JP Morgan Healthcare Conference January 10, 2011

Transcription

1 JP Morgan Healthcare Conference January 10, 2011

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 forwardlooking 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. Forwardlooking 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 and our success in integrating acquired businesses; and numerous other matters that affect us or our markets, including those of a political, economic, business or competitive 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 & Nephew's expectations. 2

3 Dave Illingworth Chief Executive 3

4 Market - Orthopaedic market growth rates Orthopaedic market growth rates Price Manageable Only part of healthcare cost solution 14% Annual growth rate (%) 12% 10% 8% 6% 4% 2% 0% Q Q Q Orthopaedic market S&N Ortho Recon & Trauma Mix benefit Available Products offering clinical and cost benefits Volumes Deferrals, cyclical Long term growth drivers continue Source: Smith & Nephew Note: S&N growth rates are underlying growth. Q1 and Q adjusted by 5% and 1% respectively to reflect disclosed selling days impact. Orthopaedic market is the global market served by S&N and figures are unadjusted for selling days. 4

5 Market US Reconstruction, cyclical growth US Orthopaedic Reconstruction growth and Consumer Confidence 12% % Annual growth rate (%) 8% 6% 4% 2% Index value 0% Q Q Q Q Q1 US Ortho Recon growth (LHS) Cons um er Confidence Index (RHS) Source: Smith & Nephew, The Conference Board, US Government Note: US Ortho Recon figures are unadjusted for selling days. 5

6 Market Long term growth drivers continue Orthopaedics Endoscopy AWM Demographics Prevalence - Osteoarthritis - Obesity - Diabetes Lifestyle - Activity levels - Quality of life Technology - Innovation - Evidence platform Economics - Reimbursement/funding - Structure of healthcare delivery Emerging markets By 2050, the number of people over the age of 65 around the world will have tripled to nearly 1.5 billion Source: United Nations 6

7 Smith & Nephew strategy - Delivering results Ortho Endo AWM Customer-led Efficient Outperform our markets through: Product innovation Medical education Customer service Continued focus on operational margin and cash generation enabling increased investment in the business Investing for growth Drive new revenues from new opportunities / Emerging Markets / Adjacent technologies Aligned Company-wide objectives, aligned with compensation plan that rewards results and integrity 7

8 Innovation Being part of the solution VISIONAIRE Patient Matched Instrumentation Patient specific cutting blocks Received 510k clearance Over 10,000 total knee operations conducted using VISIONAIRE Expanding to other implant systems Advantages Eliminates 20+ steps and approximately 20 minutes from every knee case Saves operating room time In-house design and manufacturing 8

9 Innovation Increasing importance of clinical data VERILAST Technology Combination of Smith & Nephew s patented OXINIUM metal alloy and highly crosslinked polyethylene OXINIUM Oxidized Zirconium Cross Linked Polyethylene 30-year wear claim is FDA cleared* US advertising campaign driving patient demand and customer awareness *Note: Based on laboratory wear simulation testing, the LEGION Primary Knee System with VERILAST Technology is expected to provide wear performance sufficient for 30 years of use under typical conditions 9

10 Innovation - Sports Medicine repair growth Market leading innovation Repair growth rates 20% 18% 16% ENDOBUTION Annual groth rates (%) 14% 12% 10% 8% 6% 4% 2% FOOTPRINT 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q FASTFIX Source: Smith & Nephew Note: Growth rates are underlying, adjusted for disclosed selling days impact 10

11 Investment & Innovation Giving customers a choice RENASYS Negative Pressure Wound Therapy System Choice of product mobility - Hospital setting or Mobile/Homecare setting Choice of wound dressing - Foam or Gauze Choice of purchase terms - Rental or Purchase 11

12 Investing for growth - Emerging markets Emerging markets revenues and growth 2009 Revenue by Regions Revenues (US$m) % CAGR Africa/Middle East 19% 31% 15% 35% Asia 15% 35% Europe 31% 19% Central & South America Source: Smith & Nephew 12

13 Smith & Nephew in Greater China Employee growth Heilongjiang Uygur Tibet Qinghai Inner Mongolia Jilin Beijing Liaoning Tianjin Ningxia Shanxi Hebei Shandong Gansu Shaanxi Henan Jiangsu Chengdu Hubei Anhui Shanghai Employee (no.) Yunnan Hunan Guizhou Guangxi Hainan Hangzhou Jiangxi Fujian Taiwan Shantou Hong Kong Guangzhou Source: Smith & Nephew Commerical Beijing Plants Suzhou Plant 13

14 Efficiency Supporting continuing investment 26% Trading profit margin 25% 24% 23% 22% 21% 20% H Group 19.3% Ortho 22.8% Endo 18.1% AWM 13.0% (1) H (2) Group 24.4% Ortho 25.0% Endo 22.0% AWM 24.9% Exit 2010 Base year 19% 18% Annual Group trading profit margin H1 Group trading profit margin Source: Smith & Nephew Notes: (1) 2007 full year margin is shown with/without acquisition of Plus and BlueSky, (2) H margin benefited by 130 bps due to BlueSky settlement 14

15 Some key achievements in 2010 Performance (Q YTD) AWM business growing faster than the market Endoscopy repair revenues continued to grow at double digit Reconstruction returned to market outperformance Improved Trauma performance Innovation Received FDA clearance for our 30-year wear claim for VERILAST Over 10,000 procedures carried out using VISIONAIRE ALLEVYN Gentle Border Lite successfully launched NPD Fast Track initiative launched within Endoscopy Medical Education Surgical skills centre opened in York, England KLEOS trained >7,000 surgeons within Orthopaedic business (Q YTD) Investing For Growth Factories in China opened/extended NPWT continued success on all fronts 15

16 Summary Challenging market conditions as expected, but long term growth drivers continue Innovation and products with clear economic benefits create differentiation and drive revenues Good quality investment opportunities increasing Efficiency enables investment for growth Management teams well established and performing well 16

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