Capital Markets:Healthcare Trends & Future

Outlook

Kuwait Healthcare Reform 2009

Presented by Julie B. DeckerManaging Director, Lynxcom Partners

Operating Partner, Director of Healthcare Practice, FocalPoint Partners

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Introduction: Julie Decker

Law

Public accounting

Strategy consulting

Senior lending

Payer relations, reimbursement and regulatory affairs

Business development and operations

Healthcare information services

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Agenda Current economic situation

What happened? Capital Markets Government response

Healthcare outlook Current trends Spending and Government initiatives Continued investor interest M&A activity

Future outlook of healthcare investments Financing and M&A activity Expected future capital allocation

Market Changes

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Capital MarketsBank failures and consolidations

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Dow Jones Industrial Average

JP Morgan Chase acquires Bear Stearns for $270 MM

Lehman files for bankruptcy

Merrill Lynch sold to Bank of America for $50.3 Bn

JP Morgan Chase acquires assets of Washington Mutual

US Treasury takes 36% ownership of Citigroup

FreddieMac and FannieMae failures

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Government Stabilization Initiatives

1st major action: Troubled Asset Relief Program (TARP) Authorized by legislation passed October 3, 2008 $700 billion, approximately 50% has been spent Provide financial support to failing banks

2nd major action: Stimulus Package (American Recovery and Reinvestment Act) Signed into law February 17, 2009 Provides additional $789 billion in funding for tax relief,

healthcare, education, housing and infrastructure

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Why Healthcare Remains Healthy: Aging Population

Aging population utilizes more healthcare services

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Why Healthcare Remains Healthy: New Technologies

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Why Healthcare Remains Healthy: Drug Development

Drug spend forecasted to reach $453 billion by 2018 New advances in drug therapy

475 drugs in Phase III clinical trials 800 drugs in Phase II clinical trials Cancer treatment is the largest area of drug development

Targeted, long-term therapies Genetically based information Tumor biomarkers

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Why Healthcare Remains Healthy: Growing Healthcare Spend Healthcare is a large part of the US economy

National health expenditures totaled $2.3 trillion in 2007 Single largest segment of the GDP at 16% Expenditures on hospital care reached $700 billion in 2007

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Why Healthcare Remains Healthy: Government Commitment

American Recovery and Reinvestment Act (Stimulus Bill):

New Administration’s Renewed Focus on Healthcare Reform

New administration’s proposed budget

In addition to the Stimulus Bill, the 2009 budget includes $664 billion in Medicare and Medicaid

In 2010 the new administration plans to increase Medicaid and Medicare and establish a Uninsured Healthcare Reserve Fund increasing the total budget by 114%

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Solid Investor Interest in Healthcare Highly fragmented sector

Disconnects Shift toward inclusive model: Anthem, PrecisionRx and

Aenta SPEC.Rx Investors want to secure part of a growing market

By 2018 national health spending is expected to reach $4.4 trillion, 20.3% of total US GDP

Prescription drug spend projected to reach $453 billion by 2018

Healthcare is unavoidable and sustainable

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2008 Healthcare Transaction Overview Healthcare was the second most active M&A sector

in 2008 973 total M&A transactions $223.1 billion invested 3% of volume accounted for 74% of healthcare M&A dollars More than 90% invested in healthcare technology

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Recent Healthcare Transactions Biotechnology

Roche acquisition of Genentech for $47 billion Pharma

Teva acquisition of Barr Pharmaceuticals for $8.9 billion Merck has will acquire Schering Plough for $41 billion Pfizer will acquire Wyeth for $68 billion

Medical Devices Novartis acquisition of Alcon for $38 billion

eHealth MedAssets acquisition of Accuro Healthcare Solutions for

$450 million

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2009 Investment Focus Trends

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2009 Outlook

Although credit has dried up almost everywhere else, drugs companies, with their cash reserves and healthy revenues, can still call on the banks. - The Economist

Although credit has dried up almost everywhere else, drugs companies, with their cash reserves and healthy revenues, can still call on the banks. - The Economist