Procaps Issues Shareholder Letter MIAMI, USA &

Procaps Issues Shareholder Letter

MIAMI, USA & BARRANQUILLA, Colombia -

September 3, 2024 - Procaps Group, S.A. (NASDAQ: PROC) ("Procaps" or the "Company"), a leading integrated

LatAm healthcare and pharmaceutical conglomerate, today issued the below letter to shareholders from Jos Antonio Vieira, CEO of

Procaps, addressing the current state of the business and outlining key strategic priorities for the Company.

When I began my tenure as CEO of Procaps in January

2024, I made a commitment to formulate a strategic plan that steers Procaps towards consistent growth, optimal cash management, and predictable

profitability. I said then that to move forward successfully, we must look back, learn from our mistakes, and address any deficiencies.

I believe doing so will better enable us to position the Company going forward. Assessing our business and determining our go-forward

strategy in today's challenging market has been, and will continue to be, a non-linear journey.

I would also like to acknowledge that it has been some time since we

last communicated with the market. We understand that our shareholders and the broader market are eager for more frequent updates, especially

given the challenges we are currently navigating. Please know that we are fully aware of this need for information and are doing our utmost

to keep you informed. However, due to the sensitive and evolving nature of the internal investigation, we must take a careful and thoughtful

approach. Rest assured, as soon as appropriate and we have conclusions, we expect to provide comprehensive updates on these matters.

Today, I am providing an update on the current

state of our business and outlining the key strategic priorities that will guide our focus and efforts as we look to the future.

I recognize that our Company has near-term objectives

we must complete - most notably the previously-announced ongoing internal investigation led by the Audit Committee. I would like

to emphasize that we are working diligently with our accounting and legal advisors, in cooperation with our external auditors, to complete

the investigation in a timely manner so that we can report audited financial statements to our shareholders.

Let me be clear: I joined Procaps with the intent to bring an agenda

of value creation for our stakeholders and that intention remains intact. With over 30 years of pharmaceutical industry experience and

deep expertise of the Latin American market, I firmly believe in the long-term potential of the business and intend to chart the right

path forward for Procaps to realize this value. While I acknowledge the near- and medium-term challenges our business faces, I remain

confident, just as I did when I took this job, that Procaps is a viable organization with concrete growth perspectives and a path to profitability.

However, this year our primary focus is on addressing our internal challenges. Our future depends on us concluding this investigation

process and filing our audited financial statement with our 2023 20-F. In the meantime, we are working to correct the course where needed,

securing financing and implementing our strategic plan.

Legal action initiated by Hoche Partners

Last month, Hoche Partners initiated legal proceedings

against Procaps Group in Luxembourg. The primary claim sought the Luxembourg Court's intervention to appoint an ad-hoc administrator

to supervise or replace the current members of the Audit Committee.

We are pleased to inform you that the Luxembourg Court has ruled entirely

in our favor, dismissing all of Hoche's claims as unfounded. The Court thoroughly examined the arguments from both sides and disregarded

the arguments made by Hoche and upheld all the defenses presented by Procaps.

The Court not only rejected Hoche's claim

in its entirety but also ordered Hoche to pay a procedural indemnity of EUR 3,000, which is a notable amount given the nature of summary

proceedings in Luxembourg. Hoche retains the right to appeal this decision within 15 days of its official service.

This is a significant step forward in protecting

our interests and reinforces our commitment to defending the Company against unfounded claims.

Forbearance Agreement

The combination of non-recurring expenses related to the delay in our

financial results, coupled with the broader challenges affecting our performance, has created financial strain on the Company and our

debt management strategy. To address this, as previously announced, we have entered into forbearance agreements with our key lenders,

which temporarily pauses payments and prevents lenders from enforcing remedies while we work toward a financial solution along with them

and our shareholders. The agreement covers over $190 million of our indebtedness and will allow us to focus on core business operations

while we work to restructure our financial obligations.

This agreement provides us with temporary financial relief amounting

to approximately $20 million for the months of August, September, and October, which will be fully invested into the company's working

Additionally, it is important to highlight the

expected $5 million contribution from Procaps' majority shareholders. We expect this amount will be made available on or prior to

September 10, through a subordinated loan, further supporting our efforts to restore the company's financial position.

Internal Investigation and Delayed Audited

As we announced in May and July 2024, respectively,

the Company has had to delay the filing of its Form 20-F for the fiscal year ended December 31, 2023, and has required additional time

to prepare and complete the review of its financial statements. As previously disclosed, an internal investigation led by the Company's

Audit Committee with the assistance of external advisors is ongoing into matters involving the Company's historical accounting treatment

and associated financial statement disclosures related to certain historical related party transactions.

We are working diligently alongside our legal

and accounting advisors, in cooperation with our external auditors, to resolve this matter so that we can finalize and report our financial

statements as soon as possible.

Additionally, Nasdaq has approved our previously-submitted compliance plan and granted us an extension until

November 11, 2024, to file our results and regain compliance with Nasdaq's listing requirements. While

we are making every effort to meet this deadline, the timing of the finalization of our financial statements will remain closely tied

to the progress and findings of the ongoing investigation.

Current State of the Business

As we reflect on the current state of the business,

we are acutely aware of key challenges that continue to weigh on the Company, which are outlined below.

Operational and Macroeconomic Challenges

We are currently navigating significant operational

and macroeconomic challenges that have negatively impacted our performance, particularly in the OTC and prescription drug (Rx) segments

across Latin America. The region has experienced a slowdown in market growth due to economic instability, political uncertainty, and reduced

consumer purchasing power. Additionally, regulatory challenges, currency devaluations, and inflation have further strained margins and

sales volumes, contributing to a modest overall performance with sharp declines in some markets.

In Ecuador, the pharmaceutical market is under

pressure due to the country's ongoing economic and societal challenges. These challenges have led to increased pressure on commercial

channels to reduce inventory levels, negatively affecting both our CASAND and CDMO segments.

According to IQVIA, market growth in the 11 countries

where we operate has slowed from a growth rate of 6.6% YTD June 2023 to just 2.2% YTD June 2024. In the specific therapeutic classes where

Procaps operates, the relevant market's growth also decreased from 6.4% YTD June 2023 to only 1% YTD June 2024.

Despite these challenging market conditions, Procaps

has managed to significantly outperform the market. We achieved a 5.1% growth rate YTD June 2024, which is double the average growth in

the markets where we operate. This performance ranks Procaps as the second fastest-growing company overall and the third fastest within

our relevant segments, underscoring the strength of our commercial organization and reinforcing our confidence in the future of this organization.

This challenging environment requires strategic

adjustments, including tighter inventory management, cost control measures, and a focus on maintaining market share amid slower growth.

Operationally, we have experienced higher year-over-year

COGS, slow inventory turnover, and reduced CDMO plant utilization, all of which have applied pressure on our gross margins. Delays in

orders and postponed product launches from our customers have continued to put pressure on the business, particularly in our CDMO operations.

Additionally, we have been actively working towards

reducing stock-in-trade in some of our markets, which ended 2023 at higher-than-normal levels and has continued to have a significant

impact in the first half of the year. This had a strong adverse impact on revenues in our CAN and CASAND regions.

Net revenues for the six months ended June 30,

2024 ("1H24") were approximately $190 million, a 2% decline from $194 million for the six months ended June 30, 2023 ("1H23").

This decline was driven by lower sales volumes, as a result of the destocking process in key segments, including CAN and CASAND, and was

further compounded by delays in product launches in CDMO at client s requests.

We currently estimate Adjusted EBITDA for 1H24

to be between $8 million and $10 million, a significant decline from $29 million in 1H23. This decline has been primarily driven by two

major factors. First, our destocking efforts had an approximately $17 million negative impact as we worked to reduce inventory levels