In 1993, "la Caisse de dépôt et placement du Québec" invested 5M in Axcan Pharma (now Aptalis) for a 25% ownership. In 2008, a US private equity fund acquired all shares of Axcan for 1.3B, or 65 times its value 15 years earlier.

1. The Axcan Story
1993 to 2008
Any strategy?
HEC Montréal
cours MNGT 343009A groupe A01 H-2011
11.01.25

2. Mr. Jean Vezina
Consultant, former CFO of Axcan Pharma Inc.
• For 15 years, Mr. Vézina was responsible for finances at Axcan Pharma Inc.
(http://www.axcan.com), a Canadian company based in Mont-Saint-Hilaire, Québec. Initially
hired as director of finance, he became Vice-president of finance and Chief Financial Officer
in 1995 when Axcan became public. In 1993, Axcan was a private company selling exclusively
in Canada and worth approximately 20M CAD. Axcan acquired numerous products and
companies to become multi-national. In 2008, TPG (http://www.tpg.com), a US private
equity firm, bought all outstanding shares of Axcan for 1.3B USD. For its last fiscal year as a
public company, revenues for Axcan amounted to 349M USD, of which 73% originated from
the United States, 16% from Europe and 11% from Canada.
• As a senior-level consultant, in 2009 Mr. Vézina contributed to the completion of a reverse
takeover transaction between Xebec Adsorption Inc., a renewable energy solutions company
located in Blainville (http://www.xebecinc.com), and QuestAir Technologies Inc. in Vancouver.
He also facilitated a financing for Xebec Adsorption Inc. initially announced at 5.0M CAD and
increased to 6.4M CAD, closed on November 25, 2009.
• Mr. Vézina is currently consulting in financing for several public and private companies in
North America.
• Mr. Vézina holds a Bachelor degree in Accounting from l’Université de Sherbrooke and is a
member of the Quebec Order of Certified General Accountants (CGA). In 2004, he
completed the Executive Development Course and Advanced Management Training at McGill
International Executive Institute in Montreal.
The Axcan Story 2

3. Mission and Vision
Source: www.Axcan.com, Company Profile >
• Mission
– To improve the quality of care and health of patients
suffering from gastrointestinal diseases and disorders by
providing effective therapies for patients and specialized
caregivers.
• Vision
– To become the reference gastrointestinal specialty
pharmaceutical Company.
The Axcan Story 3

4. From 1993 to 2008
• 400 M+ raised in financings
• 500 M+ invested in acquisitions:
– 74% products
– 26% companies
• From Canadian to multi national:
– Revenus for FY07:
• 73% US
• 16% Europe
• 11% Canada
• From 20 M to 1.3 B in value, or 65x in 15 years
The Axcan Story 4

5. Financial performance
in millions of USD
FY Revenue Income $ Income %
1999 38 1.4 4%
2000 87 6.7 8%
2001 104 11.8 11%
2002 132 21.2 16%
2003 179 19.9 (Note) 11%
2004 244 48.7 20%
2005 251 26.4 11%
2006 292 39.1 13%
2007 349 71.5 20%
The Axcan Story 5

6. Financial performance
Note
• 2003:
– Net Income of 19.9 millions USD includes:
• 12.0 millions of Acquired in-process research following
the licensing of ITAX from Abbott Laboratories in
September 2003 and
• 3.7 millions of Takeover-bid expenses following the
unsuccessful cash tender offer to acquire Salix
Pharmaceuticals in April 2003
The Axcan Story 6

7. 1993 – 1996
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
1993
• Private placement ($5 million) involving the Caisse de Dépôt et Placement du
Québec, which acquires 25% of the Company's share capital.
1995
• Initial Public Offering: Issue of four million common shares at CDN $6.00 each. The
shares are traded on the Montreal and Toronto Stock Exchanges, under the symbol
"AXP".
1996
• Axcan announces the creation of a joint venture with Schwarz Pharma US, under
the name Axcan Schwarz LLC, which will distribute URSO in the United States, once
approved by the FDA. Among the highlights of the agreement, Schwarz will
acquire 750,000 Axcan shares at CDN $15.50 each.
The Axcan Story 7

8. 1997 – 1998
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
1997
• Second Public Offering with the issue of $17,356,950 in special warrants
exchangeable for common shares.
• Acquisition from American Home Products Corporation of the U.S. rights
of VIOKASE®, an oral pancrelipase formulation.
• Private placement with Mutual Asset Management which has subscribed
450,000 shares at a price of $12.97 for a total of $5,836,500.
1998
• Closing of the sale of the assets of Biopharm Laboratories Inc. to Warnex
Pharma Inc.
The Axcan Story 8

9. 1999
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
– Axcan sells Protectaid subsidiary and acquires full ownership of
Helicobacter pylori single capsule patent.
– Axcan acquires Scandipharm. Axcan becomes the first Canadian-based
pharmaceutical company with its own US national sales force.
– Axcan purchases Schwarz Pharma Inc.'s 50% membership interest in
Axcan Schwarz LLC, created in January 1997 for the purpose of
marketing 250 mg tablets of URSO in the United States. With its sales
force in the US, Axcan can now successfully market URSO 250 mg
independently in the United States.
– Issuance of 7,650,000 common shares providing gross proceeds of
$45.9 million. Net proceeds of this offering allow Axcan to purchase
the minority equity interest of Scandipharm Inc., held by Sofinov.
The Axcan Story 9

10. 2000
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
– Signature of a new agreement with Eurand International S.p.A.
headquartered in Milan, Italy which grants Axcan the right to market a
new generation of the ULTRASE® pancrelipase minitablets.
– Sale of Axcan's 50% equity interest in Althin Biopharm Inc., a
company active in the field of hemodialysis… This transaction allows
Axcan to focus on its core business: the development and marketing
of gastrointestinal drug products.
– Axcan begins trading on the NASDAQ National Market under the
ticker symbol "AXCA", following completion of a US $40.1 million
financing in the United States. The offering is placed principally with
three selected US subscribers…
– Selection of Mr. Léon F. Gosselin, President and Chief Executive
Officer, as Quebec Entrepreneur of the Year in the Healthcare/Life
Sciences field in the privately sponsored Entrepreneur of the Year
Awards program.
The Axcan Story 10

11. 2001 – 2002
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
2001
• Launch of CANASA® mesalamine (5-ASA) suppositories in the United States for
the treatment of active ulcerative proctitis.
• Completion of a CDN $51 million bought-deal.
2002
• Axcan raises US $66.1 million through the issuance of 5,750,000 common shares
at US $11.50.
• Acquisition of Laboratoire du Lactéol du Docteur Boucard in France for US $12.6
million. Lactéol specializes in the manufacturing and distribution of lyophilized
powder and capsules containing a specific Lactobacillus property strain for the
treatment of diarrhea.
• Acquisition of worldwide rights to PANZYTRAT enzyme product line from Abbott
Laboratories.
The Axcan Story 11

12. 2003 – 2004
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
2003
• Acquisition of DELURSAN (Ursodiol tablets) from Aventis, for France.
• Preparations for closing of a US $ 125 million convertible subordinates
notes offering
• Acquisition of a group of gastrointestinal products from Aventis
2004
• Inauguration of new CAN $15 million expansion of headquarters in Mont-
St-Hilaire
The Axcan Story 12

13. 2005 – 2008
Selected Transactions
Source: www.Axcan.com, Company Profile > History >
2005
• Frank Verwiel named Axcan president and chief executive officer - Léon
Gosselin to remain chairman of the board
2008
• Axcan announced the completion of the transaction in which of all of its
common shares have been acquired by an affiliate of TPG Capital. Axcan
common stock ceased trading on the NASDAQ Global Market and on the
Toronto Stock Exchange at market close on February 25, 2008.
The Axcan Story 13

14. Q & A
1 of 4
• To what extent was the company's strategy to become a leader in gastroenterology
planned in advance?
– Evolved over time: from 3 companies to IPO & after
• Was there a single unifying corporate strategy (e.g., growth through acquisitions)?
BTW, why not organic growth?
– Acquisitions were complementing organic growth
• What was the role of finance function in the implementation of the corporate
strategy?
– To execute; execution builds credibility
• Was Finance function just supporting other functions (i.e. providing $$ for
marketing or product acquisitions) or it was trying to create value in some other
ways?
– Delivering on announcements: “Under promise, over deliver”
The Axcan Story 14

15. Q & A
2 of 4
• Within the finance function, how much freedom did you have to improvise or to
come up with your own initiatives?
– I had to make sure the CEO looked good; my team was doing same for me
• When you look back now, it is easy to see what was important, what were good
strategic moves or bad decisions, was it clear when you lived through these
events, when the management team were making their decisions?
– Most of the time, some had a pretty good idea of the potential outcome
• What was the role of stock analysts and bankers in shaping Axcan's strategy?
– Some analysts gave us key advice on street expectations
• What would have happened if Axcan did not listen to them? Did you have options?
Was their advice useful?
– Probably lower stock price; less value for shareholders
The Axcan Story 15

16. Q & A
3 of 4
• Why did the company decide to go public in 1995? Could you still raise more debt
or private equity?
– Triple the money for same dilution
• Are there special strategies for doing a successful IPO?
– Credible story, TIMING and being able to deliver!
• What kind of support do you need from the rest of the organization to make it
successful?
– Unlimited, all must work together towards delivering on announcements
• Why did you do private placements after the IPO? Was it just easier than raising
funds in the public market?
– No risk, less efforts, lower costs, good pricing
The Axcan Story 16

17. Q & A
4 of 4
• How easy was it to find a new product or a company to acquire?
– Quite challenging: LG contacts, BD team, scientific symposia
• Why did Axcan decide to go private? An opportunistic transaction? Analysts'
pressure? SOX compliance costs?
– Maximize shareholders value; 2 products were running out of exclusivity
– SOX compliance was achieved in 2006; costs were already incurred
• Was it a good deal for TPG?
– As Léon often mentioned: “It’s not what you pay for it, it’s what you do with it.”
The Axcan Story 17