milan, 9 may 2001 2001-2004 building value. milan, 9 may 2001 giovanni recordati giovanni recordati...

Milan, 9 May 2001Milan, 9 May 2001

2001-2004 Building Value2001-2004 Building Value


• Giovanni RecordatiGiovanni Recordati Chairman and Chief Executive Chairman and Chief Executive OfficerOfficer

• Walter BevilacquaWalter Bevilacqua Vice President Corporate Vice President Corporate DevelopmentDevelopment

• Avi SartaniAvi Sartani Vice President Pharmaceutical Vice President Pharmaceutical R&DR&D

22

Giovanni RecordatiGiovanni RecordatiChairman and Chief Executive OfficerChairman and Chief Executive Officer

33

44

KEY EVENTS IN 2000KEY EVENTS IN 2000

• Strong improvement in businessStrong improvement in business• Expansion in France completed successfullyExpansion in France completed successfully• ZanidipZanidip®® license for the USA license for the USA• Pharmacia agreement: a strong basis for Pharmacia agreement: a strong basis for

further growthfurther growth

55

KEY TRENDS IN Q1 2001KEY TRENDS IN Q1 2001

• Sales up 40.4%Sales up 40.4%• Double digit organic growth continuesDouble digit organic growth continues• International sales over 60% of total salesInternational sales over 60% of total sales• Strong increase in international sales ofStrong increase in international sales of

lercanidipinelercanidipine• Further increase in profitabilityFurther increase in profitability

Walter BevilacquaWalter BevilacquaVice President Corporate DevelopmentVice President Corporate Development

66

77

147.8147.8

86.186.158.3%58.3%

17.317.311.7%11.7%

21.121.114.3%14.3%

14.114.19.6%9.6%

26.326.317.8%17.8%

Q1 Q1 20002000

17.617.611.9%11.9%

207.5207.5

121.6121.658.6%58.6%

28.528.513.7%13.7%

25.325.312.2%12.2%

16.216.27.8%7.8%

43.943.921.1%21.1%

Q1 Q1 20012001

15.915.97.6%7.6%

40.4%40.4%

41.2%41.2%

64.6%64.6%

20.2%20.2%

14.4%14.4%

66.7%66.7%

Change Change %%

(9.9)%(9.9)%

RESULTS Q1 2001RESULTS Q1 2001

Net SalesNet Sales

Gross ProfitGross Profitas % of salesas % of sales

EBIT EBIT as % of salesas % of sales

Pretax IncomePretax Incomeas % of salesas % of sales

Net IncomeNet Incomeas % of salesas % of sales

EBITDAEBITDAas % of salesas % of sales

(billion lira)(billion lira)

R&D ExpensesR&D Expensesas % of salesas % of sales

88

Q1 2001Q1 2001Q1 2000Q1 2000

10.710.7

3.43.4

14.114.1

16.516.5

(0.3)(0.3)

16.216.2

Change Change %%

54.2%54.2%

n.s.n.s.

14.4%14.4%

NET INCOMENET INCOME


Net IncomeNet Incomefrom Operationsfrom Operations

Non-recurringNon-recurringIncome / Expense, Income / Expense, (Net)(Net)

Net Income, Net Income, ComprehensiveComprehensive

99

Q1 2001Q1 2001

126.0126.060.7%60.7%

Q1 2000Q1 2000 Change Change %%

COMPOSITION OF SALESCOMPOSITION OF SALES


PHARMACEUTICALPHARMACEUTICALSS

108.8108.873.6%73.6%

80.880.8

ACTIVE ACTIVE INGREDIENTS & INGREDIENTS & INTERMEDIATESINTERMEDIATES

TOTATOTALL

ITALYITALY

INTERNATIONAINTERNATIONALL

39.039.026.4%26.4%

147.8147.8100.0%100.0%

78.178.152.8%52.8%

69.769.747.2%47.2%

165.8165.879.9%79.9%

41.741.720.1%20.1%

207.5207.5100.0%100.0%

81.581.539.3%39.3%

52.552.5

6.76.7

40.440.4

4.34.3

1010

Q1 2001Q1 2001Q1 2000Q1 2000 Change Change %%

76.4 76.4 46.1%46.1%

47.4 47.4 28.6%28.6%

32.3 32.3 19.5%19.5%

89.4 89.4 53.9%53.9%

165.8 165.8 100.0100.0

%%

9.7 9.7 5.8%5.8%

73.8 73.8 67.8%67.8%

12.7 12.7 11.7%11.7%

13.8 13.8 12.7%12.7%

35.0 35.0 32.2%32.2%

108.8 108.8 100.0%100.0%

8.5 8.5 7.8%7.8%

3.63.6

273.9273.9

133.5133.5

155.5155.5

52.552.5

14.314.3

COMPOSITION OF PHARMACEUTICAL SALESCOMPOSITION OF PHARMACEUTICAL SALES

Pharmaceuticals ItalyPharmaceuticals Italy

Pharmaceuticals FrancePharmaceuticals France

International licenseesInternational licensees

International pharmaceuticalsInternational pharmaceuticals

TOTAL PHARMACEUTICALSTOTAL PHARMACEUTICALS

Pharmaceuticals SpainPharmaceuticals Spain


1111

12.9%12.9%

39.9%39.9%

SOURCES OF GROWTHSOURCES OF GROWTH

PharmaceuticalsPharmaceuticals

Total GrowthTotal Growth

0.9%0.9%

0.5%0.5%

TotaTotall

+ 40.4%+ 40.4%

+ + 11.9%11.9%

(% change, Q1 2001 over Q1 (% change, Q1 2001 over Q1 2000)2000)

Price /Price /ExchangExchang

ee

28.5%28.5% + 28.5%+ 28.5%

Pharmaceutical ChemicalsPharmaceutical Chemicals

Organic Growth, totalOrganic Growth, total

7.4%7.4% -0.7%-0.7%

11.4%11.4% 0.5%0.5%

AcquisitionsAcquisitions

+ 13.8%+ 13.8%

+ 6.7%+ 6.7%

VolumVolumee

1212

16.616.615.3%15.3%

17.317.311.7%11.7%

EBITDA BY BUSINESS AREAEBITDA BY BUSINESS AREA

PharmaceuticalsPharmaceuticalsas % of salesas % of sales

EBITEBITas % of salesas % of sales

33.833.820.4%20.4%

28.528.513.7%13.7%

Change %Change %

+ 64.6%+ 64.6%

+ + 66.7%66.7%


* Including inter-company sales* Including inter-company sales

Q1 2001Q1 2001

7.87.8 8.98.9 + 14.3%+ 14.3%

Pharmaceutical ChemicalsPharmaceutical Chemicalsas % of sales*as % of sales*

TotalTotalas % of salesas % of sales

9.79.722.7%22.7%

10.110.121.9%21.9%

26.326.317.8%17.8%

43.943.921.1%21.1%

Operating depreciationOperating depreciation

Goodwill amortizationGoodwill amortization 6.56.51.21.2

+ + 103.7%103.7%

+ 3.4%+ 3.4%

+ 421.5%+ 421.5%

Q1 Q1 20002000

1313

2000200031 DEC31 DEC

182.2182.2

376.4376.4

(43.1)(43.1)

515.5515.5

250.1250.1

265.4265.4

515.5515.5

CAPITAL EMPLOYEDCAPITAL EMPLOYED

Net Working Capital Net Working Capital for Operationsfor Operations

Net Non-current AssetsNet Non-current Assets

Reserves for Long - termReserves for Long - termLiabilitiesLiabilities

FINANCING OF FINANCING OF CAPITAL EMPLOYEDCAPITAL EMPLOYED

Net DebtNet Debt

Shareholders’ EquityShareholders’ Equity

CAPITAL EMPLOYEDCAPITAL EMPLOYED


199.5199.5

370.3370.3

(42.9)(42.9)

526.9526.9

158.8158.8

368.1368.1

526.9526.9

2001200131 MAR31 MAR

NET DEBT / EQUITY NET DEBT / EQUITY RATIORATIO

0.940.94 0.430.43

ZANIDIPZANIDIP®® WORLDWIDE WORLDWIDESITUATION AND OUTLOOKSITUATION AND OUTLOOK

1414

1515

ZANIDIPZANIDIP®® (LERCANIDIPINE) (LERCANIDIPINE)A COMPARATIVE PRODUCT PROFILEA COMPARATIVE PRODUCT PROFILE

• Latest generation calcium-channel blockerLatest generation calcium-channel blocker

• Natural once a day Natural once a day

• Efficacy comparable to best competitorsEfficacy comparable to best competitors

• Excellent / superior tolerability and safety Excellent / superior tolerability and safety

profileprofile

1616

ZANIDIPZANIDIP®® (LERCANIDIPINE) (LERCANIDIPINE)THE REFERENCE MARKETTHE REFERENCE MARKET

• Hypertension is the largest indication Hypertension is the largest indication

worldwide - over $30 billionworldwide - over $30 billion

• Addressed by several classes of drugsAddressed by several classes of drugs

• CCBs are one of the largest, about $10 billionCCBs are one of the largest, about $10 billion

• The leading brand is NorvascThe leading brand is Norvasc® (amlodipine), (amlodipine),

sold by Pfizer, about $3.4 billion sold by Pfizer, about $3.4 billion

1717

LERCANIDIPINE IN ITALYLERCANIDIPINE IN ITALYMARKET SHARE AS A % OF NORVASCMARKET SHARE AS A % OF NORVASC®®

0%

10%

20%

1998 1999 2000

Zanedip® as a% of Norvasc®

lercanidipine asa % ofamlodipine

1818

LERCANIDIPINE IN ITALYLERCANIDIPINE IN ITALYMARKET SHARE AS A % OF OTHER CCBsMARKET SHARE AS A % OF OTHER CCBs

0%

5%

10%

15%

1998 1999 2000

Zanedip® as a% of other CCBs

lercanidipine asa % of otherCCBs

(amlodipine (amlodipine excluded)excluded)

1919

ROLL OUT HISTORYROLL OUT HISTORY

19981998

AUSTRIAAUSTRIAGREECEGREECEISRAELISRAELITALYITALYLUXEMBOURGLUXEMBOURGNETHERLANDSNETHERLANDS**

SPAINSPAINUKUK

19991999

BELGIUMBELGIUMBRAZIL BRAZIL LEBANONLEBANON

CHILE CHILE CYPRUS CYPRUS DENMARKDENMARKFINLANDFINLANDGERMANYGERMANYKOREAKOREAKUWAITKUWAITNORWAYNORWAYPAKISTANPAKISTANPHILIPPINESPHILIPPINESSWEDENSWEDEN

20002000 EXPECTEDEXPECTED20012001

ARGENTINAARGENTINAFRANCEFRANCEECUADORECUADORHONG KONGHONG KONGMEXICOMEXICOSINGAPORESINGAPORETAIWANTAIWANTURKEYTURKEYVENEZUELAVENEZUELAVIETNAMVIETNAM

* Dec. 1997* Dec. 1997

2020

ROLL OUT PLANROLL OUT PLAN

LAUNCHED:LAUNCHED: 25 countries, representing 25 countries, representing approx. 29% approx. 29% of world market (of of world market (of which 15% in last which 15% in last 12 months) 12 months)

APPROVED:APPROVED: 4 additional countries4 additional countries

FILED FORFILED FORAPPROVAL:APPROVAL: 32 additional countries32 additional countries

LICENSED:LICENSED: >40 additional countries>40 additional countries

Status Today:Status Today:

2121


AUSTRALIAAUSTRALIA (registered, launch late 2001 - (registered, launch late 2001 - early 2002)early 2002)

CANADACANADA

CHINACHINA USA USA (filing expected 2H 2001)(filing expected 2H 2001)

JAPAN JAPAN (local phase III studies)(local phase III studies)

Key countries where regulatory development is Key countries where regulatory development is ongoing:ongoing:

2222

LICENSING / ROLL OUT TARGETS LICENSING / ROLL OUT TARGETS

ANNOUNCED FOR 2003ANNOUNCED FOR 2003

TO BE MET IN 2001TO BE MET IN 2001


ZANIDIPZANIDIP®® IN THE USA IN THE USAFOREST LABORATORIES LICENSE AGREEMENTFOREST LABORATORIES LICENSE AGREEMENT

2323

2424

THE HYPERTENSION MARKET IN THE THE HYPERTENSION MARKET IN THE USAUSA

• Hypertension affects over 50 million people in Hypertension affects over 50 million people in the U.S. the U.S.

• Market size exceeding 10 bn US$ in annual salesMarket size exceeding 10 bn US$ in annual sales

• Calcium Channel Blockers account for well over Calcium Channel Blockers account for well over one third of the anti-hypertensive market…one third of the anti-hypertensive market…

• NorvascNorvasc® sales exceed $1.5 billion sales exceed $1.5 billion

Source: Recordati / Forest LaboratoriesSource: Recordati / Forest Laboratories

2525

FOREST LABORATORIES: THE RIGHT FOREST LABORATORIES: THE RIGHT PARTNERPARTNER

• Annual sales exceeding 1.1 billion US$Annual sales exceeding 1.1 billion US$

• Sales force of over 1400 RepsSales force of over 1400 Reps

• Established presence in the cardiovascular marketEstablished presence in the cardiovascular market

• TiazacTiazac®® sales exceeding 150 ml US$ (5% market sales exceeding 150 ml US$ (5% market share)share)

• Strong track record in European partnerships & Strong track record in European partnerships & collaborations in FDA filingscollaborations in FDA filings

Source: Forest LaboratoriesSource: Forest Laboratories

2626

TIAZACTIAZAC®® SALES DEVELOPMENT SALES DEVELOPMENT

0

20

40

60

80

100

120

140

1997 1998 1999 2000

(million USD)(million USD)

25

85

130

158

5% market 5% market shareshare

Source: Forest LaboratoriesSource: Forest Laboratories Fiscal year ending MarchFiscal year ending March

Avi SartaniAvi SartaniVice President Pharmaceutical R&DVice President Pharmaceutical R&D

2727

2828

DRIVERS FOR GROWTHDRIVERS FOR GROWTHLICENSED-IN PRODUCTSLICENSED-IN PRODUCTS

• Focus, determination, speed and Focus, determination, speed and

willingnesswillingnessto investto invest

• Multi-territorial presenceMulti-territorial presence

• Growing interest in the cardiovascularGrowing interest in the cardiovasculartherapeutic areatherapeutic area

• A pipeline with the right balance betweenA pipeline with the right balance betweenpotential and risks as well as time to potential and risks as well as time to marketmarket

2929

FILLING THE PIPELINE:FILLING THE PIPELINE:LICENSING-IN ACTIVITIESLICENSING-IN ACTIVITIES

• At least 2 significant projects are in At least 2 significant projects are in advanced negotiations for products in advanced negotiations for products in the cardiovascular area.the cardiovascular area.

3030

FILLING THE PIPELINE:FILLING THE PIPELINE:ONGOING R&DONGOING R&D

• Lercanidipine:Lercanidipine:

- Consolidate its advantageous clinical - Consolidate its advantageous clinical

profileprofile

- Extend its patent life- Extend its patent life

3131


• Lercanidipine-ACEI fixed combination:Lercanidipine-ACEI fixed combination:

- New aggressive targets for blood pressure- New aggressive targets for blood pressure controlcontrol

- Combination of drugs needed for most - Combination of drugs needed for most

patientspatients

- Patient compliance- Patient compliance

- Fixed combinations will play a significant - Fixed combinations will play a significant

rolerole in the future hypertension market.in the future hypertension market.

3232


• Urology:Urology:

- Collaboration agreement with Pharmacia- Collaboration agreement with Pharmacia

- Lead optimization in the area of - Lead optimization in the area of

overactiveoveractive bladder is at an advanced stagebladder is at an advanced stage

- Formulation activities are underway on a - Formulation activities are underway on a

leadlead compound for female sexual dysfunction compound for female sexual dysfunction

Giovanni RecordatiGiovanni RecordatiChairman and Chief Executive OfficerChairman and Chief Executive Officer

3333

3434

Basis for 2001 - 2004 targetsBasis for 2001 - 2004 targets

• Current businessCurrent business

• Current products/late stage projectsCurrent products/late stage projects

• Current geographyCurrent geography

• Zanidip in U.S., Japan not includedZanidip in U.S., Japan not included® ®

3535

2001-2004 TARGETS2001-2004 TARGETS

2001200120002000

Net SalesNet Sales

Gross ProfitGross Profitas % of salesas % of sales

EBITEBITas % of salesas % of sales

689.1689.1

399.5399.558.0%58.0%

90.390.313.1%13.1%

825825

48348358.5%58.5%

R&DR&Das % of salesas % of sales

71.471.410.4%10.4%

70708.5%8.5%

11111113.5%13.5%

20042004

63163160.1%60.1%

10510510.0%10.0%

17117116.3%16.3%

CAGRCAGR2000-20042000-2004

11.1%11.1%

12.1%12.1%

10.1%10.1%

17.3%17.3%


EBITDAEBITDAas % of salesas % of sales

136.7136.719.8%19.8%

10501050

17317321.0%21.0% 14.3%14.3%233233

22.2%22.2%

3636

EVOLUTION OF NET SALES & EBIT EVOLUTION OF NET SALES & EBIT (billion lira)(billion lira)

0

100

200

300

400

500

600

700

800

900

1000

1100

2000 2001 2002 2003 2004

0,0%

2,0%

4,0%

6,0%

8,0%

10,0%

12,0%

14,0%

16,0%

18,0%

EBITEBITNet SalesNet Sales

13.1%13.1%

689689 825825905905

98098010501050

13.5%13.5% 14.1%14.1%15.2%15.2%

16.3%16.3%

10.4%10.4% 11.0%11.0%12.1%12.1%

13.0%13.0%

EBIT Prev. targetsEBIT Prev. targets

3737

RECORDATI IN 2004RECORDATI IN 2004

20002000 20042004

Pharmaceutical ChemicalsPharmaceutical Chemicals

CAGRCAGR

689689 10501050

838838521521

410410

11.1%11.1%

12.6%12.6%

8.5%8.5%296296

640640393393

Net Net SalesSales

Other CountriesOther Countries

ItalyItaly

PharmaceuticPharmaceuticalsals

168168 6.0%6.0%212212

12.9%12.9%


2001-2004 Building Value2001-2004 Building Value

milan, 9 may 2001 2001-2004 building value. milan, 9 may 2001 giovanni recordati giovanni recordati...

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