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1 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
JP Morgan Healthcare ConferenceJanuary 8, 2013
Mike MahoneyChief Executive Officer
™
2 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could differ materially from the expectations and projections expressed or implied by our forward-looking statements. Factors that may cause such differences can be found in our most recent Form 10-K and Forms 10-Q filed or to be filed with the Securities and Exchange Commission under the headings “Risk Factors” and “Safe Harbor for Forward-Looking Statements.” Accordingly, you are cautioned not to place undue reliance on any of our forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which they may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.
Safe Harbor For Forward-Looking Statements
3 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Disclaimers
This presentation includes products that have not been approved or cleared by the U.S. Food and Drug Administration and are not available
for sale in the U.S.
All future product approval and launch dates are based on estimates of completion of regulatory submissions, review and/or approval or
clearance, as well as other business considerations.
For reconciliations of non-GAAP financial measures used in these presentations to the most directly comparable GAAP figures, please refer
to the Investor Relations section of our website at www.bostonscientific.com.
4 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Boston Scientific Brand
Boston Scientific is dedicated to transforming lives through innovative medical solutions that improve the health of patients around the world.
• Caring
• Meaningful Innovation
• High Performance
• Global Collaboration
• Diversity
• Winning Spirit
Mission:
Values:
™
5 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Tailwinds
Demographics(e.g. aging population, comorbidities)
Emerging markets growth
New treatments for: Hypertension, Trans Aortic Valve, Left Atrial Appendage and Asthma
Convergence of device and informatics; increasing patient awareness
Increasing scale of Accountable Care Organization model
Headwinds
Significantly stronger economic buyer, increased pricing pressure
Medical device tax
Economic conditions in EMEA
Local competitors in emerging markets
Increasing scale of Accountable Care Organization model
Market Changes …
… are Driving both New Challenges and Global Opportunities
6 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Business Results through 3Q 2012 …
… require Improved Global Execution and Leadership
Challenges
Challenging end markets: IC and CRM
Share loss in IC and Rhythm Management
Small footprint in emerging markets
Too much executive turnover
Heavy corporate infrastructure
Successes
A $7B+ global leader in our $30B+ served market
Many businesses growing above market
Gross margin improvement - execution of cost initiatives
Expansion into adjacent markets
Strong adjusted free cash flow(1)
Source: BSC FP&A
(1) Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.
7 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Creating a Global Operating Model
New Asia Pacific Leadership and Emerging Markets Infrastructure
Strengthening Sales Model in the US and EMEA
Stronger Corporate Sales Organization
R&D Alignment to Improve Productivity
Leaner Organization to Improve Speed
Operational Changes being made ...
… to Drive Growth and Improve Global Execution
8 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Established New Strategic Imperatives …
STRENGTHEN Execution to Grow Share
EXPAND into High Growth
Adjacencies
DRIVE Global
Expansion
FUNDthe Journey
to Fuel Growth
DEVELOPKey Capabilities
… to Guide the Company to a Bright Future
™
9 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Strengthen Execution to Grow Share…CRM: ICD and CRT-D
Industry-leading battery longevity
Highest performing lead reliability
Low profile - size and shape advantage
Programmable to reduce inappropriate shocks
Tiered offering
WW Est. ICD Market: ~$7B
FDA & CE Mark approved
Full EU and US launch in H2 2012
Reliance 4-Front™ CE Mark approved
Source: BSC Estimates
…through Differentiated New ICD and CRT-D platforms
NEW Reliance 4-Front™ LEAD
ENERGENTM
INCEPTA®
4-FRONT
10 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Innovative alternative for patients at risk of Sudden Cardiac Arrest
No leads required in the heart
+1400 units implanted globally
MADIT-RIT trial supports S-ICD
Expect to capture de novo and replacement share
Potential WW S-ICD Market: +$750M
FDA & CE Mark approved
Enhancing supply chain capabilities
…with the World’s Only Commercially Available S-ICDSource: BSC Estimates
Strengthen Execution to Grow Share…CRM: S-ICD®
11 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
RF Telemetry to simplify implant
LATITUDE® Remote Patient Management
Minute Ventilation algorithm
6Fr INGEVITY™ family of leads
Engineered to be ‘MRI Conditional’
WW Est. Pacemaker Market: +$4B
Full launch in US & EU during 2012
MRI Conditional launched in EU H2 2012
US IDE for MRI Conditional expected in 2013
Source: BSC Estimates
…with an Innovative Pacemaker Platform
Strengthen Execution to Grow Share…CRM: Ingenio® Pacemaker
12 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
NEJM 2009;360:2601-2602
Alternative Afib treatment to prevent stroke
Strong clinical evidence
PROTECT-AF demonstrated 38% relative risk reduction vs long-term warfarin therapy
Launched in 20+ countries
Potential WW LAAC Market: +$500M
CE Mark approved
FDA approval expected in Q4 2013
…Innovative Left Atrial Appendage Closure PlatformSource: BSC Estimates by 2020
Expand into High Growth Adjacencies…EP / IC: Left Atrial Appendage
13 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Multiple electrode mapping (64-pole)
More detailed sensitivity
Designed for faster diagnostics
Open architecture for catheter selection
WW Est. EP Market: +$2.5 Billion
CE Mark expected 1H 2013 FDA approval expected in 2H 2013 Full launch expected in 2014
…with Rhythmia™ Next Generation Mapping & NavigationSource: BSC Estimates
Expand into High Growth Adjacencies…EP: Rhythmia™ Mapping and Navigation
14 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Ultra-thin 90 day bio-absorbable polymer
Enhanced platinum chromium platform
Strong EVOLVE clinical data
Designed to reduce late stent thrombosis
Potential to reduce DAPT dependence
CE Mark approved - Limited EU launch
Full EU launch expected in 2014
EVOLVE II (US IDE Trial) Q4 2012
WW Est. DES Market: +$4 Billion
…through Synergy Next-Generation Drug Eluting Stent TechnologySource: BSC Estimates
Strengthen Execution to Grow Share…IC: Synergy™ Next Generation DES
15 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Pre-loaded device
23mm & 27mm diameters
Repositionable and fully retrievable
Adaptive seal to minimize paravalvular aortic regurgitation
REPRISE I completed; 3 month data reported at TCT
REPRISE II (CE Mark trial) began in Oct. 2012; currently in enrollment
CE Mark expected in H2 2013
Potential WW TAVR market: $3B
…with Lotus™ 2nd Generation Transcatheter Aortic ValveSource: BSC Estimates by 2020
Expand into High Growth Adjacencies…IC: Lotus™ TAVR
16 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
• CE Mark approved• EU launch expected in H2 2013• US IDE trial expected to begin late
2013/early 2014
Simple Design
Over-the-wire balloon with 8 RF electrodes
Short Treatment Time
Only one placement required per artery
Electrodes fire simultaneously in 30 sec.
Smart Technology
Confirmation of electrode apposition
Potential WW Hypertension Market: ~$2.5B
…with a 2nd Generation Renal Denervation PlatformSource: BSC Estimates by 2020
Expand into High Growth Adjacencies…PI: Vessix™ Hypertension
17 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
RF treatment for patients with severe asthma
Published excellent 5-year safety data (RISA)
84% reduction in ER visits
32% reduction in asthma attacks
Reduce use of oral steroids
Potential WW BT Market: >$500M
FDA and CE Mark approved
Launched in 18 countries and >200 sites
Cat. I CPT®(1) codes effective 2013
(1) CPT Copyright 2011 American Medical Association. All rights reserved.
…with Alair® an Innovative Treatment for Severe Asthma PatientsSource: BSC Estimates by 2020
ENDOExpand into High Growth Adjacencies…Endo: Alair® Bronchial Thermoplasty
18 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
First 32-contact lead system
Multiple lead configurations
Independent current control
Designed for maximum coverage and flexibility
Designed to deliver therapy more accurately
CE Mark approved
FDA approval expected in 2013
…with Precision SPECTRA™ a Next Generation SCS Device
WW Est. SCS Market : ~$1.4B
Source: BSC Estimates
Precision SPECTRATM
Strengthen Execution to Grow Share…Neuromodulation: Spinal Cord Stimulation
NEXT GENERATION Precision SPECTRATM
19 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
0
2
4
6
China
BrazilIndiaRussia
2017
Est. $4.8B
2012
Est. $2.4B
BRIC Market Revenue ($B) for BSC Served Markets
BSC BRIC growing +30% in Q3 2012
Represents 4% of BSC revenues
New leadership team
Strengthening commercial presence
Building new capabilities
… by Investing and Delivering Strong Growth in Emerging Markets
15%
Source: BSC Estimates as of Q3 2012
Drive Global Expansion…
20 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
…by Executing on our Continuous Improvement Actions
Gross Margin Expansion in 2012
Transitioned to Self Manufactured Stents
Manufacturing Value Improvement Programs (VIPs)
Continued Focus on Productivity Initiatives
Delivering on Restructuring Programs
R&D Productivity
Corporate Function and SG&A Initiatives
More Opportunity to Improve Productivity
Fund the Journey to Fuel Growth…
21 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
…with a Balanced Capital Allocation Strategy
Accomplishments:
Prepaid $4.6B of total debt
Achieved target debt level of ~$4B
Regained investment grade status
Repurchased ~11% of shares through Q3 2012
Improved growth profile assisted by acquisitions
$8.9
$6.0
$4.3
Q2 2006 Q3 2009 Q3 2012
Total Debt
Fund the Journey to Fuel Growth…
(in Billions)
22 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
…with Projected Future Cash Generation
(1) Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.
Estimatethrough
2017
Adjusted Free Cash
Flow (1)
$6.8B+
Q3 2012 Cash on
Hand
$0.4B
$7.2B+
Source: BSC Estimates
Fund the Journey to Fuel Growth…
Expected Future Capacity for: Acquisitions Growth Adjacencies Near-Term Revenue
Contribution
Stock repurchases
Risk contingencies Legal & Tax
23 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
Established New Strategic Imperatives…
STRENGTHEN Execution to Grow Share
EXPAND into High Growth
Adjacencies
DRIVE Global
Expansion
FUNDthe Journey
to Fuel Growth
DEVELOPKey Capabilities
… to Guide the Company to a Bright Future
™
24 Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2012Boston Scientific @ JP Morgan Healthcare Conference, January 8, 2013
™