ASX / MEDIA RELEASE
4 MAY 2017
COCHLEAR HOSTS INVESTOR DAY
Cochlear Limited, Sydney, 4 May 2017 (ASX:COH): Cochlear Limited is today hosting
analysts to an investor day at its global headquarters in Macquarie University. A copy of the
management presentations is attached and includes:-

Overview of strategic priorities – Chris Smith – CEO & President
Global marketing – Dean Phizacklea – Senior Vice President, Global Marketing
Building a services business – Stu Sayers – President, Services
R&D & product portfolio – Jan Janssen – SVP Design & Development
Overview of the Latin American business – Chris Bertrand – President, Latin America

The presentations will be recorded with a video playback available at the investor centre of
the website www.cochlear.com on May 5.

For further information, please contact:
Analysts
Kristina Devon
Head of Investor Relations
Email: kdevon@cochlear.com
Ph: + 61 2 9611 6691

Media
Piers Shervington
Senior Manager Corporate Affairs
Email: pshervington@cochlear.com
Ph: +61 2 9425 5416

Page 1 of 1

5/3/20172017 Investor Day
4 May 2017

Chris Smith

CEO & President

AgendaIntroduction and strategic priorities

Chris Smith –CEO & President

Global Marketing

Dean Phizacklea –Senior Vice President, Global Marketing

Building a services business

Stu Sayers –President, Services

R&D / product portfolio

Jan Janssen –SVP Design & Development

Overview of the Latin American business

Chris Bertrand –President, Latin America

A surgeon's view of CI

Brian A. Kaplan, MD, FACS
Chair, Department of Otolaryngology at Greater
Baltimore Medical Center & CI surgeon

Wrap up and Q&A

Chris Smith –CEO & President

Technology expo
Lunch

1

5/3/2017

Cochlear’s executive operating committee

Chris Smith

Brent Cubis

Tony Manna

Richard Brook

Anthony Bishop

CEO & President

Chief Financial Officer

President, North America

President, European Region

President, Asia Pacific Region

Dig Howitt
Chief Operating Officer

Jan Janssen

Dean Phizacklea

Stu Sayers

Katharine McLennan

Senior Vice President,
Design and Development

Senior Vice President,
Global Marketing

President, Services

Senior Vice President,
People & Culture

Overview• Cochlear Limited (ASX:COH) isthe global leader in implantable
hearing devices– Cochlear implants– Bone conduction implants– Acoustic implants• ~ 3,000 employees• Direct operations in 20+ countries• Products sold in 100+ countries25/3/2017

Our Mission
We help people hear and be heard.
We empower people to connect
with others and live a full life.
We transform the way people
understand and treat hearing loss.

We innovate and bring to market arange of implantable hearing
solutions that deliver a lifetime ofhearing outcomes.

Hearing loss market opportunity

360,000,000
Over 5% of the world’s population - 360 million people - has disabling
hearing* loss (328 million adults and 32 million children).1

1 in 3
Nearly 1 out of every 3 people over the age of 65 are affected by hearing
loss. It affects communication and can contribute to social isolation, anxiety,depression and cognitive decline.2

37,000,000
people who could benefit from a cochlear implant to treat severe toprofound hearing loss.3,4<5%Market penetration.53

5/3/2017

Cochlear implants recognised as a costeffective intervention by the WHO in 2017
World Health Organisation (WHO)report1 released in March 17…
• estimates the global cost of
untreated hearing loss at $750bn pa• recognises cochlear implants as a
cost-effective intervention• highlights interventions to address
hearing loss which lowers costs
related to depression and cognitive
decline1. World Health organisation report - ‘Global costs of unaddressed hearing
loss and cost-effectiveness of interventions’

Strategic platforms
Cochlear aims to make implantable hearing solutions thestandard of care

Focus on the Customer
Grow theCore

Build aService Business

Shape the Organisation

Value Creation4

5/3/2017

1. Grow the Core
 Innovative technology
 Increased awareness Improved access Business model innovation

What’s driving growth…..
Developed markets: market growthof 8-10% past 2 years

Emerging markets: expansion ofreimbursement and our presence• Direct-to-consumer activities• Expanding presence and sales force–

Building awareness, especially successful inreaching over 65 year olds who areincreasingly using the internet and social
media• Sales force expansion• Expanding indications––

Expand criteria in many countries
Bilaterals, Hybrid (EAS)• Great patient outcomes driving confidence––––

Improved speech recognition in noiseSound processor ascetics – smaller, lighter,
longer battery life, appeal of Kanso off the ear
Wireless accessories
Made for iPhone for Baha–––

Middle East (Dubai office)Central & Eastern Europe (Vienna office)China, India, Latin America• Expansion of funding across many markets––––

Chinese central government tenders
Expansion of state tenders across India
2017 approval for bilateral funding in Turkey
Growing reimbursement in Latin America• Government tender activity helps build
awareness and drive growth of cochlear implantationin the private pay market• Growth in surgeons performing CI driving clinic
growth• However, emerging market growth can be morevolatile––

Economic constraints
Binary nature of tender outcomes – win or lose5

5/3/2017

2. Build a Service Business Recipient engagement
 Connectivity; both
Recipient and Clinics
 Optimise upgrades Enhanced digital services

Growing importance of services
Services revenue has grown from <1% to 25% of total revenue overthe past 15 years, primarily driven by the growing recipient base6

5/3/2017

3. Shape the Organisation
 Globally integrate enabling
activities Targeted field expansion
 Deep market penetration
 China and emerging markets

 Building capabilities

4. Value Creation
 Partnerships/Alliances Innovation fund
 Drive global efficiency
and effectiveness Meet or exceed our forecast
financial targets

75/3/2017

FY17 Financial outlook
Re-iterate full year net profit guidance range of$210-225m, up ~10-20% on FY16
Key guidance considerations•

continued strong momentum in unit growth•

expect R&D expenditure for FY17 to be similar to FY16•

AUD/USD FX rate of 75 cents for FY17 v 73 cents in FY16•

target dividend payout ratio of ~70% of net profit•

Chinese Central Government tender units expected to be
below FY16 levels*•~$1.5m FY net profit impact from the reduction in R&D tax
concession rate from 40% to 38.5%** changed from original guidance for FY178

5/3/2017

References
Slide 6
* Disabling hearing loss refers to hearing loss greater than 40 decibels (dB) in the better
hearing ear in adults and a hearing loss greater than 30 dB in the better hearing ear inchildren.
1.

Who.int. WHO | Deafness and hearing loss [Internet]. 2015

2.

Who.int. WHO | 10 facts on deafness [Internet]. 2015.

3.

Hearing Loss Prevalence in the United States [Internet]. Lin, Niparko, Ferrucci [cited 26
April 2016].

4.

The Severely to Profoundly Hearing-Impaired Population in the United States [Internet].
Blanchfield, Feldman, Dunbar, Gardner [cited 26 April 2016].

5.

Market penetration - global estimate based on Cochlear sourced data.

Disclaimer
Forward looking statements
Cochlear advises that these presentation slides contain forward
looking statements which may be subject to significant uncertainties
outside of Cochlear’s control.
No representation is made as to the accuracy or reliability of forward
looking statements or the assumptions on which they are based.
Actual future events may vary from these forward looking statements
and you are cautioned not to place undue reliance on any forward
looking statement.

9

5/3/20172017 Investor Day
4 May 2017
Dean Phizacklea
SVP Global Marketing

AgendaIntroduction & Strategic priorities

Chris Smith – CEO & President

R&D & review of product portfolio

Jan Janssen – SVP Design &Development, Clinical & Regulatory

APAC strategy - Australia and China Dig Howitt – President, Asia Pacific
Break
US Direct-to-consumer

Patricia Trautwein – VP, Marketing –Cochlear Americas

US recipient services

Rene’ Courtney – VP, Customer
Experience & Recipient Services –Cochlear Americas

Wrap up and Q&A

Chris Smith – CEO & President
Neville Mitchell – CFO

Tour – manufacturing & hearing hub
Lunch

1

5/3/2017

Core growth strategy
WHAT?

Grow the Core

WHERE?
Geographic focus

Developed &Emerging

Developed

Customer segmentation

Drive category growth through increased awareness

HOW?

Demonstrate value of Cochlear hearing solutions to increase access
Leverage technology leadership and product innovation to drive brand choice

CAPABILITY

Direct To Consumer

Market AccessCustomer insightConnected Health

Levers of growth

Awareness

AccessGrow the Core

Brand choice2

5/3/2017

Levers of growth

Awareness

AccessGrow the Core

Brand choice

Lack of awareness is a barrier to growth% Familiar with Cochlear Implants<20%
GeneralPopulation<50%
Audiologists

1. Data on file, survey conducted by PSB 2014

>50% of adults
with a moderate
to profoundhearing loss are
not familiar with
Cochlear
Implants.
Source: Cochlear global segmentation study, 20163

5/3/2017

Our goal is to empower candidates fromawareness to surgery

Create clear
treatment
pathways

Buildcustomermotivation

Optimisehearing
outcomes

Build
lifetime
relationships

Developsustainableclinic models

US DTC campaign journey

Campaign-Centric
Persona campaigns
SEO

Channel-Centric
Hearing Health TourWeb MD digital
display

FY14

-

FY15

Not integrated
mediaHigh CPL
Limited targeting

FY16

+
+
+
-

Integrated media
Low CPL
Targeted
Limited lead quality
Standalone
campaigns
Some duplication

Funnel-Centric
Mature Adult andPediatric Campaign
Architecture

FY17

FY18

+ Integrated media+ Low cost per qualified
lead+ Targeted+ High lead quality+ End to end+ Less duplication4

5/3/2017

US DTC success

New Candidate Leads

Candidate Web Visits

F14

F15

F16

F17

FY14

FY15

FY16

FY17

H1 Data for F14, F15, F16, F17

US are breaking down the stages of thejourney, with solutions for each stage
Getting into
consideration
funnelTotal Potential Audience
Moderate to Profound Hearing Loss

Education
What Are Cochlear
Implants

Unfamiliar

Aware / Haven’t ActedMoving people
down the funnel

Aware/ Have Acted

Convince
Benefits of a
Cochlear Implant
Versus Hearing
Aids

Drive Action

Likely topurchase

Triggering
Behavior
Recipient5

5/3/2017

Cochlear is ramping up candidate
engagement in other markets• Increasing lead generation andlead quality work across “focusedfew” developed countries andfurther roll-out planned for FY18

• Able to cost effectively target
specific personas online

5x increase• Non US lead generation is 5x
higher in F17 H1 vs F16 H1

Using systems to effectively scale• Global CRM and marketing engine
automate initial Candidate support
communications• Using Candidate behaviour andresponses to qualify leads• Able to collect and analyse data tounderstand key Candidate barriers

65/3/2017

Candidate engagement
Concierge

Volunteer• Concierge service expandedfrom US to F17• Volunteers support Candidates
through a life changing decision• 5x increase in total Concierge
numbers from F16 to F17• Where we have introduced aVolunteer to a Candidate,surgery rates are double theaverage• We have Volunteer networks ofover 4000 individuals acrossthe globe.

Awareness and advocacy• Countries align their PR andadvocacy work with hearing
causes to help raise awareness• In the lead up to International
Cochlear Implant Day, Cochlear
ran the search for the World’s
Happiest Sound, reaching over 22
million people globally• Cochlear are working with the
WHO to raise awareness and help
improve access to treatment7

5/3/2017

Levers of growth

Awareness

AccessGrow the Core

Brand choice

What is market access ?

Ensuring that all appropriate patients get rapid
and maintained access to our products, at theright price.

8

5/3/2017

The medical device landscape ischanging rapidly• Changing decision makers• Multiple Buyers• Rise of new influencers• Pricing pressure• Stakeholder fragmentation• Emerging markets are complex andevolving environments

Building a market access capability tonavigate the landscape

STRUCTURE
Virtual Market AccessNetwork

SKILLS / KNOWLEDGE
HealthEconomics

Clinical data

Provides the
economic value
proposition forengagement withbudget holders

Provides thecontent forengagement with
HTAs and budget
holders

Stakeholder
engagement

Negotiations

Builds influential
relationships

Secures market
access throughwin-winpropositions9

5/3/2017

There is increasing recognition of the cost effectiveness of cochlear
implants in helping to alleviate the cost burden of hearing loss.

Clinical evidence is the foundation forsuccessful market access and reimbursement
Priority areas• Awareness and Advocacy•

Standard of Care for Adults
John Hopkins collaboration on cognitive
declineHearing aid versus Cochlear
implant• Expand Indications/Access– Broadening candidacy criteria– Bilateral implants in Adults– Hybrid indication10

5/3/2017

Levers of growth

Awareness

AccessGrow the Core

Brand choice

An consumer centric product portfolio thatallows personal choice11

5/3/2017

Core growth strategy
WHAT?

Grow the Core

WHERE?
Geographic focus

Developed &Emerging

Developed

Customer segmentation

Drive category growth through increased awareness

HOW?

Demonstrate value of Cochlear hearing solutions to increase access
Leverage technology leadership and product innovation to drive brand choice

CAPABILITY

Direct To Consumer

Market AccessCustomer insightConnected Health12

5/3/2017

Disclaimer
Forward looking statements
Cochlear advises that these presentation slides contain forward
looking statements which may be subject to significant uncertainties
outside of Cochlear’s control.
No representation is made as to the accuracy or reliability of forward
looking statements or the assumptions on which they are based.
Actual future events may vary from these forward looking statements
and you are cautioned not to place undue reliance on any forward
looking statement.

13

5/3/20172017 Investor Day
4 May 2017
Stu Sayers
President, Services

Growing importance of Services• Service revenue was <1% of
total in FY01 on an installedbase of less than 50k
recipients• Today it is over 25% on a baseof ~450k, growing at 30-40k
new recipients pa

1

5/3/2017

The Services flywheel
Improved
Services offering
for recipients

Better customer
experience &outcomesMore engaged
recipients
Better conversion/
more recipients
More nonimplant revenue

New Candidates
More volunteers/
advocates

Our north starLoveo Lifetime commitmento Engagement with Cochlearo Satisfaction with eachexperienceo Satisfaction with hearingo Propensity to advocate

Money
o $/earo Greater sell-throughof offeringso Faster upgrading2

5/3/2017

More than just upgrades
Upgrades account for roughly 75% of the Service revenue, however Services is much
more than upgrades
Physical products

UpgradesOther
products andservices

Services and support• Service offeringso Service planso Financing optionso Travel insuranceo Rehab/training products• Accessories• Consumableso Mini Mic 2/2+
o Mic protectors
o Phone Clipo Dry-brik refills
o TV Streamero Remote Control
o Aqua+o 3rd party items
e.g. shake awake
alarm clocks• Supporto Self-helpo Customer support• Spares and repairso Coilso Cableso Sound processor repairs

What our recipients tell us they want
1. Greater Convenience• Reduce the need to visit the clinic• Increase the chances I can solve theproblem myself• Faster support and/or repairs• Make it easier to get help when I need it• I don’t like using the phone

2. Greater Confidence• Help listening to music again• More confidence when using the phone• Better ability to recognise different sounds
in noisy environments• Solve minor problems themselves35/3/2017

4 key levers to grow Services
1. Engage with more
recipients
2. Increase upgrade
penetration

Service spend per Recipient*
7.7x
6.6x

3. Make Cochleareasier for
Recipients
4. Create newServices

2.9x

3.3x

Email
address

Email +
Store

1x
No email

Email +
Email +Store +Store +
Volunteer Volunteer +Celebration* Based on US Data

1. Engage with more recipients
Establishing the connection•

Growing B2C to compliment our traditional B2B focus•

Recipients tell us they want a deeper relationshipwith Cochlear•

Simplifying the process – easy self registration•

Single sign-on for different Services•

Testing putting less in the ‘box’ at switch-on andspreading it out over time4

5/3/2017

1. Engage with more recipients
Engaging via Cochlear Family•

140% growth in subscribed recipients YoY and is
now well over 10% of the base•Gateway to more personalised support•

Access to the online store and exclusive promotions•

A way to access and learn from other recipients•

Initially started in Germany, and then the US several
years ago. Launched in 10 new countries in FY17•

The goal here is to deliver increasingly personalised
information, Services and support

4 key levers to grow Services
1. Engage with more
recipients
2. Increase upgrade
penetration
3. Make Cochleareasier for
Recipients

40% to 50% penetration of the installed basein developed markets with each new Sound
Processor generation• Proactive emails and outbound calling• Recipient events/Clinic events• Support with reimbursement processes
Pushing higher where we can establish direct
relationships with the recipients

Nucleus 6 Upgrade Penetration by Clinic

4. Create newServices

UK BestPractice
ClinicAU BestPractice Clinic

AverageclinicJun-13Jun-14Jun-15Jun-165

5/3/2017

4 key levers to grow Services
1. Engage with more
recipients
2. Increase upgrade
penetration

3. Make Cochleareasier for
Recipients
4. Create newServices

Kanso - the first time we have offered 2 form
factors for the same underlying technology
Exceeding expectations
It is helping trigger the segment for whom
discretion is primary
Strong take-up for private pay option for
upgrades in several countries

4 key levers to grow Services
1. Engage with more
recipients
2. Increase upgrade
penetration
3. Make Cochleareasier for
Recipients
4. Create newServices

Baha 5 Product Suite and Made for iPhone(MFi) have been a very strong motivators to
upgradeSimplicity• Stream directly to the device without aphone clip
• Control device via iPhone

6

5/3/2017

4 key levers to grow Services
1. Engage with more
recipients
2. Increase upgrade
penetration

3. Make Cochleareasier for
Recipients
4. Create newServices•

Self-support easier to find and digest•

Support easier to access – more nonphone options•

Products and services easier to explore
and buy•Less time off air (82% of Service requests
completed in under 24 hours at clinics
where Link is installed)•

Ultimately reduce the need for the recipient
to visit the clinic

4 key levers to grow Services
1. Engage with more
recipients

Short term
• Trialling new offerings

2. Increase upgrade
penetration• Finance/payment plans

3. Make Cochleareasier for
Recipients• Bundled offerings based on
lifestyle triggers – e.g. going toschool, leaving home

4. Create newServices• Self support & rehabilitation tools
Longer term we are aiming to transformthe way recipients are supported• Patient connectivity• Remote care and support7

5/3/2017

Disclaimer
Forward looking statements
Cochlear advises that these presentation slides contain forward

looking statements which may be subject to significant uncertainties
outside of Cochlear’s control.
No representation is made as to the accuracy or reliability of forward
looking statements or the assumptions on which they are based.
Actual future events may vary from these forward looking statements
and you are cautioned not to place undue reliance on any forward
looking statement.

8

5/3/20172017 Investor Day
4 May 2017
Jan Janssen
SVP Design & Development

Cochlear’s mission
We help people hear and be heard.
We empower people to connect
with others and live a full life.
We transform the way people
understand and treat hearing loss.
We innovate and bring to market arange of implantable hearing
solutions that deliver a lifetime ofhearing outcomes.
21

5/3/2017

Research & Development at Cochlear
Basic
Research

AppliedResearch

DesignValidation
Studies

Research &Technology
Development

Investigational
DeviceProduct
Development

Technology
Research

Technology
Development

Post Market
Studies

Products

Global Innovation Network• Over 350 R&D staff in international locations• Main R&D site co-located with Australian Hearing Hub• Over 100 Research Partners in over 20 countries• Global network of Design Partners and Suppliers25/3/2017

Cochlear’s R&D Commitment

Annual R&D Investment(mAUD)In F16 Cochlear invested over A$140m in
Research & Development (including Clinical,
Regulatory and Quality)

Product Planning – a balancing act

Customer Needs

Market Insights

Technology
Feasibility

Financial Commitment3

5/3/2017

Cochlear Implant product update

State-of-the-Art Cochlear Implant portfolio

CP950 - OTE CP920/910 - Nucleus 6
Sound Processor Sound Processors

N6 with Acoustic Component
for Hybrid Hearing

Custom Sound

CI512 - Nucleus Profile with
Contour Advance electrode

Nucleus Fitting Software
MiniMic 2

MiniMic 2+

Slim
Modiolarelectrode
CI532

CI522 - Nucleus Profile with
Slim Straight electrode

Cochlear Link

Nucleus 6 Remote Control

Aqua+ accessory

CR220 Intra-Op Assistant4

5/3/2017

Nucleus Profile with Slim Modiolar Electrode (CI532)

Clinical Indications
1

Severe to profoundsensorineural
hearing loss

Traditional CI
Candidates

2

Mild to moderate low
frequency hearing loss*

Hybrid Hearing
Candidates

3

Special
MedicalConditions

Case-by-case*with a pure-tone average loss ofmoderately severe to profound degree55/3/2017

Indications –the primary criteria for electrode choice12
Severe to ProfoundSensorineural Hearing
Loss3
Mild to moderate
low frequency
hearing loss*

Hybrid Hearing
Candidates

Traditional CI Candidates

Special
MedicalConditions

Case-by-caseMaximise hearing
preservation

Wide range ofelectrode options to
fit individual cases

Contour Advance®

Slim Straight

Perimodiolar placement for optimum
electrical stimulation1

Hearing preservation electrode for
optimal Hybrid Hearing2

Contour Advance
Straight
ABI**
Slim Straight

Optimise electricalstimulation

Requirement:

Preferredelectrode:

Electrode Type Comparison

Lateral wall
electrode array

Peri-modiolar
electrode array

CONTOUR ADVANCE
Peri-modiolar
Tip
Base

0.5 x 0.5 mm
0.8 x 0.8 mm

SLIM STRAIGHT
Lateral wallTip

0.3 x 0.35 mm

Base

0.5 x 0.6 mm

6

5/3/2017

Slim Straight Electrode (CI422 / CI522)

Surface preparation insertion (robot controlled)
Courtesy Prof. William Gibson, Sydney

Slim Modiolar Electrode Array (CI532)
CA

Image courtesy of Prof. R. Briggs, Hearing CRC

Slim Modiolar

Slim Straight7

5/3/2017

Nucleus Profile with Slim Modiolar
electrode array – CI532• Thinnest perimodiolar array 60% less volume compared to CA
 Protecting the fine structures (atraumatic design)• Consistent Perimodiolar positioning Consistent positioning close to the modiolus Closest to the nerve to optimise hearing outcomes• Ease of insertion
 Improved surgical handling Consistent surgical use
 Confidence in surgical outcomes

1st insertion Slim Modiolar
2nd insertion CA
3rd insertion reloaded Slim Modiolar

Electrode Type Comparison
SLIM MODIOLAR
Tip
Base

0.35 x 0.4 mm
0.475 x 0.5 mm

CONTOUR ADVANCE
Tip
Base

0.5 x 0.5 mm
0.8 x 0.8 mm

SLIM STRAIGHT
Tip
Base

0.3 x 0.35 mm
0.5 x 0.6 mm

Data on file (Document 588021 & 415680)

8

5/3/2017

Indications –the primary criteria for electrode choice12
Severe to ProfoundSensorineural Hearing
Loss

Traditional CI Candidates

Requirement:

3
Mild to moderate
low frequency
hearing loss*

Special
MedicalConditions

Hybrid Hearing
Candidates

Case-by-caseMaximise hearing
preservation

Wide range ofelectrode options to
fit individual cases

Slim Modiolar

Slim Straight / Hybrid-L

Perimodiolar placement for optimum
electrical stimulation1

Hearing preservation electrode for
optimal Hybrid Hearing2

Contour Advance
Straight
ABI**
Slim Straight

Optimise electricalstimulation

Preferredelectrode:

Implant reliability matters – an ongoinginvestment

1. Cochlear Limited, D1175804. Cochlear
Nucleus Implant Reliability Report,
Volume 15, January 2017. 2017, Mar.
2. 2016 Cochlear Implant Reliability Report[Internet]. 028-M797-02 RevB ©2016
Advanced Bionics AG and affiliates. All
rights reserved.[cited 10 January 2017];
Available from:http://www.advancedbionics.com/content/
dam/ab/Global/en_ce/documents/candid
ate/2016-cochlear-implant-reliabilityreport.pdf
3. Reliability You Can Count On [Internet].
MED-EL. January 2016 [cited 10
February 2017]. Available from:http://www.medel.com/reliabilityreporting/9

5/3/2017

A smart, simple, discreet off-the-ear sound processor
with the proven technology of Nucleus® 6

Nucleus 6
Behind-The-Ear (BTE) Sound Processor
Processor
Unit

Coil

Acoustic
Component(optional)

Battery
Module10

5/3/2017

Kanso = Nucleus 6 capability
in Off-The-Ear (OTE) configuration

A smart, simple, discreet off-the-ear sound processor
with the proven technology of Nucleus® 6

Kanso Off-The-Ear Sound Processor
Smart, Simple, Discreet
SMART

SIMPLEDISCREET

11

5/3/2017

Kanso Off-The-Ear Sound Processor
Uncompromised hearing performance
The world’s first off-the-ear processor with dual microphones andSmartSound iQ with SCAN.
Dual microphones

Omni
mic

Dual mics(standard)

Dual mics(SCAN)+4.5 dB
benefit(lower is
better)Kanso microphone directionality

Delivering equivalent hearing outcomes compared to the Nucleus
6 Behind-The-Ear Sound Processor in quiet and in noise
Source : Preliminary data from CLTD 5591 Acceptance of the CP950 processor with experienced CP810/CP900 BTE sound processor users. Dataon file, 2016 (sponsored by Cochlear)

Acoustic Implant product update12

5/3/2017

Hearing Loss & Hearing Technology

How Baha works

1• The sound processor
captures sound via themicrophone.

2• The Baha transducer inthe sound processor
sends vibrations, via
the abutment, to theimplant in the skull
bone.

3

• The skull bone provides a
direct pathway for sound totravel to the cochlea
through bone conduction.

13

5/3/2017

Baha for Single Sided Deafness
Baha Attract

Baha for Single Sided Deafness

Baha Attract(transcutaneous Baha)

State-of-the-Art Baha portfolio

BI300 implant with
BA400 abutment

Baha Attract system

Baha 5 Sound Processor

Baha True Wireless accessories

Baha 5 Super PowerSound Processor

145/3/2017

Cochlear™ Baha® 5 System

Small. Smart. Powerful.
Baha 5 sound processors share thesame unique technology building blocks
to deliver a smart and seamless hearing
experience to all patients.

NEW

Baha® 5 SuperPowerNEW

Baha® 5 Power

Baha® 5 Sound Processor

Direct-to-device smart connectivity
With new Bluetooth® technology
designed by Apple, Baha 5 soundprocessors are the hearing implant
industry’s only Made for iPhone
Hearing Devices.

Streamed phone calls, music
and turn-by-turn navigation
Live Listen
and device control

15

5/3/2017

Baha 5 Smart App, now for Android
Advanced control of sound processor
and wireless accessories,
personalisation and support –directly from iPhone, iPad, iPod touchand now also Android smartphones.

Future Technology Directions
What is in the Cochlear R&D pipeline?

16

5/3/2017

We have come a long way …

Improved
Hearing Outcomes

Improved Hearing
in the real world

True WirelessConnectivity
Nucleus Profile CSP
99.94 % @ 3 years !

Improved LifestyleSound Processors

Thin, atraumatic, hearing
preservation electrodes

Thin &
ultra-reliable implants… and broadened the portfolio of
Implantable Hearing Solutions …

17

5/3/2017... but we are not where we need to be …

360,000,000
Over 5% of the world’s population - 360 million people - has disabling
hearing* loss (328 million adults and 32 million children).1

1 in 3
Nearly 1 out of every 3 people over the age of 65 are affected by hearing
loss. It affects communication and can contribute to social isolation, anxiety,depression and cognitive decline.2

37,000,000
people who could benefit from a cochlear implant to treat severe toprofound hearing loss.3,4<5%Market penetration.5… getting treated is still an obstacle race !
Lack of Awareness
Limited Access
Fear of surgery
Loss ofresidual hearing
Variable outcomes
Size & Aesthetics
Complexityof the intervention

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5/3/2017

Make Implantable Hearing Solutions“Standard of Care”

Future Focus Areas
Hearing Outcomes

LifestyleHearing Indications

Connected Care19

5/3/2017

Hearing Outcomes … closing the gap• Hearing in quiet• Hearing in noise• Listening to competing talkers• Music perception• Listening effort• Time to proficiency• # Rehab required• # Clinical follow-up required• Spread of hearing outcomes• Tonal Language performance• …

Improved Hearing Outcomes withenhanced Residual Hearing

Nucleus Profile implant with
Slim Straight electrodeAtraumatic electrode insertion(cochlea cross-section)

Research drug
eluting electrode20

5/3/2017

Future Wireless Technology evolution

Phone
Music

Nucleus 6 Sound Processor

ControlStatusNucleus 6
True Wireless accessories

Baha 5Sound
Processor

MiniMic 2 MiniMic
ProStandard of care = binaural hearing
Bilateral Cochlear Implants

BimodalTrue Wireless for Bimodal users

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5/3/2017

Extended lifestyle / wearing options
SMART

SIMPLEDISCREET

Transforming Clinical Care with
Cloud Connectivity

Cochlear
Link

Pre-op counselling
Product Counselling
Online device registration
Acute mapping & follow up

Performance Assessment
Troubleshooting product &audiology
Upgrades and accessories

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5/3/2017

Wireless clinic – Surgery

CR220
Wireless Intra-Op Assistant

Wireless clinic – Surgery & Audiology

CR220
Wireless Intra-Op Assistant

NFS Touch

Wireless programmingover Bluetooth23

5/3/2017

Expanding indications for
Implantable Hearing Solutions
Conductive/Mixed

Sensorineural
125

Frequency (Hz)1000

8000 125

30

8000

30
Bone Conduction Implants

Electro-Acoustic
Cochlear Implants

Hearing Loss (dB HL)

Middle Ear Implants

Hearing Loss (dB HL)

Frequency (Hz)1000

Middle Ear Implants

Direct Acoustic
Cochlear Implants

Cochlear Implants
Cochlear Implants

120

Nucleus® Systems
with Hybrid Mode

120

Baha®
Systems

Carina® Systems

Conclusion• Product Innovation was, is and will be acornerstone of Cochlear’s success• New Slim Modiolar CI532 implant andKanso OTE sound processor have beenvery well received in the market• Baha is a key element of Cochlear’s
product portfolio and the Baha 5 family isvery well received in the market• Cochlear has full pipeline of productinnovations that will help establish
Implantable Hearing Solutions asStandard of Care24

5/3/2017

Disclaimer
Forward looking statements
Cochlear advises that these presentation slides contain forward
looking statements which may be subject to significant uncertainties
outside of Cochlear’s control.
No representation is made as to the accuracy or reliability of forward
looking statements or the assumptions on which they are based.
Actual future events may vary from these forward looking statements
and you are cautioned not to place undue reliance on any forward
looking statement.

25

5/3/20172017 Investor Day
Cochlear Latin America
Chris Bertrand
Presidenté Cochlear Latinoamérica
4 May 2017

Latin America
Cochlear Latin America is not a commodity market!
• 21 countries• Population of 645 Million, 75 year life
expectancy with a median age of 29
years• Countries/markets are at different stagesof development• Most countries provide universal healthcare, two-tiers (rich & poor / urban &rural)• “The most unequal region in the world
with 25% of population living on $2/ day”1
SOURCE: 1) IMF; World Bank, “Deconstructing the Decline in Inequality in Latin America, in Proceedings of IEA Roundtable on Shared Prosperity and
Growth, ed. by Kaushik Basu and Joseph Stiglitz

1

5/3/2017

Rapid development of the middle class• For the first time, there are more Latin
Americans in the middle class thanpoor 4• By 2030, over half of Latin Americancountries will have a majority middle
class 2
• Latin American middle class
population is forecasted to grow from
278 million to 313 million by 2033 5

Sources:
1) World Bank2) http://shannononeil.com/blog/measuring-the-global-middle-class/3) More Latin Americans Are Middle Class Than Poor 04/30/2014 ,World Bank Group, Jim Yong kim,4) World Economic Forum on Latin America 2015, Riviera Maya, Mexico 06 - 08 May 20155) Prospects for Latin America’s middle class after the commodity boom, February 10, 2015 Michael
Penfold

Severe to profound hearing loss in Latin America•

Many of the 5.5 million people in Latin American with a severe toprofound hearing loss are candidates for CI, Baha or Carina implants

75% of people with a severe
to profound hearing loss live inBrazil, Mexico, Argentina andColombia

75%: Source: World Health Organisation, prevention of blindness and deafness (http://www.who.int/pbd/deafness/en)

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5/3/2017

CI penetration in Latin America• CI penetration remains a largely untapped opportunity
50,000

CHILDREN (under 18)

40,00030,000Penetration rates

20,00045-50%

30-35%

15-20%

10-15%

5-10%

10,000-Argentina Uruguay

Peru

Colombia

BrazilChildren with SNHL greater than 70dB

Ecuador Venezuela

Chile

PanamaMexicoChildren with a CI

1,000,000
800,000

ADULTS

600,000
400,000

Penetration rates
2-3%Less than 1%

1-2%

200,000-

Argentina Colombia Venezuela Uruguay

BrazilAdults with SNHL greater than 70dB

EcuadorMexico

Chile

Peru

PanamaAdults with a CI

Cochlear implant recipients compared to the number of people with SN hearing loss greater than 70dB

Cochlear Latin America• 39 Cochlear staff (15 Panama
based)• 7 shared services employees• 14 distributors with approx.
130+ people focused on
Cochlear’s business• Four countries account for~90% of total revenue:o Brazilo Argentina
o Colombia
o Mexico3

5/3/2017“Hybrid Business” field sales model• Objective: To keep “close to the customer”, better understand our markets
and assist distributors to deliver “complex” sales messages and to focus
on secondary products, upgrade and accessory sales• Three components•

1. Direct field expansion•

2. Direct to recipient•

3. Advocate/ Volunteer (Ambassador) Program – 150+ strong

Hybrid Business Model

Distributor

Cochlear

Professional
Recipient
Candidate

Mixed funding exists across Latin America• Funding ranges from full reimbursement to no coverage• “Disability law” are often a platform for mandating reimbursement• Laws requiring reimbursement may be limited or not funded at all
CLA Reimbursement In Practice
CI & Baha
Argentina
BrazilPublic Private Public
PrivateReimbursement

Colombia
PublicPrivateMexicoPublicPrivateAdultsChildrenAccessories
UpgradesBilateral

Public = NHSPrivate = Insurance, HMO
8or Union

Baha

Covered in practice

Recent coverage expansion

No Reimbursement45/3/2017

Expanding reimbursement•

Successful Cochlear reimbursement expansion projects• “Escuchar es lo
Máximo” Association
MexicoA non–profit Association dedicated to improving reimbursement
Result: New cochlear implant reimbursement law in 2016
(coverage for children at 14 large public hospitals)“el artículo 177 de la Ley General de Salud ”• Brazilian
Reimbursement
Expansion Project•A cross-functional team to work with surgeons, government
officials and politicians to expand funding
Result: New/ expanded reimbursement law in 2016
(Bilateral CIs, Baha, Upgrades and accessories)-> mandatory private insurance converge

Recent coverage expansion in other Latin American countries:•

Large CI public tender in Peru•

Argentina expanded coverage down to 10 months of age•

New law covering pediatric CIs proposed in Paraguay

Source: *World Bank

Evolution of reimbursement over time
Clinical effectivenessAcceptance• Multicenter studies, pediatric
bias• More cases, less bias
• Private reimbursement• Greater momentum as a group• Positive outcomes widens
acceptance, Adult/ senior adoption• Public reimbursement driven byprofessionals and recipients with HTA
data• Criteria and coverage expanded,
Bilaterals, etc.

As acceptance grows, reimbursement widens, coverage expands
and patient mix shifts into adults

55/3/2017

Cochlear implant segmentation

Premium tier
- Profile implant and Premium processor (CP900 or Kanso)

High-end technology- Freedom implant and High-end processor (CP800)

Standard- Freedom implant and Standard processor (CP802)“Cochlear Day” growth initiative• Gatherings of heath ministers, politicians, professionals, recipients and parents toimprove implantable device awareness and access– 2,800 attendees– Flyers and screening - Ibirapuera park has 220.000 visitors on a typical Saturday• Engage health ministers, professionals and politicians to improve market access
Outstanding press and media coverage!

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5/3/2017

Awareness building programs• “Taca Cochlear” Recipient vs Candidate football event in 5 cities across Brazil• Tennis event with famous tennis player Jose Luis Clerc

Sales growth projects• Detection before 3yrs old• Baha country tours• Red de Conexiones referral program• Bilateral Initiative• Concierge program in Colombia• Cochlear Family program (with distributors)% of children before the age of 6 by age of implantation, F1630%

Before 3:

20%

40%

67%

49%

10%
0%

Latin America
6 mths

6-11 mths

Developed
12-17 mths

Emerging (Ex. Lat
Am)
18-23 mths

24-29 mths7

5/3/2017

My passion for cochlear implants

8

5/3/2017

Muchas Gracias!!!

Obrigado!!!

Disclaimer
Forward looking statements
Cochlear advises that these presentation slides contain forward
looking statements which may be subject to significant uncertainties
outside of Cochlear’s control.
No representation is made as to the accuracy or reliability of forward
looking statements or the assumptions on which they are based.
Actual future events may vary from these forward looking statements
and you are cautioned not to place undue reliance on any forward
looking statement.

9