Smith & Nephew Plc · LSE:SN.
Smith & Nephew — Merger or Acquisition (November 2012)
21 slides from Smith & Nephew's merger presentation, Nov 28, 2012
Slide 1: Acquisition of Healthpoint Biotherapeutics
Acquisition of Healthpoint Biotherapeutics 28 November 2012
Slide 2: Forward looking statements
Forward looking statements This document contains certain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan"
Slide 3: Olivier Bohuon, Chief Executive Officer
Olivier Bohuon Chief Executive Officer
Slide 4: Introduction to Healthpoint Biotherapeutics
Introduction to Healthpoint Biotherapeutics • Privately held advanced wound care company, HQ in Fort Worth, Texas • Focused on the development and commercialisation of novel, cost- effective bioactive solutions for debridement, dermal repair and regeneration • Portfolio of marketed products and pipe
Slide 5: Strategic rationale for the acquisition (1)
Strategic rationale for the acquisition (1) • Strategic priority to re-orient Smith & Nephew to higher growth areas • Creates a unique wound care business with expertise in exudate and infection management, negative pressure and the bioactives field – bioactives is the fastest-growing segment of wou
Slide 6: Strategic rationale for the acquisition (2)
Strategic rationale for the acquisition (2) • Gradual integration into our Advanced Wound Management business – doubles AWM’s commercial scale in the US, adding a 215-strong sales force – brings new US-based R&D and Bioactive science capability with 70 team • Opportunities for revenue and cost syner
Slide 7: Roger Teasdale, President, Advanced Wound Management
Roger Teasdale President, Advanced Wound Management division
Slide 8: Healthpoint's products
Healthpoint’s products Bioactive therapies – highly effective, strong market access/payor coverage, wide applications and proven outcomes Collagenase • Prescription drug as the only FDA approved enzymatic debrider Santyl® • Provides continuous and active debridement of necrotic tissue and doesn’t ha
Slide 9: Healthpoint capabilities and opportunities
Healthpoint capabilities and opportunities • Greater presence and commercial scale in the US – including access to new channels and capabilities • Compelling product portfolio • R&D team brings significant experience in bioactive space – cells, enzymes, matrices and growth factors • Complementary bi
Slide 10: Integration
Integration • Integrate Healthpoint at a measured pace – strong cultural alignment, focus on patient and innovation in wound care – maximise value from both companies – initial phase – sales forces remain focused on current customers • Intent to build upon Healthpoint’s strong market presence and op
Slide 11: Adrian Hennah, Chief Financial Officer
Adrian Hennah Chief Financial Officer
Slide 12: Healthpoint financials
Healthpoint financials 2012 2010 2011 forecast $m $m $m Revenue 125 151 ~190 Growth 21% ~26% Trading profit before R&D 25 34 R&D (18) (23) Trading profit 7 11 Net operating assets 61 12
Slide 13: Transaction financials
Transaction financials • Purchase price of $782 million in cash – financed from Smith & Nephew’s existing cash resources and bank facilities – additional $10m if completion post 31 December 2012 • Return on invested capital – exceeds the Group’s cost of capital in the third full year • EPSA – broadl
Slide 14: Synergies and integration costs
Synergies and integration costs • Synergies – annual cost synergies of around $20 million by 2015 – modest medium-term revenue synergies • Integration costs – around $25 million cash costs, plus some modest non-cash costs, over first three years 14
Slide 15: Guidance
Guidance • Revenue growth • Cost leverage • R&D spend – base level c. $15m pa – HP802-247 c. $25m pa for the next five years – around $40m - $50m pa total R&D spend in the medium term 15
Slide 16: Sources of value
Sources of value 1. Growth of existing portfolio 2. Pipeline 3. R&D capability 4. Synergies 5. Tax 16
Slide 17: Olivier Bohuon, Chief Executive Officer
Olivier Bohuon Chief Executive Officer
Slide 18: Summary
Summary • Acquisition of Healthpoint – establishes strong position in bioactives – high growth existing product range – strong R&D capability and pipeline – creates a unique advanced wound management business • Delivering our Strategic Priorities 18
Slide 19: Appendices
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Slide 20: 2011 Cost structure
2011 Cost structure Year ending 31 December 2011 Income statement $m % Revenue 151 100 Cost of Sales (36) (24) SG&A (excluding R&D) (81) (54) R&D (23) (15) Trading Profit 11 7 20
Slide 21: Summary balance sheet
Summary balance sheet 31 December 2011 Balance sheet $m Inventories 35 Receivables and Prepayments 27 Payables and Accruals (37) Property, Plant & Equipment 21 Intangible Assets 15 Net Operating Assets 61 21
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