Cochlear Limited · ASX:COH
Cochlear — Investor Day (May 2018)
54 slides from Cochlear's investor day presentation, May 4, 2018
Slide 1: Cochlear Hosts Investor Day
ASX / MEDIA RELEASE For personal use only 4 MAY 2018 COCHLEAR HOSTS INVESTOR DAY Cochlear Limited, Sydney, 4 May 2018 (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 in
Slide 2: Notes and disclaimers
Notes Forward looking statements For personal use only 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 st
Slide 3: Strategic priorities: Overview
For personal use only Cochlear Investor Day 4 May 2018 Strategic priorities Dig Howitt, CEO & President Overview • Cochlear Limited (ASX:COH) is • 3,500+ employees the global leader in implantable • Direct operations in 30+ countries hearing devices – Cochlear implants • Products sold in 100+ countr
Slide 4: Global footprint and financial history
Global footprint For personal use only Chengdu 3 Financial history Cochlear implants (units) 8% in FY17 Sales revenue ($m) 12% in FY17 in CC Net profit ($m) 11% in FY17 in CC Dividends (per share) 17% in FY17 CC = constant currency 4 4
Slide 5: Our mission; hearing loss is prevalent and under-treated
Our mission For personal use only 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 hearin
Slide 6: Strategic priorities
Strategic priorities For personal use only Retain market leadership • Market-leading technology • World-class customer experience Grow the hearing implant market • Awareness • Market access • Clinical evidence Deliver consistent revenue & earnings growth • Invest to grow • Operational improvement •
Slide 7: Retain market leadership
Retain market leadership For personal use only Providing a world-class customer experience creates a brand halo for candidates and drives our Services business Convenience and Engagement Lifetime relationship confidence • Cochlear Family connecting • Improving technology with • Wireless connectivity
Slide 8: Evolution of the cochlear implant business
Evolution of the cochlear implant business For personal use only Growth has shifted to adults & seniors in developed markets and children in emerging Adults & seniors developed markets markets Children Cochlear implant growth drivers developed markets Greater uptake by adults & seniors as awareness
Slide 9: Clinical evidence
Clinical evidence For personal use only Build on the clinical evidence that demonstrates the effectiveness of our products, particularly for seniors • Higher incidence of hearing loss in seniors (over 65s)8 • Growing understanding of the link between high levels of hearing loss and social isolation,
Slide 10: Children in emerging markets; deliver consistent growth
Children – emerging markets For personal use only Current Long term growth potential as penetration wealth increases ~10% Key priorities: market expansion • Build awareness – public education campaigns, direct-to-consumer marketing and hearing screening • Expand funding – compelling health economics
Slide 11: Deliver consistent revenue and earnings growth
Deliver consistent revenue & earnings growth For personal use only Cochlear is investing operating cash flows to drive growth Invest to grow • Building awareness and access to our products requires multi-year investment in sales, marketing and R&D activities • Maintain net profit margin Operational
Slide 12: Cochlear Research & Development
For personal use only Cochlear Investor Day 4 May 2018 Cochlear Research & Development Jan Janssen, Chief Technology Officer 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 lo
Slide 13: Cochlear's mission: why product innovation matters
Cochlear’s mission For personal use only 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
Slide 14: Hearing loss is prevalent and under-treated
Hearing loss is prevalent and under-treated For personal use only >460,000,000 The WHO estimates that over 5% of the world’s population – 466 million people – has a disabling1 hearing loss. By 2050 this is expected to rise to over 900 million people – or one in every ten people2. 1 in 3 Nearly 1 out
Slide 15: Who could benefit from a cochlear implant
Who could benefit from a cochlear implant For personal use only In a recent German study, well over 50% of people with severe-to-profound hearing loss (70dB – 90 dB) get poor results with hearing aids (≤ 30% words correct) Severe-to- Profound Profound Hearing H.L. Loss >50% in 95% in this group this
Slide 16: Cochlear's R&D expenditure
For personal use only Cochlear’s R&D expenditure Cochlear’s product innovation investment In FY17 Cochlear invested over A$150m in Research & Development and Medical Affairs (Clinical, Regulatory and Quality) 16
Slide 17: Global innovation network
Global innovation network • Over 350 R&D staff in international locations For personal use only • Main R&D site co-located with Australian Hearing Hub • Over 100 Research Partners in over 20 countries • Global network of Design Partners and Suppliers Research & Development at Cochlear Design Basic A
Slide 18: Product innovation focus
For personal use only Product innovation focus Future focus areas Hearing Outcomes Lifestyle Hearing Indications Connected Care 18
Slide 19: Hearing outcomes
Hearing outcomes For personal use only Word Understanding Rehabilitation Sound Time & Quality Effort Hearing in challenging Listening Listening Effort Environments Hearing Outcomes Timbre Music Percpetion Speaker Sound Identification Localisation Nucleus® Profile with Slim Modiolar electrode array –
Slide 20: Nucleus Sound Processor bimodal; CI and pharma
Nucleus 7 Sound Processor – Bimodal Made for iPhone For personal use only Nucleus® 7 Sound Processor ReSound LiNX 3D or ReSound ENZO 3D CI & Pharma Combination therapy opportunities • Cochlear is actively scanning pharma and biological therapies for treatment of hearing loss • Collaborating with a n
Slide 21: Lifestyle and connected care
Lifestyle For personal use only Nucleus 7 Sound Processor Kanso® Sound Processor Carina® System 25% smaller & lighter* Dual mic, SmartSound® iQ Totally Implantable True WirelessTM audio Middle Ear Implant * Cochlear Limited. D1190805. CP1000 Processor Size Comparison. 2017, Mar; Data on file.. Conne
Slide 22: Portfolio of implantable hearing solutions
Portfolio of implantable hearing solutions For personal use only Future focus areas Hearing Outcomes Lifestyle Hearing Indications Connected Care 22
Slide 23: Years of product innovation
35 years of product innovation Leading cochlear implant product portfolio For personal use only Improved Improved Hearing True Wireless Hearing Outcomes in the real world Connectivity Nucleus Profile Improved Lifestyle Thin, atraumatic, hearing Thin & Sound Processors preservation electrodes ultra-r
Slide 24: Sound processor development
For personal use only Cochlear Investor Day 4 May 2018 Sound processor development Keith Walsh, Head of Sound Processors & Connectivity Cochlear Nucleus® Sound Processor • The sound processor is the external part of a Cochlear Implant System and is worn outside of the body. • It provides power and i
Slide 25: Sound processors: a history of innovation
Cochlear Nucleus® Sound Processors: a history of innovation For personal use only 2017 Nucleus® 7 Sound Processor (CP1000) 1989 1997 SPrint™ Sound 2002 ESPrit 3G Sound 2009 2016 MSP Sound Nucleus® 5 Sound Processor Kanso® Sound Processor Processor Processor (CP810) Processor (CP950) 1983 1994 1998 2
Slide 26: Hearing performance improvements
Hearing performance improvements For personal use only Improved Hearing Outcomes Dual microphones SmartSound® iQ with SCAN Cochlear™ True Wireless™ 5 Size & weight reduction • Significant reduction in the size and weight of each Sound Processor generation, through investment in micro chip design, mi
Slide 27: Design and aesthetics improvements
Design & aesthetics improvements For personal use only • Design evolution has resulted in more aesthetically appealing processors. Nucleus® 7 Sound Processor (2017) SPrint™ Sound Processor (1997) 7 Kanso off-the-ear sound processor • The Kanso Sound Processor is the smallest and lightest off-the-ear
Slide 28: Waterproofing evolution
Waterproofing evolution For personal use only 9 Waterproofing evolution • Waterproofing rating (ingress Nucleus® 7 protection) continues to Sound Processor improve with each generation. Nucleus® 6 Sound Processor Nucleus® 5 Sound Processor Freedom® Sound Processor IP57 Nano-coating IP68 with Aqua+ c
Slide 29: Improved useability and convenience
Improved useability & convenience For personal use only • The Freedom® Sound • The Nucleus® 7 Sound Processor delivered the Processor delivers our world’s first cochlear implant smallest and most system rechargeable convenient battery charger. battery. 11 Wireless connectivity evolution 12 29
Slide 30: Wireless connectivity evolution
Wireless connectivity evolution For personal use only 1. Wired connectivity. 3. The Nucleus® 7 Sound Processor – Made for iPhone lets patients connect directly to Apple iOS devices and stream music, phone calls and more. 2. Wireless via Cochlear True Wireless™ Accessories. 13 Control & monitor evolu
Slide 31: Control and monitor evolution; CI hearing informatics
Control & monitor evolution For personal use only • The Nucleus® Smart App is the first ever mobile application to control a cochlear implant sound processor. Smart App Control Hearing Tracker Find my Processor 15 CI hearing informatics • Data logging has been in use since our Nucleus® 6 Sound Proce
Slide 32: Connected care
For personal use only Cochlear Investor Day 4 May 2018 Connected care Derek Minihane, VP, Sound Processors & Clinical Care Connected health is a key industry trend Health Care is shifting from an expert care model to personalised self-care based on funding constraints and accelerating connectivity 2
Slide 33: Continuing wireless evolution
Continuing wireless evolution For personal use only Increased wireless infrastructure and capabilities is transforming society and will have a significant impact on the delivery of health care 3 Already wireless in surgical theatre CONVENIENT No equipment or PC setup required FAST No setup time and
Slide 34: Wireless for the audiologist and customers
And wireless for the audiologist For personal use only Wireless programming over Bluetooth Programming with a tablet • Improved Customer Experience, in particular for paediatric fitting • Improved Professional Experience, no longer locked to a computer desk 5 And now for our customers Nucleus 7 ® So
Slide 35: Nucleus 7 enables connected care
Nucleus 7® Sound Processor enables Connected Care Cloud connectivity enables the collection of data to better serve our customers For personal use only and clinical partners in the coming years Device analytics Recipient Review my Bluetooth Low Device and R&D, hearing outcomes Energy capable clinica
Slide 36: Artificial intelligence trending
Artificial intelligence trending For personal use only • Artificial intelligence will redesign health care delivery – Boston Children's Hospital launches cloud-based education on Amazon Alexa-enabled devices 9 Artificial intelligence in fitting? • Current challenges in fitting CI recipients • No sta
Slide 37: AI can improve CI outcomes
AI can improve CI outcomes For personal use only • Evidence based approach, using objective performance testing • Fitting to a target using best practice workflows • Acts as an audiologist assistant with changes vetted by an audiologist • Facilitates self & remote care clinical models 11 A fantastic
Slide 38: Building towards standard of care for adults & seniors
For personal use only Cochlear Investor Day 4 May 2018 Building towards Standard of Care for adults & seniors David N. Cade, Chief Medical Officer Awareness & access 38
Slide 39: CI as standard of care; key barriers
Cochlear implants are well established as the standard of care for children in developed markets For personal use only Children Children Adults & seniors developed markets emerging markets developed markets The clinical value proposition for a child born The clinical value proposition is with a seve
Slide 40: Emerging evidence for adults and seniors
Emerging evidence gives us confidence of the opportunity for adults & seniors For personal use only A recent study showed a group implanted with cochlear implants achieved a 65% point improvement in speech recognition 75% speech recognition >30 % post surgery Speech Recognition Score (SRS) ≤30 % Spe
Slide 41: Defining standard of care
Standard of care refers to the formalised & standardised practice of medicine • Standard of care For personal use only – Is the medical care provided by a doctor in accordance with what other doctors in that speciality would do for their patients in similar circumstances? – Is your doctor following
Slide 42: Why treat hearing loss?
For personal use only Why treat hearing loss? And what happens if we don’t? Increasing awareness of the shear global burden of hearing loss The World Health Organisation (WHO) and the Lancet reporting on the size and cost of untreated hearing loss • >460M people with disabling hearing loss • >5% of
Slide 43: Hearing loss association with other health impacts
Increasing awareness of hearing loss’ association with other health impacts For personal use only • Social isolation & withdrawal • Depression & anxiety • Cognitive decline & dementia • Falls & physical injury • Ability to self care Reference: Better Hearing Institute Hearing loss is associated with
Slide 44: Building the evidence base for CI
For personal use only Building the evidence base for CI as an effective treatment for hearing loss Cochlear is supporting public health research into hearing loss via its university partnerships Established the Cochlear Center for Hearing and Public Health at Johns Hopkins University • US$10M fundin
Slide 45: Treating hearing loss and cognitive performance
Recent evidence suggests that treating hearing loss may have a positive effect on cognitive performance For personal use only “…our findings suggest a positive effect of “Hearing loss is independently associated with hearing loss treatment on change in cognitive incident all-cause dementia. Whether
Slide 46: Optimise market access
For personal use only Optimise market access Importance of clinical evidence for building market access Clinical evidence is important for successful market access and reimbursement • Consumers – a reason to act – Awareness and advocacy – Investment in building capability across the business • Profe
Slide 47: Europe, Middle East & Africa overview
For personal use only Cochlear Investor Day 4 May 2018 Europe, Middle East & Africa Richard Brook President, EMEA & LA Region EMEA overview • Covering 73 countries, ~35% of the world’s population, spanning both developed and emerging economies • 35% of Cochlear’s global revenue, delivering consisten
Slide 48: Cochlear's history in EMEA
Cochlear’s history in EMEA • Cochlear pioneered CI therapy in EMEA through 1980s & 90s, building For personal use only on the research and relationships of Prof Graeme Clark – Funding initially for paediatrics (charity, gov’t), followed by adults and seniors • Initial EMEA offices opened in the 1990
Slide 49: EMEA in developed markets
EMEA in developed markets For personal use only • Healthcare systems, funding mechanisms and indications vary across Western European countries • Government funding of CI/bone conduction is reasonably well established across the majority of WE countries – Only small # of private health insurance or
Slide 50: DTC example: Hear more campaign; Germany overview
DTC Example Hear more campaign – UK For personal use only • Initial aim = to enable informative connections with candidates and their families • Important to be light on product, with a focus on helping to inform and provide link(s) to others • Utilising a range of “Nurture” emails over a period of
Slide 51: Germany awareness marketing and DTC online
Germany: Awareness marketing in regions with high 65+ population For personal use only Medium • Ads & Advertorials: links to candidate events and online information; “Don’t accept hearing loss” • Distribution focus on adult/senior populations • Response element: coupon to register for info package,
Slide 52: EMEA in emerging markets
EMEA in emerging markets For personal use only • Two geographies: Middle East & Africa, Central & Eastern Europe • Common government focus on expanding access to healthcare for their populations • Increasing awareness and funding of CI & bone conduction therapies, but often unpredictable timing of p
Slide 53: Central & Eastern Europe; key priorities for EMEA
Central & Eastern Europe For personal use only • Cochlear Central & Eastern Europe office in Vienna – Team dedicated to support & work with distributors, professionals and patients – Mix of economies and CI/bone conduction maturities, ranging from Austria (direct) to Azerbaijan • Awareness is growin
Slide 54: ...and finally...
...and finally... For personal use only • A significant and ongoing opportunity to raise the profile and importance of hearing across all of Cochlear EMEA’s markets, both in developed and emerging economies • For the first time in 22 years, that WHA has adopted a resolution on hearing • An important