presentation material · review the presentation of fy2009 2q executed all processes planed at the...

Copyright © 2010 M3, Inc. All rights reserved.

M3Presentation Material

2Q FY2010

1Copyright © 2010 M3, Inc. All rights reserved.

The following contains statements that constitute forward-looking statements, plans for the future, management targets, etc. relating to M3, Inc. and/or its group. These are based on current assumptions of future events, and there exist possibilities thatsuch assumptions are objectively incorrect and actual results may differ from those in the statements as a results of various factors.

Furthermore, information and data other than those concerning the Company and its subsidiaries/affiliates are quoted from public information, and the Company has not verified and will not warrant its accuracy or dependency.

M3, Inc.


Company BackgroundCompany Background

2000 Sep Founded

Oct Launched MR-kun service

2002 Mar Acquired WebMD Japan

2004 Sep Listed on TSE Mothers

2005 May Acquired with Medi C&C and entered into Korean market

Sep Launched QOL-kun service

Dec Launched AskDoctors service

2006 Jun Acquired MDLinx and entered into US market

2007 Mar Listed on TSE 1

2008 Oct Opened “MedQuarter.de” to enter into Europe market

Business domainBusiness domainBusiness domainInternet-based healthcare businesses

HistoryHistoryHistory

NameNameNameM3

MedicineMediaMetamorphosis


m3.com: Japan’s #1 Physician Websitem3.com: Japan’s #1 Physician Website

Medical News

Search engine

Research Paper search

Web-based medical tools

m3.com MR-kun

Sponsor messages

SponsoredSponsoredSponsoredSponsor-freeSponsorSponsor--freefree


47

78

97

125

146

188196

162174

Physicians Registered in m3.com Physicians Registered in m3.com

（1,000）

FY2002～FY2010.2Q

FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY20102Q


Platform Power of m3.com Improving SteadilyPlatform Power of m3.com Improving Steadily

2009Sep.

Physicians registered in m3.com

2010Sep.

+8.9%

2009Sep.

Physicians login to m3.com

2010Sep.

+14.3%

2009Sep.

Physicians in MR-kun active

2010Sep.

+15.6%

2009Sep.

MR-kun eDetailsread by physicians

2010Sep.

+33.2%＜＜＜


M3’s growthM3’s growth

DomesticDomestic

OverseasOverseas

Expand our core businessExpand our core Expand our core businessbusiness

Develop overseas businessesDevelop overseas Develop overseas businessesbusinesses

Develop new businessesDevelop new Develop new businessesbusinesses

1. Evidence solution business2. Other new business


Head countHead Head countcount

Annual costs per personAnnual costs Annual costs per personper person

Japanese Pharma’s Huge Marketing CostsJapanese Pharma’s Huge Marketing Costs

55,000 ¥20mnMRs(Pharmaceutical

companies)

MRMRss((Pharmaceutical Pharmaceutical

companiescompanies))

MSs(Pharmaceutical

wholesalers)

MSMSss((Pharmaceutical Pharmaceutical

wholesalerswholesalers))30,000 ¥10mn

Total cost of whole industry¥1.1-1.4 tn

Total cost of Total cost of whole industrywhole industry¥¥1.11.1--1.41.4 tntn

×× ＝＝ ¥1.1tn

＝＝ ¥300bn××

Source: MIX, Research by M3


Physicians’ Demand for On-Line DetailingPhysicians’ Demand for On-Line DetailingQ. What is the ideal ratio of on-line and off-line promotional

information (“details”) from pharma companies?

5%

16%

13%

43%

9%

12%

2%

100% = 1,300 physicians100%

80%

60%

50%

40%

20%

20%

40%

50%

60%

80%

100%

100% On-line

100% Off-line

On-line

Off-line

A.

Demand for eDetails is quite high for busy physicians as they can get the information when it’s convenient for themselves, not for MR

Source: M3 questionnaire to 1,300 physicians


16,307

22,534

29,861

19,475

34,989

FY2006 FY2007 FY2008 FY2009 FY2010

MR-kun eDetails Read by PhysiciansMR-kun eDetails Read by PhysiciansFY2006～FY2010

FY2009.2QvsFY2010.2Q+29%

The growth will be accelerated in the second half of FY.

(1,000 eDetail read)


MR-kun Annual Fee Structure MR-kun Annual Fee Structure MR-kun base

feeMRMR--kun base kun base

feefee Detail feeDetail feeDetail fee Contents production fee

Contents Contents production feeproduction fee Operation feeOperation feeOperation fee

¥70mnRevised as of Oct. 2005 for new clientPrevious fee:

￥60mn

¥20mn

¥40mn

¥100 per detail

¥30mn

M3 produces web contents shown on MR-kun

¥10mn

Basic operation, including sending messages to physicians and replying to physicians’ questions

～

¥220mn ¥10mn¥60mn

¥70mn

～

¥100mn

Initial PhaseInitial PhaseInitial Phase

Top 5 clientsTop 5 clientsTop 5 clients

¥130mn～¥150mn

The average of top 5 clients: ¥400mn

～


Case study

Off-line RepsOffOff--line Repsline RepsNon-coveredNonNon--coveredcovered coveredcoveredcovered

Non

-cov

ered

NonNon

-- cov

ered

cove

red

cove

red

cove

red

cove

red

1(baseline)

1(baseline)

+9%Sales increasecompared with base






MR

-kun

MR

MR -

- kunku

n

Combining real reps with MR-kun maximizes detailing impact

Combining real reps with MR-kun maximizes detailing impact

“MR-kun”alone has substantial power... “MR-kun”alone has substantial power...

Source: M3Notes: Questionnaire to 16,000 General Practitioners

MR-kun Increases Sales Like RepsMR-kun Increases Sales Like Reps


~500mn

CurrentCurrentCurrent Growth OpportunitiesGrowth OpportunitiesGrowth Opportunities

MR-kun’s Growth Potential in JapanMR-kun’s Growth Potential in Japan

27Companies

50~60Companies

# of clients using MR-kun# # of clients using of clients using MRMR--kunkun

Sales per ClientSales per ClientSales per Client MR-kunAppx.200mn

Appx.2 times

Appx.2 times

Appx.2.5 times

Appx.2.5 times

X

=

Appx.5 times

Appx.5 times

Average revenue from top 10 pharma clients FY09.1H 154 million yen → FY10.1H 189 million yen (23％ growth )Average revenue from top 10 pharma clients FY09.1H 154 million yen → FY10.1H 189 million yen (23％ growth )

by increase of;• # of products adopted• # of member MDs

MR-kun service regained growth momentum by;1. Staff increase2. Adoption by more products3. Increase number of read eDetails per doctor



DomesticDomestic

OverseasOverseas Develop overseas businessesDevelop overseas Develop overseas businessesbusinesses





Evidence Solution Business – MebixEvidence Solution Business – Mebix

Clinical trialClinical trialClinical trial PMS*PMS*PMS* Evidence buildingEvidence Evidence buildingbuilding

People driven

No1 company in Japan for EBM data collection. . . supporting clinical trial for launched drugs

IT driven

Drug launch

CROs

Plan to go to PMS market

* Post Marketing Surveillance


24Copyright © 2009 So-net M3, Inc. All rights reserved.

Cost ReductionCost Reduction

FY2009 FY2010 or later

12030Leanback-office

LeanLeanbackback--officeoffice

Cost for listingCost for listingCost for listing 30 60

* Fiscal year of mebix (May – Apr.)

Other indirect cost(office rent etc.)

Other indirect costOther indirect cost(office rent etc.)(office rent etc.)

System development cost

System development System development costcost

(yen million)* *

Cost reduction proceeds steadily, making Mebix leaner and more profitable.

SMO related costSMO related costSMO related cost

15 20 Integrate office space

Reduce audit feeTerminate custody service

Cut redundant function

Programs

Redesign system Integrate IT infrastructure

Recruit doctors by using m3.com

95 280 - 360

10 50 - 100

10 30 - 60

vs FY2008vs FY2008

Mebix – Improving RestructuringMebix – Improving RestructuringReview the presentation of FY2009 2Q

Executed all processes planed at the acquisition, and turned into black in FY2010 2Q.Those benefits will continue or expand in coming periods.

CompletedCompletedCompletedIn ActionIn Action


Mebix – Improving RestructuringMebix – Improving Restructuring

Realized reduction of S.G.A. while increasing sales.Steady progress in restructuring.

FY20092Q

Sales

FY20102Q

+ 15%

¥439M¥505M

FY20092Q

FY20102Q

- 54%

Actual performance（Jul. – Sep.）

S.G.A.

¥210M

¥97M


m3.com acquiring cases extremely faster than other SMO.

SMO

A A0

50

100

m3.com Company A B C D E F G

（number）

Mebix – Participating Physician Recruiting via m3.comMebix – Participating Physician Recruiting via m3.com

Number of registered case by SMO



DomesticDomestic

OverseasOverseas Develop overseas businessesDevelop overseas Develop overseas businessesbusinesses





Research（Japan）ResearchResearch（（JapanJapan））

New Business Development on the PlatformNew Business Development on the Platform

Web-based Physician Surveys

Assigned staff

Above 1,000mn

¥0mn~

¥750mn

FY2010Sales forecast

ｍ３ＭＴｍ３ＭＴｍ３ＭＴE-mail, banner promotion service for pharma companies

ＱＯＬ kunetc.ＱＯＬＱＯＬ kunkunetc.etc.

Promotion service for non-pharmacompanies

Consumer BusinessConsumer Consumer BusinessBusiness

Consumer service

iTICKETiTiTICKETICKETOnline clinical reservation system for patient

4.5

3

9

4

15

Revenue from the new businesses will exceed the revenue of MR-kun in FY2010.Many of the new businesses are run by few staff and quite profitable.Established joint venture for career business with SMS CO.,LTD.

M3 CareerM3 CareerM3 CareerJob informationfor Physicians, Pharmacist

49Consolidated

subsidiary

¥750mn~

¥1,000mn


Expansion of Consumer BusinessExpansion of Consumer Business

90%+ questions get answers from physiciansMore than 2.4 million Q&Aarchives

Consumer business grew to generate 60mil yen revenue per month, preparing new services in mental health care area.

AskDoctorsAskDoctorsAskDoctors

Mobile site targeting women (May 2009)Access to emmenia-related Q&A archives on AskDoctors

AskMoonAskMoonAskMoon

Specially offered for Softbank’s contents package (Mar. 2009)Browse only service for AskDoctors’ Q&A archives

AskDoctors LiteAskDoctorsAskDoctors LiteLite AskMindAskMindAskMind

Launched new site about mental health(Jun. 2010)


Membership of AskDoctorsMembership of AskDoctors

77

174

311

409

517 533

FY2005 FY2006 FY2007 FY2008 FY2009 FY2010.2Q

FY2005.1Q～FY2010.2Q（1,000）


M3 Career, IncM3 Career, Inc

Media power of m3.com– 191K Physicians– 70K Pharmacist

Experience in the recruiting ad business for medical professionals

Direct relationship both with employers (clinics etc) and job seekers (physicians, pharmacists)Experience in the employment agent business for nurses or care workers

Full-line service and platform for best match between employers and job seekers

Full-line service and platform for best match between employers and job seekers

Company Name ：M3 Career, IncCapital ：50 mil yenBusiness ：Recruiting service for medical professionalsEmployees ：49Shareholders ：M3 51%、SMS 49%

In FY2010 1H, posted ¥615M sales and ¥7M operating profit.Because of seasonality and operational issues, operating profit turned into red in 2Q. (1Q:¥69M, 2Q:-¥62M)


Acquisition of iTICKET

Used in 900+ clinics , more than 1 million unique users per month,

Web-based reservation system for clinics

Clinic Outdoor

Internet

more than 300,000 members (mostly moms with little kids) registered to the pan-clinic site. …became one of the largest “mom”platforms in Japan.


Media Business will Start on ASP Platform.

1

患者様用番号券（表面サンプル）

（裏面サンプル）

【XXサンプルプレゼント】詳しくは、下記携帯サイトへ

http://xxxxxxxxxxx

【XXサンプルプレゼント】詳しくは、下記携帯サイトへ

http://xxxxxxxxxxx

【院内でXX番組放映中】さらに詳しい情報は、下記携帯サイトへ

http://xxxxxxxxxxx

【院内でXX番組放映中】さらに詳しい情報は、下記携帯サイトへ

http://xxxxxxxxxxx

製品ロゴ

製品ロゴ

ConsultationTicket

ASP : Reservation for medical careASP : Reservation for medical careASP : Reservation for medical care Media businessMedia businessMedia business

Clinic UsersClinic Media

Mobile Media(Nov.～）

Ticket Media（Sep.～）

<Fee Structure>Initial Fee ：498,000yen / Clinic ～

ASP Service ：11,400yen / Month ～

<Fee Structure>Clinic Media ：1,500,000yen / Month ～

Mobile Media ：130,000yen / 2Week ～

Ticket Media ：750,000yen / Project ～

330

479

692

830976942

'05 '06 '07 '08 '09 '10



DomesticDomestic

OverseasOverseas


Develop overseas businessesDevelop overseas Develop overseas businessesbusinesses



Development in the USDevelopment in the US

“M3 Messages” (US version of MR-kun) started on MDLinx(merged with M3 USA in Mar. 2009).– Washington D.C.– 328K medical professionals

(incl. 100K physicians) as registered member

The service has been adopted by products in Oncology, Rheumatology, Neurology, Cardiology and PCP area


MDLinx (US)：Member Coverage by SpecialtyMDLinx (US)：Member Coverage by Specialty

Oncology area（100%＝10,000 specialists）

Developed leading platforms by acquiring half of oncologists andrheumatologists in the U.S. Starting new acquisition programs in Psychiatry, Neurology, Cardiology, and PCP area.

Rheumatology （100%＝4,200 specialists ）

（before program）

FY2007.1Q14%

(Currently)75%

（before program）

FY2007.3Q14%

(Currently)53%

After merging membership

of SmartestDoc


M3 Messages Contracting StatusM3 Messages Contracting Status

Ongoing

12 products(FY2009 4Q; 17 products)

Among the top 20 global pharmaceutical companies adopted “M3 Messages ” already.– All in Oncology, Rheumatology,

Neurology, Cardiology or PCP area– Close to sign in other areasDelivery of the messages started already in 12 products. The clients appreciate the performance and made further commitments (contract extension, addition of new products etc.). Others will start soon. Acquired a big project in PCP（Primary Care Physician） area.Pipeline for project acquisition is well filled for FY2011.

Preparingto start

Pipeline

appx. 20 products(growing steadily)

12 products(FY2009 4Q; 7 products)

Contracted11 companies24 products


Consolidated P/L Statement for FY2010 2QConsolidated P/L Statement for FY2010 2Q

(yen milion)Consolidated

FY2010.2QFY2009.2Q

1,300

2,400

2,400

6,800

Forecast

+1,169%1,434113Net profit

+28%2,6052,038Ordinary profit

+29%2,6622,056Operating income

+36%6,8585,030Sales

YoY GrowthActualActual


Consolidated P/L Statement for FY2010 2QConsolidated P/L Statement for FY2010 2Q

(yen milion)

+123%982439SalesEvidence Solution -%▲48▲183Profit

+58%704446SalesOverseas

-%36▲49Profit

+16%2,9052,498Profit

+27%5,1734,071SalesMedical Portal

Others+20%141117Sales

-%0▲1Profit

YoY GrowthFY2010.2QFY2009.2Q

Breakdown by Business Segments


Consoli. Sales Analysis (vs P.Y.)*Consoli. Sales Analysis (vs P.Y.)*（yen milion）

Steady growth momentum continues.

Evidence Solution

Overseas

Medical Portal

Others

Research, Others

FY2010 2Q Act

Career

MR-kun

FY2009 2Q Act

Increasing order

Expanding “M3 Messages” and research service(Absorbed forex impact : -47mil yen)

Consolidate M3 Career

Consolidate Mebix

Contribution from iTicket

Research and AskDoctors expansion

* Sales to outside customers

486

6,858

5,030

386

543

258

24

130


166

1,241

1,364

62

14

2

7

▲131

（ yen milion ）

Steady growth and increasing profitability of mebix covered loss of M3 career.

Others

Evidence Solution

Overseas

Medical

Portal

HQ and elimination

MR-kun, Research, Others

FY2010 2Q（Jul - Sep）

Career

FY2010 1Q（Apr - Jun）

Each business expansion

Expanding synergy with M3, and turning black

Expanding “M3 Messages”and continuing black

Because of seasonality, turning red in 2Q.

Consoli. Profit Analysis (1Q vs 2Q)Consoli. Profit Analysis (1Q vs 2Q)


44508

872

1,694

2,779

3,7344,170

4,811

5,800

256

-93

2,3631,938

3,300

62

1,9651,609

-93

136 279 493991

107 480 8911,563

2,276

3,854

5,729

7,4758,534

11,811

14,500

FY2000

(6 months)

FY2000

(6 months)

（Forecast）

Annual Results & Forecast for FY2010Annual Results & Forecast for FY2010SalesSalesSales Ordinary Profit & Net ProfitOrdinary Profit & Net ProfitOrdinary Profit & Net Profit

(¥ mn) (¥ mn)

Consolidated Consolidated

（Forecast）

Ordinary profit

Net Profit

FY2001

FY2002

FY2003

FY2004

FY2010

FY2005

FY2006

FY2007

FY2008

FY2001

FY2002

FY2003

FY2004

FY2010

FY2005

FY2006

FY2007

FY2008

FY2009

FY2009


81 80 76 64 61 60 51 43

19 20 2227 29 31 40 46

10 11 9 9 112

FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010Fct

Consolidated Sales TrendConsolidated Sales Trend

Core business(MR-kun)Core businessCore business(MR(MR--kun)kun)

OverseasdevelopmentOverseasOverseasdevelopmentdevelopment

New business(domestic)New businessNew business(domestic)(domestic)

1,563 2,276 3,8545,729

7,475 8,53411,811

14,500

FY2007FY2006FY2005FY2004FY2003 FY2008 FY2009

（%）

mil ¥

FY2010 Fct


M3MedicineMediaMetamorphosis

Healthcare sector is huge…・ Japanese national spending on medical services is

approximately ¥33tn (approximately ¥50tn if peripheral businesses are included)

・ Equivalent to 10% of Japanese GDP・ Sector controlled by only 270,000 people, e.g.,

physicians, representing only 0.2% of the population

M3 aims to create new value in this sector・ Solve the issues and problems of the medical sector・ With new and unique business models・ While focusing on areas were we can add high value

(e.g., have high profit) to boost our enterprise value

Source: Ministry of Health, Labour and Welfare, the Japan Medical Association, M3

Creating New Value in HealthcareCreating New Value in Healthcare

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