Coloplast A/s Class B · OMXCOP:COLO_B
Coloplast A/s Class B — Investor Day (2016)
54 slides from Coloplast A/s Class B's investor day presentation, 2016
Slide 1: Coloplast North America
Coloplast North America Coloplast Capital Markets Day 2016 Edmond Veome, SVP Chronic Care Management, NA
Slide 2: Agenda for this afternoon – Delivering +10% growth in the US
Agenda for this afternoon – Delivering +10% growth in the US over a 3-5 years horizon • How we navigate the complex US healthcare system • How to win in the Acute Channel and build clinical preference • How to be the preferred partner in community for patients and trade • Our ambitions and performan
Slide 3: North America is the most attractive healthcare market in the world
North America is the most attractive healthcare market in the world North America Region North America at a glance • The US is the world leader in healthcare spending with • Consists of USA and Canada 17% of GDP • 400 Coloplast employees • Canada spends 11% of GDP • Headquarter in Minneapolis and To
Slide 4: Coloplast has tremendous potential as we still have a low market share
Coloplast has tremendous potential as we still have a low market share Continence Care Ostomy Care Wound & Skin Care ~ 30% ~15% 2-7% Coloplast US market share In percent • Large market with intense • ~120,000 new surgeries each year Skin Care competitive price pressure • Market revenue growth of ~4%
Slide 5: The US market is complex to navigate with several influential stakeholders
The US market is complex to navigate with several influential stakeholders Hospitals Clinical Setting Group Purchasing Organization Home Health Long Term Care Consumer Coloplast Distribution Community Setting Distribution / Dealer Hybrid DME Dealers/Retail Payer channel Consumer Product reimbursemen
Slide 6: US Healthcare System and Reimbursement
US Healthcare System and Reimbursement Coloplast Capital Markets Day 2016 Mark Draper, Head of Public Affairs
Slide 7: Three key dynamics drive US reimbursement
Three key dynamics drive US reimbursement and influence Coloplast’s commercial landscape … The mission to “bend the The shift to alternative The quest for value- healthcare cost curve” payment models vs. volume-based care Page 7
Slide 8: Recessions, reforms have slowed, but not stopped, spending growth
Recessions, reforms have slowed, but not stopped, spending growth 20 18 Medicare established 16 1965 Managed Care 14 12 Affordable Care Act 10 8 6 4 Jul, ’81 – Nov, ’82 Jul, ’90 – Mar, ’91 Mar, ’01 – Nov, ’01 Dec, ’07 – Jun, ’09 2 Recession Recession Recession Recession - 1960 1961 1962 1963 1964 19
Slide 9: Who drives reimbursement decision making?
In one of the world’s most complex healthcare systems, who drives reimbursement decision making? Reimbursement Insurance Claims Payers Providers Services Coloplast Product Sales Payment Consumer Product Sales Suppliers Payment Page 9
Slide 10: A complex payer environment, where US government programs play an increasingly important role
A complex payer environment, where US government programs play an increasingly important role Covered lives (millions) 2008 2014 Key segment expenditures Employment-based insurance (private payers) 174.8 175.0 USDbn, 2014 Direct purchase/Individual market (private payers) 26.8 46.2 Private 1,020.3 M
Slide 11: Private insurers are still the largest payers
Private insurers are still the largest payers, and also administer some government spending • How most Americans still Largest private insurers* Projected average annual increase receive care in per capita spending, 2013-2023 USD 112.7bn • Purchased from private insurers • Employers negotiate USD 41
Slide 12: Medicare is the most important government payer in the US
Medicare is the most important government payer in the US • Age 65+ (and some disabled) 1 in 2 beneficiaries with incomes of Beneficiaries (millions) < $23,500 100 92.8 • Different categories for inpatient, 89.2 90 outpatient, drugs, etc. 81.8 80 1 in 3 beneficiaries with 5+ chronic 70 64.4 • Often
Slide 13: Medicaid has expanded under the Affordable Care Act
Medicaid has expanded under the Affordable Care Act • Low income and disabled 1 in 5 Americans < 65 years of age Federal Medicaid spending (USDbn) • Jointly financed by federal and state governments 1000 900 1 in 3 children 800 • Expanded under Affordable Care 700 Act 600 500 400 300 2 in 3 nursing
Slide 14: So where is this system heading…?
So where is this system heading…? Reimbursement Insurance Claims Payers Providers Services Coloplast Product Sales Payment Consumer Product Sales Suppliers Payment Page 14
Slide 15: Complexity in the US payer landscape is mirrored in reimbursement mechanics
Complexity in the US payer landscape is mirrored in the mechanics of reimbursement • Coverage: defines what conditions, Coloplast product examples: services, technologies are paid for Product HCPCS Code Rate Utilization Ostomy pouch, A4427 $3.09 Max. 20 /month • Coding: system designed to classify d
Slide 16: US healthcare payment models continue to evolve…
US healthcare payment models continue to evolve… Fee for service Managed care Value-based payment • Consumers choose provider • Payers and providers create • Payers contract with providers to restricted networks care for defined population • Providers deliver a service and/or product • Contracted pr
Slide 17: The future? More spending, more pressure, more reform
The future? More spending, more pressure, more reform • The Affordable Care Act Target percentage of payments in FFS linked to quality/alternative payment • Medicaid Expansion models by 2016 & 2018 • Alternative Payment Models • Value-based payment • Coding and evidence • Private Payer Trends • Out-
Slide 18: US Acute Market Structure
US Acute Market Structure Coloplast Capital Markets Day 2016 Richard McEnroe, Director Chronic Care National Accounts, US
Slide 19: The Acute Channel contains several key stakeholders to product access
The Acute Channel contains several key stakeholders to product access Acute channel Hospitals Clinical Setting Home Health Long Term Care Consumer Coloplast Distribution Community Setting Distribution / Dealer Hybrid DME Dealers/Retail Consumer Product reimbursement / Payers Page 19
Slide 20: Key customers in the Acute Channel are large hospital systems or IDNs
Key customers in the Acute Channel are the large hospital systems or integrated delivery networks (IDNs) Top 10 IDNs in the US IDN decision making process Demand for product change Acute Acute Beds IDN / System Facilities (Licensed) Hospital Corporation of America 180 43,000 Value Analysis Committee
Slide 21: The US acute landscape has four main layers of decision makers
The US acute landscape has four main layers of decision makers GPO Enter into purchase agreements for members with key vendors to leverage scale across hospitals Group of IDNs that consolidate volume for purchasing Purchasing coalitions power Group of hospitals that make decisions together on IDN ID
Slide 22: Purchases are made either directly or through GPO contracts
Purchases are made either directly or through GPO contracts Four large GPOs cover majority of the market Example of a bidding process Acute Acute OC Acute WSC GPO Members1 share2 share2 GPO bid Novation 3,000 ~35% ~25% Premier 3,600 ~25% ~25% Category Management Clinical Committee MedAssets 4,500 ~1
Slide 23: GPO contracts make it easier to sell to hospitals …
GPO contracts make it easier to sell to hospitals … GPO Three main reasons for using GPO • Pricing structure already in place • Pre-negotiated T&C • Other incentives to use GPO contracted vendors Purchasing coalitions IDN IDN IDN Two main decisions for IDNs/Hospitals: “What product do we prefer to u
Slide 24: … and there are GPO contracts up for renegotiation in 2016
… and there are GPO contracts up for renegotiation in 2016 On GPO contract New technology agreement No contract 2016 2017 Category Q2 Q3 Q4 Q1 Q2 Continence Ostomy Skin Wound Continence Ostomy Skin Wound Continence Ostomy Wound & Skin Page 24
Slide 25: IDNs drive purchase decisions, so Coloplast can win business
But IDNs drive purchase decisions, so Coloplast has access to win business in the majority of acute care accounts We are challenged where there is contract compliance… …but we estimate over 50% can buy off-contract 90% 85% 80% 90% 90% 85% 75% 50% 80% 95% 85% 0% 20% 10% • Category has a standardizati
Slide 26: We target key stakeholders with a dedicated sales force
We target key stakeholders across the acute landscape with a dedicated sales force GPO National Accounts team Purchasing coalitions IDN IDN IDN Dedicated sales teams (OC, CC, WSC) Page 26
Slide 27: Key trends influencing the Acute market in the US
Key trends influencing the Acute market in the US will provide further business for Coloplast Trends Key driver Examples Exerting more influence on product Several large systems go off GPO contract decision. IDNs have scale and structure • Excelerate (Novation) IDNs more influential to get attractiv
Slide 28: Strong growth in US Acute Care sales and well positioned for further growth
Coloplast has strong growth in US Acute Care sales and is well positioned for further growth We have strong growth in Acute Growth driven by a couple of factors Coloplast Acute market share development +6.5% Launch of SenSura® Mio Dedicated OC sales force 12/13 13/14 14/15 15/16 Q1 Page 28
Slide 29: US Community Market Structure
US Community Market Structure Coloplast Capital Markets Day 2016 Morten Hansen, VP Sales and Marketing, US
Slide 30: Distribution is a cornerstone of product delivery in US healthcare
Distribution is a cornerstone of product delivery in US healthcare Hospitals Clinical Setting Group Purchasing Organization Home Health Long Term Care Coloplast Distribution Distribution Community Setting Consumers Distribution / Dealer Hybrid DME Dealers/Retail Product reimbursement / Payers Page 3
Slide 31: Distribution operates in three main channels
Distribution operates in three main channels Acute Alternate Site DME dealers/retailers Channel • Product distribution to Acute • Product distribution in non-Acute • Some distributors compete directly facilities across multiple product care settings across multiple in DME space; does billing categor
Slide 32: Three core modes of delivery to end users in US marketplace
Three core modes of delivery to end users in US marketplace Direct Coloplast DME/Retail Consumer DME bills insurance for consumer Indirect Coloplast Distributor DME/Retail Consumer DME bills insurance for consumer PRODUCT DROP SHIPMENT Indirect Drop-ship Coloplast Distributor DME/Retail BILLING/SERV
Slide 33: Coloplast value proposition consistent across channels
Coloplast value proposition consistent across channels but collaboration activities differ Clinical setting Community setting Distributors Dealers/DMEs Order box Order box Innovative Clinical Education Joint Marketing Education & Support Innovative products Preference & Support Activities through fi
Slide 34: DME dealers manage delivery and billing of products to consumers
DME dealers manage delivery and billing of products to consumers Facts about the DME market Company Market approach* • More than 15,000 DME/retailers in US market Substantial national field presence • Approx. 2,000 bill Medicare in IC and/or OC • Highly concentrated market, Medicare volume example:
Slide 35: We work actively to ensure product access and patient education
We work actively to ensure product access and patient education DME dealer/retailer Key account management Coloplast Care • Manage core business relationship, • Tips and tricks that can help make life easier contracts, and performance • Product education • Identify growth opportunities • The latest
Slide 36: Consumer interaction is critical for product access
Consumer interaction is critical for product access in challenging reimbursement environment Illustrative example of catheter reimbursement DME product cost $ $$$ Page 36
Slide 37: The Coloplast Care Ecosystem – everything starts with the consumer
The Coloplast Care Ecosystem – everything starts with the consumer • Educated by field • Seamless transitions • Field travel when relevant • Educates on products and lifestyle • Supports clinician & end user Page 37
Slide 38: Coloplast Care began as an offline program
Coloplast Care began as an offline program – now the program includes much more Key benefits to the upgraded program One size fits all Personalized support One-way dialogue Interactive & on-demand Limited support Lifelong support Static flow Interactive & dynamic ONLINE OFFLINE Emails Websit
Slide 39: Coloplast Care offering revised to deliver two core promises
Our Coloplast Care offering has been revised to ensure we deliver two core promises … Clinically validated 1 Provide Reliable Advice content Clinically validated advice decision trees Self- Assessments 2 Identify Struggling Users Tailored content driven by data Page 39
Slide 40: Data-driven, consistent experience across all channels
… while also being data-driven, providing a consistent experience across all channels 2016 Winner of Gold: Cross-Channel Experience Page 40
Slide 41: With DtC we capture the community through direct and cooperative marketing
With DtC we capture the community through direct and cooperative marketing programs with dealers We operate in numerous channels to expose our …and with the reach we get several benefits content, service and product offering… Expose innovative products Ensure product accessibility Ensure successful
Slide 42: Coloplast North America
Coloplast North America Coloplast Capital Markets Day 2016 Edmond Veome, SVP Chronic Care Management, NA
Slide 43: Successfully executing on a long-term strategy with ambitious milestones
We have successfully been executing on a long-term strategy with several ambitious milestones North America growth horizons: Execution focus Horizon 3 “Towards our Horizon 2 full potential” “Beyond Horizon 1 Breakthrough” “Back to Basics - regaining our growth momentum” 2014/15 2018/19 Page 43
Slide 44: Since 2012 we have delivered profitable double digit revenue growth
Since 2012 we have delivered profitable double digit revenue growth while encountering some challenges Financial performance, NA region Challenges • Department of Justice investigation Revenue growth • Wholesaler buying patterns CAGR 11/12-14/15 • Inventory reductions resulting from contract changes
Slide 45: Our 'Beyond Breakthrough' strategy will deliver double digit growth in the US
Our current “Beyond Breakthrough” strategy will deliver on an ambition of double digit growth in the US Strategic themes 1 Challenge the Market Leader in Ostomy Care 2 Make SpeediCath® and Peristeen® the Standard Ambition 3 Become a Tier 1 Skin-Integrity Player Double digit growth 4 Drive Community
Slide 46: Challenge the Market Leader in Ostomy Care
1 Challenge the Market Leader in Ostomy Care We continue to grow our market share and enroll consumers in CARE driving above market performance Progress Acute market share (B&P units) CARE enrollments • Acute growth 3-5X market • Brava® continues to deliver high growth in the community +15% • Launch
Slide 47: Make SpeediCath and Peristeen the Standard
2 Make SpeediCath® and Peristeen® the Standard In Continence Care, hydrophilic catheters are gaining momentum due to increased sales force pressure Progress Hydrophilic sales by HCPC CARE enrollments • Sales force expansion in Q1 • Demand for hydrophilic growing as awareness is increasing • Launch o
Slide 48: Become a Tier 1 Skin-Integrity Player
3 Become a Tier 1 Skin-Integrity Player We are now the second largest skin care player in the US but we have yet to unfold the full potential of this business Progress Focus product sales Number of skin integrity accounts • Increased leadership position in Skin care • Winning IDNs seeking a manufact
Slide 49: Drive Community Preference through Consumer Efforts
4 Drive Community Preference through Consumer Efforts We continue to expand our efforts to meet consumer demand for better products in the community Progress Size of end user Database Number of consumer FTEs • Created a unique consumer support setup • Coloplast Care launched as online platform +33%
Slide 50: Continue to invest in partnership programs and expand our sales force
We will continue to invest in better partnership programs with customers and expand our sales force Current investment focus Future investment focus Continence sales force expansion Ostomy sales force expansion Consumer Programs Wound/Skin sales force expansion TV Pilot Consumer Programs incl. TV sc
Slide 51: Innovation will be a key driver for our growth in the US
Innovation will be a key driver for our growth in the US as both hospitals and consumers have innovation preference Several innovative products in the US… …and new product launches in 2015/16 SenSura® Mio Brava® SenSura® Mio Convex The SpeediCath® family Peristeen® SpeediCath® Compact Male Page 51
Slide 52: Significant investments to interact with consumers in the community
... combined with significant investments to interact with consumers in the community Pilot TV Website and other with new support channels and solutions Continued focus on delivering a better Consumer marketing experience Patient support campaigns Page 52
Slide 53: We have taken significant market share and will continue to outperform the market
We have taken significant market share and we will continue to outperform the market Sales Out and Market growth; FY15/16 MAT (Dec-15) Ostomy Care Continence Care Skin Care Wound Care 1.1x 5x 1.5x 2.5x Market Coloplast Market Coloplast Market Coloplast Market Coloplast Page 53
Slide 54: Our mission, values and vision
Our mission Making life easier for peoplé with intimate healthcare needs Our values Closeness... to better understand. - Passion... to make a difference Respect and responsibility... to 0 guide | US: Our vision Setting the global standard for listening and responding: Coloplast A/S - Ostomy Care / C