Title: WK Health Cluster Hugh Yarrington Member Executive Board November 5, 2002 Philadelphia
1WK Health Cluster Hugh Yarrington Member
Executive BoardNovember 5, 2002 Philadelphia
2Agenda
- 930 1000 Global Strategy - Hugh Yarrington
- 1000 1100 Strategy in-depth - Christopher
Ainsley QA - 1100 1115 Coffee break
- 1115 1215 Business Unit Strategies - CEOs
- 1215 1330 Lunch
- 1330 1630 Break-out sessions Product demos
- 1630 1645 Closing Remarks Hugh Yarrington
3Health Cluster The Story Today
- New Strategy to Focus on Health
- Divestment of KAP (E 600 mln)
- New Structure to Leverage Health Assets
- Roll-out Product Development 2002-05
- IT Organizational Synergies
- Development of Clinical Tools Growth Business
- Pursue Uncontested No 1 Status
4Wolters Kluwer Strategy
Launch new products
Acquire growth businesses
Extend content to software
Preserve foundation business
Drive growth
Divest slow growing assets
5Launch New Products
Revenues from new products (EUR mln)
Selected examples
- Fiscal Advice Journal internet tool enabling
customers to send tailor-made newsletters to
their clients, The Netherlands - Legal Announcements and Formalities a workflow
tool, France - CCH Securities Compliance tracker a daily news
service on securities rules and regulations, CCH
US - All Health cluster content loaded onto Ovid
platform - Redaktion D, on line language course, Germany
(joint venture with Goethe Institute)
18
81.1
68.8
New products are launched in the past 12 months
6Acquire Growth Businesses
Selected examples of HY-I acquisitions
Artel Ciceron Compliance Tools ICC Moorehouse
Black Uniform Val Informatique
Emphasis on acquiring strong software
companies in growing markets
Average projected growth rate of revenues is 17
p.a.
7 at Good Multiples
Total 2001 - June 2002
FY 2001
HY-I 2001
HY-I 2002
(Amounts in EUR mln)
Number of transactions
29
47
13
18
Total investment
533
736
362
203
Acquired annual revenues 1)
255
360
177
105
Revenues multiplier
2.1
2.0
2.0
1.9
EBITA multiplier
7.0
6.7
8.0
6.0
1) Revenues from first full year after acquisition
8Extend Content to Software
Total revenues per business type ()
Revenue increase year on year ()
HY-I 2001
HY-I 2002
Integrated solutions
29
5.5
6.6
13
Smart tools
12.4
13.0
Dynamic content
15
34.1
36.0
48.0
44.4
Static content
1
100
100
Continuing revenue
9
Total continuing revenue (EUR M.)
1,600
1,747
9Internet and Other Electronic Revenues (EUR mln)
32
26
20
18
Percentage figures represent total electronic
revenues as part of total revenues
10Divesting Non-Core Assets
Annualized revenues (EUR mln)
- Kluwer Academic Publishers
150
100
30
20
30
EUR 330 mln
Divestments represent approximately 8 of total
revenues
11Preserve Foundation Business
- Implement retention/loyalty programs
- Increase effectiveness of sales and marketing
- Sales force restructuring/reinforcement
- CRM
- Pursue value driven pricing policies
- Enhance product quality
12Wolters Kluwer Health Financial Results
EUR mln
Revenues
EBITA
Margin
- Organic growth improved to 7 (as at 1H 2002)
13Wolters Kluwer Health Strategic Focus
- Reorganize to serve health and medical
professionals - Four customer-facing business units created
- New CEOs and management teams in place
- Marketing approach and channels rationalized
- Back office and systems work scheduled for 2002/3
- Divest non-conforming assets
- KAP purchase agreement signed
- Revitalize textbook, research, institutional
research businesses - Improved society, author, and distributor
relationships - Increased investment in new product development
- Improved distributor contacts
- Reduced cycle times
14Wolters Kluwer Health Strategic Focus, cont.
- Ovid is and open platform and the health and
medical leader - Number of A titles
- Number of medical titles
- Number of publishing partners
- Monthly growth in total titles
- Number of page views
- Number of end-users
- Market penetration (segment, national,
international) - Spend per purchaser
- Spend per user
- Accelerate clinical tools development
- Medi-Span provides great opportunities
- Market for clinical tools about to explode
- Increase growth organically and by acquisition
- Organic revenue growth at 7 (as at 1H 2002)
- Acquisition program in place and actively
pursuing target companies
15WK Health Christopher Ainsley, CEO
16Health Is an Attractive Market for Wolters Kluwer
- A large market
- Approximately 4.0bn
- Roughly 40 of the global STM market
- A growing market
- Underlying growth of 2-5.
- More rapid expansion in pharmaceutical, clinical
tools, payors and allied health - Additional growth opportunities through market
share gains - Consolidation in traditional segments 50 of
the market controlled by small players - Suited to our strengths
- Concentrated in the US (65 of revenues)
- Largely English-language (85 of revenue)
- Largely distinct from the Scientific/Technical
market - Content, Authors, Societies, Libraries and
End-users
17Our Vision
- Become the global leader in information for
- health and medical professionals
- Focus on Pharma Solutions, Medical Research,
Professional and Education, and Clinical Tools - Primary customers English reading professionals
globally
Markets served
- Physicians
- Nurses
- Medical Students
- Nursing Students
- Allied Health Professionals (e.g. physical
therapists, chiropractors) - Pharmacists
- Medical Schools/Teaching hospitals
- Community hospitals
- Pharmaceutical Sales and Marketing
- Pharmaceutical Research
- Biotech and Biomedical Research
- Medical Device companies
- Payors
- Institutional Science (focused on medical and
health-related science)
18Our Vision Whats Changing
TODAY TOMORROW
YESTERDAY
19Customer-Facing Business Units
Old Business Units
Adis
Ovid/Silver Platter
LWW-Medical
LWW-Education
Facts Comparisons/ Medi-Span
KAP
20WK Health Organization
21WK Health 2002(E) Business Unit Revenues
Clinical Tools
60 Million
Pharma Solutions
120 Million
Medical Research
320 Million
Professional Education
230 Million
Total WK Health 730 Million
22WK Health 2002(E) Business Unit FTEs
Clinical Tools
240 FTEs
Medical Research
710 FTEs
Pharma Solutions
570 FTEs
Professional Education
870 FTEs
Total WK Health 2,390 FTEs
23WK Health 2002(E) Print/Electronic Revenue Mix
in Millions
24Implementing Our Strategy
- Reorganize to focus on health and medical
- Expand our portfolio of top medical content
- Increase market share in medical research
- Accelerate development of clinical tools
- Revitalize core text and reference business
- Grow pharmaceutical sales by restructuring and
acquiring - Increase growth organically and by acquisition
25Reorganize to Focus on Health and Medical
- Leadership Recruited and developed strong
leadership team - Processes Improved the way we work together
- Finance
- Technology
- Human Resources
- Implementation Teams Task forces targeting
growth opportunities - Global
- Medical Research
- Professional and Education
- Pharmaceuticals
- Clinical Tools
- Values, Behavior Culture Developed common
values to establish new culture and drive
change in strategy
26Expand Our Portfolio of Top Medical Content
- Rationale
- Provide the must-have content on the preferred
platform - Aggregate databases and content from many
publishers
- Achievements
- Renewed AHA journal contract 185 million
- Licensed 171 new titles from six publishers
including 15 A titles - Moved all owned content to Ovid Platform
- Next Steps
- Pursue all A medical content for online
platform
27Increase Market Share in Medical Research
- Rationale
- Reinforce our leadership in institutional
research segments - Support WK Health goal of expanding role in
electronic distribution of content
- Achievements
- Introduced new content packages and new pricing
- Ovid platform achieved a 62 increase in Internet
usage and a 35 increase in peak concurrent users
- Next Steps
- Manage customer migration from print to online
with the right pricing and content packages - Further penetrate international and community
hospital markets
28Accelerate Clinical Tools Development
- Rationale
- Place multiple bets in evolving clinical tools
market - With multiple interests at the point of care,
need to embed/integrate WK Health content in more
general systems
- Achievements
- Medi-Span acquired 2002 integrating FC and
Medi-Span - New CEO named 9/02 preliminary strategy
identified
- Next Steps
- Develop disease management and drug information
business strategy - Complete integrated data tool exit FDB editorial
agreement - Explore acquisitions and partnership
opportunities
29Revitalize Core Text Reference Business
- Rationale
- Near-term stronger performance depends on
sourcing of top content and developing stronger
relationships with customers - Longer term, books will have significant value as
an element of our clinical tools strategy
- Achievements
- Established new management team
- Created market focused organization improving
relationships
- Next Steps
- Investing in market research to drive
customer-focused product development - Developing stronger relationships with
distributors, authors, and customers
30Growth and Restructuring in Pharma
- Rationale
- Pharma companies need to get products to market
faster to maximize returns - Opportunity to establish strategic leadership by
leading an aggressive industry consolidation
campaign
- Achievements
- New CEO named 8/02
- Acquisition plan developed
- Restructuring business to improve market
penetration and leverage strengths and assets
- Next Steps
- Complete key acquisitions
- Continue development of new electronic products
31Growing Organically and Through Acquisitions
2001 1H 2002 1.7
6.6
- Actively pursuing acquisitions
32WK Health Key Strengths Challenges
- Strengths
- Strong proprietary content
- Strong pipeline of electronic products
- Excellent brands market position
- Revitalized and focused management team
- Recurring revenue business model
- Large and growing market segments
- Challenges
- Building a customer-focused organization
- Rebuilding our critical processes and systems
33 MEDICAL RESEARCHDean Vogel, CEO
34Market Overview
- Medical Research combines the premiere clinical
journals of LWW with the leading online medical
platform at Ovid - Target Market Size
- Focus on information managers, clinicians,
medical and student researchers purchasing
through institutions medical libraries,
biomedical research facilities, teaching and
community hospitals - U.S. institutional medical market is
approximately 1.8 billion and growing
approximately 5 - Key Trends
- Institutional libraries represent the majority of
medical information spending - Trends in medical information spending suggest
that the share of institutional buying is likely
to grow in the future - As customers migrate online, there is an
opportunity to capture spend - English remains the lingua franca of medical
research creating a global medical marketplace
35Leading Position in Medical Institutions
Source ResearchPro, March 2002
- Full penetration of NHS in U.K. and Australia
- Supporting over 13.3 million end-users worldwide
36Leading Source of Medical Content
- Greatest breadth of content through bibliographic
layer - Greatest depth of medical content through full
text journals - Unique addition of book content
- Completed loading of all LWW content on the Ovid
platform
37Overview of Strategy
- Become the platform of choice for content
providers - Expand our leading position as an online provider
of medical research content
Expand Lead in Content
- Become the most used (and trusted) resource for
online medical research - Maintain a leading platform for the online
distribution of content for end-users
Drive End UserDemand
- Continue to expand into new markets including
- International Markets and
- Community Hospitals (North America)
Increase MarketPenetration
Gain Sharein Spend
- Capture spend as customers migrate online
- Target segments with packages tailored to their
needs and price sensitivity
38SilverPlatter Integration
- Strategic Benefits
- Created leadership position in the medical market
- Expanded local sales presence in key
international markets - Provided an installed customer base for the sale
of full text content
- Progress Report
- Consolidation of SilverPlatter and Ovid sales
forces and product management organizations - Migrated to a single fulfillment system with a
single view of customer base - Enabled cross-selling of content across platforms
- Consolidated all areas of operations including
finance, accounting, customer service and
technical support - Relaunched brand Energize Your Thinking
39Implementing the Strategy
Accomplishments
- All LWW content loaded onto the Ovid platform
- Increased number of A list journals by 32.5 to
98 - Increased total number of journals by 54.6 to
824 - Increased book content by 64.7 to 168
Expand Lead in Content
- Increase of 35 on number of concurrent users
(4,100) - Increase of 62 in page views to 152 million
- Numerous software feature releases focused on
end-user functionality including Ovid_at_Hand and
PIN Support
Drive End UserDemand
- Leveraged local sales offices to penetrate the
international clinical marketplace first
success in Germany/Sweden - Created content packages focused on penetrating
the community hospital market in the United States
Increase MarketPenetration
- Implemented account planning process to identify
additional spend opportunities through customer
profiles - Completed customer segmentation of Ovid customer
base - Captured LWW print spend to accelerate online
migration through bundled pricing incentives
Gain Sharein Spend
40Summary
- Medical Research has the leading online platform
(Ovid) in the medical market as defined by
penetration and usage - The combination of the LWW publishing program and
third party licensing skills enable a rapid
expansion of content offerings - A deeper integration of the LWW and Ovid
organizations will enable WK to more fully
leverage our market position - Ovid and SilverPlatter have been fully integrated
within twelve months of the SilverPlatter
acquisition
41Medical Research Product Demo
- Patti Corbett, Vice President, Marketing and
Customer Development - Will discuss and demonstrate Ovid's Web-based
biomedical information solutions for information
professionals and clinicians
42PROFESSIONAL EDUCATIONJay Lippincott, CEO
43PROFESSIONAL EDUCATION
- VISION
- To be the dominant and most trusted healthcare
information provider to individuals in all global
markets and for all stages of their professional
development
- KEY STRATEGIES
- Implement and practice a customer-focused
approach throughout the unit, including the
extensive use of market research - Work collaboratively with other WK Health units
to fully exploit our high-quality content through
all media and all channels - Publish more successful first editions in
targeted markets and increase market share of
product revisions - Strengthen management of key sales channels,
i.e., direct marketing, international, and
wholesale/retail - Continue to concentrate on (print) base business,
but also expand program of electronic solutions
44PROFESSIONAL EDUCATION
- MARKET OVERVIEW
- Professional Education serves individual
customers in Medicine, Nursing, and the Health
Professions - Medicine
- Physicians and Medical Students
- US Market Size 500 Million
- WK Health Share 20
- Growth Rate 2-3
- Primary Competitors Elsevier, McGraw-Hill,
UpToDate - Nursing
- Nurses and Nursing Students
- US Market Size 200 Million
- WK Health Share 55
- Growth Rate 3-5
- Primary Competitors Elsevier, Thomson
- Health Professions
- Various Allied Health Professionals and Students
- US Market Size 150 Million
- WK Health Share 20
- Growth Rate 7
45PROFESSIONAL EDUCATION
- MARKET TRENDS
- Market dominated by Elsevier and Wolters Kluwer
- Selected markets are growing student
enrollments in nursing and the health
professions, and nursing professionals - Other markets are flat medical education and
practice - Customers want up-to-date information
- Student markets are being negatively impacted by
used textbooks and sharing of resources - Customers are looking for print and electronic
product combinations - Rapid growth in PDA handheld products
46PROFESSIONAL EDUCATION
- PRODUCT OVERVIEW
- 4,000 Textbooks and Reference Titles
- 375 New Books Published Each Year
- 60 Periodicals
- 50 Electronic Products, Including PDAs
- TOP PRODUCTS
- Nursing 2002
- American Journal of Nursing
- Brunner Suddarths Textbook of Medical Surgical
Nursing, 9th Edition - Cancer Principles and Practice of Oncology, 6th
Edition - Clinically Oriented Anatomy, 4th Edition
47PROFESSIONAL EDUCATION
- IMPLEMENTING THE STRATEGY WHERE WE ARE
- Created market-focused organization structure
- Established new management team
- Improved relationships with key wholesalers
- Implemented market research program to drive
product development - Reallocated resources to growth areas
- Working cooperatively with other WK Health units
to maximize exploitation of content and increase
development of new print and electronic products
48PROFESSIONAL EDUCATION
- SUMMARY
- Print business remains important to customers and
WK Health - Collaboration with other WK Health units will
lead to improved results - Wealth of high-quality content assets presents
significant opportunity to WK Health - A customer-focused organization and operation
will lead to improved product development and
increased sales
49PROFESSIONAL EDUCATION
- PRODUCT DEMOS
- Jim Ryan, Vice President, Medicine
- Will explain and demonstrate Professional
Educations PDA program for medical practitioners - Diana Mason, Editor-in-Chief, American Journal of
Nursing - Will describe Professional Educations
market-leading nursing periodical publishing
program and how the Springhouse acquisition has
been successfully integrated and increased our
strength in the market
50 PHARMA SOLUTIONSJohn Monahan, CEO
51Pharma Solutions
- VISION
- Become the leading provider of communications and
information solutions to the global
pharmaceutical, biotech, and medical device
industries
- KEY STRATEGIES
- Focus on Pharmaceuticals, Biotechnology, and
Medical Device companies - Develop Greater Depth Breadth Across the
Product Life Cycle - Move From Purchased Data to Suite of Flexible
Solutions - Aggressive Acquisition Expansion Plan
52Pharma Solutions Market Overview
- Market Trends
- Pharmaceuticals, Biotech Medical Device Markets
continue to grow - at 8
- Spend approximately 50 billion annually on
information, content and knowledge - Assuming 10 is outsourced 5 billion potential
throughout the product lifecycle - Greater need for timely, value-added, integrated
information - Competition
- Strongest competition comes from Reed Elsevier
and Thomson - Additionally many small players compete on a
segment-by-segment basis
53Pharma Solutions Opportunities
- Current Positioning
- Revenues continue to grow organically
- Currently providing solutions to 17 of top 20
Pharma Companies worldwide - However, under-penetrated in U.S. marketplace
which is the largest pharma market in the world - Opportunities
- Develop greater depth breadth across product
life cycle - Significant opportunities to establish strategic
leadership though acquisitions - Consolidation of smaller players across the
product lifecycle equals large opportunity - Development of new products and strategic
acquisitions will enhance ability to capture
larger market share - Restructuring business to leverage our strengths
and assets and focus on customers
54Pharma Solutions Strengthening Depth Breadth
Across Product Life Cycle
55Pharma Solutions Products
- Providing robust and significant data in the
areas of - Clinical Trials Data
- Drug Data
- Business Intelligence Data
- Commercial Reprints
- Customized Healthcare Communications
- Publication Planning Tools
- Continuing Medical Education Resources
56Implementing the Strategy Where we are
- Strategic acquisition plan developed and
implemented - 100 initial acquisition targets identified and
screened against current gaps - Thirty serious targets being closely examined
- U.S. operation restructured and sales force
aligned around customers - New executive team in U.S. in place
- Global marketing and new product development
function established - Sales force customer teams established
- New electronic products launched
- LWW Healthcare and Adis integration underway
57Pharma Solutions Summary
- Combined LWW and ADIS International to form
Pharma Solutions, a strong global solution
provider - History of strong organic growth
- Commitment to develop greater depth and breadth
across the product lifecycle through new product
development and acquisitions - Penetration into US marketplace is a priority
- Move from data provider to suite of flexible
solutions
58Pharma Solutions Product Demos
- John Monahan, CEO, Pharma Solutions
- John Starzewski, Vice President, Strategic
Marketing Services - Will describe and demonstrate, several of the
Pharma Solutions core offerings, - including
- Clinical Trials Insight
- R D Insight
- AdisZenith Publication Planning Tool
59 CLINICAL TOOLS Jon Seymour, MD, CEO
60Clinical Tools Focus and Guiding Principles
- Focus
- Forward-looking unit focused on the application
of emerging technologies to healthcare
information needs - Dramatic growth opportunities will exist -- our
goal is to lead - Timing understanding state of technology and
market forces is critical - First example e-prescribing
- Guiding Principles
- Technology will inexorably creep out to the front
lines of healthcareto the clinicians - The breakthrough products for clinicians have not
yet been made - Print products should be derivatives of
electronic products, not vice-versa - Collaboration between Clinical Tools and other
business units creates unique potential - We will need to innovate and take risks
61Clinical Tools Current Product Lines
- Three synergistic organizations being integrated
into one working group - Referential drug info lt--gt Integrated drug info
lt--gt Integrated disease info
62Clinical Tools Vision
- Deliver tools to healthcare professionals that
make them information professionals - Reduce medical errorsand capitalize on that
financially! - Disease-centric decision support
- Distance learning
- Digital human
- Attention to medical device industry in addition
to pharmaceutical industry
63Clinical Tools Competitive Landscape
- Barriers to entry are extremely high in the
integrated drug data market - Only two players FirstDataBank (55) and
Medi-Span (45) - Switching costs for customers are often
prohibitive - Resources and expertise required to create a
comprehensive clinical drug database (e.g., Facts
and Comparisons) are significant - Competitors include Thomson (PDR, Drugdex, USP),
Reed Elsevier (Mosby GenRx), Medimedia
(Triple-i), Lexi-Comp (Lexi-Drugs), Gold Standard
Multimedia (Clinical Pharmacology), American
Society of Health-Systems Pharmacists (AHFS Drug
Monographs) - A new player emerges only every several years
- Clineguides disease database is an even more
complex build and only Cerner (Zynx) has an
existing competitive product
64Clinical Tools Customers are institutional
Over 40 of total sales (and vast majority of
Medi-Span sales) are to systems vendors
65Clinical Tools Products Landscape
- Skillful application of advanced information
technologies will create massive opportunities in
healthcare
66Clinical Tools Goals for 2003
- Continue to integrate the existing product lines
and operations, providing the market with novel
and compelling products - Add new leadership in marketing to support an
integrated and well-trained sales force - Establish operational stability and continue
solid market momentum into 2004 - Participate aggressively in acquisition market
- Set stage for payoff in 2004 and beyond
67Clinical Tools Product Demos
- Russ Worley, Managing Director, Medi-Span
- Leslie Mills, Senior Product Developer,
Medi-Span - Will explain and demonstrate the Medi-Span
product line - Jon Seymour, MD, CEO, Clinical Tools
- Will explain and demonstrate the
Clineguide/eFacts web-based products
68Closing RemarksHugh Yarrington