Hypera S.A. (HYPE3) Earnings Call Transcript & Summary

[Presentation] Good afternoon, everyone. It's great to have everyone present here at our 2022 Hype Day. It's great to do this in person. Last year, it was only remote because of the pandemic, but now it's hybrid, and that's great. So we're going to talk a lot about Hypera today, about our strategy, our strengths, everything that has brought Hypera here so far. Before talking about the speakers and the agenda, I'd like to show a video. [Presentation]

Nice. The video really shows who Hypera is. It's probably the main pharma industry in retail in Brazil. Now I'd like to talk about the agenda and our speakers. Breno, our CEO, will start with his presentation, talk about Hypera and our strengths, everything that has gotten us this far. Luiz will talk about the business platform. Without a doubt, that's one of our main strengths. Adalmario will talk about innovation. That's our pillar for sustainable growth in the medium and long term. And Tobias will talk about our new growth measure. It's the institutional market. We'll have a quick break. When we come back, Juliana will talk about compliance and governance, a very important topic. And then Breno comes back for the closing. Right after that, we're going to have a Q&A session. And for those who are on the webcast, you can submit your questions via webcast. After that, we'll have a chat with the business units right outside the room. Right after the Q&A, the BU head will be outside, and you can talk to them, talk to the -- about their individual strategies. Now I'd like to hand over to Breno, to give his presentation.

Thank you, Douglas. Good afternoon, everyone. It's great to see you here again. I've already talked to some people when you came in, it's great see you, great to see some known faces. The last in-person Hype Day that we had was before the pandemic in 2019, and last year, it was a virtual webcast. Obviously, it's not the same thing, but we did offer that possibility for those who couldn't come here. I'd like to start my presentation, talking about the performance. Ever since we became a 100% pharma company, the first year that happened was in 2018. And considering the guidance for 2022, we practically have doubled the company in size since 2018 with net revenues according to the guidance of BRL 7.4 billion, the double of 2018, giving us an approximate CAGR of 19% per year in that period. And if we exclude the acquisitions, we would have a 13% CAGR. That would be very relevant if we disregard those acquisitions. At the same time, we're able to increase the company margin. The EBITDA margin grew 1.5 percentage points. So we grew improving the company's profitability. Now we deliver -- we have over 10,400 employees. We also increased that, that would be proportionately at a rate of 10% per year. We doubled the number of our power brands, meaning the ones that have revenues over BRL 100 million per year. We had 10, and now we have 20. We more than doubled our production capacity from 500 million units to 1.1 billion units and more than doubled our investment in R&D, will explore that. That's a great source of growth for the company. The launches, the innovation. And with that, we gained 2 percentage points in market share. So now we're at 8.7% market share in the pharma market. And we are the leader in the retail pharma market this year. So leadership was always one of our objectives ever since we acquired Takeda, that became closer for us. And now in the first half of 2022, we are the leaders. All company leadership that's based out of Sao Paulo is here with us. I'd like to thank you, congratulate you, as well as all the Hypera employees that helped Hypera get this far in this position as a leader. The main takeaway today is the main competitive advantages for Hypera. I'll start off talking about people. That's the main pillar, and I'll start talking about leadership. So today, we are professionally managed. It's a group of 15 executives, all of them are professionals and few pharma companies have this kind of governance, where all management is professionalized. The group of executives has on average 8 years of experience with Hypera, so they know the company well, and 16 years on average of experience in the pharma industry. And most importantly, even more than how long they've been with us or the experience they have is the time that this group has been working together. So I'd like to stress that this group has been working together since 2018. We have only added people. Nobody has left us. Rafael, Silvio and more recently Tobias. And the group has been working as a team and getting better and better. And I would say the great part of the success that we have achieved recently is the result of this group. Another thing about people is our culture. We're highly focused on results. We award meritocracy. There's a group of 80 executives. So the main 80 executives have compensation based on shares and differently than the multinational companies that also offer that here. The executive actually impacts the company. So it's a Brazilian group and leadership impacts the results and consequently, the price of shares. We also have a talent recognition program. So we have mapped out all company talent. We created the talent map and a succession map based on our pillars and the values and the company culture. So we aim at attracting, retaining and promoting this talent in the company. And lastly, one of our advantages is the operational structure focused on excellence and accountability. And here, I'm especially talking about our business units that has defined P&L and targets and that really helps our culture in terms of meritocracy and focusing on results. Something we get asked a lot by investors here at the company is how we manage so many different brands, so many business lines and all of this complexity. I remember that when I joined the company back in 2008, in the first years, it was much more complex than what we have today. So our culture was formed by the diversity in segments and people coming from different companies, not only in personal care and consumption, but also from the pharma market. So that's how our culture was shaped, and today, I believe that our company is more simple than it was in the past, but that's the foundation of our culture. So there are some values that we truly value -- some behaviors that we truly value in the company, and that's what we look for in our employees. Collaborative spirit, expeditious decision-making, constructive mindset. So if you see something that you can change and proposing that in constructive way of the company, connectivity, being to new trends and everything that's happening in the market, adaptability and especially the sense of urgency. We've been investing a lot -- oh, not to mention that we have a lot of gender diversity in the company, it's pretty much 50-50 in terms of number of women and men in the company. In the management, 30% and at the Board of Directors, 20% women. So we've been investing a lot in our people and management framework to attract even more, train and retain our talent. So I'd like to show you some recent initiatives that we've had. We created a group of affinities focused on creating Hypera, more inclusive and more welcoming. So the focus here is to promote racial and gender equity and improve accessibility for persons with disabilities. That's a new initiative that we have in the company. And since 2019, we have been recognized as a great place to work. So this is a constant objective of the company, always pursuing to improve the work environment and conditions for our employees. And in the last survey, we've already increased our score by 11% compared to the previous survey, and that's a continuous effort, ongoing effort of the company. In our metrics, global variable compensation of the company, we've included turnover. So it's really hard to attract and select talent, especially in the current workplace. So to attract, train and retain employees is not easy and then losing them for any other reason or losing them to the competition isn't easy. So that's why we've mapped out all the talent. And that's one of our metrics in compensation. So it's clear to high or top management and leadership, the importance of retaining and attracting talent in the company. The second pillar of our competitive advantage is governance. As I mentioned, 100% of the executives that manage the company or professional executives, we have Board that's 100% independent. So we have a statutory audit committee that reviews all our financial statements, the company's practices, governance, risk, compliance and supervises the internal and external audit work for the company. In 2016, we also created an ethics committee that reviews all the cases concerning our ethics, code of conduct and also monitors the work on the compliance side. We have a strategy and management committee, and that's very important as it offers agility in decision-making. It's comprised by 3 executives and 3 Board members that get together on a monthly basis to have more agility in strategic decision-making for the company. We have an ethics and compliance program that was recently improved. Juliana will explain that better when she comes up. We've also matured our process to contract services, draft contracts and make payments in the company. That was a huge evolution dating back to 2016. And Juliana will show you more about that. The third pillar in our competitive advantage is our portfolio of brands that cannot be copied. We have over 300 brands. Some of them have existed for 100 years like Biotonico Fontoura with many of them have been around for decades. So this portfolio was created in 3 different ways. First of all, what we call our baseline, the brands that came from old acquisitions such as Benegrip, Coristina and Epocler, and the brands that were started from scratch here at Hypera, such as Addera, Colflex, Ofolato, and more recently, the Neo Química vitamins and the brands from recent acquisitions such as Neosaldina, Buscopan, Dramin, and other simple Bioage, those are recent acquisitions. And in this portfolio, we have 20 power brands. We went from 10 brands in 2018 to 20 brands now. 6 came through acquisitions and 4 through line extensions and organic growth of these brands. It's important to point out the 20 brands, 15 are leaders in their segments and categories. And I would like to point out the importance of these brands for the company's future growth. They are the base on which we will extend many of these lines. And extending lines is important not only for growth, but also to dilute expenses and investments in marketing, which today is our main expense in the company. We can invest it in a more effective way. Since for each BRL invested in marketing, we can achieve more sales and greater exposure at the point of sales at the drugstores. So these brands are the core of our growth from now on. Looking at our portfolio in terms of market segments, 47% of our sales come from the OTC market and 32% of the market from prescription, 14% generics and 7% skin care. I'm going to talk about each of these segments. In OTC, we are the leading company with twice the market share of the second place with important share in some segments like flu and respiratory. A market of BRL 4.6 billion, we have about 20% of the market with brands like Benegrip, Rinosoro, Coristina and others that are not even on the slide. In GI, it's a BRL 3.5 billion market. We're leaders with 70% market share in brands like Engov, Estomazil, Epocler, Gastrol, Eparema, Naturetti. I would also like to point out the Pain market. It's large, but it's more concentrated. We're the second player in the market with almost 30% of market share. With brands like Neosaldina, Alivium, Lisador, Doril, Doralgina, Miorrelax and also VMS, which are vitamins, minerals and supplements. It's also a large market, almost BRL 6 billion, in which we started investing in more recently for the past 3 years, creating Neo Química vitamins brand and relaunching Vitasay, in addition to Addera and Biotonico Fontoura, which were already part of this market. Now the prescription market. We ranked fourth in the market, but we've grown greatly. I think we were below the tenth position 3 years ago. Now we are fourth. I would like to highlight the diabetes market, BRL 6.3 billion. We ranked fifth with the Nesina brand. But we have a lot of space to grow, especially with line extensions, combination of molecules on Nesina and also with the breach of patents that we will have in a few years. And respiratory is also large, BRL 4.3 billion. We're third with 10% of market share, with Alektos, Neosoro and Rizi, and also VMS with the branded products where we have a strong market for vitamin D, like Addera, Dropy D, vitaminas Neo Química and dissimilar. On Skin Care, we rank second in the market. And we rank second and third in most of the categories. But there's a huge potential for growth. We don't have as many restrictions from ANVISA to launch products. So the market is faster. And we have opportunity not only with our main brand Mantecorp's Skincare, but also companies that were recently acquired like Simple Organic, which is growing greatly beyond our expectations and our budget. It's been doubling size for the past years. And Bioage, which was our entry for the skin care, especially where we see a huge potential for growth. And in the generics market, we operate with Neo Química brand. When we bought the brand in 2010, we invested heavily in marketing on the brand to make the brand well-known domestically in Brazil. We invested also in expanding the portfolio. Today, we have 60% of coverage of the generics market with Neo Química and Neo Química brand is recognized as a top of mind brand since last year. And we were able to multiply tenfold the revenues of Neo Química since it was acquired in 2010 to today. A fourth competitive advantage is innovation. We're going to talk a lot about innovation during the presentation, especially with Adalmario. We've been investing greatly in innovation since 2018 with our innovation center that you will be able to see tomorrow. Those who haven't seen it yet, I recommend you visiting. And we start already reaping the results. Since 2018, we launched 400 products, and there's a lot to come in the future. We have a structure with 800 people dedicated to innovation with being able to work at approximately 100 projects simultaneously and since last year, all the projects that were sent to ANVISA were approved, all -- there was a 100% approval rate. In addition to our own in-house developments, we have large -- the largest infrastructure for business development in a pharma industry in Brazil. We have contracts with 100 partners in Brazil, and other continents around the world, we have more than 100 products in partnership that achieved more than 900 million sell-out in 2021. Our goal is to consolidate ourselves as partners of choice of these companies because of the structure we have here for distribution, medical sales reps and all our power at the point of sale. And we've been achieving this. Many of our partners, we started with 1 product. Now we have 2, 3, 4 products in partnership with the same company. We also, as I said, we launched 400 projects since 2021, but we also have 450 new products in our pipeline, and half are new brands or categories that we're entering and have our line extensions that are very important to grow from here on. And of these 50%, half are innovation with our power brands. What I just mentioned was in the retail market. Now we also have a front for growth that Tobias will explain during his presentation, which is the non-retail market. We created this business unit a year ago, and we have more than 70 molecules mapped, of which 30 already are projects under development in partnerships or in-house and an addressable market of BRL 12 billion. In oncology, biologics and specialty care that Tobias will detail later during his presentation. Our grade -- our fifth competitive advantage is our production capacity. We invested heavily, and we have the largest plant compound in Latin America. It's 1.1 billion units produced, 100,000 people working at our plant in Anápolis, and recently we invested BRL 400 million to build a new plant for steriles that will increase our capacity threefold in injectables, eye drops and bringing new technologies like [Indiscernible], and it will be very important for our growth in the nonretail market. The investment is already done. We opened the plant last week, and I'm going to show you a video of the plant. [Presentation]

I had a visit with investors at the plant a while ago. So I think it's worth scheduling another one for the next few months. It's incredible. Every time I go there, I'm very much impressed with how amazing our plant is in Anápolis, and I recommend you to visit, to have an idea of how all the products that we sell here are produced. Our next pillar for competitive advantage is our go-to-market strategy, sales and marketing platform. We have our in-house advertisement agency called Cafehyna. We can negotiate directly with the media channels in the market. So we're negotiating with global TV network, radio stations, Google, Facebook. So that allows us to have a great competitive advantage, negotiating prices. We also are more agile in having our in-house agency. We have 2 studios, where we record most of our commercials in-house. That also gives us great flexibility, especially in digital media, which is our focus. We're investing more and more on digital media. We -- in 2018, less than 10% of the investments were in digital media, and this year, that should account for 40%. And for next year, our goal is to have it at least 50%, and that allows us to have great efficiency in our media resources. We reached the target audience, and it helps for the smaller brands. that don't have enough budget to invest heavily in the large communication channels. In addition to Cafehyna, we have Lumina, which is our research center in-house, you will have an opportunity to see this center tomorrow during our visit. And here, we research all our launchings with the end consumer, with health care professionals, physicians, pharmacists, understanding how that product will be perceived, also sensorial testing. So we can have a good feel of our launchings. And recently, since 2020, we have Neo Química arena. In my opinion, it was the best investment that we did in marketing for the past years. We were able with this [content], and I don't root for [Indiscernible] We were able to have a return of spontaneous media 5x greater than our investment in the contract. And additionally, we have a unique opportunity to connect with our customers, health care professionals and all stakeholders, offering unique experiences for the stakeholders at the stadium. Even investors, there are some investors who I know like to go there. All this provides data, Neo Química Arena, Cafehyna, Lumina. All this supports our business unit structure and brings focus to each of these areas, which makes it easier to manage our portfolio. I like to say that each BU head is the owner of a store with their P&Ls and strategies and targets defined. So it's a balance between focus and synergy. We can continue having synergy with operational shared among the business units. So I'm going to go through them again. Consumer health is direct contact with consumers through media visibility at the point of sale. We have more than 850 consultants visiting more than 35,000 drug stores every month. Prescription products with Mantecorp Farmasa. The focus is contacting physicians, which generates demand for our products. We have more than 1,100 reps visiting 165,000 doctors. For Similars and Generics, we want accessibility and promoting the drugs of Neo Química through the drug store clerks. We have the presence of 96% of our products. Our products are present in 96% of Brazilian drugstores. I think that's the largest penetration in the pharma industry. We have a skin care BU that was created in July last year. It was a spin-off from the prescription products BU. And we want to make -- promote this brand not only through physicians, but bring Mantecorp Skincare brand closer to the end user through direct to consumers, so B2C, and also to manage the recently acquired brands like Simple Organic and Bioage. And lastly, the nonretail BU that was created in March. And there's a huge potential for growth. I think it's our largest growth route that Tobias will discuss the market and all the opportunities we have here. With all these strengths that I have described so far, our investments and focus makes a start reaping the results. So for the past 7 quarters, we grew above the market, 3 percentage points above market; for the past 2 quarters, we grew more than 6 percentage points above the market. And we're seeing another quarter, probably the third quarter will be also above market. July, we grew more than the market. August, we haven't closed the figures yet, but we probably will grow more than the market. And we're going to have 2 years now with growth above market. And it's not a surprise for us that this is happening. This is because of all the investments made last year and the company's strategy, which allows us to have these results. And lastly, the last competitive advantage. In addition to focusing on organic is our M&A DNA. So we haven't lost that from the previous acquisitions. We did 3 major transformational acquisitions. We were able to integrate those 3 acquisitions very fast according to plan. So the integration of sales and marketing was done in 6 months for all those companies, and we've been capturing the synergies. So there are approximately 300 million in synergies in the beginning of the transaction, and we're on track to capture those synergies. And we've been making these brands grow even more in our hands than before. So we have 12 percentage point growth above what they were growing before with the previous owners, and Luiz will show some examples in his presentation. And with the M&A integration without dropping the bar in our core business, in our brands that has already been well established. That's what I had to say about the main competitive advantages. I'm very satisfied with the recent results for the company. And I believe that from now on, we'll remain on that track. And I'll be back at the end. So I'd like Luiz come back -- come on up here to talk about our multi-brand strategy in sales and marketing.

Good afternoon. It's great to talk to all of you that are here in person, and for those who are on the webcast. So I'd like to understand how the dynamics of everything that we do for retail and pharma retail, how it will fit into the context that Breno mentioned in our competitive advantages and then can produce the results for the business. I'll explore how our business platform that has been designed in the past years connects to produce results. And at the end, it will show some cases that will represent what that platform produces. So the first thing is that everything that we do is connected to 3 main players, either it's the consumer or patient, physician or clerk from pharmacists. So they may be in their practice or at the drugstore. And that's where we have the final decision of the consumer or patient when they're going to buy our products. So the platform was designed. So it can work around these -- or work together with these 3 players understanding them, understanding their behavioral trends so we can organize, produce and structure ourselves to build and deliver the best solution for all of them. So Breno mentioned the business units. And I put the business units in the center, at the core, because they're the master of that platform. They coordinate what we call centers of excellence. So Lumina, which is the consumer and shopper insights. So Cafehyna, it's about positioning and support from the brands for all these 3 audiences and on the other side, how we get to the last mile, be it taking entertainment, health and wellness through Arena or in a drugstore or at physician's office, doctor's office. But at the end of the day, the BUs are at the core, and they're the ones that coordinate the entire process. Now a little bit more about the centers of excellence and adding to what Breno mentioned. Lumina has been around since 2017 when we became 100% pharma company. It was born together with Hynova. And we're the only one that has its own research and development center. We work with different audiences. We look at consumers. We look at the patient, we listen to clerks and pharmacists and also the physicians. And during this period, we worked with over 85,000 consumers and over 3,000 HCPs with over 700 surveys and research, be it sensorial where we test the impact of our products on consumers or patients or even the opinion of physician and pharmacists about that market research, and we test that on site at the POS, and some of you will have an opportunity of seeing that tomorrow. For those who saw in 2017, 2018, you'll see that we have changed it completely, because we work together with retail and how we see the behavioral trends and how we see the solutions for drugstores in the future. You have an interesting experience if you have an opportunity to go there tomorrow. And by using all the insights and by feeding in all these inputs from Lumina, we put that into Cafehyna and it creates the brand communication with positioning, we work direct with media centers. We do that ourselves. Most companies use third parties and then they have a longer, more complex chain, but we do that directly so we can gain more time. For over a year now, we've had the studios inside the agency. Cafehyna, we have 2 studios. We lowered cost, lowered time, we're faster. And you'll see some of the ads here, some that showed up in the beginning, they were already done in the house. And we'll bring them in even more as we become more digital and we become more agile, we'll do it all in-house. And as we become more Digital, will focus more on performance and indicators to make daily decisions about the best media program. We also work with the partner pool, partnering agencies that we've developed when we want benchmarks from the market or other specific communication solutions, we bring them in. So we can find solution together. And then we can renew things and renew knowledge and bring the benchmark inside for those who work at Cafehyna. At the end of the day, that will create an entire ecosystem that will produce the communication strategy for the brands to get results. Now just so you can -- I'll put this into context. When I talk about Lumina and Cafehyna, you'll see. [Presentation]

That's just a small sample of what we can do in these centers of excellence. And that brings us more agility in the business. It connects not only to the business areas, but also to the other connected areas, so that we can create more appealingness and connections, so we can be more assertive, more productive and faster. As I mentioned, the business units are the maestro. There's a core, they connect the center of solutions and connect them to brand needs and translate that into our go-to-market strategy. And what we -- how we get to the last mile and to the players in the chains and doctors' offices and so on. So we have the 4 business units, and they're divided according to leverage demand. So prescription products. It's what we generate in doctor's office through calls. So we have Farmasa. We're the fourth in this case, 3 years ago, we were the 10th. So the acquisitions, launches and renewing the brand, we were able to increase that. And now we're the fourth in the brand. In Skin Care. Originally, we worked a lot with physicians in the beginning. And a couple of years ago, we brought in digital media. So we're working in parallel with that. We used to work with Mantecorp skin care. And then we created the ecosystem with a digital brand that we're adding on to retail, which is Simple, and with [Indiscernible] Bioage, gives different professional to our profile to our product range. In consumer health, it's focused on what we talk to consumers when they're in a store or when they're at home or anywhere else. We're the first in the market with a very important leadership position compared to others. Here, we work with the power brands, Buscopan, Neosaldina, Benegrip and Engov. Most of you know them. We're the first and in similar drugs and generic, we have the Neo Quimica brand. And here, we're second. And here, we're trying to point out what Neo Quimica has in quality and portfolio strength and affordability to build the portfolio based on the mother brand, Neo Quimica. And all of them have dedicated teams in marketing, planning, trade, sales. They're all demand teams, they're dedicated and verticalized, so we can respect the specificity of each market. And they are the connection of this entire business chain. And they translate the brand strategy, as I mentioned, in our business layers, be it through Arena, as Breno showed us. Arena is a great movement that we did 2 years ago. It was a [Indiscernible] Arena [Indiscernible] naming rights in Brazil. It's the first one that has sector rights. So we have the 6 main brands. As you can see, the power brands and put them in many different sectors in the Arena. For those who have been there, have probably seen that. Each different sector has the name of one of our brands, power brands. And in addition to -- it's not just exhibiting our brands, it's a center of experience with health care professionals and customers, not just to take them to games, but we also discuss business plans with those people, -- we bring in internal people, we do events, conventions. So in fact, we do use everything that's installed there to create a with all the stakeholders in the chain. And we also send that back in local testing for the community, vaccination campaigns in the east side of Sao Paulo and also brings the specific groups to the Arena, not just to create a buzz, but also to replicate that in digital media and social media. As you can see, it was the campaign launch. So it's Arena of number of different options for us to interact with all the important people in the chain. And to add on to that, it's a strength that was acquired and built across the years. So we designed a go-to-market framework that has a differential that one side, retail, on the other side, doctor's offices. So in retail, 300 professionals that visit drugstores in Brazil, be them consultants, merchandising, promotion, or product based on promotion or dermal consultants. Nobody has coverage like us. 36,000 drugstores, we cover over 70% of the demand with directly negotiated by our professionals. 3,100 cities, 66,000 visits a month in person. In addition in doctors' offices, we are not the biggest in terms of people, but in the medical specialties that are in relevance such as ENT, orthopedics, dermatology, cardiology, gynecology, on average, over 80% of coverage and we have a competitive coverage and productivity way above the competition. So where it matters, we have covered above average, and productivity above average, be it in which each representative will do. You can say that compared to the first and second competitor were better and more visits. So using the arena to feed back into the chain, top coverage in drugstores that we go to every week with great coverage in doctors' offices. We can add on to this platform and pursue the results that we have had achieved so far. So what about the success cases? So for the portfolio of the more mature brands, that strategy, that platform can also deliver for acquisitions, it can absorb the acquisitions and deliver an add value to grow and develop the acquisitions, and it can also generate new brands. and at the same time, be ready to receive new options that come in through innovation. I'll mention a few. First example, Benegrip, 64-year-old brand, for 11 years, the market leader, the top of mind in flu and anti-flu medication. So as we understood the flu journey, we expanded the portfolio. It used to be just a blister. And then after that, we have them in boxes and then syrup and the night and day, and more recently, vitamins and supplements that give you energy or immunity to add on to the flu journey. It started off at BRL 36 million and now it's worth BRL 375 million. We cannot only support the baseline, but also grow. And the platform delivers media solutions that speak to the entire family and also point-of-sale experiences that are a huge differential for us. Another example is Rinosoro, over 40 years old. Consistency in expanding the line, the synonymous in nose hygiene. We've visited over 70,000 physicians and presence in over 65,000 drugstores. We're leaders in prescription and sales. And here, as we found new solutions for experiences, especially in devices for breathing medicine. And then, first, we had drops, and then there were sprays, and then the jet. And we've added [Indiscernible] and more recently, high-volume for those who work with more pressure in their respiratory apparatus for treatment. So from BRL 17 million, we went to BRL 170 million in the 10-year cycle. It's worth noting that this is a consumer health brand and prescription product. Different businesses producing the same results. And it's no different for the case of acquisitions. When we talk about Buscopan, the portfolio was very stable, and we saw an opportunity to add on to the products and increase the supply. So recently, we've offered Buscopan blister. We have Buscofem Hot to add on to the pain journey. We brought in a new campaign with more know-how, more digital for the Buscopan communication. We had a campaign with celebrities, and that was very good for brand health and increased visibility by 40% in the point of sale, so [Indiscernible] growing 1.7 year-to-date, and in the past years, we grew 13%. So we've added value to this kind of portfolio as well. And in other segments such as prescription, we have Dramin. We were focusing on physicians. They were -- we weren't using that lever. We brought that back into our medical visits. We started to have medical visits, medical events. We had a price adjustment. We've launched the gel capsules. They were too low prices compared to the pills, and we adjusted that. We did our homework. It was well done, and we went started visiting 45,000 physicians, resulting in less than 2 years at 45% share. We gained 6 percentage points in market share and the growth was 13%, now it's 30%. And that's also valid for the new brands. It's a very important mission to build new brands. It's a challenge. Adalmario will talk about that, what we have about the portfolio moving forward. So the platform has to deliver not only a mature product, but it has to know how to receive a well-established product that comes from the outside, but also know how to create. So two good examples. And here, this has a special effect, so it takes longer. So in the Similars and Generics with Neo Quimica vitamins that we created less than 2 years ago. We used [Indiscernible] Neo Quimica for distribution and the installed execution capacity. We grew our portfolio, and we went from 7 SKUs in 2020. We launched 5 more last year. We launched 2 more this year. And we left a revenue of BRL 11 million, and now our projection of BRL 75 million using our capacity to produce media and also to expand [Indiscernible] and experience, bringing the brand, an ambassador for the brand and vitamins, and also strong point-of-sale exposure. And to conclude also in prescription, Colflex, which is in collagen. When we started in the past, we only had 1 brand of competitors that only worked 1 SKU. We started working 1 SKU. But as we had access to technology partners and could develop new alternatives, we added new solutions to the collagen category, such as vitamins, then hydrolized pills, then HMB, hyaluronic acid and now turmeric. And we also started working with social media. And in point of sale, bringing it from outside of the counter to the counter in less than 5 years. We went from scratch to BRL 90 million. It's our next power brand, as you can see, this line can produce results in different business alternatives. And this is what I wanted to show you. So connect with all this, I first want to thank you very much for this time. And to show all this and see how the future will connect with this platform, I would like to call Adalmario.

Hello. Good afternoon. Thank you for being here. I've seen several familiar faces and also new investors who are looking at Hypera. They came back looking at us. So it's great to be here with you. Speaking of innovation, we've been talking a lot with investors about innovation. And I'm here representing several business departments that use innovation. We have our R&D, [Indiscernible], our team from Anápolis, our regulatory team, portfolio management team, innovation team focused on strategy, product launch, our new business team which is looking for start-ups and building business models inside Hypera. It's a huge team. But its size is the size of Hypera's ambition, which is to be the best health option for Brazilians. And many investors ask, "Well, what do you do in innovation? What is innovation for Hypera." And we had several cases shown here. But when we're looking at innovations, especially with this dedicated team, we always look 5 to 10 years in the future. And what permeates all our decisions and talks and projects is always considering how we can contribute to improve Brazilian's health so that they can live longer and better. At the end of the day, this is what we propose to do, and that's the vision of our innovation team. When we look at all the discoveries and advancements in health care that has been speeding up recently, they're amazing. Recently, we've seen how fast we can develop a vaccine for disease that didn't even exist before. And in 8 months, we have -- we had a vaccine ready. And Brazilians also want to have the opportunity to benefit from all these advances and how it can help them to live longer and with better quality of life in the future. And in face of this changing landscape with structural changes, Brazilians are aging more and more. The population is aging, our pyramid will probably be inverted by 2030. So we might have more people over 60 than children in Brazil, which creates several demands for new services and products. We also have behavioral changes in society that have been -- were happening before the pandemic, but they sped up. So today, health is a key topic in everyone's life. Everyone goes on TV, social media, the news, that's all people talk about health care. And we started to prevent -- have better prevention, better self-care. We noticed this in several of our product brands, huge increase in adherence to treatment. And there are other diseases that are being discovered and symptoms that are changing because of the population's current life habits and diseases that didn't exist 3 years ago like COVID. And now we have to learn how to coexist with it. And along all that, there's another trend, which is digitalization of the health care segment, that more and more, there are new business models, the players are more integrated with huge focus on the patient. So in the past, the focus was on the service and the product and now it's more patient-centric. How can we improve the patient's journey. What I wanted to show to you today is how Hypera stands with all these changes and what we can do. So what are our key strategic pillars for innovation? So I'm going to tell you what we've been doing for the past 4 years, what are the main launches from the company, how this can -- has helped Hypera's growth, why innovation is important for Hypera. What's relationship between launching new products and the company's growth? And how we can be closer to these business units in start-ups and technology, and how we have been including that in our business and also being more connected in several of these ecosystems that are being created and that we've been building our own inside Hypera. This is what I want to show you today. So since 2018, we launched more than 400 products. You've seen the products that we launched with several extension of the lines that already exist in our portfolio, but also creating new brands to enter categories we weren't in before. And also, I would like to show the curve of these launching, how fast it is, if we look at the past 5 years, which is our innovation index. So if we look at the 2 first years, 2018, 2019, we more than double what we had in the first year when we also include the launchings of 2019 and the following years, we were able to grow exponentially of 45%, 50% year-over-year, reaching more than BRL 1.5 billion with the launchings of the past 5 years. And only in 2022, we launched 60 new products. And probably by the end of the year, we will launch 42 additional products. And the products that we've launched until now already contribute with almost 20% of the total of the launches of 2022. When we look at the key cases of success of launches from the past 3 years, I brought 4 examples. Different types of innovation with -- from different business units, different strategies. So the first one is in Engov After, which you will all have the opportunity to try. I think most of you already tried it. We have the opportunity to have the first line extension from Engov, which is a line that is more than 60 years old. And how we had the insight to create this product? So everything that Breno and Luiz mentioned of the excellence centers that we have in consumer research, we've been carrying them out for the past few years, we looked at the customers' journey. And what we noticed that the Engov consumer always took 1 before and 1 after, but they also combine it with some kind of beverage after usually -- like Gatorade, Coke or coffee. So we wanted to know how we could bring all these attributes into one single product, the benefits in one product. And we created in Engov after it was launched at the end of 2019. And it's a huge hit. It already accounts for 1/3 of the brand's total sales, and it helped not only to enter a new category, but it allowed us to increase Engov's sales overall. So it increased the sales of the original Engov. Colflex, this also has an interesting story. We've always seen people that travel to bring Osteo Bi-Flex to Brazil. And we asked why can't we have an Osteo Bi-Flex here as well. So we try to negotiate with the brand to bring it to Brazil. And for several reasons, we were unable to do so, especially regulatory reasons in Brazil, it would be classified as a drug. We would have to have a clinical trial. So how could we launch a brand focused on joint health that is even better than Osteo Bi-Flex. So we started with our hydrolyzed collagen which is the base of the entire line. And we launched several products throughout the years, including new ingredients, new formulations, new pharmaceutical formats. And in the future, we will have more power brands, and one of them will be Colflex. So it already has more than BRL 90 million in sales. It's been growing fast, and we will launch new products from this line to continue with its growth. Another brand that was created in 2018 is Ofolato. We also used the benchmark from other countries, which is methylfolate, and we created an entire line of products in our portfolio, bringing -- including new ingredients like iron and vitamin D, and recently we launched [Indiscernible] which is the product to treat polycystic ovary syndrome for women who want to get pregnant. And it's focused on pregnant women. This line has been growing greatly, and we have several other launches and new pharmaceutical formulations to launch and create some new categories, as well with this brand. And the last example is Rivaroxaban, a molecule that we launched last year. We were the first brand to launch it with physicians. So part of everything that we've been doing in innovation is to be the first to launch after the patent is broken. So it was the first to be launched after Xarelto, and this is the strategy showing that we can launch the same product in 2 business units. So both in prescription and generic. And both products have been in the [Indiscernible] next 12 months, we expect revenues of BRL 67 million. That's why it's important to have a pipeline that is ready for the next patents that drop. So we can be the first ones to go to market. So we can get BRL 60 million in a market that is an BRL 800 million market. So it's a very important strategy. When we look at the contribution of all these launchings for the company's growth. This is a breakdown of our growth according to maturity. At the end of 2022, the portfolio of established brands that we had in the company that were launched before 2018 accounted for BRL 4.4 billion. This portfolio grew in a very relevant manner last year. So we grew almost 20% in the established brands, which accounted for 29% of our growth. They will account for 29% of our growth this year. The M&As are also important. It's something that adds to our growth. So we will have about 500 -- 1,000 more from Sanofi and Takeda. In the previous years, it was more relevant in 2020, 2021. But what we noticed is more -- what really drives the company to grow are the launchings. So the launchings from the past 5 years account for more than 50% of our growth. And they help Hypera to continue to grow above market, continue to gain market share and entering new categories. I also would like to show 4 cases of recent launches that just happened or will happen this month. The first is CBD or kind of BDO. We've been studying the BDO market for the past 4 years. The best way to enter the segment or create this category, it doesn't exist in Brazil. So what is the best way to go in. We only see one product here, but we have a full portfolio with different concentrations and pharmaceutical formulas, and we can enter this segment with an exclusive product. So it will be the first full spectrum product in Brazil that has kind of [BDO], but also up to 2% of THC, creating this effect that boosts the effect of [Indiscernible] and the physician can prescribe lower doses for the patients. And it's a market that has a huge potential for growth, and it can reach almost BRL 6 billion of addressable market. This product can be recommended for several treatments from epilepsy, depression, insomnia and chronic pain. And we believe that we will have at least 5% of this potential market share, reaching 10% in the short term. Another one is Ammy, we launched it 2 years ago. It's our entry in the contraceptive market, which is a BRL 2.5 billion market. It's a patented exclusive product that offers huge benefits for the patients. It has a very low hormone dose without estrogen with high effectiveness with very few side effects. It's a market that we believe we can have at least 5% market share, achieving 10% of market share. So the third product is Ondif, which we just launched it. It was launched at the conference in last month. It's the first oral film of ondansetron here in Brazil. It has a much better sensorial feel than the reference product. And we conducted market share. So 9 in every 10 consumers of the reference product prefer Ondif because of the after taste. So it's a product that we believe a lot. We're entering this category, and we believe that we will have 15% to 20% of the market share of the reference product. And lastly, another strategy in patent expired. We will be the first to launch again. It's the apixaban compound that we should launch by the end of the month, not only in prescription, but also generic version. Today, the reference product has BRL 320 million in the market. And we believe that we should get a market share of at least 25% to 30% or even more given the benefit that we're going to have to be the first to launch. So what about the evolution of our pipeline, what's coming? Last time we had the Hype Day in the beginning of 2021. We had 350 compounds in our pipeline. Since then, we've launched 182 new products, but we were able to renew our pipeline, approving more than 285 projects. And with that, we have a total of 453 projects in the pipeline. So we believe that with the products that we have today, we have a potential to more than double the company's size in the next years. And I'll show you that in further detail about the therapeutical classes that we're betting more on. Per type of innovation first, ones that portfolio comprised. A great part of it is what we have, what we call ME TOO, almost 37%. That means white spaces to cover areas in the market where we're not present, line extensions of our brands that make a lot of sense to our business and generic products to increase the coverage that we have in the generics market through the Neo Quimica brand. Then we have ME FIRST. That's our strategy to be the first to launch after the patent expires. So many products in the patent we're ready to be the first to launch because we know the patent will expire and some products with technological barrier that even though they do not have a patent, no other player launched it yet. So we also have those projects in the pipeline. And after that, we have ME BETTER and ME ONLY where we have higher incremental innovation. ME BETTER, all the incremental innovation that we have, so new deliveries, new pharmaceutical forms, new concentrations new ingredients and new strains that are still not here in Brazil. And lastly, we have the extreme or radical innovation, ME ONLY where here we have new compounds that aren't in Brazil yet and essentially some new compounds that haven't even been launched anywhere. So we're starting to do that kind of partnership with companies that are still developing products in the clinical phase, Phase II/Phase III of clinical trials, to license them and be the first to launch in Brazil. So when we look at the highlights, these are the top 10 products that we currently have in the pipeline. The top 10 accounts for 20% of our total pipeline. As you can see through therapeutical area, their continuous treatment. And that's the greatest part of the market, prescription market. So we should launch them in the midterm. So many of them we have the launch date from 2024 to 2026. Moving on to therapeutic areas. We have this division of the market in our pipeline. So here, we can see that the 3 biggest therapeutic areas in the prescription drugs and generic drugs, the 3 biggest classes, are almost half of this market: cardiology, CNS and endocrinology. In addition, there are therapeutical classes that grow above the market growth in the past 5 years. And they're the classes where we have more projects because we believe that dynamism should continue for these therapeutic areas, and we want to have an increasingly more relevant share in those classes. So in cardiology, today, CVD is currently the disease that kills the most all around the world. And including Brazil, the number of deaths is higher in CVD. 30% of the Brazilian population has hypertension. CNS as well, there are studies and data showing that depression will be the biggest disease in the world by 2030. We have over 10 million Brazilians that have depression or had depression in the past, and there are many other diseases connected to the CNS, such as anxiety and insomnia, so it's becoming increasingly more relevant. Endocrinology, Breno mentioned a bit about this. So Brazil is currently the sixth country with the largest rate of diabetes in the world where 60% of the population is obese. We're the second highest country in bariatric surgery. So we believe we should still have a high demand for new treatments in the future. And this is the biggest part of our pipeline in the number of projects. We have 266 projects. This is what we call the OTC products, including vitamins, supplements, dermocosmetics and painkillers. Those are the 3 biggest areas in the market. And that's where most of our pipeline is. So here, we have the market dynamics where we can launch products faster given the regulatory issues to approve a product. And these categories are more dynamic and they reiterate more information and new ingredients coming up, so we can add more oxygen to our portfolio by launching products in these categories. And to conclude here about the pipeline. This is the Bionovis portfolio. Some of you may not know, but it's a joint venture of 4 pharma companies in Brazil, the Brazilian pharmaceuticals. Each one has 25%. And since its establishment, it's been closing many partnerships with global pharma companies to internalize the products here in Brazil. So the evolution of the Bionovis portfolio, we really believe in its potential. There are already 10 products in the portfolio and 4 of them are to be launched this year. They're also in the new phase of pursuing new partnerships to continue to increase the size of revenues. And as of next year, they'll produce the first product that was internalized, Infliximabe, from Janssen. And with that, the company will grow even more and have better margins. In upcoming years, the plan is to internalize all these other products through partnerships and also pursue development of our own biosimilar product. Biosimilars are the generic drugs from the biologics world. Now going into business models. Here at Hypera, we've also been working on this certain part of our strategy. All these changes are happening in the health care segment. So as we mentioned in previous Hype Days, we currently have a number of initiatives of working with start-ups. We have Hypera Hub and Hypera Ventures that was created in 2020. And since then, we've been doing a lot in the world of start-ups in health care. We have over 355 start-ups mapped, 180 contacted. And I'm pretty sure that there aren't any start-ups that we haven't contacted in our line of work. 22 have been analyzed. And as the conclusion of all the work, we made 5 investments in the past 2 years and also decided to create 3 internal start-ups in our venture builder program. The start-ups were demands, business demands, that we had and where we couldn't find a market for them in the market. So we decided to develop them in-house. Okay, here, so about our ecosystem. We have all of these relationships with HCPs, patients, consumers, drugstores, distributors. And how do all these initiatives fit together? We have Bioage now. It was acquired last year. That came through our corporate venture program. Bioage currently contributed not only to develop new products for our dermocosmetics portfolio, but also it's an area focused on statisticians and selling products for them, we call it the B2B2C model, as well as the franchise model with over 50 franchise stores to service that audience of these statisticians that we didn't have a relationship before acquiring Bioage. We also have Amigo. It's an investment we made last year. It's an integrated solution for physician clinics and health care professionals. We currently have over 3,000 connected clinics in the Amigo system, over 25,000 physicians that use that system on a daily basis. And we truly believe in the potential of this business. So we can take not only product and information to physicians but also solutions and services. So we believe that some have more advance technology amongst all the start-ups in health care. So we really believe in these partnerships because they have a lot of synergy with our business. We also have partnerships with digital prescription platforms. Digital prescription has really grown during the pandemic with everyone at home. So we've been developing many partnerships in that area as well. When we look at patients that are consumers, we also see a number of initiatives in that area. We have the first investment that we made in our venture capital strategy, which was Simple Organic. It's a native digital brand in dermocosmetics. And the founder is here with us, Patricia. You can talk to her later on. So we really admire this brand. They have organic products, clean label products. This brand adds a lot of expertise to our other brands in impact marketing by using influencers. So we're very happy with this acquisition. And we'll give you some flavor on Simple. There's Consulta Remédios It's currently the biggest portal and marketplace in Brazil. People check the website, over 1 million on a daily basis, over 1,000 drugstores connected, over 130,000 products that are cataloged in the Consulta Remédios website, and a very interesting portal for our brands. So they can talk directly to consumers. And not just about drugstore point of sale and distributors, we also have the Hypera start-up created in-house last year to service small retailers. So we currently have almost 20,000 drugstores that order directly from us. It's a hybrid model, omnichannel, where we can take drugstore orders, 24 hours a day, 7 days a week. And direct distribution and sales to our distributors and deliver the products. We currently have an expectation of ending the year at almost BRL 500 million in sales through the Parceiro Hypera, and we believe that, that will increase in future years and bringing other services into that. About Simple Organic, it was the first investment that we made. We have almost 5 million visits on the website in the past 12 months. The average ticket is very high, over BRL 230. And most importantly is recurrence. These consumers are brand loyal, 40% return. A lot of relationship and interaction in social media, so over 450,000 followers on Instagram. And it's an omnichannel model that's very interesting for us to use. Has its own stores, franchises as well, over 26 stores. When we bought the brand, it had less than 20 stores. So we've been increasing new store openings. And as Breno mentioned, when we bought the brand, sales level was close to BRL 10 million, and we were able to triple that in the first year. And now we're going to double towards the end of the year. It's been growing a lot. And it's a candidate to be a new power brand next year. So when we talk about everything that we've been doing, how does all of that connect? That's the next step, how we can connect all these businesses and strengths of each one of the businesses, for the brand together with them, how do we make that work in harmony, so to make the ecosystem actually work as an ecosystem. And here, there's a very important strategic change, which is change focus from product. Many companies were always focused on that but instead focusing on the solution that customers want, how can we meet consumer needs, physician needs, clerk needs, drugstore needs and all our stakeholders. That's the big step moving forward, how can we create loyalty and, by understanding them better, their profile and, with that, develop solutions that involve products, services to attract and engage even more with these consumers. So this is our next step, how we strengthen our brands through this ecosystem and how we can expand this virtuous cycle of knowing more our customers, understand their demands, understand their profile and, with this, develop solutions to bring more customers and create a long-term value when you capitalize that. So this is what we have to focus for the next years. And with this, I pass the floor to Tobias to talk about the non-retail market. Everything I said is the retail market. Now Tobias will talk about the non-retail market.

It's a great pleasure to be here to talk about the non-retail market. Since it's my first Hype Day, I would like to introduce myself. My name is Tobias. I'm a pharmacist. I've been in the pharma industry for 24 years. I started in '98 in Germany at [ Rexalt ] that turned into Sandoz from the Novartis Group. I spent 12 years in the Sandoz Group. I've had several positions in leadership, especially R&D. And then I spent 5 years expat here in Brazil, then 2 in Slovenia. I left Sandoz. I came back to Brazil. I spent 4 years at the Sanofi Medley Group, being responsible for R&D and Latin America market for generics and SMS. Before starting to work at Hypera, I spent 3 years at Cristália, a very strong and well-known market company in the non-retail market. I had my first anniversary at Hypera in August. And our goal, our challenge from now on is to make this business unit of non-retail to grow as much as possible. And how do we do that? Creating sales team and R&D teams to develop these products that we need to dedicate to our market; creating physical structure, so a development center, to develop tests in-house; and create a dedicated portfolio to our non-retail market. And that's how we're going to make this unit grow as much as possible. I would like to start my presentation with a market overview. We're talking about the total pharmaceutical market, which is around BRL 172 billion. The split is 55% for retail. I broke down the COVID vaccine market, which is about BRL 19 billion. If you remove the vaccines from that amount, it's a BRL 59 billion market. It grew about 12% for the past years. And the retail market grew about 11% in the past 5 years. Now focusing on the non-retail market. This BRL 59 billion market, in the past years, it grew 13%. Since there's a split between private channel and public channel, 35% is the public channel and 65% private. Private is private hospitals and clinics and public is for the Ministry of Health and the Secretaries of Health, in the municipality, states and federal. The growth was 9% in the public sector and 16% in the private sector. And why did Hypera decide last year to go into this market more strongly? BRL 59 billion is a very significant part of the total market. This non-retail market grows more than the total pharmaceutical market with a very relevant share in the private channel, 65%, and a growth rate of 60%, which is higher than the public setting. We're talking about oncology, biological products. So they have a higher value-added product and also significant entry barriers for the competition because they require specific knowledge to develop and register that type of product. And they also need financial power for these investments and development. And Hypera hasn't explored this market for the past years in full. So it was an opportunity approach. So there's a lot of growth to be had in that market. What is our strategy? Where do we want to go? What is our vision? And how do we want to be seen from now on? We want to be a relevant market in the institutional market with quality drugs, which is a very important point of focus, with competitive prices, contributing with a greater access to such products by the Brazilian population, be it in the public or private market. And our strategic plan to do that is based on 3 pillars. The first is people, meaning creating dedicated [ technical ] and commercial teams for R&D and sales, focused on our non-retail market. And our sales team in time will change its profile. Currently, we're selling indirectly by distributors. And from now on, in 1 year, we're going to also work directly being part of bids with a new portfolio with oncology and biologicals and products more dedicated to private hospitals. We will also have a specific sales force for oncology and private hospitals. The second pillar is the brick-and-mortar structure, creating R&D centers and exclusive manufacturing lines to create, produce injectables, oncological and biologicals. And the third pillar is to create a portfolio. Today, we are working with a portfolio focused on oral solids. For the non-retail, we need to focus more on injectables. So we defined a list of more than 70 molecules that we've already started developing. We're still focusing on established products, but we will also focus on new molecules for this market as well. I'm going to start with people. Together with me, we have 2 new officers, Vinícius Gil and Marcos Alegria. Vinícius is our Commercial & New Business Development Officer. He has sales market intelligence. He defines our portfolio that we want to create from now on and is responsible for identifying partnerships and companies outside of Brazil to bring the products to the country. Vinícius has been in the non-retail market for 14 years, several departments in Aché and New Business Development Officer at Cristália. Marco Alegria, R&D Officer, 15 years' experience in the pharmaceutical market. Most of these 15 years working at Cristália also. He's responsible for establishing a biotechnology development team. So he's with this first biosimilar phase from the very beginning that was developed and produced 100% in Brazil. We started with 3 people and plus 4, 5 or 6 people in sales. Now we have 57 employees. And I can say that it's an amazing team, very high performers, young, full of energy and willingness to make things happen. And I'm absolutely sure that we have the right people to make this business unit grow as fast as possible. We expect to have about 100 employees by 2023 dedicated to our non-retail market. Second is our brick-and-mortar structure. We bought a pre-existing building in the City of Jundiai. We're now building 11,000 square meters, an investment of BRL 150 million. And in the next 2 years, the full total will be about BRL 400 million. This will be our development facility for these products that we want to develop: oncology, biologicals and specialty care. Oncology, we will have R&D, a pilot plant and also production facilities from now on. We're talking about oral solids and also more traditional molecules that are injectable, lyophilized powders. We will have analytics and R&D for biologicals and a pilot plant that will meet the demand for freeze dried powders and also drugs that are used every day in the hospital, anesthetics, antibiotics, muscle relaxants, that were very important during the pandemic at the [ UCIs ] for intubation. So we have several prefilled syringes, ampoules, powders. And the R&D will happen here at Jundiai and the production for the market afterwards will be in the plant that Breno showed during his presentation in Anápolis that was opened last week, with an investment already reaching BRL 400 million and increasing our capacity threefold. So we will be able to use this plant with competitive product cost. The third pillar that I showed you was the portfolio. On the left, you can see the total market. For non-retail market of BRL 15 billion, our current portfolio accounts for 5%. We defined a list of priorities, 20 (sic) [ 70 ] molecules divided into the 3 main areas: so 28 molecules for oncology, 7 in biologicals and 35 molecules in specialty care. These more than 70 molecules account for 21% of the total non-retail market. We still have a 28% market of products that we're looking at that will supplement our portfolio. 31% of the non-retail is well addressed. So we're talking about anticlonal (sic) [ monoclonal ] antibodies. And 50% of the market, we reached the conclusion that it's not worth tapping into because it's not very attractive. So with our current portfolio, we will be talking about a target market of BRL 15 billion. Now the phase for all these molecules, this is how we want to launch these products. We can split into 3 phases. The initial phase, 2023, 2024, 2025. These opportunities already started in the past or these are initiatives in the short term, like registering. We plan 6 launchings per year until 2025. After 2026, we start launching our in-house developments that are part of that 70-molecule list. So we want to launch more than 15 products per year. And then the complementation phase, so based on the list that we identified, we would have 11 launchings in 2028, 2029, and approve other projects adding to the list so that we can reach about 15 to 20 projects per year. What I've said so far, are plans, strategies and the future. But it's very important to make clear that we're focused on execution and bringing good results to the current portfolio as well. It's not just waiting 5 years before we launch something or grow. We also want to evolve this current portfolio, and the results that we have for the first half of 2022 year-over-year are very positive. We grew 158% considering the current portfolio plus an opportunity that we captured in the first half of immunoglobulin. And even excluding this opportunity of immunoglobulin, we have a growth of 56% in the current portfolio year-over-year. This opportunity with immunoglobulin was already mentioned in our calls. It's an opportunity based on license from ANVISA that allowed us to import as an emergency product. And we're getting the license to import it definitely. Also focused on the first half on restructuring our specific sales force that lead to our non-retail market, covering 100% of Brazil. We increased 4 regions. We added an account manager to cover 100% of the country. I want to conclude my presentation with the slide, translating what it means to hire people, creating business teams and technical teams to develop our new products. We're also building our brick-and-mortar structure, our facilities to manufacture oncology, biologicals and specialty care products with new 70 products. We want to achieve 2028 with BRL 1.4 billion in sales and also the non-retail be accountable for 10% to 15% of the total share. I would like to conclude my presentation now and invite you to a very quick break, 10 minutes, then we'll be back at 4:15. Thank you for your attention. [Break]

Good afternoon, everyone. It's a great pleasure to be here with all of you this afternoon. I'm Juliana Damião. I'm the General Counsel for Hypera. I've been with the group for 12 years. And I'm here to show you our corporate governance and compliance framework. As you know, in the past years, we've been investing a lot in transforming our compliance program, in strengthening our ethical conduct. Here at Hypera, we have a motto that I'd like to share with you, which guides all our business, which is doing what is right always works. And that goes from the intern to the Chairman of the Board of Directors. And that guides us in all our relationships with our partners. And it's not just a pretty motto. It's actually how we run our business. And I'll show you in practice how we've transformed all of that. I'd like to start off by showing our corporate governance framework. We currently have 9 members in the Board of Directors, 3 of the members are independent members. Mr. Flair is an independent member. He's a doctor actually. He's from the clinics hospital (sic) [ Hospital das Clínicas ], and he became a part of the Board in 2019. More recently, we've invited 2 new members to the Board of Directors, Dr. Fernando Bacal. He's a cardiologist from Hospital Albert Einstein. And Dr. Yana, she's an oncologist from Sírio Hospital. When they joined us, we were able to diversify the skills of the Board of Directors, and we also believe that they will be able to contribute a lot to develop our pipeline. The Board of Directors have 3 main Advisory Committees. But I'd like to mention the Statutory Audit Committee that Breno mentioned before. It's comprised of independent members, and they help us in planning and in the routine of company compliance. In fact, they interfere, monitor and assist us in developing the entire program internally. It's also worth noting, as Breno mentioned, that we have the Tax Committee with 100% independent members, effective and interim, and all of them are independent. We'd like to remind you that we currently have 5 statutory officers and they're market executives. Their targets are absolutely connected to the strategic planning of the company. The statutory management is also reporting to the Board of Directors, and we believe that this structure of corporate governance in the company is a competitive advantage, especially when we're comparing that to other Brazilian companies. I would like to highlight the governance department. As you know, we've implemented this department in 2018. We have 2 people that are dedicated and support the entire area of governance at the company of the entire Board of Directors, statutory managers or officers and enable our shareholders to be a part of the General Shareholders' Meeting. So that's what I had to say about corporate governance. And now I'd like to go into the slide that I really love, which is the evolution of our compliance program. First of all, I'd like to mention that in 2013, we created the compliance area. But the big transformation, the big change and transformation, happened from 2016 to 2017. And when the company becomes an actual pharma company focused on drugs, and that's when we review our code of ethics to be in line with the best practices of the industry. We published our anticorruption policy, trained 100% of our employees. And we also have support systems for internal investigation. So today, when we have a claim at the company, we have the right systems to conduct the investigations. And lastly, I'd like to highlight our individual compliance program. So this program effectively is when we hire new employees at the company, during the selection process, we do not look just at the technical competency and skills or just their historical background, we assess them based on ethics. So it's an important barrier of entry. We want to hire people for the company that are, in fact, in line with our ethical values. We want to hire people for the company that are, in fact, in line with our ethical values. The same success that we have in hiring new employees, we also require that from our partners. So in 2018 and 2019, we have implemented the policy of partner integrity. So before we hire a partner by the company, we learn more about them. We understand their ethical values, we understand their history. And if, in fact, they're qualified to become a partner. In 2018 and 2019, we also implemented our risk management process, and I'll tell you more about that later on. We also have fun e-learning to teach our employees about the code of ethics. And we also implemented the government department in 2020. In 2022, we deemed that our compliance program had achieved a very good maturity level. And we believe that it was time for launching our program of ethics and compliance So we launched it again with all our different policies and codes and communicated that strongly so that our employees could continue to understand what our values are. In addition to launching that, we have our compliance portal. So 100% of our employees can access any of the information regarding our policies and training available internally in our systems. As I mentioned, we were so sure that the maturity level of the program was a good. Program was good that for this first time, we hired an independent audit firm in this case that audited our program and recommended new conducts and practices in line with market practices. And that's the recommendation that we had so that we can also plan our compliance program going forward. I'd like to mention that in the ethics and compliance program, we have 8 pillars. But in my vision, the 4 pillars that I have for you are the pillars that have effectively transformed the ethics culture in the company. The first one is the pillar of communication and training so we invested a lot in training for our employees. Over 10,000 employees have been trained to understand the ethical values and that should guide companies business. So we did that. We have a program that when a new employee onboards, they're trained, but we also have a program that sustains that training for those who are still in the company. So we have compliance e-learning, as I mentioned, in person training during the sales convention. So we'd like to say that the commercial team can escape us. In any sales convention, we have 30 or 40 minutes to talk about compliance as well as in the plenary session at the plants. Another important aspect is that we started to train our partners. So we give presentations to them. We go to them and show them the policies, what our code of ethics says and what we actually expect from that partnership. I'd like to mention another pillar that's very important, which is the whistleblowing channel. We have an independent whistleblowing channel that's outsourced and preserves confidentiality of information and of the claims that were reported. So we handle 100% of that. That's an important element of communication with our employees. There's another pillar of continuous monitoring like to talk about our program of integrity of third parties. We want to learn more about them when they enter the company. They can only do that if they have ethical values in line with us. So during that, we trained them once again. We understand their ethical conduct. So we monitor while they're with the company. And the last pillar, policies and procedures, we renewed and invested in new policies and not just launching the new policy. When I bring them in, it's about launching that and training our employees, so that, in fact, they understand what the policy means. So we've done that in the past year, we've launched that, and I'd like to highlight our policies with -- in relationships with the government. So how they have to relate to that, how they have to be a part of that with public entities. So we've done massive training based on that as well. It's an example that is very good about the effective transformation that we had in governance and compliance in the company. We strengthened and prioritized strengthening of governance in our hires. So how does that work today? For an supplier to enter the company, they have to go through procurement. 100% of hires go through procurement. If they believe it's a good supplier that presented a price and good technical conditions to be a partner, they can go on to the next step, the compliance step. As I mentioned before, we do an integrity for third parties on this third party. They have to be validated by the compliance area. We have to believe that the ethical values of those partners are in line with ours. After compliance, it proves that we go into creating the contract. So 100% of the contracts are drafted by our legal department and the signatures are also managed by the legal department, having 2 statutory directors always or officers always find them. As well as the hierarchical levels that are established for signatures. And after the partner onboard, they become a partner and internal audit monitors while there's a third party, if they're respecting what the agreements says, if the proof of service of that partner is effectively adequate. And we are also absolutely sure that we're able to strengthen and give these processes more security when we're hiring. Another important example of change in compliance is, as I mentioned, we implemented the process of managing corporate risk. That's a preventive process. It enables us to understand the risks that the company may be involved in strategic risk, financial risk, operational risk. So if the company has a cyberattack, we have a preventative plan to act on that. So that gives us a lot of tranquility so that we can continue with our business. We have some brief illustrations of the past trainings that we had about compliance, about our policies. The first one, as I mentioned in the last sales convention, we've achieved 2,700 employees. The sales area can't escape us because the agenda is always there. We've also trained -- have training at the plants achieving 1,900 employees in the last training. And hear similar illustration, Compliance Day 2020. We brought in a specialist to talk to all our employees about ethical In 2021, we also had Compliance Day. We brought in a specialist to talk about harassment in the workplace. And now in 2022 on the 16th of September, we'll have a new Compliance Day with the specialist to talk about ethics in the pharma industry. So for illustration purposes, a fun phase of our e-learning about the code of ethical conduct and also the compliance for the where our employees can have access to all the information and training and we encourage them to do that. Now going on to the last part of my presentation. I'd like to talk about our commitments that we are undertaking for 2023. Our commitment is to maintain and continue to publish our policies and intensify our training. But I'd like to highlight some points that I believe are interesting. We're reviewing the code of conduct. And we will publish that again. I talked about ESG and LGPD, which is a Brazilian data privacy law. We align with new pharma company practices, we'll have training about that new code of ethics. And we'll also -- we also have a commitment to publish for any stakeholder, we currently have an internal portal. And in 2023, we'll have an external portal. The audit that I mentioned that Ernst & Young did that's our commitment, and we will be audited every 2 years. So these recommendations, all of them will foster the compliance for future years, always supported by Statutory Audit Committee. In 2023, we'll have Compliance Day, but it won't be just 1 day. We have a commitment of having a week with training to fight corruption, remembering our anticorruption policies and the best market practices as well. And the last important commitment is that in 2023 in the external portal, we will promote all the information about donations and sponsorships that are done for governmental entities. In my opinion, these commitments are in line with the commitments that guide the entire corporation to do what's right always for and that's what we really want to work on. And I do believe that we were able to align our strategies and objectives to our ethical values. So I'm available for any questions during the Q&A. Thank you. [indiscernible], your turn.

Thank you, Juliana. Okay. So for the closing, initially, I mentioned all the different growth levers and the competitive advantages of Hypera. Luiz gave us some details of our go-to-market platform and gave us many examples of how we've been able to grow above the market. And Adalmario showed us everything that we've already done so far, especially from 2018 to 2022. And we still have a pipeline in growth that we've seen so far. So Tobias showed us all the opportunities that we have in the market. With the 70 compounds alone that we've already mapped out, we can achieve net revenues of BRL 1.4 billion and translating that to 2028, that's an increment of 3 percentage points per year. Not to mention the 28% of the market that we plan on addressing, but still having created the business plan to service that market. And Juliana has the evolution that we've had in governance and compliance program, especially as of 2016, but many much have been done since 2018. So that's something that we're very confident about with all these policies that have been implemented in the company. So to put this into perspective, everything that was said about the result and the impact to our portfolio, we've doubled our revenue from BRL 3.7 billion to BRL 7.4 billion in the past 4 years. And we are doubling the segments of our portfolio. So considering the established products, mature products that account for almost 50% of our portfolio. And in that period, we grew approximately 10% per year. So we've grown above inflation in the period. Usually, we believe that that's lower growth because there's nothing new. These products are -- have more than 5 years. But even so with the investments in marketing, we're able to grow above inflation. A part of the portfolio relating to launches, launches that were done in the past 5 years account for 25% of the company portfolio and grew approximately 16% in that period. The non-retail is still small 4%, but with relevant growth in past years of 4%, and the acquisition accounts for about 20% of our portfolio and grew around 13%. These 13% we use the sellout data since it started on 0 on the baseline. And it also shows the period from 2018. So it includes the growth that was still under the old management. And as we've shown, it's speeding up under our management. This is my outlook of how each one of these segments should develop from now on. For the established portfolio, we grew 10%. And I believe that we will maintain this level of growth, a little bit above inflation, 3 percentage points above inflation, which is very feasible. As I mentioned, we invest greatly in marketing media, marketing at the point of sales, visibility at the point of sales, and that's something we will continue to do. That's our source to grow more and more with the established portfolio, which accounts for 50% of our revenues. For the launches, the growth rate was around 16%. I think we could speed this figure up. And as Adalmario showed, we have more products in our pipeline than we had before and bigger projects. Now we're packing large compounds. There's a whole list of products that will lose their patents in the following years. And we are ready to be one of the first to launch them. So we have many sources for growth. The non-retail market, as I mentioned it, we can contribute with at least 3 percentage points in our growth for the next 5 years. The investments were mostly already done. So BRL 800,000 million, BRL 400,000 million in the sterile and BRL 400,000 million in the R&D and pilot plan. This year, we will have invested BRL 550,000 million and the other BRL 350,000 million in the following years. The team is all entirely ready, but now we have to invest in the portfolio and the intangibles that will happen throughout the years, but this will help with at least 3 percentage points for the company's growth in M&A, which accounted for 30% growth, the 3 acquisitions that were done recently in the very short term, our focus is not on new acquisitions. But as the company has the financial capacity and deleverages, that's another potential for the company to grow. Since we can generate a lot of value for the shareholders by capturing synergies and also growing the established brands. We will definitely have more opportunities to do investments of portfolios from multinational companies like what happened with these 3. We're seeing this process happening in other companies and it will continue to happen. And lastly, to conclude, I want to talk about our main strategic goals for the midterm. I would like to say that I'm very happy with the results that the company achieved for the past years. I think we're at the best moment of our company in the last decade. And I see this continuing for the following years because of everything we said until now. Our main strategic goals are to consolidate our leadership position. We have a market share of 8.7%, but it's still very close to the second place. We want to grow above market. The 2%, 3% percentage points above market that we've been growing for the past 2 years, we want to continue like that for the future so we can consolidate our leadership position in the retail market. The second is to continue to explore new avenues of growth. We're always -- would have our values is to be in tune to what is happening. We're always looking at opportunities for M&A or entering new markets. But in the short term, specifically the non-retail market, will give us good opportunities. And lastly, focusing on deleveraging the company in the short term. So generate cash. We have EBITDA in operational cash flow that is very large, and we want to see that even more focusing on generating cash. We have a work group in the company focusing on that. I didn't mention, but it's also at overall metrics. Free cash flow is a global metrics for compensation for the executives in the company, and I see a rich potential, especially by reducing debt and by reducing interest rates, which probably reached its peak. So there is a tendency for that to drop, and this will have a huge impact in the company's profitability. So despite all the gain in EBITDA that we had for the past years, our net income didn't grow as much because of the interest rates. But as this turns around, we will have a huge opportunity to increase the company's net income and also giving space for a new cycle of acquisitions, not in the short term, but in the midterm, that's a great opportunity for growth. This is what I would like to share with you. I would like to call to the stage our speakers. So [indiscernible], Adalmario, Luiz and Juliana for a Q&A session.

We're going to start our Q&A session. And the first question were sent by the webcast. Bob Ford from Bank of America. His question is about the potential size for the Simple Organic market. What is the potential of that brand for the company?

I'll answer it. Simple Organic is positioned in the dermocosmetics market. And we think the people who bought synthetic and more traditional products will migrate. And now they have this alternative of buying organic and natural products. When we look specifically at the younger generation by millennials and generation z, they focus on sustainability and the types of products that they're consuming and what the brand is doing, the concern with the environment, that's more -- much more important and relevant to them. And we see this growth coming from that younger generation. So in terms of a target market, it's the one that we showed of about -- the pharma market of BRL 6 billion. It's one of the largest markets, and a lot of that demand comes from what I just mentioned.

Okay. Now we can have questions from the audience.

Congratulations for your [indiscernible]. I'm Joseph from JPMorgan. I have two questions. The first one is for Adalmario's presentation. Looking at the markets that you addressed, you mentioned BRL 53 billion in Prescription and Generics that you could address. My question is to try to quantify your growth plan and the potential of your pipeline. How much you already covered of the sector today with Hypera's portfolio and the target with the pipeline? And also the BRL 31 million for the Generics. The second question is for Tobias. And one of the growth avenues is a BRL 15 billion market. When you look at the infrastructure that is being built at Hypera, how does that compare to what you we have in the market? What is the challenge of capturing human capital for you to build that? And when we look at the market, the CapEx necessary for that surprises negatively. So you spent more than expected to achieve the biologics. I would like to know how comfortable you are with the business plan and how much of the intangible investment those 70 molecules that you have in your pipeline will require? And I had talked to Breno during the break. How do you see the opportunities of M&A of the non-retail to speed that even more?

Answering your first question, Joseph, thank you for your question. When we look at the pipeline that we have for retail, which I mentioned on my part, basically, the projects that we have today, they address 100% of the size of the retail market. As Tobias mentioned in his presentation, it's a market that is about BRL 100 billion, which we already operated with our brands, Generics and Prescription products. So the focus for giving is per product category, what is the best strategy for us to increase our share on those categories that we already are relevant. And on those, we aren't, what is the best way to enter that. When we mentioned cannabidiol, which is a product for the central nervous system, neurology and psychiatry, we still have a very limited portfolio for that category, but we've been studying for the past years how we can create a pipeline to be a more relevant player in that category. So our ambition in all categories and the treatment classes is to be #1. In some, we already are #1. We -- our strategy is, what do we do to continue strengthening our position and continuing leading these categories. And some others, leadership will come as we are able to launch and develop our pipeline and invest in sales force and new products and new categories. So answering your question, the addressable market are BRL 100 billion. And we believe that we will be able to gain market share in some categories faster than others, but it's a pipeline of 450 products. So it's very diverse.