pharmstandard company presentation business & financial results, 2007
TRANSCRIPT
Pharmstandard company presentation
Business & Financial results, 2007
Disclaimer and Confidentiality Requirements
This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of OJSC Pharmstandard (the “Company”) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
This presentation is only for persons having professional experience in matters relating to investments and must not be acted or relied on by persons who are not Relevant Persons (as defined below). Solicitations resulting from this presentation will only be responded to if the person concerned is a Relevant Person.
This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) qualified investors or investment professionals falling within Article 19(5) and Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons collectively being referred to as "Relevant Persons").
This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a Relevant Person. Failure to comply with this restriction may constitute a violation of applicable securities laws. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of the Company.
This presentation includes 'forward-looking statements'. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's projects and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. Each of the Company and the Selling Shareholder and their respective agents, employees and advisers, expressly disclaims any obligation or undertaking to update any forward-looking statements contained herein.
The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.All information not separately sourced is from Company data.
2
Today’s Presenting Team
Dr. Igor Krylov
CEO,
Chairman
of the Management Board
and Member
of the Board of Directors
Elena Arkhangelskaya
Chief Financial Officer
Dr. Olga Mednikova
Chief Sales
and Marketing Officer
3
Company Overview
Dr. Igor Krylov, CEO
4
Pharmstandard at a Glance
Leading domestic pharmaceutical company in Russia (measured by sales)
• #3 pharma company overall in Russia by sales value in 20071
• #1 pharma company in the Consumer spending (Commercial retail) pharma market by sales value in
20071
Modern and efficient manufacturing facilities
• 4 pharmaceutical production sites and 1 medical equipment and disposables plant
• Russian GMP compliant facilities, some of which are EU GMP compliant
• 200 branded and non-branded pharmaceutical products
• Capacity – more then 1.3 billion packs
Experienced sales and marketing people
• More then 340 sales people and 25 actively promoted brands
• 6 brands among top-20 best selling domestic brands in Russia1
Arbidol®, Pentalgin®, Complivit®, Terpincod®, Codelac®, Flucostat®
Since IPO (May’2007) Pharmstandard is listed on LSE, RTS
• Industry leading growth EBIDTA margin and profitability
• Market capitalization more then $3.5 billion (60% growth from IPO)
Source1 Pharmexpert, preliminary data, in retail prices. Subject to change. . 2 Company As at 31 December 2007
Market
Production
Sales & Marketing
Financials
5
Russia pharmaceutical market development
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
1.1 1.3
1.4 1.5 1.6 1.7 1.8 1.9 2.1 2.3
4.4 5.1 5.6 6.79.4 11.0 12.9 15.1 17.5
1.4
2.52.0
2.5
2.5
2.5
2.5
2.5
0.0
5.0
10.0
15.0
20.0
25.0
2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
US
D m
ln
Hospitals
Commercial
FRP
CAGR 07-12 Total market-15%CAGR 07-12 Commercial segment-17%
7.8
6
Retail market by countries, value and growth (%)
USA$250 000 mln
+5%
Europe$130 000 mln
+5%
Russia$8 000 mln
+17%
Japan$63 000 mln
+2%
Source: Pharmexpert presentation on Аnnual Conference, St. Petersburg, March, 2008, manufacture prices
7
Russian Pharma Market Set to Expand
• Drug consumption per capita
expected to double in 2011
due to strong
macroeconomic driving
consumer boom
• Growing access to medicines
in retail market by active
development of distribution
companies and pharmacy
chains
• Increased consumer focus on
health and well being in line
with demographic trends
Pharmaceutical Consumption Per Capita in Russia($)*
Pharmaceutical Consumption Per Capita by Country($)**
Co
ns
um
pti
on
pe
r c
ap
ita
($
)C
on
su
mp
tio
n p
er
ca
pit
a (
$)
3844
59
75 79
96109
124
141
160
0
20
40
60
80
100
120
140
160
180
2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E
* in retail prices
** in producers' prices
Source1: Pharmexpert, preliminary data, subject to change
Source2: Renaissance, EU Market Indicators
20062007
303
230 238
149 144 135
49
330
251 258
160 160145
63
0
50
100
150
200
250
300
350
Greece Hungary CzechRepublic
World East-CentralEurope
Poland Russia
8
Russian Pharmaceutical market structure 2007
Market structure by sales channelsbased on 2007
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
IMPORT; 34% DOMESTIC; 66%
IMPORT; 78% DOMESTIC; 22%
0% 20% 40% 60% 80% 100%
Value(USD)
Volume(Packs)
IMPORT
DOMESTIC
3,8 bn units
11,4 bn USD
Market split between domestic and international competitors 2007
Hospitals10%
FRP17%
Commercial73%
Commercial
FRP
Hospitals
9
FRP – Update
• 2007 budget was set at RUR 40bn (RUR 51.2bn spent)1
• 2006 budget was set at RUR 34bn (RUR 67.9bn spent)
• 2005 budget was set at RUR 50.8bn (RUR 39.6bn spent)
• Resulted in a number of products being removed from the FRP list both voluntarily and involuntarily by pharma companies as FRP officials ask for even longer payment terms and simultaneously cut prices
• 16.9 million participants eligible – 5.5 million currently enrolled
Key facts
• 2006 debts fully paid
• 2008 FRP budget is set at RUR 58bn plus RUR 10bn reserved
• FRP was divided in two parts on federal and regional level
• Going forward Government focused on including generic domestic products on FRP list rather than expensive foreign products
• Currently only 7% of the total FRP market is serviced by Russian pharma companies
Current status
FRP is recovering, domestic pharmacompanies appear to be future beneficiaries
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change
10
Low Exposure to FRP
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
Pharmstandard has a lower exposure to the FRP compared to its peers
Composition of Leading Companies’ Sales in Russia by Market Segment in 2007
50
72
95
68
8782
27 31
8287
4612
3
25
8
4
61
65
63
4
16
27 5
14 124
12 11
0
50
100
NO
VA
RTIS
SA
NO
FI-
AV
EN
TIS
PH
AR
MS
TA
ND
AR
D
BA
YER
SC
HER
ING
PH
AR
MA
BER
LIN
-CH
/MEN
AR
INI
SA
ND
OZ
RO
CH
E
JAN
SS
EN
-CIL
AG
GED
EO
N R
ICH
TER
PFIZ
ER
%
HospitalFRP
Commercial
11
Pharmstandard position in the ATC1 categories of Consumer spending (commercial retail) pharma market by value, 2007
Top 5 ATC1 categories occupies 67% of total Commercial retail market
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
A - ALIMENTARY TRACT AND METABOLISM
R - RESPIRATORY SYSTEM
C - CARDIOVASCULAR SYSTEM
N - CENTRAL NERVOUS SYSTEM
J - GENERAL ANTI-INFECTIVES SYSTEMIC
G - GENITO-URINARY SYSTEM AND SEX HORMONES
M - MUSCULO-SKELETAL SYSTEM
D - DERMATOLOGICALS
L - ANTINEOPLASTIC AND IMMUNOMODULATING AGENTS
V - VARIOUS
S - SENSORY ORGANS
B - BLOOD AND BLOOD FORMING ORGANS
H - SYSTEMIC HORMONAL PREPARATIONS (EXCLUDING SEX HORMONES)
K - HOSPITAL SOLUTIONS
P - PARASITOLOGY
T - DIAGNOSTIC AGENTS
PHS #5
PHS #2
PHS #1
PHS #1 PHS #25*
*PHS growth +19%
Segm growth +12%
12
Growth Analysis Across Market Segments1
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
Dom
esti
c c
om
pan
ies
Inte
rnati
on
al com
pan
ies
Pharmstandard demonstrated leading absolute growth in 2007 among its domestic and international pears
CorporationCommerci
alFRP Hospital
Commercial
FRP HospitalTotal sales
2006Total sales
2007Total
Growth Commercial Growth
Total Growth (% )
Commercial Growth (% )
Pharmstandard 280,7 22,5 7,0 357,2 11,6 6,3 310,3 375,1 64,8 76,4 21% 27%Nizhparm (Stada) 88,2 47,5 2,5 105,1 40,4 3,1 138,2 148,6 10,4 16,9 8% 19%Otechestvennye lekarstva 52,0 25,2 13,0 76,4 18,6 19,6 90,2 114,6 24,4 24,4 27% 47%Pharm-Center 33,4 11,4 25,1 45,5 9,3 36,0 69,9 90,8 20,9 12,1 30% 36%Materia Medika 71,5 0,1 79,7 0,1 71,6 79,8 8,2 8,2 11% 11%Mikrogen NPO 50,8 16,8 61,1 17,0 67,6 78,1 10,5 10,4 16% 20%Veropharm ZAO 41,8 8,4 11,5 50,7 7,3 14,6 61,6 72,6 10,9 8,8 18% 21%Biotek 32,2 4,6 11,5 51,5 3,2 12,4 48,3 67,1 18,8 19,3 39% 60%Akrichin (Polpharma) 41,8 17,0 3,2 44,1 12,4 3,1 61,9 59,6 (2,3) 2,3 (4%) 6%Moshimpharmpreparaty 39,2 1,4 5,9 42,4 1,1 7,2 46,5 50,6 4,1 3,1 9% 8%
Novartis 189,2 183,3 17,7 234,4 212,8 17,3 390,3 464,6 74,3 45,2 19% 24%Sanofi-Aventis 295,0 131,2 76,3 325,4 53,9 71,4 502,5 450,7 (51,9) 30,3 (10%) 10%Pharmstandard 280,7 22,5 7,0 357,2 11,6 6,3 310,3 375,1 64,8 76,4 21% 27%Bayer Shering Pharma 180,6 86,8 21,0 222,4 80,8 24,4 288,4 327,6 39,2 41,8 14% 23%Berlin-Chemie/Menarini 226,4 57,3 14,3 261,4 24,7 15,0 298,1 301,2 3,1 35,0 1% 15%Sandoz 173,5 19,1 29,5 235,1 11,0 40,5 222,1 286,6 64,5 61,5 29% 35%Roche 64,0 188,7 32,9 74,7 170,7 34,9 285,6 280,3 (5,4) 10,7 (2%) 17%Janssen-Cilag 80,3 241,3 7,3 86,9 181,0 10,8 328,9 278,7 (50,2) 6,6 (15%) 8%Gedeon Richter 183,1 45,9 29,3 221,5 15,5 33,4 258,3 270,4 12,1 38,4 5% 21%Pfizer 196,5 27,6 30,1 222,1 6,5 27,0 254,1 255,6 1,5 25,6 1% 13%
2006 2007
13
Market Share of Top-10 Companies in theRussian Pharma Market (% 2007 in value)1
Market Share of Domestic Pharmaceutical Producers (% 2007 in value)1
#3 pharmaceutical company on Russian market
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
#3 pharma company in Russia overall
#1 domestic pharma company
Nizpharm (Stada)
Otechestvennye lekarstva5,0%
10,1%
Pharmstandard16,3%
2006 – 15,0% (1st)
Pharm-Center4,0%
3,5%
3,4%
Materia Medika
Mikrogen NPO
Veropharm ZAO
2,9%Biotek
46,9%Other
2,6%
Akrichin(Polpharma)2,2%
Moshimpharmpreparaty
3,2%Veropharm ZAO
Novartis
Bayer Shering Pharma
Berlin-Chemie/Menarini
4,4%
4,2%Sanofi-Aventis
Pharmstandard3,5%
2006 – 3,1% (4th)
3,1%
2,8%
2,7%Sandoz
2,6%Roche
2,6%Janssen-Cilag
2,5%Gedeon Richter
2,4%Pfizer69,0%
Other
14
A Leader in the Consumer spending (Commercial retail pharma market) of Russian Pharma market
Market Share — Top 10 Companies1 Market Share—Top 10 Domestic Companies1
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
PHS is #1 in Consumer spending (Commercial retail pharma market)
is 73% of the total market
Nizpharm (Stada)9,4%
Pharmstandard18,7%
2006 – 17,0% (1st)
Otechestvennye lekarstva
4,0%
Materia Medika4,2%
Biotek2,7%
Mikrogen NPO3,2%
Veropharm ZAO2,6%
Pharm-Center2,4%
Krasnogorskleksredstva2,4%
Akrichin (Polpharma)
2,3%
50,2%Other
Sanofi-Aventis4,2%
Berlin Chemie/Menarini3,4%
Pharmstandard4,6%
2006 – 4,2% (2nd)
Sandoz3,0%
Novartis3,0%
Bayer Shering Pharma2,9%Pfizer
2,9%
Gedeon Richter2,8%
Nycomed2,8%Servier
2,7%67,8%Other
15
2003
4Q03:
Acquisition of ICN’s business in Russia (five factories, distribution centres and pharmacy chain)
Q104:
New management team brought in with experience in international and domestic pharma companies2Q04:Close Polypharm (pharma production facility)
2H05:
Sale of Marbiopharm (pharma production facility)
Creation of holding company/ legal restructuring finalised
1H05:
Acquisition of TZMOI (Tyumen)—manufacturer of medical equipment
Open centralised warehouse for pharmaceutical products in Moscow
1Q08:
Acquisition of 19,88% shares of «DIPAKA TRAIDING LIMITED», which owns Mirpharm
Signing agreement with Grindeks on exclusive distribution and promotion of Mildronate®
Pharmstandard Key Development Milestones
4Q06:
New production of spray, tablets and capsules; central manufacture laboratory and renovation of production facilities
Total investment since 2004: approximately RUR 600m
Leksredstva plant (Kursk)
2007:Solvay and Pharmstandard has signed the agreement on manufacturing two pharmaceutical products Imudon® and IRS 19® in Russia
Start production of Arbidol and Flucostat on Leksredstva ( Kursk)
1H06:
New production of solutions, production of vitamins and insulin at Ufavita plant (Ufa). Total investment since 2004: approximately RUR 730m
May 2006:Legal name changed from Biovit LLC to OJSC Pharmstandard
2H06:Termination of production in Oktyabr plant in St Petersburg, production transferred to other existing sitesAcquisition of Masterlek (3.5% share of domestic Russian Pharma market by sales value)
May 2007:
Pharmstandard successfully completed its IPO, selling 43% of its share capital to the international and domestic institutional investors
Pre 2003:
Group consisted of two manu-facturing facilities (Ufa and Phytopharm) operating under Biovit LLC
2004
2005
2006
2008
Source: Company
Note: OJSC – Open Joint Stock Company, LLC – Limited Liability Company
2007
16
Modern Production Facilities
Source: Company
Note: Capacity in packs. Figures shown are as of 31 December 2007
Tomsk
Tyumen
Moscow
Ufa
Kursk
TomskhimpharmCapacity: 332 m
TZMOIUfavitaCapacity: 230 m
LeksredstvaCapacity: 719 m
Nizhny Novgorod
PhytopharmCapacity: 56m
Pharmstandard HQ
17
Production Facilities – Summary Overview
Source: Company. Note: Total capacity calculations assume 8-hour shifts and 5 day working week
Factory Approximate size (sq. m.) Formulation
Capacity 000’s packs Dec 2005
Capacity 000’s packs Dec 2006
Capacity 000’s packs Dec 2007
14'900 (own) Syrops & liquid forms 52,644 52,644 46,456 Tablets 361,077 564,406 638,705 Sprays 10,368 12,288 Powders 1,260 2,241
LEKSREDSTVA (KURSK)
Capsules 16,200 18,870
5'850 (lease) Ampules 7,624 8,595 10,346 Frozen-dried preparation 2,640 2,640 3,360 Syrops & liquid forms 6,360 6,360 9,053 Tablets 63,012 109,973 159,711 Vitamin bars (ferrohematogen) 14,000 22,680 33,660 Insulin 14,400 14,400
UFAVITA (UFA)
Saline infusin 4,500 0
1'200 (lease) Ointments 11,100 1,200 13,600 Powders 10,280 10,280 10,000 Syrops & liquid forms 29,187 24,000 23,699
PHYTOFARM (N.NOVGOROD)
Tablets 12,850 12,850 8,265
29'000 (own) Syrops & liquid forms 1,200 1,200 5,400 TOMSKHIMPHARM (TOMSK) Tablets 206,856 206,856 326,949
Closed in 2006 Capsules 1,384 Sprays 4,582 Tablets 72,797
OKTYABR (S.PETERSBURG)
857,593 1,070,412 1,357,852
Syringes 295 295 552 Needles 624 624 1,200 Sterilizing machines < 100 dm³ 24,250 24,250 8,400 Sterilizing machines > 100 dm³ 319 319 318
Aquadistilling machines 7,320 7,320 6,200
TZMOI (Tyumen)
18
Diversified Product Portfolio in 2007
Pharmaceuticals86% of 2007 sales
Medical Devices14% of 2007 sales
OTC85% of 2007 sales
Rx1
15% of 2007 sales
• Therapeutic focus:AnalgesicsCough & cold Vitamins Anti-viral Anti-fungal
• Product portfolio includes:Acid pump inhibitorsNitrites & nitratesACE inhibitorsAlimentary tract
metabolism
Source: Company
Note: 1 Includes Other sales
2 Pro forma 2006
33% (21%)2 revenue growth in 2007
37% growth (23%)2 23% (12%)2 growth 33% growth
• Product portfolio includes:Sterilisers (72% of
sales) Distillers (5% of
sales)Medical disposables
(23% of sales)
19
Pharmstandard achievements 2007
Source: Company1 Pharmexpert,preliminary data, in retail prices. Subject to change.2 As at 31 December 2007
Leading domestic pharmaceutical company in Russia (measured by sales)1:
– #3 pharma company overall in Russia
– #1 pharma company in the commercial segment
Significant growth in sales and profitability2:
– Revenue growth +33% and achieved $445 mln
– Gross profit growth +39% and achieved $268 mln or 60% of sales
– EBITDA growth +50% and achieved $191 mln or 43% of sales
– Net profit growth + 60% and achieved $ 128 mln or 29% of sales
Market leading brands and new launches:
– Arbidol® is a leader of Russian Consumer spending pharma market (measured by sales)1
– 6 brands among top-20 best selling domestic brands in Russia1
– Launched 10 new products – $ 13.7 mln or 3% of total sales.
New long-term projects and acquisitions:
– Co - рroduction contract with Solvay Pharma (IRS-19, Immudon)
– Acquisition 20% of Mir-Farm company (R&D base for future development)
– Exclusive sales contract with Grindex ( Mildronat® ) in Russia
– Successful completion of Masterlek integration
20
Core Comparables Benchmarking
Net profit margin (2007)
Gross margin (2007)
EBITDA margin (2007)
Sales growth (2007)
Source: Renaissance estimations. Company reports. Source: Renaissance
33,4%
3,9%
39,4%
27,5%
41,6%
22,4%
37,6%
0%
10%
20%
30%
40%
50%
Phar
mst
anda
rd
Aspe
n
Vero
phar
m
KRKA
Hikm
a
Ged
eon
Rich
ter
Stad
a
60,3%48,3%
59,1% 63,8%49,4% 52,9% 48,1%
0%
20%
40%
60%
80%
Phar
mst
anda
rd
Aspe
n
Vero
phar
m
KRKA
Hikm
a
Ged
eon
Rich
ter
Stad
a
42,9%
32,2% 32,2% 30,0%25,4% 25,4%
20,2%
0%
10%
20%
30%
40%
50%
Phar
mst
anda
rd
Aspe
n
Vero
phar
m
KRKA
Hikm
a
Ged
eon
Rich
ter
Stad
a28,7%
17,9% 18,4% 17,0%14,0% 14,9%
6,7%
0%
5%
10%
15%
20%
25%
30%
35%
Phar
mst
anda
rd
Aspe
n
Vero
phar
m
KRKA
Hikm
a
Ged
eon
Rich
ter
Stad
a
PHS has industry leading growth EBIDTA margin and profitability
21
Pharmstadard’s investment case since IPORussian consumer stocks performance in 2007 vs RTS Index (%)Pharmstandard IPO placement structure
Offer structure:•43.3% of total shares•Date of placement – May 4, 2007•Price
•$58.2 for share •$14.55 for GDR
Stock Exchange (PHST):•LSE - 25% in GDRs•RTS, MICEX - 18.3%
Underwriters: •UBS and Citigroup
Depositary for GDR: •Bank of New York
Source: Bloomberg, Renaissance
60
80
100
120
140
160
180
04.0
5.20
07
04.0
6.20
07
04.0
7.20
07
04.0
8.20
07
04.0
9.20
07
04.1
0.20
07
04.1
1.20
07
04.1
2.20
07
04.0
1.20
08
04.0
2.20
08
04.0
3.20
08
Pharmstandard FTSEurofirst 300 - PharmaceuticalsFTSE Global Pharmaceuticals MSCI Pharmaceuticals Index
50%
70%
90%
110%
130%
150%
16.0
5.20
07
14.0
6.20
07
12.0
7.20
07
09.0
8.20
07
06.0
9.20
07
04.1
0.20
07
01.1
1.20
07
30.1
1.20
07
28.1
2.20
07
05.0
2.20
08
PHST APTK VRPH RTSI
Pharmaceutical stock performance (rebased %) GDRs Pharmaceutical stock performance (rebased %) Local shares
22
Our Strategy
•Promote our market-leading brands to drive sales growth and profitability
•Launch new products on a regular basis
•Expand sales and marketing effort
•Continue to actively control costs
•Grow through acquisitions
•Exploit opportunities from Federal Reimbursement Programme (FRP)
Building a top-3 pharmaceutical company in Russia
23
Sales & Marketing Overview
Dr. Olga Mednikova, Chief Sales and Marketing Officer
24
Promote our market-leading brandsto drive sales growth and profitability
• Arbidol is #1 on Consumer spending pharma market
• 6 leading brands
• “Top of mind” position with consumers
• Significant brand loyalty
• 5 leading brands improve their positions
• 3 leading brands among top-20 on the total Consumer spending pharma market
Exclusively produced by Pharmstandard
Produced by Pharmstandard
Leading domestic pharma trademarks by sales value in 2007
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.Note: 1 Masterlek Brands
Trademark Ranking in 2007 Ranking in 2006ARBIDOL1
1 1
PENTALGIN 2 3
MEXIDOL 3 2
SODIUM CHLORIDE 4 5
TREPINCOD 5 6
VIFERON 6 7
COMPLIVIT 7 10HOWTHORN 8 4
FLUKOSTAT1 9 12
FENOTROPIL 10 8
CEFAZOLIN 11 13
CORTEXIN 12 19
CYCLOFERON 13 17
CAPSICI ANNUI TINCTURE 14 18
CODELAC 15 20
ESSLIVER 16 11
GLUCOSE 17 16
CHONDROLON 18 38
CORVALOL 19 15
BIPHIDUMBAKTERIN 20 14
25
OTC Products – Top-Selling Products
Source: Company and MasterLek reportsNotes:1 Acquired as part of MasterLek acquisition on 2 August
2006, sales 2006 on pro forma basis, Pro Forma assumes
inclusion of MasterLek as part of Pharmstandard as of 1 January
2006. Sales in 2005 – Masterlek sales.
Product
ATC-2Therapeuticsegments
Arbidol1 Anit-viral 56%Terpincod Cough And Cold 14%Pentalgin Analgesics 9%Complivit Vitamins -6%Flukostat1 Anti-fungal 16%Codelak Cough And Cold 10%Askophen-P Analgesics 7%Ingalipt Cough And Cold 72%Codelak-Phyto Cough And Cold 145%Rinostop Nasal preparationis 79%Other
840
975
899
471
296
222
82
34
29
17
1 190
2 316
1 322
1 314
623
502
412
85
85
56
56
1 465 21%
TOTAL OTC products sales 5 055
1 485
1 163
1 206
663
435
375
80
49
23
31
1 212
6 722 8 235
831
159
108
-40
68
36
5
36
33
25
253
1 513 23%
2006SalesRURm
Sales growthin 2007RURm
% Growthin 2007
2005SalesRURm
2007SalesRURm
26
Leading Products in Anti-infective Systemic Use Segment (2007)
Arbidol®—#1 Pharma Brand in Russia
Arbidol®
• Captured #1 brand position, in part, through active promotion by Pharmstandard sales force
• Acquired as part of Masterlek transaction
• Original product developed in 1987, active marketing launched in 2000
• Segment growth 2006-2007 + 31,0% (2001-2007 CAGR+42%)
• Arbidol sales growth 2006-2007 +38,3% (CAGR +127%)
Source: PharmexpertNote: Remodelled to reflect current categories
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
2
Annual Segment Sales Dynamics1,2
GRIPPFERON(FIRNM ZAO)
3%
AMIXIN (PHARMSTANDARD)
5%
AFLUBIN (RICHARD BITTNER GMBH)
4%
IMMUNAL (SANDOZ)
6%
OTHER3%
ARBIDOL (PHARMSTANDARD)
35%
ANAFERON (MATERIA MEDIKA)
15%
VIFERON(FERON OOO)
12%
CYCLOFERON (POLYSAN)
7%
OSCILLOCOCCINUM(LABORATOIRE
BOIRON)10%
30,4 41,163,0 74,7
97,2129,1
164,7
3,15,5
12,216,4
44,9
82,9
113,0
1,24
3,03
3,89
4,70
5,64
1,49
1,90
0
50
100
150
200
250
300
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Avera
ge p
rice (U
S$
)
OTHER
PHARMSTANDARD
Average Price (US$)
2001-2007 CAGR: 42%
27
Arbidol – Marketing Strategy
Marketing strategy
Arbidol is a key driver of the business
Cough & Cold consumer based development and potential for Arbidol
Source: ComConNote: Growth rate based on hy-o-hy growth, represents increase in the number of consumers
• Arbidol is expected to become the key driver for OTC category/entire Company:
Significant market opportunitySuperior efficacy will drive market development and sales growth
• Marketing objective is
to further increase Arbidol's brand awareness as a unique, anti-flu agent with clinically-proven efficacy
to establish strong consumption habit of flu treatment with symptomatic agent plus Arbidol
New DTC campaign has been launched in Jan 2008 “To stop and deactivate virus”
Product(millions of consumers)
1H05
2H05
1H06
2H06
1H07
%growth
Cough & Cold 34,1 33,1 34,3 33,3 34,8 +4,5%Coldrex 7,8 7,5 7,8 8,2 7,9 -3,7%Teraflu 4,1 4,9 5,2 5,0 7,9 +59,3%Arbidol 1,4 1,6 2,4 2,2 3,3 +49,6%
28
Pentalgin—#1 Pain Reliever (Non-Narcotic)
Pentalgin
• Franchise includes Pentalgin-N® andPentalgin-ICN®
• First launched Pentalgin-ICN® in 1999 and followed with launch of Pentalgin-N® in 2002
• Steadily gained market share since 2001
• Market segment growth 2006-2007 +16% (2001-2007 CAGR +17%)
• Pentalgin sales growth 2006-2007+13% (2001-2007 CAGR +28%)
Source: Pharmexpert
Top-10 Products in Analgesics Segment (2007)
Annual Segment Sales Dynamics1,2
ALKA-ZELTCER (BAYER SCHERING PHARMA)
3%
OTHER39%
SEDAL-O (SOPHARMA)3%
EFFERALGAN (BMS)3%NUROFEN
(BOOTS HEALTHCAREINTERNATIONAL)
3%
ASPIRIN (BAYER SCHERING
PHARMA)
3%
PENTALGIN (PHARMSTANDARD)
24%
TEMPALGIN(SOPHARMA)
7%
BARALGIN(SANOFI-AVENTIS)
7%
SEDALGIN (ACTAVIS)6%
SOLPADEINE (GSK)3%
75,7102,7 105,9 104,0
131,3152,6
176,917,5
24,5 24,9
30,9
50,658,4
64,5
0,20
0,31
0,39
0,46
0,58
0,24 0,25
0
50
100
150
200
250
300
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
0,1
0,2
0,3
0,4
0,5
0,6
Avera
ge p
rice (U
S$
)
OTHER
PHARMSTANDARD
Average Price (US$)
2001-2007 CAGR: 17%
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
229
Pentalgin – Marketing strategy
Source: Comcon
Note: Growth rate based on hy-o-hy growth, represents increase in the number of consumers
• Pentalgin has been keeping leading position since 2001 and demonstrating stable growth
• Pentalgin is expected to be further driver of OTC category
• Marketing objective is to
– keep conversion consumers from old traditional analgesics to Pentalgin through communication of Pentalgin's USP/Best-In-Class efficacy
– to capitalise on Pentalgin’s brand recognition by launching Pentalgin plus® in new (improved) formulation (launched Mar 2008)
– introduce additional new formulations of this leading product to consumers by taking advantage of current brand loyalty
Marketing strategyNon-narcotic analgesics consumer based development and potential for Pentalgin
Product(millions of consumers)
1H05
2H05
1H06
2H06
1H07
%growth
Solpadein 1,5 1,6 1,5 1,3 1,1 -10,7%All other 28,0 27,9 26,4 25,6 24,9 -2,7%Pentalgin 7,9 7,4 6,1 5,9 6,2 +4,6%
30
Complivit - #1 Vitamin (Vitamins + Minerals)
Annual Segment Sales Dynamics1
Multivitamins with Minerals Market Share Breakdown (2007)
• Complivit has been leading brand since 2001
• Pharmstandard had 19.7% market share in 2007
• Market segment growth 2006 - 2007 + 8%
(2001-2007 CAGR +15% )
• Complivit sales growth 2006–2007 + 32%
(2001-2007 CAGR +19%)
COMPLIVIT
(PHARMSTANDARD)15%
VITRUM (UNIPHARM INC.) 8%
SUPRADYN(BAYER SCHERING PHARMA)
6%
ELEVIT PRONATAL (BAYER SCHERING PHARMA)
4%
MERZ SPEZIAL DRAGEES (MERZ GMBH)
4%
BIOVITAL GEL FOR CHILDREN
Other48%
MULTI-TABS JUNIOR
(FERROSAN)2%
VITRUM PRENATAL FORTE(UNIPHARM INC.)
VITRUM BEAUTY (UNIPHARM INC.)
3%
MULTI-TABS KID
(FERROSAN)2%
4%(BAYER SCHERING PHARMA)
4%
63,1
81,291,0
102,4
135,9143,9 142,814,7
16,7
18,5
19,3
26,8
27,635,1
3,40
4,97
5,38
5,82
6,23
4,03
4,42
0
20
40
60
80
100
120
140
160
180
200
2001
2002 2003 2004
2005
2006
2007
Sale
s (
US
$m
)
0,0
1,0
2,0
3,0
4,0
5,0
6,0
Avera
ge p
rice (U
S$)
OTHERPHARMSTANDARDAverage Price (US$)
2001-2007 CAGR:15%
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
231
Complivit – Marketing strategy
• Complivit demonstrates above-market sales growth and expected to continue to be the most popular “Russian vitamin”
• Marketing objectives is to
– increase Complivit consumption through launching of new specialised sub-brands under umbrella (recently launched new brands Complivit Ca D3, Complivit sugar free, Complivit 365)
– Increase brand consumptionamong current users through increasing of period of usage (communication of Comlivit as “annual vitamin” )
Marketing strategyVitamins consumer based development and potential for Complivit
Source: Comcon
Note: Growth rate based on hy-o-hy growth, represents increase in the number of consumers
Product(millions of consumers)
1H05
2H05
1H06
2H06
1H07
%growth
Complivit 3,0 2,7 3,7 3,5 3,9 +11,5%Vitrum 2,4 2,0 2,3 2,0 2,4 +16,3%Centrum 1,6 1,7 1,7 1,6 2,0 +26,4%All other 13,0 11,5 10,6 9,9 10,0 +0,8%
32
Product
ATC-2Therapeuticsegments
2006SalesRURm
Sales growthin 2007RURm
% Growthin 2007
2005SalesRURm
2007SalesRURm
Prescription Products—Top Selling Products
Source: Company and MasterLek reports
Note: Shading denotes actively promoted products
1 Acquired as part of MasterLek acquisition on 2 August 2006,
sales on pro forma basis, Pro Forma assumes inclusion
of MasterLek as part of Pharmstandard as of 1 January 2006.
Sales in 2005 – Masterlek sales.
Phosphogliv Hepatic protector 6 253 356 103 41%
Amixin Anti-viral 151 217 247 29 14%
Biosulin Diabet care 26 50 120 70 140%
Rastan Growth hormone 0 0 53 53 16920%
Pikamilon Psychoanaleptics 25 34 45 11 33%
Renipril Cardiovascular 28 36 41 5 14%
Azitrox Systemic Antibacterial 28 34 37 3 10%
Piracetam Psychoanaleptics 13 24 37 13 54%
Termikon Anti-fungal 14 35 37 2 5%
Ciklodol Anti-parkinson products 10 1 29 28 2083%
Other 638 646 489 -157 -24%
TOTAL Rx products sales 939 1 331 1 491 160 12%
33
1 Source: Pharmexpert2 Based on consumer prices
Top products in Hepatic Protectors segment (2007)
Phosphogliv® – Successful Rx Product Launch
• Launched in 2005• Novel product in-licensed from the Institute of Biomedical Chemistry • Premium priced product based on superior efficacy • Patent protected until 2018• Clinically validated
– 2nd generation combination therapy with anti-viral, anti-inflammatory andimmunomodulating properties
Market segment growth 2006-2007 + 4% (2001-2007 CAGR +25%)Phosphogliv sales growth 2006-2007+42% (2001-2007 CAGR +149%)
• Expected to be a significant growth driver going forward
Phosphogliv®
Annual segment sales dynamics1
TYCVEOL (EUROPA-
CARSIL (SOPHARMA)9%
LIV-52 (HIMALAYA DRUG COMPANY LTD.)
3%
HEPA-MERZ (MERZ GMBH) 3%
THIOCTACID (PLIVA)4%
BIOPHARM ZAO)3%
OTHER9%
PHOSPHOGLIV (PHARMSTANDARD)
4%
BERLITION (BERLIN-CH/MENARINI)
6%
ESSLIVER (STADA ARZNEIMITTEL AG)
9%
HEPTRAL (ABBOTT LABORATORIES)
22%
ESSENTIALE (SANOFI-AVENTIS)28%
52,2 69,5 80,1 90,9
130,3
194,2 196,3
0,6
0,91,2
1,5
1,8
4,1 8,0
3,864,55
5,12
5,90
6,85
8,74
10,05
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
2,0
4,0
6,0
8,0
10,0
Avera
ge p
rice (U
S$
)
OTHER
PHARMSTANDARD
Average Price (US$)
2001-2007 CAGR: 25%
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
2 Based on consumer prices34
New product launches in 2007O
TC
Rx
New products sales achieved $13.7 mln or 3% from total pharmaceutical sales in 2007
Product ATC
Sales value
2007
USD mln
Market
value 2007
USD mln Key Market brands
Recent product launches
175,6 Coldrex, Fervex, Teraflu
68,3 Novo-Passit, Persen
107,9 Immunal, Immunorm
45,0 Calcium D3, Calcium
Maxicold®
Passifit®
Immunex®
Complivit® Ca D3
Complivit® 365
R05A0-Cold Preparations Without Anti-Infectives
N05B5-Herbal Hypnotics/Sedatives
L03A0-Immunostimulating Agents Excluding Interferons
A12A-calcium products
A11A - Multivitamins, combinations
2,0
1,0
0,4
1,2
0,2 231,8 Vitrum, Complivit, Multi-Tabs
239,5 Humulin, Protaphan, Actrapid
21,0 Genotropin, Saizen, Humatrope
241,1 Movalis, Voltaren, Diclofenac
93,2 Mexidol
Biosulin®
Rastan®
Artrozan®
Mexiprim®
Benfolipen®
A10C2-Human Insulins And Analogues
H04C0-Growth Hormones
M01A1-Anti-Rheumatics, Non-Steroidal Plain
C01X0 - All Other Cardiac Preparations
A11D (tablets) - vitamin B1 and combinations
4,9
2,2
0,6
1,1
0,1 15,0 Milgamma, Neuromultivit
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
235
multivitamins with minerals
232 Vitrum, Multi
Complivit Fe Sep-08 A11A – multivitamins with minerals
232 Vitrum, Multi
Complivit Mg Sep-08 A11A – multivitamins with minerals
232 Vitrum, Multi
Neurocomplit Mar-08 A11D – vitamin B1 and combinations
43 Milgamma, Multi-Tabs B complex, Neuromultivit
Lactazar Sep-08 A15A – appetite stimulants Lactasa Neosmectine Jan-08 A07B – intestinal absorbent
antidiarrhoeals 45 Smecta, Carbone
Activated
Combilipen
Product Approvals and Launches 2008O
TC
Rx
Product
Date of expected launch ATC
ATC value, US$m
(2007) 1 Key market brands
New product launches in 2008
Influnorm May-08 R05A – cold preparations without anti-infectives
175 Coldrex, Fervex, Teraflu
Pentalgine plus Mar-08 N02B – non-narcotics analgesics and antipyretics
248 Tempalgine, Baralgine, Nurofen, Solpadeine
Complivit ophtalmo Sep-08 A11A – multivitamins with minerals
232 Vitrum, Multi-Tabs, Supradine
Complivit Se Sep-08 A11A –
Mar-08 A11D3 (injections) – vitamin B1 and combinations
34 Milgamma, Multi-Tabs B complex
Octolipen Nov-08 A05B0 – hepatic protectors 209 Tioctacid, Berlition Neupomax Sep-08 L03A1 – colony-stimulating
factors 13 Neupogen, Granocyte
Formetin Jun-08 A10B2 – biguanide antidiabetics 21 Glucofazh, Siofor Bloctran Apr-08 C09C0 – antgiotensine-2
antagonists plain 21 Losap, Diovan, Kozaar
Source: CompanySource: Pharmexpert preliminary data, retail prices 2007. Subject to change.
236
Expand sales and marketing effort
• Covers 75% of the Russian pharma market
• All sales reps have medical education/work experience
• Appropriately incentivised with cash bonus up to 33% of salary
• In 2008 looking to:
– Increase “feet on the street” to over 470 sales people
– Further specialise sales force by therapeutic area
– Increased product expertise
Experienced sales force up to 340 sales persons1
Source: Company
Note: As at 31 December 2007
Real ti
me d
ata
-
ETM
S
HQ Sales and marketing
Real tim
e d
ata
- ETM
S
National manager
1 manager
Regional manager
23 managers
OTC sales force(134)
Rx sales force(157)
National manager
2 managers
Regional manager
29 managers
OTC Rx(incl. ENDO-
Team)
37
Effective Sales Force management system
• Pharmbase software system allowing regular sales in/sales out analysis
– Product distribution and stock on each territory
– Sales performance by each territory and medical rep
• ETMS system allowing effective sales people, marketing activities and clients performance management
– Real time data on sales force activities allowing regional managers to more effectively manage sales force
– Clients data base and prescription dynamic by each doctor
– Effective clients detailing
– Segmentation and targeting of clients
– Daily activities and commitments
– Sales Force recourses allocation analysis by each product
– Data on 101 880 clients: doctors, specialists, pharmacists
are already included
Effective and competitive Sales Force team
38
Rapidly Growing Revenue Profile
Source:Company
Note:
1 2005 results include results of Tyumen acquisition (as of 1 January 2005)
2 2006 results include results of MasterLek acquisition (as of 2 August 2006)
3 Pro Forma assumes inclusion of MasterLek as part of Pharmstandard as of 1 January 2006
Achieved 21% growth in 2007 (OTC 23%, Rx 11%, Medical equip 34%)
(pro-forma)
Medical equipment and disposables
PHARMA
Growth
3 946
5 685
8 5239 374
11 371
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
10 000
11 000
12 000
2004 IFRS 2005 IFRS 2006 IFRS 2006 pro-forma 2007 IFRS
RU
R,
mln
44%
50%
33%
21%
Growth
14%
13%
14%
18%
100%82%
86%
87%
86%
39
Financial Overview
Elena Arkhangelskaya, Chief Financial Officer
40
Divisional Sales Breakdown 2004-2007
Source: Company reports, 2004, 2005, 2006, 2007 results audited by E&Y (IFRS)
Note: 1 Pro Forma assumes inclusion of MasterLek as part of Pharmstandard as of 1 January 2006.
Pro-Forma basis 1
IFRS basis2007 2006 2005 2004
Growth 07/06
Growth 07/06, %
Pharmaceutical products 9 763 7 326 4 674 3 946 2 436 33%OTC products 8 235 6 032 3 902 3 347 2 204 37%Branded generics 7 548 5 341 3 275 2 766 2 207 41%Non-branded generics 688 691 627 581 -3 0%Prescription products 1 473 1 199 733 555 274 23%Branded generics 1 207 899 440 294 308 34%Non-branded generics 266 299 293 261 -33 -11%Other sales 55 96 39 44 -42 -43%Medical equipment and disposables 1 609 1 196 1 011 0 412 34%
Sale of goods 11 371 8 523 5 685 3 946 2 849 33%
2007 2006 2005 2004Growth 07/06
Growth 07/06, %
Pharmaceutical products 9 763 8 178 4 674 3 946 1 585 19%OTC products 8 235 6 722 3 902 3 347 1 513 23%Branded generics 7 548 6 031 3 275 2 766 1 516 25%Non-branded generics 688 691 627 581 -3 0%Prescription products 1 473 1 331 733 555 142 11%Branded generics 1 207 1 025 440 294 182 18%Non-branded generics 266 306 293 261 -40 -13%Other sales 55 125 39 44 -70 -56%Medical equipment and disposables 1 609 1 196 1 011 0 412 34%
Sale of goods 11 371 9 374 5 685 3 946 1 997 21%
41
Revenue Growth Drivers
Source: Company reports
Note:
1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
2 Excluding Other Pharma Sales
3% 2% 16%
11 371 9 374
0
2 000
4 000
6 000
8 000
10 000
12 000
Sales 2006 PF OTC product sales Rx product sales Med. Equipment Sales 2007 IFRS
RU
R,
mln
Total growth 21% (pro-forma)1
42
Margin Expansion 2007
EBITDAGross Profit
Source: Company reports
Note:
1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
1 726
3 178
4 942 5 233
6 852
56%
60%58%
56%
44%
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma
2007 IFRS
RU
R m
ln
Gross profit
As % of sales
583
1 720
3 255 3 496
4 882
43%
37%38%
30%
15%
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma
2007 IFRS
RU
R m
lnEBITDA
As % of sales
50% EBITDA growth 2006-2007 (IFRS)39% Gross Profit growth 2006-2007 (IFRS)
43
Competitive Cost Structure 2007
General and Administration CostsSelling and Distribution Costs
Source: Company reports
Note:
1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
13%
8%
6% 6%
5%
499522443
549 571
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma
2007 IFRS
RU
R m
lnLabour costs
Other expenses
As % of sales
74% 64%42% 42%
38%
26% 36%58% 58% 62%
14%15%15%
19%
13%
1 626
1 372
1 069
532
1 268
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
2 200
2 400
2004 IFRS 2005 IFRS 2006 IFRS 2006Pro-forma
2007 IFRS
RU
R m
ln
Marketing
Labour costs
Other expenses
As % of sales
30%
59% 52% 52%46%
17%
10%17% 17%
24%
53%
31%
31%30%
29%
44
Attractive Profitability Growth
Source: Company reports
Note:
1 Pro Forma assumes inclusion of Masterlek as part of Phamstandard as of 1 January 2006
60% Net Profit growth in 2007 (IFRS)
320
1 019
2 036 2 006
3 263
21%
29%
8%
18%
24%
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2004 IFRS 2005 IFRS 2006 IFRS 2006pro-forma
2007 IFRS
RU
R m
ln
Net Profit
As % os sales
Net Profit 2004–2007
45
Consolidated Balance Sheet and Capex
Capital ExpenditureIFRS basis
Debt summary
• Facility A: US$80.9m (maturity Dec-2009/L+150)
• Facility B: US$51.7m (maturity Dec-2011/L+190)
• Net debt: US$125.1m
CAPEX structure in 2007:
1. Purchase of property, plant and equipment 521.6 mln RUR (76%)
2. Purchase of intangible assets 165.2 mln RUR (24%)
Source: Company reports
Note:
1 Conversion rate 25,57 RUR/USD
189
889 890
687
0
200
400
600
800
1 000
2004 2005 2006 2007
RU
R,
mln
CAPEX
(in millions of RUR) 2004 2005 2006 2007
Cash and Equivalents 66 244 193 193
Other Current Assets 2 980 4 263 5 300 6 696
Long-term Assets 2 292 3 806 8 277 8 405
Total Assets 5 337 8 313 13 770 15 294
Total Debt 1 496 584 3 875 3 265
Current Liabilities (excl. short-term debt) 931 3 303 2 425 1 129
Non-current Liabilities (excl. long-term debt) 378 502 1 129 1 297
Total Equity 2 533 3 925 6 340 9 603Total Liabilities & Equity 5 337 8 313 13 770 15 294
46
Masterlek Integration
• Leading Masterlek brands accelerated its sales growth under Pharmstandard management in 2007 (pro-forma):
– Arbidol +56%; + 831 m RUR
– Flucostat + 16%; + 68 m RUR
– Amixin + 14%; + 29 m RUR
• Improvement of Gross Margin due to decrease of API prices, transferring of production to own facility (Kursk):
– Arbidol to 62% in 2007 vs 46% in 2006
– Flukostat to 86% in 2007 vs 58% in 2006
– Amixin to 75% in 2007 vs 45% in 2006
• Amixin production transfer on own facility (Tomsk) will be fully accomplished in 2008
• Integration of commercial and administrative operations decreased S&D and G&A costs by 4% of sales
Realised estimated synergy effect
Source: Company
47
2007 Underlying Financials
RUR Mln FY 2007 FY 2006 Change
Sales 11 371 8 522 33,4%
Gross Profit 6 852 4 942 38,6%
S&D Expenses 1 626 1 268 28,2%
S&D Expenses, % of Sales 14% 15% -1%
G&A Expenses 571 499 14,4%
G&A Expenses, % of Sales 5% 6% -1%
Operating Income 4 614 2 967 55,5%
Net Income 3 263 2 036 60,3%
EBITDA* 4 882 3 255 50,0%
48
Appendix
49
Russian pharma market – generic market
Commercial
8%
92%
Generics Original
Hospital
83%
17%
Generics Original
FRP
25%
75%
Generics Original
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
50
Structure of the Commercial segment of Russianpharma market by OTC, Rx in volume
26.2
73.8
24.1
75.9
24.9
75.1
25.9
74.1
0%10%20%30%40%50%60%70%80%90%
100%
2004 2005 2006 2007
OTC
Rx
50.3
49.7
48.3
51.5
50.6
49.4
51.4
48.6
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007
OTC
Rx
Structure of the Commercial segment ofRussian pharma market by OTC, Rx in value
Structure of the Russian market by product group (OTC, Rx) 2004-2007
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
51
Ratio of imported and local pharma products in Comercial segment of Russian market is stable since 2004
In value
76.3
23.7
76.5
23.5
76.6
23.4
76.3
23.7
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007
Local
Imported
In volume
32.4
67.6
32.8
67.2
32.8
67.2
32.8
67.2
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007
Local
Imported
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
52
Maxicold®
• Launched in 2007
• Achieved about $2 mln sales during the first year
Maxicold® – Successful OTC Product Launch
Top products in Cold preparations segment (2007)
Annual segment sales dynamics1
Source: Company1 Source: Pharmexpert preliminary data, retail prices. Subject to change2 Based on consumer prices
Annual segment sales dynamics1
37,462,8
89,0 82,2
116,9142,0
173,3
0,0
0,0
0,00,0
0,0
0,1
1,9
1,77 1,76 1,701,93
2,23
3,03
3,73
0
20
40
60
80
100
120
140
160
180
200
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
Avera
ge p
rice (U
S$)
OTHERPHARMSTANDARDAverage Price (US$)
2001-2007 CAGR: 29%
ANTIFLU (SAGMEL INC.)3%RINZASIP (UNIQUE
PHARMACEUTICAL LABORATORIES)
3%RINZA (UNIQUE
PHARMACEUTICAL LABORATORIES)
5%
RINIKOLD (SHREYA LIFE SCIENCES)
2%OTHER
4%
COLDACT (RANBAXY LABORATORIES
LTD.)5%
ANTIGRIPPIN (NATUR PRODUCT)
6%
ANTIGRIPPIN (ANTIVIRAL NPO
ZAO)8%
FERVEX (BMS)14%
COLDREX (GSK)20%
TERAFLU (NOVARTIS)
30%
53
Flukostat
Flukostat
• Market leader since 2006
• Launched in 2000, actively marketed
since 2002
• Market segment growth 2006-2007 +2% (CAGR 2001-2007 +24%)
• Flucostat sales growth 2006–2007 +21% (CAGR 2001-2007 +102%)
Top 10 Products - Anti Fungal Infections 2007
Annual Segment Sales Dynamics1
NIZORAL(JANSSEN-CILAG)
3%
LAMISIL(NOVARTIS)
6%
IRUNINE(VEROPHARM ZAO)
5%
RUMICOZ(OTECHESTVENNIE
LEKARSTVA)3%
OTHER26%
FLUKOSTAT(PHARMSTANDARD)
18%
DIFLUCAN (PFIZER)17%
MYCOSYST (GEDEON RICHTER)10%
ORUNGAL(JANSSEN-CILAG)
7%
MYCOMAX(ZENTIVA A.S.)
5%
35,0 58,9 59,6 64,7 82,3 107,3 106,1
0,3
2,27,6
10,7
14,8
21,4 24,9
2,63
5,36
6,67
8,517,70
4,164,44
0
20
40
60
80
100
120
140
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
Avera
ge p
rice (U
S$)
OTHERPHARMSTANDARDAverage Price (US$)
2001-2007 CAGR: 24%
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
54
GRIPPFERON(FIRN-M ZAO)
3%OTHER
3%
CYCLOFERON(POLYSAN)
7%
IMMUNAL(SANDOZ)
6%
AFLUBIN(RICHARD BITTNER GMBH)
4%
ECHINACEA(SAINT-PETERSBURG PHARMACEUTICAL
FACTORY/GALENOPHARM)
0%
ARBIDOL(PHARMSTANDARD)
35%
ANAFERON (MATERIA MEDIKA)
15%
VIFERON(FERON OOO)
12%
OSCILLOCOCCINUM (LABORATOIRE
BOIRON) 10%
AMIXIN(PHARMSTANDARD)
5%
Amixin
Top 10 products - Anti-virals, excluding anti-HIV 2007
• Mode of action - induces production of all types of interferon (α, β, γ); has antiviral and immunomodulating activity; stimulates production of human antibodies
• Currently 90%1 of prescriptions come from GPs and pediatricians for the treatment of prophylaxis and treatment of URTI
• Other potential indications include acute and chronic pelvic infections and STD
• Market segment growth 2006-2007 +31% (CAGR 2001-2007 +42%)
• Amixin sales growth 2006-2007 +16,7% (CAGR 2001-2007 +37%)
Amixin
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
55
Terpincod/Codelac
Top-10 Products – Antitussive & Expectorants 2007
Annual Segment Sales Dynamics1
64,087,9
114,0 121,2156,9
177,1
220,1
8,4
13,7
26,235,2
40,1
46,3
55,2
0,460,83 1,02 1,22
1,57
0,52 0,67
0
50
100
150
200
250
300
2001 2002 2003 2004 2005 2006 2007
Sale
s (
US
$m
)
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
Avera
ge p
rice (U
S$)
OTHERPHARMSTANDARDAverage Price (US$)
2001-2007 CAGR: 25%
Terpincod
First launched Terpincod in 1996
Terpincod sales growth 2006-2007 + 16%
(CAGR 2001-2007 +43%)
Codelac
Includes Codelac tablets and Codelac Phyto syrup
First launched Codelac tablets in 1996 and followed with Codelac Phyto syrup in 2004
Codelac sales growth 2006-2007 +35% (CAGR 2001-2007 +33%
Market segment growth 2006-2007 +23% (CAGR 2001-2007 +25%) 4%
OTHER32%
AMBROBENE(RATIOPHARM
INTERNATIONAL)
6%
PULMOZYME (ROCHE)
5%
HEDELIX(KREWEL
MEUSELBACHGMBH)
4%
3%
TERPINCOD(PHARMSTANDARD)
13%
LASOLVAN(BOEHRINGERINGELHEIM)
12%
ACC (SANDOZ)10%
CODELAC(PHARMSTANDARD)
6%
DOKTOR MOM (UNIQUE
PHARMACEUTICALLABORATORIES)
5%
Source: Pharmexpert preliminary data, retail prices 2007. Subject to change.
56
Top Pharmaceutical Product Drivers
Source: Company and MasterLek reports
Note:
1 Acquired as part of MasterLek acquisition on 2 August 2006,
sales 2006 on pro forma basis, Pro Forma assumes inclusion
of MasterLek as part of Pharmstandard as of 1 January 2006.
Arbidol1
Terpincod
Pentalgin
Phosphogliv
Biosulin
Flukostat1
Rastan
Maxicold
Codelak
Ingalipt
Product
Anti-viral
Cough and Cold
Analgesics
Hepatic protector
Diabet care
Anti-fungal
Growth hormone
Cough and Cold
Cough and Cold
Cough and Cold
ATC-2Therapeuticsegments
TOTAL Pharmaceutical sales
2006SalesRURm
1 485
1 163
1 206
253
50
435
0
7
375
49
8 053
2007SalesRURm
2 316
1 322
1 314
356
120
502
53
50
412
85
9 726
Sales growthin 2007RURm
831
159
108
103
70
68
53
43
36
36
1 673
% Growthin 2007
56%
14%
9%
41%
140%
16%
16920%
618%
10%
72%
21%
57
Breakdown of Sales for 2007 by Distributor
• Top 5 distributors accounted for 58% of pharmaceutical product sales in 2007
• Typical payment terms for distributors:
– Regional wholesalers: 45-75 days
– Export distributors: 30-90 days
– National distributors: 60–90 days
– FRP program: 60-90 days
Source: Company
Note: Manufacturers’ prices
Top 5 Distributors – 2007
Distributor % of sales
Genesis 19
Katren 14
Protek 10
SIA International 9
Rosta 6
Total 58
58
Thank you!
59