STRYKER ANALYST MEETING September 2014 FORWARD LOOKING STATEMENT - - PowerPoint PPT Presentation

stryker analyst meeting
SMART_READER_LITE
LIVE PREVIEW

STRYKER ANALYST MEETING September 2014 FORWARD LOOKING STATEMENT - - PowerPoint PPT Presentation

STRYKER ANALYST MEETING September 2014 FORWARD LOOKING STATEMENT Certain statements made in the presentation may contain information that includes or is based on forward-looking statements within the meaning of the federal securities law that


slide-1
SLIDE 1

STRYKER ANALYST MEETING

September 2014

slide-2
SLIDE 2

2

FORWARD LOOKING STATEMENT

A copy of this presentation will be available for 90 days on the Events & Presentations page of the For Investors section of our website at www.Stryker.com.

Certain statements made in the presentation may contain information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level

  • f demand for our products; pricing pressures generally, including cost-containment

measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement levels from third- party payors; a significant increase in product liability claims; the ultimate total cost with respect to the Rejuvenate and ABG II matter; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; changes in financial markets; changes in the competitive environment; our ability to integrate acquisitions; and our ability to realize anticipated cost savings as a result of workforce reductions and other restructuring activities. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including

  • ur Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

2

slide-3
SLIDE 3

AGENDA

ORTHOPAEDICS SPOTLIGHT ON INSTRUMENTS GLOBAL QUALITY & OPERATIONS SPOTLIGHT ON CHINA INVESTOR Q&A MAKO PANEL

David Floyd Group President, Orthopaedics Tim Scannell Group President, MedSurg and Neurotechnology Lonny Carpenter Group President, Global Quality and Operations Ramesh Subrahmanian Group President, International Moderator: David Floyd Group President, Orthopaedics

PRODUCT FAIR OVERVIEW

3

Kevin Lobo Chairman and Chief Executive Officer Orthopaedics Focus

AGENDA

slide-4
SLIDE 4

4

MISSION VALUES

TOGETHER WITH OUR CUSTOMERS, WE ARE DRIVEN TO MAKE HEALTHCARE BETTER.

INTEGRITY ACCOUNTABILITY PEOPLE PERFORMANCE

MISSION

4

slide-5
SLIDE 5

Endoscopy 13% Medical 8% Sustainability Solutions 2% Spine 8% Neurovascular 5% Neuro Powered Instruments 3% CMF 3% Knees 15% Hips 14% Trauma & Extremities 12% Other 3% Instruments 14% 5

2013 Sales

$9.0B

  • Strong market share

and broad product

  • ffering in orthopaedics,

neuro and specialty medical surgery

  • Growth through

dedicated businesses structured around physician specialties

STRENGTH IN KEY

HOSPITAL SERVICE LINES

slide-6
SLIDE 6

6

  • Demonstrating commitment

to internal innovation

  • Driving innovation with products

and services

  • Commitment to improved outcomes & delivering

greater cost savings/efficiencies

  • Augmenting R&D with focused acquisitions

+11%

3 Year CAGR R&D

FOCUSED ON INNOVATION

slide-7
SLIDE 7

7

  • Building on momentum in Europe
  • Entered the lower priced segment in China and

expanding to other emerging market countries

  • Expanding market coverage and optimizing go to

market models in premium emerging markets

ACCELERATING GLOBAL GROWTH

slide-8
SLIDE 8

8

2.6% 2.4% 2.1% 4.2% 5.1% 4.9% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 2012 2013 1H2014

MedTech Market** Stryker Organic Revenue Growth*

* Organic revenue growth removes the impact of changes in foreign currency exchange rates, divestitures and the first twelve months of acquisition sales that affect the comparability and trend of sales. **MedTech market growth is based on Company research of 20 companies

GROWTH AT THE HIGH END OF MEDTECH

slide-9
SLIDE 9

9

Share Repurchases: $1.0B Continued share buybacks over time Dividends: $1.0B Committed to increasing the dividend at or above EPS growth M & A: $4.5B Focused on driving sales growth in core and adjacent markets 2011–2013 Capital Deployment History

BALANCE SHEET STRENGTH

slide-10
SLIDE 10

10

  • Global Quality & Operations cost improvement initiatives
  • G&A efficiencies
  • European Regional Headquarters (RHQ)
  • Information technology simplification

OPERATING LEVERAGE INITIATIVES

slide-11
SLIDE 11

FY2014 FY2015

  • Effective tax rate to improve by roughly two percentage points
  • Plan to reinvest approximately half of the tax savings to

accelerate our top line growth

  • Expect an additional 5-8 cents per share improvement for 2015

3Q2014

5.0 – 6.0% Organic sales growth $4.75 – 4.80 Adjusted diluted net earnings per share $1.12 – 1.16 Adjusted diluted net earnings per share

FINANCIAL TARGETS CONFIRMED

11

slide-12
SLIDE 12

12

David Floyd

Group President, Orthopaedics

slide-13
SLIDE 13

13

ORTHOPAEDICS GROUP: A WORLD LEADER

slide-14
SLIDE 14

14

KEY GROWTH DRIVERS

  • Expand portfolio and specialty selling teams in high growth

segments

  • Drive Power Brands in Reconstructive
  • Drive market adoption of robotic arm assisted surgery
  • Focus on geographic expansion opportunities
  • Focus Spine portfolio development on premium segments
slide-15
SLIDE 15

15

LONG TERM POTENTIAL FOR

ROBOTIC ARM ASSISTED SURGERY

slide-16
SLIDE 16

16

ROBOTIC ARM ASSISTED

SURGERY PORTFOLIO EXPANSION

  • Cementless unicompartmental knee system to begin

evaluations by early 2015

  • Total knee arthroplasty IDE enrollment nearing

completion, preparing regulatory submission for 2015 clearance

  • Hip Power Brands accessible mid-year 2015 following

software development and regulatory clearance

  • X3 poly bearings available mid-year 2015
slide-17
SLIDE 17

17

Tim Scannell

Group President, MedSurg and Neurotechnology Spotlight On: Stryker Instruments

slide-18
SLIDE 18
  • 200

400 600 800 1,000 1,200 1,400 1,600 1,800

Global Revenue ($ Millions)*

18

* Revenue includes Neuro Powered Instruments and Stryker Interventional Spine

STRYKER INSTRUMENTS

PERFORMANCE OVER TIME

slide-19
SLIDE 19

STRYKER INSTRUMENTS

BUSINESS UNITS

  • Bone cutting ● Waste management
  • Patient & caregiver safety ● Blood & wound management

Surgical

  • Navigation systems for ortho, neuro, spine and ENT procedures
  • Intraoperative patient imaging (partnership)

Navigation

  • Repair: warranty, preventive maintenance & onsite
  • Infection control: cleaners & detergents

Service

  • Bone cutting (high speed drills & Bone Mill)
  • Ultrasonic soft tissue removal

Neuro Powered Instruments

  • Radiofrequency technology
  • Vertebral compression fracture treatment
  • Interventional radiology instrumentation

Interventional Spine (IVS)

*Neuro Powered Instruments and Interventional Spine are reported in the Neurotechnology and Spine business segment

19

*

slide-20
SLIDE 20

Sonopet (2010) Sterishield (1994) Neptune (2000) SurgiCount (2014)

GROWTH PLATFORMS ENABLED THROUGH ACQUISITIONS

20

slide-21
SLIDE 21
  • 78% CAGR since acquisition in 2010
  • Strong Stryker sales force execution and incremental R&D

innovation has driven the growth

  • Future plans include expansion of neurosurgery offering and

building new innovations in adjacent specialties such as spine, plastics, and reconstructive surgery

SONOPET

21

slide-22
SLIDE 22
  • 17% CAGR since

acquisition in 1994

  • Future growth

strategies include expanding our

  • rthopaedic footprint

and entering new surgical specialties

  • Innovation will include

focus on intraoperative communication and comfort technologies

STERISHIELD

22

slide-23
SLIDE 23
  • 31% CAGR since acquisition in 2000
  • Future plans include capturing lost

share due to recall and further penetrating the fluid waste management market

  • Innovations in this space will be aimed

at improving the user experience and growing the disposable base business

NEPTUNE

23

slide-24
SLIDE 24

Quarter

Neptune Waste Management < Re-launch < Recall

Revenue

NEPTUNE PERFORMANCE OVER LAST TWO YEARS

24

slide-25
SLIDE 25

NEPTUNE 2 CUSTOMER EDUCATION

25

slide-26
SLIDE 26

26

SurgiCounter Safety-Sponges SurgiCount360

  • Small mobile device

designed for hands-free use

  • Rests in small docking

station with extra battery

  • Unique, barcode label,

permanently fused to each Safety-Sponge

  • Master Tag allows all Safety-

Sponges to be tracked with a simple scan

  • Backend database that
  • rganizes reports by

service, campus, and date

  • E-mail alerts for exceptions

26

SURGICOUNT SAFETY-SPONGE SYSTEM

slide-27
SLIDE 27

27

Lonny Carpenter

Group President, Global Quality and Operations

slide-28
SLIDE 28

Quality First Compliance Quality Products/ Services Enhance Brand Equity Plant Network Optimization Strategic Sourcing Core Competency Alignment Automation/ Lean Processes Supply Chain Optimization Warehousing / Logistics Network Integrated Business Planning Global Inventory Mgmt

28

FY12 FY17

3 Focus Areas

$500m Cumulative Cost Savings

  • Quality 1st culture

continues to strengthen

  • Global sourcing is driving

leverage

  • Reduction of warehousing

and logistics costs continues

  • Plant network optimization

in early stages

  • Efficient integration of

acquisitions

  • Annual COGS reduction

trend continues

GQ&O COST IMPROVEMENT INITIATIVES ON TRACK

slide-29
SLIDE 29

29

STRYKER IN EUROPE

  • $1B sales / growing
  • 12 manufacturing facilities

(France/Ireland/Germany/Switzerland)

  • Over 6,000 employees
  • Central distribution center in Venlo, Netherlands
  • Opened regional headquarters (RHQ) in

Amsterdam

RHQ OBJECTIVES

  • Continue to strengthen Europe
  • Increased financial leverage
  • Enable the Trans-Atlantic Operating Model

EUROPEAN REGIONAL HEADQUARTERS

slide-30
SLIDE 30

30

United States

MSNT Divisions Orthopaedics Divisions

International 6 Regions

Europe Japan South Pacific Americas China/Korea/ASEAN EEMEA-I

Trans-Atlantic US / Europe International

Operating Model

  • All businesses within MSNT

and Orthopaedics

  • Full P&L responsibility for

United States / Europe

  • Strong Europe & country

shared service structure

HISTORICAL 2015

Objectives

  • Optimize go to market

model

  • Expand market coverage
  • Accelerate growth

MSNT Divisions Orthopaedics Divisions

5 Regions

Japan South Pacific Americas China/Korea/ASEAN EEMEA-I

TRANS-ATLANTIC OPERATING MODEL

slide-31
SLIDE 31

63% 40% 44% 26% 42% 37% 11% 18% 19%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Europe US World Wide

2013 Stryker Sales Mix

Reconstructive MedSurg Neurotechnology & Spine

Stryker’s lower market share positions in Europe are an exciting growth opportunity for our business

31

DRIVING GROWTH IN EUROPE

Significant potential in MedSurg and Neurotechnology

slide-32
SLIDE 32

32

Ramesh Subrahmanian

Group President, International Spotlight On: China

slide-33
SLIDE 33

AN EVOLVING LANDSCAPE

  • Healthcare, regulatory reforms drive market growth, especially mid-tier segment
  • China is currently the 4th largest

market in the world

  • By 2020 will become the 2nd largest

market after the US

  • Overall growth rate of ~14% to 2020
  • Mid-tier segment cannot be ignored

CHINA MEDICAL TECHNOLOGY MARKET

33% 36% 31% 19% 43% 39%

2011 2020

'11-'15E CAGR '15-'20E CAGR

DISTINCT MARKET SEGMENTS IN CHINA

Premium Mid Low

11% 21% 24% 8% 17% 15%

CHINA: WORLD’S 2ND LARGEST MED TECH MARKET BY 2020

33

slide-34
SLIDE 34

06 07 08 09 10 11 12 13

STRYKER IN CHINA HISTORICAL GROWTH

STRYKER WELL POSITIONED

TO TAKE ADVANTAGE OF CHINA MARKET GROWTH

34

STRYKER IN CHINA

  • Over 2,000 employees
  • Stryker China expanding sales force,

distribution reach (premium segment)

  • Trauson brand, distribution network

strong in mid-tier market segment

  • 3 manufacturing facilities:

Suzhou (Stryker brand - 1) Changzhou (Trauson brand - 2)

  • Trauson R&D facility in Changzhou

STRYKER STRATEGY

  • Leverage Stryker premium portfolio across

franchises for leadership

  • Grow mid-tier segment presence through

Trauson brand and low cost business model

slide-35
SLIDE 35

35

EXPAND MARKET COVERAGE

  • Currently 40% market coverage
  • Target full coverage of 37 key cities by

2015 (60% coverage)

  • Target 80% coverage by 2020
  • Expand sales force > 30% per annum

OPTIMIZE GO TO MARKET MODEL

  • Regional hubs, dealer structures
  • Invest in marketing, account management

WIN IN PREMIUM MARKET: STRYKER CHINA

35

slide-36
SLIDE 36

36

PREMIUM PORTFOLIO DEVELOPMENT

  • Develop products specifically

for Chinese anatomy

  • Tiered product portfolio
  • Product life cycle extension
  • China for China manufacturing

BROAD PORTFOLIO

(Leverage Leading Position in Endoscopy)

INVEST IN EDUCATION & TRAINING

  • Mobile training centers –

takes training to customers

ENHANCE SERVICE CAPABILITY

Spine Neuro Hips Trauma Knees Other Endoscopy Instruments

WIN IN PREMIUM MARKET: STRYKER CHINA

slide-37
SLIDE 37

37

PORTFOLIO AND R&D FOCUS

  • Continue to evolve trauma and

spine portfolio

  • Assessing opportunities in

broader reconstructive market

  • Leverage low cost domestic

manufacturing capabilities

SUCCESSFUL INTEGRATION – MAINTAINED BUSINESS MOMENTUM

  • Key integration milestones achieved on time
  • Key talent retained
  • Leading domestic player in trauma and spine,

growing ahead of market (46% growth YTD 2014)

TRAUSON - PLATFORM TO WIN IN MID-TIER SEGMENT

slide-38
SLIDE 38

PLANS

  • Launch Trauson brand in other emerging markets
  • Continue expansion in China
  • Assessing expansion of Trauson into broader

recon mid-tier market segment

INTERNATIONAL LAUNCHES 2014

  • Malaysia
  • Turkey
  • South Africa
  • Vietnam
  • Russia
  • Thailand
  • Colombia
  • Mexico

TRAUSON - PLATFORM TO WIN IN MID-TIER SEGMENT

38

slide-39
SLIDE 39

STRYKER ANALYST MEETING

Closing remarks

slide-40
SLIDE 40

40

  • Strength in key hospital service lines
  • Focused on innovation
  • Accelerating global growth
  • Balance sheet strength
  • Opportunities to drive meaningful
  • perational leverage

STRYKER ADVANTAGE

slide-41
SLIDE 41

Q & A

41

slide-42
SLIDE 42

42

Moderator David Floyd Group President, Orthopaedics

MAKO SURGEON PANEL

slide-43
SLIDE 43

43

Robert C. Cohen

Vice President and General Manager of Stryker Mako

David J. Jacofsky, MD

Chairman of The Center for Orthopaedic Research and Education

Robert C. Marchand, MD

Partner, South County Orthopaedics and Physical Therapy, Inc.

Douglas E. Padgett, MD

Chief of the Adult Reconstruction and Joint Replacement Service, Hospital for Special Surgery

PANELISTS

slide-44
SLIDE 44

STRYKER ANALYST MEETING

September 2014