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JPMorgan Healthcare ConferenceJanuary 11, 2012
Hank KuchemanChief Executive Officer
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Safe Harbor - Forward Looking Statements
This presentation contains forward-looking statements within the meaning of 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 vary materially from the expectations and projections expressed or implied by our forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by the statements in this presentation can be found in our most recent Form 10-K and Form 10-Qs under the heading “Risk Factors” and “Safe Harbor for Forward-Looking Statements”. Participants 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.
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 20123
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 best estimates of completion of regulatory
submissions, review and/or approval or clearance, as well as other business considerations.
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
• Clear global leader in our $30B served market
• Significant new product introductions
• Global expansion through emerging markets
• Innovation driven by R&D realignment and investment
• Sizeable cost reduction opportunities
• Strong and stable adjusted(1) free cash flow
• Balanced capital allocation strategy
Significant Value Creation Opportunity
(1) Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuringand 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.
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Global Leader in our $30B Served Market
Other$6.8
(23%)ABT
$2.3(7%)
JNJ $2.7(9%)
STJ
$4.1(14%)
MDT
$6.8(22%)
BSX(2)$7.5(25%)
2010 Worldwide Revenue(1)
($, billions)
(1) Represents estimated revenue in medical device markets served by BSC(2) Excludes Neurovascular business ($340M in BSX revenue), which was divested in 2011
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
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Anatomy of Strength: 23 No. 1’s or No. 2’s
All categories are WW market share & estimates except: Guide Wires, Balloons, Diagnostic Catheters and Guide Catheters, Atherectomy, Embolic Protection, and Inflation Devices, which are US only
1 4 2 1 2 2 1 1 1 2 3 3 3 3 2 3 1 3 1 2 3 2 1 1 1 1 1 1 1 3 1 1 4 3 3 3
ABT 2 1 1 2 4 2 4
BCR 2 5 5 4 2 3 4
CNMD 4 4 5 4 4
Cook 5 2 2 3 3 3 2 2 3 5 2
JNJ 4 5 5 3 1 1 1 3 2 1 2 1 1 2
MDT 3 3 3 4 3 3 2 1 1 1 1 1 4 1
OLYP 3 2 5 2 3 2 5 2
STJ 4 2 2 2 2 3 3 1 3 2
Others 5 2 4 5 4 2 3 2 1 4 4 4 4 4 4 5 1 3 4 1 4 1 2 1Note: All categories are WW market share estimates except: Guide Wires, Coronary Balloons, Diagnostic Catheters, Guide Catheters, Coronary Atherectomy, Embolic Protection, Inflation Devices and Remote Patient Management (RPM), which are US onlySource: Data as of June 20116
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Market Dynamics
• Global ECONOMIC pressures impacting pricing
• MODERATE, JOBLESS RECOVERY impacting procedures
• Increased OVERSIGHT and TRANSPARENCY
• ALIGNMENT of physicians, healthcare systems and/or payers
• Increased REGULATORY requirements
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
How We Will Win With
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In the Near Term
by increasing our profitability and optimizing our organization
In the Medium Term
by accelerating sales growth and operating leverage
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
PtCr ELEMENT Stent Series
Unique, proprietary Platinum Chromium (PtCr) stent alloyImproved visibility/radiopacityHigh radial strength – allowing increased flexibility/deliverabilityReduced recoilIncreased stent conformability
PtCr ELEMENT™ DESEMEA Market Share
US Market Share (ION only)
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Worldwide DES Market: $4+ Billion growing low-single digits(1)
FDA & CE mark approvedU.S. approval in Q4 2011 - ~6 months ahead of goal; launch in-processJapan approval expected by mid-2012
Source: BSC Estimates(1) Based on 5 year CAGR estimate
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
INCEPTA™ - ENERGEN™ - PUNCTUA™
ICDs and CRT-Ds with 4-SITE™
Continues BSC advantages in size and shape
Industry-leading projected longevity with warranty up to 10 years
Advanced algorithms designed to minimize RV Pacing and reduce inappropriate shocks
DF-4 lead connection with proprietary EZ-4 tool to simplify procedure
HF diagnostics available in ICDs
Worldwide ICD Market: ~$7 Billion growing low-single digits(1)
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FDA & CE mark approved
EU launch mid-2011
Full U.S. launch expected early 2012Source: BSC Estimates(1) Based on 5 year CAGR estimate
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 201211
INGENIO™ Pacemaker Platform
RF TelemetryRemote Patient ManagementNovel algorithm to reduce RV pacing6Fr family of leadsEnhanced programming for the Minute Ventilation (MV) SensorMR Conditional system
Worldwide Pacemaker Market:Stable(1) at $4+ Billion
CE mark approvedFDA approval expected H1 2012U.S. & EU launches expected H1 2012
Source: BSC Estimates(1) Based on 5 year CAGR estimate
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Peripheral PortfolioPTA Balloons and CTO Devices
Best in class balloons across all platforms: .014”, .018”, .035”
Mustang™ 0.018” and Charger™ 0.035” -Workhorse balloons with powerful dilatation and superior deliverability
Coyote™ 0.014” - New level of deliverability, crossability, and ultra-low profile
TruePath™ and OffRoad™– New CTO crossing and re-entry devices
Worldwide Peripheral PTA/CTO Market:~$0.6 Billion growing mid-single digits(1)
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Mustang and Coyote approved and launched in U.S. and EU in 2011
Charger and TruePath FDA approved with full U.S. launch expected in 2012
OffRoad CE mark approved with full launch expected in 2012
(1) Based on 5 year CAGR estimate Source: BSC Estimates
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Genesys HTA® SystemEndometrial Ablation for Abnormal Uterine Bleeding
Redesigned for simple set-up and intuitive operation
Compelling clinical outcomes - 53% amenorrhea at 3 years
Redundant safety features - only global endometrial ablation (GEA) device under direct visualization
Versatility to treat irregularly shaped cavities
High patient tolerability for in-office procedures
Worldwide GEA Market:~$0.4 Billion growing mid-single digits(1)
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CE mark approved; launched in EU in 2010
FDA approved; fully launched in U.S. in 2011
(1) Based on 5 year CAGR estimate Source: BSC Estimates
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Alair®
Bronchial Thermoplasty (BT) System
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Proprietary treatment for patients with severe asthmaPublished 5-year safety data (RISA) and 2-year efficacy data (AIR2)Launched in 7 countries and >90 sitesCat. III CPT®(1) codes and CMS pass-through payment establishedPlan to expand to 20+ countries and ~200 sites by YE 2012
Worldwide BT market projected to be $1+ Billion in 2020
FDA and CE Mark approved
Leveraging global Endo sales capabilities
Source: BSC Estimates
(1) CPT Copyright 2011 American Medical Association. All rights reserved.
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
NEJM 2009;360:2601-2602
Watchman®
Left Atrial Appendage Closure Device
Designed to prevent ischemic stroke in AFibpatients as an alternative to long-term drug therapyPROTECT-AF trial (~800 patients) showed 38% relative risk reduction vs. long-term warfarin therapy Launched in 20+ countriesAspirin Plavix Registry enrolledExpect to complete PREVAIL enrollment & submit PMA in 2012Plan to expand to 20+ new countries by YE 2012
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Worldwide LAAC market projected to be ~$0.5 Billion in 2020
CE mark approvedFully launched in EU in 2011FDA approval and U.S. launch expected in 2013
Source: BSC Estimates
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Deep Brain Stimulation (DBS)
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High unmet need in refractory population
2nd largest Neuromodulation market today with significant growth opportunity beyond Movement Disorder indications
First DBS device with current steering –designed for accurate stimulation
Unique visualization technology in development – Intelect GUIDE system
Worldwide DBS market projected to be $1+ Billion in 2020
DBS for Parkinson’s DiseaseVANTAGE (EU trial) – expected completion 2012FDA approval projected following completion of a U.S. trial
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Emerging Markets DES
0
500
1,000
2010 2011 2012 2013
China India
~20% CAGR
0%
25%
50%
WW US China &India
DES Market Revenue ($M)
BSC DES Market Share (1)
Single-digit DES market shares far below WW and US levels
Industry-leading PtCr Element platform approved and launching in both countries
Significant 2011 investments in commercial resources, product registrations, distribution and support
5-year, $150M investment in China manufacturing and training capabilities underway
(1) As of Q3 201117 Source: BSC Estimates
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Total Est. AnnualCost Reduction
~$650M - $750M
MedTech Tax(2)
Net Mfg.VIPs
~$200M
(~$150M(2))
Plant NetworkOptimization(1)
~$100M(1)
ProjectTransformation
~$200M
Net Corp.SG&A
~$100M - $200M
Promus®Element™
~$200M
Significant Cost Reduction Opportunities
(1) Substantially complete end of Q4’11(2) Expected implementation in 2013
Source: BSC Estimates
Expected to benefit near-term earnings and cash flow
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FDA approval Nov 2011 Japan approval expected by mid-2012
Direct COGS reductions of 5%/yr
Net savings exiting 2013 from July 2011 restructuring program
R&D realignment & leverage in 2011+
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
(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.
Source: BSC Estimates
Balanced Capital Allocation Strategy
AchievementsReached targeted debt level of ~$4B; no debt maturities until 2014
Reached investment grade status with 2 of 3 credit rating agencies
Announced ~$1.3B share repurchase plan in July and bought back ~5% of outstanding shares in H2 2011
Significant Future Capacity for:Acquisitions• Priority Growth Areas• Near-Term Revenue Contribution
Stock repurchases
Risk contingencies• Legal• Tax
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Estimatethrough
2016
Adjusted Free Cash
Flow
$7.5B+
Q3 2011 Cash on
Hand
$0.3B
$7.8B+
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
How We Will Win With
In the Near Term
by increasing our profitability and optimizing our organization
In the Medium Term
by accelerating sales growth and operating leverage
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Sudden Cardiac Arrest
Peripheral Vascular Disease
Structural Heart Disease
Hypertension
Our 12 Priority Growth Areas
Coronary Artery Disease
Atrial Fibrillation
Endoluminal Surgery
Diabetes/Obesity
Deep Brain Stimulation
Autonomic Modulation Therapy
Women’s Health
Endoscopic Pulmonary Intervention
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Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Next-Generation SYNERGY DES
Ultrathin Abluminal-only, BioerodablePolymer (Rollcoat Technology)Acute performance benefits of PtCr ElementReduced polymer load absorbed within 4 mo.Potential to reduce DAPT dependencePotential to reduce late stent thrombosisStrong EVOLVE I clinical data – 0% restenosis
CE Mark approval expected as early as late 2012 with full launch anticipated in 2013EVOLVE II (U.S. IDE trial) – expected to begin as early as mid-2012U.S. & Japan approval expected in 2016
Source: BSC Estimates22
Primary endpoint data presented at TCT 2011
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Lotus™Percutaneous Aortic Valve
Source: BSC Estimates
Pre-loaded23mm & 27mm diametersFully repositionable True retrievabilityAdaptive Seal designed to prevent Paravalve Aortic Regurgitation
Deploy Retrieve
Release
REPRISE I (feasibility study) expected H1 2012 REPRISE II (CE Mark trial) expected to begin in H2 2012EU launch expected H2 2013
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Worldwide PAVR market projected to reach ~$3B in 2020
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Significant unmet need for drug-refractory patientsTherapeutic approaches fit well with existing BSC capabilities:– Catheter technology– Ablation technology– Stimulation technology
Currently working on multiple approaches
Arterial Baroreceptors
RenalInfluence
First Human Use (renal denervation) expected in 2012CE Mark approval and EU commercialization expected in 2013U.S. trial expected to begin in 2014
All dates are BSC Estimates24
Resistant Hypertension
Worldwide market projected to reach ~$3B in 2020
Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012
Significant value creation opportunity
2011 2016
Growth Drivers
2012 2013 2014 2015
CRV Integration
OptimizationPrograms
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Thank You