“New” Cardinal Health (Post-Spin)


 George Barrett
 Vice Chairman and Chief Executive Officer
 Healthcare Supply Chain Se...
Forward-looking information
This presentation contains forward-looking statements addressing expectations, prospects, esti...
Cardinal Health post-spin

  A new Cardinal Health
• Leading provider of products and services across
  the healthcare sup...
Progress over past year
                                  Strategic priorities
     Improve Customer Loyalty              ...
Two segments,
with a comprehensive vision

      Pharmaceutical                                                           ...
Matching fragmented demand
   with complex supply network

Pharmaceutical                                                 ...
Pharmaceutical Segment




                                                                                     7
     © 2...
Pharmaceutical Segment

    Pharmaceutical Supply Chain

        Brand                                                    ...
Pharmaceutical Supply Chain

    Flexible generic model
•   Extensive launch capabilities
•   Broadest product portfolio i...
Pharmaceutical Supply Chain

    Customized programs to increase profit
    and competitiveness for Leader® customers

   ...
Pharmaceutical Segment

Leading Nuclear Pharmacy position
                                                                ...
Medical Segment




                                                                                  12
  © 2009 Cardinal...
Medical Segment


                                                                                                        ...
Medical Segment

Leveraging vertical scale


                  Self-manufactured
                                         ...
Medical Segment

  Ambulatory Care
• Defining the market
   – Surgery centers, long-term care facilities, physician office...
Unprecedented environment for reform

                                                                                    ...
Cardinal Health post-spin

    Positioned to lead in evolving
    healthcare landscape

    Our Foundation
•   Leading pro...
Thank you!

    © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
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cardinal health UBS Global Healthcare Services Conference 2009

  1. 1. “New” Cardinal Health (Post-Spin) George Barrett Vice Chairman and Chief Executive Officer Healthcare Supply Chain Services and Chief Executive Officer Cardinal Health, Inc. (post-spin) February 9, 2009 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  2. 2. Forward-looking information This presentation contains forward-looking statements addressing expectations, prospects, estimates and other matters that are dependent upon future events or developments. These matters are subject to risks and uncertainties that could cause actual results to differ materially from those projected, anticipated or implied. The most significant of these uncertainties are described in Cardinal Health’s Form 10-K, Form 10-Q and Form 8-K reports (including all amendments to those reports) and exhibits to those reports, and include (but are not limited to) the following: uncertainties related to the deferral in hospital capital spending affecting Cardinal Health’s Clinical and Medical Products segment and difficulties in forecasting the exact duration and potential long-term changes in hospital spending patterns; uncertainties regarding the planned spin-off of the clinical and medical products businesses as a new stand-alone entity, including the timing and terms of any such spin-off and whether such spin- off will be completed, and uncertainties regarding the impact of the planned spin-off on Cardinal Health, the new clinical and medical products company and the potential market for their respective securities; competitive pressures in Cardinal Health’s various lines of business; the loss of one or more key customer or supplier relationships or changes to the terms of those relationships; uncertainties relating to timing of generic and branded pharmaceutical introductions and the frequency or rate of branded pharmaceutical price appreciation or generic pharmaceutical price deflation; changes in the distribution patterns or reimbursement rates for health-care products and/or services; the results, consequences, effects or timing of any inquiry or investigation by any regulatory authority or any legal or administrative proceedings; future actions of regulatory bodies or government authorities relating to Cardinal Health’s manufacturing or sale of products and other costs or claims that could arise from its manufacturing, compounding or repackaging operations or from its other services; the costs, difficulties and uncertainties related to the integration of acquired businesses; uncertainties related to the recent disruptions in the financial markets, including uncertainties related to the availability and/or cost of credit and the impact of the financial market disruptions on Cardinal Health’s customers and vendors; and conditions in the pharmaceutical market and general economic and market conditions. This presentation reflects management’s views as of February 9, 2009. Except to the extent required by applicable law, Cardinal Health undertakes no obligation to update or revise any forward-looking statement. 2 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  3. 3. Cardinal Health post-spin A new Cardinal Health • Leading provider of products and services across the healthcare supply chain • Extensive footprint across multiple channels • Serving >50,000 customers with renewed focus • Experienced management team with diverse experiences • ~30,000 employees with direct operations in 11 countries • >$90B FY09 pro forma revenue* • Continued solid cash flow generation Broadest view of the healthcare supply chain *An estimate of the pro forma revenue for fiscal 2009 in accordance with generally accepted accounting principles with adjustments expected to reflect each company as a stand-alone entity. The estimate is based on assumptions that management currently believes are reasonable, but actual revenue may vary materially from the estimate. 3 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  4. 4. Progress over past year Strategic priorities Improve Customer Loyalty Execute Flawlessly Rebuild Winning Culture Sweeten Mix Strengthened focus on customer All controlled drug licenses restored Regaining momentum with Retail Independent customers Enhanced generic programs Solidified leadership in Nuclear Pharmacy Services post-generic event Efficiency gains in inventory management and SKU rationalization Growth in Ambulatory, Lab and Hospital Solid financial progress 4 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  5. 5. Two segments, with a comprehensive vision Pharmaceutical Medical Shared customers Integrated sales programs Mike Kaufmann Mike Lynch Operating efficiencies 18 years in healthcare 24 years in healthcare Pharmaceutical & Medical Product Specialty Distribution Distribution Infection Prevention / Nuclear Pharmacy Operating Room Products Manufacturer Services Gloves, Drapes, Gowns, Fluid Management Focused portfolio of products/services playing a critical role in healthcare 5 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  6. 6. Matching fragmented demand with complex supply network Pharmaceutical Home Retail Mail manufacturers Care Pharmacy Service Provider Healthcare’s broadest Surgery Long-term Hospital Center Care supply chain platform Physician Medical products Clinic Laboratory Office manufacturers Distribution • Inventory management • Logistics support • Product selection (formulary management) • Financial transactions • Risk management • Empowering providers to focus on delivering care 6 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  7. 7. Pharmaceutical Segment 7 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  8. 8. Pharmaceutical Segment Pharmaceutical Supply Chain Brand Retail Retail HBA/OTC Mail Service Mail Service Pharma Pharmacy Pharmacy Cardinal Health Alternate Generic Alternate Hospital Hospital Private Label Care Pharma Care Physician Office Physician Office Customers Surgery Center Supplier partners Surgery Center • Next day delivery • Efficiency and demand management • Access to >2,000 manufacturers • Contract and credit management with one order, one invoice • Next day delivery to >30k locations • Working capital management • Influencing demand/moving share • Value-added services • Delivery data and product security • Enable improved patient service Generating value up and down the supply chain 8 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  9. 9. Pharmaceutical Supply Chain Flexible generic model • Extensive launch capabilities • Broadest product portfolio in the industry • Tailored offering combining direct and indirect contracting with Cardinal Health’s portfolio • Management of supply risk • Strengthened strategic supplier relationships Annual Sales of Brand Losing Exclusivity in 2008 - 2012* Collaboration Expertise $25 $23 2007 Sales $ in Billions $21 $20 $20 $18 Generics Optimization Services Generics Optimization Services $15 $11 $10 Flexibility Transparency $5 $0 2008 2009 2010 2011 2012 Robust generic product launch environment * Source: IMS Health, MIDAS, New Market Segmentation, MAT Sept 2008, includes patent expirations 9 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  10. 10. Pharmaceutical Supply Chain Customized programs to increase profit and competitiveness for Leader® customers • Supporting payor process Leader is a partnership with retail independent – Leverage scale to negotiate most pharmacies that improves patient care, competitive terms maximizes profitability and provides opportunities to effectively compete by: – Increase patients’ generic utilization – Reconcile third-party payments – Saves pharmacy about 1/2 of its NOI / yr* • Streamlining pharmacy operations – Improve cash flow – Increase sales and margin – Reduce working capital – Saves pharmacy about 1/3 of its net operating income (NOI) / yr* Entire program offering doubles the average pharmacy’s NOI / year* *Based on average pharmacy data from the NCPA Digest sponsored by Cardinal Health 10 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  11. 11. Pharmaceutical Segment Leading Nuclear Pharmacy position • Best-in-class breadth of product offering Unparalleled national footprint of nuclear pharmacies • Long-term, cost-effective supply agreements – Will be only national pharmacy network with distribution agreements for Cardiolite, Myoview and a private label, lower cost alternative – Only national pharmacy network with dual-source generator agreements • Continued strong growth of PET business – Support new drug development and core products Leading Nuclear Pharmacy position pre- and post-generic event 11 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  12. 12. Medical Segment 12 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  13. 13. Medical Segment Surgery Surgery Hospital Self-manufactured Sourced Hospital Center Center Long-term Long-term Cardinal Health Care Care Physician Physician Branded Private label Laboratory Laboratory Office Office Unique value creation for supplier partners and customers • Influencing demand/moving share • Unrivaled scale in distribution breadth and product choice for customers • Present throughout the care continuum • Significant consultative role • Leading infection prevention product portfolio Generating value up and down the supply chain 13 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  14. 14. Medical Segment Leveraging vertical scale Self-manufactured Strong operating room presence Sourced Procedure kits Leading global infection prevention product portfolio • Gloves • Drapes, gowns, masks, kits • Fluid management 14 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  15. 15. Medical Segment Ambulatory Care • Defining the market – Surgery centers, long-term care facilities, physician office, homecare – $16B opportunity growing approx. 6-8% per year • Cardinal Health’s business – Leading position in surgery centers; – Fast growing in other non-acute care channels • Key strategies / opportunities – Offers tailored to specific practices – Focused product portfolio – Extend hospital/IDN relationships to provide an integrated supply chain solution 15 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  16. 16. Unprecedented environment for reform Opportunities for Cardinal Health Health Reform Priorities Rising need for: • Slow growth rate of costs • Efficient, low cost partner Rising costs Rising costs • Comparative effectiveness • Solutions for increased research customer efficiency • Expand coverage through • Continued/increased demand Increasing number Increasing number public / private hybrid with for products and services of uninsured of uninsured and underinsured shared responsibility and underinsured • Continuum of care • Necessitates broad footprint Fragmented system Fragmented system infrastructure and health IT and capability to work across channels • Pay for performance and • Heightened focus on safety Quality issues Quality issues aligned incentives and quality 16 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  17. 17. Cardinal Health post-spin Positioned to lead in evolving healthcare landscape Our Foundation • Leading provider of products and services across the healthcare supply chain • Strengthened focus on the customer • Experienced management team • Robust cash flow and liquidity • Significant scale and efficiency Our Future • Expand presence in growing markets • Deepen penetration of existing channels • Drive leadership in growing generic business • Expand value-added services to enable customer efficiency and quality • Leverage global manufacturing and sourcing capabilities Broadest view of the healthcare supply chain 17 © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
  18. 18. Thank you! © 2009 Cardinal Health, Inc. or one of its subsidiaries. All rights reserved.
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