rad T. Sauer Executive Vice President, Health Care Business

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rad T. Sauer Executive Vice President, Health Care Business

  1. 1. Accelerating Growth In Health Care Brad Sauer Executive Vice President, Health Care Business 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  2. 2. 3M Healthcare: Key Financial Data Sales Operating Income $1,200 $5.0 $Billions & YOY % Chg $Millions & YOY % Chg $1,114 +15% $973 $3.8 $907 $4.0 +7% $3.4 $3.6 $900 +5% +5% +20%* +12% $3.0 $600 $2.0 $298 $1.0 $300 $1.0 +10% +2% $0 $0.0 2003 2004 2005 Q1 2006 2003 2004 2005 Q1 2006 LC Growth 5.3% .6% 4.2% 4.9% OI Margin 26.4% 27% 29.6% 30.8% 2005 Sales By Geographic Area U.S. 47% LAC 7% APAC 11% Europe 35% *2002 estimated stock options, not restated. 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  3. 3. Health Care Growth Strategy STEP 1 STEP 2 Accelerate Reconfigure the Portfolio Growth REDIRECT RESOURCES 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  4. 4. Health Care Portfolio Reconfiguration Health Drug Dental & Information Personal Delivery Medical Orthodontics Pharma Systems Care Systems Focused Portfolio Of Strength Leverage Pursue Investment Increase R&D For New Products Strategic 3M I&TB Supply Redirection Expand Sales Coverage Chains & Alternatives Penetrate Developing Countries Technologies Synergistic Acquisitions 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  5. 5. Pharmaceuticals Business Direction 3M is exploring strategic alternatives for its global branded pharmaceuticals business and IRM platform (Goldman Sachs retained) Today’s very competitive pharmaceutical marketplace requires broad pipelines of new drugs, significant investments, and a longer term risk-reward business model than applies to most other 3M businesses Very successful business but different model and not core for 3M The best way for our branded pharmaceuticals business to succeed is for it to be free to pursue separate strategies under the direction of a dedicated pharmaceutical industry company with a business model better suited to maximize its potential 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  6. 6. Health Care Reconfigured Portfolio Health Drug Dental & Information Delivery Medical Orthodontics Systems Systems Investment Focused Portfolio of Strength Increase R&D For New Products Expand Sales Coverage Penetrate Developing Countries Synergistic Acquisitions 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  7. 7. Health Care Growth Strategy STEP 1 STEP 2 Reconfigure the Accelerate Growth Portfolio REDIRECT RESOURCES 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  8. 8. Health Care Growth Strategies Drive additional organic growth with key investments – R&D for new products – Expanded sales coverage and marketing globally Accelerate in high growth market spaces with new organic platforms Rapidly penetrate developing countries 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  9. 9. Rapidly Penetrating Developing Countries 2005 Local HCB Revenues Currency Growth China 35% Developed Countries* Venezuela 34% Expanded Sales Russia 32% Coverage Turkey 25% New Products Malaysia 25% Tailored To Market Needs Argentina 24% India 22% Local Manufacturing Thailand 19% Taiwan 19% Developing Gulf 14% Countries South Africa 13% Mexico 12% *U.S., Canada, Western Europe, Japan, Australia, New Zealand Brazil 10% 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  10. 10. Health Care Growth Strategies Drive additional organic growth with key investments – R&D for new products – Expanded sales coverage and marketing globally Accelerate in high growth market spaces with new organic platforms Rapidly penetrate developing countries Step up the pace on acquisitions, especially synergistic bolt-ons 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  11. 11. Medical Division Portfolio Infection Prevention Skin Health Asepsis Skin Care & Protection Sterilization Tapes & Secural Preps & Disinfection Wound Care Skin Closure Assessment & Therapy Food Safety Electrodes & Plates Food Bacterial Testing Immobilization Food Pathogen Testing Auscultation Food Sample Prep 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  12. 12. Medical Division Operations A broad portfolio in clinically important growth segments: – Infection Prevention – Skin Health – Patient Assessment – Food Safety Global business – 55% of revenue & 63% of growth OUS Dedicated sales coverage in more than 60 countries R&D resources on 5 continents Major manufacturing in 10 countries 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  13. 13. Medical Division Growth Drivers Investing for accelerated new product flow Expanded sales coverage U.S. and Europe New push into Alternate Care Accelerating growth in developing countries – Products – Coverage – Manufacturing Acquisitions and technology licensing 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  14. 14. Medical Key New Products For 2006 Comfort Layer 3M One Comfortte) Layer Compression (L ami na Compression (L ami na te) Lay erer Littmann™ Lay Step PU-Foa mm PU-Foa Electronic Patient Coban LF Coban LF Stethoscopes Prep CobanTM 2 Layer modified Coban LL F modified Coban F Compression (much l ess stre tch, more and he avlier Denier -simore (much ess stre tch, ze and he av ier Denier -si ze Spa ndex fi la ments) System Spa ndex fi la ments) ClozeXTM Wound Closure Tegaderm™ Ag Ioban™ 2 Frame Mesh Dressing with Silver Delivery Scotchcast™ Wet or Tegaderm™ on Roll Dry Cast Padding 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  15. 15. Licensing Agreement – ClozeXTM Medical Unique design for fast application and closure Good cosmetic results Less infection potential than invasive sutures or staples Reduced skin trauma and patient discomfort Sutures ClozeX Used by variety of surgeons and physicians - plastic and reconstruction Suture closure at 6 months post-op ClozeX closure at 6 months post-op - cardiothoracic - vascular - OB-GYN - general surgery - orthopedics - dermatology - emergency medicine 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  16. 16. Medical Alternate Care Growth Market Drivers Portfolio Strength Care moving to outside of hospital Tape Secural Growth in Chronic Wounds - aging Acute and Active Dressings population, diabetes & obesity Skin Care Regulatory/reimbursement activity Advanced Wound Care increasing in Chronic Care Compression Growth Initiatives Invest – Dedicated US Coverage Expand European Coverage New Products Build Brand 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  17. 17. High Growth Space – Food Processing Safety Market Drivers Leveraging Health Care Growth Initiatives Growing Awareness of Integrated Detection, Monitoring Investing in Global Food Safety – Globally & Antimicrobial Technology Marketing/Sales Coverage Increased Regulatory Development & Testing Expertise Expanding US Manufacturing Vigilance Global Regulatory & Quality Establishing Manufacturing International Market Monitoring Systems in Asia Expansion Regulated Manufacturing Investing in Technology Customer Expectation Processes Accessing Technology of Safe Food Through Partnerships Globalization of Food Processing 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  18. 18. Dental and Orthodontics Portfolio FiltekTM Supreme Composite ImpregumTM ClarityTM Filling Materials Impression Materials Orthodontic Appliances ProtempTM 3 LavaTM Frame and Bridge OMNI Temporization Materials Preventive Products Digital Ceramic Systems 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  19. 19. Dental & Orthodontics Operations A broad portfolio in both established and newer, high-growth segments: – Restoratives – Prosthodontics • Including Laboratory and Digital Dentistry – Orthodontics – Prevention Global business – 65% of revenue OUS Dedicated sales coverage in more than 60 countries Major operations centers in the U.S. and Germany 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  20. 20. Dental & Orthodontics Growth Drivers Investing for accelerated new product flow Expanded sales coverage globally Accelerating growth in developing countries – Products – Manufacturing Enter high-growth market spaces Acquisitions and technology licensing 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  21. 21. Dental & Orthodontics Key New Products For 2006 SmartClip TM FiltekTM Supreme Plus Vitrebond TM Plus ImprintTM Self-Ligating Brackets Composites Liner/Base Impression Materials LavaTM Finished Bridge LavaTM Ceram Overlay ParadigmTM C Glass Ceramic Blocks Digital Ceramic Systems 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  22. 22. High Growth Space – Preventive Oral Care Acquisition Of OMNII 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  23. 23. High Growth Space – Digital Dentistry 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  24. 24. Drug Delivery Systems Division Leveraging 3M Technologies And Manufacturing Processes 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  25. 25. Attractiveness Of Drug Delivery Systems Differentiating from competing products Commercial value Increasing returns Extending patent life of drug delivery on R&D Improving efficacy, convenience, compliance, Reducing side effects 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  26. 26. Drug Delivery Systems Key Growth Drivers Market transition from CFC to HFA inhalers Growing attractiveness of global emerging markets Increased interest in transdermal delivery as a product enhancement opportunity Demand for patient friendly macromolecule delivery technologies 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  27. 27. Hospital Information Systems Division 3M HIS Solutions Medical Record Compliance and Patient Billing Codes Patient Assessment for Billing Edits for Record post- Transferred to Hospital Billing - 3M Decreased A/R discharge Billing System Care Code Finder Cycle & Accuracy Leader in a critical segment - accuracy of reimbursements - Pioneer in coding and grouping - Leading expertise and technology - Scale Pay for Performance pressures increasing - Severity adjusted reimbursement opportunity - 3M well positioned Market pressures are global - opportunity in selected OUS countries Acquisition opportunities in adjacent segments 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  28. 28. Health Information Systems Acquisition 3M HIS has entered into a definitive agreement to acquire SBG GmbH based in Berlin, Germany SBG is a leading developer of coding and grouping software for the German health information technology market The Company participated in the development of the German coding and grouping classification system used by hospitals for reimbursement SBG’s products are complementary to 3M’s existing portfolio and expands our footprint in Germany SBG’s technology also serves as a catalyst to expand our presence in Europe, Asia Pacific and other developing markets SBG provides 3M with a regional development center of excellence to better serve our European customers This acquisition also solidifies key relationships with leading European systems integrators 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
  29. 29. Health Care Business Summary Health Care Portfolio Dental & Drug Delivery HIS Medical Orthodontics Systems Strategies To Accelerate Growth Drive additional organic growth with key investments – R&D for new products – Expanded sales coverage and marketing globally Accelerate in high growth market spaces with new organic platforms Rapidly penetrate in developing countries Step up the pace on acquisitions, especially synergistic bolt-ons 3M Investor Meeting 2006 © 3M 2006 All Rights Reserved

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