Hospira 2007 Investor Day - IIS Windows Serverlibrary.corporate-ir.net/library/17/175/175550/items/248894/01... · – Europe −Hikma Pharmaceuticals ... – SAP rollout timelines

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Hospira 2007 Investor Day

Advancing Wellness …through the right people and the right products

Hospira 2007 Investor Day

Strategic Overview

Christopher B. BegleyChairman and Chief Executive Officer

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Safe HarborThe Investor Day presentations contain forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements in the federal securities laws. In some cases, you can identify these statements by our use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “estimate,” “expect,” “plan,” “believe,” “predict,”“potential,” “project,” “intend,” “could” or similar expressions. In particular, statements regarding our plans, strategies, prospects, goals and expectations regarding our business, and statements and projections regarding the markets and industries in which we operate are forward-looking statements. You should be aware that these statements and any other forward-looking statements in this material only reflect our expectations and are not guarantees of performance. These statements involve risks, uncertainties and assumptions. Many of these risks, uncertainties and assumptions are beyond our control and may cause actual results and performance to differ materially from our expectations. Important factors that could cause our actual results to be materially different from our expectations include the factors, risks and uncertainties described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Hospira’s Annual Report on Form 10-K for the year ended Dec. 31, 2006. Accordingly, you should not place undue reliance on the forward-looking statements contained in this material. These forward-looking statements speak only asof the date on which the statements were made. We undertake no obligation to updateor revise publicly any forward-looking statements, whether as a result of newinformation, future events or otherwise.

Hospira 2007 Investor Day – Strategic Overview

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Agenda

Strategic Overview Chris Begley

Global Pharmaceuticals Tom Moore

Global Devices Chris Kolber

R&D Ed Ogunro

The Americas Alejandro Infante

Europe, Middle East and Africa Michael Kotsanis

Asia-Pacific Tim Oldham

Q&A All


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Hospira Has Executed Well Across a Diverse Set of Initiatives Since the Spin-off

Transition from a U.S.-focused division to a more mature global public company

Optimized portfolio through selective M&A

Careful financial management to driveshareholder value

Transformation from an under-invested, no-growth operating division with declining margins

to a company with top-line growth and improving margins


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Transition from a U.S.-focused Divisionto a More Mature Global Public Company

Successfully completed physical separationfrom Abbott

Developed and implemented actionsfor long-term growth

– Investments in new product pipeline• 14 specialty injectables products launched 2004 - 2006,

plus new drug delivery systems• Hospira MedNet® / Plum A+®3 / LifeCare PCA®

product enhancements and Symbiq™ product launches– Biogenerics strategy


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Optimized Portfolio Through Selective M&A

Mayne acquisition

Forged alliances to build ex-U.S. specialty injectable pharmaceuticals (SIP) portfolio

– Europe − Hikma Pharmaceuticals– Japan − Taiyo Pharmaceuticals– Latin America − ABL

Exited low-margin businesses – Berlex imaging agents and certain contract manufacturing agreements


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Careful Financial Managementto Drive Shareholder Value

Manufacturing optimization initiatives– Expected cost savings of $15 million in 2007,

increasing to $45 million of savings annually by 2010– Initiative will result in 5 fewer plants

$300 million of share repurchases in 2006 using excess cash


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Hospira Has Made SignificantFinancial Progress Since Spin-off

* This is a non-GAAP financial measure. Descriptions of the adjustments made to the nearest GAAP measureand a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides.

** Other than Core Net Sales, 2003 numbers have not been adjusted.

“Core” Net Sales* Growth

[pre-spin]

High Single Digits

Long-termGoal

Adjusted* Gross Margin

Adjusted* Operating MarginHigh Teens

Long-termGoal

Adjusted* Diluted EPSGrowth Rate of Low-

to Mid-teens (%)

Long-termGoal

(2.0)%

1.2%

5.0% 5.4%

-4%

-2%

0%

2%

4%

6%

8%

10%

2003** 2004 2005 2006

13.7%

14.9%16.0% 16.2%

10%

12%

14%

16%

18%

20%

2003** 2004 2005 2006

$1.67$1.82

$1.91 $1.94

$1.00

$2.00

2003** 2004 2005 2006[pre-spin][pre-spin]

[pre-spin]

26.7%29.9%

34.2%37.0%

0%

10%

20%

30%

40%

2003** 2004 2005 2006


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Hospira Has Made SignificantFinancial Progress Since Spin-off

We have generated nearly $1.4 billion of Cash Flow from Operations over the last three years

Adjusted* Operating Incomeper Employee

Cash Flow from Operations

*This is a non-GAAP financial measure. Descriptions of the adjustments made to the nearest GAAP measureand a full reconciliation to the GAAP results can be found in the accompanying reconciliation slides.

$387

$571

$424

$0

$100

$200

$300

$400

$500

$600

2004 2005 2006

$29.2

$32.3$33.6

$20

$25

$30

$35

2004 2005 2006


$MM

$M

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Hospira’s Vision, Values and Commitment

IntegrityOwnership / AccountabilitySpeedEntrepreneurial Spirit

ValuesOur customers, delivering on our promise by serving their needs with integrity and trust

Our employees, by embracing diversity of thought and cultural perspective, fostering an environment of empowerment, fairness and respect

Our shareholders, by safeguarding their investment and providing a fair return

Our communities, acknowledging our social responsibility through active citizenship and thoughtful giving

Unwavering Commitment to ...

VisionAdvancing Wellness

through the right people and the right products


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Hospira Has Outperformed the S&P 500 and DJIA Since Spin-offPrice History: 5/3/04 - 5/31/07

HSP: 47%S&P: 37%DJIA: 32%

HSP

Dow JonesInd. Avg.

S&P 500

100

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22004 2005 2006 2007


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Strategy: Invest for Growth

Increase R&D pipeline investment and acceleratenew product introductions

– Medication Management Systems

– Specialty Injectable Pharmaceuticals

Expand internationally

Pursue acquisitions and alliances

We are increasing our investments in the business to drive long-term profitable growth


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Strategy: Improve Margins and Cash Flow

Improve product mix

Optimize manufacturing efficiencies

Streamline administrative systems / processes

Advance culture of financial fitness

We are taking actions across the entireorganization to sustain and expand profitable growth


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We Are Part of the Solution for Our Customers

Current Hospira Strengths Moving ForwardCustomer Needs

We help reduce healthcare expenses by lowering pharmaceutical costs and improving productivity and safety

Specialty injectable pharmaceuticals and biogenerics

Full integration enabling added safety features and enhancements

Compounding

Broad portfolio of high qualitygeneric injectable pharmaceuticals

Innovative solutions from bar codingto drug infusion monitoring systemshelp reduce medication errors

Comprehensive offeringof needleless products

Solutions to high cost of proprietary pharmaceuticals

Reduction in medication errors:Errors create an economic burden estimated at $77 billionin the U.S. alone

Increased worker safety:Needlestick accidents cost an estimated $1 billion annuallyExposure to toxic drugs when mixed in a hospital pharmacy

Networked infusion systems withsafety software; proprietarydrug delivery systems

Caregiver labor reduction:Saves time and enables focus on more value-added activities

iSecure™, VisIV™, new deliverysystems in development; auto-programmable infusion systems and incremental services


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Specialty Injectable PharmaceuticalsOur Business is Evolving in New Directions to Drive Growth

Oncology

Compounding

IntellectualProperty Strategy

BiogenericsNew Delivery andPackaging Systems

GeographicExpansion

SuperGenerics

ProprietaryAcute-care Drugs

Precedex®

LEGACYSIP BUSINESSTraditional small

moleculegeneric injectables

Differentiatedpackaging systems


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LEGACYMMS BUSINESS

Medication Management SystemsOur Business is Evolving in New Directions to Drive Growth

Global Expansion

Integration Partnerships

New PumpPlatforms

AdjacentOpportunities

Value-addedDisposables

Client Services

EnhancedHospira MedNet®


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Near-term Priorities

Integrate Mayne

Begin to pay down debt

Maximize the return on new product launches


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Mayne IntegrationActions completed– Mayne U.S. and Canada commercial activities

combined with Hospira– Commercial operations outside the U.S. merged into

new regional structures– Puerto Rico manufacturing facility closed by July– SAP rollout timelines set– Drug pipeline harmonized

Key remaining activities to be completedno later than the end of 2008

– Integration of functions globally• Finance systems• IT / SAP rollout• Supply chain

– Resolution of overlapping distributorand other relationships


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Specialty Injectable PharmaceuticalsIV Solutions/NutritionalsContract Manufacturing

Medication Management SystemsCritical CareBrain-function Monitoring

Global Product Management

* Including Mayne

Responsibilities:•Global growth strategy development for product lines

•Upstream marketing activities•Portfolio and pipeline management

2006 Hospira Pro Forma Sales*

Global Pharma

Global Devices

President, Global Pharmaceuticals: Tom MoorePresident, Global Devices: Chris Kolber


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President, The Americas: Alejandro InfantePresident, Europe, Middle East and Africa: Michael KotsanisPresident, Asia-Pacific: Tim Oldham

* Including Mayne

Regional Management

Responsibilities:•Regional strategy to deliver on financial growth targets

•Drive market leadership •Sales and marketing promotional activity

Americas

APAC

EMEA

2006 Hospira Pro Forma Sales*


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Long-term Financial Goals

High single digitsNet sales growth

High teensAdjusted operating margin

Low to mid teensAdjusted EPS growth

Our financial goals for 2008 and beyond remain intact subsequent to the Mayne Pharma acquisition


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Hospira’s Core StrengthsCombined capabilities create abilityto provide unique, integrated productsto customers

Pharmaceutical and device competencies

Going forward, skill sets in both areaswill be necessary to be successful in the marketplace

Expertise in both generic and proprietary pharmaceuticals

Reliability of product and supply is critical to our customersQuality and manufacturing

Deep local market knowledgeand strong customer relationshipsSales and distribution

Provides customers with a“one-stop shop”

Breadth and depth of SIP and MMS product lines

Ability to move quickly to capitalizeon market opportunitiesSpeed in decision making


Documents

Hospira 2007 Investor Day - IIS Windows Serverlibrary.corporate-ir.net/library/17/175/175550/items/248894/01... · – Europe −Hikma Pharmaceuticals ... – SAP rollout timelines