Slide 1: Cochlear hosts Investor Day (ASX media release)
ASX / MEDIA RELEASE 4 MAY 2017 COCHLEAR HOSTS INVESTOR DAY Cochlear Limited, Sydney, 4 May 2017 (ASX:COH): Cochlear Limited is today hosting analysts to an investor day at its global headquarters in Macquarie University. A copy of the management presentations is attached and includes: - Overview of
Slide 2: 2017 Investor Day
5/3/2017 2017 Investor Day 4 May 2017 Chris Smith CEO & President Agenda Introduction and strategic priorities Chris Smith – CEO & President Global Marketing Dean Phizacklea – Senior Vice President, Global Marketing Building a services business Stu Sayers – President, Services R&D / product portfoli
Slide 3: Cochlear's executive operating committee
5/3/2017 Cochlear’s executive operating committee Chris Smith Brent Cubis Tony Manna Richard Brook Anthony Bishop CEO & President Chief Financial Officer President, North America President, European Region President, Asia Pacific Region Dig Howitt Jan Janssen Dean Phizacklea Stu Sayers Katharine McL
Slide 4: Our Mission; hearing loss market opportunity
5/3/2017 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. H
Slide 5: Cochlear implants recognised as cost effective by the WHO
5/3/2017 Cochlear implants recognised as a cost effective intervention by the WHO in 2017 World Health Organisation (WHO) report1 released in March 17… • estimates the global cost of untreated hearing loss at $750bn pa • recognises cochlear implants as a cost-effective intervention • highlights inte
Slide 6: What's driving growth: Grow the Core
5/3/2017 1. Grow the Core Innovative technology Increased awareness Improved access Business model innovation What’s driving growth….. Developed markets: market growth Emerging markets: expansion of of 8-10% past 2 years reimbursement and our presence • Direct-to-consumer activities • Expand
Slide 7: Build a Service Business
5/3/2017 2. Build a Service Business Recipient engagement Connectivity; both Recipient and Clinics Optimise upgrades Enhanced digital services Growing importance of services Services revenue has grown from <1% to 25% of total revenue over the past 15 years, primarily driven by the growing re
Slide 8: Shape the Organisation; Value Creation
5/3/2017 3. Shape the Organisation Globally integrate enabling activities Targeted field expansion Deep market penetration China and emerging markets Building capabilities 4. Value Creation Partnerships/Alliances Innovation fund Drive global efficiency and effectiveness Meet or exc
Slide 9: FY17 Financial outlook
5/3/2017 FY17 Financial outlook Re-iterate full year net profit guidance range of $210-225m, up ~10-20% on FY16 Key guidance considerations • continued strong momentum in unit growth • expect R&D expenditure for FY17 to be similar to FY16 • AUD/USD FX rate of 75 cents for FY17 v 73 cents in FY16 • t
Slide 10: References and Disclaimer
5/3/2017 References Slide 6 * Disabling hearing loss refers to hearing loss greater than 40 decibels (dB) in the better hearing ear in adults and a hearing loss greater than 30 dB in the better hearing ear in children. 1. Who.int. WHO | Deafness and hearing loss [Internet]. 2015 2. Who.int. WHO | 10
Slide 11: Global Marketing Agenda
5/3/2017 2017 Investor Day 4 May 2017 Dean Phizacklea SVP Global Marketing 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 – Preside
Slide 12: Core growth strategy; Levers of growth
5/3/2017 Core growth strategy WHAT? Grow the Core WHERE? Developed & Geographic focus Emerging Developed Customer segmentation Drive category growth through increased awareness HOW? Demonstrate value of Cochlear hearing solutions to increase access Leverage technology leadership and product innovati
Slide 13: Lack of awareness is a barrier to growth
5/3/2017 Levers of growth Awareness Access Grow the Core Brand choice Lack of awareness is a barrier to growth % Familiar with Cochlear Implants >50% of adults <20% with a moderate General Population to profound hearing loss are <50% not familiar with Audiologists Cochlear Implants. 1. Data on file,
Slide 14: Empower candidates from awareness to surgery
5/3/2017 Our goal is to empower candidates from awareness to surgery Create clear Optimise treatment hearing pathways outcomes Build Build customer Develop lifetime motivation sustainable relationships clinic models US DTC campaign journey Channel-Centric Campaign-Centric Funnel-Centric Hearing Heal
Slide 15: US DTC success
5/3/2017 US DTC success Candidate Web Visits New Candidate Leads F14 F15 F16 F17 FY14 FY15 FY16 FY17 H1 Data for F14, F15, F16, F17 US are breaking down the stages of the journey, with solutions for each stage Getting into Education Total Potential Audience consideration Moderate to Profound Hearing
Slide 16: Ramping up candidate engagement in other markets
5/3/2017 Cochlear is ramping up candidate engagement in other markets • Increasing lead generation and lead quality work across “focused few” developed countries and further roll-out planned for FY18 5x increase • Non US lead generation is 5x higher in F17 H1 vs F16 H1 • Able to cost effectively tar
Slide 17: Candidate engagement; awareness and advocacy
5/3/2017 Candidate engagement Concierge Volunteer • Concierge service expanded • Volunteers support Candidates from US to F17 through a life changing decision • 5x increase in total Concierge • Where we have introduced a numbers from F16 to F17 Volunteer to a Candidate, surgery rates are double the
Slide 18: Levers of growth: What is market access?
5/3/2017 Levers of growth Awareness Access Grow the Core Brand choice What is market access ? Ensuring that all appropriate patients get rapid and maintained access to our products, at the right price. 8
Slide 19: Changing medical device landscape; market access capability
5/3/2017 The medical device landscape is changing rapidly • Changing decision makers • Multiple Buyers • Rise of new influencers • Pricing pressure • Stakeholder fragmentation • Emerging markets are complex and evolving environments Building a market access capability to navigate the landscape STRUC
Slide 20: Clinical evidence for market access and reimbursement
5/3/2017 There is increasing recognition of the cost effectiveness of cochlear implants in helping to alleviate the cost burden of hearing loss. Clinical evidence is the foundation for successful market access and reimbursement Priority areas • Awareness and Advocacy • Standard of Care for Adults Jo
Slide 21: Consumer centric product portfolio
5/3/2017 Levers of growth Awareness Access Grow the Core Brand choice An consumer centric product portfolio that allows personal choice 11
Slide 22: Core growth strategy
5/3/2017 Core growth strategy WHAT? Grow the Core WHERE? Developed & Geographic focus Emerging Developed Customer segmentation Drive category growth through increased awareness HOW? Demonstrate value of Cochlear hearing solutions to increase access Leverage technology leadership and product innovati
Slide 23: Disclaimer
5/3/2017 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
Slide 24: Growing importance of Services
5/3/2017 2017 Investor Day 4 May 2017 Stu Sayers President, Services Growing importance of Services • Service revenue was <1% of total in FY01 on an installed base of less than 50k recipients • Today it is over 25% on a base of ~450k, growing at 30-40k new recipients pa 1
Slide 25: The Services flywheel
5/3/2017 The Services flywheel Improved Services offering for recipients Better customer experience & outcomes More engaged recipients Better conversion/ more recipients More non- implant revenue New Candidates More volunteers/ advocates Our north star Love Money o Lifetime commitment o $/ear o Enga
Slide 26: More than just upgrades
5/3/2017 More than just upgrades Upgrades account for roughly 75% of the Service revenue, however Services is much more than upgrades Physical products • Accessories • Consumables o Mini Mic 2/2+ o Mic protectors Upgrades Other o Phone Clip o Dry-brik refills products and o TV Streamer services o Re
Slide 27: 4 key levers to grow Services: engage recipients
5/3/2017 4 key levers to grow Services 1. Engage with more recipients 2. Increase upgrade Service spend per Recipient* penetration 7.7x 3. Make Cochlear 6.6x easier for Recipients 2.9x 3.3x 1x 4. Create new Services No email Email Email + Email + Email + address Store Store + Store + Volunteer Volun
Slide 28: Engage with more recipients; upgrade penetration
5/3/2017 1. Engage with more recipients Engaging via Cochlear Family • 140% growth in subscribed recipients YoY and is now well over 10% of the base • Gateway to more personalised support • Access to the online store and exclusive promotions • A way to access and learn from other recipients • Initia
Slide 29: Make Cochlear easier; Kanso and Baha 5 upgrades
5/3/2017 4 key levers to grow Services 1. Engage with more recipients 2. Increase upgrade penetration 3. Make Cochlear easier for Recipients 4. Create new Kanso - the first time we have offered 2 form factors for the same underlying technology Services Exceeding expectations It is helping trigger th
Slide 30: Easier for recipients; create new Services
5/3/2017 4 key levers to grow Services 1. Engage with more recipients 2. Increase upgrade • Self-support easier to find and digest penetration • Support easier to access – more non- phone options 3. Make Cochlear easier for • Products and services easier to explore Recipients and buy 4. Create new •
Slide 31: Disclaimer
5/3/2017 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
Slide 32: Cochlear's mission (R&D)
5/3/2017 2017 Investor Day 4 May 2017 Jan Janssen SVP Design & Development Cochlear’s 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 imp
Slide 33: Research & Development; Global Innovation Network
5/3/2017 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 Global Innovation Network • Over 350 R&D staff in
Slide 34: Annual R&D Investment
5/3/2017 Cochlear’s R&D Commitment In F16 Cochlear invested over A$140m in Research & Development (including Clinical, Regulatory and Quality) Annual R&D Investment (mAUD) Product Planning – a balancing act Customer Needs Market Insights Technology Financial Commitment Feasibility 3
Slide 35: Cochlear Implant product update
5/3/2017 Cochlear Implant product update State-of-the-Art Cochlear Implant portfolio CP950 - OTE CP920/910 - Nucleus 6 Sound Processor Sound Processors N6 with Acoustic Component Custom Sound for Hybrid Hearing CI512 - Nucleus Profile with Contour Advance electrode Nucleus Fitting Software MiniMic 2
Slide 36: Clinical Indications
5/3/2017 Nucleus Profile with Slim Modiolar Electrode (CI532) Clinical Indications 1 Severe to profound 2 Mild to moderate low 3 Special sensorineural frequency hearing loss* Medical hearing loss Conditions Traditional CI Hybrid Hearing Case-by-case Candidates Candidates *with a pure-tone average lo
Slide 37: Indications: criteria for electrode choice
5/3/2017 Indications – the primary criteria for electrode choice 1 2 3 Severe to Profound Mild to moderate Special Sensorineural Hearing low frequency Medical Loss hearing loss* Conditions Traditional CI Candidates Hybrid Hearing Case-by-case Candidates Wide range of Requirement: Optimise electrical
Slide 38: Slim Straight and Slim Modiolar electrodes
5/3/2017 Slim Straight Electrode (CI422 / CI522) Surface preparation insertion (robot controlled) Courtesy Prof. William Gibson, Sydney Slim Modiolar Electrode Array (CI532) CA Image courtesy of Prof. R. Briggs, Hearing CRC Slim Modiolar Slim Straight 7
Slide 39: Nucleus Profile with Slim Modiolar electrode array CI532
5/3/2017 Nucleus Profile with Slim Modiolar electrode array – CI532 • Thinnest perimodiolar array 60% less volume compared to CA Protecting the fine structures (atraumatic design) • Consistent Perimodiolar positioning Consistent positioning close to the modiolus Closest to the nerve to optim
Slide 40: Implant reliability matters
5/3/2017 Indications – the primary criteria for electrode choice 1 2 3 Severe to Profound Mild to moderate Special Sensorineural Hearing low frequency Medical Loss hearing loss* Conditions Traditional CI Candidates Hybrid Hearing Case-by-case Candidates Wide range of Requirement: Optimise electrical
Slide 41: Nucleus 6 Behind-The-Ear Sound Processor
5/3/2017 A smart, simple, discreet off-the-ear sound processor with the proven technology of Nucleus® 6 Nucleus 6 Behind-The-Ear (BTE) Sound Processor Processor Coil Unit Acoustic Component (optional) Battery Module 10
Slide 42: Kanso Off-The-Ear Sound Processor
5/3/2017 Kanso = Nucleus 6 capability in Off-The-Ear (OTE) configuration A smart, simple, discreet off-the-ear sound processor with the proven technology of Nucleus® 6 Kanso Off-The-Ear Sound Processor Smart, Simple, Discreet SMART SIMPLE DISCREET 11
Slide 43: Kanso uncompromised hearing performance
5/3/2017 Kanso Off-The-Ear Sound Processor Uncompromised hearing performance The world’s first off-the-ear processor with dual microphones and SmartSound iQ with SCAN. Dual microphones Omni Dual mics Dual mics mic (standard) (SCAN) +4.5 dB benefit (lower is better) Kanso microphone directionality De
Slide 44: How Baha works
5/3/2017 Hearing Loss & Hearing Technology How Baha works • The sound processor 1 captures sound via the microphone. • The Baha transducer in the sound processor 2 sends vibrations, via the abutment, to the implant in the skull bone. • The skull bone provides a direct pathway for sound to 3 travel t
Slide 45: Baha for Single Sided Deafness; Baha portfolio
5/3/2017 Baha for Single Sided Deafness Baha Attract Baha for Single Sided Deafness Baha Attract (transcutaneous Baha) 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 14
Slide 46: Baha System: Small. Smart. Powerful.
5/3/2017 Cochlear™ Baha® 5 System Small. Smart. Powerful. Baha 5 sound processors share the same unique technology building blocks to deliver a smart and seamless hearing experience to all patients. NEW Baha® 5 SuperPower NEW Baha® 5 Power Baha® 5 Sound Processor Direct-to-device smart connectivity
Slide 47: Baha Smart App; Future Technology Directions
5/3/2017 Baha 5 Smart App, now for Android Advanced control of sound processor and wireless accessories, personalisation and support – directly from iPhone, iPad, iPod touch and now also Android smartphones. Future Technology Directions What is in the Cochlear R&D pipeline? 16
Slide 48: We have come a long way
5/3/2017 We have come a long way … Improved Improved Hearing True Wireless Hearing Outcomes in the real world Connectivity Nucleus Profile CSP 99.94 % @ 3 years ! Improved Lifestyle Thin, atraumatic, hearing Thin & Sound Processors preservation electrodes ultra-reliable implants … and broadened the
Slide 49: Getting treated is still an obstacle race
5/3/2017 ... but we are not where we need to be … 360,000,000 Over 5% of the world’s population - 360 million people - has disabling hearing* loss (328 million adults and 32 million children).1 1 in 3 Nearly 1 out of every 3 people over the age of 65 are affected by hearing loss. It affects communic
Slide 50: Make Implantable Hearing Solutions Standard of Care
5/3/2017 Make Implantable Hearing Solutions “Standard of Care” Future Focus Areas Hearing Outcomes Lifestyle Hearing Indications Connected Care 19
Slide 51: Hearing Outcomes: closing the gap
5/3/2017 Hearing Outcomes … closing the gap • Hearing in quiet • Hearing in noise • Listening to competing talkers • Music perception • Listening effort • Time to proficiency • # Rehab required • # Clinical follow-up required • Spread of hearing outcomes • Tonal Language performance • … Improved Hea
Slide 52: Future Wireless Technology evolution
5/3/2017 Future Wireless Technology evolution Phone Music Nucleus 6 Sound Processor Control Baha 5 Status Sound Processor Nucleus 6 MiniMic 2 MiniMic Pro True Wireless accessories Standard of care = binaural hearing Bimodal Bilateral Cochlear Implants True Wireless for Bimodal users 21
Slide 53: Extended lifestyle options; cloud connectivity
5/3/2017 Extended lifestyle / wearing options SMART SIMPLE DISCREET Transforming Clinical Care with Cloud Connectivity Cochlear Link Pre-op counselling Performance Assessment Product Counselling Troubleshooting product & Online device registration audiology Acute mapping & follow up Upgrades and acc
Slide 54: Wireless clinic: Surgery and Audiology
5/3/2017 Wireless clinic – Surgery CR220 Wireless Intra-Op Assistant Wireless clinic – Surgery & Audiology CR220 Wireless Intra-Op Assistant Wireless programming NFS Touch over Bluetooth 23
Slide 55: Expanding indications for Implantable Hearing Solutions
5/3/2017 Expanding indications for Implantable Hearing Solutions Sensorineural Conductive/Mixed Frequency (Hz) Frequency (Hz) 125 1000 8000 125 1000 8000 30 30 Hearing Loss (dB HL) Middle Ear Implants Bone Conduction Implants Hearing Loss (dB HL) Middle Ear Implants Electro-Acoustic Cochlear Implant
Slide 56: Disclaimer
5/3/2017 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
Slide 57: Cochlear Latin America
5/3/2017 2017 Investor Day Cochlear Latin America Chris Bertrand Presidenté Cochlear Latinoamérica 4 May 2017 Latin America Cochlear Latin America is not a commodity market! • 21 countries • Population of 645 Million, 75 year life expectancy with a median age of 29 years • Countries/markets are at d
Slide 58: Rapid development of the middle class
5/3/2017 Rapid development of the middle class • For the first time, there are more Latin Americans in the middle class than poor 4 • By 2030, over half of Latin American countries will have a majority middle class 2 • Latin American middle class population is forecasted to grow from 278 million to
Slide 59: CI penetration in Latin America
5/3/2017 CI penetration in Latin America • CI penetration remains a largely untapped opportunity 50,000 CHILDREN (under 18) 40,000 30,000 Penetration rates 20,000 45-50% 30-35% 15-20% 10-15% 5-10% 10,000 - Argentina Uruguay Peru Colombia Brazil Ecuador Venezuela Chile Panama Mexico Children with SNH
Slide 60: Hybrid Business field sales model
5/3/2017 “Hybrid Business” field sales model • Objective: To keep “close to the customer”, better understand our markets and assist distributors to deliver “complex” sales messages and to focus on secondary products, upgrade and accessory sales • Three components • 1. Direct field expansion • 2. Dir
Slide 61: Expanding reimbursement
5/3/2017 Expanding reimbursement • Successful Cochlear reimbursement expansion projects A non–profit Association dedicated to improving reimbursement • “Escuchar es lo Máximo” Association Result: New cochlear implant reimbursement law in 2016 Mexico (coverage for children at 14 large public hospital
Slide 62: Cochlear Day growth initiative
5/3/2017 Cochlear implant segmentation Premium tier - Profile implant and Premium processor (CP900 or Kanso) High-end technology - Freedom implant and High-end processor (CP800) Standard - Freedom implant and Standard processor (CP802) “Cochlear Day” growth initiative • Gatherings of heath ministers
Slide 63: Awareness building programs; sales growth projects
5/3/2017 Awareness building programs • “Taca Cochlear” Recipient vs Candidate football event in 5 cities across Brazil • Tennis event with famous tennis player Jose Luis Clerc Sales growth projects • Detection before 3yrs old • Baha country tours • Red de Conexiones referral program • Bilateral Init
Slide 64: My passion for cochlear implants
5/3/2017 My passion for cochlear implants 8
Slide 65: Muchas Gracias! Obrigado!
5/3/2017 Muchas Gracias!!! Obrigado!!! 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