Alcon Ag · SIX:ALC
Alcon — Investor Day (November 2018)
116 slides from Alcon's investor day presentation, Nov 27, 2018
Slide 1: Investor & Analyst Day
Investor & Analyst Day November 27, 2018
Slide 2: Welcome
Welcome Samir Shah Karen King Novartis Global Head Investor Relations Alcon Global Head Investor Relations & Communications
Slide 3: Agenda
Agenda Morning Afternoon Registration, Breakfast 8:30 – 9:00am and Product Booths 12:20 – 1:30pm Lunch with Management & Product Booths Samir Shah, Novartis Global Head Investor Relations; 9:00 – 9:10am Welcome Afternoon Session 1: Karen King, Alcon Global Head IR & Communications Franck Leveiller,
Slide 4: Objectives for Capital Markets Day
Objectives for Capital Markets Day Meet Alcon management 1 Discuss our strategy and key growth drivers 2 3 Provide 5-year financial goals 4 Explain the benefits of Alcon as a stand-alone company 5 Answer your questions 4
Slide 5: Legal Disclaimers
Legal Disclaimers Forward-Looking Statements This presentation contains “forward-looking statements” that involve risks and uncertainties. These statements can be identified by the fact that they do not relate strictly to historical or current facts, but rather are based on current expectations, est
Slide 6: Progress report
Progress report Mike Ball Chairman-Designate
Slide 7: Alcon at a glance
Alcon at a glance $6.8b $23b sales market favorable market trends with significant opportunities growing eye care device leader growing at 4%1 to grow and expand #1 or #2 140+ in all categories within countries served by over strong & experienced Surgical & Vision Care1 20,000 employees management t
Slide 8: A strong foundation with a long history of success
A strong foundation with a long history of success 70+ years of success Outstanding as a trusted brand customer relationships Legacy of industry firsts and Industry leading pipeline technological advancements Robust industry expertise, leading brands and a winning mindset 8
Slide 9: Creation of a more nimble medical device company
Creation of a more nimble medical device company will allow us to focus on eye care and utilize our expertise Rapid, Strong Medical Iterative Customer Device DNA Innovation Relationships Nimble, Operational Agile Culture Flexibility 9
Slide 10: In 2016, we outlined a turnaround plan
In 2016, we outlined a turnaround plan... 1 Fix the foundation and strengthen execution 2 Invest in promotion, capital and systems 3 Reinvigorate the innovation pipeline 4 Strengthen the customer relationship 5 Develop a nimble medical device culture 10
Slide 11: ...and strong results have followed
...and strong results have followed 1 2 1 Fix the foundation and strengthen execution Sales have returned to growth1 Highest ranking of customer 2 Invest in promotion, capital and systems over the last several quarters satisfaction in major markets; SAP now spans ~60% 3 Reinvigorate the innovation p
Slide 12: Improving the culture has been a top priority
Improving the culture has been a top priority and the organization has responded Removed barriers Added management Increased resources Empowered to improve salesforce experience in eye care in customer training the organization effectiveness and medical devices and field service to serve the custome
Slide 13: The foundation has been strengthened and we have advanced to the next phase
The foundation has been strengthened and we have advanced to the next phase Fix The Execute the Deliver Foundation growth plan leading-edge solutions AT-IOLs1 Accelerate Innovation Vitreoretinal Expand markets & adjacencies DAILIES TOTAL1 New business models Dry Eye 2016-2017 2018-2020 2021 & Beyond
Slide 14: Introduction to Alcon: Vision and Strategy
Introduction to Alcon Vision and Strategy David Endicott Chief Executive Officer
Slide 15: Vision Mission Strategy
Vision Mission Strategy We aspire to lead the world in We help people see better We apply world leading eye care innovations that expertise to innovate products, enable extraordinary lives build markets and deliver new solutions in eye care 15
Slide 16: Strong management expertise
Strong management expertise David Endicott David Murray Michael Onuscheck Sergio Duplan Ian Bell Laurent Attias Chief Executive Officer Chief Financial Officer President Global President North America President International Head Corporate Businesses & Innovation Development, Strategy, Executive Com
Slide 17: Sizeable opportunities with substantial unmet medical need
Sizeable opportunities with substantial unmet medical need could be saved with of visual impairment is 80 % preventable or curable1 $102b appropriate eye care services1 People: 153 million 1.7 billion 352 million 20 million 93 million 67 million with uncorrected have live with are blind have live wi
Slide 18: Variety of ocular disorders that can cause visual impairment
Variety of ocular disorders that can cause visual impairment and loss of sight Disorder Results in… REFRACTIVE ERRORS Myopia, Hyperopia and Astigmatism1 Blurred or impaired vision Hardening of the natural lens due to age PRESBYOPIA Inability to focus up close (35 years and beyond) Blurred vision, it
Slide 19: Offering leading solutions for patients throughout their lives
Offering leading solutions for patients throughout their lives Children - 25 25 - 40 40 - 60 60+ Contact Lenses & Solutions REFRACTIVE Refractive Surgery ERRORS Monofocal and Toric IOLs Contact Lenses & Solutions PRESBYOPIA Presbyopia Correcting IOLs DRY EYE Systane Drops, Gels, Ointments CATARACTS
Slide 20: Eye care devices represent a large and growing $23b market
Eye care devices represent a large and growing $23b market 2017 Industry Sales1 ($b) 2018E-2023E Industry CAGR1 Total Market $23b 4% Implantables2 3 6% Surgical Consumables2 4 $9b 3% CAGR: 4% Equipment / Other2 2 2% Contact Lenses 8 4% Vision Care $14b Ocular Health2 6 CAGR: 4% 4% REFRACTIVE RETINAL
Slide 21: Favorable megatrends underpin strong market potential
Favorable megatrends underpin strong market potential Myopia prevalence is Aging population Increasing wealth growing; increased Innovation improving the with growing eye care and growth from screen time and mobile quality of eye care needs emerging economies device use is impacting vision Populatio
Slide 22: Alcon is the #1 eye care devices company in the world
Alcon is the #1 eye care devices company in the world 2017 Sales by Business ($b) Surgical Vision Care 3.7 3.1 $9b market $14b market Note: All trademarks are property of the respective owner Source: Internal analysis as well as GFK, IMS, Nielsen, CBG, Euromonitor data and Market Scope 22
Slide 23: #1 or #2 in all product categories
#1 or #2 in all product categories Surgical Vision Care Implantables Consumables Equipment / Other Contact Lenses Ocular Health Market Position # 1 # 1 # 1 # 2 # 1 Key Brands 2017 Sales $1.0b $2.1b $0.6b $1.8b $1.2b Note: Numbers may not add up due to rounding 23
Slide 24: Global reach provides a significant competitive advantage
Global reach provides a significant competitive advantage Independent Optometrists Eye Clinics Mass Merchandisers Surgeon Offices Optical Chains Public Hospitals Pharmacies Private Hospitals Distributors Ambulatory Surgery Centers Internet Retailers 24
Slide 25: Leveraging our core strengths to win in the market
Leveraging our core strengths to win in the market Global leader in highly attractive markets with the most complete product offering for eye care professionals Experts in eye care with 20,000+ employees and a strong management team Market leading development capabilities and investments in innovati
Slide 26: The foundation has been strengthened and we have advanced to the next phase
The foundation has been strengthened and we have advanced to the next phase Fix The Execute the Deliver Foundation growth plan leading-edge solutions AT-IOLs1 Vitreoretinal Accelerate Innovation DAILIES TOTAL1 Expand markets & adjacencies Dry Eye New business models 2016-2017 2018-2020 2021 & Beyond
Slide 27: Focusing on 4 near term growth drivers
Focusing on 4 near term growth drivers Surgical Vision Care AT-IOLs Vitreoretinal DAILIES TOTAL1 Dry Eye • Gain share with PanOptix • Deepen technology • Continue rapid growth • Continue roll-out of penetration in key markets of DAILIES TOTAL1 family SYSTANE Complete • Increase penetration of advanc
Slide 28: Expected to result in 80% of sales growth contribution
Expected to result in 80% of sales growth contribution Illustrative Alcon Sales Growth Contribution ~80 of near-term growth % 1 2018E AT-IOLs Vitreoretinal DAILIES Total1 Dry Eye Rest of portfolio 2020E 1. Majority of rest of portfolio growth comes from cataract and refractive consumables 28
Slide 29: Innovation, expansion and new business models to drive longer term growth
Innovation, expansion and new business models expected to drive longer term growth Accelerate Expand Markets Develop New Innovation & Adjacencies Business Models 29
Slide 30: Working to bring exciting innovation to the market
Working to bring exciting innovation to the market Accelerate Innovation Innovative contact lens New contact lens materials designs for presbyopia Multiple novel Enhanced lasers IOL technologies and robotics for surgery Ground-breaking Digital surgical suite to cataract/vitreoretinal deliver improve
Slide 31: Looking to capture opportunities to expand markets and pursue adjacencies
Looking to capture opportunities to expand markets and pursue adjacencies Expand Markets & Adjacencies Shift to Premium Emerging Markets Adjacency products & procedures to increase are under-penetrated opportunities to enter market size and have favorable market trends new categories Market Diagnost
Slide 32: Working to develop new business models
Working to develop new business models to improve access to our leading product portfolio Develop New Business Models Innovative Go-To-Market Solutions Digital Health Offerings • Building solutions for eye care professionals (ECP) • Focusing on connectivity, integration, and analytics and patients t
Slide 33: Poised to grow at or above market while expanding core operating margins
Poised to grow at or above market while expanding core operating margins Sales Mid-single digit CAGR by 20231 Core Operating Margin Low-to-mid 20% by 20231,2 1. 5 year outlook is subject to various risks and uncertainties. See “Legal Disclaimers” on slide 5 and the assumptions underlying our outlook
Slide 34: Margin growth expected to be based on 3 primary levers
Margin growth expected to be based on 3 primary levers Gross margin Operational P&L improvement efficiency Leverage Favorable Process and cost Growing sales product mix efficiencies SG&A improvement Pricing discipline Leveraging SAP Leveraging existing Manufacturing Global Business infrastructure pr
Slide 35: Key takeaways
Key takeaways Core strengths and Poised to deliver solid Sizeable markets, with large eye care expertise financial top & bottom line unmet medical needs help us win in the market returns 1 2 3 4 5 #1 eye care devices Significant opportunity for both company in the world near-term and long-term growt
Slide 36: Surgical
Surgical Michael Onuscheck President, Global Business & Innovation
Slide 37: Strong legacy of innovation
Strong legacy of innovation Introduced First First First First Balanced synthetic digitally combination femtosecond Salt Solution aqueous controlled OVD laser (BSS) all- humor pressurized (DuoVisc) assisted purpose (BSS Plus) infusion cataract irrigating system surgery fluid for eye (Accurus) surger
Slide 38: Leading position in the global Surgical market
Leading position in the global Surgical market 2017 Global Surgical Sales1 ($b) 2017 Industry 2018E-2023E Sales1 ($b) Industry CAGR1 Others Implantables 3 6% ~$9b Consumables 4 3% 3.7 Market Equipment/Other 2 2% Total 9 4% 1. Market Scope; Alcon internal estimates; see “Legal Disclaimers” on slide 5
Slide 39: Breakdown of Surgical market sub-categories
Breakdown of Surgical market sub-categories 2017 Surgical Market Breakdown % Sales EQUIPMENT / OTHER CONSUMABLES IMPLANTABLES Visualization/ Other Diagnostics Vitreoretinal AT-IOLs Service $2b $4b Refractive $3b Monofocal IOLs Glaucoma devices Cataract Refractive Cataract Vitreoretinal • Cyclical eq
Slide 40: The most complete line of ophthalmic surgical devices
The most complete line of ophthalmic surgical devices Surgical sales Market position Products $b 3.7 AcrySof brand IOLs 1.0 Implantables #1 UltraSert pre-loaded IOL Globally Clareon AutonoMe pre-loaded IOL Cataract consumables Vitreoretinal instruments & consumables Consumables #1 Custom surgical pa
Slide 41: Sound fundamentals for driving sustainable growth
Sound fundamentals for driving sustainable growth Industry-leading expertise built on decades of driving technology and business innovation Leading portfolio with strong future pipeline Best-in-class equipment platforms and leading equipment installed base with continued expansion Large consumables
Slide 42: Unmatched equipment installed base
Unmatched equipment installed base Alcon equipment installed base (2001-2018) 2017 installed base share (%) 2017 new installs 7th gen 1st gen 52% #1 Globally Phaco 2001 2018 machines 3rd gen 1st gen 48% #1 Globally Vitrectomy 2001 2018 machines1 3rd gen 3 1st gen 34% #1 Globally Refractive 2001 2018
Slide 43: Equipment footprint delivers a recurring consumable contribution
Equipment footprint delivers a recurring consumable contribution Custom Surgical Packs Flexible contracting methods Consumables combining Alcon that enable adoption of latest that work with Alcon equipment & 3rd party products technology • Reduces operating room complexity, improves inventory manage
Slide 44: Highest ranking of customer satisfaction in major markets
Highest ranking of customer satisfaction in major markets #1 overall in 13 markets representing 80% of sales Customer Satisfaction 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st Value 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st* 1st 1st Innovation 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st 1st
Slide 45: Focusing on 2 near term growth drivers
Focusing on 2 near term growth drivers 1 Advanced Technology IOLs 2 Vitreoretinal • Build on new product launches to drive AT-IOL share • Deepen technology penetration in key markets and increase margins • Advance smaller incision surgery and safer vitrectomy • Address barriers to adoption with new
Slide 46: Leading global IOL share with room to grow AT-IOLs
Leading global IOL share with room to grow AT-IOLs Global IOL % of Value % of Segment Description Segment Share Market units per lens Market revenue %, 2017 31 Presbyopia Correcting 5-8x (multi-focal) 22 AT-IOLs 8% 30% Astigmatism Correcting 3-4x (toric) 6 Myopia/Hyperopia 4 Monofocals Correcting 92
Slide 47: New technologies driving near-term growth
New technologies driving near-term growth ... Growth of presbyopia correcting IOLs with PanOptix launch Nordics Canada 2-3x 2x 5x growth opportunity1 sales sales Pending regulatory 2017 2018 2017 2018 approval for PanOptix Q2 Q2 Q2 Q2 Source: Market Scope 1. Alcon internal estimates 47
Slide 48: ...could lead to significant market expansion
...could lead to significant market expansion 2017 AT-IOL market penetration1 % of units US potential • New innovations and Opportunity to further expand technologies improve North American penetration patient outcomes 14% AND • Lifestyle-driven consumers desiring Growing OUS spectacle penetration t
Slide 49: Strong vitreoretinal market growth driven by disease burden and technology
Strong vitreoretinal market growth driven by disease burden, technology advancement, and growing access Disease Growth Technology Advancement Increased Access Diabetes and an aging population Improved diagnostics and Growing number of retinal driving retinal disease growth advancements with safer sp
Slide 50: Alcon is well positioned to continue to capture this growth
Alcon is well positioned to continue to capture this growth Best-in-class console preferred by Leading consumables share2 Strong innovation a wide majority of surgeons and a complete portfolio pipeline of equipment and instruments Preferred Vitreous cutters Vitrectomy system1 % Forceps / Alcon Instr
Slide 51: Longer term growth driven by innovation, market expansion and new models
Longer term growth expected to be driven by innovation, market expansion and new business models Accelerate Expand Markets Develop New Innovation & Adjacencies Business Models Deliver a balance of Expand presence in key Create new models to breakthrough and incremental underpenetrated geographies ma
Slide 52: Surgical has a broad and robust pipeline
Surgical has a broad and robust pipeline Accelerate Innovation Next generation equipment Next generation platforms to Novel techniques for AT-IOL technologies refresh our capital presbyopia correction equipment base and drive future consumables sales Technologies to bring efficiency to surgical plan
Slide 53: Expand in markets and enter adjacencies
Expand in markets and enter adjacencies Expand Markets & Adjacencies Invest in fast-growing and underpenetrated Expand share in markets (e.g., China) Diagnostics and Visualization China $600m+ Global 2017 IOL share 2017 IOL market growth market1 % of units Units China +13% US +3% Source: Market Scop
Slide 54: Develop new business models
Develop new business models Develop New Business Models Shift from individual product to full procedure contracts Digital health offerings delivered as a Value-based models that reward service through an ecosystem of improved patient outcomes networked equipment 54
Slide 55: Key takeaways
Key takeaways Our Surgical business has ...with strong near-term ...and a long-term strategy to solid fundamentals... opportunities to drive growth... drive accelerated growth Broad and robust pipeline with new Share gains technologies coming from AT-IOL to market launches Leading positions in under
Slide 56: Vision Care
Vision Care Andy Pawson President & General Manager, Global Vision Care
Slide 57: Strong legacy of innovation
Strong legacy of innovation First First First First First First to create a to develop a to develop to develop to develop (and only) visibly tinted soft contact a silicone a contact a one-bottle, to develop a soft contact lens for hydrogel lens with up peroxide lens water gradient lens periodic (SiH
Slide 58: A leading position in the global Vision Care market
A leading position in the global Vision Care market 2017 Global Vision Care Sales1 ($b) 2017 Industry 2018E-2023E Sales1 ($b) Industry CAGR1 Others Contact 8 4% Lenses ~$14b 3.1 Ocular market Health 6 4% Total 14 4% 1. Source: GFK, Nielsen, IQVIA, CBG, Euromonitor data, Market Scope, Company filings
Slide 59: Breakdown of Contact Lens Market sub-categories
Breakdown of Contact Lens Market sub-categories 2017 Contact Lens Market Breakdown1 % Sales MODALITY DESIGN GEOGRAPHY Sphere International Reusable $8b Daily $8b $8b Toric US Cosmetic Multi-Focal • Market shifting from reusable to • Increasing demand for premium lenses • Accelerating growth in under
Slide 60: Significant opportunity for growth in Ocular Health
Significant opportunity for growth in Ocular Health 2017 Ocular Health Market Breakdown1 % Sales #1 Market position #1 Market position Dry Eye Contact Lens Care (CLC) Vitamins Allergy Red Eye Increased awareness Growth in daily lenses Aging population Growth in market with New technology Market of t
Slide 61: A leading portfolio of recognizable brands
A leading portfolio of recognizable brands Vision Care sales Market position1 Portfolio includes: $b 3.1 DAILIES TOTAL1 water gradient lenses DAILIES AquaComfort Plus Contact #2 1.8 AIR OPTIX monthly reusable lenses Lenses Globally AIR OPTIX COLORS cosmetic lenses FreshLook cosmetic lenses SYSTANE f
Slide 62: Strong brands across Contact Lenses and Ocular Health
Strong brands across Contact Lenses and Ocular Health Contact Lenses Ocular Health Daily Disposable Reusable Dry Eye Contact Lens Care Market Position #2 #2 #1 #1 Key Brands • DAILIES TOTAL1 is • SmartShield • SYSTANE Complete: • CLEAR CARE offers first and only water- protects against fast-acting,
Slide 63: Sound fundamentals for driving sustainable growth
Sound fundamentals for driving sustainable growth Strong brands in fastest growing categories Preferred manufacturer among eye care professionals (ECP) in US and major European markets1 Growing consumer capabilities complimented with retail scale and promotionally responsive product line Strong inno
Slide 64: Focusing on 2 near term growth drivers
Focusing on 2 near term growth drivers 1 DAILIES TOTAL1 2 Dry Eye • Grow DAILIES TOTAL1 family of products • Continue global roll-out of SYSTANE Complete • Expand presbyopia category through increased consumer • Leverage #1 position in Dry Eye awareness, lens comfort and quality • Grow consumer dema
Slide 65: Building on the success of DAILIES TOTAL1 and its proprietary technology
Building on the success of DAILIES TOTAL1 and its proprietary technology DAILIES TOTAL1 Sales and Market Share, Growth outlook remains strong: 2012 – 2018E1 $m, % share in DD SiHy segment • #1 brand in category with $1b+ sales potential $ Market Share 33% 32% of Sales 29% 30% • Shift to daily dispos
Slide 66: Opportunity for DAILIES TOTAL1 multifocal with age
With age, eyes get dryer and presbyopia sets in, creating an opportunity for DAILIES TOTAL1 multifocal 100% Large majority of presbyopes resort to “readers” to better 80 Contact lens dropouts begin see items up close as early as 30 due to % of US population comfort and changing vision needs (e.g., d
Slide 67: Results of DAILIES TOTAL1 multifocal campaign have been promising
Results of DAILIES TOTAL1 multifocal campaign have been promising US DAILIES TOTAL1 Growth in US Daily Contact Multifocal Sales Lens Market by Design1 2017-2018 (% Change) 5.5x Sphere 8 6 Toric 16 16 Multifocal 21 20 Alcon’s “Lose Your 2016 2017 2018 Sales Growth Unit Growth Readers” campaign Source
Slide 68: 'Lose Your Readers' Commercial
‘Lose Your Readers’ Commercial
Slide 69: Dry eye is a large market with untapped potential
Dry eye is a large market with untapped potential Overall Opportunity 352 million people worldwide suffer from dry eye symptoms1 Untapped Opportunity AWARENESS DIAGNOSIS TREATMENT ECP-diagnosis Undiagnosed Products Products suitable unsuitable 55% 41% for Dry Eye 45% for Dry Eye 45% treatment 55% tr
Slide 70: SYSTANE is the world leading brand for dry eye
SYSTANE is the world leading brand for dry eye Comprehensive portfolio Responsive to DTC advertising $3.5b dry eye Alcon’s US dry eye market share (%, value), with Apr-18 SYSTANE Complete promotion opportunity2 Doctor Recommended #1 brand for dry eye symptom relief Best-selling dry eye franchise in
Slide 71: Longer term growth driven by innovation, expansion and new business models
Longer term growth expected to be driven by innovation, expansion and new business models Accelerate Expand Markets Develop New Innovation & Adjacencies Business Models Launch a wave of products Expand presence in key Develop new omni-channel go across new platforms that better underpenetrated categ
Slide 72: Vision Care has a strong pipeline
Vision Care has a strong pipeline Accelerate Innovation PRECISION1 to DAILIES TOTAL1 HydraGlyde enter the daily for astigmatism to expansion for disposable complete the AIR OPTIX mainstream SiHy premium offering segment Next generation reusable water Novel designs for presbyopia gradient lens correc
Slide 73: PRECISION1 expected to be a top performing contact lens in its class
PRECISION1 expected to be a top performing contact lens in its class Accelerate Innovation Projected growth of global daily disposable (DD) market by sub-category PRECISION1 will compete in the fastest-growing daily disposable mainstream subcategory PRECISION1 contact lenses will aim to offer 2018 D
Slide 74: Opportunities to expand in new markets and adjacencies
Opportunities to expand in new markets and adjacencies Expand Markets & Adjacencies Expand contact lens penetration Filling SYSTANE portfolio Innovation in new spaces U.S. Multifocal Penetration1 Asia CL Penetration1 % of units % of units 5% 3% • Launch new SYSTANE products and • Utilize dry eye as
Slide 75: Developing digital platforms to address ECP and consumer pain points
Developing digital platforms to address ECP and consumer ‘pain points’ Develop New Business Models Easy connect & access to education Current market challenge Alcon solutions Easy shop Easy pay • E-commerce seen by and select options ECP’s as a threat versus opportunity • Inadequate tools to fully a
Slide 76: Key takeaways
Key takeaways Our Vision Care business has ...with strong near-term ...and a long-term strategy to solid fundamentals... opportunities to drive growth... drive accelerated growth New contact lens technologies Winning in daily on an innovative disposables platform Leading in presbyopia Category penet
Slide 77: Innovation
Innovation Franck Leveiller Sr. Vice President, Head of Global R&D
Slide 78: We aspire to lead the world in eye care innovation
We aspire to lead the world in eye care innovation Commitment Pipeline fueled Close partnerships with eye to innovation for growth care professionals 100+ active projects and 35+ with with increased positive proof of concept or and key investments in R&D under regulatory review research institutions
Slide 79: World class capabilities
World class capabilities Optics Material & Surface Chemistry 40 60 cm cm Clinical Automation Development Equipment & Instrumentation 79
Slide 80: Advancing the field of optical design
Advancing the field of optical design Optics Presbyopia 2 Correcting Accommodating, Diffractive Non-Diffractive Adjustable & Modular Astigmatism Best in class IOL Market leading contact Innovative new 1 Correcting PanOptix ENLIGHTEN lens design technologies Novel IOL proprietary PowerVision Fluid Le
Slide 81: Leading in material and surface chemistry
Leading in material and surface chemistry Material & Surface Chemistry Blink activated Superior protection 1st in class water Aqueous extraction Next generation moisture to preserve against deposits while gradient with ultrasoft and surface treatment water gradient the tear film maintaining moisture
Slide 82: Robust clinical development capabilities
Robust clinical development capabilities Clinical Development Patient Reported Exploratory Global Outcomes Studies Footprint Validated, proprietary tools to Ability to iterate designs Strong relationships with measure subjective quickly through an internal health authorities and outcomes innovation
Slide 83: New contact lens manufacturing platform
New contact lens manufacturing platform expected to provide flexibility, efficiencies and rapid scalability Automation New Contact Lens Platform Output per line ~40% improvement Improving Increasing cycle times flexibility Cost ~40% Developing quality Delivering per lens improvement (no-touch) produ
Slide 84: Future of cataract surgery relies on data exchange and cloud decision support
The future of cataract surgery relies on seamless data exchange and cloud-based decision support Equipment & Instrumentation Digital Health Solutions Connected equipment seamlessly Applications to simplify the complexity Cloud-based decision support to moving data from clinic to the OR of eye surger
Slide 85: Majority of investments support novel innovation and portfolio advancements
Majority of investments support novel innovation and portfolio advancements Other Novel Innovation Product Support Novel Advanced technology programs: Innovation • Customized & novel optics • Robotics & digital health solutions Line • New presbyopia solutions Extensions • Unique delivery devices $2.
Slide 86: Partner of choice for external innovation
Partner of choice for external innovation Commercial strength and Execute a range of Leading reputation and strong global reach to maximize agreements, e.g. equity stakes, relationships in ophthalmology potential of new technologies options, licenses, acquisitions Examples of recent agreements Note:
Slide 87: Rich pipeline to fuel growth into the future
Rich pipeline to fuel growth into the future SELECTED LAUNCHES Recent 2018 - 2020 2020+ Clareon with PanOptix Trifocal (US) 4 major new IOL platforms SURGICAL AutonoMe (Intl) Non-diffractive presbyopia correcting IOL (e.g. accommodating) UltraSert Clareon with AutonoMe (US) Next generation cataract
Slide 88: Key takeaways
Key takeaways Alcon aspires to lead the world Alcon balances investment, both in eye care innovation internally and externally to diversify the portfolio and manage risk 1 2 3 4 Alcon leverages world class Alcon has a robust pipeline expertise to bring new in development to fuel innovations to the m
Slide 89: Financial Overview
Financial Overview David Murray Chief Financial Officer
Slide 90: Financial framework to deliver strong shareholder returns
Financial framework to deliver strong shareholder returns • Attractive market fundamentals • Clear focus on 4 product initiatives to drive near term growth Sales growth • Accelerate innovation, expand markets & adjacencies and develop new business models to drive mid-to long-term growth • Operating
Slide 91: Diversified portfolio across businesses and geographies
Diversified portfolio across businesses and geographies Vision Care $3.1b Surgical $3.7b 15% U.S. $2.8b Implantables 27% 41% Contact Lenses 2017 Sales 2017 Sales $6.8b 31% $6.8b 18% Consumables Ocular Health 59% 9% Equipment / Other International $4.0b 91
Slide 92: Several consecutive quarters of sales growth
Several consecutive quarters of sales growth Quarterly sales growth1 (% growth constant currency) Invested in people -1% +3% +6% in 2016 in 2017 in 9M 2018 Invested in direct-to-consumer +6 advertising +5 +5 +5 +4 +3 Improved supply +1 +1 0 and service levels -1 -3 Launched Q1'16 Q2'16 Q3'16 Q4'16 Q
Slide 93: Progressive annual improvement in core operating margin
Progressive annual improvement in core operating margin Quarterly core operating income margin1 Focus has been primarily (% of sales) on top-line growth to drive margin improvement 17% 16% 18% in 2016 in 2017 in 9M 2018 Allocated more investment & resources 19 to the front line 19 17 17 17 17 16 16
Slide 94: Financial performance in 2018 year-to-date
Financial performance in 2018 year-to-date 9M 2017A 9M 2018A Variance1 • Surgical driven by Total sales $5.0bn $5.4bn 6% (cc) double digit growth of AT-IOLs & continued growth in consumables and equipment Surgical $2.7bn $3.0bn 8% (cc) • Vision care driven by double digit growth of DAILIES TOTAL1 an
Slide 95: Core operating income bridge from Novartis to standalone Alcon
Core operating income bridge from Novartis to standalone Alcon ($m) FY2015 FY2016 FY2017 9M '17 9M '18 Alcon core operating income 1,555 1,150 1,168 866 999 within Novartis1 Core operating margin (% of sales) 23% 18% 17% 17% 19% Adjustments Allocations2 -49 -22 -82 -50 -46 Alcon core operating incom
Slide 96: 2018 – 2023 outlook assumptions
2018 – 2023 outlook assumptions Outlook assumes • Successful execution of four near-term organic growth drivers • Continued strength in equipment and consumables • Ability to outgrow the market in the latter years driven by pipeline launches • Faster pace of growth in certain international/emerging
Slide 97: 2023 financial outlook
2023 financial outlook 2023E1 Sales growth Mid-single digit (% CAGR 2018-2023) Core operating margin2 Low-to-mid 20s (%) Capex Mid-single digit (as % of sales) Core tax rate2 High-teens (%) 1. 5 year outlook is subject to various risks and uncertainties. See “Legal Disclaimers” on slide 5 and the as
Slide 98: Sales growth to accelerate in 2021 and beyond
Sales growth to accelerate in 2021 and beyond Illustrative Alcon Sales1 2018E AT-IOLs Vitreoretinal DAILIES Dry Eye Rest of 2020E Accelerated 2023E Total1 portfolio growth 1. 5 year outlook for our sales growth is subject to various risks and uncertainties. See “Legal Disclaimers” on slide 5 and the
Slide 99: Committed to delivering significant margin expansion
Committed to delivering significant margin expansion Core operating margin1,2 Drivers of margin improvement (% of sales) Sales acceleration on the back + of near term growth drivers Low-to-mid and new innovation 20% + Favorable product mix Mid-to-high Manufacturing efficiencies from teens % + new lo
Slide 100: Cash flow generation expected to increase 2.5x – 3.0x by 2023
Cash flow generation expected to increase 2.5x – 3.0x by 2023 Free cash flow1,2 ($) Drivers + Sales growth 2.5 - 3.0x + Margin expansion Stabilization of capital + and IT investments 2018E 2023E Including separation costs in 2019-2020 of ~$0.3b 1. 5 year outlook for our free cash flow generation is
Slide 101: Clearly defined capital allocation framework
Clearly defined capital allocation framework Key priorities Returns to Investment shareholders Invest in organic growth drivers Organic Dividends growth Invest in R&D Operating Capital cash flow Share enhancements buyback Disciplined BD&L and M&A Business Development & Licensing (BD&L) Mergers & Acq
Slide 102: Capital enhancements of over $3b over six years
Capital enhancements of over $3b over six years Capital Spend 2018E - 2023E Real Estate / Capacity to support Other + sales growth R&D + Recapitalization of asset base Capacity ~$3b expansion IT + Investment in global ERP system • Capital expenditures expected to reduce as a % of sales as larger pro
Slide 103: BD&L and M&A strategy primarily focused on new technologies
BD&L and M&A strategy primarily focused on new technologies Innovation driven with particular interest in next-generation technologies Focus on bolt-on acquisitions to surgical, Opportunity to leverage Alcon’s global vision care and adjacencies footprint/scale Agnostic to source Flexibility to execu
Slide 104: Maintaining flexibility with our balance sheet and investment grade profile
Maintaining flexibility with our balance sheet and investment grade profile 1 2 3 4 5 Alcon will be Financing at spin Part of this bank Net financial Targeting externally will be provided debt is expected debt of $3b at the investment grade financed by bank debt / to be re-financed time of spin cred
Slide 105: Key takeaways
Key takeaways • In line with market growth in near term Sales • Accelerates in mid-to-long term, above market growth • Future margins in-line with medical device peers Core Operating • Sales growth and gross margin improvement Margins • Spend leverage Operating Free • Growth, efficiencies and discip
Slide 106: Transaction Overview and Final Thoughts
Transaction Overview and Final Thoughts David Endicott
Slide 107: Novartis' strategic review concluded that a 100% spinoff is in shareholders' interest
Novartis’ strategic review of Alcon concluded that a 100% spinoff will be in the best interest of shareholders Alcon incorporated and headquartered in Switzerland; Fort Worth will continue to be a key location Dual listing on SIX Swiss Exchange and NYSE with one global share Expected completion in H
Slide 108: Dual listing on Swiss and New York stock exchange
Dual listing on Swiss and New York stock exchange Natural listing location for a Swiss company Access to large US investor base Main listing location of Novartis Enables geographically restricted shareholders to invest Enables maximum number of Novartis shareholders to remain invested list
Slide 109: In summary, the global market leader in eye care devices
In summary, the global market leader in eye care devices Favorable market trends with significant opportunities to grow and expand World leading expertise, focused strategy and strong management team Strong pipeline filled with significant innovation Partner of choice to secure external technologies
Slide 110: Objectives for Capital Markets Day
Objectives for Capital Markets Day Meet Alcon management 1 Discuss our strategy and key growth drivers 2 3 Provide 5-year financial goals 4 Explain the benefits of Alcon as a stand-alone company 5 Answer your questions 110
Slide 111: Q&A
Q&A
Slide 112: Appendix
Appendix
Slide 113: Appendix: Core gross profit bridge
Appendix: Core gross profit bridge ($m) FY2015 FY2016 FY2017 9M 2017 9M 2018 Reported gross profit 3,247 3,111 3,204 2,384 2,313 Adjustments Amortization of intangibles 1,005 1,006 1,007 755 751 Impairment charges 0 19 0 0 376 Restructuring 2 0 0 0 0 Legal-related items/Other 0 -13 0 0 -25 Core gros
Slide 114: Appendix: Core operating income bridge
Appendix: Core operating income bridge ($m) FY2015 FY2016 FY2017 9M 2017 9M 2018 Reported operating income 417 10 -77 -20 -173 Adjustments Amortization of intangibles 1,015 1,018 1,017 763 759 Impairment charges 2 23 86 77 333 Restructuring 29 29 30 15 1 Legal-related items/Other 43 48 30 -19 34 Cor
Slide 115: Appendix: Several consecutive quarters of sales growth
Appendix: Several consecutive quarters of sales growth Quarterly sales growth (% growth reported) Invested in people -2% +3% +7% in 2016 in 2017 in 9M 2018 Invested in direct-to-consumer +11 advertising +7 +6 +4 +3 Improved supply +1 +1 and service levels 0 -1 -2 Launched -7 Q1'16 Q2'16 Q3'16 Q4'16
Slide 116: Appendix: Non-IFRS financial definitions
Appendix: Non-IFRS financial definitions included in this presentation Core results Alcon’s core results, which include core operating income, core net income and related margin calculations, fully exclude all amortization and impairment charges of intangible assets, with the exception of software,