AUSTRALIAN PHARMACEUTICAL INDUSTRIES LIMITED

2013 ANNUAL GENERAL MEETING

THURSDAY 30 JANUARY 2014

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Important information

The material in this presentation is of general information about

API’s activities current at the date of the presentation. It is

information given in summary form and does not purport to be

complete. Nothing in this presentation should be construed as a

recommendation or forecast by API or an offer to sell or a

solicitation to buy or sell shares. It does not take into account the

investment objectives, financial situation or needs of a particular

investor. These should be considered with or without professional

advice when deciding if an investment is appropriate.

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Welcome

Admittance Cards

Blue for voting shareholders

Yellow for non-voting shareholders

White for visitors

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Introductions – API Board

• Dr Michael Wooldridge – apology

• Mr Rob Millner

• Mr Miles Hampton

• Ms Lee Ausburn

• Mr Peter Sanguinetti, Company Secretary& General Counsel

• Mr Stephen Roche, CEO & Managing Director

• Mr Gerry Masters

• Ms Carol Holley

• Mr Paul McDonald - KPMG

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Notice of Meeting

1. Receive and consider Financial Report to 31August 2013

2. Adopt Remuneration Report

3. Re-election of Gerard Masters

4. Re-election of Carol Holley

5. Grant of Performance Rights to MD & CEO

6. Increase sum available for Non-Executive Director

Remuneration

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Financial Report to 31 August 2013

• Chairman’s Address

• Managing Director and CEO’s Address

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2013 ANNUAL GENERAL MEETING

CHAIRMAN’S ADDRESS

Mr Peter Robinson

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Depressed consumer sentiment persisted, exacerbated by

protracted Federal election campaign

But our results show those with the right retail offering can

prosper in the new norm

Worst impacts of PBS are only now hitting home:

• $450 million reduction in wholesalers’ revenue pool in

calendar year 2013

• a further $575 million decline in wholesalers’ revenue

pool in 2014 calendar year to date

Further reductions in operating costs and customers’ discounts are therefore unavoidable

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The current operating environment

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API’s operational and profit result highly creditable

Improved underlying performance driven by unwavering

focus on strategic priorities

Statutory NPAT $24.3m

Underlying NPAT up 9.6% on prior year

Full year dividend of 3.25 cents per share, up 8.3% on prior year

Underlying EPS up 11% on prior year

FY 2013 results 2013 A

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Retail strategy delivering shareholder value and key to the

future

Priceline Pharmacy network now stands at 370 stores

Bounce in retail sales post-election maintained:

• Retail sales (excluding dispensary) up 9.0%

• Like-for-like sales (excluding dispensary) up 6.3%

Progress on our retail strategy

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Retail sales provide a solid base for

our half year profit result

Sales increase driven by lift in

consumer sentiment and increased investment in Priceline Pharmacy

brand

But consumer sentiment remains fragile and API’s plans reflect this

reality

Progress on our retail strategy

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API will implement further operational improvements covering systems, warehousing and transport

Further discount reductions to pharmacists will also offset

reduced PBS revenue

API will maintain a strong focus on building our programs for

banner customers and independent pharmacists

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Update on pharmacy distribution

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2013 ANNUAL GENERAL MEETING

CEO & MANAGING DIRECTOR’S ADDRESS

Mr Stephen Roche

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2013 results demonstrate our strategic priorities remain

aligned to sustainable profit growth

Underlying net profit growth of 9.6% particularly pleasing given

weak consumer sentiment and ongoing impacts of PBS

reform

All areas of the business made a strong contribution to

improved result:

• Pharmacy distribution

• New Zealand

• Retail operations

• Financial management and functions

2013 PERFORMANCE REVIEW - OVERVIEW

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Maintained leadership in Pharmacy

distribution

Grew the Soul Pattinson and Pharmacist

Advice networks

Expanded the Club Premium program for

independent pharmacists

Together with Priceline Pharmacy, have over 1,000 pharmacies aligned to API as

preferred supplier

2013 Performance review – Pharmacy distribution

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2013 Performance Review - Priceline Pharmacy

For five years, Priceline Pharmacy has delivered

a top quartile retail performance

Increased momentum since Federal election

was maintained:

• Like-for-like front-of-store sales up 6.3%

• Like-for-like sales including dispensary up

4.6%

FY13 saw a net increase of 14 Priceline

Pharmacy stores

Since FY end we have added another 7

Priceline Pharmacy stores to take total Priceline

and Priceline Pharmacy stores to 370

We continue to meet or exceed our franchisees’

expectations on all critical dimensions 16

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The year ahead for Priceline Pharmacy

Our view on the fundamentals remains unchanged

Consolidation in community pharmacy will continue, driven by:

• Contracting dispensary revenue

• Increased competition from supermarkets and discounters

• Rising rents and operating costs

We expect to maintain our rate of network expansion in

2014 with a minimum of 20 stores

Priceline Pharmacy has highly attractive front-of-

store growth options for independent pharmacists:

• One of the best health and beauty ranges in

the country

• Unrivalled loyalty programme in our sector with

4.3 million members

• Sister Club members typically spend 50 per

cent more and account for 55 per cent of

front-of-store sales

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The growing importance of ‘clicks and bricks’

Our on-line store will increase sales beyond $1.8 million in 2014

Visitations of one million in December suggest value of strong online

presence goes way beyond on-line sales

It is a base expectation of consumers that they can research on-

line before they visit a store

With 12,000 products online now and a network of 370 stores we

have a superior offering to our direct competitors

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Building front-of-store profits

We are boosting our investment in our

own in-house range of beauty products

and moving into sun care, healthcare

and vitamins

These products deliver superior profit

margins for both API and pharmacists

Following successful trial, now

embarking on a national in-store roll-out

of multi-media consumer connectivity

A combination of in-store screens and

consumers’ mobile phones will highlight

special offers and boost in-store

engagement and front-of-store

spending

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Priceline Sisterhood is now integral

Our research shows our Priceline Sisterhood is increasing engagement

with Sister Club members

We have now raised more than $800,000 to help charities that

matter most to Australian women

Our commitment to the Priceline Sisterhood community program

will be reflected in our 2014 marketing activity

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The combination of operational improvements and reduced

discounts will continue to ameliorate PBS reform

It is important that API continues to take a leadership position

and help customers manage discount reductions as the

worst impacts of PBS reform hit home

We expect to see a formal framework for negotiations on the

next Community pharmacy agreement to emerge shortly

The Government is aware of our view that wholesalers must

be engaged early if it wants to achieve further savings and

maintain equity of access to medicines

Priorities for pharmacy distribution

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In summary

We will cement our advantage in retail pharmacy by

expanding further our Priceline Pharmacy network and

investing in the brand

We will maintain our leadership in pharmacy distribution and proactively address PBS reform

Continue to deliver operational and financial management

improvements

Assuming no deterioration in external environment, we

anticipate a further lift in earnings

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2013 ANNUAL GENERAL MEETING

ORDINARY BUSINESS

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Business of Meeting

Reminder

Blue Admission card – vote and ask questions

Yellow admission card - ask questions but

cannot vote

White Admission card - cannot ask questions or

vote

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Financial Report

“To receive and consider the Financial Report of the

Company and its controlled entities and the reports

of the Directors and the Auditor for the year ended

31 August 2013”

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Remuneration Report

“To adopt the remuneration report for the year ended

31 August 2013”

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Remuneration Report – Proxies Received

Proxies Received

For: 263,224,070 (81.18%)

Against: 60,288,625 (18.59%)

Open – usable: 757,403 (0.23%)

Abstain: 1,699,258

Exclusions: 1,281,335

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Remuneration Report

Voting outcome

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Re-election of Directors

• Mr Gerard Masters

• Ms E Carol Holley

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Re-election of Gerard Masters

Ordinary Resolution:

“To re-elect a Director. Mr Gerard J Masters retires

by rotation in accordance with the Company’s

Constitution, and being eligible, offers himself for re-

election”

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Re-election of Gerard Masters

Proxies Received

For: 323,267,221 (98.82%)

Against: 1,076,156 (0.33%)

Open – usable: 2,787,659 (0.85%)

Abstain: 119,655

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Re-election of E Carol Holley

Ordinary Resolution:

“To re-elect a Director. Ms E Carol Holley retires by

rotation in accordance with the Company’s

Constitution, and being eligible, offers herself for re-

election”

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Re-election of E Carol Holley

Proxies Received

For: 250,146,765 (76.47%)

Against: 74,194,841 (22.68%)

Open – usable: 2,784,424 (0.85%)

Abstain: 124,661

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Grant of Performance Rights

“That the grant of performance rights under the API Long Term

Incentive Plan to the Company’s Chief Executive Officer &

Managing Director, Mr Stephen Roche, in the manner set out in

the Explanatory Notes to Notice of 2013 Annual General

Meeting be approved for all purposes, including for the purpose

of ASX Listing Rule 10.14”

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Grant of Performance Rights

Proxies Received

For: 252,381,820 (77.28%)

Against: 61,685,013 (18.89%)

Open – usable: 12,500,548 (3.83%)

Abstain: 683,310

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Increase in sum available for NED Remuneration

“In accordance with Rule 10.2 of the Company’s Constitution

and for the purposes of ASX Listing Rule 10.17, that the

maximum aggregate amount of Approved Fees (within the

meaning in the Company’s Constitution) available for payment

to the Directors of the Company (other than the Managing

Director) as remuneration for their services as Directors of the

Company be increased by $255,000 from $595,000 to $850,000”

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Increase in sum available for NED Remuneration

Proxies Received

For: 240,330,256 (73.91%)

Against: 72,334,130 (22.25%)

Open – usable: 12,486,075 (3.84%)

Abstain: 827,229

Exclusions: 1,273,001

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THANK YOU FOR ATTENDING

2013 ANNUAL GENERAL MEETING

30 JANUARY 2014

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