udg healthcare plc jefferies conference june 2019 healthc… · capabilities . global network of...
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UDG Healthcare plcJefferies Conference June 2019
2 : UDG Healthcare plc
Forward Looking Statements
This Presentation has been prepared by UDG Healthcare plc and contains certain forward-looking statements, beliefs or opinions, including statements with respect to the Group's business, financial condition and operational results.
They represent expectations for the Group’s business, including statements that relate to the Group’s future prospects, developments and strategies, and involve risks and uncertainties both general and specific. The Group has based these forward-looking statements on assumptions regarding present and future strategies of the Group and the environment in which it anticipates operating in the future. However, because such statements involve known and unknown risks, uncertainties and other factors including but not limited to general economic, political, financial and business factors, which in some cases are beyond the Group’s control, and accordingly you should
note that actual results, performance, operations or achievements expressed or implied by such forward looking statements may differ materially from those expressed or implied by such statements and accordingly you should not rely on these forward looking statements in making investment decisions. Except as required by applicable law or regulation, neither the Group nor any other party intends to update or revise these forward looking statements after the date these statements are published, whether as a result of new information, the passage of time, any future events or otherwise.
3 : UDG Healthcare plc
UDG Healthcare Overview
UDG Healthcare is a global leader in the healthcare advisory, communications, commercial, clinical and packaging services industry. The Group is organised and managed across two divisions, Ashfield and Sharp, and employs 9,000 people in 26 countries.
2Operating divisions
9,000Employees
Top 30Pharma companies
as clients
FTSE 250Listed
30+ yearDividend growth
26Countries
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The Shape of UDG – H1 FY19
Business Unit Operating Profit Split
44%
25%
31%
Geographic Revenue Split
63%19%
18%
Customer Concentration (net revenue)
9%
32%59%
Ashfield Communications & AdvisoryAshfield Commercial & ClinicalSharp
North AmericaUKRest of World / Other
# 1 Customer# 2 -10 CustomersOther Customers
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Continuous record of operating profit growth
Ashfield and Sharp combined operating profit CAGR of +15%
since FY14
Ashfield Sharp
57.5 68.3 70.6 81.698.4
25.934.0 38.2
41.3
45.8
83.4
102.3108.8
122.9
144.2
FY14 FY15 FY16 FY17 FY18
Operating Profit Growth: Ashfield and Sharp ($m)*
* Excludes Aquilant
Divisional Review:Ashfield
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Ashfield Overview
69%
57.568.3 70.6
81.6
98.4
FY14 FY15 FY16 FY17 FY18
*Adjusted for amortisation of acquired intangible assets, transaction costs, and exceptional items
Operating profit* ($m)
A global leader in healthcare advisory, communication, commercial and clinical services
7,200+People across 25 countries
Delivering services in more than 50 COUNTRIES
Partnering with the top 30 GLOBAL PHARMA COMPANIES
10 YEARSof benchmarking data within STEM with over 300,000 observations
COMPLETED 2 ACQUISITIONS IN MAY 2019
TRANSFORMEDCommunications and Advisory now accounts for >64% of operating profits of Ashfield
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Development of Ashfield
Data/Analytics
Digital
Face to Face
Payor
Patient
HCP
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Ashfield Communications – Overview & Strategy
What we doScientific and brand creative communications, digital and patient-centredcontent, specialised agencies in behavioural science, rare disease, PR and on-demand advertising services.
Where we do itOffices in New York, New Jersey, Raleigh, Manchester, London, Boston and Brighton.
Strategy & Differentiation
Key focus to increase collaboration between agencies
Strategy to continue to expand into aligned adjacencies to core scientific communication capabilities
Global network of business and talent driven by a ‘science first’ perspective
Supplemented by strong creative communications, digital, data and analytics expertise
Our peopleWe have 1,200 people, including 400 with a PhD or equivalent
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Ashfield Advisory - Overview & Strategy
Healthcare consulting focused on brand strategy, planning and launch
120 + peoplebased in Philadelphia,
Boston and London
Acquired in 2017
Strategy: Cross-selling, international expansion, and client and service expansion
Acquired in 2018
Strategic commercial, consulting and analytics business
140 + peoplebased in New York, India
and London
Q – do we need another STEM X slide beyond this
200+ peopleoffering audit services
across 51 countries
Acquired in 2016
Accelerating excellence in brand strategy execution
120 + peoplebased in Boston and San
Francisco
Acquired in 2019
Strategic management healthcare consultancy
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Acquisition in Ashfield Advisory
US Based
Offices in Boston and San Francisco
Founded in 1988Strategic management
healthcare consultancy with capabilities in:
• New Product Strategy
• Pricing, Reimbursement & Market Access
• Portfolio Development
120+People
Deal structureInitial consideration of $60m rising to $88.6m in total over a 5-year
earn out
2018 Adjusted Operating Profit of approximately $8m
Acquired in May 2019Significantly expands
Ashfield’s pricing, reimbursement and
market access capabilities and adds further scale to
commercialisation strategy and portfolio support
services$88.6m
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Acquisition in Ashfield Healthcare Communications
UK Based
Offices in London and Brussels
Founded in 2013Healthcare policy and
communications agency with capabilities in:
• Market Access Strategy and Policy Development
• Public Affairs
• Payer Engagement
36People
Deal structureInitial consideration of
$10.4m rising to $17.7m in total over a 3 year
earn-out
Acquired in May 2019Continues to broaden
Ashfield Communications’ service offering and
capabilities specifically in healthcare policy and
market access communications
$17.7m
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Ashfield Commercial and Clinical - Overview & Strategy
Ashfield continues to invest to expand and differentiate its offering.
Recent activity includes:
50%
50%
of operating profit generated from commercial/CSO related activities
of operating profit from clinical, patient support, medical information, pharmacovigilance, meetings and events and market access services
Where we do itAshfield Commercial and Clinical provides services
across
22 countries
5,500 people
50/50
Divisional Review:Sharp
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Sharp Overview
*Adjusted for amortisation of acquired intangible assets, transaction costs, and exceptional items
25.9
34.038.2
41.345.8
FY14 FY15 FY16 FY17 FY18
31% Operating profit* ($m)
Sharp US
Sharp EU
Sharp Clinical
A global leader in contract packaging and clinical trial supply services
1,600+Employees
Operations in 4 COUNTRIES
Belgium, Netherlands USA, UK
9 GMP & FDAApproved facilities
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Sharp H1 FY19 Strategic Overview
• Clinical UK moves to Rhymney facility andreceives MHRA approval
• Clinical US completes move to Bethlehem facility
Clinical Facility Investments Commercial Packaging
• Biotech demand continues to drive capacity expansion plans in the US with the continueddevelopment of Sharp’s US biotech Centre of Excellence
H1 FY19 Summary
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45.6
18.9
47.2
21.1
Ashfield Sharp
+6% CC ↗
+12% CC ↗
H1 FY19 Divisional Financial Overview (IAS18)
^ Throughout this presentation, references to underlying growth are financial metrics adjusted for the impact of currency translation movements and any acquisition or disposal activity.
* Net operating margin adjusts for pass-through revenues upon which no margin is earned
• Underlying ̂net revenue increased by +1%
• Underlying ̂operating profit flat (including the impact of STEM aXcellerate investments)
• Net operating margins increased to 12.4%
● H1 FY18 ● H1 FY19
• Underlying ̂net revenue increased by +20%
• Underlying ̂operating profit growth of +12%
• Net operating margin declined to 12.5% (driven by Sharp Europe, Sharp US margins increased)
OPERATING PROFIT ($M)
NET OPERATING MARGIN*
12.3% 12.4% 13.3% 12.5%
UNDERLYING^ NET REVENUE GROWTH RATE+1% +20%
UNDERLYING^ OPERATING PROFIT GROWTH RATE0% +12%
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H1 FY19 Summary
Increased Free Cash Flow
conversion rate of 77%
Net debt of $57 million at half-year
end (0.33x) providing significant capacity for continued M&A
EPS growth of 5% (7% constant
currency)
5% increase in interim dividend
to 4.46c per share
Acquisitions of Putnam
Associates and Incisive Health for a combined consideration of
up to $106m
FY19 guidance increased to 5-7% EPS growth (on a constant currency
basis)
UDG Healthcare Summary
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Acquisitions ($850m+) & Disposals ($625m+) since 2012Do you have this logo?
Bethlehem site
Acquisitions 2012 2013 2014 2016 2017 2018
DisposedDisposed Disposed
2019
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Growth underpinned by long term structural trends
Industry: Positive Market Dynamics
Global pharmamarket growth:
Forecasted global market growth of
4-5% p.a. to 2023*
Volume of medicines: Expected to reach 4.5 trillion
doses by 2021 (+13%)^
Growth in FDA drug approvals: 59
novel drug approvals in 2018
(47 in 2017)^
By 2023, 50% of global spending
expected to be on specialty
medicines*
Growing trend towards healthcare
outsourcing to larger, more global
partners
*The Global Use of Medicine in 2019 and Outlook to 2023, Forecasts and Areas to Watch, QuintilesIMS Institute, January 2019.^ Outlook for Global Medicines through 2021, Balancing Cost and Value, QuintilesIMS Institute, December 2016.
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Medium Term Outlook
FY19 Guidance & Outlook
*Constant currency adjusted diluted earnings per share, before the amortisation of acquired intangible assets, transaction costs and exceptional items
Ashfield medium term underlying operating profit growth: 5-10%
Sharp medium term underlying operating profit growth: >10%
Medium term Free Cash Flow conversion
rate: 60-65%
Capex: $50m per annum (Inc. $35m
maintenance capex)
FY19 Guidance
EPS* Growth of 5-7%
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1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Historic dividends translated from € to $
16.0
Progressive Dividend Policy 30 year+ history of consistent dividend growth ($ cent)