Health Care

Presentation to

IB Analytics Regarding Healthcare January 2007

Integreon

Table of Contents Section 1

Bear Stearns Health Care Group Overview

2

Pharmaceutical Sector Overview

3

Specialty Pharmaceutical Sector Overview

4

Medical Technology Sector Overview

5

Healthcare Services Overview

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9936149, v1

Section 1

Bear Stearns Health Care Group Overview

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Leading Health Care M&A Franchise Global Health Care M&A Transactions

($ in billions)

$250

$200

$200 150

150 100 100

50 50

0

0 Goldman Sachs

Bear Stearns

Merrill Lynch

Morgan Stanley

Rothschild

Lazard

BNP Paribas SA

JP Morgan

Banc of America

UBS

Source: Securities Data Company. Deals completed between January 2003 and December 2005.

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Entrusted with Some of the Most Important Health Care M&A Deals Top Global Health Care M&A Transactions(1) Transaction Rank

Advised on $17 billion Sale of PCH to Johnson & Johnson

Advised on $27 billion Acquisition of Guidant

€14.6 billion Unsolicited Takeover Offer for Schering AG

December 2006

April 2006

Withdrawn

IDD

Advised on $63 billion Sale to Sanofi-Synthelabó

IDD

Warner Lambert

Pfizer

SmithKline Beecham

Glaxo Wellcome

3

Aventis

Sanofi-Synthelabo

√

4

Pharmacia

Pfizer

√

5

Guidant

Boston Scientific

√

6

Monsanto

Pharmacia & Upjohn

√

7

Pfizer Consumer Health

Johnson & Johnson

√

8

√

Immunex

Amgen

ALZA

Johnson & Johnson

10

Amersham

General Electric

11

DuPont Pharmaceuticals

Bristol-Myers Squibb

April 2003

July 2002

12

IVAX

Teva

13

Knoll AG

Abbott Laboratories

14

Biogen

IDEC Pharmaceuticals

15

Chiron

Novartis AG

16

Hexal AG

Novartis AG

Advised on $90 billion Merger with Pfizer

July 2000

June 2000

√

1

9

Advised on $26 billion Merger-of-Equals with Monsanto Company

Bear Stearns Advised

2

Advised on $11 billion Acquisition of Immunex

IDD

May 2001

Acquiror

Advised on $60 billion Acquisition of Pharmacia Corp.

October 2004

Advised on $3.8 billion Acquisition of BioChem Pharma

Target

17

Mallinckrodt

Tyco International Ltd.

18

Renal Care Group

Fresenius Medical Care AG

19

BioChem Pharma

Shire

20

Jones Pharmaceutical

King Pharmaceuticals

21

SICOR

Teva

√ √ √

IDD

(1)

= Investment Dealers’ Digest deal of year. Source: Securities Data Company. Includes US and European Pharma and MedTech transactions since 2000.

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Building Client Relationships That Result in Successful Repeat Transactions

„ „ „ „ „

$338M Secondary Offering $868M Secondary Offering $163M Secondary Offering $195M Secondary Offering $258M Secondary Offering

„ Mandated Lead Arranger for

„ „

„

„ „

„

€11.5B Credit Facility to fund €9.7B Acquisition of Serono €14.6B Unsolicited Takeover Offer for Schering AG $1.7B sale of VWR International to Clayton, Dubilier & Rice $370M Private Placement of Public Equity (Merck KGaA’s stake in Par Pharmaceutical) JV of European Orthopedics with Biomet Filed $250M Initial Public Offering for Dey Lab subsidiary $150M acquisition of CN Biosciences, Inc.

„ $120M sale of vaccines

„

„ „ „ „ „ „ „

business to ID Biomedical Corp. $72M sale of US OTC products portfolio to Purdue Pharma L.P. Merger of CADx subsidiary with Qualia Computing, Inc. $400M Convertible Debt Offering $4B Acquisition of BioChem Pharma $265M Spot Secondary for Yamanouchi $1B Merger with Roberts Pharmaceutical $121M ADR Offering Acquisition of Richwood Pharmaceuticals

„ Acquisition of Optivar from „ „ „ „

Viatris Advised on $70M Sale of Wampole Laboratories Acquisition of JV stake from Asta Medica $225M Senior Credit Facilities $408M acquisition of CarterWallace Pharmaceutical division

„ $16.6B sale of Consumer

„ „ „ „ „

Healthcare business to Johnson & Johnson Pfizer’s $126M acquisition of CSL Animal Health Pfizer’s $60B acquisition of Pharmacia $700M IPO of Monsanto Pharmacia’s $26.2B Merger with Monsanto $2B Offering of Volvo’s Secondary Shares of Pharmacia & Upjohn

Watson Pharmaceuticals „ Acquisition of Solgar Vitamin „ „ „ „ „ „

& Herb Sale of Quinton Instrument $35B Terminated Merger with Monsanto $55B Merger discussions with SmithKline Beecham $2B Senior Notes $200M Animal Health Swap with Roche $380M Sale of Storz Instrument to Bausch & Lomb

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„ $63B Sale to Sanofi-

„ $980M Acquisition of Schein

Synthelabo „ $133M ADR offering for Rhône-Poulenc „ $400M Sale of OTC business to Ciba-Geigy for RhônePoulenc „ Advised Rhône-Poulenc on $3B Animal Health Joint Venture with Merck

„ „ „ „ „

Pharmaceuticals $300M Acquisition of TheraTech $99M Acquisition of Royce Labs Acquisition of Rugby Pharmaceutical $67M Follow-on $50M IPO

„ $90B Merger with Pfizer „ Formation of $4B „ 3-way JV with Glaxo and

Wellcome „ Advised on $1B Repurchase of

Glaxo Wellcome Joint Venture „ $150M Senior Notes „ $500M Medium Term Notes „ Sale of Warner-Chilcott to

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Nalé Labs (Elan plc)

„ $2 billion sale to Cardinal

Health $511 million bond tender $131 million Follow-on $175 million Sr. Sub Notes $275 million Sr. Secured Credit Facility „ Acquisition of Instromedix „ Advanced Medical merger with IVAC „ „ „ „

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Endo Pharmaceuticals Case Study Offering Summary

Stock Price Performance 3,000

$30.00 10/5/05: Priced at $26.04

$755 million Secondary Offering 29.0 million shares

28.00

2,000 1,500

9/22/05: Filed at $28.27

26.00

Price

Volume (000s)

2,500

24.00 1,000 500

Joint Bookrunner October 2005

0

22.00

20.00

5 5 5 5 5 5 5 5 5 5 5 5 5 9/0 0/0 1/0 2/0 3/0 6/0 7/0 8/0 9/0 0/0 3/0 4/0 5/0 9/1 9/2 9/2 9/2 9/2 9/2 9/2 9/2 9/2 9/3 10/ 10/ 10/

Background

Highlights

„ Endo Pharmaceuticals (ENDP) is a market leader in the research,

development, sale and marketing of branded and prescription drugs for pain treatment „ All shares were offered by Endo Pharma LLC, partially owned by Kelso and current/former management and directors, in their fourth public offering of shares since July 2003

• The selling shareholder reduced its stake from 48% to 19% • Proceeds to management will be used to fund the exercise price and related taxes on options set to expire in Jan ’06 „ Largest Health Care follow-on offering since November 2001

(King Pharmaceuticals) „ Represents the fourth Bear Stearns bookrun equity offering for the Company–total proceeds raised of $1.37B

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„ After building an order book north of 2x oversubscribed with no

price sensitivity, the deal was upsized by 3 million shares

• • • •

6-day roadshow with 44 1-on-1 meetings and 30 indications 81 domestic institutional orders placed Approximately 80% of shares placed with new holders 68% hit ratio

„ On the day of pricing, the stock traded up slightly vs. a decline of

1.5% and 2.8% for the S&P 500 and Nasdaq Biotech Index, respectively „ The shares were offered at a 0.0% discount to the closing stock price „ The offering represents Bear Stearns largest bookrun follow-on offering in over 5 years

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Case Study: Sale of betapharm to Dr. Reddy’s Laboratories Transaction Summary Target: Seller: Acquiror: Purchase Price: Form of Consideration: Announcement Date: Expected Closing Date:

betapharm Arzneimittel GmbH. (“betapharm”)

3i Dr. Reddy’s Laboratories Ltd. €480 million 100% Cash February 16, 2006 Early March 2006

Deal Synopsis „ betapharm, based in Augsburg, Germany, and founded in 1993, is the fourth-largest generic pharmaceutical company

in Germany with a market share of approximately 3.5%. 3i, a UK based leading private equity firm, acquired control of betapharm in May 2004. „ Pursuant to substantial in-bound inquiries received by betapharm, 3i retained bankers to review strategic alternatives. „ Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research

capabilities. It produces finished dosage forms, APIs and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. „ The deal is the largest cross border acquisition ever by an Indian pharmaceutical company and is evidence of the

growing trend of global consolidation in the pharmaceutical industry. The combination of Dr. Reddy’s and betapharm offers an excellent opportunity to build on the unique strengths of each company to emerge as a leading generics player in Europe in the long-term. „ Bear Stearns served as financial advisor to 3i in connection with this transaction.

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Section 2

Pharmaceutical Sector Overview

Integreon

The 20 Leading Drug Companies With Sales in 1981 and 2004 ($ in billions) Name

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Hoechst Ciba-Geigy Merck & Co. Roche Pfizer Wyeth Sandoz Eli Lilly Bayer SmithKline Beckman Boehringer Ingelheim Takeda Upjohn Johnson & Johnson Bristol-Myers Schering-Plough Sankyo Rhone-Poulenc Shionogi Glaxo

1981A Sales

$2.6 2.1 2.1 1.5 1.5 1.4 1.4 1.4 1.2 1.2 1.1 1.1 1.0 1.0 1.0 0.9 0.9 0.8 0.8 0.8

Name

Pfizer Johnson & Johnson Glaxo Bayer Sanofi-Aventis Novartis Roche Merck AstraZeneca Abbott Bristol-Myers Squibb Wyeth Eli Lilly Amgen Boehringer Ingelheim Takeda Schering-Plough Schering AG Novo Nordisk Sankyo

2005A Sales

$51.3 50.5 39.3 33.5 33.4 30.8 29.7 22.0 23.9 22.3 19.2 18.8 14.6 12.4 11.1 10.6 9.5 6.5 5.5 5.0

Source: Wood Mackenzie, and Company Filings.

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Summary of Major Industry Transactions 1994—Present ($ in billions) Year

2006 2006 2006 2006 2006 2005 2005 2003 2002 2001 2000 2000 2000 2000 1999 1998 1998 1998 1997 1996 1995 1995 1995 1995 1995 1994

Purchaser

UCB SA(1) Merck KGaA(1) Nycomed Bayer AG Barr Teva Novartis Pfizer Amgen Bristol-Myers Johnson & Johnson Abbott Glaxo Wellcome Pfizer Pharmacia Upjohn Rhone-Poulenc Rorer Sanofi Zeneca Hoffman-La Roche Sandoz Glaxo Hoechst-Roussel Pharmacia Rhone-Poulenc Rorer American Home Hoffman-La Roche

Target

Schwarz Pharma AG Serono SA ALTANA Pharma AG Schering AG Pliva Ivax Hexal AG Pharmacia Immunex DuPont Pharma Alza Knoll (BASF Pharma) SmithKline Beecham Warner-Lambert Monsanto Hoechst AG Synthelabo Astra Boehringer Mannheim Ciba-Geigy Burroughs Wellcome Marion Merrell Dow Upjohn Fisons American Cyanamid Syntex

Cost of Target

$4.2 11.9 5.7 19.5 2.6 8.5 5.9 60.0 17.6 7.8 10.8 6.9 76.0 89.2 26.9 21.2 11.1 34.6 11.0 60.0 (2) 20.0 7.1 13.0 (2) 2.7 9.2 5.3

Source: PhRMA/Reuters. (1) Transaction pending. (2) Value of merged entity.

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Relative Valuation—% of Stock Price Highs 52-Week 110%

110% 100.0% 100

99.1%

98.7%

Average = 95.0% 96.8%

95.8%

95.6%

95.6%

100

92.7% 90.0%

85.5%

90

90 80

80 SGP

BMY

MRK

WYE

GSK

PFE

NVS

SAN

LLY

AZN

$39

$52

$100

$70

$160

$199

$138

$126

$60

$90

MVE ($B)

3-Year 110% 100

99.0%

110% 96.8%

95.8%

95.7%

95.6%

92.9%

90

Average = 88.8% 86.9%

85.5%

80

100 90

70.1%

69.4%

80

70

70

60

60

50

50 SGP

WYE

GSK

SAN

NVS

MRK

BMY

AZN

PFE

LLY

Note: Data as of January 19, 2007.

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Relative Valuation—GAAP P/E 2007E P/E 30.0x

30.0x 23.4x

Harmonic Mean = 15.9x

22.0x 17.5x

20.0

17.0x

15.9x

15.0x

14.8x

13.9x

13.5x

12.4x

20.0

10.0

10.0

0.0

0.0

R&D % of Sales

SGP

BMY

MRK

NVS

LLY

GSK

WYE

AZN

SAN

PFE

20.1 %

16.4 %

19.3 %

14.1 %

19.9 %

15.5 %

15.0 %

15.6 %

14.6 %

16.0 %

2008E P/E 30.0x

30.0x 19.8x

20.0

Harmonic Mean = 14.5x 18.6x

16.7x

15.0x

14.4x

13.9x

13.3x

13.1x

20.0 12.5x

11.8x

10.0

10.0

0.0

0.0

R&D % of Sales

SGP

BMY

MRK

NVS

LLY

GSK

WYE

AZN

SAN

PFE

20.6%

16.3%

19.9%

14.0%

15.6%

19.7%

15.7%

16.3%

14.6%

16.3%

Note: Data as of January 19, 2007. EPS estimates per First Call and includes SFAS 123R stock option expense.

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Relative Valuation—Forward P/E (GAAP)(1) Last 5 Years: One-Year Forward P/E Multiples 25.0x

25.0x

20.0

20.0x

15.0

15.0x

10.0

10.0x 1/07

1/02

11/02

9/03

7/04

Peer Index

5/05

3/06

(2)

Source: FactSet Research Systems. Data as of January 19, 2006. (1) Based on 12 month forward consensus GAAP EPS estimates. (2) Peer index includes AstraZeneca, Bristol Myers, Eli Lilly, Glaxo, Merck, Novartis, Pfizer, Sanofi-Aventis, Schering-Plough and Wyeth.

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Relative Valuation—PEG Ratios (based on GAAP P/E) 2007E PEG 4.0x

3.0

4.0x

2.92x

3.0 2.50x

Harmonic Mean = 1.89x 2.42x 2.20x 2.00x

1.99x

1.91x

2.0

2.0

1.84x 1.31x

1.17x

1.0

1.0

0.0

0.0

LTG

MRK

PFE

GSK

BMY

AZN

SAN

LLY

WYE

NVS

SGP

6.0%

5.0%

6.2%

10.0%

7.0%

6.8%

8.3%

8.0%

13.0%

20.0%

Average 9.0%

Note: Data as of January 19, 2007.

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The Process of Research—Stages and Timing Compound Success Rates by Stage 5,000–10,000 screened

Discovery (2–10 years) Pre-clinical Testing (Laboratory and animal testing)

250 enter pre-clinical testing

Phase I (20–80 healthy volunteers used to determine safety and dosage) Phase II (100–300 patient volunteers used to look for efficacy and side effects)

5 enter clinical testing

Phase III (1,000–5,000 volunteers used to monitor adverse reactions to long-term use) FDA Review/Approval Additional Post-marketing Testing 0

2

4

6

8

10

12

14

16

18

1 approved by the FDA

Years

Source: PhRMA 2002.

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Big Pharma’s Adoption of the Blockbuster Model…

70%

70%

60

60

50

50

40

40

30

30

20

20 1993

1994

1995

1996

1997

1998

1999

New PCP-Driven Sales/Total New Sales

New PCP-Driven Sales/Total New Sales

% Contribution of Primary Care Physician-Driven Products to Top 10 Pharma Sales Growth

2000

Includes: AstraZeneca, Aventis, BMS, Eli Lilly, GSK, JNJ, Merck, Novartis, Pfizer, and Roche. Source: EvaluatePharma; Defined Health Analysis.

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…Created a Number of Products Available for Divestment Small Drugs—Serving markets deemed as too small

King and Altace®

Old Products—Modest sized products nearing the end of their patent lives

KOS and Azmacort®

Under-Developed Products—That had minimal clinical investment

Medpointe and Astelin®

Neglected Products—That had minimal sales and marketing resources applied to them

ESP and Cardene®

Damaged Goods—Products that were not launched well or failed initial clinical trial

The Medicines Company and Angiomax®

A $100 million cast off product for Big Pharma is a “Blockbuster” for Specialty Pharma.

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Section 3

Specialty Pharmaceutical Sector Overview

Integreon

Specialty Pharma: Industry Landscape Convergence is changing traditional market segments. „ Although much of specialty pharma consists of hybrid players, the sector can be segmented into three sub-

categories

Specialty Marketing

„

Improve market visibility and branding of smaller and mid-size proprietary products, and exploit revenue synergies „ Strength of sales and marketing infrastructure drives growth „ Reduced technology, market, and litigation risk „ May be dependant on one or two products or product platforms Key Players: „

Allergan, Axcan, Cephalon, Endo, First Horizon, Forest, King, Kos, KV Pharma, Medicines Company, Medicis, Shire

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Drug Delivery

„

Create more effective delivery mechanisms for existing drugs and solutions for product life cycle management for branded companies „ High R&D spend and technology risk „ Develop strategic alliances and partnerships for access to pipeline candidates and therapeutic area platforms „ IP drives continued industry leadership Key Players: „

Alkermes, Biovail, Connetics, Enzon, Nektar, Noven, Sepracor

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Generics

„ „ „ „ „

Market generic versions of branded drugs Record numbers of drugs coming off patent First to file—first to market gains all important 6-month market exclusivity Litigation costs continue to rise Highly regulated industry

Key Players: „

Andrx, American Pharmaceutical Partners, Barr, Mylan, Par, Taro, Teva, Watson

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Specialty Pharmaceuticals Company Universe Drug Delivery Company Abrika Acusphere Advancis Aerogen Alexza Molecular Delivery Alkermes Inc. Altea Therapeutics Andrx Corp. Aradigm Corp. Bioject Medical Technol Cydex Cygnus DepoMed Dexcel Pharma Elite Emisphere Technologies Inc. Eurand Flamel Technologies SA Generex Biotechnology Impax Labs Labopharm Microdose Mistral Pharma Nastech Pharmaceutical Nektar Therapeutics (Inhale) New River Pharmaceutical Nobex NovaDel Penwest SkyePharma Plc Syntonix Valera Pharmaceuticals Dermatology Company Barrier Therapeutics Bradley Pharmaceuticals Chester Valley Pharmaceuticals Connetics Corp. Ferndale Isolagen Medicis Pharmaceuticals OMP SkinMedica Valeant

CONFIDENTIAL

Cancer Company American Pharmaceutical Partners Celgene Chiron Genitope Inovio Ligand MGI Pharma NeoPharm Pharmion Supergen Urology Company Auxilium MacroChem Nexmed Pentech Senetek Situs Vivus Watson Zonagen Women’s Health Company Barr Pharmaceuticals Columbia Laboratories Insmed Novavax Noven Pharmaceuticals Xanodyne Cardiology/Cardiopulmonary Company Biovail King Pharmaceuticals KOS Pharmaceuticals Medicines Company Myogen Nitromed Nuvelo Reliant United Therapeutics

Specialty Marketing Ophthalmic Company Advanced Medical Optics Akorn Alcon Allergan Eyetech ISTA Pharmaceuticals Miravant

Analgesics/Pain Company Adolor AlgoRx Durect Endo Pharmaceuticals Epicept IDDS IOMED Inc. Manhattan Pharmaceuticals NeurogesX Pozen ProEthic Pharmaceuticals Purdue Frederick Vela Pharmaceuticals Vernalis Wex Pharmaceuticals

Gastrointestinal Company Axcan Cellegy Prometheus Salix Pharmaceuticals Santarus

Pediatrics Company Alliant Pharmaceuticals Pediamed Verus

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Respiratory/Allergy Company Adams Respiratory Therapeutics Corus Pharma Dey Labs Inspire MedPointe Sepracor Tanox Other Company Access Pharmaceuticals Aesgen Amylin Chesyl Pharma Ltd. Collagenex Pharmaceuticals Delsys D-Pharm DrugAbuse Sciences Enzon Inc. First Horizon Pharmaceuticals Gilead Sciences K V Pharmaceutical MakScientific Ovation Pharmaceuticals Peninsula Pharmaceuticals Questcor Savient SciClone CNS Company Aderis Pharmaceuticals Amarin CeNeS Cephalon Corcept Therapeutics Cypress Bioscience Dov Pharmaceuticals Elan Corp. Plc Forest Laboratories Guilford Pharmaceutical Lundbeck Neurosearch A/S Pharmos Corp. Shire Pharmaceuticals Titan

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US Generic Drug Market Dynamics Generics will continue to increase their share of the total pharmaceutical market. US Pharmaceutical Prescriptions

US Pharmaceutical Sales

60%

60% 52%

52%

100% 90

50% 50

100% 86%

86%

85%

90

84%

83%

50

47% 45% 45%

80

80

70

70

60

60

50

50

40

40

30

30

20

20

42% 39%

40

37%

40

37%

30

30

20

20

11%

11%

11%

11%

10%

10

10 10

0

0 2000

2001

Brand

2002

Generic

2003

2004

6%

8%

6%

9% 6%

8%

9% 7%

9% 7%

0

10 0

2000

Branded Generic

2001

Brand

2002

Generic

2003

2004

Branded Generic

Source: Wall Street research.

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Specialty Pharma Key Value Drivers Key success factors relate to sustainability/growth of both in-line and pipeline products.

Flagship Products

Therapeutic Leadership

„ Targeting sizeable/attractive niche markets

„ Focus on specialty areas with concentrated prescriber audience

„ Portfolio that is highly synergistic from a call point perspective

„ Clear “commercial proposition” (i.e., differentiated product profile)

„ Meaningful SOV within targeted therapeutic categories/ indications

„ Demonstrated potential for operating leverage

„ Exclusivity/ patent life remaining

„ Partner of choice for product opportunities

CONFIDENTIAL

Economies of Scale

Life Cycle Management

Product Pipeline

„ Market intelligence to identify commercially viable line extensions/ reformulations

„ Development of a deep, visible pipeline that could provide sustainable growth

„ Ability to implement picket fence IP strategies

„ Well balanced risk-reward profile

Management Team

„ Operational excellence „ Exemplary track record „ Strong network

„ Infrastructure/ network to develop concepts to market products in cost effective manner

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US Generics Landscape Common Business Models Formulation/ Manufacturing Expertise

Examples of Companies

Breadth of Product

Unique/Niche Product Offering

Drug Delivery Capabilities

Paragraph IV Expertise

Mylan Laboratories Inc. Mylan Laboratories Inc.

Comments

CONFIDENTIAL

„ Natural barrier to

„ Positions as one-

„ Barrier to entry

entry „ Enhanced margins

stop shop for wholesalers and other buyers „ Scale-based commodity strategy

„ Limited competition „ Potentially limited size

of target market „ Potential to establish

company as “partner of choice” in specific therapeutic area

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„ Enables to

compete in higher-margin “super generics”

„ Exclusivity

periods provide enormous source of profits „ Adds layer of unpredictability to sales/earnings profile

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US Generic Market Stratification Latest 12 Month Sales Format

$25–50M

$50–100M

$100–250M

$250–500M

Ferring & Co X Gen

Breckenridge Caraco Lannett Paddock

Impax

KV Pharma Qualitest Upsher Smith URL/Mutual

Akorn Therapeutics AmphaStar

Mayne

APP

Pharmaceutical Associates

Cypress Pharmaceuticals

Morton Grove

Spear Dermatology

Hi-Tech Pharmacal

Solid Dose

Injectibles

Liquids & Misc

$500+M

Actavis Apotex Barr Mylan Par Ranbaxy Taro Teva Watson

Note: In bold—publicly traded companies. Excludes generic division/subsidiaries within larger companies.

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Overview of Specialty Pharma Sector Category

Specialty Marketing

Concept

Focused detailing and marketing of under– promoted products

Growth Drivers „ Large pharma’s increasing focus on

blockbusters „ Lengthening “tail” product portfolios

• Implications on overall growth rates Drug Delivery

Improved product formulations

• Less frequent dosing • Improved methods of administration (e.g. oral

„ Life-cycle extension mechanism, especially

for products losing patent protection „ May address certain “feasibility” issues

encountered in drug development

vs. injectible)

„ Increased barriers to entry

Generics

Bioequivalent versions of branded products

„ Cost containment „ Bolus of patent expirations „ Favorable political climate

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Indian Pharma Universe ($ in millions, except per share data) Company

Large Pharma MCAP

Ranbaxy Laboratories Dr. Reddy’s Cipla Limited Sun Pharmaceuticals Wockhardt

$3,490.7 3,076.7 4,435.3 4,453.9 905.0

Small Cap 2007E P/E

18.3 x 22.6 21.0 24.3 13.1

Mid-Cap Company

MCAP

2007E P/E

Lupin Ipca Labs Cadila Health Aurobindo Alembic Matrix Labs Glenmark Nicholas Piramal Jubilant Torrent Pharma Orchid Chemicals Biocon FDC

$1,031.4 362.6 990.6 879.6 210.1 754.5 1,681.9 1,257.3 887.2 396.7 309.1 961.3 168.5

16.2 x 11.8 15.8 18.0 7.7 12.8 18.6 18.7 16.7 13.6 7.4 18.3 10.4

Company

Divi’s Laboratories

MCAP

2007E P/E

$941.0

23.6 x

Dishman Pharmaceuticals

399.6

15.6

Shasun Chemicals

139.2

12.8

Hikal

139.3

9.3

Vimta Labs

93.5

38.7

Suven Life Sciences

98.5

56.6

Dabur Pharma

280.3

15.9

Elder Pharmaceuticals

167.8

10.0

Ind-Swift

30.4

30.1

194.2

170.7

Jupiter Bioscience

27.7

23.6

Kopran

27.9

27.8

Natco Pharma

97.8

67.8

Panacea Biotec

574.3

480.5

32.3

39.1

296.2

48.5

JB Chemicals & Pharmaceuticals

RPG Life Sciences Strides Arcolab Unichem Laboratories

309.9

261.3

Venus Remedies

216.2

187.5

22.1

15.6

Surya Pharmaceuticals

Note: Stock price as of January 19, 2007.

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22

Section 4

Medical Technology Sector Overview

Integreon

Overview of Med-Tech Subsectors The following represents a sampling of Mid-Tech sectors and companies. Companies

Ophthalmology

Dental

Products/Services

„ Alcon

„ Contact Lenses

„ Bausch & Lomb

„ Lens care

„ Eyetech

„ Pharmaceuticals

„ Dentsply

„ Filling materials

„ Sybron Dental Specialties

„ Bonding agents „ Braces, brackets & rubber bands

Medical/Surgical

„ American Medical Systems

„ Products to treat urinary incontinence

„ Conmed

„ Surgical installments for arthroscopic sports medicine

„ Kinetic Concepts

(Drills and Saws) „ Wound healing and tissue repair systems

Respiratory

Orthopedic

Cardiovascular

Conglomerates

CONFIDENTIAL

„ Respronics

„ Sleep therapy systems/Sleep diagnostic systems

„ Viasys

„ Ventilation systems

„ Vital signs

„ Neuro monitoring systems

„ Biomet

„ Knee & hip implants

„ Zimmor

„ Spinal implants

„ Stryker

„ Biologic materials to replace bone

„ Boston Scientific

„ Drug-eluting stents

„ Medtronic

„ Implantable defibrillators

„ Thoratec

„ Pacemakers

„ Baxter

„ Infusion pumps

„ Johnson & Johnson

„ Peripheral stents

„ Medtronic

„ Neurostimulation devices

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23

Integreon

Medical Technology Industry Dynamics Relative Price Performance—Past Five Years

Summary Observations

150%

150%

125

125

the broader market over the past five years

100

100

• The Med Tech Index has increased 7% versus 24% for the

75

75

50

50 12/06

1/02

10/02

8/03

6/04

4/05 (1)

Med Tech Index

2/06

„ Medical technology stocks have performed in line with

S&P 500, driven by the broader market’s outperformance in 2006 „ Over the last year, Med Tech’s performance has been

negatively impacted by:

S&P 500

• Increased pricing pressure and scrutiny

Forward P/E Ratios—Past Five Years 32.0x

32.0x

29.0

29.0

26.0

26.0

23.0

23.0

20.0

20.0

17.0

17.0

14.0 1/02

11/02

9/03

7/04

4/05

2/06

14.0 12/06

• Less favorable regulatory and reimbursement environments „ Looking ahead, Med Tech is increasingly being viewed

again as a potential “defensive play” in a volatile market

• Improving growth and risk profile • Prospect for continued Med Tech industry consolidation

(1)

Med tech Index

S&P 500

Source: ThomsonOne Banker. Note: Data as of December 31, 2006. (1) Includes ABT, BAX, BDX, BEC, BMET, BOL, BSX, EW, JNJ, MDT, STJ and SYK.

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24

Integreon

Comparative Sector Performance 2-Year % Change

Respiratory Dental Diagnostics

16%

41% (2)

(3)

13%

Mid-Cap Med/Surg (6)

12%

99%

11%

94%

12% 0%

(7)

94% 84%

(15%)

5%

Orthopedic (8)

93% 14%

17%

Large Cap (5)

91%

7%

19%

14%

92%

17%

29%

Diversified Industrials (4)

Ophthalmology

% of 52-Week High

(1)

S&P 500

Cardiovascular

1-Year % Change

74% 14%

(1%)

(9)

(17%)

(8%)

96% 72%

Source: ThomsonOne Bank. Note: Data as of December 31, 2006. (1) Includes ARRO, RESP, RMD, VAS, VITL and FPH. (2) Includes NOBE, STMN and XRAY. (3) Includes BEC, DADE, BIO, GPRO and CYTC. (4) Includes GE, DHR, SMIN, PHIA, SIE, MMM, TFX and TYC. (5) Includes ABT, BAX, JNJ and MDT. (6) Includes AMMD, BCR, CNMD, HB, ISRG, MNT, STE, ARTC, IVC and KCI. (7) Includes BSX, EW, STJ and THOR. (8) Includes BMET, SNN, SYK, SYST, ZMH and WMGI. (9) Includes ACL, EYE, BOL and COO.

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25

Integreon

Medical Technology Historical IPO Activity 1990–2006 YTD(1)

($ in millions)

$3,000

$3,000 $2,732

2,500

2,500

$1,941

2,000

2,000 $1,582

1,500

1,500 $1,178 $997

1,000 $685

$727

$0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

4

9

24

7

10

13

32

7

2

0

10

7

6

0

18

$573 500

$498

$392

$441

$171

$147

$86

$0

0

# of Transactions:

500

KCI (540M)

Alcon ($2,302M)

$663

1,000

0 2005

2006

12

12

Source: SDC and Dealogic. (1) As of December 31, 2006.

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26

Integreon

Medical Technology M&A Environment „ Medical technology consolidation activity continues to be robust

• Driven by acquirer’s strong valuations, historically low financing costs and need to accelerate growth „ Activity is broad-based covering all main medical technology sub-sectors (e.g., cardiovascular, orthopedics,

medical/surgical & others) „ Valuations remain strong for companies with superior market positioning and robust growth prospects

1995–YTD 2006(1)

($ in billions) $60

$60 $54.2

50

$45.3

40

40 $28.2

30

12 20 10 0

50

$11.9

14

$9.8

$7.6 1 26

$3.5 25

29

26

7 21

1995

1996

1997

1998

1999

5

$12.9

$10.8

6 20

3 32

2000

2001

Transaction Value < $500 Million

$10.0

$12.2

18

30

$14.6

20

8

10

1 28

5 29

31

2002

2003

2004

37

42

2005

2006

0

Transaction Value > $500 Million

Source: Medical Device Daily and company press releases. (1) Represents announced transactions where value was disclosed; data as of December 31, 2006.

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27

Section 5

Healthcare Services Overview

Integreon

Managed Care Overview—Sizing of US Health Insurance Market Of the approximately $1.9 trillion in Health Care spending in the US in 2004, 44% was Government funded. 2005 US Health Insurance Coverage(1)

2004 US Health Care Spending(2) 70%

70%

59.5% 60

60

50

50

40

40

30

30

20

15.9% 13.7%

Consumer Outof-Pocket 15.1% Medicaid 17.4%

Medicare 19.2%

20

Private Health Insurance 36.1%

13.0%

9.1%

10

Other Government Programs 7.8%

10 3.8% 0

0 EmploymentBased

DirectPurchase

Commercial

Medicare

Medicaid

Military

Uninsured

Other Private 4.4%

Government

Total: ~$1.9 trillion

Total: 293.9 million

(1) (2)

Source: US Census Bureau. Does not add to 100% as individuals may covered by more than one type of health insurance during the year. Source: Kaiser Family Foundation.

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28

Integreon

Relative Stock Price Performance Managed care companies with a concentration in government-funded programs have outperformed the large cap companies in the past five years. For the Last Five Years 900%

900% 11/07/06: Democrats take over House and Senate 07/06/05: UNH/PHS announced

600

600 11/02/03: Bush defeats Kerry 12/08/03: MMA signed to law

300

300 03/20/03: MMA announced

0

0 12/01

10/02

8/03

Medicare

(1) (2) (3)

6/04 (1)

4/05 (2)

Medicaid

1/06

12/06

(3)

Large-Cap

Consists of PHS, HUM, SIE, WCG and HS (PHS includes 4/24/01 to 12/20/05; HS from 2/06/2006 to present; WCG from 7/1/04). Consists of AGP, CNC and MOH (CNC from 1/31/02; MOH from 7/3/03). Consists of AET, CI, UNH and WLP.

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29

Integreon

Managed Medicare Penetration „ Managed Medicare has a very low penetration on an absolute and relative basis „ Penetration has already increased to 18% of eligibles as of 11/06 from 12% in 2005 „ In the next 6–7 years, 8.1 million additional Medicare beneficiaries are expected to enroll in Medicare

Advantage plans Share of Medicare Beneficiaries Enrolled in Medicare Advantage Plans 40%

Relative Managed Care Penetration 40%

Actual (1)

100%

Projected (2)

100% 86%

30

30

75

75 61%

18% 16%

20

20

50

50 30%

5% 25

10

10

25

18% 11%

0

0

0

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

(1) (2) (3) (4) (5)

0 2004

2006

(3)

Medicare Managed Care

2013(11)

Commercial Managed Care (5)

Medicaid Managed Care (6)

CMS, Medicare Managed Care Contract Plans Monthly Summary Report. President’s FY 2006 Budget, Office of Management and Budget (February 2005). CMS as of November 2006. Wall Street Research Estimates. Medicaid Managed Care Penetration Report (December 2004). Includes PCCM programs.

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30

Integreon

Medicaid Managed Care Enrollment Trends(1) Medicaid managed care has enjoyed significant unit growth in the past two years as states have embraced managed care as a way to control expanding medical costs. Medicaid Managed Care Enrollment(1)

($ in millions)

35.0

State

70%

30.0

60

25.0

50

20.0

40 29%

10.0 13 5.0

15

17

18

19

21

23

25

27

29

30 20 10

10

0.0

0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

% Penetration

Enrollees

62%

15.0

Top 15 States by Enrollment(1)(2) California New York Ohio Michigan Pennsylvania Georgia Texas Arizona Puerto Rico Washington Florida New Jersey Maryland Missouri Indiana Top 15

Enrollees

% of Total

% Penetration

3,290,851 2,555,173 1,400,000(2) 1,290,240 1,261,704 1,057,297(2) 992,093 885,204 865,299 812,470 782,326 553,461 482,749 427,615 415,315 17,071,797

15.3% 11.9 6.5 6.0 5.9 4.9 4.6 4.1 4.0 3.8 3.6 2.6 2.2 2.0 1.9 79.4%

50.2% 54.4 81.8 89.9 74.3 76.7 35.9 77.6 99.9 84.4 34.8 69.0 67.4 40.7 51.2

Source: CMS and Kaiser Family Foundation. (1) Pro Forma for Georgia and Ohio expansions based on CMS website data. (2) Excludes PCCM arrangements and other state-managed programs as well as ancillary service-only programs.

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31

Integreon

Geographic Concentration of Medicaid Opportunities

WA

ND

MT

MN SD

ME

WI

ID

OR

VT

WY

MI NE

MA

NV IL UT

CO

KS

IN

PA

OH

MO

CA NM

Tier I:

DE

NC

MD DC

AR MS

TX

CT

VA

TN AZ

RI NJ

WV KY

OK

NH

NY

IA

AL

SC GA

LA

Large Population(1) High Penetration

FL

Tier II: Medium Population(2) High Penetration Tier III: Large Population(3) Low Penetration

(1) (2) (3)

Puerto Rico

Tier I defined as having >500,000 Medicaid enrollees and >500,000 managed care enrollees. Tier II defined as having >500,000 Medicaid enrollees and <500,000 managed care enrollees. Tier III defined as having between 200,000 and 500,000 Medicaid enrollees and between 200,000 and 500,000 managed care enrollees.

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32

Integreon

Valuation Trends Although the recent Democrat takeover of both the House and the Senate is seen as a negative for Medicare Advantage, these specialized companies are still trading at a premium largely due to lack-luster expected growth in the Commercial sector. Comparative Valuation—2008 P/E

Research Commentary

15.0x

15.0x

14.3x 11.4x

12.4x

11.9x

„ We view participation in government-funded healthcare

programs to be a strategic disadvantage...as yields decelerate and focus shifts to enrollment growth. 11/06/06

13.0x

10.9x

10.0

10.0

5.0

„ Government-focused companies have led the large caps

and have shown strong recoveries from 2005, with Amerigroup leading the pack, up 74.6%, followed by WellCare and Molina, which posted returns of 58.8% and 25.6%, respectively. 12/05/06

5.0 AET

WLP

CI

UNH

(1)

(2)

Medicare Medicaid

Large-Cap

(1) (2)

Consists of PHS, HUM, SIE and HS (PHS includes 4/24/01 to 12/20/05; HS from 2/06/2006 to present). Consists of AGP, CNC, MOH and WCG (CNC from 1/31/02; MOH from 7/3/03; WCG from 7/1/04).

CONFIDENTIAL

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33

Integreon

Overview of the Medicare Market Population growth trends underlying Medicare Advantage will be favorable for the foreseeable future. Significant Number of Medicare Beneficiaries

„ Aging of US population

• People aged 65+ are expected to reach 20% of

75

75

population by 2030 (72 million)

• Comprise over 39% of total health care expenditures „ Medicare expenditures growth of over 9% per

year (excluding Part D)

(In millions)

50

42

R 12% CAG 47

53 50

25

25

0

0

• Part D expected to comprise 20% of Medicare

2005

2010

2014

spending by 2010

„ Medicare as a percentage of GDP is expected to

grow from 2.7% in 2004 to 4.2% by 2014

Rapidly Growing Medicare Expenditures $1,000 9% C

750 500

AGR $573

($ in billions) $817

750 500

$336

250

250

0

0 2005

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$1,000

2010

2015

34

Integreon

Healthcare Facilities Overview Long-Term Intensive Care „ High Acuity

Hospital

Assisted Living

„ High Acuity

„ Low Acuity

„ Most sophisticated

Skilled Nursing „ Medium-Low Acuity

Home Health

Home

„ Cheaper Alternative

„ Medicare/ Medicaid Certified

Most Expensive

Least Expensive CONTINUUM OF CARE

Source: Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (2006).

CONFIDENTIAL

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35