Our growth has occurred organically and continuously throughout our history. We intend to maintain this growth, intensifying our presence in markets where we identify high growth potential and profitability, especially in regions where we believe they are not saturated, where we can strengthen our density, and where our value proposition, focused on lower classes, is appealing. Following our history of growth and successful expansion, we believe we can continue to grow significantly in our dominant regions, Northeast and North, in addition to advancing over micro-regions with characteristics similar to the Northeast and North, in the other states of Brazil, whenever the return on invested capital follows the Company’s strategic guidelines.

We have an opportunity to increase our sales per store, considering the level of sales reached by other competitors in the sector. We believe we are clear about which levers to use, seeking improvement actions in our assortment, vendor management, pricing better adjusted to each micromarket, and reducing the level of stock outs at our stores, in addition to actions that increase the loyalty and average ticket of our customers. We expect to capture opportunities to improve sales, with an increase above inflation in same store sales, as already observed in recent quarters.

We believe that the presence of Clinic Farma in our stores is a factor of competitive advantage today and we are convinced that it will be an important lever in the future, as seen in more developed markets, such as in North America.

We believe that selling pharmaceuticals through digital platforms is an important tool for expanding our sales and customer base. We currently sell our products through our website, app, call center, and through superapps such as UberEats and Rappi. The entire delivery structure includes more than 80 mini distribution centers in our stores, dark stores, as well as direct deliveries by the store’s own employees and last mile with our own structure or partners, such as Loggi. We will continue improving our website, connecting our solutions with strategic partners, combining the digital experience with the structure of physical stores and making the shopping experience increasingly simple and enjoyable. Allowing several ways of purchase our products, in an integrated way between the channels, and enabling several means of delivery are ways that contribute to increasing our revenues. We are developing an “online health hub”, where we will be integrated with marketplace, electronic prescription, telemedicine and video service platforms with our pharmacists at Clinic Farma.

We currently have a line of 1,300 exclusive products with private label brands, including Pague Menos, Amorável, Dauf and Power Vita. These products account for around 6% of our total sales. We intend to strengthen this line by developing and launching new products, which excel in quality, in partnership with our suppliers to provide a cost-benefit advantage. Private label products are sold in our stores only, creating customer loyalty. We will always pursuit greater depth and availability in categories of our target audience’s preference.

Special drugs are produced with high technology, used in complex and costly treatments, usually in fertility, cancer and hormone verticals. We believe that the Company has a strong space for expansion in this area, considering that the sales volume is substantially lower than some of our competitors, besides a very reduced mix of just over 200 products. We believe that sales to the clinic market can be a good lever for product distribution and that the availability of such products adds us a strong component of advantage over competitors, as well as better contribution margins.

We have adhered to PBM and signed agreements and corporate partnerships with over 800 companies. We believe that by expanding into PBM and covenants and partnerships, we will be able to obtain better discounts from drug manufacturers and make more assertive promotions, thus offering better service to our customers, increasing loyalty and the Company’s sales. The PBM sector is a strategic segment for the Company. It represents approximately 10% of our sales. Our performance in this sector is further reinforced through an investee business of the Company, E-Pharma, market share leader in Brazil. With the increase in health insurance costs for companies and the strengthening of the digital prescription, we believe there is a trend that healthcare operators and more companies become payers of medication in Brazil, to contribute to the reduction of accidents, allowing the chronic diagnosed to follow the treatment correctly, avoiding complications and worsening of the clinical condition.

In 2019, we prepared an Information Technology Master Plan (“PDTI”), with the support of specialized consultants, aiming at building an investment plan for the next three years in infrastructure and systems in order to sustain the Company’s growth and further improve our clients’ purchasing experience. Several initiatives described aim to increase the agility of the organization and expand the use of data. We will continue to invest in our CRM sector and in our partnership with Symphony to increase the knowledge of our end customer. We will invest in the continuous improvement of our more than 15 million active customers’ registration in order to provide unique shopping experiences in the store, with special discounts and promotions, smarter pricing and increased cross-sell of our products and services. We will continue to expand our investments in technology as we consider the continuous transformation of our processes and systems to be essential to our long-term strategy and to our advantage. We believe that technology can help us to increase our efficiency in stores, our management efficiency, and improve processes directly related to our customers, increasing loyalty and consequently our NPS (net promoter score).