Jefferies London Healthcare Conference Julie Brown, CFO

Transcription

1 Jefferies London Healthcare Conference Julie Brown, CFO

2 Forward looking statements This document may contain forward-looking statements that may or may not prove accurate. For example, statements regarding expected revenue growth and trading margins, market trends and our product pipeline are forward-looking statements. Phrases such as "aim", "plan", "intend", "anticipate", "well-placed", "believe", "estimate", "expect", "target", "consider" and similar expressions are generally intended to identify forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results to differ materially from what is expressed or implied by the statements. For Smith & Nephew, these factors include: economic and financial conditions in the markets we serve, especially those affecting health care providers, payers and customers; price levels for established and innovative medical devices; developments in medical technology; regulatory approvals, reimbursement decisions or other government actions; product defects or recalls; litigation relating to patent or other claims; legal compliance risks and related investigative, remedial or enforcement actions; strategic actions, including acquisitions and dispositions, our success in performing due diligence, valuing and integrating acquired businesses; disruption that may result from transactions or other changes we make in our business plans or organisation to adapt to market developments; and numerous other matters that affect us or our markets, including those of a political, economic, business, competitive or reputational nature. Please refer to the documents that Smith & Nephew has filed with the U.S. Securities and Exchange Commission under the U.S. Securities Exchange Act of 1934, as amended, including Smith & Nephew's most recent annual report on Form 20-F, for a discussion of certain of these factors. Any forward-looking statement is based on information available to Smith & Nephew as of the date of the statement. All written or oral forward-looking statements attributable to Smith & Nephew are qualified by this caution. Smith & Nephew does not undertake any obligation to update or revise any forward-looking statement to reflect any change in circumstances or in Smith & Nephew's expectations. 2

3 Agenda 1. Our business and strategic priorities 2. Progress to date 3. Insight into recent announcements ArthoCare Group optimisation Syncera Mid-Tier Strategy in Emerging Markets 4. Summary 3

4 Our business ALLEVYN Wound Dressings Collagenase SANTYL Ointment Enzymatic debrider Advanced Wound Management VISIONAIRE Patient Matched Instrumentation PICO Negative Pressure Wound Therapy Knee Implants DYONICS PLATINUM Shaver Blades Other Arthroscopic Enabling Technologies Sports Medicine (Joint Repair) $4.35bn revenues (2013) Trauma Hip Implants VERILAST 30-year wear claim ANTHOLOGY Primary Hip System FAST FIX 360 Meniscal Repair System HEALICOIL PK PERI-LOC TRIGEN INTERTAN 4 Suture Anchor Periarticular Locked Plating System Intertrochanteric Antegrade Nail

5 Our position leading share and a diversified business S&N 11% Biomet 12% Other 15% Hip & Knee Implants Stryker 19% Zimmer 23% Segment Size: $14.0bn Growth: 3% DePuy 20% Conmed 5% Stryker 10% Other 17% DePuy Mitek 15% Sports Medicine Arthrex 28% S&N 25% Other, 9% Zimmer 6% Biomet 6% S&N 10% Trauma & Extremities Stryker 22% Segment Size: $4.9bn Growth: 7% DePuy Synthes 47% KCI 22% Other 38% Advanced Wound Management Convatec 8% Molnlycke 12% S&N 20% Segment Size: $4.3bn Growth: 6% Segment Size: $6.7bn Growth: 4% Data: 2013 Estimates generated by Smith & Nephew based upon public sources and internal analysis *Acquisition of Systagenix by KCI completed Oct 2013 *Sports Medicine consists of Repair, Access & Resection 5

6 What drives underlying market growth? Demographics Emerging markets Technology Prevalence Lifestyle Diabetes Economics 6

7 Strategic Priorities Winning in Established Markets Accelerating development in Emerging Markets Innovating for value Simplifying and improving our operating model Supplement organic growth through acquisitions 7

8 Capital allocation framework Reinvest for organic growth Progressive dividend policy Acquisitions in line with strategy Return excess to shareholders Maintain strong balance sheet to ensure solid investment grade credit metrics 8

9 Agenda 1. Our business and strategic priorities 2. Progress to date 3. Insight into recent announcements ArthoCare Group optimisation Syncera Mid-Tier Strategy in Emerging Markets 4. Summary 9

10 Shareholder Value Progressing our Strategic Priorities Established Markets Focused investment & management. Greater efficiency. Emerging Markets China. Distributor acquisitions. Mid-tier. Innovation Increased R&D. Launch momentum. Strong pipeline. Simplification More agile and efficient. Group optimisation plan. Acquisitions 13 deals, $2.8bn consideration (at H1) 10

11 Rebalancing Smith & Nephew Lower Higher Growth Growth 65% 35% Lower Growth 65% Proportion of Revenue * Excluding Clinical Therapies ** H including proforma ArthroCare for full period Higher Growth 50% Lower Growth 50% 2011* 2014 H1** Franchises / Geographies Higher Growth Sports Medicine Joint Repair ArthroCare Trauma & Extremities Gynecology Advanced Wound Bioactives Advanced Wound Devices Emerging markets (all franchises) Lower Growth Enabling Technologies (Established mkts) Reconstruction (Established mkts) Advanced Wound Care (Established mkts) 11

12 Agenda 1. Our business and strategic priorities 2. Progress to date 3. Insight into recent announcements ArthoCare Group Optimisation Syncera Mid-Tier Strategy in Emerging Markets 4. Summary 12

13 ArthroCare - compelling strategic rationale Creates a comprehensive product portfolio Arthroscopic Enabling Technologies (COBLATION ) Joint Repair (Shoulder) Opportunities to drive greater revenue sales force enhancement geographic penetration outside US options in ENT Strong pipeline and R&D COBLATION & Joint Repair expertise new product development resources Great fit for Smith & Nephew 13

14 Group optimisation plan four levers Optimising Functions Driving Procurement Savings Develop best in class global support functions Drive savings and capability investments Increasing overall efficiency/ agility Simplifying Operating Model Simplify our management structure Liberating resources to re-invest in critical areas to drive growth Optimising Locations Rationalise property portfolio 14

15 The Syncera solution Value 1 Hip/Knee implant solutions for progressive customers Clinically proven 2 Products from Smith & Nephew addressing the vast majority of primary joint procedures Automation 3 Customer interfaces using innovative technology to reduce cost while improving efficiency Full support 4 High levels of service and support Attractive economics 5 Transparent prices driving substantial benefit for providers 15

16 Mid-tier new emerging markets business model Mid-tier commercial model Independent Mid-tier sales organisation Good quality products at lower prices Dedicated leadership Manufacturing & design efficiency Common shared services Different business model Different service model Different brand Separate sales channels Streamlined sales & marketing Collaboration with premium-tier organisation 16

17 Agenda 1. Our business and strategic priorities 2. Progress to date 3. Insight into recent announcements ArthoCare Group optimisation Syncera Mid-Tier Strategy in Emerging Markets 4. Summary 17

18 Summary Delivering on our Strategic Priorities re-balancing the growth profile enhancing the returns through cost and tax optimisation generating cash flow for value creating acquisitions or shareholder returns 18

19 Questions

20 20