Smiths Group PLC · LSE:SMIN
Smiths — Smiths Medical — Investor Day (June 2011)
34 slides from Smiths's investor day presentation, Jun 28, 2011
Slide 1: Smiths Medical Investor Day, New York
Smiths Medical New York June 28, 2011 www.smiths-medical.com Smiths Medical Investor© Day, New 2011 by York Smiths – June Medical: 2011 Data Proprietary | 1
Slide 2: Forward-looking statements
This document contains certain statements that are forward-looking statements. They appear in a number of places throughout this document and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other thin
Slide 3: Setting the Stage
Setting the Stage Srini Seshadri President, Smiths Medical Smiths Medical Investor Day, New York – June 2011 | 3
Slide 4: Smiths Medical: Bringing Technology to Life
Smiths Medical: Bringing Technology to Life Our mission is to help healthcare professionals make every intervention successful. Deliver Medication Provide Vital Care Keep People Safe • Reduce programming • Manage acute and chronic • Provide safe treatment & delivery errors with airway conditions acc
Slide 5: Smiths Medical…The investment case
Smiths Medical…The investment case • Long-term sustained global demand for healthcare driven Sales by age demographics, key diseases, rise in middle class • Smiths Medical well placed in lower risk, short residency, Growth* interventional devices • Broad portfolio: hardware & consumables, hospital,
Slide 6: We have strong, high quality brands
We have strong, high quality brands Deliver Medication Provide Vital Care Keep People Safe • Leading • Life saving • Devices to safely ambulatory products provide treatment access, e.g.: drug delivery that keep Intravenous systems that you breathing Catheters - PIVCs allow complete - Needles patient
Slide 7: World leader in interventional devices with balanced segment mix
Smiths Medical is a world leader in interventional devices with balanced segment mix and regional presence ~ 6% Asia ~ 20% Hardware ~ 13% Asia ~ 30% Safety Devices ~ 22% EMEA ~ 33% EMEA ~ 40% North Vital Disposables ~ 37% ~ 80% America Care ~ 54% Americas ~ 30% Med ~ 35% Mexico Delivery 2010 Sales 2
Slide 8: We have transformed the business over the last ~3 years
We have transformed the business over the last ~3 years Leadership Oracle Global brand changes implementation strategy in place complete finished Streamlined Business Cost of “unquality” 4 P&Ls into 1 & Portfolio down by 10%+ p.a. Transformation 100% Value engineering improvement Reduced ~ establish
Slide 9: Portfolio management contributing to operating profit and ROCE improvement
Portfolio management approach contributing to headline operating profit and ROCE improvement Portfolio Management Impact, FY07 - FY10 Core portfolio enhancement Core • Vitality index >10% • SMZ acquisition* • Profit pool maximization Sales Non-core profitability management • Diabetes exit Non-Core •
Slide 10: Well positioned with ~21% market share in key segments
We are well positioned with ~21% market share in our key segments Target market ~£4B Market size Future SM sales SM approx Market FY10* share Vital Medication growth Care Delivery Medication Delivery ~£1.2B 3-5% ~£220M 18% ~ £100B Vital Care ~£1.7B 2-4% ~£350M 21% Safety Devices ~£1.2B 3-5% ~£270M 2
Slide 11: We compete with a wide array of multi-portfolio competitors
We compete with a wide array of competitors who are themselves also multi-portfolio companies FY2010 Smiths approach to % of competitor sales Revenue R&D EBIT value creation Company in Smiths‟ markets (£B) (%) (%) • Balance scale and profit Bard Safety 1.6 7 26 pool share • Build out on customer BD
Slide 12: Customer needs are complex and evolving
Customer needs are complex and evolving Need Requirement Anticipated changes Safe products which meet Increased regulations, linked Compliance regulatory requirements globally Efficacy Effective devices that drive Desire for more clinical data, studies enhanced patient care and results New, differen
Slide 13: Some pressures, but positive trends will generate growth
Some pressures, but positive trends will generate growth General market trends: Medical Delivery growth drivers • Developing markets middle class ; • Credit squeeze, but innovation rewarded ageing population − Medication error reduction − Wireless integration with IT • Spend in developing mar
Slide 14: Investing for growth
Investing for growth Stuart Morris-Hipkins VP, Global Sales & Marketing Smiths Medical Investor Day, New York – June 2011 | 14
Slide 15: Solid game plan in place for next 3 years
Solid game plan in place for next 3 years to drive profitable growth Increase global new product development impact Drive quality and cost leadership in new healthcare world Enhance presence in Emerging Markets Leverage our enhanced global structure Reduce G&A and reinvest in sales & marketing Optim
Slide 16: Investing to expand the core
Investing to expand the core Target adjacencies ~£9bn PICCs Anti-microbials Safety Safety EU Safety Humidification ~£4bn VC Chronic Respiratory Vital Care Vizualization Informatics MD Lower cost infusion Medication Delivery Volumetric Infusion Current Core Expanded Core Significant headroom in near
Slide 17: Investing more in R&D
Investing more in R&D … focus and increased efficiency driving results We continue to invest . . . While focusing our pipeline New Product for growth . . . Sales Pipeline (# projects) (35%) R&D as % of Sales +15% +65% e e . . . And accelerating launches R&D Headcount in EMs Launches (# projects) +50
Slide 18: Leading technologies in our products and plants
We have leading technologies both in our products and our plants • CADD Solis is the leading ambulatory infusion pump • Diverse applications require delivery flow rates between 0.1 and 500 ml/hr This ratio is equivalent …And the to the difference Alaskan Pipeline • A 5000:1 ratio between a standard
Slide 19: Compelling technology initiatives driving growth
Compelling technology initiatives driving growth Medication Delivery Vital Care Safety Hospital Airway Needle Infusion Syringe Pump Access Large neck tracheotomy Safety Enhancements Passive PIVC safety • Hospital and homecare • Capture growth associated with • Low cost “passive” safety applications
Slide 20: Local in all key regions, investing in emerging markets
Local in all key regions . . . Investing in emerging markets Americas EMEA • Enhanced NPI impact • Enhanced NPI impact • Investment in sales effectiveness • Conversion to Safety • Increased focus outside Hospital • Investment in sales effectiveness • Invest in Brazil • Accelerate Middle East growth
Slide 21: Increasing China presence rapidly
Increasing China presence rapidly SMZ SMZ critical for enhancing our China presence China headcount FY08 FY09 FY11e Performing above expectations • Strong domestic sales • Integration project on plan China sales • Low cost product launches growth Why SMZ? • Leading infusion position in China • Value
Slide 22: We are investing in India
We are investing in India India medical device Growth driven by: market growing rapidly… • Rising middle class • Growth of healthcare insurance, expenditure • Expansion of healthcare infrastructure India Medical Device Mkt (£B)* • Shift in disease patterns from communicable ~15% We have a history in
Slide 23: Increasing emphasis on clinical outcomes and cost excellence
Increasing our emphasis on clinical outcomes and cost excellence Healthcare dynamics Implications Actions • US: Patient Protection • Reimbursement • Engage in the debate & Affordable Care Act reductions, pricing • Further demonstrate • EU: Transparency clinical efficacy Directive • Quality based r
Slide 24: Our new structure becoming very effective
Our new structure becoming very effective… global in processes, local with customers New global structure in place… …Driving desired behaviours and results • Finance Functions • Operations Global • Supply Chain • Smashed internal barriers … • Sourcing transparency in all we do • Regulatory & Quality
Slide 25: Executing on G&A reduction to reinvest in sales & marketing
Executing on G&A reduction to reinvest in sales & marketing Consistently reducing G&A . . . G&A • Business unit / P&L reductions • Global restructuring • Streamlining of support functions 2009 2010 2011e • Back office / shared services consolidation . . . And reinvesting in Sales & Marketing Marketi
Slide 26: Driving Efficiencies
Driving Efficiencies Rob White VP, Global Finance Smiths Medical Investor Day, New York – June 2011 | 26
Slide 27: Operations excellence game plan
We have designed and executed an operations excellence game plan . . . Pursuing additional opportunities Our vision is to achieve ... by breaking problems down operations excellence ... through focused projects Sourcing Manufacturing Distribution Best in Class Today Streamlined Closed 5 plants Close
Slide 28: Driving efficiencies via inventory and site management
For example, driving efficiencies via inventory and site management … Inventory turns up ~40% 15 sites closed in last 5 years… More opportunity ahead Wampsville, NY Rossendale Waukesha, WI & Cherwell, UK Watford & Hythe, UK Dusseldorf, Munich Portugal Gary, IN Kirchseeon, Wampsville, NY Germany Otay
Slide 29: VAVE projects continue to add significant value
… And VAVE projects continue to add significant value We have established an effective VAVE program increasingly effective . . . variable cost reduction program • Value Analysis/Value Engineering VAVE impact 60% Examples of recent projects: • Epidural Connector redesign (50% unit cost reduction) • A
Slide 30: Continue to drive margin improvements
Continue to drive margin improvements Target margin range: ~20% to ~24% • New products • Demographics Opportunities • Leveraging the portfolio • Emerging Markets External Internal • Sales effectiveness spend growth • Emerging Markets penetration • Healthcare reform • VAVE/sourcing initiatives • Safe
Slide 31: Conclusion
Conclusion Srini Seshadri President, Smiths Medical Smiths Medical Investor Day, New York – June 2011 | 31
Slide 32: Recap: driving value via profitable growth
Recap: driving value via profitable growth Leverage our enhanced global structure Reduce G&A and reinvest in sales & marketing Increase global new product development impact Enhance presence in Emerging Markets Drive quality and cost leadership in new healthcare world Optimize operational excellence
Slide 33: Smiths Medical…The investment case
Smiths Medical …The investment case • Long-term sustained global demand for healthcare driven Sales by age demographics, key diseases, rise in middle class • Smiths Medical well placed in lower risk, short residency, Growth* interventional devices • Broad portfolio: hardware & consumables, hospital,
Slide 34: Questions and answers
Questions and answers Smiths Medical Investor Day, New York – June 2011 | 34