PRAGUE, SEPTEMBER 23-24, 2014

7TH EPLS CONFERENCE

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PIERRE FABRE

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TURNOVER: 910 M€ ; 45% TURNOVER: 1089 M€ ; 54%

PHARMACEUTICALS DERMO-COSMETICS

TURNOVER

2008 M€

2013 KEYS FIGURES

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BRANCHES on 5 continents

COUNTRIES Commercializing Pierre Fabre’s products

EMPLOYEES 1/3 outside France

FOOTPRINT

GLOBAL REACH

America 800

Africa 300

Asia 300 + 1500*

Europe (out of France) 2 000

* via Cardinal Health in China

44

130

10 000

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A PROVEN PARTNERSHIP EXPERTISE

Commercial Partnerships Xelevia©, Velmetia© Merck

Oslif©, Novartis Inorial©, Faes / Menarini

Neorecormon©, Roche Lercan©, Lercapress© Recordati

Busilvex©, Otsuka

Medinova, Zambon…

Research Partnerships CNRS (Navelbine©, Javlor©)

Programme IGF-1 Merck Programme C-MET Abbvie

F2207 , F2695 Forest PD-1 Aurigene

Industrial Partnerships Sumitomo, Helsinn, Baxter,

Angelini, Serono, Seagen, Biogen…

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BUSINESS DEVELOPMENT GOALS

The Pierre Fabre Group is particularly geared for innovation in the following fields of activity:

For more than 50 years, our group has been open to new ideas and has strongly embraced innovation. Our partners are at the heart of our strategy all around the world.

Bertrand Parmentier, CEO

•Oncology / Hematology

•Dermatology

•Women’s health

•OTC

•Natural health

•Oral/dental care

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European

Opportunities

Europe is dead, long live Europe! Shall we give up on Europe?

European Pharma markets are tough and getting tougher

Mid-size pharma companies have a limited access to innovation (internal R&D and BD)

Grabbing BRIC opportunities turned out to be challenging

BUT

Europe is certainly not “one market”

Regulated markets are also a high barrier to entry for foreign companies

Mid-size companies don’t live in exactly the same world as “big pharma”

We see more & more country/region-“tailored” developments

Strictement confidentiel, ne pas faire circuler Page 8

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Our growth is slowing down

0%

4%

8%

16%

12%

20%

2003-2007 2008-2012 2013-2017e

China

B.R.I.

EU 5

Japan WORLD

USA

Source: IMS

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Emerging markets benefit mainly to local companies

Source: IMS Midas June 2012

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Self-medication market: a solid business

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OTC is still growing in Europe

The Bumblebee paradox

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Porter’s forces urge us to exit the business

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Rivalry among

competitors

Threat of new

entrants

Bargaining power of

buyers

Threat of substitution

Bargaining power of suppliers

Thousands of emerging

companies

Sector consolidation

New innovations

(Digital health)

Highly regulated markets

Is size the answer?

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Growth in Europe is sluggish but:

Growth in China is difficult to grab

Pricing advantage for non-Chinese medicine might not last

More than 90% of the market is generic products

Turkey is no more an attractive market

Russia is becoming difficult to operate

South America remains a question mark

Africa is growing but still a small opportunity

According to KPMG annual survey, margins in Europe are higher than China

Market access for first grade

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Driven by reimbursement

Sales = Units x Price

Driving profit

We are forced to have a global pricing strategy

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Note: France References UK, Italy, Spain & Germany if ASMR of the Drug is Between I & III

UK Germany

Ireland France Italy

Portugal Spain

Rest of EU Greece

Drug price cuts drive down EU average price

Inclusion of cheaper drug price in other EU countries drives down EU-5 drug prices

Drug price cuts drive down EU average

ASMR rating used as internal reference

Each country use its own list of countries and mechanism for price referencing

Higher

Lower

Price

Po

ten

tia

l

Q3/n Q1/n+1 Q2/n+1 Q3/n+1

Positive

impact on

French price Positive

impact on

Spanish and

Italian price

Launch sequence can impact each country price

In 18 months, decisions in one country will affect the entire market

Are big and mid-size pharmas worlds apart? The GSK oncology case

GSK: N°1 or nothing

Celgene, Ariad, Incyte, MerckSerono, DebioPharm?

We can create value with a smaller business

GSK onco worth $14bn

But we need to secure our access to innovation

Organizational challenge

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What a « sell side » partner is looking for? Value creation expertise & core partnering skills

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• Ability to add value to Therapeutic Areas of interest

• Creativity and flexibility on deal terms

• Clinical capability

• Responsiveness during deal negotiation

• Executive leadership committed to partnering

• Allows partners to develop and prosper

• Regulatory capability

• Sales / marketing capability

• Global / international reach

• Pricing, access and reimbursement capability

Mar

ket

Acc

ess

Source: BCG survey of Biotech CEOs and Licensing Executives, 2012; BCG analysis; see appendix 1 for format of survey questionnaire

Europe is dead, long live Europe!

• Europe is certainly not “one market” – Intimate knowledge of its complexity is a clear competitive advantage

– The “science” of pricing

• Regulated markets are also a high barrier to entry for foreign companies – In particular in Southern Europe where uncertainty is higher

• Profitable growth can still be capture in European markets – (multi) local deal are still happening but it requires perfect execution

We may need to make a choice…

Global mid (small)-size European specialty player