3. Profarma | Disclaimer
This presentation does not constitute an offering, invitation or solicitation of any kind to subscribe for or purchase shares or any other type of securities, nor
does this presentation or any information contained herein form the basis of any type of contract or commitment.
This material should not be construed as investment advice to potential investors. This information is not intended to be complete and is presented as a
summary. No trust should be built upon the basis of the accuracy of the information herein and no representation or guarantee, whether expressed or
implied, is made as to the accuracy of the information herein.
This presentation contains forward-looking statements that may be based upon forecasts which, as such, are no guarantee of future performance.
Investors are advised that these forecasts are and will be subject to countless risks, uncertainties and factors related to Profarma’s operations and
business environments, such as: competitive pressure, the performance of the Brazilian economy and of the pharmaceutical industry and changing market
conditions among other factors mentioned in the documents released by Profarma. These risks may cause the Company’s results to be materially different
from any future results expressed or implied by such forward-looking statements.
Although Profarma believes the expectations and assumptions contained in the forward-looking statements and information to be reasonable and based
upon data presently available to its management, Profarma cannot guarantee future results or events. Profarma does not assume the obligation to update
any forward-looking statements and information.
It is summary information not intended to be complete and should not be deemed investment advice by potential investors. This presentation is strictly
confidential and may not be disclosed to any other persons. We make no statements and no guarantee as to the accuracy, suitability or completeness of
the information posted herein, which should not be relied upon for investment decisions.
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5. Profarma | Long-Term Growth Strategy
Profarma’s long-term growth strategy rests on three main pillars.
Selected
acquisitions
New
Segments
Regional
Expansion
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6. Profarma | A Strategy Based on A Broad Market Vision and Perfect Execution
Strategic Positioning Comments
Business Segment
Profarma has been consistently implementing the strategy of
Distribution Hospitals Specialties Services Retail diversifying its pharmaceutical distribution business by
breaking into new market segments such as:
Scale
The hospital industry;
Special products (vaccines, dermatological products,
Price
higher value-added products, etc.);
Attributes
Value-added services for manufacturers;
Quality
Retailing.
Profarma’s new business segments complement and
Products
Distinct
strengthen the Company’s position in the industry:
Higher-margin segments;
Initial Focus Synergy Approach New Focus
Synergies with the logistics segment;
Selected portfolio
Synergies with the purchasing department.
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7. Profarma | Main Events
A proven history of success: a unique ability to enter new regions and segments and make successful acquisitions.
Timeline
CAGR Market (97-00) = 12% CAGR Market (04-10) = 12% Market (9M11-9M12) = 17%
Dimper’s Casa Saba
K+F Hospitals (RS) Prodiet Brasil
Minas Hospitals
(SP) SP CE
Gerais DF RJ GO
Espírito IPO Arpmed Tamoio
Santo Bahia PE
Paraná Vaccines
1996 1998 1999 2001 2003 2004 2005 2006 2007 2009 2011 2012 2013
Organic Growth / New Regions New Segments / Products Selected Acquisitions
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9. Drogarias Tamoio | Overview
Company Overview
• Tamoio was established in 1954 headquartered in Rio de Janeiro State;
• It is a pharmaceutical retailer and has a large share of the health, beauty and skin care product markets;
• It is one of the fastest-growing drugstore chains in the state featuring a Compounded Annual Growth rate (CAGR) of
19,8% between 2009 and 2012;
• In 2012, Tamoio recorded gross revenues of R$312.3 million and EBITDA margin of 5.0%.
• Currently, Tamoio’s chain is Composed of 57 stores in 18 cities and towns in Rio de Janeiro State.
Gross Revenues 2012 Sales Mix # Stores
R$ million
Branded
312.3 31.3% 57
Health and
270.8 Beauty 51
224.8 Products 42
44.0%
Generic
8.4%
OTC
2010 2011 2012 16.3% 2010 2011 2012
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* Growth Same Store Sale
10. Drogarias Tamoio | Rationale of the Transaction
A retail platform with about 140 stores (85 Drogasmil / Farmalife stores + 57 Tamoio stores) was
developed. It is one of the largest drugstore chains in Brazil and the 2nd largest in Rio de Janeiro;
Diversification
Tamoio and Drogasmil / Farmalife are present in different parts of the state;
and Scale
Creation of one of the top mixed pharmaceutical distribution and retail platforms in Latin America
and the largest in Brazil.
The Company is in a unique position to significantly help the industry consolidate its position;
Growth Greater flexibility and capillarity allow Profarma to enter new markets in which it already operates
(support from Profarma’s local team).
Support from manufacturers’ regional executives may create synergies in purchasing, marketing,
logistics and back office;
Synergies
Tax optimization in Rio de Janeiro State;
The retail operations will be integrated and managed more easily.
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11. Drogasmil + Farmalife + Tamoio | Present in Different Geographical Areas
Geographical Coverage - Rio de Janeiro State View
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12. Drogasmil + Farmalife + Tamoio | Present in Different Geographical Areas
Geographical Coverage
Campos dos Goytacazes – 1 store Campos dos Goytacazes – 2 stores Nova Friburgo – 2 stores Petrópolis – 1 store
Duque de Caxias – 1 store Magé / Piabetá / Fragoso – 3 stores São Gonçalo – 9 stores Três Rios – 1 store
Rio de Janeiro – 73 stores Cachoeira de Macacu – 1 store Teresópolis – 1 store Valença – 1 store
São Gonçalo – 3 stores São Pedro da Aldeia – 1 store Araruama – 1 store Itaboraí – 3 stores
São Paulo – 3 stores Rio das Ostras – 2 stores Cabo Frio – 4 stores Macaé – 2 stores
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Niterói – 4 stores Rio de Janeiro – 2 stores Bacaxá – 1 store Niterói – 16 stores
São João de Meriti – 1 store Barra do Piraí – 1 store Itaperuna – 2 stores Maricá – 1 stores
13. Drogasmil + Farmalife + Tamoio | An Attractive Strategic Rationale
• The brands will be maintained in the current markets.
• Each company is going to continue doing what it does best. The main businesses are going to be expanded in
the current markets, focusing on services, innovation and value creation.
• The companies are going to support one another to speed up–synergies and expertise.
Complementariness Efficiency
Complementary Considerable Potential
Business Segments for Synergies
Relationships Growth
New Business A Platform for
Opportunities Future Growth
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14. Drogarias Tamoio | Overview of the Transaction
Profarma is going to acquire 50% of Tamoio's total capital immediately by means of a primary subscription of
R$62.3 million and a secondary subscription of R$43.1 million, corresponding to a multiple EV/EBITDA (2012E) of
7.5x. The remaining 50% of the capital will be acquired for a multiple EV/EBITDA of 7.5x based on the 12-month
period prior to the acquisition. Tamoio’s current shareholders will be fully liable for any contingencies connected
with events occurring prior to the execution date of the acquisition contract.
Payment Schedule
Primary Offer:
• 40% paid on Execution Date
• 15% paid on April 30, 2013 or on the Execution Date, whichever is later ;
• 15% paid on July 31, 2013 or on the Execution Date, whichever is later;
• 15% paid on October 31, 2013 or on the Execution Date, whichever is later;
• 15% paid on January 31, 2014 or on the Execution Date, whichever is later.
Secondary Offer:
• 100% paid on Execution Date
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15. Drogarias Tamoio | Overview of the Transaction
Contingency Cover
Contingency Cover
1 – Reimbursement:
• The Current Shareholders will have to reimburse Profarma for any contingencies related to taxable events occurring
prior to the Execution Date within the limits established below:
(i) The Current Shareholders will bear all contingency costs until the combined amount reaches a total of R$3.0 million;
(ii) Tamoio will bear all contingency costs exceeding R$3.0 million up to a total of R$20.0 million;
(iii) The Current Shareholders will bear all contingency costs exceeding R$20.0 million.
2 – Right of Defense, Guarantees and Costs:
• The Current Shareholders will have the right to defend themselves or make Tamoio defend itself in all administrative
and/or legal proceedings;
• The Current Shareholders will bear all the defense and guarantee-related costs;
• If Tamoio exercises its right of defense, the Current Shareholders will reimburse it for the defense costs after the
decision becomes final and unappeasable.
Contingency Cover
Description of Guarantees
1 – Interest Adjustment via Subscription Bonus:
• At the Execution Date, a subscription bonus will be issued in favor of Profarma, entitling it to issue new Tamoio shares
should the Current Shareholders fail to reimburse Profarma for past contingencies;
• Accordingly, Profarma will be reimbursed by adjusting its interest in Drogarias Tamoio;
• The subscription price of new Tamoio shares will be based on a multiple of 7.5x the EBITDA of the 12-month period 15
immediately prior to the subscription to the exercise of the Subscription Bonus.
17. Profarma | Acquisitions of the Drogarias Tamoio, Drogasmil and Farmalife Drugstore Chains
Profarma: a New Company
The Tamoio acquisition marks Profarma’s entry into
the retail market, In line with the Company's strategy
of diversifying and expanding its business, always
with a view to leveraging synergies among the fields
in which its operates and making its business more
profitable.
Without shifting away from it core business, Profarma
is breaking into a still fragmented, but more profitable
market with a greater growth potential.
Profarma is adapting to the modern world and the new
dynamics of the global pharmaceutical distribution
market, as well as capturing value throughout its
distribution chain.
Carefully-planned execution
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18. Profarma | A New Company
Mixed Model
Distribution Retail
A Solid Regional Expansion and
A Fragmented Market:
a Diversification of Channels and Products
Brazil’s 3rd largest distributor, with 12 Creation of a 140-store chain in
distribution centers and present in the different parts of Rio de Janeiro
whole country;
+ State;
The Company also has two platforms Position within the industry: one of
(Prodiet and Arpmed) focusing on the Brazil's top ten pharmaceutical
hospital industry, the government and retailers.
the specialties market.
A New Company with higher margins and better opportunities for growth. 18