Recordati Industria Chimica e Farmaceutica

Earnings Release • Oct 28, 2021

Milano, 28th October 2021

First nine months 2021 highlights

• Q3 results continued to reflect the positive trends already seen in Q2, with rebound of revenue across SPC, strong contribution from Eligard(1) (all key markets now selling directly) and continued strong growth of Rare Diseases
• YTD Q3 net revenue of €1,156.2 million was +5.7% vs PY or +8.6% at CER; excluding Eligard® revenue of €59.4 million, growth in CER would be +3.2%, with good revenue momentum in recent months more than off-setting the full year impact of 2020 LOEs and impact of Covid-19 restrictions particularly on flu medicines in 1H
• Financial results are in line with expectations, with operating results reflecting planned increased investment behind Endo and Eligard® and return to higher level of activity in the field. Results also reflect higher financial charges (due to FX volatility) and non-recurring tax benefits of €26.2 million recognized in Q2:
• EBITDA(2) €447.9 million or 38.7% of sales, +2.1%
• Net Income €296.4 million or 25.6% of sales, +8.1%
• Adjusted Net Income(3) €313.4 million or 27.1% of sales, -1.3%
• Free cash flow(4) €352.9 million, an increase of € 69.6 million vs same period 2020
• Continued focus on ESG agenda results in MSCI rating improvement and inclusion in Euronext MIB ESG index
• Board approved interim 2021 dividend of € 0.53 per share, consistent with our dividend policy
• Approved a share buy-back program for a maximum of 1 million shares to service the stock option plans

(1) Acquired under license from Tolmar International Ltd. in January 2021

(2) Net income before income taxes, financial income and expenses, depreciation, amortization and write-downs of property, plant and equipment, intangible assets and goodwill, and non-recurring items

(3) Net income excluding the amortization and write-downs of intangible assets (except software) and goodwill, and non-recurring items, net of tax effects (4) Operating cash flow excluding financing items, milestones, dividends, purchases of treasury shares net of proceeds from exercise of stock options

® Eligard transition ahead of plan, with positive early signals from active promotion

• Revenue of €59.4 million* is ahead of expectations due to earlier switch to direct sales and Recordati promotion in several markets
• Recordati is MA Holder in all Mutual Recognition Procedure markets, with around 30 Marketing Authorisation Transfers completed before the end of September
• Eligard® is being promoted directly by our affiliates in 24 countries and indirectly by our partners in 6 additional countries with positive feedback from HCPs
• Encouraging signs of changes in the sales trend in early promotion markets with August in-market sales returning to growth in Spain and Germany and improvements in other markets including France and Italy
• The development of the new device by Tolmar is progressing, regulatory filing now expected in Q1 2022
• On track to deliver just over €80 million revenue for FY 2021

Countries directly promoting Eligard® Countries indirectly promoting Eligard® by our partners

Signifor® & Signifor LAR® sales growth continues in Q3 2021 Isturisa® launch on track in US, EU and JP

Signifor® and Signifor® LAR commercialization on track

• YTD Q3 2021 reported Net Revenue of ~€58.5 million
• Growth of in-market sales at constant exchange rate estimated to be around 10% vs 2020*
• Continued new patient acquisition in all Regions across all approved indications
• Transfer of Marketing Authorization almost finalized in wave 2 markets

Isturisa® launch and new patient acquisition progressing as planned

• Isturisa® YTD Q3 2021 Net Revenue ~€32 million

• Robust patient uptake in US, France and other EU markets
• Reimbursement price agreed in Germany in line with expectation, discussion ongoing in other EU markets
• Launched in Japan on June 30th, 2021. Performing according to plan
• Strong support from top KOLs and patient organizations continues

Main products sales

5

(million Euro)	9M 2021	9M 2020	Change %
Zanidip® (lercanidipine)	107.2	106.1	1.0
Seloken®/Seloken® ZOK/Logimax® (metoprolol/metoprolol+felodipine)	73.0	77.7	(6.1)
(1) Eligard®	59.4	-	n.m.
Urorec® (silodosin)	45.3	58.5	(22.6)
Livazo® (pitavastatin)	31.8	42.5	(25.0)
Zanipress® (lercanidipine+enalapril)	31.3	38.2	(18.1)
Other corporate products (2)	198.1	198.7	(0.3)
Drugs for rare diseases	279.4	232.4	20.2
of which Endo franchise(3)	90.5	53.8	68.2

(1) Eligard® net revenue includes margins booked as net revenue until transfer of market authorizations and distribution

(2) Includes the OTC corporate products for an amount of € 79.3 million in 2021 and € 78.4 million in 2020

(3) Endo franchise net revenue 2020 includes margins on sales of Signifor® and Signifor® LAR until transfer of market authorizations

A diversified product portfolio

Data: First nine months 2021 Total revenue € 1,156.2 m

Composition of revenue by geography

(million Euro)	9M 2021	9M 2020	Change %
Italy	195.8	202.9	(3.5)
France	112.2	109.1	2.8
Germany	111.7	100.6	11.1
Spain	85.9	63.1	36.1
Portugal	33.5	32.6	2.8
Turkey	53.5	62.4	(14.3)
Russia, other CIS countries and Ukraine	63.4	69.1	(8.2)
U.S.A.	127.5	89.4	42.6
Other CEE countries	80.3	67.1	19.6
Other W. Europe countries	75.9	66.9	13.5
North Africa	27.3	33.4	(18.1)
Other international sales	153.7	159.3	(3.5)
TOTAL PHARMACEUTICALS	1,120.8	1,055.9	6.1
CHEMICALS	35.4	37.9	(6.6)

(In local currency, millions)	9M 2021	9M 2020	Change %
Russia (RUB)(1)	4,040.3	4,276.8	(5.5)
Turkey (TRY)	478.7	450.3	6.3
U.S.A. (USD)	152.5	100.6	51.6

Geographical breakdown of pharmaceutical¹ revenue

Data: First nine months 2021

Pharmaceutical (1) revenue € 1,120.8 m

(1) Excluding sales of pharmaceutical chemicals which are € 35.4 million, down by 6.6% and represent 3.1% of total revenue.

First nine months 2021 results

(million Euro)	9M 2021	9M 2020	Change %
Revenue	1,156.2	1,093.8	5.7
Gross Profit	843.2	785.6	7.3
as % of revenue	72.9	71.8
SG&A Expenses	347.1	310.3	11.8
as % of revenue	30.0	28.4
R&D Expenses	119.7	106.3	12.6
as % of revenue	10.4	9.7
Other Income (Expense), net	(3.5)	(4.9)	(27.9)
as % of revenue	(0.3)	(0.4)
Operating Income	372.9	364.0	2.4
as % of revenue	32.3	33.3
Financial income/(expenses), net	22.2	11.2	98.3
as % of revenue	1.9	1.0
Net Income	296.4	274.1	8.1
as % of revenue	25.6	25.1
Adjusted Net Income (1)	313.4	317.5	(1.3)
as % of revenue	27.1	29.0
EBITDA (2)	447.9	438.8	2.1
as % of revenue	38.7	40.1

(1) Net income excluding the amortization and write-downs of intangible assets (except software) and goodwill, and non-recurring items, net of tax effects

(2) Net income before income taxes, financial income and expenses, depreciation, amortization and write-downs of property, plant and equipment, intangible assets and goodwill, and non-recurring items

First nine months 2021 results

Operating Segments

REVENUE

Primary and specialty care 75.8%

Margin on Sales:

Treatments for rare diseases: EBITDA 47.4%, EBIT 38.5% Specialty & primary care: EBITDA 36.0%, EBIT 30.3%

EBIT

Treatments for rare diseases 28.8%

Primary and specialty care 71.2%

EBITDA

Treatments for rare diseases 29.5%

Primary and specialty care 70.5%

First nine months 2021 cash flow

(million Euro)	9M 2021	9M 2020	Change
EBITDA	447.9	438.8	9.1
Movements in working capital	12.8	(68.8)	81.6
Changes in other assets & liabilities	(14.6)	(18.9)	4.3
Interest received/(paid)	(11.3)	(11.2)	(0.1)
Income Tax Paid	(61.6)	(45.0)	(16.6)
Other	(5.1)	1.6	(6.7)
Cash flow from Operating activities	368.1	296.5	71.6
Capex (net of disposals)	(15.2)	(13.2)	(2.0)
Free cash flow	352.9	283.3	69.6
Increase in intangible assets (net of disposals)	(61.4)	(93.1)	31.7
Dividends paid	(109.4)	(110.5)	1.1
Purchase of treasury shares (net of proceeds)	(29.0)	(15.6)	(13.4)
(1) Other financing cash flows	0.6	25.6	(25.0)
Change in cash and cash equivalents	153.7	89.7	64.0

Net financial position

(million Euro)	30 SEPT 2021	31 DEC 2020	Change
Cash and cash equivalents	341.9	188.2	153.7
Short-term debts to banks and other lenders	(13.5)	(12.6)	(0.9)
Loans and leases – due within one year	(228.1)	(270.2)	42.1
due after one year(1) Loans and leases –	(815.0)	(771.2)	(43.8)
NET FINANCIAL POSITION	(714.7)	(865.8)	151.1

Full year 2021 outlook

Expect FY results in line with the objectives set at the start of the year, at lower end of the guidance range

• Revenue likely to land in lower end of target range:
• FX headwind of -2%/-3%, slightly adverse to plan (particularly TRY)
• SPC returning to growth, with first signs of recovery of C&C market unlikely to fully off-set adverse impact in the first part of the year and market headwinds in CEE & Turkey, assuming no significant new waves of Covid restrictions
• Eligard® transition ahead of schedule (revenue of just over €80 million*)
• Robust growth of RRD portfolio across all Regions; Endo uptake on track, with base set for further growth in 2022
• EBITDA margin on track, 2H reflects increase in field activity and seasonality
• Financing costs of around €28 million (reflecting €6-7 million FX losses due to high volatility)
• Tax rate to be around 17%, reflecting planned ACE benefit from reverse merger and additional Q2 non-recurring benefit of €13 million from Magnesio Supremo® step up

Company declarations, disclaimers and profile

DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANY'S FINANCIAL REPORTS

The manager responsible for preparing the company's financial reports Luigi La Corte declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this presentation corresponds to the document results, books and accounting records.

Statements contained in this presentation, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Company's control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements.

All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company's activities and are not intended to indicate the advisability of administering any product in any particular instance.

Recordati, established in 1926, is an international pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003828271), with a total staff of more than 4,300, dedicated to the research, development, manufacturing and marketing of pharmaceuticals. Headquartered in Milan, Italy, Recordati has operations in Europe, Russia and the other C.I.S. countries, Ukraine, Turkey, North Africa, the United States of America, Canada, Mexico, some South American countries, Japan and Australia. An efficient field force of medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in several therapeutic areas including a specialized business dedicated to treatments for rare diseases. Recordati is a partner of choice for new product licenses for its territories. Recordati is committed to the research and development of new specialties with a focus on treatments for rare diseases. Consolidated revenue for 2020 was € 1,448.9 million, operating income was € 469.0 million and net income was € 355.0 million.

Offices: Recordati S.p.A. Via M. Civitali 1 20148 Milano, Italy Investor Relations: Federica De Medici +39 02 48787146 demedici.f@recordati.it Investor Relations: Lucia Abbatantuoni +39 02 48787213 abbatantuoni.l@recordati.it Website: www.recordati.com