midterm report subject financial planning and policy topic the new project of covid 19 medicine

1 COMPANY INTRODUCTION Vision: “For a more beautiful and healthier life.” Mission: “DHG Pharma always provides high-quality products and services to satisfy the aspiration for a more bea

VIETNAM GENERAL CONFEDERATION OF LABOUR TON DUC THANG UNIVERSITY FACULTY OF FINANCE AND BANKING

ĐẠI HỌC TON ĐỨC THẮNG

TON DUC THANG LINIVERSITY

MIDTERM REPORT SUBJECT: FINANCIAL PLANNING AND POLICY

2 Tran Ngoc Anh Thue B19C0068

Ho Chi Minh City, 14° December 2021

List of tables

Table 6 The free cash flow of the project

Table 7 Cost of capital (WACC)

Table 9 Two variables analysis between Sales and COOS Lee

Table 10 Best, Worst and Base Case

1 COMPANY INTRODUCTION

Vision: “For a more beautiful and healthier life.”

Mission: “DHG Pharma always provides high-quality products and services to satisfy the aspiration for a more beautiful and healthier life.”

Core Value:

¢ Our highest commitments are quality, safety, & effectiveness

* Our ways of doing business are with responsibility, cooperation, & promotion

* Our foundation for development is knowledge & creativity

* Our pride is DHG Pharma’s cultures and identify

* Our long-term goal is mutual prosperity with partners

* Our activities all centered around the benefits of the community

* Our competitive advantage is the superior differentiation

History:

« The predecessor of DHG Pharma is the 2/9 Pharmaceutical State Enterprise, established

on September 2, 1974, at Kenh 5 Dat set, Khanh Lam Commune (now Khanh Hoa Commune), U Minh District, Ca Mau Province

« After April 30, 1975: the Department of Public Health of the Southwest Region was dissolved, and the 2/9 Pharmaceutical Enterprise was assigned to the Hau Giang Department of Health for management

2006 - | High-quality Vietnamese goods, contributing to the cause of | Prime Minister

All of these noble titles showed that DHG Pharma has been gradually developed and sustainable in its industry and not only tries to get more and more noble titles but also brings people more and more healthy products

Distinguished & spotlight Awards in 2020:

* 8 consecutive years Top 50 Best Listed Companies voted by Forbes Vietnam

* 2 consecutive years of Scoring Hat-tricks at the Vietnam Listed Company Award with the following awards:

- Top 10 Best Annual Reports (Midcap)

- 1 Prize for Best Corporate Governance Report (Midcap)

- Top 5 Best Sustainable Development Reports

* 5 consecutive years Top 10 Prestigious Pharmaceutical Companies voted by Vietnam Report

* 9 consecutive years Top 50 Vietnam’s Best Performing Companies organized and voted

by Vietnam Investment Review Magazine

« 5 consecutive years Top 50 Leading Brands in Vietnam voted by Forbes Vietnam

* Certificate of Merit from The State Securities Commission for the contribution to the development of HoChiMinh Stock Exchange (HOSE) and the stock market in the period

2015 — 2020

* 3 consecutive years Top 15 Listed Enterprises with Best Performances (2017 — 2019)

* 24 consecutive years Vietnamese High-quality Goods voted by consumers

1.2 Business industry:

Manufacturing and trading pharmaceuticals, functional foods and cosmetics

- The pharmaceutical industry discovers, develops, produces, and markets drugs or pharmaceutical drugs for use as medications to be administered (or self-

administered) to patients, with the aim to cure them, vaccinate them, or alleviate the

symptoms

- The functional food industry, consisting of food, beverage and supplement sectors, claimed to have an additional function (often one related to health promotion or disease prevention) by adding new ingredients or more of existing ingredients

- The cosmetic industry describes the industry that manufactures and distributes cosmetic products

1.3 Introduction of products:

¢ Antibiotic

Antibiotics are one of the key categories that account for more than 35% of the sales of DHG’s goods Over the past 15 years, Klamentin — Haginat have always been trusted by health workers, doctors, and large hospitals These two brands have been available in more than 98% of drugstores nationwide Many products of the Antibiotic category are proven

to be bioequivalent to the invention drugs and are always present in the Top 200 market- leading products (according to IQVIA research)

Outstanding products: Klamentin - Haginat, Zaromax 500, Clabact

¢ Analgesic - Antipyretic

In Vietnam, DHG Pharma is the first enterprise to launch a diverse line of analgesics - antipyretics for all ages As for the sachet product for children in the form of sweetened orange-flavored effervescent powder, which conquers the trust of doctors, pharmacies and consumers With more than 20 products meeting Japan-GMP standards, this category has offered its customers the choice of international quality products at affordable prices

Outstanding products: Hapacol 250, Hapacol 650, Hapacol 650 Extra, Hapacol Blue, Hapacol Extra

¢ Respiratory

More than 70% of sales of the Respiratory category are manufactured on Japan-GMP production lines, effectively meeting the demands of treating a wide variety of respiratory diseases Recently, Cozz IVY syrup with France-originated imported materials is effective

in treating cough with phlegm and is well-welcomed by doctors, pharmacies, and consumers

Outstanding products: Telfor, Medlon, Cozz IVY

¢ Nutrition

With the desire to provide nutrition for the health of the community, the nutrition industry

is always innovating and developing many new products best to meet the demands of every single family member Among them, Bocalex is taking the lead in sales of effervescent tablets with vitamin supplements Bipp leads the sales of children’s vitamin candy products Furthermore, the Nutrition category develops new products from Spirulina such

as Spivital, Pimum, and Anomin Gold to promptly meet the demands of all family members

Outstanding products: Bocalex, Bipp, Pimum

« Musculoskeletal

The category has more than 70% of products meeting Japan-GMP and bioequivalence DHG Pharma is proud to own AlphaDHG - one of the leading products in the domestic market and the first choice of doctors This product helps increase treatment efficiency but still saves costs for patients In addition, the Atocib product group (Etoricoxib, new generation of painkillers) are certified 2 standards that are the first bioequivalence in the Vietnamese market and Japan-GMP standard

Outstanding products: Atocib, Mebilax, AlphaDHG

* Gastrointestinal - Hepatobiliary

This is the 3rd sales contributing category of DHG Pharma with more than 10 products

manufactured on the production line meeting international Japan-GMP standards and treatment needs on prescription and non-prescription products Several products of this category reach scientific and technical content, such as Naturenz — cooperation with Vietnam Institute of Biotechnology, Haxium - New generation of proton pump inhibitor,

Outstanding products: Lipvar, Rotor Clip, Apitim, Vastec

¢ Beauty Care

Apart from skin treatment products, the industry has expanded to beauty care, helping consumers trust quality products from reputable pharmaceutical companies Among these, Medskin is the product line for treating skin, virus, and bacteria diseases The most outstanding product among these is Medskin Clovir tablets manufactured on the Japan- GMP certified production line The Bioskin sanitizer line is a great combination of Nano Silver and natural herbal essential oils, which provides an effective solution for preventing many strains of bacteria and maintaining hand moisturization Nano Silver is highly antibacterial, deodorant and safe for skin Bioskin brand has been and will always accompany agencies and people to take care of their health and prevent the Covid-19 pandemic

Outstanding products: Medskin, Bioskin

¢ Imported Products

In order to diversify products, increase sales and competitiveness of DHG Pharma in the market, DHG Pharma outsources its products at foreign pharmaceutical manufacturers

such as Mitoyo, Yunpro, Hoshi, etc, then distributes in the Vietnamese market

Outstanding products: Yunpro, Hoshi, Mitoyo, so forth

Competitors:

Currently, the three biggest competitors of DHG in terms of revenue and market capitalization are:

e Traphaco Joint Stock Company (TRA) is a company specializing in the production

of traditional medicines with two main products: Boganic (liver tonic) and Hoat Huyet Duong Nao (supplement brain)

e Domesco Medical Import-Export Joint Stock Company (DMC) has a good pharmaceutical portfolio, including traditional pharmaceutical products, vitamins,

functional foods, antibiotics, pain relievers, and brand-name drugs

® Imexpharm JSC (IMP) is currently a pharmaceutical company with technical infrastructure and the best technology in Vietnam

1.4 Business performance in recent years

In 2020, many major economies in the world were affected by the COVID-19 pandemic and a large number of failures for the enterprises, so many businesses were unstable, and they changed the operation of the business However, DHG was known as the business that worked in the pharmaceutical industry, and it played a crucial role through the pandemic Therefore, with a high motivation, spirit to overcome this time, DHG gained a great operation result in 2020

At the end of 2020, the business had a significant achievement which is a profit before tax

of about 821 billion and it increased by 15% in comparison to 2019 Moreover, the total sales of the company reached 3.756 billion, and it is such a huge number through the operation in the COVID-19 pandemic Besides that, the company also achieved the goals that they made, which means that the total assets were raised up to 4,448 billion

NET SALES PROFIT

(Unt: VND bilo ứt VND BiMfior)

DHG is a company that operates in the domestic and international market, with a wide network in the Vietnamese market They serve a large number of medicines and many products related to support to health for hospitals and drugstores in and others in the

pharmaceutical sector Therefore, the revenues of domestic sales are about 3,132 billion,

which accounted for 98% of total sales, and for the export market is about 108 billion

To summarize the operation of DHG, we provide a table below:

Unit of measurement: dong

Costs of goods sold 2,184,461,607,643 1,944,243,042,082

e 8 years in a row are in the top 50 best-listed companies voted by Forbes Vietnam

e 9 years in a row are in the top 50 of Vietnam’s best-performing companies

e 24 consecutive years of high-quality Vietnamese goods

e And so forth

One of the milestones in 2020 is to give a hand to the socials to help them come through the COVID-19 pandemic and the flood, with the total funds for the pandemic and people who were affected by the flood was about 12 billion VND

1.5 Analysis of strengths and weaknesses (SWOT)

e DHG spends more on research and development of generic products and does not spend much money on research for a new product

e Develop a management system following the global standard, but it still has some point that does not reach the requirements

Opportunities

e Inthe developing decade, many people are more concerned about health because of the environmental pollution and the increase of age, so they spend more money on products that can support beauty or have a healthy body

e The Government creates many opportunities for the company to develop production

e Globalization helps the company to communicate with other countries and gain knowledge, transfer, and buy research about the production lines of medicines Threats

e The materials are mainly imported from other countries (80 - 90%), so it can be impacted by the fluctuation of price, taxation, exchange rate and so forth

e Operation maintenance is the challenge of the business in the new normal

economics

e Many pharmacy businesses in foreign countries have modern technology and a lot

of experience in researching the ingredients Moreover, nowadays, more and more people prefer to use foreign medicines, so it is a threat to the medicines company in

the domestic market.

2 APPRAISAL OF INVESTMENT PROJECTS

2.1 Project introduction:

DHG Pharma belongs to DHG Pharmaceutical Joint — Stock Company which provides many medical products such as Antibiotic, Analgesic — Antipyretic, etc with a passion toformaking the community’s life better, healthier DHG Pharma always manufactures the best medicals as soon as possible to help ill people overcome the sickness As we can see,

at the end of 2019 — December, there was a virus called SARS—CoV-—2 or COVID-19 was

found in Wuhan, China This virus is highly contagious and has spread rapidly all around the world COVID-19 usually causes respiratory symptoms, which can feel like a cold, flu,

or pneumonia COVID-19 can attack more than just your lungs and respiratory system Other parts of your body can also be affected by this disease

For nearly 2 years, there are more than 260 million people affected by this virus and more than 5 million people passed away In Vietnam, people have struggled with this virus, increasing to more than | million, and people couldn’t come over more than 24 thousand

To heal people, COVID—19 vaccines were made and are a critical tool for helping bring the pandemic under control There are 8 vaccines against COVID—19 that have been licensed in Vietnam by the Ministry of Health: AstraZeneca, Gam-COVID-Vac

(SPUTNIK V), Vero Cell, Comirnaty of Pfizer/BioNTech, Spikevax (Moderna), Janssen,

Hayat- Vax, and Abdala The advantages of these vaccines are effective and can reduce the risk of getting and spreading the virus that causes COVID-19, which helps children and adults from getting seriously ill even if they do get COVID-19

Besides that, there are some disadvantages related to the environment For people to get vaccinated, the medical sector has to use many syringes and equipment which is only used once Seeing those problems, we want to do a project which not only helps people not affected by the virus but also protects the environment from waste Our project is preparing

an orally COVID medicine that is taken by mouth, which is called Cv19med Cv19med will be taken after people get tested through PCR tests or rapid lateral flow tests and give