Post on 14-Mar-2018
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Hospira 2007 Investor Day
Advancing Wellness …through the right people and the right products
Hospira 2007 Investor Day
Strategic Overview
Christopher B. BegleyChairman and Chief Executive Officer
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Safe HarborThe Investor Day presentations contain forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, you can identify these statements by our use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,”“potential,” “project,” “intend,” “could” or similar expressions. In particular, statements regarding our plans, strategies, prospects, goals and expectations regarding our business, and statements and projections regarding the markets and industries in which we operate are forward-looking statements. You should be aware that these statements and any other forward-looking statements in this material only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Many of these risks, uncertainties and assumptions are beyond our control and may cause actual results and performance to differ materially from our expectations. Important factors that could cause our actual results to be materially different from our expectations include the factors, risks and uncertainties described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Hospira’s Annual Report on Form 10-K for the year ended Dec. 31, 2006. Accordingly, you should not place undue reliance on the forward-looking statements contained in this material. These forward-looking statements speak only asof the date on which the statements were made. We undertake no obligation to updateor revise publicly any forward-looking statements, whether as a result of newinformation, future events or otherwise.
Hospira 2007 Investor Day – Strategic Overview
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Agenda
Strategic Overview Chris Begley
Global Pharmaceuticals Tom Moore
Global Devices Chris Kolber
R&D Ed Ogunro
The Americas Alejandro Infante
Europe, Middle East and Africa Michael Kotsanis
Asia-Pacific Tim Oldham
Q&A All
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Hospira Has Executed Well Across a Diverse Set of Initiatives Since the Spin-off
Transition from a U.S.-focused division to a more mature global public company
Optimized portfolio through selective M&A
Careful financial management to driveshareholder value
Transformation from an under-invested, no-growth operating division with declining margins
to a company with top-line growth and improving margins
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Transition from a U.S.-focused Divisionto a More Mature Global Public Company
Successfully completed physical separationfrom Abbott
Developed and implemented actionsfor long-term growth
– Investments in new product pipeline• 14 specialty injectables products launched 2004 - 2006,
plus new drug delivery systems• Hospira MedNet® / Plum A+®3 / LifeCare PCA®
product enhancements and Symbiq™ product launches– Biogenerics strategy
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Optimized Portfolio Through Selective M&A
Mayne acquisition
Forged alliances to build ex-U.S. specialty injectable pharmaceuticals (SIP) portfolio
– Europe − Hikma Pharmaceuticals– Japan − Taiyo Pharmaceuticals– Latin America − ABL
Exited low-margin businesses – Berlex imaging agents and certain contract manufacturing agreements
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Careful Financial Managementto Drive Shareholder Value
Manufacturing optimization initiatives– Expected cost savings of $15 million in 2007,
increasing to $45 million of savings annually by 2010– Initiative will result in 5 fewer plants
$300 million of share repurchases in 2006 using excess cash
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Hospira Has Made SignificantFinancial Progress Since Spin-off
* This is a non-GAAP financial measure. Descriptions of the adjustments made to the nearest GAAP measureand a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides.
** Other than Core Net Sales, 2003 numbers have not been adjusted.
“Core” Net Sales* Growth
[pre-spin]
High Single Digits
Long-termGoal
Adjusted* Gross Margin
Adjusted* Operating MarginHigh Teens
Long-termGoal
Adjusted* Diluted EPSGrowth Rate of Low-
to Mid-teens (%)
Long-termGoal
(2.0)%
1.2%
5.0% 5.4%
-4%
-2%
0%
2%
4%
6%
8%
10%
2003** 2004 2005 2006
13.7%
14.9%16.0% 16.2%
10%
12%
14%
16%
18%
20%
2003** 2004 2005 2006
$1.67$1.82
$1.91 $1.94
$1.00
$2.00
2003** 2004 2005 2006[pre-spin][pre-spin]
[pre-spin]
26.7%29.9%
34.2%37.0%
0%
10%
20%
30%
40%
2003** 2004 2005 2006
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Hospira Has Made SignificantFinancial Progress Since Spin-off
We have generated nearly $1.4 billion of Cash Flow from Operations over the last three years
Adjusted* Operating Incomeper Employee
Cash Flow from Operations
*This is a non-GAAP financial measure. Descriptions of the adjustments made to the nearest GAAP measureand a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides.
$387
$571
$424
$0
$100
$200
$300
$400
$500
$600
2004 2005 2006
$29.2
$32.3$33.6
$20
$25
$30
$35
2004 2005 2006
Hospira 2007 Investor Day – Strategic Overview
$MM
$M
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Hospira’s Vision, Values and Commitment
IntegrityOwnership / AccountabilitySpeedEntrepreneurial Spirit
ValuesOur customers, delivering on our promise by serving their needs with integrity and trust
Our employees, by embracing diversity of thought and cultural perspective, fostering an environment of empowerment, fairness and respect
Our shareholders, by safeguarding their investment and providing a fair return
Our communities, acknowledging our social responsibility through active citizenship and thoughtful giving
Unwavering Commitment to ...
VisionAdvancing Wellness
through the right people and the right products
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Hospira Has Outperformed the S&P 500 and DJIA Since Spin-offPrice History: 5/3/04 - 5/31/07
HSP: 47%S&P: 37%DJIA: 32%
HSP
Dow JonesInd. Avg.
S&P 500
100
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22004 2005 2006 2007
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Strategy: Invest for Growth
Increase R&D pipeline investment and acceleratenew product introductions
– Medication Management Systems
– Specialty Injectable Pharmaceuticals
Expand internationally
Pursue acquisitions and alliances
We are increasing our investments in the business to drive long-term profitable growth
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Strategy: Improve Margins and Cash Flow
Improve product mix
Optimize manufacturing efficiencies
Streamline administrative systems / processes
Advance culture of financial fitness
We are taking actions across the entireorganization to sustain and expand profitable growth
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We Are Part of the Solution for Our Customers
Current Hospira Strengths Moving ForwardCustomer Needs
We help reduce healthcare expenses by lowering pharmaceutical costs and improving productivity and safety
Specialty injectable pharmaceuticals and biogenerics
Full integration enabling added safety features and enhancements
Compounding
Broad portfolio of high qualitygeneric injectable pharmaceuticals
Innovative solutions from bar codingto drug infusion monitoring systemshelp reduce medication errors
Comprehensive offeringof needleless products
Solutions to high cost of proprietary pharmaceuticals
Reduction in medication errors:Errors create an economic burden estimated at $77 billionin the U.S. alone
Increased worker safety:Needlestick accidents cost an estimated $1 billion annuallyExposure to toxic drugs when mixed in a hospital pharmacy
Networked infusion systems withsafety software; proprietarydrug delivery systems
Caregiver labor reduction:Saves time and enables focus on more value-added activities
iSecure™, VisIV™, new deliverysystems in development; auto-programmable infusion systems and incremental services
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Specialty Injectable PharmaceuticalsOur Business is Evolving in New Directions to Drive Growth
Oncology
Compounding
IntellectualProperty Strategy
BiogenericsNew Delivery andPackaging Systems
GeographicExpansion
SuperGenerics
ProprietaryAcute-care Drugs
Precedex®
LEGACYSIP BUSINESSTraditional small
moleculegeneric injectables
Differentiatedpackaging systems
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LEGACYMMS BUSINESS
Medication Management SystemsOur Business is Evolving in New Directions to Drive Growth
Global Expansion
Integration Partnerships
New PumpPlatforms
AdjacentOpportunities
Value-addedDisposables
Client Services
EnhancedHospira MedNet®
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Near-term Priorities
Integrate Mayne
Begin to pay down debt
Maximize the return on new product launches
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Mayne IntegrationActions completed– Mayne U.S. and Canada commercial activities
combined with Hospira– Commercial operations outside the U.S. merged into
new regional structures– Puerto Rico manufacturing facility closed by July– SAP rollout timelines set– Drug pipeline harmonized
Key remaining activities to be completedno later than the end of 2008
– Integration of functions globally• Finance systems• IT / SAP rollout• Supply chain
– Resolution of overlapping distributorand other relationships
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Specialty Injectable PharmaceuticalsIV Solutions/NutritionalsContract Manufacturing
Medication Management SystemsCritical CareBrain-function Monitoring
Global Product Management
* Including Mayne
Responsibilities:•Global growth strategy development for product lines
•Upstream marketing activities•Portfolio and pipeline management
2006 Hospira Pro Forma Sales*
Global Pharma
Global Devices
President, Global Pharmaceuticals: Tom MoorePresident, Global Devices: Chris Kolber
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President, The Americas: Alejandro InfantePresident, Europe, Middle East and Africa: Michael KotsanisPresident, Asia-Pacific: Tim Oldham
* Including Mayne
Regional Management
Responsibilities:•Regional strategy to deliver on financial growth targets
•Drive market leadership •Sales and marketing promotional activity
Americas
APAC
EMEA
2006 Hospira Pro Forma Sales*
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Long-term Financial Goals
High single digitsNet sales growth
High teensAdjusted operating margin
Low to mid teensAdjusted EPS growth
Our financial goals for 2008 and beyond remain intact subsequent to the Mayne Pharma acquisition
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Hospira’s Core StrengthsCombined capabilities create abilityto provide unique, integrated productsto customers
Pharmaceutical and device competencies
Going forward, skill sets in both areaswill be necessary to be successful in the marketplace
Expertise in both generic and proprietary pharmaceuticals
Reliability of product and supply is critical to our customersQuality and manufacturing
Deep local market knowledgeand strong customer relationshipsSales and distribution
Provides customers with a“one-stop shop”
Breadth and depth of SIP and MMS product lines
Ability to move quickly to capitalizeon market opportunitiesSpeed in decision making
Hospira 2007 Investor Day – Strategic Overview