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William J. Federici
Vice President and Chief Financial Officer
Investor Relations Contact:
Michael A. Anderson
Vice President and Treasurer
mike.anderson@westpharma.com
UBS 20th Annual Global Healthcare Conference
New York, New York
February 9, 2010
NYSE: WST
westpharma.com
All trademarks and registered trademarks are the property of West Pharmaceutical Services, Inc., unless noted otherwise.
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This presentation contains forward-looking statements, within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, that are based on management’s beliefs and assumptions, current
expectations, estimates and forecasts. Statements that are not historical facts, including
statements that are preceded by, followed by, or that include, words such as “estimate,”
“expect,” “intend,” “believe,” “plan,” “anticipate” and other words and terms of similar
meaning are forward-looking statements. West’s estimated or anticipated future results,
product performance or other non-historical facts are forward-looking and reflect our
current perspective on existing trends and information.
of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, that are based on management’s beliefs and assumptions, current
expectations, estimates and forecasts. Statements that are not historical facts, including
statements that are preceded by, followed by, or that include, words such as “estimate,”
“expect,” “intend,” “believe,” “plan,” “anticipate” and other words and terms of similar
meaning are forward-looking statements. West’s estimated or anticipated future results,
product performance or other non-historical facts are forward-looking and reflect our
current perspective on existing trends and information.
Many of the factors that will determine the Company’s future results are beyond the ability
of the Company to control or predict. These statements are subject to known or unknown
risks or uncertainties, and therefore, actual results could differ materially from past results
and those expressed or implied in any forward-looking statement. You should bear this in
mind as you consider forward-looking statements. A non-exclusive list of important factors
that may affect future results may be found in West’s filings with the Securities and
Exchange Commission, including our annual report on Form 10-K and our periodic reports
on Form 10-Q and Form 8-K.
of the Company to control or predict. These statements are subject to known or unknown
risks or uncertainties, and therefore, actual results could differ materially from past results
and those expressed or implied in any forward-looking statement. You should bear this in
mind as you consider forward-looking statements. A non-exclusive list of important factors
that may affect future results may be found in West’s filings with the Securities and
Exchange Commission, including our annual report on Form 10-K and our periodic reports
on Form 10-Q and Form 8-K.
You should evaluate any statement in light of these important factors.
Forward Looking Statements
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Corporate Profile
• Founded in 1923
• Leading global supplier of
components and systems
for injectable drug delivery
components and systems
for injectable drug delivery
– Vial closure systems
– Prefillable syringe components
– Components for diagnostics
– Devices and device sub-
assemblies
assemblies
– Safety and administration
systems
systems
• Market capitalization $1.3 billion
• Diverse, stable customer base
• Global footprint
Devices |
Proprietary Products |
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• Challenges:
– Adverse effects of pension expense, currency effects
– Recession impacted customer behavior/order patterns
• Tighter cost, working capital and inventory management
• Some major programs delayed or cancelled
– Slowed growth coming into 2009 continued through Q2
• Q3 revenues grew by 4.3% excluding currency
– H1N1-related sales growth
– Customer cyclical inventory adjustments moderating
• Key developments:
– Validated Daikyo Crystal Zenith 1ml single cavity manufacturing cell
• Four cavity cell installed late Q4; commercial production should
start Q3 2010
start Q3 2010
– Plastef acquisition completed
– Officially opened China Plastics facility
– Announced plans to restructure and re-align operating segments in Q4
Fourth-quarter and full-year 2009 results and 2010 financial guidance are
scheduled to be announced on February 18, 2010, with analyst call to follow.
scheduled to be announced on February 18, 2010, with analyst call to follow.
2009 in Retrospect
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Long Term Business Drivers
• Demographics
• Growth in Biologics & Vaccines
• Requirement for easy, safe,
accurate dosing
accurate dosing
• Combination product growth
• Generic growth
• Increasing global access to
advanced healthcare
advanced healthcare
West supplies sophisticated
packaging systems for the top 20
biologic drugs (by sales) currently
on the market.
packaging systems for the top 20
biologic drugs (by sales) currently
on the market.
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Therapeutic Category Drivers
Category | Key Customers | Projected Growth |
Diabetes | 8 - 10% | |
Oncology | 6 - 8% | |
Vaccines | 4 - 6% | |
Autoimmune | 6 - 8% |
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• Global economic conditions remain soft, but show signs of
improvement
improvement
• Uncertainty over pending US healthcare legislation
• Global pharma revenue growth projected to be 4-6% (per
IMS)
IMS)
• North America growth projected at 4.5 - 5.5%
• Europe growth moderate 2-4%
• Emerging economies should grow > 10% (India, China, Brazil)
• Customer consolidation increasing focus on large molecule
therapies:
therapies:
• Pfizer - Wyeth
• Roche - Genentech
• AstraZeneca - Medimmune
• Lilly - Imclone
• Merck - Schering Plough
2010 Outlook
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Packaging Systems (How drugs are contained) |
Primary Container Solutions |
Delivery Systems (How drugs are administered) |
Administration Systems |
Business Unit Re-alignment
• Safety systems (NovaGuard, Eris)
• Reconstitution systems -
MediMop
MediMop
• CZ prefillable syringe systems
• Advanced Injection Systems
(Confidose)
(Confidose)
• Tech Group Contract
Manufacturing
Manufacturing
• Small volume parenteral
packaging
packaging
• Large volume parenteral
packaging
packaging
• Prefillable syringe components
• Disposable medical device
components
components
• Diagnostic, dental, veterinary
packaging
packaging
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Five-Year Growth Opportunity
$2 billion combined markets for safety,
prefilled and auto-injectors, with unit
growth 6-12%, depending on product and
therapeutic segment
prefilled and auto-injectors, with unit
growth 6-12%, depending on product and
therapeutic segment
Strategic Planning Goals:
• Projected 2014 sales of $0.6 billion
• Projected 2014 Operating margin: 20%
$1.5 billion market for components with unit
growth 0% to 8% per year, depending on
product and therapeutic segment
growth 0% to 8% per year, depending on
product and therapeutic segment
Strategic Planning Goals:
• Projected 2014 sales of $1.0 billion
• Projected 2014 Operating margin: 20%
Packaging Systems (How drugs are contained) |
Primary Container Solutions |
Delivery Systems (How drugs are administered) |
Administration Systems |
Consolidated 2014 Planning Objectives
• 2014 Sales: $1.6 billion
• 2014 Operating Margin: 19%
• 2014 Consolidated ROIC: 17%
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Our Growth Strategy
West’s Competitive Advantages:
• Unmatched expertise in drug -
material interactions
material interactions
• Market leader in packaging for
biologics
biologics
• Protected IP: Proprietary materials
and processing technology - Drug
Master File (DMF) 1546
and processing technology - Drug
Master File (DMF) 1546
• Regulatory barriers to entry:
US NDAs and ANDAs
require proof of stability
require proof of stability
• Global technical support
Packaging Systems (How drugs are contained) |
Primary Container Solutions |
• Therapeutic segment focus
• Generate incremental value per
unit
unit
• Leverage changing regulatory
environment
environment
• Optimize manufacturing
productivity
productivity
• Strategic acquisitions
• Geographic expansion
• China
• India
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Value Proposition
PROPRIETARY
PRODUCTS
Revenue and
Margin
Opportunity
Opportunity
Disposable Device
Disposable Device
Components
Components
Westar® RS
Mix2Vial®
NovaGuard™
éris™
Westar® RU
Standard
Components
Components
Standard
Components
Components
Consumer
Consumer
Products
Products
Packaging
Delivery
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Our Growth Strategy
• Concentrate on systems for unmet
market needs
market needs
• Build market share in multi-
component systems for drug
administration utilizing Daikyo CZ as
a platform technology
component systems for drug
administration utilizing Daikyo CZ as
a platform technology
• Production supported by existing
design, multi-material molding, and
assembly capabilities
design, multi-material molding, and
assembly capabilities
• Expand through innovation and
strategic technology acquisitions
strategic technology acquisitions
Packaging Systems (How drugs are contained) |
Primary Container Solutions |
Delivery Systems (How drugs are administered) |
Administration Systems |
• Therapeutic segment focus
• Generate incremental value per
unit
unit
• Leverage changing regulatory
environment
environment
• Optimize manufacturing
productivity
productivity
• Strategic acquisitions
• Geographic expansion
• China
• India
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Delivery Systems - Key Programs
Vial2Bag™
Mix2Vial®
MixJect®
NovaGuard™ Safety
Needle Device
Needle Device
(luer-lock syringe)
ConfiDose®
Auto-injector
Auto-injector
Daikyo Crystal Zenith®
éris™
Safety Needle Device
(fixed-needle syringe)
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Management Focus
• Packaging Systems Segment
– Organic growth (on average) of 3-5% per year
– Margin expansion through improved operating efficiency
– Positive mix with increasing biologic product sales
– Capital investments targeted at enhanced quality and value
• Delivery Systems Segment
– Deliver the potential of Daikyo CZ products
– Increase healthcare-consumable contract manufacturing revenue
– Grow proprietary safety and delivery system businesses
• Continued investment for the future
– Innovation focused on meeting the challenge of biologics
– Geographic expansion
– Technology & product acquisitions
• Financial discipline
– Focus on operating cash flow: Discretionary SG&A, R&D and capital spending
supported by revenue growth.
supported by revenue growth.
– Maintain a balance sheet that supports current plans and new opportunities.
– Invest and execute to deliver returns on invested capital (“ROIC”) that regularly
exceed weighted average cost of capital (“WACC”).
exceed weighted average cost of capital (“WACC”).
– Align incentives with financial performance and value creation
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Summary
• A valuable franchise
– Substantial market share
– Proprietary technology
– Diversified Customer Base
– Global footprint
• Positioned to grow
– Strength in new product
pipeline
pipeline
– Preferred products for
biologics
biologics
• With the financial strength to
invest
invest
– Reliable operating cash
flow
flow
– Balance sheet strength
• Led by an experienced
management team
management team
– Aligned incentives
Injectable Container Solutions
Advanced
Injection
Systems
Injection
Systems
Prefillable Syringe Systems
Safety and
Administration Systems
Administration Systems
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William J. Federici
Vice President and Chief Financial Officer
Investor Relations Contact:
Michael A. Anderson
Vice President and Treasurer
mike.anderson@westpharma.com
UBS 20th Annual Global Healthcare Conference
New York, New York
February 9, 2010
NYSE: WST
westpharma.com
All trademarks and registered trademarks are the property of West Pharmaceutical Services, Inc., unless noted otherwise.