3M Health Care Business
3M Investor Day – October 9, 2007Health Care Business Health Care Business –– Investor UpdateInvestor Update
Brad T. Sauer, Executive Vice PresidentBrad T. Sauer, Executive Vice President
11-Oct-07 © 3M 2007 All Rights Reserved.
3M Health Care Business
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Health Care Market is Global, Steady and GrowingHealth Care Market is Global, Steady and Growing2001-06 CAGRWW Health Care Spending
$US billions
2,2931,497
1,318
764
462
397
588
299
2,957
2001
4,661
2006
Developing markets*Developed Asia
Western Europe
North America
*Latin America, Eastern Europe, developing Asia and Africa
8.9%
11.5%
3.1%
14.5%
9.5% Growth Drivers• Aging population• Rising middle class indeveloping regions
• Increasing cost of care, need for innovation
• U.S. presidential order: Quality of care and pricingtransparency
• Demand for aestheticsolutions in oral care
• Drug-resistant pathogens increasing
• Food safety is a growing, global concern
Growth Drivers• Aging population• Rising middle class indeveloping regions
• Increasing cost of care, need for innovation
• U.S. presidential order: Quality of care and pricingtransparency
• Demand for aestheticsolutions in oral care
• Drug-resistant pathogens increasing
• Food safety is a growing, global concern
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3M Health Care Business
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$779 $888 $916
$448 $546
2004 2005 2006 1H06 1H07
$2,963 $3,237
$1,576 $1,950$2,803
2004 2005 2006 1H06 1H07
Europe 34%
APAC 12%LAC 7%
U.S. 47%
Sales
LC% 2.9% 5.3% 8.5% 19.9%*
2006 Sales by Geography
Organic LC% has accelerated for five consecutive quarters
Portfolio repositioned to focus on higher-growth opportunities
Operating in attractive segments with strong underlying fundamentals
Highlights
1
2
3
+7% +6% +9%
+24%
*Excludes Pharma and special items in all periods. 1H07 includes 4.9% of local currency growth due to Pharma supply agreements. Refer to appendix for complete reconciliation.
Operating Income
($ millions)(YOY % Change)
OI % 27.8% 30.0% 28.3% 28.0%
+13%+14% +3%
+22%
7.5%
28.4%
Health Care Financials*Health Care Financials*
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Dental &Orthodontics
Health Care Portfolio Reconfiguration Health Care Portfolio Reconfiguration –– 2006 2006
Medical Pharma
DivestedFocused Portfolio Of StrengthIncrease R&D For New ProductsExpand Sales CoveragePenetrate Developing CountriesSynergistic Acquisitions
InvestmentRedirection
DrugDeliverySystems
HealthInformation
Systems
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MedicalMedical
Assessment & TherapyElectrodes & PlatesAuscultation (Scopes)Immobilization
Infection PreventionAsepsis (Drapes)Preps & DisinfectionSterilization
Skin & Wound – Acute Care Tapes & SecuralSkin Closure
Skin & Wound – Chronic CareSkin Care & ProtectionWound Care
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Oral CareOral Care
Filtek™ Supreme Composite Filling Materials
Imprint™ 3Impression Materials
Protemp™ 3Temporization Materials
Lava™ Frame and RestorationLava™ CAD/CAM System
SmartClip™ Self-Ligating Bracket
Clarity™ SL Bracket
Clinpro™ SealantPreventive Treatment
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Drug Delivery SystemsDrug Delivery SystemsLeveraging 3M Technologies and Manufacturing ProcessesLeveraging 3M Technologies and Manufacturing Processes
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Medical Record Assessment
Document CreationDocument Creation HIM (Medical Records) ProcessingHIM (Medical Records) Processing Document ReviewDocument Review
Transcription Mobile Dictation
Document Imaging/Scanning
Provides a front end solution for capturing data
Coding & Grouping
Abstracting
Enhances productivity and drives reimbursement
Provide storage and document management capabilities
Storage Release of Info.
Document Management
Health Information SystemsHealth Information SystemsPatient
Hospital CarePatient Record Post-Discharge Billing Codes
Payment Accuracy, Compliance & TimingDocument
CreationHIM
ProcessingDocument
Review
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Food Processing SafetyFood Processing Safety
3M Tecra™ E.coli VisualImmunoassay Test
3M Petrifilm™ Plates3M™ Uni-Lite ATP
Luminometer
3M Petrifilm™Plate Reader
3M™ Clean-Trace ATP Swab
End Product Screening Systems
3M™ Quick Swabs
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Strong PortfolioStrong Portfolio
Diverse, Steady, Growing and ProfitableDiverse, Steady, Growing and Profitable
Systems Systems Safety
Diagnostics Digital Dry Powder Quality Care PathogenAdvanced Preventive Microneedles Patient Financial DetectionWound Care Self-Ligating Services HygieneChronic Care Monitoring
Dressings Restoratives Transdermal Coding & IndicatorsAcute Care Prosthodontics Inhalers ReimbursementMed Spec Bands & TubesInfectionPrevention
Faster Growth (10%+)
Steady Growth (5-7%)
Medical
HCB
FoodOral Care Drug Delivery Health Info.
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Health Care Business Growth StrategyHealth Care Business Growth Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
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Health Care Business Growth StrategyHealth Care Business Growth Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
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Clarity™ SL Bracket SmartClip™ BracketImprint™ 3 VPSImpressioning Material
High Impact New ProductsHigh Impact New Products
Lava™ Scan STScanner
Filtek™ Supreme PlusUniversal & Flowable
Restoratives
Protemp™ Crown Temporization MaterialLava™ Milling Unit
Adper™ Scotchbond™Self-Etch Adhesive
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High Impact New ProductsHigh Impact New Products
Advanced Tegaderm™CHG Dressing
Littmann™ Electronic Stethoscopes
Dose-Count Inhaler
BacLite™ RapidMRSA Test
Advanced Chronic Wound Dressing
Healthcare Document Management Systems
Coban™ 2 LayerCompression System
Ioban™ 2 FrameDelivery
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3M Health Care Business
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Health Care Business Growth StrategyHealth Care Business Growth Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
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Acquisitions: Supplementing Organic Growth Acquisitions: Supplementing Organic Growth
Steri-StripTM SWound Closure
OMNI Oral PharmaceuticalsPreventive Dentistry
SBG GmbHCoding & Grouping
BiotraceFood Testing
SoftMedEnd-to-End Health Info Mgmt
Response Biomedical (partnership)Microbial Diagnostic Platform
Brontes TechnologiesDigital Oral Care
LingualCare iBraces™“Invisible” Brackets
Peridex® Oral RinsePreventive Dentistry
Acolyte Biomedica Ltd.Rapid Pathogen Detection
DMS – ChileSurgical Drapes & Gowns
Neoplast - ThailandTapes & Dressings
Abzil - BrazilOrtho Brackets
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3M Health Care Business
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Health Care Business Growth StrategyHealth Care Business Growth Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
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Pour Plaster Model Trim, Pin, and Cut Model
Wax Buildup and Sprue Cast, Grind, and Polish Porcelain Veneer
Conventional Impression
Dental Dental –– Traditional Impression & Crown ProcessTraditional Impression & Crown Process
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LavaLava™™ ChairsideChairside Oral ScannerOral Scanner
Technology Obtained via Brontes AcquisitionTechnology Obtained via Brontes Acquisition
“Digital Impressions”
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Digital Workflow for Oral CareDigital Workflow for Oral Care
Prosthodontics
Model Production Crown / BridgeCAD/CAM
Custom AppliancesCustom DesignVirtual Model
Orthodontics
Custom DesignVirtual Model Digital Appliances
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The Problem
New Business Opportunity: Medical DiagnosticsNew Business Opportunity: Medical Diagnostics
Infectious diseases a global threat:
- MRSA - TB- Staph aureus - VRE- Flu A/B - C difficile
Cost of infectious diseases in US alone:
- 100,000 Lives per year- $6.2 Billion per year
Current screening methods are too slow, ineffectiveU.K., other parts of Europe already setting standards
Patient at hospital screened for infectious diseases
Goal: Help prevent spread and risk of infection(Example: MRSA)
Lab Test
CultureSlow, Labor intensive
Results: 2-3 days
Traditional Method
3M™ BacLite™(Approved in Europe: MRSA)
Results: 5 hours
3M Solution
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Drug-Coated Microneedles
Microneedles3M microreplication technology
Microneedles for Transdermal Drug DeliveryMicroneedles for Transdermal Drug Delivery
Hollow MicroneedlesFor controlled delivery of larger doses
Patch - Low Pain & Convenient
“Patches Instead of Injections”
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Health Care Business Growth StrategyHealth Care Business Growth Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
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Rapidly Growing in International MarketsRapidly Growing in International Markets3M Health Care Revenues
DevelopedCountries*
*U.S., Canada, Western Europe, Japan, Australia, New Zealand
DevelopingCountries
Expanded salescoverage
New productstailored to market needs
Local manufacturing
2006 Local Currency Growth:
Turkey 35%India 30%Russia 29%Gulf 25%China 22%Argentina 21%Thailand 21%Malaysia 19%Venezuela 18%Korea 15%
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3
1530A-0 Hypoallergenic
Rol ls Size12.5mm x 9.1 m1/2 inch x 1 0yd2 4
Microporous Surgical Tape
3
1530A-0 Hypoallergenic
Rol ls Size12.5mm x 9.1 m1/2 inch x 1 0yd2 4
Microporous Surgical Tape
Tian Tu (Second Way) China Brand
Tier 2 Dressing
Tier 2 Paper Tape
Regional Localization Hand Hygiene
Korean Hand Hygiene Line
Brasil IV Fix Dressing
Localized Electrodes
Tier 2 DrapesCleaning & Disinfecting
International: Products for Local NeedsInternational: Products for Local Needs
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New 3M Health Care Plant in ChinaNew 3M Health Care Plant in China
On Schedule for 2008 Start-upOn Schedule for 2008 Start-up
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International Health Care AcquisitionsInternational Health Care AcquisitionsDMS Chile S.A. – A leading manufacturer of surgical packs, drapes and gowns. Based in Santiago, covers Latin America.Neoplast Co. Ltd. – Manufacturer of surgical tapes, dressings, first aid products. Based in Thailand, adds regional capacity.Abzil Industria e Comercio Ltda. – Second largest orthodontic products maker in Brazil. Expands our regional presence and manufacturing capabilities.
Boosting Our International CapabilitiesBoosting Our International Capabilities
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Health Care Business StrategyHealth Care Business Strategy
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
• High-ImpactNew Products
• Sales Coverage
• Bolt-ons- Technology- Capabilities
• Mid-Tier• International
• Digital Oral Care• Preventive Oral Care• Medical Diagnostics• Food Processing Safety• Microneedles• Dry Powder Inhalation• Patient Financial Services
• Sales Coverage• Appropriate Products• More LocalizedSupply Chains
GrowthStrategy
Operational Excellence• Lean Six Sigma• Sourcing
• Supply Chain Performance• Productivity
• Quality• Customer Service
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Accelerating Growth, Maintaining Premium Returns*Accelerating Growth, Maintaining Premium Returns*
Oper
atin
g In
com
e Mar
gin
Loca
l Cur
renc
y Gro
wth
Rate
24.6%
26.4% 26.4%
27.8%
30.0%
28.3% 28.3%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2001 2002 2003 2004 2005 2006 1H200720%
22%
24%
26%
28%
30%
*Unaudited. Total Health Care without Pharma and Pharma Supply Agreement1H07 with Pharma Supply Agreement: LC Growth = 19.9%, O.I. = 28.0%.
Organic
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Health Care Business Health Care Business –– SummarySummary
Oral CareMedical
FoodProcessing
Safety
Drug DeliverySystems
HealthInformation
Systems
Strong PortfolioStrong Portfolio
Grow the CurrentCore Business
Build NewBusinesses
Acquisitions InternationalGrowth
Accelerating Profitable GrowthAccelerating Profitable Growth
Well-Positioned for 8%+ Top-Line Growth at Premium MarginsWell-Positioned for 8%+ Top-Line Growth at Premium Margins
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Health Care Financials*- Appendix
$779 $888 $916
$448 $546
$194$226 $256
$120
2004 2005 2006 1H06 1H07
$2,803 $2,963 $3,237
$1,576 $1,950
$797 $774
$390
$793
2004 2005 2006 1H06 1H07
Pharma
Europe 34%
APAC 12%LAC 7%
U.S. 47%
Sales
2006 Sales by Geography
Highlights+5% +5% +7%
-1%
*Includes Pharma in all periods; excludes special items.
Operating Income
($ millions)(YOY % Change)
0.6% 4.2% 6.0% -4.6%LC%
OI % 27.0% 29.6% 29.2% 28.0%
+7%+15% +5%
-4%
4.6%
28.9%
1
2
3
Organic LC% has accelerated for five consecutive quarters
Portfolio repositioned to focus on profitable opportunities
Operating in high growth segments with strong underlying fundamentals