How “fit” is your capital allocation strategy? презентация

Today’s speakers

Business pressures increased the importance of getting the capital agenda right

Activist investors shake up the status quo – are biopharma companies prepared?

Activists target larger biopharmas over time

The drivers of biopharma value

1. Operational performance

Revenue growth: big pharma underperforms relative to biotech, specialty pharma peers Big pharma: growth expected to revive in 2016 Specialty pharma/generics: growth via M&A Biotech: growth hard to maintain organically

Operating margins: big pharma rebounds but still lags biotech

Total shareholder return as a performance measure: bottom tier at greater risk of activism

2. The R&D cycle

Biopharma pipeline renaissance: analysts project ~ 25% increase in approvals

3. Capital structure

Big pharmas return cash to shareholders; biotechs, specialty pharmas focus on M&A

Working capital key to development of more cost-effective, less risky business models Big pharma companies have as much as US$50billion in excess working capital (WC) Big pharma’s 2014 WC performance stronger than in 2007, but … … WC varies widely overall along the metrics we track (e.g., DSO, DIO, DPO and C2C) Individual opportunities for improvement, especially by adopting practices of leading WC performers in other industries

4. Business portfolio and M&A

Robust M&A market continues in 2015 with strong prospects for second half

As companies focus on core priorities, more emphasis on divestitures

Creating long-term value

At each stage of the life cycle, new opportunities and challenges

Value creation comes from holistic deployment of capital agenda

Summary: Build these 5 steps into strategic planning initiatives

Additional information