Transcript Презентация для аналитиков

Company’s Presentation
August 2011
Disclaimer
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The presentation does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group
nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its group, nor shall it or any part of it form the basis of
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This presentation includes forward-looking statements. These forward-looking statements include statements concerning targets, plans, objectives, goals, strategies, future events or performance, and underlying assumptions
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By their nature, forward-looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this
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Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are
beyond the Company's control, and the Company may not achieve or accomplish these targets, expectations, beliefs or projections. The Company cautions you that forward-looking statements are not guarantees of future
performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forwardlooking statements contained in this presentation. These forward looking statements speak only as at the date as of which they are made and, neither the Company, nor any of its agents, employees or advisors intend or have
any duty or obligation to supplement, amend, update or revise any of the forward-looking statements contained in this presentation to reflect any change in the Company's expectations with regard thereto or any change in
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1
Table of Contents
I.
Company Overview
3
II.
Investment Highlights
9
III.
Strategy and directions of development
21
IV.
Key Financial Indicators
26
APPENDIX
1. Financial Statements For The Years of 2007-2010
31
2. Key Financial Parameters Forecast
35
3. Company's Product Portfolio
37
2
Company Overview
Section 1
DIOD at a Glance
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■
■
■
■
■
(*) according to DSM Group marketing agency, 2010
(**) – Research and Development
Raw materials
Consumer
healthcare
products
■
Group’s structure
Pharmaceutical
■
DIOD, one of the founders of the Russian consumer healthcare
market, has started production of consumer healthcare and
pharmaceutical products in 1997
As of the end of 2010, the Company was the forth largest player in the
Russian consumer healthcare market according to the volume of
sales 5,2% on the market of nutritional supplements*
Company’s product portfolio includes leading brands in the Russian
consumer healthcare market
 Capilar, the Company’s core brand with a market share of
2.1%*, has been the leading and best-selling consumer
healthcare brand in Russia since 2006
 The Company’s other brands include Phase 2, Iod-Aktiv,
Viardo Forte, Stella
The Company is the world’s largest producer of dihydroquercetin
(DHQ)
The Group currently comprises 11 subsidiaries involved in production
and distribution of consumer healthcare products, pharmaceuticals,
medical and ecological equipment and innovative substances
The Company boasts an efficient distribution chain, which covers
almost 100% of the territory of Russia. In 77 regions (93% of the total
area in Russia) the Company enjoys partnership relationships with
regional distributors. DIOD also operates its own retail network, which
is comprised of 6 stores
The Group employs 565 people (incl. 20 R&D** employees)
In June 2010, the Company did IPO and became public on MICEX’s
sector of “ Market of Innovations and Investments”. There were
placed 10% of shares among private investors. After IPO finished,
Company’s capitalization was about $100 mln.
In July Company’s shares were included in the calculation base of the
index "MICEX-Innovation» (MICEX INNOV)
Export
■
Production
Distribution
OJSC Diod
CJSC Ametis
Ecologia Zhizni, Ltd.
CJSC Ecologia
Pitaniya
Taxifoliya, Ltd.
CJSC Taiga-Gaz
Flavir, Ltd.
CJSC Olyfen
CJSC Vega Pharm
Taxifoliya, Ltd.
CJSC Ametis
Vitamedis AG
CJSC Ametis
Gruppa Kompanij
SIBLAREX, Ltd.
OJSC Diod
Source: Company data
Key financial parameters
Mln. rub.
Revenue
Growth rate
Gross profit
Gross margin
EBITDA
EBITDA margin
Net profit
Net margin
Net profit less M&A
Net margin less M&A
2007
2008
2009
2010
1 624
14%
953
59%
417
26%
232
14%
1 730
7%
1 056
61%
389
23%
303
17%
1 559
-10%
833
53%
332
21%
374
24%
1 548
-1%
796
51%
359
23%
163
11%
229
14%
200
12%
109
7%
131
8%
Source: Company’s audited consolidated IFRS financial statements for the years of 2007-2010
4
Sales Structure*
Consumer Healthcare
Pharmaceuticals
Nutritional Supplements
Other
Equipment
Health Cosmetics
16%
1%
RUB 938
mln
12%
61%
RUB 187
mln
RUB 19,5
mln
RUB 155
mln
RUB 247
mln
10%
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•
•
•
Nutritional supplements –
food supplements for oral
consumption, containing
natural nutritive and
biologically active ingredients
of plant, animal, microbial
and mineral origin
Major products:
Capillar (cardiovascular
system) - brand #1 in Russia
in the consumer healthcare
market
Viardo / Viardo Forte (men’s
health)
Iod-Aktiv (thyroid gland
function sustentation)
■
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■
•
•
•
Health cosmetics –
cosmetics, creams, balms,
sprays and other products for
application to body surfaces
Combine aesthetic and
therapeutic properties
Major products:
Artro-Aktiv health cosmetics
(musculoskeletal system
health)
Capillar health cosmetics
(venous insufficiency,
hydrops, bruises)
Spray-tonic Okulist for
eyelid and eye contour
(vision correction)
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•
•
•
•
•
•
Technology for diagnosis and
monitoring of, and relief from,
health conditions
■
■
Major products:
Cardiovisor (heart condition
screening)
Georgy (silver ion water
ioniser)
Svetovit (infrared therapy)
Elion-132 (aeroionization
profilactics equipment)
Urinary iodine analyzer
Minimax (blood
hemophoresis measurement)
■
•
•
•
Original and generic
pharmaceuticals production
The Company started
pharmaceuticals’ production
in 2008, when acquired
Olyfen and Vega Pharm
■
■
Major products:
The Company has a license
for rendering medicine
services. Since 2001, the
Company operates Mir
Ekologii medical center
Own retail network (6 stores,
operating under Mir Ekologii
brand name)
Gipoksen (hypoxia
treatments, OTC)
■
Mebix (depression, neurosis
treatment, Rx)
www.ecvita.ru
Online store operations
Orvirem (antiviral treatment,
Rх)
Phase 2 (weight control)
(*) highlighted figures refer to the share of the product group in the total Group’s revenue. Figures in the circles indicate sales of the product group in 2009
Source: Company data
5
Top-15 Company’s Products
Top - 15 Company's Brands
Brand
Sales 2010, RUB
Sales share, %
mln
Type
Segment
Capilar pills
cardiovascular system
305,8
20%
Capilar Cardio
cardiovascular system
18,6
1%
Phase-2
weight control
193,7
13%
Viardo
men's sexual health
71,5
5%
Viardo Forte
men's sexual health
81,5
5%
women's sexual health
72,5
5%
Iodine-active
vitamin&mineral supplements
23,6
2%
Iodine-active 100
vitamin&mineral supplements
14,9
1%
Calcium-active
vitamin&mineral supplements
28,0
2%
eyes health
27,1
2%
vitamin&mineral supplements
38,0
2%
healthy vessels
28,2
2%
health of gastrointestinal tract
23,0
1%
antiviral
51,5
3%
antioxidant
33,9
2%
1 011,9
65%
536,2
35%
1 548,1
100%
Stella
Okulist
Selenium-active
Arto-active
Chistovit
Segment of pharmaceuticals
Orvirem®
Dikvertin®
Segments' total
Others
Total
Source: Company data
6
Production Facilities
1
Moscow
2
Belgorod
CJSC Taxifoliya
■
Voikovskaya
Paveletskaya
4
CJSC Taiga-GAZ
Largest Russian company, engaged
in taxifolin chromatographic
purification
■
Purification of 45 tons raw taxifolin
annually
Blagoveshensk
CJSC Ametis
■
Producer of raw taxifolin with purity
factor of 75-80%
Production capacity:
■
Production capacity:
■
Irkutsk
3
Russian and world’s largest
producer of taxifolin
Production capacity:
■
Up to 10 tons annually
11 tons of taxifolin annually
Flavir, Ltd.
■
Chromatographic purification of raw
taxifolin up to the purity factor of 9092% for producing pharmaceuticals
Production capacity:
■
OJSC Diod (Paveletskaya)
■
■
Up to 5 tons annually
3 workshops with 5 production lines
specialized in production of
consumer healthcare products
Russia
1 workshop producing ecology
equipment
Production capacity:
■
■
1.8 bln pills (0.25g pills), 50 mln
blisters annually
Capacity utilization amounted to 5560% in 2009
Moscow
1
Belgorod
2
CJSC Olyfen (Voikovskaya)
Production facility:
■
■
2 workshop producing pills and
syrups
An additional workshop is planned
to be launched
Blagoveshensk
Irkutsk
4
3
Production capacity:
■
1.8 mln blisters, 48,000 liters syrup
and 300 mln pills annually
The Company acquired a land plot – 5,8 hectares in Podolsk, where it plans to build a new modern manufacturing
and warehouse facilities and relocate R&D and manufacturing departments from Moscow
Source: Company data
7
History Milestones
1994 - 1996
Company's establishment
1997 - 2002
2003 - 2007
Enter Russian consumer healthcare
market
Leadership in consumer healthcare
market
2007 - 2011
Launch of pharmaceuticals production
Innovation development
Diversification
1997
1994
■
Company's privatization on the
basis of territory #2 (workshop
#4) of Sapfir Company
1995
■
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■
■
DIOD – leading producer of
uncooled photodiods
Company's management decides
to switch from B2B market to
consumer healthcare (B2C)
market
Serial launch of Elion-132,
developed in association with
Research Institute of First Aid
n.a. N.V.Sklifosovsky
■
■
■
Start of design and development
of production workshop,
specializing in production of
healthcare products on the
territory of DIOD
■
Launch of production of Dolgolet
and Iod-Aktiv (nutritional
supplements), developed in
association with the Medical
Radiological Center of the
Russian Academy of Medical
Sciences
2000
■
Launch of Viardo (nutritional
supplement) production
■
Launch of Capillar (nutritional
supplement) production
2002
■
Launch of Selen-Aktiv (nutritional
supplement) production,
developed in association with the
Medical Radiological Center of
the Russian Academy of Medical
Sciences
2008
DIOD is the leading player in the
consumer healthcare market
■
Launch of Kaltcy-Aktiv (nutritional
supplement) production,
developed in association with
Moscow Stomatological
University and Okulist
■
2004
■
Launch of health cosmetics
production – Capillar body
cream-balm
2005
■
2001
Source: Company data
■
Launch of Spirulina BEL
(nutritional supplement)
production
1999
Launch of Mir Ekologii retail
chain
Launch of 1st modification of
Georgy equipment, developed in
association with the Central
Military Hospital n.a.
N.N.Burdenko
■
1998
1996
■
2003
Founding of a “Ekologiya
Pitaniya” subsidiary, producing
consumer healthcare products
Launch of Kapsula Artro-Aktiv
(nutritional supplement), oil balm
Artro-Aktiv Warming, cream-balm
Artro-Aktiv Alimentary
production
■
Launch of Capillar leg gel
production
2007
■
Procurement of exclusive rights
on the territory of Russia & CIS
for producing of Phase 2 Calories blocker; signing of an
exclusive distribution agreement
with Pharmachem, USA
Start of nanotechnology development
2009
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Procurement of Security certificate (GRAS), USA for taxifolin
Acquisition of controlling equity interest in CJSC Flavir and
CJSC Taiga-GAZ, producing Dikveretin (pharmaceutical)
Launch of Agralin D (nutritional supplement) production,
developed in association with the Flu Institute of the Russian
Academy of Medical Sciences
Launch of Okulist Chernika (nutritional supplement)
production, developed in association with the Russian
Association of Children Ophthalmologists
Development of Okulist sprey in association with the Institute
of Biomedical Problems
2010
■
2006
Launch of Phase 2 production Acquisition and consolidation
of Olyfen and Vega Pharm pharmaceutical companies
■
■
Launch of Stella (nutritional supplement) production,
developed in association with the Russian Association of
Obstetricians /Gynaecologists
Registration of urinary iodine analyzer MIKON-IOD
Development of medical paste for tooth filling using
nanotechnology
2011
■
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Launch of production of medical and prophylactic food with
the brand “Capilar”.
Getting the certificate Novel Food for the substance
dihydroquercetin (DHQ)
8
Investment Highlights
Section 2
Key Investment Highlights
1
Innovative leader of
the Russian consumer
healthcare market
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2
3
Portfolio of
recognizable brands
Strong R&D
capabilities
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4
5
6
Efficient multi-level
distribution network
Professional and
entrepreneurial
management team
High corporate
governance standards
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Second-largest player in the Russian consumer healthcare market (according to DSM)
Focus on the fastest growing market segments – cardiovascular systems, weight control, men’s and women’s health, musculoskeletal system,
central nervous system, vision
Well positioned to re-register nutritional supplements and health cosmetics as medical nutrition and pharmaceutical products, enabling the Company
to capture additional market share
First company in Russia which got the expert conclusion from the Russian Academy of Medical Sciences and Research Institute of Nutrition for the
use of clinical nutrition for prevention and as a component of complex therapy coronary heart disease
Portfolio of recognizable and demanded brands in the market
Since 2006, Capillar has been the best-selling consumer healthcare product in Russia
Product portfolio includes such well-known brands as Viardo, Okulist, Blocker of calories Phasa-2, Iod-Aktiv, Artro-Aktiv,
Stella
Team of highly skilled R&D staff, including 10 Ph.D. professionals with comprehensive industry experience
Established partnerships with more than 50 Russian and international scientific research institutes, clinical centers, research and
testing laboratories, and professional groups
Wide development portfolio of compounds , products/substances that have already passed pre-clinical and clinical trials
Product distribution network covers all 83 Russian regions (100%), with established regional distribution partnerships in 77
Russian regions (93%)
High penetration of each regional market without dependency on any single distributor
Own retail chain, comprising 6 branch stores and an online store
Cooperation with leading industry associations and access to key opinion-leaders
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Senior management team that determines the Company’s strategic development
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Ability to transform the Company’s direction at different development stages
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3 independent Board Directors’ protecting shareholders’ interests
Strong track record of converting concepts and scientific and technical knowledge into commercially viable products that cater to
specific market needs
Adherence to best corporate governance practices
Transparent corporate structure and business-model, supported by IFRS financial accounts
Management’s ISO 9001:2008 certified
10
Russian Consumer Healthcare Market Leader (1/2)
Nutritional Supplements (NS)
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Focus on the most perspective market segments
Joint R&Ds with the leading Russian institutes and
associations, such as the Flu Institute of the Russian
Academy of Medical Sciences and the Russian Association of
Obstetrician-Gynecologists
Clinical trials done in association with the leading Russian
research institutes and clinics
Promotion support from NGOs and professional associations:
Russian Association of Honored Doctors, Restorative
Medicine Institute, Nation Health League, Russian Association
of Children Ophthalmologists
Promotion of the Company’s products through its own medical
equipment
Developed methodological recommendations for use across
medical activities
6 registered medical technologies for the usage of the
Company’s products in medical practices
11
Russian Consumer Healthcare Market Leader (2/2)
Health Cosmetics
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As of 2010, the Company’s market share in the health cosmetics market amounted to 3.4%
Ability to leverage off some of the best selling brands to produce a number of successful brand families
The Company registered 3 medical technologies for the usage of health cosmetics products in medical
practices
Equipment
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The Company produces diagnostic and therapeutic medical equipment
Medical equipment allows the Company to effectively promote other Company’s products as well as to
demonstrate effectiveness of the Company’s consumer healthcare products
The Company registered 2 medical technologies for the usage of its products in medical practices (on the basis
of Georgy water ionizer and Svetovit infrared therapy equipment)
Source: DSM Group data
12
Portfolio of Recognizable Brands
Capillar
Iod-Aktiv and Iod-Aktiv 100
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Cardiovascular system disease prevention
NS #1 in Russia since 2006
Thyroid gland function sustentation
NS #2 in Russian in thyroid gland function
sustentation in 2006
Artro-Aktiv
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Diarthroses treatment
Other brands
NS #2 for diarthroses treatment in 2009
Viardo
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Erectile dysfunction treatment
NS #3 for erectile dysfunction treatment in
2009
KALTCY-AKTIV
Regulation of calcium
metabolism
OKULIST
Vision correction
Dolgolet
General tonic action
SELEN AKTIV
Anti-oxidant, radio
protector
Araglin D
Flu and acute
respiratory viral
infection prevention
Stella
Women reproductive
system health
Calories blocker – Phase 2
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Weight control, blocks complex carbohydrate
fixation
NS #2 for weight control in 2009
Source: Company data, DSM Group
13
Clinical nutrition (1/2)
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JSC DIOD opens a new manufacturing segment – clinical nutrition.
Certificates of state registration of clinical (dietary)
This is relatively new segment of products for health for Russia. Production of nutrition ‘’Cardio capilar with coenzyme Q10”,
“Capilar 120/80”.
clinical and functional nutrition is the main brand of Healthcare industry.
JSC DIOD has got Certificate of State registration of clinical (dietary) nutrition
“Cardio capilar”, “Capilar 120/80”.
In the nearest future JSC DIOD is planning to produce clinical nutrition for use
together with cure as a complex therapy of treatment the following diseases:
arthrosis, vision diseases, insufficiency of iodine, diseases of female reproductive
system.
“Capilar 120/80” is for:
■
■
■
strengthening of vascular walls and improvement of functional state of
cardiovascular system;
normalization of arterial pressure and heart rate;
reduction of risk of development of ischemic heart disease, stroke, hypertension,
atherosclerosis.
“Cardio capilar” is for:
■
■
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reduction of risk of development of ischemic heart disease and its complications
(heart attack and stroke), cardiopulmonary insufficiency;
Reduction of inclination to trombus’ formation, normalization of microcirculation of
blood, improvement of functional state of cardiovascular system;
For realization to people who
suffer from high arterial pressure
and hypertension
For realization to people as
specialized foodstuff for dietary
(clinical and prophylactic) nutrition
for prevention and complex therapy
of ischemia
Consumer package
Increase of physical endurance of heart muscle and tolerance to physical
activity, reduction of period of rehabilitation after acute old myocardial infarction.
14
Clinical nutrition (2/2)
Valuation of global market
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Situation in Russia
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According to the WHO data more than 17 mln people die annually
in the world from cardiovascular diseases, more than 1 mln – in
Russia;
According to the GNITS of prophylactic medicine of Ministery of
Healthcare and Social Development in Russia about 10 mln
capable of working people have stable forms of Ischemic heart
disease;
More than 40 mln people of patients in Russia suffer from arterial
hypertension;
According to the official data of Russian Healthcare Organization in
Russia 2,4 mln people are registered with the chronic obstructive
disease of lungs, but according to the epidemiologic evidence this
figure could be about 16 mln people.
World’s market of clinical and prophylactic nutrition is developing
intensively, and annually it is increasing for 15-20%.
Federal authorities give annually from the federal budget in USA
budget millions of dollars on subvention for enrichment of nutrition
products with natural active components. About 40% of functional
products belongs to USA according to official data.
The volume of probiotic products and products that have food
supplements in France has increased in 350 times.
It is considered that till 2015 the market will be more than 30% of
all the selling nutrition products.
Millions,
rubles
15
Optimal Platform for Innovation, Product Development and Commercialization
Developed, registered and launched*:
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4 medical equipment products
Own R&D laboratories
■
29 new unique medical products, including 3
finished products and 8 market leaders
Developed and registered:
■
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6 new medical technologies
15 items of original raw materials, including 2 active
pharmaceutical compounds
■
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4 state reference standards
Unique bioactivity and toxicological
safety test laboratory, certified by the
Federal Service on Surveillance for
Consumer Rights Protection and
Human Well-being
(“Rospotrebnadzor”)
Outsourced R&D facilities
■
Established partnership with 53
leading R&D institutions, clinical
centers, research and testing
laboratories and professional groups
7 methods of bioactivity and safety
measurement
Research preparative
chromatography laboratory
Developed 6 state reference
standards
Developed and under registration:
■
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8 finished products
8 state reference standards
Intellectual property
Human resources
6 original active pharmaceutical compounds
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1 prize winner of the Russian
Government
2 members of the Russian Academy
of Natural Science
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34 registered patents
9 patents under registration
47 brand name registration
certificates
5 Doctors of Science
6 PhDs
(*) over the last 10 years
Source: Company data, DSM Group
16
Longstanding R&D Experience
- Nutritional Supplements
- Health cosmetics
1999
•
•
•
•
2000
2001
• Viardo
Dolgolet
Iod-Aktiv
Mitomin
Yantavit
- Pharmaceuticals
- Medical equipment
2002
• Capillar (pills)
• Enerlit
• Selena VEL
- Medical technology
2003
• Selen-Aktiv
• Gepavit
• Chistovit VEL
2004
• Calcium-Aktiv
• Dushevny Chai
• Body cream-bal Capillar
• Elion 132
• Georgy silver ion water
ionizer
2005
2006
2007
2008
• Artro-Aktiv blisters
• Capillar leg gel
• Viardo-forte
• Iod-Aktiv Forte
• Calories blocker – Phase 2
• L-carnitine
• Artro-Aktiv warming
• Artro-Aktiv alimentary
• Medical technology with ArtroAktiv balm
• Liquid patch
• Gipoksen
• Orvirem
• Mebiks
• T-Iod
• Infrared therapy equipment
Svetovit
2009
•
•
•
•
•
•
•
Araglin D
Okulist-chernica
Chistovit forte
Cardio-Capillar
Q10
Stella
Products for thyroid gland
function sustentation
• Spasin
• 4 medical technologies
applying:
 NS Okulist
 Artro-Aktiv balm
 Medical equipment
Cardiovisor
 Svetovit
17
Developed Distribution Network
■
■
■
■
The Company has developed efficient multi-level distribution
network (176 partners), comprising the following levels:
 National distributors of pharmaceutical products: CIA,
Katren, Apteka-Holding, Protek, Rosta (with presence
in all Russian regions)
 National distributors of consumer healthcare products
 Regional distributors of pharmacy products
 Regional representatives
 Independent drug-store chains
 Retail chains
Multilevel structure of the distribution network allows to limit
dependency on any single distributor and to rapidly achieve
high penetration levels of each regional market
Successful distribution of the Company’s products through
Metro Cash&Carry chain showed the potential of retail chains
as a new distribution channel
 The Company plans to further enhance its presence in
retail chains and currently holds negotiations with
Auchan, X5 Retail Group (Perekrestok and
Pyaterochka stores), Magnit, Giperglobus and Zelgros
Own retail stores enable the Company to pilot launch of new
healthcare products
Sales breakdown by region
North-West region
RUB 130.88
mln
Central region
RUB 252.15
MOSCOW
mln
Volga region
Far East region
RUB 42.60
RUB 119.01
mln
mln
South and
Caucasus region
RUB 38.96
mln
Urals region
RUB 58.92
mln
Siberian region
RUB 83.80
mln
- Company’s head office
Source: Company data for the year of 2009
Distribution channels
Independent drugstore chains
Regional
representatives
13%
Regional pharmacy
distributors
17%
National pharmacy
distributors
4%
RUB
1,548**
mln
48%
18%
Specialized distributors of
nutritional supplements
ТOP-10 distributors
Share*, %
CIA International
14.8%
Regional representatives
12.9%
Katren
10.6%
AMMA
9.9%
Rosta
8.4%
Apteka-Holding
7.7%
Protek
5.8%
Akonit
4.0%
Moron
2.8%
Interpan
2.6%
Total TOP-10
79.6%
(*) distributor’s share in the total sales for the year of 2009
(**) total sales for the year of 2010
Source: Company data
18
Experienced Management Team
The team of professionals with long-term
experience in the market
Vladimir Tikhonov
CEO
One of the Company’s founders, who manages it since its origin in 1994. Graduated from Moscow State Technical University n.a. Bauman in 1992. Member of the Russian
Academy of Natural Science
Vladimir Kozlov
First Deputy CEO
One of the Company’s founders, Chairman of the Board of Directors. Graduated from Moscow Radiotechnics, Electronics and Automation Institute in 1991
Eduard Chernyshov
Foreign Economic Relations Director
Started his career in OJSC DIOD in the beginning of 1995. Graduated from All-Union Extramural Polytechnics Institute in 1989
Vadim Silantiev
Sales and Marketing Director
Occupies this position since the end of 2000. Graduated from All-Russian Extramural Financial-Economics Institute in 2002
Lubov Dergacheva
Head of R&D Department
Occupies this position from September 2004. Graduated from Moscow State Medical University in 1984. Highest Quality Endocrinologist, specialist in restorative medicine,
holds GSP certificate
19
Best Corporate Governance Practices
Company’s corporate structure
Consumer
Healthcare
OJSC DIOD
Pharmaceutical
100%
Production
99%
Ecologia Zhizni, Ltd.
CJSC Ecologia
Pitaniya
100%
Nika Stroj. Ltd.
Land plot
51%
CJSC Vega Pharm
51%
Flavir, Ltd.
Compounds and raw
taxifolin production
100%
CJSC Ametis
Compounds production,
distribution
50%
Distribution
Nutriceutical production
100%
CJSC Olyfen
Export
Production
Distribution
70%
Independent directors
V. Tyurenkov
Independent Director
■ Private investor, consults several USA and Singapore investment funds.
Worked as a management director of Hansberger Global Investors
investment company, USA; OGK-4 Board Member; Open Investments
Board Member
Education:
■ Moscow State Technical University n.a. Bauman, graduate education in
the Russian Academy of Science Institute of USA and Canada
■ Pepperdine University, USA, California (MBA)
Vitamedis AG
Distribution
74%
SIBLAREX Gruppa
Kompanij Ltd.
Distribution
E.Fell
Independent Director
■ Worked as an employee of the Russian representative office of
Hansberger Global Investors (USA)
■ Has a great experience at the high-tech companies
■ Education: Moscow Aviation Institute, Economist
Nika Servis, Ltd.
Land plot
Y.Kuznetsov
Independent Director
■ Head of Industry Department of the Moscow Government (1992 – 2000)
Education:
■ Kharkov Academy АRTA (1984)
■ Minsk Higher Engineer Technician Academy (1981)
20
Strategy and directions of development
Section 3
Development Strategy
1
■
■
■
Stabilize and retain the share of
consumer healthcare products market
Export and production of
substances
4
■
Launch of new forms of current products
Launch of 12-15 new products by 2013, with
the goal of introducing 2-3 “blockbuster”
products (with annual sales of $10-15 mln) .
■
Develop substances export for
food, cosmetics, and consumer
healthcare production
Development and marketing new brands
without material commercial costs
Use of nanotechnologies in the development
of consumer healthcare products
Pharmaceuticals revenue share shall increase from 10%
up to 50%
2
■
■
Convert into a pharmaceutical company
2010
■
Launch of:
■
■
- modernized generics (combined drugs)
- drugs production under Diod’s umbrella brands
- registration and launch of Diod’s healthcare
products as branded drugs
■
■
5
Construction a new pharmaceutical plant as a
joint venture with a large producer of generics
and substances
- generics
3
2016
■
Launch of functional
/medical nutrition
Use of current healthcare product substances
for functional/medical nutrition
Marketing of functional/medical nutrition under
Diod’s umbrella brands
6
■
■
Retain 5-7% market share in consumer
healthcare segment with annual market
growth of 10-15%
■
Expand distribution network
Besides drugstores, establish new
partnerships with food retailers to
sale consumer healthcare
products and functional/medical
nutrition
Tune the current distribution to
sale new pharmaceuticals
Increase the share of sales by
regional distribution partners and
due to regional promoting
Export sales through partnerships
with foreign pharmaceutical
companies
Increase sales and margins
Increase sales CAGR up to 3033% as a result of launching of
pharmaceuticals and
functional/medical nutrition
Reach EBITDA margin up to 3540%
22
Pipeline
Existing brands
OTC (over-the-counter)
2011
2012
■
■
■
■
2013
■
Rx (prescription products)
■
Antibacterial nose spray
Prevention and treatment of iodine deficit
Decreasing of arterial blood pressure (antihypertensive
treatment)
Rheumatologic diseases and diseases of musculoskeletal
system treatment
■
■
Antiviral product
Children memory and attention enhancing treatment, immune
system treatment
■
Sexual dysfunction treatment
Heart ischemia treatment
Weight control treatment
New (innovative) products
OTC (over-the-counter)
2011
■
Rx (prescription products)
Cardio- and angioprotecting treatment
2012
2013
■
■
Gynecopathy treatment and mastitis
2014
■
■
Prostatitis treatment
2015
■
Antibacterial and immunostimulatory product
■
Neurological diseases’ treatment
■
Prevention of thrombosis (hemoreologic treatment)
■
Osteoporosis treatment
Anti-inflammatory for rheumatism diseases treatment
Side effects of chemo- and radiotherapy treatment
23
Sales and Marketing
Key initiatives of the marketing strategy of “DIOD”
Sales and promotion
■
■
■
■
■
■
Defining market trends, analysis of new attractive market
segments
Development and implementation of efficient brands and
advertising strategy
■
■
Implementation of customer loyalty and customer incentive
programs
■
60-90 day delay of payment provided to distributors at 30%
annual interest rate
Additional discounts, bonuses and incentive schemes
Recurrent marketing initiatives in order to increase
customers’ interest to Company’s products
Target amount of advertising costs - 20% of total sales
The Company has historically successfully launched new
products, which were in great demand and addressed
customers’ needs and demands
The Company makes substantial investments in marketing
and advertising
Advertising expenses allocation, RUB mln
Key elements of the brand strategy
■
■
■
■
15-years’ comprehensive experience of partnership with
leading mass media
Reputation of producer of efficient and secure products
Focus on unique technologies and original compounds
Creation of brands by umbrella pattern which will unite
products of different product categories
Source: Company data
Source: Company’s management accounts for the year of 2009
24
Investment Program
■
■
■
In order to enhance its market positions, the
Company makes substantial investments in its
business development
Investment program
Corporate structure
optimization
Steps
n Conversion of healthcare
products into pharmaceuticals
Capitalization of
R&Ds
n Development of specialized
medical nutrition
Bond issuing
400
19%
The Company has developed a comprehensive
investment program for 2010 - 2014 with a total
value RUB 2.6 bln ($84 mln)
These investments are aimed at growing DIOD’s
market share, increasing its efficiency and
capitalization
Financing sources
Enhancing of
market positions
RUB 2,600 46%
mln
Capital
expenditure
Target
Grow DIOD’s market
share, increase
efficiency and
capitalization
Capital expenditure
n Modernization of current and
construction of new
production facilities
Increase of
production volume
and reduction of
costs
Development and
optimization of
corporate structure
Vertical and horizontal
n
integration
Hedging of business
risks and growth of
the market share
RUB 2,600 1,200
mln
Long-term loan
resources
35%
Budget,
RUB mln
Share issuing
and company
financing
1,000
Expenditures
u Enhance positions in pharmaceutical segment
1 200
u Development of innovative medical technologies
u Enter into new market of health medical food
u Build a new complex to relocate production and
R&D facilities outside of Moscow
900
u Modernization of existing production facilities in
consumer health and pharmaceutical segments
u Completion of current M&A deals
500
u Strengthen of vertical integration through new
acquisitions
Based on the Company’s investment program for 2010-2014.
Source: Company data.
25
Key Financial Indicators
Section 4
Key Financial Indicators
Company’s key financial indicators
Mln. rub.
Revenue
Growth rate
Cost of Sales
Gross profit
Gross margin
2007
2008
Revenue structure by segment, 2010
2009
2010
1 624
1 730
1 559
1 548
14%
7%
-10%
-1%
(671)
(674)
(726)
(752)
953
1 056
833
796
59%
61%
53%
51%
SG&A and other expenses
(527)
(670)
(529)
(493)
R&D expenses
(18)
(17)
(17)
(12)
EBITDA
417
389
332
359
EBITDA margin
26%
23%
21%
23%
Operating profit
407
368
287
303
25%
21%
18%
20%
232
303
374
163
14%
17%
24%
11%
229
200
109
131
14%
182
12%
516
7%
529
8%
610
159
488
491
572
Operating margin
Net profit
Net margin
Net profit less M&A
Net margin less M&A
Total debt
Net debt
Source: Company’s audited consolidated IFRS financial statements for the years of 2007-2010
10% 0%
Nutritional Supplements
6%
1%
12%
Pharmaceuticals
Health cosmetics
1 548 mln.
RUR
Medical equipment
61%
10%
Substances
Sale of goods
Other
Source: Company’s audited financial statements for the year of 2010
27
Key Financial Parameters Dynamics
Revenue, RUB mln
EBITDA, RUB mln
14%
26%
7%
23%
-1%
21%
23%
-10%
Investment expenditures*, RUB mln
Net income, RUB mln
14%
12%
7%
8%
*According to the Cash Flow report for the years of 2007-2010
Source: Company’s audited consolidated IFRS financial statements for the years of 2007-2010
28
Cost Structure and EBITDA
Cost structure, 2010
SG&A structure, 2010
1%
Services of outside organizations
Other
Services Other expenses
Cost of purchased goods
3%
18%
Fixed Assets
depreciation and
intangible assets
amortization
Royalty
2%
8%
Rent
3%
2%
Depreciation
3%
Labor expenses
27%
RUB 752
mln
6%
3%
RUB 481
mln
56%
Materials
Tax
6%
13%
Labor
49%
Taxes
Advertising expenses
EBITDA calculation, 2010 RUB mln
Source: Company’s audited IFRS financial statements
29
Long-Term Growth Drivers
EBITDA 2013
Launch of new
products and
brands
Launch of new
products under
existing brand
names
EBITDA 2008
Marketing
expenses
decrease
EBITDA 2009
Market size
decreases
Consumer
healthcare market
growth
Cost-cutting
initiatives
30
Financial Statements for the Years of 2007-2010
Appendix 1
Income Statement for the Years of 2007-2010
Mln. rub.
Revenue
2007
1 624
growth rate %
COGS
2008
2009
1 730
14%
2010
1 559
14%
1 548
14%
14%
(671)
(674)
(726)
(752)
953
1 056
833
796
Sales expenses
(396)
(516)
(369)
(332)
G&A expences
(131)
(154)
(160)
(150)
R&D expenses
(18)
(17)
(17)
(12)
Operating profit
407
368
287
303
7
154
292
46
Gross profit
Other income
Other expenses
(74)
(65)
(56)
(92)
Earnings before taxes
333
408
410
165
Income tax
(101)
(106)
(46)
(35)
Net income
229
303
364
130
232
303
364
130
3
0
-10
-33
229
303
374
163
91 500 000
91 500 000
91 500 000
91 500 000
2,50
3,31
4,08
1,78
Payments after taxes
Retained earnings per annum
Minority Interest
Shareowners’ Profit
Weighted Average Shares Outstanding per
annum
Earnings per Share (in RUR per share). Basic.
Source: Company’s audited consolidated IFRS financial statements for the years of 2007-2010
32
Balance Sheet for the Years of 2007 - 2010
Mln. rub.
2007
2008
2009
Mln. rub.
EQUITY
2010
Assets
NON-CURRENT ASSETS:
Fixed assets
2009
2010
1
1
1
1
Revaluation reserve
280
285
285
279
Retained earnings
808
1 082
1 429
1 544
1 089
1 368
1 709
1 824
11
57
296
350
1 100
1 425
2 005
2 174
0
310
76
381
73
152
281
295
0
0
21
14
73
462
379
691
182
206
453
229
21
91
158
146
106
46
0
24
401
443
452
0
0
1
1
215
266
268
266
Intangible assets
4
478
1 100
1 160
Financial assets for sale
0
0
0
0
LIABILITIES
Other financial assets
9
19
1
0
Non-current liabilities
Long-term accounts
receivable
16
28
0
0
Long-term loans and
liabilities
Deferred taxes
29
33
46
51
Non-current assets held for
sale
11
0
0
0
Total non-current assets
667
Goodwill
2008
Shareowners' equity
384
Investment property
2007
Total Capital pertaining to the
Mother Company Capital
Minority interest
Total equity
Deferred taxes
Long-term accounts payable
Total non-current liabilities
CURRENT LIABILITIES:
1 226
1 860
1 931
CURRENT ASSETS:
Loans
Accounts payable
Inventories
336
578
639
570
Accounts receivable
496
493
548
797
Reserves
10
42
45
40
Loans
53
21
16
21
Tax liabilities
84
74
62
51
Cash and cash equivalents
23
29
38
38
Total current liabilities
402
459
718
491
TOTAL LIABILITIES
475
922
1 096
1 182
2 347
3 101
3 356
Total current assets
TOTAL ASSETS
908
1 574
1 121
1 241
1 425
2 347
3 101
3 356
Other accounts payable
TOTAL EQUITY AND
LIABILITIES
1 574
Source: Company’s audited consolidated IFRS financial statements for the years of 2007-2010
33
Cash Flow Statement for the Years of 2007-2010
Mln. rub.
2006
2007
2008
2009
2010
Mln. rub.
2006
2007
2008
2009
2010
Investing activities:
Current activities:
Cash from buyers and customers
Other revenues
1 822
1 638
2 028
1 756
1
372
1
11
1 578
Labor
Dividends and interests
Taxes and duties including income
tax
0
0
66
0
0
Proceeds from sale of securities and
other financial investments
0
0
1
0
0
0
1
1
0
1
0
9
9
47
15
12 Interest earned
Redemption of loans provided to other
companies
Cash used to pay for:
Purchased goods, services, raw
materials and other current assets
Proceeds from fixed assets sales and
other non-current assets sales
-1 242
-180
-27
-289
-1 134
-1 474
-181
-67
-250
-248
-49
-352
-1 039
-226
-99
-308
-988 Affiliated companies acquisition
0
-140
-55
-37
-51
Fixed assets acquisition and other
investments into commodities and
intangible assets
0
-2
-34
-22
-18
Acquisition of securities and other
financial investments
0
-10
-200
-1
-3
Loans provided to other companies
0
-24
-15
-17
-8
0
-166
-227
-30
-63
0
0
-1
-1
0
0
0
0
0
0
Loans and Credits repaid
0
30
1 494
1 129
1 271
Repayment of loans and credits
(without interest)
0
-3
-1 144
-1 140
-1 182
Dividends paid
0
0
-13
-24
-10
Subsidies
0
0
0
1
7
Cash Flows from Financing
Activities, net
0
27
336
-35
86
-73
0
5
10
0
5
24
29
38
38
-212
-91
-300 Cash Flows from Investment
Activities, net
Financial activities
Other expenses
-157
-239
-10
-19
-73
140
-103
74
-22 Loss from Currency Purchase
Proceeds from issue of shares or other
Cash Flows from Operations,
net
-23 equity securities
Net Cash Increase (Decrease)
End of the Year Balance
Source: Company’s consolidated IFRS financial statements for the years of 2007 - 2010
34
Key Financial Parameters Forecast
Appendix 2
Key Financial Parameters Forecast
Revenue forecast in nutrition supplements, RUB mln
Revenue forecast in pharmaceutical sector, RUB mln
Revenue forecast in clinical nutrition, RUB mln
Revenue dynamics, EBITDA & net income, RUB mln
Source: Company data
36
Company’s Product Portfolio
Appendix 3
Product Portfolio*
Consumer healthcare
products
Medical nutrition
Health cosmetics
Capillar balm cream
Capillar leg balm
Branded generics
Капилар Эналаприл
Капилар Бета-блокатор
Original products
Capillar cardio
Capillar 120/80
Cardiovascular
Capillar
Capillar-cardio
Capillar 120/80
Armakor
Selen-Aktiv
Neurological
Nurovena
Oil extract with ataractic
effect
Ataractic tea
Activny Den Tea
Artro-Aktiv blisters
Artro-Aktiv alimentary pills
Artro-Aktiv alimentary
Artro aktiv warming
Artro aktiv alimentary
Артро актив Немесулид
Артро актив Диклофенак
Artro Aktiv forte
antiphogistic
Artro Aktiv forte
reconstructive
Artro strong
Araglin D
Bronhodiol
Pulmo Aktiv
Flu treatment
Tooth paste
Георгий спрей для носа
Орвирем таблетка
Orvirem
Arbistrong
Askovertin
Mebix
Capilashka
Arthrological
Antiviral and
antibacterial
Basidial mushrooms
Oncologic
Gipoksen
Capillar forte
Dikvertin
Salivertin
Khimdetox
Gynaecological
Stella
Stella
Georgy silver ion water ionizer
Stella parm
Okulist
Okulist-chernika
Okulist-lutein
Okulist
Tonic Okulist
Okulisty forte
Ophthamology
Phase 1
Phase 2
Phase 4 (Bloker of sweets)
Phase 0
Phase 1 (olean)
Phase 3
Cosmossup
Weight control
Phase 3 forte
Iod-Aktiv standard
Calcium srtrong
Women’s reproductive
health
Е-Aktiv
Q10-Aktiv
Iod-Aktiv
Iod-Aktiv forte
Dolgolet
L-karnitin
Men’s sexual health
Viardo
Viardo-forte
Viardo-max
Prostatcel
(*) Indicated by colors as follows: registered brands, products under registration, planned products
38
Established Partnership With Research Institutes and
Associations
■
■
The Company has sufficient capabilities to develop new
pharmaceutical and consumer healthcare products building
partnership with leading research institutes
R&D partnerships in different sectors
Cardiovascular
15
The Company has established partnership with 53 research
institutes and 8 professional associations, including:
 Belgorod State University (nanocenter)
 State Research University of the Russian Academy of
Medical Sciences (“RAMS”) of pharmacology n.a. Zakusov
Antiviral
12
Women's health
9
 Russian Oncology Scientific Center of RAMS n.a. N.N.
Blokhin
Oncological
8
Arthrological
8
Neurological
8
 Moscow Medical Academy n.a. I.M. Sechenov
 Russian Cardiologic Scientific Institute
 Russian State Medical University
 Moscow Pediatric Surgery Research Institute
 Russian Center of Reconstructive and Spa Medicine
Ophthalmology
7
 Flu Research Institute of RAMS (St. Petersburg)
 Russian Chemical-Engineering University n.a. D.I.
Weight control
6
Mendeleev
 Association of Restorative Medicine
Men's sexual health
5
 Russian Association of Children Oculists
 Russian Association of Obstetrician-Gynecologist
Gynaecological
4
 National Association of Dietarians and Threpsologists
39
Contacts
DIOD OJSC
11A Derbenevskaya Str.
Moscow 115114
Russia
phone: +7 (499) 235-2151
e-mail: [email protected]
IMPORTANT NOTICE
Neither this document nor any copy hereof may be sent or taken or transmitted into the United States, Canada, Australia or Japan or distributed, directly or indirectly, in the United States, Canada,
Australia or Japan. Any failure to comply with this restriction may constitute a violation of U.S., Canadian, Australian or Japanese securities laws.
40