Fisher & Paykel Healthcare Corporation Limited · NZX:FPH
Fisher & Paykel Healthcare — Investor Day (September 2016)
64 slides from Fisher & Paykel Healthcare's investor day presentation, Sep 12, 2016
Slide 1: US & Mexico Investor Day
US & Mexico Investor Day 12 September 2016 Care.
Slide 2: Morning Agenda
Morning Agenda 8:30am Welcome Marcus Driller (General Manager, Corporate) Why Mexico? Lewis Gradon (Managing Director & CEO) Overview of Mexican Operations Raul Sanchez (General Manager Mexico Operations) 9:15am Tour of Parque Industrial Pacifico Manufacturing Facility Raul Sanchez (General Manager
Slide 3: Why Mexico?
Lewis Gradon Managing Director and CEO Why Mexico? 3
Slide 4: Why Mexico?
Why Mexico? Mexico is performing extremely well Manufacturing Output by Region 12 months to 31 March 2016 o Grow manufacturing outside New Zealand for geographical risk mitigation o Working day overlap with Auckland o Access to raw materials o Economic and political stability o Ease of personnel tra
Slide 5: Why Mexico?
Why Mexico? 5 https://www.bcgperspectives.com/content/interactive/lean_manufacturing_globalization_bcg_global_manufacturing_cost_competitiveness_index/
Slide 6: Overview of Mexican Operations
Raul Sanchez General Director Mexico Operations Overview of Mexican Operations 6
Slide 7: Tijuana Benefits
Tijuana Benefits o Medical device manufacturing skills (>38,000 people) o Proximity to major North American markets o Low and relatively stable manufacturing labour costs o Bilingual Spanish, English 7
Slide 8: Proximity
Proximity 10,462 km Distance from Auckland to Tijuana 8
Slide 9: Tijuana and Mexico Demographics
Tijuana and Mexico Demographics 1.8% annual population growth o Population of Mexico estimated at approximately 120 million o 3.15 million people in Baja California 74.9 years 27.0 life average o 1.7 million people in expectancy work Tijuana metropolitan area force age 1.2 million people labor force
Slide 10: Medical Device Industry in Tijuana
Medical Device Industry in Tijuana Employees in the Maquiladora Employed in Baja Industry in Mexico in 5,000+ California in 900+ companies companies >2.4 million >290,000 Employed in Tijuana in Medical device 500+ companies manufacturing plants in Tijuana >200,000 50 Employees in medical device manu
Slide 11: Quality
Quality o Commitment to manufacturing quality healthcare devices o Environmentally-controlled environment: temperature, humidity, pressure and contaminant levels are kept within strict limits o Production quality is continuously monitored and our products are rigorously tested before shipment o As i
Slide 12: Timeline
Timeline Lease Fit-out First Started mask Commenced Commenced Started Started production agreement completed. shipments to production. production of production production of nasal prongs and signed and First full face Europe. Second Evaqua II. of Optiflow of Simplus Nivairo mask. fit-out mask shippe
Slide 13: Our People
Our People Total number of Mexico employees at August 2016 811 EDUCATION World class universities Public & Private universities Technical Schools 35 14 Degrees and Masters • Mechanical Engineer • Master and Doctorate in Sciences • Industrial Engineer and Digital Systems • Mechatronic Engineer • Mast
Slide 14: Organization Chart
Organization Chart re VICE PRESIDENT Products & Technology NEW ZEALAND MEXICO GENERAL DIRECTOR Mexico Operations HUMAN a OPERATIONS & QUALITY RESOURCES ENGINEERING DIRECTOR DIRECTOR DIRECTOR FINANCE & — MATERIALS GROUP SERVICES MANAGEMENT DIRECTOR DIRECTOR Fisher & Paykel HEALTHCARE
Slide 15: Products Made in Mexico
Products Made in Mexico Chambers Circuits 15
Slide 16: Products Made in Mexico
Products Made in Mexico Masks and accessories 16
Slide 17: Valuing Our People
Valuing Our People o Educational excellence o Children’s Day open house o Environmental and community initiatives o Health awareness campaign o Transport o Subsidized meals 17
Slide 18: New Tijuana Campus - La Encantada
New Tijuana Campus - La Encantada 18
Slide 19: New Tijuana Campus - La Encantada
New Tijuana Campus - La Encantada 19
Slide 20: What is next for Mexico?
What is next for Mexico? o Adding capacity growth in Mexico, generally not moving production from New Zealand o Currently in process of establishing a manufacturing campus in Tijuana o New manufacturing facility in Tijuana to be completed in 2019 o Continued gross margin expansion – 50 to 100bps for
Slide 21: Questions?
Raul Sanchez General Director Mexico Operations Questions?
Slide 22: Afternoon Agenda
Afternoon Agenda 3:00pm The Opportunity Lewis Gradon (Managing Director & CEO) 3:20pm North American Business Overview Justin Callahan (President US Operations) US Hospital Steve Lacke (VP Sales & Marketing – US Hospital) 4:20pm Afternoon Break 4:30pm Optiflow nasal high flow with AIRVO Dr Robert Go
Slide 23: The Opportunity
Lewis Gradon Managing Director and CEO The Opportunity
Slide 24: Our Business: Hospital
Our Business: Hospital Invasive Noninvasive Hospital Surgical Ventilation Ventilation Respiratory Support Humidification “NEW APPLICATIONS” Applications outside of invasive ventilation 24
Slide 25: Our Business: Homecare
Our Business: Homecare Home CPAP Respiratory Support Therapy 25
Slide 26: Global Opportunities
Global Opportunities Demographics: o 60% of total lifetime healthcare cost incurred over 65 years of age o US population over 65 years of age to grow by ~80% over the next 20 years o Healthcare spending per capita increasing by 5-7% pa in developing countries o Focus on reducing healthcare costs: in
Slide 27: Strong Global Presence
Strong Global Presence o International reach Revenue by Region 12 months to 31 March 2016 o Selling into 120 countries o Our people based in 36 countries o New sales offices in Brazil, Norway o 100+ distributors worldwide o 15 distribution centres o 3,500+ employees o Will continue to grow our globa
Slide 28: Financial Targets
Financial Targets o More than NZ$1 billion of annual operating revenue within the next two years o Doubling our constant currency operating revenue every 5-6 years o Targeting gross margin of 65% and operating margin of 30% o Targeted dividend pay-out ratio of approximately 70% of net profit after t
Slide 29: New Product Development
New Product Development o Investment into R&D: 500+ people, NZ$73.3M (9% of operating revenue)* o Working on new products and ideas many years prior to release o Just released three new products, more to come Just released three new products, omore New products will support long-term to come growth
Slide 30: Competitive Advantage – 45 Years' Experience
Competitive Advantage – 45 Years’ Experience Significant expertise in, and history, of changing clinical practice High barriers to entry: o Years in market o Dedicated and focused sales force o Strong distribution channels, supplier/dealer relationships o Substantial and growing clinical evidence sh
Slide 31: Importance of North American Market
Importance of North American Market o Our largest market – 47% of revenue FY16 o New direct sales model for hospital products to accelerate growth o Unique sales process – GPOs, reimbursement o Looking at ways to reduce overall healthcare spend 31
Slide 32: Questions?
Lewis Gradon Managing Director and CEO Questions?
Slide 33: North American Business Overview
Justin Callahan President US Operations North American Business Overview
Slide 34: Overview of our North American Business
Overview of our North American Business North American Revenue North American Employees Revenue by Region US$M 12 months to 31 March 2016 300 250 200 250 150 200 100 150 50 0 100 2010 2012 2013 2014 2015 2016 2007 2008 2009 2011 50 8,000 direct customers 0 250,000 square feet of 2010 2011 2012 2013
Slide 35: Structure
Structure Se) + ea PRESIDENT US Hospital Sales Homecare Canadian Commercial Finance HR Legal Team Sales Team Team Operations Fisher & Paykel 35 HEALTHCARE
Slide 36: Operations Overview
Operations Overview State-wide coverage Canada Head Office Laval, Quebec of hospital and homecare products by FPH reps Distribution Center Louisville, Kentucky Distribution Center US Head Office Moreno Valley, California Irvine, California 36
Slide 37: Drivers of Growth
Drivers of Growth Affordable Care Act 2010 (“Obamacare”) Increasing Prevalence of Obesity Aging Demographics o Expanded insurance coverage o 2012: 32% of the US o 2015: 15% of the US population is obese population older than 65 o CMS reimbursement linked to quality of care o 2030: 42% of the US o 20
Slide 38: Customer Segments
Customer Segments Reimbursement DRG – Diagnosis Related Groups FFS – Fee for Service Reimbursement tied to specific diagnosis Reimbursement tied to specific product during inpatient stay. HCPC code for use in the home. 38
Slide 39: US Hospital Distribution Change
US Hospital Distribution Change Transition Update: o Established Distribution Contracts o Established GPO Contracts o Shipping Product o Uninterrupted Supply to Hospitals Benefits: o Focused Sales Force o Increased Access to Customers o Strengthen Customer Relationships o Customer Education & Evalua
Slide 40: Questions?
Justin Callahan President US Operations Questions?
Slide 41: US Hospital
Steve Lacke VP Sales & Marketing US Hospital
Slide 42: Optiflow - Displacing Conventional Oxygen Therapy
Optiflow™ - Displacing Conventional Oxygen Therapy CONVENTIONAL NONINVASIVE OXYGEN THERAPY VENTILATION 42
Slide 43: Optiflow Focus – Go With the Flow
Optiflow Focus – Go With the Flow o Driving Adoption o Powerful clinical research o Improved patient outcomes o Strong economic message o Positive patient experience o Activities to drive awareness o Focused sales force o Clinical forums o KOL development o Ongoing research activity 43
Slide 44: Powerful Clinical Research
Powerful Clinical Research 44
Slide 45: Optiflow – Reduces Mortality Rate
Optiflow – Reduces Mortality Rate 45
Slide 46: Optiflow – Reduces Escalation of Care
Optiflow – Reduces Escalation of Care 46
Slide 47: Improved Patient Outcomes & Strong Economic Message
Improved Patient Outcomes & Strong Economic Message 47
Slide 48: Invasive Ventilation
Invasive Ventilation o Strong market share position o Converting market to best circuit solution o Better patient care o Improved clinician efficiencies o Barriers to entry o Strong product pipeline o Further raise the bar o Enhance the clinician’s experience o Easier adoption across therapies 48 F&
Slide 49: Non-invasive Ventilation
Non-invasive Ventilation o Improves patient comfort and compliance o Supports better therapy outcomes o Growing market penetration greater than underlying growth o Strong product pipeline F&P Nivairo will be available in the US upon receipt of FDA 510(k) approval 49
Slide 50: Questions?
Steve Lacke VP Sales & Marketing Questions?
Slide 51: Guest Speaker: Dr. Robert Y. Goldberg
Guest Speaker: Dr. Robert Y. Goldberg • Pulmonologist at Mission Hospital, Mission Viejo, CA • Board certified in Internal Medicine, Pulmonary Medicine and Critical Care Medicine • Medical School: Sackler School of Medicine, Tel Aviv University, Israel • Internship: Cedars-Sinai Medical Center, Los
Slide 52: Mission Hospital, Mission Viejo, CA
Mission Hospital, Mission Viejo, CA Mission Hospital is a not-for-profit combined 523-bed acute-care full-service facility with campuses in Mission Viejo and Laguna Beach, and member of the St. Joseph Health alliance. Mission Hospital Mission Viejo houses south Orange County’s only regional trauma c
Slide 53: St. Joseph Health: Integrated Healthcare Delivery System
St. Joseph Health: Integrated Healthcare Delivery System St. Joseph Health is not-for-profit, integrated Catholic healthcare delivery system sponsored by the St. Joseph Health Ministry of The Sisters of St. Joseph of Orange, who trace their roots back to 17th century France. What began as a single 2
Slide 54: Experience with Optiflow Nasal High Flow Therapy
Experience with Optiflow™ Nasal High Flow Therapy • How Optiflow was used at Mission Hospital initially • The impact of Optiflow on patients (ie. comfort, compliance, outcomes) • The impact of Optiflow on the hospital (ie. patient outcomes, cost avoidance, reduction in intubation, increase in vent f
Slide 55: US Homecare
Steve Polgar National Sales Manager US Homecare
Slide 56: Obstructive Sleep Apnea
Obstructive Sleep Apnea o The Mask Matters Most o Market leading mask technology o Unique patented designs o Growing share of new patient starts o Ease of use o Patient comfort o Less refits o Improving DME efficiencies 56
Slide 57: F&P Eson 2
F&P Eson™ 2 o New RollFit™ seal o Intuitive, easy to use headgear o Long life washable diffuser o Introducing VisiBlue, the use of color cues to assist with mask use and care Will be available in the US upon receipt of FDA 510(k) approval 57
Slide 58: F&P Brevida
F&P Brevida™ o A quick and easy fit o Innovative AirPillow™ seal o Designed for confidence, built for comfort Will be available in the US upon receipt of FDA 510(k) approval 58
Slide 59: OSA Market Update
OSA Market Update o Home Sleep Testing (HST) accepted and stabilizing o Majority of sleep diagnostics (PSG & HST) administered through traditional channel o HST driving moderate increase in volume o Homecare Providers adjusting to the new reimbursement environment o DME consolidation in some regions
Slide 60: COPD Challenge
COPD Challenge o Over 15 million diagnosed and perhaps an equal number undiagnosed COPD patients in the United States o Exacerbation of COPD is the primary cause of readmission and the increasing cost of care o United States’ projected cost for COPD exacerbation will exceed $90 billion in 2020 o Cur
Slide 61: Nasal High Flow Therapy in the Home
Nasal High Flow Therapy in the Home o Building a body of clinical evidence o Developing early adopters o Focused on vertically integrated health systems o Self funded o Risk Managed plans o Medicare Advantage contractors o Accountable Care Organizations 61
Slide 62: Questions?
Steve Polgar National Sales Manager Questions?
Slide 63: Health of the Homecare Industry - Doug Coleman
Health of the Homecare Industry - Doug Coleman o Doug Coleman is CEO of Major Medical Supply, Colorado. He is also the President of the Colorado Association of Medical Equipment Services (CAMES) o Major Medical Supply was founded in 1983 and has locations in Brighton, Colorado Springs, Denver, Ft Co
Slide 64: Concluding Remarks
Lewis Gradon Managing Director and CEO Concluding Remarks
Fisher & Paykel Healthcare — Investor Day (September 2016) on 6ix