Download - Morningstar Research Conference
Morningstar Research Conference
Michael WarmuthSenior Vice President, Established PharmaceuticalsAbbott
2© 2011 Abbott LaboratoriesMorningstar Research Conference
Forward-Looking Statement
Some statements in this presentation may be forward-looking statements for the purposes of the Private Securities Litigation Reform Act of 1995. Abbott cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Economic, competitive, governmental, technological and other factors that may affect Abbott’s operations are discussed in Item 1A, “Risk Factors,” to Abbott’s Annual Report on Securities and Exchange Commission Form 10-K for the year ended December 31, 2010, and are incorporated by reference. Abbott undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments.
3© 2011 Abbott LaboratoriesMorningstar Research Conference
A Broad-Based Health Care Company
U.S.
Proprietary Pharmaceuticals
International
Vascular
Molecular DiagnosticsVision Care
Innovation-Driven Device Businesses $5BN
$15BN
$15BN
Total 2010 Abbott Sales: $35BN
Established Pharmaceuticals
NutritionalsCore Diagnostics
Durable Growth Businesses
Diabetes CarePoint of Care Diagnostics
4© 2011 Abbott LaboratoriesMorningstar Research Conference
• Expanding reach in fast-growing emerging markets
• Growing three times the rate of developed markets– Driven by population growth, rising incomes, modernization of health
systems and increase in treatment of chronic diseases
Emerging Markets: Abbott Well-Positioned
5© 2011 Abbott LaboratoriesMorningstar Research Conference
Emerging Markets: Abbott Well-Positioned
• More than quadrupled international sales over past decade• In 2010, approximately 23% of total sales from emerging markets
– Growing to >30% in 2014– Emerging markets include all countries/regions excluding the
developed world: U.S., Canada, W. Europe, Japan and Australia
International Sales
2010: $20.0 Billion
2000:$4.7
Billion
Emerging Market Sales
2010 2014
>$8BN
>$14BN
International Presence
6© 2011 Abbott LaboratoriesMorningstar Research Conference
Diverse Exposure to Emerging Markets
2010 Emerging Market Sales: >$8BN
30%
25%20%
15%
10%
7© 2011 Abbott LaboratoriesMorningstar Research Conference
Emerging Markets Nutritionals, Diagnostics and Vascular Strategy
• Second-largest emerging markets business
• Enhanced strategic focus to maximize opportunities around the world
• >$2BN in 2011 emerging market nutritional sales; expect to double over next five years
Nutritionals
• Strong performance in key markets such as China, Russia
– Placement of new ARCHITECT system– Further penetration of markets
Diagnostics
Vascular
• Strong growth across emerging markets
• Growth in procedure volumes and share gains
• 1Q11 emerging markets vascular sales up more than 45%
8© 2011 Abbott LaboratoriesMorningstar Research Conference
Emerging Markets Pharmaceutical Strategy
Strategic actions provide critical mass and the right structure to become one of the largest pharmaceutical companies in key emerging markets
2001 2010 2010 2010 2011
Abbott Legacy/Knoll
Zydus Cadila
Solvay Pharmaceuticals
Piramal Healthcare Solutions
Established Pharmaceuticals
9© 2011 Abbott LaboratoriesMorningstar Research Conference
Creation of Established Pharmaceuticals
Proprietary Pharmaceuticals
Established Pharmaceuticals
• New division enables greater focus on the products, markets and commercial opportunities for established pharmaceuticals outside of the U.S.
– Strong presence and brands in developed world– Emphasis on accelerating growth in emerging markets
• Also globalized Proprietary Pharmaceuticals • Began reporting new division results 1Q11
Global Pharmaceuticals
10© 2011 Abbott LaboratoriesMorningstar Research Conference
Global Pharmaceutical Market Value is Expected to Expand to $1+ Trillion by 2014
Source: IMS Health, Market Prognosis, March 2010. New Pharmerging definition
Top 5 EuropeMarket Size: US$170-200Bn
1-4%
USMarket Size: US$360-390Bn
~3%
JapanMarket Size: US$100-130Bn
2-5%
Pharmerging MarketsMarket Size: US$260-290Bn
14-17%
Rest of WorldMarket Size: US$180-210Bn
4-7%
2014 Global Growth Forecast
2014 Sales and 2009-2014 Compound Annual Growth Rate (CAGR)
11© 2011 Abbott LaboratoriesMorningstar Research Conference
Pharma Growth Is Shifting From Developed to “Pharmerging” Markets
“Pharmerging” Markets
• Brazil
• Russia
• India
• China
• Argentina
• Mexico
• Venezuela
• Poland
• Romania
• Turkey
• Ukraine
• Indonesia
• Pakistan
• Thailand
• Vietnam
• Egypt
• South Africa
Source: IMS Health, Market Prognosis, March 2010
U.S. Other developed countries
17 “Pharmerging” countries
ROW
12© 2011 Abbott LaboratoriesMorningstar Research Conference
Established Pharmaceuticals Business Model
Sales & Marketing
Model
Business Model
Key Business
Levers
• Molecular innovation, high product differentiation
• Deliver R&D value w/ high quality data (outcomes/HEOR)
• Highly differentiated products
• Premium prices
• Small, specialized sales force
• Significant long term investment (data, competitive advantages).
• Manufacturing cost
• Commercial strategies
• Capacity to quickly develop, manufacture, register, and market incremental innovations
• Modestly differentiated products • Lower prices, but attractive
margins
• Large sales force
• Leverage reputation, therapeutic area presence, relationships
• Strong marketing to build brands
Pure Generics
• Undifferentiated products
• Lowest price points
• Target pharmacies, wholesalers, government
• Low SG&A spend; promote portfolio vs. individual products
• Manufacturing scale, cost
• Very low/no R&D spend
• Provide large discounts, accept much lower margins
Established Pharmaceuticals
Patented Pharmaceuticals
13© 2011 Abbott LaboratoriesMorningstar Research Conference
Value of Established Pharmaceuticals in Emerging Markets
Established pharmaceuticals driving majority of growth in fastest-growing markets
Continued innovation in formulation, new indications
Importance of proven, well-established distribution systems to ensure reliable supply
Trustworthy, high quality brands greatly valued in markets with fear of counterfeiting
14© 2011 Abbott LaboratoriesMorningstar Research Conference
Established Pharmaceuticals Snapshot
Commercial Footprint
• Vast commercial footprint with products sold in >130 countries• Strong knowledgeable sales force, distribution channels
Manufacturing
Development
Broad Portfolio
• Large portfolio of 500+ established products with significant brand equity spanning therapeutic areas
• Driving manufacturing efficiencies through lean processes without compromising product quality, availability or reliability
• ~$5BN in 2011 sales; ~50% in emerging markets• Margin Profile: Accretive to corporate profile• Sales Growth: High-single-digit, strong double-digit in emerging markets
• Capacity to quickly develop, register and market product improvements based on customer feedback
• Launching hundreds of new products over next 5 years
15© 2011 Abbott LaboratoriesMorningstar Research Conference
Abbott India Pharmaceuticals Business Overview
• One of the world’s fastest-growing markets• Dominated by branded generics; predominantly self-pay • Acquired Piramal in 2010; became largest pharma company in India• Largest pharmaceutical sales force in India
2009 2020
$12.6BN
$55BN
Source: India Pharma 2020, McKinsey & Company
India Pharma Market Growth
16© 2011 Abbott LaboratoriesMorningstar Research Conference
Pharmaceutical Marketshare Leadership in India
Source: IMS
$ M
illio
ns
6.9%
5.2%4.7%
4.2%3.7% 3.7%
3.3% 3.2% 3.1%2.7%
Abbott GSK Pfizer
Market Share
17© 2011 Abbott LaboratoriesMorningstar Research Conference
Key Emerging Markets Focus and Accelerate
• India and China: focus and acceleration plans resulting in above market growth:
– India: In-market growth >30% anticipated in 2011– China: In-market growth >50% anticipated in 2011
• Expand focus to Russia, Brazil and Turkey:– Increase commercial footprint and patient access – Pursue organic and inorganic growth strategies
• In all five key markets:– Long-term strategy– In-market experience: Existing infrastructure and local leadership
strengthened by Solvay Pharmaceuticals– Platforms for future investment and targeted business
development activity
18© 2011 Abbott LaboratoriesMorningstar Research Conference
• Broad exposure to emerging markets
• Strategic actions provide critical mass in key emerging markets
• Abbott well-positioned to capture growth
Summary
Morningstar Research Conference
Michael WarmuthSenior Vice President, Established PharmaceuticalsAbbott