apresentação institucional - hypermarcas 26/01/2016

Institutional Presentation January/2016

Disclaimer

This release contains forward-looking statements that are exclusively related to the prospects of the business, its operating

and financial results, and prospects for growth. These data are merely projections and, as such, based exclusively on our

management's expectations for the future of the business and its continued access to capital to fund its business plan. These

forward-looking statements substantially depend on changing market conditions, government regulations, competitive

pressures, the performance of the Brazilian economy and the industry, among other factors, as well as the risks shown in our

filed disclosure documents, and are therefore subject to change without prior notice.

As a goal to maintain a correlation with the Financial Statements prepared by its external auditors, the considerations and

comments contained herein are prepared on a consolidated viewpoint of the economic group Hypermarcas, and not

necessarily individualized by the various legal entities that compose the group.

In addition, unaudited information herein reflects management's interpretation of information taken from its financial

statements and their respective adjustments, which were prepared in accordance with market practices and for the sole

purpose of a more detailed and specific analysis of our results. Therefore, these additional points and data must also be

analyzed and interpreted independently by shareholders and market agents, who should carry out their own analysis and

draw their own conclusions from the results reported herein. No data or interpretative analysis provided by our management

should be treated as a guarantee of future performance or results and are merely illustrative of our directors' vision of our

results.

Our management is not responsible for compliance or accuracy of the management financial data discussed in this report.

which must be considered as for informational purposes only, and should not override the analysis of our audited

consolidated financial statements for purposes of a decision to invest in our stock, or for any other purpose.

3

Agenda

• Overview

• Brazil Pharma Market

• Our Business

• Financials pre-deal

• Financials post-deal

4

Agenda

• Overview


• Our Business



5

Phases

6

Sustainable

growth with

value creation

“We’ve done a lot...

but there is still

much to do!”

Focus on Pharma (2016 onwards)

Restructuring (2011 – 2015)

Industry

Consolidation (2007 – 2010)

Embryo in

Home Care & Food (2002 – 2006)

Business overview

3Q15 LTM

* Ranking includes Sweeteners and Condoms 7

37%

33%

30%

Net Rev: R$3.0 bn

Rankin

g

Key f

acts

Branded

Prescription

Generics/

Smart

Generics

OTC/

Consumer

Health

#1 Aché Hypermarcas EMS

#2 Sanofi Sanofi Hypermarcas

#3 Eurofarma Bayer Sanofi

#4 Novartis Boehringer Novartis

#5 Hypermarcas Takeda Teuto

3Q15 LTM revenue

breakdown

Branded

Prescription (ex-patents)

OTC/

Consumer

Health *

Generics/

Smart

Generics

Focus in Brazil Long Experience

Fast growing/

resilient market Diversified Portfolio

Ownership and listings

¹ LTM November average

² October 31, 2015

³ December 11, 2015

SOURCE: BM&F Bovespa and Hypermarcas 8

Ownership structure Listings

• Sao Paulo Stock Exchange: - HYPE3

- BRHYPEACNOR0

• Ibovespa Index Ranking: 31/63

• Trade volume¹: 2.6 MM shares/day

• ADR (HYPMY)²: 10.4 MM shares outstanding

• Market Cap³: R$ 14 B

20.1%

14.8%

6.0%

59.1%

Igarapava Participações S.A.

Maiorem S.A. de C.V

Other Controlling Shareholders

Free Float

(Founder)

632.2 MM Shares

Pharma market

9

Business

Segment

Product

Category

Demand

Drivers Mkt Size

Mkt Growth

Δ2014-2015

Patents

Branded

Prescription

Trade

DTC

5%

60%

17%

18%

• RX with/without

prescription retention

• OTX

• Dermocosmetics

9.8% R$24.9B Physicians

• OTC

• Nutritionals

• Related products

14.2% R$6.9B Consumer

• Patents 25.5% R$2.3B Physicians

• Generics

• Smart Generics 11.8% R$7.7B Pharmacist

Agenda

• Overview


• Our Business



10

Attractive market characteristics

11

• Low levels of per capita consumption

• Ageing of population

• Fast growing, resilient market

• High entry barriers

Low levels of per capita consumption

SOURCE: Organization for Economic Co-operation and Development (OECD), 2012 12

3,484

1,109

1,577

3,289

3,649

4,288

4,811

8,745

OECD Avg.

Brazil

Chile

UK

Japan

France

Germany

USA

Per Capita, USD PPP

Healthcare Expenditure per Country (USD/year)

7.9x

Fast ageing of population

SOURCE: IBGE 13

Population 60+ MM People

CAGR

2.8%

14 20

29

42

54

66 74

8% 10%

14%

19%

24%

29%

34%

0%

5%

10%

15%

20%

25%

30%

35%

0

10

20

30

40

50

60

70

80

90

2000 2010 2020 2030 2040 2050 2060

Potential for higher drug consumption

SOURCE: http://hpi.georgetown.edu/agingsociety/pubhtml/rxdrugs.html (10.12.2015) 14

Expenditure on prescription drugs USD per year

811

560

262

124

65-79

50-64

35-49

18-34

6.5X

Fast growth within Emerging Markets

SOURCE: IMS Health (Global Use of Medicines in 2020), 2015 15

4.2%

5.2%

6.7%

6.8%

Indonesia

China

Brazil

India

Daily Doses Per Capita (CAGR 2015-20)

Resilient market

SOURCE: IMS Health (PMB-PPP Sep15); IBGE 16

7.7%

9.4%

7.1%

5.4%

11.1% 10.6%

11.6% 11.4%

12.3% 11.9%

8.5%

3.5%

2012 2013 2014 2015 YTD

Pharma

Market

Nominal GDP

Retail Sales

Large and growing pharmaceutical market (R$ billion)

SOURCE: IMS Health – PPP 17

32.5

35.9

40.0

43.4

2012 2013 2014 2015 LTM

CAGR 12-2015 LTM: 11.1%

Brazil pharma market overview

SOURCE: IMS Health 18

Expected Market Growth (2014-2019) of 8.3% p.a. in USD

Ranking 2014* Trends Ranking 2019*

1st United States

2nd China

3rd Japan

4th Germany

5th France

6th USD 24 bn

7th Italy

1st United States

2nd China

3rd Japan

4th Germany

5th USD 36 bn

6th France

7th Italy

• Low levels of disease

treatments

• Underdeveloped health

system

• Aging of population

• Still low penetration

of generics (25%* of

the Pharma Market)

• Peak in economically

active population

High entry barriers

Regulator • Long approval

process

• Strict control of

manufacturers

and products on

the market

19

Distribution • ~70k drugstores

• Low chain

concentration

• ~170 distributors

• Continental Wide

Country (27

states; 5 regions;

+200m people)

Power of brands • Strong local brands

• Pure generics are

also branded at

Retail level

Agenda

• Overview


• Our Business



20

Business overview

* Excluding patents

SOURCE: IMS Health – PMB- PPP Oct15; Hypermarcas 21

37%

33%

30%

R$3.0 bn

Branded

Prescription

Generics/

Smart

Generics

OTC/

Consumer

Health

3Q15 LTM revenue

breakdown Hypermarcas

Rank

PPP

Share

Growth

Opportunities

OTC/

Consumer

Health

Generics/

Smart Generics

Branded

Prescription*

#1

#2

#5

14.7%

14.2%

4.8%

• Launch new product

concepts through brand

extensions

• Improve retail space

• Increase market presence,

especially at retails chains

• Improve portfolio coverage

especially at high value

products

• Leverage on physicians

visit network

• Launch new products

with untapped demand

Pharma scope

22

Cosmetics Food

Pharmaceuticals

Nutra-

ceuticals

Long Experience in the Pharma Market

23

1950 1970 1980 1990 2000 2010 2020 1960

1970

1953

1970s

1959

Traditional Pharma company with strong brands with leadership

in the market, mainly in OTC, prescription and

dermocosmetics, such as Coristina D, Polaramine, Celestamine,

Diprospan, Quadriderm, Episol, among others.

Traditional company of OTC and prescription brands with over

50 years in the market. Its portfolio includes leader brands such

as Rinossoro, Tamarine, Lisador and Mioflex.

Owner of the most traditional brands in the Brazilian OTC

market, such as Apracur, Atroveran, Benegrip, Biotônico

Fontoura, Doril, Engov, Epocler, Estomazil, Gelol, Lactopurga,

Melhoral, Merthiolate, among others.

Leader in branded generics and with an incipíent portfolio of

generics and expertise in the application for the registration of

off-patent copies with the regulator. Examples of leading

products are Neosoro, Massageol and Torsilax.

Constant gains in market share

SOURCE: IMS Health – PMB – PF (nov-15) 24

7.5%

8.0%

8.5%

9.2%

9.9%

10.5%

2010 2011 2012 2013 2014 nov-15 LTM

Large scale production facility

25

323,000 m2 land 120,000 m2 constructed area 3,700 employees

Distribution

Center

Solids/

Raw

Materials

Quality

Control

Aerosol

Efervecent

Dermo Liquids

Semisolids

Injectables

R&D

Penicilin Solids

Semisolids

Liquids

R&D

High production capacity

SOURCE: Hypermarcas (per year) 26

Tablets, capsules,

coated tablets,

pills and

effervescent

10 billion

Injectable and

ophthalmic

45 million

Aerosols

11 million

Liquids, creams,

oils, ointments,

lotions and jellies

276 million

5,8%

4,1%

3,9%

3,5%

3,4%

2,9%

2,8%

2,8% 2,5%

2,3%

66,1%

Diversified revenue base

SOURCE: Company Data, Sept. YTD 2015 27

Other

products

(Branded Presc.)

(Trade)

(Branded Presc.)

(Branded Presc.)

(Branded Presc.)

(DTC)

(Branded Presc.)

(DTC)

(DTC)

Top 10

brands

~ 34%

net sales

(DTC)

Increasing importance of innovation

7.7% 8.4%

11.4%

15.7%

2012 2013 2014 YTD 2015

28 SOURCE: Company data, Sept 2015. % Revenue from products launched over the past 3 years.

Business: Branded Prescription

29

37%

33%

30%

Branded

Prescription

Generics/

Smart

Generics

OTC/

Consumer

Health

Products

Strategy

Demand Driver

• Drugs promoted to

Physicians (OTC / RX)

• Intensify therapeutic

classes expansion

• Physician prescription

Branded Prescription Leverage on physician visit network

SOURCE: IMS Health; Hypermarcas 30

10.4%

1.1%

9.7%

11.9%

0.6%

2.7%

4.8%

87%

74%

85%

74%

78%

55%

69%

Orthopaedics

Psychiatry

Dermatology

Paediatrics

Cardiology

Gynecology

General Practice

Main Visited

Specialties Coverage

(% of prescriptions – R$ PF)

Market Share (% R$ PF) Portfolio


1 2016 31

Physicians Coverage As % of total market demand

Specialties

Covered

Visited

Physicians

Total Weighted

Coverage

93%1

67%

62%

• Leadership in Pain/Fever

Pediatrics

• Leader in Rx for Sun Protection and Corticoids

Dermatology

• Leverage “General Practice” (Addera/Tamarine)

Gynecology

• Asthma/Vitamins

• Nutraceuticals/

Acne

• Contraceptives

Opportunities


32

• +100 reps and 12 managers

• +30,000 contacts/month

• New medical demand executive

• HyperSelling

• Optimization Panel/Grid

• Diagnosis clinic

• Demand App

+ Medical visits

+ Team efficiency

+ Demand tools

Action


33

Actions in several companies

• Diagnosis of Osteoporosis and Osteopenia with prescription of Addera

• Monitoring glucose, cholesterol and triglycerides, and prescription of Lipanon

• APP automatically interacts with physical material delivering technical content

• Increased technology to reach physicians engagement

Clinic Days Demand App

Branded Prescription Launch new products with untapped demand

34 SOURCE: IMS Health; Hypermarcas

Current Pending Approval Under Development Target

37%

75%

20%

16%


35 SOURCE: IMS Health – PMB PF Oct15 YTD

Concept

• Hypovitaminosis D

- Fractures

- Muscular strength

- Cardio diseases

• Treatment dosage

- Supplementation

- Attack dosage 10.4

12.5 14.3 14.9

12.9 15.4

25.0

32.2 31.2

36.7

50.1

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

290%

Pills

(Mar-2014)

Sell-Out (R$ MM) 2016

36


Concept

• Continuous jet

• 360º

• Adjustable flux

SOURCE: IMS Health – PMB PF Oct15 YTD

32%

2012

61.5

58.9

46.6

44.5

2015

YTD

OCT

2014 2013

Sell-Out (R$ MM)

37


SOURCE: IMS Health – PMB PF Oct15 YTD

30% of Revenue from products

launched in <1 Year

+4pp

Market Share

+27%

Demand

• Faster renewal of portfolio

• Line extensions

Innovation

• Increased demand team

• Focus on POS operation

• Proximity to patients

Execution

• Category gap coverage

• Intensification in categories

with lower share

Diversification

Business: OTC / Consumer Health

38

Products

Strategy

Demand Driver

• OTC

• Condoms

• Sweeteners

• Intensify brand extensions

• Mass media

37%

33%

30%

Branded

Prescription

Generics/

Smart

Generics

OTC/

Consumer

Health

SOURCE: IMS Health – PMB Oct’15 39

OTC / Consumer Health New products concepts through brand extensions

Concept

• High awareness

• Stronger formulation

• Product concept: “Good even for migraines”

31.7 30.0

30.1

14.3

2013 2014 2015

Doril family

Sell-Out (R$ MM)

Doril

Enxaqueca

Doril

SOURCE: IMS Health – PMB Oct’15 40

OTC / Consumer Health New products concepts through brand extensions

145

171

2014 2015

18%

Mkt share

+ 0.5 p.p.

Sell-Out (R$ MM)

41

OTC / Consumer Health Improve retail space

Before After

42

OTC / Consumer Health Improve retail space

Coverage Clients Stores

21

3

8

1

1

1

1

2

2

Business: Generics / Smart Generics

43

Products

Strategy

Demand Driver

• Generics (Large Chains)

• Smart Generics (M&Ps)

• Defend & grow selectively

• Pharmacist

recommendation

37%

33%

30%

Branded

Prescription

Generics/

Smart

Generics

OTC/

Consumer

Health


52% 50% 38%

33% 31%

29%

15% 19% 33%

Hypermarcas 2014 Hypermarcas 2015 Market

Relevance

Large retail chains

Mid-sized chains

Independent

Generics / Smart Generics Increase market presence, especially at retails chains


Generics / Smart Generics Improve portfolio coverage especially with high value products

Current PendingApproval

UnderDevelopment

Target

71%

91%

14%

7%

Agenda

• Overview


• Our Business



46

Net revenue & EBITDA (R$ Million)

47

Net revenue Adjusted EBITDA (R$ Million)

CAGR (2011-2Q15 LTM): 11.9% CAGR (2011-2014 LTM): 14.0%

3,325

3,874

4,259

4,680

5,064

2011 2012 2013 2014 3Q15 LTM

695

865

1,002

1,106 1,135

2011 2012 2013 2014 3Q15 LTM

20.9%

22.3%

23.5%

23.6% 22.4%

Gross margin & Expenses

48

Gross margin (%)

SG&A ex-marketing (%)

Marketing (%)

27.4%

23.7% 22.7%

21.1% 20.4%

2011 2012 2013 2014 3Q15LTM

60.3% 62.2% 64.5% 63.7%

61.5%

2011 2012 2013 2014 3Q15LTM

19.0% 18.3% 19.6%

21.0% 20.6%

2011 2012 2013 2014 3Q15LTM

+1.2 pp

-7.0 pp

+1.6 pp

Increasing profitability

11.9% 14.0%

21.6%

Net Revenue Adjusted EBITDA Net Income*

49

CAGR (2011-3Q15)

* 2012-3Q15

Agenda

• Overview


• Our Business



50

Net debt reduction

51

Net debt / Adjusted EBITDA* Debt Profile

3.9x

3.1x 2.9x

2.6x 2.9x

-0.4x

2011 2012 2013 2014 3Q15 3Q15proforma

3T15

Gross Debt 5,477.7

Cash (1,616.8)

Net Debt 3,860.9

Hedge (524.3)

Net Debt after Hedge 3,336.6

(3,800.0)

Net debt after Cosmetics Sale (463.4)

Proceeds from Cosmetics Sale

3Q15

* LTM EBITDA before non-recurring expenses and other non-cash expenses

Pro forma liquidity (Sept/15; R$ billion)

52

Continuing Operations Discontinued Operations

• Net Income of Discontinued Operations to be a line on P&L

• P&L to reflect results of Continuing Operations

• 2015 P&L (and 2014 comparison) to adopt this format

• Pharma division

• Condoms

• Sweeteners

• Beauty business

• Disposables business

Pro forma P&L (3Q15 LTM)

53

Non-audited estimates

Net Revenue 5,063.7 100.0% 3,011.2 100.0%

Gross Profit 3,115.3 61.5% 2,288.1 76.0%

Sales (777.0) -15.3% (459.6) -15.3%

Marketing (1,042.2) -20.6% (790.1) -26.2%

G&A (254.2) -5.0% (156.4) -5.2%

Other (148.1) -2.9% (29.7) -1.0%

Adjusted EBITDA 1,135.2 22.4% 948.4 31.5%

Net Financial Expenses (508.1) -10.0% (508.1) -16.9%

Discontinued Op. Net Income 0.0 0.0% 62.4 2.1%

Net Income 348.4 6.9% 348.4 11.6%

Old report (Continuing + Discontinued)

New report (Continuing only)

R$ million

Guidance

54

EBITDA of Continuing Operations around R$1.1 billion

Share Performance

Source: Bloomberg as of December 11, 2015 55

Return* YTD LTM 24m 36m 48m Since

IPO

Hype3 37% 39% 25% 48% 171% 173%

Ibovespa -9% -9% -10% -24% -21% -30%

Icon -3% -3% 10% 10% 54% 143%

56

Phone: +55 (11) 3627-4242

[email protected]

www.hypermarcas.com.br/ir

apresentação institucional - hypermarcas 26/01/2016

Investor Relations