Coloplast A/S Investor presentation
2 Coloplast Coloplast products and services help patients achieve greater independence from medical challenges in 5 areas: Ostomy care, continence care, wound care, skin care and breast care. 39%* 24% 12% 5% 7% *Percentage of total group sales (2003/04)
3 History of revenue growth 1957-2004 7000 6000 5000 Forward integration 4000 Acquisitions mDKK 3000 Product divisions and subsidiaries 2000 Danish production and sale through 1000 distributors 0 1957 1962 1967 1972 1977 1982 1987 1992 1997 2002
4 Sales and production world wide Switzerland Canada Denmark Hungary Germany Argentina Belgium France Sweden Poland Australia Italy Norway USA China Costa Rica Austria Japan Great Britain Spain Holland Portugal Czech Republic Israel Slovakia Croatia Russia Slovenia South Africa Brazil
5 Geographical distribution Revenue 2003/04 6% 13% 81% Europe The Americas ROW
6 Innovation rate* 35 30 25 % of sales Group 20 target 15 10 5 0 98/99 99/00 00/01 01/02 02/03 03/04 * Share of products in sales with less than 4 years of age
7 Macro trends Health care Power to Trend Demographics reforms distribution Health care budget Description Population aged The major constraints… 60 or older is distributors grow growing steadily in their share... Europe, Asia and … lead to the need for cost North America… ...through both containment retail pharmacy, programmes… … and with higher home care and demands for health parallel importing... … through co- care payment and ...changing them to Changing lifestyles consumption competitors, not capitation triggered by customers improved wealth All issues have been on the agenda for years
8 Market conditions and response 1. Reimbursement changes Market growth influenced by: • Monitor/influence policy • Earlier cancer detection • Product design • Improved surgical procedures • Emphasis on clinical • Increased longevity documentation • New technologies and treatment alternatives 2. Price pressure • Slowdown in conversion from • Observe market trends older products • Improve tendering capabilities 3. Harmonisation of health care systems • Monitor development
9 Three key customers • The end customer • The user, primary concern is quality of life • The health care professional • The advisor, primary concerns are user quality of life and handling • The payer • Concern is primarily product pricing
10 Competitor overview Total corp. % of total 80% 4% 67% 20% ½% 12% ¼% Turnover by business area (DKKm) Skin care Wound care Continence care Ostomy care N r J t r h c e s o & & e c t a t T s e J S n l p a i T e l o l v M o a l n H o r o t C s C A
11 Business Structure Group Management Corporate functions Chronic care segment SBU segment V o l Sales Ostomy Continence Wound Skin Breast u care care care health care m e Europe, North p r Europe, o South d u c Americas t i o RoW n
12 Ostomy care - for discreet protection • Normal function of bowel or bladder lost • Almost 80% related to cancer • Designed for security, skin-friendliness, discretion, ease of use and comfort • Wide variety of bags, plugs and accessories
13 Ostomy care - market data Global market value DKK 8-8½bn Europe (>4bn) USA (<2bn) Global (>8bn) 6% 2% 10% 5% 28% 35% 27% 24% 39% 55% 37% 4% 28% ConvaTec Coloplast Hollister B Braun Other Note: Only markets where Coloplast is present are included
14 Continence care - for independent living • Spinal cord injured, multiple sclerosis, spina bifida • Discreet and easy-to-use solutions • Catheters, urine bags, urisheaths, bowel management, absorbent products
15 Continence care - market data Product Market Coloplast market Coloplast Main area size share (Europe) growth competitors 1.5bn DKK 43% 15-20% Astra Tech, Porges/Mentor, 15% Rüsch, Rochester, B Braun 1.2bn DKK 30% (value) 5% Bard, Hollister, Mentor, B Braun, 0-5% Manfred Sauer, Unomedical 0.5bn DKK >60% 0-3% Mentor, Hollister, Rochester, Manfred Sauer 0-3% 1.0bn DKK - - No direct competitors 2%
16 Chronic care - US market positioning and key goals • Strong product portfolio • Convex baseplate, EasiClose • Market access through GPO/IDN • Consorta • Large number of IDN contracts • Significant growth in new patient discharge • Sustained OC hospital growth > 30% • Sustained OC/CC growth > 20% • Reach two-digit ostomy market share within 3-5 years • Develop intermittent coated catheter market segment
17 Chronic care - US market value Ostomy market value 280mn USD Continence market value 370mn USD Other Coloplast 2% 4% Holl CvT 38% 56% Intermittent Coated Catheters estimated value potential 60 mill. USD, 16% of total CC
18 Chronic care - US patient path Medical product manufacturer GPO Direct sales, wholesalers and specialised home care providers Distribution 2-5 Days 30-90 Days 90 Days - 20 Years Hospital Home Health Agencies Retail DME Patient path Convalescent patient New patient Patient at home (at home or in long-term care inst.) Payer source - Medicare, Medicaid and private insurance
19 Home care value chain Hospitals Active distribution Home Coloplast Subs. care Value Proposition Innovation Relationship Passive distribution Wholesaler Pharmacy
20 Coloplast home care activities German market leader in active distribution. Distributing 1/3 of all ostomy bags in Germany. Ownership majority since 2001. Distribution of ostomy, continence care and wound care products in the UK. Cutting service for ostomists. Internal merger of Coloplast Direct (1996) and ThackrayCare (2001). Established 2004. Leading provider in the US of ostomy, wound care, urological, and diabetic products and cost management services. Ownership since 2001.
21 Effects of changing market conditions in Germany CC draft for CC final Implementation of new prices decision health care reform CC final decision Market conditions postponed Introduction of patients‘ co-payment OC draft for OC final for medical devices new prices decision Reimbursement on auxiliary products OC price removed reduction Jan 04 Apr 04 Dec 04 Jan 05 Oct 03 Oct 04 Exp 2006 Jul 04 Market effects Stocking De-stocking Retail anticipates Alignment to by users, by users, lower prices, changed market additional dampened dampened conditions sales sales, higher sales. admin. costs Comparison with Q1 03/04
22 German market impact on Coloplast • Reform impacts 1-1.2bn DKK turnover (ostomy and continence care) • Coloplast is German market leader in ostomy • HSC is German market leader in distribution - distributing 1/3 of all ostomy products • Activities will be aligned to changed market conditions from 2005 • Expectations for 2004/05 affected by 1-2 percentage points on top line and profit margin • Objectives for 2008 are maintained
23 Wound care - providing better outcomes • For difficult to heal wounds • leg ulcers, pressure sores, diabetic ulcers • Primarily affects the elderly • Portfolio of advanced, active dressings • Education, information and service
24 Wound care - market definition Wound type Acute Chronic Dry wound € 1.0 billion € 1.5 billion healing Product technology € 1.1 billion segment, growth 9-11% Moist wound € 0.5 billion € 1.0 billion € 1.0 billion healing Active Pharma and € 0.4 billion € 0.1 billion biotech VAC € 0.1 billion € 0.4 billion Compression
25 Wound care - market shares in Europe MWH and active products 21% 27% Convatec S&N Coloplast J&J Mölnlycke Others 10% 17% 11% 14% Technology Traditional Advanced Active ConvaTec X X S&N X X Coloplast X X J&J X X X Mölnlycke X X
26 Skin health - for medical and personal use • To treat skin problems arising from medical conditions or related to frequent hand washings • Designed for cleansing, moisturising, protection and treatment • Skin health includes US wound care sales • 3/4 of SBU turnover generated in the US
27 Skin health - product positioning CLINICIAN PATIENT INTERVENTIONS ALL PATIENTS Bathing Moisturising Intact Skin Risk Factors - Dry skin - Immobility - Incontinence Hand hygiene + Cleansing + Barriers Intact Skin Skin breakdown + Wound cleansing + Wound care Skin repair INTACT SKIN
28 Skin health - competitors 4bn DKK US market Wound 100 80 Product mix (%) 60 40 20 0 Skin 0 20 40 60 80 100 Sales setting (%) Long-term care Acute
29 Breast care - for peace of mind • Attached, lightweight and soft breast forms, partial breast shapers, lingerie and swimwear • Breast cancer affect approx. 10% of women
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