Slide 1: Cochlear Hosts Investor Day
ASX / MEDIA RELEASE 28 APRIL 2016 COCHLEAR HOSTS INVESTOR DAY Cochlear Limited, Sydney, 28 April 2016 (ASX:COH): Cochlear Limited is today hosting analysts to an investor day at its global headquarters in Macquarie University. Attached is a copy of the management presentations that will be made on t
Slide 2: Agenda
Agenda 8.30 – 8.50am Welcome & overview of day Chris Smith Review of strategic priorities CEO & President 8.50 – 9.45am R&D and product portfolio Jan Janssen SVP Design & Development, Clinical & Regulatory 9.45 – 10.00am Morning Tea 10.00 – 10.45am Asia Pacific strategy – Australia & Dig Howitt Chin
Slide 3: 2016 Investor Day: Strategic Priorities
2016 Investor Day 28 April 2016 Strategic Priorities Chris Smith CEO & President Cochlear’s leadership team Chris Smith Neville Mitchell Tony Manna Richard Brook Dig Howitt Rom Mendel CEO/President Chief Financial Officer and President, North America President, European Region President, Asia Pacifi
Slide 4: Agenda and Overview
Agenda Introduction & Strategic priorities Chris Smith – CEO & President R&D & review of product portfolio Jan Janssen – SVP Design & Development, Clinical & Regulatory APAC strategy - Australia and China Dig Howitt – President, Asia Pacific Break US Direct-to-consumer Patricia Trautwein – VP, Marke
Slide 5: Our Mission; Hearing Loss: Market Opportunity
Our Mission We help people hear and be heard. We empower people to connect with others and live a full life. We transform the way people understand and treat hearing loss. We innovate and bring to market a range of implantable hearing solutions that deliver a lifetime of hearing outcomes. Hearing Lo
Slide 6: Focus on the Customer; Grow the Core
Strategic Platforms Focus on the Customer Grow the Build a Core Service Business Shape the Organisation Value Creation 1. Grow the Core Innovative technology Increased awareness Improved access Business model innovation
Slide 7: Build a Service Business; Shape the Organisation
2. Build a Service Business Recipient engagement Connectivity; both Recipient and Clinics Optimise upgrades Enhanced digital services 3. Shape the Organisation Globally integrate enabling activities Targeted field expansion Deep market penetration China and emerging markets Malaysia
Slide 8: FY16 Financial Outlook
4. Value Creation Partnerships/Alliances Drive global efficiency and effectiveness Focus FY16 Financial Outlook Re-iterate full year net profit guidance range of $180-190m, up 23-30% on FY15 Full year forecast assumes a weighted average rate of 74c USD/AUD FX rate (72c as at Feb16 result)
Slide 9: Cochlear Research & Development
2016 Investor Day 28 April 2016 Cochlear Research & Development Jan Janssen SVP Design & Development, Clinical and Regulatory Overview 1. Introduction to R&D at Cochlear 2. Why does Cochlear invest in R&D? – The role of Research & Development @ Cochlear 3. What has R&D delivered for Cochlear? – Over
Slide 10: Cochlear's R&D Commitment
Cochlear’s R&D Commitment In FY15 Cochlear invested ~A$130m in Research & Development (including Clinical, Regulatory and Quality) Annual R&D Investment (A$m) Global Innovation Network • Over 350 R&D staff in international locations • Main R&D site co-located with Australian Hearing Hub • Over 100 R
Slide 11: Research & Development at Cochlear
Research & Development at Cochlear Design Basic Applied Post Market Validation Research Research Studies Studies Research & Investigational Product Technology Device Development Development Products Technology Technology Research Development Why does Cochlear invest in R&D? The role of Research & De
Slide 12: Role of Product Innovation at Cochlear
Role of Product Innovation at Cochlear 1. Maintain “Technology Leadership” to support Cochlear’s market leadership – with focus to lead in areas that are most valuable to our customers and professionals 2. Grow the Implantable Hearing Solutions (“Core”) market by • removing barriers to growth (e.g.
Slide 13: Life-changing outcomes across all age groups
Life-changing outcomes for Cochlear’s customers across all age groups Life-changing outcomes … and remaining challenges Hearing Optimised Outcomes Lifestyle Hearing Clinical/Self Indications Management
Slide 14: Role of Product Innovation: Horizons
Role of Product Innovation at Cochlear 1. Maintain “Technology Leadership” to support Cochlear’s market leadership – with focus to lead in areas that are most valuable to our customers and professionals Horizon 1 Horizon 2 Horizon 3 R&D R&D R&D 0 … 3 year 3 … 7 year 7+ year The combination of very h
Slide 15: Eliminate and reduce hurdles
Role of Product Innovation at Cochlear: Eliminate and reduce hurdles • Fear of surgery • Loss of residual hearing • Variability of outcomes • Size and Aesthetics • Complexity of the intervention • Cost of the intervention Role of Product Innovation at Cochlear: Eliminate and reduce hurdles SPrint Nu
Slide 16: Role of Product Innovation @ Cochlear
Role of Product Innovation @ Cochlear 1. Maintain “Technology Leadership” to support Cochlear’s market leadership – with focus to lead in areas that are most valuable to our customers and professionals 2. Grow the Implantable Hearing Solutions (“Core”) market by • removing barriers to growth (e.g. f
Slide 17: Cochlear's Implantable Hearing Solutions
What has R&D delivered for Cochlear? Overview of current product portfolio Cochlear’s Implantable Hearing Solutions Sensorineural Conductive/Mixed Frequency (Hz) Frequency (Hz) 125 1000 8000 125 1000 8000 30 30 Middle Ear Implants Bone Conduction Implants Hearing Loss (dB HL) Hearing Loss (dB HL) Mi
Slide 18: State-of-the-Art Cochlear Implant portfolio
State-of-the-Art Cochlear Implant portfolio • Thinnest cochlear implant on the market • Most reliable implant • Cochlear’s implants are available with a range of electrode arrays: • Contour Advance – peri-modiolar electrode for precise stimulation of the hearing nerve • Slim Straight – thin, atrauma
Slide 19: Nucleus 6: New benchmark for hearing in the real world
Nucleus 6 – New benchmark for Hearing in the Real World Market research: key customer needs relate to the need to hear well in the real world: • Understand people in background noise: classroom, restaurant, ... • Have a conversation on the phone • Hear people at a distance (meeting, classroom) Custo
Slide 20: Nucleus 6 pre-processing technologies
Nucleus 6 includes a full suite of pre-processing technologies Tri‐Loop Gain control Slow Medium Fast Automation of pre-processing in Nucleus 6: breakthrough in hearing performance Slow Medium Fast Scene Classifier (SCAN)
Slide 21: Nucleus True Wireless technology
Nucleus 6 True Wireless technology – state-of-the art wireless audio streaming 2.4 GHz True Wireless Nucleus 6 Phone Clip Mini Mic TV Streamer + Digital sound quality + Integrated receiver + Affordable transmitters + No “relay” neckloop device Nucleus 6 True Wireless technology enables large improve
Slide 22: State-of-the-Art Cochlear Implant portfolio
State-of-the-Art Cochlear Implant portfolio • Smallest Sound Processor • SmartSound iQ with SCAN technology • True Wireless 2.4 GHz CP920/910 ‐ Nucleus 6 • Hybrid option Sound Processors N6 with Acoustic Component • Advanced data logging for Hybrid Hearing • True Wireless 2.4 GHz accessories: Phone
Slide 23: State-of-the-Art Baha portfolio and Acoustic Implants
State-of-the-Art Baha portfolio BI300 implant with Baha 5 Sound Processor BA400 abutment Baha Attract system Baha True Wireless accessories Baha 5 Super Power Sound Processor State-of-the-art Acoustic Implants TM Codacs Conductive/Mixed Frequency (Hz) 125 1000 8000 30 Bone Conduction Implants Hearin
Slide 24: Future Technology Directions: Slim Modiolar Electrode Array
Future Technology Directions What is in the Cochlear R&D pipeline? 1. Even Better Hearing Outcomes: Slim Modiolar Electrode Array • Thinnest perimodiolar array 60% less volume compared to CA Protecting the fine structures (atraumatic design) • Consistent Perimodiolar positioning Consistent pos
Slide 25: The Future is Wireless
2. The Future is Wireless Phone Music Nucleus 6 Sound Processor Control Baha 5 Status Sound Processor Nucleus 6 True Wireless accessories 2. The Future is Wireless – also for Clinicians CONVENIENT No equipment or PC setup required FAST No setup time and faster measures SIMPLE One button diagnostics
Slide 26: The Future is Connected; Preserves Residual Hearing
3. The Future is Connected – Cochlear Link 4. The Future preserves Residual Hearing even better Nucleus Profile implant with Slim Straight electrode Atraumatic electrode insertion Research drug (cochlea cross‐section) eluting electrode
Slide 27: The Future is Binaural; Different Customer Segments
5. The Future is Binaural Bimodal Bilateral Cochlear Implants True Wireless for Bimodal users 6. The Future supports different customer segments “I love the fact that I don’t have to “I want to take control of my hearing care about my device” loss and excel at every stage of my life” Out and Proud E
Slide 28: 33 year history of Innovation
Summary: 33 year history of Innovation … and much more to come Cochlear Implants 1982 1997 1999 1999 2003 2005 2008 2009 2011 2014 CI22 CI24M CI24R with CI24R with CI24R with CI24RE Hybrid L24 with CI500 CI422 with Slim Profile Straight Contour® Contour Series Hybrid Electrode Series Straight Electr
Slide 29: Australia & China: APAC Overview
2016 Investor Day 28 April 2016 Australia & China Dig Howitt President Asia Pacific APAC Overview • More than half the world’s people (~4B people) and the fastest economic growth • Accounts for ~18% of Cochlear’s revenue APAC Revenue (Constant Currency) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2
Slide 30: Australia: Driving growth in a developed market
Australia: Driving growth in a developed market • Australia has one of the highest penetrations of CI in the world at ~10% • Revenue has grown consistently, 10-15% pa revenue growth over 5 years • Services (processors, accessories and other services) revenue is growing faster than new systems sales
Slide 31: Market growth drivers in Australia
Market growth drivers in Australia Sustained growth in Australia is a result of multiple factors Cochlear Surgeries in Australia • Expanded Indications or increased acceptance driven by evidence of good outcomes – Seniors – Bilateral Second Ear 65+ – Residual hearing Second Ear 18‐ 64 – Single Sided
Slide 32: Generating demand; Melbourne Cochlear Care Centre
Generating demand: Working age adults and seniors • Key challenge is still awareness of both therapy and criteria for candidacy • Building awareness through on and off line media is critical to drive growth Dissatisfied hearing aid users Recapture A+ Hearing Awareness/urgency to treat “Get Started”
Slide 33: China: Building an emerging market business
China Building an emerging market business • The China market has significant opportunity for growth – Penetration is less than 0.5% (children <20%, adults <0.1%) – 90+% of implants are for children • Recent market growth is a result of a long period of investment and advocacy • There are two major
Slide 34: China CI overview; Cochlear history in China
China CI overview CI centers & surgeons # of CI center / surgeon - 2015 CI volume distribution – 2015 Estimated Private Pay ~60% ~100 Market ~80 ~40% Bilateral CI Centers Surgeons Top 20 CI Other Total CI surgery Centers Hospitals in China Adults Top 20 CI center geographic distribution Children Bei
Slide 35: National tender market; Private pay market
National tender market National Tender • Started in 2009, continued in 2016 - 2020 5 year plan Total Annual National • Volume usually split into 3 Tender Volume (CY) tranches per year • Goal is to provide implants to 5,954 children with hearing loss 4,716 4,708 • Purchase decision made on 4,098 pric
Slide 36: Market opportunities; China success factors
Market opportunities – private pay market will continue to grow Opportunity Newborns and Improving Newborn hearing screening and referral, children Increasing awareness from national tender, Increasing affordability Increasing reimbursement coverage Adults Awareness and acceptance growing, especiall
Slide 37: Direct to Consumer Marketing – USA Experience
2016 Investor Day 28 April 2016 Direct to Consumer Marketing – USA Experience Patricia Trautwein VP, Marketing Cochlear Americas Direct to Consumer (DTC) Marketing Why: The USA has a large underserved market Who: Seniors are the fastest growing population with hearing loss How: Leveraging data scien
Slide 38: USA is an aging population
USA is an aging population 1 Children Adults Seniors (<18 years) (18-64 years) (65+ years) 2012 73M (23%) 197M (63%) 43M (14%) 313M 2X 2050 86M (21%) 230M (58%) 84M (21%) 400M Life Expectancy 6 Senior Population 5 2012 2050 4 3 2012 77 82 2 2050 82 86 1 0 65-69 70-74 75-79 80-84 85+ 1. US Census, Th
Slide 39: Lack of awareness is a barrier to growth
Lack of awareness is a barrier to growth 1 % Familiar with Cochlear Implants “I thought cochlear <20% implants were only for General people who are totally Population deaf ” <50% Audiologists 1. Data on file, survey conducted by PSB 2014 Seniors in the USA are online and engaged in social networking
Slide 40: Targeted awareness maximizes effectiveness
Targeted awareness maximizes effectiveness Targeted awareness maximizes effectiveness Ageless Boomers 1. Anna McMahan 2. Roger Carpenter Connected Seniors 3. Teenie Matheson 4. Gary Stevens Driven Dynamics 5. Michelle Thomas 6. Mike Taylor Upward Bound Families 7. Jenny King
Slide 41: Targeted segment campaigns to reach seniors
Targeted segment campaigns to reach seniors (Sample “Boomer” Persona) Targeted segment campaigns to reach seniors (Sample “Senior” Persona)
Slide 42: Integrated campaigns maximize effectiveness
Integrated campaigns maximize effectiveness and customer experience FIND CAPTURE NURTURE CONVERT Online Call Center Email Campaigns Clinic Appointments SEO/SEM Display Ads Social In Market Concierge Web / Landing Pages Counseling Tools Advertising CRM System Volunteers PR: Radio, TV, Events Cochlear
Slide 43: Concierge educates and supports candidates
Concierge educates and supports candidates throughout the journey Cochlear Concierge Unique engagement team of highly trained professionals who educate and guide candidates through the process to get an hearing implant. The team includes: • Audiologists who have an implant • Audiologists who have a
Slide 44: Extensive analytics and optimization of campaigns
Extensive analytics and optimization of campaigns maximizes results Integrated campaigns are increasing leads and new customers (Year on Year results) 5X increase in captured leads Conversions 34% higher Capture Leads Grow Customers FY14 FY15 FY16 FY14 FY15 FY16 12000 300 Lead Conversions (by quarte
Slide 45: USA market growth across age segments
USA market growth evident across age segments H1 Reported Growth in F16 of ~10% cochlear implant units 25% 20% Seniors 65 years+ are the % market growth fastest growing segment 15% consistent with DTC 10% campaign focus and US market demographics 5% 0% Children Adults Seniors Next Steps: Expand DTC
Slide 46: Recipient Services – USA experience
2016 Investor Day 28 April 2016 Recipient Services – USA experience Rene’ Courtney VP, Customer Experience & Recipient Services Cochlear Americas Recipient Services – North America Current responsibilities Building capabilities Engagement Upgrades
Slide 47: Overview of Recipient Services
Overview of Recipient Services Customer Intimacy Revenue Growth Operational Excellence Improve Increase Integration the growth of people, customer and process experience profitability and systems Customer base growth – North America Services Revenue* 130,000+ Customer Ears* (Upgrades & accessories)
Slide 48: Opportunities for direct engagement
Opportunities for direct engagement Changing environment • Clinicians experiencing growing recipient base • Increasing sophistication of products • Complexity of candidate indications • Larger amount of uncompensated time Opportunity for Cochlear • More direct engagement with recipients Building cus
Slide 49: Creating and supporting customers for life
Creating customers for life Optimize Hearing Outcomes New Recipient Welcome Experience Cochlear Family Membership Activation Support Apps Social Communities Practice Tools New Cochlear Family Members Supporting customers for life Build lifetime relationships Cochlear Family Personalized Account Coch
Slide 50: Recipient outbound sales
Recipient outbound sales New positions to focus on upgrade sales Start with traditional marketing campaigns Navigating a complex Insurance process Supporting customers for life Build lifetime relationships Cochlear Family Personalized Account Cochlear Store Social Peer to Peer Care & Accessories Ser
Slide 51: Cochlear Link benefits
Cochlear Link – Cochlear benefits Device Activation Service Requests • ~4,800 automatic registrations completed • ~41,000 recipients Auto-upload of MAP Automatic data transfer covered by Cochlear Link clinics Automatic data transfer Auto-download of MAP MAPs used by Service Sound HA team; no Auto re
Slide 52: Cochlear Link recipient benefit; upgrade campaigns
Cochlear Link – Recipient benefit Within Link Accounts Recipient upgrade campaigns Upgrade Microsite WOM / Social Media Ads Events Traditional campaigns Nurture campaigns Outbound team INTRODUCING NUCLEUS ® 6 Michael Noble 13059 E Peakview Ave. Centennial, CO 80111
Slide 53: Key Points; Lifetime Commitment
Key Points • Growing recipient base and ongoing revenue growth • The opportunity to provide lifetime support requires an ability to connect and engage with recipients • We have been building the infrastructure to do that over the past several years • Great technology and continuing investment in ser
Slide 54: Disclaimer
Disclaimer Forward looking statements Cochlear advises that these presentation slides contain forward looking statements which may be subject to significant uncertainties outside of Cochlear’s control. No representation is made as to the accuracy or reliability of forward looking statements or the a