CSL Ltd. — M&A Activity 2014

Oct 26, 2014

27 October 2014

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For immediate release

CSL to acquire Novartis influenza vaccine business

CSL Limited (ASX:CSL; USOTC:CSLLY) today announced that it has agreed to acquire Novartis’ global influenza vaccine business for US$275 million. The business will be combined with CSL’s subsidiary, bioCSL.

Combining bioCSL’s existing influenza vaccine operations with the Novartis business will create the number two global player in the US$4 billion global influenza vaccine industry, with manufacturing plants in the US, UK, Germany and Australia, a diversified product portfolio and strong pre-pandemic and pandemic franchises in its major centres of operation.

The combined business will have a strong growth profile and is expected to achieve sales approaching US$1 billion per annum over the next 3 to 5 years.

The Novartis influenza vaccine business is one of the largest in the world, with net sales in the 12 months to 31 December 2013 of US$527 million. The business has state-ofthe-art manufacturing facilities and a diversified, late stage product pipeline.

CSL Managing Director and Chief Executive Officer, Mr Paul Perreault, today said, “The Novartis influenza vaccine business provides bioCSL with a global leadership position in an attractive sector we understand intimately. It will transform bioCSL by giving it first class facilities and global scale as well as product and geographic diversity.

“CSL has demonstrated its ability to make the most of specialist pharmaceutical acquisitions in areas we know well and this transaction has the potential to create a global platform for bioCSL that is comparable in many aspects to our global protein science business”.

Final settlement of the transaction is expected to occur in the second half of calendar year 2015, subject to regulatory approval.

Acquisition synergies are estimated to reach US$75 million per annum by fiscal year 2020. Integration costs are estimated at $US100 million, accruing predominantly in fiscal year 2016.

The acquisition is expected to be funded through surplus cash and is not expected to impact the share buy-back program announced at the Company’s Annual General Meeting in October 2014.

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27 October 2014

Media and analyst briefings

CSL’s Chief Executive Officer, Mr Paul Perreault will host the following briefings today (AEDT):

10.15am media conference call

Australia: International: Conference ID No:

1800 908 299 +612 9007 8048 854967

11.00am analyst conference call Australia: International: Conference ID No:

1800 908 299 +612 9007 8048 290247

For further information, please contact:

Investors: Mark Dehring Head of Investor Relations CSL Limited Phone: +613 9389 2818 Email: mark.dehring@csl.com.au

Media: Sharon McHale Senior Director Public Affairs CSL Limited Mobile +61 409 978 314 Email: sharon.mchale@csl.com.au

US media Inquiries:

Natalie de Vane CSL Behring Phone: +1 610 878 4468 Mobile: +1 610 999 8756 Email: natalie.devane@cslbehring.com

Tim Duncan Hintons & Associates Mobile: +61 408 441 122 Email: tduncan@hintons.com.au

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Acquisition of Novartis’

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Legal Notice

Forward looking statements

The materials in this presentation speak only as of the date of these materials, and include forward looking statements about CSL Limited and its related bodies corporate (CSL) financial results and estimates, business prospects and products in research, all of which involve substantial risks and uncertainties, many of which are outside the control of, and are unknown to, CSL. You can identify these forward looking statements by the fact that they use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “may,” “assume,” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance. Factors that could cause actual results to differ materially include: the success of research and development activities, decisions by regulatory authorities regarding approval of our products as well as their decisions regarding label claims; competitive developments affecting our products; the ability to successfully market new and existing products; difficulties or delays in manufacturing; trade buying patterns and fluctuations in interest and currency exchange rates; legislation or regulations that affect product production, distribution, pricing, reimbursement, access or tax; litigation or government investigations, and CSL’s ability to protect its patents and other intellectual property. The statements being made in this presentation do not constitute an offer to sell, or solicitation of an offer to buy, any securities of CSL.

No representation, warranty or assurance (express or implied) is given or made in relation to any forward looking statement by any person (including CSL). In particular, no representation, warranty or assurance (express or implied) is given in relation to any underlying assumption or that any forward looking statement will be achieved. Actual future events may vary materially from the forward looking statements and the assumptions on which the forward looking statements are based.

Subject to any continuing obligations under applicable law or any relevant listing rules of the Australian Securities Exchange, CSL disclaims any obligation or undertaking to disseminate any updates or revisions to any forward looking statements in these materials to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based. Nothing in these materials shall under any circumstances create an implication that there has been no change in the affairs of CSL since the date of these materials.

Trademarks

Except where otherwise noted, brand names designated by a ™ or ® throughout this presentation are trademarks either owned by and/or licensed to CSL or its affiliates.

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Acquisition of Novartis’ influenza vaccines business for US$275 million

• Attractive opportunity to create leading global position

• Scale economies, product differentiation and pandemic preparedness contracts to drive sales growth and robust margins

• State-of-the-art facilities with substantial capacity to support growth

• Significant value creation potential for CSL and enhanced strategic optionality for bioCSL

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Combined business well placed for growth

• 2 position in global influenza vaccine industry

• Combined influenza vaccine sales expected to approach US$1 billion in 3 to 5 years

• Well positioned for growth following recent significant investment

• State-of-the-art facilities in Holly Springs, US and Liverpool, UK

• Diversified, late stage pipeline

• Significant pandemic preparedness contracts, including US and UK

• Synergies estimated at US$75 million pa by FY20

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Influenza vaccine industry dynamics

• US$4 billion global industry for seasonal influenza vaccine

• In typical year:

• 5-20% of the global population contract influenza

• 3-5 million cases of severe illness

• 300,000-500,000 deaths

• Industry currently shifting from TIV to QIV

• Governments increasingly focused on local production for pandemic preparedness

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Current bioCSL influenza business transforming

• Anticipate FY15 Northern Hemisphere sales of ~22 million doses vs 18 million doses in FY14

• Established commercial infrastructure in US, achieving 45% volume growth in FY15

• FDA approval of first needle-free delivery system for inactivated influenza vaccine

• New product registrations in Europe

• Commenced clinical trials for QIV

• Focusing on speed to market and operational efficiencies

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Differentiated product portfolio

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• Differentiated, adjuvanted influenza vaccine

• • Currently registered outside US for 65yr+

• Manufactured in Liverpool, UK

• Cell-culture influenza vaccine

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• Currently registered for 18yr+

• Holly Springs, US, licensed for seasonal production in 2014

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• Existing bioCSL influenza vaccine

• Currently indicated for 5yr+

• Manufactured in Parkville, Australia

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Key R&D Programs Well Advanced

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• TIV Filing • Filing in 2014 • PIII completing 2014

• TIV Phase III • Expand age (18yr+ to 4yr+)

• • Adjuvanted QIV

• aQIV Phase III • Filing in 2015+

• • Cell culture QIV

• QIVc Phase III • Filing in 2015+

• • Age 18yr+

• QIV Phase III • Filing 2015

• • Age 5yr+

• QIV Phase III • Filing 2016

• • Age 6mo+

• QIV Phase III • Filing 2017 bioCSL Product Novartis Product

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Medium term product portfolio expansion

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bioCSL standalone bioCSL + Novartis influenza
revenue
revenue in 3-5 years
Other
Pandemic
Flucelvax
Fluad
Afluria / Fluvax
Afluria / Fluvax
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Addition of state-of-the-art cell culture and egg based manufacturing capabilities

Overall Network

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Holly Springs, US

• Pandemic and seasonal capacity

• State-of-the-art facilities

Holly Springs, US

• Cell culture production, first major advancement in influenza production in over 40 years

• Result of joint partnership with US Department of Health and Human Services

• Capacity of 50m seasonal doses

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Liverpool, UK

Liverpool, UK

• Egg-based production

• UK’s only injectable flu vaccine facility

• Capacity of 40m seasonal doses

Marburg, Germany

• Vaccine-sparing MF59 vaccine adjuvant, shown to enhance immune response

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Key Novartis influenza vaccine business financials

Key P&L Items Key Balance Sheet Items ~~12 Months to 31 Dec 2013 as at 31 Dec 2013~~ Net Sales US$527 million PP&E US$687 million R&D US$144 million Inventory US$90 million EBITDA[(1) ] (US$138 million)

(1) Equivalent to operating income before depreciation and amortisation

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Financial impacts

• Fair value of net assets acquired expected to exceed consideration, resulting in a one-off accounting gain

• Financial impacts

• Including accounting gain on acquisition, accretive in FY16

• Accretive within 2-3 years

• Synergies of US$75 million per annum by FY20

• Integration costs of US$100 million predominantly in FY16

• Funding

• Funding through surplus cash

• No impact on A$950 million buyback announced at AGM

• Acquisition expected to close during second half of CY15

• Transaction costs in FY15

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