/12 Jan/13 Feb/13 Mar/13

Rosário

Sant’Ana

Mais Econômica

Big Ben

Guararapes

Improvement of Process and synergy gains

Improvement of systems and entries

Concluded Planned GoLive

Timetable: Procurement centralization

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Stores lay-out

Sales mix

Product categorization

Trade Marketing Constantly working on improving consumption experience...

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Non-renovated store


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Renovated store


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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


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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Shared Service Center

- SSC Integrating talents and services, sharing excellence

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Preparation

Understanding the “as is”

Drawing the “to be”

Brazil Pharma’s Process Kit

Physical space

Dimensioning

SSC’s Modus Operandi

Productivity

Ensure scalability of SSC

Transactions Accounts payable per HC (daily)

Start Momentum 2

“Plug in”

Plug more operations into the SSC

Through productivity efforts, we are able to plug-in

the platforms operations with gains of scale in HC

Continuous improvement

(ESTABILIZATION)

Using quality tools we’ve created groups responsible for

process improvement s

E

X

A

M

P

L

E

Project Phases

Brazil

Pharma

Company

X

100 200

Brazil

Pharma

Company

X

150 200

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SIPOC

Cadastro de pessoas físicas

Suppliers Inputs Process Output Customers

1

2

3

4

O

Início Fim

Receber solicitação de cadastro

1)Cliente

2)Lojas

Loja

Arquivar fichas

CS I P

Cliente Ficha Prencher ficha CMV Ficha preenchida

Cliente Solicitação de cadastroReceber solicitação de

cadastro

1) Aceita cartão mais vantagens

(CMV)

2)Não aceita cartão mais

vantagens (CMV)

Fichas recebidas

Cliente

Lojas

Ficha preenchida

com todos os dados -

verificação do gerente

Conferir e protocolar fichaFicha CMV preenchida e

protocolada Call center

Call centerLojas

Call centerFichas

Receber fichas de

solicitação de cadastro

S I P O C MATRIX

FLOW DIAGRAM

CATALOGUE OF SERVICES

MATRIX OF OPERATIONAL RISKS

ANS VS Ano

SSC CONTRACT

Brazil Pharma’s Processes Kit

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Admission / Dismissal

Operational Groups

Op

eration

al grou

ps

Customers

Administrative Areas

Stores/DC/Call Center

Employees

Operational Level Agreement

Service Level Agreement

Regulators

Verification and Gathering

Profit Analysis

HUMAN RESOURCES AND GENERAL SERVICES

Finance (Administrative)

Administrative Support

IT Support

Ad

van

ced

Ser

vice

St

atio

ns

Cal

l Ce

nte

r

Co

nti

nu

ou

s im

pro

vem

en

t

Projects Performance

Suppliers

2

1

4

5

3

Service model of the SSC

The SSC will be as a new department responsible for providing adminstrative services to Brazil Pharma

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Typical Structure Process-Oriented Structure

• The Processes “cross over” the departments

• Organizational structure is based on departments

• Management measurements are department-based

• Fragmentation of processes, which have several

owners

• Difficulty in product management

• Departments lose their existence purpose.

• Organizational structure is a consequence of the processes.

• Management measurements are process-based

• One single owner for each macroprocess

• End-to-end integrated measurement in product

generation

Ch

arac

teri

stic

s Im

pac

ts

2. From Request to Payment

4. From Closing to Reporting

3. From Admission to Dismissal

1. From Order to Supply

In SSC, by plugging-in the platforms activities, we get an integrated view of processes, as we put together under a

single management activities that were sequential and correlated, but previously held separated, increasing the

control over overall quality.

Exa

mp

les

Direct an

d in

direct T

axes

Acco

un

ts Payab

le

Acco

un

ts Receivab

le

Treasu

ry Back-o

ffice

Payro

ll

Acco

un

ting

Pu

rchase o

f Ind

irect Items

Eq

uip

men

ts and

Help

desk

Macroprocessing SSC: plugging-in for Excellence in Services

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Admission to Dismissal

SSC

Op

erat

ion

al G

rou

ps

Verify and collect

Profit Analysis

HUMAN RESOURCES AND GENERAL SERVICES

Financial Administrative

Adminstrative support

IT Support

Co

nti

nu

ou

s im

pro

vem

en

t

Ad

van

ced

Se

rvic

e S

tati

on

Cal

l Ce

nte

r

1

URA

Satisfaction survey

2

3

4

• Very satisfied

• Satisfied

• Indifferent

• Unsatisfied

• Very unsatisfied

Calls from SSC manager in order to improve attendance

IT

Human Resources

Returned checks

Financial and Administrative Services

Management and Level 1 Problem Solving

Objective: Channel for doubts and information supply in

order to give an immediate response to the user

Finalized calls:

100% surveyed by phone calls

SSC Operation

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• Lower operating cost

• Longer implementation

• Higher investiment

• Higher operating cost

• Shorter implementation

• Lower investiment

SSC Customer service

HIGH TECNOLOGY RESOURCE

CENTRAL SERVICE

Special Cases

Resolution

Decision- Making

Self Service Especialized Attendance

OPERATIONAL GROUPS

COORDINATOR EXECUTIVE

Exception cases

e.g: Online Payment

Status

e.g: Payment

Questions

e.g: Invoice not

found e.g: Payment not in

compliance w. rules

Attendance Level Central service

The volume of problems solved in each level influences quality and costs of the service provided.

Central

Attendance

Scope

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PHONE

WEBPAGE

E-MAIL

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

Requirements via Central Service Real instance

1 2

3 4

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Indicator (“ANS”) Goal Jun/12 Jul/12 Aug/12

Call index - # of calls answered in 1º Level 40% 40.4% 47.2% 43.1%

Calls solved within timeframe index 90% 89.9% 94.3% 93.7%

Dropped call index 8% 5.1% 3.8% 2.5%

Average time on waiting (ATW) 15 sec. 15 seg. 11 seg. 07 seg.

Average time of attendance (ATA) 5min 4:19 min 4:23 min 04:06 min

Satisfaction attendance index 85% 77.4% 77.7% 85.3%

Volumetry Jun/12 Jul/12 Aug/12

# Received calls 8,030 9,856 10,055

# Dropped calls 408 371 255

# Total of opened calls 14,336 18,877 18,413

• Increase in HC for e-mail service

• Training of new attendants

• Open-line for problem solving

• Dedicated inbox for certain subjects

In time Delayed Concluded

Act Period

Revision of scripts together with N2 Sept/2012

Revision of process together with N2 Sept/2012

Training for satisfaction survey Sept/2012

Improvements in the satisfaction survey Sept/2012

Modification of TV screen’s Lay-out Sept/2012

Central Service

Indicators

Volumetry

Main developments

Prior Projects/Acts Status

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Po

sto

s A

van

çad

os

de

Ser

viço

s

Stock exchange of Excellence: Quotation of operational areas rely on

“ANS”/”ANO” attendance

The better operational performance in the year receives a recognition prize

Incentives a “healthy competition” among the operational groups

Objective: Support on improvement and optimization of

the process in order to perpetuate operational excellence

SSC Operations


Op

erat

ion

al g

rou

ps

Verify and collect

Verification of results

HUMAN RESOURCE AND GENERAL SERVICES


Adminstrative support

IT Support

Co

nti

nu

os

imp

rove

me

nt

Ad

van

ced

se

rvic

e s

tati

on

Ce

ntr

al s

erv

ice

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Stock Exchange of Excellence

1º R$ 149.9

2º R$ 148.9

3º R$ 147.43

4º R$ 147.43

5º R$ 146.07

6º R$ 140.19

7º R$ 140.08

8º R$ 126.08

IT Support

Verification and Gathering

Accounting close process

Stock Exchange of Excellence - June/12

Managerial information

Central service


Administrative support


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incorporate (plug-in) more activities into SSC

by increasing productivity

Increase of efficient headcount, adding value

to new demands of the SSC

SSC Adding Value ...more with less

More with less

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Employee BI (overall

headcount mapping)

EBITDA per store

Sales diary

Expenses

Purchase price (COGS)

Leasing contracts

control

Payments follow-up

Leasing expenses

control

Purchase centralization

of non-tradable items

(e.g.: travel, telephony,

etc..)

Work group dedicated

to looking for economic

opportunities through

improvement of process

and (or) controls

NEW CORPORATE DEMANDS

SSC BRPH

Quick Wins SG&A

Rental Management

Purchase of indirect

materials (synergies)

Managerial Information

Area

SSC Adding Value

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Transportation voucher

Average for vacations

Elimination of duplicated

vacation benefits

Food/Meal voucher

Saving

(R$/month) Description

Saving

(12 months – R$)

Deduction in transportation voucher benefits related to non

justified work absences

Payment adjustments

Vacation scheduling

Deduction in meal voucher benefits related to non justified work

absences

R$ 7,200

R$ 10,000

R$ 9,600

R$ 86,400.00

R$ 120,000.00

R$ 11,000.00

R$ 115,200.00

R$ 132,000.00

R$ 42,800 R$513,600 Total

Triennium &

Quinquennial

Configuration of the system to correct undue payments

R$ 5,000 R$ 60,000.00

After bringing the activities into the SSC, the continuous process improvement of has already provided savings...

SSC Adding Value Quick Wins SG&A...

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Working day

Assiduity award

Cash flow shortage

Saving

(R$/month) Description

Elimination of undue working day payment 220h to 110h.

Parameterization of the award payment

Intelligence on payments schedule

R$ 2,200

R$ 10,000

R$ 3,000

R$ 26,400.00

R$ 120,000.00

R$ 36,000.00

R$ 15,900 R$ 190,800 Total

Consigned Conciliation of consigned loans R$ 700.00 R$ 8,400.00

Saving

(12 month – R$)

R$ 58,700 R$ 704,400 Total profit recorded

CSC Agregando Valor Quick Wins SG&A...

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Central of Indirect items Purchase Focus on implementation

Identify existing policies and

revise when needed;

Define policy of use and

consumption for all working

fronts;

Measure gains from new

policies application.

Policy

Define control process;

Define mechanism to capture

gains ;

Define mechanism for

monitoring and reporting of

realized gains.

Control

Validate baselines already

proposed by consultancy

companies;

Accelerate the activities

already negotiated by the

consultancies companies

(realize gains ASAP);

Initial focus: travel,

connectivity (Mobile and fixed

telephony, data...);

Prioritize negotiation of the

most profitable fronts;

Seek baselines for new

fronts of negociation.

Price

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Negotiation only Policy + Process +Negotiation

Prior cost

After negotiation cost

Absorbed saving

used in others

operations

Policy

application

Process

controls

Negotiation Saving return to the

Company’s cash flow

Importance of policy and process definition Gains..

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Travelling request

Verification of plane ticket

request x Area budget

Yes

No

Price quotation

Travel policy

- Request in 5 days prior

- Cheaper price for the hour

- Duble room accomodation(whenever

possible)

- Reimbursement of R$ 35.00/day

Authorization

request - Manager approval/Area Director

Ticket issuance

Send ticket to

petitioner

In accordance to

rules?

Travel justification

Director approval

request

- Policy

Real x Budget

(Managerial info.)

Send status to

Board of directors

(Managerial info.)

Justification/ Action

plan

(Board of directors)

Control

Travel Control - Example

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Relógio de Ponto

Seguros

Segurança

IT material

Office material

Cleaning material

Fixed Telephony

Mobile Telephony

Travel

Fleet

Coils

Bags

Staff clock

Insurance

Fuel

Uniforms

Work fronts led by internal team +

consultancy;

Potential gains analysis for

prioritization of the fronts to be

implemented;

Definition of control policy and

process;

Synergy opportunities analysis.

Synergies – Negotiation front

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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

GO

LIVE


In time Delayed Concluded Not initiated

Estabilization

Mais Econômica

(DP)

Corporate Closing

SAP Back Office

Quick Wins Big Bem

(PD)

Farmais, Corporate

and Mid-east

Plug-in “as is” Project “SSC Adding Value”

All operation plugged

into SSC

GO

LIVE

GO

LIVE

GO

LIVE

GO

LIVE

GO

LIVE

Bahia

(PD & Financial)

Rental

(Santana)

Rental (Mais

Econômica)

Rental (Big

Ben) Rental

(Rosário) Rental

Diagnosys

Central of indirect items purchase (Synergies)

South

(all areas) GO

LIVE

Kick off em

09/24

SSC Roadmap and Projects

People &

Management

Culture & Integration

Our people

Management

Culture & Integration Proud to be part of Brazil Pharma

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Culture

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 suppliers

• 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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Visual Identity

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Culture Roadshow Disseminating our values all over Brazil

• Store visits with André Sá and Gabriel Guioto.

• 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.

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Annual Integration Event

• Strategic Planning 2013 – 2015

• Integration activity – creation of a Samba

association, reinforcing the pride to be part and

the feeling of group unit

• Activity to launch the Company’s standardization

process - Integrated Management System

• Main Lecture: Bernardinho – Volleyball coach.

“Transforming Sweat into Gold”.

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Integration

• Monthly workshops with Platforms, transforming regional into national practices.

Best Practices

• Training and Professional Development Process in Brazil Pharma, providing all employees the opportunity to increase knowledge and individual and collective productivity with several training programs.

“Vendo Mais” Program

• Creation of an interactive environment with the area documents, corporate information, space for communication and training material. National reach and real-time opportunity of integration between areas and regional units. Planned for 2013.

Intranet

Our People The look of Brazil Pharma

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Management Team

PEOPLE DIRECTOR

GABRIEL GUIOTO

PEOPLE

RAFAELLA ANDRADE

TRAINING

BERENICE PUCCI

Goals of the People Team

Disseminate Brazil Pharma culture for all platforms and provide proper training in order

to be the best and larger Drug Store Chain in the country.

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People BI Brazil Pharma family...

• 16,332 collaborators

• 13,549 collaborators allocated in stores

• 60% works longer than 1 year with us

• 66% are women

• 27% aged between 21 and 25 years

• 42% are store assistants /cashier operators

• Acknowledgment of our people

• Team-development

• Efficiency increase in our operations

• Providing better opportunities to our people

• Reduced turnover costs

• Reduced operational costs

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Carrer and Salary Plan

• Finished

ￚ Job description

ￚ Competency Map

• On going

ￚ Job description validation at the Regional

Platforms

ￚ Salary validation of each Regional Platforms

ￚ Salary Adjustment

• Benefits

ￚ Same remuneration methodology for all

platforms

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Training program

• Pharmaceutical trainer

• Supervisor trainer

• Multiplier

• Sales method

• Pharmaceutical trainer


• Multiplier

• Sales method


• Multiplier

• Sales method

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Performance Evaluation

Operation (all platforms)

• Evaluate leadership skills at supervisor level

Operation/ Sales

• Sales performance evaluation

Evaluate collaborator skills (know-how, abilities and behavior), according to area and

scope of activity.

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Executive Development Program

• Definition of the Talents Profiles based on our culture

• HR Follow-Up and Performance Evaluation as main tools Identification of the Company’s

Talents

• First Class: 06/24 to 07/01, and 11/08 to 11/10

• Second Class: 2013 Executive Training

• Directed Development Program

• Compensations and Benefits to Retain Talents (RETAIL: Intelligence, Leadership and Talent Retention)

Talent Development and Retention

Management Strategic support for each Regional Platform

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Management Team

DIRECTOR

PERFORMANCE MANAGEMENT

GABRIEL GUIOTO

SOUTH PLATFORM

FABIO COSTA

MID-EAST PLATFORM

GUILHERME FIORENZANO

BAHIA PLATFORM

MAURÍCIO TISO

NORTH/NORTEAST PLATFORM

FABIO EIRADO

RECIFE OPERATION

NATHÁLIA RODRIGUES

Goals of the Management Team:

Monitoring and controlling the pharma retail operations from Brazil Pharma group in

order to put in practice the goal of being the best and larger Drug Store Chain in the

country

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Improvement and Projects

Reduction of the store HC, decreasing the HC/store average from 22.6/store in 1Q11 to

20.4/store in 2Q12

Renegotiation of existing agreements and termination of older agreements

Corporate card cancellation

Reduction of expenses with transportation of employees to stores working after 10 p.m.;

Implementation of the VoIP system in all company’s land lines and review of the mobile

phone users;

Store Expenses Control (meals, phone, etc.)

Cost reductions already implemented

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Weekly meetings with Regional Managers and Supervisors

Implementation of budget monitoring

Control focused on variable expenses such as Telephone Lines, Travels and Fuel

Implementation of a payment control and approval by competent areas

Implementation of a reimbursement policy for employee expenses

Control and approval of positions, transferences and raises

Implemented management improvements


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Profit sharing for store Managers/Supervisor (implement monitoring of expenses under the

store control)

Help in the efficacy analysis of CD

Request a review of the chain power installations to reduce costs

Project to reduce water use in the chain

Conduction of a study to reduce delivery costs

Help to migrate from BackOffice to SSC

Challenges and ongoing projects


Operations Focus on sales and leadership development

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Initiated his professional experience in

Drogaria Rosário at the age of 15 as a

Underage Trainee. He worked in every

position in the store – from salesman to

store supervisor.

He was Director of Operations & Sales in

GRD and currently works as Director of

Operations of GRD.

RODRIGO SILVEIRA

Professional Training and Development Training and Partner Succession...

In charge of training and transition process of

incorporators

1.Identify, evaluate and promote training for the platform

professionals, developing the vision of “business owners”;

2.Monitor main indexes and promote actions that ensure that

goals related to these indexes are reached;

3.Perform regular maintenance, as required.

Status:

South and North: first step ongoing

Bahia and Mid-Western: in phase of maintenance

Strategic Goal

PROFESSIONAL EXPERIENCE

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Professional Training and Development ...Training future leaders

New identity of the “Training and

Professional Development Process in

Brazil Pharma”, providing all

employees the opportunity to

increase knowledge and individual

and collective productivity with

several training programs.

We also highlight the launch of the

BRPH Sales and Consumer Service

Method, with tips and techniques to

standardize the consumer service and

maximize results.

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MUBARACK - SIG/PDCA, INDG – GMR/GMD, LT/A PONTE e SETA –

SIX SIGMA

Looking for continuos

Improvement

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• Store Official Visit by the Coach Lead. Tool developed in the Mid-Western based on the use of Consulting techniques: MUBARACK- SIG/PDCA, INDG – GMR/GMD, LT/A PONTE and SETA – SIX SIGMA.

VOLLTA Spreadsheet:

• Formalize and control visits of each Supervisor to the store. Identify productivity, technical, operational or professional attitude deviations or issues.

Purpose:

“A monthly Action Plan is prepared in order to revert results for each clerk with a negative deviation in the Mid-Western.”

Operations & Sales - GRD

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Operation Team

EMILIO JOSE DE AZEVEDO

WESLEY BARBOSA RICARDO KITAMURA FABIO COSTA

Our Operation Regional Managers:

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20 years working in the area

Initiated his professional experience in

1992 as cashier, Salesman, manager,

pharmacist, supervisor and regional

manager. Currently Manager of

Operations in Mid-Western for Brazil

Pharma.

Background: Drogaria Santa Mônica

and Drogaria Rosário (Brazil Pharma).

EMÍLIO JOSÉ DE AZEVEDO


Mid-Western Platform

Strengths

Training and Professional Development Process

completely implemented

Marathon – largest sales campaign in the

pharmaceutical retail

Average Ticket

Leadership in the Mid-Western market

Strong growth in the States of GO and MT

Top of Mind for 2 consecutive years.

Points to be developed

Head Count by store

Launch of the new CD

Reduction of the discount

Platform Shot

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Experience as analyst, Coordinator and

Manager of planning, controllership, budget

and management areas

Background: Brazil Pharma, Mais

Econômica, Itaú, Credicard and PDG

FÁBIO COSTA


Strengths

Over 1 million of generic drugs/month

Capillarity in the countryside

204 stores, 80 cities, 2 States

Reference in the work with C and D classes


Head Count by store

Mix adjustment

Logistics

Expansion of Covenants

Improve performance in A and B publics

Implementation of the Training and Professional

Development Process: Multiplying agents, Supervisors and

Regional Managers

Platform South

Platform Shot

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Experience in administrative and financial

routines, foreign trade, costs, planning, sales and

general direction.

Background: several areas, such as agriculture,

metallurgy, communication, food, cosmetics and

pharma retail in positions of office boy, supervisor,

manager and director.

RICARDO KITAMURA

Strengths

Absolute leader in the North region and largest player.

In the city of Belém, Leader for over 15 years, with

average preference of 70% of the population.

Work in the States of PA, MA, PI, PE, PB, CE and AP.


Focus in the countryside growth;

Expansion of the dermo-cosmetics sales and Big

Serviços;

Integration of Guararapes Store.

Platform North/Northeast


Platform Shot

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Experience in Administrative and financial

routines, Sales, Trade Marketing and Category

Management

Background: AMBEV, Niasi and Colgate Palmolive

in positions of salesman, supervisor, manager and

director.

WESLEY DE PADUA BARBOSA

Strengths

70% of market share in the city of Salvador

Average public of 2 M individuals/month in 114

stores

15 years as top of mind in Salvador

Developing average ticket


Team training

Store layout

New CD Implementation of the Training and Professional

Development Process: Multiplying agents, Managers,

Supervisors and Regional Managers


Platform Northeast - Bahia

Platform Shot

Farmais

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Why to expand the footprint?

# Stores by

Sales

category

Average sales

of each store

R$

thousand/mon

th

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

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Farmais Context

Number progression of active stores from Farmais Chain

Main leverages for Farmais Turn Around

Expansion

Management

Brand Equity

• Creation of a team focused in the expansion with a goal based on results

• Flexibility of fees and conditions for new stores

• Farmais benefits individually calculated in order to encourage conversion

• Unified management system - transparency regarding all the store numbers

• Creation of a trade area and solid training of the field consultants

• Synergy with the know-how obtained in own platforms

• Ana Hickmann as advertising girl and improved marketing strategy

• Convention of franchise holders with motivational lecture and recognition of the best

franchise holders

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Farmais Representativeness in BRPH

• FARMAIS Representativeness in the number of BRPH stores

• Turn-Over Mix – “Daily Sale” criterion

• Farmais represents approx.

34% of the total number of

BRPH stores.

• In the current scenario,

Farmais will represent 37% up

to 2014.

• In case of expansion to

alternative areas, the

representativeness would

increase to 42%

• Farmais represents approx.

18% of sales, same % that it

tends to reach in 2014 in the

current scenario.

• In case of expansion to

alternative areas, the

representativeness would

increase to 21%

368 444 532 602

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Macro benefits to become Farmais

Independent Farmais

Commercial

conditions

Management

Marketing

Regulatory /

legal

• Purchases made by one drugstore or a small

group of drugstores, obtaining smaller margins

• Product financial fees are within the market

standard

• Purchases with negotiated conditions for over a

thousand stores – Larger margin

• Product financial fees are much more appealing

• Absence of a team professional supervision

focused in the store and in trade techniques to

leverage the turn-over

• Team expert in store management with trade

know-how to increase the store turn-over and

brand visibility

• Inventory management and optimization of a

regionalized mix

• Regular training for store teams

• Local marketing with low efficacy and no large

scale media power

• Amateur material with high costs and low

appealing

• Ana Hickmann as advertising girl in

• Seasonal campaigns with drawing of cars,

motorcycles, tablets etc

• Mass Media in the largest communication

companies in Brazil

• Tabloids with price intelligence according to the

working region

• Reduced or no support of specialized

professionals in regulatory and legal issues

• Technical team that facilitates and reduces

the costs of all regulatory processes, in addition

to alert on all possible renewals

• Support in decisions in order to avoid potential

legal and accounting issues

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The new look of Farmais Creating Brand value

ANA HICKMANN

The new integrant of Farmais

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Brazil Pharma Day

Thank you for you presence

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Nota Importante

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.

Documents

Brph day 17.09.12_english