Lotus - IR prez_20150514_FINAL

LOTUS
BUILDING A PAN-REGIONAL LEADER
May 2015
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Safe Harbor Statement
Except for historical information contained herein, the matters set forth in this presentation are forward
looking statements that are subject to risks and uncertainties that could cause actual results to differ
materially. These forward looking statements are not based on historical facts but rather on
management’s expectations regarding future growth, results of operations, performance, future capital
and other expenditures, competitive advantages, business prospects and opportunities. Statements in
this presentation about our future plans and intentions, results, level of activities, performance, goals or
achievements or other future events constitute forward looking statements. Wherever possible, words
such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”,
“plan”, “predict”, or the negative or other variations of statements reflect management’s current beliefs
and assumptions and are based on the information currently available to our management. Investors
are cautioned not to place undue reliance on these forward looking statements, which are made
as of the date of this presentation and we assume no obligation to update or revise any forward
looking statements.
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COMPANY OVERVIEW
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COMPANY OVERVIEW
Market Leader in the Highly Attractive Asia Pacific Generic
Pharmaceutical Industry
Pioneer in the Asia Pacific
Generic Pharmaceutical Industry
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Research-based company focused on innovative development
of difficult to make generic pharmaceuticals
63.4% owned by Alvogen, a specialty pharmaceutical company
with global presence, focusing on developing, manufacturing
and marketing of generic and OTC pharmaceuticals, as well as
biosimilars
#1 in Korea in terms of sales from anti-obesity drug, and strong
presence in Taiwan for oncology and CNS generic drugs
Strong Pipeline
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Robust international pipeline:
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8 products for Japan in pipeline
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4 products for EU Asia scope in pipeline
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9 products filed in China
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10 products in pipeline / filed ANDA for US
Current product portfolio comprises 250+ marketed products
Strong Growth and Margin
Robust pipeline focusing on oral oncology, high potency, and
soft gel drugs
Experienced in-house sales team with a strong emphasis on
marketing, covering ~10,000 clinics, hospitals and pharmacies /
drugstores in Asia Pacific
1 US FDA, EU EMA, and Japan PMDA approved manufacturing
facility, 2 KGMP approved manufacturing facilities and R&D
centers with 140+ generic drug submissions for past 4 years
20141
NT$ MM
US$ MM2
Revenue
2,310
75
Gross Profit
1,191
39
Gross Margin
52 %
52 %
Net Profit
(31)
(1)
Normalized numbers. Please refer to p. 20 for details of normalization
Based on USD / TWD FX rate of 30.918.
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COMPANY OVERVIEW
Lotus History and Key Milestones
 Alvogen Became a Majority Shareholder of Lotus
 Lotus Acquired Alvogen’s Korea, Taiwan and India Businesses
Aug 11
Dec 19
Lotus Acquired
Dream Pharma
Listed in GreTai
Stock Exchange
(1795.TT)
First Product
Launch in the
US
First Product
Launch in Japan
Founded in 1966
1966
Manufacturing
Facility Obtained
US FDA Approval
Manufacturing
Facility Obtained
Japan PMDA
Approval
US FDA
Compliance
Inspection Passed
Manufacturing Facility
Obtained EU EMA
Approval
EU EMA
Compliance
Inspection Passed
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COMPANY OVERVIEW
Shareholding Structure
Alvogen Asia Pacific
Holdings Ltd.
63.4%
Lotus Pharmaceutical
Co., Ltd.
(Taiwan)
100.0%
Alvogen Taiwan
(Taiwan)
100.0%
Alvogen Korea Ltd.
(Korea)
82.5%
Kunwha
Pharmaceutical Co.,
Ltd.
(Korea)
100.0%
Dream Pharmaceutical
Co., Ltd.
(Korea)
Note: as of March 31, 2015
98.0%
Alvogen Pharma India
Pvt Ltd.
(India)
100.0%
Norwich Clinical
Services Pvt Ltd.
(India)
100.0%
Lotus International Pte.
Ltd.
(Singapore)
100.0%
Lotus Tab, Ltd
(UK)
100.0%
樂特仕生物科技諮詢
(上海)有限公司
(China)
Lotus Pharmaceutical,
HK Inc.
100.0%
(HK)
美喬生技有限公司
(Taiwan)
100.0%
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COMPANY OVERVIEW
Lotus and Alvogen Joining Forces
Asia Pacific Hub with Dominant Market
Leadership for Alvogen
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Well-established market leadership
in Taiwan and Korea, high entry
barriers countries for multinational
firms
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State-of-the-art manufacturing
facility approved by US FDA, EU
EMA, and Japan PMDA, accessible
to highly regulated markets
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Strong pipeline and capabilities in
difficult-to-make generics focusing
on oral oncology, high potency, and
soft gel
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Global platform with unparalleled market
potential for Lotus
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Solid management team with
extensive industry experience as
well as in-depth knowledge from
multinational background
Strong sales and profit growth
since Company’s inception with
sales and marketing network in
more than 30 countries
Solid US regulatory and IP
capabilities
Robust pipeline of more than 300
products globally
Proven track record in M&A
execution
The combination of Lotus’ strategically important foothold in Taiwan and Korea markets and its growing US/
Japan/ China product pipeline and Alvogen’s strong geographic coverage in the US, Central and Eastern
Europe and Asia is expected to generate significant opportunities to drive revenue growth, margin
enhancement, and create further value for the two companies
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INVESTMENT HIGHLIGHTS
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INVESTMENT HIGHLIGHTS
Investment Highlights
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Well-positioned in Highly Attractive and Fast Growth Markets
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Strong Sales Forces and Distribution Channels in Key Markets
3
High Growth via Organic Growth and Strategic M&As
4
Strong R&D and Solid Manufacturing Capabilities Delivering Top Quality
Drugs
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Broad Pipeline that Delivers Sustainable Growth
6
Solid Integration Capabilities and Management Team that Extract
Synergies and Generate Value
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INVESTMENT HIGHLIGHTS
Well-positioned in Highly Attractive and Fast Growth Markets in Asia…
5yr CAGR
(%)
Pharma Market Size
(US$bn)
Japan
107.0
China
98.8
2.1%
Strong Presence in Korea and Taiwan
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9.9%
Well-established presence in key markets of North Asia where
strong growing economies, fast aging populations, high cultural
and other entry barriers for multinational firms
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India
16.7
11.6%
Korea
15.8
3.7%
• #1 in Korea in terms of sales from anti-obesity drug
• Solid track record in Taiwan for oncology and CNS generics
Indonesia
5.9
9.2%
Taiwan
5.5
7.1%
Thailand
4.5
7.3%
Philippines
3.8
5.2%
Strong market leadership in Korea and Taiwan
Well-positioned to tap into other Asian markets
Vietnam
3.3
13.9%
Malaysia
2.2
11.5%
Bangladesh
2.0
9.2%
Hong Kong
1.6
8.0%
Singapore
0.8
7.6%
Source: BMI Research
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Well-planned strategies for access to Japan and China
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8 products for Japan in pipeline
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9 products filed in China
Leveraging existing production capabilities and commercial
network through Alvogen’s platforms to further penetrate fast
growing markets in South East Asia
Aiming to tap into complementary markets in terms of product
portfolio where mostly self-pay to fuel future growth
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INVESTMENT HIGHLIGHTS
… As Well As US with Strong Sales Forces and Distribution Channels
US
- Direct access with strong pipeline leveraging
US FDA approved manufacturing facility
- 10 products in pipeline/ filed ANDA in
the US
- Product launch through Alvogen’s existing
sales forces or partnership
UK
South
Korea
Shanghai
Taiwan
Indian
Solid Market
Position
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Strong Brand
Recognition
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Presence
Access
Headquarter
Branch Offices
Partnership
Covering a network of ~10,000 clinics, hospitals and pharmacies / drugstores with internal sales force in key markets
Experienced sales force with product expertise
Strong management team with executives and regional managers who have years of experience in the pharmaceutical industry
Well recognized by clinics, hospitals and pharmacies / drugstores
Effectively market and sell existing products and new products
Foundation for cross-selling products targeting fast-growing / core therapeutic areas
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INVESTMENT HIGHLIGHTS
High Growth via Organic Growth and Strategic M&As
Organic Growth
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Double digit growth per year
Aggressive product launches across the APAC region – 26 products selected and roll out started into Korea and other Asian
markets
Gain further market share in existing and new markets
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Alvogen, Lotus’ majority shareholder with robust M&A track record, is committed to supporting Lotus for
future growth to achieve its target to become leading generic pharmaceutical player in APAC
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M&A Strategies
Solidify our leadership position in Asia Pacific generic pharmaceutical market and capture opportunities
ahead of industry consolidation in the region
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Strengthen product portfolio in our focused therapeutic areas
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Acquire or invest in companies with generic pharmaceutical products or candidates that complement
our existing product portfolio
Selection
Criteria
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Targets with strong generic drug submission capabilities or attractive products / candidates
Targets’ products need to have strong market potential, potential synergies, and minimal overlap with
existing product portfolio or pipeline
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Opportunities with restructuring opportunities (balance sheet management, non core asset disposal
opportunities)
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INVESTMENT HIGHLIGHTS
Strong R&D and Solid Manufacturing Capabilities Delivering Top
Quality Drugs
Strong Development Capability
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Integrated R&D Platform
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In-house R&D capabilities
Collaboration with industry leading
companies and research institutions
Integrated R&D
Capabilities with a
proven track record
of successful
innovations
Systematically acquires and integrates
targets with solid development and
commercialization track record
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Integrated capabilities spanning a widerange of therapeutic areas:
– Strategically focus on oral oncology,
high potency, and soft gel drugs
Solid contract research organization in
India:
– Facilitates oncology studies
– Quick patient enrollment
Multiple Manufacturing Platforms
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US FDA, EU EMA and Japan PMDA
approved production facilities focusing
on high potency and cytotoxic products
Provides oncology contract manufacturing
organization services to Japanese
pharmaceutical companies
Analytic process development for quality
control and assurance
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INVESTMENT HIGHLIGHTS
Broad Pipeline that Delivers Sustainable Growth
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Biosimilars
Lotus and Alvogen/AlvoTech signed distribution agreements for two key biosimilars currently under
development by AlvoTech.
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Lotus will market and distribute these biosimilars in the following APAC markets: Taiwan, China, Vietnam,
South Korea, Thailand, Hong Kong, Philippines, Malaysia, Indonesia, Singapore and Myanmar
Note: As of April 2015
Source of originator’s sales: IMS data
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INVESTMENT HIGHLIGHTS
Solid Integration Capabilities and Management Team that Extract
Synergies and Generate Value…
Renaat Janssen
CEO Lotus
Previously Executive Director at PPD with more
than 20 years experience in pharma industry
Siegfried Gschliesser
Deputy CEO Lotus and GM Taiwan
Joined Alvogen in 2010 as regional head of
Business development and the country manager for
Taiwan
David Young
Regional CFO
Previously CFO of SemiLEDs Corporation,
(NASDAQ: LEDS), VP of sourcing, accounting and
finance at Payless Shoesource, formally NYSE
company
Dr. Jon Valgeirsson, VP of R&D APAC
Dr. Saral Thangam, CEO Norwich Clinical Services (CRO India)
Jade Lee, Regional HR Director
Sunny Chen, Regional Supply Chain Manager
Dr. Chung R. Kim, Regional Quality Director
Extensive Experience
Senior management team has comprehensive
experience up to 20 years in the pharmaceutical
industries
In-depth Knowledge
Many have worked with leading global
pharmaceutical companies. They bring extensive
M&A and industry experience and in-depth
knowledge
Diversified Exptertise
Experience and expertise range from research
and development to manufacturing, sales,
marketing and distribution
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INVESTMENT HIGHLIGHTS
… With Strong Support from Board of Directors
Charles Lin
Chairman of BOD
Robert Wessman
Director
• Founder of Lotus and has more than 30
years in pharmaceutical industry
• Leads Lotus as a R&D-based Taiwanese
company with manufacturing facilities
approved by global FDAs
• Chairman and CEO of Alvogen Group
• Has grown Alvogen from a small US
business into an international pharma with
commercial operations in 34 countries and
with 2,000 employees within 5 years
Independent Directors
Benjamin Ku
Hui Wen Cheng
Hjorleifur Palsson
Partner at Cheng & Ku Law firm
Professor at Taipei Medical University
Previous EVP and CFO at Ossur hf., a listed company at NASDAQ OMX Copenhagen
Directors
Arni Hardarson
Kevin Bain
Thor Kristjansson
Le Hong
Chief Legal Counsel, Alvogen
CFO, Alvogen
EVP M&A, Alvogen
VP, Lotus
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Combined efforts from Lotus founding team as well as strong commitment from Alvogen Group with
seamless cooperation
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Nine distinguished members with an exceptional knowledge and experience in the related fields to
guide the Company in all aspects
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GROWTH STRATEGIES
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STRATEGIES
Lotus is Committed to Delivering Value-Driven Medicine
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Further Develop Asia Pacific and US Generic Pharmaceutical Markets
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Expand Product Portfolio through Strategic M&A
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Expand Our Network of Sales and Marketing Personnel to
Further Promote Our Products
Unlock Value Through Realizing M&A Synergies
Strong Support From Majority Shareholder - Alvogen
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FINANCIAL HIGHLIGHTS
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FINANCIAL HIGHLIGHTS
FY2014 Results Update
Major adjustments include 1) costs related to early retirement programs of Kunwha for integration with Dream Pharma’s
integrations of NT$266 million; 2) post-acquisition special bonus to Lotus’ employees of NT$12 million; 3) M&A-related
costs including professional fees and transaction taxes of NT$39 million; 4) financial costs and losses related to the early
redemption of Alvogen Korea’s CB of NT$113 million
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FINANCIAL HIGHLIGHTS
2015 YTD Monthly Sales Update
Unit: NT$MM
Key highlights
448
435
432
429
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49
Jan
37
44
Feb
Mar
2014
2015
52
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Robust January sales as the merger between Lotus and
Alvogen’s key operations in Asia has been completed in
2014 with closing of Kunwha’s acquisition of Dream
Pharma in December
Contribution from Korean subsidiaries helped Lotus
deliver a solid result in February of maintaining sales at a
similar level with January sales despite both the Chinese
New Year holidays in Taiwan and Korea
Due to a substantial depreciation in the Korean Won
against the New Taiwan Dollar from February to March,
Lotus March consolidated sales in NT dollars slightly
decreased. Excluding the FX impact however, the March
result would in fact represented an increase with the
integration of Dream Pharma going well
Contributed by the synergies of co-promotional sales
efforts between Kunwha and Dream Pharma and Lotus’
license fees related to a partnership for product sales into
China, April sales achieved yet another record high with a
solid MoM growth of 4.4%
Apr
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2015 OUTLOOK
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2015 OUTLOOK
2015 Outlook
Goals in 2015
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Successful integration of Dream Pharma and Kunwha in Korea
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Further expand Lotus’ export business by launching more products in the US
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Achieve solid profit and positive EPS
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APPENDIX
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APPENDIX
Taiwan Pharma Market Overview
Taiwan Market Overview
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Taiwan Market Segmentation
Taiwan is a ~US$5.5 billion pharma market. Fast aging
population drives volume demand growth
11%
9%
Taiwan has a National Health Insurance system covering
96% of the population under a one payer system
Total Market
~US$5.5bn
Payer is public; however, health administration is through
private (non-profit) hospitals, clinics, and pharmacies.
Hospitals are the dominate health care provider and are
large behemoths offering both in and outpatient care
80%
Hospitals
Large concentration of the market in 21 medical centers
which have around 35% of the total healthcare market
Bad perception of local product quality prevented generic
penetration into large medical centers so far so only
multinational generics are able to get in as of now
Regulatory approval timelines are between 12 to 18
months for generics products
Taiwan has joined PIC/S from January 2014. Among the
current 160 local manufacturers, only 70 have completed
accreditation so far
Hospitals
20%
G.P. (Clinics)
Drug Stores
40%
45%
Generic
40%
Patented
G.P. (Clinics)
15%
20%
35%
Drug stores
20%
65%
Originator patent expired
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APPENDIX
Korea Pharma Market Overview
Korea Market Overview
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Korea Anti-obesity Drugs Market Outlook
Korea is a ~US$15.8 billion pharma market and is
expected to continuously grow due to aging population
and increase in chronic diseases followed by growing
demands for medical treatments
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Korea’s medical diet market (including Korean medicine
clinics, surgery, anti-obesity drugs) is estimated to be
~KRW1.6 trillion at the end of 2013, whereby the antiobesity drugs market accounts for ~9%
Korea has a government funded health care system with
complete coverage of the Korean population under one
single payer (the NHIC)
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With a growing perception that “obesity is an illness,”
there is continued social focus on losing weight not only
from external appearance perspective but also from
pursuing a healthy life
Further promotion of generic usage expected by the
NHIC to reduce health care costs
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Price erosion will be compensated by strong volume
growth due to increased consumption by a fast aging
population and further expansion of the health care
coverage
Generic regulatory approval times currently are around 6
to 9 months for locally produced products and 9 to 12
months for imported generics. It is expected the bias
favoring local production will remain
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Anti-obesity drugs possess a clear competitive advantage
over its substitutes, as it maximizes the effect of weight
loss within relatively shorter period of time at a lower cost
(v.s. oriental medicine that requires consistent
consumption and bariatric surgery with potential of high
risk side effects)
Consequently, overall anti-obesity drugs market is
expected to account for a higher proportion of the
domestic medical diet market
The market is expected to be restructured led by top
pharma companies with R&D and product capabilities
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APPENDIX
Alvogen Today
Alvogen Overview
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An international privately-owned specialty pharmaceutical
company focused on the development, manufacturing and
marketing of generic pharmaceuticals, biosimilar and OTC
products
Alvogen Support
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its target to become top-5 regional player in the APAC region by
leading industry consolidation
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Led by Chairman/CEO Robert Wessman and management
team that previously worked at Delta / Actavis Group
Robust product portfolio consists of a broad range of molecules
for treating conditions in the fields of oncology, cardiology,
respiratory, neurology and gastroenterology
Deep experience in generic drug development with an strong
track record of growth through organic growth and acquisitions
Has manufacturing capabilities in US, Romania, Korea and
Taiwan, and commercial operations in over 30 countries
Geographic presence across the US, Central and Eastern
Europe as well as Asia (Korea, Taiwan, China, Japan, India,
etc.)
Alvogen is committed to support Lotus for future growth to achieve
Alvogen formally became a majority shareholder in Lotus in
August 2014, currently owning approximately 63.4 % of
outstanding shares following a private placement
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As a part of the transaction, Lotus acquired 3 of Alvogen’s
businesses in Asia: Korea, Taiwan and India
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Securing distribution rights for biosimilar products currently under
development by Alvogen’s sister company AlvoTech
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Furthermore, Lotus’ subsidiary Kunwha acquired Dream
Pharma in Korea in December 2014
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Co-development with Lotus with a focus on US difficult-to-make /
high barrier products, i.e. oncology orals, hormones and soft gels
Alvogen’s total revenue grew at a CAGR of 77% from 2009 to
2014 with 59% from organic growth
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APPENDIX
Recent Acquisitions
Kunwha Pharma – Acquired by Lotus in January, 2014
Key Milestone
Business Mix
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Founded in 1958
Acquired by Alvogen in October, 2012
Prescription, OTC, medical device sales, export, consignment business
72 molecules (99 products)
Production
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Plant in Gongju: 46,893m2
Sales Network
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14 district sales organizations
Employee / Office
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257 employees in total as at the end of March 2015 – G&A (33). S&M(115), Plant incl. R&D (109)
Headquartered in Seoul
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APPENDIX
Recent Acquisitions (cont’d)
Dream Pharma – Acquired by Lotus Subsidiary Kunwha in December, 2014
Key Milestone
Product Mix
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R&D
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Established as the pharmaceutical division of Hanwha Corporation (March 1996)
Changed the company name to DreamPharma Corporation (January 2005)
Acquired Meditech Korea Pharm Co., Ltd. (September 2006)
Anti-obesity drugs (56% of 2013 revenue): unrivalled #1 player in Korea with c.35% M/S
Prescription (“Rx”) (37% of 2013 revenue): competitive advantages possessed in antibiotics, antifungal drug,
hyperlipidemia treatment
Possesses two OTC products and a closure of esthetique business completed in 2013
Leading R&D personnel: 79% with a postgraduate degree, 34% with a pharmaceutical career experience of at
least 10 years
Secured Korea’s New Drug Development Technical Award for Bonviva Plus (February 2014)
Production
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Sales Network
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c.3,650 clinics and c.70 general hospitals in Korea
Employee / Office
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365 employees in total as at the end of March 2015 – G&A (34), R&D (39), S&M (179), Plant (113)
Operates 8 branches and 2 sales offices nationwide
Production and quality assurance of 106 drug items through in-house production (57 items) and outsourced
production (49 items) compliant with KGMP (Korea Good Manufacturing Practice)
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APPENDIX
Recent corporate action in Korea
Merger between Kunwha Pharmaceutical and Dream Pharma Corporation
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Since Dream Pharma is 100% owned by Kunwha Pharmaceutical, the merger can be completed as smallscale merger to Kunwha / short-form merger to Dream Pharma. Only board meeting of two entities are
required unless 20% of shareholders notified its objection towards to merger between two entities
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Minority shareholders of Kunwha only account for 17.5% - no shareholders’ objection is expected
Merger ratio – 1:0 (Kunwha/Dream)
Merger timeline
Date
Board resolution for the execution of merger agreement
March 17 2015
Completed
Disclosure of Board resolution and relevant filing
March 17 2015
Completed
Execution of merger agreement
March 18 2015
Completed
Confirm the shareholders on shareholder registry
April 1 2015
Completed
Announcement of small scale merger
April 1 2015
Completed
Closure of shareholders’ registry
April 2 - April 9 2015
Completed
Receipt of notice from dissenting shareholders
April 2 – April 16 2015
Completed
Board resolution to approve the merger
April 27 2015
Completed
Dissenting creditor notification process
April 28 – May 29 2015
Merger date
June 1 2015
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