HIRA Annual Conference

Transcription

1 HIRA Annual Conference July 20, Chicago, IL PRODUCT DISTRIBUTION SOLUTIONS MARKETING PEOPLE National Distribution & Contracting, Inc.

2 Industry Overview Attractive recurring demand for disposable medical supplies Products include surgical gowns, drapes and gloves, institutional incontinence disposables, custom kits and trays, shoe covers, masks, coveralls and lab-coats, headwear, protective eyewear, sterile wipes, swabs, test kits, etc. Industry revenue grew 5% annually over the past five years and are expected to continue to grow at a similar rate through 2013 Ageing population Expanded insurance coverage Technology advancements driving increases in point-of-care testing and other new product introductions Heightened awareness of the risk of infection and continued emphasis on clean, sterile provider environments Medical Supplies Distribution $ in millions End Market Disposable Medical Supplies $36,980 $47,140 $58,900 Medical Instruments & Devices $10,020 $13,410 $17,470 Wound Management supplies $6,410 $7,590 $8,910 Nonwoven Medical Disposables $5,600 $6,850 $8,240 Other $14,950 $19,290 $24,280 Source: The Freedonia Group, Inc. 5.0% 6.0% 3.4% 4.1% 5.2% 4.6% 5.4% 3.3% 3.8% 4.7% 1

3 Who Are We? 2

4 History NDC evolved from a single buying cooperative to a consolidation of five buying cooperatives The current management team has been leading the company since 2005 The 2008 consolidation eliminated divisional management and consolidated member groups under NDC, eliminating the legacy trade names (e.g. Abco, Starline) that had been run as separate divisions with their own membership base, marketing materials and private label brands 1953: ABCO Dealers, Inc. founded 1979: Central Independent Dealer Association (CIDA) 1995: United Dental Dealers (UDD) : MedPlus & MedChain Logistics 2008: Medical subsidiaries consolidated into one company, NDC 2010: Consolidation of dental subsidiaries into NDC Dental 1976: American Dental Cooperative (ADC) 1986: StarLine Dealers Association : NDC formed to execute industry rollup of ABCO, CIDA, StarLine, ADC & UDD : Mark Seitz, Scott Craighead join NDC; Promotions: Chuck Miller, VP - Vendor Relations & Operations; Lori Paulson, VP Marketing & Dental Programs 2010: MedChain Supply fulfillment solutions 3

5 Why are we important? The Medical Supplies Distribution Industry is fragmented with numerous small local and regional companies serving vast customer segments HIDA, the leading industry trade association, reports that over 40% of its members generate less than $10 million in annual revenue Independent distributors maintain well in excess of 60% market share in most provider segments Market Share by Provider Segment 100% 80% 25% 60% 67% 74% 69% 35% 40% 20% 0% 22% 16% 8% 12% 11% 10% 11% Primary Care (35% of NDC Revenue) Extended Care (12% of NDC Revenue) Alternate Site (28% of NDC Revenue) 40% Acute Care (25% of NDC Revenue) MCK Medline/GulfSouth Cardinal PSS/HSIC OMI Other Source: McKesson Investor Presentation, Company data 4

6 Competitive Benchmarking (Fiscal Year 2011) LTM Revenue Growth vs. PY NDC 14.9% Henry Schein, Inc. 13.3% McKesson Corporation 9.1% Cardinal Health, Inc. 8.2% PSS World Medical Inc. 6.6% Owens & Minor Inc. 6.2% Patterson Companies Inc. 4.1% AmerisourceBergen Corporation 2.8% LTM EBITDA Growth vs. PY NDC 20.7% Cardinal Health, Inc. 16.7% AmerisourceBergen Corporation 13.4% McKesson Corporation 12.0% Henry Schein, Inc. 10.0% PSS World Medical Inc. 8.6% Owens & Minor Inc. 8.2% Patterson Companies Inc. -3.6% 3-Year Historical Revenue CAGR 1 3-Year Historical EBITDA CAGR 1 NDC 13.1% Henry Schein, Inc. 10.2% Owens & Minor Inc. 6.0% AmerisourceBergen Corporation 4.7% Cardinal Health, Inc. 4.6% McKesson Corporation 4.0% Patterson Companies Inc. 4.0% PSS World Medical Inc. 2.2% NDC 24.7% AmerisourceBergen Corporation 13.5% Henry Schein, Inc. 10.3% McKesson Corporation 9.9% PSS World Medical Inc. 9.1% Owens & Minor Inc. 7.0% Patterson Companies Inc. 1.4% Cardinal Health, Inc. -0.9% 1. Measures growth based on the company s most recent FY end compared to three years prior Note: Public company information includes growth through acquisitions while NDC s growth has been strictly organic 5

7 Upstream and Downstream Value Proposition NDC s unique distribution model provides strong benefits to both manufacturers and distributors, creating supply chain efficiencies for all constituents For Distributors Distributor customers realize the following benefits: Improved pricing, access to products and programs to enhance competitiveness Proprietary Private Label brand Access to a wide range support services and sales force training programs Consolidated manufacturer rebate programs For Manufacturers Manufacturers realize the following benefits: Increased sales to independent distributors (and lessened dependence on concentrated, national accounts) Allows manufacturers to focus on product development and marketing, rather than distribution and logistics Streamlined sales tracings for GPO and/or rebate programs GPO access 6

8 Member Demographics NDC members distribute products to Primary Care, Acute Care, Extended Care, Veterinary, Dental and Physical Therapy markets. Member Statistics 292 Distributors 361 Distribution Centers Sales Personnel 7 As of December 2007

9 NDC: Multiple Value Propositions Medical supplies distributors maintain a broad line of products often in excess of 10,000 SKUs in order to serve a diversified customer base. Large distributors typically purchase high-volume, fast-moving A & B products directly from manufacturers and use master distributors for slower moving C & D items. Smaller distributors have insufficient volume to source even A & B items direct and therefore use master distributors for the vast majority of their purchasing. Customer Profile Purchasing with Master Distributors Rationale for using NDC NDC s Competition Large, national distributor $1 billion+ annual sales Multiple distribution centers 90%+ of volume purchased direct from manufacturers on a truck-load basis Ex: Henry Schein, Professional Hospital Supply Select, C/D products only < 5% of total volume Ex: lab diagnostics, needles and syringes NDC aggregates slower moving SKUs, allowing for reduced inventory carrying costs Additional product access Lower prices NDC is not viewed as a competitor A/B products freight economies and bulk discounts associated with direct sourcing C/D products pricing compared to peer distributors in a master capacity (e.g. McKesson, Medline) Mid-sized, regional distributor $25 million+ annual sales Single distribution center 50% of volume purchased direct from manufacturers on a truck-load basis Ex: Claflin, Buffalo Hospital Supply Select A/B products Majority of C/D products Approximately 50% of total volume with master distributors, on average Ex: surgical gloves, wound care, crutches Supply chain efficiencies One shipment and one point of contact with many vendors and products from a single source Value-added services rebate administration NDC is not viewed as a competitor A/B products freight economies and bulk discounts associated with direct sourcing C/D products pricing compared to peer distributors in a master capacity (e.g. McKesson, Medline) Small, local distributors <$25 million annual sales Single, small distribution center with limited capacity <25% of volume purchased direct Ex: Medical Supply Corp of New Jersey, Diamed >75% of all products - A through D Ex: table paper, needles, gloves, lab diagnostics, wound care, EKGs Access to all products needed to be a full-service dealer JIT inventory management Value-added services rebate administration, GPO contracting, sales training NDC is not viewed as a competitor Breadth of product portfolio and pricing compared to peer distributors in a master capacity (e.g. McKesson, Medline) Given low volumes, limited threat of direct sourcing 8

10 Member Services GPO & Rebate Providing access to the resources, products and contracts that keep independent distributors competitive. E-Business Fulfillment Services Processing NDC Purchasing & Logistical Financial Private Brand Products Marketing & Education 9

11 Vendor Partners Warehouse 165 Vendors Vendor products inventoried and shipped from NDC distribution centers Member benefits: access to product lines and reduced costs Vendor benefits: increased sales and reduced costs Direct 156 Vendors Vendor ships and bills NDC member direct NDC member access with single point of support Private Label Pro Advantage Quala 10

12 Sample Product Mix Point of Care Testing Gloves Surface Disinfection Disposables Small Equipment ECG Monitors Defibrillators Dental Supplies 11

13 Private Label Programs 12

14 GPO Contract Administration GPO trends continue growth pace Strong relationship with Novation. NDC won award for Supplier of the Year (non-acute) at their national meeting in January Working on other ways to work together to grow our respective businesses MedAssets acquisition of Broadlane Innovatix added to portfolio GPO Volume Projected Growth Yr Over Yr Amerinet $938, $958, $969, , % Novation (4/07 start date) $1,305, $7,108, $14,499, ,497, % MedAssets (4/08 start date) $178, $1,499, ,484, % GPO Total $2,243, $8,245, $16,968, $23,936, % % of Total Master Distribution Revenue 1.5% 5.1% 8.7% 11.9% Master Distribution Revenue 147,509, ,117, ,065, ,687,747 13

15 Financial Value In Partnership Encourages Results Scorecard reporting Consolidated Vendor Payout 80% of members earned VIPER dollars $2,023, in 2011 VIPER Payouts 75 Vendor VIPER Programs in

16 Marketing Offers dynamic programs ensuring successful market penetration, profitability, and increased market share Streamlined Communication from all Manufacturers Pull through marketing tools Advertising resources to produce customized information quickly Private label brand marketing 15

17 Education NDC University Providing sales training, tools, & market trend info to Member Distributor Reps. Total NDCU Graduates: 1218 Participating Companies: 298 Retention Rate: 80% Classes Rookie Boot Camp Regional Sales Operations/Customer Service No one trains the industry better than NDC Monthly Webinars presented by key vendor partners 16

18 Meetings

19 NDC s Field-based Sales Force Anita McKinley, VP Sales & Member Services Colleen Stern, Managing Director - Medical Territory Managers Carl Dews West Denise Gregory - Central Scott Beight Northeast Open - Southeast 18

20 Member Services GPO & Rebate Providing access to the resources, products and contracts that keep independent distributors competitive. E-Business Fulfillment Services Processing NDC Purchasing & Logistical Financial Private Brand Products Marketing & Education 19

21 20 V. At NDC - the Future is Now

22 Tiered Vendor Approach Identification of partners based upon support and category management Premier Focus Feature Contract Feature Premier Focus Contract 21

23 Premier Vendor Program Identifies key manufacturing partners Top tier marketing services package Capture awareness & attention Annual Program 22

24 What does a Premier Vendor receive? Premier Vendor Summit meeting Interaction with NDC Management & Sales Team Product overview Identification of targets and opportunities Sales Team Member follow-up Quarterly reports Regular conference calls Marketing Services 23

25 Marketing Services to Premier Vendor Partners Double booth at NDC International Exhibition Feature in Product Reference Guides Newsletter ad Website banners Market Match Participation Ad in physician catalog Message on-hold ad Participation in NDCU 24

26 Master distribution & logistics Serving independent distribution since 2003 Medical, dental, veterinary and related markets Ancillary programs & services Delivering efficiencies for manufacturers & distributors 25

27 MedPlus distributors provide products to the following markets: Primary care Acute care Extended care Dental Veterinary Service-disabled veteran-owned distributors (with or without additional minority-owned designation) to enhance their FSS offerings Professional organizations to provide special promotions to enhance their membership 26

28 Linking the Supply Chain Enables manufacturers to access distribution channel efficiently Cost reductions with warehouse model: a. Minimizes customer service b. One purchase order vs. multiple c. One accounts receivable d. Economical shipping (one bulk ship to point) 27

29 Med Chain Logistics Partnership with NDC and OHL Third Party logistics solutions to vendors Worldwide capabilities Healthcare distribution expertise 28

30 Fulfillment Services By NDC Introducing... A division of NDC

31 NDC Fulfillment Solution Your Customer Your Sale Your Name on the Package No Warehouse Space, Labor or Supplies No Inventory No Hassle Expanded product offering + Increased geographic coverage = MORE SALES $$$$

32 31

33 Strategically located throughout the country, we serve the entire United States. Your facilities will receive the service and attention they deserve provided by companies that are part of their community. 32

34 Services Formulary development Online Ordering Consolidated reporting and billing Staff inservicing and education Ancillary tracking/inventory management software CMS and state guidelines Programs for the entire continuum of care (SNF, ALF, Independent Living, Home Care) 3 rd Party billing programs Innovative product offering Contract compliance 33

35 34 Thank You