Galenica : Investor Presentation (Version January 2021)

Galenica Group

Investor Presentation

January 2021

Agenda

1	History	3
2	Galenica at a glance	6
3	Business Sectors	8
4	Financial track record	13
5	Strategy and organisation update	15
6	Financial results H1 2020	23
7	Market update	35
8	Regulatory projects update	39

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1 Building the leading Swiss healthcare platform over 90 years

Foundation of

Organic and

Creation of

Acquisition of

Acquisition of

Amavita uniform

Galenica as a

acquisition-led

Merfen® and

brand in

Bahnhof

wholesaler

expansion of

Vita-Merfen®

Switzerland

Apotheke

pharmacies network

Acquisition of

Expansion of

IPO of

Acquisition

Sun Store

Acquisition of

distribution

Joint Venture

Galenica

of Mediservice

pharmacies

Bichsel Group

activities

with Coop Vitality

Santé

2017

1927

1995

1996

1999

2000

2002 / 2004

2005

2007 2008

2009

2013

2018 2019 2020

Strategy to

Partnership

Acquisition of

Opening of highly

Acquisition

Acquisition of

Acquisition of

engage in the

with Alliance

Anti-Brumm®

automated

entire Swiss

UniChem

and Perskindol®

distribution centre in

of medifilm

care product

Hedoga Group

healthcare

Niederbipp

value chain

Acquisition of

Pharmapool

Corporate

Services

Retail

Products & Brands

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1 History of resilient growth and margin improvement

2009-19

sales CAGR

2009-19

EBIT CAGR3

2009-19 EBIT

margin

improvement3

2019 cash

conversion5

Employees as of 31 December 2019

Logistics, HealthCare Information	Galenica
& Retail1,4

3.0%	2009-19 CAGRs		1.7%
Retail market sales2
	Galenica net sales	3.0%
	Galenica EBIT3		11.5%
11.5%						2'826	2'915	3'009	3'1416	3'165	3'301	6.0%
					2'766
			2'603	2'661
	2'467	2'526
+282bps
												3.0%
75%
7'071	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	0.0%

			Net sales (CHFm)		EBIT margin %
Source:	Company information, Galenica Annual Reports, IQVIA (former IMS Health)
Notes:	The financial information presented with respect to the financial years ended 31 December 2008 through 2013 has been derived from the audited consolidated financial statements of Galenica AG (now renamed Vifor Pharma
	AG) and represent its Logistics, Retail and Other (Healthcare Information) businesses, excluding the Pharma business. The Company, a former wholly-owned subsidiary of Galenica AG (now renamed Vifor Pharma AG),
	prepared combined financial statements for the financial years ended 31 December 2014, 2015 and 2016. Accordingly, the financial information derived from the combined financial statements of the Company and from the
	consolidated financials of Galenica AG (now Vifor Pharma AG) for its Logistics, Retail and Other (Healthcare Information) businesses, excluding the Pharma business, for prior periods may not be fully comparable.

1. Not including Verfora (former Vifor Consumer Health )
2. Retail market sales include direct and indirect pharmaceutical sales through pharmacies, self-dispensing doctors and drugstores (IQVIA Market Prognosis 2019-2023, Switzerland; published September 2019)
3. 2014-16EBIT from combined financial statements, 2017 and 2018 EBIT, excludes IAS 19 expense, 2019 excludes IAS 19 expense and effects of IFRS 16 leasing, details adjustments, Annual Report 2019, pages 95 and 96
4. 2013 financials as per 2014 financial statements due to changed segment structure (Galenica Santé is reported as a separate segment since 2014). Financials not adjusted to include Products & Brands.
5. Calculated as (EBITDA-capex)/EBITDA.2014-18 EBITDA excludes IAS 19 expense and 2019 EBITDA excludes IAS 19 expense and effects of IFRS 16 leasing; capex includes investments in tangible and intangible assets, details adjustments, Annual Report 2019, pages 95, 96 and 97
6. Adoption of IFRS15 starting from 2017.

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1 History of share price since IPO

75
70				CHF 59.45
Initial trade price
			
7 April 2017
CHF 43.00
IPO offer price
CHF 39.00
50
45
40
35				15.01.21
30
		12/2019	12/2020
7.4.2017	12/2017	12/2018
	Galenica	SPI

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2 Galenica is the leading healthcare provider in Switzerland

2019 net sales CHF3'301 million

2019 EBIT1

CHF167 million

Health & Beauty

Services

Retail

Products & Brands

Market position2

#1

Consumer Health market position2

#1

Market position2

#1

2019 net sales

2019 EBIT

(pre eliminations of intercompany positions)

CHF1'621m CHF124m

2019 net sales

2019 EBIT

(pre eliminations of intercompany positions)

CHF2'441m CHF45m

• Leading domestic network of own, joint venture and independent partner pharmacies
• Provision of health and beauty products, patient advice and new services through our pharmacy network as well as via different online offerings

• Broad range of own, exclusive and partner products for consumer health, beauty and well-being
• Strong sales and marketing force in Switzerland

• Leading provider of specialised pre-wholesale and wholesale distribution services
• Specialised databases and solutions for clinical decision support

1. Excludes IAS 19 and IFRS 16 effects, Details adjustments, Annual Report 2019, page 95
2. Services based on sales reported at ex-manufacturer price level as of MAT December 2019. Source: IQVIA Market Prognosis 2019-2023, Switzerland; Retail based on number of pharmacies. Source: IQVIA Market Prognosis 2019-2023, Switzerland, pharmaSuisse 2019 and company websites; Products & Brands based on IQVIA MAT December 2019 sales value for OTC, Patient Care, Personal Care and Nutritionals products

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Operating in a stable and attractive Swiss healthcare market

2 with favourable long-term fundamentals

5

4

3

2

1

0

Resilient, stable Swiss healthcare retail sector2

Pharmaceutical market in Switzerland (2019)1

CHF bn (based on ex-manufacturer price)						2019-23 CAGR 1.5%3		By value−CHF6.1bn	By volume−187 million packs
				2009-19 CAGR 1.7%3
															1.0%		3.4%
																	9.0%
															25.4%	48.3%	22.7%
							4.3	4.4	4.5	4.5	4.6	4.6	4.7	4.8	25.3%		64.9%
3.8	3.8	3.8	3.9	3.9	3.9	4.1
															Pharmacies	Physicians	Hospitals	Drugstores
2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	E2020 E2021 E2022 E2023

Financial crisis		Mandatory price cuts

Unpegging of Swiss Franc by SNB

• Underlying healthcare sector growth drivers, including demographics, lifestyle and innovation
• One of the highest life expectancy rates in the world
• Non-discretionarynature of products and services

Pharmacists play a crucial role in the provision of medicines

• Indispensable role in one of the world's highest quality health care systems, providing drugs, advice and services
• Continued efforts by government and health insurers to make pharmacists the first point of contact
• Growing importance to meet consumer trends towards more personalized healthcare and self-medication

Source:

IQVIA, Pharmamarkt Schweiz, YTD December 2019, IQVIA Market Prognosis 2019-2023, Switzerland; published September 2019

1. Medicines Swissmedic list A, B, C, D sold from suppliers and wholesalers to hospitals, physicians, pharmacies and drugstores
2. Total market without hospitals
3. IQVIA Market Prognosis 2019-2023, Switzerland; published September 2019

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3 The largest pharmacy retailer in Switzerland	Retail
Network of chains (# of pharmacies as of 31 December 2020) Webshop Competitive positioning-#1 market position4

	−	Largest branded pharmacy network by		By number of pharmacies5		Total # of pharmacies as of 2018
1831		number of pharmacies in Switzerland		156		1'806
	−	The first Swiss pharmacy chain2			9%	~5.8x more pharmacies
94
						than next competitor
	−	Joint venture (49:51) with Coop, the 2nd largest
			366
87		retail group in Switzerland		20%	89
			65
	− Service provider for independent pharmacies
1563		under Feelgood's brand				No. 2	No. 3
	− Specialty pharmacy focused on home healthcare
		Own	Independent
1		for patients with chronic illnesses

−	Specialty pharmacy with manufacture of individual	Net sales performance (CHFm)
1	medicines & medical devices and home care services

Highlights

CAGR 3.9%

• Largest pharmacy network, including online presence
• Offers broad product range, including well-known own brands, as well as health services and tests
• Built organically and through targeted acquisitions since 2000
• Including attractive, high customer traffic locations across Switzerland
• Average sales per pharmacy of CHF4.3m > 1.4x Swiss market average6

1. Amavita figures include 4 majority holdings in other pharmacies
2. Based on 1976 Federal Court law permitting non-pharmacists to own a pharmacy for the first time
3. Includes 5 Amavita partnerships
4. Based on number of pharmacies. Source: pharmaSuisse 2020, IQVIA Market Prognosis 2019-2023, Switzerland; published September 2019 and company websites

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		1'251		1'308	1'349	1'3878	1'431	1'516
		2014		2015	2016	2017	2018	2019
Health & Beauty7		1'437	1'479 8
Sales	1'335	1'393	1'525	1'621
EBIT margin 6.0%	6.4%	6.5%	6.7%	7.2%	7.6%9

1. Own includes 84 pharmacies through joint venture with Coop; independent includes 7 Amavita partners
2. Retail pharmacy sales for Galenicare on a like-for-like basis, including Amavita and Sun Store pharmacies only. Swiss market average based on pharmaSuisse 2020, Roka 2018 (financial year 2017)
3. H&B post-inter-segmental eliminations
4. Restatement of IFRS15 starting from 2017.

9

2019 excludes effects of IFRS 16 leasing, details adjustments, Annual Report 2019, page 95

8

3 Ongoing pharmacy network consolidation and optimisation

Retail

• Proven track record of delivering synergies through streamlining of business processes and creating value through acquisitions and network optimisation

Marketing

IT and

Processes Purchasing

• Widely spread pharmacy network covers every Region in Switzerland

• Demonstrated M&A track record with an average of 10 pharmacies acquired and 8 net pharmacies added per

year over the last 8 years

		2012	2013	2014	2015	2016	2017	2018	2019	2020
Pharmacies acquired	10	20	5	2	13	6	10	11	12
Net pharmacies added1	11	12	6	0	11	8	8	11	10
Total own Pharmacies		300	312	318	318	329	337	345	356	366

1 Includes the impact of acquisitions with concurrent mergers, new openings and closings

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3 Diversified product portfolio for health, beauty and wellbeing

Retail

Galenicare's

retail product offering in % of sales1

12%

18%37%

17%

53%

4% 12%

Beauty		Nutrition, Personal		OTC medicines
		and Patient Care

1 Sales YTD December 2019, includes Amavita and Sun Store pharmacies, without Mediservice, Winconcept and Coop Vitality

Prescription medicines of which originals of which generics of which service fees

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Leading role in Consumer Health
3 with broad and innovative product portfolio	Products & Brands

Portfolio

Consumer Health & Skincare brands

Exclusive partner brands Health & beauty

OTC retail own brands

Competitive position: #1 Consumer Healthcare1 market position

						ORAL PAIN
2 (%)						REMEDIES5
					No. 1
5.9					35% market share2
share	5.3	5.2			REMEDIES5
				TOPICAL PAIN
Market				3.3	2.7	No. 3
				14% market share2
						COUGH & COLD
						REMEDIES5
		No.2	No.3	No.4	No.5	No. 2
		16% market share2

Highlights

• Preferred Consumer Healthcare partner for Swiss Pharmacies & Drugstores
• Broad Consumer Healthcare Sales & Training force -> Distribution partner of choice
• Expanding portfolio of own and exclusive brands & products
• Ability to leverage Galenicare Retail platform to distribute VERFORA brands

Net sales performance (CHFm)3

CAGR 5.0%

804	844	89	89	92	6	102

1 Includes OTC, Patient Care, Personal Care and Nutritionals products

2014

2015

2016

2017

2018

2019

2 Based on IQVIA Sell Out MAT Dec 2019 streetprice - net sales incl. VAT, price actually paid by final customer

3 2014-16 net sales on a comparable basis including 12 month Verfora (former Vifor Consumer Health) sales and G-Pharma adjustment

4 Adjusted for disposal of Equazen® in November 2015

5 Market shares in categories are shown for Verfora (former Vifor Consumer Health), not including OTC retail own brands

6 Adoption of IFRS15 starting from 2017.

Growth on a comparable basis

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Leader in pre-wholesale and wholesale distribution, supported
3 by an innovative healthcare information business	Services

Services

• Pre-wholesaleoutsourced storage and distribution
• Logistics services to pharmaceutical and various healthcare clients
• Wholesale distribution with three modern sites; main site at Niederbipp operates at c.70% automation
• Supplies to pharmacies, self-dispensing doctors' practices, drugstores, nursing homes and hospitals
• One-stopshop
• Prepared medication in blisters
• Product master data and scientific databases
• IT platforms relating to electronic medication process
• Software solutions and services for pharmacies

Highlights

−	75 customers	−	Temperature zones:
−	>10,000 products	−	(i) -80⁰C, (ii) 2-8⁰C, (iii) 15-25⁰C
−	>9,000 customers	−	Access to nearly all dispensers
−	100,000 products (c.11,000 Rx2) −	Present in all three language regions
−	>1,100 suppliers	−	GDP3-compliant services

− Systemically relevant information and databases

− Solutions for safe and cost-effective provision and application of medicines

1. Based on market share. Source: IQVIA Market Prognosis 2019-2023,
2. Prescription products
3. Good Distribution Practice
4. Restatement of IFRS15 starting from 2017.
5. 2017 including one-off effect, ROS without one-off effect 1.8%
6. 2019 excludes effects of IFRS 16 leasing, details adjustments, Annual report 2019, page 95

Competitive positioning - #1 market position1

Pre-wholesale market share %

Wholesale market share %

(pharmacy)

2.5x larger

than next

2.0x larger

than next

competitor

competitor

No. 2 No. 3 No. 2 No. 3

Net sales performance (CHFm)

			CAGR 2.4%
2'171	2'245	2'329		2'362 4	2'372	2'441
						2.15		1.9	1.8 6
1.7	1.6	1.7
2014	2015	2016	2017		2018	2019
				EBIT margin (%)

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Long-term track record of sustainable growth and

4 attractive cash generation …

Logistics, HCI & Retail1,4

Galenica

	2009-19 CAGRs		1.7%
	Retail market sales2
(CHFm)salesNet	Galenica net sales		3.0%						3'1416	3'165	3'301
Galenica EBIT3	11.5%	2'661	2'766	2'826	2'915	3'009
	2'467	2'526		2'603

	2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019
(CHFm)3	63%	70%	70%	78%	78%	74%	74%	80%	70%7	74%	75%
% Cash conversion5						148	8	154	167	6.0%
			126	134
EBIT margin (%)3			117
EBIT	93	99
	73	73								3.0%
56
Reported
2009	2010	2011	2012	2013	2014	2015	2016	2017	2018	2019	0.0%

• • Above market growth
• History of margin improvement
• Attractive cash flow generation
• Well-investedinfrastructure

Source:	Company information, Galenica Annual Reports, IQVIA (former IMS Health)
Notes:	The financial information presented with respect to the financial years ended 31 December 2008 through 2013 has been derived from the audited consolidated financial statements of Galenica AG and represent its Logistics, Retail and
	Other (Healthcare Information) businesses, excluding the Pharma business (please refer to the footnote on page 4)

1. Not including Verfora (former Vifor Consumer Health)
2. Retail market includes direct and indirect pharmaceutical sales through retail pharmacies, self-dispensing doctors and mail-order services (IQVIA Market Prognosis 2019-2023, Switzerland; published September 2019)
3. 2014-16EBIT from combined financial statements, 2017 and 2018 EBIT, excludes IAS 19 expense, 2019 excludes IAS 19 expense and effects of IFRS 16 leasing, details adjustments, Annual report 2019, pages 95 and 96
4. 2013 financials as per 2014 financial statements due to changed segment structure (Galenica Santé is reported as a separate segment since 2014). Financials not adjusted to include Products & Brands
5. Calculated as (EBITDA-capex)/EBITDA.2014-19 EBITDA excludes IAS 19 and IFRS 16 adjustment; capex includes investments in tangible and intangible assets, details adjustments, Annual report 2019, pages 95, 96 and 97
6. Adoption of IFRS15 starting from 2017.
7. 2017 cash conversion without acquisition trademark Merfen 78%
8. 2017 EBIT including one-off effect (CHFm 7.0), comparable EBIT CHFm 141.3

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4 … demonstrating strong performance in both segments

	Health & Beauty			Services
Retail	Health & Beauty		Logistics and HCI	Services

(CHFm)		10.4%							4.0%				0.6%						2.4%
													2'105		2'158	2'171	2'245	2'329	2'362 1	2'372	2'441
sales													1'621
			1'246	1'335	1'393		1'437		1'479 1	1'525
Net	838
	2009A	…	2013A	Health & Beauty	2017A	2018A	2019A	2009A	…		Health & Beauty
	2014A	2015A	2016A	2013A 2014A 2015A 2016A 2017A 2018A 2019A
(CHFm)		10.8%						9.2%			124	10%		28.7%					4.4%			10%
										110
								100
						93
					89
				80
adjusted3				63							7.6%
										5%											5%
42														35	36	36	40	512	44	45
													13
EBIT																						1.8%
2009A	…											0%										0%
	2013A 2014A 2015A 2016A 2017A 2018A 2019A	2009A	… 2013A 2014A 2015A 2016A 2017A 2018A 2019A
		…

Source:	EBIT margin (%)	CAGRs
Company information, Galenica Annual Reports
Note:	The financial information presented with respect to the financial years ended 31 December 2008 through 2013 has been derived from the audited consolidated financial statements of Galenica AG and represent its Logistics,
	Retail and Other (Healthcare Information) businesses, excluding the Pharma business (please refer to the footnote on page 4)

1. Adoption of IFRS15 starting from 2017.
2. 2017 including one-off effects (CHFm 7.0), comparable EBIT CHFm 43.6 and ROS 1.8%

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2014-16 EBIT from combined financial statements, 2017 and 2018 EBIT, excludes IAS 19 expense, 2019 excludes IAS 19 expense and effects of IFRS 16 leasing, details adjustments, Annual report 2019, pages 95 and 96

14

5 Our ambition and self-perception

Galenica:

The first choice for health,

beauty and wellbeing.

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5 Our Strategy - the power of 3 drives sustained value creation

Products & Brands

• Leverage leading positions to promote higher margin and exclusive products
• Further expand and optimise retail network on- and offline (omni-channel)
• Drive efficiency through one single process for all three pharmacy formats

Click & Collect		Loyalty cards

Retail

Leverage

Support

Services

Develop and launch own and partner brands and products for pharmacies

20172018

/

20192020

• Leverage scale advantages to develop new, value-added services
• Continue to drive synergies across the entire organisation

medifilm		GDP-qualified fleet		e-health

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5 Strategic frame and business model

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Strategic Programmes

5  Implement strategy with focus and speed

Focus

Strategic programmes

Omni-Channel

	Care	Market
	Professionals
		Inside
	Efficiency

Transformation

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5 Focus of the strategic programmes

Omni-Channel:

Offer customers the best experience on all channels, anytime, anywhere.

Care:

Strengthen the role of pharmacies with healthcare offers and partnerships.

Professionals:

Strong partner for all stakeholders in the healthcare sector.

Efficiency:

Secure earnings, release funds for investments.

Transformation:

Implement strategy powerfully, effectively, quickly and successfully.

Market

Inside

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5 Management structure Galenica Group

• Executive Committee
• extended Executive Comittee

1) Joint venture with Coop	Status: january 2021

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52 Executive Committee

Marc Werner	−	CEO since 2020
CEO	−	24 years industry experience
	− Joined Galenica in 2020
	− Previously, Head Marketing & Sales division and Member of the Group Executive Board at Swisscom
Felix Burkhard	−	CFO since 2017
CFO	−	30 years industry experience of which 26 years at Galenica
	− Joined Galenica in 1995
	− Previously, Head of Strategic Projects of Galenica Group and Head of Retail Business Sector
Virginie Pache Jeschka	−	Chief Pharmacies Officer from 1st January 2021 and CEO Coop Vitality
Pharmacies	−	17 years Marketing and Sales Manager experience of which 3 years at Galenica
	−	Joined Galenica 2018
	− Previously, CEO Coop Vitality, Management of Caudalie Suisse and then Caudalie D-A-CH in Düsseldorf
Daniele Madonna	−	Chief Healthcare Officer from 1st January 2021
Healthcare	−	18 years industry experience of which 17 years at Galenica
	−	Joined Galenica 2004
	− Previously Store Manager, Regional Sales Manager, CEO of the joint venture Coop Vitality and Head of Retail Business Sector
Thomas Szuran	−	Chief Products & Marketing Officer from 1st January 2021
Products & Marketing	−	24 years industry experience of which 2 years at Galenica
	−	Joined Galenica 2019
	− Previously, CEO at Biomed AG, President at ASSGP
Andreas Koch	−	Head of Wholesale Logistics from 1st January 2021
Wholesale Logistics	−	Degree in business administration
	− 21 years industry experience of which 12 years at Galenica
	− Previously, Head Supply Chain Management at Galexis and Alloga, CEO Alloga, CEO Galexis

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52 Extended Executive Committee

Lukas Ackermann	− Since 2021 Member of the Extended Executive Committee
IT & Digital Services	− 22 years health care experience
	− Joined Galenica in 2020 as Managing Director of HCI Solutions
	− Previously, General Manager of amétiq Ltd.
Marianne Ellenberger	− Since 2021 Member of the Extended Executive Committee
Human Resources	− 35 years Human Resources experience of which 20 years at Galenica
	− Joined Galenica in 2001 as Head Human Resources Retail
	− Previously, Various Human Resource functions (Ascom, CSL Behring, Swisscom)
Christina Hertig	− Since 2021 Member of the Extended Executive Committee
Corporate Communications	− 36 years Communication experience of which 15 years at Galenica
	− Joined Galenica in 2006
	− Previously, Federal Office of Public Health (FOPH)
Barbara Wälchli	− Since 2021 Member of the Extended Executive Committee
Legal & Board Services	− 10 years attorney at law experience
	− Joined Galenica in 2019 General Counsel of the Galenica Group
	− Previously attorney at law in various law firms Bern and Zurich
Jürg Paul	− Since 2021 Member of the Extended Executive Committee
Transformation	− 28 years Marketing and Transformation experience
	− Joined Galenica in 2020 as Head of Transformation
	− Previously Head of Business Transformation Swisscom

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H1 2020

6 Strong sales growth

Net sales (in CHF million)

Galenica Group

+5.6%

Retail

+2.9%

Products &	+1.0%
Brands

Services

+7.9%

H1 2019		H1 2020

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H1 2020

6 Retail Business sector

Net sales (in million CHF)

+2.9%

48%

Elements of growth:

Expansion1):	+5.6%	+5.1%	+4.3%	thereof Bichsel Group: +3.2%
Organic2):	+0.4%	-0.7%	-1.4%
thereof impact of price reductions3):	-1.8%	-1.9%	-1.9%
thereof one-time effect of process optimisation4):			-1.3%

• Estimated impact of COVID-19 on sales: -1%
• Ongoing COVD-19 impact on high-frequency locations (part of around 10% of sales of Amavita and Sun Store pharmacies)
• 1. Calculated for points of sale without a full year period comparison, Half-year Report 2020, page 28
  2. Consolidated net sales minus expansion effect, Half-year Report 2020, page 28

21.01.2021 © Galenica Group	3)	Mandatory price reductions of reimbursed medications of the specialities list, calculated based on volumes of previous period, Half-year Report 2020, page 28	24
	4)	As a part of a process optimisation, various intersegmental sales transactions were discontinued at the beginning of 2020.

H1 2020

6 Products & Brands Business sector

Net sales (in million CHF)

+1.0%

+14.0% International sales

53%

-2.6%Sales in the Swiss market

• New distribution of Bucco-Tantum®,Omni-Biotic®, launch of Veractiv® and discontinuation of distribution of Ginsana ® and Equazen® with +2.6% net impact on Swiss market sales growth

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H1 2020

6 Services Business sector

Net sales (in million CHF)

+7.9%

49%

impact of price reductions1):	-2.3%	-2.6%	-1.8%
One-time effect of adapted invoicing models2):			+1.9%

• Estimated impact of COVID-19 on sales: +3%
• Growth of 5.9% in the pharmacy wholesale market (63% of net sales)  thereof 3.0% thanks to the expansion of the Retail business sector
• Growth of 10.4% in the physician wholesale market (26% of net sales)

	1)	Mandatory price reductions of reimbursed medications of the specialities list, calculated based on volumes of previous period, Half-year Report 2020, page 28
21.01.2021 © Galenica Group	2)	In the context of the new Ordinance on Integrity and Transparency in the Therapeutic Products Sector (OITTP), agreements with suppliers as well as invoicing models were adapted to the new transparency obligations, which	26
	influenced the sales development in the Services business sector.

H1 2020

6 Solid results

EBITDA (in million CHF)

EBIT (in million CHF)

+2.1%

-0.6%

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H1 2020

6 EBITDA and EBIT adjustments1)

EBITDA (in million CHF)

	H1	H1
	2019	2020
EBITDA	126.7	129.3
Adjustment IAS 19	-0.3	2.4
Adjustment IFRS 16	-24.6	-26.4
EBITDA adjusted	101.8	105.3

1) Details of the adjustments in the Half-year Report 2020, pages 29 and 30

EBIT (in million CHF)

	H1	H1
	2019	2020
EBIT	82.8	82.3
Adjustment IAS 19	-0.3	2.4
Adjustment IFRS 16	-1.4	-1.1
EBIT adjusted	81.1	83.6

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H1 2020

6 EBIT growth despite negative COVID-19 impact

EBIT and EBIT margin adjusted1)

(in million CHF / %)

Galenica Group	4.9%	+3.0%
5.1%

Health & Beauty	7.7%	+2.5%
7.7%

1.8%

Services-0.3% 1.9%

		H1 2019		H1 2020	1)	Excluding effects of IAS 19 and IFRS 16, Half-year Report 2020,	pages 29 and 30
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H1 2020

6 Financial result and taxes

Financial result (in million CHF)

Financial result adjusted 1)

Effects of IAS19 and IFRS16 1)

1. Details of the adjustments of IAS19 and IFRS16 effects, in the Half-year Report 2020, pages 29 and 30
2. Details of one-time effects of deferred taxes, in the Annual Report 2019, pages 118 and 119
3. Taxe rate would be at 17.9% excluding the effects of changes in tax rates of +0.7 million CHF

Taxes (in million CHF)
Tax rate excluding	18.2%	18.9%	17.0%	3)
one-time effects2)

-15.1-13.6

-29.7

-15.1-13.6

-8.4

-38.1

2019

H1 2019

H1 2020

Taxes excluding one-time effects

One-time effects of deferred taxes 2019 2)

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H1 2020

6 Pleasing net profit growth

(in million CHF)

125.3

	+2.2%	66.3			One-time effects of deferred taxes1)
134.2	64.9			Net profit comparable, adjusted2) and
				excluding one-time effects of deferred taxes1)
	65.0	68.4	+5.3%		Effects of IAS19 and IFRS162)
-8.4	-0.1	-2.1
-0.5
2019	H1 2019	H1 2020

1. Details of one-time effects of deferred taxes, in the Annual Report 2019, pages 118 and 119
2. Details of the adjustments of IAS19 and IFRS16 effects, in the Half-year Report 2020, pages 29 and 30

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H1 2020

6 Investments

(in million CHF)

% of net sales

1.6%1.5%1.6%

Investments

in intangible assets

Investments

in tangible assets

• COVID-19has delayed the strategic efficiency projects in the Services business sector:
• • Replacement of the ERP system in Wholesale and Prewholesale
  • • Duration of the project expected until 2023 with investments to be made of ~CHF 13 million
  • Renovation and modernisation distribution center Lausanne-Ecublens
  • • Duration of the project expected until 2022 with investments to be made of ~CHF 22 million

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H1 2020

6 Solid free cash flow1)

(in million CHF)	H1 2019	H1 2020	Change
Cash flow from operating activities before working
capital changes	116.0	118.7		+2.7
Payment of lease liabilities	-23.4	-24.4
Cash flow from operating activities before working
capital changes adjusted	92.6	94.3		+1.7
Working capital changes	-41.2	-53.9
Cash flow from operating activities adjusted	51.5	40.4		-11.0
Cash flow from investing activities without M&A	-24.6	-22.1
Free cash flow before M&A	26.8	18.4		-8.5
Cash flow from M&A	-54.6	-2.4
Free cash flow	-27.8	16.0		+43.8

1)	Details of free cash flow in the Half-year Report 2020, page 31	33
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H1 2020

6 Solid balance sheet

(in million CHF)
Debt coverage1)	2.1x	2.6x	2.4x
Debt coverage adjusted2)	1.5x	2.0x	1.9x

Equity adjusted3)

Effect of IFRS163)

Net debt adjusted3)

IAS19 and IFRS16 effects on equity3)

1. Net debt / EBITDA, Half-year Report 2020, page 33
2. Net debt adjusted / EBITDA adjusted excluding effects of IAS19 und IFRS16, Half-year Report 2020, page 33
3. Detail of the adjustments in the Half-year Report 2020, page 32

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7 Swiss pharmaceutical market by channel 2020

Value (ex-factory): CHF 6'331.7 million CHF +176.9 million / +2.9%

Volume (packs): 183.0 million -3.3 million / -1.8%

Hospitals 1'633.9 million +3.1%

Drugstores

67.5 million

+13.1%

Physicians 1'600.4 million +3.1%

Pharmacies 3'029.8 million +2.4%

25.8%

43.3%

1.1%

25.3%

4.5%

Stationary Mail-order 2'745.3 million 284.5 million

+2.5% +1.9%

Hospitals

16.6 million -3.2%

Drugstores

6.6 million

+8.7%

Physicians

41.2 million -3.1%

Pharmacies

118.6 million

-1.6%

9.1%

3.6%

22.5%

63.6%

1.2%

Stationary Mail-order

116.4 million 2.1 million

-1.7%-1.0%

Source: APO/SD/DRO/SPI Index, Swissmedic A, B, C, D

Medicines Swissmedic lists A, B, C, D, sold from suppliers and wholesalers to hospitals, physicians and drugstores

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7 Swiss pharmaceutical market monthly development

Value (ex-factory) 2020: CHF 6'331.7 million

CHF +176.9 million / +2.9%

Source: APO/SD/DRO/SPI Index, Swissmedic A, B, C, D

Medicines Swissmedic lists A, B, C, D, sold from suppliers and wholesalers to hospitals, physicians and drugstores

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7 Consumer healthcare market YTD June 2020

3.5%

12.8%

CHF million

1'294

20.9% +3.9%

	OTC
	+5.7%
	Personal
	care -5.2%
	Patient
62.8%		non-medication products +0.8%
care +10.4%

Nutrition +6.5%

Source: Pharma Trend for pharmacies and drugstores in Switzerland, streetprices

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Generics growth (in volume) in the pharmacy channel 2020

Market with
generics potential	5.7%
56.2 million	21.2%
-0.2%

26.4%

19.8%

Market with generics

35.9 million26.9% -1.5%

Substitution rate 58%3)

Pharmacies Galenica Group4) 72%

Source: Market Segmentation, reimbursable products (FOPH) in the pharmacy channel Monthly calculation basis, delineated market division, data as of December 2020

1. Source: Galenica Group

21.01.2021 © Galenica Group © IQVIA Switzerland - Swiss pharmaceutical market 2020

Total Packs reimbursable	76.9 million / +1.8%
by health insurance
			Patent protected products		4.4 million / +12.6%
			Products with expired patent		20.3 million / +2.2%
			protection without generics
			Generics		20.7 million / +0.4%
			Pharmacies Galenica Group4)	+1.6%
			Originals1)		15.2 million / -3.9%
			Others2)		16.3 million / +6.5%

1. Products with expired patent protection and at least one generic
2. 1. Natural substance (e.g. vitamins, minerals, herbal ingredients)
3. 1. Vaccines
   2. Biosimilars
   3. Reference products
4. Generics 20.7 million / market with generics 35.9 million = 58%

38

8 Authorities: measures and projects

Reduction in drug

prices

Category changes of

OTC products1)

Distribution margin

SBR IV  SBR V

Generics prices

"Reference price

system"

1. Swissmedic categories C, D

2017 2018 2019 2020

2019

SBR IV extended until the end of 2021

from 2022?

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Price reduction rounds 2017 to 2019

8 Annual savings per channel at public and ex-factory price in million CHF

225

2017

2018

2019

44.6 185

64.8

116.1

41.0

52.4

91.3

122

13.4 101

30.9 12.1

24.6

78.0 64.6

118			Hospitals
		Physicians
19.3	94
	Pharmacies
33.2	17.1
	25.9
65.5	51.4

Public price		Ex-factory price

	Public price			Ex-factory price

	Public price			Ex-factory price

Analysis FOPH price reductions 2019 - Source: iQPharma - Input FOPH

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8 Reclassification of OTC's

Category A	Category B	Category C	Category D	Category E
prescription without	prescription	pharmacy only	pharmacy & drugstore	sale in all shops
repetition
with a prescription	with a prescription	without prescription	without prescription	without prescribtion

~15%		~85%	~85%	~15%

Category A

Category B

Category D

Category E

with a prescription	with a prescription	specialist retailer	sale in all shops
or pharmacy advice

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8 Swiss Pharmaceutical market - composition of drug prices

Fixed margin elements help to offset price reductions

Composition of the price of a prescription/ reimbursable drug: c.3/4 of the retail margin secured by fixed elements

~ 8 %1 LOA - Retail	~ 8%	Per prescription / line
service fees
Reimbursed 
~		~24% Retail
~ 28% - 30% Galenica	~ 29%	~ 2/3 Fixed
total margin; thereof	+	~1/3 Variable
~		~ 5% Wholesale
~ 4% - 6% Wholesale
Ex-factory

~70% - 72% Supplier margin ~ 71%

FOPH defines price and margin - Margin covers

wholesale and retail

Ex factory price	+ price-related	+ surcharge per
(in CHF)	surcharge	pack
0.05-4.99	12.0%	4.00
5.00-10.99	12.0%	8.00
11.00-14.99	12.0%	12.00
15.00-879.99	12.0%	16.00
880.00-2.569.99	7.0%	60.00
From 2.570.00	-	240.00

Source:	Swissmedic and company information	LOA: Service based compensation
Note:	FOPH stands for Federal Office of Public Health; sets prices based on basket of nine countries and quality aspects
1	Based on Company internal figures.

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Disclaimer

Disclaimer Galenica

Certain statements, beliefs and opinions in this presentation are forward-looking, which reflect the Company's or, as appropriate, the Company's directors' current expectations and projections about future events. By their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. A multitude of factors including, but not limited to, changes in demand, competition and technology, can cause actual events, performance or results to differ significantly from any anticipated development. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. As a result, the Company expressly disclaims any obligation or undertaking to release any update or revisions to any forward-looking statements in this presentation as a result of any change in expectations or any change in events, conditions, assumptions or circumstances on which these forward-looking statements are based. Neither the Company nor its advisers or representatives nor any of its of their parent or subsidiary undertakings or any such person's officers or employees guarantees that the assumptions underlying such forward-looking statements are free from errors nor does either accept any responsibility for the future accuracy of the forward-looking statements contained in this presentation or the actual occurrence of the forecasted developments. You should not place undue reliance on forward-looking statements, which speak only as of the date of this presentation.

Disclaimer IQVIA

© 2021, IQVIA Solutions GmbH

All rights reserved. The information may not be duplicated, stored, processed further, nor be made accessible in whole or in part to any third party without prior express and valid written permission of IQVIA Solutions GmbH . Terms used in connection with data/figures such as "patient", "doctor", "medical practice", "prescriber", or "pharmacy" do not designate any personal data but exclusively anonymous information (according to applicable, valid data protection laws).

IQVIA utilizes highly sophisticated technologies and methods in order to ensure that all its Information Services meet the applicable data protection requirements, regardless of the way data are combined.

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Galenica Group - Contact information

Investor Relations	Media
Felix Burkhard	Christina Hertig
CFO Galenica	Head Corporate Communication
Tel.: [phone]	Tel.: [phone]
Mail:[e-mail]	Mail:[e-mail]

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