ANNUAL GENERAL MEETING - Recipharm...Inhalation devices Valves Auto injectors DRUG DELIVERY DEVICES...
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ANNUAL GENERAL MEETING 12 May 2020
Transcript of ANNUAL GENERAL MEETING - Recipharm...Inhalation devices Valves Auto injectors DRUG DELIVERY DEVICES...
ANNUAL GENERAL MEETING12 May 2020
Health and safety1
Business continuity2
3 Financial impact
COVID-19 RESPONSEMEETING THE NEEDS OF EMPLOYEES, CUSTOMERS AND PATIENTS
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COVID-19 RESPONSEMEETING THE NEEDS OF EMPLOYEES, CUSTOMERS AND PATIENTS
• Employee safety is the top priority; safety protocols enhanced
• No visitor and non-essential access to sites;
• Video quality audit procedure launched
• Reorganized workflows and shifts to maximize social distancing
• Increased use PPE including face masks
• 20-25% of employees working remotely; IT infrastructure enhanced
Health and safety1
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COVID-19 RESPONSEMEETING THE NEEDS OF EMPLOYEES, CUSTOMERS AND PATIENTS
• All facilities are currently open, despite elevated absenteeism from time to time. Previously temporary suspensions of manufacture in Portugal and India
• Supply chain continuity plans in place with no notable impact to material and other supplies
• Delivery of product and services largely unaffected
• No impact to quality
• Net overall demand remains or even increases
• Sharp drop in development services
Business continuity2
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COVID-19 RESPONSEMEETING THE NEEDS OF EMPLOYEES, CUSTOMERS AND PATIENTS
• Net impact in Q1 2020 estimated to SEK ~20m in Sales and EBITA
• Increased stock levels and logistics delays impact working capital
• Consort integration and synergy gain at slower pace but still on track to be achieved latest Q2 2021
• Recovery of the Cramlington site from incident mid 2019 will take longer
Financial impact3
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Broad response to help meet patient needs1
Chloroquine2
Other products
PARTNERING WITH CUSTOMERS AND HEALTH CARERESPONDING TO COVID-19
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• Helping our customers to develop and manufacture potential COVID-19 treatments
• Projects and services include those for drug substance, drug product, oral, sterile, respiratory, analytical chemistry and clinical trial supply
• Several opportunities from customers and we are also pursuing a number of in-house opportunities
• Supported local Health Care providers with donations of hand sanitizers in India, personal protection equipment in Spain, facial masks in France for example.
• Engaged with Health Care providers in several places to help source critical medicines
Broad response to patient needs1
PARTNERING WITH CUSTOMERS AND HEALTH CARERESPONDING TO COVID-19
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• Recipharm holds a Swedish marketing authorisation
• Secured API for further manufacture in Stockholm before closure
• Several ongoing clinical trials in China, EU and the US, supported by WHO. Many show negative results so far.
• Supplied materials for a clinical study to various organisations
• Investigating opportunity in hydroxychloroquine, tablets in Bengaluru and API in Cramlington;
• Unlikely to have a material financial effect on Recipharm
Chloroquine2
PARTNERING WITH CUSTOMERS AND HEALTH CARERESPONDING TO COVID-19
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• Ongoing clinical study with our product Erdosteine in Italy
• High demand for critical antibiotics, for example Piperacillin Tazobactam
• Large increase in demand for Dexmedtomidine, an important sedative in critical care
• Several other projects in discussion
• Large volume manufacturing of hand sanitizers in Bengaluru
Other products
PARTNERING WITH CUSTOMERS AND HEALTH CARERESPONDING TO COVID-19
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A TOP 5 GLOBAL CDMOIDEALLY POSITIONED FOR FURTHER VALUE CREATION
9,000We have almost 9,000
employees
SEK 11bn1
Net sales (EUR 1.1bn)
100Supplying more than 100 markets around the world
Listed on Nasdaq Stockholm since 2014RECI B SS
30+ development and manufacturing facilities in Europe,
Israel, USA and India
Note 1. LTM Q1 2020 Pro forma including Consort
1,000Every minute >1,000 people
use one of our products
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A COMPREHENSIVE SERVICE OFFERING
DEVELOPMENT
Finished products
Packaging
Serialisation
MANUFACTURING
Drug substance
Drug product
Analytical services
Clinical trial material
Development and design
Inhalation devices
Valves
Auto injectors
DRUG DELIVERY DEVICES
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DEEPENED GEOGRAPHIC FOOTPRINT
FRANCE
Fontaine
Kaysersberg
Monts
Pessac
ITALY
Brescia
Lainate
Masate
Paderno Dugnano
Pianezza
PORTUGAL
Odivelas
Queluz
USA
Research Triangle Park
SWEDEN
Stockholm
Höganäs
Karlskoga
Solna
Strängnäs
Uppsala
Uppsala
ISRAEL
Ness Ziona
INDIA
Bengaluru
Karnal & Paonta Sahib
Manufacturing Development
EUROPE
UK
Cambridge
Cramlington
Holmes Chapel
Kings’s Lynn
Milton Keynes
Nelson
Queenborough
GERMANY
Monheim
Wasserburg
Zwickau
SPAIN
Leganés
Parets Device development and manufacturing
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VISION
To be acknowledged as the best in class provider of contract development and manufacturing solutions to the pharmaceutical industry as judged by our customers, employees and other stakeholders
MISSION
Recipharm offers its expertise and facilities in the development, production and supply of pharmaceuticals to demanding customers for global use
Supplying innovative expertise1
A global development service offering2
3
4
5
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Increasing our share of the value chain
Consolidating the CDMO industry
Employing excellent people
Streamlining operations
OUR STRATEGIES
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CONTINUED STRONG FINANCIAL PERFORMANCE
• Good performance on all our financial KPIs
• Sales increase 17.0%
• Organic growth 5.0%
• Significant improvement in EBITDA margin
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PERFORMANCE AGAINST OUR FINANCIAL TARGETS
ANNUALSALES SHOULD
EXCEED SEK8 BILLIONBY 2020
With net sales of SEK 7.5billion, corresponding togrowth of 17.0 percent, we remain on track toachieve our 2020 sales target.
The EBITDA margin of 17.3per cent for 2019 exceededour margin target of 17.2per cent.
EBITDAMARGIN
SHOULD BEHIGHER THAN
16%*
Net debt in relation toequity was 0.7 in relationto our target of below 0.8.
NET DEBT TOEQUITY SHOULD
BE LESSTHAN 0.8
RESULTS
2017RESULTS
2018RESULTS
2019
5.3 6.4 7.5
13.5 15.5 17.3
0.7 0.7 0.7
billion SEK billion SEK billion SEK
*Alternative Performance Measure
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DELIVERED ON GROWTH AND PROFITABILITYWELL INVESTED CAPITAL BASE
2
3
1 Defined as Accounts receivable + Inventory – Accounts Payable; Average of last four quarters divided by rolling four quarters of Net Sales
2 000
4 000
6 000
8 000
2017-Q
1
2017-Q
2
2017-Q
3
2017-Q
4
2018-Q
1
2018-Q
2
2018-Q
3
2018-Q
4
2019-Q
1
2019-Q
2
2019-Q
3
2019-Q
4
+14%+20%
+17%
10%
14%
18%
0
200
400
600
800
1 000
1 200
2017-Q
1
2017-Q
2
2017-Q
3
2017-Q
4
2018-Q
1
2018-Q
2
2018-Q
3
2018-Q
4
2019-Q
1
2019-Q
2
2019 Q
3
2019 Q
4
SEKm
Size of the bubbles reflect net sales
Rolling 12 months each quarter
4NET OPERATING WORKING CAPITAL1
Well invested, optimised balance sheet
25,5%
26,0%
26,5%
Q4-17 Q4-18 Q4-19
EBITDA %
10
15
20
25
30
150 200 250 300 350 400 450 500 550 600 650 700
Development & Technology
Steriles & Inhalation
Solids & Others
EBITDA
2018
2019
2019
2019
2018
2018
EBITDAExpanding margins
NET SALESRobust growth1
SOLID PERFORMANCE ACROSS ALL SEGMENTSAll segments contributed
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EUROPE
• Our excellent reputation in the market is helpful in creating new business
INDIA
• Well positioned with a growing market share in rapidly growing Indian market
• Creating sterile production capacity for sterile dosage forms through joint venture
USA
• Growth potential with good progress following the establishment of a new US sales organisation
GOOD MARKET DEVELOPMENT
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DRIVING OPERATIONAL EXCELLENCE
• Optimising our operations by continuously making improvements
• Higher capacity utilization is supporting further efficiency
• The closures of facilities in Ashton, UK and Stockholm will be completed in H2 2020
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EXCELLENT PROGRESS IN DEVELOPMENT SERVICES
• Enriched customer offering and improved collaboration between development centres in Europe, the US, India and Israel
• Providing a pipeline of new business for our manufacturing units
• Short term Covid-19 headwinds
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BUILDING ON OUR SUSTAINABILITY LEADERSHIP
• Growing interest in our sustainability work from customers and investors
• The principles of the UN Global Compact continue to form the basis for our global sustainability work
• Continued certification of facilities to the ISO 14001 Environmental Management System andISO 45001 Occupational Health and Safety standard
• One of the few CDMOs responding to CDP’sclimate questionnaire
• Increased CDP rating to B- in 2019
• Joined the AMR Industry Alliance in 2019
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A SUSTAINABLE APPROACH TO EVERYTHING WE DO
SUPPLIER ASSESSMENT AND MONITORING
DEVELOP INTERNAL GOVERNANCE
REDUCED GREENHOUSE GAS EMISSIONS
MANAGEMENT SYSTEMS
RECIPHARM INTERNATIONAL ENVIRONMENTAL AWARD
Collaborations and partners
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NEW REPORTING SEGMENTS
STERILESADVANCED DELIVERY SYSTEMS
SOLIDS AND OTHERS
DEVELOPMENT AND LICENSING
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COMMITTED TO NEW FINANCIAL TARGETSCOVID-19 IS PROVIDING A SHORT-TERM HEADWIND
SALES
LONG-TERM GROWTH OF
≥11%CAGR
MARGINEBITA ≥12%
CAPITAL EFFICIENCY
RETURN ON OPERATING
CAPITAL
≥10%
Note. All measures are Alternative Performance Measures
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Annual savings
SEK 125m synergies
CONSORT INTEGRATION AND SYNERGIES
Integration programme prime objectives
✓ Ensure business continuity post acquisition
✓ Define and implement the new operating model
✓ Identify and implement cost synergy savings, latest Q2 2021
✓ Explore commercial synergies
Progress
✓ Company delisted
✓ Key stakeholder communication
✓ Former Aesica businesses re-branded and operating according to Recipharm model
✓ HQ and Aesica divisional personnel costs will be realised in Q3
✓ Identifying savings on track – minor effect already in Q1 and total will be backloaded
Next phase focus areas
✓ Procurement
✓ IT
✓ HR activities
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Q1: PREPARING FOR FURTHER SUCCESS IN 2020 AND BEYONDPLATFORM FOR FURTHER ACCRETIVE GROWTH
✓ Completed transformational acquisition of Consort Medical
✓ Integration and synergy capture plans progressing according to plan
✓ Delivered organic EBITA growth ahead of sales growth
✓ High levels of liquidity to support business
✓ On track to significantly deleverage the business
✓ Demand from customers remains strong
✓ Well positioned to benefit in a growing industry
✓ Confident in medium and long term outlook
LONG-TERM GROWTH OF
≥11%CAGR
SALES
LONG-TERM
GROWTH OF ≥11%
CAGR
EBITA ≥12%
MARGIN
RETURN ON OPERATING
CAPITAL≥10%
CAPITAL EFFICIENCY
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Completed acquisition of Consort Medical in February 2020
Progressing first phase of integration, delivering against 60 day plan to ensure continuity of business
Defined new operating model and identified cost and revenue synergy opportunities
Extensive group-wide customer engagement, demonstrating new and more innovative product proposition
Refined management and reporting structure to better align business for growth and drive synergy capture
Well positioned to take advantage of the many growth opportunities seen by the enlarged group
CONSOLIDATING OUR GLOBAL POSITIONCREATED A LEADER IN INTEGRATED ADVANCED DELIVERY SYSTEMS
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• One of the oldest companies in the industry – the foundation for our reputation
• A fantastic platform to weather the storms and capitalise on the latest trends and developments in the pharmaceutical and CDMO markets
• Our platform is the basis of our continued success we develop over the next 25 years
25 YEAR ANNIVERSARY
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THE RECIPHARM JOURNEY25 YEARS OF PROFITABLE GROWTH
1995–2007Growth phase: CDMO and product rights
2007–2010Growth phase:
CDMO
2011–2013Integration
phase
CDMO only
2014–Present Growth phase:Public company
220 276 268 259 311 311 345 458 510 596829 915 915
1416
18762211 2125 2055 2125
2569
3389
4678
5332
6374
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
SEKm
Sales ~16% CAGR
since 1995
Own products + CDMO
Company creation
Recipharm brand for
CDMO
Divestment of own
products division
IPO –Nasdaq
Stockholm
Strong M&A activity to expand capabilities, enter new markets and
acquire new technologies
X XX
XX = Divested, closed or planned to close
7457
X
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