COOPERATIVES WORKING IN THE PHARMACY

SECTOR

FRANCE

RomeMarch 31st 2009

1. Distribution & Pharmacies suffer from market pressure

• Price structure on reimbursed medicines for France1999 2007

State 5,9% 6.6%Manufacturer 64.2% 67.6%Wholesale 3.8% 2.5%Pharmacies 26.1% 23.3%

Wholesalers are suffering most

KEY FIGURES & FACT

2. Direct sales to pharmacy by manufacturers on reimbursed medicines

2001 = 8,3%2006 = 15%Estimated 2012 = 19,5%

France is N°1 for direct sales in Europe

KEY FIGURES & FACT

3. Generic market2008 = 10% value and 20% volume

57% of the distribution is done by direct sales, not by full line wholesalers 1 900

2 200

1 082

750

480

292

74197

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

13941500

Turnover in Millions €

KEY FIGURES & FACT

4. New risks emerged in France

Opening of the capital of pharmaciesDTP model (as in the UK)Double pricingQuota system

=> A new economic model is being modelled towards the development of servicesservices to pharmacies

KEY FIGURES & FACT

Strategies of cooperatives in France become clearer:

- consolidation of wholesale activities at European level (Millenium)

- wholesale competition at national level in areas where historically cooperatives were lonely (Cerp Rouen, Cerp Rhin Rhône Méditerranée)

- connections with Group of pharmacies (CERPenthès)

- disengagement of the historic wholesale business activity (Cerp Lorraine sold to Phoenix Pharma)

- introduction of a new economic model (Groupe Welcoop)

Groupe WELCOOP (ex Cerp Lorraine Group) proposes to the 22,600 pharmacies of France to become owner of their suppliers.

WELCOOP :THE NEW ECONOMIC MODEL

This new economic model is based on3 major grounds:

1. Computing and Management with Pharmagest Interactive, leader in France with 43% market share equipping 9.800 pharmacies in France with a complete back-office solution

2. Advice and Organization with Profidia (merchandising, pricing structure, geomarketing…)

3. Products Offer with Generics (Cristers), Medical Equipment (D,Médica) and Parallel Imports (Pharma Lab)

This new economic model adds a two-way value for the pharmacists:

- increasing the margins with the right to get cooperative dividends based on a percentage on all purchases done with the Products Offer (20% for Cristers, 4% for D,Médica, 5% for Pharma Lab),

- accessing the capital of the Group by opening the capital of the holding Welcoop Pharma

Future priorities and strategies for French cooperatives :

Find the model of tomorrow to allow the pharmaciststo remain competitive, liberal and independent.

Thank you for your attention !