Acino – A Focused Pharma Group Annual Results 2010

Acino – A Focused Pharma Group
Annual Results 2010
Peter Burema, CEO
Marcel von Ah, CFO
Dr. Jean-Daniel Bonny, Head R&D
QQ1Q1 Acino Holding Ltd.
Erlenstrasse 1 | CH-4058 Basle | www.acino-pharma.com
Phone +41 61 338 60 00 | Fax +41 61 338 60 80
Q4

Acino – drug delivery specialist and
partner for the pharmaceutical industry
Acino is specialized in the development, registration and manufacture of
generic and innovative pharmaceuticals using advanced drug delivery
technologies for which Acino also holds patents
Complex oral forms Transdermal patches Subcutaneous implants Oral dispersible films
Acino is partner of renowned pharma companies
– Acino develops new products with proprietary drug delivery formulations for research-
driven pharmaceutical companies, such as Bayer Schering Pharma
– Acino supplies generic pharmaceuticals to leading generics companies, such as
Sandoz/Hexal, TEVA/Ratiopharm, Mylan, Stada and others
Acino has started marketing its own products in emerging markets
– To capitalize on its product portfolio and strong pipeline, Acino is entering into certain
emerging markets and will make use of Acino product branding where appropriate
2

Annual performance 2010
3

2010 operating performance
EUR
million
130
110
90
70
50
30
10
‐10
Revenue
127.5
Parenteral
36.7 (54.6)
Peroral
90.8
Goods / change in
inventory
Employee benefits
(35.2)
Other
OPEX
(29.2)
Capitalized
work per-
formed
3.9
5.5
Key Financials
(EUR million)
18.0
2010 2009 Change
y-o-y
Revenue 127.5 158.2 (19%)
EBITDA
% of revenue
EBIT
% of revenue
Net profit
EPS (diluted)
Other
income
EBITDA
18.0
14%
(9.0)
(7%)
4.5
1.42
Depreciation
& Amortization
(27.0)
EBIT
(9.0)
64.8
41%
40.4
26%
33.5
10.53
13.5
(72%)
(122%)
(86%)
3.2 Financial result
10.5 Tax
(0.2) Associates
Net profit
4.5
4

Impact of clopidogrel recall on
operating performance
EUR
million
160
140
120
100
80
60
40
20
0
‐20
Provision & credit
notes of
EUR 18.5 million
for returned goods
127.5
146.0
+ EUR 2.3 million inventory write-off
+ EUR 1.5 million additional costs
- EUR 4.4 million compensation
= EUR 17.9 million extraordinary
impact on EBITDA & EBIT
35.9
18.0 (9.0)
2010
(EUR million)
Revenue EBITDA EBIT Net result
8.9
4.5
Effective Excl.
recall
Revenue 127.5 146.0
EBITDA 18.0 35.9
EBIT (9.0) 8.9
Net profit 4.5 19.5
- EUR 3.8 million tax effect
+ EUR 0.9 million associates
= EUR 15.0 million impact
19.5
Effective
Excl. Recall
5

2010 cash flow
EUR
million (EUR million)
50
45
40
35
30
25
20
15
10
5
0
‐5
‐10
‐15
Cash
Flow
46.0
Change in
working capital
(25.6)
CF from
operating
activities
20.4
Payment
PPE
(16.2)
(9.4)
(7.1)
0.2
(12.1)
2010 2009 Change
y-o-y
Cash flow 46.0 54.7 (16%)
Changes in working capital (25.6) (4.5)
Cash flow from
operations
20.4 50.2 (59%)
Cash flow from investing (25.7) (28.3) (9%)
Cash flow from financing (7.1) (7.1)
Net change in cash (12.1) 15.1
Free cash flow (5.2) 19.1
Payment
intangibles &
Financial assets
Financing
activities Forex
effects
Net change
in cash
Free cash
flow
Proposal to the AGM: distribution of CHF 2.50 / share from contributed capital
reserves, same level as last year but exempt of withholding tax
(5.2)
6

Balance sheet
EUR
million
31.12.2010
EUR 344.8 million
20.5
68.4
27.5
12.9
51.5
ASSETS
• Higher working capital due to
Clopidogrel recall
• High level cash balance maintained
LIABILITIES AND SH‘ EQUITY
32.6
47.4
25.8
22.9
24.6
15.9
• Higher current liabilities due to
Clopidogrel recall
6.6
79.1
2010
EQUITY RATIO
•Maintained at high 73%
71.0 252.9
Deferred revenues
Deferred tax liabilities
Other liabilities
Shareholders’ equity
Cash and cash equivalents
Working capital
71.0
89.9
Other non‐current assets
Other intangible assets
Goodwill
Property, plant & equipment
82.4
Assets Liabilities &
Shareholders‘
equity
Assets
31.12.2009
EUR 329.3 million
89.3
256.0
Liabilities &
Shareholders‘
equity
7

Break-down of Acino’s revenue
150
135
120
105
90
75
60
45
30
15
Proprietary products &
contract manufacturing
Total sales in EUR milion
0
2004 2005 2006 2007 2008 2009 2010
Peroral manufactured in Switzerland
Peroral manufactured in India
Contract manufacturing Peroral
Parenteral
1%
3%
Main countries 2010
42%
10%
5%
22%
9%
Germany UK Switzerland
France Netherlands Rest of Europe
Canada Rest of World Unspecified
(Product sales in end user markets, Acino estimate)
2%
6%
8

R&D and development pipeline
9

R&D organization
R&D
Basle (Switzerland) is the location
of Acino’s head office and
development departments for Oral
Formulations and Oral Dispersible
Films (ODF)
R&D
Miesbach (Germany) is home to our
technology capabilities for Transdermal
Systems (TTS) and Biodegradable
Subcutaneous Implants
Competence and creativity of 80 highly motivated
employees from different scientific disciplines,
40% hold a PhD degree
10

R&D focus
Investments in development projects
2006-10: EUR 46 million
– Yearly average spending of about
11% of revenue
Pipeline comprises numerous customer
projects and own developments
– Original compounds for the researchdriven
pharmaceutical industry
– New forms of administration for already
approved active ingredients
Research focus on new, patented
technologies
– Novel and protected drug delivery
applications and innovative
manufacturing technologies
– (Actively) controlled drug release
systems
11

Acino products
Oral dosage forms
Products marketed
– Alfuzosine
– Amlodipin (-besylat) and (-maleate)
– Clopidogrel
– Doxazosine
– Hydromorphone
– Itraconazole
– Levodopa/Carbidopa
– Metoprolol (-tartrate) and (-succinate)
– Nebivolol
– Oxycodone
Products in development
– 2 projects schizophrenia
– 2 projects pain
– 2 projects Parkinson's disease
– 1 project depression
Acino assembles complete registration dossiers and offers for all products a Common
Technical Document (CTD). Acino respects the property rights of third parties, therefore
developments and products are only offered under the condition that they are not in violation
of third-party rights or only in countries where such rights do not apply.
12

Acino products
Transdermal systems (TTS)
Products marketed
– Fentanyl
– Buprenorphine
Products in development
– Fentanyl low loading EU & USA
– Rivastigmine EU & USA
– 1 project pain
– 2 projects Alzheimer's disease
– 1 project Parkinson's disease
Acino assembles complete registration dossiers and offers for all products a Common
Technical Document (CTD). Acino respects the property rights of third parties, therefore
developments and products are only offered under the condition that they are not in violation
of third-party rights or only in countries where such rights do not apply.
13

Acino products
Biodegradable subcutaneous implants
Products marketed
– Goserelin 1- & 3-month
(in selected markets)
Products in development
– Goserelin 3-month
– Goserelin 1- & 3-month, for Japan
– Leuprorelin 1-month
– Leuprorelin 3-month
– 1 project schizophrenia
Acino assembles complete registration dossiers and offers for all products a Common
Technical Document (CTD). Acino respects the property rights of third parties, therefore
developments and products are only offered under the condition that they are not in violation
of third-party rights or only in countries where such rights do not apply.
14

Acino products
Oral dispersible films (ODF)
Products Marketed
– None
Products in Development
– 1 Project lifestyle disorder
Besides ODF, we are able to develop
other oral dispersible formulations,
e.g. tablets or stick packs
Acino assembles complete registration dossiers and offers for all products a Common
Technical Document (CTD). Acino respects the property rights of third parties, therefore
developments and products are only offered under the condition that they are not in violation
of third-party rights or only in countries where such rights do not apply.
2cm
3cm
15

Acino has an extensive pipeline with
projects at different development stages
Preclinical
development
Oral
Depression
Oral
Pain
Oral
Pain
Oral
Parkinson
Oral
Parkinson
TTS
Parkinson
Clinic
Phase I / Pilot
Oral
Schizophrenia
Oral
Schizophrenia
TTS
Pain
TTS
Alzheimers‘ Disease
TTS, Fentanyl 3-day (low load)
USA, Pain Legend:
TTS
Alzheimers‘ Disease
Implant
Schizophrenia
Implant, Goserelin Japan
Prostate / Mamma carcinoma
ODF
Lifestyle disorder
11
Clinic
Phase III / Pivotal
TTS, Fentanyl 3-day (low load)
EU, Pain
TTS, Rivastigmine EU
Alzheimer
TTS, Rivastigmine USA
Alzheimer
I.V. injection, Iclaprim
Infection
TTS, Contraceptive
Customer project Bayer Schering
Oral TTS Implant ODF
Approval
4 4 3
22 Number of Acino own projects by stage
Implant, Goserelin 3-month
Prostate carcinoma
Implant, Leuprorelin 1-month
Prostate carcinoma
Implant, Leuprorelin 3-month
Prostate carcinoma
Customer
project
NCE (new
chemical entity)
Undisclosed:
additional customer projects in different stages of development
16

Annually 2-3 projects are expected
to get registration approval
Project 2011 2012 2013 2014 2015 2016
Implant, Leuprorelin 1-month
Implant, Leuprorelin 3-month
Project, x0170
Implant, Goserelin 3-month
Project, x0040
Project, x1190
Project, x0400
TTS, Fentanyl (low load) USA
Project, x1140
Project, x0410
Project, x1330
Project, x1100
Project, x1180
Project, x1120
Project, x0120
Project, x0270
Project, x0340
Project, x0230
Project, x0360
Implant, Goserelin Japan
Project, x0220
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
This slide only serves for information purposes and does not represent an offer from Acino. Acino respects the valid property rights of third parties, therefore developments and products
are only offered under the condition that they are not in violation of third-party rights or only in countries where such rights do not apply.
17

Business strategies & Outlook
18

Key strategies to accelerate growth of
Acino’s business going forward
B2B Generics &
Prescriptions
Accelerate growth
Acquisitory growth through targeted M&A activities
Organic growth initiatives based on existing opportunities
Acino Brand
Marketing
Drug Delivery R&D
19

B2B strategy
B2B Generics &
Prescriptions
Focus Build on existing (Gx and Rx) B2B core
business and grow sales by expanding
existing customer base as well as into
new markets
Target market Rx and Gx companies operating in
developed markets
Offering Technologically challenging products
New drug delivery systems for
established products (life cycle
management)
Complex contract manufacturing
Approach Broaden customer base
Value
proposition
In-house development creativity and
speed
20

B2B – operating in an increasingly
difficult environment
B2B Generics &
Prescriptions
EU challenges with continued pressure on
prices
Additional focus on USA und Japan filings to
support the B2B model
Further focus on niche molecules and special
formulation technologies where price erosion is
less pronounced and Acino delivers value
added
First to market with these developments
Cost leadership in API sourcing and
manufacturing
Continued focus on broadening the B2B
customer base
21

Acino brand marketing (B2C)
Acino Brand
Marketing
Focus Geographic and customer diversification by
taking Acino product portfolio beyond
established countries to new markets and
create lasting Brand equity
Target market Selected emerging markets with a demand
for high quality products
Offering Existing product portfolio
Future products from in-house
development, licensing from 3rd parties
and/or acquisitions
Approach Promote products under the Acino brand
Market portfolio through a local/regional
pharma company, distributor, agent or
representative office
Value
proposition
High quality products from a Swiss
Company
22

Differences between B2B and B2C
Brand &
Intellectual
Property (IP)
Income
streams
B2B Generics & Prescriptions Acino Brand Marketing (B2C)
• Product with customers brand or INN
in market
• No IP build-up and customer free to
switch manufacturer after contract
period
• Relatively fast income through signing
fees and fast Rx to Gx switch in
countries where patents expired
• Fast price erosion
Marketing • Making use of big Gx companies
marketing power
• Product with Acino brand in the
market
• IP and brand equity build-up which
remains with Acino
• Takes longer to establish substantial
sales
• Once successful, sustainable income
flow
• Mid- to long-term higher profitability
• Marketing expenses to establish
brands
• Risk of being unsuccessful in
marketing the branded product
Market reach • Fast access to big market potential • Possibility for opportunistic
(substantial) government tender sales
23

B2C progress
Acino Brand
Marketing
CCO appointed
Regional Directors in 3 of the 4 territories in
place
13 distributor contracts signed
First EUR 1 million sales in 2010
Filing of relevant dossiers under way in those
countries where distributors arrangements have
been established
Communication concept tested and finalized
Outlook for 2011: >30 distributors/country
agreements finalized
24

Business approach by region
Worldwide
Acino B2B
M East &
Maghreb
Acino B2C
Latin
America
Acino B2C Africa
Acino B2C
Location Regional Heads
Malta, Kenya, Singapore
Asia
Acino B2C
25

B2C progress
Contracts signed for Jordanian, Lebanon, Egypt, Tunisia,
U.A.E., Kuwait, Pakistan, Afghanistan, Myanmar, Thailand,
Vietnam, Singapore, Taiwan, Philippines
Contract negotiations for additional 18 countries ongoing
26

Acino products for Acino brand marketing
Active ingredient Formulation
Pain Fentanyl Patch TTS
Oxycodone Retard tablet
Buprenorphine Patch TTS
Hydromorphone Retard capsule
Cancer Goserelin Implant
Leuprorelin Implant
Cardiovascular Clopidogrel Film tablet
Metoprolol (-tartrate) and (-succinate) Once-daily retard tablet
Amlodipine (-besylate) and (-maleate) Tablet
Nebivolol Tablet
Doxazosine Retard tablet
Other indications Alfuzosine Retard tablet
Itraconazole Capsule
Levodopa/Carbidopa Retard tablet
Numerous other products are currently in development. Acino assembles complete registration dossiers and offers for all products
a Common Technical Document (CTD). Acino respects the property rights of third parties, therefore developments and products are
only offered under the condition that they are not in violation of third-party rights or only in countries where such rights do not apply.
27

Drug delivery R&D focus
Drug Delivery R&D
Focus Expand drug delivery technology platforms
and intensify cooperation with pharma cos.
Target
market
Research-driven pharmaceutical companies,
globally
Offering Drug delivery systems for new chemical
entities (NCE) and established products (life
cycle management)
Initially (co)develop and later manufacture
commercial batches of technologically
complex customer products
Approach Proven track record in patch/implant
technology positions Acino well to attract
customers (exp. Bayer contraception patch)
Acino is No 2 patch manufacturer in Europe
Value
proposition
Leading edge advanced drug delivery systems
Development creativity, speed and flexibility
Target 1 new customer project every 2 years
28

3rd party drug delivery projects
TTS, contraceptive for Bayer Schering
Drug Delivery R&D
Indication
– Contraceptive
Dosage form
– TTS, combining ethinylestradiol and gestodene
Competitor:
– Evra® (Janssen-Cilag, EU)
– OrthoEvra® (Ortho-McNeil, US)
Development status
– In clinical Phase III / filing expected 2012
Key advantages
– Smallest, lowest dosed and only transparent
patch for female contraception
29

„Acino – delivering health“
Developing our vision
– Change process to reflect the
new/extended strategy
– Process started in June 2010
Objective
– Define and share common
understanding and goals
Complete Vision roll out on all
levels by Q1-2011
– Detailed action items list
defined
– Each and everyone will be
involved through specific action
items and delivery timelines to
support the strategy
30

„Acino – delivering health“
Organizational changes
Changes in the overall organizational structure are underway to meet our set
goals
B2C / commercial organization under the newly created CCO position
Adapted regulatory department structure
– meet filing needs of both established (EU/USA/Japan) and emerging markets
Cross functional team for drug delivery project marketing
Legal / IP will be further strengthened
In licensing organization will be strengthened
Quality department to be strengthened and centralised
– Group quality department established)
31

Strong financial position allows for
M&A activities to accelerate growth
Strong financial position
High level of cash
Debt-free balance sheet with equity
ratio of 73%
Acquisition targets
Advanced drug delivery technologies
complementing Acino‘s own know-how
Complementary product portfolio
Access to new markets where Acino
does not have an established presence
Evaluate opportunities for organic
growth and/or acquisitions to
strengthen the Acino Group as a
leading provider of pharmaceutical
specialties
32

Outlook for the Acino Group
Current year 2011
Top-line growth in the mid to high single-digit percentage range expected
At an average exchange rate of EUR/CHF of 1.30 or higher, EBITDA margin
expected to significantly surpass the 2010 level but still to remain below
the targeted sustainable level of 25%
Mid- to long-term
Proactive initiatives will further strengthen the revenue stream, reduce Acino’s
exposure to mature markets and contribute positively to earnings in the mid-
term
EBITDA-margin of 25% viewed as a sustainable profitability level going
forward
Financial strength will allow to proactively pursue growth opportunities and to
advance Acino’s position as a leading provider of pharmaceutical specialties
33

Acino – A Focused Pharma Group
Annual Results 2010
Peter Burema, CEO
Marcel von Ah, CFO
Dr. Jean-Daniel Bonny, Head R&D
QQ1Q1 Acino Holding Ltd.
Erlenstrasse 1 | CH-4058 Basle | www.acino-pharma.com
Phone +41 61 338 60 00 | Fax +41 61 338 60 80
Q4
34