M3, Inc. · TSE:2413

M3 — Q3 FY2014 Earnings Presentation

41 slides from M3's earnings presentation, January 2015

  1. Slide 1: M3, Inc. Presentation Material January 2015

    M3, 3 Inc. Presentation Material January 2015 Copyright © 2015 M3, Inc. All rights reserved.

  2. Slide 2: Forward-looking statements disclaimer

    The following presentation contains forecasts, future plans, management targets and other forward-looking projections relating to M3 M3, Inc Inc. and/or its group. group These statements are drawn from assumptions of future events based on data currently available to us, and there exist possibilitie

  3. Slide 3: Current Business Situation and Outlook

    Current Business Situation and Outlook Copyright © 2015 M3, Inc. All rights reserved. 2

  4. Slide 4: Summary

    Summary ＭＲ kun  Cumulative sales grew at +16% yoy, continuing expansion.  Cumulative sales increased +25% yoy, and operating profit Ｍ３ Career grew +54% 54% yoy. Sales for the mainstay service for doctors grew at 44% yoy, providing traction.  New orders remained steady, with backlog totaling 18.8

  5. Slide 5: Summary continued

    Summary continued  Segment profit was 1.32 bn yen, continuing its expansion at +54% yoy  Operational improvements in the U.S. at previously acquired PracticeMatch progessed smoothly (confirmation that PE type Overseas gy is also valid overseas)) turn-around strategy  Membership on China site topp

  6. Slide 6: Expand our core business

    Expand our core business M3 M3’ss Develop new Growth businesses Develop overseas businesses Copyright © 2015 M3, Inc. All rights reserved. 5

  7. Slide 7: Physicians' Demand for On-Line Detailing

    Physicians’ Demand for On-Line Detailing Q. What is the ideal ratio of on-line and off-line promotional information (“details”) from pharma companies? A A. 100% 100% 4.7% On-line 80% 20% 14.4% 60% 40% 20.0% 75% 50% 50% 35.9% 40% 60% 12.4% 20% 80% 11.1% 100% Off line Off-line 100% 1.5% According to 4

  8. Slide 8: Doctors' Information Collection Venue vs Pharma's Marketing Cost Allocation

    Doctors’ Information Collection Venue vs Pharma’s Marketing Cost Allocation Doctors spend the most time collecting information via the Internet. Conversely, pharmaceutical firms spend the majority of their budget on MR related costs costs. Time spent collecting PR costs for pharma information a comp

  9. Slide 9: Japanese Pharma's Huge Marketing Costs

    Japanese Pharma’s Huge Marketing Costs Head Annual Cost Count per Head MRs (pharmaceutical 63,000 × ¥20 mn ＝ ¥1.2 tn companies) + MSs ＝ (pharmaceutical 30,000 × ¥10 mn ¥300bn wholesalers) Total Marketing Cost for the industry: ¥1.2 1 2 ~ 1.5 1 5 tn Source: MIX, Research by M3 Copyright © 2015 M3, In

  10. Slide 10: MR-kun's Growth Potential in Japan

    MR-kun’s Growth Potential in Japan Currently Potential Market MR-kun MR- 29 30~35 USERS Companies Companies Growth Potential of ¥800 mn ~ ¥1 bn 3~4 times (approx.) per client current levels MR-kun MR- ¥350 mn via increase in: SALES  # off products d t per client  # of member MDs  Added value of c

  11. Slide 11: MR-kun Increases Sales Like Reps

    Case MR-kun Increases Sales Like Reps study Off--line Reps Off Non--covered Non Covered ed n-covere 1 +9% ((baseline)) Sales increase Non compared with base MR--kun MR +8 8% +16 16% Covered d Combining real reps with MR-kun Sales increase Sales increase maximizes detailing compared with base compare

  12. Slide 12: MR-kun Annual Fee Structure

    MR-kun Annual Fee Structure MR-kun Contents Detail fee Operation fee Base fee Production fee ¥100 per detail sent Production of Basic operations customized detail (sending details, replying to contents physicians’ questions, etc.) ¥70 mn ¥20 ~ 40 ¥30 ~ ¥10 mn e product) Entrry Level  Revised as of

  13. Slide 13: Develop new businesses

    Expand our core business M3 M3’ss Develop D l new Growth businesses Develop overseas businesses Copyright © 2015 M3, Inc. All rights reserved. 12

  14. Slide 14: Consolidated Sales Trend

    Consolidated Sales Trend (million yen) FY14 FCT 50,000 887 38,449 36,887 36 38 449 26,007 19,040 14,646 11,811 5,729 7,475 8,534 1,563 2,276 3,854 0% 0% 2% 10% 11% 9% 9% 11% 16% 16% 17% Overseas 19% 20% 22% 21% Development 27% 29% 31% 40% 43% 44% 49% 55% New business 57% 81% 80% (domestic) ( ) 76% 6

  15. Slide 15: New Business Development on the Platform

    New Business Development on the Platform CLIENT BASE Business Size Scale Pharma Hospital, Doctor Consumer （FY2014 Forecast） 3 ¥10,000mn AskDoctors M3 Research QOL-kun M m3MT ¥5,000mn 2 onsolidatted ¥3,000mn 1 Subsidiarry Career ¥1,000mn Evidence solution iTicket S Co Detailed Electronic Medical slid

  16. Slide 16: Placing Evidence Solution Business in Our Strategy

    Placing Evidence Solution Business in Our Strategy １ Evid Sol “Making use of the Internet to increase, as much as possible, ibl the h numberb off people l whoh can live li longer l andd healthier lives, and to reduce, as much as possible, the amount of unnecessary medical costs.” Past Paradigm shift

  17. Slide 17: Patient Enrollment in a Large-Scale Clinical Trial

    Patient Enrollment in a Large-Scale Clinical Trial １ Evid Sol In the case of study in the Endocrinology and Metabolism area, m3.com doctors enrolled five times more patients compared to other SMOs: 1,500 1,400 Case study Nu 1 300 1,300 umber of paatient enrollm 1,200 1,100 1,000 900 800 700 600 500

  18. Slide 18: Shift to Online Trials

    Shift to Online Trials １ Evid Sol Theme Operation M&A Timing 2011 160  Site Selection 2009 80  Feasibility F ibilit Study, St d etc t 2015/4 470 Accelerating electronic on-boarding 2014 850 of clinical  Monitoring 2009 80 research  EDC, etc functions 2012 320 as a group  Utilization of 2012 150

  19. Slide 19: Number of CRAs by Company (CRO)

    Number of CRAs by Company (CRO) １ Evid Sol M3 Group # CRO Companies # of ＣＲＡ ＣＲＡss 1 EPS 855 2 Cimic 780 M3 Group p 780 3 Quintiles 600 4 Parexel 550 5 MEDISCIENCE PLANNING 478 6 A2 Healthcare 380 7 ＭＩＣメディカル 260 8 Linical 170 9 Intellim 90 10 B ll Medical Bell M di l SSolutions l ti 80 Mebix <MIC re

  20. Slide 20: Acquisition of Neues (From April 2015)

    Acquisition of Neues (From April 2015) １ Evid Sol Main Attributes Neues Co, Co Ltd  Approx. 20 centers across Japan  Affiliates with approx. 800 clinical sites Address Yaesu, Chuo-ku, Tokyo  Labor force of approx. 300 CRCs  4th largest SMO in the industry Established September Septe be 1982 98 O

  21. Slide 21: Number of CRCs by Company (SMO)

    Number of CRCs by Company（SMO） １ Evid Sol # SMO Companies # of ＣＲ ＣＲCs Cs M3 Group 1 Site Support Institute 615 2 EP-Mint 550 M3 Group p 434 3 Sogo Rinsho Group 346 4 Neues 313 5 Ethic Ethi 269 6 Irom Group - 7 eSMO 121 8 Exam 116 Source: Individual corporate websites. Compiled by M3. Top level in n

  22. Slide 22: Sales and Profit Trend of Evidence Solution

    Sales and Profit Trend of Evidence Solution １ Evid Sol (mn yen) IFRS basis Sales Orders received Segment Profit FY14 FCT reached 18.8 bn yen, 14 bn yen with corresponding (approx.) increase in h d headcount t as upfront f t 9,685 investment. Q3 segment g p profits were 580 mn yen. 6,650 Q4 expecte

  23. Slide 23: Sales and Profit Trend of M3 Career

    Sales and Profit Trend of M3 Career 2 Career (mn yen) JGAAP basis Sales Ordinary Profit FY14 FCT 6 bn yen (approx.) Development of 4,594 4,393 newly-hired staff has improved 3,235 productivity Continued traction 2 191 2,191 from job search 1,433 services for doctors 1,368 1,070 (+44% growth yoy) 7

  24. Slide 24: AskDoctors Rating Service

    AskDoctors Rating Service 3 Service Overview  Provide doctors’ (few hundred to several thousand) objective evaluations on health care related products sold by manufacturers  Certification of healthcare related products th t meett specified that ifi d rating ti criteria it i  Full support of healt

  25. Slide 25: Develop overseas businesses

    Expand our core business M3 s M3’s Develop new Growth businesses Develop overseas businesses Copyright © 2015 M3, Inc. All rights reserved. 24

  26. Slide 26: Physicians Registered in Our Site or Research Panel (Global)

    Physicians Registered in Our Site or Research Panel (Global) （thousand） 3,500 Over 2.5 million members in total 3,000 Other Nations （M3 Global Research, Research 2,500 MDLinx, Russia） Korea （MEDIGATE） 2 000 2,000 1,500 China 1,000 U.K. （Doctors.net.uk） 500 S （MDLinx U.S.A （ + PDR）） Japan （m3.com） 0

  27. Slide 27: Development in the US

    Development in the US  Expanding services in the U.S. via MDLinx, centered around M3 USA (100% subsidiary) – Membership has reached over 600,000 US doctors after partnering with PDR, g in coverage resulting g of 80%+ of US physician population – Developed into the #1 player in the U.S. for marketin

  28. Slide 28: Turn-Around of PracticeMatch

    Turn-Around of Practice +11%  Topline increase via site integration – Increased service line line-up up through Sales affiliation with MDLinx, our US portal website designed for medical professionals Pre- Post-  Cost Restructuring M&A M&A（※） – Optimization of labor force and cost restructuring to

  29. Slide 29: Physicians Registered on Our Site in China

    Physicians Registered on Our Site in China Jan. – Dec. in 2014 (thousand) 1,096 1,068 1,042 1 0031,019 1,003 , 981 953 911 881 828 766 780 2014 Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec. Copyright © 2015 M3, Inc. All rights reserved. 28

  30. Slide 30: China Business Results

    China Business Results （mn yen） JGAAP basis Sales Recurring Profit China site membership 338 has exceeded 1 million doctors, covering roughly 50% of physicians in China Marketing and research 157 163 services for pharma co’s co s are growing steadily, producing 76 surplus. 48 14 MR-kun MR k serv

  31. Slide 31: Sales and Profit Trend of Overseas

    Sales and Profit Trend of Overseas (mn yen) IFRS basis Sales Expansion of segments in China Segment Profit FY14 FCT on top of the U.S. 8 bn yen (largely US contribution) 8,062 and U.K. (approx) 6,661 FX impact of U.S. and U.K. earnings equalled 548 mio yen Growth yen. 4,069 continues to accelerate

  32. Slide 32: M3 Group's Business Strategy

    M3 Group’s p Business Strategy Copyright © 2015 M3, Inc. All rights reserved. 31

  33. Slide 33: Changing Strategy in New Business Development

    Changing Strategy in New Business Development Business Development Internet-Powered Investment in Healthcare-Internet Sector Strategy in Healthcare Sector （2000～2010） （2011～） Internet + Real-world Approach Internet Operation Service Web-based End-to-End Coverage eTools Service Structure Number of Po

  34. Slide 34: Value Creation via M&A

    Value Creation via M&A Va We aim to create value alue crea Synergy across 3 successive Lever 3 terms after execution of M&A. ation Execution of 10+ M&As Synergy Lever 2 in the past 3 years have created t d more synergistic effects than Synergy initially expected and Lever 1 has provided Short term

  35. Slide 35: Financial Results

    Financial Results Copyright © 2015 M3, Inc. All rights reserved. 34

  36. Slide 36: FY2014 3Q (2014 Apr-Dec) Consolidated Earnings (YoY)

    FY2014 3Q（2014 Apr-Dec）Consolidated Earnings (YoY) IFRS basis (mn yen) Sales Operating Profit Pre tax Profit Pre-tax Net Profit +44% +20% +19% +21% 38,449 12,271 12,439 8,074 10 238 10,238 10 473 10,473 6 670 6,670 26,793 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 FY2013 FY2014 1Q-3Q 1Q-3Q 1Q-3Q 1Q-3

  37. Slide 37: Consolidated Sales Analysis (YoY)

    Consolidated Sales Analysis (YoY) IFRS basis (mn yen) FY2013.1Q-3Q 26,793 Continuing growth Medical Portal MR-kun 1,135 Expanded Research and Research, Others 433 marketingg support pp services aside from MR-kun Career 889 M3 Career expanded Evidence Solution Consolidated Mediscience 4 875 4,875 Pla

  38. Slide 38: Breakdown by Business Segments

    Breakdown by Business Segments IFRS basis FY2013 FY2014 (mn yen) YoY Growth 1Q- 1Q -3Q 1Q- 1Q -3Q Sales 14,733 17,190 +17% Medical Portal Profit 8,241 10,089 +22% Evidence Sales 4,809 9,685 +101% Solution Profit 1,156 1,216 +5% Sales 4,815 8,062 +67% Overseas Profit 857 1,321 +54% Clinical Sales 2,0

  39. Slide 39: One-Time Upfront Investment Costs (Apr-Dec)

    One-Time Upfront Investment Costs（Apr-Dec） (mn yen) 473 429 Total 190 0 8~1 3 0.8~1.3 74 bn yen 180 Office M&A Recruitment Productivity CSO Relocation Due & Training Time Lag of Losses Fees New Staff Costs Diligence Upfront p investment costs is expected p to dampen p profits p by y 0.8 ~ 1.3 bn yen

  40. Slide 40: Annual Results & Forecast for FY2014

    Annual Results & Forecast for FY2014 Sales Ordinary Profit & Net Profit (mn yen) (mn yen) 50,000 15,000 Net Profit Operating profit Extraordinary 13,738 profit from acquisition of MPI 12,704* 36,759 9,294 8,878 9,000 26,007 26 007 7,648 7,844* 19,040 6,031 5,598 4,803 4,492 14,646 3,990 11 811 11,81

  41. Slide 41: Creating New Value in Healthcare

    Creating New Value in Healthcare M3 Medicine Media Metamorphosis Healthcare sector is enormous… ・ Japanese national spending on medical services is approximately i t l ¥33tn ¥33t (approx. ( ¥50t if peripheral ¥50tn i h l businesses are included) ・ Equivalent to 10% of Japanese GDP ・ Sector controlle

M3 — Q3 FY2014 Earnings Presentation on 6ix