West Pharmaceutical Services, Inc. · NYSE:WST
West Pharmaceutical Services — CL King 10th Annual Best Ideas Conference (September 2012)
33 slides from West Pharmaceutical Services's conference presentation, Sep 12, 2012
Slide 1: West Pharmaceutical Services, Inc.
WEST PHARMACEUTICAL SERVICES, INC. Solutions for Injectable Drug Delivery NYSE:WST www.westpharma.com © 2012 by West Pharmaceutical Services, Inc., Lionville, PA. All rights reserved. This material is protected by copyright. No part of it may be reproduced, stored in a retrieval system, or transmitt
Slide 2: Safe Harbor Statement
Safe Harbor Statement Cautionary Statement Under the Private Securities Litigation Reform Act of 1995 This presentation and any accompanying management commentary contain “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements inc
Slide 3: Who We Are
Pharmaceutical Packaging Systems Pharmaceutical Delivery Systems • A globally diverse manufacturer of products used primarily in containing and administering small-volume parenteral drugs • Strong competitive position § Diversified customer base § Proprietary technology § Global footprint § Signific
Slide 4: A Diverse, Stable Customer Base
PHARMACEUTICAL / BIOTECHNOLOGY GENERIC MEDICAL DEVICE A Diverse, Stable Customer Base (representative healthcare customers)
Slide 5: The West Transition
2001 $392 M 2011 $1.2 B The West Transition • Founded in Philadelphia (1923) and listed on NYSE since 1980 • Initiated strategic transformation in 2001 to become a leading global supplier of value-added pharmaceutical packaging systems and components ‘03 ‘04 ‘05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 Kinston recov
Slide 6: Business Segments
$857 $337 Packaging Systems Business Segments 2011 Revenues ($ millions) Delivery Systems • Contract manufacturing base • Multi-material • Project management • Automated assembly • Regulated products • Capabilities + IP = proprietary delivery devices • Proprietary devices are expected to drive growt
Slide 7: 2012 Q2 Overview
2012 Q2 Overview • Second Quarter 2012 Sales Grew 5.5% (11.3 % at constant currency) – High-value product growth and price were key components – Backlog still growing: longer-lead times, customers building inventories • Pharmaceutical Packaging and Device markets: – Customer’s new product pipelines
Slide 8: Q2 Summary Results
Q2 Summary Results $ millions, except per-share data (1) These are Non-GAAP measurements. For an explanation and reconciliation of these items, see “Cautionary Statement” (Slide 2) and “Non-GAAP Financial Measures” and “Notes to Non-GAAP Financial Measures” (Slides 30 - 32).
Slide 9: Selected Factors Expected to Impact Second-Half 2012 and Comparisons
Selected Factors Expected to Impact Second-Half 2012 and Comparisons See “Cautionary Statement” on slide 2. This is not an exclusive list of risks. • Stronger US dollar impact on reported sales, profits from international operations vs. first half and prior year • Pricing changes vs. prior year smal
Slide 10: What will drive growth?
– Growth in emerging markets – Escalating regulatory and quality demands – Adding plants: China, India – Expanding Westar ® and Envision ® capacity, introducing NovaPure ® components – Growth in combination products: • safety, dosing accuracy, ease of use • deliver cost savings • product differentia
Slide 11: Therapeutic Category Growth Drivers
Category Key Customers Projected Growth Diabetes > 10 % Oncology > 10 % Vaccines > 10 % Autoimmune > 8% Generics >10% IMS April 2010 Report; Business Insights 2009; GBI Research 2009 Therapeutic Category Growth Drivers
Slide 12: Packaging Segment Overview
Packaging Systems $857 Packaging Segment Overview 2011 Revenue ($ millions ) • Market leader • Strong recurring revenue base • Global manufacturing • Steady growth in base • Future growth will be driven by: added value per unit sold; geographic expansion; and growth in key therapeutic segments
Slide 13: Pharmaceutical Packaging Systems
Pharmaceutical Packaging Systems Packaging Components for Small Volume Parenterals Plungers, Tip caps, Needle shields for Glass Syringes Plungers, lined seals for Glass Cartridges for Pens Primary packaging components (those that touch the drug) are typically proprietary to West and are “designed in
Slide 14: Providing Solutions to a Changing Market
Providing Solutions to a Changing Market
Slide 15: Faster Growth of High-Value Products
Faster Growth of High-Value Products Pharmaceutical Packaging Systems
Slide 16: Asia-Pacific Region Operations
Asia-Pacific Region Operations Strategy Singapore 1. High-value Product Focus 2. A-P market & special items 3. R&D hub & technical center China IV Plastic Global supply China Elastomer: China Market, Efficiency focus India Elastomers for: 1. Domestic standard products & local support for multi-natio
Slide 17: Delivery Systems Segment Overview
$337 Delivery Systems Segment Overview • Contract manufacturing base • Customer owned IP • Project management • Automated assembly • Regulated products • Proprietary Product Development 2011 Revenue ($ millions )
Slide 18: Portfolio Expansion to Meet Market Needs
2005 2006 2007 2008 2009 2010 2011 Acquisition of Medimop: Administration Systems Licensing of NovaGuard ™ : Safety System Acquisition of PharmaPen: Auto-injector Daikyo CZ Insert Needle License: Prefillable Syringe Systems Acquisition of Plastef: Prefillable Syringe Safety Acquisition of LaModel: E
Slide 19: Pharma Industry Drug Life-Cycle Management
Phase I Phase II Phase III Post-Market Life Cycle Management Pharma Industry Drug Life-Cycle Management 8 - 10 years 2 - 3 years 2 - 3 years Regulatory Approval Discovery
Slide 20: Potential Glass Syringe Risk Areas
Tungsten residue Breakage Silicone oil variability Cosmetic defects Particles Potential Glass Syringe Risk Areas
Slide 21: Illustrative Estimates of Recall Costs
Action Associated with Breakage Issue Associated Costs Estimated Cost* Investigation and inspection of issues, complaints and syringe products · Field complaints inquiry · Investigation and resources · Inspection > $50 Million Loss of market share Loss of sales until re-launch, and loss of 5% of sha
Slide 22: Daikyo CZ Solution
Daikyo CZ Solution with Daikyo Flurotec ® Barrier Film • Reduces: – drug exposure to extractables – risk of protein aggregation caused by silicone oil in the drug product – returns and in-process clean-ups caused by broken glass – risk of delamination and glass-particulate contamination • Consistent
Slide 23: Daikyo Crystal Zenith Competitive Advantage
Orange color indicates Flurotec ® film coverage Complete coverage with inert film on drug contact surfaces Flurotec Film • Patent Protection from Daikyo Seiko • Trade Secret Molding / Processing • Silicone-Free System Daikyo Crystal Zenith Syringe Barrel • Custom Formulated Resin exclusive to Daikyo
Slide 24: Products Approved in Daikyo Crystal Zenith
Products Approved in Daikyo Crystal Zenith hyaluronic acid MRI contrast media bone cement 6 Contrast Media 5 MRI 2 Hyaluronic Acid 1 Calcitonin 1 Proton Pump Inhibitor fluconazole oncology anticoagulant 2 oncology 1 acyclovir hyaluronic acid 3 oncology API Container Japan MHLW Europe EMEA US FDA Cal
Slide 25: SmartDose Electronic Patch Injector Technology Platform
Programmed by PDA or PC Dose may be customized Applied and activated by patient SmartDose ® Electronic Patch Injector Technology Platform • Controlled, subcutaneous, micro-infusion delivery of high volumes and high viscosity drugs • Prefilled cartridge, no need for user filling • Based on Daikyo CZ
Slide 26: Effect of Increasing Proprietary Device Sales
Revenue per-unit Consumer product manufacturing Medical device manufacturing Mix2Vial ® CZ vials CZ Syringes Effect of Increasing Proprietary Device Sales Contract Manufacturing Proprietary Devices Products Auto-injector platform technology Electronic patch injector technology
Slide 27: Our Long-Term Focus
Our Long-Term Focus • Pharmaceutical Packaging Systems – Organic growth of 3-5% per year – Margin expansion from efficiency, product mix – Capital investments target enhanced quality and value • Pharmaceutical Delivery Systems – Deliver the potential of Daikyo CZ products – Stronger mix of healthcar
Slide 28: Summary
Pharmaceutical Packaging Systems Pharmaceutical Delivery Systems • Strong first half • Established market leader • Stability with growth potential • New products well positioned to meet future market needs • The financial strength to invest Summary
Slide 29: Non-GAAP Financial Measures (3)
As Reported March 31, 2012 Restructuring and related charges Acquisition- related contingencies Discrete tax items Non-GAAP March 31, 2012 Operating profit $41.7 $0.4 $0.2 $- $42.3 Interest expense, net 3.9 - - - 3.9 Income before income taxes 37.8 0.4 0.2 - 38.4 Income tax expense 9.8 0.1 0.1 (0.3)
Slide 30: Non-GAAP Financial Measures
As Reported June 30, 2012 Restructuring, impairment & related charges Acquisition- related contingencies Extinguishment of debt Non-GAAP June 30, 2012 Operating profit $35.6 $3.7 $0.2 $- $39.5 Loss on debt extinguishment 11.6 - - 11.6 - Interest expense, net 4.0 - - - 4.0 Income before income taxes
Slide 31: Notes to Non-GAAP Financial Measures
NOTES TO NON-GAAP FINANCIAL MEASURES For additional details, please see today’s press release and Safe Harbor Statement. (continued on following slide) These presentation materials and associated presentation use the following financial measures that have not been calculated in accordance with gener
Slide 32: Notes to Non-GAAP Financial Measures
NOTES TO NON-GAAP FINANCIAL MEASURES For additional details, please see today’s press release and Safe Harbor Statement. value of one of our product lines no longer exceeded the carrying value of the related assembly equipment and intangible asset. The remaining charges were restructuring and relate
Slide 33: West Pharmaceutical Services, Inc.
WEST PHARMACEUTICAL SERVICES, INC. Solutions for Injectable Drug Delivery NYSE:WST www.westpharma.com © 2012 by West Pharmaceutical Services, Inc., Lionville, PA. All rights reserved. This material is protected by copyright. No part of it may be reproduced, stored in a retrieval system, or transmitt
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