Investor Relations 2017 - file.irgo.co.kr

Advanced Therapeutics within Everyone’s Reach

Celltrion Healthcare

Investor Relations 2017

The following presentation has been prepared by Celltrion Healthcare Co., Ltd. (the “Company”) solely for informational purposes in its presentation to prospective investors held in connection with the proposed offering (the “Offering”) of shares of the Company (the “Securities”) and should not be construed to be, directly or indirectly, in whole or in part, an offer to buy or sell and/or an invitation and/or a recommendation and/or a solicitation of an offer to buy or sell any security or instrument or to participate in any investment or trading strategy, nor shall any part of it form the basis of, or be relied on in connection with, any contract or investment decision in relation to any securities or otherwise. Any decision to purchase or subscribe for the Securities in the Offering shall be made solely on the basis of the information contained in the offering circular to be issued by the Company relating to the Offering.

The information in this document is being provided by the Company. By viewing or accessing the information contained in this material, the recipient hereby acknowledges and agrees that neither the Company, nor any of Mirae Asset Daewoo Co., Ltd., UBS Securities Pte. Ltd., Seoul Branch, Macquarie Securities Korea Limited, Hanwha Investment & Securities Co., Ltd. and Shinhan Investment Corp. (collectively, the “Underwriters”), nor any of the Company’s or the Underwriters’ respective directors, shareholders, employees, agents, affiliates, advisors or representatives accept any responsibility for or makes any representation or warranty, express or implied, with respect to the truth, accuracy, fairness, completeness or reasonableness of the information contained in, and omissions from, these materials. Neither the Company, nor any of the Underwriters, nor any of the Company’s or the Underwriters’ respective affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any information presented or contained in these materials. The information presented or contained in these materials is subject to change without notice. The Company relies on information obtained from sources believed to be reliable but does not guarantee its accuracy or completeness.

This presentation is strictly confidential, is being given solely for your information and for your use and may not be copied, reproduced, redistributed or passed on, directly or indirectly, in whole or in part, by any medium to any other person in any manner. Unauthorized copying, reproduction or redistribution of these materials could result in a substantial delay to, or otherwise prejudice, the success of the Offering. No part of these materials may be retained following this presentation. By viewing, accessing or participating in this presentation, you agree to be bound by the foregoing limitations. Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

You acknowledge that any assessment of the Company that may be made by you will be independent of this document and that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the business of the Company.

This document contains certain statements that constitute forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, with respect to the Company’s future financial or business performance, strategies or expectations. These statements typically contain words such as “expects” and “anticipates” and words of similar import. Any statement in this document that is not a statement of historical fact is a forward-looking statement and involves known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. There can be no assurance that the results and events contemplated by the forward looking statements contained herein will in fact occur. None of the future projections, expectations, estimates or prospects in this document should be taken as forecasts or promises nor should they be taken as implying any indication, assurance or guarantee that the assumptions on which such future projections, expectations, estimates or prospects have been prepared are correct or exhaustive or, in the case of assumptions, fully stated in the document. The Company also cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and which may be beyond the Company’s control. The Company assumes no duty to and does not undertake to update any forward-looking statements to reflect actual results, changes in assumptions or changes in factors affecting these statements.

This document speaks as of 26th June, 2017. Neither the delivery of this document nor any further discussions of the Company with any of the recipients shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since that date.

This document does not constitute or form a part of any offer for sale or solicitation to purchase or subscribe for the Securities in the United States or any jurisdiction in which such offer or solicitation or sale would be unlawful. The Securities have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and will be offered or sold in the United States only to “qualified institutional buyers” in reliance on Rule 144A under the Securities Act and outside the United States in reliance on Regulation S under the Securities Act. The Offering will be made by means of an offering circular and a Korean prospectus that may be obtained from the Company or the Underwriters, which will contain detailed information about the Company and its management and financial statements. The Company does not intend to register the Securities in the United States, and no public offering of the Securities will be made in the United States or in any jurisdiction other than Korea.

Disclaimer

Section 01. Offering Summary

Section 02. Company Introduction

Section 03. Industry Overview

Section 04. Company Highlights

Section 05. Vision & Strategy

Section 06. Financial Highlights

Appendix

Contents

Offering Summary01Section

5Investor Relations 2017

Offering Summary

ㆍCelltrion Healthcare Co., Ltd. (the "Company" or "CTHC") Issuer

ㆍKRW32,500 – KRW41,000 per sharePrice Range

ㆍKRW800 bn – KRW1,009 bnOffering size

ㆍ24,604,000 (18.0%): primary shares onlyShare offered (%1))

ㆍKRX KOSDAQ Market of the Korea Stock Exchange Listing

ㆍRule 144A / Reg SDistribution

ㆍManagement roadshow: June 26 ~ July 14, 2017ㆍBookbuilding: July 3 ~ July 14, 2017ㆍPricing: July 17, 2017ㆍSubscription: July 19 ~ July 20, 2017ㆍSettlement: July 24, 2017ㆍListing: July 28, 2017

Timing

ㆍ6 months : Chairman JJ Seo and other related parties (38.7%) One Equity Partners IV, L.P. (18.2%), OEP II PARTNERS CO-INVEST,L.P. (0.5%), ION INVESTMENTS B.V. (12.7%)

Lock up(%2))

ㆍexpansion of global distribution network, broadening product portfolio and general working capitalㆍrepayment of outstanding debt

Use of proceeds

Note: 1) Number of shares offered at the IPO as a % of the total number of issued and outstanding shares on a post-IPO basis 2) % of total lock up shares on a post-IPO basis

Bookrunner (Global Coordinator / Joint Bookrunner) (Joint Bookrunner)

Company Introduction02Section


Global Biosimilar LeaderLeading global marketing & distribution company specializing in the biosimilar market

34Global Partners

115Countries and Regionsfor Distribution

14Products andCandidates

World′s 1st Infliximab Biosimilar(IV)

(Immunology, Remicade®)

World′s 1st 1)

Infliximab Biobetter(Immunology)

World′s 1st

Oncology Biosimilar(Lymphoma, Rituxan®)

World′s LeadingOncology Biosimilar

(Breast Cancer, Herceptin®)

Subcutaneous

Note : 1) candidate


Strategic Co-development for Risk Diversification▶ Biosimilar products are very complicated to develop and require significant capital investment upfront

▶ Strategic relationship was established with Celltrion, Inc.(CTI) in 2008 at the beginning of product development to share development risks

▶ Celltrion Healthcare(CTHC), as co-developer, purchases initial safety stock before approval on a non-refundable & irrevocable basis

▶ In return for taking the risk as co-developer, CTHC retains the exclusive sales right to all CTI’s products

Development Risk

Manufacturing Risks

Clinical Trials & Approvals Manufacturing Global Marketing DistributionR&D

Commercialization Risks


Master Distributorship Agreement (MDA)

Note: 1) Profit split complies with (1) the Corporate Tax Act (CTA) and its enforcement decree, (2) the Act for the Coordination of International Tax Affair (ACITA) and its enforcement decree and (3) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administration published by The Organization for Economic Co-operation and Development (OECD)

Key terms in MDA

ㆍEffective until June 30, 2024 and may be automatically extended for successive 5 year terms unless one party provides prior written notice of non-renewal

ㆍAll CTI’s products including biologics

ㆍExclusive right for CTHC for global distribution

ㆍDetermined and adjusted every year based on MDA ㆍEstimated profits are allocated between CTHC and CTI applying the profit split ratio which is mutually-agreed and reviewed by external accounting firm1) (See “Pricing & Profit structure” on page 26)

ㆍCTHC is obligated to purchase certain amounts of the biosimilar product from CTI prior to the receipt of the respective regulatory approvals, which are non-refundable and irrevocable regardless of whether the products sold are ultimately able to obtain regulatory approval for commercialization

Term

Products

Distribution right

Purchase price

Initial safety stock


Company HistoryIn step with product approval, we have expanded partnership & launched products in Europe and the US▶ Established leadership in global biosimilar market since signing of MDA1) with Celltrion, Inc. in 2008

▶ Regulatory approvals have marked many significant milestones for our business development

Note: 1) MDA: Master Distributorship Agreement 2) The logo of InflectraTM is owned by Pfizer 3) BCA: Business Collaboration Agreement for CT-P10 & CT-P6 biosimilar candidates

Aug 2008Master Distributorship Agreement with CTI

Jul 2012

MFDS approval

Sep 2011TEMASEK investment

Sep 2013

EMA approval

2)

Feb 2012One Equity Partners

investment

Jan 2014

MFDS approval

Apr 2016

FDA approval

Oct 2016BCA3) with Teva

Nov 2016

MFDS approval

Feb 2017

EMA approval

Sep 2013

EU launch

Dec 2016

US launch

Apr 2017

EU launch


Corporate Structure of Celltrion Group (post-IPO)Celltrion Healthcare is the standalone commercializing arm of the Celltrion Group

Celltrion Group Shareholding Structure

94% 70%

2%

20%

37%1)

55%

Chairman

JJ Seo

(Ticker: KS 068270) (Ticker: KS 068760)

Celltrion Healthcare Shareholding Structure

Others Chairman JJ Seo & related parties

31% 37%

19%13%

Note: 1) Chairman JJ Seo and related parties

Industry Overview03Section


Overview of Biosimilars

What is a biosimilar?

Biosimilar vs Generics

Generics

A biological product that is highly similar to the reference biologic product without clinically meaningful differences in safety, efficacy and quality

Greater Value to Multiple Stakeholders

BiosimilarPatients HCPs

Companies Payers

Increased accessibility More treatment options

More businessopportunities

Reduced healthcareexpenditure

Biosimilar

Source: Frost & Sullivan

High Low

Technology know-how

Capital investment

Process dependence

Lifecycle

Profitability

Competition

BeforeApproval

AfterApproval


80


Global Biosimilar Market Dynamics

Key Market Growth Driver Global Biosimilar Market Forecast (USD bn)

2016

4

2021E

37

2026E

90

80

70

60

50

40

30

20

10

0

CAGR

17%

▶ The biosimilar market is expected to grow very fast due to increased aging population, favorable environment and patent expiration

▶ Estimated to reach market value of $80bn by 2026, representing 34% CAGR from 2016

CAGR

54%

Aging

population

Favorable

environment

Patent

expiration

ㆍIncreased aging population & financial

pressure

ㆍBiosimilar at affordable prices

ㆍBiosimilar supportive government

initiatives

ㆍPositive perception by medical societies

ㆍ$80bn market with patent expected

to expire by 2020

Company Highlights04Section


Company Highlights

Global Sales PlatformSynergizing Partner Resources and Personal Selling Capabilities

Global Marketing & Medical Expertise Strategic Marketing Know-how and Comprehensive MedicalCommunication Capabilities

Strong PipelineHighly Visible Commercialization Plan for Pipeline Products

Visionary Management & Sound Corporate Governance

1234


ㆍInflectraTM

(Infliximab Biosimilar)

ㆍExclusivity : 6 countries including US & Canada

ㆍCo-Exclusivity : Europe (44 countries)

ㆍ10 years

ㆍRituximab & Trastuzumab biosimilar candidates (Oncology)

ㆍExclusivity : US & Canada

ㆍ10 years

1. Global Sales Platform

Global Partners

Global partnership network and market access with global & regional pharma experts

Strongpharmacoeconomics Optimal pricing Tailored

cultural approachesEfficient operations & quality supply chains

Synergistic global & regional collaborations

Korea

Europe

Africa

South Africa

Asia

Australia

North America

South America


2. Strong PipelineTwo commercializing biosimilars (RemsimaTM & TruximaTM) and strong near-term pipeline approaching commercialization with 1 oncology biosimilar and 1 infliximab biobetter

Pipeline 2016 2017 2018

TruximaTM

(CT-P10)(Rituxan® biosimilar)

HerzumaTM

(CT-P6)(Herceptin® biosimilar)

MFDS approval

Clinical trial(EBC)

FDA(3Q′17E)

EMA (Oct ′16)

EMA approval

FDA(3Q′17E)

RemsimaTM Subcutaneous type

Approvals Clinical trials Application submission

Near Term Pipeline Accessible Market for CTHC1) (USD bn)

Note: 1) Subject to company’s launch plan. 2) Original drug names for each INNSource: Frost & Sullivan, total market size by INN (Int'l Nonproprietary Name)

Note: The schedule is subject to change depending on business plans, market status and progress of regulatory approval.

Phase III EMA (2Q ′18E)

CAGR 52%

2016

9.5

9.5

2017E

9.1

7.3

16.4

2018E

8.8

7.2

6.5

22.5

2019E

8.7

7.1

6.4

17.8

9.9

49.9

2020E

9.1

7.2

6.6

17.8

9.9

50.6

Infliximab(Remicade®)2)

Rituximab(Rituxan®/

MabThera®)

Trastuzumab(Herzuma®)

Adalimumab(Humira®)

Etanercept(Enbrel®)


2-1. Future products in pipeline

Product Code Classification Reference drug / Drug type Market Size (′16) Therapeutic Area Development Status

1 CT-P5 Biosimilar Enbrel® $ 9.5bn Immunology Clinical trial Preparation

2 CT-P14 Biosimilar Synagis® $ 1.4bn Infectious diseases Cell line Development

3 CT-P15 Biosimilar Erbitux® $ 1.7bn Oncology Clinical trial Preparation

4 CT-P16 Biosimilar Avastin® $ 6.6bn Oncology Clinical trial Preparation

5 CT-P17 Biosimilar Humira® $ 16.4bn Immunology Clinical trial Preparation

6 CT-P19 New Drug Monoclonal antibody N/A Infectious diseases Process Development

7 CT-P24 New Drug Monoclonal antibody N/A Infectious diseases Process Development

8 CT-P25 New Drug Cell culture vaccine N/A Infectious diseases Non Clinical Preparation

9 CT-P27 New Drug Monoclonal antibody N/A Infectious diseases Phase IIb

10 CT-P26 Biobetter Antibody drug conjugation N/A Oncology Non Clinical Preparation

Note : Near term pipeline is excluded from the list above. Source: Frost & Sullivan


3. Global Marketing and Medical Expertise

World’s 1st mAb1) biosimilar Evidence-based approaches Product life cycle management

2013~2014Build Ground

2015~2016Market Build Up

2017~2019Expansion

ㆍNorway 94%, Finland 89%, Netherlands 45%ㆍUK 48%, Italy 37%, Germany 21% (source: Frost & Sullivan 2016)

ㆍConcept of mAb biosimilarㆍBiosimilar regulatory process

ㆍPartnership with experienced companies

ㆍReal world 8,000+ switching dataㆍ100k+ prescribed patient data

ㆍCTI’s R&D, facilities ㆍCTHC’s drug safety monitoring system

ㆍTruximaTM : EU launch in Apr 2017ㆍHerzumaTM : EMA filed in Oct 2016

ㆍMedical society collaborationㆍPharmacoeconomic data for payers

ㆍMedical community communicationㆍPharmacoeconomic data for payers

ㆍIn phase 3 clinical trial

Product Education Achieve 30% M/S in EU US Launch

Build Company Reputation Extensive Clinical data TruximaTM/HerzumaTM Launch

Communication with Stakeholders Stakeholder Interactions Infliximab SC type

▶ Accumulated strategic know-how in biosimilar life cycle management with marketing and medical expertise

▶ Capitalize on experience in Europe to maximize US market penetration

Note: 1) mAb: Monoclonal Antibody


1. EU Launch : Co-exclusivityㆍCo-exclusive partnership to maximize market penetrationㆍExpansion of market share supported by Norwegian government funded switch study (The NOR-SWITCH Study)ㆍAs a result, achieved 30% market share on average in 2016

2. US Launch : ExclusivityㆍUS Launch in December 2016ㆍExclusive partnership with Pfizer to improve profitabilityㆍCapitalize on experience in Europe to maximize market penetration

1. Current statusㆍDeveloping RemsimaTM SC type to meet market needㆍIn phase 3 clinical trial

2. Advantage of SC typeㆍMore convenient with self-injectionㆍTarget Enbrel® (Etanercept) & Humira® (Adalimumab) treated patients

3. Expand target market into entire TNF-α blockers

3-1. Differentiation of Marketing Strategy ▶ Maximize profitability through sole distributor arrangement with Pfizer and Teva in North America

▶ Expand product life cycle and market share with biobetter development

RemsimaTM / InflectraTM Launch in EU & US Remsima SCTM as a Biobetter


InfliximabAdalimumabInfliximab

Etanercept

24%+ 49%100%


Norway 94%Finland 89%

Netherlands 45%UK 48%

+ 27%

2016

$ 9.5 bn

2019E

$ 36.4 bn

2014 2015 2016


4. Visionary Management and Sound Corporate GovernanceStrong leadership of professional management and sound corporate governance structure with4 out of 9 board members being independent directors

Jung Jin SeoChairman of Celltrion Group

ㆍA pioneer and leader in the biosimilar industry, with strong belief in the biopharmaceutical market as the driver of economic growth in Korea and the global market

ㆍEstablished Celltrion Group in 2000. He joined Daewoo Motor Company in 1992 and served as Executive director.

Senior Leadership

MH KimCEO of Celltrion Healthcare

ㆍServed as CEO of Celltrion Healthcare since Feb 2016. He joined Celltrion Group as CEO of Celltrion Pharm in 2013 and captured 30% of M/S in 3 years since the launch of RemsimaTM in Korea.

ㆍStarted his career in pharmaceutical company and worked as Head of Commercial and CEO at Henkel Homecare Korea

Independent & Sound Corporate Governance System

▶ Each director makes decisions separately & independently ▶ Transactions between CTHC & CTI are conducted based on local tax law, fair trade law and OECD guidelines to maintain fairness & transparency

Independent outside directors1 Sound internal procedures on decision-making process based on global standard2

Maximize returns to the entire shareholder

Vision & Strategy05Section


Long-term VisionBecome a global top-tier marketing & distribution company in healthcare industry

1 2

3 4

Broaden Our Product Portfolio Expand Global Sales Network

Strengthen Marketing &Medical Capabilities

Expand our Global Presence through Optimized Investment Activities

ㆍBiosimilars, biobetters and innovative drugs from Celltrion, lnc.

ㆍChemical drugs from Celltrion Pharm

ㆍBroaden portfolio offerings with in-licensing and collaboration with third parties

ㆍContinue to strengthen our global partnership network

ㆍEstablish worldwide direct sales network starting from emerging countries

ㆍEvidence-based marketing

ㆍProduct life cycle management by innovative approaches

ㆍMedical network to access to all stakeholders

ㆍExplore other investment opportunities such as new partnership, JV and cross-border acquisitions

Financial Highlights06Section


Pricing & Profit Structure

Pricing & Profit Structure per unit Consistent Profit Split between CTHC and CTI

source: public filings of CTHC and CTI

CTI's Sales Revenue (excluding Celltrion Pharm)CTHC's Sales Revenue (consolidated basis)CTI's Operating Profit ratio (excluding Celltrion Pharm)CTHC's Operating Profit ratio (consolidated basis)

60%

50%

40%

30%

20%

10%

0%

800

700

600

400

300

200

100

0

26.8%

45.0%

22.7%

48.4%

27.8%

48.1%

2013 2014 2015 2016

23.5%

43.8%

(Operating Profit ratio) (KRW bn)

Partners1)

CTHC2)

CTI3)NSP

Profit for Partners(Unknown)

Profit for CTHC

Profit for CTI

?

25%

47%

Sales

Sales

Sales

COGS

COGS

COGS

SG&A

SG&A

SG&A

Note: 1) NSP : Net Sales Price 2) Avg. Operating Profit ratio of 2014~2016 : 25% (COGS 67%, SG&A 8%) 3) Avg. Operating Profit ratio of 2014~2016 : 47% (COGS 35%, SG&A 18%) CTI’s results exclude Celltrion Pharm.

Source: public filings of CTHC and CTI


Rapid Sales Growth with High ProfitabilityRobust revenue growth with significant profit improvement

Annual Revenue(KRW bn) (KRW bn) (KRW bn)

Annual Operating Profit Quarterly Results

EuropeAsia/Middle East

North Americaothers

37

165

54%

46%

112

179

402

15%

85%

758

35%

6%

56%

27.8%

Operating profit Operating Profit ratio Sales Revenue Operating Profit ratio

22.6%23.5%

53

70

15.2%

1.1%

2014 20142015 2015 1Q 2016 1Q 20172016 2016


Active Inventory Management System

Decreasing inventory as multiple of sales1) Maintaining optimized inventory level

Note: 1) Inventory amount of Infliximab biosimilar ÷ Sales amount of Infliximab biosimilar 2) The scale of chart is not proportional to data

Maintaining an appropriate inventory level reflecting the updated market demand

1

2

3

Prepare for the rapidly increasing US demand & new biosimilar launch of TruximaTM & HerzumaTM

Purchase initial safety stock as co-developer

Take into account long production lead time & manufacturing uncertainties from sole supplier ㆍBiologics manufacturing requires longer production lead time

ㆍIf manufacturing facilities are contaminated, the recovery

requires longer period

2014

4.8x

2015

2.5x

2016

1.4x

2017E 2)

Appendix


Financial Statement

Summary Income Statement

(KRW bn) 2014 2015 2016 1Q 2016 1Q 2017

Revenue 164.7 402.4 757.7 52.8 69.9

Cost of Sales 95.8 252.7 537.8 43.1 46.3

Gross Profit 68.9 149.7 219.9 9.7 23.6

SG&A 31.6 37.7 41.3 9.2 13.0

Operating Income 37.3 111.9 178.6 0.6 10.6

Non-operating Income (443.2) 24.7 (15.5) (4.2) (8.8)

Other Income 5.5 57.5 19.2 3.6 11.7

Other Expenses 3.2 3.9 13.0 2.8 18.2

Financial Income 4.4 150.4 25.0 3.8 18.6

Financial Expenses 449.9 179.3 46.7 8.7 20.9

Profit (Loss) before Taxes (406.9) 136.6 163.1 (3.6) 1.9

Tax Expense (Benefit) (36.9) 116.0 40.2 0.2 3.7

Net Profit (Loss)1) (370.0) 20.6 122.9 (3.9) (1.8)

Note: 1) Fluctuation of net profit in 2014 and 2015 is largely due to unusual and nonrecurring valuation loss/profit of financial liabilities such as convertible bonds.


Financial Statement

Summary Balance Sheet

(KRW bn) 2014 2015 2016 1Q 2017 Current Assets 1,241.8 1,512.5 1,949.2 1,811.0 Cash and Cash Equivalents 4.4 36.9 95.9 53.3 Trade and Other Receivables 40.8 62.1 364.2 139.3 Inventories 1,186.8 1,399.3 1,472.1 1,599.4 Other Current Assets 9.7 14.2 17.0 19.1 Non-Current Assets 141.9 63.1 38.3 38.2 Total Assets 1,383.7 1,575.5 1,987.4 1,849.2 Current Liabilities 1,053.0 700.3 1,143.4 1,024.5 Short term Financial Liabilities 176.9 15.1 188.8 143.5 Financial liabilities at fair value 318.2 7.2 100.2 75.0 Trade and Other Payables 361.8 642.3 787.4 786.0 Other Current Liabilities 196.1 35.7 66.9 19.9 Non-Current Liabilities 1,015.4 375.6 195.4 178.9 Total Liabilities 2,068.4 1,075.8 1,338.8 1,203.4 Share Capital 1.7 2.8 112.1 112.1 Capital Surplus 144.2 1,323.6 380.6 380.6 Retained Earnings (797.2) (776.7) 205.6 203.8 others (33.4) (50.0) (49.7) (50.7) Total Equity (684.7) 499.7 648.7 645.8 Total Liabilities and Equity 1,383.7 1,575.5 1,987.4 1,849.2

4th Fl., 19, Academy-ro 51beon-gil, Yeonsu-gu, Incheon, South Korea, 406-840 / Tel: +82-32-850-6400 / Fax: +82-32-850-6498 / Email: [email protected] /

www.celltrionhealthcare.com

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Investor Relations 2017 - file.irgo.co.kr