Tsg Poc Dx Introductory Overview March2009 D

This presentation and the material provided within is for informational purposes only and is not meant to be viewed as definitive strategic
advice or investment advice. TSG reserves the right, in its sole discretion and without notice, to correct any errors or omissions in any
portion of this report, or to update this report due to changes in the market or our methodology.

Strategic Opportunities in Point of Care Diagnostics
March 2009

C O N T A C T S ::

Jerry Choate
Vice President
jerry@tsg-partners.com
+1-404-607-6953

Laura White
Analyst
laura@tsg-partners.com
+1-404-607-6954

Panna Sharma
CEO & Managing Partner
panna@tsg-partners.com
+1.404.607-6955

Confidential & Proprietary, Do Not Distribute

In vitro diagnostics (IVD) is uniquely positioned at the convergence
of the life science and healthcare sectors

2007 Global Life Sciences Mkt * 2007 Global Healthcare Spend
$960Bn $1,900Bn

Diagnostic information is
driving an increasing
proportion of the 11% 3%
healthcare spend.
24% –
4%
16% 37%
62%
10%
7%
In point of care (POC)
diagnostics, this effect is
even more pronounced due 26%
to the highly actionable,
Medical Devices near-patient nature of POC Hospital Care
information. Physician/Clinical Services
Includes reference Diagnostics
lab revenues Nursing Home Care
Discovery Tools & Svcs
Other Personal Care*
Therapeutics Other Health Spending^
Home Health Care

Source: TSG Analysis, Roche Investor Presentation, NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group. Kaiser Family Foundation, Siemens, WHO World Health Statistics 2008.

TSG & The Sharma Group – Copyright 2001 - 2009 -2- Do Not Distribute Without Explicit Permission

The IVD market is growing at 9% annually and is expected to double
its share of the global healthcare spend

GLOBAL IVD GROWTH IS ….DRIVING AN INCREASE IN IVD’s SHARE OF
ACCELERATING… GLOBAL HEALTHCARE SPENDING
$Bn 80 IVD
$69.5 Bn 4%
70 IVD
3%
IVD
60
2%
CAGR: 9%
50

40 $37.5Bn

30 2007 2014 2020
20 $1900Bn
$1900Bn
$2650Bn
10 $3526Bn
0

2007 2014

KEY TAKEAWAYS
 IVD is expected to increase to $69.5Bn in 2014.
 Diagnostics provide 70+% of all the information doctors use worldwide, but make up just 2% of global healthcare spending.
 TSG expects IVD’s share of global healthcare will increase to 3% in 2013, and continue to carve out a larger share of global healthcare spend.
 As IVD’s share of global healthcare spending increases, TSG expects to see more players from healthcare, information technology, and other
peripheral markets entering the diagnostics space.

Source: TSG Analysis, Roche Investor Presentation , NHE data from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics
Group. Kaiser Family Foundation , Siemens quot;Pictures of the Future,” WHO World Health Statistics 2008.


Point of Care is an $11.3 billion market growing at 10-12% annually –
this category can be further subdivided by end user setting

 Although user needs are still evolving, no single platform is likely to adequately address the needs
of all four POC user segments.

POC Global Market Breakdown $1.1Bn Acute Care Time to result is the most important factor for critical
by revenue CAGR 10% / Hospital care users, followed by multiplexing capabilities.

3%
Physician office labs prefer results in <30m, and
36% $4.1Bn
CAGR 9.9%
POL place a higher value on sensitivity, accuracy, and
integration with existing systems.
84%
10%
Self Test / The retail push for consumer Dx is increasing –
$9.4Bn
these products must be simple to use, low-cost,
CAGR 13% Consumer and produce relatively rapid results.
Self Test/Consumer (Primarily Home Glucose Tests)
Acute Care / Hospital Retail and corporate health clinic users favor fast,
POL $0.3Bn Retail easy-to-use, and inexpensive tests for common,
Retail Clinic
CAGR 24% Clinic non-critical conditions.

*Source: Cambridge Consultants, Kalorama Information, Clinica’s Complete Guide to the Diagnostics Market 2007


The POC market’s attractive growth rates of 10-12% are grounded in
7 key macro themes that are driving growth and opportunity

 TSG has performed detailed
reviews of these 7 drivers through
surveys, discussions with subject
Cost-Efficient, matter experts, and conversations
Distributable with leading diagnostic companies
Detection
Technologies
Consumer / Retail Needs of Emerging
Empowerment Economies

POC ILLUSTRATIVE
GROWTH
Aging Populations
in Maturing DRIVERS Evolving Physician /
Clinician Attitudes
Economies

Theranostics and
Rise of Higher
Personalized
Value Testing
Medicine
ILLUSTRATIVE


TSG’s portfolio research surveys where POC leaders have invested in
their franchises, as well as opportunities for expansion /collaboration

Company / POC Application
J&J Ortho Clinical

Roche

Abbott

Siemens

Quest

Inverness Medical

Meridian

Cepheid (molecular)

Quidel

Abaxis

Axis Shield

Response Biomedical

Medmira

Jant

Source: TSG Analysis, Company reports, Clinica’s guide to diagnostics


TSG has identified several high-growth subcategories of interest
to POC companies looking to expand their portfolios

Oncology - ILLUSTRATIVE Infectious Disease - ILLUSTRATIVE

Companion Dx - ILLUSTRATIVE Endocrinology - ILLUSTRATIVE


POC diagnostics will be a primary beneficiary of the ongoing
convergence of medical devices, IT, and life science research

TRENDS DRIVING KEY COMPETITIVE
POC CONVERGENCE DEVELOPMENTS

In January, Inverness Medical
Innovations announced it was
acquiring health enhancement
program provider Matria
Healthcare in a deal worth $900M

Continued consolidation of IVD market – large players build out diagnostic portfolios

Philips Medical Systems’ magnetic
nanoparticle-based prototype, the
Magnotech handheld reader,
hopes to bring complex IVD testing
to home and bedside settings

Quest acquired HemoCue for
$420M in Feb. 2007 as part of a
strategy to enable integrated POC
testing in the clinical lab setting


What does the future hold for point of care? Scenarios to consider…

KEY OBSERVATIONS & QUESTIONS
• AT T R A C T I V E L O N G - T E R M N E E D S
The long term growth rates in POC diagnostics will be
supported on an ongoing basis for the next 5-7+ years due
significant increase

key demographic developments and a need for more efficient
medical delivery.
What key convergences will drive sector growth, and
“SUBSUMED INTO “BEST CASE
how will the category evolve and change?
Patient Value Increases

THE NEEDS OF SCENARIO for
Global Dx Customers and
Companies” Clinicians” • AREAS OF OPPORTUNITY
TSG has identified multiple POC markets that we believe
contain attractive “white space” opportunities for a continued
technology shift to the Point of Care.
Which areas should category leaders consider for future
growth and expansion?
“ROAD TO “TECHNOLOGY
COMMODITIZATION” DRIVEN”
• S I G N I F I C A N T F R A G M E N TAT I O N
minimal increase

The POC sector has a high degree of fragmentation;
established companies are looking to develop beachheads
and migrate existing assays and tests to a more compelling
Technology Changes / Increases technology base and closer to the patient.

minimal change significant change How can POC companies protect their existing business
as the sector becomes more consolidated?


TSG’s POC Dx Leaderboard TM

Market & competitive view of point of care diagnostic companies

Market Position of The Leading 34 POC Dx Companies
10
FOCUS NEEDED ON WELL POISED LEADERS
GO TO MARKET GENZ
9

IMA
Atlas
8 LMNX ROCHE
Genetics Axela
ChemBio SIE
CPHD
7 JNJ
Alverix
Handy Labs NGEN
DxTech Qualigen
Developed Vision (1)

6 TRIB DGX BIM BDX
Pria Dx
Atonomics QDEL
5 OSUR VIVO
TOSOH
Spectral Dx ABT
LifeAssays
4 BEC THOR ASD ABAX

3
COMMODITIZED LEGEND:
Circle Size & Revenue
2 < $20 MM
LEGEND: Response GenBio > $20 - $125 MM
Colors & Company Type Biomedical
1 > $125 - $1 BN
Public (Pure Play Provider)
FOCUS NEEDED ON
Public (Division of Larger Co.) > $1 BN
DEVELOPING DIFFERENTIATION
Private
0
0 1 2 3 4 5 6 7 8 9 10
Market Traction (2)
* Source: TSG analysis, (1) Formation of products and services that meet dual needs of portability and information integration; Ability to handle multiple sample types; Ability to
Company reports and multiplex; Ability to integrate into needs of personalized medicine; Management focus on future needs of Dx and Healthcare
presentations, Company
interviews with management (2) Customer base; Strength of partnerships and alliances; IP position (issued and published); Revenue growth rate; Product launch rate

TSG & The Sharma Group – Copyright 2001 - 2009 - 10 - Do Not Distribute Without Explicit Permission

A quick overview of TSG

 Specialty, high-impact corporate advisors with unique
combination of strategy, corporate finance, and
operational expertise
 Transaction-oriented strategic consulting with deep sector expertise in
growth markets
Shareholder Value Creation
 Financial advice without the deal-hungry bias, yet informed by prolific deal
experience: M&A, private placements and strategic investments/divestitures
Operational Insights  Operating experience feeding financial and strategic advice
Corporate Finance

Growth Strategy

 Deep sector-specific knowledge focused exclusively on
growth opportunities in:
 Life Sciences & Biotechnology (e.g. Proteomics, Cell-based Assays, High
Content Screening, RNAi, Biomarkers, Molecular Diagnostics, IVD, Flow-
cytometry, Bioinformatics, etc.)
 Discovery Tools, Diagnostics & Devices
 Environmental Sciences (e.g. Environmental sensing, Food Diagnostics,
Water and Waste Water Treatment, IAQ, etc.)
 Nutrigenomics, Functional Foods & Beverages & Wellness
Atlanta
Boston
 Experience with emerging firms as well as established
New York companies allowing us to stay ahead of the curve in
Silicon Valley technological innovation and market timing


TSG has identified 5 macro market themes that are shaping the
future of the Life Sciences industry and market dynamics

Cross Sector 1. Renewed convergence activity between Discovery and Diagnostics
Convergence - Becton Dickinson & Tripath & GeneOhm - Qiagen & Digene
- Fisher & Apogent - Beckman & DSL & Olympus
- Fisher & Athena - ABI & Agencourt

Industrial Co’s. 2. Industrial companies reviewing MedTech-&-Healthcare Growth options
Enter
- GE & Biacore - Siemens & DPC
- Philips & Witt Biomedical - Siemens & Bayer Diagnostics
- GE & Amersham - Reliance & Healthcare Initiatives

Emerging
Economies
3. Increasing importance of Emerging Economies (supply and demand)
China  Thermo, Qiagen, Millipore, Adaltis, GE
India  Millipore, GE, Quintiles, Bayer, Siemens, Waters, Thermo / Customer Demand
Russia  Biomarker research & Algorithim development / Customer demand

Consumer’s
Awareness & Role 4. Consumers demanding increased visibility and information ( 20% of GDP)
- HPV campaign (other D2C for both Dx and Therapeutics)
- Demand for visibility into clinical trial successes and faillures
- Focus on wellness and wellness products (dollars shifting to alternative therapies)

Adjacent &
5. Core Life Science Technologies being applied to Adjacent Markets
Applied Mkts.
- Biodetection - Environmental detection
- Water, Mold, IAQ - Food, Forensics, Animal


Dedicated To Building Sector Leaders
In Life Sciences, Healthcare & Wellness

TSG
The Sharma Group, LLC

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Tsg Poc Dx Introductory Overview March2009 D

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