AGP Limited Corporate Briefing Session 08 th August

AGP Limited Corporate Briefing Session 08 th August 2019

Table of Contents 1. 2. 3. 4. 5. 6. 7. 8. Financial Performance Jan-Jun-19 Analysis of Variances in Half Year Profit & Loss Financial Performance 2016 -2019 Corporate Information & Structural Changes Pharma Sector Overview Regulatory and Pricing Environment and Updates Imports from India in Recent Times Challenges & Future Outlook Note: Actual results may vary from any forecast / expectations / opinions which may have been shared in this presentation / session. 2

AGP Limited – Financial Performance Jan-Jun-19 § AGP limited (“AGPL”) posted net profit of PKR 743 Mn for the period of Jan-Jun 2019 translating into EPS of PKR 2. 65 § Interim dividend of PKR 1. 25/share 10. 2% 23% 22% Revenue Growth Net Profit Margin Return on Equity § Revenue grew by 10. 2% in 1 st half 2019. § Ignoring the impact of a one-off government order, sales grew by 20%, of which 8. 2% is volumetric increase § The company’s Gross Margin improved to 58% (55% last year) Revenue Growth (PKR mn) 6, 000 5, 000 4, 000 3, 000 2, 000 1, 000 - 2014 (12 M) 2015 (12 M) 2016 (12 M) Jan-Jun Sales 2017 (12 M) 2018 (12 M) Jul-Dec Sales 1 H 2019 (6 M) Specialty Areas GYNAE Gynae / Orthopedic / Antibiotic Products / Pain management / Complimenting Nutraceuticals PAEDS Antibiotics for children/Antiasthmatic/Nutraceuticals INTERNAL MEDICINE General GP/ GNT / Broad-Spectrum Antibiotics / Antiallergens CARDIOMETABOLIC -NEURO Cardio, Diabetes and Neuropsychiatry products ANTI VIRAL Hepatitis treatment (Mylan licensed) ONCOLOGY Breast cancer treatment (Mylan licensed) 3

Analysis of Variances - Profit & Loss Jan-Jun-19 (PKR in Mn) Jan-Jun 2019 Jan-Jun 2018 Var % Sales 3, 159. 3 2, 866. 10% 3 Gross Profit 1, 836. 7 1, 580. 16% 8 GP % EBITDA % Op Profit 58. 1% 55. 2% 1, 084. 0 34. 3% 0 32. 9% 1, 022. 0 6 32. 3% 31. 2% 8 914. 801. 4 29. 0% 28. 0% 7 171. 124. 9 Effective Rate 18. 8% 15. 6% PAT 743. 1 OP % PBT % Tax 943. 15% 5 895. 14% Remarks § With an overall growth of 10. 2%, the growth in Q 1 was 4% and 19% in Q 2. § Ignoring non-recurring sales (of PKLI in 2018 and similar tender sales in 2019) the sales grew by 20%. § The volumetric increase stood at 8. 2%. § Gross profit percentage improved mainly due to change in product mix. The devaluation impact was partially mitigated by the one-off price increase of 15% allowed by DRAP. § Despite the significant inflationary impact (8. 9% on YOY basis) and other increases in operating expenses (admin expenses due to listing, increase in marketing expenses due to new teams etc. ), the company posted a healthy increase of 15% in EBITDA and 14% in Operating profit vs. 10% increase in sales. 14% § Devaluation leading to higher exchange loss (PKR 10 Mn) and increase in finance cost of Sukuk Loan by PKR 17. 5 Mn due to higher markup rate were major expense variances - the base rate for AGP borrowing increased from 10. 96% in Dec-18 to 13. 91% in Aug-19 38% § The increase in PBT lead to a net tax increase of PKR 26 Mn (net of listing tax credit). Furthermore, prior year tax expense of PKR 31 Mn was recorded during the period. Resultantly, the effective tax rate has increased to 18. 8% 676. 10% • The PAT percentage was maintained at 23. 5% even in this 4

Financial Performance Amount in PKR '000 Dec-16 (12 M) Dec-17 (12 M) Dec-18 (12 M) Jun-19 (6 M) Revenue 4, 205, 750 4, 724, 990 5, 382, 055 3, 159, 327 Gross Profit 2, 460, 112 2, 874, 392 3, 040, 649 1, 836, 699 EBITDA 1, 634, 426 1, 718, 688 1, 724, 078 1, 084, 008 Operating Profit 1, 528, 879 1, 610, 235 1, 625, 558 1, 022, 028 Profit After Tax 1, 087, 081 1, 233, 904 1, 206, 690 740, 787 Non Current Assets 6, 804, 379 6, 874, 933 7, 095, 279 7, 324, 061 Current Assets 1, 708, 624 1, 651, 904 1, 868, 111 2, 027, 352 Total Assets 8, 513, 004 8, 526, 836 8, 963, 390 9, 342, 278 Share Capital 2, 800, 000 Total Equity 4, 277, 031 5, 510, 935 6, 367, 625 7, 108, 413 Non Current Liabilities 2, 257, 643 1, 713, 826 1, 251, 152 1, 001, 943 Current Liabilities 1, 978, 330 1, 302, 075 1, 344, 613 1, 241, 057 Gross Margin 58. 49% 60. 83% 56. 5% EBITDA Margin 38. 86% 36. 37% 32. 0% Net Margin 25. 85% 26. 11% 22. 4% 58. 1% 34. 3% 23. 5% Earnings Per Share 3. 88 4. 41 4. 31 2. 65 Dividend Per Share - - 1. 25 15. 28 19. 68 22. 74 25. 39 Current Ratio 0. 86 1. 27 1. 39 1. 63 Debt Equity Ratio 0. 79 0. 39 0. 26 0. 21 Return on Assets 12. 90% 14. 48% 13. 8% 16. 2% Return on Equity 29. 12% 25. 21% 20. 3% 22. 0% Income Statement Balance Sheet Ratios Breakup Value Per Share 5

Rigix – Billion Rupee Brand 1066 mn 927 mn f 19% CAGR o 760 mn 633 mn 522 mn 381 mn 415 mn 269 mn 301 mn 219 mn 245 mn 2009 2010 2011 2012 2013 2014 2010 0. 0% 2011 0. 0% 2012 0. 0% 2013 0. 0% 8. 4% 13. 6% 19. 3% Price Growth Units Growth 2015 2016 2017 2018 2014 5. 5% 2015 10. 4% 2016 0. 0% 2017 1. 1% 2018 3. 2% 2019 13. 2% 19. 7% 6. 2% 16. 4% 14. 7% 21. 4% 21. 3% 19. 7% 11. 7% 26. 8% 14. 7% 22. 5% 24. 6% 34. 4% * Sales are Ex-Distributor (Local) at Trade Price (in PKR Mns) Source : IMS Q 2 -2019 2 Q-2019 (MAT Basis) Rigix has crossed PKR 1 Bn brand in latest IMS report 6

AGP – Corporate Information AGP Limited - Pattern of Shareholding in Jun-19 Aitken. Stuart Pakistan (Pvt. ) Limited Tariq Moinuddin Khan Muller & Phipps Pakistan (Private) Limited Baltoro Growth Fund Aspin Pharma Limited High-Q Pharmaceuticals (Private) Limited Bank Alfalah Limited General Public & Institutions 50. 53% 0. 21% 13. 54% 9. 57% 4. 79% 4. 35% 3. 68% 13. 32% Sharia Compliance Board of Directors Tariq Moinuddin Khan Nusrat Munshi Kamran Nishat Mahmud Yar Hiraj M. Kamran Mirza Naved Abid Khan Zafar Iqbal Sobani Chairman CEO & Executive Director (Muller & Phipps) Director (Baltoro) Director (Aikten. Stuart) Independent Director Entity Rating Meezan Bank Limited have reviewed the accounts of AGP and found them to be in compliance with Karachi Meezan Islamic Index – 30 Criteria set out by Pakistan Stock Exchange Entity Rating: Long-Term A+ (Upgraded May-19) Short-Term A 1 Outlook Stable “The ratings reflect AGP's strong business fundamentals. The pharmaceutical industry has witnessed a higher rate of sustained growth over the years. While product pricing has been a challenge, the new CPI-linked pricing criteria has allowed an increase in prices with respect to inflation, indicating a positive sign. At the same time, AGP's core profitability is strong; any downward revision in margins must remain range-bound. ” 7 Extract from PACRA’s Rating Report May-19

AGP Ownership Structure § For the purposes of better organizational management and pooling of business risks, scheme for rearrangement, restructuring and reorganization of OBS group was undertaken. § Under the Scheme of Arrangement sanctioned by the Court, shares of AGP Limited held with OBS Pakistan (Private) Limited have been amalgamated with and into Aitken. Stuart Pakistan (Private) Limited. § Consequent to the above, it is pertinent to mention that the ultimate beneficial ownership of AGP Limited remains the same. Pre Scheme of Arrangement West End 16 Pte. Ltd. (Singapore) 50% Mr. Tariq Khan 50% Mrs. Adeela Tariq 70% Ownership OBS Healthcare (Pvt. ) Ltd. 30% Mr. Tariq Khan (Singapore) 50% Mr. Tariq Khan 50% Mrs. Adeela Tariq OBS Healthcare (Pvt. ) Ltd. 30% Mr. Tariq Khan 100% Ownership 10% Mr. Tariq Khan 50. 53% Ownership AGP Limited West End 16 Pte. Ltd. 70% Ownership 90% Ownership OBS Pakistan (Pvt. ) Ltd. Existing Group Structure Aitken. Stuart Pakistan (Pvt) Ltd 50. 53% Ownership 0. 21% Mr. Tariq Khan 4. 79% Aspin (Associate) 44. 47% Others AGP Limited 0. 21% Mr. Tariq Khan 4. 79% Aspin (Associate) 44. 47% Others 8

Sector Overview ü Compound Annual Growth Rate (CAGR) of total Market over last 5 years (Jun-19 vs Jun-15) in PKR is 13. 1% ü Total 12 months Pakistan Pharma Market: Ø Total revenue in PKR – 423 Billion Ø Share of local manufacturers in Pakistan is 69% Ø Total growth June-2019 MAT Basis (PKR) – 13. 23% Ø AGP Growth as per IMS – 17. 1% ü Pharmaceutical spending of the country stands at c. USD 13 per capita, which is low compared to regional countries average of USD 35 per capita and global average of USD 144 per capita (Source : IMS) ü Overall expenditure in the country on healthcare also lags behind the region at US$ 40 per capita vs. Regional average of US$ 76 per capita (Source : World Bank Group) Sales in PKR Bn Growth +/- 324. 1 15. 65 325. 6 328. 9 338. 0 344. 3 10. 06 361. 2 10. 93 373. 2 380. 6 393. 9 407. 1 12. 72 12. 61 14. 42 13. 45 422. 7 13. 23 7. 48 7. 91 Source : Q 4 -16 IMS Q 2 -2019 Q 4 -16 Q 1 -17 Q 2 -17 6. 24 Q 3 -17 Q 4 -17 Q 1 -18 Q 2 -18 Q 3 -18 Q 4 -18 Q 1 -19 Q 2 -19

Major Industry Players ü The top 10 corporates all have annual sales more than PKR 10 Bn and collectively have a ~39% share of the industry’s revenues. ü Top 25 corporates, in terms of revenue and growth rate, are shown below in the bar diagrams. AGP Limited stands at 23 rd position with revenue of around PKR 5. 3 Billion (excluding institutional sales and exports). 26. 0 21. 8 Source: IMS Q 2 -2019 Revenue at trade price includes ex-distributor sales only and excludes institutional sales and exports BO r) ut TT (N AC TE R P 10. 5 9. 6 8. 7 7. 9 7. 8 7. 6 6. 9 6. 6 6. 5 6. 4 5. 9 5. 7 5. 4 5. 3 4. 9 4. 7 AB 12. 2 12. 0 11. 1 AG 13. 7 13. 5 CC PH AR L M EV M OR O IN M AR AGA TI N DO HI GH W NO ON NO VA RT IS BA YE R 15. 8 M 28. 0 GS K GE TZ SA M AB I BO TT HI GH -Q SA SE NO AR LE FI -A VE NT IS HI LT M AR ON TI N DO BOS CH W M AR KE R PF IZ ER BA RR N ES ET T T HO LE DG S GS ON K (C on s) AT CO Sales in PKR Bn They contribute around 62. 6% of the total market share

Regulatory and Pricing Environment and Updates § Pharma Industry operates in a heavily regulated environment, stringent and closely monitored and administered by Drug Regulatory Authority of Pakistan (DRAP). § New molecules can take up to 12 -18 months to register and generics take up to 3 years. Slow registration processes and bottlenecks are hindering new product launches. § Although Pharma companies are contributing 1% of their PBT to government for conducting R&D, much of this is going towards meeting administrative expenses of DRAP rather than R&D § Resolve is needed on the part of the government to end the counterfeit menace which is believed to be as high as 45% § Pricing matters have been addressed to some extent through a revised pricing policy. § The Drug Regulatory Authority of Pakistan (DRAP) has granted a one-off price increase of 15% in Jan-19 to mitigate the impact PKR devaluation of 26% in 2018. § DRAP concluded the proceedings on all hardship case and applying the Drug Pricing Policy issue in June 2018. AGP had 6 hardship cases, of which 5 were decided in AGP’s favor. § Subsequently, at the request of DRAP and in the interest of the patients, AGP voluntarily forfeited a around 1/3 rd of the increase granted for 2 products (Magnus and Kefzol). 11

Imports from India in Recent Times In light of the emergent strained relationship with India, AGP at the beginning of the current year undertook a detailed analysis of its supplies from India. Findings are as under: Raw Materials: § Currently, 24% of raw materials (in value) are imported from India which is approximately 11% of total COS of 2019 § AGP maintains 45 days of finished goods inventory with the distributor, 15 days of finished goods inventory at the warehouse and 90 days of raw material inventory, to mitigate the risk of material shortages due to short term disruptions. § AGP has already developed alternative sources for 80% of the raw materials currently imported from India. Alternative sources for the remaining are under developmental phase. In the event that we need to shift to alternative sources, our gross margins will fall by 1. 3%. Finished Imports § AGP currently imports Mylan products from India. Mylan has agreed to supply through alternative routes, if necessary. AGP currently has 6 months of average inventory for Mylan products 12

Challenges & Future Outlook § The Pak Rupee has seen a devaluation of over 15. 6% since December 2018 while key interest rates are increased by 325 basis points since January 2019. We believe that this pattern may continue in the short term with lower and slower intensity. The devaluation and inflationary impact is partially mitigated by the annual price increase linked to CPI index § The Company is moving to import in Chinese Yuan to manage the devaluation impact. § AGP launched 8 new products in 2018 and has plans to launch at least 4 new products in the second half of 2019. § The Company is pursuing to aggressively expand its product offerings in the growing segment of the Nutraceutical market. § Construction of new office building is also in progress and is expected to be completed in the first quarter of 2020, making space for future plant expansion at plant 1. • Spending on pharmaceutical drugs remains low compared to our International counterparts and the regional average, paving way for growth prospects. • The Company remains optimistic about the future outlook of the business given the essential nature of the industry, internal economies of scale, strength and growth of current product mix along with a strong new product pipeline.

Challenges & Future Outlook - Nutraceutical Plant § Nutraceuticals is a growing segment with several players entering the market in the recent past. It is a relatively less regulated segment with market forces determining product pricing § With 2 years of experience in this segment, AGP has witnessed a fair contribution to top line from the sale of products such as Novafol, Cofif Syrup range, All-D Drops, Carodek and Protégé Sachets § During the half year ended, the Company purchased of an existing Nutraceutical product manufacturing facility as opposed to the previous plan of building a new plant. This will lead Company to an early entry in the market resulting in saving valuable time of 15 -18 months, mitigate foreign exchange exposure risk and lead to possible savings in capital expenditure. § AGP is already marketing nutraceutical products through 3 rd party tolling and will shift to own manufacturing once the plant is commissioned and operational. AGP has plans to launch at least 3 new products in the next 12 months. The estimated total cost is of PKR 220 million versus PKR 250 million for building the facility. 14

Q&A Thank you