Capital Markets Day Capital Markets Day September 16 th ,2014 - - PowerPoint PPT Presentation

Capital Markets Day  September 16th ,2014 Page 1 www.stada.com

Capital Markets Day

Capital Markets Day  September 16th ,2014 Page 2 www.stada.com

T&R within the UK Market

Dieno George CEO, T&R

September 2014

Capital Markets Day  September 16th ,2014 Page 3 www.stada.com

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• Founded in 1922
• Leading UK OTC branded

business with increasing branded Rx NHS presence, particularly dermatology

• Balanced portfolio of market

leading brands, growing market share through continued innovation and market support

• Excellent customer relationships

throughout the UK pharmacy, grocery and other retail channels as well as NHS including GPs and CCGs

Thornton and Ross overview

• Operates a well invested, fully

integrated, highly skilled, cost- effective manufacturing site specialising in pharmaceutical creams, gels, liquids and suppositories

• Growing international presence

through licensees, distributors and Stada affiliates

• Strong and experienced

management team capable of delivering exceptional growth

• A demonstrable track record of

delivering year-on-year growth in sales, margins and EBITDA

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• Utilise T&R’s strategic and
• perational expertise to create a

Centre of Excellence for OTC, Consumer Medicines and Dermatology

• To strengthen T&R in its core

markets by continuing to develop and commercialise new brand extensions and launch new brands with innovative appeal to consumers and healthcare professionals

• Acquire strongly branded OTC

products, Rx dermatologicals, and

• ther niche Rx brands including

medical devices for sale in the UK and internationally through Stada affiliates

Mission statement

• Continue to invest in our facilities

and people

• Ensure we remain competitive and

in control of our key processes and activities so that we comply with all regulatory and legal requirements

• By developing the business as

indicated, it is anticipated that T&R can continue to profitably grow sales ahead of key competitors and so increase market share in core market segments

• Operating profit and EBITDA

progression on an annual basis will be a key measure of success

As part of Stada AG, we will aim to:

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T&R Total Sales

£33m £33m £39m £42m £45m £52m £58m £60m £66m £72m £80m £114m FY05A FY06A FY07A FY08A FY09A FY10A FY11A FY12A FY13A CY13A CY14E CY14E

FY = Previous Financial Year to 31 March CY = Calendar Year

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T&R Sales 2014

Sales by route Sales by therapeutic area

Cough/Cold 18% Derma 22% Topical Analgesic 13% Household 9% Generic's 12% Other 26% OTC 47% Rx 40% International 13%

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T&R Sales 2014

Covonia 14% Care 13% Hedrin 10% Cetraben 10% Zoflora 9% Movelat 6% Radian B 5% Gal 3% Cerumol 2% Generic's 12% Other 16%

9

major brands

72%

• f sales

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UK healthcare spectrum

PROFESSIONAL CONSUMER

Hospital CCG Health Centre Pharmacy Grocery Convenience/Discount

Consultant Specialist GP Disp GP Nurse Pharmacist Staff Retail Buyer

Place & person Product A&P

Biosimilar Rx brands and generics Medical devices OTC brands and generics FMCG inc disinfectants Sales and detailing costs Advertising costs

Medicines Managem’t GENERICS

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UK Healthcare

20th century:

Killer disease

Challenge was to address killer diseases caused by poor sanitation and communicable infections

21st Century:

Poor lifestyle choices

Facing time-bomb of poor lifestyle choices with significant health consequences. Ageing society: considerable growth in

• ver 65s.

Chronic disease explosion – eczema, arthritis, diabetes, coronary heart disease and dementia.

The burden on the NHS is arguably unsustainable unless there is a fundamental behaviour change from within the NHS and everyone using the NHS.

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OTC

UK Healthcare Environment

NHS

Severe cost PPRS Ageing population Deregulation from P > GSL > Medical Device NICE Free Rx Lifestyle Consumer information Widening distribution GP consultations Self-care

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GPs ARE STILL PRESCRIBING MORE… OTC vs. Rx Performance

951m packs 942m packs 196m packs 189m packs 873m packs 913m packs

2012 2013

Annual unit sales & growth rate POM packs dispensed on prescription1 OTC packs dispensed on prescription1 OTC packs sold OTC2

• 1. IMS Xponent 2. IRI Infoscan

+4.6%

• 3.6%
• 0.9%

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• Minor ailments take up 20% of a

GP’s workload

• Costs NHS £2bn per annum
• Bulk of costs due to

– Consultation time – Rx cost

• 90% of minor ailment consultations

receive Rx

• 75% of GP’s time on minor ailments

spent on just 10 indications

Minor ailments

Examples of minor ailments:

• Coughs
• Colds
• Headaches
• Eczema
• Indigestion

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Minor ailments

Minor ailment Number of consultations Average Rx cost Total cost Back pain 8.4m £8.23 £64.0m Heartburn and indigestion 6.8m £8.07 £54.0m Dermatitis 6.8m £5.30 £35.3m Nasal congestion 5.3m £3.36 £17.4m Constipation 4.3m £5.31 £22.2m Migraine 2.7m £19.58 £51.9m Cough 2.6m £4.18 £9.0m Acne 2.4m £10.96 £25.7m Sprains and strains 2.2m £6.86 £12.1m Headache 1.8m £8.03 £11.7m

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UK OTC Market

Pain Relief 22% Skin 17% Cough/Cold /Sore Throat 18% GI 11% Vitamins & Minerals 14% Other 18%

£2.4bn

MARKET SIZE (2013)

Source: IRI Infoscan

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Top 12 OTC companies in pharmacy SALES AT RSP

£9,1m £12,3m £13,9m £14,2m £14,5m £21,0m £46,2m £56,0m £58.9m £130,4m £131,8m £177,4m Pro Bono Bio Alliance Dendron Forest P+G H/care Sanofi Bayer Omega Thornton+Ross GSK Reckitt McNeil

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UK OTC market

£2,07bn £2,13bn £2,17bn £2,28bn £2,30bn £2,27bn £2,28bn £2,27bn £2,33bn £2,38bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

+0.7% +3.4% +1.7% +5.0% +0.5%

• 0.3%

+0.3%

• 0.6%

+2.9% +2.2%

STABLE MARKET

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Sales & Marketing Review

Barry Draude UK Sales & Marketing Director, T&R

September 2014

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Significant coverage of wholesale and retail markets and the NHS through dedicated teams.

Routes to UK market

Pharmacy Wholesale Pharmacy Retail Grocery Retail

CCG GP Nurse Hospital

28 strong experienced team focused on OTC commercial 48 establish team focused on driving NHS Prescriptions

Pharmacy 9% Discounters 12% Grocery 16% Grocery wholesalers 5% Others 2% Pharmacy wholesalers 56%

UK sales by channel

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UK Commercial

Deliver double digit growth by:

• Continually being better than our competition
• Focus on key activities that make a difference
• Help our customers sell more products

through educational training and promotions.

• Communicate and educate consumers in the

new media landscape.

• Significant educational & detailing programs

to Healthcare professionals (GP’s, CCG’s) driving our Rx Brands.

• Innovate with products consumers wish to

buy and the NHS wish to prescribe

+24% +13% +15% +17% +18% +6% +14% +9% +2% +5% +1%

• 0,3%

+0,3%

• 1%

+3% +2%

2006 2007 2008 2009 2010 2011 2012 2013 T&R OTC Market

OTC Market vs. T&R growth

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MARKET

SHARE:

26%

Vision

To be a recognised healthcare “power brand” by becoming brand leader in the adult cough category and one of the top 5 brands in all sub-categories where Covonia competes, by the end of 2018. Strategy

• Strong values (Power, Efficacy, Value, Impact, Feel it Working!)
• Increase ATL support, distribution points and in-store presence
• Innovative NPD aimed at loyal consumers and competitor

switchers

• Work with trade partners to increase cough category value:
• Range choice = expertise (products for specific cough types)
• Premium priced and larger size launches
• Fixture rationalisation (target low-growth brands with no ATL support)

Sales performance index

GROWING DECLINING

Importance of NPD

Pharmacy: 22% Grocery multiple: 31% Grocery convenience: 24%

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Next generation head lice treatment

Vision:

The Hedrin Brand will be worth over £10m at MSP in the UK by 2018, taking over 50% of a growing market for head lice treatment /maintenance products through clinically proven product development and above the line support.

• Hedrin 4% lotion
• Market leadership in UK
• Hedrin 1 hour
• New gel formula
• New clinical data – reduced

treatment times

• Hedrin Treat & Go
• Breakthrough Octanediol

based non-pesticide

• Award winning TV campaign
• Launch of Protect & Go
• First protection product
• Hedrin 4% lotion
• Brand leader in 6 months
• IRI top OTC launch (revenue)
• Won 9 industry awards
• Spray pack
• Licensed spray added to

pharmacy range and self- select range launched

• Hedrin Once re-launched

with new TV ad following breakthrough clinical trial

• £3m support campaign
• Smart awards Feb 2013

2006 2007 2008 2009 2010 2011 2012 2013

Track record of innovation From zero to brand leader…

2006 0% 36% 1% 21% 22% 7% 13% 2014 41% 0% 21% 21% 0% 0% 17%

1st clinically proven preventive product.

• New £30m+ market -

extensively researched with consumer & clinical

• Parents are crying out for it
• Gold standard detailing,

training and parents’ educational materials

• Above the line campaign (TV,

press & online)

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Care

95 products, selling 15m units annually

Vision

• 1. Build on our No. 1 position in pharmacy

and expand into other distribution outlets

• 2. Evolved into a recognised, credible and

trusted OTC consumer brand All the care you need for those everyday family ailments

Skin 25% Cough 13% GI 19% Pain Relief 10% Cold 3% Other 14%

Revenue by therapy area

MAT Jun 14

£8,5m £10,0m £11,3m £12,5m £14,4m

2010 2011 2012 2013 2014

Sales Growth

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Rx derma market

• Largest market T&R
• perate within
• Fastest growing

company in the UK

• T&R to become the

emollient therapy experts

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Rx derma market 2004-2018

Cetraben & Zeroderma co-positioning strategy

• First line emollient of

choice for patients

• First choice

alternative for any patients requiring a change of emollient

• Cost-effective switch

alternative for existing patients already on equivalent brands (i.e. chronic repeat scripts)

Company Brand(s) Growth T&R Cetraben, Zerodema & Flexitol +23% J&J Aveena +18% RB E45 +18% Dermal Doublebase & Dermol +12% GSK Oilatum

• MSD

Diprobase +2% Mölnlycke Epaderm +8% Market +10%

Fastest growing company

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Cetraben

Vision:

5 year vision to be the UK’s most recommended emollient brand.

• Recommended/prescribed by GPs

and Healthcare Professionals

• Recommended by family and

friends and online for OTC purchases

£8,3m £9,8m £11,1m £13,6m

2010 2011 2012 2013 2014

Cetraben Growth

+18% +14% +22%

Rx Market

• Establish Cetraben as the

most authoritative brand for prescribing problematic dry skin

• A brand renowned for its

product and format innovation

• Commitment to improve

patient care and outcomes

• Partnership working with NHS

OTC Market

• To become No.2 medicated

dry skin brand by 2018

As close to your skin as you are

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Vision:

The Zeroderma range will match

• ver 50% of NHS emollient spend.
• The most comprehensive emollient range
• Achieve 12% equivalent brand share
• 1st Company to provide the NHS with

QIPP (quality, innovation, productivity & prevention) solutions for emollients

£148k £474k £1.117k £2.658k £4.630k

2010 2011 2012 2013 2014

+220% +235% +238% +174%

Zeroderma Growth

CCGs who have switched:

• Herts Valley
• Sheffield
• Croydon
• Sandwell and West

Birmingham

• Nene (Northampton)
• Bolton
• East and North

Hertfordshire

• Sunderland
• Great Yarmouth
• North West Surrey
• Wakefield
• Norfolk areas 4

CCGs

• Plus Greater

Glasgow and Clyde health board

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Foot care 26% Anti fungal 17% DM/Skin treatment 17% Medicated skin care 15% Feminine care 6% Cold sore 5% Anti inflammatory 5% Other 9%

UK OTC skin care market: £495m

Vision: To be the leading brand for Foot Treatments & Speciality Dry Skin areas

• Acquired the UK & Eire rights in June 2014
• 2013 sales were £3.2m combined Rx and

OTC markets.

• Utilizing our Rx and OTC sales and

marketing expertise

• In-house manufacturing within 6 months
• NPD already underway

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Vision:

To be the parents’ first choice for treatment and protection of nappy rash.

• Acquired 2010
• In-house production 2011
• No.3 nappy rash brand
• Growing 2x faster than

the competition

• Extensive sampling

campaign

794k 790k 807k 808k 813k

UK Birth Rate

Mumsnet Product Trial

• 89% response – very high!
• Instructions clear & easy to apply
• Liked texture and only small

amount required

• Effective nappy rash prevention

(esp. vulnerable times – teething / runny noses)

• Good night time protection (esp.

if nappy soiled)

• Would definitely recommend

We’ve got your baby’s bottom covered!

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Extremely Strong Consumer Research

TV / Press Communication Disrupts Behaviour

“Sand Face” was the favoured visual execution from consumer research:

• Attention grabbing, impactful and mildly shocking
• Engaging and emotive
• But with scientific basis (the importance of the ray-

penetration diagram)

• Powerful USP - enhanced

protection against 4x more of the sun’s rays

• True Broad Spectrum

Protection

• No other UK brand offers UV-

A, UV-B and IR-A protection on skin and at cellular level

• No colourants/perfumes and

emulsifier “nasties” to cause irritation

• Unique non-greasy formats

available in a range of key SPF thresholds matched to consumer needs.

• Specific kids range for extra

skin-kind benefits

• Impactful support
• ATL and PR campaigns to

engage and educate consumers in order to change purchasing behaviour

A “Game Changer” to the UK Sun Care Category…

• Oct-Dec 2013 - a massive 575

consumers

• Instructions clear & easy to apply
• “I’m always looking for better

protection”

• “Why haven’t we been told about

IR-A before?”

• “I’d be worried that there were

products on the market that didn’t have IR-A protection”

• “In over 30 years, I’ve never seen

such strong purchase interest scores” (Tony Moore, PPCR Research)

100% likely to buy

82% very likely 18% fairly likely 0% unlikely

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Operations Review

Bryan Close Operations Director, T&R

September 2014

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T&R Operations

To supply consumers with branded OTC & Rx medicines and other pharmaceutical, healthcare and disinfectant products, and to utilise our manufacturing skills in our core areas of liquids, creams, gels and suppositories. Fully integrated business on one site

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Thornton and Ross

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Creams/Gels

• 4 manufacturing vessels

– 2 Calmix at 400kg and 600kg – 2 Dinex at up to 3000kg each

• 3 filling lines

– 2x tubes and 1x tubs/jars

Powders

• 2 filling booths
• 1 specialist booth for

Methadone

Current Production Equipment

Liquid Medicines

• 5 manufacturing vessels
• 10 filling lines

Household

• Continuous manufacturing
• f disinfectant
• 3 filling lines

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T&R Production

LINE 5 LINE 6 LINE 7 LINE 8/11 LINE 4+12 LINE 1 MARCHESINI NORDEN FD11 Zoflora 1-3

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Supply Strategy

39% 61%

Sales 2014

Third party

• Solid dose
• Powders

Manufactured

• Liquids
• Creams
• Gels
• Ointments
• Suppositories

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Supply Strategy

20% 80%

Sales 2018

Third party

• Solid dose
• Powders

Manufactured

• Liquids
• Creams
• Gels
• Ointments
• Suppositories

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Dedicated Hedrin Production Line

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Future Creams Manufacturing

Cetraben, Derma, Flexitol and Ladival

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Tube Filling

for Radian B, Flexitol and Ladival

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Site layout

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Summary

• Confident we can deliver

the quality, service and cost required going forward

• £16 million needs to be

spent over the next 4 years to ensure we have the asset and facility capability on the existing site to support the planned growth

• Investment required in

improvement initiatives to ensure machine performance, cost and working capital targets are delivered

• Small increases in headcount
• Aim to leverage existing

infrastructure and people on site.

• Stada’s fully integrated OTC

centre of excellence on one site

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T&R – A Centre of Excellence

Dieno George CEO, T&R

September 2014

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Investing in the Future

Centre of Excellence

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Aims: To provide the leadership, competence, infrastructure and technical capabilities to deliver new opportunities throughout the Stada Group in:

• OTC
• Consumer marketing
• Dermatology

Centre of excellence

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Centre of excellence

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Bundled International OTC / Derma Expertise for STADA success Mission Statement : “Implementing an interdisciplinary committee of OTC and Derma experts with the competence to make strategic decisions from international perspectives to improve the OTC and Derma performance at STADA”

The objectives of a Centre of Excellence

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Main Goal: Long-term OTC & Derma pipeline and portfolio development Centre of excellence

• Focus on the concept of a

“think-tank” to generate new product ideas

• Analysis of potential OTC &

Derma markets for STADA

• Stimulate target-oriented

internal development projects

• n a global basis
• Possibility for all STADA

affiliates to submit product ideas to the Centre of Excellence at any time

• Links to universities (particularly

Huddersfield University) to be maintained and developed

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World Class Development Laboratories

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World Class Development Laboratories

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Structure: Interdisciplinary working group incorporating skills in: Centre of excellence

• New product development
• Regulatory affairs
• Clinical trials
• Operations
• Market research
• Brand marketing
• Business development
• Led by Thornton & Ross but

incorporated within Stada corporate processes and practices

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Capital Markets Day Questions