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Niels Jacobsen, President & CEO, William Demant Holding Sren Nielsen, President, Oticon
Agenda
Starting point
The hearing healthcare market
Hearing aids
Fundamental drivers
Demographics Prevalence Reimbursement Drop-out rates Consequences of hearing loss Understanding end-users
Challenges
Niels Jacobsen
President and CEO, William Demant Holding A/S
Born in 1957 M.Sc. in Economics from Aarhus University Part of the executive management in William Demant Holding since 1992 President & CEO in William Demant Holding since 1998 Board positions:
LEGO (Chairman) KIRKBI (Vice Chairman) Maersk Group (Vice Chairman) ssur (Chairman) Oticon (Chairman) Directorships in a number of Group-owned subsidiaries
Hearing solutions
Strong growth opportunities in the implant market Styles
BTE ITE RITE IIC/extended wear Cochlear implants Bone anchored systems OTC amplifiers
Description
Preferred choice in more complex cases and in developing markets Stabelised at the current share of total market Preferred choice in many countries best peformance/size ratio A niche market for cosmetically oriented users An underpenetrated market with strong growth opportunities A market with strong growth, but limited size of total market Fragmented market with lack of fitting and follow-up support
Market value
Good Strong
Strong Good USD 1bn
USD 125m
USD 50m
1994
Oticon - Bernafon Maico - Bosch Gfeller/Ascom - Sonic - Neurelec
Phonak - Unitron - Lori Medical - Argosy Advanced Bionics InSound Medical
Today
Hearing aids
Sren Nielsen
President, Oticon A/S
Born in 1970 M.Sc., Industrial Management and Product Development, Technical University of Denmark President of Oticon A/S since 2008, employed with the Group since 1995 Worked for Bernafon AG in Bern, Switzerland, 1995-1997 Board positions:
FertiliTech Sennheiser Communications Directorships in a number of Group-owned subsidiaries
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Global market
Positive opportunities in an under-penetrated market The market 10-11 million units sold per year Global wholesale market of USD 4 billion per year Six largest manufacturers hold a total market share of +90% Main markets are still the OECD countries 2-4% yearly unit growth driven by demographic development End-users +10% of population in OECD countries suffer from hearing loss 35-40% of population aged +65 are hearing -impaired Just above 20% of the hearing impaired use a hearing aid Average age of first-time user is 69 years (USA) Average age of all users is 72 years (USA)
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10.000
9.000
8.000
7.000
6.000
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Europe 41%
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Top 25 countries
Share of total world market (units)
30% 100%
Accumulated
25%
20%
15%
50% 40%
10%
5%
0%
0%
In-The-Ear
Style
Receiver-InThe-Ear BehindThe-Ear
50%
2012
2010
22%
23% 8% 46% 23%
Large retail chains 24% Independent dispensers 9% Manufacturer retail 45% Public
Channel
Source: WDH market data and estimates
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Market channels
Increased professionalisation of the distribution channels
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Minority ownership
Loans for expansion Supply-based loans Co-op Supply agreements Independent retailers Degree of interaction
17
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Demographics
Penetration rate
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2 billion mature customers in 2047 Dependency ratio will force us to work longer In Japan, the 60+ group already constitutes more than 1/3 of the population
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Demographic development
Increasing growth in the 65+ population
Yearly growth in 65+ population
Share of global market (units) Western Europe 35% Units sold per Total 65+ population in 2008 to 2013 year (000) 2013 3,700 78,000,000 1.6% 2013 to 2018 1.6% 2018 to 2023 1.5%
Eastern Europe
North America South America Oceania Asia Africa Total
7%
29% 7% 4% 17% 2% 100%
750
3,100 750 400 1,800 200 10,700
18,000,000
50,000,000 44,000,000 4,500,000 313,000,000 38,000,000 545,500,000
1.2%
2.6% 3.3% 3.0% 3.1% 2.6%
2.6%
3.1% 3.7% 3.4% 3.8% 3.5% 3.2%
2.4%
3.2% 3.9% 2.9% 3.9% 4.0% 3.5%
Source: U.S. Census Bureau, Population Division, 2013 and WDH estimates (units sold)
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2.1%
300 250 200 150 100 50 0 2010 65-69
2.1%
2.0%
1.7%
2030
Baby boomers
Focus group of the entire industry
The baby boomer generation covers U.S. citizens born from 1946 to 1964 The segment consists of approx. 77 million Americans who constitute the largest population group in the US The generations oldest members have now passed 65 years of age and thus entered the target market for the hearing aid industry This group is:
Internet-savvy Health-conscious Critical and has high expectations
Developing countries
Growth in 65+ population in the developing countries
Millions 800 3.4% 700 600 500 400 300 4.1% 3.7% 3.9% 5 years CAGR
200
100 0 2010 65-69
2015
70-74 75-79 80-84
2020
85-89 90-94
2025
95-99 100+
2030
Drivers for increased penetration Increasing age and GDP Next 65+ generation is wealthier Developing markets are significantly underpenetrated Reimbursement in place Access to distribution
Factors limiting increased penetration Lack of audiological tradition A relatively young population Elderly population with low income Few reimbursement plans Lack of infrastructure Low average selling prices
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Penetration rates
Percentage of hearing-impaired population wearing hearing aids
40% 35% 30% 25% 20%
15%
10% 5% 0% Australia USA Europe (EU) Japan China
20%
Binaural Monaural
80%
26%
Binaural Monaural
74%
35% 65%
Binaural Monaural
70%
30%
Binaural Monaural
Reimbursement
Significant variety in reimbursement systems
Third-party payment
Lack of awareness of reimbursement
Owners: Was any part or all of your hearing aid(s) paid for by a third party? (insurance, government etc.) 4% 17% Yes No Don't know 79% 61% 9% 30% Yes No Don't know Non-owners: Based on your current knowledge, would any part or all of your hearing aid(s) be paid for by a third party?
No
Don't know 31%
No
Don't know
Don't know
22%
Don't know
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MarkeTrak and EuroTrak/JapanTrak are global comparative studies of hearing, hearing loss and hearing aids conducted on behalf of industry associations in select countries
MarkeTrak Most recent survey First survey 2009 1989 EuroTrak/JapanTrak 2012 2009/2010
Markets covered
Survey base Main sources for further information
USA
46,843 households (14,623 people with hearing loss) www.hearingreview.com www.betterhearing.org
Direct links to the most recent studies: MarkeTrak VIII (2009): http://www.betterhearing.org/pdfs/M8_hearing_loss_trends_2009.pdf EuroTrak/JapanTrak 2012: http://www.conjoint.ch/publikationen/Hearing_Review_March_2013_Article.pdf
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Industry challenges
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Industry challenges
Main obstacles for increased penetration continues
Realising the hearing loss takes time Getting people with an admitted hearing loss to do something about it is still the biggest problem A small industry with limited marketing power Attractive product offerings do not attract more endusers
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100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
100%
Drop-out:
20%
80%
Drop-out:
40%
Drop-out:
29%
34%
Discussed hearing Positive medical Discussed hearing loss with doctor advice from doctor loss with (further action) audiologist
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The Reluctant
Is in denial
The Acceptant
Has accepted
The Dependent
Is dependent on
Decision parameter
Focus on cosmetics
Background
Mixed
Very experienced
Hearing loss
Mild to moderate
Moderate to severe
Severe to profound
Expectations
Knows it will be a HA
Comfortable with HA
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The Reluctant
Is in denial
The Acceptant
Has accepted
The Dependent
Is dependent on
Decision parameter
Focus on cosmetics
Background
Mixed
Very experienced
Hearing loss
Mild to moderate
Moderate to severe
Severe to profound
Expectations
Knows it will be a HA
Comfortable with HA
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If we understand people, we can design the process and offer the right solutions
Awareness
Counselling
Treatment
Rehabilitation
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Conclusions
A healthy underlying market with growth potential
Generally speaking, reimbursement schemes are positive, but they can also be a limiting factor, if there is no freedom of choice Low penetration rate of hearing aid users
Lack of relevant counseling is a limiting factor Create a better understanding of the end-users needs and the socioeconomic consequences of a hearing loss
Hearing aids are not a commodity one size does not fit all!
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Q&A
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