Solvay Sa · EURONEXT:SOLB
Solvay Sa — Investor Presentation (October 2005)
123 slides from Solvay Sa's investor presentation, Oct 5, 2005
Slide 1: Solvay group: focus on Growth, Competitiveness and Innovation
Presentation – October 2005 Solvay group : focus on Growth, Competitiveness and Innovation
Slide 2: Table of contents
Table of contents Mission, Vision and Values Solvay today : ÎA hybrid group with 3 sectors ÎOur transformation : dynamic management of portfolio ÎOur strategy for profitable and sustainable growth Î2005 trends Sector review Chemicals Sector Unlocking resources to support our growth Plastics Se
Slide 3: Mission, Vision and Values
White text on dark blue background Text: Max 26., min 20. Mission, Vision and Values Text anchor point: middle Solvay group presentation – October 5, 2005 - 3 © 2005, SOLVAY S.A. N.V.
Slide 4: Our Mission
Our Mission Building on our scientific,technical and commercial expertise,we responsibly provide innovative products and services related to chemistry and human health to create ever-increasing value to our customers, shareholders and employees Solvay group presentation – October 5, 2005 - 4 © 2005,
Slide 5: Our Vision
Our Vision Solvay is an independent and ethical global industrial group with a balanced portfolio of sustainable profitable and growing businesses under careful environmental management : Î Amongst the world leaders in selected markets and products either alone or with sound complementary business p
Slide 6: Our Values
Our Values We firmly believe in : Î Customer care Î Ethical behavior Î Respect for people Î Empowerment Î Teamwork Solvay group presentation – October 5, 2005 - 6 © 2005, SOLVAY S.A. N.V.
Slide 7: Solvay today: focus on sustainable and profitable growth
White text on dark blue background Solvay today : Text: Max 26., min 20. focus on sustainable and profitable growth Text anchor point: middle Solvay group presentation – October 5, 2005 - 7 © 2005, SOLVAY S.A. N.V.
Slide 8: Solvay Today
SOLVAY TODAY A HYBRID group with 3 sectors : Chemicals, Plastics and Pharmaceuticals Major TRANSFORMATIONAL portfolio reshuffling over the last 10 years resulting in LOWER CYCLICALITY Strategy for GROWTH A clear focus on SUSTAINABLE and PROFITABLE GROWTH in selected areas of pharmaceuticals, c
Slide 9: Solvay history: 142 years of development
Solvay Today Solvay history 142 years of development Total sales 2004 : EUR 7.9 Bn major Limestone Salt Fluor Kali Chemie pharmaceutical (1952) acquisitions + Ausimont in 2002 DUPHAR (chemicals/polymers) 1980 Soda Ash Electrolysis (1866) (1898) REID ROWELL (USA) 1986 + BP Specialty polymers (2001) U
Slide 10: An international presence
Solvay Today An international presence Europe 62% EU25 : 57%, rest of Europe : 5% The Americas 29% Asia-Pacific 7% (USA : 19%) Industrial/Commercial Presence Export In % of 2004 sales (EUR 7,877 M) Solvay group presentation – October 5, 2005 - 10 © 2005, SOLVAY S.A. N.V.
Slide 11: Serving a diversified customer base
Solvay Today Serving a diversified customer base (in % of 2004 sales) 1. Human health 24% 2. Automotive industry 13% 3. Building and architecture 12% 4. Chemical industry 11% 5. Glass industry 7% 6. Consumer goods 6% 7. Electricity and electronics 4% 8. Packaging 4% 9. Water and the environment 3% 1
Slide 12: A hybrid group with 3 sectors (1)
Solvay Today A HYBRID GROUP with 3 sectors (1) Pharmaceuticals Chemicals Plastics In % of Sales1 In % of REBIT2 31% 22% 29% 22% 47% 49% 2004 : before the acquisition of Fournier Pharma (sales : EUR 593 M, REBIT : EUR 138 M) 1 Total 2004 Sales = EUR 7,877 M, including also “discontinuing operations”
Slide 13: A hybrid group with 3 sectors (2)
Solvay Today A HYBRID GROUP with 3 sectors (2) REBIT/Sales 14% Chemicals Plastics 12% Chemicals Group 10% Pharmaceuticals 8% Group Pharmaceuticals 6% Plastics 4% 2% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 H1/05 2004 : before the acquisition of Fournier Pharma (sales : EUR 593 M, REBIT : EU
Slide 14: Our Transformation
OUR TRANSFORMATION For the past 10 years, our strategy has been to: Strengthen our leadership in our key strategic activities by focusing on innovation and continuously improve our competitiveness Accelerate the development of our pharmaceutical and specialty activities Exit areas in which we
Slide 15: Dynamic management of portfolio over the last 10 years (1)
Our Transformation Dynamic management of portfolio of activities over the last 10 years (1) Solvay’s business portoflio underwent more than 15 major moves worth about €6 bn in sales over the past 10 years 15 deals totaling about € 6 bn in value Acquisitions, of which 3 deals exceeding € 1 bn each
Slide 16: Major strategic moves
Our Transformation Major strategic moves 2002 2005 2001 Acquisition of Acquisition Deal with BP: Ausimont Fournier Pharma 2000 Sale of PP Inergy JV in PE 2001 2004 1999 Automotive Acquisition of Strategic Strategic alliances Solvin, JV with Systems, JV Specialty partnerships with Wyeth & BMS; BASF i
Slide 17: Dynamic management of portfolio over the last 10 years (2)
Our Transformation Dynamic management of portfolio over the last 10 years (2) TOP TEN BUSINESSES In % of Total Group’s sales * 2004, incl. Fournier Pharma and excluding Industrial Foils (divestment announced in July 2005) Acquisition 1995 Fournier Pharma Proforma 2004* Ausimont 1. Pharmaceuticals (2
Slide 18: Presence in the industry
Our Transformation Presence in the industry 1980 - 1989 1990 - 1999 Today Petro- chemicals Essentials Specialties Pharmaceuticals Solvay group presentation – October 5, 2005 - 18 © 2005, SOLVAY S.A. N.V.
Slide 19: Increased proportion of specialties (1)
Our Transformation Increased proportion of specialties (1) The proportion of sales from Specialties (incl. pharmaceuticals) has increased from 29% in 1995 to 56% in 2004 (excl. Fournier Pharma) 1995 – 2004 Sales M EUR 100% 90% Essentials 80% 44% 70% 60% 71% Pharmaceuticals 50% 22% 40% 30% 13% Specia
Slide 20: Increased proportion of specialties (2)
Our Transformation Increased proportion of specialties (2) REBIT/sales margins increased from 9% in 1995 to 10.4% in 2004 (excl. Fournier Pharma), and 10.6% in H1/05 1995 – 2004 REBIT/Sales GROUP 10.4% ROI : 15% GROUP 14% 9% 13.5% 12% ROI : 12% 10% 10.1% 9.8% 8% 9.7% 9.1% 6% 4% 4.9% 2% 0% 1995 2004
Slide 21: Leadership in our markets
Our Transformation Leadership in our markets SOLVAY is among the leaders for about 85% of its sales (75% in 2000) Market position in 2004 Europe US World Hormone Therapies • Female 3 2 2 Pharmaceuticals • Male - 1 1 Digestives/Enzymes 1 3 1 Antispasmodics/IBS 1 - 2 Vertigo (Ménière’s disease) 1 1 1
Slide 22: Higher margin resulting from improved portfolio
Our Transformation Higher margin resulting from improved portfolio Our transformation strategy leads to higher margins over time 96-01 02-04 04pf Average REBIT/sales 7.7% 9.9% 10,9% 1000 12% 900 11% 800 10% 700 9% 600 8% 500 7% 400 6% 300 5% 200 4% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2
Slide 23: Clear Strategy and Objectives
Clear Strategy and Objectives STRATEGY Our priority is sustainable and profitable growth in selected areas of pharmaceuticals, chemicals and plastics Innovation is our cornerstone to generate growth and to ensure competitiveness. An increased presence in Asia, the Americas and Eastern Europe w
Slide 24: Recent growth projects
Our Strategy Recent growth projects Pharmaceuticals : building the next Solvay Pharmaceuticals Î Acquisition of Fournier Pharma Î Partnerships with highly-skilled partners to accelerate R&D Î Business expansion (acquisition of Neopharma (Parkinson) and Italmex (Mexico)) Î Launch of new products (e
Slide 25: Innovation: most recent initiatives
Our Strategy Innovation : most recent initiatives SBU’s : Î Yearly presentation of their innovation objectives and initiatives with performance indicators New Business Development Î New Business Board with participation of external personalities Î Selected platforms : Energy (e.g. fuel cells wit
Slide 26: Competitiveness: most recent initiatives
Our Strategy Competitiveness : most recent initiatives Pharmaceuticals : building the next Solvay Pharmaceuticals Î Integrate Solvay Pharmaceuticals and Fournier Pharma Î Transform Solvay Pharmaceuticals to face future challenges of the industry Chemicals : unlocking resources to support growth
Slide 27: Long term financial objectives
Our Strategy Long term financial objectives Average Annual Objective 2002 2003 2004 95-04 Growth in Group net profit 10% +23% - 13% + 26% + 6.4 %/y Return on equity 15% 13.9% 12.3% 14.6% 12.1% Not to exceed Net debt to equity durably 45% 37% 32% 21% 28% Increasing our dividend whenever possible, and
Slide 28: Investments for the future
Our Strategy Investments for the future • Major strategic initiatives Æ2001 : Ausimont and BP high performance polymers Æ2005 : Fournier Pharma (EUR 1.2 Bn) • Increased R&D efforts in Pharma : In M EUR 2004 : + 4%, EUR 294 M (including EUR 38 M provision) 2005 : + 20%, EUR 353 M (partners’ contribut
Slide 29: Net debt to equity: financial strength
Our Strategy Net debt to equity : financial strength Objective: not to exceed durably 45% Single A rating maintained by S&P and Moody’s after the acquisition of Fournier Pharma M EUR Equity Net debt Net debt to equity 4000 55% 3500 50% 3000 45% 2500 40% 2000 35% 1500 30% 1000 25% 500 20% 0 15% 1995
Slide 30: Strong growth in H1/05
2005 trends Strong growth in H1/05 Sales : EUR 4 Bn, +16% (Q2 : +17%) Î Plastics +18%, Chemicals +16%, Pharma +13% REBIT : EUR 428 M, +33% (Q2 : +43%) Î Strong growth : Chemicals (+106%); Plastics (+39%) Î Further strategic developments in Pharma : acquisition of Fournier Pharma (consolidation f
Slide 31: H1/05 operational margin up to 11%
2005 trends H1/05 operational margin up to 11% 11% 11% 10% 9% 9% 8% 3,477 +16% 4,039 Sales 323 +33% 428 REBIT 7% 6% H1/04 H1/05 Solvay group presentation – October 5, 2005 - 31 © 2005, SOLVAY S.A. N.V.
Slide 32: 2005: implementation of the strategy for sustainable and profitable growth
2005 trends 2005 : implementation of the strategy for sustainable and profitable growth Acquisition of Fournier Pharma Sale of Solvay’s interests in the HDPE joint ventures to BP Significant capacity increases in Specialty Polymers to meet growing demand Further restructuring in the Vinyls i
Slide 33: Our responses to current challenges
2005 trends Our responses to current challenges Our responses Higher energy costs 13 cogeneration plants Higher raw material costs Integration & price increases Low USD Hedging (transactional & conversion) Low interest rates Interest rates and maturity management Solvay group presentation –
Slide 34: Sector trends
2005 trends Sector trends Pharmaceuticals : full year REBIT for Pharma in 2005 in line with last year (on top, comes Fournier Pharma, consolidated as from August 1, 2005) Chemicals pursuing positive trend : significant improvement in Chemicals activities thanks to focused efforts and market reco
Slide 35: Trends for the Group in 2005
2005 trends Trends for the Group in 2005 “Overall, the Group’s operating profits for the year 2005 should be up from 2004’s very good performance. In addition, they will benefit from the profits of Fournier Pharma from August on. Net profit will again set a record” Press release of July 29, 2005 Sol
Slide 36: Solvay shares
Solvay shares Listed in EURONEXT BRUSSELS Æincluded in Euronext 100 Available in the US in the form of sponsored AMERICAN DEPOSITARY RECEIPTS traded over- the-counter Solvay group presentation – October 5, 2005 - 36 © 2005, SOLVAY S.A. N.V.
Slide 37: Shareholding structure December 31, 2004
Shareholding structure December 31, 2004 73 % free float, Solvac 27% stable shareholder Market capitalization : about EUR 7.5 Bn (March 1, 2005) Individual Investors 49% Institutional Investors 51% * Solvac : 27% * Others : 24% Solvay group presentation – October 5, 2005 - 37 © 2005, SOLVAY S.A.
Slide 38: Sector review
White text on dark blue background Text: Max 26., min 20. Sector review Text anchor point: middle Solvay group presentation – October 5, 2005 - 38 © 2005, SOLVAY S.A. N.V.
Slide 39: Unlocking resources to support our growth
Unlocking resources to support our growth
Slide 40: Positioning
Positioning Key Figures Priorities M EUR 2002 2003 2004 Sales 2636 2386 2433 Leadership and competitiveness in REBIT 259 182 180 Essentials Depreciation 188 172 174 Accelerated growth in Specialties and Capex 239 182 165 entry in new activities (organic chemistry) Cash from op. activities 334 38
Slide 41: Major markets
Major markets Sodium carbonate and sodium bicarbonate : In % of 2004 sales = EUR 2,433 M Mainly used in the glass industry, chemicals industry, detergents, paper industry, environmental technologies, pharmaceuticals,… Hydrogen peroxide : Mainly used in the paper industry, chemicals industry, deterge
Slide 42: Key priorities
Key priorities Leadership and competitiveness in Essentials Soda Ash, Caustic Soda, Hydrogen Peroxide, Persalts, … Î 72% of Chemicals sales Î Volume & Price volatility, cyclicality (e.g. Caustic Soda) Î Focus on competitiveness and cost strucutre Upstream integration, with resulting relative ind
Slide 43: Strategy: unlocking resources to support our growth
Strategy : unlocking resources to support our growth COMPETITIVENESS ongoing restructuring measures to reduce costs e.g. shut down of non competitive activities (soda ash in Zurzach & Ebensee, detergents in Torrelavega), divestments (salt), … cogeneration plants GROWTH PROJECTS to get ready fo
Slide 44: Molecular solutions: acquisition of Girindus
Molecular solutions : acquisition of Girindus Sucessful friendly public offer (74%) SOLVAY’s offer values GIRINDUS at around EUR 45 million (100%) To build an added value business position in multi-step organic chemistry, based on proprietary products or technologies (outside the area of APIs
Slide 45: Reinforcement of chemicals activities in Asia
Reinforcement of chemicals activities in Asia new fluor production facility in Korea to serve the fast growing markets Î 1st Asian plant of Solvay Fluor (fluorine (F2), sulfur hexafluoride (SF6), iodine pentafluoride (IF5) and NOCOLOK®) Î to serve Southeast Asia – the world’s fastest growing marke
Slide 46: Financials
Financials REBIT (M EUR) SALES evolution H1/05 vs H1/05 vs 2004 H1/04 H1/05 H1/04 H1/04 % CHEMICALS 2,433 1,185 1,373 +16% +106% Minerals cluster [1] 1,105 543 601 +11% Ò Electrochemistry and Fluor 892 426 554 +30% chemicals cluster Ò Oxygen cluster [2] 436 215 219 +2% Ò [1] including SBUs Soda ash
Slide 47: H1/05 REBIT
H1/05 REBIT ¾ EUR 163 M, +106% (Q2 : EUR 82 M, +82%) Further strengthening of market, tight cost control and price increases Î Operational margin increase in the context of high energy costs Growth in Soda ash Î improving worldwide market conditions Î measures to restore margins in 2005 (restruc
Slide 48: Soda ash
Soda ash Europe : Despite a strong EUR, competitive position maintained vs US producers disadvantaged by logistics and increased cost of energy Further restructurings of existing capacities (Ebensee 2005) and a full operation network across Europe Energy issue : major competitive advantages of
Slide 49: 1st worldwide soda ash player
1st worldwide soda ash player 01/01/2005 8 7.4 Solvay process 6 Trona Mio metric tons/year 4.4 4 2.8 2.5 2.1 2 1.8 1.6 1.3 1.3 1.1 1.1 0 IMC CIECH Chemical Chemical Sterlitamak FMC Solvay Sisecam Brunner Shandong Tangshan Oriental General Hai Hua Mond alkali Solvay group presentation – October 5, 20
Slide 50: Electrochemistry: caustic soda prices in Europe
Electrochemistry Caustic soda prices in Europe Source : HARRIMAN NWE Liquid NaOH Average Market Price EUR/ton 350 2004 2005 300 250 significant recovery of caustic soda prices 200 since June 2004 150 100 50 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Solvay group presentation – October 5, 2005
Slide 51: Electrochemistry
Electrochemistry Converting from mercury cells to membranes only the competitive and integrated plant by improving significantly the fixed cost structure Î Going on with the gradual “conversion” of our competitive production units : all the production units using mercury cells will be amortized wh
Slide 52: Caustic soda producers
Caustic soda producers 01/01/2005 Mio tons 7.0 7.3 6.0 5.0 Nafta 4.0 4.2 3.0 Western Europe 2.0 2.3 2.2 1.9 Asia Pacific 1.0 1.4 1.4 1.2 1.1 1.0 0.0 Rest of the world Asahi Glass O lin Nobel PPG Form osa Chem ical Bayer Solvay Arkem a Plastics Akzo Oxychem Dow Solvay group presentation – October 5,
Slide 53: Fluor Chemicals
Fluor Chemicals N°2 in the world, N°1 in Europe Well diversified portfolio Strong R&D + Technical service Î HFC (cell gas for insulation foam, refrigeration, pharma aerosols) Î Salts and solvents for Lithium batteries Î Organic intermediates for pharma- and agro-applications Î Diversified inor
Slide 54: Hydrogen peroxide
Hydrogen peroxide Operational excellence : superior operational productivity by continuing to lower operational costs, investment costs and optimising rates of utilization Leadership : Î low cost technology, global presence and an assertive market approach Î geographic expansion, e.g. in Asia
Slide 55: 1st worldwide producer of hydrogen peroxide
1st worldwide producer of hydrogen peroxide - 01/01/2005 000 tons 700 630 600 510 500 400 330 290 300 250 250 200 120 100 70 40 0 Mitsubishi H ansol C hemical A rkema S o lvay K emira C hem icals D egussa FMC EKA DC gas Solvay group presentation – October 5, 2005 - 55 © 2005, SOLVAY S.A. N.V.
Slide 56: Enrichment of portfolio and regrouping of our forces
Enrichment of portfolio and regrouping of our forces
Slide 57: Positioning
Positioning Key Figures Priorities M EUR 2002 2003 2004 Major portfolio upgrading Sales 3416 3215 3632 Acquisition of Ausimont and BP specialty REBIT 327 225 397 polymers Depreciation 207 176 190 Capex Vinyls : Creation of Solvin in Europe with 295 187 234 Cash from op. subsequent restructuring;
Slide 58: Major markets
Major markets in % of 2004 sales = EUR 3,632 M Specialty Polymers : High value added specialties mainly used in electronics, telecommunications, automotive industry, packaging of food and pharmaceuticals, building and architecture, ... Vinyls (mainly PVC) : Mainly used in construction and civil engi
Slide 59: Major portfolio upgrading (1)
Major portfolio upgrading (1) Sales REBIT/sales 5000 14% 4000 12% 10% 3000 8% 2000 6% 4% 1000 2% 0 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 H1/05 Sales, in % of Group’s sales 35% 30% 25% Specialty Polymers 20% 15% 10% PVC,HDPE*, PP* 5% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Slide 60: Major portfolio upgrading (2)
Major portfolio upgrading (2) Focus areas Actions Results Increased presence Assets swap with BP Leadership in high performance in Specialty Polymers Acquisition of engineering polymers Ausimont Leading position in high value added fluorinated materials Exit of non-integrated Creative
Slide 61: Solvay's plastics portfolio after upgrading
Solvay’s plastics portfolio after upgrading ULTRA-HIGH PERFORMANCE PFPE PAI POLYMERS Fluoro PEEK FLUOROMATERIALS fluids HIGH PPSU LCP PERFORMANCE PES PPS PSO PPA POLYMERS PAMXD6 Elastomers PVDF FKM/FFKM ECTFE PTFE MFA, PFA BARRIER RESINS PVDC Dacarto - Benvic (J-V CPDS PVC) PERFORMANCE COMPOUNDS (PV
Slide 62: Financials
Financials REBIT SALES (M EUR) evolution H1/05 vs H1/05 vs 2004 H1/04 H1/05 H1/04 H1/04 % PLASTICS [1] 3,632 1,484 1,748 +18% +39% Specialty polymers and Inergy Automotive Systems 1,294 644 682 +6% ~ cluster Vinyls cluster [2] 2,338 839 1,066 +27% Ò [1] Plastics and Processing were regrouped on June
Slide 63: H1/05 Plastics REBIT
H1/05 Plastics REBIT ¾ EUR 218 M, +39% (Q2 : EUR 111 M, +18%) Specialty Polymers, major contributor to the results : Î Very good resilience to market conditions Î Strong demand in polysulfones and in fluorinated polymers Î Slowdown in sales of fluorinated fluids and pressure on prices of elastomer
Slide 64: Strategy: Enrichment of portfolio and regrouping of forces
Strategy : Enrichment of portfolio and regrouping of forces Regrouping of Plastics and Processing sectors from June 1, 2004 Specialties : ÎSpecialty polymers, major contributors to Group results ÎInergy Automotive Systems growing and high added value markets Vinyls chain cluster : Îstrong leader
Slide 65: Vinyls: Strategic focus
Vinyls : Strategic focus To leverage our global position (Europe, Mercosur, Asia Pacific) with strong leadership To consolidate our competitiveness Îpermanent cost improvement, restructuring and scale-up process Îreduced number of world scale integrated plants well located within its markets and
Slide 66: Average plant size (kton/yr)
Vinyls Evolution of the average S-PVC plant size in Western Europe 300 250 Average Plant size (kton/yr) 200 150 End 2005 : closure of VCM and 100 PVC operations in Ludwigshafen with debottleneckings in other SolVin production sites 50 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Ave
Slide 67: A major player on a global PVC market
Vinyls A MAJOR PLAYER ON A GLOBAL PVC MARKET (capacities on 01/01/2005) Capacities in M t/year 3.3 3.0 3.0 Nafta 2.5 2.0 2.1 2.0 Western Europe 1.5 1.4 Asia- 1.2 1.1 1.0 Pacific 1.0 0.7 0.6 Rest of the 0.5 world 0.0 Shin-Etsu Formosa Oxyvinyls Solvay Ineos Georgia Atofina LG Group Advent Tayio Plast
Slide 68: Specialty Polymers: Solvay's portfolio
Specialty Polymers : Solvay’s portfolio High Performance Fluoromaterials Barrier Polymers Engineering Polymers • R&D intensive Business • Highly integrated plants Characteristics • Close cooperation with customers • Extensive knowledge of processes and markets • Fluoropolymers • Polysulfones • PVDC
Slide 69: Critical Success Factors
Specialty Polymers Critical Success Factors Sophisticated polymer chemistry and process technology Sustained commitment to R&D. Extensive Intellectual property Operational / Manufacturing excellence Worldwide presence and extensive end user industry knowledge Strong marketing and sales ski
Slide 70: Innovation is the key growth driver
Specialty Polymers Solvay’s Business : Innovation is the key growth driver ••% %of ofsales salesof ofnew newproducts products (1):: (1) +29% +29% ••Patent Patentapplications: applications: 54 54 ••Development Developmentpool poolat atthe theend endof of2004: 2004: ••Eng. Eng.Polym. Polym. ~~1230Acti
Slide 71: Historical Growth & Profitability
Specialty Polymers Solvay Business : Historical Growth & Profitability Historic average sales volume growth rate: ~8%/y Sustained REBITDA/Sales: 25% – 30% Stable contribution margin despite business pressures Solvay group presentation – October 5, 2005 - 71 © 2005, SOLVAY S.A. N.V.
Slide 72: Current Strategy: Focus on Growth
Specialty Polymers Current Strategy : Focus on Growth Upgrade the existing product portfolio and expanding production capacity: ÎIncreased production capacity fluorinated polymers in Italy (“fine powder” ALGOFLON ® and HYFLON ® PFA/MFA) ÎNew world-scale (PES/PPSU) RADEL® production unit in the US
Slide 73: Growth Potential from Innovation: an Example
Specialty Polymers Growth Potential from Innovation : an Example New TRANSPARENT high-temperature sulfone polymer SUPRADEL™ HTS Technological breakthrough : highest heat resistance (temperature of 265°C) of any transparent amorphous thermoplastic polymer Other performance features traditionally
Slide 74: End-Use Markets
Specialty Polymers Solvay’s Business : End-Use Markets Breakdown of 2004 Specialty Polymer sales by end use markets Electricity and Automotive electronics industry 18% 25% Construction and architecture 12% Other industries 10% Consumer goods 10% Water and environment 2% Chemical Medical 8% industry
Slide 75: Building the next Solvay Pharmaceuticals
Building the next Solvay Pharmaceuticals
Slide 76: Solvay Pharmaceuticals: what we are today?
Solvay Pharmaceuticals : what we are today ? Non-cyclical and focused area of growth for Solvay Mid-sized Pharmaceutical company Selected therapeutic areas Well diversified portfolio of products Strong investments in R&D and well balanced portfolio Major alliances for co-development and
Slide 77: Fournier Acquisition
Fournier Acquisition Largest transaction ever for Solvay Pharmaceuticals Shows the commitment of the Solvay Group towards Pharmaceuticals Provides contributions; ÎImmediately to top line ÎImmediately to bottom line ÎAdditional pipe line opportunities Transaction completed July 28th 2005 ÎCon
Slide 78: Agreed price of EUR 1200 M
Agreed price of EUR 1200 M Price of EUR 1200 M (Debt free) Conditional additional payments based on future performances : up to EUR 415 M, subject to specific milestones Earn out mechanisms depending on future sales of TriCor® Customary indemnification provisions for representation and warra
Slide 79: Fournier: The leader in fibrates
Fournier The leader in fibrates Fenofibrate : current flagship product and global leader in its therapeutic class A growing market dominated by statins Î11 Bn$ (’97) →22 Bn$ (’03) →33 Bn$ (est ’09) A strong presence in the US : TriCor® partnership with Abbott Î2004 sales : USD 779 M ÎSuccessful
Slide 80: Immediate impact of Fournier on sales
Immediate impact of Fournier on sales M EUR Proforma 2004 Including Fournier Pharma 2338 1863 1832 1769 1745 1548 1349 1167 1049 922 865 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004 proforma Solvay group presentation – October 5, 2005 - 80 © 2005, SOLVAY S.A. N.V.
Slide 81: Immediate impact of Fournier on margins
Immediate impact of Fournier on margins REBIT/sales in % Proforma 2004 Including Fournier Pharma 16% 14% 14% 13% 12% 12% 11% 11% 11% 9% 9% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2004 proforma Solvay group presentation – October 5, 2005 - 81 © 2005, SOLVAY S.A. N.V.
Slide 82: Sales by Therapeutic Area 2004 proforma
Sales by Therapeutic Area 2004 proforma Cardio- metabolic Cardio-Metabolic becomes the largest Neuroscience franchise after the Influenza vaccines acquisition of Fournier Pharma Pancreatic enzymes Gastroenterology Women's & Men's health 0 100 200 300 400 500 600 700 M EUR Notes : Excluding « others
Slide 83: First half 2005 Examples
First half 2005 Examples Acquisition Fournier Pharma Acquisition Neopharma/DUODOPA® DUODOPA® launch 13 EU countries SLV 308 start full development cilansetron FDA/MHRA AERUGEN® vaccine deal with Berna ANDROGEL® geographical expansion to include Africa, Asia, Latin America, more EU Gr
Slide 84: Evolution of flagship products sales
Evolution of flagship products sales 2004 vs H1/05 vs M EUR 2003 2004 H1/05 H1/04 2003 PHARMACEUTICALS 1.832 1.745 -5% 917 +13% Androgel® 250 231 -8% 106 +8% Pantoloc® 124 139 +12% 71 +16% Creon® 137 130 -5% 76 +23% Estratest® 131 100 -24% 45 -10% Serc® 86 96 +12% 59 +28% Luvox® 80 77 -4% 42 +35% In
Slide 85: Pharmaceuticals REBIT
Pharmaceuticals REBIT H1/05 : EUR 76 M (Q2/05 : EUR 34 M, +89%) incl. compensation payment from Barr (EUR 15 M), capital gain on the sale of minor products (EUR 12 M) Î Sales growth Î Validation costs of new units (Netherlands, France) and restructuring charges (USA) Î Sustained R&D : EUR 144 M (1
Slide 86: The next Solvay Pharmaceuticals
THE NEXT SOLVAY PHARMACEUTICALS Performance Goals 20% REBIT/sales > 7% Growth* in Revenues** Building the next Solvay Pharmaceuticals Complete integration and Global Organisation transformation by 2010 Portfolio Focus 300 MEUR of stepwise Key Focus Areas efficiency Specific Medical Needs improvement
Slide 87: Portfolio focus
Portfolio focus Cardio Neuro Influenza Pancreatic Gastro Women’s & Metabolic Science Men’s Health Vaccines Enzymes Enterology KEY FOCUS AREAS SPECIFIC MEDICAL NEEDS MARKETING EXCELLENCE • Sustain and build on • Sustain and build on • Sustain and build on market market leadership market leadership ex
Slide 88: Future resource deployment
Future resource deployment Development Marketing & R to POP in-licensing Cardio ++ ++ ++ Metabolic Neuro Science ++ ++ ++ Influenza Vaccines + + ++ Pancreatic + + ++ Enzymes Gastro 0 + ++ Enterology Women’s & Men’s 0 + ++ Health Solvay group presentation – October 5, 2005 - 88 © 2005, SOLVAY S.A. N.
Slide 89: Cardio-Metabolic
Cardio-Metabolic Proforma 2004 Sales : EUR 630 M Fenofibrate Physiotens Others (Tricor, Lipanthyl) Teveten Aceon 0 100 200 300 400 500 600 Proforma 2004 R&D investments : EUR 126 M Fenofibrate & combinations Atrial fibrillation/Pulzium Strategic investments Heart failure/daglutril (SLV306) in
Slide 90: Cardio-Metabolic R&D Pipeline
Cardio-Metabolic R&D Pipeline 2005 Pre-Clinical 316, 327, 329, 331, 332, 335, LF246691, LF250033, LF242594 Phase I SLV 319 zolip (fenofibrate + statin) Phase II odiparcil daglutril (SLV 306) SLV 320 PULZIUM (tedisamil intravenous) Phase III DUALTIS (fenofibrate + metformin ) TRICOR® NFE US LIPANTHYL
Slide 91: Fenofibrate
Fenofibrate PPAR alpha agonist Hypercholesterolemia and mixed dyslipidemias As adjunct to diet, lowers triglycerides, total C, LDL-C, and apoB, while raising HDL-C (the “good” cholesterol) Basic compound Intellectual Protection (IP) expired mid 90’s, extensive IP coming from innovative new f
Slide 92: Advantages of fenofibrate
Advantages of fenofibrate Higher efficacy than other fibrates Positive long term safety record Different metabolic profile from other fibrates less interactions 7 – 15% of patients do not tolerate statins gastrointestinal side effects, muscle pains, elevated liver enzymes More clinical
Slide 93: Fibrates and statins have different lipid lowering profiles
Fibrates and statins have different lipid lowering profiles LDL-Cholesterol HDL-Cholesterol Triglycerides (TG) («bad cholesterol ») («good chlolesterol») Decreased by Increased by Decreased by Fibrates 10-30% 10-15 % 40-50% Decreased by Increased by Decreased by Statins 25-60% 5-12% 15-30% Historica
Slide 94: Fenofibrate & combination projects in different patient profiles
Fenofibrate & combination projects in different patient profiles Metabolic Cardio-vascular Diabetes Lipids Syndrome Prevention FENOFIBRATE & STATIN FIXED DOSE COMBINATION FENOFIBRATE + METFORMIN FIXED DOSE COMBINATION NON FOOD EFFECT FENOFIBRATE FIELD TRIAL FIELD TRIAL FENOFIBRATE Solvay group prese
Slide 95: Fenofibrate Non Food Effect
Fenofibrate Non Food Effect Fenofibrate 145 mg non food effect (NFE) formulation gives important clinical benefit ELAN nanocrystal technology IP to 2011 + possible extensions Approved in both US & EU 95% of US patients use TRICOR® NFE after FDA approval Nov 2004 Being introduced into marke
Slide 96: Fenofibrate in diabetes: The FIELD Study
Fenofibrate in diabetes The FIELD Study FIELD = Fenofibrate Intervention Event Lowering in Diabetes study ÎIndependent, investigator lead study, supported by Fournier/Solvay Pharmaceuticals ÎLargest prevention trial ever in type 2 diabetes ÎType 2 diabetes raises risk of myocardial infarct, stroke
Slide 97: Fenofibrate & metformin fixed dose combination
Fenofibrate & metformin fixed dose combination Internal project name Dualtis ÎLaunch date : 2007 EU ÎPeak sales potential : IP 2019 + possible extensions above 250 MEUR Increased compliance in type 2 diabetics with lipid disorders Who are stabilized on metformin (for blood sugar control) and
Slide 98: Fenofibrate & statin fixed dose combination
Fenofibrate & statin fixed dose combination ÎLaunch date : 2010 EU Internal project name Zolip ÎPeak sales potential : Proof of concept available, under investigation data on more than 800 patients already available (SAFARI trial etc) Îstatin plus fenofibrate was significantly more effective in
Slide 99: Neuroscience
Neuroscience Proforma 2004 Sales : EUR 333 M Serc Luvox Marinol Others 0 100 200 300 400 Proforma 2004 R&D investments : EUR 107 M bifeprunox with Lundbeck & Wyeth Strategic investments DUODOPA® in all phases, research, SLV 308 development LUVOX Japan, social anxiety disorder and marketed pr
Slide 100: Neuroscience R&D Pipeline
Neuroscience R&D Pipeline 2005 Pre-Clinical 318, 326, 330, 333, 334, LF 231591 Phase I SLV 314 anatibant (LF 160687) MARINOL® aerosol Phase II SLV 313 bifeprunox DUODOPA® (US) Phase III SLV 308 fluvoxamine CR MARINOL® (EU) Filed/ LUVOX® SAD (Japan) Approved DUODOPA® (EU) Solvay group presentation –
Slide 101: bifeprunox with Lundbeck & Wyeth: goals
bifeprunox with Lundbeck & Wyeth – goals Offer a novel, safe & effective treatment with a favorable side effect profile to patients suffering from schizophrenia and bipolar disorder especially in long term treatment Increase our expertise within the field of psychosis and mood disorders by partn
Slide 102: bifeprunox with Lundbeck & Wyeth
bifeprunox with Lundbeck & Wyeth ÎLaunch date 2007 Partial dopamine agonist ÎPeak sales potential + additional serotonin 1A activity above 1000 M USD Schizophrenia & bipolar disorders IP 2017 + possible extensions Registration submission 2006 schizophrenia, Launch 2007 Bipolar disorder i
Slide 103: bifeprunox: limitations/Goals of Antipsychotic Therapies
bifeprunox : limitations/Goals of Antipsychotic Therapies CLINICAL NEEDS BIFEPRUNOX RESULTS (phase II) Better control of the core Comparable efficacy with more symptoms of schizophrenia in favorable side effect profile long term treatment Ability to treat other disorders Bifeprunox has the a
Slide 104: bifeprunox schizophrenia clinical data
bifeprunox schizophrenia clinical data Headline results from clinical phase III program expected Q4/05 Substantial phase III 3 placebo controlled studies plus 3 extension trials 2 active reference controlled studies 5 continents 2600+ patients 1800 received bifeprunox [2600 including e
Slide 105: Influenza vaccines
Influenza vaccines 2004 Sales : EUR 100 M Influenza Vaccines New technology 0 100 to expand geography 2004 R&D investments : EUR 9 M and Cell culture brings opportunities partnering Start-up time shorter for cell-based by up to 6 months Seed virus to product 6 months for both egg and cell base
Slide 106: Influenza vaccines R&D Pipeline
Influenza vaccines R&D Pipeline 2005 Pandemic vaccine New delivery systems Adjuvant (polyoxidonium) INFLUVAC®TC US INFLUVAC® Canada, China Filed/ INVIVAC® Approved INFLUVAC®TC (cell culture) NL (pending factory validation) Solvay group presentation – October 5, 2005 - 106 © 2005, SOLVAY S.A. N.V.
Slide 107: Influenza Vaccines
Influenza Vaccines Geographical expansion : currently present in more than 50 countries Launch in Canada this season USA – preparations started Southern hemisphere = vaccine already available Solvay group presentation – October 5, 2005 - 107 © 2005, SOLVAY S.A. N.V.
Slide 108: Pancreatic enzymes
Pancreatic enzymes 2004 Sales : EUR 130 M Creon 0 100 Proforma 2004 R&D investments : EUR 11 M Bioengineered pancreatic enzymes Pseudomonas aeruginosa vaccine AERUGEN® Solvay group presentation – October 5, 2005 - 108 © 2005, SOLVAY S.A. N.V.
Slide 109: Gastro-Enterology
Gastro-Enterology Proforma 2004 Sales : EUR 537 M Duphalac Dicetel Others Pantoloc Duspatal Rowasa 0 100 200 300 400 Proforma 2004 R&D investments : EUR 46 M Pantoloc® end of license rights May 2006 cilansetron Invest in development and marketed products from third parties Phase out progress
Slide 110: cilansetron
cilansetron Non-approved letter received by FDA and MHRA In UK Appeal running Consultation with MHRA encouraging with opportunity to gain approval in the future FDA discussions ongoing Decision on future will be taken before end 2005 Solvay group presentation – October 5, 2005 - 110 © 2005
Slide 111: Women's and Men's Health
Women’s and Men’s Health Proforma 2004 Sales : EUR 545 M Duphaston Presomen Androgel Prometrium Others Estratest Femoston 0 100 200 300 400 500 600 Proforma 2004 R&D investments : EUR 68 M ANDROGEL® cetrorelix Invest in development and marketed products from third parties Phase out progressi
Slide 112: The next Solvay Pharmaceuticals
THE NEXT SOLVAY PHARMACEUTICALS Performance Goals 20% REBIT/sales > 7% Growth* in Revenues** Building the next Solvay Pharmaceuticals Complete integration and Global Organisation transformation by 2010 Portfolio Focus 300 MEUR of stepwise Key Focus Areas efficiency Specific Medical Needs improvement
Slide 113: Streamlining the pharmaceutical business
Solvay Pharmaceuticals Holding Company CONSOLIDATION OF ALL PHARMACEUTICAL COMPANIES INTO ONE HOLDING WILL BE COMPLETED BY H1 2006 Optimized management of the Pharmaceutical business Provides alternative options for growth & deal making Streamlining the pharmaceutical business Solvay group pre
Slide 114: To a REBIT/sales of 20% by 2010
Profitability GLOBAL INTEGRATION ALL FUNCTIONAL AREAS ÎReach industry benchmark ratios INCREASE OUTPUT R&D STREAMLINE ÎCommercial operations ÎManufacturing ÎGeneral & administration To a REBIT/sales of 20% by 2010 Solvay group presentation – October 5, 2005 - 114 © 2005, SOLVAY S.A. N.V.
Slide 115: R&D organization
R&D organization FULL INTEGRATION OF SOLVAY & FOURNIER PORTFOLIO ÎAllocate resources on basis of portfolio focus DISCOVERY PLATFORM ÎDijon, Hannover, Weesp CONSOLIDATE & STREAMLINE DEVELOPMENT RESOURCES Maintain R&D efforts Focus is output Contributor to growth Solvay group presentation – Octo
Slide 116: Significant Events
Significant Events FIELD-trial results November 2005 bifeprunox Phase III results Q4 2005 Luvox SAD (Japan) approval Q4 2005 cilansetron decision to continue Q4 2005 tedisamil IV decision to file Q4 2005 Influenza cell culture manufacturing Q1 2006 Solvay group presentation – October 5,
Slide 117: Commercial operations
Commercial operations MAINTAIN GLOBAL PRESENCE ÎIntegrate & optimize in all geographical areas ÎOne single commercial organization in each country IN USA ÎTransfer TRICOR® co-promotion to Solvay Pharmaceuticals Inc IN EU Î Progressively build pan-European organization IN ASIA & ROW ÎFinalize
Slide 118: Manufacturing & supply
Manufacturing & supply REDUCE AND OPTIMIZE NETWORK OF MANUFACTURING SITES ÎReach industry benchmark for Cost of Goods STREAMLINE SUPPLY CHAIN & STOCKS ÎInventory improvement FOCUS ON PRODUCTS WITH SPECIFIC KNOW-HOW & STRATEGIC IMPORTANCE ÎUse strategic outsourcing where appropriate e.g. Active
Slide 119: General and Administration
General and Administration BUILD G&A FUNCTIONS SUPPORTING SOLVAY PHARMACEUTICALS HOLDING COMPANY ÎFinance & information technology ÎHuman resources ÎLegal ÎCommunication GLOBAL INTEGRATION TO SUPPORT NEW STRATEGIC FRAMEWORK AND OPTIMIZED STRUCTURES IN OTHER FUNCTIONAL AREAS Contributor to REBIT
Slide 120: 300 MEUR of stepwise efficiency improvements
300 MEUR of stepwise efficiency improvements 300 275 250 160 80 5 2005 2006 2007 2008 2009 2010 Sales & Marketing + ++ ++ + + - Manufacturing - + ++ ++ + - General & Admin. + ++ ++ + + - Solvay group presentation – October 5, 2005 - 120 © 2005, SOLVAY S.A. N.V.
Slide 121: The next Solvay Pharmaceuticals
THE NEXT SOLVAY PHARMACEUTICALS Performance Goals 20% REBIT/sales > 7% Growth* in Revenues** Building the next Solvay Pharmaceuticals Complete integration and Global Organisation transformation by 2010 Portfolio Focus 300 MEUR of stepwise Key Focus Areas efficiency Specific Medical Needs improvement
Slide 122: Performance goals 2010
Performance goals 2010 REBIT margin To generate Target : the required Pharmaceutical Industry growth the 20% operational profitability needs to be improved to Solvay reinvest in Pharmaceuticals growth Target : Revenues > 7% Growth* in Revenues** per year Growth * above current industry average of 7%
Slide 123: Forward-looking statements
“To the extent that any statements made in this presentation contain information that is not historical, these statements are essentially forward-looking. The achievement of forward-looking statements contained in this presentation is subject to risks and uncertainties because of a number of factors