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2014 jp morgan conference Smith&Nephew

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Ana Cláudia Campana
Ana Cláudia Campana

This document summarizes Smith & Nephew's presentation at the 2014 JP Morgan Healthcare Conference. It discusses Smith & Nephew's strategic priorities to win in established markets, accelerate growth in emerging markets, innovate for value, simplify operations, and supplement organic growth through acquisitions. Efficiency initiatives have delivered $127 million in annual benefits year-to-date with a total program cost of $160 million in cash and $40 million non-cash expected. The presentation outlines progress across strategic priorities and maintaining a strong balance sheet to ensure solid investment grade credit metrics.

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       JP Morgan Healthcare Conference    14  January  2014  
Forward  looking  statements   This  document  contains  certain  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,  payors  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  integrating  acquired  businesses,  and  disruption  that  may  result  from  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  20F,  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     2  
Our  business   Advanced Wound Management Knee Implants Hip Implants Trauma Sports Medicine (Joint Repair) Arthroscopic Enabling Technologies Other FAST FIX 360 Meniscal Repair System ALLEVYN Wound Dressings DYONICS PLATINUM Shaver Blades HEALICOIL PK Suture Anchor RENASYS GO Negative Pressure Wound Therapy ANTHOLOGY Primary Hip System VERILAST 30-year wear claim VISIONAIRE Patient Matched Instrumentation PERI-LOC Periarticular Locked Plating System BIRMINGHAM HIP Resurfacing System TRIGEN INTERTAN Intertrochanteric Antegrade Nail 3   $4.1bn revenues (2012)
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     4  
Winning  in  Established  Markets   2012  highlights   ASD  restructuring   AWM  realignment   Bioventus     2013  developments   Trauma  and  Extremities  investment   continued  NPWT  expansion   integration  of  Healthpoint  on  track   5   Established   Markets   (88%)   EM/IM   (12%)   2012 S&N revenues (geographic split)
Accelerating  development  in  Emerging  Markets   2012  highlights   China  successful  model   significant  structural  and  talent   investment     2013  developments   organic  investment  (e.g.  Mexico)   acquisitions  (Brazil,  India,  Turkey)   mid-­tier  portfolio  development   6   2012 S&N revenue growth (contribution) EM/IM   (41%)   Establis hed   Markets   (59%)   Revenue Development
Closer  to  the  customer;;  developing  critical  mass   China   India   Brazil   Russia   South  Africa  Mexico  Turkey   Saudi  Arabia      BRIC   7  
8   Product  strategy  and  development   Mid Tier Lower Tier Market S&N Strategy Execution Lead segments   Registering  more  existing   products   Champion create  Mid-­tier   Acquisitions   New  product  development   Launching  AWM  range   Opportunistic   Upper tier Mid-­tier Lower tier
Innovating  for  value   2012  highlights   32  new  AWM  products   ASD  launch  new  platforms     2013  developments   increased  R&D  investment   ASD:  JOURNEY  II,  Foot  &  Ankle   set,  HEALICOIL  anchors   AWM:  continues  launch  momentum   HP-­802  Phase  III  trials   mid-­tier  portfolio   HEALICOIL PK Suture  Anchor   R&D % 9   VLP FOOT Percutaneous   Calcaneus  Plating  System    
Simplifying  and  improving  our  operating  model   10   2012   Programme  initiated  Q4  2011     Expect  total  programme  annual   benefits  of  $150m     Ortho  and  Endo  businesses   combined           2013   Manufacturing  asset  review   underway       Incurred  costs  of  $127m  to   Sept  2013  ($112m  cash  and   $15m  non-­cash)     Annualised  benefits  of  over   $127m  delivered  to  date   2014   AWM  manufacturing  footprint   complete     Total  programme  cost    $160m   cash  &  $40m  non-­cash     On  track  to  deliver  $150m   annual  benefits  
Acquisitions Supplement  organic  growth  through  acquisition   11   Scale Large  bolt-­ons   Supplementing  organic     growth  strategies   Complementary  technology  
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     1 2 3 4 12
Summary    making  choices  for  the  long  term   Strategic  priorities  progress   revenue  and  trading  profit  in-­line  with  expectations   efficiency  benefits  evident   strong  operational  and  financial  platform   acquisitions   Towards  stronger  portfolio,  flexibility  and  predictability   invested  in  attractive  high  growth  markets  and  segments   business  profile  balancing  growth  and  efficiency     13  
2014 jp morgan conference Smith&Nephew

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2014 jp morgan conference Smith&Nephew

  • 1.        JP Morgan Healthcare Conference    14  January  2014  
  • 2. Forward  looking  statements   This  document  contains  certain  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,  payors  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  integrating  acquired  businesses,  and  disruption  that  may  result  from  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  20F,  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     2  
  • 3. Our  business   Advanced Wound Management Knee Implants Hip Implants Trauma Sports Medicine (Joint Repair) Arthroscopic Enabling Technologies Other FAST FIX 360 Meniscal Repair System ALLEVYN Wound Dressings DYONICS PLATINUM Shaver Blades HEALICOIL PK Suture Anchor RENASYS GO Negative Pressure Wound Therapy ANTHOLOGY Primary Hip System VERILAST 30-year wear claim VISIONAIRE Patient Matched Instrumentation PERI-LOC Periarticular Locked Plating System BIRMINGHAM HIP Resurfacing System TRIGEN INTERTAN Intertrochanteric Antegrade Nail 3   $4.1bn revenues (2012)
  • 4. 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     4  
  • 5. Winning  in  Established  Markets   2012  highlights   ASD  restructuring   AWM  realignment   Bioventus     2013  developments   Trauma  and  Extremities  investment   continued  NPWT  expansion   integration  of  Healthpoint  on  track   5   Established   Markets   (88%)   EM/IM   (12%)   2012 S&N revenues (geographic split)
  • 6. Accelerating  development  in  Emerging  Markets   2012  highlights   China  successful  model   significant  structural  and  talent   investment     2013  developments   organic  investment  (e.g.  Mexico)   acquisitions  (Brazil,  India,  Turkey)   mid-­tier  portfolio  development   6   2012 S&N revenue growth (contribution) EM/IM   (41%)   Establis hed   Markets   (59%)   Revenue Development
  • 7. Closer  to  the  customer;;  developing  critical  mass   China   India   Brazil   Russia   South  Africa  Mexico  Turkey   Saudi  Arabia      BRIC   7  
  • 8. 8   Product  strategy  and  development   Mid Tier Lower Tier Market S&N Strategy Execution Lead segments   Registering  more  existing   products   Champion create  Mid-­tier   Acquisitions   New  product  development   Launching  AWM  range   Opportunistic   Upper tier Mid-­tier Lower tier
  • 9. Innovating  for  value   2012  highlights   32  new  AWM  products   ASD  launch  new  platforms     2013  developments   increased  R&D  investment   ASD:  JOURNEY  II,  Foot  &  Ankle   set,  HEALICOIL  anchors   AWM:  continues  launch  momentum   HP-­802  Phase  III  trials   mid-­tier  portfolio   HEALICOIL PK Suture  Anchor   R&D % 9   VLP FOOT Percutaneous   Calcaneus  Plating  System    
  • 10. Simplifying  and  improving  our  operating  model   10   2012   Programme  initiated  Q4  2011     Expect  total  programme  annual   benefits  of  $150m     Ortho  and  Endo  businesses   combined           2013   Manufacturing  asset  review   underway       Incurred  costs  of  $127m  to   Sept  2013  ($112m  cash  and   $15m  non-­cash)     Annualised  benefits  of  over   $127m  delivered  to  date   2014   AWM  manufacturing  footprint   complete     Total  programme  cost    $160m   cash  &  $40m  non-­cash     On  track  to  deliver  $150m   annual  benefits  
  • 11. Acquisitions Supplement  organic  growth  through  acquisition   11   Scale Large  bolt-­ons   Supplementing  organic     growth  strategies   Complementary  technology  
  • 12. 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     1 2 3 4 12
  • 13. Summary    making  choices  for  the  long  term   Strategic  priorities  progress   revenue  and  trading  profit  in-­line  with  expectations   efficiency  benefits  evident   strong  operational  and  financial  platform   acquisitions   Towards  stronger  portfolio,  flexibility  and  predictability   invested  in  attractive  high  growth  markets  and  segments   business  profile  balancing  growth  and  efficiency     13 Â