Institutional

Presentation
January/2016

Disclaimer
This release contains forward-looking statements that are exclusively related to the prospects of the business, its operating
and financial results, and prospects for growth. These data are merely projections and, as such, based exclusively on our
management's expectations for the future of the business and its continued access to capital to fund its business plan. These
forward-looking statements substantially depend on changing market conditions, government regulations, competitive
pressures, the performance of the Brazilian economy and the industry, among other factors, as well as the risks shown in our
filed disclosure documents, and are therefore subject to change without prior notice.
As a goal to maintain a correlation with the Financial Statements prepared by its external auditors, the considerations and
comments contained herein are prepared on a consolidated viewpoint of the economic group Hypermarcas, and not
necessarily individualized by the various legal entities that compose the group.

In addition, unaudited information herein reflects management's interpretation of information taken from its financial
statements and their respective adjustments, which were prepared in accordance with market practices and for the sole
purpose of a more detailed and specific analysis of our results. Therefore, these additional points and data must also be
analyzed and interpreted independently by shareholders and market agents, who should carry out their own analysis and
draw their own conclusions from the results reported herein. No data or interpretative analysis provided by our management
should be treated as a guarantee of future performance or results and are merely illustrative of our directors' vision of our
results.
Our management is not responsible for compliance or accuracy of the management financial data discussed in this report.
which must be considered as for informational purposes only, and should not override the analysis of our audited
consolidated financial statements for purposes of a decision to invest in our stock, or for any other purpose.
3

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

Phases

Focus on Pharma
(2016 onwards)

Sustainable
growth with
value creation

Restructuring
(2011 2015)

Industry
Consolidation
(2007 2010)

Embryo in
Home Care & Food
(2002 2006)

Weve done a lot...

but there is still
much to do!

Business overview

3Q15 LTM revenue

breakdown

OTC/
Consumer
Health
33%

Net Rev: R$3.0 bn

7

3Q15 LTM
* Ranking includes Sweeteners and Condoms

Ranking

Branded
Prescription
37%

Generics/
Smart
Generics

#1 Ach

Hypermarcas

EMS

#2 Sanofi

Sanofi

Hypermarcas

#3 Eurofarma

Bayer

Sanofi

#4 Novartis

Boehringer

Novartis

#5 Hypermarcas

Takeda

Teuto

(ex-patents)

Key facts

Generics/
Smart
Generics
30%

OTC/
Consumer
Health *

Branded
Prescription

Focus in Brazil

Long Experience

Fast growing/
resilient market

Diversified Portfolio

Ownership and listings

Ownership structure
632.2 MM Shares

Listings
Sao Paulo Stock Exchange:

20.1%

- HYPE3
- BRHYPEACNOR0

14.8%
59.1%

6.0%
Ibovespa Index Ranking: 31/63
Igarapava Participaes S.A. (Founder)
Maiorem S.A. de C.V
Other Controlling Shareholders
Free Float

LTM November average

October 31, 2015
December 11, 2015
SOURCE: BM&F Bovespa and Hypermarcas

Trade volume: 2.6 MM shares/day

ADR (HYPMY): 10.4 MM shares outstanding
Market Cap: R$ 14 B

Pharma market
Business
Segment
5%

Patents

17%

DTC

18%

Trade

60%

Branded
Prescription

Product
Category

Demand
Drivers

Mkt Size

Mkt Growth
2014-2015

Patents

Physicians

R$2.3B

25.5%

OTC
Nutritionals
Related products

Consumer

R$6.9B

14.2%

Generics
Smart Generics

Pharmacist

R$7.7B

11.8%

RX with/without
prescription retention
OTX
Dermocosmetics

Physicians

R$24.9B

9.8%

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

10

Attractive market characteristics

Low levels of per capita consumption

Ageing of population
Fast growing, resilient market
High entry barriers

11

Low levels of per capita consumption

Healthcare Expenditure per Country (USD/year)

USA

8,745

Germany

4,811

France

4,288

Japan

3,649

UK
Chile
Brazil
OECD Avg.

3,289

1,577
1,109
3,484
Per Capita, USD PPP

12

SOURCE: Organization for Economic Co-operation and Development (OECD), 2012

7.9x

Fast ageing of population

MM People

Population 60+

90

35%

34%
80

29%

30%

74

70

25%

24%

60

50

19%

66
20%

54

40

14%

42

15%

30

10%
20

10

8%

14

29

10%

20

5%

0%

2000
13

SOURCE: IBGE

2010

2020

2030

2040

2050

2060

CAGR
2.8%

Potential for higher drug consumption

Expenditure on prescription drugs

USD per year

18-34

35-49

124
262

50-64

65-79

14

SOURCE: http://hpi.georgetown.edu/agingsociety/pubhtml/rxdrugs.html (10.12.2015)

6.5X
560
811

Fast growth within Emerging Markets

Daily Doses Per Capita (CAGR 2015-20)

India

6.8%

Brazil

6.7%

China
Indonesia

15

SOURCE: IMS Health (Global Use of Medicines in 2020), 2015

5.2%

4.2%

Resilient market
12.3%
11.1%

11.9%

11.6%

11.4%

10.6%

9.4%
7.7%

Pharma
Market

8.5%

7.1%
5.4% Nominal GDP
3.5% Retail Sales

2012
16

SOURCE: IMS Health (PMB-PPP Sep15); IBGE

2013

2014

2015 YTD

Large and growing pharmaceutical market

(R$ billion)

CAGR 12-2015 LTM: 11.1%

43.4

40.0
35.9
32.5

2012
17

SOURCE: IMS Health PPP

2013

2014

2015 LTM

Brazil pharma market overview

Ranking 2014*
1st United States

2nd China

Trends

Low levels of disease

treatments

Underdeveloped health
system

3rd Japan

4th Germany

Aging of population

Still low penetration

of generics (25%* of
the Pharma Market)

5th France

6th

USD 24 bn

7th Italy

Peak in economically
active population

Ranking 2019*
1st United States

2nd China
3rd Japan

4th Germany
5th

USD 36 bn

6th France
7th Italy

Expected Market Growth (2014-2019) of 8.3% p.a. in USD

18

SOURCE: IMS Health

High entry barriers

Power of brands
Distribution
Regulator

19

Long approval
process
Strict control of
manufacturers
and products on
the market

~70k drugstores
Low chain
concentration
~170 distributors
Continental Wide
Country (27
states; 5 regions;
+200m people)

Strong local brands

Pure generics are
also branded at
Retail level

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

20

Business overview

3Q15 LTM revenue

breakdown

Generics/
Smart
Generics
30%

Branded
Prescription*

Branded
Prescription
37%

OTC/
Consumer
Health
33%

R$3.0 bn
21

Hypermarcas
Rank

* Excluding patents
SOURCE: IMS Health PMB- PPP Oct15; Hypermarcas

OTC/
Consumer
Health

Generics/
Smart Generics

#5

#1

PPP
Share

4.8%

14.7%

Growth
Opportunities
Leverage on physicians
visit network
Launch new products
with untapped demand

Launch new product

concepts through brand
extensions
Improve retail space

#2

14.2%

Increase market presence,

especially at retails chains
Improve portfolio coverage
especially at high value
products

Pharma scope

Nutraceuticals

Cosmetics

Food

Pharmaceuticals

22

Long Experience in the Pharma Market

1950

1960

1970

1970

1953

23

1990

2000

2010

2020

Traditional Pharma company with strong brands with leadership

in the market, mainly in OTC, prescription and
dermocosmetics, such as Coristina D, Polaramine, Celestamine,
Diprospan, Quadriderm, Episol, among others.

Traditional company of OTC and prescription brands with over

50 years in the market. Its portfolio includes leader brands such
as Rinossoro, Tamarine, Lisador and Mioflex.

1970s

1959

1980

Owner of the most traditional brands in the Brazilian OTC

market, such as Apracur, Atroveran, Benegrip, Biotnico
Fontoura, Doril, Engov, Epocler, Estomazil, Gelol, Lactopurga,
Melhoral, Merthiolate, among others.

Leader in branded generics and with an incipent portfolio of

generics and expertise in the application for the registration of
off-patent copies with the regulator. Examples of leading
products are Neosoro, Massageol and Torsilax.

Constant gains in market share

10.5%
9.9%
9.2%

8.5%
8.0%
7.5%

2010
24

2011

SOURCE: IMS Health PMB PF (nov-15)

2012

2013

2014

nov-15 LTM

Large scale production facility

Solids/
Raw
Materials

Distribution
Center

Quality
Control

Aerosol
Efervecent
Dermo

Liquids
Semisolids
Injectables
R&D

Penicilin

Solids
Semisolids
Liquids

R&D

323,000 m2 land
25

120,000 m2 constructed area

3,700 employees

High production capacity

Tablets, capsules,
coated tablets,
pills and
effervescent

10 billion

Aerosols

11 million

26

SOURCE: Hypermarcas (per year)

Injectable and
ophthalmic

45 million

Liquids, creams,
oils, ointments,
lotions and jellies

276 million

Diversified revenue base

(DTC)
(Branded Presc.)

5,8%
4,1%

(Trade)

3,9%
Other
products

66,1%

3,5%

(Branded Presc.)

3,4%

(DTC)

2,9%
2,8%
2,8%
2,5%
2,3%

(Branded Presc.)
(Branded Presc.)
(DTC)
(Branded Presc.)
(DTC)

27

SOURCE: Company Data, Sept. YTD 2015

Top 10
brands
~ 34%
net sales

Increasing importance of innovation

15.7%

11.4%
7.7%

2012
28

8.4%

2013

2014

SOURCE: Company data, Sept 2015. % Revenue from products launched over the past 3 years.

YTD 2015

Business: Branded Prescription

Generics/
Smart
Generics
30%

Drugs promoted to
Physicians (OTC / RX)

Strategy

Intensify therapeutic
classes expansion

Demand Driver

Physician prescription

Branded
Prescription
37%

OTC/
Consumer
Health
33%

29

Products

Branded Prescription
Leverage on physician visit network

Main Visited
Specialties

Coverage

Market Share

(% of prescriptions R$ PF)

(% R$ PF)

General Practice
Gynecology
Cardiology
Paediatrics

69%

4.8%

55%

2.7%
78%
74%

Dermatology

Psychiatry
Orthopaedics

30

SOURCE: IMS Health; Hypermarcas

0.6%
11.9%

85%
74%

9.7%
1.1%

87%

10.4%

Portfolio

Branded Prescription
Leverage on physician visit network

Physicians Coverage

Opportunities

As % of total market demand

Pediatrics
Leadership in Pain/Fever

Asthma/Vitamins

Dermatology
Specialties
Covered

93%1

Visited
Physicians

67%

Total Weighted
Coverage

31

2016

62%

Leader in Rx for Sun

Protection and Corticoids

Nutraceuticals/

Acne

Gynecology
Leverage General Practice
(Addera/Tamarine)

Contraceptives

Branded Prescription
Leverage on physician visit network

Action
+ Medical
visits

+100 reps and 12 managers

+30,000 contacts/month
New medical demand executive

32

+ Team
efficiency

HyperSelling

+ Demand
tools

Diagnosis clinic

Optimization Panel/Grid

Demand App

Branded Prescription
Leverage on physician visit network

Clinic Days

Demand App

Actions in several companies

Diagnosis of Osteoporosis and Osteopenia with

prescription of Addera

Monitoring glucose, cholesterol and

triglycerides, and prescription of Lipanon

33

APP automatically interacts with physical

material delivering technical content

Increased technology to reach physicians

engagement

Branded Prescription
Launch new products with untapped demand

16%

75%

20%

37%

Current

34

SOURCE: IMS Health; Hypermarcas

Pending Approval Under Development

Target

Branded Prescription
Launch new products with untapped demand

Sell-Out

2016

(R$ MM)

Concept
50.1

290%

Hypovitaminosis D
- Fractures

36.7

- Muscular strength

32.2 31.2

- Cardio diseases

Pills
(Mar-2014)

25.0

Treatment dosage

- Supplementation
- Attack dosage

10.4

1Q
13
35

SOURCE: IMS Health PMB PF Oct15 YTD

12.5

2Q
13

14.3 14.9

3Q
13

4Q
13

12.9

1Q
14

15.4

2Q
14

3Q
14

4Q
14

1Q
15

2Q
15

3Q
15

Branded Prescription
Launch new products with untapped demand

Sell-Out
(R$ MM)

Concept

32%

Continuous jet

61.5

58.9

360
Adjustable flux
46.6
44.5

2012

36

SOURCE: IMS Health PMB PF Oct15 YTD

2013

2014

2015
YTD
OCT

Branded Prescription
Launch new products with untapped demand

Market Share

Innovation
Faster renewal of portfolio

+4pp

Line extensions

Diversification
Category gap coverage

Demand

Intensification in categories
with lower share

+27%

Execution
Increased demand team

Focus on POS operation

Proximity to patients

37

SOURCE: IMS Health PMB PF Oct15 YTD

30% of Revenue from products

launched in <1 Year

Business: OTC / Consumer Health

Generics/
Smart
Generics
30%

Strategy

Intensify brand extensions

Demand Driver

Mass media

Branded
Prescription
37%

OTC/
Consumer
Health
33%

38

Products

OTC
Condoms
Sweeteners

OTC / Consumer Health

New products concepts through brand extensions

Sell-Out
(R$ MM)
Doril family

Concept
High awareness

31.7

14.3
30.0

Doril
Enxaqueca

Stronger formulation
30.1

Product concept: Good

even for migraines

Doril

2013

39

SOURCE: IMS Health PMB Oct15

2014

2015

OTC / Consumer Health

New products concepts through brand extensions

Sell-Out
(R$ MM)
171

18%

145

Mkt share
+ 0.5 p.p.

2014
40

SOURCE: IMS Health PMB Oct15

2015

OTC / Consumer Health

Improve retail space

Before

41

After

OTC / Consumer Health

Improve retail space

Clients

Stores
21
8
3
2
2
1
1
1

1
42

Coverage

Business: Generics / Smart Generics

Generics/
Smart
Generics
30%

Generics (Large Chains)

Smart Generics (M&Ps)

Strategy

Defend & grow selectively

Demand Driver

Pharmacist
recommendation

Branded
Prescription
37%

OTC/
Consumer
Health
33%

43

Products

Generics / Smart Generics

Increase market presence, especially at retails chains

Relevance

15%
33%

44

19%

Large retail chains

29%

Mid-sized chains

38%

Independent

31%

52%

50%

Hypermarcas 2014

Hypermarcas 2015

SOURCE: IMS Health; Hypermarcas

33%

Market

Generics / Smart Generics

Improve portfolio coverage especially with high value products

7%

91%

Under
Development

Target

14%

71%

Current

45

Pending
Approval

SOURCE: IMS Health; Hypermarcas

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

46

Net revenue & EBITDA

(R$ Million)

Net revenue

Adjusted EBITDA (R$ Million)

CAGR (2011-2Q15 LTM): 11.9%

CAGR (2011-2014 LTM): 14.0%

1,106

5,064
1,002

4,680

23.6%

4,259

865

3,874
695

3,325

1,135

22.4%

23.5%

22.3%

20.9%

2011
47

2012

2013

2014

3Q15 LTM

2011

2012

2013

2014

3Q15 LTM

Gross margin & Expenses

Gross margin

SG&A ex-marketing

Marketing

(%)

(%)

(%)

+1.2 pp
-7.0 pp
60.3% 62.2%

64.5% 63.7%

61.5%

27.4%
23.7%

2011

48

2012

2013

2014

3Q15
LTM

2011

2012

+1.6 pp
22.7%

2013

21.1%

2014

20.4%

3Q15
LTM

19.0% 18.3%

19.6%

2011

2013

2012

21.0% 20.6%

2014

3Q15
LTM

Increasing profitability

CAGR
(2011-3Q15)
21.6%

14.0%
11.9%

Net Revenue
49

* 2012-3Q15

Adjusted EBITDA

Net Income*

Agenda

Overview
Brazil Pharma Market

Our Business
Financials pre-deal
Financials post-deal

50

Net debt reduction

Debt Profile

Net debt / Adjusted EBITDA*

3.9x
3.1x

3Q15
3T15
Gross Debt
Cash

5,477.7

2.6x

2.9x

(1,616.8)

Net Debt

3,860.9

Hedge

(524.3)

Net Debt after Hedge

3,336.6

Proceeds from Cosmetics Sale

(3,800.0)

Net debt after Cosmetics Sale

(463.4)

-0.4x
2011

51

2.9x

* LTM EBITDA before non-recurring expenses and other non-cash expenses

2012

2013

2014

3Q15

3Q15
proforma

Pro forma liquidity

(Sept/15; R$ billion)

Continuing Operations

Discontinued Operations

Pharma division

Beauty business

Condoms

Disposables business

Sweeteners

Net Income of Discontinued Operations to be a line on P&L

P&L to reflect results of Continuing Operations
2015 P&L (and 2014 comparison) to adopt this format
52

Pro forma P&L

(3Q15 LTM)
Non-audited estimates

R$ million

Old report

(Continuing + Discontinued)

53

New report

(Continuing only)

Net Revenue

5,063.7

100.0%

3,011.2

100.0%

Gross Profit

3,115.3

61.5%

2,288.1

76.0%

Sales

(777.0)

-15.3%

(459.6)

-15.3%

Marketing

(1,042.2)

-20.6%

(790.1)

-26.2%

G&A

(254.2)

-5.0%

(156.4)

-5.2%

Other

(148.1)

-2.9%

(29.7)

-1.0%

Adjusted EBITDA

1,135.2

22.4%

948.4

31.5%

Net Financial Expenses

(508.1)

-10.0%

(508.1)

-16.9%

Discontinued Op. Net Income

0.0

0.0%

62.4

2.1%

Net Income

348.4

6.9%

348.4

11.6%

Guidance

EBITDA of Continuing Operations around R$1.1 billion

54

Share Performance

55

Return*

YTD

LTM

24m

36m

48m

Since
IPO

Hype3

37%

39%

25%

48%

171%

173%

Ibovespa

-9%

-9%

-10%

-24%

-21%

-30%

Icon

-3%

-3%

10%

10%

54%

143%

Source: Bloomberg as of December 11, 2015

Phone: +55 (11) 3627-4242

ir@hypermarcas.com.br
www.hypermarcas.com.br/ir
56