EX-99.2 3 ex992.htm CJS PRESENTATION SLIDES ex992.htm
Donald E. Morel, Jr., Ph.D.
Chairman and Chief Executive Officer
William J. Federici
Vice President and Chief Financial Officer
Investor Relations Contact:
Michael A. Anderson
Vice President and Treasurer
mike.anderson@westpharma.com
CJS 9th Annual “New Ideas” Investor Conference
January 7, 2009 New York City
NYSE: WST
westpharma.com
All trademarks and registered trademarks are the property of West Pharmaceutical Services, Inc., unless noted otherwise.
 
 

 
Certain statements in the following slides and certain statements that may be made by management of the Company orally during this presentation
contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are based on management’s plans and assumptions. Such statements give our current expectations or
forecasts of future events; they do not relate strictly to historical or current facts. We have tried, wherever possible, to identify such statements by using
words such as “estimate,” “expect,” “intend,” “believe,” “plan,” “anticipate” and other words and terms of similar meaning in connection with any
discussion of future operating or financial performance or condition.
We cannot guarantee that any forward-looking statement will be realized. If known or unknown risks or uncertainties materialize, or if underlying
assumptions are inaccurate, actual results could differ materially from past results and those expressed or implied in any forward-looking statement.
You should bear this in mind as you consider forward-looking statements. We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise.
Important factors that may affect future results include, but are not limited to, the following: Revenue and profitability: ales demand and our ability to
meet that demand; competition from other providers in the Company’s businesses, including customers’ in-house operations, and from lower-cost
producers in emerging markets, which can impact unit volume, price and profitability; customers’ changing inventory requirements and manufacturing
plans that alter existing orders or ordering patterns for the products we supply to them; the timing, regulatory approval and commercial success of
customer products that incorporate our products, including the availability and scope of relevant public and private health insurance reimbursement for
prescription products, medical devices and components and medical procedures in which our customers’ products are employed or consumed;
average profitability, or mix, of products sold in any reporting period; maintaining or improving production efficiencies and overhead absorption; the
timeliness and effectiveness of capital investments, particularly capacity expansions, including the effects of delays and cost increases associated with
construction, availability and cost of capital goods, and necessary internal, governmental and customer approvals of planned and completed projects,
and the demand for goods to be produced in new facilities ; dependence on third-party suppliers and partners, some of which are single-source
suppliers of critical materials and products, including our Japanese partner and affiliate Daikyo Seiko, Ltd.; the availability and cost of skilled employees
required to meet increased production, managerial, research and other needs of the Company, including professional employees and persons employed
under collective bargaining agreements; interruptions or weaknesses in our supply chain, which could cause delivery delays or restrict the availability
of raw materials and key bought-in components and finished products; raw-material price escalation, particularly petroleum-based raw materials, and
our ability to pass raw-material cost increases on to customers through price increases; and, claims associated with product quality, including product
liability, and the related costs of defending and obtaining insurance indemnifying the Company for the cost of such claims; the cost and progress of
development, regulatory approval and marketing of new products as a result of the Company’s research and development efforts; the defense of self-
developed or in-licensed intellectual property, including patents, trade and service marks and trade secrets; dependence of normal business operations
on information and communication systems and technologies provided, installed or operated by third parties, including costs and risks associated with
planned upgrades to existing business systems; the effects of a prolonged U.S. and global economic downturn or recession; the relative strength of the
U.S. dollar in relation to other currencies, particularly the Euro, British Pound, and Japanese Yen; changes in tax law or loss of beneficial tax incentives;
the conclusion of unresolved tax positions inconsistent with currently expected outcomes; the timely execution and realization of savings anticipated by
the restructuring plan for certain operations and functions of The Tech Group, announced in December 2007; significant losses on investments of
pension plan assets relative to expected returns on those assets, will, if sustained through year-end, result in significantly higher pension expense in
2009 and increase the Company’s pension funding obligations; and, other risks and uncertainties detailed in West’s filings with the Securities and
Exchange Commission, including our annual report on Form 10-K for the year 2007 and our periodic reports on Form 10-Q and Form 8-K. You should
evaluate any statement in light of these important.
Forward Looking Statements
 
 

 
Who We Are
 Founded in 1923
 Global Headquarters near
 Philadelphia
 Market capitalization $1.2 billion
 World’s premier manufacturer
 of components and systems
 for injectable drug delivery
  Closure systems and prefillable
 syringe components
  Components for disposable systems
  Devices and device sub-assemblies
  Safety and administration systems
 
 

 
 Stability/efficacy/shelf life
 Safety; “Quality by Design”
 Time to market
 Component selection
 Ease of use
 Safety (needles and
 exposure)
 Convenience/Compliance
 Needle safety
 Ease of use
 Compliance
 Convenience
DRUG PACKAGING
DRUG PREPARATION
DRUG ADMINISTRATION
Production
Patient
West’s products and innovations address these needs
What We Do
 
 

 
Diverse, Stable Customer Base
 
 

 
Sales and Income from Continuing Operations
($ in millions)
 
 

 
South America
5%
North
America
49%
Europe
42%
Asia/Pacific
4%
 
 

 
Exubera is a registered trademark of Pfizer, Inc.
2008 Overview
 A challenging year
  Exubera, ESA packaging, diagnostic
 component lost sales impact
  Commodity, currency market instability
  Global economic downturn
 Strong growth in core component sales
 Tech restructuring completed
 China plant construction underway
 Expansion programs on schedule/budget
 
 

 
Source: Datamonitor
Oncology & Hematology
 Auto-Immune
 (RA, MS, AIID)
Diabetes/Insulin
Vaccines
Market Dynamics Support Future Growth
 Increasing number of patients
 with chronic illnesses
 Many of these are treated with
 biologic drugs
 Biologic drugs demand ultra-
 clean delivery systems
 Point of Care Shift: Hospital to
 Specialty Clinic to Home
 Safe, accurate dosing needs
 are pushing the market toward
 integrating the container/
 closure system into the delivery
 system
 
 

 
West’s Competitive Advantage
  Global manufacturing footprint
  Unmatched experience/expertise: drug - material interface
  Global regulatory and technical support
  Protected IP: Proprietary materials and technology
  Regulatory barrier to entry: US NDA and ANDA filing must
 include reference to all packaging/components in contact
 with the drug
 1.  West Drug Master File (DMF) 1546 is confidential
 2.  West DMF includes functionality data (multi-year studies)
 3.  All primary package changes require new stability/functionality
 studies for new filing
  Engineering expertise in high-volume manufacturing, assembly,
 and vision inspection
 
 

 
Drug Packaging
(How it is contained)
Primary Container Solutions
Prefillable Syringe Systems
Drug Delivery
(How it gets into the patient)
Administration Systems
Advanced Injection Systems
Development
Primary Package
Administration
Our Growth Opportunities
 
 

 
Corporate Growth Strategy
 Pharmaceutical Systems Segment
  Develop differentiated, value added products to
 generate organic growth
  New product innovation
  Lean manufacturing
  Strategic acquisitions
  Geographic expansion
 
 
 

 
West FluroTec®
Components
Seal - Stopper - Vial
Daikyo Crystal Zenith® Vials
Estimated Market Size - $1.5 billion
CAGR - 4%
Source: Company estimate for vial systems only
West Spectra™ Seals
Crystal Zenith is a registered trademark of Daikyo Seiko, Ltd.
FluroTec and Crystal Zenith technologies are licensed from Daikyo Seiko, Ltd.
Primary Packaging
 
 

 
Uncoated 4432/50 V35
$50
$200
4432/50 S2 FluroTec®
Westar RS
$250
4432/50 S2 FluroTec®
Westar RS B2-40 Port Bag
$300
4432/50 S2 FluroTec®
Westar® RS B2-40
(1000 packs)
$465
4432/50 Sterile S2 W
(RU) Ready Pack

(1000 packs)
$2,900
RU Ready Pack System
(small volume sourcing only)
$3,500
$360
Building Value in the Injectable Container Business
 
 

 
Corporate Growth Strategy
 Pharmaceutical Systems Segment
  Market segmentation to generate organic growth
  New product innovation
  Lean manufacturing
  Strategic acquisitions
  Geographic expansion
  China Plastics
  India Rubber site selection
 
 
 

 
Overview Plastic and Rubber plant
 
 

 
Plastic Plant - Construction activities
 
 

 
 India represents a significant growth opportunity
 Two regions being evaluated:
   Ahmedabad
    Hyderabad
 Broad generic infrastructure
  Rapidly growing R&D
  Strong biologics focus
 
 

 
Corporate Growth Strategy
 Tech Group Segment
  Build market share in multi-component
 systems for drug administration
  Expand proprietary product portfolio
 through innovation and strategic
 technology acquisitions
 
 

 
Vial2Bag™
Mix2Vial®
MixJect®
Total Market - $1.5 billion
CAGR - 11%
Source: Greystone Associates and Company estimate
Project Orion

Safety and Administration Systems
 
 

 
Critical Stability Issues for Biotechnology Drugs
 Aggregation
  Silicone, Tungsten, Glue, Mfg. Processing
 Adsorption - vials and syringes
  Impacts potency of large molecules
 Immunogenicity/Neurogenicity
 Polysorbate 20 and 80
  Detergents used for mitigating aggregation
  Highly unpredictable
  Too much creates aggregation
  Potential for peroxide creation
 
 

 
FluroTec® Plungers
Needle Shields, Tip Caps
Daikyo Crystal Zenith®
1mL LL Prefillable Syringe
Daikyo Crystal Zenith®
Inserted Needle Syringe
Estimated Market Size - $900 million
CAGR - 8%
Source: Company estimates
Crystal Zenith is a registered trademark of Daikyo Seiko, Ltd.
FluroTec and Crystal Zenith technologies are licensed from Daikyo Seiko, Ltd.

Prefillable Syringe Systems
 
 

 
Higher extent of aggregation in
Glass compared to CZ
Day 0
Glass
CZ
0.00
0.05
0.10
0.15
0.20
0.25
O.D. 350
Glass
CZ
Recombinant Fusion Protein
 
 

 
Higher extent of aggregation in Glass compared to CZ
Daikyo Crystal Zenith®
Glass
Model antibody
 
 

 
Filling Trials Underway
Numerous customers are evaluating
Daikyo Crystal Zenith as both a
primary container and a prefilled
syringe in a broad range of trials
 
 

 
West Advanced
Injection System
Platform 2
Staked Needle Prefillable Syringe
Plunger
Primary Drug
Container
Lined
Seal
Platform 3
1mL Flanged Cartridge
Estimated Market Size - $210 million
CAGR - 8%
Source: Greystone Associates and Company estimates

Advanced Injection Systems
 
 

 
Management Operating Priorities 2009
 Generate organic growth
 Improve operating margin
 Continue investing for the future
  Innovation programs
  New product launches
  Geographic expansion: China, India
  Capacity Expansion: Europe, North America
  Information systems
  Selective technology/product acquisitions
 Maximize operating cash flow - tightly manage CapEx
 Maintain a strong balance sheet
 
 

 
* 2008 diluted EPS from continuing operations excludes an $0.11 per share net gain on a contract settlement related to a
discontinued product line, a $0.05 per share impact of Tech restructuring charges and $0.09 per share of discrete tax
benefits.
2007 diluted EPS from continuing operations excludes $0.18 of discrete tax benefits and an $0.18 unfavorable impact for
Brazilian social security, excise and other tax compliance issues.
 Nine months ended September 30,
 2008
 2007
Net Sales
 $806.3
 $764.0
Gross Margin
28.9%
29.0%
Research and Development
14.8
11.5
SG&A
122.5
112.8
Income from Continuing Ops
68.3
65.2
Diluted EPS from Continuing Ops
$1.98
$1.86
Diluted EPS from Continuing Ops (Non-GAAP) *
$1.83
$1.86
September Results
($ in millions, except per share data)
 
 

 
($ millions, except %)
9/30/08
12/31/07
Total Debt
$ 382.5
$ 395.1
Total Capitalization
 920.5
886.0
 Debt to Total Invested Capital
41.6%
44.6%
Cash
$ 102.5
$ 108.4
 Net Debt to Total Invested Capital
34.2%
36.9%
     
 Year-To-Date Capital Spending
 $ 88.2
$ 129.4
Capital Management
 
 

 
Summary
  Fundamental business drivers remain unchanged
  Long term growth opportunities intact
  Solid balance sheet
  Seasoned, experienced management team
  Incentives closely tied to growth in shareholder value
  Year end call Thursday February 19 9:00AM
 
 

 
Donald E. Morel, Jr., Ph.D.
Chairman and Chief Executive Officer
William J. Federici
Vice President and Chief Financial Officer
Investor Relations Contact:
Michael A. Anderson
Vice President and Treasurer
mike.anderson@westpharma.com
CJS 9th Annual “New Ideas” Investor Conference
January 7, 2009 New York City
NYSE: WST
westpharma.com
All trademarks and registered trademarks are the property of West Pharmaceutical Services, Inc., unless noted otherwise.