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Transcript of Investor Relations & Capital Markets. Some of the Some of the information in this presentation is...
Investor Relations & Capital Markets
Some of the Some of the information in this presentation is not historical in nature and may constitute forward-looking statements, which are made pursuant to the safe harbor provisions of Code of Capital Markets of Turkey. These statements may be identified by the use of forward-looking terminology such as “believes,” “expects,” “anticipates,” “may,” “will,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or the negative of these words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied by such statements. Although it is not possible to predict or identify all such risks and uncertainties, they may include, but are not limited to, those described in the Company’s annual, quarterly and current reports as filed and furnished with the regulations of Capital Markets Board of Turkey (CMB). You are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date such statements were first made. To the degree financial information is included in this presentation, it is in summary form only and must be considered in the context of the full details provided in the Company’s most recent annual, quarterly or current report as filed or furnished with the CMB. The Company’s IFRS reports are available at www.selcukecza.com.tr under the “Investors” tab. Except to the extent required by law, the Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of unanticipated events.
Forward-Looking Statements
2All rights reserved by Selcuk Ecza Deposu A.S.®
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
3All rights reserved by Selcuk Ecza Deposu A.S.®
At-A-Glance...
4All rights reserved by Selcuk Ecza Deposu A.S.®
TRL 4.9 billion in revenues in FY12
Two segments: Pharmaceuticals& Toiletry Products Distribution
FY12 Net Income TRL 144 million
More than 5.000 employees, over 2.000 vehicles and over 100 warehouses across the country
621.000.000 shares and 20% free float
Headquartered in Istanbul-TURKEY
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
5All rights reserved by Selcuk Ecza Deposu A.S.®
USSize: US$355-360bn
Growth Forecast: 2-3%
Top 5 EuropeSize: US$150-160bn
Growth Forecast: 1-3% JapanSize: US$130-135bn
Growth Forecast: 4-5%“Pharmerging” Markets
Size: US$280-300bnGrowth Forecast: 15-17%
Rest of WorldSize: US$200-215bn
Growth Forecast: 8-9%
Global MarketSize: US$ 1,190BnGrowth Forecast:
3-6%
Source: IMS «The Global Use of Medicines: Outlook Through 2016»–July,2012
“Pharmerging” markets include: 17 countriesNew Definition China, Brazil,Russia, India, Venezuela, Poland, Argentina, Turkey, Mexico, Vietnam, S. Africa, Thailand, Indonesia, Romenia, Egypt, Pakistan, Ukraine
Global Market Developments 2012-16: «Pharmerging» the key stimulator...
6All rights reserved by Selcuk Ecza Deposu A.S.®
Global Market through 2016...
Source: IMS «The Global Use of Medicines: Outlook Through 2016»–July,2012
7All rights reserved by Selcuk Ecza Deposu A.S.®
30%
2%
13%
6%11%
31%
7%
2016 Predicted Global Market Shares by Region (%)
U.S. Canada EU5 Rest Europe Japan Pharmerging ROW Europe
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
8All rights reserved by Selcuk Ecza Deposu A.S.®
9
0
1000
2000
3000
4000
5000
6000
7000
Favorable Demographics...
All rights reserved by Selcuk Ecza Deposu A.S.®
2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E0.00
5.00
10.00
15.00
20.00
25.00
30.00
0%
5%
10%
15%
20%
25%
30%
19.0%20.0%
22.0%
24.0%
26.0%
Population Over Age of 50 Years in Turkey
50+ years age (mn people) 50+years age (% of total population)
Source: Turkstat (TUIK)
10
0
1000
2000
3000
4000
5000
6000
7000
Source: IMS Market Prognosis , May 2012, Importing Prices
16th Largest in the World, 6th in Europe
All rights reserved by Selcuk Ecza Deposu A.S.®
U.S
.
Japa
n
Chin
a
Ger
man
y
Fran
ce
U.K
.
Ital
y
Cana
da
Spai
n
Braz
il
Russ
ia
Indi
a
S.Ko
rea
Aus
tral
ia
Turk
ey
Pola
nd
Gre
ece
Net
herl
ands
Belg
ium
Ven
ezue
la
0.00
50.00
100.00
150.00
200.00
250.00
300.00
350.00
The Largest 20 Pharmaceutical Market
Advanced
Developing
Turkey
11
0
1000
2000
3000
4000
5000
6000
7000
Total Healthcare Expenditure
All rights reserved by Selcuk Ecza Deposu A.S.®
Source: OECD Health At A Glance Oct. 29, 2012 Update
Uni
ted
Stat
esN
ethe
rlan
dsFr
ance
Ger
man
yCa
nada
Swit
zerl
and
Den
mar
kA
ustr
iaPo
rtug
alBe
lgiu
mG
reec
eN
ew Z
eala
ndSp
ain
Swed
enU
nite
d Ki
ngdo
mJa
pan
Nor
way
Icel
and
Ital
yIr
elan
dA
ustr
alia
Slov
ak R
epub
licSl
oven
iaFi
nlan
dCh
ileLu
xem
bour
gH
unga
ryCz
ech
Repu
blic
Isra
elKo
rea
Pola
ndEs
toni
aM
exic
o
OEC
D a
vg.
Turk
ey
0
2
4
6
8
10
12
14
16
18
20
18
12 12 12 11 11 11 11 11 11 10 10 10 10 10 10 9 9 9 9 9 9 9 98 8 8 8 8 7 7
6 6
9
6
Total Expenditure on Health % of GDP (2010 or the nearest year)
12
0
1000
2000
3000
4000
5000
6000
7000
Per Capita Healthcare Expenditure
All rights reserved by Selcuk Ecza Deposu A.S.®
Source: OECD Health At A Glance Oct. 29, 2012 Update
Uni
ted
Stat
esN
orw
aySw
itze
rlan
dN
ethe
rlan
dsLu
xem
bour
gD
enm
ark
Cana
daA
ustr
iaG
erm
any
Fran
ceBe
lgiu
mSw
eden
Irel
and
Aus
tral
iaU
nite
d Ki
ngdo
mIc
elan
dFi
nlan
dSp
ain
Japa
nN
ew Z
eala
ndIt
aly
Gre
ece
Port
ugal
Slov
enia
Slov
ak R
epub
licIs
rael
Kore
aCz
ech
Repu
blic
Hun
gary
Pola
ndEs
toni
aCh
ileM
exic
o
OEC
D a
vg.
Turk
ey
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
8,23
3
5,38
8
5,27
0
5,05
6
4,78
6
4,46
4
4,44
5
4,39
5
4,33
8
3,97
4
3,96
9
3,75
8
3,71
8
3,67
0
3,43
3
3,30
9
3,25
1
3,05
6
3,03
5
3,02
2
2,96
4
2,91
4
2,72
8
2,42
9
2,09
6
2,07
1
2,03
5
1,88
4
1,60
1
1,38
9
1,29
4
1,20
2
916
3,26
5
913
Per Capita Expenditure on Health, US$, PPP (2010 or the nearest year)
13
0
1000
2000
3000
4000
5000
6000
7000
Pharma Expenditures % of Total
All rights reserved by Selcuk Ecza Deposu A.S.®
Source: OECD Health At A Glance Oct. 29, 2012 Update
Hun
gary
Mex
ico
Slov
ak R
epub
licG
reec
ePo
land
Esto
nia
Kore
aJa
pan
Czec
h Re
publ
icSl
oven
iaPo
rtug
alIr
elan
dSp
ain
Ital
yCa
nada
Fran
ceBe
lgiu
mIc
elan
dG
erm
any
Aus
tral
iaFi
nlan
dSw
eden
Aus
tria
Uni
ted
Stat
esU
nite
d Ki
ngdo
mCh
ileSw
itze
rlan
dN
ethe
rlan
dsN
ew Z
eala
ndLu
xem
bour
gD
enm
ark
Nor
way
Isra
el
OEC
D a
vg.
Turk
ey
0
5
10
15
20
25
30
35
40
34
27 2625
23 2222
21 20 19 19 19 18 17 17 16 16 16 15 15 1413 12 12 12 11
10 10 9 97 7
17
33
Pharmaceutical Expenditure % of Total Expenditure on Health (2010 or the nearest year)
14
0
1000
2000
3000
4000
5000
6000
7000
Source: OECD Health At A Glance Oct. 29, 2012 Update, Pharmaceutical Manufacturers Association of Turkey (IEIS)
Per Capita Pharma Consumption
All rights reserved by Selcuk Ecza Deposu A.S.®
Uni
ted
Stat
esCa
nada
Irel
and
Gre
ece
Ger
man
yFr
ance
Japa
nBe
lgiu
mSp
ain
Slov
ak R
epub
licA
ustr
alia
Hun
gary
Aus
tria
Icel
and
Ital
ySw
itze
rlan
dPo
rtug
alN
ethe
rlan
dsSw
eden
Slov
enia
Finl
and
Kore
aLu
xem
bour
gN
orw
ayCz
ech
Repu
blic
Uni
ted
King
dom
Den
mar
kPo
land
New
Zea
land
Esto
nia
Mex
ico
Chile
OEC
D S
ampl
e av
g.Tu
rkey
*
0
200
400
600
800
1,000
1,200
983
741
686
677
640
635
630
626
561
554
541
538
525
523
511
510
508
481
474
472
452
440
406
395
375
369
331
315
285
282
250
135
495
121
Per Capita Pharmaceutical Consumption in US$, PPP, (2010 or the nearest year)
*2011 figure
RX Drugs Market in Turkey
Sustainable growth...IMS anticipates a typical CAGR of 3-4% in volume for Turkish market! ≈US$9 bn. market size with app. 10% belongs to OTC (Non-prescription) products group!
15All rights reserved by Selcuk Ecza Deposu A.S.®
Source: Pharmaceutical Manufacturers Association of Turkey (IEIS), IMS
20032004200520062007200820092010201120120.00
0.50
1.00
1.50
2.00
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
0.86 0.
95
1.11 1.15
1.27
1.33 1.37 1.39 1.
52 1.56
9.0%
10.8%
16.2%
3.9%
10.2%
5.3%
2.7%
1.9%
8.8%
2.8%
Boxes(Billion)
Growth Rates (%)
20032004200520062007200820092010201120120.0
3.0
6.0
9.0
12.0
15.0
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
6.2
7.7 8.
5 9.3
10.8 11
.9
13.9
13.6
13.7
12.9
31.1%
23.5%
11.0% 9.2%
16.9%
9.5%
16.7%
-1.8%
0.9%
-5.9%
Value (Billion TL)
Growth Rates(%)
OTC Products Market in Turkey
Faster pace of growth depending on GDP growth and increasing accessibility!
16All rights reserved by Selcuk Ecza Deposu A.S.®
Source : BMI, Turkey Pharmaceutical & Healthcare Report
f: forecast
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f0
0.5
1
1.5
2
2.5
-20.0%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
0.66
0.86 0.911.03
1.150.99
1.16
1.42
1.68
2.01
30.3%
5.8%
13.2% 11.7%
-13.9%
17.2%
22.4%18.3%
19.6%
OTC Market Size (US$bn), Growth Rates (%)
OTC Market Size (US$bn) Growth Rates (%)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013f9.0
9.5
10.0
10.5
11.0
11.5
12.0
10.5
11.511.6
10.3 10.3
10.010.1
10.210.4
10.7
OTC Market % of Total Pharma Market
OTC Market % of Total Pharma Market
Generics vs. Brands in Turkey
17All rights reserved by Selcuk Ecza Deposu A.S.®
Source: Pharmaceutical Manufacturers Association of Turkey (IEIS), IMS
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 201240.0%
45.0%
50.0%
55.0%
48.5
%
50.5
%
50.4
% 51.4
%
51.4
% 52.3
%
52.2
%
52.1
%
52.3
%
52.0
%
52.0
%
51.5
%
49.5
%
49.6
%
48.6
%
48.6
%
47.7
%
47.8
%
47.9
%
47.7
%
48.0
%
48.0
%
Generics Branded
Boxes
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
30.5
%
32.2
%
34.4
%
34.7
%
33.0
%
33.6
%
34.9
%
35.4
%
37.2
%
38.1
%
37.7
%
69.5
%
67.8
%
65.6
%
65.3
%
67.0
%
66.4
%
65.1
%
64.6
%
62.8
%
61.9
%
62.3
%
Generics Branded
Value
Domestic vs. Imported in Turkey
18All rights reserved by Selcuk Ecza Deposu A.S.®
Source: Pharmaceutical Manufacturers Association of Turkey (IEIS), IMS
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0%
20.0%
40.0%
60.0%
80.0%
100.0%
89.6
%
88.4
%
87.3
%
85.9
%
84.7
%
82.7
%
80.7
%
79.2
%
78.5
%
77.8
%
77.8
%
10.4
%
11.6
%
12.7
%
14.1
%
15.3
%
17.3
%
19.3
%
20.8
%
21.5
%
22.2
%
22.2
%
Domestic Imported
Boxes
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
66.5
%
62.7
%
62.9
%
59.0
%
55.0
%
52.3
%
50.3
%
48.2
%
49.1
%
50.1
%
50.4
%
33.5
% 37.3
%
37.1
% 41.0
% 45.0
%
47.7
%
49.7
%
51.8
%
50.9
%
49.9
%
49.6
%
Domestic Imported
Value
332 Companies
64 Manufacturers49 Domestic15
Multinational12 Raw Mat. Producers 31 Importers
Fragmented market: Largest player with a market share of 8.2%
Top 10 market share app.: 44%
No original product development, local firms develop their own generics, manufacture licensed products and subcontract from international firms
295 Domestic37 Multinationals
Market Structure: Suppliers
Source: IMS Health Pharmaceutical Companies Market Data, Cumulative 2012
19All rights reserved by Selcuk Ecza Deposu A.S.®
8.185.40
4.96
4.40
3.89
3.72
3.71
3.71
3.102.90
56.03
Turkish Pharmaceutical Market Suppliers' Shares (%)
IBRAHIM
NOVARTIS
BILIM
PFIZER
EASTPHARMA
SANOFI
GLAXOSMITHKLINE
BAYER
ASTRAZENECA
SANOVEL
OTHER
Market Structure: Wholesalers
20All rights reserved by Selcuk Ecza Deposu A.S.®
Nationals
Multinationals Multinationals
Regionals
Cooperatives
App. 300 Distributors ;15 of which have economically meaningful size
Small distributors have little room to increase their market share, given the financial strength and economies of scale of the large players
High Barriers for New Entrants
Top 2 have approximately 70% market share
Aliance Boots, UK has got the controlling stake and announced that they would increase their share in a 2-
year term purchasing process (80% share recently)
Nationals
21
Market Structure: Pharmacies~ 24,119 pharmacies across the country
1 per 2,965 population
5,065 in Istanbul, 2,095 in Ankara and 1,820 in Izmir
~ 250 newcomers for a typical year.
All rights reserved by Selcuk Ecza Deposu A.S.®
Owned and run by pharmacists
Pharmacy chains are NOT allowed
OTC drugs can NOT be sold through other retail channels
Rely on wholesalers for financing
Typically work with 2 or 3 distributors
Substitution by pharmacists is allowed by the regulation
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
22All rights reserved by Selcuk Ecza Deposu A.S.®
Reference Pricing Scheme – 1Reimbursement
23All rights reserved by Selcuk Ecza Deposu A.S.®
Upper Limit for Reimbursement
Price
Reimbursement Price
International Reference
PriceReference Price
Factor(1 - Institutional
Discount)
2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013
Without Generics
100 100 100 100 100 100 11% 23% 32.5% 41% 41.0% 41.0%
With Generics
100 66 66 60 60 60 11% 11% 20.5% 28% 28.0% 28.0%
28.0%
28.0%
40.0%
11%
4%
60
80
28.0%
28.0%
40.0%
11%
4%
60
80
20.5%
11% 11%
4% 4%
11% 11%
4% 4%
28%
32.5% 40%
11% 11%
11% 11%
11% 11%
28%
20.5%
< 6.79 TRL, and > 3.56
TRL
All
dru
gs
> 3.56 TRL
20 Y
ears
100 100 100 80
> 6.79 TRL, does not have Ref.
Price
> 6.79 TRL, has Ref.
Price
Generics 80 66 66 60
International Ref. Price
Bra
nded
Reference Price Factor Institutional Discount Factor
New Institutional Discount Factors As of May, 2013 , Scheme–2
PRICE≤ 3,55 3,56 - 6,78 6,79 - 10,21 ≥ 10,22
Before May, 2013
After May, 2013
Before May, 2013
After May, 2013
Before May, 2013
After May, 2013
Before May, 2013
After May, 2013
BRANDED
Withot Generics 4% 0% 41% 20% 41% 41% 41% 41%
With Generics 4% 0% 28% 20% 28% 28% 28% 28%
GENERICS 4% 0% 28% 20% 28% 28% 28% 28%
20 YEARS
Has ref. price 4% 0% 11% 7% 28% 20% 28% 28%
Does not have ref. price
4% 0% 11% 7% 40% 20% 40% 40%
All rights reserved by Selcuk Ecza Deposu A.S.® 24
Reference Pricing Scheme–3 Mark-ups, Reimbursement & Official FX Policy
25All rights reserved by Selcuk Ecza Deposu A.S.®
• Prices in TRL terms adjusted if the change at 90-day moving average of official €/TRL exchange rate announced by CBT exceeds +/-5% of the official range, of which the floor of the range is the available reference €/TRL currency and the ceiling is 10% higher. (current reference exchange rate: 1€ = 1.9595 TL valid since April 2, 2009)
• Prices of Generic drugs are also 60% (Max.) of their branded’s reference prices (valid since November 18, 2011); reimbursable margin for generics between the cheapest and the most expensive one in a given bioequivalence group shall be max. 10%
• Co-payment is 20% for employees and 10% for seniors
• Pharmacies are directly reimbursed by the Government (via Social Security Institution-SGK)
• Prices are determined according to (5 to 10) EU member reference countries announced by the Ministry of Health (MoH). Reference Countries for 2012: France, Italy, Spain, Portugal, Greece (Not Changed)
• The prices of the branded products which have already been on the market and approved by MoH or the ones which have applied for the first pricing cannot exceed their related reference prices, while the prices of the branded products that have their generics available in the domestic market shall be max 60% of their reference prices
• There shall be a price cap of 80% of the reference prices for branded products which have stayed on the market over 20 years and wholesale prices over 6.79 TRL
• Government applies additional public discounts over the wholesale prices for its reimbursements; changing between 20% to 40-41% depending on whether it’s a branded or generic drug or stay on the market over 20 years
Pri
cin
g T
able
(in
TR
L)
Producer Price Distributor Mark-up Distributor Price Pharmacy Mark-up Pharmacy Price (excl. VAT) Retail Price (incl. VAT)
A = 0 – 10 9% Aa = A X 1.09 25% Aaa = Aa X 1.25 Aaaa = Aaa X 1.08B = 10 - 50 8% Bb = B X 1.08 25% Bbb = Bb X 1.25 Bbbb = Bbb X 1.08C = 50 - 100 7% Cc = C X 1.07 25% Ccc = Cc X 1.25 Cccc = Ccc X 1.08D = 100 - 200 4% Dd = D X 1.04 16% Ddd = Dd X 1.16 Dddd = Ddd X 1.08E = 200 - X 2% Ee = E X 1.02 12% Eee = Ee X 1.12 Eeee = Eee X 1.08
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
26All rights reserved by Selcuk Ecza Deposu A.S.®
Selcuk Ecza - Over 55 years being a milestone in Turkish pharmaceutical market...
Selcuk Ecza was established as a small local company for distributing pharmaceuticals to its small neighborhood in Konya province - 1958
Selcuk Ecza, started to take orders by phone calls which drives the business to even very small locations - 1960
Selcuk Ecza improved its technology and network and started to serve in many locations in the western side of Turkey - 1970
Selcuk Ecza established its first branch in the business center of Turkey, Istanbul - 1975
Selcuk Ecza’s sister company AS Ecza was established - 1987
Selcuk Ecza has been l isted by a free-fl oati ng rate of 20%. Became the fi rst publicly-owned company in its sector - 2006
SELCUK ECZA İS CELEBRATİNG İTS 55TH ANNİVERSARY - 2013
27All rights reserved by Selcuk Ecza Deposu A.S.®
• App. 24,000 pharmacies across the country owned and run by pharmacists
• Pharmacy chains are not allowed by the regulation
• OTC drugs cannot be sold through other retail channels
• Rely on wholesalers for financing
Top 2 wholesalers control approximately 70% of the total market. (Top 3 > 80%)
Top 10 pharma suppliers get approximately 44% of the market.
Approximately 24,000 pharmacies throughout Turkey.
A pharmacy typically works with 2 or 3 distributors
(Differentiation: quality and speed of service, close follow-up, payment terms and product campaigns)
Value Chain- Selcuk Ecza: A strong link...
28All rights reserved by Selcuk Ecza Deposu A.S.®
Approximately 20,000 clients nationwide (as of FY12)
102 (26 main + 76 regional) warehouses with a total storage area over 130,000 m2.
Can reach 75% of customers within 30 minutes, and 95% within 90 minutes.
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
29All rights reserved by Selcuk Ecza Deposu A.S.®
Focused on Profitability...
30All rights reserved by Selcuk Ecza Deposu A.S.®
(TRL in millions except EPS)As of Dec. 31,
2013 2012 ChgRevenues 5,238.02 4,902.07 6.85%
Gross Income 416.18 404.64 2.85%
Gross Margin 7.95% 8.25% -0.3 pts
EBITDA 164.92 162.54 1.46%
EBITDA Margin 3.15% 3.32% -0.17 pts
Net Income 152.33 148.19 2.79%
Net Income Margin 2.91% 3.02% -0.11 pts
EPS 0.245 0.239 2.79%
2007 2008 2009 2010 2011 2012 2013
3.634.05
5.03 4.90 5.07 4.905.24
TL Billions
...that we have leveraged into higher income
31All rights reserved by Selcuk Ecza Deposu A.S.®
2007 2008 2009 2010 2011 2012 2013
164.41 160.67
231.70
183.93
138.56148.20 152.33
TL millions
All rights reserved by Selcuk Ecza Deposu A.S.®32
Working Capital Management
mn.FY06 FY07 FY0
8FY09 FY10 FY11 FY12 FY13
A/R 1,209 1,303 1,502
1,538 1,538 1,538 1,571 1689
Inventories 346 387 469 404 545 577 695 659
A/P 929 1,043 1,234
1,228 1,362 1,325 1,342 1397
WC 626 647 737 714 721 790 924 951
WC/Sales (%)
19.88 17.83 18.21
14.20 14.70 15.57 18.84 18.16
All rights reserved by Selcuk Ecza Deposu A.S.®33
OpEx Improvement
FY06 FY07 FY08 FY09 FY10 FY11 FY12 3Q13
Revenue (mn.) 3,151 3,628 4,047 5,029 4,902 5,074 4,902 5,238
# of WHs 98 100 100 107 114 118 102 99
# of Employees 4,694 4,554 4,600 4,893 5,162 5,322 5,049 5,187
OpEx / Sales 4.84% 4.49% 4.57% 3.93% 4.28% 4.74% 5.25% 5.12%
Personnel / Sales 2.86% 2.69% 2.64% 2.39% 2.66% 2.79% 3.12% 3.05%
Employee per WH 48 46 46 46 45 45 50 52
Revenue per Employee
671,241
796,743
879,676
1,027,748
949,678
953,495
970,885
1,009,840
All rights reserved by Selcuk Ecza Deposu A.S.®34
OpEx Breakdown
OPERATIONAL EXPENSES 2013 % 2012 % 2013 vs. 2012Personnel expense 160,038,735 59.60% 153,512,575 59.56% 4.25%Fuel expense 21,113,180 7.86% 21,406,417 8.31% -1.37%Other 8,499,774 3.17% 8,238,890 3.20% 3.17%Transportation expense 13,998,630 5.21% 13,123,480 5.09% 6.67%Depreciation expense 12,245,795 4.56% 11,016,370 4.27% 11.16%Outsourcing expense 9,839,473 3.66% 9,539,733 3.70% 3.14%Rent expense 5,478,829 2.04% 6,746,056 2.62% -18.78%Repair and maintenance expense of motor vehicles 5,767,842 2.15% 5,993,190 2.33% -3.76%Communication expense 4,777,608 1.78% 4,878,816 1.89% -2.07%Insurance expense 6,040,569 2.25% 4,829,595 1.87% 25.07%Donations and aids 2,245,970 0.84% 3,549,995 1.38% -36.73%Stationery expense 2,797,367 1.04% 2,651,678 1.03% 5.49%Promotion expenses 1,098,304 0.41% 2,324,149 0.90% -52.74%Tax expense 2,297,429 0.86% 2,298,764 0.89% -0.06%Representation and host expenses 2,023,424 0.75% 1,759,311 0.68% 15.01%Fair Expenses 9,559,907 3.56% 5,256,946 2.04% 81.85%Advisory and audit fees 687,471 0.26% 598,333 0.23% 14.90%Total 268,510,307 257,724,298 4.19%
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
35All rights reserved by Selcuk Ecza Deposu A.S.®
All rights reserved by Selcuk Ecza Deposu A.S.®36
Sustainable growth to Market Leader Position...
2007 2008 2009 2010 2011 2012 2013
33.40% 34.40% 36.09% 35.41% 35.69% 34.40% 35.10%
Market Share (%)
A progressive network across the Country...
37All rights reserved by Selcuk Ecza Deposu A.S.®
Main Warehouses
Regional Warehouses Total
Selçuk Ecza 19 58 77As Ecza 7 15 22Group Total 26 73 99
All rights reserved by Selcuk Ecza Deposu A.S.®
38
Operational Stats I
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
21 22 23
4153
9198 100 100
107114 118
102 99
#Warehouses
Operational Stats II
39All rights reserved by Selcuk Ecza Deposu A.S.®
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
2,584 2,825
3,043
3,432
3,917
4,926 4,694 4,554 4,600
4,893 5,162
5,322 5,049 5,187
Employment Size
Operational Stats III
40All rights reserved by Selcuk Ecza Deposu A.S.®
Market Share (%)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
715
895
1,074
1,282
1,483
2,037 2,030 1,970 1,948 2,049
2,173 2,242
2,061 2,030
Vehicle Fleet
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
41All rights reserved by Selcuk Ecza Deposu A.S.®
All rights reserved by Selcuk Ecza Deposu A.S.®42
Toiletry Segment: A significant catalyst... Selcuk Ecza has started to sell/distribute toiletry products (personal care products, cosmetics etc.) by June 1, 2009 and expanded it to all of its warehouses
The market size in Turkey for toiletry products is approximately as of US$11 bn. And almost US$1 bn. of it is pharmacies’ share
Using the same distribution network, while by using the avalaible spare capacity in warehouses lead to an insignificant increase in CAPEX
Strategy to create a steady amount of additional revenue from this segment in order to support a sustainable profit level
SelcukEcza medium term target is 500 mn TRL
Higher gross margin around 10-11% compared to 7-8% from pharma segment
Selcuk Ecza At-A-Glance
Global Pharmaceutical Market
Turkish Pharmaceutical Market
Reference Pricing Scheme & Reimbursement
Selcuk Ecza
Financial Review
Operational Review
A New Scope: Toiletries
Ownership
Appendices
Contents
43All rights reserved by Selcuk Ecza Deposu A.S.®
Ownership
Selcuk Ecza Deposu Ticaret ve Sanayi A.S.
As Ecza
Selcuk Ecza Holding A.S. Free Float* Gurgen Family
Ahmet Kelesoglu
(39.20%)
Nezahat Kelesoglu
(9.80%)
77.32%
0.51x0.7732
= 39.43%
0.3920x0.7732
= 30.31% 2.67%
99.99%
Ahmet & Nezahat Kelesoglu
Foundation (51%)
20.01%
0.0980x0.7732
= 7.58%
44All rights reserved by Selcuk Ecza Deposu A.S.®
*Selcuk Ecza Holding A.S. hasacquired 5% of free float, total ownership of the company has increased to 82,32% .
Attractive marketsDemographics drive long-term demandPublic policy agenda supports greater access and improved efficiency
Well-positioned businessesSolid operating profit and cash flow strength from distribution segmentNationwide network built over mutual commercial interests
Steady track record of delivering results and a balanced approach to capital deployment
Strong balance sheet and solid liquidity position
Experienced and tenured management team
Selcuk Ecza: A precious link to sustainable value creation
45All rights reserved by Selcuk Ecza Deposu A.S.®
Appendices
Appendix-1: Reimbursement Schedule
Appendix-2: Reference Pricing Scheme
Appendix-3: The New Regulation
Appendix-4: Summary Financials: Income Statement & Balance Sheet
Contents
46All rights reserved by Selcuk Ecza Deposu A.S.®
All rights reserved by Selcuk Ecza Deposu A.S.®47
Max60 Days
First Dayof Month
Last Dayof Month
Application to SSI
15th of the Following
Month
Reimbursement
Average15 Days
15Days
REIMBURSEMENT to PHARMACIES by THE SSI
Dispensing
Appendix-1: Reimbursement Schedule
All rights reserved by Selcuk Ecza Deposu A.S.® 48
ReferenceCountriesFrance
ItalySpain
PortugalGreece
1.00
Generic Drugs in the Same Bioequivalence Group
10% higher than the cheapest
price*
x
q
z
y
j
t
n
p100% = Brands Price (If its generic does not exist in the market)
60% = Generic Price
p & n NOT reimbursed
REIMBURSEMENT
60% = Brands Price (If its generic exists in the market)
Appendix-2: Reference Pricing Scheme
** The government recently lowered the price ceiling from 15% to 10% for thereimbursement price of generic drugs in the same bioequivalance group (which is applied over the lowest price of the generic product in the market; the lower 10% limit came intoforce from Nov. 5, 2011).
*The government has changed the regulation on the reference pricing mechanism and lowered the ratio of both brands and generics to 60% of the reference price on Nov.10, 2011 which is valid since Nov.18, 2011.
The price ceiling for branded drugs has been reduced to 60% from 66% of the reference price, which is determined according to lowest price in the five reference EU member countries (France, Italy, Spain, Portugal, Greece), if the branded drug has a generic substitute available in the market, although the price ceiling remained at 100% for branded drugs that do not have generic substitutes.
The price ceiling for generics has been also decreased from 66% to 60% of the reference price.
The drugs which stay on the market more than 20 years and with a wholesaler price higher than TRL 6.79, shall be priced at most 80% of its reference price while their generics shall not be priced higher than their branded ones’ wholesaler prices.
All drugs with prices lower than TRL3.56, OTC drugs (without prescription), blood products, infant food, radiopharmaceutical products, enteral feeding products, and all other products that are not stated in public reimbursement list shall not be priced according to this new regulation.
The exchange rate mechanism used to determine drug prices has also been changed. According to the new mechanism, the exchange rate may only be revised if the 90-day moving average of EUR/TRL exchange rate exceeds/falls below the periodic EURO value band by +/-5%; while the upper end of this band is estimated as 10% higher of the EUR/TRL exchange rate in effect for calculation of drug prices. (The official EUR/TRL rate is 1.9595 since April 2009)
The Notice period for amending the “Reference Countries List” by the MoH has been reduced from 4 months to 2 months.
49All rights reserved by Selcuk Ecza Deposu A.S.®
Appendix-3: Major Regulatory Items as of Nov. 2011
50All rights reserved by Selcuk Ecza Deposu A.S.®
Appendix-4: Summary Financials: Income Statement-Consolidated
(TL Million) Dec 31, 2013 Dec 31, 2012 2013 vs. 2012
Net Sales 5.238,02 4.902,07 6,85%Cost of sales (-) (4.821,84) (4.497,43) 7,21%
GROSS PROFIT 416,18 404,64 2,85%OPEX (268,51) (257,72) 4,19%Other operating income/Exp.(Net) 25,47 25,60 -0,52%OPERATING PROFIT 173,14 172,52 0,36%Income/Expense from investment 61,61 24,73 149,07%Finance income /Exp.(Net) (43,59) (9,78) 345,74%EBIT 152,67 151,53 0,76%EBIT (exc.other) 147,67 146,91 0,51%Income before minority Int.& Tax 191,16 187,47 1,97%Minority interest 0,00 0,00 -2,82%Income tax expense (38,83) (39,28) -1,14%Net Income / (Loss) 152,33 148,19 2,79%
EBITDA 164,92 162,54 1,46%
EBITDA (exc.other) 159,92 157,93 1,26%Gross Margin 7,95% 8,25%
EBIT Margin 2,91% 3,09%
EBIT Margin (exc.other) 2,82% 3,00%
EBITDA Margin 3,15% 3,32%
EBITDA Margin (exc.other) 3,05% 3,22%
Income Statement
51All rights reserved by Selcuk Ecza Deposu A.S.®
Appendix-4: Summary Financials: Balance Sheet
(TL million)
Assets Dec. 31, 2013 Dec. 31, 2012 Liabilities & Equity Dec. 31, 2013 Dec. 31, 2012
Cash and cash equivalents 549,85 1.066,43 Short-term debt 332,13 895,53
Accounts rec.& due from related parties 1.688,54 1.570,86 Accounts payable & due to related parties 1.396,71 1.342,24
Inventories 659,36 695,13 Provisions & other current liabilities 42,70 39,17
Other current assets 74,65 63,60 Total Current Liabilieties 1.771,54 2.276,93
Total Current Assets 2.972,40 3.396,01 Long-term debt 0,00 0,00
PP&E 201,21 168,77 Provision for Employee Benefits & Other Liabilities 13,49 10,20
Intangible Assets(Including Goodwill) 31,93 31,50 Deferred tax liability 14,73 20,52
Other non-current assets 15,12 15,34 Other liabilities 0,00 0,00
Deferred tax assets 18,67 22,05 Total Non-Current Liabilieties 28,22 30,71
Total Non-Current Assets 266,93 237,66 Shareholder's equity & minority interest 1.439,57 1.326,02
Total Assets 3.239,33 3.633,67 Total Liabilities & Equity 3.239,33 3.633,67
Balance Sheet
Selcuk Ecza Deposu A.S. Investor Relations & Capital Markets DivisionHead of Investor Relations & Capital Markets
Tel: +90 216 554 0554 Tel: +90 216 554 0384-0385Fax: +90 216 554 0517 www.selcukecza.com.tr
Istanbul Stock Exchange: SELEC.ISBloomberg: SELEC.TIReuters: SELEC.IS