Mayne Pharma Group Ltd. · ASX:MYX
Mayne Pharma — Mayne Group — FY2003 Earnings Presentation
40 slides from Mayne Pharma's earnings presentation, Aug 27, 2003
Slide 1: 27 August 2003, Melbourne, Australia
27 August 2003 Melbourne, Australia
Slide 2: Group Managing Director and Chief Executive Officer
Group Managing Director and Chief Executive Officer
Slide 3: Strategic overview
Strategic overview
Slide 4: Current broad-based health offering
Current broad-based health offering Products Primary care services • Pharmaceuticals • Pharmacy services • Consumer health products • Medical centres Margin – 15-20% Margin – 2-3% Growth – 10-15% pa Growth – 5-10% pa Capital – 36% of total Capital – 14% of total Health Professionals (GPs – Specialis
Slide 5: Diverse asset and returns profile
Diverse asset and returns profile EBITA Margin (%) 25 20 15 High Margin/ High Capital Low Margin/ Return 10 Low Capital Return 5 0 0 5 10 15 20 25 ROCE* (%) Hospitals Pharmacy Services Diagnostics Pharma * Return on Capital Employed, excluding goodwill
Slide 6: Clean balance sheet provides significant flexibility
§ Clean balance sheet provides significant flexibility § Ability to pursue strategic growth without financial necessity for divestments § Need to balance strategic acquisitions with appropriate capital management initiatives
Slide 7: Strategic priorities: Hospitals, Consumer, Pharmacy Services
Hospitals § Progressive reputation, revenue and earnings improvement Consumer § Rebuilding product range and market position post-Pan Pharmacy Services § Maximise earnings and cash flow
Slide 8: Strategic priorities: Diagnostics and Pharmaceuticals
Diagnostics § Integrate acquired businesses § Generate productivity and cost efficiencies Pharmaceuticals § Market penetration § Portfolio development § Enterprise acquisition opportunities
Slide 9: Group management team
Stuart James Group Managing Director and CEO Alan Reid Stuart Hinchen Peter Jenkins President Global President Americas Chief Development Officer Services Robert Cooke Scott Richards Paul Binfield Group General Manager President EMEA Chief Financial Officer Hospitals Stephen Roche Michael Kotsanis P
Slide 10: Paclitaxel purchase - strategic and tactical rationale
Paclitaxel purchase - strategic and tactical rationale Mayne has achieved a strategic and tactical win: § Consolidates position as a global provider of paclitaxel – globally ranked #2 behind BMS § Accesses and generates revenue from the critical US market for paclitaxel and extends opportunity in EM
Slide 11: Strategic and tactical rationale (cont)
Strategic and tactical rationale (cont) Mayne has achieved a strategic and tactical win: § Gains an additional revenue stream for Active Pharmaceutical Ingredient (API) supply § Gains proven competencies in biomass, extraction and finished product manufacture with top quality team retained § Enables
Slide 12: Supply chain – current and future
Supply chain – current and future Yew Trees Harvest/dry/grind Extraction Biomass Dilute Taxane Solution Isolation Other Taxanes 10 DAB Crude Paclitaxel-Ext Semi Synthetic Chemistry Crude Paclitaxel-S/S Paclitaxel
Slide 13: Assets that Mayne has acquired
Assets that Mayne has acquired § NaPro – All of NaPro’s cremaphor based paclitaxel assets including intellectual property, yew tree plantations, extraction contracts, purification plant in Boulder Colorado, distribution contracts – NaPro’s disclosed performance of this business in 2002 was revenue U
Slide 14: Existing contracts limit Mayne's control of key molecule
§ Existing contracts limit Mayne’s control of key molecule – No access to taxane development (e.g. docetaxel/ABI-007) – Exclusive API agreement with NaPro – Limited ability to renegotiate rigid pricing structures and other difficult terms and conditions – No access to North American markets (Abbott
Slide 15: Mayne validated decision to pursue taxanes
Mayne validated decision to pursue taxanes Key questions Segment Key Outputs # of patients Taxane market forecasts x By region % receiving drug therapy What is the growth of underlying patient populations? and x How will future innovations in cancer treatment affect the use of cytotoxics? % receivin
Slide 16: Taxanes are used for 25% of chemotherapy treatments in the US
Total Cancer Patient Treatments Chemotherapy Cancer Patient Treatments by Type by Type % % Vinca Alkaloids 100 100 Other Unknown / None Other Platins 80 80 Antibiotics/ Surgery Anthracyclines 60 60 40 40 Chemotherapy Taxanes* (only or in 20 combination) 20 0 0 Breast NSCL Ovarian Breast NSCL Ovarian
Slide 17: Paclitaxel market outlook
Paclitaxel market outlook Forecast US and Europe Paclitaxel Forecast US and Europe Paclitaxel Forecast US and Europe Paclitaxel Volumes for Breast Cancer Volumes for NSCL Cancer Volumes for Ovarian Cancer (2002-12) (2002-12) (2002-12) 160 ABI Paxoal 160 160 -007 Xyotax 140 140 140 120 120 Paxoral 12
Slide 18: Mayne evaluation and decision
§ Mayne evaluation and decision recognises and accounts for: ü Decline in overall paclitaxel volumes consistent with product life cycle ü Generic price erosion ü Development of novel taxanes such as ABI007 ü No first to market position in Europe
Slide 19: Incremental returns
Incremental returns (US$ millions) 2004 2005 Avg § Attractive pricing multiple Revenues 26.4 24.9 25.6 § Improving EBITA in EBITA 13.1 16.4 14.8 05/expected from Purchase Price 85.0 – Reduced COGS from new semi synthetic processing EBITA Multiple 5.8 technology – European expansion § Forecast ROIC i
Slide 20: Paclitaxel: Importance to Mayne in the USA
Paclitaxel: Importance to Mayne in the USA § Paclitaxel and carboplatin in Top 6 USA Oncology Drugs combination are the first line Drug $IMS Status Launch treatment for ovarian cancer Docetaxel $608m New development § Paclitaxel and pamidronate opportunity combination will provide sales Carboplatin
Slide 21: Americas Pharma FY03 pro-forma with NaPro
Americas Pharma FY03 NaPro & Pro-forma ($A m) Actual Abbott* with NaPro Revenue 75.6 40.6 116.2 EBITA 11.4 20.2 31.6 EBITA margin 15.1% 49.6% 27.2% • EBITA margin accretive in year 1 * Forecast results for 12 months to 31 Dec 2004
Slide 22: Key benefits of the acquisition
§ Access to a key product in US oncology range with existing strong market position § Access to future novel taxane developments around the globe and access to broader taxane market § Ownership of scarce biomass resource (2 million yew trees) § Proven API development and manufacturing capabilities,
Slide 23: Group result
Group result
Slide 24: Achievements in past year
Achievements in past year § Divested non-core and underperforming assets § Continued growth of pharmaceutical business § Diagnostic acquisitions (QML and QDI) § Restoration of Hospitals performance § Solid Pharmacy performance § Medical Centres turned cash flow positive in 2H02 § Result in-line with
Slide 25: Group financial results 2001-2003
($m) 2001(3) 2002 2003 Reported Revenue 3,159 4,992 5,194 Reported EBIT 211.2 249.7 176.5 Significant items – after tax 55.2 23.3 (513.0) Reported NPAT 161.6 173.6 (456.1) EPS before significant items 26.8 21.3 7.1 Continuing businesses Revenue 1,886 3,699 4,479 Continuing businesses EBIT 127.5 172.
Slide 26: Significant items after tax
2H03 FY03 Significant items after tax ($m) Net profit on sale of Logistics (6.6) 15.3 Closure and sale of consumer businesses 1.0 (9.6) Pan recall costs to consumer business (34.0) (34.0) Write-down on sale of hospital assets 3.2 (19.8) Writedown of continuing hospital assets (270.0) (321.5) Writedo
Slide 27: Dividend intentions
§ Size of asset writedowns has limited capacity to pay a final dividend for FY03 § Intention to pay three dividends in FY04, the first of which will be paid on the same day that the final FY03 dividend would otherwise have been payable
Slide 28: Underlying EBIT by business
2001*(1) 2002(2) 2003 Hospitals 94.5 71.6 54.6 Primary care services (1.8) 15.9 27.6 Diagnostics 42.8 47.2 58.6 Products - 51.0 59.8 Continuing businesses 135.5 185.7 200.6 Unallocated (8.0) (12.8) (13.3) Underlying EBIT 127.5 172.9 187.3 *Prior period not adjusted for businesses discontinued in 2H0
Slide 29: Business unit performance
Business unit performance
Slide 30: Pharmaceuticals – Building and growing
Pharmaceuticals – Building and growing CONTINUED REVENUE CONTINUED EBITA GROWTH $m GROWTH $m 22.6% 260 60 21% 20.2% 21% 240 50 220 200 40 180 30 235.8 49.3 160 224.2 224.4 45.2 47.0 20 140 120 108.6 ` 10 24.5 100 0 H102* H202 H103 H203 1H02* 2H02 1H03 2H03 EBITA EBITA margin *Results from 1/10/01 –
Slide 31: New product approvals
New products approvals New product approvals The first time a new product is planned for Combined current market value matched to approval within the Region year of planned approval for key markets* (USD millions) 2,500 Number of 1,987 Approvals Region 2,000 Pending/Planned 14 FY03-FY06 1,500 12 Ame
Slide 32: Consumer: rebuild revenue and earnings
REBUILD REVENUE REBUILD EARNINGS $m $m (continuing business only) 125 15.0 13.0 100 26.4 22.4 11.0 8.8% 22.5 9.0 75 6.6% 7.0 50 5.0 85.4 86.3 7.6 70.1 3.0 5.6 25 1.0 -1.1 0 -1.0 2H02* 1H03 2H03 2H02* 1H03 2H03 -3.0 -1.6% -5.0 EBITA ($M) EBITA margin (%) * For three months to 31 December 2002. * For
Slide 33: Pathology - Building and growing
Pathology - Building and growing REVENUE GROWTH ($M) EBITA GROWTH ($M) $m $m 35 30 200 14.8% 86.3 25 12.3% 13.4% 41.5 20 100 15 29.4 10 18.7 21.0 126.3 129.6 132.4 5 0 0 2H02 1H03 2H03 2H02 1H03 2H03 Underlying QML EBITA EBITA margin • Revenue growth 73% over pcp • EBITA margins gained 1.1% in 2H03
Slide 34: Imaging: revenue growth, EBITA flat
REVENUE GROWTH ($M) EBITA FLAT $m $m 125 15 100 8.3 3.4 24.3 14.2% 10 13.2% 75 11.5% 50 11.9 11.9 12.5 79.4 81.8 84.8 5 25 0 0 2H02 1H03 2H03 2H02 1H03 2H03 Underlying Acquisitions EBITA ($M) EBITA margin (% ) • Revenue up 35% over pcp • Acquisitions increase presence in key markets • Organic growth
Slide 35: Hospitals: revenue growth and EBITA stabilised
UNDERLYING SEASONAL EBITA STABILISED & $m REVENUE GROWTH $m IMPROVING 660 40 34.8 640 35 51.3 30.7 620 3.6 35.8 30 600 25 53.8 580 20 560 15 12.5 601.3 598.6 540 10 5.5% 558.2 4.7% 520 5 2.0% 500 0 2H02 1H03 2H03 2H02 1H03 2H03 AHC divestitures EBITA ($M) EBITA margin (% ) HSP and Primelife divestit
Slide 36: Hospitals – KPIs improved over same half last year
Hospitals – KPIs improved over same half last year 2H02 1H03 2H03 ¢ Admissions increased over Underlying admissions prior comparable period (‘000) 241.6 249.0 244.5 ¢ Higher acuity service mix ALOS 3.01 3.07 2.99 ¢ Continued focus on productivity and labour cost Labour cost / work-hour $35.87 $34.24
Slide 37: Pharmacy – Continued earnings
Pharmacy – Continued earnings SEASONAL REVENUE CONTINUED EARNINGS $m $m GROWTH PERFORMANCE 1,020 25 21.4 20.8 1,000 19.4 20 980 960 15 995.4 940 10 920 948.0 900 918.6 5 2.10% 2.15% 2.19% 880 0 2H02 1H03 2H03 2H02 1H03 2H03 EBITA ($M) EBITA margin (% ) • Revenue growth 3.2% over pcp • EBITA margins
Slide 38: Balance sheet
Balance sheet 2001 2002 2003 Net debt 435 195 373 Equity 1,410 3,618 2,988 Gearing 23.6% 5.1% 11.1% Ø Strong balance sheet positioned to improve shareholder value Ø Continuing flexibility to focus on growth opportunities in Pharmaceuticals and consolidate acquisitions in Diagnostics
Slide 39: Priorities for the year ahead
¢ Growing Pharmaceuticals ¢ Continuing hospitals improvement ¢ Maintaining growth in Pathology and Imaging and focus on operating margins ¢ Integrating and leveraging recent Diagnostics acquisitions ¢ Continuing earnings and cash flow stream from Pharmacy ¢ Rebuilding Consumer Health Products ¢ Focu
Slide 40: Full year results 2003
Full year results 2003