The Health Care Sector

1. The Health Care Sector Analysts: Heather Hund and Emily Butler

2. The Health Care Sector Health Care companies seek to promote the wellness of individuals through the development and distribution of products or by providing health care services or products. The sector can be categorized into four major sub sectors according to the current Cox Holdings: Biotechnology Health Care Services Supplies and Equipment and Medical Waste Management Other sub sectors exist. A sub sector that is not held by the Cox Portfolio would be: Drugs and Pharmaceuticals

3. Healthcare Sub Sectors and COX Holdings

4. Biotechnology • Sub sector - Biotechnology: Companies utilize genomics to develop and sell drugs, therapeutic products, research equipment, and related research services • Historic v. Future markets • R&D accounts for over 50% of companies • Regulation by FDA • Cox Holding - Amgen (AMGN): Global biotech company that discovers, develops, manufactures, and markets human therapeutics • Main areas of focus: oncology, nephrology, inflammation • Main drugs developed in these areas • Acquisition to expand R&D capabilities

5. Healthcare Services • Sub Sector: Healthcare Services • Provide, support, and market medical, surgical, or health care services • Companies Providing: health plans, home health services, general services to hospitals and long term care facilities, diagnostic and laboratory services, and specialized health care services • Legislative/Demographic Impacts: benefiting from private pay rate hikes and favorable demographic trends • Cox Holding: Quest Diagnostics • leading global provider of laboratory testing services: 30 principal laboratories in the United States as well as 2,000 international patient centers, processes over 130 million order forms annually • Testing: routine, esoteric, clinical trial • detection, diagnosis, evaluation, monitoring and treatment of diseases and medical conditions by physicians, managed care organizations, hospitals, governmental institutions, employers, prisons, and independent clinical laboratories

6. Medical Equipment and Supplies • Sub Sector: Medical Equipment and Supplies • Innovate and develop new products designed more efficiently and effectively • Patent rights to technology = Competition • Specific Costs: R&D and the potential lag time for FDA approval. • Not discretionary therefore always a market • Trend: Consolidation • Cox Holding: Medtronic • Leading maker of implantable biomedical devices • Key Business: Cardiac Rhythm Management, Neurological, Spinal and ENT Surgery, Cardiac Surgery, and Vascular • Strategy: expand market share and product lines through in-house development and acquisitions • Recent Acquisitions: stent maker, spinal implant maker, surgical products • Result: bundled products

7. Medical Waste Management • Sub sector - Medical Waste Management: Companies that treat, transport, and manage medical waste • Services and Clients • Regulation: OSHA and FDA • Cox Holding – Stericycle (STRL): Largest North American medical waste management company that provides waste collection, transfer and disposal, OSHA compliance services, and waste consulting services. • Diversified Client base • Acquisition based growth strategy • New products • (i.e. consulting services and waste management training)

8. Healthcare Sector Breakdown

9. Market Outlook • Threats and Opportunities to specific industries • Biotechnology: • Threat: Biogenerics, Growth Company Competition • Opportunity: High Price Maintenance, Undervaluation • Medical Equipment and Supplies: • Threat: Budgetary Pressures, Supply/Demand imbalance • Opportunity Product Launches, Positive Long Term Fundamentals, Increased Mergers and Acquisitions • Overall PROGNOSIS: Optimistic • Constant increased demand: Demographics • Consistent Across Sectors • Anticipation: The Long Run