 Valeant
Pharmaceuticals
International, Inc.
Investor Day
June 21, 2012
Exhibit 99.1 |
 Valeant’s Investor Day Agenda
Today’s Schedule
Opening Remarks -
Mike Pearson
Financial Discussion –
Howard Schiller
Business Overview –
Rajiv De Silva
Emerging Markets
Europe –
Pavel Mirovsky
South
East
Asia/South
Africa
–
Andrew
Howden
Specialty Pharmaceuticals
U.S.
Dermatology
–
Dave
Mullarkey
Global R&D –
Susan Hall
Wrap up/Lunch
1 |
 Introductions
Panel Participants
John Connolly –
GM Russia/CIS/Adriatic Region
Julie Kang –
GM Podiatry
Alissa Hsu Lynch –
GM U.S. Consumer Products
Carlos Picosse –
GM Brazil
Javier Rovalo –
Chairman –
Latin America
Tom Schlader –
President, Canada
Dan Spira –
GM Australia
Janet Vergis –
CEO, OraPharma
Ryan Weldon –
GM U.S. Neurology and
Other/Aesthetics
2 |
 Introductions
Guests In Attendance
Ronald Farmer –
Board Member
Robert Power –
Board Member
Norma Provencio –
Board Member
Katharine Stevenson –
Board Member
Robert Chai-Onn –
General Counsel
Brian Stolz –
Chief Human Capital Officer
Tanya Carro –
Corporate Controller
Grace Lin –
Treasurer
3 |
 Important Information
Forward-looking Statements
This presentation may contain forward-looking statements, including, but not
limited to, statements regarding our financial guidance (including quarterly
trends) with respect to revenues, non-GAAP cash earnings per share and adjusted cash flow from operations, future
growth, potential product launches, regulatory submissions and approvals, timing and
costs of integration, synergies, expenses, business development
opportunities
and
market
position,
and
the
impact
of
foreign
exchange
on
our
financial
performance
and
projections
with
respect to market growth, size and spend. Forward-looking statements may be
identified by the use of the words "anticipates," "expects,"
"intends," "plans," "should," "could,"
"would," "may," "will," "believes," "estimates," "potential," or "continue" and variations or similar
expressions. These statements are based upon the current expectations and
beliefs of management and are subject to certain risks and uncertainties that
could cause actual results to differ materially from those described in the forward-looking statements. These risks and
uncertainties include, but are not limited to, risks and uncertainties discussed in
the company's most recent annual or quarterly report filed with the Securities
and Exchange Commission (the “SEC”) and other risks and uncertainties detailed from time to time in the Company’s
filings with the SEC and the Canadian Securities Administrators (“CSA”),
which factors are incorporated herein by reference. Readers are
cautioned not to place undue reliance on any of these forward-looking
statements. Valeant undertakes no obligation to update any of these
forward-looking statements to reflect events or circumstances after the date of
this presentation or to reflect actual outcomes. Non-GAAP
Information To
supplement
the
financial
measures
prepared
in
accordance
with
generally
accepted
accounting
principles
(GAAP),
the
Company
uses
non-GAAP financial measures that exclude certain items. Management uses
non-GAAP financial measures internally for strategic decision making,
forecasting future results and evaluating current performance. By disclosing non-GAAP financial measures, management intends to
provide investors with a meaningful, consistent comparison of the Company's core
operating results and trends for the periods presented. Non-GAAP
financial measures are not prepared in accordance with GAAP; therefore, the information is not necessarily comparable to other
companies and should be considered as a supplement to, not a substitute for, or
superior to, the corresponding measures calculated in accordance with
GAAP. The Company has provided guidance with respect to cash earnings per share, adjusted cash flows from operations
and organic growth rates, which are non-GAAP financial measures. The
Company has not provided a reconciliation of these forward-looking
non-GAAP
financial
measures
due
to
the
difficulty
in
forecasting
and
quantifying
the
amount
of
the
items
excluded
from
the
non-GAAP
financial measures that will be included in the comparable GAAP financial
measures. Reconciliations for other non-GAAP financial measures can
be found in the appendix to this presentation and in the Company’s earnings releases, which are available under the Investor
Relations section of the Company’s website (www.valeant.com).
Note on Financial Guidance
The
reaffirmation
of
the
Company’s
previous
financial
guidance
issued
on
May
3,
2012
is
effective
only
as
of
the
date
hereof,
June
21,
2012,
and will not be updated or confirmed until the Company publicly announces updated or
affirmed guidance. |
 Opening Remarks
J. Michael Pearson
Chairman and Chief Executive Officer
Investor Day
June 21, 2012 |
 Agenda
Overview
Our Strategic Principles
How they have changed over the past 4 years
Our people and our compensation
Update on our OraPharma acquisition
Objectives for today
6 |
 Valeant Pharmaceuticals Overview
Focused, multinational specialty pharma company
$2.4B in 2011 revenue and ~7,000 employees
Headquartered in Montreal, Canada (NYSE/TSX: VRX)
International footprint
Specialty Pharma (U.S., Canada, Australia, New Zealand)
Branded Generics –
Central and Eastern Europe; Latin America; South
East Asia and South Africa
Diversified revenue base
Over 500 products
Limited generic risk
Minimal exposure to US healthcare reform
Leveraged R&D Model with promising pipeline
Ezogabine/retigabine
Dermatology –
IDP-108, lifecycle management
Branded generics/ various OTC line extensions
Experienced, high quality management team, with established
track record for delivering results
7 |
 Establishing a Track Record of Performance
($ in millions)
Revenue
Valeant
Biovail
Free Cash Flow
•2010 and prior years are pro-forma
•Free Cash Flow = EBITDA less (Cash Taxes, Cash Interest, &
CapEx), plus/minus changes in Working Capital $1.80
$2.63
$2.98
Cash EPS
8
$690
$657
$830
$1,928
$2,463
$2,755
$843
$757
$820
$1,532
$1,414
$1,651
FY 2007A
FY 2008A
FY 2009A
FY 2010A
FY 2011A
LTM 31-
Mar-
2012
$866
$995
$306
$182
$353
$377
$366
$520
$728
FY 2007A
FY 2008A
FY 2009A
FY 2010A
FY 2011A
LTM 31
-
2012
2010A
2011A
2012LTM 31-
Mar-2012
$71
$184
$167
Mar
- |
 9
50%
Revenue Mix
65%
11%
3%
21%
Total Revenues 2010
US
Canada
Australia
Emerging Markets
11%
7%
32%
Total Revenues 2012 Fcst
US
Canada
Australia
Emerging Markets
59%
27%
14%
Product Revenues 2012 Fcst
Rx
Branded Generics
OTC
71%
20%
9%
Product Revenues 2010
Rx
Branded Generics
OTC |
 Our Strategic
Principles 1. Only compete in attractive market segments
•
Geographies
•
Payors
•
Competition
•
Therapeutic areas
•
Product forms
2. Highly disciplined business development driven
growth strategy
•
Undermanaged company assets
•
In line vs. pipeline
•
Cash on cash returns >20%
•
Don’t bet on science
3. Decentralized operations and strategy
•
Attract top talent
•
“Insider”
in all markets
•
No global S&M infrastructure
4. Low cost operating structure
•
Generic mindset
5. Diversification
•
Geographies (>50% outside the U.S.)
•
Products (No single product more than 7%
sales)
6. Strong bias towards enduring assets
•
Branded generics
•
OTC
•
Topicals
•
Life cycle management
10 |
 How
our Strategy has Changed (Lessons learned)
Avoid primary care tail products in the U.S.
(Wellbutrin)
Greater discipline on integration costs
Bias to private company deals
Bias towards business development vs. share
repurchase
Bias towards asset vs. company acquisitions
Cash flow from operations most important metric
11 |
 Our
People and Our Compensation Growth strategy requires continual
development / upgrading of talent
Culture / motivated workforce is critical to
excellent execution
Compensation system geared to
rewarding long term shareholder value
12 |
 Notable New Additions To Our Team in
Last 12 Months
Howard
Schiller
(CFO)
–
Goldman
Pavel
Mirovsky
(President
Valeant
Europe)
–
CEO
Polpharma
Andrew
Howden
(CEO
iNova)
–
AstraZeneca
Brian
Stolz
(Chief
Human
Capital
Officer)
–
GhSmart
Tage
Ramakrishna
(Chief
Medical
Officer)
–
Progenics
Pharmaceuticals
Alissa
Hsu
Lynch
(GM
Consumer
Products)
–
J&J
Janet
Vergis
(CEO
OraPharma)
–
J&J
AIP Group Increased from
42 people (2010) to 68 People (2012)
13 |
 2012 Survey
Results - Focus on Our People
People
like
working
here
–
92%
agree
or
strongly
agree
that
they
are satisfied with their jobs
People
believe
in
our
continued
growth
–
95%
agree
or
strongly
agree that Valeant is on the right track for continued growth
90% of our employees would recommend Valeant as an
employer to a friend or colleague
Our employees cite the following attributes to describe the
culture
Ethical
Accountable
Performance oriented
Customer focused
Dynamic
Entrepreneurial
Source: 2012 World-Wide Employee Survey conducted in May 2012.
14 |
 Compensation for Senior Leadership
Annual Comp
Target 50% of benchmark for base salary
Target top quartile with bonus
Revenue –
25% (zero if Cash EPS not met)
Cash EPS –
75%
Equity Comp
3 year front loaded equity
>15% TRS to vest
Up to 2-3 times multiple -
based on 30-45% TRS
15 |
 OraPharma, a Valeant Company
U.S. dental market (products) -
~$17B
~$ 5B Periodontal Market
Fragmented with no big pharma
presence
~7%+ growth projected
45,000+ dental offices in the
U.S.
Broad potential for offerings
Rx products
Devices
OTC
High cash pay component
Market Characteristics
16
Business Overview
Founded in 1996
Became subsidiary of J&J in 2002
Acquired by Water Street
Healthcare Partners in 2010
Most recognized name in Dental
Pharmaceuticals –
OraPharma
100 person, highly respected
sales force
Key products
ARESTIN (periodontis)
Best in class –
35 studies
Xerese (cold sores)
Best in class
Healos (bone regeneration)
Status
Deal closed June 18, 2012
Planned new |
 Why
OraPharma? Niche Market
Avoid big pharma
Cash pay / no government
reimbursement
Durable assets
Ability to expand into other
geographic markets
Attractive additional BD
opportunities to add to
platform
(drugs,
devices,
OTC)
Double digit growth
opportunity
Base Case
36% tax rate
With cost synergies
U.S. only
IRR > 20%
Upside Case
Lower tax rate
Promotion of Valeant products
(e.g. Xerese)
Pipeline products
Other geographies
Strategic Criteria
Financial Criteria
17 |
 Today’s Meeting Objectives
1.
Addressing Investors’
Financial Concerns
Our progress on building a cash flow generating
machine
Demystifying organic growth calculations
Clarifying normal rhythm of our earnings and how
annual guidance should be anticipated on a quarterly
basis
Providing insight into restructuring charges
Outline changes we are making to our quarterly
earnings call based on your feedback
18 |
 Today’s Meeting Objectives
(Continued)
2.
Address Investor Questions Around Our
Emerging Markets Business
Underlying performance in Europe
Our strategy in South East Asia and South Africa
3.
Address Questions Around Underlying U.S.
Dermatology Performance
4.
Update On How We Are Spending
$100M/year in R&D
19 |
 What I Am Excited About
Overall performance of the business continues to be
strong –
both operationally and financially
In the last year, we have become a major player in
two of our key segments –
Central and Eastern
Europe and dermatology
We have added 8 new growth platforms (South East
Asia, South Africa, Russia / CIS, nutritionals in
Brazil, OTC in Canada, Podiatry, Oral health,
Aesthetics)
Significantly strengthened our organization
Efinaconazole (IDP-108); Potiga/Trobalt; Regederm
Deal flow has never been better –
both small & large
20 |
 Opening Remarks
J. Michael Pearson
Chairman and Chief Executive Officer
Investor Day
June 21, 2012 |
 Financial Discussion
Howard Schiller
Executive Vice President, Chief Financial Officer
Investor Day
June 21, 2012 |
 2
Topics to Cover
Financial Performance
Established track record of financial performance
We have a growing, profitable business model
Organic Growth
Both the base business and acquired businesses are growing, although there will
be quarter -
quarter fluctuations in growth rate
March
31 ,
2012
LTM
base
business
organic
growth
is
8%
-
“Same
Store
Basis”
Business Development
A
disciplined
approach
-
high
IRR’s
and
short
payback
periods
Timing and amount of synergy capture and restructuring charges depends on the type
of deal
BD effort to date has added significant revenue and new growth opportunities
Guidance
Excluding
the
impact
of
acquisitions,
40-45%
of
Cash
EPS
is
generated
in
1
half
of
year
FX has been a headwind
We are re-affirming high end of guidance from our Q1 earnings call
Changes to our quarterly presentation
We have taken your suggestions seriously
st
st |
 3
Growing, Profitable Business Model
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Reported Revenues ($M)
$452
$494
$467
$515
$565
$609
$601
$688
$856
Sale Cloderm/5FU/IDP111
-$36
-$66
Milestones
-$40
Revenues excl. certain one-time items
$452
$494
$467
$515
$529
$569
$601
$688
$790
Revenue Growth (vs PYQ)
17%
15%
28%
34%
49%
Reported Cash EPS
$0.44
$0.46
$0.40
$0.50
$0.62
$0.73
$0.66
$0.93
$1.14
Sale Cloderm/5FU/IDP111 (margin)
-$0.05
-$0.15
Milestones
-$0.12
Gain on Cephalon Shares
-$0.06
Exchange Gains
-$0.06
-$0.08
Cash EPS excl. certain one-time items
$0.44
$0.46
$0.40
$0.50
$0.56
$0.54
$0.66
$0.87
$0.91
Cash EPS Growth (vs PYQ)
28%
17%
65%
75%
61%
Cash Earnings ($M) excl. certain one-
time items
$146
$153
$131
$164
$188
$179
$212
$277
$287
Cash EPS / Revenue
32%
31%
28%
32%
36%
31%
35%
40%
36%
Cash EPS / Revenue (LTM)
31%
32%
32%
34%
36%
36%
•Used Q4, 2010 (1st Q post-merger) for Q1-Q3, 2010 share count
•Q3’10 and prior period revenue and cash earnings are pro-forma
|
 4
What Is Management Focused On?
Integration and operational excellence
Organic Growth
Synergy realization
Gross margin improvement
Working capital efficiencies
Talent Development
Developing a bench; next generation leaders
Business Development
Deployment of capital is most important decision
Maintaining our price discipline is key to success
Ultimately, we are focused on delivering superior shareholder returns!
|
 5
Organic Growth
*
Same
Store
Sales
only
include
acquisitions
in
their
first
full
quarter
of
comparison
Q1, 2012 LTM SSS
Organic Growth = 8%
7%
7%
4%
4%
14%
12%
10%
13%
10%
6%
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
As Reported
Same Store Sales |
 6
Organic Growth
7%
7%
15%
4%
4%
12%
14%
12%
24%
10%
13%
23%
10%
6%
14%
Q1'11
Q2'11
Q3'11
Q4'11
Q1'12
As Reported
Same Store Sales
Same Store Sales w/o Neuro & Other
* Same
Store
Sales
only
include
acquisitions
in
their
first
full
quarter
of
comparison
Q1, 2012 LTM SSS
Organic Growth = 8% |
 7
Progress on 2012 Synergy Program
Run rate
expected by mid-
year
Run Rate
May 3, 2012
$200 million
$165 million
Run Rate
Feb 23, 2012
$135 million
Run rate
expected by Year-
end
$230+ million*
* Includes acquisitions announced and closed in 2012 |
 8
Synergy Capture
Synergy Scenario
Recent Examples
Timing of
Synergy Capture
Business is folded into Valeant
infrastructure in first Quarter
Ortho, Dermik, University Medical, Eyetech,
Afexa, Atlantis
Immediate
Business is "bolt-on" to Valeant
Day one and integrated into
Valeant infrastructure over time
Europe (PharmaSwiss, Sanitas), Brazil
(Delta, Bunker), Tecnofarma
Over Time
New Platforms
Russia (GL, Natur Produkt*), Podiatry
(PEDiNOL), SEAsia/South Africa (iNova),
Probiotica, OraPharma
Over Time
* Not yet closed |
 9
Synergy Capture
Ortho/Dermik Example
Total Dermik
Total Pre-
Total Post
VRX Derm &
Ortho Synergy
Synergy
Headcount
213 472
685
499
OpEx
$84.5 M $151.3 M
$235.8 M $125.1 M
Total synergies of $110.7M achieved in Q1, 2012 |
 10
Business Development
Characteristics of our acquisitions
Markets with attractive growth rates
Durability of earnings
We don’t bet on science
Rigorous Financial Modeling
Target of 20+% IRR at statutory tax rates
Target cash payback within 5 to 6 year range
Acquisition and restructuring costs are modeled as additional
purchase price
Integration
Speed is important
The “best person”
rule
Tracking Performance
We track revenue and synergies
Deal model including restructuring costs becomes budget
|
 11
Summary of 2012 YTD BD Efforts
Large number of smaller deals
Low risk, high IRR deals
In aggregate, added approximately $400 million or more than 10% to run rate
revenue
Decentralized structure allows for faster, more efficient integration
Deals spread among regions and businesses
4 in U.S. (none in derm)
1 in Canada
2 in Europe (none in Poland)
3 LatAm (no deals in 2011)
Many deals represent exciting new growth platforms or are material at the
local level
PEDiNOL –
Podiatry
OraPharma –
Dental
GL and Natur Produkt* –
Russia
Probiotica –
Brazil
Acne Free –
Consumer
Eyetech –
Opthalmology
Integrations will be less costly
No acquired manufacturing facilities other than in Probiotica
Few people acquired (mainly sales reps)
* Not yet closed |
 12
$M
Purchase Price
Restructuring, Integration &
Acquisition Related Costs
(Q4 10 - Q1 12)
Projected
Annualized
Synergies
Restructuring, Integration
& Acquisition Related
Costs % of Projected
Annualized Synergies
Biovail
N/A
204.1
350.0
58%
Ortho/Dermik
767.0
43.7
110.7
39%
Europe (PharmaSwiss, Sanitas)
939.0
23.6
75.0
31%
Afexa
92.0
13.3
13.0
102%
iNova
657.0
10.0
25.0
40%
Probiotica
91.0
0.8
1.9
42%
EyeTech
22.0
0.1
5.7
2%
Total
2,568.0
295.6
581.3
51%
Restructuring Costs & Synergies
(Includes deals through Q1, 2012)
*
*
*
* Europe,
iNova,
Probiotica
–
Some
additional
restructuring
and
integration
costs
related to these acquisitions are yet to be incurred
|
 13
Our Approach to Guidance
Provide revenue, Cash EPS, and adjusted cash flow from
operations on an annual basis
Updates to our annual guidance are provided quarterly
We don’t included future deal forecasts –
we only include
BD that is closed or announced
We don’t include the effect of potential changes in exchange
rates or actual gains/losses from changes in exchange rates
Our business is stronger in the second half of the year
We are reaffirming our current FY guidance at the higher
end of the range
Does not include OraPharma, Natur Produkt, Acne Free, Swiss
Herbal |
 14
Changes to Our Quarterly Earnings Presentation
Earnings call moving to 8 a.m. ET
Gain/loss from asset sales:
GAAP EPS –
Will be moved to Other Income
Cash EPS –
Will be excluded
FX
gain/losses
will
continue
to
be
included,
but
if
significant,
Cash
EPS
will
be shown with and without
Cash
EPS
will
be
shown
with
and
without
certain
“one-time”
items
(e.g.
milestone payments)
Organic growth will be shown on a Pro-Forma, Base Business, and
Base Business Without Neuro basis
All acquisitions will be included
Royalty payable to Meda begins in January 2013
10% royalty on sales of Elidel, Xerese and Zovirax
Royalty payments will not affect GAAP earnings, but will be deducted in Cash
EPS calculation
Restructuring, integration and acquisition charges will be disclosed by deal
and category of expense
As always, our goal is clarity and transparency |
 15
Annual Financial Guidance for 2012
As of June 21, 2012
Revenue = $3.4 -
$3.6 billion
Cash EPS = $4.45 -
$4.70
> $1.4 billion in Adjusted
Cash Flow from Operations
“One-timers”
Included:
$66M –
Sale of 5FU/IDP111 (Q1)
$45M
–
Retigabine milestone (Q2)
$111M
$0.15 –
Sale of 5FU/IDP111 (Q1)
$0.08 –
Fx Gain (Q1)
$0.14 –
Retigabine milestone (Q2)
$0.37
$66M –
Sale of 5FU/IDP111 (Q1)
$45M –
Retigabine milestone (Q2)
$111M |
 16
Cash EPS Trends
(excluding certain “one-timers”
and acquisitions)
31%
33%
23%
27%
25%
21%
23%
27%
19%
21%
26%
24%
0%
10%
20%
30%
40%
Q1
Q2
Q3
Q4
2011 Actuals
2012 Budget
2012
Consensus
Estimate
* $3.99 Cash EPS consensus estimate is as of March 22nd, 2012 and excludes $0.14
for the Q2 GSK milestone 44%
56%
60%
40%
53%
47%
0%
20%
40%
60%
80%
1H
2H
2011 Actuals
2012 Budget
2012
Consensus
Estimate
$1.86
$2.13
($3.99)
* |
 17
Cash EPS
(excluding certain “one-timers”)
*All figures above exclude the GSK milestone
**FY
consensus
averages
are
based
on
the
March
22
nd
,
2012
FY
guidance
$0.88
$0.80
$1.03
$1.28
$0.91
$0.96
$0.90
$1.03
$1.10
$0.96
Q1
Q2
Q3
Q4
FY Consensus Estimate at Avg 2011A / 2012B Phasing
Q1, 2012 Actuals
Consensus Estimate, March 22nd 2012
Consensus Estimate, Current |
 18
Q2 Currency Impact
-20%
-15%
-10%
-5%
0%
5%
10%
11/03/11
Spot
Q1 Avg
April 2012
Avg
May 2012
Avg
6/7/2012
Spot
AUD
BRL
CAD
EUR
MXN
PLN
RUB
RSD
ZAR
Based on internal forecasts as of Q1’12 earnings
call, declining currencies are expected to have a
negative Q2 impact of $0.03 Cash EPS and $15M
revenue |
 19
Q2 Currency Impact 2012 vs. 2011
“Year over Year Declining Rates”
-30%
-25%
-20%
-15%
-10%
-5%
0%
AUD
BRL
CAD
EUR
MXN
PLN
RUB
RSD
ZAR
Compared to Q2’11 exchange rates, declining currencies have a negative
Q2’12
impact
of
$55
-
$60
million
revenue
and
$0.05
-
$0.06
Cash
EPS |
 20
Adjusted (Non-GAAP) Cash Flow from
Operations
GAAP Cash Flow from Operations, adjusted for:
Cash Payments Relating to Restructuring/Integration/Acquisition costs, Legal
Settlements, and IPR&D payments
One time working capital changes relating to business development activity
(where A/R and Inventory are not acquired)
In
Q1
12,
adjustments
to
GAAP
Operating
Cash
Flows
were
$88.0
M,
of
which
$87.3 M was related to Restructuring/Integration/Acquisition costs:
If we stopped all BD activity, restructuring/integration/acquisition costs
would trend to zero.
Ortho/Dermik
26.9
Biovail Merger (closure of old Biovail HQ)
25.9
Europe (PharmaSwiss, Sanitas)
11.9
Afexa
9.5
iNova
9.3
Manufacturing Integration (Various Deals)
1.9
Probiotica
0.3
Eyetech
0.1
Other
1.5
Total
87.3
$ |
 21
Q1 Restructuring, Integration and
Acquisition Related Costs
Expense Type
Q1 Amount
Paid (millions)
Comments
Facility Closure Costs
22.6
Relates
to
closure
of
Mississauga
facility.
$12.4
M
was
accrued
for
in previous quarters.
Acquisition Related Costs
19.8
Includes payments for legal fees and advisory services associated with
Dermik,
Ortho,
and
iNova
transactions
($17M)
accrued
in
previous
quarters.
Severance Payments
19.7
iNova $8.1M, Ortho/Dermik $6.2M, Europe $3.3M, Other $2.1 M
Integration related consulting,
duplicative labor, and other
10.7
Duplicative Labor (Europe, Canada) $3.2M, IT Integrations costs and Transition
Services $5.1 M, Integration Related Consulting (Dermik/Ortho) $2.4 M
Contract Termination
3.2
Termination of contracts associated with Mississauga facility $1.6M,
Other smaller items $1.6M
Manufacturing Integration Costs
1.8
Related to integration of Delta and Bunker facilities in Brazil
Travel/Other
1.4
Payments of Integration Costs
accrued in previous quarters
8.1
Includes Integration related consulting, duplicative labor, contract termination
and manufacturing integration costs accrued for in previous quarters
Total
87.3 |
 22
Topics to Cover
Financial Performance
Established track record of financial performance
We have a growing, profitable business model
Organic Growth
Both the base business and acquired businesses are growing, although there will
be quarter -
quarter fluctuations
March
31
,
2012
LTM
base
business
organic
growth
is
8%
-
“Same
Store
Basis”
Business Development
A disciplined
approach
-
high
IRR’s
and
short
payback
periods
Timing and amount of synergy capture and restructuring charges depends on the type
of deal
BD effort to date has added significant revenue and new growth opportunities
Guidance
Excluding
the
impact
of
acquisitions,
40-45%
of
Cash
EPS
is
generated
in
1
half
of
year
FX has been a headwind
We are re-affirming high end of guidance from our Q1 earnings call
Changes to our quarterly presentation
We have taken your suggestions seriously
st
st |
 Financial Discussion
Howard Schiller
Executive Vice President, Chief Financial Officer
Investor Day
June 21, 2012 |
 Questions?
J. Michael Pearson
Howard Schiller |
 Business Overview
Rajiv De Silva
President, Valeant Pharmaceuticals International, Inc.
Chief Operating Officer, Specialty Pharmaceuticals
Investor Day
June 21, 2012 |
 1
Executive Summary
Pharmaceutical market gives Valeant a large canvas upon
which to implement a unique strategy
$700B+ IMS reported, but likely $1-2 trillion when adjacent categories
and unreported sales are included
Highly fragmented, with a substantial component in private companies
Fundamental shift in growth rates among global markets
Emerging markets most attractive
Developed markets are slowing (e.g., Western Europe)
But, still some attractive niches in the U.S., Canada and Australia
Valeant strategy has focused on re-shaping its footprint in light
of market dynamics
Exit / avoid low growth markets, e.g., Western Europe, Japan
Focus efforts in the U.S. on niche platforms, e.g., Dermatology
Canada and Australia offer opportunistic platforms through acquisitions /
mergers –
Biovail and iNova
Focus
on
high
growth
emerging
markets
–
Latin
America,
Central
and
Eastern Europe, South East Asia, South Africa |
 2
Future Growth Will be Most Attractive
in
Emerging Markets
1 Real GDP growth; Pharma spend growth in constant US dollars
Source: Economic Intelligence Unit (EIU); BMI
Above median
Below median
Western Europe
Japan
US & Canada
Asia (ex Japan)
Australia
Africa
Central & Eastern Europe
Latin America
0%
-1%
0%
GDP growth
(2008-2011)
7%
2%
2%
1%
3%
0%
-1%
0%
GDP growth
(2008-2011)
7%
2%
2%
1%
3%
-2%
1%
2%
Projected pharma
spend growth
(2012-2016, CAGR)
12%
1%
10%
8%
11%
-2%
1%
2%
Projected pharma
spend growth
(2012-2016, CAGR)
12%
1%
10%
8%
11%
Projected GDP
growth (2012-16)
1%
1%
3%
4%
2%
7%
3%
4%
Projected GDP
growth (2012-16)
1%
1%
3%
4%
2%
7%
3%
4%
1
1
1 |
 3
Investment Focus
Niche markets that fit strategy
Dermatology
Podiatry
Ophthalmology
Dentistry
Orphan
Avoid primary care
Broad presence given legacy Biovail / Valeant capabilities
Aggressive in-licensing to leverage infrastructure
Build Consumer business
Broad presence given legacy iNova / Valeant capabilities
Bolt-on acquisitions in Consumer
Increase critical mass in Brazil and Mexico
Look for new market expansion opportunities (e.g., Colombia)
Growing
“anchor
markets”
–
Poland,
Serbia
High
growth
emerging
markets
–
Russia,
CIS
New platform from iNova acquisition
Strengthen existing hubs (e.g., Malaysia and Philippines)
Enter new markets (e.g., Indonesia, Vietnam)
New platform from iNova acquisition
Strengthen hub in South Africa
U.S.
Canada
Australia
Central Europe
Latin America
South East Asia
South Africa |
 4
Valeant Has Grown by Focusing on High
Growth Countries / Niche Markets
**Adjusted
for
Valeant/Biovail
merger.
Line
denotes
share
price
plus
the
special
dividend
paid
to
Legacy
Valeant
shareholders
related
to
the
Biovail
merger.
Valeant stock price* (Adjusted Close – $USD); selected deals
|
 5
Business Unit Overview
Rx Dermatology
Consumer
Aesthetics
Podiatry
Dentistry
Ophthalmology
Neurology / Other
U.S.
Canada / Australia
Emerging Markets
Latin
America
Asia /
Africa
Central /
Eastern
Europe
Poland
Russia / CIS
Serbia
Balkans / Other
Canada
Australia
Mexico
Brazil
South East
Asia
South Africa
2012 Revenue
~$1,700
~$100
~$360
~$760
~$600 |
 6
Case Study: U.S. Podiatry
PEDiNOL, A Valeant Company
~$1B U.S. market (2011)
Fragmented with no big pharma
presence
3-5% growth projected
17,000+ podiatrists in the U.S.
Broad potential for offerings
Rx products
OTC/cosmetics
Dietary supplements
Wound care
Orthotics / Diabetic shoes / braces
Equipment for in-office
procedures
High cash pay potential
Founded in 1925
~$50M* in sales
Most recognized name in
podiatry: PEDiNOL
~25 person highly respected
sales force
Key products
Ertaczo (Athlete’s Foot)
Gris-PEG (Athlete’s Foot)
CeraVe SA
Nalfon (pain)
Various OTC
Integration targets achieved
Severances completed
National Sales Meeting on
6/11/12 to kick off new unit
Market Characteristics
Business Overview
New
* Includes Valeant podiatry products |
 7
Latin America Overview
Mexico
Population: ~115M
Healthcare spend: $605 / Capita / Year
Pharmaceutical market: ~$20B
Cash pay: 75% of total spend
Brazil
Population: ~195 M
Healthcare spend: $990 / Capita / Year
Pharmaceutical market: ~$25B
Cash pay: 70% of total spend |
 8
Valeant Brazil—Overview
Market size ~ $25B
High growth outlook ~10-12%
Well regulated environment
Affluent segment of population
with high disposable income
High proportion of out-of-
pocket expense (~70%)
Government reimbursement
system providing broad access
Physicians and pharmacists are
important points of influence
2012 revenues of ~$150M
Legacy Valeant
Branded Gx
OTC
Dermatology
Acquired Branded Gx
Bunker and Delta (Regederm)
Branded Gx
Probiotica
Sports nutritionals
High growth business
2009 –
2012 growth of 88%
CAGR
Organic growth of ~15% projected
for 2012
Market Characteristics
Business Overview |
 9
Valeant Mexico—Overview
Market size ~$20B
Strong growth outlook ~7%
Government reimbursement
broadly in place, but largely a
cash pay market
High proportion of out-of-
pocket expense (~75%)
Strong branded generics
market
Substantial influence of
pharmacists and concentrated
retailers and wholesalers
2012 revenues of ~$210M
Legacy Valeant
Branded Generics
OTC
Bedoyecta –
Vitamin B
Tecnofarma
Generics / Branded generics
Atlantis
Branded generics
2009 –
2012 growth of 17%
CAGR
Organic growth of >10% projected
for 2012
Market Characteristics
Business Overview |
 10
Further Opportunities for Expansion
Exist in Latin America
Valeant market
Valeant not present
Expansion Opportunity
0
5
10
15
8
7
6
5
4
3
1
0
Paraguay
El Salvador
Ecuador
Costa Rica
Bolivia
Peru
Chile
Argentina
10
9
Projected Rx/OTC Growth
CAGR (2012-16)
Current Rx/OTC Market Size
2011, Dollars Billion
26
12
2
Brazil
Mexico
Venezuela
Nicaragua
Honduras
Guatemala
11
Colombia
Source: BMI |
 Business Overview
Rajiv De Silva
President, Valeant Pharmaceuticals International, Inc.
Chief Operating Officer, Specialty Pharmaceuticals
Investor Day
June 21, 2012 |
 Emerging Markets –
Central and Eastern
Europe
Pavel Mirovsky
President, Valeant Europe
Investor Day
June 21, 2012 |
 2
Geographic Footprint CEE, Russia, CIS
Population
=
340
million
people
Pharmaceutical Market
= $31B
Territory of 8,567,284 square miles |
 3
14
12
10
8
Projected Rx/OTC Growth
CAGR (2012-2016)
20
4
2
0
Western Europe
Turkey
Ukraine
Slovenia
Croatia
Bulgaria
Belarus
18
6
Kazakhstan
Hungary
274
272
16
Serbia
Slovakia
Latvia
Lithuania
Poland
Czech Republic
Romania
Russia
Valeant market
Valeant not present
Expansion Opportunity
PharmaSwiss and Sanitas Acquisitions Have Created a
Broad Eastern European Footprint
Current Rx/OTC Market Size
2011, Dollars Billion
-2
0
2
4
6
8
10
12
14
16 |
 4
Business Strategy
Business model consistent with Valeant philosophy
Durable branded generic business
Rich pipeline, rapidly growing number of new launches
Operational and market access excellence
Aggressive, but disciplined, BD and M&A activities
Execute
synergies
–
on
time
and
in
full
Out-pace both the market and the competitors
Focus on key geographies in CEE
Russia & CIS, Poland, Serbia,
Explore Middle East North Africa (MENA) potential
Avoid Western Europe |
 5
Where We Rank in The CEE Market
Rank
Company
Market Share
1.
Novartis
7.9%
2.
Sanofi-Aventis
7.0%
3.
Roche
4.7%
4.
Teva
3.8%
5.
GSK
3.7%
6.
Servier
3.7%
7.
Pfizer
3.3%
8.
Bayer
2.9%
9.
KRKA
2.7%
10.
Abbott
2.7%
……..
15.
Valeant Pharmaceuticals
2% |
 6
Business Summary
Region
Revenues
(2012e)
# Sales Reps
% Govt
Reimbursement
Poland
~$200 M
325
~30%
Serbia
~$100 M
90
~45%
Russia/CIS/
Adriatics
~$200 M
525
~20%
Central Europe
~$135 M
215
~40%
All Other
~$65 M
0
Partnered
Total Valeant
Europe
~$700 M
1155 (85%*)
~30%
* % of total headcount, excluding manufacturing |
 7
Product Mix -
CEE
Drivers of Change:
Reduced dependence on very competitive cardiovascular segment
Significant penetration into dermatology
Entry
to
niche
segments
as
ophthalmology
and
gastro-enterology
Significant growth in oncology driven in Ex-Yugo and Baltic markets and
launches of licensed innovative oncology portfolio
Continuing focus on OTC
2012e
Primary,
37%
OTC, 29%
Specialty,
34% |
 8
Poland
The new pharmaceutical law has had a dramatic short
term negative
impact on Polish market
2012 forecast predicts no growth for retail market first
time in 20 years
Week
1-10:
(18.8%)
in
value,
Week 11-20: ~(4%)
Full year expected at zero growth 2011/2012
Valeant one of few companies that continue to grow
May +4%
(YTD)
2012-2016
Polish market expected CAGR >5%
Forecasted Valeant organic growth is expected to significantly
outpace the market |
 9
Branded Generics Example: 250+ launches per
year planned in Central and Eastern Europe
Example Product
Indication
Market
Benzydamine
lozenges
/
Spray
Throat inflammation
Multiple markets
Ketoprofen ER tablets / Spray
Inflammatory pain
Multiple markets
Mometasone / Cream, Solution
Skin inflammation
Multiple markets
Telmisartan-HCTZ
/
Tablets
Hypertension
Multiple markets
Azithromycin / ODT
Respiratory tract infections
Multiple markets
Brimatoprost / Eye drops
Glaucoma
Multiple markets
Terbinafine / Tablets
Antifungal
Multiple markets |
 10
Business Development Opportunities
Purchasing Dossiers
~$70,000 expense per dossier (on average)
Representation business
Eisai oncology
In-licensing products
Ipsen GI, dermatology, oncology
Small acquisitions
Chemo Iberica’s diabetes drugs in Russia
Mid-size acquisitions
Gerot Lannach (Russia/CIS)
Natur Produkt (not yet closed) |
 11
5 Year Aspirations
Become a top 10 pharma in CEE
(>5% market share, >$2 B turnover)
Focus on Russia, Russia, Russia, Poland, Ukraine,
Kazakhstan, explore MENA potential
Shift focus to OTC, niche markets
(dermatology,
ophthalmology) and enter biosimilars
Maintain double digit organic growth, coupled with
intensive BD/M&A
EBITA growing from 31
–
37% (base case) to 31 -
41%
(aspirational) |
 Emerging Markets –
Central and Eastern
Europe
Pavel Mirovsky
President, Valeant Europe
Investor Day
June 21, 2012 |
 Emerging Markets -
South East Asia and
South Africa
Andrew Howden
CEO, iNova
Valeant, South East Asia, South Africa and Australia
Investor Day
June 21, 2012 |
 2
Notes:
1 All employee figures are as at June 2012
2 Country sales figures are excluding royalties (SEA) and acquisitions
Valeant Asia / Africa Pacific Footprint
Other African markets
–
Partners
Vietnam –
2 Partners
Taiwan
–
A$0.6m,
1 Partner
South
Korea –
A$2.6m,
2 Partners
China –
A$1.0m,
2 Partners
South Africa
–
A$37m
37 employees
Philippines
–
A$6.1m,
5 employees + sales
outsourced
Singapore
–
A$5.4m,
9 employees
Malaysia
–
A$11.0m,
26 employees
Hong
Kong
–
A$3.0m,
7 employees
Thailand
–
A$6.8m,
2 Partners
Japan –
A$6.7m,
2 Partners
Indonesia
–
Begin 2012
Valeant presence
Distributor or licensing partner |
 3
Philippines
Indonesia
Thailand
Current Rx/OTC Market Size
2011, Dollars Billion
South Korea
China
68
66
Taiwan
14
12
10
Projected Rx/OTC Market Growth
CAGR (2012-16)
128
126
8
6
4
2
0
Vietnam
Japan
Hong Kong
Singapore
Malaysia
South Africa
Valeant market
Valeant partners
Expansion Opportunity
Our Focus Has Been on High Growth Markets With
Opportunities for Future Expansion
India
0
5
10
15
Source: BMI, company data |
 4
Business Summary -
Established and Growing
Businesses in Key Asian Markets
Region
# Sales Reps
Key Products
% Govt
Reimbursement
Malaysia
17
Difflam, Duromine, Nuelin,
DuroTuss
<10%
Thailand
29
Norgesic, Nuelin
<30%
Philippines
38
Difflam, Norgesic
0%
Singapore
5
Difflam, DuroTuss, Duromine
0%
Hong Kong
4
Difflam, DuroTuss, Tambocor
0%
Source: Market data |
 5
Valeant Growth Exceeds Market Growth in
Asian Markets
Country
Valeant YTD MAT
Growth
Q1’12
Market YTD MAT
Growth
Q1’12
Thailand
+24%
+3%
Philippines
+23%
+6%
Malaysia
+24%
+12%
Singapore
+8%
+3%
Hong Kong
+15%
+10%
Source: IMS |
 6
17,204
19,518
21,886
24,184
26,165
7,965
9,870
12,721
15,958
19,173
0
20,000
40,000
60,000
80,000
16,886
2007
39,196
14,027
Sales (USDm)
Originals
54,767
Unbranded Gx
2011
Branded GX
72,211
2009
46,274
26,873
2008
2010
63,787
20,160
23,645
CAGR
21%
16%
11%
15%
Overall
APAC Sales breakdown by originator
Branded Generics Showing Strong Growth
Across Asian Market
Why Brand Matters
•
In mature markets
unbranded generics
represent fastest
growing segment
•
Brand is associated
with quality and can
command a higher
price
•
In less mature
markets generics as
a whole represent a
greater
share
–
given
price concerns
•
Branded generics
are both larger and
faster growing than
unbranded
Source:
The
APAC
Pharmamarket;
Connecting
the
dots,
July
2011 |
 7
Consumers in Asia Pacific Show a High Propensity
to Self-medicate –
Strong OTC Segments
Expectorants
Allergy
Chinese Medicines
Cold Preps
Dietetics
Non-narcotic Analg.
Vitamins & Minerals
Anti-rheumatics, topical
Antacids
All other therapeutics
Source: IMS Health MAT Dec 2011; OTC only
Asia Pac OTC Market
Value share, percent
Value CAGR
(2007 -
2011), %
~-1
~1
~4
~6
~4
~ 6
~5
~4
~20
~20
15.8
6.3
5.1
4.4
3.3
3.2
3.0
2.8
2.4
7.4 |
 8
Product Focus Remains With Weight Control,
Dermatology, Cough, Throat and Pain Products
Drivers of Change:
Focus on sales and marketing as a competitive advantage
Build key account management
Difflam,
Durotuss
and
Duromine
key
growth
drivers
(throat,
cough
and
weight
management)
Take a position of Professional Endorsement for brands
Extend product life cycles with Product Development
2012e
Primary,
30%
OTC, 52%
Specialty,
18% |
 9
Key Market / Environmental Factors
South Africa
High growth market -
+5-10%
Consistent market growth
through volume and price
increases
Established brands, growing pharmacy segment
with
strong OTC brands
Introduction of the National Health Insurance
(NHI) to
enable broader access to healthcare and medication
International Benchmark Pricing
(2013) will result in 3-4%
one-off loss from total private sales turnover
Protracted regulatory process
at Medicines Control
Council (MCC) current backlog of more than 4,000
applications at the MCC |
 10
Valeant Is One Of The Fastest Growing Pharmaceutical
Businesses in South Africa
Source: IMS MAT Mar-2011 , LHS based on AUD, RHS based on ZAR
BI
SA
Average 2006-2010
CAGR=13.1%
Valeant growth evolution vs. leading South African companies
Average MAT Q1 2011 PPG= 6.6%
40
10
0
35
10
5
15
(10)
25
(5)
0
5
15
20
30
J&J
LILLY
NOVARTIS
AZ
SERVIER
Sanofi
International MNCs
BI
ADCOCK
CIPLA
BMS
PFIZER
ROCHE
Valeant
MAT Q1 2011 Annual Sales Growth
30
25
20
S.Africa MNCs
LUPIN
ASPEN
J&J
BAYER
ABBOTT
NOVO
MERCK
KGAA
MSD |
 11
Five-Year Aspirations
Rank
in
top
10
in
key
markets
–
South
Africa,
Thailand,
Philippines,
Indonesia, Malaysia
Target of $500m sales
Enter new markets
and establish brands in Indonesia and Vietnam
Aggressive
acquisition
plans
to
speed
growth
Launch
global
Valeant
brands
in
Asia
and
Africa
–
CeraVe,
Dr
Lewinns, Dermaveen, Hamiltons Sun and create strong skin position
Patient/customer
value
at
the
core
of
everything
we
do
Maintain
focus
on
sales
management
Professional
endorsement
of
brands
as
a
key
marketing
focus
Balanced portfolio
of OTC and Prescription brands to suit Asia and
African markets
Supply
Chain
optimization
and
efficient/lean
operational
structure |
 Emerging Markets -
South East Asia and
South Africa
Andrew Howden
CEO, iNova
Valeant, South East Asia, South Africa and Australia
Investor Day
June 21, 2012 |
 Questions?
Panel:
Pavel Mirovsky
Andrew Howden
Javier Rovalo
Carlos Picosse
John Connolly |
 U.S. Rx Dermatology
David Mullarkey
Senior Vice President & General Manager,
Valeant Dermatology
Investor Day
June 21, 2012 |
 2
U.S. Rx Dermatology Business Overview
Top tier U.S. Dermatology business
–
Top 3 in U.S.
–
5 year sales growth CAGR of ~59% --
fastest growing top
Derm company
Focused on three key segments
–
Acne
–
Dermatitis
–
Anti-virals
Strong Pipeline/Expansion Opportunities
–
Efinaconazole (IDP-108) –
Potential to be breakthrough
onychomycosis treatment
–
Multiple lifecycle management efforts
–
Potential new areas: skin cancer, psoriasis, fungal
infections of the skin |
 3
U.S. Dermatology Market Dynamics
General
–
Large (~$9B), but low growth market
–
Low big Pharma presence
–
Fragmented competition/many small players
Prescribers
–
Relatively focused target list
–
Relationship-oriented/industry-friendly
–
Growing influence of PA’s/nurses
Coverage
–
Relatively low government reimbursement
–
Increasing self-pay component
–
Increasing managed care controls
–
High use of co-pay assistance programs
Innovation
–
Predominantly through formulation innovation
–
High barrier to generic entry, though some regulatory changes ongoing
|
 4
Valeant Is Now Top Tier Rx Dermatology Player
2008 -
Top 15
Source:
Wolters
Kluwer
Health
Integrated
AWP
Dollars
for
Rx
Derm
Products
Only
-
May
2012
*Medicis: gross sales only, excludes aesthetics and Rx reported 2011 net sales ~$500M
**Allergan excludes aesthetics
Valeant #11
Valeant #3
2011 -
Top 15
(Based on Gross Sales)
-$100
$100
$300
$500
$700
$900
Pedinol
Intendis/Bayer
Triax
Merz
Valeant
Allergan
Dermik
Ortho derm
Astellas
Warner Chilcott
Graceway
Nycomed
Medicis
GSK (Stiefel)
Galderma
$0
$200
$400
$600
$800
$1,000
$1,200
Aqua
Promius
Onset
Intendis/Bayer
Merz
Astellas
Leo
Allergan
Warner Chilcott
GSK (Stiefel)
Sandoz/Novartis
Valeant
Galderma
Medicis* |
 5
Valeant Segment Strategy
Market/Environment
–
Co-pay programs mandatory
–
Increased cost of access within
managed care plans
–
Continued growth of PA/NP
influence
–
Continued increase in non-Rx
acne treatment options
–
Market shifted back to topical
steroids
–
TCI market (Elidel) very
promotionally sensitive
–
Combination treatment is rule
–
Non-prescription options (e.g.,
CeraVe) established as critical
components of regimen
–
“Inch deep, mile wide”
–
Unmet need for more effective
topical for HSV-1
–
High use of OTC medications
–
Increasing patient interest in
topical vs. oral therapies
Acne
~$3.2B
Dermatitis
~$1.5B
Anti-viral
~$2.3B
Strategy
–
Convert BenzaClin to
Acanya
–
Focus on
Acanya/RAM/Atralin
lifecycle management
–
Manage RAM/Atralin as a
portfolio
–
Return Elidel to growth
–
Maximize CeraVe use in
combination treatment
regimens
–
Accelerate Xerese launch
–
Convert Zovirax to
Xerese
–
Expand Xerese
indications |
 6
Key Current Products –
Focus of Growth |
 7
Valeant U.S. Dermatology Growth
~67%
CAGR
Note: Includes entire Valeant U.S. Dermatology segment
|
 8
Key Changes in Rx Dermatology Business
Over Time
2012
2008 |
 9
3%
9%
29%
33%
44%
3%
18%
38%
37%
40%
0%
10%
20%
30%
40%
VRX Retinoid
Franchise
Acanya
Atralin
Zovirax/Xerese
CeraVe**
MAT
May
Maintaining Growth During Acquisitions
in U.S. Dermatology
2012 vs. 2011 Volume Growth
Source: Wolters Kluwer Health; IRI Scan data; Retailer data –
May 2012
*Zovirax/Xerese volume in TRx grams; **CeraVe scan volume
growth *
2012 |
 10
Promotional Efforts Turning the Elidel Growth
Curve
Elidel YOY TRx Growth All Prescribers
Source: Wolters Kluwer Health May 2012
Elidel YOY TRx Growth Dermatologists |
 11
Key Priorities for 2012
Successfully integrate Ortho, Dermik and Coria and create high-
performing field sales organization optimizing multiple brands
Create growth brands out of Elidel and Xerese
Grow retinoid portfolio of Retin-A-Micro/Atralin
Convert BenzaClin business prior to patent expiry
“Introduce”
new Valeant Dermatology and align external
presence/perception with our industry leadership ambition
Accelerate life cycle management options for existing brands
Extensive launch planning for efinaconazole (IDP-108 -
onychomycosis) |
 U.S. Rx Dermatology
David Mullarkey
Senior Vice President & General Manager,
Valeant Dermatology
Investor Day
June 21, 2012 |
 R&D Update
Susan Hall, Ph.D
Senior Vice President, Global R&D
Investor Day
June 21, 2012 |
 1
R&D Operating Principles
Lower risk / niche
opportunities
Diverse portfolio
Major focus on
lifecycle
management
Extensive topicals
expertise driver of
internal innovation
Lean operating
model
supplemented with
partnerships
Leverage R&D
globally |
 2
R&D –
Excellent Productivity Track
Record
As measured by:
Disciplined R&D budget and
associated FTEs relative to revenue
Successful rapid integration of
products that are acquired
Executing on numerous pipeline
activities
Multiple successes to date, e.g.
Acanya, IDP-111, Potiga/Trobalt,
CeraVe line extensions,
efinaconazole (IDP-108), Sublinox,
Lodalis, Regederm
Ensuring ongoing support of the
portfolio
2010
2011
2012e
(proposed)
U.S.
$36.5 M
$57.4 M
$70 -
$85 M
Non U.S.
$19.1 M
$8.3 M
$20 -
$25 M
Total Spend
$55.6 M
$65.7 M
$90 -
$110 M
Spend as %
Sales
5%
3%
~3%
R&D spend |
 3
Diverse Portfolio Driving The Business
Targeted NCE development
New formulations and delivery technologies
New indications / market expansions opportunities
Generics / Branded Generics
Novel therapies utilizing currently approved products
Examples
efinaconazole (IDP-108)
IDP-118
Potiga XR
Acanya, Atralin, Elidel,
Zovirax lifecycle
management
Central & Eastern
Europe portfolio |
 4
Efinaconazole (IDP-108) / Onychomycosis
(1/2)
Onychomycosis is a progressive fungal infection of the nail bed
Caused mostly by dermatophyte fungi, but also yeasts or molds
Represents 50% of all nail disorders & frequently involves
several nails
Current treatment challenges are many
Need for medication to reach infection site under nail
Clinical efficacy is based on nail appearance, which grows slowly
Two phase 3 studies completed: primary efficacy outcome of
complete cure at week 52 (48 weeks treatment with 4 weeks
follow up) vs. placebo:
Statistically superior (p<0.001) to placebo for all primary and secondary
endpoints
Efinaconazole was generally safe and well tolerated |
 5
Efinaconazole (IDP-108) / Onychomycosis
(2/2)
Submission to FDA 3Q 2012; other countries planned -
Canada, Brazil, Mexico, Central Europe
Valeant has rights to North & South America and EU countries
W. Europe submission requires evaluation vs. an already
approved product –
active partnering discussions underway
Phase 3 and other data targeted for top specialty journals
plus presenting at national dermatology and podiatry
conferences
Efinaconazole is a potent anti-fungal with the potential for a
broad range of additional multiple indications |
 6
CeraVe
®
Premium
Line
of Skincare Products
Designed to restore and repair the skin barrier for healthier skin
Innovation-driven approach:
Meeting patient / consumer needs with superior formulations
designed to restore and repair the skin barrier
All new products have driven incremental sales due to
focusing on different skin disease states
All innovations were developed by Dow Pharmaceuticals with
input from leading dermatologists
We are actively progressing other opportunities to meet
unmet needs in the marketplace |
 7
Regederm
®
: Treatment & healing of wounds
Brazil
Launched in Brazil, April 2012
Prescription product Indicated for the
acceleration of wound healing and tissue
regeneration properties
Gel
cream
formulation
–
consists
of
bioactive protein fractions of latex serum
derived from the rubber tree
Mechanism of action:
Stimulates angiogenesis
Inhibits collagenase
Valeant is evaluating opportunities to
launch Regederm
®
in other regions,
patents pending worldwide |
 R&D Update
Susan Hall, Ph.D
Senior Vice President, Global R&D
Investor Day
June 21, 2012 |
 Questions?
Panel:
Dave Mullarkey
Alissa Hsu Lynch
Tom Schlader
Susan Hall
Ryan Weldon
Dan Spira
Julie Kang |
 Appendix |
 2
GAAP EPS vs. Cash EPS
Adjustments:
Non-Cash Items
Amortization
Intangible Assets
Deferred Financing Costs
Debt Discounts
Inventory Step Up (Acquisition related)
Contingent Consideration Fair Value Adjustment (Acquisition related)
Stock Based Compensation Fair Value Step Up (Acquisition related)
Deferred Taxes
“Non-recurring”
charges:
Restructuring and Integration Charges
Acquisition-related Transaction Costs
Legal Settlements
IPR&D (Cash and non-Cash)
Gain/loss on early extinguishment of debt
Non-Cash items included in Cash EPS
Stock Based Comp
Depreciation |
 3
Restructuring, Integration and Acquisition
Related Costs
“Acquisition-related Restructuring and Integration Costs”:
Employee severance and/or relocation
Contract termination costs
Costs to consolidate or close facilities (including manufacturing)
Other associated costs:
Duplicative labor during transition period
Professional fees (consulting, temporary labor)
Systems integration costs
Travel related costs for which the primary purpose is related to
integration
“Acquisition-related Transaction Costs”:
Professional fees for advisory, brokerage, legal, accounting, valuation
Travel related costs for which the primary purpose is related to
the
acquisition |
 4
Presentation of Non-GAAP Adjustments
Inventory
step-up
Alliance
product
assets &
pp&e step-
up
Stock-based
compensation
step-up
Contingent
consideration
fair value
adjustment
Restructuring,
acquisition-
related and other
costs
Legal
settlements
Amortization &
other non-cash
charges
Amortization of
deferred financing
costs, debt
discounts and ASC
470-20 interest
(Gain) Loss on
extinguishment
of debt
Tax
Product Sales
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Cost of goods sold
X
X
X
- -
- -
- -
X
- -
- -
- -
Cost of Alliances
- -
X
- -
- -
- -
- -
- -
- -
- -
- -
Selling, general and administrative ("SG&A")
- -
X
X
- -
- -
- -
X
- -
- -
- -
Research and development
- -
X
X
- -
- -
- -
- -
- -
- -
- -
Acquired in-process research and development
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -
Legal settlements
- -
- -
- -
- -
- -
X
- -
- -
- -
- -
Contingent consideration fair value adjustments
- -
- -
- -
X
- -
- -
- -
- -
- -
- -
Restructuring, acquisition-related and other costs
- -
- -
- -
- -
X
- -
- -
- -
- -
- -
Amortization of intangible assets
- -
- -
- -
- -
- -
- -
X
- -
- -
- -
Interest expense, net
- -
- -
- -
- -
- -
- -
- -
X
- -
- -
(Gain) loss on extinguishment of debt
- -
- -
- -
- -
- -
- -
- -
- -
X
- -
Tax
- -
- -
- -
- -
- -
- -
- -
- -
- -
X |
 5
Pro Forma Adjusted Income (Non-GAAP)
Legacy Valeant
$M
Q1 10
Q2 10
Q3 10
Q1 10
Q2 10
Q3 10
Q1 10
Q2 10
Q3 10
GAAP Net income (loss) from Continuing Operations
(3.2)
$
34.0
$
(207.9)
$
35.6
$
32.2
$
(176.0)
$
32.4
$
66.2
$
(383.9)
$
Non-GAAP adjustments
:
Inventory step-up
-
-
-
-
2.5
3.2
-
2.5
3.2
Other amortization and non-cash charges
2.8
2.7
2.6
-
-
-
2.8
2.7
2.6
Stock-based compensation step-up
-
-
20.9
-
-
-
-
-
20.9
Restructuring and other costs
0.6
2.9
95.9
0.5
2.0
28.3
1.1
4.9
124.2
Acquired in-process research and development
51.0
10.2
-
-
-
-
51.0
10.2
-
Acquisition-related costs
-
7.6
28.0
0.5
8.7
66.5
0.5
16.2
94.6
Legal settlements
-
-
38.5
0.5
1.0
1.0
0.5
1.0
39.5
Amortization of intangible assets
33.3
33.3
35.5
19.3
22.3
26.0
52.6
55.6
61.5
Amortization of deferred financing costs, debt discounts
and ASC 470-20 (FSP APB 14-1) interest
4.1
4.2
3.8
2.0
2.0
1.8
6.1
6.2
5.6
Loss on early extinguishment of debt
-
-
-
-
-
205.6
-
-
205.6
(Gain) loss on investments, net
0.2
0.4
5.0
-
-
-
0.2
0.4
5.0
Write-down of deferred financing costs
-
-
5.8
-
-
-
-
-
5.8
Tax
4.3
0.7
59.5
(5.7)
(13.8)
(112.9)
(1.4)
(13.1)
(53.4)
Total adjustments
96.3
61.9
295.6
17.2
24.8
219.5
113.5
86.7
515.1
Adjusted Income (Non-GAAP)
93.2
$
95.9
$
87.7
$
52.8
$
57.1
$
43.5
$
146.0
$
153.0
$
131.2
$
Legacy Biovail
Combined |
 6
Organic Growth Summary
Q1, 2011
Q2, 2011
Q3, 2011
Q4, 2011
Q1, 2012
LTM (Q1, 2012)
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
Product sales, as reported
$570
$418
37%
$654
$489
34%
$768
$500
54%
Acquisitions (add to PY)
$67
$120
$211
Exchange
-$16
$14
$16
Total organic, as reported
N/A
N/A
$555
$485
14%
$669
$608
10%
$785
$711
10%
N/A
Q1, 2011
Q2, 2011
Q3, 2011
Q4, 2011
Q1, 2012
LTM (Q1, 2012)
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
CY
PY
% Change
Product sales, as reported
$521
$431
21%
$563
$491
15%
$570
$418
37%
$654
$489
34%
$768
$500
54%
$2,556
$1,898
35%
Acquisitions (deduct from CY)
-$55
-$24
-$88
-$118
-$275
-$18
-$505
-$18
Exchange
-$8
-$27
-$16
$14
$16
-$12
Total organic, excl. acquisitions
$459
$431
7%
$512
$491
4%
$467
$418
12%
$551
$489
13%
$509
$483
6%
$2,039
$1,881
8%
Less: neuro
-$178
-$186
-$196
-$201
-$183
-$202
Total organic, excl. acquisitions & neuro
N/A
N/A
$289
$232
25%
$355
$287
24%
$327
$281
16%
N/A |
 7
Integrating New Acquisitions –
Ortho
Dermatologics/Dermik
–
Introductions/communications
–
Share integration timelines
–
Announce senior management team
–
Town hall –
company name, cultural introduction.
–
Transition critical control functions to Valeant
(e.g., order-to-cash, contract approvals)
–
Define new portfolio and marketing strategy
–
Set new budgets (incorporating synergy targets)
–
Adjust territory alignments/incentive plan
–
Finalize sales management selections
–
Communicate offers/complete all terminations
–
Complete all product, policy and process training
–
Conduct National Sales Meeting to launch
integrated business
–
Target list refinement
–
Cultural integration/team building
–
Process improvement
–
Shift transition services from sellers (e.g., supply
chain, medical, sales support)
Day 1
First 30-45
Days
Next 60
Days |