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To: Jim Bishop who wrote (63708)	9/16/2000 8:41:03 AM
From: CIMA	Respond to of 150070

PIL.V - This is in my RRSP and here's why: Pharmex Industries Inc. Report prepared Friday September 15, 2000 PIL:CDNX Current Market: $1.40 - $1.44 Market Cap: $65,000,000 Shares Outstanding: 45,000,000 ________________________________________________________________________________ Pharmex Industries Inc. is a manufacturer and distributor of over the counter and prescription pharmaceutical products in finished-dosage and bulk formats for the North American and export markets. Pharmex provides contract manufacturing to large pharmaceutical companies and private label manufacturing to many pharmacy chains. Pharmex also manufactures high quality, brand name vitamin, herbal and nutritional products. -With the recent acquisitions of Wampole, Formulex, and Novopharm Quebec, Pharmex has become one of the biggest OTC pharmaceutical companies in Canada. They now are able to offer a variety of over three hundred products. Novopharm Quebec: -On August 3, Pharmex completed its $14.6-million acquisition of Novopharm Quebec and Wampole Canada Inc.. Novopharm Quebec was formerly the contract manufacturing division of Novopharm Limited in Quebec. With this acquisition, Pharmex takes control of a state-of-the-art, FDA approved, 14,000-square-foot pharmaceutical manufacturing, packaging, testing and development facility. They also acquire an adjacent laboratory facility which will be utilised for Rand D projects. Novopharm Quebec had $18 million in sales last year. Wampole: -The acquisition of Wampole gives Pharmex a readily recognizable brand name. Since 1893, the Wampole name has been associated with quality nutritional and medicinal products in Canada. Wampole has grown to become one of Canada's most respected and most recognized brands of high-quality pharmaceutical and nutritional supplement products including a full lineof vitamin, herbal and OTC pharmaceutical products. There are 135 Wampole products in all. The acquisition of Wampole includes all of Wampole's sales, products, physical assets and intellectual property. Wampole had $20 million in sales last year. Formulex: - In May, Pharmex completed the acquisition of the Formulex Group of companies. Founded in 1979, Formulex is a manufacturer and distributor of over 85 prescription and over-the counter pharmaceutical, vitamin and herbal products. The Formulex manufacturing facility is an HPB-approved, 87,000-square-foot plant located in Montreal, Que. Formulex has experienced 80 percent compounded annual growth rate over the last five years and had $14 million in sales last year. -The facilities Pharmex has acquired have been bought at excellent prices considering what they will mean to Pharmex immediately and down the road. They come full of product that has purchase orders already attached. Through the acquisitions, Pharmex has also inherited dozens of established customers from the vendors. -Pharmex is realizing very healthy profit margins as they take full manufacturing control of the new facilities. The company is already trimming the excess and streamlining production to ensure increased profitability. There is a much greater efficiency and capacity that Pharmex will attain in these factories than was achieved by the former operators. -All the acquired plants are already profitable, and are currently only functioning at approximately 25% of capacity. As Pharmex gets these facilities up to maximum production, they will generate over $200 million in annual revenues. Other Developments: - Major contract announcements are imminent, including increased product lines to existing customers as well as new outsourcing; private label and brand name contracts. - Recent acquisitions of Novopharm Quebec, Wampole Canada and Formulex qualify PIL for the TSE; the prospectus is currently being prepared and the new listing should come by year end. Institutional interest is also mounting. 2 analyst research reports are expected in coming weeks. - The new executives appointed at Wampole are experienced and well connected within the industry. This management greatly enhances the opportunity for domestic and American brand name contracts. - $15 million in long term contracts are in place with huge industry multinationals, such as Teva, Aventis, Novartis, Novopharm and Cellegy. R and D partnerships are also being created with the major biotechs. ________________________________________________________________________________ Pharmex is forecasting net income of $1.7 million for year end 2000, (Jan. 31, 2001), and net income of $10 million FYE 2001; (approximate EPS of $.04 and $.21 respectively). Projected revenues FYE 2000 are $35 to $40 million and $90 to $100 million FYE 2001. Based on their experienced sales team and the proven ability to maximize production capabilities, Pharmex expects an annual revenue increase of 75% to 100% over the next five years. Two industry comparables are Patheon, PTI:TSE, and King Pharmaceuticals, KG:NYSE. Patheon trades at over 60 times earnings and about 4 times revenue. King trades at around 70 times earnings and over 10 times revenue. If these multiples are even conservatively applied to Pharmex's projected net incomes and revenues, it is clear that the company is undervalued and is an excellent buying opportunity at these levels. ________________________________________________________________________________ Pharmex is creating an enterprise of significant and lasting value. They will maintain a commitment to shareholders by continuing to build on Canadian distribution and the global export business and will soon launch into the U.S. with one or more private label sales. The company's long term growth and success will also be the result of forming strategic partnerships with large pharmaceutical companies and major biotechs. ________________________________________________________________________________ - Pharmex is officially changing its name to PanGeo Pharma Inc. It will still trade under the PIL symbol. ________________________________________________________________________________