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1

What I Learned in Business School:


Marketing:

How to Make Better Beer Commercials

Statistics:

Why I Dont Play the Lottery, and


Math is Hard

Finance:

Money is Good

Accounting:

Count Your Money

Tax:

Hide Your Money

Org. Psych:

Two Ways to Motivate:

Corp. Strategy:

Porters Five Forces, and

Carrot and Stick

Agenda
Company Overview
Differentiating characteristics of Med Device Industry
Company strategy
Irelands attractiveness
Operational Excellence at Boston Scientific
Strategy Execution
Management Systems
Talent

Sustaining
3

Company Background
4

Quality Policy

Focus on the Customer . . .


And that is where it will always begin and end

Plant Network
In-Network Manufacturing Plants: 12
Acquired Plants: 5
Tier 1 DCs: 2
Ireland

Arden Hills
Rythmia
Bridgepoint
(Plymouth)

Quincy

Kerkrade
Cork

Spencer

Maple Grove/
Plymouth

Galway
Clonmel

Heredia,
Cost Rica
Coyol,
Cost Rica
San Jose
Valencia
Fremont
Sunnyvale (Asthmatx)
San Clemente (Cameron)
Los Gatos (Sadra)

Dorado,
Puerto Rico

Mission

Boston Scientific is dedicated to


transforming lives through innovative
medical solutions that improve the
health of patients around the world.

We are pushing the


boundaries of todays
innovations that lead
to tomorrows
medical solutions

Science calls out


our heritage of
discovery, which
drives our passion
for transforming
lives

We are committed
to helping patients
live healthier,
longer lives

Core Businesses
Interventional Cardiology
technologies for diagnosing and
treating coronary artery disease
and other cardiovascular
disorders.

Cardiac Rhythm
Management
solutions for treating irregular
heart rhythms and heart
failure, and protecting against
sudden cardiac arrest.

Neuromodulation microelectronic
implantable technologies for managing
chronic neuropathic pain and neurological
diseases.

Electrophysiology technologies,
such as mapping catheters and
radiofrequency energy for
diagnosing and treating heart
rhythm disorders.

Urology and Womens Health


solutions for treating urological
and gynecological disorders like
kidney and bladder stones,
stress urinary incontinence,
pelvic organ prolapse and
excessive uterine bleeding.

Endoscopy technologies for


diagnosing and treating
diseases of the digestive
system, airway and lungs.
Peripheral Intervention solutions
for treating vascular system
blockages in areas such as the
carotid and renal arteries and the
lower extremities.

2012 Performance
Worldwide Sales by
Geographic Segment ($M)
52%
21%
13%
12%
2%

United States

$3,756

EMEA

$1,568

Japan

$931

Inter-Continental

$872

Divested Businesses

$122

Worldwide Sales by Product Category ($M)


Interventional Cardiology

$2,179

Cardiac Rhythm Management

$1,908

Endoscopy

$1,252

Peripheral Interventions

$774

Urology/Womens Health

$500

Neuromodulation

$367

Electrophysiology

$147

Divested Businesses

$122

30%
26%
17%
11%
7%
5%
2%
2%

Note: The Neurovascular businesses was divested as of 1/3/2011.


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Corporate Information - At a Glance


Boston Scientific (NYSE: BSX) transforms lives through
innovative medical solutions that improve the health of patients
around the world. As a global medical technology leader for
more than 30 years, we advance science for life by providing a
broad range of high performance solutions that address unmet
patient needs and reduce the cost of healthcare. For more
information, visit us at www.bostonscientific.com.

Locations
Global corporate HQ: Natick, Massachusetts
Regional HQs: Singapore and Paris, France
Major technology centers: Minnesota, California,
Ireland, Costa Rica
12 manufacturing facilities worldwide
Web site: www.bostonscientific.com

Select Senior Leadership*


President & Chief Executive Officer: Mike Mahoney
Chief Financial Officer: Jeff Capello
Chief Administrative Officer, General Counsel &
Secretary: Tim Pratt
Chief Compliance Officer: Jean Lance
President, Europe, the Middle East and Africa:
Michael Onuscheck
President, Asia-Pacific: Supratim Bose

Important numbers at a glance

1 of the worlds largest medical device companies


15,000+ patents issued; ~7,300 applications pending worldwide
$886 million invested in R&D
~24,000 employees worldwide
Market presence in nearly 100 countries worldwide
All numbers above as of December 31, 2012
* For a complete list of our Executive Committee, please refer to
www.bostonscientific.com/aboutus

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General Manager, Latin America: Mauricio Ortiz

Financials
$7.25 billion revenue
$933 million adjusted net income1
NYSE: BSX
1. Adjusted net income excludes acquisition, litigation, divestiture,
restructuring, and other charges. For reconciliations of our nonGAAP financial measures, please refer to the Investor Relations
section of our website at www.bostonscientific.com

Differentiating Characteristics
12

Med Device Characteristics


Intellectual Property Protection
Protect
valuable Intellectual Property
Flawless
Quality

Flawless Quality

Highly Regulated and policed environment


Highly Regulated and policed environment

Integrated
Manufacturing
control
Quality Processes
Stream
Integrated
Manufacturing
Model
need to
controlend-to-end
Quality Control
Product availability - Emergency Use

Product availability - Emergency Use


Higher Gross Margin

Higher Gross Margin

13

Supply Chain Characteristics


Design around the unique parameters of the customer/physician

Large product portfolio affect


Sole source manufacturing
Regulatory factors
Global distribution through regional distribution centres
Consignment stock system in many markets
Non-scheduled product use

Innovation constraints to leverage Supply Chain


14

Competitive Advantage Drivers


COMMODITY
BATTLEGROUND

INTELLECUTAL PROPERTY
BATTLEGROUND

Electronics

Medical Devices

Time-to-market for new products

Time-to-market for new products

Outsourced Manufacturing Model

Integrated Manufacturing Model

Final assembly component


configuration

Integrated material component


manufacturing

Standardised work

Highly skilled product builders

Price / Performance / Cost Optimisation

Acquisition of Intellectual Property

Distribution

Clinical/Regulatory know-how

Velocity

Close physician relationships

Competing With The Supply Chain


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Competing With The Knowledge Base

Outcomes of our Supply Chain

Serves the Strategy Well

Lower Inventory Turns

Intellectual Property Protected

High R&D and Clinical Investment

Quality Control not compromised

Obligated Reg. Nature of the Industry

Meets Regulatory Body requirements

Opportunistic

16

Company Strategy
17

BSC Strategy

18

Global Business Environment

Pressure on Prices and Growth

Competition

Buying Power

Governments
Finances & Policy

JNJ
ABT
MDT
Cook

19

Why Ireland ?
20

Role of FDI in Irish Economy


Economy /
Demographics

US Foreign Direct Investment (FDI)


Role In Ireland
Scale of US investment
$190bn invested to date. 5x 2000
115k employed across 700 companies
Generating more than 26% Irelands GDP
$41bn income generated in 2011
Return on investment of 26.5%
R&D spending of $700m in 2011
Between now and 2014, predicted to be
$7.7b in investment and 20,000 new jobs

21

GDP Growth 1985-2009, 11.5% pa


Small open economy
4.6m Population
2.1m Working Population
> 35% population under 25 yrs
Unemployment rate 14.7%

Strong Clusters
Ireland has clusters of world-leaders in ICT,
software, services, pharmaceuticals and
medical devices
Irish FDI Role in the US
Irish owned firms employ 120k with $31bn
invested

Critical Role of US FDI in Ireland, Binding Ireland and the US Together

Investment in Ireland

22

MedTech Investment in Ireland

23

Worlds Largest Medical Device


Companies in Ireland

11 of Top 12 Medical Device


Companies in Ireland
Boston Scientific
Medtronic
Johnson & Johnson
Abbott Laboratories
General Electric
Stryker
Baxter Healthcare
B. Braun
Covidien
Siemens Healthcare
Becton Dickinson
**Philips Healthcare**

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Investing in Ireland
Investing in Ireland
Pro-business government
Low corporate tax rate
Strong track record of stability and
predictability of FDI policies
Research Development and
Innovation grants with additional tax
credit of 25%
Strategic location within the
European Union
Skilled work force with a global
reputation for being flexible,
innovative and highly productive

Cork Profile
400,000 Population within 1 hour of
Cork
5 Technology Institutes
2 Major Universities
Access to 60,000 3rd level graduates
Direct flight connections to 41
European cities
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Irelands Attractiveness

26

TRACK RECORD

TALENT

TAX

TECHNOLOGY

Irelands Attractiveness
T

TRACK RECORD
Best location to invest in Western Europe
1st for inward investment by value
11 of the Top 12 Medical Device companies are here
In the Top 10 Easiest Places to do business in the world
8 of the Top 10 Global IT Companies based here
9 of Top 10 Global Pharma firms based here

>50% of the Worlds Financial Services operate here


3 of the top 6 Games companies based in Ireland
27

Irelands Attractiveness
T

TALENT
# 1 for availability of skilled people
60% of Irish people go on to higher education
Youngest population in Europe >35% under 25
Adaptive and flexible

28

Irelands Attractiveness
T

TAX
One of the lowest corporation tax rates anywhere

Extensive Tax treaty networks around the globe


25% R & D tax credits
Fully transparent tax system

29

Irelands Attractiveness
T

TECHNOLOGY
8bn invested in science, technology and innovation (4% GDP)
Highest proportion of Science and Engineering graduates within the
OECD
Access to the European Market 500m consumers

30

Operational Excellence at BSC


31

Strategic Quality Process


Overview
BSC Strategic Imperatives

Divisions Priorities

BSC Operations SQP


1.
2.
3.
4.
5.

Site SQP Priorities

32

People development & leadership


Optimize our trade model
Win global market share
Expand sales & global presence
Realign product portfolio to
enable new growth R&D

How We Run The Business


Global Operations

33

Strategic Planning Process Cork Site


Strategic Plan Delivers Clear Vision Of Success

Integrated Process = Consistency In Execution

34

Execution Driven By Strategy Quality Process

Leadership Focus Through Established Processes

Management Systems
35

36 36

Sites Funnel for Managing Projects

Execution
Detailed
Planning

Candidate
37

Preliminary
Planning

Complete

Sites funnel aligned to PDP


Proposal

Definition

MMM yy MMM yy
Develop p-IBP

MMM yy MMM yy

Product Design
Refinement

Product Definition
Packaging & Label
Definition

Product & Process


Technology Assessment

Preliminary
Planning

Detailed
E&AS Life
Cycle for
Test Method
Equipment
Planning

GMA-VOC

Mfg.
Core TM

Product Design
Verification

Clinical Design

Sponsor

Staff
Team

StaffClinical Planning
Team

Preclinical
Project Strategy

Supply Chain
Validation & Scale-up

HE&R Strategy

Business Review

Continuous Improvement
Programs

Production Scale-up

Preclinical Study Execution

Clinical Execution

Clinical
Close-out

Preclinical Analysis and Reporting


HE&R Strategy Execution

IP Generation

38

Market Rollout

Regulatory Filing

Preclinical Study Planning

HE&R Screening
/ Assessment

E&AS Life Cycle for Equipment


used during Commercialization
Complete

Supply Chain
Staff
Development

Clinical Preparation

Regulatory Strategy

1st Launch
dd-MMM-yy

Launch Readiness

Manufacturing
Site Selection

Scaling
Report

dd-MMM-yy
Design Transfer

Global Market
Launch Strategy

Team

dd-MMM-yy

DHF Review

Process
Validation

E&AS Life Cycle for Design E&AS Life Cycle for Process &
Verification Equipment
Design
Validation Equipment
Execution

Supply Chain Definition

Project
Close-out
Post Market Vigilance /
Field Assessment

Design Validation

Process Development

Market Specification

MMM yy MMM yy

Update IBP

Packaging & Label


Packaging & Label
DHF
Development
Validation
Review
dd-MMM-yy
dd-MMM-yy
dd-MMM-yy
Design Freeze Design Verification
First Human Use

dd-MMM-yy
Product Specification

Candidate

MMM yy MMM yy

Update IBP

Develop IBP

PD
Core TM

Validation & Scale-up Commercialization

Development

MMM yy MMM yy

IP Management

Business Review

Business Review

Business Review

Business Review

PLCP Overview

39

NPE Embedded in Cork Foundation


Underpinned by Essentials

40

NPD Capability Evolution


2000

2012
Adaptable,
Flexible
Workforce

BSC NPD
Product
Established
Transfers
16 Years
Broad
Technical
Acumen

RD& I
Grants
PD & NPE
Essentials
Value
Improvement
Process

Rotablator
Core
Technology

Product Transfers
41

Acquisition
Integration

Target Coils

Product
Development

New Product
Excellence

New Product Launch


Examples

42

Product Development Excellence


Target Coil
Preferred
Preferred
Physician
Physician
Evaluations
Evaluations
in 2
in
2 mths
mths

Complete
DV
Complete DV
& &
PV in
in 99mths
PV
mths

US Approval
Approval by by
US
19-Oct-2010
19-Oct-2010

Target
NPD Challenge
Artefact issue Feb 2010
European

Production
ramp
Production ramp
in 5
in
5 mths
mths

European
Approval
Approval by
by
21-Sep-2010
21-Sep-2010

25% cost
25%
cost
reduction
reduction
11 mths
11 mths
43

Parallel PV / DV activities
Completed by Sep 2010

30 projects completed
5 design change opportunities

Target Coil
How did we get here?
Target Detachable Coil

Launch
3 months early!
Built 161k units in the 1st year
25% COGS Value Improvements in 11 months

Manufacturing complaint in the 1st year of launch


57% improvement in non conformances
25% improvement in Health & Safety metrics
Increase headcount from 35 Product Builders to 220
300% increase in output in 5 months
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44

Product Development Excellence


Key lessons applied to Target Coil
Highly experienced Core Team & SMEs Empowered
TEAM

Teamwork & synchronisation (multi-site) Project


Governance and organisational commitment
(synchronisation of activities)

Key decisions identified and made in time to influence the


program

Total focus on the projectplanning / execution around


immovable dates!
Understanding of business drivers schedule #1

Application of LEAN PD & reduction of build to test times

45

Encore New Technology Developments


1.

Air plasma surface etching of polymer tubing

2.

Automated UV Glue dispensing

3.

In-line barcode identification of all materials & components

Fully Automated product packaging & boxing

46

In-line simulated use testing

High speed component verification

6.

In-line 100% functional testing of product

Automated plunger dynamic force measurement

5.

Micro-spray glue dispensing & placement

Automated product integrity testing

4.

Replace manual alcohol wipe with air plasma etching

End to end continuous automated processing

Encore Product Life History


2001 - 2009

1996 - 2000

2009 - 2013

Feb 96

Maple
Grove

Product
Launch

80% labour re-deployed

Feb 01

Transfer to
Tullamore

Tullamore

Semi-automate
packaging

Sep 09

Transfer to Cork
Gauge redesign

Key

Breather bag
removal

Production Event

Cork

Re-design
insertion tool

Major VIP Event

Switch to
GW Plastics
Full automation

Sales
(units)

100

153

Std Cost

100

81

221

Std Cos +

110
BusinessEssentials
Inflation
47

276

333

368

395

56

53

48

43

137

139

421

39

Operational Excellence
Results

48

Operational Excellence
Rates of Improvement
Manufacturing Related Complaints

Rate of Expected Improvements

CPM

COMPLAINTS PER MILLION

Scrap

Scrap
-15%

-15%

Materials Cost $

Rate of Expected Improvements

-28%

-28%

Rate of Expected Improvements

-3.5%
-6.9%

-40%

-10%

-40%
2010

2011

2012

2010

2011

2010

2012

2011

2012

Annual Reduction: (Target 15%)

Annual Reduction: (Target 15%)

Annual Reduction: (Target 3.5%)

Net Labour Efficiency

Overhead Cost $

Materials
Cost $
VIP Expectations

Rate of Expected Improvements

Rate of Expected Improvements

Rate
Rate of
of Expected
Expected Improvements
Improvements

Overhead Cost ($)

Overhead Cost ($)

11.6% Minimum Realised VIP

31%
22%

-9%

%
%

-16%

12%
2010

-24%

2011

2012

Annual Improvement: (Target 12%)

2010

2011

2012

Annual Reduction: (Target 8.5%)

2010

2010

2011

2011

2012

2012

Annual Reduction: (Target 3.5%)

Minimum Realised VIP: 11.6% (Target 8.5%)

Exceeding Industry benchmark standards


49

Talent
50

BSC Corks Vision: Being The Best

People

Best
Cost

Credibility

Vision

Best
Quality

Best
Service

Success is only achieved through our People


51

Attracting Top Talent

Attracting Top Talent


American multinational medical device
company
Graduate Rotation Trainee Programme
Great Place to Work Company
Strong emphasis on Training & Development
Continuous Improvement Culture
Voted Top 10 Graduate
Programme in 2013 by
Graduates

Working towards achieving the


Shingo Award in 2015

52

Hiring Top Talent


Third Level Partnerships
Sourcing via LinkedIn
Competency based interviewing
Tailored Psychometric Assessments
Onboarding and Mentoring

Employee Profile
Living the BSC Values
Winning Spirit
Meaningful
Innovation

We have Never Arrived


New Product Introduction

Value Improvement
Programme
- Savings over 5 yrs

High Performance

Big Q

Best Performing Plan

- Celebrates CI 60 projects
in 2013

- 2011 and 2012

NV Divestiture

Boston
Scientific
Values
Caring
What I do matters, how I
do matters

Global
Collaboration

Quality Policy

New Product Introduction


- Alair/Truepath/Vessex
- Product Development

53

Diversity
Over 30 nationalities on
site

Sustaining
54

Position Ireland for the Future

Certainty

Talent

Competitiveness

International
Reputation

55

Supply Chain Linkage

Position Ireland for the Future


Environment of Certainty
No Change corporation tax regime
Predictability on Income Taxes
Maintain flexibility and industrial peace in our workforce

Talent

Our most compelling asset

Stem the talent drain build viable employment prospects for young people through targeted investment
Reform our education system:
Position and grow great, international leaders in our Higher Education system
More internationally renowned scientists and professionals
Create top ranking universities
Education reform must be relevant to the needs of industry and underpin the on-going transformation of the workforce
We need to rationalise the education system in order to reduce costs and improve quality

56

Learning as a life long process

Position Ireland for the Future

Competitiveness

Sustain a workforce with the skills and competencies to win internationally

Maintain wage inflation restraint to close the gap with peers/competitors

Source lower cost energy

International Reputation

Preserve and build upon our superb track record

Maintain environment of certainty

Create a renewed sense of belief for investors emerge successfully from our
economic reform challenges

57

Position Ireland for the Future

Supply Chain Linkage Opportunities


Build a comprehensive supplier base as part of the existing MNC clusters
Aim to optimize Procurement, Transformation and Distribution Processes
Further differentiates Ireland from low cost competitors flexibility combined with sophistication

58

In conclusion

Remain Relevant !
Stay Competitive !

Thank You
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