Brad T. Sauer, Executive Vice President, Health Care

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  • 1. 3M Health Care Business Health Care Business – Investor Update 3M Investor Day – October 9, 2007 Brad T. Sauer, Executive Vice President
  • 2. 3M Health Care Business Health Care Market is Global, Steady and Growing 2001-06 CAGR WW Health Care Spending 9.5% Growth Drivers 4,661 Growth Drivers $US billions • •Aging population Aging population 14.5% • •Rising middle class in 588 Rising middle class in developing regions developing regions 3.1% 462 • •Increasing cost of care, Increasing cost of care, 2,957 need for innovation need for innovation 11.5% 1,318 • •U.S. presidential order: Developing markets* U.S. presidential order: 299 Quality of care and pricing Quality of care and pricing 397 Developed Asia transparency transparency Western Europe 764 • •Demand for aesthetic Demand for aesthetic solutions in oral care solutions in oral care 2,293 8.9% • •Drug-resistant pathogens Drug-resistant pathogens North America increasing 1,497 increasing • •Food safety is aagrowing, Food safety is growing, global concern global concern 2001 2006 *Latin America, Eastern Europe, developing Asia and Africa 2 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 3. 3M Health Care Business Health Care Financials* Highlights Sales (YOY % Change) ($ millions) Organic LC% has accelerated +9% 1 +6% +7% for five consecutive quarters +24% Portfolio repositioned to focus 2 $3,237 $2,963 on higher-growth opportunities $2,803 $1,950 $1,576 Operating in attractive segments 3 with strong underlying fundamentals 2004 2005 2006 1H06 1H07 LC% 2.9% 5.3% 8.5% 7.5% 19.9%* Operating Income 2006 Sales by Geography LAC 7% APAC 12% +3% +14% +13% +22% $916 $888 $779 $546 $448 Europe 34% 2004 2005 2006 1H06 1H07 U.S. 47% OI % 27.8% 30.0% 28.3% 28.4% 28.0% 3 *Excludes Pharma and special items in all periods. 1H07 includes 4.9% of local currency growth due to Pharma supply agreements. Refer to appendix for complete reconciliation. 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 4. 3M Health Care Business Health Care Portfolio Reconfiguration – 2006 Health Drug Dental & Information Delivery Medical Orthodontics Pharma Systems Systems Focused Portfolio Of Strength Divested Investment Increase R&D For New Products Redirection Expand Sales Coverage Penetrate Developing Countries Synergistic Acquisitions 4 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 5. 3M Health Care Business Medical Infection Prevention Skin & Wound – Acute Care Asepsis (Drapes) Tapes & Secural Preps & Disinfection Skin Closure Sterilization Skin & Wound – Chronic Care Assessment & Therapy Skin Care & Protection Electrodes & Plates Wound Care Auscultation (Scopes) Immobilization 5 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 6. 3M Health Care Business Oral Care Protemp™ 3 Clarity™ SL Clinpro™ Sealant SmartClip™ Self- Preventive Treatment Temporization Materials Bracket Ligating Bracket Imprint™ 3 Lava™ Frame Filtek™ Supreme and Restoration Impression Materials Lava™ CAD/CAM System Composite Filling Materials 6 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 7. 3M Health Care Business Drug Delivery Systems Leveraging 3M Technologies and Manufacturing Processes 7 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 8. 3M Health Care Business Health Information Systems Medical Record Assessment Payment Accuracy, Patient Record Patient Billing Codes Document Document HIM Compliance & Timing Post-Discharge Hospital Care Processing Review Creation Document Review Document Creation HIM (Medical Records) Processing Coding & Grouping Transcription Mobile Dictation Storage Release of Info. Document Imaging/Scanning Abstracting Document Management Provides a front end solution Enhances productivity and Provide storage and document for capturing data drives reimbursement management capabilities 8 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 9. 3M Health Care Business Food Processing Safety 3M™ Uni-Lite ATP 3M™ Clean-Trace Luminometer 3M Petrifilm™ Plates ATP Swab 3M Petrifilm™ 3M™ Quick Swabs End Product 3M Tecra™ E.coli Visual Screening Systems Plate Reader Immunoassay Test 9 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 10. 3M Health Care Business Strong Portfolio Medical Oral Care Drug Delivery Health Info. Food Systems Systems Safety HCB Diagnostics Digital Dry Powder Quality Care Pathogen Advanced Preventive Microneedles Patient Financial Detection Faster Wound Care Self-Ligating Services Hygiene Growth (10%+) Chronic Care Monitoring Dressings Restoratives Transdermal Coding & Indicators Acute Care Prosthodontics Inhalers Reimbursement Steady Growth Med Spec Bands & Tubes (5-7%) Infection Prevention Diverse, Steady, Growing and Profitable Diverse, Steady, Growing and Profitable 10 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 11. 3M Health Care Business Health Care Business Growth Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Bolt-ons • Digital Oral Care • High-Impact • Sales Coverage New Products - Technology • Preventive Oral Care • Appropriate Products • Sales Coverage - Capabilities • Medical Diagnostics • More Localized • Food Processing Safety Supply Chains • Mid-Tier • International • Microneedles • Dry Powder Inhalation • Patient Financial Services 11 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 12. 3M Health Care Business Health Care Business Growth Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Bolt-ons • Digital Oral Care • High-Impact • Sales Coverage New Products - Technology • Preventive Oral Care • Appropriate Products • Sales Coverage - Capabilities • Medical Diagnostics • More Localized • Food Processing Safety Supply Chains • Mid-Tier • International • Microneedles • Dry Powder Inhalation • Patient Financial Services 12 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 13. 3M Health Care Business High Impact New Products Adper™ Scotchbond™ Imprint™ 3 VPS Clarity™ SL Bracket SmartClip™ Bracket Self-Etch Adhesive Impressioning Material Filtek™ Supreme Plus Lava™ Scan ST Protemp™ Crown Universal & Flowable Temporization Material Lava™ Milling Unit Scanner Restoratives 13 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 14. 3M Health Care Business High Impact New Products Advanced Tegaderm™ BacLite™ Rapid Ioban™ 2 Frame Littmann™ Electronic Stethoscopes Delivery CHG Dressing MRSA Test Coban™ 2 Layer Advanced Chronic Healthcare Document Dose-Count Inhaler Compression System Wound Dressing Management Systems 14 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 15. 3M Health Care Business Health Care Business Growth Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Bolt-ons • Digital Oral Care • Sales Coverage • High-Impact New Products - Technology • Preventive Oral Care • Appropriate Products • Sales Coverage - Capabilities • Medical Diagnostics • More Localized • Food Processing Safety Supply Chains • Mid-Tier • International • Microneedles • Dry Powder Inhalation • Patient Financial Services 15 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 16. 3M Health Care Business Acquisitions: Supplementing Organic Growth DMS – Chile Surgical Drapes & Gowns SBG GmbH Acolyte Biomedica Ltd. Brontes Technologies Coding & Grouping Rapid Pathogen Detection Digital Oral Care Neoplast - Thailand Tapes & Dressings Peridex® Oral Rinse Response Biomedical (partnership) SoftMed Preventive Dentistry End-to-End Health Info Mgmt Microbial Diagnostic Platform Abzil - Brazil Ortho Brackets Steri-StripTM S Biotrace OMNI Oral Pharmaceuticals Wound Closure Food Testing Preventive Dentistry 16 LingualCare iBraces™ “Invisible” Brackets 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 17. 3M Health Care Business Health Care Business Growth Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Bolt-ons • Digital Oral Care • Sales Coverage • High-Impact New Products - Technology • Preventive Oral Care • Appropriate Products • Sales Coverage - Capabilities • Medical Diagnostics • More Localized Supply Chains • Mid-Tier • Food Processing Safety • International • Microneedles • Dry Powder Inhalation • Patient Financial Services 17 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 18. 3M Health Care Business Dental – Traditional Impression & Crown Process Conventional Impression Pour Plaster Model Trim, Pin, and Cut Model Wax Buildup and Sprue Cast, Grind, and Polish Porcelain Veneer 18 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 19. 3M Health Care Business Lava™ Chairside Oral Scanner “Digital Impressions” Technology Obtained via Brontes Acquisition Technology Obtained via Brontes Acquisition 19 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 20. 3M Health Care Business Digital Workflow for Oral Care Prosthodontics Model Production CAD/CAM Crown / Bridge Orthodontics Custom Appliances Design Virtual Model Custom Virtual Model Custom Design Digital Appliances 20 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 21. 3M Health Care Business New Business Opportunity: Medical Diagnostics The Problem Goal: Help prevent spread and risk of infection (Example: MRSA) Infectious diseases a global threat: - MRSA - TB - Staph aureus - VRE - Flu A/B - C difficile Cost of infectious diseases in Patient at hospital screened US alone: for infectious diseases Traditional - 100,000 Lives per year 3M Solution Method - $6.2 Billion per year Lab Test Current screening methods are too slow, ineffective U.K., other parts of Europe Culture already setting standards 3M™ BacLite™ Slow, Labor intensive (Approved in Europe: MRSA) Results: 2-3 days Results: 5 hours 21 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 22. 3M Health Care Business Microneedles for Transdermal Drug Delivery “Patches Instead of Injections” Microneedles Patch - Low Pain & Convenient 3M microreplication technology Hollow Microneedles Drug-Coated Microneedles For controlled delivery of larger doses 22 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 23. 3M Health Care Business Health Care Business Growth Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Digital Oral Care • Bolt-ons • Sales Coverage • High-Impact • Preventive Oral Care New Products - Technology • Appropriate Products • Medical Diagnostics • Sales Coverage - Capabilities • More Localized • Food Processing Safety Supply Chains • Mid-Tier • Microneedles • International • Dry Powder Inhalation • Patient Financial Services 23 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 24. 3M Health Care Business Rapidly Growing in International Markets 3M Health Care Revenues 2006 Local Currency Developing Countries Growth: Expanded sales coverage Turkey 35% India 30% New products Developed Russia 29% tailored to Countries* Gulf 25% market needs China 22% Local Argentina 21% manufacturing Thailand 21% Malaysia 19% Venezuela 18% Korea 15% *U.S., Canada, Western Europe, Japan, Australia, New Zealand 24 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 25. 3M Health Care Business International: Products for Local Needs Brasil IV Fix Dressing Localized Electrodes 3 Microporous Surgical Tape Tier 2 Dressing Tian Tu (Second Way) China Brand Rol ls Size 12.5mm x 9.1 m 24 1/2 inch x 1 0yd 1530A-0 Hypoallergenic Tier 2 Paper Tape Korean Hand Hygiene Line Cleaning & Disinfecting Tier 2 Drapes Regional Localization Hand Hygiene 25 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 26. 3M Health Care Business New 3M Health Care Plant in China On Schedule for 2008 Start-up On Schedule for 2008 Start-up 26 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 27. 3M Health Care Business International Health Care Acquisitions DMS Chile S.A. – A leading manufacturer of surgical packs, drapes and gowns. Based in Santiago, covers Latin America. Neoplast Co. Ltd. – Manufacturer of surgical tapes, dressings, first aid products. Based in Thailand, adds regional capacity. Abzil Industria e Comercio Ltda. – Second largest orthodontic products maker in Brazil. Expands our regional presence and manufacturing capabilities. Boosting Our International Capabilities Boosting Our International Capabilities 27 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 28. 3M Health Care Business Health Care Business Strategy Growth Strategy Grow the Current International Build New Acquisitions Core Business Growth Businesses • Digital Oral Care • High-Impact • Bolt-ons • Sales Coverage New Products • Preventive Oral Care - Technology • Appropriate Products • Sales Coverage - Capabilities • Medical Diagnostics • More Localized • Food Processing Safety Supply Chains • Mid-Tier • Microneedles • International • Dry Powder Inhalation • Patient Financial Services Operational Excellence • Supply Chain Performance • Quality • Lean Six Sigma • Productivity • Customer Service • Sourcing 28 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 29. 3M Health Care Business Accelerating Growth, Maintaining Premium Returns* 30.0% 20% 30% 18% 28.3% 28.3% 27.8% 16% 28% Local Currency Growth Rate Operating Income Margin 14% 26.4% 26.4% 12% 26% 24.6% 10% 8% 24% Organic 6% 4% 22% 2% 0% 20% 2001 2002 2003 2004 2005 2006 1H2007 *Unaudited. Total Health Care without Pharma and Pharma Supply Agreement 1H07 with Pharma Supply Agreement: LC Growth = 19.9%, O.I. = 28.0%. 29 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 30. 3M Health Care Business Health Care Business – Summary Strong Portfolio Drug Health Food Delivery Information Processing Oral Care Medical Systems Systems Safety Accelerating Profitable Growth Grow the Current International Build New Acquisitions Core Business Growth Businesses Well-Positioned for 8%+ Top-Line Growth at Premium Margins Well-Positioned for 8%+ Top-Line Growth at Premium Margins 30 11-Oct-07 © 3M 2007 All Rights Reserved.
  • 31. 3M Health Care Business Appendix
  • 32. 3M Health Care Business Health Care Financials*- Appendix (YOY % Change) Sales Highlights ($ millions) Pharma +7% +5% +5% Organic LC% has accelerated for five 1 $774 $797 consecutive quarters $793 -1% Portfolio repositioned to focus on 2 $390 $3,237 $2,963 $2,803 profitable opportunities $1,950 $1,576 Operating in high growth segments 3 with strong underlying fundamentals 2004 2005 2006 1H06 1H07 LC% 0.6% 4.2% 6.0% 4.6% -4.6% Operating Income 2006 Sales by Geography +5% +15% LAC 7% APAC 12% +7% $256 $226 $194 -4% $120 $916 $888 $779 $546 $448 Europe 34% 2004 2005 2006 1H06 1H07 U.S. 47% OI % 27.0% 29.6% 29.2% 28.9% 28.0% 32 *Includes Pharma in all periods; excludes special items. 11-Oct-07 © 3M 2007 All Rights Reserved.