Growing Professional in Healthcare On July 1, 2006 Orion Group will - - PowerPoint PPT Presentation

Growing Professional in Healthcare

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On July 1, 2006 Orion Group will Demerge

Oriola KD

”Oriola-KD Corporation” Trade in pharmaceuticals, healthcare and dental products

Orion Diagnostica Orion Pharma

New ”Orion Corporation” R&D, manufacture and marketing of pharmaceuticals and diagnostic tests Current Orion Group

General Trends

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Pharmaceutical Market Overview

Pharmaceutical Market in 2005, USD million Market Growth in 2005, %

+ 17 % + 4 % + 7 % + 9 % + 17 % + 14 % + 1 % Estonia Latvia Lithuania Finland Sweden Russia Poland Denmark 4645 3740 3286 2083 401 194 153 1759 Estonia Latvia Lithuania Finland Sweden Russia Poland Denmark + 7 %

Population per Country, million

142.0 8.9 5.3 5.3 3.5 2.4 1.4 Estonia Latvia Lithuania Finland Sweden Russia Poland Denmark 38.6

Source: IMS World Review 2006

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Spending in Healthcare is I ncreasing

Source: Statistics Finland, 2003

Population projection in Finland

• ver 65 year olds

200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 2005 2010 2015 2020 2025 2030 85- 75-84 65-74

Population projection in Sweden

• ver 65 year olds

200 000 400 000 600 000 800 000 1 000 000 1 200 000 1 400 000 1 600 000 1 800 000 2 000 000 2 200 000 2 400 000 2005 2010 2015 2020 2025 2030 Population 85- 75-84 65-74 Population Source: Statistics Sweden

Oriola-KD Businesses

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Market Presence and Invoicing by Market Area

Invoicing by Market Area in 2005, EUR million Sweden 1 450 M€ Finland 950 M€ Baltic Countries 50 M€ Denmark 5 M€ Denmark and Baltic countries Sweden Finland Personnel by market area in 2006 243 458 836

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Business Segments and Key Figures in 2005

Pharm aceutical Trade

• Distribution
• Wholesale
• Retail

Healthcare & Dental Trade

• Healthcare Products
• Healthcare Distribution Services
• Dental Products

I nvoicing M€ I nvoicing M€ EBI T M€ 2 1 2 5 2 6 7 1 8 9 EBI T M€ Out of Group total 8 9 % 1 1 % 6 7 % 3 3 %

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Strategic Intent

• To be the leading company in both

Pharmaceutical and Healthcare & Dental Trade in Finland and Sweden by developing and investing in both business segments

• To grow selectively in the Baltic Countries,

Denmark, Poland and Russia organically and through acquisitions

Pharmaceutical Trade

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Pharmaceutical Trade – Businesses

Distribution Wholesale Retail

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Business Logic in Distribution

Pharmaceutical industry Independent retail pharmacies Pharmaceutical distributors Pharmaceutical industry Apoteket AB retail pharmacies Pharmaceutical distributors

Finland Sw eden

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Pharmaceutical Trade

Baltic Countries Sweden Finland

• Vertical integration

into retail pharmacies

• Increase the number of

principals

• Start marketing of free

trade goods to pharmacies

• Increase the number
• f principals
• Strengthen further the

position in pharmacy marketing

Key actions

• Number 3-4 in each

country

• Market share

approximately 5%

• Number 2
• Market share 43%
• Number 2
• Market share 42%
• Market leader in free

trade goods to pharmacies

Market position Market size

EUR 1.7 billion EUR 2.8 billion EUR 0.7 billion

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Pharmaceutical Trade - Principals

Healthcare & Dental Trade

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Business Logic in Healthcare and Dental

Healthcare and dental OEMs Hospitals, dentists, etc… Healthcare and dental distributors

Healthcare Trade

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Healthcare Trade – Product Offering

Procedure Units Nursing Care Medical Imaging Laboratories

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Healthcare Trade

• Further develop
• ffering into growing

market segments

• Increase offering

especially into the ORs/ I CUs

• Enter into the

wholesaling of consumables

• Strengthen market

leadership by close cooperation with the leading suppliers and by developing the portfolio

Key actions

• Growing position

(< €10M) in hospital supplies and in selected laboratory products

• Small operations

(< €10M) in the surgical and anesthesia products

• Market leader
• Market share
• appr. 15%

Market position Market size

Baltic Countries Sweden and Denmark Finland EUR O.6 billion EUR 2.1 billion EUR 0.2 billion

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Healthcare Trade - Principals

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Healthcare Distribution Services

• Healthcare Logistics
• Logistic services including warehousing to

public sector healthcare customers

• Home Distribution
• Delivery of hospital products directly to the

homes of the patients

• Supplier Services
• Distribution services to the medical device

manufacturers

Dental Trade

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Dental Trade - Product Offering

Consumables and

• rthodontic

products Equipment Dental laboratory products

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Dental Trade

• More focus on

equipm ent

• Develop product
• ffering
• More focus on digital

imaging

Key actions

• Market leader or # 2

position depending on the country

• Strong position in

selected product areas

• Market leader
• Market share
• ver 50%

Market position Market size

EUR 60 million EUR 160 million EUR 25 million Baltic Countries Sweden and Denmark Finland

• Strengthen further the

leadership position

• First to introduce new

technologies

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Dental Trade - Principals

Financials

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Increasing Focus on Growth

• Markets for

pharmaceuticals and healthcare continue to grow

• Rigorous price

competition in pharmaceutical trade

• More focus in

development of healthcare and dental trade

* Kronans Droghandel from 1 July 2 0 0 2

Healthcare & Dental Trade Pharmaceutical Trade

4 9 9 1 2 4 1 2 3 8 1 9 3 2 3 4 9 2 6 8 2 1 2 5 2 6 7 2 2 2 8 2 3 6

300 600 900 1200 1500 1800 2100 2400 2700 F A S 2 1 F A S 2 2 F A S 2 3 I F R S 2 4 I F R S 2 5 I NVOI CI NG, MEUR

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Stable Performance

• Strong market position in

Finland and Sweden

• Higher margins in

Healthcare and Dental Trade – High volumes and low m argins in Pharmaceutical Trade

• Optimization of cost

efficiency and capacity in pharm aceutical distribution

• Share of Healthcare and

Dental Trade of operating profit to grow

OPERATI NG PROFI T, MEUR

1 3 1 7 2 4 9 8 7 8 7 1 8 2 1

F A S 2 1 F A S 2 2 F A S 2 3 I F R S 2 4 I F R S 2 5

Pharmaceutical Trade Healthcare & Dental Trade

5 10 15 20 25 30 35

* Operat ing profit of business segm ents does not include Group ex penses ex pected to be approx. EUR 3.0 m illion

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Strong Cash Flow after Investments

• Stable and strong cash flow

enabling development of business operations and growth into new market areas

• Low requirements for

maintenance investments

• Possibility to strengthen

future cash flow through further optimization of working capital

26 38 32

5 10 15 20 25 30 35 40 F A S 2 3 I F R S 2 4 I F R S 2 5 CASH FLOW, MEUR

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Strong Balance Sheet

• Strong cash and cash

equivalents

• Low interest-bearing

liabilities and gearing

• High working capital, the

utilization of which can be optimized further

• Equity ratio 34%

(March 31, 2006)

• Gearing -4%

(March 31, 2006)

MEUR

20 40 60 80 100 120 140 160 180 200

F A S 2 3 I F R S 2 4 I F R S 2 5 Cash and bank Interest-bearing debt Shareholders' equity NWC

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Invoicing – Q1 2006

• Invoicing of

Pharmaceutical Trade declined 2,5%

• Invoicing of Healthcare

and Dental Trade increased 15,7%

I NVOI CING, MEUR

6 2 7 1 5 2 1 5 0 8

100 200 300 400 500 600

I F R S Q 1 2 5 I F R S Q 1 2 6

Pharmaceutical Trade Healthcare and Dental Trade

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Operating Profit – Q1 2006

• Operating profit of

Pharmaceutical Trade declined due to tight competition

• One-off items include restructuring

costs of MEUR 0.4

• Operating profit of

Healthcare and Dental Trade clearly im proved without one-off items

• One-off items include inventory

write-down of MEUR 1.6

* Operat ing profit before allocat ion of Group expenses

Healthcare and Dental Trade Pharmaceutical trade

OPERATING PROFIT, MEUR

1 .8 1 .2 2 .8 2 .7 3 .9 3 .1

2 4 6 8 Q 1 2 5 Q 1 2 6 Q 1 2 6 ( e x c l . O n e

• f

f I t e m s )

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2006 Outlook

• The invoicing of Oriola-KD for 2006 is

forecasted to be almost at the level of the comparable figure for 2005

• The operating profit for 2006 is forecasted to

be lower than the comparable figure for 2005, mainly due to the heavy competitive situation and the low growth of the pharmaceutical market in Finland, as well as one-off items related to the dem erger and the operational rearrangem ents being implemented in the Group

Summary

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Company Strengths

• Basic market fundaments support long term

growth

• Deep knowledge of the Nordic healthcare

market – since 1907

• Independent and locally managed company
• Two strong business segments
• Excellent position in Pharmaceutical trade
• Growing Healthcare & Dental business
• Strong balance sheet and cash flow

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Focus on Profitable Growth

• Pharmaceutical Trade
• Further strengthen the strong market position in Finland

and Sweden

• Continuous focus on cost efficiency
• Vertical integration in Baltic countries
• Actively looking for growth opportunities in the Baltic

countries, Poland and Russia

• Healthcare and Dental Trade
• Further develop very strong market position in Finland
• Actively looking for growth opportunities in the Baltic

countries, Denmark, Sweden and Russia

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Disclosure Aspects

• The assumptions, opinions, estimates and views

expressed in this presentation are solely the

• pinions and views of the company unless a

reference to the source of the information is stated.

• They reflect the current view of the company with

regard to the discussed issues. Several factors can however cause changes to these opinions and views.

• Neither the company nor its management can

answer for any future accuracy of the opinions or views expressed in this presentation or the actual

• ccurence of any forecasts.

Growing Professional in Healthcare