![]() Valeant Pharmaceuticals International, Inc. Investor Day June 21, 2012 Exhibit 99.1 |
![]() Valeant’s Investor Day Agenda Today’s Schedule Opening Remarks - Mike Pearson Financial Discussion – Howard Schiller Business Overview – Rajiv De Silva Emerging Markets Europe – Pavel Mirovsky South East Asia/South Africa – Andrew Howden Specialty Pharmaceuticals U.S. Dermatology – Dave Mullarkey Global R&D – Susan Hall Wrap up/Lunch 1 |
![]() Introductions Panel Participants John Connolly – GM Russia/CIS/Adriatic Region Julie Kang – GM Podiatry Alissa Hsu Lynch – GM U.S. Consumer Products Carlos Picosse – GM Brazil Javier Rovalo – Chairman – Latin America Tom Schlader – President, Canada Dan Spira – GM Australia Janet Vergis – CEO, OraPharma Ryan Weldon – GM U.S. Neurology and Other/Aesthetics 2 |
![]() Introductions Guests In Attendance Ronald Farmer – Board Member Robert Power – Board Member Norma Provencio – Board Member Katharine Stevenson – Board Member Robert Chai-Onn – General Counsel Brian Stolz – Chief Human Capital Officer Tanya Carro – Corporate Controller Grace Lin – Treasurer 3 |
![]() Important Information Forward-looking Statements This presentation may contain forward-looking statements, including, but not limited to, statements regarding our financial guidance (including quarterly trends) with respect to revenues, non-GAAP cash earnings per share and adjusted cash flow from operations, future growth, potential product launches, regulatory submissions and approvals, timing and costs of integration, synergies, expenses, business development opportunities and market position, and the impact of foreign exchange on our financial performance and projections with respect to market growth, size and spend. Forward-looking statements may be identified by the use of the words "anticipates," "expects," "intends," "plans," "should," "could," "would," "may," "will," "believes," "estimates," "potential," or "continue" and variations or similar expressions. These statements are based upon the current expectations and beliefs of management and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include, but are not limited to, risks and uncertainties discussed in the company's most recent annual or quarterly report filed with the Securities and Exchange Commission (the “SEC”) and other risks and uncertainties detailed from time to time in the Company’s filings with the SEC and the Canadian Securities Administrators (“CSA”), which factors are incorporated herein by reference. Readers are cautioned not to place undue reliance on any of these forward-looking statements. Valeant undertakes no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect actual outcomes. Non-GAAP Information To supplement the financial measures prepared in accordance with generally accepted accounting principles (GAAP), the Company uses non-GAAP financial measures that exclude certain items. Management uses non-GAAP financial measures internally for strategic decision making, forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to provide investors with a meaningful, consistent comparison of the Company's core operating results and trends for the periods presented. Non-GAAP financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP. The Company has provided guidance with respect to cash earnings per share, adjusted cash flows from operations and organic growth rates, which are non-GAAP financial measures. The Company has not provided a reconciliation of these forward-looking non-GAAP financial measures due to the difficulty in forecasting and quantifying the amount of the items excluded from the non-GAAP financial measures that will be included in the comparable GAAP financial measures. Reconciliations for other non-GAAP financial measures can be found in the appendix to this presentation and in the Company’s earnings releases, which are available under the Investor Relations section of the Company’s website (www.valeant.com). Note on Financial Guidance The reaffirmation of the Company’s previous financial guidance issued on May 3, 2012 is effective only as of the date hereof, June 21, 2012, and will not be updated or confirmed until the Company publicly announces updated or affirmed guidance. |
![]() Opening Remarks J. Michael Pearson Chairman and Chief Executive Officer Investor Day June 21, 2012 |
![]() Agenda Overview Our Strategic Principles How they have changed over the past 4 years Our people and our compensation Update on our OraPharma acquisition Objectives for today 6 |
![]() Valeant Pharmaceuticals Overview Focused, multinational specialty pharma company $2.4B in 2011 revenue and ~7,000 employees Headquartered in Montreal, Canada (NYSE/TSX: VRX) International footprint Specialty Pharma (U.S., Canada, Australia, New Zealand) Branded Generics – Central and Eastern Europe; Latin America; South East Asia and South Africa Diversified revenue base Over 500 products Limited generic risk Minimal exposure to US healthcare reform Leveraged R&D Model with promising pipeline Ezogabine/retigabine Dermatology – IDP-108, lifecycle management Branded generics/ various OTC line extensions Experienced, high quality management team, with established track record for delivering results 7 |
![]() Establishing a Track Record of Performance ($ in millions) Revenue Valeant Biovail Free Cash Flow •2010 and prior years are pro-forma •Free Cash Flow = EBITDA less (Cash Taxes, Cash Interest, & CapEx), plus/minus changes in Working Capital $1.80 $2.63 $2.98 Cash EPS 8 $690 $657 $830 $1,928 $2,463 $2,755 $843 $757 $820 $1,532 $1,414 $1,651 FY 2007A FY 2008A FY 2009A FY 2010A FY 2011A LTM 31- Mar- 2012 $866 $995 $306 $182 $353 $377 $366 $520 $728 FY 2007A FY 2008A FY 2009A FY 2010A FY 2011A LTM 31 - 2012 2010A 2011A 2012LTM 31- Mar-2012 $71 $184 $167 Mar - |
![]() 9 50% Revenue Mix 65% 11% 3% 21% Total Revenues 2010 US Canada Australia Emerging Markets 11% 7% 32% Total Revenues 2012 Fcst US Canada Australia Emerging Markets 59% 27% 14% Product Revenues 2012 Fcst Rx Branded Generics OTC 71% 20% 9% Product Revenues 2010 Rx Branded Generics OTC |
![]() Our Strategic Principles 1. Only compete in attractive market segments • Geographies • Payors • Competition • Therapeutic areas • Product forms 2. Highly disciplined business development driven growth strategy • Undermanaged company assets • In line vs. pipeline • Cash on cash returns >20% • Don’t bet on science 3. Decentralized operations and strategy • Attract top talent • “Insider” in all markets • No global S&M infrastructure 4. Low cost operating structure • Generic mindset 5. Diversification • Geographies (>50% outside the U.S.) • Products (No single product more than 7% sales) 6. Strong bias towards enduring assets • Branded generics • OTC • Topicals • Life cycle management 10 |
![]() How our Strategy has Changed (Lessons learned) Avoid primary care tail products in the U.S. (Wellbutrin) Greater discipline on integration costs Bias to private company deals Bias towards business development vs. share repurchase Bias towards asset vs. company acquisitions Cash flow from operations most important metric 11 |
![]() Our People and Our Compensation Growth strategy requires continual development / upgrading of talent Culture / motivated workforce is critical to excellent execution Compensation system geared to rewarding long term shareholder value 12 |
![]() Notable New Additions To Our Team in Last 12 Months Howard Schiller (CFO) – Goldman Pavel Mirovsky (President Valeant Europe) – CEO Polpharma Andrew Howden (CEO iNova) – AstraZeneca Brian Stolz (Chief Human Capital Officer) – GhSmart Tage Ramakrishna (Chief Medical Officer) – Progenics Pharmaceuticals Alissa Hsu Lynch (GM Consumer Products) – J&J Janet Vergis (CEO OraPharma) – J&J AIP Group Increased from 42 people (2010) to 68 People (2012) 13 |
![]() 2012 Survey Results - Focus on Our People People like working here – 92% agree or strongly agree that they are satisfied with their jobs People believe in our continued growth – 95% agree or strongly agree that Valeant is on the right track for continued growth 90% of our employees would recommend Valeant as an employer to a friend or colleague Our employees cite the following attributes to describe the culture Ethical Accountable Performance oriented Customer focused Dynamic Entrepreneurial Source: 2012 World-Wide Employee Survey conducted in May 2012. 14 |
![]() Compensation for Senior Leadership Annual Comp Target 50% of benchmark for base salary Target top quartile with bonus Revenue – 25% (zero if Cash EPS not met) Cash EPS – 75% Equity Comp 3 year front loaded equity >15% TRS to vest Up to 2-3 times multiple - based on 30-45% TRS 15 |
![]() OraPharma, a Valeant Company U.S. dental market (products) - ~$17B ~$ 5B Periodontal Market Fragmented with no big pharma presence ~7%+ growth projected 45,000+ dental offices in the U.S. Broad potential for offerings Rx products Devices OTC High cash pay component Market Characteristics 16 Business Overview Founded in 1996 Became subsidiary of J&J in 2002 Acquired by Water Street Healthcare Partners in 2010 Most recognized name in Dental Pharmaceuticals – OraPharma 100 person, highly respected sales force Key products ARESTIN (periodontis) Best in class – 35 studies Xerese (cold sores) Best in class Healos (bone regeneration) Status Deal closed June 18, 2012 Planned new |
![]() Why OraPharma? Niche Market Avoid big pharma Cash pay / no government reimbursement Durable assets Ability to expand into other geographic markets Attractive additional BD opportunities to add to platform (drugs, devices, OTC) Double digit growth opportunity Base Case 36% tax rate With cost synergies U.S. only IRR > 20% Upside Case Lower tax rate Promotion of Valeant products (e.g. Xerese) Pipeline products Other geographies Strategic Criteria Financial Criteria 17 |
![]() Today’s Meeting Objectives 1. Addressing Investors’ Financial Concerns Our progress on building a cash flow generating machine Demystifying organic growth calculations Clarifying normal rhythm of our earnings and how annual guidance should be anticipated on a quarterly basis Providing insight into restructuring charges Outline changes we are making to our quarterly earnings call based on your feedback 18 |
![]() Today’s Meeting Objectives (Continued) 2. Address Investor Questions Around Our Emerging Markets Business Underlying performance in Europe Our strategy in South East Asia and South Africa 3. Address Questions Around Underlying U.S. Dermatology Performance 4. Update On How We Are Spending $100M/year in R&D 19 |
![]() What I Am Excited About Overall performance of the business continues to be strong – both operationally and financially In the last year, we have become a major player in two of our key segments – Central and Eastern Europe and dermatology We have added 8 new growth platforms (South East Asia, South Africa, Russia / CIS, nutritionals in Brazil, OTC in Canada, Podiatry, Oral health, Aesthetics) Significantly strengthened our organization Efinaconazole (IDP-108); Potiga/Trobalt; Regederm Deal flow has never been better – both small & large 20 |
![]() Opening Remarks J. Michael Pearson Chairman and Chief Executive Officer Investor Day June 21, 2012 |
![]() Financial Discussion Howard Schiller Executive Vice President, Chief Financial Officer Investor Day June 21, 2012 |
![]() 2 Topics to Cover Financial Performance Established track record of financial performance We have a growing, profitable business model Organic Growth Both the base business and acquired businesses are growing, although there will be quarter - quarter fluctuations in growth rate March 31 , 2012 LTM base business organic growth is 8% - “Same Store Basis” Business Development A disciplined approach - high IRR’s and short payback periods Timing and amount of synergy capture and restructuring charges depends on the type of deal BD effort to date has added significant revenue and new growth opportunities Guidance Excluding the impact of acquisitions, 40-45% of Cash EPS is generated in 1 half of year FX has been a headwind We are re-affirming high end of guidance from our Q1 earnings call Changes to our quarterly presentation We have taken your suggestions seriously st st |
![]() 3 Growing, Profitable Business Model Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Reported Revenues ($M) $452 $494 $467 $515 $565 $609 $601 $688 $856 Sale Cloderm/5FU/IDP111 -$36 -$66 Milestones -$40 Revenues excl. certain one-time items $452 $494 $467 $515 $529 $569 $601 $688 $790 Revenue Growth (vs PYQ) 17% 15% 28% 34% 49% Reported Cash EPS $0.44 $0.46 $0.40 $0.50 $0.62 $0.73 $0.66 $0.93 $1.14 Sale Cloderm/5FU/IDP111 (margin) -$0.05 -$0.15 Milestones -$0.12 Gain on Cephalon Shares -$0.06 Exchange Gains -$0.06 -$0.08 Cash EPS excl. certain one-time items $0.44 $0.46 $0.40 $0.50 $0.56 $0.54 $0.66 $0.87 $0.91 Cash EPS Growth (vs PYQ) 28% 17% 65% 75% 61% Cash Earnings ($M) excl. certain one- time items $146 $153 $131 $164 $188 $179 $212 $277 $287 Cash EPS / Revenue 32% 31% 28% 32% 36% 31% 35% 40% 36% Cash EPS / Revenue (LTM) 31% 32% 32% 34% 36% 36% •Used Q4, 2010 (1st Q post-merger) for Q1-Q3, 2010 share count •Q3’10 and prior period revenue and cash earnings are pro-forma |
![]() 4 What Is Management Focused On? Integration and operational excellence Organic Growth Synergy realization Gross margin improvement Working capital efficiencies Talent Development Developing a bench; next generation leaders Business Development Deployment of capital is most important decision Maintaining our price discipline is key to success Ultimately, we are focused on delivering superior shareholder returns! |
![]() 5 Organic Growth * Same Store Sales only include acquisitions in their first full quarter of comparison Q1, 2012 LTM SSS Organic Growth = 8% 7% 7% 4% 4% 14% 12% 10% 13% 10% 6% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 As Reported Same Store Sales |
![]() 6 Organic Growth 7% 7% 15% 4% 4% 12% 14% 12% 24% 10% 13% 23% 10% 6% 14% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 As Reported Same Store Sales Same Store Sales w/o Neuro & Other * Same Store Sales only include acquisitions in their first full quarter of comparison Q1, 2012 LTM SSS Organic Growth = 8% |
![]() 7 Progress on 2012 Synergy Program Run rate expected by mid- year Run Rate May 3, 2012 $200 million $165 million Run Rate Feb 23, 2012 $135 million Run rate expected by Year- end $230+ million* * Includes acquisitions announced and closed in 2012 |
![]() 8 Synergy Capture Synergy Scenario Recent Examples Timing of Synergy Capture Business is folded into Valeant infrastructure in first Quarter Ortho, Dermik, University Medical, Eyetech, Afexa, Atlantis Immediate Business is "bolt-on" to Valeant Day one and integrated into Valeant infrastructure over time Europe (PharmaSwiss, Sanitas), Brazil (Delta, Bunker), Tecnofarma Over Time New Platforms Russia (GL, Natur Produkt*), Podiatry (PEDiNOL), SEAsia/South Africa (iNova), Probiotica, OraPharma Over Time * Not yet closed |
![]() 9 Synergy Capture Ortho/Dermik Example Total Dermik Total Pre- Total Post VRX Derm & Ortho Synergy Synergy Headcount 213 472 685 499 OpEx $84.5 M $151.3 M $235.8 M $125.1 M Total synergies of $110.7M achieved in Q1, 2012 |
![]() 10 Business Development Characteristics of our acquisitions Markets with attractive growth rates Durability of earnings We don’t bet on science Rigorous Financial Modeling Target of 20+% IRR at statutory tax rates Target cash payback within 5 to 6 year range Acquisition and restructuring costs are modeled as additional purchase price Integration Speed is important The “best person” rule Tracking Performance We track revenue and synergies Deal model including restructuring costs becomes budget |
![]() 11 Summary of 2012 YTD BD Efforts Large number of smaller deals Low risk, high IRR deals In aggregate, added approximately $400 million or more than 10% to run rate revenue Decentralized structure allows for faster, more efficient integration Deals spread among regions and businesses 4 in U.S. (none in derm) 1 in Canada 2 in Europe (none in Poland) 3 LatAm (no deals in 2011) Many deals represent exciting new growth platforms or are material at the local level PEDiNOL – Podiatry OraPharma – Dental GL and Natur Produkt* – Russia Probiotica – Brazil Acne Free – Consumer Eyetech – Opthalmology Integrations will be less costly No acquired manufacturing facilities other than in Probiotica Few people acquired (mainly sales reps) * Not yet closed |
![]() 12 $M Purchase Price Restructuring, Integration & Acquisition Related Costs (Q4 10 - Q1 12) Projected Annualized Synergies Restructuring, Integration & Acquisition Related Costs % of Projected Annualized Synergies Biovail N/A 204.1 350.0 58% Ortho/Dermik 767.0 43.7 110.7 39% Europe (PharmaSwiss, Sanitas) 939.0 23.6 75.0 31% Afexa 92.0 13.3 13.0 102% iNova 657.0 10.0 25.0 40% Probiotica 91.0 0.8 1.9 42% EyeTech 22.0 0.1 5.7 2% Total 2,568.0 295.6 581.3 51% Restructuring Costs & Synergies (Includes deals through Q1, 2012) * * * * Europe, iNova, Probiotica – Some additional restructuring and integration costs related to these acquisitions are yet to be incurred |
![]() 13 Our Approach to Guidance Provide revenue, Cash EPS, and adjusted cash flow from operations on an annual basis Updates to our annual guidance are provided quarterly We don’t included future deal forecasts – we only include BD that is closed or announced We don’t include the effect of potential changes in exchange rates or actual gains/losses from changes in exchange rates Our business is stronger in the second half of the year We are reaffirming our current FY guidance at the higher end of the range Does not include OraPharma, Natur Produkt, Acne Free, Swiss Herbal |
![]() 14 Changes to Our Quarterly Earnings Presentation Earnings call moving to 8 a.m. ET Gain/loss from asset sales: GAAP EPS – Will be moved to Other Income Cash EPS – Will be excluded FX gain/losses will continue to be included, but if significant, Cash EPS will be shown with and without Cash EPS will be shown with and without certain “one-time” items (e.g. milestone payments) Organic growth will be shown on a Pro-Forma, Base Business, and Base Business Without Neuro basis All acquisitions will be included Royalty payable to Meda begins in January 2013 10% royalty on sales of Elidel, Xerese and Zovirax Royalty payments will not affect GAAP earnings, but will be deducted in Cash EPS calculation Restructuring, integration and acquisition charges will be disclosed by deal and category of expense As always, our goal is clarity and transparency |
![]() 15 Annual Financial Guidance for 2012 As of June 21, 2012 Revenue = $3.4 - $3.6 billion Cash EPS = $4.45 - $4.70 > $1.4 billion in Adjusted Cash Flow from Operations “One-timers” Included: $66M – Sale of 5FU/IDP111 (Q1) $45M – Retigabine milestone (Q2) $111M $0.15 – Sale of 5FU/IDP111 (Q1) $0.08 – Fx Gain (Q1) $0.14 – Retigabine milestone (Q2) $0.37 $66M – Sale of 5FU/IDP111 (Q1) $45M – Retigabine milestone (Q2) $111M |
![]() 16 Cash EPS Trends (excluding certain “one-timers” and acquisitions) 31% 33% 23% 27% 25% 21% 23% 27% 19% 21% 26% 24% 0% 10% 20% 30% 40% Q1 Q2 Q3 Q4 2011 Actuals 2012 Budget 2012 Consensus Estimate * $3.99 Cash EPS consensus estimate is as of March 22nd, 2012 and excludes $0.14 for the Q2 GSK milestone 44% 56% 60% 40% 53% 47% 0% 20% 40% 60% 80% 1H 2H 2011 Actuals 2012 Budget 2012 Consensus Estimate $1.86 $2.13 ($3.99) * |
![]() 17 Cash EPS (excluding certain “one-timers”) *All figures above exclude the GSK milestone **FY consensus averages are based on the March 22 nd , 2012 FY guidance $0.88 $0.80 $1.03 $1.28 $0.91 $0.96 $0.90 $1.03 $1.10 $0.96 Q1 Q2 Q3 Q4 FY Consensus Estimate at Avg 2011A / 2012B Phasing Q1, 2012 Actuals Consensus Estimate, March 22nd 2012 Consensus Estimate, Current |
![]() 18 Q2 Currency Impact -20% -15% -10% -5% 0% 5% 10% 11/03/11 Spot Q1 Avg April 2012 Avg May 2012 Avg 6/7/2012 Spot AUD BRL CAD EUR MXN PLN RUB RSD ZAR Based on internal forecasts as of Q1’12 earnings call, declining currencies are expected to have a negative Q2 impact of $0.03 Cash EPS and $15M revenue |
![]() 19 Q2 Currency Impact 2012 vs. 2011 “Year over Year Declining Rates” -30% -25% -20% -15% -10% -5% 0% AUD BRL CAD EUR MXN PLN RUB RSD ZAR Compared to Q2’11 exchange rates, declining currencies have a negative Q2’12 impact of $55 - $60 million revenue and $0.05 - $0.06 Cash EPS |
![]() 20 Adjusted (Non-GAAP) Cash Flow from Operations GAAP Cash Flow from Operations, adjusted for: Cash Payments Relating to Restructuring/Integration/Acquisition costs, Legal Settlements, and IPR&D payments One time working capital changes relating to business development activity (where A/R and Inventory are not acquired) In Q1 12, adjustments to GAAP Operating Cash Flows were $88.0 M, of which $87.3 M was related to Restructuring/Integration/Acquisition costs: If we stopped all BD activity, restructuring/integration/acquisition costs would trend to zero. Ortho/Dermik 26.9 Biovail Merger (closure of old Biovail HQ) 25.9 Europe (PharmaSwiss, Sanitas) 11.9 Afexa 9.5 iNova 9.3 Manufacturing Integration (Various Deals) 1.9 Probiotica 0.3 Eyetech 0.1 Other 1.5 Total 87.3 $ |
![]() 21 Q1 Restructuring, Integration and Acquisition Related Costs Expense Type Q1 Amount Paid (millions) Comments Facility Closure Costs 22.6 Relates to closure of Mississauga facility. $12.4 M was accrued for in previous quarters. Acquisition Related Costs 19.8 Includes payments for legal fees and advisory services associated with Dermik, Ortho, and iNova transactions ($17M) accrued in previous quarters. Severance Payments 19.7 iNova $8.1M, Ortho/Dermik $6.2M, Europe $3.3M, Other $2.1 M Integration related consulting, duplicative labor, and other 10.7 Duplicative Labor (Europe, Canada) $3.2M, IT Integrations costs and Transition Services $5.1 M, Integration Related Consulting (Dermik/Ortho) $2.4 M Contract Termination 3.2 Termination of contracts associated with Mississauga facility $1.6M, Other smaller items $1.6M Manufacturing Integration Costs 1.8 Related to integration of Delta and Bunker facilities in Brazil Travel/Other 1.4 Payments of Integration Costs accrued in previous quarters 8.1 Includes Integration related consulting, duplicative labor, contract termination and manufacturing integration costs accrued for in previous quarters Total 87.3 |
![]() 22 Topics to Cover Financial Performance Established track record of financial performance We have a growing, profitable business model Organic Growth Both the base business and acquired businesses are growing, although there will be quarter - quarter fluctuations March 31 , 2012 LTM base business organic growth is 8% - “Same Store Basis” Business Development A disciplined approach - high IRR’s and short payback periods Timing and amount of synergy capture and restructuring charges depends on the type of deal BD effort to date has added significant revenue and new growth opportunities Guidance Excluding the impact of acquisitions, 40-45% of Cash EPS is generated in 1 half of year FX has been a headwind We are re-affirming high end of guidance from our Q1 earnings call Changes to our quarterly presentation We have taken your suggestions seriously st st |
![]() Financial Discussion Howard Schiller Executive Vice President, Chief Financial Officer Investor Day June 21, 2012 |
![]() Questions? J. Michael Pearson Howard Schiller |
![]() Business Overview Rajiv De Silva President, Valeant Pharmaceuticals International, Inc. Chief Operating Officer, Specialty Pharmaceuticals Investor Day June 21, 2012 |
![]() 1 Executive Summary Pharmaceutical market gives Valeant a large canvas upon which to implement a unique strategy $700B+ IMS reported, but likely $1-2 trillion when adjacent categories and unreported sales are included Highly fragmented, with a substantial component in private companies Fundamental shift in growth rates among global markets Emerging markets most attractive Developed markets are slowing (e.g., Western Europe) But, still some attractive niches in the U.S., Canada and Australia Valeant strategy has focused on re-shaping its footprint in light of market dynamics Exit / avoid low growth markets, e.g., Western Europe, Japan Focus efforts in the U.S. on niche platforms, e.g., Dermatology Canada and Australia offer opportunistic platforms through acquisitions / mergers – Biovail and iNova Focus on high growth emerging markets – Latin America, Central and Eastern Europe, South East Asia, South Africa |
![]() 2 Future Growth Will be Most Attractive in Emerging Markets 1 Real GDP growth; Pharma spend growth in constant US dollars Source: Economic Intelligence Unit (EIU); BMI Above median Below median Western Europe Japan US & Canada Asia (ex Japan) Australia Africa Central & Eastern Europe Latin America 0% -1% 0% GDP growth (2008-2011) 7% 2% 2% 1% 3% 0% -1% 0% GDP growth (2008-2011) 7% 2% 2% 1% 3% -2% 1% 2% Projected pharma spend growth (2012-2016, CAGR) 12% 1% 10% 8% 11% -2% 1% 2% Projected pharma spend growth (2012-2016, CAGR) 12% 1% 10% 8% 11% Projected GDP growth (2012-16) 1% 1% 3% 4% 2% 7% 3% 4% Projected GDP growth (2012-16) 1% 1% 3% 4% 2% 7% 3% 4% 1 1 1 |
![]() 3 Investment Focus Niche markets that fit strategy Dermatology Podiatry Ophthalmology Dentistry Orphan Avoid primary care Broad presence given legacy Biovail / Valeant capabilities Aggressive in-licensing to leverage infrastructure Build Consumer business Broad presence given legacy iNova / Valeant capabilities Bolt-on acquisitions in Consumer Increase critical mass in Brazil and Mexico Look for new market expansion opportunities (e.g., Colombia) Growing “anchor markets” – Poland, Serbia High growth emerging markets – Russia, CIS New platform from iNova acquisition Strengthen existing hubs (e.g., Malaysia and Philippines) Enter new markets (e.g., Indonesia, Vietnam) New platform from iNova acquisition Strengthen hub in South Africa U.S. Canada Australia Central Europe Latin America South East Asia South Africa |
![]() 4 Valeant Has Grown by Focusing on High Growth Countries / Niche Markets **Adjusted for Valeant/Biovail merger. Line denotes share price plus the special dividend paid to Legacy Valeant shareholders related to the Biovail merger. Valeant stock price* (Adjusted Close – $USD); selected deals |
![]() 5 Business Unit Overview Rx Dermatology Consumer Aesthetics Podiatry Dentistry Ophthalmology Neurology / Other U.S. Canada / Australia Emerging Markets Latin America Asia / Africa Central / Eastern Europe Poland Russia / CIS Serbia Balkans / Other Canada Australia Mexico Brazil South East Asia South Africa 2012 Revenue ~$1,700 ~$100 ~$360 ~$760 ~$600 |
![]() 6 Case Study: U.S. Podiatry PEDiNOL, A Valeant Company ~$1B U.S. market (2011) Fragmented with no big pharma presence 3-5% growth projected 17,000+ podiatrists in the U.S. Broad potential for offerings Rx products OTC/cosmetics Dietary supplements Wound care Orthotics / Diabetic shoes / braces Equipment for in-office procedures High cash pay potential Founded in 1925 ~$50M* in sales Most recognized name in podiatry: PEDiNOL ~25 person highly respected sales force Key products Ertaczo (Athlete’s Foot) Gris-PEG (Athlete’s Foot) CeraVe SA Nalfon (pain) Various OTC Integration targets achieved Severances completed National Sales Meeting on 6/11/12 to kick off new unit Market Characteristics Business Overview New * Includes Valeant podiatry products |
![]() 7 Latin America Overview Mexico Population: ~115M Healthcare spend: $605 / Capita / Year Pharmaceutical market: ~$20B Cash pay: 75% of total spend Brazil Population: ~195 M Healthcare spend: $990 / Capita / Year Pharmaceutical market: ~$25B Cash pay: 70% of total spend |
![]() 8 Valeant Brazil—Overview Market size ~ $25B High growth outlook ~10-12% Well regulated environment Affluent segment of population with high disposable income High proportion of out-of- pocket expense (~70%) Government reimbursement system providing broad access Physicians and pharmacists are important points of influence 2012 revenues of ~$150M Legacy Valeant Branded Gx OTC Dermatology Acquired Branded Gx Bunker and Delta (Regederm) Branded Gx Probiotica Sports nutritionals High growth business 2009 – 2012 growth of 88% CAGR Organic growth of ~15% projected for 2012 Market Characteristics Business Overview |
![]() 9 Valeant Mexico—Overview Market size ~$20B Strong growth outlook ~7% Government reimbursement broadly in place, but largely a cash pay market High proportion of out-of- pocket expense (~75%) Strong branded generics market Substantial influence of pharmacists and concentrated retailers and wholesalers 2012 revenues of ~$210M Legacy Valeant Branded Generics OTC Bedoyecta – Vitamin B Tecnofarma Generics / Branded generics Atlantis Branded generics 2009 – 2012 growth of 17% CAGR Organic growth of >10% projected for 2012 Market Characteristics Business Overview |
![]() 10 Further Opportunities for Expansion Exist in Latin America Valeant market Valeant not present Expansion Opportunity 0 5 10 15 8 7 6 5 4 3 1 0 Paraguay El Salvador Ecuador Costa Rica Bolivia Peru Chile Argentina 10 9 Projected Rx/OTC Growth CAGR (2012-16) Current Rx/OTC Market Size 2011, Dollars Billion 26 12 2 Brazil Mexico Venezuela Nicaragua Honduras Guatemala 11 Colombia Source: BMI |
![]() Business Overview Rajiv De Silva President, Valeant Pharmaceuticals International, Inc. Chief Operating Officer, Specialty Pharmaceuticals Investor Day June 21, 2012 |
![]() Emerging Markets – Central and Eastern Europe Pavel Mirovsky President, Valeant Europe Investor Day June 21, 2012 |
![]() 2 Geographic Footprint CEE, Russia, CIS Population = 340 million people Pharmaceutical Market = $31B Territory of 8,567,284 square miles |
![]() 3 14 12 10 8 Projected Rx/OTC Growth CAGR (2012-2016) 20 4 2 0 Western Europe Turkey Ukraine Slovenia Croatia Bulgaria Belarus 18 6 Kazakhstan Hungary 274 272 16 Serbia Slovakia Latvia Lithuania Poland Czech Republic Romania Russia Valeant market Valeant not present Expansion Opportunity PharmaSwiss and Sanitas Acquisitions Have Created a Broad Eastern European Footprint Current Rx/OTC Market Size 2011, Dollars Billion -2 0 2 4 6 8 10 12 14 16 |
![]() 4 Business Strategy Business model consistent with Valeant philosophy Durable branded generic business Rich pipeline, rapidly growing number of new launches Operational and market access excellence Aggressive, but disciplined, BD and M&A activities Execute synergies – on time and in full Out-pace both the market and the competitors Focus on key geographies in CEE Russia & CIS, Poland, Serbia, Explore Middle East North Africa (MENA) potential Avoid Western Europe |
![]() 5 Where We Rank in The CEE Market Rank Company Market Share 1. Novartis 7.9% 2. Sanofi-Aventis 7.0% 3. Roche 4.7% 4. Teva 3.8% 5. GSK 3.7% 6. Servier 3.7% 7. Pfizer 3.3% 8. Bayer 2.9% 9. KRKA 2.7% 10. Abbott 2.7% …….. 15. Valeant Pharmaceuticals 2% |
![]() 6 Business Summary Region Revenues (2012e) # Sales Reps % Govt Reimbursement Poland ~$200 M 325 ~30% Serbia ~$100 M 90 ~45% Russia/CIS/ Adriatics ~$200 M 525 ~20% Central Europe ~$135 M 215 ~40% All Other ~$65 M 0 Partnered Total Valeant Europe ~$700 M 1155 (85%*) ~30% * % of total headcount, excluding manufacturing |
![]() 7 Product Mix - CEE Drivers of Change: Reduced dependence on very competitive cardiovascular segment Significant penetration into dermatology Entry to niche segments as ophthalmology and gastro-enterology Significant growth in oncology driven in Ex-Yugo and Baltic markets and launches of licensed innovative oncology portfolio Continuing focus on OTC 2012e Primary, 37% OTC, 29% Specialty, 34% |
![]() 8 Poland The new pharmaceutical law has had a dramatic short term negative impact on Polish market 2012 forecast predicts no growth for retail market first time in 20 years Week 1-10: (18.8%) in value, Week 11-20: ~(4%) Full year expected at zero growth 2011/2012 Valeant one of few companies that continue to grow May +4% (YTD) 2012-2016 Polish market expected CAGR >5% Forecasted Valeant organic growth is expected to significantly outpace the market |
![]() 9 Branded Generics Example: 250+ launches per year planned in Central and Eastern Europe Example Product Indication Market Benzydamine lozenges / Spray Throat inflammation Multiple markets Ketoprofen ER tablets / Spray Inflammatory pain Multiple markets Mometasone / Cream, Solution Skin inflammation Multiple markets Telmisartan-HCTZ / Tablets Hypertension Multiple markets Azithromycin / ODT Respiratory tract infections Multiple markets Brimatoprost / Eye drops Glaucoma Multiple markets Terbinafine / Tablets Antifungal Multiple markets |
![]() 10 Business Development Opportunities Purchasing Dossiers ~$70,000 expense per dossier (on average) Representation business Eisai oncology In-licensing products Ipsen GI, dermatology, oncology Small acquisitions Chemo Iberica’s diabetes drugs in Russia Mid-size acquisitions Gerot Lannach (Russia/CIS) Natur Produkt (not yet closed) |
![]() 11 5 Year Aspirations Become a top 10 pharma in CEE (>5% market share, >$2 B turnover) Focus on Russia, Russia, Russia, Poland, Ukraine, Kazakhstan, explore MENA potential Shift focus to OTC, niche markets (dermatology, ophthalmology) and enter biosimilars Maintain double digit organic growth, coupled with intensive BD/M&A EBITA growing from 31 – 37% (base case) to 31 - 41% (aspirational) |
![]() Emerging Markets – Central and Eastern Europe Pavel Mirovsky President, Valeant Europe Investor Day June 21, 2012 |
![]() Emerging Markets - South East Asia and South Africa Andrew Howden CEO, iNova Valeant, South East Asia, South Africa and Australia Investor Day June 21, 2012 |
![]() 2 Notes: 1 All employee figures are as at June 2012 2 Country sales figures are excluding royalties (SEA) and acquisitions Valeant Asia / Africa Pacific Footprint Other African markets – Partners Vietnam – 2 Partners Taiwan – A$0.6m, 1 Partner South Korea – A$2.6m, 2 Partners China – A$1.0m, 2 Partners South Africa – A$37m 37 employees Philippines – A$6.1m, 5 employees + sales outsourced Singapore – A$5.4m, 9 employees Malaysia – A$11.0m, 26 employees Hong Kong – A$3.0m, 7 employees Thailand – A$6.8m, 2 Partners Japan – A$6.7m, 2 Partners Indonesia – Begin 2012 Valeant presence Distributor or licensing partner |
![]() 3 Philippines Indonesia Thailand Current Rx/OTC Market Size 2011, Dollars Billion South Korea China 68 66 Taiwan 14 12 10 Projected Rx/OTC Market Growth CAGR (2012-16) 128 126 8 6 4 2 0 Vietnam Japan Hong Kong Singapore Malaysia South Africa Valeant market Valeant partners Expansion Opportunity Our Focus Has Been on High Growth Markets With Opportunities for Future Expansion India 0 5 10 15 Source: BMI, company data |
![]() 4 Business Summary - Established and Growing Businesses in Key Asian Markets Region # Sales Reps Key Products % Govt Reimbursement Malaysia 17 Difflam, Duromine, Nuelin, DuroTuss <10% Thailand 29 Norgesic, Nuelin <30% Philippines 38 Difflam, Norgesic 0% Singapore 5 Difflam, DuroTuss, Duromine 0% Hong Kong 4 Difflam, DuroTuss, Tambocor 0% Source: Market data |
![]() 5 Valeant Growth Exceeds Market Growth in Asian Markets Country Valeant YTD MAT Growth Q1’12 Market YTD MAT Growth Q1’12 Thailand +24% +3% Philippines +23% +6% Malaysia +24% +12% Singapore +8% +3% Hong Kong +15% +10% Source: IMS |
![]() 6 17,204 19,518 21,886 24,184 26,165 7,965 9,870 12,721 15,958 19,173 0 20,000 40,000 60,000 80,000 16,886 2007 39,196 14,027 Sales (USDm) Originals 54,767 Unbranded Gx 2011 Branded GX 72,211 2009 46,274 26,873 2008 2010 63,787 20,160 23,645 CAGR 21% 16% 11% 15% Overall APAC Sales breakdown by originator Branded Generics Showing Strong Growth Across Asian Market Why Brand Matters • In mature markets unbranded generics represent fastest growing segment • Brand is associated with quality and can command a higher price • In less mature markets generics as a whole represent a greater share – given price concerns • Branded generics are both larger and faster growing than unbranded Source: The APAC Pharmamarket; Connecting the dots, July 2011 |
![]() 7 Consumers in Asia Pacific Show a High Propensity to Self-medicate – Strong OTC Segments Expectorants Allergy Chinese Medicines Cold Preps Dietetics Non-narcotic Analg. Vitamins & Minerals Anti-rheumatics, topical Antacids All other therapeutics Source: IMS Health MAT Dec 2011; OTC only Asia Pac OTC Market Value share, percent Value CAGR (2007 - 2011), % ~-1 ~1 ~4 ~6 ~4 ~ 6 ~5 ~4 ~20 ~20 15.8 6.3 5.1 4.4 3.3 3.2 3.0 2.8 2.4 7.4 |
![]() 8 Product Focus Remains With Weight Control, Dermatology, Cough, Throat and Pain Products Drivers of Change: Focus on sales and marketing as a competitive advantage Build key account management Difflam, Durotuss and Duromine key growth drivers (throat, cough and weight management) Take a position of Professional Endorsement for brands Extend product life cycles with Product Development 2012e Primary, 30% OTC, 52% Specialty, 18% |
![]() 9 Key Market / Environmental Factors South Africa High growth market - +5-10% Consistent market growth through volume and price increases Established brands, growing pharmacy segment with strong OTC brands Introduction of the National Health Insurance (NHI) to enable broader access to healthcare and medication International Benchmark Pricing (2013) will result in 3-4% one-off loss from total private sales turnover Protracted regulatory process at Medicines Control Council (MCC) current backlog of more than 4,000 applications at the MCC |
![]() 10 Valeant Is One Of The Fastest Growing Pharmaceutical Businesses in South Africa Source: IMS MAT Mar-2011 , LHS based on AUD, RHS based on ZAR BI SA Average 2006-2010 CAGR=13.1% Valeant growth evolution vs. leading South African companies Average MAT Q1 2011 PPG= 6.6% 40 10 0 35 10 5 15 (10) 25 (5) 0 5 15 20 30 J&J LILLY NOVARTIS AZ SERVIER Sanofi International MNCs BI ADCOCK CIPLA BMS PFIZER ROCHE Valeant MAT Q1 2011 Annual Sales Growth 30 25 20 S.Africa MNCs LUPIN ASPEN J&J BAYER ABBOTT NOVO MERCK KGAA MSD |
![]() 11 Five-Year Aspirations Rank in top 10 in key markets – South Africa, Thailand, Philippines, Indonesia, Malaysia Target of $500m sales Enter new markets and establish brands in Indonesia and Vietnam Aggressive acquisition plans to speed growth Launch global Valeant brands in Asia and Africa – CeraVe, Dr Lewinns, Dermaveen, Hamiltons Sun and create strong skin position Patient/customer value at the core of everything we do Maintain focus on sales management Professional endorsement of brands as a key marketing focus Balanced portfolio of OTC and Prescription brands to suit Asia and African markets Supply Chain optimization and efficient/lean operational structure |
![]() Emerging Markets - South East Asia and South Africa Andrew Howden CEO, iNova Valeant, South East Asia, South Africa and Australia Investor Day June 21, 2012 |
![]() Questions? Panel: Pavel Mirovsky Andrew Howden Javier Rovalo Carlos Picosse John Connolly |
![]() U.S. Rx Dermatology David Mullarkey Senior Vice President & General Manager, Valeant Dermatology Investor Day June 21, 2012 |
![]() 2 U.S. Rx Dermatology Business Overview Top tier U.S. Dermatology business – Top 3 in U.S. – 5 year sales growth CAGR of ~59% -- fastest growing top Derm company Focused on three key segments – Acne – Dermatitis – Anti-virals Strong Pipeline/Expansion Opportunities – Efinaconazole (IDP-108) – Potential to be breakthrough onychomycosis treatment – Multiple lifecycle management efforts – Potential new areas: skin cancer, psoriasis, fungal infections of the skin |
![]() 3 U.S. Dermatology Market Dynamics General – Large (~$9B), but low growth market – Low big Pharma presence – Fragmented competition/many small players Prescribers – Relatively focused target list – Relationship-oriented/industry-friendly – Growing influence of PA’s/nurses Coverage – Relatively low government reimbursement – Increasing self-pay component – Increasing managed care controls – High use of co-pay assistance programs Innovation – Predominantly through formulation innovation – High barrier to generic entry, though some regulatory changes ongoing |
![]() 4 Valeant Is Now Top Tier Rx Dermatology Player 2008 - Top 15 Source: Wolters Kluwer Health Integrated AWP Dollars for Rx Derm Products Only - May 2012 *Medicis: gross sales only, excludes aesthetics and Rx reported 2011 net sales ~$500M **Allergan excludes aesthetics Valeant #11 Valeant #3 2011 - Top 15 (Based on Gross Sales) -$100 $100 $300 $500 $700 $900 Pedinol Intendis/Bayer Triax Merz Valeant Allergan Dermik Ortho derm Astellas Warner Chilcott Graceway Nycomed Medicis GSK (Stiefel) Galderma $0 $200 $400 $600 $800 $1,000 $1,200 Aqua Promius Onset Intendis/Bayer Merz Astellas Leo Allergan Warner Chilcott GSK (Stiefel) Sandoz/Novartis Valeant Galderma Medicis* |
![]() 5 Valeant Segment Strategy Market/Environment – Co-pay programs mandatory – Increased cost of access within managed care plans – Continued growth of PA/NP influence – Continued increase in non-Rx acne treatment options – Market shifted back to topical steroids – TCI market (Elidel) very promotionally sensitive – Combination treatment is rule – Non-prescription options (e.g., CeraVe) established as critical components of regimen – “Inch deep, mile wide” – Unmet need for more effective topical for HSV-1 – High use of OTC medications – Increasing patient interest in topical vs. oral therapies Acne ~$3.2B Dermatitis ~$1.5B Anti-viral ~$2.3B Strategy – Convert BenzaClin to Acanya – Focus on Acanya/RAM/Atralin lifecycle management – Manage RAM/Atralin as a portfolio – Return Elidel to growth – Maximize CeraVe use in combination treatment regimens – Accelerate Xerese launch – Convert Zovirax to Xerese – Expand Xerese indications |
![]() 6 Key Current Products – Focus of Growth |
![]() 7 Valeant U.S. Dermatology Growth ~67% CAGR Note: Includes entire Valeant U.S. Dermatology segment |
![]() 8 Key Changes in Rx Dermatology Business Over Time 2012 2008 |
![]() 9 3% 9% 29% 33% 44% 3% 18% 38% 37% 40% 0% 10% 20% 30% 40% VRX Retinoid Franchise Acanya Atralin Zovirax/Xerese CeraVe** MAT May Maintaining Growth During Acquisitions in U.S. Dermatology 2012 vs. 2011 Volume Growth Source: Wolters Kluwer Health; IRI Scan data; Retailer data – May 2012 *Zovirax/Xerese volume in TRx grams; **CeraVe scan volume growth * 2012 |
![]() 10 Promotional Efforts Turning the Elidel Growth Curve Elidel YOY TRx Growth All Prescribers Source: Wolters Kluwer Health May 2012 Elidel YOY TRx Growth Dermatologists |
![]() 11 Key Priorities for 2012 Successfully integrate Ortho, Dermik and Coria and create high- performing field sales organization optimizing multiple brands Create growth brands out of Elidel and Xerese Grow retinoid portfolio of Retin-A-Micro/Atralin Convert BenzaClin business prior to patent expiry “Introduce” new Valeant Dermatology and align external presence/perception with our industry leadership ambition Accelerate life cycle management options for existing brands Extensive launch planning for efinaconazole (IDP-108 - onychomycosis) |
![]() U.S. Rx Dermatology David Mullarkey Senior Vice President & General Manager, Valeant Dermatology Investor Day June 21, 2012 |
![]() R&D Update Susan Hall, Ph.D Senior Vice President, Global R&D Investor Day June 21, 2012 |
![]() 1 R&D Operating Principles Lower risk / niche opportunities Diverse portfolio Major focus on lifecycle management Extensive topicals expertise driver of internal innovation Lean operating model supplemented with partnerships Leverage R&D globally |
![]() 2 R&D – Excellent Productivity Track Record As measured by: Disciplined R&D budget and associated FTEs relative to revenue Successful rapid integration of products that are acquired Executing on numerous pipeline activities Multiple successes to date, e.g. Acanya, IDP-111, Potiga/Trobalt, CeraVe line extensions, efinaconazole (IDP-108), Sublinox, Lodalis, Regederm Ensuring ongoing support of the portfolio 2010 2011 2012e (proposed) U.S. $36.5 M $57.4 M $70 - $85 M Non U.S. $19.1 M $8.3 M $20 - $25 M Total Spend $55.6 M $65.7 M $90 - $110 M Spend as % Sales 5% 3% ~3% R&D spend |
![]() 3 Diverse Portfolio Driving The Business Targeted NCE development New formulations and delivery technologies New indications / market expansions opportunities Generics / Branded Generics Novel therapies utilizing currently approved products Examples efinaconazole (IDP-108) IDP-118 Potiga XR Acanya, Atralin, Elidel, Zovirax lifecycle management Central & Eastern Europe portfolio |
![]() 4 Efinaconazole (IDP-108) / Onychomycosis (1/2) Onychomycosis is a progressive fungal infection of the nail bed Caused mostly by dermatophyte fungi, but also yeasts or molds Represents 50% of all nail disorders & frequently involves several nails Current treatment challenges are many Need for medication to reach infection site under nail Clinical efficacy is based on nail appearance, which grows slowly Two phase 3 studies completed: primary efficacy outcome of complete cure at week 52 (48 weeks treatment with 4 weeks follow up) vs. placebo: Statistically superior (p<0.001) to placebo for all primary and secondary endpoints Efinaconazole was generally safe and well tolerated |
![]() 5 Efinaconazole (IDP-108) / Onychomycosis (2/2) Submission to FDA 3Q 2012; other countries planned - Canada, Brazil, Mexico, Central Europe Valeant has rights to North & South America and EU countries W. Europe submission requires evaluation vs. an already approved product – active partnering discussions underway Phase 3 and other data targeted for top specialty journals plus presenting at national dermatology and podiatry conferences Efinaconazole is a potent anti-fungal with the potential for a broad range of additional multiple indications |
![]() 6 CeraVe ® Premium Line of Skincare Products Designed to restore and repair the skin barrier for healthier skin Innovation-driven approach: Meeting patient / consumer needs with superior formulations designed to restore and repair the skin barrier All new products have driven incremental sales due to focusing on different skin disease states All innovations were developed by Dow Pharmaceuticals with input from leading dermatologists We are actively progressing other opportunities to meet unmet needs in the marketplace |
![]() 7 Regederm ® : Treatment & healing of wounds Brazil Launched in Brazil, April 2012 Prescription product Indicated for the acceleration of wound healing and tissue regeneration properties Gel cream formulation – consists of bioactive protein fractions of latex serum derived from the rubber tree Mechanism of action: Stimulates angiogenesis Inhibits collagenase Valeant is evaluating opportunities to launch Regederm ® in other regions, patents pending worldwide |
![]() R&D Update Susan Hall, Ph.D Senior Vice President, Global R&D Investor Day June 21, 2012 |
![]() Questions? Panel: Dave Mullarkey Alissa Hsu Lynch Tom Schlader Susan Hall Ryan Weldon Dan Spira Julie Kang |
![]() Appendix |
![]() 2 GAAP EPS vs. Cash EPS Adjustments: Non-Cash Items Amortization Intangible Assets Deferred Financing Costs Debt Discounts Inventory Step Up (Acquisition related) Contingent Consideration Fair Value Adjustment (Acquisition related) Stock Based Compensation Fair Value Step Up (Acquisition related) Deferred Taxes “Non-recurring” charges: Restructuring and Integration Charges Acquisition-related Transaction Costs Legal Settlements IPR&D (Cash and non-Cash) Gain/loss on early extinguishment of debt Non-Cash items included in Cash EPS Stock Based Comp Depreciation |
![]() 3 Restructuring, Integration and Acquisition Related Costs “Acquisition-related Restructuring and Integration Costs”: Employee severance and/or relocation Contract termination costs Costs to consolidate or close facilities (including manufacturing) Other associated costs: Duplicative labor during transition period Professional fees (consulting, temporary labor) Systems integration costs Travel related costs for which the primary purpose is related to integration “Acquisition-related Transaction Costs”: Professional fees for advisory, brokerage, legal, accounting, valuation Travel related costs for which the primary purpose is related to the acquisition |
![]() 4 Presentation of Non-GAAP Adjustments Inventory step-up Alliance product assets & pp&e step- up Stock-based compensation step-up Contingent consideration fair value adjustment Restructuring, acquisition- related and other costs Legal settlements Amortization & other non-cash charges Amortization of deferred financing costs, debt discounts and ASC 470-20 interest (Gain) Loss on extinguishment of debt Tax Product Sales - - - - - - - - - - - - - - - - - - - - Cost of goods sold X X X - - - - - - X - - - - - - Cost of Alliances - - X - - - - - - - - - - - - - - - - Selling, general and administrative ("SG&A") - - X X - - - - - - X - - - - - - Research and development - - X X - - - - - - - - - - - - - - Acquired in-process research and development - - - - - - - - - - - - - - - - - - - - Legal settlements - - - - - - - - - - X - - - - - - - - Contingent consideration fair value adjustments - - - - - - X - - - - - - - - - - - - Restructuring, acquisition-related and other costs - - - - - - - - X - - - - - - - - - - Amortization of intangible assets - - - - - - - - - - - - X - - - - - - Interest expense, net - - - - - - - - - - - - - - X - - - - (Gain) loss on extinguishment of debt - - - - - - - - - - - - - - - - X - - Tax - - - - - - - - - - - - - - - - - - X |
![]() 5 Pro Forma Adjusted Income (Non-GAAP) Legacy Valeant $M Q1 10 Q2 10 Q3 10 Q1 10 Q2 10 Q3 10 Q1 10 Q2 10 Q3 10 GAAP Net income (loss) from Continuing Operations (3.2) $ 34.0 $ (207.9) $ 35.6 $ 32.2 $ (176.0) $ 32.4 $ 66.2 $ (383.9) $ Non-GAAP adjustments : Inventory step-up - - - - 2.5 3.2 - 2.5 3.2 Other amortization and non-cash charges 2.8 2.7 2.6 - - - 2.8 2.7 2.6 Stock-based compensation step-up - - 20.9 - - - - - 20.9 Restructuring and other costs 0.6 2.9 95.9 0.5 2.0 28.3 1.1 4.9 124.2 Acquired in-process research and development 51.0 10.2 - - - - 51.0 10.2 - Acquisition-related costs - 7.6 28.0 0.5 8.7 66.5 0.5 16.2 94.6 Legal settlements - - 38.5 0.5 1.0 1.0 0.5 1.0 39.5 Amortization of intangible assets 33.3 33.3 35.5 19.3 22.3 26.0 52.6 55.6 61.5 Amortization of deferred financing costs, debt discounts and ASC 470-20 (FSP APB 14-1) interest 4.1 4.2 3.8 2.0 2.0 1.8 6.1 6.2 5.6 Loss on early extinguishment of debt - - - - - 205.6 - - 205.6 (Gain) loss on investments, net 0.2 0.4 5.0 - - - 0.2 0.4 5.0 Write-down of deferred financing costs - - 5.8 - - - - - 5.8 Tax 4.3 0.7 59.5 (5.7) (13.8) (112.9) (1.4) (13.1) (53.4) Total adjustments 96.3 61.9 295.6 17.2 24.8 219.5 113.5 86.7 515.1 Adjusted Income (Non-GAAP) 93.2 $ 95.9 $ 87.7 $ 52.8 $ 57.1 $ 43.5 $ 146.0 $ 153.0 $ 131.2 $ Legacy Biovail Combined |
![]() 6 Organic Growth Summary Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 Q1, 2012 LTM (Q1, 2012) CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change Product sales, as reported $570 $418 37% $654 $489 34% $768 $500 54% Acquisitions (add to PY) $67 $120 $211 Exchange -$16 $14 $16 Total organic, as reported N/A N/A $555 $485 14% $669 $608 10% $785 $711 10% N/A Q1, 2011 Q2, 2011 Q3, 2011 Q4, 2011 Q1, 2012 LTM (Q1, 2012) CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change CY PY % Change Product sales, as reported $521 $431 21% $563 $491 15% $570 $418 37% $654 $489 34% $768 $500 54% $2,556 $1,898 35% Acquisitions (deduct from CY) -$55 -$24 -$88 -$118 -$275 -$18 -$505 -$18 Exchange -$8 -$27 -$16 $14 $16 -$12 Total organic, excl. acquisitions $459 $431 7% $512 $491 4% $467 $418 12% $551 $489 13% $509 $483 6% $2,039 $1,881 8% Less: neuro -$178 -$186 -$196 -$201 -$183 -$202 Total organic, excl. acquisitions & neuro N/A N/A $289 $232 25% $355 $287 24% $327 $281 16% N/A |
![]() 7 Integrating New Acquisitions – Ortho Dermatologics/Dermik – Introductions/communications – Share integration timelines – Announce senior management team – Town hall – company name, cultural introduction. – Transition critical control functions to Valeant (e.g., order-to-cash, contract approvals) – Define new portfolio and marketing strategy – Set new budgets (incorporating synergy targets) – Adjust territory alignments/incentive plan – Finalize sales management selections – Communicate offers/complete all terminations – Complete all product, policy and process training – Conduct National Sales Meeting to launch integrated business – Target list refinement – Cultural integration/team building – Process improvement – Shift transition services from sellers (e.g., supply chain, medical, sales support) Day 1 First 30-45 Days Next 60 Days |