2Q-1HY_2010_Protek_p by wufengmei007

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									Q2-2010 / 1HY-2010
TRADING UPDATE

PRESENTATION FOR INVESTORS AND ANALYSTS




August 2010
                     0
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                                                                                                            1
Agenda


§       Overview of the market Q2-2010 and 1HY-2010

    §       Vadim Muzyaev, President, Protek Group

§       Overview of operational indicators and business

    §       Vadim Muzyaev, President, Protek Group

    §       Timofei Prokopov, CFO, Protek Group
§       Questions and Answers


Details of the conference-call:

Protek Analyst & Investor Conference Call : Mon, August 9-th, 14.00 UK time / 17.00 Moscow time

PARTICIPANT DIAL-IN NUMBERS:
International: +44 (0)20 8817 9301
Russia Freephone: 81080026174011
Local UK: 0845 634 0041

Password:    Protek

                                                     2
Russian Pharmaceutical Market in Q2-2010


§ In Q2-2010 the Russian
  pharmaceutical market has grown
  by 16%* comparing to Q2-2009 (in
  rouble terms) and has reached ~
  RUR 108 billion.*
                                       Dynamics of the market, RUR, bln.*                                   Dynamics in packages, mln.*
§ In terms of packages the market                                                                                                                      1,108
                                                                 16%               107.7                                              10%
  has grown by 10%*, the sales                                                                                        1,012
                                                  92.6
  volume reached 1,108 billion*
  packages in Q2-2010.

§ The commercial segment of the
  market – strategic segment for the
  Protek Group – in rouble terms has
  grown by 7%* comparing to Q2-
  2009                                         2Q-2009                           2Q-2010                             2Q-2009                          2Q-2010
§ The revival of the market in Q2-
  2010 is a consequence of an
  increase in consumer demand




                                       * Source: Data from DSM Group for the Ready-Made Medicines market, excluding the parapharmaceuticals segment


                                                                       3
     Russian Pharmaceutical Market in 1HY-2010

§ In 1HY-2010 the Russian
  pharmaceutical market has grown by
  5% comparing to 1HY-2009 (in rouble                                    Dynamics of the market, RUR, bln.                           Dynamics in packages, mln.*
  terms) and has reached RUR 277
  billion (DSM report)                                                                                          277                        2,145          4.0%      2,226
                                                                               263             5%
§ In 1HY-2010 in terms of packages the
  market has grown by 4.0%*, the sales
  volume has reached 2,226 million
  packages*

§ The commercial segment – the
  strategic segment for the Group – in                                      1HY-2009                         1HY-2010                    1HY-2009                   1HY-2010
  1HY-2010 has grown by 3.6 % in
  rouble terms comparing to last year
                                                                     Source: DSM report, 1HY-2010                                    Source: DSM report, 1HY-2010

§ In 1HY-2010 comparing to 1HY-2009
                                                                       Market structure in 1HY-2010                                  Dynamics across segments
  the market is showing positive results
  both in volume and in rouble terms.
  The main reason behind the positive                                     Hospitals                                                                                     12 %
  dynamics of volume is a revival of                                         11%                                                                         10 %
  consumer demand. The market
  dynamics deterrents in rouble terms
  were: minimal inflation on medicines                                FRP                                    Commercial             3.6 %
  and stabilisation of price markup after                            17%                                           72%
  the changes in legislation and
  regulations on price markup control for
                                                                                                                                 Commercial         Hospitals           FRP
  Life Essential Medicines

Data from DSM Group for the Ready-Made Medicines market, excluding       Source: DSM report, 1HY-2010
         the parapharmaceuticals segment                                 * Commercial segment does include parapharmaceuticals       Source: DSM report, 1HY-2010

                                                                                                    4
Group Performance in Q2-2010
                                     Consolidated sales dynamics,                                  Consolidated sales dynamics,
                                     Q2-2010, RUR, mln.                                            1HY-2010, RUR, mln.

                                                                                                                                 %
§ Consolidated revenue of the                                                                                              10.0             45,460
                                                                        23,202                               41,323
  Group in Q2-2010 has                                    16%
  increased by 16% and reached             20,000
  RUR 23,202 mln.
                                                                       4%
§ Consolidated revenue of the
  Group in 1HY-2010 has
  increased by 10% and reached
  RUR 45,460 mln.                          Q2-2009                     Q2-2010                            1HY-2009                       1HY-2010

§ The dynamics of sales growth
  of the Group in 1HY-2010 is well   Consolidated sales dynamics,                                   Business segments share in sales,
  ahead of the 5% market growth      RUR, mln.                                                      1HY-2010, %*
  in 1HY-2010.
                                                                      18%                                         Production
§ In 1HY-2010 the Distribution                     23%                                                                5%
  segment was ~84% of the                                                                             Retail
                                                                                                       11%
  consolidated Group revenue,
  Retail ~11% and Production
  ~5% respectively


                                                                                                                                                  Distribution
                                                                                                                                                       84%

                                           Source: Protek Group IFRS accounts for 2007-2009,   •       Calculated on the basis of revenue for each segment
                                           unaudited management accounts Q2-2010               •       (excludes unallocated revenues and eliminations)

                                                                  5
Performance of the Distribution Segment in Q2-2010

                                      Sales Dynamics in Q2-2010, RUR, mln.
§ In Q2-2010 the highest growth
                                                                                                  8%    21,054
  within the Group was                                                                     +17.
  demonstrated by the Distribution                                  17,869
  segment – 17.8 %, which has
  achieved the segment sales of
  RUR 21,054 mln. comparing to
  RUR 17,869 mln. in Q2-2009
§ The volume of sales in terms of
  packages has increased by 22.4%
  and reached 232 million packages                                   2Q-2009                            2Q-2010
  comparing to 189 million packages   Source: Protek Group unaudited management accounts
  in Q2-2009
                                      Dynamics in packages in Q2-2010, mln.
§ The key drivers of the growth in
  Q2-2010: increase in state-
  financed sales, large volume of                                                                   %        232
                                                                                            +22.4
  sales on the commercial market,                                         189
  stocking of pharmacies which was
  delayed in1Q-2010 until the
  changes in legislation and
  regulations on price mark-up
  control for Life Essential
  Medicines came into effect
                                                                        Q2-2009                             Q2-2010
                                      Source: Company data


                                                                6
 Performance of Distribution Segment in 1HY-2010

                                               Sales Dynamics in 1HY-2010, RUR, mln.
§ 1HY-2010 shows a stable growth of
  sales by 11.7%, reaching RUR 41,108
                                                                                                       7%
  mln., comparing to RUR 36,868 mln.                                                            +11.        41,108
  in 1HY-2009                                                                 36,868
§ The volume sales in terms of packages
  has increased by 12.0% and reached
  444 million packages comparing to 397
  million packages in 1HY-2009

§ The key indicators in 1HY-2010:
  number of customers has increased by                                    1HY-2009                          1HY-2010
  ~8% and has exceeded 16,000              Source: Protek Group unaudited management accounts
  customers comparing to 14,870 in 1HY
  -2009, number of items in the product
                                               Dynamics in packages in 1HY-2010, mln.
  range has increased by ~4% and is
  now about 15,000 comparing          to
  14,360 in 1HY-2009                                                                                .0%          444
                                                                                 397            +12
§ The key factors of the growth in
  1HY-2010: increase in sales on the
  state-financed market, growth of the
  client base, increase in efficiency of
  the product range

                                                                               1HY-2009                        1HY-2010

                                                   Source: Company data


                                                                          7
 Performance of Retail Segment in Q2-2010

                                              Sales Dynamics in Q2-2010, RUR, mln.
§ Dynamics across pharmacies in Q2-2010:
    § Organically opened 19 pharmacies,
      3 pharmacies shut down                                                                             %
                                                                                   2,680           +5 . 4         2,824
    § 2 chains (15 pharmacies ) were
      acquired in April and May 2010
      § Total number of pharmacies by
        June 30th, 2010: 609*
§ Sales growth in Retail (Rigla) has
  increased by 5.4 % and has reached RUR
  2,824 mln. comparing to RUR 2,680 mln.
  in Q2-2009. The dynamics of sales in                                           2Q-2009                         2Q-2010
  Retail exceeds the dynamics of the
  commercial market growth, which in          Source: Protek Group unaudited management accounts
  Q2-2010 was ~ 3.6%.
                                                  Performance of Life-For-Like pharmacies in Q2-2010, %
§ The growth of sales in Like-for-Like
  pharmacies was at 0.1%, which is greater
                                                                                                    1.2%
  than growth of the previous quarter which
  was negative 4.3%.
§ Like-for-Like pharmacies have broken the
                                                                                                                                0.1%
  trend with number of tickets decrease: in
                                                          # tickets, %
  Q2-2010 L-f-L decrease in number of
  tickets became less than 1%, whereas in
                                                                                             Dynamics of a sum         Dynamics of sales, %
  the previous quarter L-f-L tickets have
                                                                                             on an average ticket, %
  shown negative 11.3 %.

                                                             -0.76%
 * incl. Zhivika chain                        Source: Protek Group unaudited management accounts


                                                                        8
 Performance of Retail Segment in 1HY-2010

                                                          Sales Dynamics in 1HY-2010, RUR, mln.
§ Dynamics across pharmacies in 1HY-2010:
    § 25 pharmacies were organically opened,                                                                  +1.0%
      8 pharmacies shut down                                                               5,592                                 5,646
    § 2 chains (15 pharmacies) were acquired
§ The sales dynamics of Retail in 1HY-2010
  demonstrates a positive trend which
  correlates with market growth. The sales in
  Retail have grown by 1.0% to reach RUR
  5,646 mln. comparing to RUR 5,592 mln in
  1HY-2009
                                                                                       1HY-2009                              1HY-2010
§ The sum on an average ticket in Retail has
  grown by 3% in 1HY-2009 and has reached                Source: Protek Group unaudited management accounts
  262 roubles
                                                         Performance of Life-For-Like pharmacies in 1HY-2010, %
§ Like-for-Like pharmacies sales in 1HY-2010
  came to minus 2%, which is caused by the
  negative dynamics of minus 4.3% in 1Q-2010                                                                    3.6%

§ The main initiatives in Retail in 1HY-2010,
  aimed at increasing revenue and traffic:                              # tickets, %                                              Sales dynamics, %
  repositioning in terms of prices, adopting multi
  -format system, development of pharmacies                                                               Dynamics of a sum
                                                                                                          on an average ticket
  and discount chains, increase of own                                                                                                    -1.9%
  private label products share (22 products by
  June 30-th, 2010, share in sales 0.6%),
  improvement in pharmacies’ staff productivity                             -5.3%
                                                     Source: Protek Group unaudited management accounts


                                                                               9
Performance of Production Segment in Q2-2010

                                    Q2-2010 Sales dynamics, RUR, mln.
                                                                                                                1,307
§ In Q2-2010 the sales in the
                                                                                           56. 8 %
  Production segment have
  increased by more than 56.8%                                          834
  and came to RUR 1,307 mln.
  comparing to RUR 834 mln. in
  Q2-2009                                                                                                       22 %
                                                                      14 %
§ Volume growth (in terms of
  packages) has reached 34.9% -
                                                                    Q2-2009                                    Q2-2010
  and became 5.24 million
  packages, comparing to 3.88                                                            Sotex own brands, %
  million packages in Q2-2009
                                    Source: Protek Group unaudited management accounts

§ The share of own brands in the
  sales has increased from 14% to   Q2-2010 Dynamics in packages, mln.
  22% and has exceeded RUR
  181 mln. (+98% increase over                                                                                    5.24
  Q2-2009)                                                                                   34. 9 %
                                                                        3.88
§ The number of own brand
  products has reached 22 items
  (by the end of Q2-2010)

§ The most successful out of the
  promoted own brands: Eralfon,
                                                                     Q2-2009                                    Q2-2010
  Amelotex, Neurox, Kompligam,
                                    Source: Company data
  Flamax

                                                             10
Performance of Production Segment in 1HY-2010

                                     1HY-2010 Sales dynamics, RUR, mln.

 § In 1HY-2010 the sales in the                                                                                2,458
   Production segment have                                                                 5   0.8%
   increased by 50.8% and reached                                  1,630
   RUR 2,458 mln. comparing to
   RUR 1,630 mln. in 1HY-2009

 § Volume growth (in terms of                                                                                   22
                                                                   14
   packages) was 48% - reached
   10.67 mln. packages comparing
                                                               1HY-2009                                       1HY-2010
   to 7.21 mln. in 1HY-2009
                                                                                      Sotex own brands, %
 § The share of own brands in
                                     Source: Protek Group unaudited management accounts
   revenue has increased from
   14% to 22% and has exceeded       1HY-2010 Dynamics in packages, mln.
   RUR 339 mln. (+93% increase
   by 1HY-2009)                                                                                               10.67
                                                                                                 %
 § The growth factors: increase in                                                        48.0
   the sales of own brands on the                                   7.21
   state-financed market, increase
   in the sales of licensed drugs,
   targeted promotion of own
   brands
                                                              1HY-2009                                      1HY-2010

                                           Source: Company data


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