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3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Accelerating Growth In Health Care
Brad SauerExecutive Vice President,
Health Care Business
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
2005 Sales By Geographic AreaU.S. 47%
Europe 35%APAC 11%
LAC 7%
3M Healthcare: Key Financial Data
$3.4$3.8
$1.0
$3.6
$0.0
$1.0
$2.0
$3.0
$4.0
$5.0
2003 2004 2005 Q1 2006
$1,114
$298
$907 $973
$0
$300
$600
$900
$1,200
2003 2004 2005 Q1 2006
Sales Operating Income
LC Growth 5.3% 26.4%.6% 4.2% 4.9% 27% 29.6% 30.8%OI Margin
$Billions & YOY % Chg $Millions & YOY % Chg
+12% +5% +5%
+2%
+7%+15%
+10%
+20%*
*2002 estimated stock options, not restated.
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Care Growth Strategy
Accelerate Growth
STEP 2
Reconfigure thePortfolio
STEP 1
REDIRECT RESOURCESREDIRECT RESOURCES
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental &Orthodontics
Health Care Portfolio Reconfiguration
Medical Pharma
PursueStrategic
Alternatives
Leverage3M I&TB Supply
Chains &Technologies
Focused Portfolio Of StrengthIncrease R&D For New ProductsExpand Sales CoveragePenetrate Developing CountriesSynergistic Acquisitions
InvestmentRedirection
DrugDeliverySystems
HealthInformation
SystemsPersonal
Care
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Pharmaceuticals Business Direction
3M is exploring strategic alternatives for its global branded pharmaceuticals business and IRM platform (Goldman Sachs retained)
Today’s very competitive pharmaceutical marketplace requires broad pipelines of new drugs, significant investments, and a longer term risk-reward business model than applies to most other 3M businesses
Very successful business but different model and not core for 3M
The best way for our branded pharmaceuticals business to succeed is for it to be free to pursue separate strategies underthe direction of a dedicated pharmaceutical industry company with a business model better suited to maximize its potential
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental &Orthodontics
Health Care Reconfigured Portfolio
Medical
Focused Portfolio of StrengthIncrease R&D For New ProductsExpand Sales CoveragePenetrate Developing CountriesSynergistic Acquisitions
DrugDeliverySystems
HealthInformation
Systems
Investment
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Care Growth Strategy
REDIRECT RESOURCESREDIRECT RESOURCES
Accelerate Growth
STEP 2
Reconfigure thePortfolio
STEP 1
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Care Growth Strategies
Drive additional organic growth with key investments – R&D for new products
– Expanded sales coverage and marketing globally
Accelerate in high growth market spaces with new organic platforms
Rapidly penetrate developing countries
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Rapidly Penetrating Developing Countries
HCB Revenues
DevelopedCountries*
*U.S., Canada, Western Europe, Japan, Australia, New Zealand
DevelopingCountries
Expanded SalesCoverage
New ProductsTailored To Market Needs
Local Manufacturing
2005 Local Currency Growth
China 35%Venezuela 34%Russia 32%Turkey 25%Malaysia 25%Argentina 24%India 22%Thailand 19%Taiwan 19%Gulf 14%South Africa 13%Mexico 12%Brazil 10%
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Care Growth Strategies
Drive additional organic growth with key investments – R&D for new products
– Expanded sales coverage and marketing globally
Accelerate in high growth market spaces with new organic platforms
Rapidly penetrate developing countries
Step up the pace on acquisitions, especially synergistic bolt-ons
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Infection PreventionAsepsisSterilizationPreps & Disinfection
Medical Division Portfolio
Assessment & TherapyElectrodes & PlatesImmobilizationAuscultation
Skin HealthSkin Care & ProtectionTapes & SecuralWound CareSkin Closure
Food SafetyFood Bacterial TestingFood Pathogen TestingFood Sample Prep
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Medical Division Operations
A broad portfolio in clinically important growth segments:– Infection Prevention
– Skin Health
– Patient Assessment
– Food Safety
Global business – 55% of revenue & 63% of growth OUS
Dedicated sales coverage in more than 60 countries
R&D resources on 5 continents
Major manufacturing in 10 countries
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Medical Division Growth Drivers
Investing for accelerated new product flow
Expanded sales coverage U.S. and Europe
New push into Alternate Care
Accelerating growth in developing countries– Products
– Coverage
– Manufacturing
Acquisitions and technology licensing
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Medical Key New Products For 2006
Scotchcast™ Wet or Dry Cast Padding
Littmann™Electronic
Stethoscopes
Ioban™ 2 Frame Delivery
3M One Step Patient Prep
ClozeXTM Wound Closure
Tegaderm™ on Roll
Tegaderm™ Ag Mesh Dressing
with Silver
CompressionLay er
Comfort Layer(L ami nate)
PU-Foa m
Coban LF
modified Coban L F(much l ess stre tch, more and he avier Denier -si ze Spandex fi laments)
CompressionLay er
Comfort Layer(L ami nate)
PU-Foa m
Coban LF
modified Coban L F(much l ess stre tch, more and he avier Denier -si ze Spandex fi laments)
CompressionLay er
Comfort Layer(L ami nate)
PU-Foa m
Coban LF
modified Coban L F(much l ess stre tch, more and he avier Denier -si ze Spandex fi laments)
CompressionLay er
Comfort Layer(L ami nate)
PU-Foa m
Coban LF
modified Coban L F(much l ess stre tch, more and he avier Denier -si ze Spandex fi laments)
CobanTM 2 Layer Compression
System
CobanTM 2 Layer Compression
System
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Licensing Agreement – ClozeXTM MedicalUnique design for fast application and closure
Good cosmetic results
Less infection potential than invasive sutures or staples
Reduced skin trauma and patient discomfort
Used by variety of surgeons and physicians
- plastic and reconstruction - cardiothoracic - vascular- OB-GYN - general surgery- orthopedics- dermatology- emergency medicine
Sutures ClozeX
Suture closure at 6 months post-op ClozeX closure at 6 months post-op
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Medical Alternate Care GrowthMarket Drivers
Care moving to outside of hospital
Growth in Chronic Wounds - aging population, diabetes & obesity
Regulatory/reimbursement activity increasing in Chronic Care
Growth InitiativesInvest – Dedicated US CoverageExpand European CoverageNew Products Build Brand
Portfolio StrengthTape Secural
Acute and Active DressingsSkin CareAdvanced Wound Care
Compression
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
High Growth Space – Food Processing Safety
Market DriversGrowing Awareness of Food Safety – Globally
Increased Regulatory Vigilance
International Market Expansion
Customer Expectation of Safe Food
Globalization of Food Processing
Leveraging Health CareIntegrated Detection, Monitoring & Antimicrobial Technology
Development & Testing Expertise
Global Regulatory & Quality Monitoring Systems
Regulated Manufacturing Processes
Growth InitiativesInvesting in Global Marketing/Sales Coverage
Expanding US Manufacturing
Establishing Manufacturing in Asia
Investing in Technology
Accessing Technology Through Partnerships
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental and Orthodontics Portfolio
FiltekTM Supreme CompositeFilling Materials ImpregumTM
Impression Materials
ProtempTM 3Temporization Materials
LavaTM Frame and BridgeDigital Ceramic Systems
OMNI Preventive Products
ClarityTM
Orthodontic Appliances
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental & Orthodontics Operations
A broad portfolio in both established and newer, high-growth segments:– Restoratives
– Prosthodontics• Including Laboratory and Digital Dentistry
– Orthodontics
– Prevention
Global business – 65% of revenue OUS
Dedicated sales coverage in more than 60 countries
Major operations centers in the U.S. and Germany
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental & Orthodontics Growth Drivers
Investing for accelerated new product flow
Expanded sales coverage globally
Accelerating growth in developing countries– Products
– Manufacturing
Enter high-growth market spaces
Acquisitions and technology licensing
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Dental & Orthodontics Key New Products For 2006
SmartClipTM
Self-Ligating BracketsFiltekTM Supreme Plus
CompositesImprintTM
Impression Materials
LavaTM Finished Bridge
Digital Ceramic Systems
VitrebondTM PlusLiner/Base
ParadigmTM C Glass Ceramic BlocksLavaTM Ceram Overlay
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
High Growth Space – Preventive Oral Care
Acquisition Of OMNII
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
High Growth Space – Digital Dentistry
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Drug Delivery Systems DivisionLeveraging 3M Technologies And Manufacturing Processes
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Attractiveness Of Drug Delivery Systems
Commercial valueof drug deliveryExtending patent life Increasing returns
on R&D
Differentiating fromcompeting products
Improving efficacy, convenience, compliance,
Reducing side effects
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Drug Delivery Systems Key Growth Drivers
Market transition from CFC to HFA inhalers
Growing attractiveness of global emerging markets
Increased interest in transdermal delivery as a product enhancement opportunity
Demand for patient friendly macromolecule delivery technologies
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Hospital Information Systems Division
Compliance and Billing Edits for Decreased A/R
Cycle & Accuracy
Patient Record post-
discharge
Medical Record Assessment for
Billing - 3M CodeFinder
Billing Codes Transferred to Billing System
Patient Hospital
Care
3M HIS Solutions
Leader in a critical segment - accuracy of reimbursements- Pioneer in coding and grouping- Leading expertise and technology- ScalePay for Performance pressures increasing- Severity adjusted reimbursement opportunity- 3M well positionedMarket pressures are global - opportunity in selected OUS countriesAcquisition opportunities in adjacent segments
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Information Systems Acquisition
3M HIS has entered into a definitive agreement to acquire SBG GmbH based in Berlin, GermanySBG is a leading developer of coding and grouping software for the German health information technology marketThe Company participated in the development of the German codingand grouping classification system used by hospitals for reimbursement SBG’s products are complementary to 3M’s existing portfolio and expands our footprint in Germany
SBG’s technology also serves as a catalyst to expand our presence in Europe, Asia Pacific and other developing markets
SBG provides 3M with a regional development center of excellence to better serve our European customers
This acquisition also solidifies key relationships with leading European systems integrators
3M Investor Meeting 2006 © 3M 2006 All Rights Reserved
Health Care Business Summary
HISDrug DeliverySystems Medical Dental &
Orthodontics
Health Care Portfolio
Drive additional organic growth with key investments – R&D for new products
– Expanded sales coverage and marketing globally
Accelerate in high growth market spaces with new organic platforms
Rapidly penetrate in developing countriesStep up the pace on acquisitions, especially synergistic bolt-ons
Strategies To Accelerate Growth