Slide 1: M3, Inc. Presentation Material
M3, Inc. Presentation Material April 2017 Copyright © 2017 M3, Inc. All rights reserved.
Slide 2: Forward-looking statements disclaimer
The following presentation contains forecasts, future plans, management targets and other forward-looking projections relating to M3, Inc. and/or its group. These statements are drawn from assumptions of future events based on data currently available to us, and there exist possibilities that such a
Slide 3: FY 2016 Overview
FY 2016 Overview Copyright © 2017 M3, Inc. All rights reserved. 2
Slide 4: FY2016 Consolidated Results
FY2016 Consolidated Results IFRS basis (million yen) Forecast Actual YoY Sales 75,000 < 78,143 +21% Operating Profit 23,000 < 25,050 +25% Pre-tax Profit 23,000 < 24,959 +25% Net Profit 15,300 < 16,938 +26% FY16-end dividend: 10 yen Copyright © 2017 M3, Inc. All rights reserved. 3
Slide 5: FY2016 Consolidated Results by Segment
FY2016 Consolidated Results by Segment IFRS basis (million yen) FY2015 FY2016 YoY Sales 25,234 30,790 +22% Medical Portal Profit 14,844 16,709 * +13% Evidence Sales 19,992 22,313 +12% Solution Profit 3,908 5,307 +36% Sales 13,810 16,338 +18% *** Overseas Profit 1,614 1,582 ** -2% *** Sales 2,902 2,8
Slide 6: Upfront Investment Costs for Future Growth
Upfront Investment Costs for Future Growth (million yen) 808 869 Total 1.7 ~ 2.5 bn yen 184 321 339 m3.com Recruiting& Productivity M&A Revitalization Others Training Time Lag of Fees Investment Fees New Staff Special costs incurred in anticipation of future growth dampened profits by 1.7 ~ 2.5 bn y
Slide 7: OP Growth Contributors (FY2009 - FY2016)
OP Growth Contributors (FY2009 FY 2016) Operating Profit 2 25 (billion yen) 12 Over 2/3 of incremental OP contributed by businesses aside from MR-kun 3 Family. 3 5 Platform FY 2009 MR-kun Family Overseas FY 2016 Linked MR-kun family will continue to grow, while profit growth contribution will be exc
Slide 8: Current Business Situation and Outlook
Current Business Situation and Outlook Copyright © 2017 M3, Inc. All rights reserved. 7
Slide 9: Overview
Overview The m3.com platform continues to expand. Physician access Platform increased +94% (mobile access also increased) from 5 years ago, and platform sales increased +132% Full year sales were strong at +19% yoy with further penetration MR-kun of various services Family Orders are off to a
Slide 10: Continued Expansion of m3.com
Continued Expansion of m3.com Number of Number of Physician Members Physician Logins Medical Portal Sales +39% ＜ +94% ＜ +132% FY11 FY16 FY11 FY16 FY11 FY16 Platform expansion exceeds membership growth, with diversification of revenue sources Copyright © 2017 M3, Inc. All rights reserved. 9
Slide 11: MR-kun Family
MR-kun Family M3’s Platform Linked Growth Business Copyright © 2017 M3, Inc. All rights reserved. 10
Slide 12: Doctor Demand for On-Line Detailing
Doctor Demand for On-Line Detailing What is the ideal ratio of online and offline product information (“details”) from drug companies? 100% 100% 4.7% On-line 80% 20% 14.4% 60% 40% 20.0% 75% 50% 50% 35.9% 40% 60% 12.4% 20% 80% 11.1% 100% Off-line 100% 1.5% According to 400 physicians High demand for
Slide 13: Doctor's Time Allocation vs Pharma's Budget Allocation
Doctor’s Time Allocation vs Pharma’s Budget Allocation Doctors spend the most time collecting information via the Internet. However, pharmaceutical firms operating in Japan spend the majority of their marketing budget on off-line sales rep related costs. Time Allocation Marketing Budget Allocation o
Slide 14: MR-kun Family's Growth Potential in Japan of 3~4x
MR-kun Family’s Growth Potential in Japan Currently Full Potential (approx.) Pharma 30 30~35 CLIENTS Companies Companies Growth Potential ¥1 bn ~ ¥1.5 bn of 3~4x SALES per client current levels (approx.) drivers: per ¥500 mn # of products CLIENT # of opt-in MDs Added value of contents Broadeni
Slide 15: MR-kun Family Fee Structure (annual)
MR-kun Family Fee Structure (annual) MR-kun Contents Other MR-kun Delivery fee Base & Operation fee Production fee Family Services ¥100 per message sent Production of Others MR-kun, One Point eDetail, customized detail Web Symposium contents (one product) ¥60 ~ 70 ¥20 ~ 40 ¥30 ~ ¥10 ~ Entry Level mn
Slide 16: MR-kun Family: YoY Incremental Sales Comparison
MR-kun Family: YoY Incremental Sales Comparison (million yen) 1,708 FY16 YoY 737 +19% 737 500 500 -6 FY14 H1 H2 FY15 H1 H2 FY16 Total YoY YoY Total YoY YoY Total FY15 FY16 FY16 H2 sales growth accelerated (+24% yoy). Full fiscal year sales grew at +19% yoy. Copyright © 2017 M3, Inc. All rights reser
Slide 17: Platform Linked Business
MR-kun Family M3’s Platform Linked Growth Business Copyright © 2017 M3, Inc. All rights reserved. 16
Slide 18: Consolidated Sales Trend
Consolidated Sales Trend (million yen) FY17 FCT 78,143 90,000 64,660 51,346 36,759 26,007 19,040 7,475 8,534 11,811 14,646 1,563 2,276 3,854 5,729 25% 19% 19% 19% MR-kun 30% 43% 38% Family 54% 49% 73% 68% 65% Platform 83% 95% 90% 59% 60% 57% Linked 52% 54% Business 41% 46% 36% 40% 17% 21% 26% Overse
Slide 19: Business Segment Breakdown and Type
Business Segment Breakdown and Type Business Business Segments Services FY16 Sales Type MR-kun Family 15 bn yen MR-kun Family Career 9 bn yen Medical Portal Research 3 bn yen Other 3 bn yen (Mr. Finder, AskDoctors, others) Platform Evidence Solution 22 bn yen Linked Business Clinical Platform 3 bn y
Slide 20: Group Companies
Platform Linked Business Development CLIENT BASE Business Size Scale Hospitals, (FY2017 Forecast) Pharma Consumers Doctors 3 M3 QOL-kun, etc. AskDoctors, ¥20 bn Research others Group Companies 1 Evidence 2 ¥5 bn Career Solution iTicket ¥3 bn EMR Others ¥1 bn CSO Detailed slides follow Total revenue
Slide 21: Power of Mr. Finder in Drug Development
Power of Mr. Finder in Drug Development １ Evid Sol “Making use of the Internet to increase, as much as possible, the number of people who can live longer and healthier lives, and to reduce as much as possible, the amount of unnecessary medical costs.” Evolution via MR-kun for pharmaceutical ~ 2010 e
Slide 22: Patient Enrollment in Large-Scale Trials
Patient Enrollment in Large-Scale Trials １ Evid Sol Case study Mr. Finder dramatically outpaced competitors both by number and speed in enrolling cases for a particular Endocrinology trial 1,500 Number of Patients Enrolled 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 m3.com A
Slide 23: Shift to e-Clinical Trials
Shift to e-Clinical Trials １ Evid Sol Theme Operation M&A Timing 2011 Site Selection 2009 Feasibility Study, etc 2015/4 Group-wide approach to promoting 2014 and accelerating Monitoring 2009 internet EDC, etc based drug 2012 development Utilization of 2012 electronic medical records, etc C
Slide 24: Sales and Profit Trend of Evidence Solution
Sales and Profit Trend of Evidence Solution １ Evid Sol (million yen) IFRS basis Sales Segment Profit FY17 FCT 22,313 24 bn yen 19,992 Orders backlog at 29bn yen, with corresponding 13,195 increases in headcount as upfront investment OP margin rose to 24% 6,554 with backdrop of healthy 5,328 orders
Slide 25: Sales and Profit Trend of M3 Career
Sales and Profit Trend of M3 Career 2 Career (million yen) JGAAP basis Sales Ordinary Profit FY17 FCT 10.5 bn yen 8,630 6,925 Sales and profit expansion from 5,712 increase in staff and 4,594 productivity 3,235 FY2017 should see 2,191 2,292 2,554 * continued traction 1,433 1,714 from job placement
Slide 26: Potential for AskDoctors.com
Ask Potential for AskDoctors.com 3 Doctors 200,000 paid members 15,000 consultations per month 5.6 doctors respond to each question 99.9% response rate 2,400,000 archived consultation results Yahoo! Japan affiliation Already Japan’s largest remote medical consultation platform (numbers
Slide 27: Established M3 AI Labo
Established “M3 AI Labo” Development Stages M3 Value Addition Accumulation • Medical data accumulation from the 250 of Medical thousand local and 4+ million global physician Big Data members Clinical Study, • Clinical study execution via group CROs, SMOs Application • Rapid patient recruitment utili
Slide 28: Overseas Growth
MR-kun Family M3’s Platform Linked Growth Business Copyright © 2017 M3, Inc. All rights reserved. 27
Slide 29: Number of Physician Members and Panelists (Global)
Number of Physician Members and Panelists (Global) (thousand) 4,500 Other Nations 4,000 4+ million (M3 Global Research, MDLinx, Russia) 3,500 members worldwide Korea (Medigate) 3,000 India (Health Impetus) 2,500 China (Medlive) 2,000 1,500 France, Germany, Spain (VidalGroup) 1,000 U.K. (Doctors.net.
Slide 30: Expansion of U.S. Career Services
Expansion of U.S. Career Services Sales (million yen) 3,959 Operation size grew +63% yoy due to expansion of existing businesses as well as contribution from M&As +63% 2,432 Synergies with MDLinx, the U.S. web portal designed for physicians, is expected to improve sales and profitability Steady g
Slide 31: China: Membership Expansion
China: Membership Expansion Number of Physician Members in China (thousands) 1,838 1,753 1,680 Marketing services 1,617 for drug companies 1,561 1,490 starting with MR- kun, and marketing 1,362 research services 1,250 showed steady 1,154 growth 1,096 1,019 953 MR-kun is now being utilized for 30 d
Slide 32: RotaMaster
RotaMaster Overview Synergies Corporate Name：IQUS Limited Developed and sells the RotaMaster Established: 2000 software designed for workforce Location: West Yorkshire, U.K. management at healthcare institutions Employees: approx. 20 Trademark: Utilized at 75 medical institutions, and holds 63%
Slide 33: Sales and Profit Trend of Overseas
Sales and Profit Trend of Overseas (million yen) IFRS basis Sales FY17 FCT Segment Profit 22 bn yen 16,338 Broader business scope 13,810 in US, UK, France, and 10,980 China Local currency basis yoy 6,661 growth ex M&A fees: 4,069 - Sales: +35% 2,983 - Profit: +27% 1,105 1,585 1,043 1,430 1,614 1,
Slide 34: M3 Group's Business Strategy
M3 Group’s Business Strategy Copyright © 2017 M3, Inc. All rights reserved. 33
Slide 35: Strategy Change in Business Development
Strategy Change in Business Development Internet-Powered PE Style New Service Development in Business Expansion in the Medical Internet Sector Healthcare Industry (2000~2010) (2011~) Approach Internet Internet + Real Operations Service Web-based Coverage Entire Value-Chain eTools Potential Business
Slide 36: M3's Investment Spectrum
M3’s Investment Spectrum Domestic: 2 companies Domestic: 3 companies Human Metabolome Mebix Listed Technologies Honyaku Center MIC Medical Mediscience Planning Ventures: 20 companies Domestic: 1 company Domestic: 16 companies M3 Career Unlisted Overseas: 2 companies Mid-sized medical Kingyee (China)
Slide 37: Value Creation via M&A
Value Creation via M&A Value creation We aim to create value Synergy across 3 successive Lever 3 terms after execution of M&A. Execution of 10+ M&As Synergy Lever 2 in the past 3 years have created more synergistic effects than expected Synergy and has provided Lever 1 accumulation of turn- Short
Slide 38: Powerful Execution Team
Powerful Execution Team Specialized team of approx. 10 experts with IBD backgrounds from top banks such as JPMorgan, UBS, Mizuho Securities, as well as KPMG, Innovation Network Corporation of Japan, and VC firms Internalized capabilities from sourcing to execution, leading post merger integratio
Slide 39: M3 is Just Getting Started
M3 is Just Getting Started Copyright © 2017 M3, Inc. All rights reserved. 38
Slide 40: Annual Results & Forecast for FY2017
Annual Results & Forecast for FY2017 Sales Operating Profit & Net Profit (mn yen) (mn yen) 29,000 90,000 Operating Profit Net Profit 25,050 78,143 64,660 20,022 19,500 16,938 51,346 16,061 13,738 13,493 36,759 12,704* 10,428 9,294 8,878 26,007 7,648 19,040 6,031 5,5987,844* 14,646 4,803 4,492 11,811
Slide 41: FY2017 Budget Guideline
FY2017 Budget Guideline Topline Opportunities are partially and conservatively incorporated Pending new businesses and M&As are excluded Cost Continued aggressive hiring, planning increase of 400 headcounts over the fiscal year: – Medical Portal 150 – CRO, SMO： 150 – Others： 100 Allocation f
Slide 42: FY 2017 Budget Guidance (By business)
FY 2017 Budget Guidance (By business) MR-kun Double digit growth from increase in number of Family products using MR-kun family services Career Healthy growth led by job placement for physicians. Evidence Continued growth form strong orders and projects Solution progress US: Continued growth
Slide 43: Creating New Value in Healthcare
Creating New Value in Healthcare M3 Medicine Media Metamorphosis Healthcare sector is enormous… ・ Japanese national spending on medical services is approximately ¥33tn (¥50tn including peripheral businesses) ・ Equivalent to 10% of Japanese GDP ・ Sector controlled by only 290,000 physicians (0.2% of