Specialty pharma meets M&A competence

INVESTOR RELATIONSInvestor Presentation per December 2018

CHEPLAPHARM AT A GLANCE

Company Snapshot Strong Historic Growth

Recently Closed Acquisitions Brand Diversification by Area (2018P)

Family‐owned company with > 25 years of pharma sector expertise

Buy and Build strategy

M&A know‐how and track record with > 80 products acquired

Branded specialty pharma / niche products in over 120 countries

Value creation via scalable platform and Life‐Cycle‐Management

Asset light business model with strong scientific backbone

Revenue growth from < € 1m in 1998 to ca € 226m in 2017  

80122

226188

3868

134115

2015A 2016A 2017A YTD Sep 2018

Sales EBITDA

56% 59%47%

29%

15%

13%

8%

7%

7%

5%

11%

2%

2%2%

Opthalmology

ObesityCardiology

Infection Medicine

Emergency Medicine

Gastroenterology

OncologyHaematologyAddiction Medicine

Sleeping DisorderAll Other

61%

02/201804/2018 01/2018

Average age: ca 25 years

09/2018

07/2018

09/2018 09/201809/2018

% EBITDA margin

2018P

2

47%

31%

22%

PORTFOLIO OVERVIEW

Sales by Products (2018P)

CHEPLAPHARM is well diversified across products and geographies, providing global reach to Big Pharma

Sales by Geography (2018P)

Niche vs. Legacy (2018P)

2018P

Business Footprint

• Business in more than 120 countries

• Vast network of distribution partners globally

• Valuable business partner to Big PharmaNiche

Legacy

15%

15%

12%

8%7%6%

5%

5%

4%

11%

2%

2%

2%

1%

2%

2%

2%Atacand/Plus

Dilatrend

Visudyne

Xenical

Cymvene

Deursil/Ursolvan

Heminevrin/Distraneurin

Fungizone

AnexateVePesid

Vesanoid

SotalexRohypnol

Questran

EtopophosKonakion MM All Other

2018P 50%

7%

28%

6%5% 4%

Latin America and Caribbean

Europe ex Germany

Asia and Oceania

North America

Germany

Africa

2018P

Branded Products with competitionBranded Products with unique competitionBranded Products with limited/partial competition

3

ORGANISATIONAL STRUCTURE

4

100%

HelmMedical GmbH

RubiePharmArzneimittel GmbHSanavita GmbH

CHEPLAPHARM Arzneimittel GmbHMoody´s B1 / S&P B both stable outlook

RubiePharmVertriebs GmbH

Glenwood LLCCHEPLAPHARMFrance SAS

Walter RitterGmbH & Co KG

WR Pharmaceuticals Vertriebs GmbH

Deal Sourcing & Due Diligence

Life‐Cycle ManagementKey value levers: (i) overhead cost and complexity reduction, (ii) 

optimization of production costs, (iii) active pricing strategy and (iv) well‐established partners for production / D&M

ProductionResearch & Development

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Distribution & Marketing

BUY – INTEGRATE – BUILD / OPTIMIZEDisciplined identification of right acquisition targets, integration into outsourced supply chain 

and optimization via professional Life‐Cycle Management 

No R&D activities & associated risks

Focus on inorganic growth acquiring branded original off‐patented niche or legacy products from Big Pharma

CHEPLAPHARM is principally shifting distribution & marketing to its own external exclusive distribution network or taking over agreements by assignmentCHEPLAPHARM’s clear focus and key competence is Life‐Cycle Management creating added value vs Big Pharma

Lean set‐up given outsourced manufacturing and distribution activities to trusted, qualified and long‐standing 3rd parties

CHEPLAPHARM‘S BUSINESS MODEL

UNIQUE, LOW RISK BUSINESS MODEL

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Acquisition of “tried and tested” pharmaceuticals with sticky customer base, long‐phase out periods and high brand awareness requiring no / less marketing

Post‐Patent Phase Management ofproduct Life‐Cycle

Optimization ofcost structure

• Limited competition,no relevant generics

• Unlikely to be replacedby new treatment guidelines

• Stable to little growing sales and cash flows

TimeCash

Development Phase Patent Phase

CHEPLAPHARM’s Business Model

Niche product ‐ Lower volume – typically no or limited competition (solid and stable sales)Legacy product ‐ Higher volume – generic competition (price competitive)

CHEPLAPHARM advantages:• Limited or no competition• 10+ years out of patent• Stable sales• Low risk due to “tried & tested” pharmaceuticals

• Stable market share following generics competition

• High brand loyalty being able to retain customers

• Stable to slightly declining sales and cash flows

1

2

Key characteristics

Nicheproducts

Legacy products

2

1

LIMITED COMPETITION MARKET SEGMENT / BARRIERS TO ENTRY

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Strong relationships to Big Pharmas and reliability being key for any upcoming transaction representing a significant barrier to entry for potential new market players

M&Atrack record and regulatory competence

Fast ‐ Flexible ‐Reliable

Package Deals

Global distribution

And many more…!

DISCIPLINED M&A STRATEGY –INVESTMENT CRITERIA (EXCERPT)  

Track record of carefully adding new products to the portfolio based on stringent selection criteria that have been successful for 15 years

Remainingeconomic life

• > 10 years

Presence of “Pull effect” • Secures survival as cash cow • Brands should be established in the market and should have a high degree of familiarity

Track record • Established products with proven track record (at least 15‐20 years history)

Market position • Either niche position (USP of API and/or indication) with growth opportunity or extremely cheap and offer attractive ROI (legacy deal)

Production • Production must be ensured in the long‐term

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Balanced productportfolio

• Incremental sales contribution from a single acquired product of max. €100m 

0

200

400

600

800

1000

1200

1 2 3 4 5 6 7

CREATING VALUE FROMLIFE‐CYCLE MANAGEMENT

Life‐Cycle Value of

Big Pharma

Life‐Cycle Value of

CHEPLAPHARM

Overhead Reduction

Reduction ofProduction Costs

Active Price Strategy

Reduction ofcomplexity

Others

Schematic presentation for illustration purposes only

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Life‐Cycle Management comprises several measures with regular optimization of production costs being the most important value lever

Life‐Cycle Management provides additional upside, i.e. neither included in investment decision nor in 

CHEPLAPHARM’s business plan

Basis for investment decision (ROI calculation)

STRONG AND SUSTAINABLE EBITDA MARGINSREFLECTING INVESTMENT POLICY

Strong operational track record proven by stable EBITDA margins across the cycle  Fluctuation in EBITDA margin mostly driven by M&A activity and related Transitional 

Service Agreements (TSAs), i.e. in years of stronger M&A activity such as 2013, 2016 and 2017, margins are slightly overstated due to TSA accounting effects

However, through the cycle, EBITDA margins have been fairly stable around 50%

10

7 8 11 12

26 2738

68

134

57%

48% 50% 52%

61%

48% 46%

56% 59%

0%

20%

40%

60%

80%

100%

0

30

60

90

120

150

2009 2010 2011 2012 2013 2014 2015 2016 2017

€m

EBITDA EBITDA margin

Average

SUMMARY ‐ KEY CREDIT HIGHLIGHTS

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Unique, low risk business model with easy scalability

Strong acquisition track record and global distribution

Limited competition market segment

Diversified sales base and high revenue visibility

Limited capex requirements resulting in significant cash generation

Highly qualified management with proven operational and M&A track record

1

2

3

4

5

6

Specialty pharma meets M&A competence

APPENDIX

COMMENTS FROM THE RATING AGENCIES

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“ CHEPLAPHARM runs a profitable and cash flow generative business model

…. good therapeutic and geographic diversity

…. successful track record and established relationships with leading global pharma companies ”

“ CHEPLAPHARM will be able maintain its profitability metrics, supported by management's focus on lifecycle management activities

The main strengths of the company is its established track record of careful productselection ….

…. the company has been able to generate average EBITDA margins of about 55% ”

Konakion®Roche

Lariam®Roche

Inhibace®Roche

Cymevene®Roche

Visudyne®Novartis

Streptosil®Boehringer Italia

UCB PackageUCB

Aldactone®Sanofi

Reisegold®Teva

Halbmond®Teva

Sanofi PackageSanofi

Rohypnol®Roche

Vesanoid®Roche

Distraneurin® / Heminevrin®AstraZeneca

Baldrian Dispert®Vemedia

0

30

60

90

120

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

CORPORATE DEVELOPMENT

Klosterfrau PackageKlosterfrau

Anexate®Roche

Calcivit® Hexal

Building the platform  Acceleration of growth 

Xenical® Roche

Dilatrend®Roche

Product acquiredSeller

Legend:Vesanoid Japan®Roche

Sotalex®BMS

Num

bero

fcou

ntrie

s covered

14

Questran®BMS

Atacand®AstraZeneca

Fungizone®BMS

Etopophos®BMS

VePesid®BMS

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

VERY BROADLY DIVERSIFIED ACROSSPRODUCTS ANDMARKETS (% OF SALES)

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Highly diversified portfolio as a result of always acquiring global rights to products

Atacand®/Plus 15.0% Xenical® 14.8% Dilatrend® 11.9% Cymevene® 7.9% Visudyne® 6.9%

Germany 2.9% Australia 1.7% Italy 1.9% Japan 2.5% China 1.4%Romania 2.8% USA 1.5% Austria 0.9% France 0.6% Japan 1.3%Spain 1.6% Russia 1.0% Spain 0.9% South Korea 0.5% France 0.7%Switzerland 1.5% Canada 0.9% Turkey 0.8% USA 0.4% Italy 0.3%France 1.3% UK 0.6% Mexico 0.6% Turkey 0.3% Hong Kong 0.3%Greece 1.1% Spain 0.6% Japan 0.6% Russia 0.2% Spain 0.3%Finland 0.6% Malaysia 0.6% South Korea 0.6% Taiwan 0.2% UK 0.3%Italy 0.5% China 0.5% Taiwan 0.4% Italy 0.2% Taiwan 0.3%Belgium 0.4% Saudi Arabia 0.5% Thailand 0.3% Thailand 0.2% Canada 0.2%Other 2.3% Philippines 0.5% Belgium 0.3% UK 0.2% Netherlands 0.2%

Others 6.3% Others 4.7% Others 2.5% Others 1.8%

Deursil®/Ursolvan® 5.8% Fungizone® 5.2% Konakion® 4.7% Vesanoid® 3.6% Questran® 2.4%

Italy 4.4% France & FOT 3.4% France 0.9% Canada 0.3% France & FOT 0.8%France 0.0% Japan 0.4% Germany 0.5% Germany 0.2% UK 0.4%Switzerland 0.3% Algeria 0.4% Italy 0.3% Italy 0.2% Italy 0.3%Tunisia 0.0% Germany 0.2% UK 0.3% France 0.2% Brazil 0.2%Others 0.0% GPS Sales 0.2% Spain 0.2% Spain 0.2% Germany 0.1%

Others 0.6% South Africa 0.2% Brazil 0.2% Mexico 0.1%Morocco 0.2% South Korea 0.2% Others 0.5%Belgium 0.2% UK 0.2%Turkey 0.2% Argentina 0.2%Algeria 0.2% Australia 0.1%Others 1.5% Others 1.5%

OVERVIEW TOP 10 PRODUCTS

Atacand®/Plus Xenical® Dilatrend® Cymevene® Visudyne® Deursil® / 

Ursolvan® Fungizone® KonakionMM® Vesanoid® Anexate® Vesanoid® Questran®

2018PSales 15% 15% 12% 8% 7% 6% 5% 5% 4% 2% 2% 2%

Segment Cardiology Obesity Cardiology Virology Ophthal‐mology

Gastro‐enterology Oncology Haemato‐

logy Oncology Emergency Medicine Oncology Cardiology

ApplicationHeart failure, 

hyper‐tension

Obesity

Heart failure, hyper‐tension, 

stable anginapectoris

Treatment and 

prophylaxis of 

cytomegalo‐virus (CMV) disease 

Retinaldisease: age‐

relatedmacular de‐generation (AMD)

Dissolution of small gallstones

Antifungal / supportive oncology

Haemor‐rhage; Vit K Deficiency Bleeding in new‐born

Acute leukemia

Post‐anaestheticrecovery period

Acute leukemia

Cholesterol reducer for hypercholest

eremia

Rx / OTC Rx Rx Rx Rx Rx Rx Rx Rx/OTC Rx Rx Rx Rx

Intro 1997 1997 1990 1994 1999 1980 1971 1955 1994 1987 1994 1965(1980s)

PatentExpiry 2012 2009 1999 2002 2009(1) 2002 2003 2008 2002 2008 2002(4) Never

patented

KeyCountries

Germany, Romania, Switzerland

Australia, USA, UK, Canada

Japan, Austria, Italy, 

Korea

Japan, Korea, Hong‐kong, Italy, Russia

Japan, China, France, Italy, 

SpainItaly, France

France, Japan, Algeria, Germany

France, Germany, Italy, UK

Canada,Germany, Italy, Korea, 

Brazil

Japan, Brazil, Germany, Korea

Canada,Germany, Italy, Korea, 

Brazil

France, UK, Italy, Brazil,Germany

USP

Genericmarket hassettled

quickly withthe productavailable in more than125 markets

Strong brand, first line therapy according to 

several national clinical practice guidelines

API is listed in the WHO 

list of essential medicines; first line therapy 

according to several 

guidelines

First Line therapy in major medical guidelines

Stable since many years 

as the second line therapy with 

niche‐position, no generic 

competition

Strong brand, leading market position 

(especially in Italy); 

dominant therapeutic strategy in guidelines

Ampho‐tericin B is included in the WHO list of essential medicines

Strong brand for routine life saving VitK prophylaxis in neonates, with limited competition

Strong brand in a niche 

market with limited 

competition

Strong brand with long history and quality „made in Europe“

Strong brand in a niche 

market with limited 

competition

First‐line therapy for diarrhea and

for management of pruritus in 

primary biliary 

cholangitis , second line as mono‐therapy

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CONTACT

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Request further information

HEADQUARTER ǀOFFICE Germany

CHEPLAPHARM Arzneimittel GmbH

Ziegelhof 24

17489 Greifswald

Internet: www.cheplapharm.com

Jens Remmers

Head of Investor Relations

Tel.: +49 (0) 3834 8539‐145

Email: investor‐relations@cheplapharm.com

Jens Rothstein

Chief Financial Officer

Tel.: +49 (0) 3834 8539‐122

DISCLAIMER

The information contained in this Document does not purport to be all‐inclusive or to contain all information that is required to properly evaluate a potential transaction. Any recipient of this Document should therefore conduct its own independent analysis of the Company and the data contained or referred to in this Document. The Company, does not expect to update or otherwise revise this Document or other materials supplied herewith.

The Company does not make any representation or warranty as to the accuracy or completeness of any of the information contained herein or with regard to otherwritten or verbal information submitted or made available to the recipient. The Company accepts no liability for possible errors or omissions in this Document. Inparticular, the Company makes no representation or warranty with respect to any financials (including without limitation management projections) that may becontained in this Document. Where this Document contains forward‐looking statements, these statements involve risks and uncertainties, and the Company's actualresults may differ significantly. Such information should therefore not be construed as a representation or prediction that the Company will achieve or is likely toachieve any particular results.

The recipient of this Document must not construe any of the contents of this Document as legal, business, or tax advice. Each recipient should therefore consult hisown attorney, business advisor and tax advisor as to legal, business, tax and related matters concerning this Document.

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