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Small is beautiful..

Winning in the highly competitive generics market

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It’s not the size,

it’s what you do with it that matters!

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Presented by

John Beighton

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How to grow without losing the “spirit” of what creates value

The AMCo case study…

An entrepreneur’s dilemma

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Company Origins

£367m2012

Oct£465m

2012

Aug

2013

Dec2013

May

2010

Dec

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Management Team

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Unique business model with industry leading margins and cash generation, replicable across geographies and therapeutic areas

Optimise existing portfolio and acquire niche products

Acquire and develop difficult-to-make niche products which are below the radar of larger pharma companies with attractive margins and growth opportunities

Leverage market knowledge

Local presence in selective markets will enable successful product commercialisation (e.g. pricing, portfolio optimisation, market insight, leveraging distributor network, etc.)

Apply asset light modelNetwork of CMOs and distribution partners enables high flexibility and efficient capital utilisation, while driving costs down and securing stable long-term supply of goods and services

Use low cost supportLow cost Centre of Excellence for support functions in India (e.g. RA, Supply Chain, Finance, IT, Quality, HR) ensures high-quality support and cost effectiveness

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Unique business model underpinned by three critical enablers

Cash generating engine based on asset light, highly profitable business model enables organic and inorganic growth opportunities

AMCo has an embedded entrepreneurial mindset with fast decision making and the ability to implement quickly

Financial strength

Entrepreneurial mindset

Right size and scalable

Large enough to commercialise multinational product portfolios, while staying nimble and agileReplicable business model across geographies and therapeutic areas

9Commodity Gx Differentiated Gx (DGx) Branded

specialty

Exte

nt o

f geo

grap

hic

dive

rsifi

cati

onGlobal generics companies with strong presence in commodity Gx; strategic focus on specialty Gx

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Mid-sized commodity generics players moving up the value chain into differentiated products and mature brands

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4 Focused R&D players with deep expertise in specific technology platforms; limited front end presence; partner/sell products to large players for marketing/devt

Large R&D companies with broad range of branded innovative products being sold across the world

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Mid-sized Specialty Pharma companies with therapeutically-focused innovative pipelines

7Commercially-focused players,

with primary expertise in a single market

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NCE / NBE

Selectiveglobalisation beyondlocal markets

Mostly local

Mostly Global

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Development- focused co’s, finding new,

local customer solutions

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Five strategic Business Action Plans (BAPs) can be derived from the overarching strategy

Leverage AMCo's unique business model to expand in other attractive markets and to broaden niche product portfolio

Strategic BAP Description

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Strategic Growth

International Excellence

Operational Excellence

Compliance and Reputation

Integration and Culture

We will increase revenues through Portfolio Optimisation, acquisition of products and infrastructure, and through new products launches

We will increase revenues through establishing direct market presence and developing internal expertise to support the International markets

We will ensure customer satisfaction by ensuring that product is reliably supplied when required

We will remain compliant and ethical with all our stakeholders, whilst also being adequately structured to support rapid growth plans

Fast and effective integration is critical to support long-term growth and our people are key to supporting it

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Strategic Growth• Portfolio Optimisation – registering existing AMCo products into new markets where the

product isn’t currently registered or sold, and using the existing manufacturers to make the product (at least 40 submissions made in 2014)

• Product Development – creating new products with a contract development partner, whereby AMCo retains full ownership rights to the product, and freedom to choose who to manufacture the product

• In-Licensing – buying the rights to sell a third party’s product in a defined territory, and agreeing for the licensor to supply the product to AMCo for an agreed period of time (typically 5 years)

• Product Acquisitions – buying the permanent rights to own an existing product, in a defined territory (sometimes global e.g. Fucithalmic). The seller may wish to continue making the product, but more often would require AMCo to find a new supplier within 2-3 years

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Background: The In-market value chain

Marketpotential

a) Sizing the opportunity

b) Product selectionc) Dosage / form

adaption

Coverage

Medical Promotion- by Salesforce- Controlling Salesforce / “Managing margin”- Selling discounts- Creating promotion materials- Telesales

Regulatory

a) Registration of new products

b) Pricing regimec) Legal frameworks

Pricing Distribution

a) Supply chain optimisation / no stock-outs

b) Order taking / invoicing / collection

c) Box shifting

I II III VIIVI

a) Price elasticityb) Competitive

environment

The diagram below represents a break down of the in-country value chain and the indicated key strategic drivers / actions related to each part.

Sales Marketing

Geographic coverage of- Hospitals- Doctors- Wholesalers

a) Specialist conferences / KOLs

b) E-marketing (B2C for OTC)

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Reporting Data analysis

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Global Coverage

AMCo offices/direct presenceDistributor network

>50% of sales in UK

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International Excellence

AMCo offices/direct presenceDistributor networkTarget markets – direct presence

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Five Distinct go-to-market approaches for AMCo

Unmanaged box shifting

Strong distributor

AMCo Implant

AMCoPresence ‘light’

AMCoPresence ‘heavy’

Marketpotential CoverageRegulatory Pricing Distribution

I II III VIIVI

Sales Marketing

IV V

Distributor

Joint AMCo / Distributor

AMCo

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Distributor

Distributor

Distributor

Distributor

Drivers to increase sales Additional costs

– More “managed service” – Higher margin to distributor

– Broader coverage– More products to market faster– Price increase– Volume initiatives– Focus

– Personnel costs– Potential 3rd party Sales Resource

– Closer to activities– Additional focus

– Office– Regulatory costs– Tax implications

– AMCo salesforce– AMCo marketing

– Direct labour

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Distributor5

AMCo 3rd Parties

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Operational Excellence in an asset light context

Critical Success Factors• Flexibility and having options for supply

• API• Finished dosage form

• Dual (or triple) sources for key products and APIs• That are registered and maintained in the MAs• That remain in a validated status

• Strong Supplier Relationships• Contractual protection

Results in a low risk supply chain

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