Sorin Group. June 2008

Transcription

1 Sorin Group June 2008

2 Disclaimer This presentation contains management preliminary estimates and forward looking statements, including information related to Sorin projected financial performance and the expected development of the med-tech industry, in particular in the cardiovascular segments. These statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, as of this date, though by their nature future estimates are uncertain and difficult to predict. Actual results or experience could differ materially from the information contained herein. External guest speakers may have received compensation from the company. 2

3 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 3

4 Global presence 2007 Sales by geography 2007 Sales by business Current R&D and manufacturing locations ROW 10% Japan 5% North America 22% Europe 63% Vascular Th. Renal Care Heart Valves Cardiopulmonary Cardiac Rhythm Management 4% 13% 13% 41% 29% 4

5 Overview of Sorin business lines and products Cardiac Rhythm Management CRT-D Defibrillators (ICD) Pacemakers Cardiopulmonary Heartlung machines Oxygenators Auto-transfusion systems Heart Valves Tissue valves Mechanical valves Annuloplasty rings Vascular Therapy Bare metal stents (BMS) Drug eluting stents (DES) Catheters Renal Care Dialysis machines Dialysers Concentrates and solutions 5

6 Market position and the reference markets Sorin position Market trends Cardiac Rhythm Management Cardiopulmonary Heart Valves Strong European presence Fastest growing High Voltage player Entrenched Global market leader (estimated 40% market share) Strong competitive position in EU, just entered US tissue segment Growing market, especially on the High Voltage segment Stable market conditions Moderate growth, fueled by tissue valves penetration Vascular Therapy and Renal Care Limited, regional presence Stents: DES clinical efficacy currently under scrutiny Renal Care: highly competitive and concentrated market 6

7 The cardiovascular space Cardiovascular diseases: # 1 killer and growing Patients Innovation is rewarded Industry Reimburse -ment Major opportunity for devices reducing total therapy cost Currency exchange Strong : a challenge for European manufacturers 7

8 Key strategic imperative for the future Transform our company to consistently deliver strong financial performance: >20% EBITDA margin Implement our new organizational model Aggressively pursue cost reduction programs Explore alternative strategic options for Renal Care and Vascular Therapy Continue to invest in technological innovation, for sustainable long-term growth Maximize cash generation Drive mid single digit sales growth 8

9 New organization is based on 5 Business Units Chairman of the Board CEO Corporate functions Cardiopulmonary BU Heart Valves BU Cardiac Rhythm Management BU Renal Care BU Vascular Therapy BU 9

10 Why a new BU-driven organization Accountability and commitment: - Clear roles & responsibilities - Enhanced performance visibility Cost effectiveness: : - Reduced number of management layers - No duplication of activities Global culture: talent management and international diversity 10

11 Cost reduction initiatives target >20 m annual savings by 2010 Main initiatives Extraordinary item in P&L 07 (restructuring charge) Benefits at full speed by m >20 m Reduction of management layers Setup of shared services centers Manufacturing and operations rationalization Support functions optimization 11

12 Key strategic imperative for the future Transform our company to consistently deliver strong financial performance: >20% EBITDA margin Implement our new organizational model Aggressively pursue cost reduction programs Explore alternative strategic options for Renal Care and Vascular Therapy Continue to invest in technological innovation, for sustainable long-term growth Maximize cash generation Drive mid single digit sales growth 12

13 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 13

14 Cardiac Rhythm Management products: diseases addressed Disease Heart Failure Sudden cardiac death Bradycardia Treatment Pacing both sides of the heart + defibrillation Pacing + defibrillation Pacing Products CRT-D Defibrillators (ICD) Pacemakers High Voltage Low Voltage 14

15 The Cardiac Rhythm Management market Market value, m CAGR ~ % ~ % High Voltage CRT-D ICD % Low Voltage Pace

16 Cardiac Rhythm Management market trends High Voltage - CRT-D Growth High growth with further improvements in efficacy, driven by product innovation - ICD Growth Double digit growth in Europe due to underpenetration of therapy US expected to rebound, after sluggish 2006/ 07 Increased scrutiny on product performance Low Voltage - Stable market - Increase in number of implants to offset moderate price erosion 16

17 Cardiac Rhythm Management vision and strategy Vision Become the innovative Leader in haemodynamic management of Heart Failure Key Strategic Pillars Gain share in High Voltage market, focusing on Heart Failure segment Drive product cost reduction programs Geography strategy: - US: Pursue expansion program - Europe: 10% share by 2010 in High Voltage market Consolidate # 3 Low Voltage position - Japan: Expand market share to become # 2 player 17

18 High voltage product approval timeline in the US Isoline ICD lead Ovatio CRT-D Paradym CRT-D Paradym CRT-D sonr FDA approval expected date Approved Jan. 08 Approved Apr Main product features Safety Ease of use World s smallest High Output CRT-D (42J) LV Bipolar Pacing/ Sensing Capabilities Paradym Platform + sonr 18

19 Cardiac Rhythm Management product pipeline Paradym DR/VR/CRT Paradym CRT SonR Brady Leads LV Bipolar Lead SonRFix (SonR lead) Paradym RF Platform Paradym CRT PhD New ICD Lead Spiderflash AFIB 2nd Generation RF (Remote) Platform Next generation LV and SonR leads Isoline ICD Lead Ovatio CRT Reply Pacemaker Paradym DR/VR/CRT Paradym RF Platform Brady Leads LV Bipolar Lead Paradym CRT SonR 2nd Generation RF (Remote) Platform New ICD Lead Spiderflash AFIB Isoline ICD Lead Reply Pacemaker Paradym DR/VR/CRT Brady Leads LV Bipolar Lead Spiderflash AFIB Paradym CRT SonR Paradym RF Platform New ICD Lead 19

20 Sorin is well positioned to address Heart Failure with sonr and PhD Hemodynamic Optimization Automatic INSIDE the device Dynamic Heart Failure CRT-D Predict HF Development Advance Warning: Hospitalization 20

21 SonR: Automatic Resynchronization of the Ventricles INSIDE the device For the Hemodynamic Management of Heart Failure patients Sensor is in the lead tip Device automatically determines optimal AV/VV delay at implant and adjusts for each individual patient Eliminates hospital visits for CRT optimization 300 patients included in CLEAR clinical trial End of Enrollment in Q In April 2008:CE Mark and first implant in a clinical trial of Paradym TM 8770 sonr TM CRT-D 21

22 PhD: Predict Heart Failure Development To predict and prevent acute decompensation and hospitalization Pre-warning of patient deterioration Alert algorithm based on patient activity and breathing Early results are very promising 22

23 Our advanced device functions via Remote Monitoring Patient implanted with our RF device is linked to the physician Patient RF transmission Network Web site Physician Monitoring centre 23

24 Cardiac Rhythm Management commitment CAGR 7-10% Sales ( m) % 40% High Voltage % 60% Low voltage Cash-flow Improved cash generation through: - Profitable growth - Tight working capital management - Manufacturing process re-engineering with lead time reduction (=inventory optimisation) 24

25 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 25

26 Cardiopulmonary products: diseases addressed Products Heartlung machines Oxygenators Auto-transfusion systems Diseases Heart valves diseases Coronary arteries diseases Congenital heart defects Treatments Prosthetic replacement Bypass Valve repair Need for Extra- Corporeal Circulation 26

27 The Cardiopulmonary market Market value, m CAGR ~790 ~ % Autotransfusion Heart-lung Machines Oxygenators

28 Cardiopulmonary market trends Stable and profitable market. Erosion by interventional procedures and off-pump surgery more than offset by: - Open heart surgery increase in emerging countries - Valve procedures increase globally Customers requiring high level of service No disruptive technology in the mid term: - However, continuous innovation will improve patient care 28

29 Cardiopulmonary vision and strategy Vision Consolidate our WW #1 position and increase profitability and cash flow Key Strategic Pillars Continue to deliver product and service excellence to support our leading position (65% in Heart-Lung Machines, 40% in Autotransfusion, 35% in Oxygenators) Strengthen cost and quality leadership position Drive market development through technological innovation 29

30 The opportunities Defend and strengthen market leadership while focusing on financial performance Capture specific growth niches (e.g., neonatal) Continuously renew and improve product range to ensure technology advantage (e.g., APOPS) Establish best-in-class integrated supply chain capabilities Explore options for further improvement of cost position 30

31 Kids neonatal oxygenators Neonates are the most critical patients in cardiovascular diseases (11,5% mortality rate vs. <1% in overall population) Sorin Group has specifically designed an Oxygenator for neonates below 4kg: Kids D100 Extremely low priming volume (30 cc., 12% of neonate total volume blood), unique on the market Since market launch in January 2007, this product has contributed to saving lives of over neonates! 31

32 APOPS (Advanced Patient Oriented Perfusion System) is designed to change the standard of care in perfusion APOPS Delivery of superior clinical outcomes with improved patient safety From patient Staged approach To patient Automated and integrated ECC system 32

33 Cardiopulmonary product pipeline 2008 Apops (Data-master perfusion monitor) Oxy Kids D101 HLM S5 accessories 2009 Apops (Coating, Allicor, Datamaster Perfusion Monitor Op) New gen. ATS 2010 Apops (Coagulation Monitor, Multi-parameter blood monitor) Oxy Primox 2 Oxy Kids D101 HLM S5 accessories Apops (Allicor, Datamaster Perfusion Monitor Op) Apops (Coagulation Monitor, Multi-parameter blood monitor) Oxy Primox 2 New gen. ATS Oxy Kids D100 HLM S5 Oxy Kids D101 HLM S5 accessories Apops (Allicor, Datamaster Perfusion Monitor Op) New gen. ATS 33

34 Cardiopulmonary commitment % CAGR 1-2% 17% Autotransfusion Sales ( m) % 66% 17% 66% Heart-lung Machines Oxygenators Cash-flow Improved cash generation through: - Enhanced profitability - Tight working capital management: Portfolio pruning leading to inventory optimization 34

35 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 35

36 Heart Valves products: diseases addressed Products Tissue valves Mechanical valves Annuloplasty rings Diseases Structural heart valves diseases: - Regurgitation - Stenosis Congenital heart defects Treatments Prosthetic replacement Valve repair 36

37 The Heart Valves market Market value, m CAGR Repair ~ ~ % +9% Tissue % Mechanical %

38 Heart Valves market trends Heart Valves continues to be an attractive market Procedure growth (3% - 5%) driven by an aging population and early referrals Large undertreated population (40% of aortic, 80% of mitral) Continuing conversion of mechanical valves to tissue Significant industry investments in minimally invasive technologies However, a limited impact on surgical procedure volume over next 3 years is expected Innovation continues to benefit from premium pricing 38

39 Heart Valves vision and strategy Vision Shift from a specialized mechanical valve player to a WW leading company in the Heart Valve segment Key Strategic Pillars US market penetration with tissue and repair therapies at premium pricing Extend tissue position in Europe whilst defending mechanical share world wide Drive operational efficiencies Be an innovator for Surgeons 39

40 A specific US cardiac surgeons segmentation has been put in place % of total cardiac surgeons High Key Opinion Leaders/Very Experienced 1. Conservative KOLs 2. Innovators KOLs 5% 10% Surgical experience Large Volumes Implanters 3. Conservative Large Volumes 30% 4. Innovators Large Volumes 30% Short surgical experience 5. Conservative young 10% 6. Innovators young 15% Low Conservative Early adopters/innovators Low Attitude to innovation High 40

41 US growth strategy relies on the launch of 3 key products by 2011 Mitroflow Mitroflow with Detox. Freedom Solo Sutureless FDA approval expected date onwards Main product features Ease of use Implant versatility Superior haemodynamics Proven long term durability Same as Unmatched Mitroflow haemo-dynamic performance + Enhanced Native-like biocompa-tibility innovative and durability design Ease of implant Reduced procedure time Reduction in patient risk Human-like haemodynamic performance 41

42 which will cover all identified segments Conservative KOLs MF MF W/D MF W/D 2. Innovators KOLs MF MF MF W/D FS SL FS 3. Conservative Large Volumes - MF MF MF W/D MF W/D FS 4. Innovators Large Volumes MF MF MF W/D FS SL FS 5. Conservative Young MF MF W/D MF W/D 6. Innovators Young MF MF MF W/D FS SL FS MF MF W/D Mitroflow Mitroflow with Detoxification FS SL Freedom Solo Sutureless 42

43 Heart valves product pipeline Soprano Armonia Mitroflow with Detoxification Sutureless New semirigid ring Mitroflow (approved Q4 07) Memo 3D (approved Q3 07) New annuloplasty Ring model (Sovering) Mitroflow with Detoxification Freedom Solo 3rd generation Bicarbon 43

44 Highlight on sutureless The Sorin Sutureless is an innovative heart valve prosthesis that combines ease and speed of implant with the haemodynamic characteristics of the best traditional prosthesis available today Key features Valve deployed by a simple delivery mechanism No need for sutures and no suture ring Self expanding nitinol frame Proven tissue valve (Sorin Freedom Solo heart valve prosthesis) Key expected benefits Reduced procedural time (with clear benefits for the patient and the surgeon) Best in class haemodynamic performance (larger valve size) Reduced risk in complex anatomical situations (e.g. severely calcified annulus, narrow ascending aorta) 44

45 Heart Valves growth commitment CAGR 4-6% 5% 28% 7% 41% Repair Tissue Sales ( m) % 52% Mechanical Cash-flow Improved cash generation through: - Enhanced profitability - Tight working capital management: Consignment stock optimization 45

46 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 46

47 Sorin Q1-08 Highlights and 2Q-08 Guidance Q1-08: results exceeded guidance despite unfavourable FX impact Revenues at 183.2M (-1.4%* compared to same period last year). > 7M negative contribution from foreign exchange; EBIT to 9.1M (4.9% of revenues), compared to 6.4m in Q1 07 (3.3% of revenues); EBITDA at 20.6M (11.2% of revenues) up from 19.3M (9.9% of revenues) in Q1 07; Net Debt at 318.2M, vs M as of 31/03/07. Q2-08 Guidance: Revenues constant vs. Q2-07 * EBITDA at 11.5% - 12% of Revenues EBIT at 5.5% - 6% of Revenues Net Profit H1-08 > 0 at constant perimeter Net Debt Q ( 309.9m) * At comparable exchange rates Net of sales to subcontractors 47

48 2008 Guidance* Sales growth +2-3% EBIT/sales >5% EBITDA/sales >11,5% Operating Cash Flow >15 m Net Financial Position Stable * Assumptions and definitions: Comparable exchange rate Current business perimeter Operating Cash Flow: total Cash Flow before financing and restructuring Exchange rate US$/ : 1,45 48

49 2008 Guidance - Sales growth by BU 2007 Revenues (%growth * on FY 06) 2008 Guidance * 232.2M (+9.3%) Cardiac Rhythm Management 6-8% 322.6M (+2.0%) Cardiopulmonary 1-2% 99.3M (-3.3%) Heart Valves 3-5% 29.8M (-7.3%) Vascular Therapy -15%/-17% 99.8M (-4.6%) Renal Care 0-1% * At comparable exchange rates 49

50 2010 EBITDA commitment EBITDA margin, % 10.4% >11.5% 2x 14-15% 17-18% >20% Beyond

51 Levers driving 2010 EBITDA commitment Gross margin/sales expansion (>100 bps per year) due to: - Favorable product mix - Pricing on new products - Manufacturing cost reduction SG&A/sales reduction (>100 bps per year) due to: - Reduction of management layers - Streamlining of support functions R&D/sales increasing slightly 51

52 2010 sales growth commitment Sorin Group sales Strategic options on RC and VT currently being explored Vascular Therapy Renal Care Heart Valves 15% CAGR 3-5% 15% Cardiopulmonary 50% 45% Cardiac Rhythm Management 35% 40% E 52

53 Cash generation capability to be maximized We will generate a >40 m Operating Cash Flow by 2010 through the following levers: - EBITDA maximization - No Working Capital increase year on year - Tight Capex control 53

54 Agenda Introduction Cardiac Rhythm Management Cardiopulmonary Heart Valves Key financials Wrap-up and conclusions 54

55 Avenues for further value creation Levers requiring additional resources, not included in current plan Integration along the value chain Potential acquisition of customers/suppliers Geographie s Further reinforce US and Japan presence Strengthen European leadership Sorin today New businesses Leverage capabilities into new segments in cardiac surgery/ cardiovascular space 55

56 Avenues for further value creation Margin improvement due to pricing improvement on premium products Pricing improvement Integration along the value chain Sorin today Potential acquisition of customers/suppliers Geographi es Levers requiring additional resources, not included in current plan Levers still under analysis Further reinforce US and Japan presence Strengthen European leadership Margin improvement due to product redesign Other manufacturing efficiency programs Product cost reduction New products & services New business Leverage capabilities into new segments in cardiac surgery/ cardiovascular space Release next generation tissue valve Reinforce presence in Heart Failure (through improved hemodynamic and patient management) 56

57 Recent achievements Timely and open approach to the market: - Since 3Q-07 annual and quartely guidance release - 1H-08 financial preliminary data will beshared with the market in advance vs. the original planned date Market confidence: from 3Q-07 guidance always confirmed Strategic plan: announced divestiture of the peripheral stent business to Datascope; 57

58 Conclusions We are A global company active in the attractive Cardiovascular market The global market leader with strong franchises in Cardiopulmonary, and a growing actor in Heart Valves and Cardiac Rhythm Management A company with a new management team and a simplified organization focused on timely execution. We will Optimize our business portfolio, leading to a EBITDA margin >20% beyond 2010 Streamline our SG&A structure (target: -100bp/year) Significantly improve our Gross Margin (target: +100bp/year) Reliably generate operating Cash Flow Consistently deliver strong financial performance, with a timely and open approach to the market while Continuing to invest in patient-focused technological innovation, for sustainable long-term growth Pursuing targeted geographic expansion (US, Japan) with new product introductions. 58