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Roadshow Presentation1
April / May 2007
Roadshow Presentation
Initial Offering—Roadshow Presentation
Roadshow Presentation2
Disclaimer and Confidentiality Requirements
This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of OJSC Pharmstandard (the “Company”) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
This presentation has been prepared solely for use in connection with the possible offering of ordinary shares (the “Shares”) and global depositary receipts representing shares (“GDRs” and, together with the Shares, the “Securities”) in the Company (the “Offering”). This document is an advertisement and not a prospectus and any purchase of Securities in the Offering should be made solely on the basis of information contained in the prospectus and any supplemental prospectus to be published in respect of the Offering. The information contained in this presentation has not been independently verified. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of Augment Investments Limited (the “Selling Shareholder”) or the Company or any of their respective affiliates, advisors or representatives shall have any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with the presentation.
This presentation is only for persons having professional experience in matters relating to investments and must not be acted or relied on by persons who are not Relevant Persons (as defined below). Solicitations resulting from this presentation will only be responded to if the person concerned is a Relevant Person.
This presentation is not for distribution in, nor does it constitute an offer of securities in the United States, Canada, Australia or Japan. Neither the presentation nor any copy of it may be transmitted into the United States, its territories or possessions, or distributed, directly or indirectly, in the United States, its territories or possessions. Any failure to comply with this restriction may constitute a violation of US securities laws. The presentation is not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The Company has not registered and does not intend to register any portion of the Offering in the United States or to conduct a public offering of any securities in the United States.
This presentation is made to and directed only at (i) persons outside the United Kingdom, (ii) qualified investors or investment professionals falling within Article 19(5) and Article 49(2) (a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”), and (iii) high net worth individuals, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (such persons collectively being referred to as "Relevant Persons").
This presentation and its contents are confidential and must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a Relevant Person. Failure to comply with this restriction may constitute a violation of applicable securities laws. If you have received this presentation and you are not a Relevant Person you must return it immediately to the Company. This presentation does not constitute a recommendation regarding the securities of the Company.This presentation is not a public offer or advertisement of Securities in the Russian Federation and is not an invitation to make offers to purchase any Securities in the Russian Federation, and must not be passed on to third parties or otherwise be made publicly available in Russia. The GDRs have not been and will not be registered in Russia and are not intended for “placement” or “circulation” in Russia.This presentation includes 'forward-looking statements'. These statements contain the words "anticipate", "believe", "intend", "estimate", "expect" and words of similar meaning. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Company’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Company's projects and services) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of the Company to be materially different from results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this presentation. Each of the Company and the Selling Shareholder and their respective agents, employees and advisers, expressly disclaims any obligation or undertaking to update any forward-looking statements contained herein.
Citigroup Global Markets Limited and UBS Limited are acting for the Company and no one else in connection with the proposals referred to in the presentation and will not be responsible to any other person for providing the protections afforded to their client, or for providing advice in relation to such proposals.
The information and opinions contained in this document are provided as at the date of this presentation and are subject to change without notice.All information not separately sourced is from Company data.
Roadshow Presentation3
Today’s Presenting Team
Name Title
Dr. Igor Krylov CEO, Chairman of the Management Board and Member of the Board of Directors
Elena Arkhangelskaya Chief Financial Officer
Dr. Olga Mednikova Chief Sales and Marketing Officer
Maxim Stetsuk Head of IR/Financial Management
Roadshow Presentation
1. Company Overview
Dr. Igor Krylov, CEO
Roadshow Presentation5
Pharmstandard at a Glance
Leading domestic pharmaceutical company in Russia (measured by sales)
– #4 pharma company overall in Russia by sales value in 20061
– #2 pharma company in the commercial segment by sales value in 20061
Industry leading growth and profitability
Market leading brands
– 5 brands among top-15 best selling domestic brands in Russia1
– Arbidol®, Pentalgin®, Complivit®, Terpincod®/Codelac®, Flucostat®
Acquired Masterlek in August 2006
– Added 30 products including 2 market-leading brands, Arbidol® and Flucostat®
Experienced sales force and modern and efficient manufacturing facilities
– 287 sales reps2, all with a medical background
– Russian GMP compliant facilities, including lines at Kursk, some of which are EU
GMP compliant
Source: Company1 Pharmexpert, preliminary data (subject to change), in wholesale
prices2 As at 31 December 2006
Roadshow Presentation6
Diversified Product Portfolio
Pharmaceuticals
87% of 2006 sales
Medical Devices
13% of 2006 sales
OTC71% of 2006 sales
Rx2
16% of 2006 sales
Therapeutic focus: Analgesics Cough & cold Vitamins Anti-viral Anti-fungal
Product portfolio includes: Acid pump inhibitors Nitrites & nitrates ACE inhibitors Alimentary tract
metabolism
Product portfolio includes: Sterilisers Distillers Medical disposables
Source: Company
Note: 1 Pro forma 2006 sales, including Masterlek from 2 August 2006
2 Includes Other sales
1
Roadshow Presentation7
Investment Case
Leading pharmaceutical company in the most rapidly growing pharma market
Attractive industry fundamentals
Portfolio of market leading brands
Proven product development strategy
Experienced sales force
Modern and efficient manufacturing facilities
Operational efficiency
Experienced management team
Roadshow Presentation8
Our Strategy
Promote our market-leading brands to drive sales growth and profitability
Launch new products on a regular basis
Expand sales and marketing effort
Continue to actively control costs
Grow through acquisitions
Exploit opportunities from Federal Reimbursement Programme (FRP) as they arise
Building a top-3 pharmaceutical company in Russia
Roadshow Presentation
2. Market Overview
Dr. Olga Mednikova, Chief Sales and Marketing Officer
Roadshow Presentation10
Russia—The World’s Fastest Growing Pharma Market
Source: DSM, EIU
(in retail prices, US$bn)
Russia was the fastest growing pharma market in 2005–2006
28%24%
17%14%
8% 7% 7%5% 5%
3% 3% 2%
(6%)(10)
(5)
0
5
10
15
20
25
30
Rus
sia
Braz
il
Chin
a
Cana
da
Mex
ico
US
Spai
n
Fran
ce UK
Ger
man
y
Ital
y
Aust
ralia
/NZ
Japa
n
2006
gro
wth
rat
e (
%)
Pharma marketsize (US$bn)
8.4 8.4 11.4 13.7 8.1 197.8 11.6 25.6 15.7 27.7 14.9 5.8 56.7
Population (in million) 142 187 1,315 33 108 340 45 61 60 83 58 25 128
Roadshow Presentation11
214
165142
111
47 38
230194
171
119
50 49
0
50
100
150
200
250
300
Hungary CzechRepublic
Slovakia Poland Romania RussiaCo
nsu
mp
tio
n p
er c
apit
a ($
)
2005 2006
Source: Pharmexpert, EIU Market Indicators
Russian Pharma Market Set to Expand
Drug consumption per
capita amongst lowest in
Europe
Rapid market growth
expected to continue
Russia was the fastest
growing market globally
in 2004-2006
Pharmaceutical Consumption Per Capita in Russia($)
2733
3844
58
70
0.00
20.00
40.00
60.00
80.00
2001 2002 2003 2004 2005 2006
Co
nsu
mp
tio
n p
er c
ap
ita
($)
Pharmaceutical Consumption Per Capita by Country($)
Roadshow Presentation12
Russian Pharma Commercial Market Drivers
Commercialization and
development of distribution
channels
Affordability boosts access
and consumption
Strongmacroeconomic
s driving consumer boom
Supportive demographic
trends
Increased consumer focus on health and
well being
Market Drivers
Roadshow Presentation13
A Leader in the Russian Commercial Segment
Market Share—Top 10 Companies1 Market Share—Top 10 Domestic Companies1
Source: Pharmexpert, preliminary data (subject to change)Notes:1 Commercial segment 2006, based on sales in wholesale prices2 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
PHS is #2 in the US$5.3bn commercial segment (66% of the total market)
2
2
Other69.2%
Nizhpharm (Stada)2.2%
Nycomed2.6%
Sandoz2.6%
Gedeon Richter2.8%
Novartis2.8%
Servier2.9%
Berlin-Ch/Menarini3.4%
Sanofi-Aventis4.5%
Pharmstandard4.2%
Pfizer3.0%
Other53.7%
Nizhpharm (Stada)5.0%
Materia Medika4.5%
Otechestvennie Lekarstva
3.4%
Microgene Npo3.2%
Farm-Centr2.1% Verofarm Zao
2.7%
Akrikhin (Polpharma)
2.7%
Moshimfarmpreparaty2.5%
Pharmstandard17.7%
Krasnogorskleksredstva2.6%
2
2
Roadshow Presentation14
Well Positioned to Capture FRP Upside
In 2006 FRP budget was set at RUR 29bn (RUR 70bn spent)1
2005 budget was set at RUR 51bn (RUR 46bn spent)1
Resulted in a number of products being removed from the FRP list both voluntarily and involuntarily by pharma companies as FRP officials ask for even longer payment terms and simultaneously cut prices
17.1 million participants eligible—8.7 million currently enrolled21
2007 FRP budget is set at approximately RUR 35bn3
Key facts
Short term solution:
– Reallocating funds from prior and future years (~RUR 20bn)
– Additional allocation of RUR 16bn Going forward Government focused on including generic domestic
products on FRP list rather than expensive foreign products
– Currently only 7% of the total FRP market is serviced by Russian pharma companies
Current status
Although FRP currently in adjustment mode, domestic pharmacompanies appear to be future beneficiaries Source:
1 RBC daily, 4 September 2006 2 Commersant (Russia) 6 March 20073 Pharmvestnik #2, 23 January 2007
Roadshow Presentation15
Low Exposure to FRP
Source: Pharmexpert, preliminary data (subject to change)
Note: Based on wholesale prices in US$
Pharmstandard has a lower exposure to the FRP compared to its peers
Composition of Leading Companies’ Sales in Russia by Market Segment in 2006
0
10
20
30
40
50
60
70
80
90
100
Sanofi-Aventis Novartis Janssen-Cilag Pharmstandard Berlin-Ch/Menarini
Servier Roche Gedeon Richter Pfizer Nycomed
Commercial FRP Hospital
Roadshow Presentation
3. Product Portfolio/Pipeline
Dr. Olga Mednikova, Chief Sales and Marketing Officer
Roadshow Presentation17
Our Portfolio – Top 15 Pharmaceutical Products
Source: CompanyNotes:1 Sales only formed part of consolidated results from 2 August 20062 Total Pharmaceutical products sales include products categorised as Other
ATC 2 2005 Sales 2006 SalesProduct Status therapeutic segment (RURm) (RURm) Growth (% )Terpincod® OTC Cough and cold 975 1,163 19.2%Arbidol®(1) OTC Antiviral 0 1,032 NMPentalgin — N® OTC Analgesics 586 796 35.8%Complivit® (excluding Mama® and Active®) OTC Vitamins 394 545 38.5%Pentalgin — ICN® OTC Analgesics 313 410 31.0%Codelac® OTC Cough and cold 222 375 69.1%Phosphogliv® Rx Antiviral 6 254 NMFlucostat®(1) OTC Anti-fungal 0 197 NMCorvalol® OTC Psycholeptics 148 155 4.9%
Amixin®(1) Rx Antiviral 0 137 NMAskophen® OTC Analgesics 82 80 -2.4%Validol® OTC Cardiac therapy 54 69 26.6%Complivit Active® OTC Vitamins 46 68 48.9%Oligovit® OTC Vitamins 57 60 5.2%Citramon P® OTC Analgesics 41 51 26.6%Top-15 Pharmaceutical products 2,923 5,390 84.4%Other Pharmaceutical products 1,751 1,936 10.6%
Pharmaceutical products total(2) 4,674 7,326 56.8%
Roadshow Presentation18
Pharmstandard’s Leading Brands
5 leading brands
“Top of mind” position with consumers
Significant brand loyalty
Trademark Ranking
share
Pentalgin 3
Arbidol 1 1
Howthorn 5Sodium Chlorid 4
Terpincod 6
Chondroxid 10
Mexidol 2
Viferon 8
Phenotropil 9
Complivit 11
Cephazolin 12
Essliver 14
Impaza 17Corvalol 18
Flucostat 1 13
Glucose 15
Biphidumbacterin 16
Cyclopheron 20
Exclusively produced by PharmstandardProduced by Pharmstandard
Leading domestic pharma trademarks by sales value in 2006
Source: Pharmexpert. Based on consumer prices, Rx and OTC productsNote:1 Masterlek Brands
Anaferon 7
Proproten 19
Roadshow Presentation19
Focused Sales and Marketing Efforts
Covers 75% of the Russian pharma market
All sales reps have medical education/work experience
Appropriately incentivised with cash bonus up to 33% of salary
In 2007 looking to:
– Increase to over 350 sales people
– Further specialise sales force by therapeutic area
Electronic Territory Management System (ETMS) system improving efficiency
Significant sales and marketing capabilitiesNote: As of 31 December
2006Source: Company
Sales force Marketing / Advertising
Promote products through TV, radio, print media and internet as part of focus on brand building
Launched 5 new marketing campaigns since September 2006, including TV campaigns for Pentalgin®, Arbidol® and Flucostat®
Pentalgin® Print / TV campaign
Arbidol® Print / TV campaign
Roadshow Presentation20
Ocillococcinum (Laboratoire
Boiron)7.6%
Viferon (Feron Ooo)
13.7%
Cycloferon (Polysan)
6.6%
Anaferon (Materia Medika)4.5%
Aflubin (Richard
Bittner GmbH)4.2%
Amixin (Pharmastanda
rd)5.7%
Grippferon (Frn-M Zao)
2.3%
Other6.3%
Immunal (Sandoz)
7.3%
Anaferon for Kids (Materia
Medika)9.8%
Arbidol (Pharmstandard)32.1%
Amixin(Pharmstandard)
5.7%
Arbidol®—#1 Pharma Brand in Russia
Arbidol®
Captured #1 brand position, in part, through active promotion by Pharmstandard sales force
Acquired as part of Masterlek transaction
Original product developed in 1987, active marketing launched in 2000
Source: Pharmexpert (subject to change)Note: Remodelled to reflect current categories
Leading Products in Anti-infective Systemic Use Segment (2006)
Annual Segment Sales Dynamics1,2
29.6 40.362.3 74.6
97.0128.712.2
16.4
44.9
82.9
5.53.1
1.231.49
1.91
3.03
3.89
4.72
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Sale
s (U
S$m
)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
Average price (U
S$)
Other Pharmstandard Average price (US$)
1 Source: Pharmexpert, 2006 preliminary data (subject to change) 2 Based on consumer prices
Source: Company
Roadshow Presentation21
Pentalgin-N (Pharmstandard)
15.8%
Tempalgin (Sopharma)
8.0%
Baralgin M (Sanofi-Aventis)
7.8%
Pentalgin-ICN (Pharmstandard)
7.8%
Sedalgin-Neo (Actavis)
5.9%
Sedal-M (Sopharma)
3.4%Solpadeine (GSK)3.3%
Cardiomagnyl (Nycomed)
2.7%
Alka-Seltzer (Bayer)2.5%
Nurofen Plus (Reckitt Benckiser)
2.2%
Other40.5%
Pentalgin—#1 Pain Reliever (Non-Narcotic)
Source: Company
Pentalgin
Looking to launch new (improved) formulation of Pentalgin in 2007 to capitalise on Pentalgin’s brand recognition
Franchise includes Pentalgin-N® andPentalgin-ICN®
First launched Pentalgin-ICN® in 1999 and followed with launch of Pentalgin-N® in 2002
Steadily gained market share since 2001
Source: Pharmexpert, preliminary data (subject to change)
Top-10 Products in Analgesics Segment (2006)
Annual Segment Sales Dynamics1,2
73.599.6 102.8 100.8
126.6147.8
16.5
23.8 24.1 30.8
54.7
57.6
0.48
0.42
0.320.260.25
0.20
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Sale
s (U
S$m
)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
Average price (U
S$)
Other Pharmstandard Average price (US$)
1 Source: Pharmexpert, 2006 preliminary data (subject to change) 2 Based on consumer prices
Roadshow Presentation22
Heptral (Abbott)19.3%
Essliver Forte (Stada)9.6%
Carsil(Sopharma)
9.1%
Other16.7%
Berlition 300(Berlin-
Ch/Menarini)7.5%
Tycveol(Europa-
Biopharm)4.1%
Essentiale(Sanofi-Aventis)
29.8%
Pharmstandard (Phosphogliv)
4.0%
1 Source: Pharmexpert, 2006 preliminary data (subject to change) 2 Based on consumer prices
Top products in Hepatic Protectors segment (2006)
Phosphogliv® – Successful Rx Product Launch
Phosphogliv®
Launched in 2005 Novel product in-licensed from the Institute
of Biomedical Chemistry Premium priced product based on superior
efficacy Patent protected until 2018 Clinically validated
– 2nd generation combination therapy with anti-viral, anti-inflammatory andimmunomodulating properties
Annual segment sales dynamics1
Source: Company
51.0 67.6 78.0 88.4126.7
187.0
7.8
0.90.6
2.5
1.51.2
3.834.49
5.065.82
6.79
8.71
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Sale
s (U
S$m
)
0
2
4
6
8
10
Average price (U
S$)
Other Pharmstandard Average price (US$)
Source: Pharmexpert, preliminary data (subject to change)
Roadshow Presentation23
PHS Recent Product Approvals and Launches
Source: Pharmexpert, preliminary data (subject to change)Note:1 Russian segment size – retail audit2 Excludes regional tenders
OTC
Rx
OTC
Rx
Roadshow Presentation24
Product PipelineR
x
Near term pipelineProducts in registration
Products in development
ATC2
Products
Immunostimulating agents 2 Psychoanaleptics excluding anti-obesity preparations 1
Pituitary and hypothalamic hormones 1 Urologicals 1 Anti-asthma and COPD products 2 Antithrombotic agents 1
Total 8
OTC
ATC1
Products
Vitamins 8
Analgesics 1
Cough and cold preparations 1
Laxatives 1
Nonsteroidal products for inflammatory skin disorders 1
Total 12
ATC1 Product applications Formulations
Number of registered
trademarks
Vitamins 4 8 4 Mineral supplements 2 3 2
Wound healing agents 1 1 Immunostimulating agents 1 1 1
Analgesics 2 2 1 Cough and cold preparations 1 2 1
Total 11 17 9
ATC1 Product applications Formulations
Number of registered
trademarks Functional gastro-intestinal disorder drugs 1 1 1 Antiemetics and antinauseants 1 2 1 Cholagogues and hepatic protectors 2 4 2 Drugs used in diabetes 3 9 2 Vitamins 2 4 2 Cardiac therapy 2 2 1 Agents acting on the renin-angiotensin system 1 1 1 Hypolipidaemics/anti-atheroma preparations 1 2 Topical corticosteroids 1 2 Pituitary and hypothalamic hormones 1 1 1 Immunostimulating agents 1 1 1 Analgesics 1 1 1 Psycholeptics 1 1 1 Total prescription 18 31 14
Pipeline of OTC and Rx products supports Pharmstandard’s growth story
Roadshow Presentation
4. Financial Overview
Elena Arkhangelskaya, Chief Financial Officer
Roadshow Presentation26
3,3473,902
6,032555
1,199
39
96
96
1,011
1,196
6,722
733
1,331
44
1,196
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2004 2005¹ 2006² 2006 PF³
RU
R m
illio
ns
OTC Prescription Other Medical Equipment
Rapidly Growing Revenue Profile
Source: Company
Note:
1 2005 results include results of Tyumen acquisition (as of 1 January 2005)
2 2006 results include results of Masterlek acquisition (as of 2 August 2006)
3 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
4 Organic growth excludes sales by Masterlek (standalone Masterlek sales in 2006 RUR 2,283m and in 2005 RUR 1,362m, according to IFRS)
Achieved 25% organic growth4 in 2006
1%
14%
72%
13%
13%
69%
18%
1%
14%
71%
14%
1%14%
85%
5,685
8,523
9,374
3,946
Roadshow Presentation27
13.2%
5.9%6.0%
7.8%
0
100
200
300
400
500
600
2004 2005¹ 2006² 2006 PF³
RU
R m
illio
ns
0%
2%
4%
6%
8%
10%
12%
14%
Labour costs Other expenses As % of Sales
433
522499
549
13.5%
14.9% 14.6%
18.8%
0
200
400
600
800
1,000
1,200
1,400
1,600
2004 2005¹ 2006² 2006 PF³
RU
R m
illio
ns
0%
5%
10%
15%
20%
25%
Marketing & advertising Labour costs Other expenses As % of Sales
1,069
532
1,268
1,372
Competitive Cost Structure
General and Administration CostsSelling and Distribution Costs
Source: Company reports
Note:
1 Tyumen consolidated as of 1 January 2005
2 Masterlek consolidated as of 2 August 2006
3 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
Roadshow Presentation28
5,233
4,942
3,178
1,726
43.7%
55.9%
58.0%
55.8%
0
1,000
2,000
3,000
4,000
5,000
6,000
2004 2005¹ 2006² 2006 PF³
RU
R m
illio
ns
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
Gross Profit Gross Margin (%)
Margin Expansion
EBITDAGross Profit
Source: Company reports
Note:
1 Tyumen consolidated as of 1 January 2005
2 Masterlek consolidated as of 2 August 2006
3 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
583
1,720
3,252
3,497
37.3%38.2%
30.3%
14.8%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2004 2005¹ 2006² 2006 PF³
RU
R m
illio
ns
10%
15%
20%
25%
30%
35%
40%
45%
50%
EBITDA EBITDA margin (%)
Roadshow Presentation29
320
2,036
8.1%
17.9%
23.9%
0
500
1,000
1,500
2,000
2,500
2004 2005 2006 2006 PF
RU
R m
illio
ns
0%
5%
10%
15%
20%
25%
30%
Net Profit Net Margin
1,019
2,006
Attractive Profitability Growth
FY Net Profit 2004–2006
Source: Company reports
Note:
1 Tyumen consolidated as of 1 January 2005
2 Masterlek consolidated as of 2 August 2006
3 Pro Forma assumes inclusion of Masterlek as part of Phamstandard as of 1 January 2006
21.4%
1 2 3
Roadshow Presentation30
Logical Consolidator—Masterlek Acquisition Overview
Our business was built through several strategic transactions
Masterlek is the largest pharmaceutical transaction in Russia to date
Focused on anti-viral and anti-fungal therapeutic segments
– 3.5% market share among domestic producers by sales value in 20051
Portfolio of 30 products:
– Leading brands include Arbidol® and Flucostat®
Arbidol’s complementary fit with the Pharmstandard cough & cold franchise
Significant cost savings anticipated through integration
Source: CompanyNote: 1 Pharmexpert
Focused on pursuing attractive acquisition opportunities
Roadshow Presentation31
Consolidated Balance Sheet and Capex
Capital Expenditure
189
889 890
0
200
400
600
800
1,000
2004 2005 2006
Ca
pex
(R
UR
m)
IFRS basis
Debt summary
Facility A: US$91m (maturity Dec-2009/L+150)
Facility B: US$55m (maturity Dec-2011/L+190)
Net debt: US$140m
Roadshow Presentation32
Modern Production Facilities
Source: Company
Note: Capacity in packs. Figures shown are as of 31 December 2006
Tomsk
Tyumen
Moscow
Ufa
Kursk
TomskhimpharmCapacity: 208m
TZMOIUfavitaCapacity: 169m
LeksredstvaCapacity: 645m
St. Petersburg – Facility Closed
Nizhny Novgorod
PhytopharmCapacity: 48m
Pharmstandard HQ
Roadshow Presentation33
0%
10%
20%
30%
40%
50%
60%
Phar
mst
anda
rd
Act
avis
Asp
en
Egis
Ged
eon
Ric
hter
Hik
ma
Krk
a
Stad
a
Ver
opha
rm
Zent
iva
0%
10%
20%
30%
40%
Phar
mst
anda
rd
Act
avis
Asp
en
Egis
Ged
eon
Ric
hter
Hik
ma
Krk
a
Stad
a
Ver
opha
rm
Zent
iva
Core Comparables Benchmarking
Sales growth (2006)
Net profit margin (2006)EBITDA margin (2006)
Gross margin (2006)
PHS has industry leading growth and profitability
0%
20%
40%
60%
80%
Phar
mst
anda
rd
Act
avis
Asp
en
Egis
Ged
eon
Ric
hter
Hik
ma
Krk
a
Stad
a
Ver
opha
rm
Zent
iva
Source: Company reports. Veropharm figures based on equity research as 2006 results not available
0%
10%
20%
30%
Phar
mst
anda
rd
Act
avis
Asp
en
Egis
Ged
eon
Ric
hter
Hik
ma
Krk
a
Stad
a
Ver
opha
rm
Zent
iva
Roadshow Presentation
5. Concluding Remarks
Dr. Igor Krylov, CEO
Roadshow Presentation35
Investment Case
Leading pharmaceutical company in the most rapidly growing pharma market
Attractive industry fundamentals
Portfolio of market leading brands
Proven product development strategy
Experienced sales force
Modern and efficient manufacturing facilities
Operational efficiency
Experienced management team
Roadshow Presentation36
Transaction Highlights
Issuer OJSC “Pharmstandard,” an open joint stock company incorporated under the
laws of the Russian Federation
Securities offered Ordinary shares and GDRs of Pharmstandard 100% secondary shares 15% over-allotment option on GDRs
Selling shareholder Augment Investments Ltd.
Offering structure
Institutional investors Shares and GDRs:
In the US under Rule 144A to Qualified Institutional Buyers (QIBs)Outside US and Russia pursuant to Reg S
SharesRussia
4 GDRs will represent 1 share
Price Range $11.55 – $14.55 per GDR $46.20 – $58.20 per share
Timing Pricing: expected on 3 May Closing: expected on 10 May 2007
Lockup 180 days for the Issuer and Augment Investments Ltd.
Listing locations Ordinary shares listed on MICEX and RTS GDRs listed on LSE
Joint bookrunners and global co-ordinators
Citi and UBS
Roadshow Presentation
Appendix
Roadshow Presentation38
Market Share of Top-10 Companies in theRussian Pharmaceutical Market (% 2006 value)1
Market Share of Domestic Pharmaceutical Producers (% 2006 value)1
Competitive Landscape – Total Market
Source: Pharmexpert, preliminary data (subject to change)Notes:1 Based on sales in wholesale prices2 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
#4 pharma company in Russia overall#1 domestic pharma company – more than 3
times the size of the #2 domestic player
Other68.7%
Pharmstandard3.1%
Roche2.8%
Gedeon Richter2.6%
Pfizer2.6%
Nycomed2.3%
Servier2.9%
Berlin-Ch/Menarini3.0%
Janssen-Cilag3.2%
Novartis3.8%
Sanofi-Aventis5.2%
Other53.3%
Farm-Centr3.8%
Verofarm Zao3.2%Akrikhin
(Polpharma)3.0%
Biotek2.5%
Materia Medika3.5%
Microgene Npo3.5%
Otechestvennie Lekarstva
4.6%
Nizhpharm (Stada)5.0%
Pharmstandard15.3%
Moshimfarmpreparaty2.4%
22
Roadshow Presentation39
Growth Analysis Across Market Segments1
Source: Pharmexpert, 2006 preliminary data (subject to change)
Note:
1 Based on sales in wholesale prices
2 Includes Masterlek with respect to 2006
Dom
esti
c c
om
pan
ies
Inte
rnati
on
al com
pan
ies
Pharmstandard is growing in-line with its peersin the commercial segment
Roadshow Presentation40
2003
4Q03:
Acquisition of ICN’s business in Russia (five factories, distribution centres and pharmacy chain)
Q104:
New management team brought in with experience in international and domestic pharma companies
2Q04:
Close Polypharm (pharma production facility)
3Q05:
Sale of Marbiopharm (pharma production facility)
Jan 05:
Acquisition of TZMOI (Tyumen)—manufacturer of medical equipment
3Q06:
Acquisition of Masterlek (3.5% share of domestic Russian Pharma market by sales value)
1H05:
Open centralised warehouse for pharmaceutical products in Moscow
Pharmstandard Key Development Milestones
4Q06:
New production of spray, tablets and capsules; central manufacture laboratory and renovation of production facilities
Total investment since 2004: approximately RUR 600m
Leksredstva plant (Kursk)
2H06:
Termination of production in Oktyabr plant in St Petersburg, production transferred to other existing sites
1H06:
New production of solutions, production of vitamins and insulin
Total investment since 2004: approximately RUR 730m
2007:
New production workshops for Rastan® and Phosphogliv®
Ufavita plant (Ufa)
May 2006:
Legal name changed from Biovit LLC to OJSC Pharmstandard
End 2005:
Creation of holding company/ legal restructuring finalised
Pre 2003:
Group consisted of two manu-facturing facilities (Ufa and Phytopharm) operating under Biovit LLC
2004
2005
2006
2007
Source: Company
Note: OJSC – Open Joint Stock Company, LLC – Limited Liability Company
Roadshow Presentation41
Medical Equipment (TZMOI)
Sterilizers(45% of 2006 sales)2
Medical Equipment(2006 sales RUR 1,196m)1,
14% of group sales in 2006
Aqua distillers(8% of 2006 sales)2
Disposables/Other(47% of 2006 sales)2
Market size approximately RUR700m
Market leader with estimated56% market share by sales value
Growth driven by the Priority National Health Project encouraging investment in new equipment
Market size approximately RUR190m
TZMOI market share estimated at 24%
Market size of syringes approximately RUR3,000m
TZMOI market share about 20%
Portfolio includes syringes, urology bags and catheters
Source: Company estimates
Note:
1 Represents Pro Forma figures which assumes inclusion of Masterlek as part of Phamstandard as of 1 January 2006
2 Based on divisional sales
Roadshow Presentation42
J01-Systemic Antibacterial0.9%
R02-Throat Preparations1.0%
R05-Cough and Cold Preparations19.9%
V03-All Other Therapeutic Products
1.2%
C01-Cardiac Therapy2.3%
N06-Psychoanaleptics Excluding Anti-Obesity Preparations
1.5%
A02-Antacids, Antiflatulents and Anti-Ulcerants
0.7%
C09-Agents Acting on the Renin-Angiotensin System
0.7%
L03-Immunostimulating Agents2.7%
N05-Psycholeptics3.5%
A05-Cholagogues and Hepatic Protectors
3.6%
J02-Systemic Agents for Fungal Infections
5.7%A11-Vitamins
11.9%
N02-Analgesics17.4%
J05-Antivirals for Systemic Use
18.5%
Other Sales8.3%
Pro Forma Pharma Portfolio by Therapeutic Segment
Pro Forma sales = RUR 8,053 million (2006)
OTC = 83% / Rx = 17%
Pro Forma1 sales split as at 2006
Source: Company
Note:
1 Pro Forma assumes inclusion of Masterlek as part of Pharmstandard as of 1 January 2006
Roadshow Presentation43
Sales Team
All sales reps have medical education/work experience
Covers 75% of the Russian pharma market
Incentivised sales force—up to 33% bonus of annual salary
In 2007 looking to:
– Increase “feet on the street” to over 350 sales people
– Further specialise sales force by therapeutic area
Experienced sales force
Real ti
me d
ata
- E
TM
S
HQ Sales and marketing
National manager1 manager
Regional manager8 managers
OTC sales force(117 medical reps)
Rx sales force(147 medical reps)
National manager2 managers
Regional manager12 managers
OTCRx
(incl. ENDO-Team)
Real tim
e d
ata
- ETM
S
Note: As of 31 December 2006
Source: Company
Roadshow Presentation44
Breakdown of Sales for 2006 by Distributor
Top 5 distributors accounted for 51% of commercial pharmaceutical product sales in 2006
Typical payment terms for distributors:
– Regional and export distributors: 30–60 days
– National distributors: 60–90 days
– FRP program: 180 days
Source: Company
Note: Manufacturers’ prices
Top 5 Distributors – 2006
Distributor % of sales
Genesis 17
Protek 13
SIA International 11
Katren 5
Infarma Pro 5
Total 51
Roadshow Presentation45
Production Facilities – Summary Overview
Source: Company. Note: Total capacity for pharmaceutical production in 2006 excludes capacity from Oktyabr factory (St. Petersburg) which closed in Q3 2006
Total capacity calculations assume 8-hour shifts and 7 day working week
Factory Approximate size (sq. m.) Formulation Shifts
Capacity 000’s packs Dec 2005
Capacity 000’s packs Dec 2006
14,900 (lease) Syrops & liquid forms 3 52,644 52,644 Tablets 3 361,077 564,406 Sprays 2 10,368 Powders 2 1,260
LEKSREDSTVA (KURSK)
Capsules 3 16,200
5,850 (lease) Ampules 2 7,624 8,595 Frozen-dried preparation 3 2,640 2,640 Syrops & liquid forms 1 6,360 6,360 Tablets 2 63,012 109,973 Vitamin bars (ferrohematogen) 2 14,000 22,680 Insulin 2 14,400
UFAVITA (UFA)
Saline infusin 2 4,500
1,200 (lease) Ointments 2 11,100 1,200 Powders 1 10,280 10,280 Syrops & liquid forms 2 29,187 24,000
PHYTOFARM (N.NOVGOROD)
Tablets 2 12,850 12,850
29,000 (own) Syrops & liquid forms 1 1,200 1,200 TOMSKHIMPHARM (TOMSK) Tablets 3 206,856 206,856
Closed in 2006 Capsules 2 1,384 Sprays 1 4,582 Tablets 2 72,797
OKTYABR (S.PETERSBURG)
857,593 1,070,412
Syringes 2 295 295 Needles 2 624 624 Sterilizing machines < 100 L 2 24,250 24,250 Sterilizing machines > 100 L 2 319 319
Aquadistilling machines 2 7,320 7,320
TZMOI (Tyumen)
Roadshow Presentation46
Complivit—#1 Vitamin Franchise
Top-10 Products in Vitamin Segment (2006)
Complivit and its sub-brands
Looking to launch 2 new products under this brand umbrella by the end of 2007
Brand umbrella includes Complivit®, Complivit-Active® and Complivit “mama”®
First launched Complivit in 1986 and followed on with Complivit-Active® and Complivit “mama”® by the end of 2004
Source: Pharmexpert, preliminary data (subject to change)
Annual Segment Sales Dynamics1,2
63.1 81.2 91.0 102.5136.4 148.1
16.718.5
19.3
26.827.6
14.7
3.414.04
4.434.98
5.395.88
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Sale
s (U
S$m
)
0
1
2
3
4
5
6
7
Average price (U
S$)
Other Pharmstandard Average price (US$)
Source: Company
1 Source: Pharmexpert, 2006 preliminary data (subject to change) 2 Based on consumer prices
Vitrum Vision (Unipharm)2.4%
Complivit (Pharmstandard)11.5%
Vitrum (Unipharm)6.6%
Supradyn (Bayer)4.8%
Centrum (Wyeth-Whitehall)4.6%
Merz Spezial Dragees (Merz)3.8%
Elevit Pronatal (Bayer)3.8%
Biovital Gel for Children (Bayer)3.4%
Vitrum Beauty (Unipharm)2.9%
Vitrum Prenatal Forte (Unipharm)3.2%
Other53.0%
Roadshow Presentation47
Terpincod®/Codelac®—#1 Cough and Cold Franchise
Terpincod®
First launched Terpincod® in 1996
Non-promoted brand with high margins
Codelac®
Includes Codelac® tablets and Codelac Phyto® syrup
First launched Codelac® tablets in 1996 and followed with Codelac Phyto® syrup in 2004
Source: Pharmexpert, preliminary data (subject to change)Note: Based on consumer prices
Source: Company
Top-10 Products of Antitussive & Expectorants Segment (2006)
Annual Segment Sales Dynamics1,2
63.987.8
114.0 121.2156.1
176.213.6
26.235.2
40.1
46.3
8.4
1.22
0.46
1.02
0.830.67
0.52
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006
Sale
s (U
S$m
)
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
Average price (U
S$)
Other Pharmstandard Average price (US$)
1 Source: Pharmexpert, 2006 preliminary data (subject to change) 2 Based on consumer prices
Ascoril Expectorant (Glenmark)
3.0% Hedelix Syrup Cough Control (Krewel Meuselbach)
3.2%
ACC (Sandoz)3.3%
Lasolvan (Boehringer Ingelheim)
10.6%
Ambrobene (Ratiopharm)
6.5%
Doktor Mom (Unique
Pharmaceutical)5.3%
Pulmozyme (Roche)4.5%
Codelac (Pharmstandard)
5.3%
Bromhexine 8 Berline-Chemie
(Berlin-Ch/Menarini)2.9%
Terpincod (Pharmstandard)
14.3%
Other41.0%
Roadshow Presentation48
In-depth analysis of potential cough/cold drug development opportunities
Marketing/medical review of compounds/possible compositions
Maxicold® Case Study
May 2004Stage 1
Marketing request
Jun-Aug 2004Stage 2
Internal expertise for production and technology,
availability of active ingredients
Aug 2004Stage 3
Project management, approval by GM
Sep-Dec 2004Stage 4
Development of production and Regulatory filing
Jan 2005-Jul 2005Stage 5
Milestones of Regulatory stage
Review of production capability and capacity
Agreed PHS-Leksredstva was to be production location
Production team put together (technologist, registration mgr., procurement mgr.), project approved by GM
Experimental / production equipment tests
Production development
Pre-clinical studies
Development of regulatory file
1st submission to Ministry of Health: 28-Jan-05
2nd submission (Pharmaceutical and Pharmacological Committees): 10-Mar-05
Clinical review completed: 19-Jul-05
Labelling approved: 07-Dec-05
Registration certification received: 26-Feb-06
License for production received: 27-Jul-06
Source: Company
Roadshow Presentation49
Source: Company
Passifit® Case Study
Production started in July 2006
First commercial sales commenced in September 2006
– Line extensions include new formulations e.g. tabs and pediatric
Actively promoted in January 2007
– Specialist doctors (e.g. gynecologists), general practitioners and pharmacists
Priced at a discount to key competitor product Novo-Passit
Growth expected to be achieved through increasing market share
Roadshow Presentation50
Complivit Calcium D3® Case Study
October 2004Stage 1
Nov-Dec 2004
Stage 2
January 2005Stage 3
Jan-Feb 2005Stage 4
March 2005Stage 5
January 2007Stage 6
April 2007Stage 7
Development of production and regulatory filing
Submitted to Ministry of Health
Registration approved
Production
Marketing request
Internal expertise for production and technology, availability of active ingredients Project management, approval by GM
Roadshow Presentation51