EX-99.1 2 a06-5010_1ex99d1.htm EXHIBIT 99

Exhibit 99.1

 

 

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[LOGO]

 

Corporate Overview

 

Donald E. Morel, Jr., Ph.D.

Chairman and Chief Executive Officer

 

UBS Global Healthcare Conference

February 14, 2006

NYSE: WST

www.westpharma.com

 



Safe Harbor Statement

 

Certain statements contained in this presentation and certain statements that may be made by management of the Company orally during this presentation may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historic or current facts. They use 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. In particular, these include statements concerning future actions, future performance or results of current and anticipated products, sales efforts, expenses, the outcome of contingencies such as legal proceedings and financial results.  Because actual results are affected by risks and uncertainties, the Company cautions investors that actual results may differ materially from those expressed or implied in any forward-looking statement.

 

It is not possible to predict or identify all such risks and uncertainties, but factors that could cause the actual results to differ materially from expected and historical results include, but are not limited to: sales demand; the timing and commercial success of customers’ products incorporating the Company’s products and services, including specifically, the Nektar inhaled insulin product; changes in medical and pharmaceutical technologies that alter the demand for injectable drug products; the Company’s ability to pass recent raw material cost increases on to customers through price increases; regulatory changes affecting the marketing, use or competitiveness of Company and customer products, the use and availability of raw materials used in the Company’s products, or the operation of the Company’s facilities; maintaining or improving production efficiencies and overhead absorption; competition from other providers; the Company’s ability to develop and market value-added products; the successful integration of acquired businesses; the average profitability, or mix, of products sold in a reporting period; financial performance of unconsolidated affiliates; the potential impact of the Medicare Prescription Drug, Improvement and Modernization Act of 2003; strength of the US dollar in relation to other currencies, particularly the Euro, UK pound, Danish Krone, Japanese Yen and Singapore Dollar; inflation; US and international interest rates and the availability of debt financing; returns on pension assets in relation to the expected returns employed in preparing the Company’s financial statements; raw material price escalation, particularly petroleum-based raw materials and energy costs; disruption in the supply of raw materials, particularly petroleum based raw materials, the production of which has been affected by recent hurricane damage in the US Gulf Coast region; exposure to product quality and safety claims; availability and pricing of materials that may be affected by vendor concerns with exposure to product-related liability.

 

The Company assumes no obligation to update forward-looking statements as circumstances change. Investors are advised, however, to consult any further disclosures the Company makes on related subjects in the Company’s 10-K, 10-Q and 8-K reports.

 



Who are we?

 

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Each and every day millions of West products are used to enhance healthcare around the world.

 



Corporate Profile

 

[GRAPHIC]

 

                  World’s premier manufacturer of components and systems for injectable drug delivery

 

                  Stoppers and seals for vials

 

                  Disposable components used in syringe, IV, blood collection and diagnostic systems

 

                  Founded in 1923

 

                  HQ in Lionville, PA

 

                  2005 (E) sales $700M

 

                  Market capitalization approx $950M

 



Global Presence

 

[GRAPHIC]

 

5,100 employees worldwide

 



Diverse Customer Base

 

Company Estimated Market Share: 70% in Pharma; 70% in Device; 95% in Biotech

 

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Key Company Developments

 

FY 2001

                  Sale of Contract Manufacturing Operations

 

FY 2002

                  New management team

                  Restructuring and increased CAPEX

                  Sale of OTC Research Services Group

 

FY 2003

                  Kinston explosion

 

FY 2004

                  Kinston restart

                  2-for-1 stock split

                  Divestiture of Drug Delivery

 

FY 2005

                  Acquisition of Monarch Laboratories

                  Acquisition of The Tech Group

                  Acquisition of Medimop

                  Sale of GFI Clinical Unit

 



Strong Sales Growth
2002-2005

 

[CHART]

 



Business Segments

FY05E Net sales: Approx. $700 MM

 

[CHART]

 



Geographic Sales Mix
(2005, based on point of sale)

 

[CHART]

 



Pharmaceutical Systems Profile

 

 

 

Market Size*/

 

 

 

 

 

 

 

 

 

Long-Term

 

 

 

Our Growth

 

Gross Margin

 

 

 

Growth Rate

 

Our Share

 

(2005-2007)

 

Range

 

Pharma Systems

 

$1 to $1.5 billion.
Growing 2-5%

 

Market Leader

 

6-8%

 

25-50+%

 

 

 

 

 

 

 

 

 

 

 

Disposable Medical Device Components

 

$150 million,
Growing 0-2%

 

Market Leader

 

0-2%

 

10-20%

 

 

 

 

 

 

 

 

 

 

 

Lab and Other Services

 

Not determined

 

Small

 

8-12%

 

10-50%

 

 


* Company estimates

 



Corporate Growth Strategy
Core Injectable Business

 

                  Maximize the value of West’s core business (Company estimated market:  $1.1 BN)

                  Market segmentation

                  New product innovation

                  Lean manufacturing

                  Geographic expansion

                  Strategic acquisitions

 



Growth Drivers

 

                  Global demographics

 

                  Diabetes

 



Diabetes

 

[GRAPHIC]

 

 

 

 

 

Components for

 

 

Traditional System

 

 

Applications

 

 

 

 

 

 

[GRAPHIC]

 

 

 

 

 

Components

 

 

for Pen System Applications

 

 

 

 

 

 

[GRAPHIC]

 

 

 

 

 

Entire Systems

 



Growth Drivers

 

                  Global demographics

                  Diabetes

 

                  Growth in biotechnology drugs

                  Oncology

                  Reconstitution Systems

                  Medimop Medical Projects Ltd

 



 

Biotechnology/Oncology

 

Closures and Components for
Traditional and Prefilled Systems

 

Closures and Components for
Biotechnology and Oncology Systems

 

 

 

[GRAPHIC]

 

[GRAPHIC]

 

 

 

Seals

 

FluroTec ® and Barrier Coatings

 

 

 

[GRAPHIC]

 

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Flip-Off ® Buttons

 

Westar® Processing

 

 

 

[GRAPHIC]

 

 

 

 

 

Stoppers

 

 

 

 

 

[GRAPHIC]

 

 

 

 

 

Syringe plungers, needle shields

 

 

 



Reconstitution Aides

 

[GRAPHIC]

 



Rationale for Medimop Acquisition

 

                  Market leader in reconstitution, transfer, mixing and administration systems for injectable drugs, including needleless systems

                  Excellent engineering and technical reputation with customer base

                  Strong proprietary technology position

                  Focuses on design, development and innovation

                  Leverages West’s market, regulatory and manufacturing expertise  (Tech)

                  Strong strategic fit with West’s core injectable business

 



Medimop Product Portfolio

 

Vial Adapters

 

Needleless Drug Transfer and Mixing

 

 

 

[GRAPHIC]

 

[GRAPHIC]

 



Growth Drivers

 

                  Global demographics

                  Diabetes

 

                  Growth in biotechnology drugs

                  Oncology

 

                  Anti-counterfeiting needs

 



Growth Opportunities

Closures with built-in product tracking, authentication and anti-counterfeiting features

 

[GRAPHIC]

 



West’s Competitive Edge

 

                  Unmatched experience/expertise: drug material interface

 

                  Ability to source components from multiple locations

 

                  Protected IP: West’s components and systems

 

                  Regulatory barrier to entry:  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

 



Corporate Growth Strategy

Device Business

 

                  Build market share in multi-component systems for drug delivery

(Company estimated market:  $4.5 BN)

 

                  Leverage customer base

                  Develop a portfolio of proprietary systems for injectable, transmucosal, and pulmonary delivery

                  Pursue selected consumer opportunities

                  License or acquire innovative technologies

 

                  Pursue strategic acquisitions

                  The Tech Group

 



Rationale for Tech Acquisition

 

                  West has:

                  Unmatched experience/expertise: drug material interface

                  Ability to source components from multiple locations

                  Anticipated 3-5 year modest core business unit growth

                  Consumer business that The Tech Group seeks

 

                  The Tech Group has:

                  Potential to broaden West’s customer base by open new market segments

                  Credibility in the pharma device segment

                  Critical European presence

                  Medical device business that West seeks

 



Tech Complements West

 

[CHART]

 

[CHART]

 

 

 

The Tech Group

 

West Device Group

FY04 Sales: $74.2 MM

 

FY04 Sales: $65.0 MM

 



Tech Customer Base

 

Pharmaceutical

 

Consumer

 

 

 

[LOGO]

 

[LOGO]

 

 

 

Device

 

 

 

 

 

[LOGO]

 

 

 



Tech Group Profile

 

 

 

Market Size*/

 

 

 

 

 

 

 

 

 

Long-Term

 

 

 

Our Growth

 

Gross Margin

 

 

 

Growth Rate

 

Our Share

 

(2005-2007)

 

Range

 

Healthcare

 

$4.5 billion.

 

Fragmented

 

 

 

 

 

Devices

 

Growing 5-7%

 

market

 

8-12%

 

18-35%

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

> $20 billion,

 

Fragmented

 

 

 

 

 

Products

 

Growing 4-6%

 

market

 

4-6%

 

8-20%

 

 

 

 

 

 

 

 

 

 

 

Engineering

 

 

 

 

 

 

 

 

 

/Tooling sales

 

Not determined

 

Small

 

8-12%

 

0-10%

 

 


* Company estimates

 



Growth Drivers

 

                  Organic growth

 

                  New product launches

 

                  Insulin delivery systems

 



Tech Product Portfolio

 

Health Care

 

Consumer

 

 

 

[GRAPHIC]

 

[GRAPHIC]

 



Exubera® Inhaled Insulin

 

                  Joint development with Pfizer & Nektar

                  Class III medical device part of NDA

                  Recent events

                  Received EMEA and FDA approval for marketing

                  Initial launch targeted for mid year

 

                  Key questions are:

                  Market acceptance – doctors and patients

                  Patient acceptance may expand market

                  Increased patient compliance – targeted for non compliant diabetic population

 

[GRAPHIC]

 



 

2006 – Where We Stand

 

                  Key elements of the “Sustainable Growth” strategy are now in place:

 

                  West’s core pharmaceutical systems business is an established global franchise

 

                  Tech Group adds new customers, products and capabilities in the key device segment

 

                  Medimop adds new technologies and products in the key biotechnology and oncology markets

 



Operating Priorities

 

                  Execute business plan and strategy

 

                  Retain focus on growth of core injectable business

 

                  Capitalize on Tech and Medimop programs and opportunities

 

                  Institutionalize “lean thinking”

 

                  Assess expansion opportunities

 

                  China – India – Brazil – Russia/Eastern Europe

 

                  Continue to innovate, develop and acquire technologies

 

                  Adaptable” integration (e.g. TagSys – RFID)

 

                  Product line expansion (e.g. Tech, Medimop)

 

                  Next-generation systems (e.g. Silicone Free CZ PFS)

 



[LOGO]

 

Investment Considerations

 



Investment Highlights

 

                  Well positioned for continued revenue growth

 

                  World’s premier manufacturer of standard-setting components and systems for injectable drug delivery

 

                  Value-added products, technologies and services that serve current and future market needs

 

                  Substantial market share in key segments

 

                  High regulatory and capital barriers to entry

 

                  Strong, diversified customer base

 

                  Favorable market drivers

 

                  Strong balance sheet and cash flows

 

                  Management incentives tightly aligned with corporate performance

 

                  Very strong corporate governance

 



Nine-month 2005 Results Nine

 

 

 

2004

 

 

 

2005

 

 

 

($ millions,

 

Pharm

 

Tech

 

 

 

Pharm

 

Tech

 

Consolidated

 

except EPS)

 

Systems

 

Group

 

Consolidated

 

Systems

 

Group (1)

 

(1)

 

Net Sales

 

$

357

 

$

43

 

$

400

 

$

402

 

$

102

 

$

504

 

growth

 

 

 

 

 

 

 

12.6

%

7

%

11.5

%

Gross Profit

 

111

 

7

 

118

 

126

 

15

 

141

 

% sales

 

31.0

%

16.3

%

29.5

%

31.3

%

14.7

%

27.9

%

Operating Profit

 

60

 

3

 

39

 

72

 

6

 

53

 

% sales

 

16.9

%

6.9

%

9.9

%

17.9

%

5.9

%

10.6

%

Income from continuing Ops

 

 

 

 

 

26

 

 

 

 

 

32

 

EPS–contg Ops

 

 

 

 

 

$

.86

 

 

 

 

 

$

1.00

 

 


Note(1) – Includes Tech acquired business from May 2005 of $56mm. Nine month 2005 sales grew by 7% over 2004 levels excluding the Tech acquired business. The Tech acquired business grew 39% for nine months 2005 over its prior year nine month sales. Consolidated nine month sales, excluding acquisitions increased 11.5% over prior year nine month sales.

 



 

Guidance Update

Given January 12, 2006

 

                  2005 revenue estimated at $700 million

 

                  EPS from continuing operations: $1.35 - $1.38

                  Annual: $1.35 to $1.38

                  Fourth quarter: $0.35 - $0.38

                  Estimates exclude fourth quarter tax charge on repatriated foreign earnings of $0.06 - $0.08

 

                  Expect 2006 revenues of $810 - $830 million

 

                  Earnings release, analyst call on February 21, 2006 will address:

                  Details of 2005 results

                  Further guidance for 2006

 



 

Financial Objectives

 

              Reduce debt to total cap ratio, exclusive of any new acquisition-related debt

 

              Selectively invest in innovative new products and technologies, and new geographies

 

              Grow sales 6-8% before the effects of currency and acquisitions

 

              Improve margins by using Lean to eliminate waste and control discretionary spending

 

•           Create returns on invested capital in excess of our Cost of Capital

 

              Deliver on Guidance

 



 

Management Performance Metrics

 

                  Short term (Annual)

                  Corporate – EPS, cash flow

                  Operations – net sales, operating profit, cash flow

 

                  Long term

                  50% restricted stock, 50% options

                  Compounded annual growth rate (CAGR)

                  Return on invested capital (ROIC)

 

                  Stock ownership guidelines for all executive officers

 



 

Summary

 

                  Core business – established, profitable, global

                  Regulatory and capital barriers to entry

                  Strong, diversified customer base

                  West’s product development cycle mirrors new drug development timeline

                  Value-added products, technologies and services that enhance growth potential

 

                  Recent acquisitions further enhance growth potential, leverage manufacturing and industry expertise

 

                  Market drivers favor continued growth

 

                  Strong balance sheet

 

                  Management incentives strongly tied to creation of shareholder value

 

                  Strong corporate governance

 



 

[LOGO]

 

Corporate Overview

 

Donald E. Morel, Jr., Ph.D.

Chairman and Chief Executive Officer

 

UBS Global Healthcare Conference

February 14, 2006

NYSE: WST

www.westpharma.com