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Capital Markets Day September 16th ,2014 www.stada.com

Capital Markets Day


T&R within the UK Market

Dieno George CEO, T&R

September 2014


• Founded in 1922

• Leading UK OTC branded business with increasing branded Rx NHS presence, particularly dermatology

• Balanced portfolio of market leading brands, growing market share through continued innovation and market support

• Excellent customer relationships throughout the UK pharmacy, grocery and other retail channels as well as NHS including GPs and CCGs

Thornton and Ross overview

• Operates a well invested, fully integrated, highly skilled, cost-effective manufacturing site specialising in pharmaceutical creams, gels, liquids and suppositories

• Growing international presence through licensees, distributors and Stada affiliates

• Strong and experienced management team capable of delivering exceptional growth

• A demonstrable track record of delivering year-on-year growth in sales, margins and EBITDA


• Utilise T&R’s strategic and operational expertise to create a Centre of Excellence for OTC, Consumer Medicines and Dermatology

• To strengthen T&R in its core markets by continuing to develop and commercialise new brand extensions and launch new brands with innovative appeal to consumers and healthcare professionals

• Acquire strongly branded OTC products, Rx dermatologicals, and other niche Rx brands including medical devices for sale in the UK and internationally through Stada affiliates

Mission statement

• Continue to invest in our facilities and people

• Ensure we remain competitive and in control of our key processes and activities so that we comply with all regulatory and legal requirements

• By developing the business as indicated, it is anticipated that T&R can continue to profitably grow sales ahead of key competitors and so increase market share in core market segments

• Operating profit and EBITDA progression on an annual basis will be a key measure of success

As part of Stada AG, we will aim to:


T&R Total Sales

£33m £33m £39m £42m

£45m £52m

£58m £60m £66m

£72m

£80m

£114m

FY05A FY06A FY07A FY08A FY09A FY10A FY11A FY12A FY13A CY13A CY14E CY14EFY = Previous Financial Year to 31 March CY = Calendar Year


T&R Sales 2014

Sales by route Sales by therapeutic area

Cough/Cold 18%

Derma 22%

Topical Analgesic

13%

Household 9%

Generic's 12%

Other 26%

OTC 47%

Rx 40%

International 13%


T&R Sales 2014

Covonia 14%

Care 13%

Hedrin 10%

Cetraben 10% Zoflora

9%

Movelat 6%

Radian B 5%

Gal 3%

Cerumol 2%

Generic's 12%

Other 16%

9 major brands

72% of sales


UK healthcare spectrum

PROFESSIONAL CONSUMER

Hospital CCG Health Centre Pharmacy Grocery Convenience/Discount Consultant

Specialist GP Disp GP

Nurse Pharmacist Staff

Retail Buyer

Place & person

Product

A&P

Biosimilar

Rx brands and generics

Medical devices

OTC brands and generics

FMCG inc disinfectants

Sales and detailing costs Advertising costs

Medicines Managem’t

GENERICS


UK Healthcare

20th century: Killer disease Challenge was to address killer diseases caused by poor sanitation and communicable infections

21st Century: Poor lifestyle choices Facing time-bomb of poor lifestyle choices with significant health consequences. Ageing society: considerable growth in over 65s. Chronic disease explosion – eczema, arthritis, diabetes, coronary heart disease and dementia.

The burden on the NHS is arguably unsustainable unless there is a fundamental behaviour change from within the NHS and everyone using the NHS.


OTC

UK Healthcare Environment

NHS

Severe cost

PPRS

Ageing population

Deregulation from P > GSL > Medical Device

NICE Free Rx

Lifestyle

Consumer information

Widening distribution

GP consultations

Self-care


GPs ARE STILL PRESCRIBING MORE…

OTC vs. Rx Performance

951m packs 942m packs



2012 2013

Annual unit sales & growth rate

POM packs dispensed on prescription1

OTC packs dispensed on prescription1

OTC packs sold OTC2

1. IMS Xponent 2. IRI Infoscan

+4.6%

-3.6%

-0.9%


• Minor ailments take up 20% of a GP’s workload

• Costs NHS £2bn per annum

• Bulk of costs due to – Consultation time – Rx cost

• 90% of minor ailment consultations receive Rx

• 75% of GP’s time on minor ailments spent on just 10 indications

Minor ailments

Examples of minor ailments:

• Coughs • Colds

• Headaches • Eczema

• Indigestion


Minor ailments

Minor ailment Number of consultations

Average Rx cost

Total cost

Back pain 8.4m £8.23 £64.0m

Heartburn and indigestion 6.8m £8.07 £54.0m

Dermatitis 6.8m £5.30 £35.3m

Nasal congestion 5.3m £3.36 £17.4m

Constipation 4.3m £5.31 £22.2m

Migraine 2.7m £19.58 £51.9m

Cough 2.6m £4.18 £9.0m

Acne 2.4m £10.96 £25.7m

Sprains and strains 2.2m £6.86 £12.1m

Headache 1.8m £8.03 £11.7m


UK OTC Market

Pain Relief 22%

Skin 17%

Cough/Cold /Sore Throat

18%

GI 11%

Vitamins & Minerals

14%

Other 18%

£2.4bn MARKET SIZE (2013) Source: IRI Infoscan


Top 12 OTC companies in pharmacy SALES AT RSP

£9,1m

£12,3m

£13,9m

£14,2m

£14,5m

£21,0m

£46,2m

£56,0m

£58.9m

£130,4m

£131,8m

£177,4m

Pro Bono Bio

Alliance

Dendron

Forest

P+G H/care

Sanofi

Bayer

Omega

Thornton+Ross

GSK

Reckitt

McNeil

Source: IMS NATOT data – MAT to June 2014 + Care sales at rsp value


UK OTC market

£2,07bn £2,13bn £2,17bn £2,28bn £2,30bn £2,27bn £2,28bn £2,27bn £2,33bn £2,38bn

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

+0.7% +3.4% +1.7% +5.0% +0.5% -0.3% +0.3% -0.6% +2.9% +2.2%

All % change numbers are like-for-like comparisons. Source: IRI Infoscan.

STABLE MARKET


Sales & Marketing Review

Barry Draude UK Sales & Marketing Director, T&R

September 2014


Significant coverage of wholesale and retail markets and the NHS

through dedicated teams.

Routes to UK market

Pharmacy Wholesale

Pharmacy Retail

Grocery Retail

CCG GP Nurse Hospital

28 strong experienced team focused on OTC commercial

48 establish team focused on driving NHS Prescriptions

Pharmacy 9%

Discounters 12%

Grocery 16%

Grocery wholesalers

5% Others 2%

Pharmacy wholesalers

56%

UK sales by channel


UK Commercial Deliver double digit growth by: • Continually being better than our competition

• Focus on key activities that make a difference

• Help our customers sell more products through educational training and promotions.

• Communicate and educate consumers in the new media landscape.

• Significant educational & detailing programs to Healthcare professionals (GP’s, CCG’s) driving our Rx Brands.

• Innovate with products consumers wish to buy and the NHS wish to prescribe

+24%

+13% +15% +17% +18%

+6%

+14% +9%

+2% +5%

+1% -0,3% +0,3% -1% +3% +2%

2006 2007 2008 2009 2010 2011 2012 2013

T&R OTC MarketOTC Market vs. T&R growth


MARKET SHARE: 26%

Vision To be a recognised healthcare “power brand” by becoming brand leader in the adult cough category and one of the top 5 brands in all sub-categories where Covonia competes, by the end of 2018.

Strategy • Strong values (Power, Efficacy, Value, Impact, Feel it Working!) • Increase ATL support, distribution points and in-store presence • Innovative NPD aimed at loyal consumers and competitor

switchers • Work with trade partners to increase cough category value:

- Range choice = expertise (products for specific cough types) - Premium priced and larger size launches - Fixture rationalisation (target low-growth brands with no ATL support)

Benylin Buttercup

Meltus

Veno’s

Robitussin

Sales performance index

GROWING

DECLINING

Source: IRI 2002-2014

Importance of NPD

£0m

£2m

£4m

£6m

£8m

£10m

£12m

£14m

£16m

£18m

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014B

Hot Dose

Chesty S/Free

Dry S/Free

Mucus

Lozenges

Dry & Tickly

Catarrh

Cold & Flu

Chesty NPD

Vapour Drops

2002 Range

2013: NPD since 2002 accounted for 80% of sales 2014: Planned to be 87%

£3.9m

£3.7m

0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Pharmacy: 22% Grocery multiple: 31% Grocery convenience: 24% Source: IRI data 14 June 14


Next generation head lice treatment

Vision: The Hedrin Brand will be worth over £10m at MSP in the UK by 2018, taking over 50% of a growing market for head lice treatment /maintenance products through clinically proven product development and above the line support.

• Hedrin 4% lotion • Market leadership in UK

• Hedrin 1 hour • New gel formula • New clinical data – reduced

treatment times

• Hedrin Treat & Go • Breakthrough Octanediol

based non-pesticide • Award winning TV campaign

• Launch of Protect & Go • First protection product

• Hedrin 4% lotion • Brand leader in 6 months • IRI top OTC launch (revenue) • Won 9 industry awards

• Spray pack • Licensed spray added to

pharmacy range and self-select range launched

• Hedrin Once re-launched with new TV ad following breakthrough clinical trial

• £3m support campaign • Smart awards Feb 2013

2006 2007 2008 2009 2010 2011 2012 2013

Track record of innovation

From zero to brand leader… Hedrin Full Marks FM Soln Lyclear Derbac Prioderm Others

2006 0% 36% 1% 21% 22% 7% 13%

2014 41% 0% 21% 21% 0% 0% 17%

1st clinically proven preventive product.

• New £30m+ market - extensively researched with consumer & clinical

• Parents are crying out for it • Gold standard detailing,

training and parents’ educational materials

• Above the line campaign (TV, press & online)


Care

95 products, selling 15m units annually

Vision 1. Build on our No. 1 position in pharmacy

and expand into other distribution outlets 2. Evolved into a recognised, credible and

trusted OTC consumer brand

All the care you need for those everyday family ailments

Skin 25%

Cough 13%

GI 19%

Pain Relief 10%

Cold 3%

Other 14%

Revenue by therapy area MAT Jun 14

£8,5m £10,0m

£11,3m £12,5m

£14,4m

2010 2011 2012 2013 2014

Sales Growth


Rx derma market

• Largest market T&R operate within

• Fastest growing company in the UK

• T&R to become the emollient therapy experts

£92m £102m £107m £111m £117m

£129m £142m £145m

£154m £166m

£178m £191m

£205m £220m

£236m

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Rx derma market 2004-2018

+18%

Cetraben & Zeroderma co-positioning strategy

+5.3% +8.7% +6.0% +9.5%

+10.7% +1.5% +6.6% +7.8%

Source: IMS BPI

• First line emollient of choice for patients

• First choice alternative for any patients requiring a change of emollient

• Cost-effective switch alternative for existing patients already on equivalent brands (i.e. chronic repeat scripts)

Company Brand(s) Growth

T&R Cetraben, Zerodema & Flexitol

+23%

J&J Aveena +18%

RB E45 +18%

Dermal Doublebase & Dermol

+12%

GSK Oilatum -

MSD Diprobase +2%

Mölnlycke Epaderm +8%

Market +10%

Fastest growing company

Source: IMS MAT Jan 2014


Cetraben Vision: 5 year vision to be the UK’s most recommended emollient brand. • Recommended/prescribed by GPs

and Healthcare Professionals • Recommended by family and

friends and online for OTC purchases

£8,3m

£9,8m £11,1m

£13,6m

2010 2011 2012 2013 2014

Cetraben Growth

+18% +14%

+22%

Rx Market • Establish Cetraben as the

most authoritative brand for prescribing problematic dry skin

• A brand renowned for its product and format innovation

• Commitment to improve patient care and outcomes

• Partnership working with NHS

OTC Market • To become No.2 medicated

dry skin brand by 2018

As close to your skin as you are


Vision: The Zeroderma range will match over 50% of NHS emollient spend. • The most comprehensive emollient range • Achieve 12% equivalent brand share • 1st Company to provide the NHS with

QIPP (quality, innovation, productivity & prevention) solutions for emollients

£148k £474k

£1.117k

£2.658k

£4.630k

2010 2011 2012 2013 2014

+220%

+235%

+238%

+174% Zeroderma Growth

CCGs who have switched: • Herts Valley • Sheffield • Croydon • Sandwell and West

Birmingham • Nene (Northampton) • Bolton • East and North

Hertfordshire

• Sunderland • Great Yarmouth • North West Surrey • Wakefield • Norfolk areas 4

CCGs • Plus Greater

Glasgow and Clyde health board


Foot care 26%

Anti fungal 17%

DM/Skin treatment

17%

Medicated skin care 15%

Feminine care 6%

Cold sore 5%

Anti inflammatory

5%

Other 9%

UK OTC skin care market: £495m

Vision: To be the leading brand for Foot Treatments & Speciality Dry Skin areas

• Acquired the UK & Eire rights in June 2014

• 2013 sales were £3.2m combined Rx and OTC markets.

• Utilizing our Rx and OTC sales and marketing expertise

• In-house manufacturing within 6 months

• NPD already underway


Vision: To be the parents’ first choice for treatment and protection of nappy rash.

• Acquired 2010 • In-house production 2011 • No.3 nappy rash brand • Growing 2x faster than

the competition • Extensive sampling

campaign

794k 790k 807k 808k 813k

2008 2009 2010 2011 2012

UK Birth Rate Source: Office for National Statistics

Mumsnet Product Trial • 89% response – very high! • Instructions clear & easy to apply • Liked texture and only small

amount required • Effective nappy rash prevention

(esp. vulnerable times – teething / runny noses)

• Good night time protection (esp. if nappy soiled)

• Would definitely recommend

We’ve got your baby’s bottom covered!


Extremely Strong Consumer Research

TV / Press Communication Disrupts Behaviour “Sand Face” was the favoured visual execution from consumer research: • Attention grabbing, impactful and mildly shocking • Engaging and emotive • But with scientific basis (the importance of the ray-

penetration diagram)

• Powerful USP - enhanced protection against 4x more of the sun’s rays

• True Broad Spectrum Protection

• No other UK brand offers UV-A, UV-B and IR-A protection on skin and at cellular level

• No colourants/perfumes and emulsifier “nasties” to cause irritation

• Unique non-greasy formats available in a range of key SPF thresholds matched to consumer needs.

• Specific kids range for extra skin-kind benefits

• Impactful support

• ATL and PR campaigns to engage and educate consumers in order to change purchasing behaviour

A “Game Changer” to the UK Sun Care Category…

• Oct-Dec 2013 - a massive 575 consumers

• Instructions clear & easy to apply • “I’m always looking for better

protection” • “Why haven’t we been told about

IR-A before?” • “I’d be worried that there were

products on the market that didn’t have IR-A protection”

• “In over 30 years, I’ve never seen such strong purchase interest scores” (Tony Moore, PPCR Research)

100% likely to

buy 82% very likely 18% fairly likely

0% unlikely


Operations Review

Bryan Close Operations Director, T&R

September 2014


T&R Operations

To supply consumers with branded OTC & Rx medicines and other pharmaceutical, healthcare and disinfectant products, and to utilise our manufacturing skills in our core areas of liquids, creams, gels and suppositories.

Fully integrated business on one site


Thornton and Ross


Creams/Gels • 4 manufacturing vessels

– 2 Calmix at 400kg and 600kg – 2 Dinex at up to 3000kg each

• 3 filling lines – 2x tubes and 1x tubs/jars

Powders • 2 filling booths • 1 specialist booth for

Methadone

Current Production Equipment

Liquid Medicines • 5 manufacturing vessels • 10 filling lines

Household • Continuous manufacturing

of disinfectant • 3 filling lines


T&R Production

LINE 5

LINE 6

LINE 7

LINE 8/11

LINE 4+12

LINE 1

MARCHESINI

NORDEN

FD11

Zoflora 1-3


Supply Strategy

39%

61%

Sales 2014 Third party • Solid dose • Powders

Manufactured • Liquids • Creams • Gels • Ointments • Suppositories


Supply Strategy

20%

80%

Sales 2018 Third party • Solid dose • Powders

Manufactured • Liquids • Creams • Gels • Ointments • Suppositories


Dedicated Hedrin Production Line


Future Creams Manufacturing

Cetraben, Derma, Flexitol and Ladival


Tube Filling

for Radian B, Flexitol and Ladival


Site layout


Summary

• Confident we can deliver the quality, service and cost required going forward

• £16 million needs to be spent over the next 4 years to ensure we have the asset and facility capability on the existing site to support the planned growth

• Investment required in improvement initiatives to ensure machine performance, cost and working capital targets are delivered

• Small increases in headcount

• Aim to leverage existing infrastructure and people on site.

• Stada’s fully integrated OTC centre of excellence on one site


T&R – A Centre of Excellence

Dieno George CEO, T&R

September 2014


Investing in the Future

Centre of Excellence


Aims: To provide the leadership, competence, infrastructure and technical capabilities to deliver new opportunities throughout the Stada Group in:

• OTC • Consumer marketing • Dermatology

Centre of excellence


Bundled International OTC / Derma Expertise for STADA success

Mission Statement : “Implementing an interdisciplinary

committee of OTC and Derma experts with the competence to make strategic decisions from international perspectives to improve the OTC and Derma performance at STADA”

The objectives of a Centre of Excellence


Main Goal: Long-term

OTC & Derma pipeline and

portfolio development


• Focus on the concept of a “think-tank” to generate new product ideas

• Analysis of potential OTC & Derma markets for STADA

• Stimulate target-oriented internal development projects on a global basis

• Possibility for all STADA affiliates to submit product ideas to the Centre of Excellence at any time

• Links to universities (particularly Huddersfield University) to be maintained and developed


World Class Development Laboratories


Structure: Interdisciplinary

working group incorporating

skills in:


• New product development • Regulatory affairs • Clinical trials • Operations • Market research • Brand marketing • Business development • Led by Thornton & Ross but

incorporated within Stada corporate processes and practices


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