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Market Perspectives on the POC Diagnostics IndustryBruce Cranna

Leerink Swann LLC

Senior Analyst and Managing Director

Presentation for MassMEDIC

Wednesday, September 12, 2007

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POC Industry Snapshot Total In Vitro Diagnostic (IVD) Market of approximately $32B We estimate Point of Care (POC) to be roughly $3B, excluding non-IVD

applications and Whole Blood Glucose testing What is it? We include other patient self test (PST), physician office lab

(POL), and hospital based POC Overall IVD market growth is at 6%-7% annually POC category growth better, at 10%-12%

POC7%

Self Testing16%

Commercial Labs29%

Hospital Labs48%

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Wall Street’s Take

IVDs historically not seen as glamorous as other medical device categories- less IP, less R&D

IVD growth rates were lower than other Med Tech categories

Consolidation in the central lab meant less pricing leverage for IVD vendors

IVD companies were often viewed as cash cows without the capital needs that typically attract Wall Street attention

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A New Point of View? Sector now being viewed much differently IVD companies are uber defensive plays - in turbulent markets

providing even greater cash flow and earnings visibility than their more volatile Device/Biotech counterparts

The Razor/Razor Blade business model provides the same demographic attractiveness as other health care groups, but with far lower volatility

Perception: IVD companies have far less exposure to reimbursement risk. We agree

Recent “game changers” have made the IVD sector more visible: High growth single markers i.e. BNP and HPV Molecular diagnostics – sensitivity and pricing advantages Tailored therapies using companion diagnostics

Lastly – M&A. There is nothing more attention-getting than a lot of acquisition activity in a sector.

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Recent M&A Activity Pace of M&A activity has accelerated Robust premiums being paid Consolidation could drive more rational pricing

Recent Transactions Cash/Stock

Previous Close

Transaction Size

Share Premium

Estimated CY08 Sales

Forward Sales

MultipleDIGE 55%/45% $38.58 $1.6B 37% $247MM 6.5CTEC* 0%/100% $15.76 $326MM 25% $100MM 3.3VMSI* 100%/0% $51.74 $3.0B 44% $348MM 8.6CYTC $16.50/.52HOLX $31.13 $6.2B 33% $856MM 7.2DADE 100%/0% $55.91 $7.0B 38% $2.0B 3.5HEM* 0%/100%--0.27 IMA shares $9.27 $169MM 38% $45MM 3.8BSTE 100%/0% $55.38 $1.6B 67% $349MM 4.6Average $2.8B 40% 5.3Source: Leerink Swann & Co. Estimates and press releases*Pending transactions

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POC mind share leaders – what has Wall Street’s attention?

Infectious disease Rapids, especially HIV

PST: New and more accurate meters (WBG and Coagulation)

Rapid hospital acquired infection (HAI) testing seen as potentially explosive – in hospital POC and POL

POC Pharmacogenomics? Warfarin metabolism testing could be the poster child. FDA is clearly supportive.

Rapid Testing

Rapid HIV

POC BNP POC MRSA

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Rapidly growing US HIV opportunity In September 2006, the Centers for Disease Control (CDC)

issued new guidelines regarding routine HIV screening for adults in all health-care settings.

We expect guidelines will drive higher rapid HIV test usage, although timing and strength of uptake is unclear.

We believe the US rapid HIV market could triple over the next 4 years.

Estimated Testing Volumes: Rapid Elisa vs. Elisa Volumes

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5

10

15

20

25

30

2006 2007 2008 2009 2010

Mill

ion

s

Tes

tin

g V

olu

mes

Rapid Elisa

Elisa

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PST Coagulation Coagulation monitoring is a sizeable market. 3MM patients on

some form of anti-coagulation therapy in the US alone - 34MM tests annually.

We believe WW sales of coagulation testing equipment and reagents exceed $1B annually. PST component of this market is 8-10% today, and could grow to 20% by 2010.

Additional indications (especially A Fib) could be the driver, with data available in 2009

2005 2008Addressable patients Mechanical heart valve 969,000 1,028,311 Atrial fibrilation 4,781,700 5,301,556 DVT 1,786,400 1,868,000 Other CV 501,600 572,409 Prophylaxis and post surgery 1,537,500 1,779,848Total tested patients 7,290,840 8,609,080Total patient opportunity 9,576,200 10,550,124

Coagulation Meter

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POC MRSA MRSA infections are ubiquitous, dangerous, and costly. The

incidence of MRSA (Methicillin Resistant Staph Aureus) infections is rising in both hospitals and long term care facilities.

In the ICU, infection rates approach 60% with 90K patients dying annually as a result of hospital-acquired infections, including those caused by MRSA.

Both POL and hospital STAT applications

Non-critical Admissions , 38,641,912

ICU Admissions , 4,873,755

Estimated 2008 US Inpatient Volume

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POC Pharmacogenomics?

These terms usually not seen together Warfarin metabolism testing could be first salvo

– FDA has signaled their support Current turnaround time is generally described

as not quick enough Rapid, easy to use testing formats are coming

to market

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Challenges

POC formats still tend to cost more than central lab tests Reimbursement, reimbursement, reimbursement – a mixed bag.

POC coagulation a poster child for challenges POL – getting beyond the 30,000 or so larger POLs – will smaller

practices ever really want to get into the blood handling/billing business?

Getting CLIA waived tests can take time, money Hospital POC: turf issues between central lab and POC advocates Technical – especially in the more esoteric segments – making

rapid POC more accessible. Will there ever be a user friendly molecular format?

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Summary

Attitude improvement on Wall Street towards IVDs in general and POC in particular.

Closer to the patient has its advantages. Wall Street wonders if the past consolidation of lab testing is being unwound – will hospitals and docs claw more testing back into the POL and hospital lab?

If you can take cost out, you win. Rapid HAI could save substantial spending downstream. POC coagulation: if shown to be cheaper than central lab testing via a office visit (and data expands indications), it could be catalytic

POC – in it’s various manifestations, a good place to be Thank you