3. Industry Performance
A Growth and Accelerating History…
Sales Performance in the Brazilian Pharmacy Retail Industry from 1996-2011 (R$ Billion)
43.00
36.00
30.20
26.40
23.60
21.50
19.20
17.20
14.80
13.10
11.20 11.60
9.40 10.30
8.30
7.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Drivers Macro Drivers Micro Timing
Income Growth Population Aging Generics Drugs Regional Brands Fragmented Formalization
Source: IMS. 3
4. Geographic Concentration
… still concentrated in the Southeast
There is low competition on the regions outside the Southeast.
Drugstores per region (2011) Brazil Pharma vs Competitors (2011)
More dense
Less dense
Competitors Focus
Market Growth - CAGR (2007-2011)
Source: IMS. 4
6. National Footprint
Largest drugstore chain outside the Southeast…
Brazil Pharma footprint and clusters
232 Owned stores
86
1
114 Owned stores
103 20 1 10
118 Owned stores
15 75
201 Owned stores
7
10 352 Franchises
89 114
REGIONS 19
Owned stores Footprint 1.017 Stores
North 104
Northeast 242
Midwest 118
8
Southeast
193
South 201
05 Distribution centers
Source: Brazil Pharma 6
7. Strong Local Knowledge
… With a leadership position in four out of five regions…
Drugstore ranking per Region
1
Number of Stores
North Northeast Mid-west Southeast South
1o
2o
(2)
3o n/a
(2) (2) (2) (2) (2)
4o n/a n/a n/a n/a n/a
Source: Brazil Pharma, Abrafarma 7
Note: (1) Ranking by number of owned stores as of Dezember 31, 2011 considering the four largest Drugstore chains in Brazil; (2) n/a: Other chains do not have operations in the region
8. Competitive Advantages
… Taking benefits of this.
Brazil Pharma competitive advantages
Strong Organic Growth Capacity Maturation of Owned Stores
Organic Growth (# owned stores) (2Q12)
Geography: More Growth and Less Competition Profitable Sales Mix
(CAGR07’-11’) (2Q12)
Brazil Pharma Abrafarma
HPC Branded Generics
Source: Brazil Pharma and IMS 8
10. Increasing Footprint Since IPO
Strong delivery since the IPO…
Footprint at and 12 months later the IPO
Platform @ IPO Actual Platform
(1Q11) (2Q12)
663 Points of sale 1,017 Points of sale
302 Owned Stores 665 Owned stores
361 Franchises 352 Franchises
60 Owned stores
232 Owned stores
1
114 Owned stores
118 Owned stores
89 Owned stores
361 Franchises
352 Franchises
201 Owned stores
153 Owned stores
Owned stores
Franchises
Distribution Center
(1) Sant’Ana’s Distribution Center suffered a fire on December 2011. A new distribution center will be inaugurated in the second half of 2012 ; (2) Includes 11 stores acquired from Estrela
10
Galdino on April 2012 and added to Sant’Ana’s store count in June 30, 2012.Therefore they generated no revenues in 2Q12.
11. Operational Performance Since IPO
… not only in growth, but also on the performance
Incresing operational efficiency and stores productivity
BRPH @ IPO (1Q11) BRPH 2Q12
Stores Performance
# of store employees -10%
per store
22,6 20,4
Sales per store / employee
34,4 54,9
(R$ thousand) +60%
Store EBITDA / employee1
(R$ thousand)
3,7 6,4 +74%
Administrative Performance
# of administrative + distribution -8%
center employees per store 3,8 3,5
EBITDA / employee2
1,5 3,0
(R$ thousand) +98%
Notes: (1) Considers total stores and distribution centers employees. Source: Brazil Pharma 11
(2) Considers total employees (store, distribution centers and administrative).
13. Brazil Pharma History
186 accumulated years of experience…
Great regional companies into a Excellent National Company
186 years of
History IPO
1945 1965 1975 1994 1994 1995 2009 2011 2012 2013E 2014E 2015E 2016E
Source: Brazil Pharma 13
14. One Company, One Culture
… becoming just one Company…
Our dream is what moves our People
• To be the best Drug Store
Dream
Chain of the country
helping create a healthier world
• Provide health and well-being for
our customers
• Create Long-term partnerships with
Mission our suppliers
• To be the best working climate to
develop our talents
• To be profitable to our Shareholders
• Attitude to go beyond
• Etics in all we do
People •
•
•
Proud to belong
Focus on results
Meritocracy to recognize our
talents
Source: Brazil Pharma 14
15. Corporate Structure
… With a simple and aligned structure …
Distinct Companies
Holding
Corporate
Unique Company
Administrative
Commercial Operations
(SSC)
#1 for Suppliers #1 for Customers #1 for Talents
Source: Brazil Pharma 15
16. Operationally Integrated
… becoming 100% integrated
Corporate
Commercial Operations Administrative (SSC)
Joint Management Mapping
negotiation Team
1 1 1
Team Training and
Regional Plugging-in
centralization
2 2 Leardeships 2
Continuos Continuos Continuos
improvement improvement improvement
3 3 3
1. Platforms operate separately but with 1. Management Team to monitor the 1. Requirements understanding, drawing
strict Corporate guidelines; Operations’ Team of each regional platform: the scope and processes;
Culture dissemination and performance
2. Centralization of Procurement 2. Plug-in platforms into the SSC.
monitoring;
department: unification of regional talents
3. Through quality tools, in the quest for
into one single team;
2. Training and formation of Regional constant improvement in its processes
3. Commercial intelligence: relationship leaderships; and productivity gains.
with the industry, sales mix improvement,
3. Centralized operation’s management.
scale in campaigns, standardization of
DC’s and Logistics.
Source: Brazil Pharma 16
18. Brazil Pharma: Comparing With The Peers
Solid track record, with improvements to come on maturation and integration
Stores (as of June 30th, 2012) LTM 2Q12 Gross Profit and Gross Margin
(R$ million, % of Gross Revenues)
807 1,367
30.8%
665 26.4%
874
1 2 1
1 2
LTM 2Q12 Selling, General, Administrative and
Other Expenses¹ and % of Gross Revenue LTM 2Q12 EBITDA¹ and EBITDA Margin
(R$ million, % of Gross Revenues) (R$ million, % of Gross Revenues
1,060 306
703 6.0%
5.9%
171
24.8%
20.5%
1 2
1 2
18
1- Adjusted figures according to each company’s criteria.
20. Why to expand the footprint?
Categories in which Own Potential categories for
BPRPH Platforms act FARMAIS 41,052
11,172
# Stores by Sales Market size
category 64,281
Stores
Addressable market
•10,062 stores
• Average turn-over ~R$
Average sales of
each store 140 thousand/month
R$
thousand/month • Total turn-over ~R$ 1,4
Bi / month ~R$ 16,8 Bi
/ year
Total sales of Market size
R$ 37,437
each category
million
R$ MM/year
Source: IMS internal bases, by distribution study. Data related to medications 20
24. Trade Marketing
Constantly working on improving consumption experience...
Non-renovated store
24
25. Trade Marketing
Constantly working on improving consumption experience...
Renovated store
25
26. Logistics
...Operational excellence supporting sales and growth
New DC – Distrito Federal
Situated at Brasília
Services Midwest region;
Storage area: 5,000 m²;
Ceiling: 8 mts;
3.6 thousand pallet position;
Production capacity of 200,000 units/day;
Storage capacity: up to 13,000 SKU;
Operates with WMS system.
26
27. Logistics
...Operational excellence supporting sales and growth
New DC – Bahia
Situated in Camaçari
Services Bahia state, may also service Sergipe state
Storage area: 9,000 m²;
Ceiling:12 mts;
6,000 pallet positions (reaching up to 8.6 thousand);
Production capacity of 400,000 units/day;
Storage capacity: up to 15,000 SKU;
Operates with WMS system.
27
