Stryker Corporation · NYSE:SYK
Stryker — Investor Day (September 2014)
44 slides from Stryker's investor day presentation, Sep 17, 2014
Slide 1: Stryker Analyst Meeting
STRYKER ANALYST MEETING September 2014
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT Certain statements made in the presentation may contain information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause our actual results to differ mat
Slide 3: Agenda
AGENDA Kevin Lobo OVERVIEW Chairman and Chief Executive Officer David Floyd ORTHOPAEDICS Group President, Orthopaedics Tim Scannell SPOTLIGHT ON INSTRUMENTS Group President, MedSurg and Neurotechnology Lonny Carpenter GLOBAL QUALITY & OPERATIONS Group President, Global Quality and Operations Ramesh
Slide 4: Mission
MISSION TOGETHER MISSION WITH OUR CUSTOMERS, WE ARE DRIVEN TO MAKE HEALTHCARE BETTER. VALUES INTEGRITY ACCOUNTABILITY PEOPLE PERFORMANCE 4 4
Slide 5: Strength in Key Hospital Service Lines
STRENGTH IN KEY HOSPITAL SERVICE LINES • Strong market share and broad product Neuro Powered CMF 3% Knees offering in orthopaedics, Instruments 3% 15% neuro and specialty Neurovascular 5% medical surgery Spine 8% Hips 14% • Growth through Sustainability Solutions 2% 2013 Sales dedicated businesses M
Slide 6: Focused on Innovation
FOCUSED ON INNOVATION • Demonstrating commitment to internal innovation +11% 3 Year CAGR R&D • Driving innovation with products and services • Commitment to improved outcomes & delivering greater cost savings/efficiencies • Augmenting R&D with focused acquisitions 6
Slide 7: Accelerating Global Growth
ACCELERATING GLOBAL GROWTH • Building on momentum in Europe • Entered the lower priced segment in China and expanding to other emerging market countries • Expanding market coverage and optimizing go to market models in premium emerging markets 7
Slide 8: Growth at the High End of MedTech
GROWTH AT THE HIGH END OF MEDTECH 6.0% Organic Revenue Growth* 5.1% 4.9% 5.0% 4.2% 4.0% 3.0% 2.6% 2.4% 2.1% 2.0% 1.0% 0.0% 2012 2013 1H2014 MedTech Market** Stryker * Organic revenue growth removes the impact of changes in foreign currency exchange rates, divestitures and the first twelve months of
Slide 9: Balance Sheet Strength
BALANCE SHEET STRENGTH Share Repurchases: $1.0B M & A: $4.5B Continued share Focused on buybacks over time driving sales 2011–2013 growth in core Capital and adjacent Deployment markets Dividends: $1.0B History Committed to increasing the dividend at or above EPS growth 9
Slide 10: Operating Leverage Initiatives
OPERATING LEVERAGE INITIATIVES • Global Quality & Operations cost improvement initiatives • G&A efficiencies • European Regional Headquarters (RHQ) • Information technology simplification 10
Slide 11: Financial Targets Confirmed
FINANCIAL TARGETS CONFIRMED 3Q2014 $1.12 – 1.16 Adjusted diluted net earnings per share FY2014 5.0 – 6.0% Organic sales growth $4.75 – 4.80 Adjusted diluted net earnings per share FY2015 • Effective tax rate to improve by roughly two percentage points • Plan to reinvest approximately half of the tax
Slide 12: David Floyd, Group President, Orthopaedics
David Floyd Group President, Orthopaedics 12
Slide 13: Orthopaedics Group: A World Leader
ORTHOPAEDICS GROUP: A WORLD LEADER 13
Slide 14: Key Growth Drivers
KEY GROWTH DRIVERS • Expand portfolio and specialty selling teams in high growth segments • Drive Power Brands in Reconstructive • Drive market adoption of robotic arm assisted surgery • Focus on geographic expansion opportunities • Focus Spine portfolio development on premium segments 14
Slide 15: Long Term Potential for Robotic Arm Assisted Surgery
LONG TERM POTENTIAL FOR ROBOTIC ARM ASSISTED SURGERY 15
Slide 16: Robotic Arm Assisted Surgery Portfolio Expansion
ROBOTIC ARM ASSISTED SURGERY PORTFOLIO EXPANSION • Cementless unicompartmental knee system to begin evaluations by early 2015 • Total knee arthroplasty IDE enrollment nearing completion, preparing regulatory submission for 2015 clearance • Hip Power Brands accessible mid-year 2015 following software
Slide 17: Tim Scannell: Spotlight on Stryker Instruments
Tim Scannell Group President, MedSurg and Neurotechnology Spotlight On: Stryker Instruments 17
Slide 18: Stryker Instruments Performance Over Time
STRYKER INSTRUMENTS PERFORMANCE OVER TIME 1,800 1,600 Global Revenue ($ Millions)* 1,400 1,200 1,000 800 600 400 200 - * Revenue includes Neuro Powered Instruments and Stryker Interventional Spine 18
Slide 19: Stryker Instruments Business Units
STRYKER INSTRUMENTS BUSINESS UNITS • Bone cutting ●Waste management Surgical • Patient & caregiver safety ● Blood & wound management • Navigation systems for ortho, neuro, spine and ENT procedures Navigation • Intraoperative patient imaging (partnership) • Repair: warranty, preventive maintenance &
Slide 20: Growth Platforms Enabled Through Acquisitions
GROWTH PLATFORMS ENABLED THROUGH ACQUISITIONS Neptune (2000) Sterishield (1994) SurgiCount (2014) Sonopet (2010) 20
Slide 21: Sonopet
SONOPET • 78% CAGR since acquisition in 2010 • Strong Stryker sales force execution and incremental R&D innovation has driven the growth • Future plans include expansion of neurosurgery offering and building new innovations in adjacent specialties such as spine, plastics, and reconstructive surgery
Slide 22: Sterishield
STERISHIELD • 17% CAGR since acquisition in 1994 • Future growth strategies include expanding our orthopaedic footprint and entering new surgical specialties • Innovation will include focus on intraoperative communication and comfort technologies 22
Slide 23: Neptune
NEPTUNE • 31% CAGR since acquisition in 2000 • Future plans include capturing lost share due to recall and further penetrating the fluid waste management market • Innovations in this space will be aimed at improving the user experience and growing the disposable base business 23
Slide 24: Neptune Performance Over Last Two Years
NEPTUNE PERFORMANCE OVER LAST TWO YEARS Neptune Waste Management < Recall Revenue < Re-launch Quarter 24
Slide 25: Neptune Customer Education
NEPTUNE 2 CUSTOMER EDUCATION 25
Slide 26: SurgiCount Safety-Sponge System
SURGICOUNT SAFETY-SPONGE SYSTEM SurgiCounter Safety-Sponges SurgiCount360 • Small mobile device • Unique, barcode label, • Backend database that designed for hands-free permanently fused to organizes reports by use each Safety-Sponge service, campus, and date • Rests in small docking • Master Tag al
Slide 27: Lonny Carpenter, Global Quality and Operations
Lonny Carpenter Group President, Global Quality and Operations 27
Slide 28: GQ&O Cost Improvement Initiatives on Track
GQ&O COST IMPROVEMENT INITIATIVES ON TRACK Quality • Quality 1st culture Enhance Quality First Compliance Products/ continues to strengthen Brand Equity Services 3 Focus Areas • Global sourcing is driving Plant Core Automation/ leverage Strategic Network Competency Lean Sourcing Optimization Alignme
Slide 29: European Regional Headquarters
EUROPEAN REGIONAL HEADQUARTERS STRYKER IN EUROPE • $1B sales / growing • 12 manufacturing facilities (France/Ireland/Germany/Switzerland) • Over 6,000 employees • Central distribution center in Venlo, Netherlands • Opened regional headquarters (RHQ) in Amsterdam RHQ OBJECTIVES • Continue to strength
Slide 30: Trans-Atlantic Operating Model
TRANS-ATLANTIC OPERATING MODEL HISTORICAL 2015 Trans-Atlantic United States International International US / Europe MSNT Divisions 6 Regions MSNT Divisions 5 Regions Europe Japan Japan South Pacific South Pacific Americas Americas China/Korea/ASEAN Orthopaedics China/Korea/ASEAN Orthopaedics EEMEA-I
Slide 31: Driving Growth in Europe
DRIVING GROWTH IN EUROPE Stryker’s lower Significant potential in MedSurg market share and Neurotechnology positions in Europe 2013 Stryker Sales Mix are an exciting 100% 11% 90% 18% 19% growth opportunity 80% 26% for our business 70% 42% 37% 60% 50% 40% 30% 63% 20% 40% 44% 10% 0% Europe US World Wi
Slide 32: Ramesh Subrahmanian: Spotlight on China
Ramesh Subrahmanian Group President, International Spotlight On: China 32
Slide 33: China: World's 2nd Largest Med Tech Market by 2020
CHINA: WORLD’S 2ND LARGEST MED TECH MARKET BY 2020 AN EVOLVING LANDSCAPE • Healthcare, regulatory reforms drive market growth, especially mid-tier segment CHINA MEDICAL TECHNOLOGY MARKET DISTINCT MARKET SEGMENTS IN CHINA • China is currently the 4th largest '11-'15E '15-'20E CAGR CAGR market in the
Slide 34: Stryker Well Positioned to Take Advantage of China Market Growth
STRYKER WELL POSITIONED TO TAKE ADVANTAGE OF CHINA MARKET GROWTH STRYKER IN CHINA STRYKER STRATEGY • Over 2,000 employees • Leverage Stryker premium portfolio across franchises for leadership • Stryker China expanding sales force, distribution reach (premium segment) • Grow mid-tier segment presence
Slide 35: Win in Premium Market: Stryker China
WIN IN PREMIUM MARKET: STRYKER CHINA EXPAND MARKET COVERAGE • Currently 40% market coverage • Target full coverage of 37 key cities by 2015 (60% coverage) • Target 80% coverage by 2020 • Expand sales force > 30% per annum OPTIMIZE GO TO MARKET MODEL • Regional hubs, dealer structures • Invest in mar
Slide 36: Win in Premium Market: Stryker China
WIN IN PREMIUM MARKET: STRYKER CHINA BROAD PORTFOLIO PREMIUM PORTFOLIO (Leverage Leading Position in Endoscopy) DEVELOPMENT Neuro Spine • Develop products specifically Instruments for Chinese anatomy Hips • Tiered product portfolio Trauma • Product life cycle extension • China for China manufacturin
Slide 37: Trauson - Platform to Win in Mid-Tier Segment
TRAUSON - PLATFORM TO WIN IN MID-TIER SEGMENT SUCCESSFUL INTEGRATION – MAINTAINED BUSINESS MOMENTUM • Key integration milestones achieved on time • Key talent retained • Leading domestic player in trauma and spine, growing ahead of market (46% growth YTD 2014) PORTFOLIO AND R&D FOCUS • Continue to e
Slide 38: Trauson - Platform to Win in Mid-Tier Segment
TRAUSON - PLATFORM TO WIN IN MID-TIER SEGMENT PLANS • Launch Trauson brand in other emerging markets • Continue expansion in China • Assessing expansion of Trauson into broader recon mid-tier market segment INTERNATIONAL LAUNCHES 2014 • Malaysia • Russia • Turkey • Thailand • South Africa • Colombia
Slide 39: Closing Remarks
STRYKER ANALYST MEETING Closing remarks
Slide 40: Stryker Advantage
STRYKER ADVANTAGE • Strength in key hospital service lines • Focused on innovation • Accelerating global growth • Balance sheet strength • Opportunities to drive meaningful operational leverage 40
Slide 41: Q&A
Q&A 41
Slide 42: Mako Surgeon Panel
MAKO SURGEON PANEL Moderator David Floyd Group President, Orthopaedics 42
Slide 43: Panelists
PANELISTS Robert C. Cohen Vice President and General Manager of Stryker Mako David J. Jacofsky, MD Chairman of The Center for Orthopaedic Research and Education Robert C. Marchand, MD Partner, South County Orthopaedics and Physical Therapy, Inc. Douglas E. Padgett, MD Chief of the Adult Reconstructi
Slide 44: Stryker Analyst Meeting
STRYKER ANALYST MEETING September 2014