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Institutional Presentation
November 2011
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7.08.3
9.4 10.3 11.2 11.613.1
14.817.2
19.221.5
23.6
26.4
30.2
36.0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Sales Performance in the Brazilian Pharmacy Retail Sector from 1996-2010 (R$ Billion)
Pharmacy Retail: A Unique Combination of Solid Growth and Strong Macro Drivers
Sources: IBGE, Farmácia Popular, Health, OMS IMS, Brazil Central Bank
Micro Drivers Timing
Regional
Brands
Fragmented
Market Formalization
Macro Drivers
Income Growth Population Aging Generic Drugs
1997 – 2000
1997: Asian Crisis
1998: Russian Crisis
1999: Real Depreciation
2000: Internet Bubble burst
2001 - 2002
2002: Crisis pre-Lula election
2001: Argentine Default
2003 – 2005
2003-04: First years of
Lula´s election
2004: Mensalão scandal
2006 – 2007
2006: Second Lula election
2008 – 2010
2008: Subprime Crisis
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Brazil Pharma: Track Record Brazil Pharma and it´s subsidiaries have a proved growth track record in both M&A and Organic
Brazil Pharma´s
Foundation
2007 2008 2009 2010 2011
07.2007
06.2009
03 stores–AL
10.2008
07 stores–PE
05.2007
03 stores-PE 11.2009
17 stores–RS
06.2011
04 stores–SC
03.2011
04 stores–RS
09.2011
07 stores-PE
08 stores-PE
07.2009
67 stores–DF
+ 03.2011
08 stores–MT
09.2009
19 stores-DF
11.2011
05 stores - PB
Diariamente Drogaria
Brazil Pharma´s
IPO
05.2010
32 stores–NE
07.2010
77 stores–MW
09.2009
361 franchises
10.2010
29 stores–NE
01.2011
153 stores–S
11.2011
146 stores–NW/NE
Platform Strategy – Leading Regional Player
Organic Strategy - The Best Spots
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Track record (sales per month)
Brazil Pharma: Sales Growth
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Big Ben - Our new acquisition
Total acquisition amount of R$453,644,000.00(1)
• R$178.6 million in Brazil Pharma shares, issued at a price of R$15 per share;
• R$100.9 million in cash; and
• R$174.1 million in 3 annual installments, adjusted by IGP-M (General Market Price Index).
Indemnity and Sureties
• Last installment in cash and equity interest in Brazil Pharma will be secured by indemnities as contractually agreed.
Corporate Governance
• Raul Aguilera remains as Big Ben’s CEO with 3-year renewable management contract; and
• 3-year lock-up for issued shares.
(1) Includes transaction fees.
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Founded in 1994, with head offices in the state of
Pará;
CEO and Founder : Raul Aguilera;
Brazil’s 8th largest drugstore chain;
Largest drugstore chain in Brazil’s northern region, 68%
top of mind in the state of Pará, according to “Diário do
Pará”;
146 stores in the states of Pará, Maranhão, Amapá, Piauí,
Pernambuco and Paraíba;
50 stores in the northeast region;
24% of stores are under maturation;
Sales per store of approximately R$500 thousand/month;
Sales in 2010: R$712.4 million; and
EBITDA in 2010 : R$40.2 million.
Big Ben Overview
Sales Breakdown
2010
Stores per State
October 31 , 2011
Besides being the leader in Brazil’s northern region, Big Ben presents high levels of sales per store with
a solid growth towards the northeast region over the past years
Pará 95 stores
Amapá 1 store
Maranhão 20 stores
Piauí 14 stores
Pernambuco 14 stores
Paraíba 2 stores
(1) As of October 31, 2011
(2) Average sales per store recorded in 2011
(2)
(1)
50%
8%
42%
Branded
Generics
Non-medicines
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Brazil Pharma Post Acquisition
Ownership structure post acquisition.
(1) Assets managed by Banco BTG Pactual.
Operating
Partners
Farmais Rosário
Distrital Guararapes Mais
Econômica
100.0% 100.0% 100.0% 100.0%
BTG
Pactual
30.33% 24.45%
Market
11.83%
FIPs1
20.41%
Big Ben
Aguilera
Family
12.98%
100.0%
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Sponsorship from Active and Experienced Shareholders and Management
Solid and rich expertise
acquired from previous
endeavors
Unique successful story in
playing the consolidation
trend in the Real Estate
industry: PDG Realty
Highly active and
performance-oriented
shareholders, with high
ambitions in the sector
Partnership with TAM: the
merchant banking division
of BTG Pactual
successfully created value
for TAM through (i)
Multiplus IPO and (ii)
merger with LAN
Experienced management with more than 25 years in the pharmacy retail industry on average
Board of Directors
Marcelo Kalim
Board Member
Carlos Fonseca
Board Member
Roberto Martins
Board Member
José Luiz Depiere
Board Member
Artur Grynbaum
Independent Board Member
36
n/a
n/a
20
14
25
n/a
15
14
22
n/a
n/a
Álvaro Silveira
Board Member
# Years
Pharmacy Retail # Years
Financial Industry
André Sá
CEO
Marcelo Doubek
CFO
Renato Lobo
Investor Relations
Álvaro Silveira Jr.
Head of Midwest and Commercial Director
Gilberto Portela
Head of Northeast Operations
Ernandes Cunha
Farmais Director
Wilson José Lopes
Head of South Operations
Management
2
2
n/a
22
30
11
25
12
14
18
n/a
n/a
n/a
n/a
Experience
Flavio Sanchez
Project Manager n/a 4 years as Project Manager at
Coca Cola and 12 years at Ambev
Andre Buric
Product Manager n/a 6 years as Product Manager at
Johnson & Johnson
Raul Aguilera
Head of North Operations 25 n/a
The Company
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Brazil Pharma: Strategies to Create Value
Market
Consolidation
Highly fragmented
market with large room
for consolidation
Organic Growth
Opening of new stores to
consolidate local
leadership and enter new
states
Differentiation
Product development,
private label and loyalty
programs
Operational
Efficiency
Strong synergy to come
through integration
Large
Amount of
Synergy to
Capture
Integration
G&A synergies
Consolidation of
operations
Unparalleled
Growth
(# of stores
9M11)
60
34
21
Enhance
Consumer
Experience
Development of new
products to enhance
client experience and
maximize profitability
Source: Drogasil and Droga Raia’s press releases as of September 30th, 2011
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60,1% 10,0%
29,9% 47,3%
21,6%
31,1%
87 25%
73 21% 63
18%
129 36%
Stores with less than 12 months
Stores with 12 to 24 months
Stores with 24 to 36 months
Stores with more than 36 months (mature)
Our Platform²
872 points of sale
Number of Proprietary Stores¹
498 own stores e 364 franchise stores
Brazil Pharma at a Glance
Largest Pharmacy Retail Company in Brazil: Ready for further consolidation
3Q11 Medicine Sales Mix (%)¹
98
52
150
71
221
71
292
60
352
25
377
2007 2008 2009 2010 9M11
Brazil Pharma Abrafarma
Branded
Generics
Non-Medicines
Distribution of the Stores by Stage¹
(Existing stores on September 30, 2011)
¹Excluded Big Ben and Estrela Galdino’s Stores
²GRD, Farmais, Mais Econômica and Guararapes’ stores as of September 30, 2011; Big
Ben’s stores as of November 03, 2011 and Estrela Galdino’s stores as of November
28, 2011
177 own stores
364 franchise stores
101 own stores
1st
2nd
230 own stores
+ 2nd 1st
Proprietary Stores
Franchise Stores
Distribuition Center
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Source: IMS Health, Companies web site, Brazil Pharma
Brazil Pharma is located in strategic regions with low competition, high growth perspectives and large
complementarities to top players.
Revenues
Breakdown per
State
Raia +
Drogasil
Drogaria
S. Paulo +
Pacheco
Brazil
Pharma
São Paulo 31%
Rio de Janeiro 14%
Minas Gerais 10%
Rio Grande do Sul 8%
Paraná 6%
Goiás + DF 5%
Bahia 4%
Santa Catarina 4%
Pernambuco 3%
Ceará 3%
Pará 2%
Others 11%
Pharmacy Retail: ... With Consolidation Opportunity
South
East
Region
Other
Regions
Revenues Growth (R$000) Store Growth
2010 2009 2008 2010 2009 2008
Droga Raia 1.860 1.594 1.147 350 299 259
growth % 16,7% 39,0% 17,1% 15,4%
Drogasil 2.089 1.788 1.326 338 283 256
growth % 16,8% 34,8% 19,4% 10,5%
São Paulo 2.214 1.706 1.412 342 249 214
growth % 29,8% 20,8% 37,3% 16,4%
Pacheco 1.843 1.621 1.248 340 370 280
growth % 13,7% 29,9% -8,1% 32,1%
Pague Menos 2.235 1.855 1.551 400 333 301
growth % 20,5% 19,6% 20,1% 10,6%
Brazil Pharma 921 660 470 292 221 150
growth % 39,5% 40,4% 32,1% 47,3%
Brazil Pharma Focus
Players Focus
Investment Case
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Brazil Pharma Integration Framework
Governance Policies Processes
Workshops
SSC I.T. Distribution
Center Procurement
Organizational Chart
Stratregic Planning Reports
Management Standards
Procurement
Accounts Plan
Regulatory
HR
IT
Sales
Legal
Controller
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Macro-Schedule
Phase 1 Phase 2 Modus operandi
-2012- USD 8,45 mm cost reduction
JUN-AGO
INDG
Operational and Financial Highlights 3Q2011
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192,4
219,6
249,4
259,8
240,0
274,1
305,2
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Sales and SSS
Solid track record in sales and SSS growth
Gross Revenues
(R$ million)
SSS (Crescimento Vendas Mesmas Lojas)
SSS SSS mature stores (36 months)
6,7%
2,2%
4,2%
5,6%
1,9%
6,1%
4,4%
13,8%
10,6%
13,4%
15,0%
8,4%
12,7%
10,3%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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26,89
27,69
28,31
27,74
28,05
29,47
30,70
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Sales Mix and Average Ticket
Increase in average ticket even with the growing relevance of generics in our sales mix
Sales Mix
(% of sales)
Average Ticket
(R$)
33,5% 31,7% 31,1% 33,5% 31,6% 30,7% 31,1%
47,0% 47,7% 47,1% 46,1%
46,7% 48,0% 47,3%
19,6% 20,5% 21,8% 20,4% 21,6% 21,3% 21,6%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Non medicines Branded Generic
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Gross Profit and Expenses
Gross margin expansion, given better mix and inventory management
Gross Profit and Gross Margin
(R$ million, % of gross revenues)
Selling, General, Administrative and Other
Expenses1 and % of Gross Revenue
(R$ million, % of gross revenue)
(1) Includes other net operating revenues. Data adjusted to exclude non-recurring expenses occurred during
the quarters. On the 3T11 non recurring expenses were R$5.9million, being R$4.3 million related to
severance paid, in view of the headcount cut in the South platform and R$1.6 million expenses related to the
stock option plan.
59,8
66,7
74,3
77,6 78,9
94,1
102,1
31,1% 30,4%
29,8% 29,9%
32,9%
34,3% 33,5%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Gross Profit Gross Margin
50,2
55,3
60,8
67,7 66,7
79,0 81,0
26,1% 25,2%
24,4%
26,1%
27,8% 28,8%
26,6%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
SG&A % of gross revenue
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EBITDA and Depreciation and Amortization
Highest EBITDA margin since the creation of Brazil Pharma
EBITDA and EBITDA Margin
(R$ million, % of gross revenue)
Depreciation and Amortization Expenses
(R$ million)
Starting January 2011 there was a change in our accounting criteria and
the key money (commercial establishments) amortization was classified
under depreciation and amortization expenses in the income statement.
This same line includes the depreciation of our plant and equipment and
the investments in the layout adjustment at our stores.
Out of the R$6.8 million depreciation and amortization expenses booked in
3Q11, R$3.9 million represented the amortization of intangible assets
(commercial establishments).
9,6
11,4
13,4
9,9
12,2
15,2
21,1 5,0% 5,2% 5,4%
3,8%
5,1% 5,5%
6,9%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
EBITDA EBITDA Margin
0,7 0,8 0,8 0,8
5,0 4,9
6,7
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
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Financial Result and Net Income
Lower financial expenses given Company’s capitalization and maintenance of profitability
Financial Result
(R$ million)
Net Income and Net Margin1
(R$ million, % of gross revenue)
(1) Net income before minority interest and adjusted to exclude non-recurring expenses in the period.
(3,4)
(4,4) (4,6)
(2,9)
(2,4)
(1,8)
4,1
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
2,0
4,7
15,0
3,2
3,0
3,9
4,6 5,4
6,1
4,0
5,2
7,8
18,9
2,4% 2,5% 2,4%
1,5%
0,8%
1,7%
4,9%
2,2%
2,8%
6,2%
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11
Adjusted for key money amortization Net Income
Net Margin Adjusted Net Margin
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Contact Details
Investor Relations
Renato Lobo IR Officer
(55 11) 2117 -5200
www.brazilpharma.com.br/ri
Brazil Pharma S.A.
Rua Gomes de Carvalho, 1629
6º e 7º andares
CEP 04547-006
São Paulo, SP, Brasil
