CEIA May 22nd 2013 T Mangan Boston Scientific Presentation
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Transcript of CEIA May 22nd 2013 T Mangan Boston Scientific Presentation
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What I Learned in Business School:
Marketing:
Statistics:
Finance:
Accounting:
Tax:
Org. Psych:
Corp. Strategy:
How to Make Better Beer Commercials
Why I Dont Play the Lottery, and
Money is Good
Count Your Money
Hide Your Money
Two Ways to Motivate:
Porters Five Forces, and
Math is Hard
Carrot and Stick
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Agenda
Company Overview
Differentiating characteristics of Med Device Industry
Company strategy
Irelands attractiveness
Operational Excellence at Boston Scientific
Strategy Execution
Management Systems
Talent
Sustaining
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Company Background
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Focus on the Customer . . .
And that is where it will always begin and end
Quality Policy
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Plant Network
Ireland Ireland
Fremont
Valencia
San Jose
In-Network Manufacturing Plants: 12
Acquired Plants: 5
Tier 1 DCs: 2
Dorado,
Puerto Rico
Spencer
Heredia,
Cost Rica
Coyol,
Cost Rica
Arden Hills
Maple Grove/
Plymouth
Kerkrade Quincy
Sunnyvale (Asthmatx)
San Clemente (Cameron)
Los Gatos (Sadra)
Bridgepoint
(Plymouth)
Rythmia
Cork
Galway
Clonmel
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Boston Scientific is dedicated to transforming lives through innovative
medical solutions that improve the health of patients around the world.
Mission
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We are pushing the boundaries of todays innovations that lead to tomorrows medical solutions
Science calls out our heritage of discovery, which drives our passion for transforming lives
We are committed to helping patients live healthier, longer lives
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Core Businesses
Interventional Cardiology
technologies for diagnosing and
treating coronary artery disease
and other cardiovascular
disorders.
Cardiac Rhythm
Management
solutions for treating irregular
heart rhythms and heart
failure, and protecting against
sudden cardiac arrest.
Urology and Womens Health
solutions for treating urological
and gynecological disorders like
kidney and bladder stones,
stress urinary incontinence,
pelvic organ prolapse and
excessive uterine bleeding.
Neuromodulation microelectronic
implantable technologies for managing
chronic neuropathic pain and neurological
diseases.
Electrophysiology technologies,
such as mapping catheters and
radiofrequency energy for
diagnosing and treating heart
rhythm disorders.
Peripheral Intervention solutions
for treating vascular system
blockages in areas such as the
carotid and renal arteries and the
lower extremities.
Endoscopy technologies for
diagnosing and treating
diseases of the digestive
system, airway and lungs.
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2012 Performance
52%
21%
13%
12%
2%
United States $3,756
EMEA $1,568
Japan $931
Inter-Continental $872
Divested Businesses $122
Interventional Cardiology $2,179
Cardiac Rhythm Management $1,908
Endoscopy $1,252
Peripheral Interventions $774
Urology/Womens Health $500
Neuromodulation $367
Electrophysiology $147
Divested Businesses $122
30% 26% 17% 11% 7% 5% 2% 2%
Worldwide Sales by Product Category ($M)
Note: The Neurovascular businesses was divested as of 1/3/2011.
Worldwide Sales by
Geographic Segment ($M)
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Corporate Information - At a Glance
Locations Global corporate HQ: Natick, Massachusetts
Regional HQs: Singapore and Paris, France
Major technology centers: Minnesota, California, Ireland, Costa Rica
12 manufacturing facilities worldwide
Web site: www.bostonscientific.com
Select Senior Leadership* President & Chief Executive Officer: Mike Mahoney
Chief Financial Officer: Jeff Capello
Chief Administrative Officer, General Counsel & Secretary: Tim Pratt
Chief Compliance Officer: Jean Lance
President, Europe, the Middle East and Africa: Michael Onuscheck
President, Asia-Pacific: Supratim Bose
General Manager, Latin America: Mauricio Ortiz
Financials $7.25 billion revenue
$933 million adjusted net income1
NYSE: BSX
Boston Scientific (NYSE: BSX) transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for more than 30 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare. For more information, visit us at www.bostonscientific.com.
1. Adjusted net income excludes acquisition, litigation, divestiture, restructuring, and other charges. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com
Important numbers at a glance 1 of the worlds largest medical device companies
15,000+ patents issued; ~7,300 applications pending worldwide
$886 million invested in R&D
~24,000 employees worldwide
Market presence in nearly 100 countries worldwide
All numbers above as of December 31, 2012
* For a complete list of our Executive Committee, please refer to www.bostonscientific.com/aboutus
http://www.bostonscientific.comhttp://www.bostonscientific.com/http://www.bostonscientific.com/aboutus
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Differentiating Characteristics
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Med Device Characteristics
Intellectual Property Protection
Flawless Quality
Highly Regulated and policed environment
Integrated Manufacturing need to control Quality Control Processes
Product availability - Emergency Use
Higher Gross Margin
Protect valuable Intellectual Property
Flawless Quality
Highly Regulated and policed environment
Integrated Manufacturing Model control end-to-end Quality Stream
Product availability - Emergency Use
Higher Gross Margin
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Supply Chain Characteristics
Innovation constraints to leverage Supply Chain
Design around the unique parameters of the customer/physician
Large product portfolio affect
Sole source manufacturing
Regulatory factors
Global distribution through regional distribution centres
Consignment stock system in many markets
Non-scheduled product use
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Competitive Advantage Drivers
INTELLECUTAL PROPERTY
BATTLEGROUND
Electronics Medical Devices
Competing With The Supply Chain
COMMODITY
BATTLEGROUND
Competing With The Knowledge Base
Time-to-market for new products
Outsourced Manufacturing Model
Final assembly component
configuration
Standardised work
Price / Performance / Cost Optimisation
Distribution
Velocity
Time-to-market for new products
Integrated Manufacturing Model
Integrated material component
manufacturing
Highly skilled product builders
Acquisition of Intellectual Property
Clinical/Regulatory know-how
Close physician relationships
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Outcomes of our Supply Chain
Serves the Strategy Well
Intellectual Property Protected
Quality Control not compromised
Meets Regulatory Body requirements
Lower Inventory Turns
High R&D and Clinical Investment
Obligated Reg. Nature of the Industry
Opportunistic
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Company Strategy
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BSC Strategy
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Global Business Environment
Governments Finances & Policy
Buying Power Competition
ABT JNJ
MDT
Pressure on Prices and Growth
Cook
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Why Ireland ?
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Scale of US investment
$190bn invested to date. 5x 2000
115k employed across 700 companies
Generating more than 26% Irelands GDP
$41bn income generated in 2011
Return on investment of 26.5%
R&D spending of $700m in 2011
Between now and 2014, predicted to be
$7.7b in investment and 20,000 new jobs
Strong Clusters
Ireland has clusters of world-leaders in ICT,
software, services, pharmaceuticals and
medical devices
Irish FDI Role in the US
Irish owned firms employ 120k with $31bn
invested
Role of FDI in Irish Economy
Critical Role of US FDI in Ireland, Binding Ireland and the US Together
GDP Growth 1985-2009, 11.5% pa
Small open economy
4.6m Population
2.1m Working Population
> 35% population under 25 yrs
Unemployment rate 14.7%
US Foreign Direct Investment (FDI)
Role In Ireland
Economy /
Demographics
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Investment in Ireland
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MedTech Investment in Ireland
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Worlds Largest Medical Device Companies in Ireland
11 of Top 12 Medical Device
Companies in Ireland
Boston Scientific
Medtronic
Johnson & Johnson
Abbott Laboratories
General Electric
Stryker
Baxter Healthcare
B. Braun
Covidien
Siemens Healthcare
Becton Dickinson
**Philips Healthcare**
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Investing in Ireland
Investing in Ireland Pro-business government
Low corporate tax rate
Strong track record of stability and
predictability of FDI policies
Research Development and
Innovation grants with additional tax
credit of 25%
Strategic location within the
European Union
Skilled work force with a global
reputation for being flexible,
innovative and highly productive
Cork Profile 400,000 Population within 1 hour of
Cork
5 Technology Institutes
2 Major Universities
Access to 60,000 3rd level graduates
Direct flight connections to 41
European cities
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T
T
T
T
TRACK RECORD
TALENT
TAX
TECHNOLOGY
Irelands Attractiveness
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T TRACK RECORD
Irelands Attractiveness
Best location to invest in Western Europe
1st for inward investment by value
11 of the Top 12 Medical Device companies are here
In the Top 10 Easiest Places to do business in the world
8 of the Top 10 Global IT Companies based here
9 of Top 10 Global Pharma firms based here
>50% of the Worlds Financial Services operate here
3 of the top 6 Games companies based in Ireland
http://www.clker.com/clipart-ireland-contour-map.htmlhttp://www.clker.com/clipart-contour-maps-of-ireland.htmlhttp://www.clker.com/clipart-contour-maps-of-ireland.htmlhttp://www.clker.com/clipart-ireland-contour-map.htmlhttp://www.clker.com/clipart-ireland-contour-map.html
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T TALENT
Irelands Attractiveness
# 1 for availability of skilled people
60% of Irish people go on to higher education
Youngest population in Europe >35% under 25
Adaptive and flexible
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T TAX
Irelands Attractiveness
One of the lowest corporation tax rates anywhere
Extensive Tax treaty networks around the globe
25% R & D tax credits
Fully transparent tax system
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T TECHNOLOGY
8bn invested in science, technology and innovation (4% GDP)
Highest proportion of Science and Engineering graduates within the
OECD
Access to the European Market 500m consumers
Irelands Attractiveness
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Operational Excellence at BSC
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BSC Strategic Imperatives
Site SQP Priorities
BSC Operations SQP Divisions Priorities
Strategic Quality Process Overview
1. People development & leadership
2. Optimize our trade model
3. Win global market share
4. Expand sales & global presence
5. Realign product portfolio to
enable new growth R&D
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How We Run The Business Global Operations
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Strategic Planning Process Cork Site
Strategic Plan Delivers Clear Vision Of Success
Integrated Process = Consistency In Execution
Execution Driven By Strategy Quality Process
Leadership Focus Through Established Processes
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Management Systems
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Sites Funnel for Managing Projects
Candidate
Preliminary
Planning
Detailed
Planning
Execution Complete
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Proposal Definition Development Validation & Scale-up Commercialization
Develop p-IBP Develop IBP Update IBP
GMA-VOC
Product Definition
Process
Validation
Production Scale-up Continuous Improvement
Programs
Global Market
Launch Strategy Launch Readiness
Post Market Vigilance /
Field Assessment
Product & Process
Technology Assessment
HE&R Screening
/ Assessment
Design Freeze
Supply Chain
Development Supply Chain Definition
IP Generation IP Management
Business Review Business Review Business Review Business Review Business Review
Update IBP
Design Validation
Process Development
Packaging & Label
Development
Design Transfer Design Verification
Supply Chain
Validation & Scale-up
Market Rollout
Project
Close-out
HE&R Strategy Execution
1st Launch
Packaging & Label
Validation
Product Design
Refinement
Product Design
Verification
Product Specification First Human Use
Manufacturing Site Selection
Packaging & Label
Definition
Clinical Preparation Clinical Design Clinical Execution
Regulatory Strategy
Preclinical Study Planning Preclinical
Project Strategy Preclinical Analysis and Reporting Preclinical Study Execution
Regulatory Filing
MMM yy MMM yy
dd-MMM-yy dd-MMM-yy dd-MMM-yy dd-MMM-yy dd-MMM-yy
dd-MMM-yy
dd-MMM-yy
E&AS Life Cycle for
Test Method Equipment
E&AS Life Cycle for Design
Verification Equipment
E&AS Life Cycle for Process &
Design Validation Equipment
E&AS Life Cycle for Equipment
used during Commercialization
Clinical Planning
Market Specification
Clinical
Close-out
MMM yy MMM yy MMM yy MMM yy MMM yy MMM yy MMM yy MMM yy
HE&R Strategy
DHF Review
DHF Review Scaling Report
Sites funnel aligned to PDP
Candidate Preliminary
Planning
Detailed
Planning Execution Complete
Staff Team
Staff Team
Staff Team
PD
Core TM
Mfg.
Core TM
Sponsor
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PLCP Overview
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NPE Embedded in Cork Foundation Underpinned by Essentials
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NPD Capability Evolution
BSC NPD Established
16 Years
Broad Technical Acumen
Product Transfers
Adaptable, Flexible
Workforce
Value Improvement
Process
Core Technology
Acquisition
Integration
PD & NPE Essentials
Target Coils
Rotablator
RD& I Grants
Product Transfers
Product
Development
New Product
Excellence
2000 2012
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New Product Launch
Examples
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Product Development Excellence Target Coil
Preferred Physician
Evaluations
in 2 mths
Complete DV & PV in 9 mths
Production ramp in 5 mths
25% cost reduction
11 mths
European Approval by
21-Sep-2010
US Approval by
19-Oct-2010
Target
NPD Challenge
Artefact issue Feb 2010
Preferred Physician
Evaluations
in 2 mths
Complete DV & PV in 9 mths
Production ramp in 5 mths
25% cost reduction 11 mths
European Approval by 21-Sep-2010
US Approval by 19-Oct-2010
30 projects completed
5 design change opportunities
Parallel PV / DV activities
Completed by Sep 2010
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Target Coil How did we get here?
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Launch
3 months early!
25% COGS Value Improvements in 11 months
Increase headcount from 35 Product Builders to 220
300% increase in output in 5 months
57% improvement in non conformances
25% improvement in Health & Safety metrics
Built 161k units in the 1st year
Target Detachable Coil
Manufacturing complaint in the 1st year of launch
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Product Development Excellence Key lessons applied to Target Coil
Highly experienced Core Team & SMEs Empowered TEAM
Teamwork & synchronisation (multi-site) Project Governance and organisational commitment
(synchronisation of activities)
Key decisions identified and made in time to influence the program
Total focus on the projectplanning / execution around immovable dates!
Understanding of business drivers schedule #1
Application of LEAN PD & reduction of build to test times
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Encore New Technology Developments
1. Air plasma surface etching of polymer tubing Replace manual alcohol wipe with air plasma etching
2. Automated UV Glue dispensing Micro-spray glue dispensing & placement
3. Automated product integrity testing In-line 100% functional testing of product
4. Automated plunger dynamic force measurement In-line simulated use testing
5. High speed component verification In-line barcode identification of all materials & components
6. Fully Automated product packaging & boxing End to end continuous automated processing
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Feb 96
Product Launch
Cork
Maple
Grove Feb 01
Transfer to Tullamore
Semi-automate packaging
Sep 09
Transfer to Cork
Breather bag removal
Re-design insertion tool
Switch to GW Plastics
Full automation
Key
Production Event
Major VIP Event
Sales
(units)
Std Cost
421
1996 - 2000 2001 - 2009 2009 - 2013
100
80% labour re-deployed
Tullamore
Encore Product Life History
39 56
Gauge re-design
221 276 368 100 333 153 395
81
Std Cos +
Inflation 110 137
53 48 43
139
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Operational Excellence
Results
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-3.5%
-6.9%
-10%
2010 2011 2012
%Materials Cost $Rate of Expected Improvements
Annual Reduction: (Target 3.5%)
%
Operational Excellence Rates of Improvement
-15%
-28%
-40%
2010 2011 2012
%Manufacturing Related ComplaintsRate of Expected Improvements
Annual Reduction: (Target 15%)
%
12%
22%
31%
2010 2011 2012
%
Annual Improvement: (Target 12%)
%
Net Labour EfficiencyRate of Expected Improvements
-9%
-16%
-24%
2010 2011 2012
%Overhead Cost $Rate of Expected Improvements
Annual Reduction: (Target 8.5%)
%
Overhead Cost ($)
2010 2011 2012
%Materials Cost $Rate of Expected Improvements
Annual Reduction: (Target 3.5%)
%
Overhead Cost ($)
Exceeding Industry benchmark standards
-15%
-28%-40%
2010 2011 2012
%
Annual Reduction: (Target 15%)
%
ScrapRate of Expected Improvements
ScrapCPM COMPLAINTS PER MILLION
2010 2011 2012
VIP ExpectationsRate of Expected Improvements
Minimum Realised VIP: 11.6% (Target 8.5%)
%
11.6% Minimum Realised VIP
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Talent
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BSC Corks Vision: Being The Best
Success is only achieved through our People
Credibility
Best Quality
Best Service
Best Cost
People
Vision
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Attracting Top Talent
Attracting Top Talent
American multinational medical device
company
Graduate Rotation Trainee Programme
Great Place to Work Company
Strong emphasis on Training & Development
Continuous Improvement Culture
Voted Top 10 Graduate Programme in 2013 by
Graduates
Working towards achieving the
Shingo Award in 2015
Hiring Top Talent
Third Level Partnerships
Sourcing via LinkedIn
Competency based interviewing
Tailored Psychometric Assessments
Onboarding and Mentoring
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Employee Profile Living the BSC Values
Boston
Scientific
Values
New Product Introduction
- Alair/Truepath/Vessex
- Product Development
Value Improvement Programme
- Savings over 5 yrs
Big Q
- Celebrates CI 60 projects
in 2013
What I do matters, how I do matters
Quality Policy
Over 30 nationalities on site
Best Performing Plan
- 2011 and 2012
NV Divestiture
We have Never Arrived
New Product Introduction
High Performance
Winning Spirit
Diversity
Caring
Meaningful
Innovation
Global
Collaboration
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Sustaining
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Position Ireland for the Future
Certainty Talent
Supply Chain Linkage International
Reputation
Competitiveness
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Position Ireland for the Future
Environment of Certainty
No Change corporation tax regime
Predictability on Income Taxes
Maintain flexibility and industrial peace in our workforce
Talent
Our most compelling asset
Stem the talent drain build viable employment prospects for young people through targeted investment
Reform our education system:
Position and grow great, international leaders in our Higher Education system
More internationally renowned scientists and professionals
Create top ranking universities
Education reform must be relevant to the needs of industry and underpin the on-going transformation of the workforce
We need to rationalise the education system in order to reduce costs and improve quality
Learning as a life long process
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Competitiveness
Sustain a workforce with the skills and competencies to win internationally
Maintain wage inflation restraint to close the gap with peers/competitors
Source lower cost energy
International Reputation
Preserve and build upon our superb track record
Maintain environment of certainty
Create a renewed sense of belief for investors emerge successfully from our
economic reform challenges
Position Ireland for the Future
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Position Ireland for the Future
Supply Chain Linkage Opportunities
Build a comprehensive supplier base as part of the existing MNC clusters
Aim to optimize Procurement, Transformation and Distribution Processes
Further differentiates Ireland from low cost competitors flexibility combined with sophistication
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In conclusion
Remain Relevant !
Stay Competitive !
Thank You