Trends opportunities in veterinary diagnostics Koos Faber Koos

Trends & opportunities in veterinary diagnostics Koos Faber

Koos Faber, introduction • • • Managing Central & Eastern Europe 3 Direct Markets 13 Indirect Markets • • • Background in Biochemistry & Hematology Over 20 year experience in medical device industry >7 Years experience at IDEXX • Private time: – Dutch, living in the Netherlands – Partner Krystyna, 5 yr old son Stan, looking for a new cat – Outdoor activities, cycling, boating, golf etc. | Commercial Summit 2017

IDEXX Laboratories Inc. Nasdaq: IDX • Founded in 1983 & Headquarters in Maine, USA • European HQ’s near Amsterdam, The Netherlands • Veterinary dedicated Dx – 7, 500 employees worldwide – ~40% of sales outside US – Offices in 20 countries – Over 450 scientists, pathologists and veterinarians on staff – Manufacturing and R&D facilities in US, UK, France & Switzerland | Commercial Summit 2017

History of Innovation and Growth From small beginnings 30 years ago to a $1. 8 billion company today | Commercial Summit 2017

History of Innovation | Commercial Summit 2017

IDEXX Laboratories, Inc. Keeping animals healthy, milk and water safe; 2016 Revenue: $1, 8 billion | Commercial Summit 2017

Companion Animal Group Diagnostics and information technology solutions; | Commercial Summit 2017

Three points I like to make: Give an insight in IDEXX’s strategies Show you the (future) role of Dx in veterinary practice Show you the opportunity for vets and IDEXX | Commercial Summit 2017

2017 and Beyond: Long term growth potential "Our strategy is to work hard to fill that gap between current practice and potential – and yet this will take years, if not decades. The trends are both huge, tectonic in pace, and long-term in nature – driving long-term secular growth well above the growth of the general economy. " CEO Jon Ayers, May 2017 | Commercial Summit 2017

IDEXX International CAG strategy for growth CAG Strategy To deliver innovative diagnostic and practice management solutions to veterinary professionals and pet owners, shaping the standard of veterinary care and strengthening our position as a market leader. Three Pillars Improve Standards of Care | Commercial Summit 2017 Expand Our Customer Base Build Our Organization

International CAG market remains ½ the size of U. S. Estimated 2015 Total Companion Animal Diagnostic and Information Management Spending stated in USD at March, 2016 FX rates (1) Canada $115 M Europe, Middle East & Africa U. S. $689 M $29 M China $125 M Japan $2, 392 M Latin America $62 M | Commercial Summit 2017 Other Asia $52 M $77 M Australia & New Zealand

There are 3 X More Potential Veterinary Practice Customers Outside North America Number of Companion Animal Veterinary Practices with In-House Chemistry today or eligible Greenfield Sites(1) Canada U. S. 3 k Western Europe 18 k 28 k Other Europe Japan China 6 k 25 k(2) 10 k 1 k Latin America 21 k Middle 6 k East & Southeast Africa Asia (1) Number of Companion Animal Veterinary Practices with In-House Chemistry (or Eligible for Basic In-House Chemistry) | Commercial (2) Does not include 2, 467 Corporate & Strategic Summit Accounts 2017 3 k Australia & New Zealand

Significant Differences in Diagnostic Utilization 2013 Average Diagnostic Spending at Manufacturer Level per Dog (1) (Indexed to U. S. market = 100) 100 U. S. 83 Germany 73 Canada 67 Australia 54 UK 47 France 43 Japan 30 26 Italy Spain (1) Includes ref labs, in-house instruments and consumables, rapid assay, digital, ultrasound, information management, | Commercial Summit 2017

Diagnostics is Growing as a % of Total Practice Revenue Worldwide, but Significant Opportunity to Grow Still Exists Average Percentage of Practice Revenue from Diagnostic Testing* 2016 * Includes A in-house diagnostics and reference lab testing; excludes radiology. | Commercial Summit 2017 ce 4. 3% Fr an us tr al ia 11. 6 % 7. 0% an ad a C U S 15. 2 %

The pet-human bond is strong: Increasing numbers of owners sleep with their pets Percentage of U. S. Pet Owners Saying their Pet Sleeps in the Bed 62% 50% 51% 41% 2004 2014 Source: APPA 2015 -16 Pet Owners’ Survey. 2017 A total of 2, 581 pet owner surveys were completed; Dog owner sample: 521, cat | Commercial Summit owner sample: 457; Surveys were conducted with a nationally representative sample of the Ipsos Online Panel.

People Love Their Pets All Over the World… PROPRIETARY AND CONFIDENTIAL “ 31% of Spaniards consider their dogs more important than their friends. ” | Commercial Summit 2017

Millennials now represent 31% of the population… and they are more likely to spend more on higher priced pet products and pet care services… | Commercial Summit 2017

Only ½ of pets visit the veterinarian once a year… and only ¼ of blood draws include a chemistry panel… | Commercial Summit 2017

Greater than 50% of symptomatic patients do not have blood work analyzed Source: 2015 CM Research Market interviews. Question: Of the sick/routine/wellness canine / feline patients you see, on approximately what percent do you draw blood for diagnostic testing? (diagnostic testing includes tests performed on in-house analyzers, pet-side tests & | Commercial 2017 those performed at a reference lab) Base: Summit All respondents

Preventive testing: Australian Veterinary Journal study on diagnostics …significant disease was identified in up-to 10% seemingly healthy pets (6. 2% of dogs, 19. 2% of cats) … abnormalities included anemia, inflammation, liver, kidney and pancreatic disease Study Conclusion: Diagnostic testing as part of regular preventative health checks may facilitate early detection of diseases before they present clinically, allowing earlier intervention and better health outcomes | Commercial Summit 2017

Raising the Standard of Care Involves Adoption of Improved Medical Protocols | Commercial Summit 2017

Thanks!! | Commercial Summit 2017