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CEO Meets Investors
May 14, 2008Vilnius
Company Presentation
Olainfarm: at a glance
– Established in 1972, privatized in 1997;
– Listed on the 2nd list in 1997, in Main list since 2006; – Produces both FDFs and full cycle APIs;
– Annual sales have more than doubled over the past 4years;– Strong and seasoned management team;
– Experienced workforce;– Producing primarily branded and historically unique “generics”;
– ISO 14001 (2001:2007), FDA (USA - APIs only, 2002) and GMP (EU 2004:2007)
Governing Structure
• Shareholders meeting
• Council- Supervisory body, consists of 5 members, elected by
shareholders for 3 years- Elects and dismisses members of the Board
• Board- Executive body composed of 5 members elected for 3 years
Sales Development
46%
32%
28%
14%
-
5 000 000,00
10 000 000,00
15 000 000,00
20 000 000,00
25 000 000,00
30 000 000,00
35 000 000,00
40 000 000,00
2005 2006 2007 2008F
LVL
EUR
- Underperformance in 2007 due to:
- shipments moved to 2008; - registration delays in Poland;- insufficient marketing effort in some markets
- As new products approach, sales push-and-pull mechanisms to be strengthened in 2008
Main Markets- Main focus on home market andthe CIS;
- Diversification of markets;
- Over 400 medical representatives in key markets;
- Sales to 27 countries, subsidiaryin Russia;
- Rep-offices in Russia, Ukraine, Kazakhstan, Lithuania, Belarus, Poland, Azerbaijan, contracted agents in USA and Sweden.
Ukraine15%
Latvia20%
Russia 30%
Belarus8%
Poland2%
Georgia2%
Lithuania1%Kazakhstan
9% Bulgaria1%
United Kingdom 7%
Other countries 5%
Main Markets (continued)
- On average the sales grow faster than markets (about 15%)�
- Significantly stronger marketing effort in Russia, Ukraine and Belarus planned for 2008, preparing for new products
- Specific products influenced significant growth Kazakhstan in 2007
Sales Growth in Top Countries, LVL
-6% 78%
47%
4%
22%
167%5%
18%
17%
13%
-5%
57%
38%20%
44%
-
1 000 000,00
2 000 000,00
3 000 000,00
4 000 000,00
5 000 000,00
6 000 000,00
7 000 000,00
8 000 000,00
9 000 000,00
Russia Latvia Ukraine Belarus Kazakhstan
2005
2006
2007
2008F
Sales by Products in 2007 in % of Total Sales Value
Noofen13%
Neiromidin12%
Fenkarol11%
Furamag7%
Remantadine7%
MAG6%
PASA Sodium salt5%
Furagin5%
Other23%
Adaptol5%
Etacizin6%
Main Products
- Good diversification of products in portfolio
- Main emphasis on branded generics, historically unique to Olainfarm
- Optimization of product portfolio under way, three potential best-sellers to be added during nearest years
- Noofen: Nootropic drug, OF owns cost efficient synthesis; doubling of sales possible.
- Neiromidin: Cholinesterase Inhibitor, sales could be trippled, Balkans and South-East Asia in focus.
- Fenkarol: antihistamine with negligable side effects, unique to OF, continuous researchconducted to strengthen sales.
Key Products
Sales Development of Top 5 Products
Ls 0,00
Ls 500 000,00
Ls 1 000 000,00
Ls 1 500 000,00
Ls 2 000 000,00
Ls 2 500 000,00
Ls 3 000 000,00
Noofen Neiromidin Fenkarol Furamag Remantadin
2005
2006
2007
Key Products - Cont’dSales Development of Top 5 Products
Ls 0,00
Ls 500 000,00
Ls 1 000 000,00
Ls 1 500 000,00
Ls 2 000 000,00
Ls 2 500 000,00
Ls 3 000 000,00
Noofen Neiromidin Fenkarol Furamag Remantadin
2005
2006
2007
- Furamag: one of original nitrafurantoine derrivatives, unique to OF in the region; applied to treat uninary infections, sales could be trippled.
- Remantadine: Antiviral, very seasonal, sales depend on outbreak of flu.
- New products expected to alter this list soon
Key Products –Cont’d
New Products – Current Status
Vasonate ® (Meldonium)
- Generic drug for treatment of cardio vascular diseases,
original among TOP 15 best selling drugs in Russia and TOP 3 best seller in Ukraine
- Current status: Registration files are being finished, bioequivalence tests started in Ukraine
- Expected launch: late 2008/ early 2009
statNew Products – Current Status
Olvazol ®
- Patent protected next generation of Meldonium
- Fast acting drug for prophylaxis and treatment of ischemic heart and brain injury and infarction
- Current status: undergoing stability tests, clinical trials are being prepared
- Expected launch: 2009
New Products – Current StatusR-Fenibut- Pure enantiomeric form of known drug, at least 2x more effective than a
parent drug, thus requires ½ of dosage or less;
- Fewer side effects;
- Current status: scale-up and fine-tuning of technology
- Expected launch: 2009/2010
R-Fenotropil
- New patented molecule, at least 2x more effective as parent drug, thus requires ½ of dosage or less and has fewer side effects;
- Current status: scale-up and fine-tuning of technology
- Expected launch: 2009/2010
New Products – Current Status
Memantine
- Widely used for treatment of Alzheimer’s disease, running out of patent protection
- Olainfarm developed technology for worldwide sales
- Exclusive co-operation with a multinational company, Olainfarm will sell Memantine in CEE, CIS and Middle East
- Current status: Bioequivalence studies completed registration under way
- Expected launch: 2009 (limited markets)�
New Products – Current Status
New Generics Program for Baltics
- First stage includes five new first generics for the Baltic states, two for treatment of fungus, two for CNS diseases and one cardiovascularmedicine
- Three of the five will be registered through Baltic MRP procedure
- Currens status: registration under way
- Expected launch: 2008
Historic figures & plans for 2008
EBITDA, EBIT and Net Profit, LVL'000
2508
3700
3250
3809
964
1671
960
1287
632778
170326
0
500
1000
1500
2000
2500
3000
3500
4000
2005 2006 2007 2008F
EBITDA
EBIT
Net profit
- Growth of all indicators reversed in 2007 due to undererformance in sales;
- General fiveyear plan remains unchanged, except for more aggressive investments in marketing
- Extra pressure on labor and energy costs outweighted by generally better margins
Historic and Expected Margins
Margins
19,3%
23,8%
18,4%
16,2%
7,4%
10,7%
5,4% 5,5%4,9% 5,0%
1,0% 1,4%0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
2005 2006 2007 2008F
EBITDA Margin
EBIT Margin
Net Margin
- Proximity to Break-even makes changes in sales leave a disproportionate impact on all margins;
- Additional marketing costs further increase the Break-even, but is a conscious decision for future launches
Share performance in 2007
-- Olainfarm-- OMX Riga
Thank you and Welcome!
-More information is always available at: - www.olainfarm.lv- www.baltic.omxgroup.com- [email protected] +371 2 644 8873or
- through conference calls
or
- Investors’ days at Olainfarm in September
IPO of June 2007
- 876 023 shares subscribed; 2 584 267.85 LVL raised
- Post issue number of shares: 14 085 078
- Raised amounts allowed to proceed with smaller items of CAPEX program, including warehousing and some production units
- Ampouling facility project postponed, not abandoned
Considerations for Further Activities
- Partial issue allowed to attract some leverage;
- Considerable CAPEX needs remain for 2008 and further years, especially as new products get launched into market;
- Limited possibilities for further significant leverage;
- Board and the Council to elaborate proposals by the end of thisyear.