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US Personal Care and Consumer Healthcare (OTC) Market and M&A highlights

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US Personal Care and Consumer Healthcare (OTC) Market and M&A highlights

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Summary notes on the US Personal Care and Consumer Healthcare (OTC pharmaceuticals) markets. Includes Market Size, Segmentation and Trends with emphasis on Natural Products and related startups. Also included indicative M&A multiples of companies in these sectors. Part of a go-to-market and capital raising study for natural hygiene and healthcare products.

Summary notes on the US Personal Care and Consumer Healthcare (OTC pharmaceuticals) markets. Includes Market Size, Segmentation and Trends with emphasis on Natural Products and related startups. Also included indicative M&A multiples of companies in these sectors. Part of a go-to-market and capital raising study for natural hygiene and healthcare products.

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US Personal Care and Consumer Healthcare (OTC) Market and M&A highlights

  1. 1. DRAFT Market Highlights and M&A Benchmarks US Personal Care and Consumer Healthcare Markets Prepared by Pete Chatziplis Not to be reproduced without permission November 2016
  2. 2. DRAFT US Personal Care Market Overview and M&A Trends 1US Personal Care and Consumer Healthcare Markets
  3. 3. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis US Personal Care Market • The size of the US Beauty & Personal Care market (includes cosmetic and toiletries) is estimated at $84 billion in 2016 growing at an annual rate of 3%. US is the leading market globally accounting for over 15% of sales. • Although the overall market is relatively mature there’s significant activity in subsegments; among them the market for natural and organics products (growing at 8-9%) and the prestige beauty products segment that grew by 7% in 2015 (NPD research). • The market is fragmented; large multinationals (P&G, L’Oreal, Unilever, Colgate, Johnson & Johnson, Estee Lauder, Avon) control around half of sales. Smaller brands can succeed when focusing on certain products, market niches and distribution channels 2US Personal Care and Consumer Healthcare Markets
  4. 4. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis US Natural & Organic Products Niche Organics & Natural products include organic or moderately processed ingredients (see glossary) and are an emerging segment: • The US sales for Natural and Organic products is estimated at $9 billion expected to reach 13.2 billion US dollars by 2018, growing at 8-9% CAGR from 2012 to 2018, faster than the overall market (Source: Nutrition Business Journal, MarketResearch.com, Kline, Transparency Market Research). • Compared to the overall market there’s a higher percentage in skincare products (over 40% of the segment sales) • Over 50% of US consumers are willing to pay more for natural and organic products • Affluent households with income of US$100,000 or more, spent 500 to 999 U.S. dollars on organic and eco-friendly personal care products in 2015 • New trend among U.S. consumers are products with non-GMO ingredients 3US Personal Care and Consumer Healthcare Markets Source: Kline Source: Personal Care Markets Trends Euromonitor 2015
  5. 5. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Market Trends • Multichannel distribution: internet, especially mobile, is increasing in importance. Percentage of e- commerce sales are estimated at 5% for basic groceries to 7-8% for more expensive cosmetics. Even if not buying online, consumers are influenced by reviews, ads and social media. Retailing is still important as point of contact and for brand building but engagement approaches are changing: for example Sephora is offering 90 minute free consultations and Kiehl’s many free samples • Consumers are more informed and demanding: customization is the name of the game; exclusivity is important in the luxury part of the market. On the other hand consumers tend to be relatively loyal to brands, after cutting down during the recession. When it comes to cosmetics, demand seems quite resistant to shocks; consumers splurge in personal care even in hard times (“the lipstick effect”) especially with the increase of social media lately (for a selfie-ready image) • Natural products and sustainability: consumers are increasingly concerned about product ingredients, quality and health features. Those that can afford, are opting for natural products or pricy premium products. They are also concerned about sustainable production and social issues, especially the younger generation. Demand for natural, organic and non-GMO products is increasing • Shifting consumer groupings: market segments evolve following changes in demographics or fashion: for example male grooming or ethnic communities. Due to population aging there is also increased interest in anti-aging skincare products US Personal Care and Consumer Healthcare Markets 4
  6. 6. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Name Total Revenues Gross MarginEBITDA margin Net Income Total Assets Market Cap. EV/ Sales EV/ EBITDA PE LTM PE NTM L'Occitane International S.A. 1,261 82.5% 17.7% 108 1,188 22,069 1.8 x 10.2 x 27.2 x 21.5 x Newell Brands Inc. 5,916 39.0% 16.8% 350 7,278 11,778 2.4 x 14.4 x 25.9 x 18.8 x L'Oreal SA 25,257 71.2% 20.6% 3,297 33,711 86,933 3.7 x 17.8 x 31.2 x 23.9 x Coty Inc. 4,276 60.9% 18.2% 311 6,512 8,895 2.6 x 14.9 x 35.3 x 27.8 x Avon Products Inc. 6,161 60.5% 7.2% (1,133) 3,880 1,764 0.5 x 5.4 x 8.6 x 16.0 x Revlon, Inc. 1,914 65.2% 16.8% 56 2,014 1,460 1.7 x 10.1 x 16.0 x 0.0 x Unilever PLC 53,272 42.2% 16.0% 4,909 52,298 83,017 2.5 x 13.5 x 24.8 x 20.9 x Shiseido Company, Limited 984,979 74.2% 9.7% 29,055 808,547 1,009,108 1.2 x 14.0 x 54.6 x 41.2 x Nu Skin Enterprises Inc. 2,247 78.2% 14.1% 133 1,506 2,168 0.9 x 6.1 x 14.7 x 12.0 x The Clorox Company 5,693 44.6% 21.4% 686 4,175 16,373 3.2 x 15.0 x 27.7 x 25.7 x BioDue S.p.A. 34 30.2% 13.3% 2 27 63 2.1 x 14.9 x 28.3 x 26.2 x Swallowfield plc 50 12.9% 4.6% 1 32 22 0.5 x 11.3 x 44.3 x 0.0 x Beiersdorf AG 6,686 58.3% 16.0% 660 6,873 19,219 2.6 x 16.6 x 33.3 x 28.2 x Korres S.A. Natural Products 54 64.2% 9.8% (1) 63 51 1.3 x 14.5 x 58.9 x 21.9 x Listed Cosmetics and Personal Care Companies (As of 12.31.15, amounts in US$ million) The following table provides indicative operating and trading metrics of listed cosmetics companies as well as companies that are broadly active in personal care/hygiene*  Public market metrics indicate multiples of 1.5-2x Revenue and EBITDA multiples in the mid teens (13-16x) 5US Personal Care and Consumer Healthcare Markets November 2016 Not to be reproduced without permission © Pete Chatziplis * The information is for illustration purposes only as some of the companies are large diversified companies active in more than one market segments
  7. 7. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis M&A Trends in Personal Care/Cosmetics There’s significant M&A and capital raising/startup activity, especially in the natural products segment: • Seventh Generation, the natural cleaning and personal care products manufacturer, was acquired in September 2016 by Unilever for $700 million in cash, or around 3.5x sales • Dollar Shave Club, a five year startup that sells lower priced razors and shaving products was bought by Unilever in July 2016 for $1 billion at 6.6x estimated Revenue multiple • Bare Escentuals, the natural cosmetics company was acquired by Shiseido in 2010 for $1.7 billion (3.1x Revenue, 9.8x EBITDA multiples) • The Honest Company, a startup co-founded by actress Jessica Alba and VCs in 2011 who is claiming to provide non-toxic, natural household products and support ethical consumerism (sustainability, social responsibility), has raised so far $228 million. It has earned the unicorn badge as its valuation is assumed to around $1.7 billion based on its last funding round (with estimated revenues of $170 million). US Personal Care and Consumer Healthcare Markets 6
  8. 8. DRAFT September 2016 Not to be reproduced without permission Prepared by Pete Chatziplis Confidential, for discussion purposes only M&A Trends in Personal Care/Cosmetics US Personal Care and Consumer Healthcare Markets 7 Announced Date Target/Issuer Total Transaction Value Buyers/Investors Implied Enterprise Value/EBITDA Implied EV/NTM Revenue (x) Target Total Revenue ($USDmm) Target EBITDA ($USDmm) Target EBITDA margin Percent Sought (%) 05/17/2016 Novamex S.A. 1.39 Inventia SAS 7.82 - 36.51 4.74 13% 3.35 03/24/2016 Global Cosmed S.A. (WSE:GLC) 6.53 - 21.63 - 226.66 10.85 5% 13.51 10/30/2015 Miraculum SA (WSE:MIR) 0.838 Crystalw aters LLC Sp. z o.o. 78.15 - 34.8 0.6 2% 17.74 10/07/2015 Miraculum SA (WSE:MIR) 0.638 Rubid Fund Management Sp z.o.o. 88.28 - 34.8 0.6 2% 9.89 06/30/2015 Miraculum SA (WSE:MIR) 0.798 Rubid 1 Sp. z o.o. 59.78 - 31.61 0.84 3% 12.33 04/30/2015 The Real Shaving Company Ltd. 1.54 Sw allow field plc (AIM:SWL) 3.33 - 0.8 0.3 38% 100.0 04/08/2015 Zep, Inc. 702.56 New Mountain Capital, LLC 14.83 0.976 702.21 47.15 7% 100.0 12/16/2014 Global Cosmed S.A. (WSE:GLC) 51.49 MW Legal 36 Sp. z o.o. 17.44 - 163.66 11.91 7% 80.34 09/22/2014 Sigma-Aldrich Corporation 17,333.15 Merck KGaA (DB:MRK) 19.78 5.77 2,738.0 834.0 30% 100.0 09/02/2014 Auriga International 7.21 ISDIN, S.A. 52.42 - 1.38 0.11 8% 93.0 09/01/2014 Auriga International 0.049 ISDIN, S.A. 73.35 - 1.38 0.11 8% 0.61 08/25/2014 Elizabeth Arden, Inc. (NasdaqGS:RDEN) 48.86 Rhone Capital, L.L.C. 108.38 0.937 1,091.07 9.36 1% 9.64 10/25/2013 Global Cosmed S.A. (WSE:GLC) 0.31 - 9.17 - 158.46 8.59 5% 1.42 10/16/2013 Global Cosmed S.A. (WSE:GLC) 0.609 - 9.2 - 158.46 8.59 5% 2.83 09/06/2012 Physicians Formula Holdings Inc. 78.35 Markw ins International Corporation 8.07 - 91.27 9.57 10% 100.0 08/21/2012 Fabryka Kosmetyków Pollena-Ew a Spólka Akcyjna 1.89 Torunskie Zaklady Materialow Opatrunkow ych Spolka Akcyjna76.51 - 28.58 0.37 1% 21.98 01/11/2012 Chr. Hansen Holding A/S (CPSE:CHR) 706.99 Novo A/S 12.21 3.76 653.3 209.0 32% 25.7 12/23/2011 Parlux Fragrances Inc. 177.72 Perfumania Holdings, Inc. (NasdaqCM:PERF)47.34 - 129.25 3.5 3% 100.0 12/21/2011 Concern Kalina, OAO 130.04 OOO Unilever Rus 14.44 - 12,119.93 2,145.1 18% 15.02 10/14/2011 Concern Kalina, OAO 673.24 OOO Unilever Rus 11.6 1.84 12,119.93 2,145.1 18% 82.0 10/12/2011 Maesa 12.66 Edmond de Rothschild Investment Partners, S.A.S.10.07 0.891 76.29 6.57 9% 22.92 05/01/2011 Pro-Clean of Arizona, Inc. 21.39 Sw isher Hygiene Inc. 26.54 - 19.49 0.81 4% 100.0 12/22/2010 Rolandos Enterprises (Public) Limited (CSE:ROL) 1.47 - 2.36 - 6.73 0.75 11% 19.09 09/27/2010 Alberto Culver Company 3,993.17 Conopco, Inc. 15.52 2.23 1,550.54 240.5 16% 100.0 09/27/2010 St Tropez Inc. 99.01 PZ Cussons Plc (LSE:PZC) 8.45 - 20.7 7.4 36% 100.0 05/19/2010 Nepentes S.A. 77.87 Sanofi-Aventis Sp. z o.o. 16.78 - 133.32 24.08 18% 62.8 05/19/2010 Nepentes S.A. 48.89 Sanofi-Aventis Sp. z o.o. 18.08 - 133.32 24.08 18% 37.23 02/10/2010 Grifols, S.A. (BME:GRF) 93.14 Capital Research and Management Company10.42 2.68 913.19 264.31 29% 3.14 01/14/2010 Bare Escentuals, Inc. 1,899.1 Shiseido Company, Limited (TSE:4911) 9.84 3.08 557.5 176.87 32% 100.0 07/28/2009 Mirato S.p.A. 54.5 - 6.54 0.88 138.19 19.66 14% 39.85 06/27/2008 Clarins S.A. 1,266.81 - 13.73 1.92 1,003.06 146.53 15% 37.26 Median 14.83x 1.92x 10% Acquisitions of cosmetics and personal care companies indicate considerations in the range of 2-2.5x Revenues, 15x EBITDA*. *Transaction multiples are dependent on the particular transactions circumstances, negotiations and target company value, which should be subject to detailed evaluation.
  9. 9. DRAFT US Consumer Healthcare Market Overview and M&A Trends 8US Personal Care and Consumer Healthcare Markets
  10. 10. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis US OTC Market Size • Sales of OTC drugs in the US are estimated at around $32 billion in 2015. Ninety percent of U.S. adults prefer to treat their minor ailments with OTC medicines before seeking professional care. As healthcare is expensive it is estimated that one fifth of population wouldn’t seek medical relief on some occasions beyond OTCs. • Large part of growth in the OTC market comes from reclassification/registering prescription drugs as OTC (Rx-to-OTC switch). For example US Rx-to-OTC switches was estimated at $7 billion in 2010 (by Kalorama) 9US Personal Care and Consumer Healthcare Markets Source: Statista.com Total OTC drug retail sales in the U.S. from 1998 to 2015 (in billion U.S. dollars) • The top OTC companies control two thirds of the US market: ie. Johnson & Johnson, GlaxoSmithKline, Novartis, Bayer, Pfizer, Procter & Gamble.
  11. 11. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Herbal Products & Supplements – US market • Dietary supplements are regulated by the Food and Drug Administration. Manufacturers are not required to prove the safety or efficacy of their products as long as they don't make 'medical' claims or imply being other than for 'dietary supplement' use. In other case they may have to apply for drug registration. The FDA may still withdraw a supplement should it prove harmful. There has recently been a scandal of adulterations and misrepresentations on certain such products. • Total sales of nutritional supplements (vitamins) are estimated at $12 billion growing at 7-8%. The market is fragmented. Sales of herbs/botanical supplements reached $6.4 billion in 2014 while the balance were sales of meal supplements. Around one third of Americans have tried herbal remedies and their popularity is rising. The wellbeing industry, which is sizeable, also draws sales. • Conditions that are sought to be treated with supplements are gastrointestinal health, insomnia, liver/detox, anti-aging, mood/depression, hair, skin, nails, dieting. Examples of popular herbs are horehound, turmeric, valerian, ayurvedic, matcha, ginkgo biloba, St. John’s wort, ginseng, echinacea and saw palmetto. 10US Personal Care and Consumer Healthcare Markets (in US$ billion) Source: Cashing in on the booming market for dietary supplements, McKinsey, Dec. 2013
  12. 12. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Market Dynamics: M&As and Investment • New products and startups: Companies outside the traditional consumer health industry such as startups develop tech solutions that aim to fulfill the new or unmet needs of the health oriented consumer. For example: • the market for wearables is now estimated at $14 billion of which health/fitness (activity trackers etc) is around $3.8 billion. Fitbit was listed in NYSE in 2H2016 at a capitalization exceeding $3billion (PE(LTM):31x, PE(NTM):11x). Wearables are expected to grow to $34billion globally by 2020 (CCS insight). • there were around 100,000 mHealth (mobile health) apps available for download in 2013. By 2017, 1.7 billion smartphones and tablets are forecast to have an mHealth app installed. mHealth services revenue is forecast to grow to $26 billion by 2017. New healthtech development have spurred acquisitions and investment to keep up with market trends. • Traditional retailers (pharmacies and chains) control around half of the market. However their share is decreasing as internet sales are picking up, now estimated to account for about 20% of total, growing at high rates. Furthermore internet is affecting much more than direct sales: 42% of US consumers use social media for health- related reviews and rely on websites such as WebMD for medical advice. Due to that the internet is also used by companies for product development as they can directly receive consumer feedback. 11US Personal Care and Consumer Healthcare Markets
  13. 13. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Listed OTC and Consumer Healthcare Companies Name Total Revenues Gross Margin EBITDA margin Net Income Total Assets Market Cap. EV/ Sales EV/ EBITDA PE LTM PE NTM The Procter & Gamble Company 72,455 51.3% 25.8% 8,223 129,143 216,041 3.2 x 12.9 x 25.0 x 20.5 x Johnson & Johnson 70,517 69.2% 32.0% 14,715 133,266 284,220 3.8 x 11.8 x 25.6 x 16.4 x Akorn, Inc. 985 61.0% 42.8% 151 2,113 4,269 9.0 x 25.5 x 71.9 x 19.1 x Colgate-Palmolive Co. 16,034 58.7% 27.4% 1,384 11,958 59,753 4.0 x 14.8 x 26.3 x 23.1 x Impax Laboratories Inc. 860 42.1% 19.3% 39 1,922 2,915 4.3 x 26.6 x 122.8 x 21.0 x Essilor International SA 6,716 59.7% 24.0% 757 11,971 24,337 4.3 x 16.8 x 34.3 x 28.6 x Prestige Brands Holdings, Inc. 788 58.5% 37.5% 110 2,641 2,715 5.3 x 14.4 x 24.8 x 23.1 x Fitbit Inc. 1,858 48.5% 19.2% 114 1,519 6,634 4.0 x 19.0 x 23.9 x 30.0 x US Personal Care and Consumer Healthcare Markets 12 The following table provides indicative operating and trading metrics of listed OTC companies (i.e. Prestige Brands) as well as other companies that are active in consumer healthcare*  Public market metrics indicate 4x-5x Revenue multiples and EBITDA multiples in the high teens (15-20x) (As of 12.31.15, amounts in US$ million) * The information is for illustration purposes only as some of the companies are not pure-OTC play
  14. 14. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Market Dynamics: M&As and Investment • Strategic realignment and product optimization: The high level of fragmentation within the consumer healthcare industry makes it a prime candidate for mergers and acquisitions. At the same time consumer healthcare is less risky than traditional prescription medicines and provides income diversification. Through M&As leading companies realign their strategies and build their portfolios and market positions especially in nutritionals. As a result distance from their peers is widening. Notable M&As during the last years include: • Pfizer: after selling its OTC group to Johnson&Johnson in 2006 for $16.6 billion, Pfizer reentered the market in 2009 by buying Wyeth for $66.8 billion (2.8x Revenue, 8.2x EBITDA). In 2012 it acquired US based vitamins & dietary supplements firm Alacer (for $780 million, estimated at 7-8x Revenue) and sold Wyeth Nutrition (nutritional supplements, baby food) to Nestle for $11.8 billion (5.6x Revenue, 23.7x EBITDA) solidifying its position among the top five companies globally. Nestle had also bought Novartis’ Medical Nutrition in 2007. • Bayer bought Steigerwald Arzneimittelwerk, a German manufacturer of herbal OTC drugs, in 2013 for $220 million (3.6x Revenues). It also bought in 2014 Merck’s Consumer Care business for $14.2 billion (estimated 21x EBITDA) to become the number two player globally in this segment • Glaxo (GSK) and Novartis created a Consumer Healthcare joint venture in 2015 that is now one of the leading OTC companies globally, along with J&J and Bayer. As part of this transactions they also exchanged their vaccines and oncology products • Reckitt Benckiser bought Schiff (a US vitamin supplement company with a line of products based on traditional Chinese medicines) in 2012 for $1.2 billion (5x Revenue, 33x EBITDA) 13US Personal Care and Consumer Healthcare Markets
  15. 15. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Market Dynamics: M&As and Investment • Acquisitions of consumer healthcare companies during the last five years indicate considerations in the range of 2.5-3x Revenues and 12x-15x EBITDA* 14US Personal Care and Consumer Healthcare Markets Announced Date Target/Issuer Total Transaction Value Buyers/Investors Implied Enterprise Value/EBITDA Implied EV/NTM Revenue (x) Target Total Revenue ($USDmm) Target EBITDA ($USDmm) Target EBITDA margin Percent Sought (%) 02/11/2014 Cadence Pharmaceuticals Inc. 1,373.92 Mallinckrodt Public Limited Company (NYSE:MNK) - 8.43 112.56 ( 26.47) -24% 100.0 08/26/2013 Hofseth BioCare AS (OB:HBC) 0.362 Trols AS - 2.93 35.93 ( 49.93) -139% 1.02 02/11/2013 Rosemont Pharmaceuticals Ltd. 286.63 Perrigo Company plc (NYSE:PRGO) 9.53x - 40.0 19.2 48% 100.0 08/20/2012 Avid Health, Inc. 650.0 Church & Dw ight Co. Inc. (NYSE:CHD) 13.37x - 198.47 48.63 25% 100.0 09/01/2011 Cyalume Specialty Products, Inc. 11.64 Cyalume Technologies Holdings, Inc. (OTCPK:CYLU)11.64x - 5.0 1.0 20% 100.0 07/13/2011 Acelity L.P. Inc. 6,291.64 Apax Partners LLP; Canada Pension Plan Investment Board; Public Sector Pension Investment Board9.13x 2.74x 2,055.19 634.51 31% 100.0 12/21/2010 Martek Biosciences Corporation 1,087.85 Koninklijke DSM N.V. (ENXTAM:DSM) 8.31x 2.21x 450.02 123.24 27% 100.0 12/13/2010 Q-Med AB 1,184.94 Galderma Pharma SA 18.17x 4.32x 1,454.0 370.0 25% 100.0 04/29/2008 Natraceutical SA 21.03 Inversiones Ibersuizas, S.A. 17.46 1.86 155.15 20.58 13% 5.0 04/20/2007 Alliance Boots Holdings Limited 21,467.4 KKR & Co. L.P. (NYSE:KKR); Ardian; KKR PEI Sicar, S.a.r.l.16.32 0.8 11,502.0 734.0 6% 84.95 Median 12.51x 2.74x 26% * Transaction multiples are dependent on the particular transactions circumstances, negotiations and target company value, which should be subject to detailed evaluation.
  16. 16. DRAFT Appendix US Economy and Regulations 15US Personal Care and Consumer Healthcare Markets
  17. 17. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis US Economic Outlook • The US economy is relatively healthy having been steadily recovering after the 2008-2009 economic crisis. It is projected to grow by 2.2% in 2016 (IMF) • Unemployment levels have been reduced to 5.3% in the last years although employee participation has dropped too (due to retirement, as the population is aging or falling out of workforce during the big depression) • Personal consumption has recovered post the 2008 crisis although consumer confidence is lagging and household incomes have only recently surpassed pre-crisis levels • The Affordable Care Act that was enacted in 2010 expanded mandatory coverage to almost 90% of population and by 20 million. By that, and regulative provisions, revenues for pharmaceutical and insurance companies increased and M&As surged among healthcare service providers to build scale • The presidential elections in fall 2016 can introduce some level of uncertainty US Personal Care and Consumer Healthcare Markets 16 2011 2012 2013 2014 2015 Population (million) 312 314 317 319 321 GDP per capita (USD) 49,725 51,384 52,608 54,375 55,868 GDP (USD bn) 15,518 16,155 16,663 17,348 17,947 Economic Growth (GDP, annual variation in %) 1.6 2.2 1.5 2.4 2.4 Domestic Demand (annual variation in %) 1.6 2.1 1.3 2.5 3 Consumption (annual variation in %) 2.3 1.5 1.7 2.7 3.1 Investment (annual variation in %) 6.4 9.8 4.2 5.3 4 Exports (G&S, annual variation in %) 6.9 3.4 2.8 3.4 1.1 Imports (G&S, annual variation in %) 5.5 2.2 1.1 3.8 4.9 Industrial Production (annual variation in %) 2.9 2.8 1.9 2.9 0.3 Retail Sales (annual variation in %) 7.3 5 3.7 3.9 2.2 Unemployment Rate 8.9 8.1 7.4 6.2 5.3 Fiscal Balance (% of GDP) -8.4 -6.7 -4.1 -2.8 -2.4 Public Debt (% of GDP) 98.3 102 104 105 106 Money (annual variation in %) 7.4 8.6 6.8 6.2 5.9 Inflation Rate (CPI, annual variation in %, eop) 3.1 1.8 1.5 0.7 0.7 Inflation Rate (CPI, annual variation in %) 3.1 2.1 1.5 1.6 0.1 Inflation (PPI, annual variation in %) 3.9 1.8 1.4 1.6 -0.9 Policy Interest Rate (%) 0.25 0.25 0.25 0.25 0.5 Stock Market (annual variation in %) 5.5 7.3 26.5 7.5 -2.2 Current Account (% of GDP) -3 -2.8 -2.3 -2.2 -2.7 Current Account Balance (USD bn) -460.4 -449.7 -376.8 -389.5 -484.1 Trade Balance (USD billion) -740.7 -741.2 -702.6 -741.5 -759.3
  18. 18. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis US FDA Regulations –Product Definitions • The term "personal care products" often covers a wide variety of items that can be found in the health and beauty departments of drug and department stores. These products may fall into a number of different categories under the law. • Products intended to cleanse or beautify are generally regulated as cosmetics. Some examples are skin moisturizers, perfumes, lipsticks, fingernail polishes, makeup, shampoos, permanent waves, hair colors, toothpastes, and deodorants. These products and their ingredients are not subject to FDA premarket approval, except color additives (other than coal tar hair dyes). Cosmetic companies have a legal responsibility for the safety of their products and ingredients. • Products intended to treat or prevent disease, or affect the structure or function of the body, are drugs. This is true even if a product affects how you look. Some examples are treatments for dandruff or acne, sunscreen products, antiperspirants, and diaper ointments. Generally, drugs must receive premarket approval by FDA or, if they are nonprescription drugs, conform to special regulations, called "monographs," for their category. • Some of these products are both cosmetics and drugs. Examples include anti-dandruff shampoos and antiperspirant- deodorants, as well as moisturizers and makeup with SPF (sun protection factor) numbers. They must meet the requirements for both cosmetics and drugs. • Some products may belong to other categories including medical devices (such as certain hair removal and microdermabrasion devices), dietary supplements (such as vitamin or mineral tablets) or other consumer products (such as manicure sets). • FDA regulates drugs and cosmetics under the authority of the Federal Food, Drug, and Cosmetic Act (FD&C Act) and the Fair Packaging and Labeling Act (FPLA). 17US Personal Care and Consumer Healthcare Markets Source: FDA
  19. 19. DRAFT September 2016 Not to be reproduced without permission Prepared by Pete Chatziplis Confidential, for discussion purposes only US FDA process for drug approval US Personal Care and Consumer Healthcare Markets 18 Source: Wilipedia, Rx to OTC Switch-Market Analysis
  20. 20. DRAFT November 2016 Not to be reproduced without permission © Pete Chatziplis Organic and Natural Product definitions in US • The main distinction between natural and organic beauty products is that organic ingredients must pass more rigorous standards of purity. In order to be organic, an ingredient must have been derived without the use of synthetic pesticides, petroleum fertilizers or sewage sludge fertilizers, and it must not be a genetically modified organism (GMO) • Natural Product: a product is ‘natural’, as long as it doesn’t contain any artificial ingredients or colors, and is minimally processed. • Products can display the USDA Organic Seal (along with the certifying agent’s name and address), only when: • “100% organic”- Product must contain (excluding water and salt) only organically produced ingredients. • “Organic”- Product must contain at least 95% organically produced ingredients (excluding water and salt). • Organic products are regulated by the US Department of Agriculture (USDA). FDA’s authority as regards to drugs, cosmetics and supplements relates to their other qualities 19US Personal Care and Consumer Healthcare Markets Source: FDA
  21. 21. DRAFT US Personal Care and Consumer Healthcare Markets 20 Limiting Factors  The document is for informationpurposes only. It is not an offering or solicitation to subscribeor invest in securities.  The information and opinions have been compiled or arrived at based on informationobtained from publicly available and company resources believed to be reliable and in good faith. Such information has not been independently verified and no representationor warranty, either expressed or implied, is provided in relation to the accuracy, completeness, reliability, or fitness for a particular purpose. Each investorshould seek independent professional advice and carry out own research before making any investmentdecision. Pete Chatziplis, CFA, MBA TBF Consulting Private Equity Advisory - M&A – Corporate Development –Strategic Consulting info@transatlanticbusinessforum.com www.transatlanticbusinessforum.com

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