Capital Markets Day 9 September 2015_presentation OriolaKD.pdf

Oriola-KD Corporation 1

ORIOLA-KD’S CAPITAL MARKETS DAY

IN STOCKHOLM 9 SEPTEMBER 2015


9.30 - 10.20 Oriola-KD’s updated strategy and new operating model Eero Hautaniemi, President and CEO

10.20-11.00 Consumer Business Area Lars Birkeland, Vice President, Consumer Business

11.00-11.15 Coffee break

11.15-11.45 Services Business Area Kimmo Virtanen, Executive Vice President, Services Business

11.45-12.15 Healthcare Business Area Thomas Gawell, Vice President, Healthcare Business

12.15-12.30 Break

12.30-12.45 New long-term financial targets Sari Aitokallio, CFO

12.45-13.00 Wrap-up

13.00-14.00 Lunch & Discussion

14.00-15.00 Pharmacy visit

Agenda


Oriola-KD’s Updated Strategy and New Operating Model Eero Hautaniemi


Pharmaceutical Market Undergoing Many Changes

• Moderate market growth supported by change in demographics

• Sales of specialty products growing faster than the total market

• Growing share of pharmaceuticals routed through hospitals

• Increased volume of generics in all markets

• Growing importance of OTC, traded goods and services

• Increasing spending on health and wellbeing in general

• Digitalization: mHealth and E-health important future trends

• Consolidation of pharma companies continues with fast pace


Global Sales Estimated to Grow 3-6 % p.a. Until 2019

• Total global spending on drugs will reach USD 1.3 trillion by 2019

• 2014 growth supported by new expensive prescription medicines

Source: IMS Health


Moderate Market Growth in Oriola-KD’s Main Markets

Estonia Lithuania Latvia

Baltics growth rate

Sales Sales

US

D m

illi

on

US

D m

illi

on

US

D m

illi

on

Source: IMS Health, 1) IMS Health, September 2014

Growth rate Growth rate

SWEDEN

2015 - 2019 CAGR 1-4 %

FINLAND

2015 – 2019 CAGR 2-5 %

BALTIC COUNTRIES

2013 – 2018 CAGR 3-5% (1


Sales of Specialty Products Growing Faster than Total Market

Traditional Specialty

Historical value growth CAGR 2005-2014

Val

ue

mar

ket

shar

e 2

01

4

Source: IMS Health


Fastest Growing Corporations are Focused on Specialty

TOP GLOBALLY TOP SPECIALTY TOP GENERICS

Source: IMS Health, Oriola-KD

Oriola-KD distribution, Finland Oriola-KD distribution, Sweden


Growing Share of Pharmaceuticals Routed Through Hospitals

• Many European

countries distribute products through the hospital channel due to: • Medical need • controlling

prescribing, • avoiding

wholesaler & pharmacy margins

• ability to negotiate discounts

Source: IMS Health

Historical value growth CAGR 2005-2014

Val

ue

mar

ket

shar

e 2

01

4


Increased Share of Total Volume for Generics in All Markets

Depending on market, ~90% of volume is off-patent Source: IMS Health


Generics Volume Growth is Expected to Outpace Market

• Volume growth is driven by: • Increasing number of patients • “Catch-up” in many markets • Impact of policy shift

• Regulated prices is expected to decrease in most markets

Evolution of therapy volume, price of treatment and overall treatment cost in 7 therapy areas, Rx

retail market from Q1 2005-Q4 2014, Normalized to population growth

Source: IMS Health


Increasing Spending on Health and Wellbeing

• Consumer Health

represents over 10% of the total Pharmaceutical business globally

• At EUR 81 billion OTC continues to grow while Pharma growth improves

Source: IMS Health


Digitalization Drives Changes Across the Entire Value Chain

Sweden and Finland Other Markets

Pharmaceutical wholesale and retail sector

http://www.google.com/url?url=http://www.punainen.fi/ajankohtaista/&rct=j&frm=1&q=&esrc=s&sa=U&ei=YnJHVbPdKIP8ULrxgfAG&ved=0CBcQ9QEwAQ&usg=AFQjCNFpLrSuRvDm3nJxh4Tr1GoFfpItMw

http://www.google.com/url?url=http://www.ssi-schaefer.nl/magazijn-automatisering/referenties/farmacie-drogisterij/mediq-dc-oss.html&rct=j&frm=1&q=&esrc=s&sa=U&ei=qJFVVenDKoTP7QbxyIGABg&ved=0CBUQ9QEwAA&usg=AFQjCNGSVqHru06jRpEbrZiF9MdTOWxNvw


M&A Continues with a Fast Pace With Potential Impact on Distribution Channels

• Pharmaceutical

companies are focusing on key strategic areas

Source: IMS Health


Downward Pressure on Pricing and Margins Due to Regulatory Measures

The pharmaceutical wholesale prices cut by 5%

5% price reduction re-applied

A 48M€ cost reduction announced

The prices for off-patent pharmaceuticals reduced in the generics price model

Prices reduced by 7,5 % for over 15 years old pharmaceuticals without generic competition

Price cut for over 300 pharmaceuticals as they pass the 15 years’ line (TLV)

2002

2006

2014

2016 2013

2015


Channel distribution

Market Regulation Varies Between Countries

Single channel / DTP distribution Multichannel wholesale, pre-wholesale has an important role

Sales outside of pharmacies mainly not allowed

Sales outside of pharmacies partially allowed

Allowed for prescription (Rx) and prescription-free (OTC) pharmaceuticals

Varies by country

Not allowed Allowed

Free establishment Regulated establishment Pharmacy establishment

Pharmacy chain

operations

Pharmacy online sales

Sales of OTC

Allowed

SWEDEN FINLAND BALTICS

Oriola-KD Corporation

Competitive Landscape


Competing with Very Big Global Companies

North America, Brazil and 13 countries in Europe

North America and 13 (25) countries in Europe

Global sourcing, distribution, and services

in partnership with

25 countries in Europe

5 countries in Europe

€150 B

€110 B €110 B

€22 B

€1.6 B

SALES MARKET AREA COMPETITORS

( (

Source: Compay filings


Solid Position in the Present Market Area

MARKETS COVERED BY THE BIG THREE:

One present

Two present

All three

market


Introduction to Oriola-KD Strategy


Retail

Pharmacy transformation toward retailing

Differentiate by great customer experience & assortments

Strategic Responses to Changes in Business Environment

Boundaries

Consolidation

Digitalization

Healthcare

Margins

Consolidation creates stronger,

multinational companies

Operate across borders and

provide pharma companies single point access to

Nordics

Drives changes across the entire

value chain

Enhance digital capabilities in

service design & delivery.

Deploy digital consumer strategy & solutions

Healthcare B2B and Homecare

B2C markets are growing

Enter the market in hospital

services and niche markets

Competition and regulation keeps putting pressure

on margins

Efficiency programs to

improve competitiveness

Boundaries in pharma value

chain are shifting

Shifting from traditional

wholesale to pharma company & retail services


Demand-supply chain management

Logistics operations

Services Kimmo Virtanen

Consumer Lars Birkeland

Healthcare Thomas Gawell

Pharma distribution Pre-wholesale

Oriola+ services

Hospital services Dose dispensing

B2B delivery

Services for pharmacies

Brands

Pharmacies

eBusiness Consumers

Pharmacies

Groceries

Public & Private Healthcare

Dentists

Pharma companies

New Operating Model Will Allow Oriola-KD to Provide Better Services for Customers

Veterinarians


Indicative Distribution of Net Sales and Operation Profit

~38 % ~62 %

~53 % ~47 %

Net Sales 2014 EUR 1,612.3 Million

Operating profit excluding non recurring items 2014 EUR 59.1 Million

Consumer Business Area Services Business Area


Investments to Improve Operational Efficiency

• To support the new strategy Oriola-KD will invest

EUR 20 million into Group’s IT systems and the logistics centre in Finland • Improving operational efficiency • Strengthens company’s market position • Will be realized over 2015 – 2018

• Further investments into Swedish supply chain

channel efficiency under investigation


Group Goals for 2015 - 2020

• Developing the new channels to better fulfill

customer needs, including digital solutions • Leverage the synergies in the group across the markets to

grow consumer business • Transforming the traditional wholesale business towards a

pharmaceutical services provider • Entering the growing niche markets in B2B healthcare

• Implementing common solutions, common processes and improving our value chain efficiency: supply chain, logistics, and information management


Summary

• Oriola-KD has solid position in consumer and

services business in the pharmaceutical markets in Sweden, Finland and Baltic countries

• With the new strategy and operating model • We can even better respond to market changes and our

customers’ needs • Provide better services to customers • Improve efficiency by streamlining operations and

unifying processes


Consumer Business Area Lars Birkeland


Consumer Lars Birkeland

Pharmacies

eBusiness Consumers

Pharmacies

Groceries


Dentists

Pharma companies

Strong Position in Consumer Market

Veterinarians


• Line between retailers and pharmacies is fading • Pharmacies transforming toward retail • Assortments extended

• Growth and ageing population drives demand for RX • Continued downward pressure on pricing and margins of RX driven by

austerity measures • Role of county councils and TLV drives structural changes in RX • OTC and traded goods penetration still underdeveloped in Sweden • Digital drives changes across value chain

• Customers expectations and requirements change rapidly • Digital buzz drives innovation • New players enter the market

Market Trends


5.3

2.4

1.60.3

+85

65-84

45-64

<45

0

2,000

4,000

6,000

8,000

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85+

5.7

2.5

1.80.3

9.7

10.0

10.110.3

2014E 2016E 2018E 2020E

Demographics Drives RX Demand in Sweden

...and the elderly use

significantly more pharmaceuticals

Population (millions)

Defined Daily Dose (DDD) Rx use /1,000 inhabitants/day (2013)

Population (in millions and CAGR)

...and getting older...

’13-’20 growth (CAGR)

+0.8%

+0.6%

+1.8%

+0.5%

<45

45-64

65-84

85+

The Swedish population is

growing...

2020E 2013

Source: SCB. The National Board of Health and Welfare

Price drivers • Relatively benign patent expiry

profile going forward • New launches of high priced

drugs support average prices • Eroding prices through LIF

agreement, effect to the industry limited given pharmacy remuneration model

• Unpredictable price cuts on individual products


34

36

40

41

49

50

52

59

63

71

77

83

89

92

96

116

145

Spain

Portugal

UK

Nether.

Denmark

Sweden

Greece

Norway

Ireland

Luxem.

Austria

Italy

France

Finland

Germany

Belgium

Switz.

OTC Spending in Sweden Below EU Average OTC penetration in different European markets

Average: EUR 71

OTC spending per capita (EUR)

GDP-adjusted average: EUR 84

Source: IMS OTC Global Analysis, February 2013. Sweden adjusted to include OTC sales in non-pharmacy channel (unadjusted figure is EUR 41).

Top line drivers going forward • Strong self medication trend

• Sales initiatives and promotion

• Expanded and improved customer offerings

• Regulatory changes to paracetamol retailing expected to benefit pharmacy sales and customer flows

• Favorable demographics for pharmaceuticals benefit also OTC

Margin drivers • Assortment management an

underused lever – significant margin potential from “generic OTC” promotion


17% 17%18%

20%

21%

23% 23%24% 25% 24% 24%

2004 2006 2008 2010 2012 2014

International Examples Clearly Illustrate The Potential in Traded Goods

(UK)

10% 12% 13% 13% 15%

2010 2011 2012 2013 2014

21%24%

50%

Tyskland Norge Boots (UK)

Source: Swedish and Norwegian Pharmacy Association, KPMG, Alliance Boots.

Traded goods sales as % of pharmacy sales

Development in Sweden

since de-regulation

Strong traded goods development in Norway following de-regulation

2014 2014 2014


0

50

100

150

200

0,100

0,105

0,110

0,115

0,120

Q2'

12

Q3'

12

Q4'

12

Q1'

13

Q2'

13

Q3'

13

Q4'

13

Q1'

14

Q2'

14

Q3'

14

Q4'

14

Q1'

15

EU

R m

illio

n

SEK

/EU

R

Price Reductions and Currency Rate are Main Drivers for Parallel Import

0

200

400

600

800

70%

75%

80%

85%

90%

95%

100%

105%

110%

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

EUR

mill

ion

SEK

/EU

R n

orm

aliz

ed

Source IMS MIDAS Data and Oanda

Sweden PI sales

SEK/EUR normalized 2003=100%

Sweden PI sales

SEK/EUR

Price cuts effect PI sales PI sales trend is mirror effect of currency fluctuation

7.5% price cut

7.5% price cut


0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Rx OTC Traded goods

Pharmacy market development in Sweden (SEKbn)

2%

7%

12%

‘04-’14 CAGR

OTC

30 - 80 %

RX

12 - 22 %

Traded goods

35 - 80 %

Growth potential Gross margin

range

Strong development potential in Swedish traded goods channel - international benchmarks supports further growth

Swedish OTC spending per capita still significantly below western Europe average

Growing and ageing Swedish population

Overall Strong Underlying Market Dynamics

Source: Swedish eHealth Agency , Swedish Pharmacy Association and Apoteket Omstrukturering AB

CAGR 3 %


Stable Position in Swedish Retail


Stable Position in Swedish Retail Market

Market Share June 30, 2015

Pharmacies June 30, 2015

Apotek Hjärtat & Cura

Apoteket

Apoteksgruppen

LloydsApotek

Others

380

377

304

166

79

Apoteket

Apotek Hjärtat & CURA

Apoteksgruppen

LloydsApotek

Established net 1-6/2015

Source: Apoteksförening and Oriola-KD

37

-1

-4


Kronans Apotek Brand and Concept Evolution

ORIGINAL CONCEPT 2010-11 UPGRADE 2012-13 NEW CONCEPT 2014

Business focus: • RX driven & health care • Traditional assortment Brand promise interpretation: ”Pharmaceuticals since 1907” Establishment focus: close to health care centers

Business development: • Extension of branded skin and

health products • Journey towards “shoppers” started

Business focus: • Embracing wellbeing and beauty

for future growth • Guarding position in RX Brand promise: ”Your wellbeing – our concern” Establishment focus: Modern shopping centers and urban areas


Strong Market Position

Strong positon in RX, Health & Beauty

• Additional services regarding

Asthma, KOL, Diabetes Over 1.5 million

members in the customer club

Wide assortment and services

• Premium Skin Care • Premium Beauty

Increased assortment in Health

• Additional categories


Case: New Care & Beauty Concept

New premium concept, 4-500 sqm, emphasizing skin care and beauty , with warm exclusive look and feel, rx and traditional pharmacy products towards the rear

Dedicated floor/wall space for premium brands

Treatment room for skin care treatments and consultations

New interiors and surfaces for campaigns and impulse

All skin care and beauty brands presented in dedicated brand

spaces

Introducing leading premium beauty brands for the first time in

pharmacy channel such as Biotherm, Clarins, Clinique,

Dermalogica


New Concepts Support Growth Potential in OTC and Traded Goods

Share of OTC and TG from total sales Oriola-KD, Swedish retail business

OTC & TG total Traded goods OTC

• Increased sales of the new and expensive prescription medicines have effected relative share of OTC/TG sales in 2015


Digital Buzz Drives Business Innovation

Across Platforms


Optimize IT to continually adapt to

the needs of a “Digital Business”

• Innovate & adapt

VISION

START

Store

Digital

Analytics

Core IT

Business

• Building the foundation

Digital metrics

Digital experience

Continue to refine seamless digital shopping

experience

Streamline digital experiences with enhanced personalization and real-

time business optimization

Seamlessly, leverage data, in real time, across

multiple channels and touch points

Sales force

Digital store experience

Digitally enabled employees

Evaluation of current data capture

Innovation and cross-channel cooperation Digital

organization Success metrics

New analytic tools

Real-time analytics and insights

Seamless online and mobile experience

Integrated social channels

Personalization

Information model

Modular IT infrastructure

Solid vendor network

Agile and customer centric projects

Lead a Seamless Digital Business


Oriola-KD’s eCommerce Portals

KronansApotek.se • Full range online pharmacy

to be launched in Sweden September 2015

OriolaShop.fi • Web shop for healthcare

professionals in Finland with wide assortment of traded goods

InternetAptieka.lv • Online pharmacy in Latvia

with product assortment of OTC and traded goods


Other sector

Competition in Digital Beyond Market and Sector

Sweden and Finland Other Markets

Pharmaceutical wholesale and retail sector

http://www.google.com/url?url=http://www.punainen.fi/ajankohtaista/&rct=j&frm=1&q=&esrc=s&sa=U&ei=YnJHVbPdKIP8ULrxgfAG&ved=0CBcQ9QEwAQ&usg=AFQjCNFpLrSuRvDm3nJxh4Tr1GoFfpItMw

http://www.google.com/url?url=http://www.ssi-schaefer.nl/magazijn-automatisering/referenties/farmacie-drogisterij/mediq-dc-oss.html&rct=j&frm=1&q=&esrc=s&sa=U&ei=qJFVVenDKoTP7QbxyIGABg&ved=0CBUQ9QEwAA&usg=AFQjCNGSVqHru06jRpEbrZiF9MdTOWxNvw

https://www.google.com/url?url=https://www.varusteleka.fi/fi/bannerit/21998&rct=j&frm=1&q=&esrc=s&sa=U&ei=cFBHVdC0B5WwaaH3gfgE&ved=0CBcQ9QEwAQ&usg=AFQjCNE0GKUMS-YFf90wWUITTSHT9PQH6Q


• Digital presence will be enhanced and strengthened to • improve brand image • leverage physical and digital • support existing and new business • increase profit and productivity

• Digital transformation requires • a change from a product- or feature–focused approach to a consumer- and

shopper-focused approach across channels • establishing integrated processes • organizational structures, goals and incentives around value positions that

cut across all channels

• This is done through • understanding customer behavior • designing the customer experience from the outside-in • developing rewarding and social media experience • seamlessly combining the physical and digital experience

Digital Consumer Strategy Strengthens Brand Positioning, Customer Loyalty and Profitability


• The Consumer business area focuses on the needs of consumers’ health and wellbeing related products and services.

• Ensuring professional customer handling in our own pharmacies and in

the digital channel • Building a health and well-being concept and widening the product range • A comprehensive selection of RX medicines • Developing pharmacy chain and customer loyalty program • Growing the online business in all operating areas

Going Forward


Services Business Area Kimmo Virtanen


Services Kimmo Virtanen

Pre-wholesale Pharma distribution

Oriola+ services

Services for pharmacies

Brands

Consumers

Pharmacies

Groceries


Dentists

Pharma companies

Pharmaceutical Distribution, Branded Products and Tailored Services

Veterinarians


• Value chain boundaries & roles are shifting • Continued shift in business model away from full line wholesale toward services and

integrated retail

• Consolidation creates stronger pharmaceutical companies with more purchasing and bargaining power • Distribution margins under pressure

• Centralization impacts B2B decision making • Pharma companies streamline local operations, and move toward centralized

country clusters • Commercial negotiations & contracts move partly beyond country level • More demand for services in local markets

Market Trends


Channel distribution

Market Regulation Varies Between Countries

Single channel / DTP distribution Multichannel wholesale, pre-wholesale has an important role

Sales outside of pharmacies mainly not allowed

Sales outside of pharmacies partially allowed

Allowed for prescription (Rx) and prescription-free (OTC) pharmaceuticals

Varies by country

Not allowed Allowed

Free establishment Regulated establishment Pharmacy establishment

Pharmacy chain

operations

Pharmacy online sales

Sales of OTC

Allowed

SWEDEN FINLAND BALTICS


Solid Position in Selected Markets MARKET SHARE

TG/OTC for pharmacies in Sweden

39%

Sweden

46.3%

Finland

MARKET SIZE (BEUR) AND GROWTH

0

1

2

3

2015-2019 CAGR 1-4 %

2014

0

1

2

3

SWEDEN

2014

32%

0

1

2

3

2014

Source: IMS Health, Apoteksförening and Oriola-KD

2015-2019 CAGR 2-5 %

FINLAND

2013-2018 CAGR 3-5 %

BALTICS

http://www.apoteksgruppen.se/


Reliable and Well-Known Partner for Healthcare Actors

Pre-Wholesale Retail Distribution

Man

ufa

ctu

rers

Dentists Grocery stores

Hospitals

Rx

OTC Pharmacies

Veterinaries Traded Goods

Small retail

Con

sum

ers & P

atients



Long-Term Customer Relationships and Wide Service Offering

Services in

Sweden

Services in

Finland

Services in

Baltics

Services for Pharmacies

Brands

Logistic Services Warehousing & Pre-wholesale Pharma distribution

Oriola+ Services: Additional Logistics Services Information Services Sales and Marketing Services Professional Services

Services for Pharma Companies Services for Retail

Services for Pharmacies

Unlicensed Medicines

Own Brands

Exclusive Products

Other Products


Case: Close Partnership with Orion Includes Wide Range of Value Adding Services

Warehousing and distribution

Sales and Marketing Services

Oriolashop.fi for non-medicinal products

Professional services Information services

Additional logistics services


Case: Centralized Sourcing Services for Pharmacies in Sweden

• Cooperation with pharmacy chains

enables large purchasing volumes with competitive pricing • Pharmacies in the cooperation represent 32

% of the OTC and traded goods sales in Sweden (Source: Apoteksföreningen, June 2015)

• Purchase and distribution of traded goods and OTC pharmaceuticals

• Pharmacy chains are in charge of assortment decisions

Competitive sourcing and supply chain



Case: Marketing and Distribution of MSD Products in Baltic Countries

• MSD sales and marketing personnel in Baltic coutries outsourced to Oriola-KD

• Distribution of MSD products to all Baltic countries centrally from Lithuania by Oriola-KD


Oriola-KD’s product selection includes leading healthcare and wellbeing brands

Strong Brands in Selected Categories

Lysi Gefilus Apteekkarin

Dexal

Pharmacare

Avène


• Oriola provides services for healthcare actors who want to succeed

in the Nordic and Baltic countries. • We have knowledge of the market from producer to consumer. We

will help you serve your customers better. • With us you can grow, increase profitability and reach your goals.

Value Proposition


• The Services business area offers tailored services to pharmaceutical companies, pharmacies and other customer groups.

• Creating loyalty and winning new customers • Growing services and creating common service concepts • Improving digital customer experience • Growing the sales of branded products • Investment programs to logistics and IM capabilities to improve

competitiveness

Going Forward


Healthcare Business Area Thomas Gawell


Healthcare Thomas Gawell

Hospital services Dose dispensing

B2B delivery

Consumers

Pharmacies

Groceries


Dentists

Pharma companies

Growing Business Opportunities in Healthcare Market

Veterinarians


• Healthcare market is growing in hospital care and specialty pharma • Most specialty products are delivered to patients in hospital setting • Market growing for expensive products – increasing part of the total

volume • Manufacturers are seeking to bypass the traditional distribution – direct-to-

hospital • The lines between in-patient care and out-patient care are slowly being

erased, Homecare is the future • Some niche markets are growing fast, e.g. veterinarian clinics & adjacent

pet food market

Market Trends


Market segments

Fragmented Swedish Market with Several Small Actors

Actor Revenue 2014 (2013*) BSEK

Hospital Services Dose Veterinary Dental Specialty

Home delivery

18.6

11.7

6.8 () (pharmacies)

() (pharmacies)

1.5 (Secondary care)

0.1*

0.6

0.1

0.1*

0.1*

1.4* () (Utilities)

2.1* () (Utilities)

n/a

Source: Companay filings, Oriola-KD


Dose dispensing • ~185 000 patients, annual medicine costs over 2 x average patient • County councils pay 0,1 - 0,5 EUR per patient/day for packaging • Secondary care dose dispensing growing

Vet market: pets & agricultural • Veterinarians, pet-owners and farmers demand online, digital and home

deliveries • Market consolidation through M&A’s by PE-companies • Vet clinic chain “tenders” worth ~7,2 MEUR coming up for competition in 2016

B2B Hospital services • Distribution, production (extempore) and pharma specific services for public &

private customers

B2B Specialty / Medical device market • County councils procure products & distribution of medical devices (e.g.

Dialysis) and nutrition • Growing segment

Relevant Market Segments For Healthcare in Sweden

~230 M€

~95 M€

~60 M€

N/A

Source: IMS Health, Public procurement material, Press releases, Oriola-KD

Market size estimate


In-Patient Market – Several Contracts up for Renewal

County Councils 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Gotland 3 + 2 years

Blekinge In house

Kalmar 3 + 2 years

Kronoberg 3 + 2 years

Skåne 4 + 2 years

Västmanland 3 + 3 years

Östergötland 4 + 2 years

Västra Götaland & Halland 4 + 3 years

Jönköping In house

Dalarna 3 + 0 years

Värmland 3 + 2 years

Gävleborg 3 + 2 years

Stockholm 4 + 2

Uppsala 3 + 3 years

Västerbotten 5 + 2 years

Västernorrland 5 + 2 years

Norrbotten 5 + 2 years

Jämtland 5 + 2 years

Södermanland 3 + 1 years

Örebro 3 + 2 years

Apotek Hjärtat Apoteket AB Apotek Hjärtat & Apoteket AB Apoteket AB & APL Apoteket AB, ApoEx & APL

In house

Market size

• Annual service contract value of ~SEK 0.5bn and pharma products turnover of approximately ~7bn

Other potential

• Private hospitals

• The Armed Forces

• Correctional facilities

• Veterinary hospitals

Source: Public procurement material, Press releases


• The Healthcare business area offers services to hospitals, healthcare centres and other healthcare sector operators

• Several potential business opportunities in the Swedish healthcare

market: • Hospital pharmaceutical care • Dose dispensing • Home distribution of pharmaceuticals

Going Forward


Long-Term Financial Targets Sari Aitokallio


• Business growth at the rate of the market

• Annual EPS growth over 5 per cent without non-recurring items

• Return on capital employed of over 20 per cent

• Adjusted gearing ratio of 30-60 per cent*

• Dividend policy • Oriola-KD's aim is to pay out an increasing annual dividend of at least 50 per cent of its

earnings per share *Non-recourse trade receivables are added to the net debt

New Long-Term Financial Targets


• Pharmaceutical market growth is expected to continue • Finland 2-5 % (CAGR 2015 – 2019) • Sweden 1-4 % (CAGR 2015 -2019)

Business Growth at the Rate of the Market

CAGR 1,5 %

Invoicing, Wholesale Sweden and Finland Net-Sales, Retail Sweden

Source: IMS Health

CAGR 11,4 %


Annual EPS Growth Over 5 % Without Non-Recurring Items

Invoicing, Wholesale Finland

Operating profit % (of invoicing), Wholesale Sweden Operating profit % (of invoicing), Wholesale Finland Invoicing, Wholesale Sweden

Invoicing, Wholesale Sweden and Finland Net-Sales, Retail Sweden

Operating profit % (of net-sales), Retail Sweden


• To support the new strategy Oriola-KD will invest EUR 20 million into Group’s IT systems and the logistics centre in Finland • Improving operational efficiency • Strengthens company’s market

position • Will be realized over 2015 – 2018

• Further investments into Swedish supply chain channel efficiency under investigation

Return on Capital Employed of Over 20 %

Return on Capital Employed

* Continuing operations


• Adjusted gearing: The non-recourse trade receivables are added to the Net Debt.

• In order to mitigate refinancing risk Oriola-KD’s external funding is diversified into different sources and maturities.

• Majority of the sold receivables are related to trade receivables from Swedish county councils and Apoteket AB.

Adjusted Gearing 30 – 60 %

Interest bearing Net Debt Sold receivables Adjusted gearing

Adjusted Net Debt


• Oriola-KD's aim is to pay out an

increasing annual dividend of at least 50 per cent of its earnings per share

Dividend Policy

0,11 0,15 0,11

0,29

0,08 0,09

0,00

0,05

0,10

0,15

0,20

0,25

0,30

0,35

0,40

2011 2012 2013 2014

EUR

1)

1)

Dividend Return of Equity Earnings per Share

1) Earnings per share including discontinued operations was EUR -1.42 (0.04)

Dividend and Earnings per Share


Documents

Capital Markets Day 9 September 2015_presentation OriolaKD.pdf