Capital Markets: Healthcare Trends & Future Outlook

1. Capital Markets:Healthcare Trends & Future Outlook Kuwait Healthcare Reform 2009 Presented by Julie B. Decker Managing Director, Lynxcom Partners Operating Partner, Director of Healthcare Practice, FocalPoint Partners

2. Introduction: Julie Decker • FocalPoint Partners – Operating Partner & Director Healthcare Practice • Largest independently-owned investment bank in Southern California, founded in 2002, with offices in Los Angeles and New York • Run by seasoned veterans, with backgrounds in: • Distressed markets • Turnaround management • Private equity • Investment banking • LynxComPartners – Managing Director • Healthcare consulting firm based in San Diego providing M&A advisory, global sales development, marketing organizations, financial turnaround with expertise in: • Alternate site and home health • Biotechnology and life sciences • Pharmacy, nursing and DME • Law • Public accounting • Strategy consulting • Senior lending • Payer relations, reimbursement and regulatory affairs • Business development and operations • Healthcare information services

3. 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

4. Market Changes

5. Capital MarketsBank failures and consolidations Lehman files for bankruptcy US Treasury takes 36% ownership of Citigroup JP Morgan Chase acquires Bear Stearns for $270 MM FreddieMac and FannieMae failures JP Morgan Chase acquires assets of Washington Mutual Merrill Lynch sold to Bank of America for $50.3 Bn Dow Jones Industrial Average Over the past year the Dow Jones Industrial Average has lost 50% of its value; however, Healthcare has remained stable

6. 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

7. Why Healthcare Remains Healthy: Aging Population Aging population utilizes more healthcare services

8. Why Healthcare Remains Healthy: New Technologies

9. 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

10. 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 Why Healthcare Remains Healthy: Growing Healthcare Spend

11. Why Healthcare Remains Healthy: Government Commitment New Administration’s Renewed Focus on Healthcare Reform • American Recovery and Reinvestment Act (Stimulus Bill): • 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%

12. 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

13. 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

14. 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 As of January 2009: Already 71 transactions valued at $73.6 billion with 43 transactions in healthcare technology

15. 2009 Investment Focus Trends

16. 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