West Pharmaceutical Services, Inc. · NYSE:WST
West Pharmaceutical Services — Barclays Capital 2011 Global Healthcare Conference
37 slides from West Pharmaceutical Services's conference presentation, Mar 16, 2011
Slide 1: West Pharmaceutical Services Overview
WEST PHARMACEUTICAL SERVICES OVERVIEW Solutions for Injectable Drug Delivery NYSE:WST www.westpharma.com Barclays Capital 2011 Global Healthcare Conference Miami, FL March 16, 2011
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This presentation and any accompanying management commentary contain “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements inc
Slide 3: West is a globally diversified manufacturer of healthcare and consumer products
West is a globally diversified manufacturer of products consumed in the healthcare and consumer markets. Every day over 80 million components manufactured by West, and our partner Daikyo, are used to enhance the quality of healthcare worldwide.
Slide 4: A Diverse, Stable Customer Base
Pharmaceutical/Biotech Generic Medical Device A Diverse, Stable Customer Base
Slide 5: Sales
Sales ($ in millions) Compound annual growth rate: 8.9%
Slide 6: Summary 2010 Results
Three Months Ended December 31 Year Ended December 31 2010 2009 2010 2009 Net Sales $ 276.8 $ 293.4 $ 1,104.7 $ 1,055.7 Gross Profit 78.0 83.9 318.1 303.6 Reported Operating Profit 5.9 21.7 90.7 97.5 Adjusted Operating Profit (1) 20.6 32.0 104.8 105.0 Reported Diluted EPS $ 0.18 $ 0.59 $ 1.89 $ 2.12
Slide 7: 2010 vs. 2009 Adjusted Diluted EPS
2009 Adjusted Diluted EPS (1) $ 2.11 Foreign Exchange (0.17) Lost H1N1 Sales (0.16) R&D (0.09) Other Operations 0.45 All Other (0.04) 2010 Adjusted Diluted EPS (1) $ 2.10 2010 vs. 2009 Adjusted Diluted EPS (1) See “Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” (Slides 33 -
Slide 8: Market Issues
Market Issues • Asymmetric global economic recovery – Europe, US, Japan remain sluggish – China, India, Brazil stronger – Continuing Fx, commodity price volatility • More demanding regulatory environment • Broader trends in Pharma/Device markets continue: – Unknown impact of healthcare legislation –
Slide 9: What will Drive Future Growth?
• Pharmaceutical Packaging Segment – Demographics and increasing prevalence of chronic disease – Biologics – Growth in Emerging Markets – Increased access to Healthcare – Escalating quality expectations: “Zero Defects” • Delivery Systems Segment – Demand for combination products that promote safety,
Slide 10: Therapeutic Category Growth Drivers
Category Key Customers Projected Growth Diabetes > 10 % Oncology > 10 % Vaccines > 10 % Autoimmune > 8% IMS April 2010 Report; Business Insights 2009; GBI Research 2009 Therapeutic Category Growth Drivers
Slide 11: 2010 Segment Reorganization
Packaging Systems Delivery Systems Development Primary Package Administration 2010 Segment Reorganization • Established leadership • High market share • Stable growth rate • Proprietary devices • Contract manufacturing • High projected growth rate $785M $324M
Slide 12: Pharmaceutical Packaging Systems
Pharmaceutical Packaging Systems Packaging Components for Small Volume Parenterals Plungers, Tip-caps, Needle shields for Glass Syringes Plungers, lined-seals for Glass Cartridges for Pens Closures for Glass Vials
Slide 13: Growth Strategy
• Packaging Systems Segment – Grow incremental value per unit – Geographic expansion - capacity investments in Asia – Improved operating efficiency: lean operations – Strategic acquisitions and partnerships Growth Strategy
Slide 14: Faster Growth of High-Value Products
Faster Growth of High-Value Products Pharmaceutical Packaging Systems
Slide 15: Value Proposition
Value Proposition Proprietary Products Revenue and Margin Opportunity Disposable Device Components Westar ® RS Mix2Vial ® Westar ® RU Standard Components Consumer Products Packaging Delivery
Slide 16: West Products for Drug Vials
CZ ® Vials Ready Pack ™ System (Kitted RU Vials, stoppers & seals) Utilizes West’s proprietary FluroTec ® technology FluroTec ® technology is licensed from Daikyo Seiko, Ltd. Daikyo Resin CZ ® Utilizes Daikyo Crystal Zenith® proprietary technology lyophilized vial Mix2Vial ® Utilizes Medimop’s propr
Slide 17: Delivery Systems
Delivery Systems West ConfiDose ® Auto-injector System Daikyo Crystal Zenith ® Life-cycle Containment Solutions West Electronic Patch-injector Daikyo Crystal Zenith ® is a registered trademark of Daikyo, Seiko, Ltd. West MixJect ® and Vial2Bag ® Proprietary Components, Devices and Systems
Slide 18: Growth Strategy
• Delivery Systems Segment – Leverage life cycle management opportunities – Realize commercial potential of CZ – Develop new platform opportunities - combination products – Custom solution provider Growth Strategy
Slide 19: Drivers for Pharma Industry Life Cycle Management
Drivers for Pharma Industry Life Cycle Management • To maximize the value of the drug development program – Extend the value of the molecule as an asset • Delivery systems as drug formulation life cycle management – Generate more revenue per dose • To expand or retain market share in a competitive e
Slide 20: Pharma Industry Drug Life Cycle Management
Phase I Phase II Phase III Post-Market Life Cycle Management Pharma Industry Drug Life Cycle Management 8 - 10 years 2 - 3 years 2 - 3 years Regulatory Approval Discovery
Slide 21: West Products for Pre-fillable Formats
FluroTec ® technology is licensed from Daikyo Seiko, Ltd. NovaPure ™ Utilizes West’s proprietary Pre-fillable Formats (shown in CZ ® ) West Products for Pre-fillable Formats Standard Value - added features & processing WestarRS ® Plungers Tip Caps Needle Shields Cartridge Plungers Cartridge seals PF
Slide 22: Concerns With Glass Syringes
Concerns With Glass Syringes • Interaction with sensitive biologics • Protein aggregation (silicone oil) • Residual chemicals (tungsten, glue) • Glass flakes • Breakage • In process • Within auto-injector systems • Recent FDA recalls • Dimensional variation • Breakage in auto-injector systems • Desi
Slide 23: Glass syringe and vial recalls
Epogen Amgen “September 24, 2010 *Glass flakes +200 lots Methotrexate Sandoz *November 1 2010 *Glass flakes +24 lots Glucagen Novo *October 28, 2010 *Broken/cracked vials “Blots Enbrel Sureclick Amgen sJanuary 18,2010 *Broken/cracked syringes *3 million units
Slide 24: Electronic Patch Injector System
Electronic Patch Injector System • Controlled, subcutaneous, micro- infusion delivery of high volumes and high viscosity drugs • Prefilled cartridge, no need for user filling • Based on Daikyo CZ cartridge • Compact • Hidden needle for safety • Single push-button operation • Fully programmable
Slide 25: Prototype Electronic Patch Injector Operation
Programmed by PDA or PC Dose may be customized Attached and activated by patient Prototype Electronic Patch Injector Operation
Slide 26: Custom Delivery Device Utilizing Daikyo CZ Resin
Custom Delivery Device Utilizing Daikyo CZ ® Resin Utilizes Daikyo’s proprietary Crystal Zenith technology Daikyo Crystal Zenith ® is a registered trademark of Daikyo, Seiko, Ltd.
Slide 27: West's Strategy Drives Revenue Growth in Excess of Unit Growth
General trend for level of device features and functionality West’s Strategy Drives Revenue Growth in Excess of Unit Growth Lyo Mixing Station Launched 1998 Lyo Vial Adapter Launched in 2003 Prefilled Syringe Launched in 2004 US Sales by Device for 2007* (One year after Autoinjector launch) * Data s
Slide 28: Our Long-Term Focus
Our Long-Term Focus • Pharmaceutical Packaging Systems – Organic growth (on average) of 3-5% per year – Margin expansion through operating efficiency, product mix – Capital investments targeted at enhanced quality and value • Pharmaceutical Delivery Systems – Deliver the potential of Daikyo CZ produ
Slide 29: Long-Term Growth Opportunity
Pharmaceutical Packaging Systems Primary Container Solutions Pharmaceutical Delivery Systems Administration Systems Long-Term Growth Opportunity Strategic Planning Goals: • Projected 2014 sales of $0.6 billion • Projected 2014 Operating margin: > 20% $1.5 billion market for components with unit grow
Slide 30: Raw Material Cost Factor
Raw Material Cost Factor Pricing (modestly higher) Unit Volume (slow growth) Mix (continuing shift) cost increases) Raw material cost Labor (~ inflation) Comprise approximately 1/3 rd of COGS Materials include: Synthetic elastomer and polymer and film (petroleum based), aluminum, natural rubber 2011
Slide 31: 2011 Full-year Financial Guidance
($ millions, except EPS) 2011 Revenue (1) Gross Profit % (1) Pharmaceutical Packaging Systems Segment $ 810 - $ 830 33.4% Pharmaceutical Delivery Systems Segment $325 - $340 20.5% Consolidated $1,140 - $1,170 29.7% 2011 Adjusted Diluted EPS (1)(2) $2.25 - $2.45 2011 Full-year Financial Guidance (1)
Slide 32: Summary
Pharmaceutical Packaging Systems Pharmaceutical Delivery Systems • Well positioned – Substantial market share – Proprietary technology – Diversified customer base – Global footprint • Stability with growth potential – Strength in new product pipeline – Preferred products for biologics • The financia
Slide 33: Non-GAAP Financial Measures
As Reported December 31, 2010 Restructuring and related charges Discrete tax items Non-GAAP (1) December 31, 2010 Operating profit $5.9 $14.7 $- $20.6 Interest expense, net 4.4 - - 4.4 Income before income taxes 1.5 14.7 - 16.2 Income tax expense (benefit) (3.6) 5.3 1.1 2.8 Equity in net income of a
Slide 34: Non-GAAP Financial Measures
As Reported December 31, 2010 Restructuring and related charges Acquisition- related contingencies Discrete tax items Non-GAAP December 31, 2010 Operating profit $90.7 $15.9 ($1.8) $- $104.8 Interest expense, net 16.2 - - - 16.2 Income before income taxes 74.5 15.9 (1.8) - 88.6 Income tax expense 13
Slide 35: Notes to Non-GAAP Financial Measures
NOTES TO NON-GAAP FINANCIAL MEASURES For additional details, please see today’s press release and Safe Harbor Statement. These slides use non-GAAP financial measures. West believes that these non-GAAP measures of financial results provide useful information to management and investors regarding cert
Slide 36: Full Year 2011 Guidance Reconciliation
Full Year 2011 Guidance (1) Diluted Earnings Per Share Adjusted guidance $2.25 to $2.45 Restructuring, net of tax (0.05) - (0.06) Reported guidance $2.19 to $2.40 NOTES TO NON-GAAP FINANCIAL MEASURES For additional details, please see today’s press release and Safe Harbor Statement. Reconciliation o
Slide 37: West Pharmaceutical Services Overview
WEST PHARMACEUTICAL SERVICES OVERVIEW Solutions for Injectable Drug Delivery NYSE:WST www.westpharma.com Barclays Capital 2011 Global Healthcare Conference Miami, FL March 16, 2011
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