Hospira 2007 Investor Day

Transcription

1 1 Hospira 2007 Investor Day

2 Hospira 2007 Investor Day Strategic Overview Christopher B. Begley Chairman and Chief Executive Officer Advancing Wellness through the right people and the right products

3 Safe Harbor The Investor Day presentations contain forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, you can identify these statements by our use of forward-looking words such as may, will, should, anticipate, estimate, expect, plan, believe, predict, potential, project, intend, could or similar expressions. In particular, statements regarding our plans, strategies, prospects, goals and expectations regarding our business, and statements and projections regarding the markets and industries in which we operate are forward-looking statements. You should be aware that these statements and any other forward-looking statements in this material only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Many of these risks, uncertainties and assumptions are beyond our control and may cause actual results and performance to differ materially from our expectations. Important factors that could cause our actual results to be materially different from our expectations include the factors, risks and uncertainties described under the headings Risk Factors and Management s Discussion and Analysis of Financial Condition and Results of Operations in Hospira s Annual Report on Form 10-K for the year ended Dec. 31, Accordingly, you should not place undue reliance on the forward-looking statements contained in this material. These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 3

4 Agenda Strategic Overview Global Pharmaceuticals Global Devices R&D The Americas Europe, Middle East and Africa Asia-Pacific Q&A Chris Begley Tom Moore Chris Kolber Ed Ogunro Alejandro Infante Michael Kotsanis Tim Oldham All 4

5 Hospira Has Executed Well Across a Diverse Set of Initiatives Since the Spin-off Transformation from an under-invested, no-growth operating division with declining margins to a company with top-line growth and improving margins Transition from a U.S.-focused division to a more mature global public company Optimized portfolio through selective M&A Careful financial management to drive shareholder value 5

6 Transition from a U.S.-focused Division to a More Mature Global Public Company Successfully completed physical separation from Abbott Developed and implemented actions for long-term growth Investments in new product pipeline 14 specialty injectables products launched , plus new drug delivery systems Hospira MedNet / Plum A+ 3 / LifeCare PCA product enhancements and Symbiq product launches Biogenerics strategy 6

7 Optimized Portfolio Through Selective M&A Mayne acquisition Forged alliances to build ex-u.s. specialty injectable pharmaceuticals (SIP) portfolio Europe Hikma Pharmaceuticals Japan Taiyo Pharmaceuticals Latin America ABL Exited low-margin businesses Berlex imaging agents and certain contract manufacturing agreements 7

8 Careful Financial Management to Drive Shareholder Value Manufacturing optimization initiatives Expected cost savings of $15 million in 2007, increasing to $45 million of savings annually by 2010 Initiative will result in 5 fewer plants $300 million of share repurchases in 2006 using excess cash 8

9 Hospira Has Made Significant Financial Progress Since Spin-off Core Net Sales* Growth Adjusted* Gross Margin 10% 8% 6% 5.0% 5.4% High Single Digits 40% 30% 26.7% 29.9% 34.2% 37.0% 4% 2% 1.2% 20% 0% 10% -2% -4% (2.0)% 2003** [pre-spin] Long-term Goal 0% 2003** [pre-spin] 20% Adjusted* Operating Margin High Teens Adjusted* Diluted EPS Growth Rate of Lowto Mid-teens (%) 18% 16% 14.9% 16.0% 16.2% $2.00 $1.67 $1.82 $1.91 $ % 13.7% 12% 9 10% 2003** [pre-spin] Long-term Goal $1.00 * This is a non-gaap financial measure. Descriptions of the adjustments made to the nearest GAAP measure and a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides. ** Other than Core Net Sales, 2003 numbers have not been adjusted. 2003** [pre-spin] Long-term Goal

10 Hospira Has Made Significant Financial Progress Since Spin-off We have generated nearly $1.4 billion of Cash Flow from Operations over the last three years Cash Flow from Operations Adjusted* Operating Income per Employee $600 $500 $400 $387 $571 $424 $35 $30 $29.2 $32.3 $33.6 $MM $300 $M $200 $25 $100 $ $ *This is a non-gaap financial measure. Descriptions of the adjustments made to the nearest GAAP measure and a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides. 10

11 Hospira s Vision, Values and Commitment Vision Advancing Wellness through the right people and the right products Values Integrity Ownership / Accountability Speed Entrepreneurial Spirit Unwavering Commitment to... Our customers, delivering on our promise by serving their needs with integrity and trust Our employees, by embracing diversity of thought and cultural perspective, fostering an environment of empowerment, fairness and respect Our shareholders, by safeguarding their investment and providing a fair return Our communities, acknowledging our social responsibility through active citizenship and thoughtful giving 11

12 Hospira Has Outperformed the S&P 500 and DJIA Since Spin-off Price History: 5/3/04-5/31/07 HSP: 47% S&P: 37% DJIA: 32% 100 HSP S&P 500 Dow Jones Ind. Avg. Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q

13 Strategy: Invest for Growth We are increasing our investments in the business to drive long-term profitable growth Increase R&D pipeline investment and accelerate new product introductions Medication Management Systems Specialty Injectable Pharmaceuticals Expand internationally Pursue acquisitions and alliances 13

14 Strategy: Improve Margins and Cash Flow We are taking actions across the entire organization to sustain and expand profitable growth Improve product mix Optimize manufacturing efficiencies Streamline administrative systems / processes Advance culture of financial fitness 14

15 We Are Part of the Solution for Our Customers We help reduce healthcare expenses by lowering pharmaceutical costs and improving productivity and safety Customer Needs Current Hospira Strengths Moving Forward Solutions to high cost of proprietary pharmaceuticals Broad portfolio of high quality generic injectable pharmaceuticals Specialty injectable pharmaceuticals and biogenerics Reduction in medication errors: Errors create an economic burden estimated at $77 billion in the U.S. alone Innovative solutions from bar coding to drug infusion monitoring systems help reduce medication errors Full integration enabling added safety features and enhancements Caregiver labor reduction: Saves time and enables focus on more value-added activities Networked infusion systems with safety software; proprietary drug delivery systems isecure, VisIV, new delivery systems in development; autoprogrammable infusion systems and incremental services Increased worker safety: Needlestick accidents cost an estimated $1 billion annually Exposure to toxic drugs when mixed in a hospital pharmacy Comprehensive offering of needleless products Compounding 15

16 Specialty Injectable Pharmaceuticals Our Business is Evolving in New Directions to Drive Growth Geographic Expansion Oncology Super Generics Compounding LEGACY SIP BUSINESS Traditional small molecule generic injectables Differentiated packaging systems Intellectual Property Strategy Proprietary Acute-care Drugs Precedex New Delivery and Packaging Systems Biogenerics 16

17 Medication Management Systems Our Business is Evolving in New Directions to Drive Growth New Pump Platforms Adjacent Opportunities Enhanced Hospira MedNet Value-added Disposables LEGACY MMS BUSINESS Integration Partnerships Global Expansion Client Services 17

18 Near-term Priorities Integrate Mayne Begin to pay down debt Maximize the return on new product launches 18

19 Mayne Integration 19 Actions completed Mayne U.S. and Canada commercial activities combined with Hospira Commercial operations outside the U.S. merged into new regional structures Puerto Rico manufacturing facility closed by July SAP rollout timelines set Drug pipeline harmonized Key remaining activities to be completed no later than the end of 2008 Integration of functions globally Finance systems IT / SAP rollout Supply chain Resolution of overlapping distributor and other relationships

20 Global Product Management President, Global Pharmaceuticals: Tom Moore President, Global Devices: Chris Kolber Responsibilities: Global growth strategy development for product lines Upstream marketing activities Portfolio and pipeline management 2006 Hospira Pro Forma Sales* Global Pharma Global Devices Specialty Injectable Pharmaceuticals IV Solutions/Nutritionals Contract Manufacturing Medication Management Systems Critical Care Brain-function Monitoring * Including Mayne 20

21 Regional Management President, The Americas: Alejandro Infante President, Europe, Middle East and Africa: Michael Kotsanis President, Asia-Pacific: Tim Oldham Responsibilities: Regional strategy to deliver on financial growth targets Drive market leadership Sales and marketing promotional activity 2006 Hospira Pro Forma Sales* EMEA APAC Americas * Including Mayne 21

22 Long-term Financial Goals Our financial goals for 2008 and beyond remain intact subsequent to the Mayne Pharma acquisition Net sales growth High single digits Adjusted operating margin High teens Adjusted EPS growth Low to mid teens 22

23 Hospira s Core Strengths Pharmaceutical and device competencies Expertise in both generic and proprietary pharmaceuticals Combined capabilities create ability to provide unique, integrated products to customers Going forward, skill sets in both areas will be necessary to be successful in the marketplace Quality and manufacturing Reliability of product and supply is critical to our customers Sales and distribution Deep local market knowledge and strong customer relationships Breadth and depth of SIP and MMS product lines Provides customers with a one-stop shop Speed in decision making Ability to move quickly to capitalize on market opportunities 23