Health Care

Presentation to

IB Analytics Regarding Healthcare

January 2007

Integreon

CONFIDENTIAL 9936149, v1

Table of Contents

Section

1 Bear Stearns Health Care Group Overview

2 Pharmaceutical Sector Overview

3 Specialty Pharmaceutical Sector Overview

4 Medical Technology Sector Overview

5 Healthcare Services Overview

Section 1

Bear Stearns Health Care Group Overview

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CONFIDENTIAL Draft of 9936149, v1, printed 1/23/2007 3:45:30 PM 1

Leading Health Care M&A Franchise

Global Health Care M&A Transactions ($ in billions)

0

50

100

150

$200

$250

GoldmanSachs

BearStearns

MerrillLynch

MorganStanley

Rothschild Lazard BNPParibas SA

JP Morgan Banc ofAmerica

UBS0

50

100

150

$200

Source: Securities Data Company. Deals completed between January 2003 and December 2005.

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Entrusted with Some of the Most Important Health Care M&A Deals

Advised on $17 billion

Sale of PCH to Johnson & Johnson

Advised on $27 billion Acquisition of

Guidant

€14.6 billion Unsolicited Takeover Offer for

Schering AG

December 2006 April 2006 Withdrawn

IDDIDD

IDDIDD

Advised on $63 billion Sale to

Sanofi-Synthelabó


Pharmacia Corp.


Immunex

October 2004 April 2003 July 2002

IDDIDD

Advised on $3.8 billion

Acquisition of BioChem Pharma

Advised on $26 billion Merger-of-Equals with

Monsanto Company

Advised on $90 billion Merger with

Pfizer

May 2001 July 2000 June 2000

Top Global Health Care M&A Transactions(1) Transaction

Rank Target Acquiror Bear Stearns

Advised

1 Warner Lambert Pfizer √ 2 SmithKline Beecham Glaxo Wellcome

3 Aventis Sanofi-Synthelabo √

4 Pharmacia Pfizer √

5 Guidant Boston Scientific √

6 Monsanto Pharmacia & Upjohn √

7 Pfizer Consumer Health Johnson & Johnson √

8 Immunex Amgen √ 9 ALZA Johnson & Johnson

10 Amersham General Electric

11 DuPont Pharmaceuticals Bristol-Myers Squibb 12 IVAX Teva

13 Knoll AG Abbott Laboratories

14 Biogen IDEC Pharmaceuticals

15 Chiron Novartis AG

16 Hexal AG Novartis AG

17 Mallinckrodt Tyco International Ltd. √ 18 Renal Care Group Fresenius Medical Care AG

19 BioChem Pharma Shire √ 20 Jones Pharmaceutical King Pharmaceuticals

21 SICOR Teva √

IDD= Investment Dealers’ Digest deal of year.

(1) Source: Securities Data Company. Includes US and European Pharma and MedTech transactions since 2000.

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Building Client Relationships That Result in Successful Repeat Transactions

$338M Secondary Offering $868M Secondary Offering $163M Secondary Offering $195M Secondary Offering $258M Secondary Offering

Mandated Lead Arranger for €11.5B Credit Facility to fund €9.7B Acquisition of Serono €14.6B Unsolicited Takeover Offer for Schering AG $1.7B sale of VWR International to Clayton, Dubilier & Rice $370M Private Placement of Public Equity (Merck KGaA’s stake in Par Pharmaceutical) JV of European Orthopedics with Biomet Filed $250M Initial Public Offering for Dey Lab subsidiary $150M acquisition of CN Biosciences, Inc.

$120M sale of vaccines business to ID Biomedical Corp. $72M sale of US OTC products portfolio to Purdue Pharma L.P. Merger of CADx subsidiary with Qualia Computing, Inc. $400M Convertible Debt Offering $4B Acquisition of BioChem Pharma $265M Spot Secondary for Yamanouchi $1B Merger with Roberts Pharmaceutical $121M ADR Offering Acquisition of Richwood Pharmaceuticals

Acquisition of Optivar from Viatris Advised on $70M Sale of Wampole Laboratories Acquisition of JV stake from Asta Medica $225M Senior Credit Facilities $408M acquisition of Carter-Wallace Pharmaceutical division

$16.6B sale of Consumer Healthcare business to Johnson & Johnson Pfizer’s $126M acquisition of CSL Animal Health Pfizer’s $60B acquisition of Pharmacia $700M IPO of Monsanto Pharmacia’s $26.2B Merger with Monsanto $2B Offering of Volvo’s Secondary Shares of Pharmacia & Upjohn

Watson Pharmaceuticals

Acquisition of Solgar Vitamin & Herb Sale of Quinton Instrument $35B Terminated Merger with Monsanto $55B Merger discussions with SmithKline Beecham $2B Senior Notes $200M Animal Health Swap with Roche $380M Sale of Storz Instrument to Bausch & Lomb

$63B Sale to Sanofi-Synthelabo $133M ADR offering for Rhône-Poulenc $400M Sale of OTC business to Ciba-Geigy for Rhône-Poulenc Advised Rhône-Poulenc on $3B Animal Health Joint Venture with Merck

$980M Acquisition of Schein Pharmaceuticals $300M Acquisition of TheraTech $99M Acquisition of Royce Labs Acquisition of Rugby Pharmaceutical $67M Follow-on $50M IPO

$90B Merger with Pfizer Formation of $4B 3-way JV with Glaxo and Wellcome Advised on $1B Repurchase of Glaxo Wellcome Joint Venture $150M Senior Notes $500M Medium Term Notes Sale of Warner-Chilcott to Nalé Labs (Elan plc)

$2 billion sale to Cardinal Health $511 million bond tender $131 million Follow-on $175 million Sr. Sub Notes $275 million Sr. Secured Credit Facility Acquisition of Instromedix Advanced Medical merger with IVAC

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Endo Pharmaceuticals Case Study Offering Summary

$755 million

Secondary Offering 29.0 million shares

Joint Bookrunner October 2005

Stock Price Performance

20.00

22.00

24.00

26.00

28.00

$30.00

Price

0

500

1,000

1,500

2,000

2,500

3,000

9/19/059/20/05

9/21/059/22/05

9/23/059/26/05

9/27/059/28/05

9/29/059/30/05

10/3/0510/4/05

10/5/05

Vol

ume

(000

s)

9/22/05: Filed at $28.27

10/5/05: Priced at $26.04

Background Endo Pharmaceuticals (ENDP) is a market leader in the research, development, sale and marketing of branded and prescription drugs for pain treatment All shares were offered by Endo Pharma LLC, partially owned by Kelso and current/former management and directors, in their fourth public offering of shares since July 2003 • The selling shareholder reduced its stake from 48% to 19%

• Proceeds to management will be used to fund the exercise price and related taxes on options set to expire in Jan ’06

Largest Health Care follow-on offering since November 2001 (King Pharmaceuticals) Represents the fourth Bear Stearns bookrun equity offering for the Company–total proceeds raised of $1.37B

Highlights After building an order book north of 2x oversubscribed with no price sensitivity, the deal was upsized by 3 million shares • 6-day roadshow with 44 1-on-1 meetings and 30 indications

• 81 domestic institutional orders placed

• Approximately 80% of shares placed with new holders

• 68% hit ratio On the day of pricing, the stock traded up slightly vs. a decline of 1.5% and 2.8% for the S&P 500 and Nasdaq Biotech Index, respectively The shares were offered at a 0.0% discount to the closing stock price The offering represents Bear Stearns largest bookrun follow-on offering in over 5 years

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Case Study: Sale of betapharm to Dr. Reddy’s Laboratories

Transaction Summary Target: betapharm Arzneimittel GmbH. (“betapharm”) Seller: 3i Acquiror: Dr. Reddy’s Laboratories Ltd. Purchase Price: €480 million Form of Consideration: 100% Cash Announcement Date: February 16, 2006 Expected Closing Date: Early March 2006

Deal Synopsis betapharm, based in Augsburg, Germany, and founded in 1993, is the fourth-largest generic pharmaceutical company in Germany with a market share of approximately 3.5%. 3i, a UK based leading private equity firm, acquired control of betapharm in May 2004. Pursuant to substantial in-bound inquiries received by betapharm, 3i retained bankers to review strategic alternatives. Dr. Reddy’s Laboratories (NYSE: RDY) is an emerging global pharmaceutical company with proven research capabilities. It produces finished dosage forms, APIs and biotechnology products and markets them globally, with focus on India, US, Europe and Russia. The deal is the largest cross border acquisition ever by an Indian pharmaceutical company and is evidence of the growing trend of global consolidation in the pharmaceutical industry. The combination of Dr. Reddy’s and betapharm offers an excellent opportunity to build on the unique strengths of each company to emerge as a leading generics player in Europe in the long-term. Bear Stearns served as financial advisor to 3i in connection with this transaction.

Section 2

Pharmaceutical Sector Overview

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The 20 Leading Drug Companies With Sales in 1981 and 2004 ($ in billions)

1981A 2005A Name Sales Name Sales

1 Hoechst $2.6 Pfizer $51.3 2 Ciba-Geigy 2.1 Johnson & Johnson 50.5 3 Merck & Co. 2.1 Glaxo 39.3 4 Roche 1.5 Bayer 33.5 5 Pfizer 1.5 Sanofi-Aventis 33.4 6 Wyeth 1.4 Novartis 30.8 7 Sandoz 1.4 Roche 29.7 8 Eli Lilly 1.4 Merck 22.0 9 Bayer 1.2 AstraZeneca 23.9 10 SmithKline Beckman 1.2 Abbott 22.3 11 Boehringer Ingelheim 1.1 Bristol-Myers Squibb 19.2 12 Takeda 1.1 Wyeth 18.8 13 Upjohn 1.0 Eli Lilly 14.6 14 Johnson & Johnson 1.0 Amgen 12.4 15 Bristol-Myers 1.0 Boehringer Ingelheim 11.1 16 Schering-Plough 0.9 Takeda 10.6 17 Sankyo 0.9 Schering-Plough 9.5 18 Rhone-Poulenc 0.8 Schering AG 6.5 19 Shionogi 0.8 Novo Nordisk 5.5 20 Glaxo 0.8 Sankyo 5.0

Source: Wood Mackenzie, and Company Filings.

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Summary of Major Industry Transactions 1994—Present ($ in billions)

Year Purchaser Target Cost of Target 2006 UCB SA(1) Schwarz Pharma AG $4.2 2006 Merck KGaA(1) Serono SA 11.9 2006 Nycomed ALTANA Pharma AG 5.7 2006 Bayer AG Schering AG 19.5 2006 Barr Pliva 2.6 2005 Teva Ivax 8.5 2005 Novartis Hexal AG 5.9 2003 Pfizer Pharmacia 60.0 2002 Amgen Immunex 17.6 2001 Bristol-Myers DuPont Pharma 7.8 2000 Johnson & Johnson Alza 10.8 2000 Abbott Knoll (BASF Pharma) 6.9 2000 Glaxo Wellcome SmithKline Beecham 76.0 2000 Pfizer Warner-Lambert 89.2 1999 Pharmacia Upjohn Monsanto 26.9 1998 Rhone-Poulenc Rorer Hoechst AG 21.2 1998 Sanofi Synthelabo 11.1 1998 Zeneca Astra 34.6 1997 Hoffman-La Roche Boehringer Mannheim 11.0 1996 Sandoz Ciba-Geigy 60.0 (2 ) 1995 Glaxo Burroughs Wellcome 20.0 1995 Hoechst-Roussel Marion Merrell Dow 7.1 1995 Pharmacia Upjohn 13.0 (2 ) 1995 Rhone-Poulenc Rorer Fisons 2.7 1995 American Home American Cyanamid 9.2

1994 Hoffman-La Roche Syntex 5.3

Source: PhRMA/Reuters. (1) Transaction pending. (2) Value of merged entity.

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Relative Valuation—% of Stock Price Highs

52-Week

100.0% 99.1% 98.7% 96.8% 95.8% 95.6% 95.6% 92.7%90.0%

85.5%

80

90

100

110%

SGP BMY MRK WYE GSK PFE NVS SAN LLY AZN80

90

100

110%

Average = 95.0%

MVE ($B) $39 $52 $100 $70 $160 $199 $138 $126 $60 $90

3-Year

99.0% 96.8% 95.8% 95.7% 95.6% 92.9%

69.4%70.1%

85.5%86.9%

50607080

90100110%

SGP WYE GSK SAN NVS MRK BMY AZN PFE LLY50607080

90100110%

Average = 88.8%

Note: Data as of January 19, 2007.

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Relative Valuation—GAAP P/E 2007E P/E

23.4x 22.0x17.5x 17.0x 15.9x 15.0x 14.8x 13.9x 13.5x 12.4x

0.0

10.0

20.0

30.0x

SGP BMY MRK NVS LLY GSK WYE AZN SAN PFE0.0

10.0

20.0

30.0xHarmonic Mean = 15.9x

R&D % of Sales 20.1 % 16.4 % 19.3 % 14.1 % 19.9 % 15.5 % 15.0 % 15.6 % 14.6 % 16.0 %

2008E P/E

19.8x 18.6x 16.7x 15.0x 14.4x 13.9x 13.3x 13.1x 12.5x 11.8x

0.0

10.0

20.0

30.0x

SGP BMY MRK NVS LLY GSK WYE AZN SAN PFE0.0

10.0

20.0

30.0xHarmonic Mean = 14.5x

R&D % of Sales 20.6 % 16.3 % 19.9 % 14.0 % 15.6 % 19.7 % 15.7 % 16.3 % 14.6 % 16.3 %

Note: Data as of January 19, 2007. EPS estimates per First Call and includes SFAS 123R stock option expense.

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Relative Valuation—Forward P/E (GAAP)(1)

Last 5 Years: One-Year Forward P/E Multiples

10.0

15.0

20.0

25.0x

1/02 11/02 9/03 7/04 5/05 3/06 1/0710.0x

15.0x

20.0x

25.0x

Peer Index (2)

Source: FactSet Research Systems. Data as of January 19, 2006. (1) Based on 12 month forward consensus GAAP EPS estimates. (2) Peer index includes AstraZeneca, Bristol Myers, Eli Lilly, Glaxo, Merck, Novartis, Pfizer, Sanofi-Aventis, Schering-Plough and Wyeth.

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Relative Valuation—PEG Ratios (based on GAAP P/E)

2007E PEG

2.92x

2.50x 2.42x2.20x

2.00x 1.99x

1.17x

1.84x1.91x

1.31x

0.0

1.0

2.0

3.0

4.0x

MRK PFE GSK BMY AZN SAN LLY WYE NVS SGP0.0

1.0

2.0

3.0

4.0x

Harmonic Mean = 1.89x

LTG 6.0% 5.0% 6.2% 10.0% 7.0% 6.8% 8.3% 8.0% 13.0% 20.0% Average9.0%

Note: Data as of January 19, 2007.

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The Process of Research—Stages and Timing

0 2 4 6 8 10 12 14 16 18

Years

Discovery (2–10 years)

Pre-clinical Testing

Phase I

Phase II

Phase III

FDA Review/Approval

Additional Post-marketing Testing

(Laboratory and animal testing)

(20–80 healthy volunteers used to determine safety and dosage)

(100–300 patient volunteers used to look for efficacy and side effects)

(1,000–5,000 volunteers used to monitor adverse reactions to long-term use)

5 enter clinical testing

250 enter pre-clinical testing

5,000–10,000screened

Compound Success Rates by Stage

1 approved by the FDA

Source: PhRMA 2002.

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Big Pharma’s Adoption of the Blockbuster Model…

% Contribution of Primary Care Physician-Driven Products to Top 10 Pharma Sales Growth

20

30

40

50

60

70%

1993 1994 1995 1996 1997 1998 1999 2000

New

PC

P-D

rive

n Sa

les/

Tot

al N

ew S

ales

20

30

40

50

60

70%

New

PCP-D

riven Sales/Total N

ew Sales

Includes: AstraZeneca, Aventis, BMS, Eli Lilly, GSK, JNJ, Merck, Novartis, Pfizer, and Roche. Source: EvaluatePharma; Defined Health Analysis.

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…Created a Number of Products Available for Divestment

Small Drugs—Serving markets deemed as too small

King and Altace®

Old Products—Modest sized products nearing the end of their patent lives

KOS and Azmacort®

Under-Developed Products—That had minimal clinical investment

Medpointe and Astelin®

Neglected Products—That had minimal sales and marketing resources applied to them

ESP and Cardene®

Damaged Goods—Products that were not launched well or failed initial clinical trial

The Medicines Company and Angiomax®

A $100 million cast off product for Big Pharma is a “Blockbuster” for Specialty Pharma.

Section 3

Specialty Pharmaceutical Sector Overview

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Specialty Pharma: Industry Landscape

Convergence is changing traditional market segments.

Although much of specialty pharma consists of hybrid players, the sector can be segmented into three sub-categories

Specialty MarketingSpecialty

Marketing

Drug Delivery

Generics

Improve market visibility and branding of smaller and mid-size proprietary products, and exploit revenue synergies Strength of sales and marketing infrastructure drives growth Reduced technology, market, and litigation risk May be dependant on one or two products or product platforms

Create more effective delivery mechanisms for existing drugs and solutions for product life cycle management for branded companies High R&D spend and technology risk Develop strategic alliances and partnerships for access to pipeline candidates and therapeutic area platforms IP drives continued industry leadership

Market generic versions of branded drugs Record numbers of drugs coming off patent First to file—first to market gains all important 6-month market exclusivity Litigation costs continue to rise Highly regulated industry

Key Players: Key Players: Key Players: Allergan, Axcan, Cephalon, Endo, First Horizon, Forest, King, Kos, KV Pharma, Medicines Company, Medicis, Shire

Alkermes, Biovail, Connetics, Enzon, Nektar, Noven, Sepracor

Andrx, American Pharmaceutical Partners, Barr, Mylan, Par, Taro, Teva, Watson

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Specialty Pharmaceuticals Company Universe

Drug Delivery Specialty Marketing Company

Abrika Acusphere Advancis Aerogen Alexza Molecular Delivery Alkermes Inc. Altea Therapeutics Andrx Corp. Aradigm Corp. Bioject Medical Technol Cydex Cygnus DepoMed Dexcel Pharma Elite Emisphere Technologies Inc. Eurand Flamel Technologies SA Generex Biotechnology Impax Labs Labopharm Microdose Mistral Pharma Nastech Pharmaceutical Nektar Therapeutics (Inhale) New River Pharmaceutical Nobex NovaDel Penwest SkyePharma Plc Syntonix Valera Pharmaceuticals

Dermatology Company

Barrier Therapeutics Bradley Pharmaceuticals Chester Valley Pharmaceuticals Connetics Corp. Ferndale Isolagen Medicis Pharmaceuticals OMP SkinMedica Valeant

Cancer Company

American Pharmaceutical Partners Celgene Chiron Genitope Inovio Ligand MGI Pharma NeoPharm Pharmion Supergen

Urology Company

Auxilium MacroChem Nexmed Pentech Senetek Situs Vivus Watson Zonagen

Women’s Health Company

Barr Pharmaceuticals Columbia Laboratories Insmed Novavax Noven Pharmaceuticals Xanodyne

Cardiology/Cardiopulmonary Company

Biovail King Pharmaceuticals KOS Pharmaceuticals Medicines Company Myogen Nitromed Nuvelo Reliant United Therapeutics

Ophthalmic Company

Advanced Medical Optics Akorn Alcon Allergan Eyetech ISTA Pharmaceuticals Miravant

Analgesics/Pain Company

Adolor AlgoRx Durect Endo Pharmaceuticals Epicept IDDS IOMED Inc. Manhattan Pharmaceuticals NeurogesX Pozen ProEthic Pharmaceuticals Purdue Frederick Vela Pharmaceuticals Vernalis Wex Pharmaceuticals

Gastrointestinal Company

Axcan Cellegy Prometheus Salix Pharmaceuticals Santarus

Pediatrics Company

Alliant Pharmaceuticals Pediamed Verus

Respiratory/Allergy Company

Adams Respiratory Therapeutics Corus Pharma Dey Labs Inspire MedPointe Sepracor Tanox

Other Company

Access Pharmaceuticals Aesgen Amylin Chesyl Pharma Ltd. Collagenex Pharmaceuticals Delsys D-Pharm DrugAbuse Sciences Enzon Inc. First Horizon Pharmaceuticals Gilead Sciences K V Pharmaceutical MakScientific Ovation Pharmaceuticals Peninsula Pharmaceuticals Questcor Savient SciClone

CNS Company

Aderis Pharmaceuticals Amarin CeNeS Cephalon Corcept Therapeutics Cypress Bioscience Dov Pharmaceuticals Elan Corp. Plc Forest Laboratories Guilford Pharmaceutical Lundbeck Neurosearch A/S Pharmos Corp. Shire Pharmaceuticals Titan

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US Generic Drug Market Dynamics

Generics will continue to increase their share of the total pharmaceutical market.

US Pharmaceutical Prescriptions US Pharmaceutical Sales

52% 52%50%

47%45%

11% 11% 11% 11% 10%

42%39%

37%37%

45%

0

10

20

30

40

50

60%

2000 2001 2002 2003 20040

10

20

30

40

50

60%

Brand Generic Branded Generic

86% 86% 85% 84% 83%

8% 8% 9% 9% 9%7%6%6%6% 7%

0

10

20

30

40

50

60

70

80

90

100%

2000 2001 2002 2003 20040

10

20

30

40

50

60

70

80

90

100%

Brand Generic Branded Generic

Source: Wall Street research.

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Specialty Pharma Key Value Drivers

Key success factors relate to sustainability/growth of both in-line and pipeline products.

Flagship Products

Targeting sizeable/attractive niche markets

Clear “commercial proposition”(i.e., differentiated product profile)

Exclusivity/patent life remaining

TherapeuticLeadership

Focus on specialty areas with concentrated prescriber audience

Meaningful SOV within targeted therapeutic categories/indications

Partner of choice for product opportunities

Economies of Scale

Portfolio that is highly synergistic from a call point perspective

Demonstratedpotential for operating leverage

Life Cycle Management

Market intelligence to identify commercially viable line extensions/ reformulations

Ability to implement picket fence IP strategies

Infrastructure/network to develop concepts to market products in cost effective manner

ProductPipeline

Development of a deep, visible pipeline that could provide sustainable growth

Well balanced risk-reward profile

ManagementTeam

Operational excellence

Exemplary track record

Strong network

Flagship Products

Targeting sizeable/attractive niche markets

Clear “commercial proposition”(i.e., differentiated product profile)

Exclusivity/patent life remaining

TherapeuticLeadership

Focus on specialty areas with concentrated prescriber audience

Meaningful SOV within targeted therapeutic categories/indications

Partner of choice for product opportunities

Economies of Scale

Portfolio that is highly synergistic from a call point perspective

Demonstratedpotential for operating leverage

Life Cycle Management

Market intelligence to identify commercially viable line extensions/ reformulations

Ability to implement picket fence IP strategies

Infrastructure/network to develop concepts to market products in cost effective manner

ProductPipeline

Development of a deep, visible pipeline that could provide sustainable growth

Well balanced risk-reward profile

ManagementTeam

Operational excellence

Exemplary track record

Strong network

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US Generics Landscape

Common Business Models

Formulation/Manufacturing

Expertise

Breadth of Product

Unique/Niche Product Offering

Drug Delivery Capabilities

Paragraph IV Expertise

Examples of Companies

MylanLaboratories Inc.

MylanLaboratories Inc.

Comments Natural barrier to entry Enhanced margins

Positions as one-stop shop for wholesalers and other buyers Scale-based commodity strategy

Barrier to entry Limited competition Potentially limited size of target market Potential to establish company as “partner of choice” in specific therapeutic area

Enables to compete in higher-margin “super generics”

Exclusivity periods provide enormous source of profits Adds layer of unpredictability to sales/earnings profile

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US Generic Market Stratification

Latest 12 Month Sales

Format $25–50M $50–100M $100–250M $250–500M $500+M

Solid Dose

Ferring & Co X Gen

Breckenridge Caraco Lannett Paddock

Impax

KV Pharma Qualitest Upsher Smith URL/Mutual

Actavis Apotex Barr Mylan Par Ranbaxy Taro Teva Watson

Injectibles Akorn

Therapeutics AmphaStar

Mayne APP

Liquids & Misc

Pharmaceutical Associates

Spear Dermatology

Cypress Pharmaceuticals

Hi-Tech Pharmacal

Morton Grove

Note: In bold—publicly traded companies. Excludes generic division/subsidiaries within larger companies.

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Overview of Specialty Pharma Sector

Category Concept Growth Drivers

Specialty Marketing Focused detailing and marketing of under–promoted products

Large pharma’s increasing focus on blockbusters Lengthening “tail” product portfolios

• Implications on overall growth rates Drug Delivery Improved product formulations

• Less frequent dosing

• Improved methods of administration (e.g. oral vs. injectible)

Life-cycle extension mechanism, especially for products losing patent protection May address certain “feasibility” issues encountered in drug development Increased barriers to entry

Generics Bioequivalent versions of branded products

Cost containment Bolus of patent expirations Favorable political climate

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Indian Pharma Universe ($ in millions, except per share data)

Large Pharma Company MCAP 2007E P/E

Ranbaxy Laboratories $3,490.7 18.3 x Dr. Reddy’s 3,076.7 22.6 Cipla Limited 4,435.3 21.0 Sun Pharmaceuticals 4,453.9 24.3 Wockhardt 905.0 13.1

Mid-Cap Company MCAP 2007E P/E

Lupin $1,031.4 16.2 x Ipca Labs 362.6 11.8 Cadila Health 990.6 15.8 Aurobindo 879.6 18.0 Alembic 210.1 7.7 Matrix Labs 754.5 12.8 Glenmark 1,681.9 18.6 Nicholas Piramal 1,257.3 18.7 Jubilant 887.2 16.7 Torrent Pharma 396.7 13.6 Orchid Chemicals 309.1 7.4 Biocon 961.3 18.3 FDC 168.5 10.4

Small Cap Company MCAP 2007E P/E

Divi’s Laboratories $941.0 23.6 x Dishman Pharmaceuticals 399.6 15.6 Shasun Chemicals 139.2 12.8 Hikal 139.3 9.3 Vimta Labs 93.5 38.7 Suven Life Sciences 98.5 56.6 Dabur Pharma 280.3 15.9 Elder Pharmaceuticals 167.8 10.0 Ind-Swift 30.4 30.1 JB Chemicals & Pharmaceuticals 194.2 170.7 Jupiter Bioscience 27.7 23.6 Kopran 27.9 27.8 Natco Pharma 97.8 67.8 Panacea Biotec 574.3 480.5 RPG Life Sciences 32.3 39.1 Strides Arcolab 296.2 48.5 Unichem Laboratories 309.9 261.3 Venus Remedies 216.2 187.5 Surya Pharmaceuticals 22.1 15.6

Note: Stock price as of January 19, 2007.

Section 4

Medical Technology Sector Overview

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Overview of Med-Tech Subsectors

The following represents a sampling of Mid-Tech sectors and companies.

Companies Products/Services

Ophthalmology Alcon Bausch & Lomb Eyetech

Contact Lenses Lens care Pharmaceuticals

Dental Dentsply Sybron Dental Specialties

Filling materials Bonding agents Braces, brackets & rubber bands

Medical/Surgical

American Medical Systems Conmed Kinetic Concepts

Products to treat urinary incontinence Surgical installments for arthroscopic sports medicine (Drills and Saws) Wound healing and tissue repair systems

Respiratory Respronics Viasys Vital signs

Sleep therapy systems/Sleep diagnostic systems Ventilation systems Neuro monitoring systems

Orthopedic Biomet Zimmor Stryker

Knee & hip implants Spinal implants Biologic materials to replace bone

Cardiovascular Boston Scientific Medtronic Thoratec

Drug-eluting stents Implantable defibrillators Pacemakers

Conglomerates Baxter Johnson & Johnson Medtronic

Infusion pumps Peripheral stents Neurostimulation devices

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Medical Technology Industry Dynamics

Relative Price Performance—Past Five Years

50

75

100

125

150%

1/02 10/02 8/03 6/04 4/05 2/06 12/0650

75

100

125

150%

Med Tech Index S&P 500(1)

Forward P/E Ratios—Past Five Years

14.0

17.0

20.0

23.0

26.0

29.0

32.0x

1/02 11/02 9/03 7/04 4/05 2/06 12/0614.0

17.0

20.0

23.0

26.0

29.0

32.0x

Med tech Index S&P 500(1)

Summary Observations

Medical technology stocks have performed in line with the broader market over the past five years

• The Med Tech Index has increased 7% versus 24% for the S&P 500, driven by the broader market’s outperformance in 2006

Over the last year, Med Tech’s performance has been negatively impacted by:

• Increased pricing pressure and scrutiny

• Less favorable regulatory and reimbursement environments

Looking ahead, Med Tech is increasingly being viewed again as a potential “defensive play” in a volatile market

• Improving growth and risk profile

• Prospect for continued Med Tech industry consolidation

Source: ThomsonOne Banker. Note: Data as of December 31, 2006. (1) Includes ABT, BAX, BDX, BEC, BMET, BOL, BSX, EW, JNJ, MDT, STJ and SYK.

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Comparative Sector Performance

2-Year

% Change 1-Year

% Change % of

52-Week High

Ophthalmology

Orthopedic

Cardiovascular

Mid-Cap Med/Surg

Large Cap

Diversified Industrials

S&P 500

Diagnostics

Dental

Respiratory (1)

(2)

(3)

(7)

(8)

(5)

(6)

(9)

(4)

(1%)

5%

12%

13%

14%

19%

29%

(8%)

41%

17%

(17%)

14%

0%

12%

11%

14%

17%

(15%)

16%

7%

72%

96%

74%

94%

99%

93%

91%

92%

94%

84%

Source: ThomsonOne Bank. Note: Data as of December 31, 2006. (1) Includes ARRO, RESP, RMD, VAS, VITL and FPH. (2) Includes NOBE, STMN and XRAY. (3) Includes BEC, DADE, BIO, GPRO and CYTC. (4) Includes GE, DHR, SMIN, PHIA, SIE, MMM, TFX and TYC. (5) Includes ABT, BAX, JNJ and MDT. (6) Includes AMMD, BCR, CNMD, HB, ISRG, MNT, STE, ARTC, IVC and KCI. (7) Includes BSX, EW, STJ and THOR. (8) Includes BMET, SNN, SYK, SYST, ZMH and WMGI. (9) Includes ACL, EYE, BOL and COO.

Integreon


Medical Technology Historical IPO Activity

1990–2006 YTD(1) ($ in millions)

$147$0$0

$392

$1,178

$171

$498

$663

$1,941

$441

$86

$573$685

$2,732

$1,582

$727

$997

0

500

1,000

1,500

2,000

2,500

$3,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

500

1,000

1,500

2,000

2,500

$3,000

# of Transactions: 4 9 24 7 10 13 32 7 2 0 10 7 6 0 18 12 12

KC

I (54

0M)

Alc

on ($

2,30

2M)

$147$0$0

$392

$1,178

$171

$498

$663

$1,941

$441

$86

$573$685

$2,732

$1,582

$727

$997

0

500

1,000

1,500

2,000

2,500

$3,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

500

1,000

1,500

2,000

2,500

$3,000

# of Transactions: 4 9 24 7 10 13 32 7 2 0 10 7 6 0 18 12 12

KC

I (54

0M)

Alc

on ($

2,30

2M)

Source: SDC and Dealogic. (1) As of December 31, 2006.

Integreon


Medical Technology M&A Environment

Medical technology consolidation activity continues to be robust • Driven by acquirer’s strong valuations, historically low financing costs and need to accelerate growth

Activity is broad-based covering all main medical technology sub-sectors (e.g., cardiovascular, orthopedics, medical/surgical & others)

Valuations remain strong for companies with superior market positioning and robust growth prospects

1995–YTD 2006(1) ($ in billions)

$7.6$3.5

$11.9

$28.2

$9.8 $12.9 $10.8 $10.0 $12.2

3129 28 32 20 21 26 29 26 37 42

851 3 6 7

14

5

25 1

12 18

$45.3

$14.6

$54.2

0

10

20

30

40

50

$60

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 20060

10

20

30

40

50

$60

Transaction Value < $500 Million Transaction Value > $500 Million

Source: Medical Device Daily and company press releases. (1) Represents announced transactions where value was disclosed; data as of December 31, 2006.

Section 5

Healthcare Services Overview

Integreon


Managed Care Overview—Sizing of US Health Insurance Market Of the approximately $1.9 trillion in Health Care spending in the US in 2004, 44% was Government funded. 2005 US Health Insurance Coverage(1) 2004 US Health Care Spending(2)

59.5%

9.1%

13.7% 13.0%

3.8%

15.9%

0

10

20

30

40

50

60

70%

Employment-Based

Direct-Purchase

Medicare Medicaid Military Uninsured0

10

20

30

40

50

60

70%

Commercial Government

Medicaid17.4%

Other Government

Programs7.8%

Medicare19.2%

Other Private4.4%

Consumer Out-of-Pocket

15.1%

Private Health Insurance

36.1%

Total: 293.9 million Total: ~$1.9 trillion

(1) Source: US Census Bureau. Does not add to 100% as individuals may covered by more than one type of health insurance during the year. (2) Source: Kaiser Family Foundation.

Integreon


Relative Stock Price Performance

Managed care companies with a concentration in government-funded programs have out-performed the large cap companies in the past five years.

For the Last Five Years

0

300

600

900%

12/01 10/02 8/03 6/04 4/05 1/06 12/060

300

600

900%

Medicare Medicaid Large-Cap

07/06/05: UNH/PHS announced

03/20/03: MMA announced

11/02/03: Bush defeats Kerry

12/08/03: MMA signed to law

(1) (2) (3)

11/07/06: Democrats take over House and Senate

(1) Consists of PHS, HUM, SIE, WCG and HS (PHS includes 4/24/01 to 12/20/05; HS from 2/06/2006 to present; WCG from 7/1/04). (2) Consists of AGP, CNC and MOH (CNC from 1/31/02; MOH from 7/3/03). (3) Consists of AET, CI, UNH and WLP.

Integreon


Managed Medicare Penetration

Managed Medicare has a very low penetration on an absolute and relative basis

Penetration has already increased to 18% of eligibles as of 11/06 from 12% in 2005

In the next 6–7 years, 8.1 million additional Medicare beneficiaries are expected to enroll in Medicare Advantage plans

Share of Medicare Beneficiaries Enrolled in Medicare Advantage Plans

Relative Managed Care Penetration

0

10

20

30

40%

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 20130

10

20

30

40%Actual (1) Projected (2)

5%

16%18%

11%18%

30%

86%

61%

0

25

50

75

100%

2004 2006 2013 CommercialManaged

Care

MedicaidManaged

Care

0

25

50

75

100%

Medicare Managed Care

(3)

(6)(5)

(11)

(1) CMS, Medicare Managed Care Contract Plans Monthly Summary Report. (2) President’s FY 2006 Budget, Office of Management and Budget (February 2005). (3) CMS as of November 2006. (4) Wall Street Research Estimates. (5) Medicaid Managed Care Penetration Report (December 2004). Includes PCCM programs.

Integreon


Medicaid Managed Care Enrollment Trends(1)

Medicaid managed care has enjoyed significant unit growth in the past two years as states have embraced managed care as a way to control expanding medical costs.

Medicaid Managed Care Enrollment(1) ($ in millions)

1013 15 17 18 19 21

2327 29

25

62%

29%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Enr

olle

es

0

10

20

30

40

50

60

70%

% Penetration

Top 15 States by Enrollment(1)(2) State Enrollees % of Total % Penetration

California 3,290,851 15.3% 50.2% New York 2,555,173 11.9 54.4 Ohio 1,400,000(2) 6.5 81.8 Michigan 1,290,240 6.0 89.9 Pennsylvania 1,261,704 5.9 74.3 Georgia 1,057,297(2) 4.9 76.7 Texas 992,093 4.6 35.9 Arizona 885,204 4.1 77.6 Puerto Rico 865,299 4.0 99.9 Washington 812,470 3.8 84.4 Florida 782,326 3.6 34.8 New Jersey 553,461 2.6 69.0 Maryland 482,749 2.2 67.4 Missouri 427,615 2.0 40.7 Indiana 415,315 1.9 51.2

Top 15 17,071,797 79.4%

Source: CMS and Kaiser Family Foundation. (1) Pro Forma for Georgia and Ohio expansions based on CMS website data. (2) Excludes PCCM arrangements and other state-managed programs as well as ancillary service-only programs.

Integreon


Geographic Concentration of Medicaid Opportunities

CA

WA

OR ID

NV

MT

WY

UT

AZ NM

CO

TX

KS

NE

SD

NDMN

IA

MO

OH

MS

TN

MI

FL

AL GASC

NC

VAKY

IN

WV

PA

NY

MEVT

NH

DC

MA

RI CT

DENJ

LA

OK AR

WI

IL

MD

Tier I: Large Population(1)

High Penetration

Tier II: Medium Population(2)

High Penetration

Tier III: Large Population(3)

Low Penetration Puerto Rico

CA

WA

OR ID

NV

MT

WY

UT

AZ NM

CO

TX

KS

NE

SD

NDMN

IA

MO

OH

MS

TN

MI

FL

AL GASC

NC

VAKY

IN

WV

PA

NY

MEVT

NH

DC

MA

RI CT

DENJ

LA

OK AR

WI

IL

MD

Tier I: Large Population(1)

High Penetration

Tier II: Medium Population(2)

High Penetration

Tier III: Large Population(3)

Low Penetration Puerto Rico

(1) Tier I defined as having >500,000 Medicaid enrollees and >500,000 managed care enrollees. (2) Tier II defined as having >500,000 Medicaid enrollees and <500,000 managed care enrollees. (3) Tier III defined as having between 200,000 and 500,000 Medicaid enrollees and between 200,000 and 500,000 managed care enrollees.

Integreon


Valuation Trends

Although the recent Democrat takeover of both the House and the Senate is seen as a negative for Medicare Advantage, these specialized companies are still trading at a premium largely due to lack-luster expected growth in the Commercial sector.

Comparative Valuation—2008 P/E Research Commentary

11.4x 11.9x10.9x

12.4x13.0x

14.3x

5.0

10.0

15.0x

AET WLP CI UNH Medicare Medicaid5.0

10.0

15.0x

Large-Cap

(1) (2)

We view participation in government-funded healthcare programs to be a strategic disadvantage...as yields decelerate and focus shifts to enrollment growth. 11/06/06 Government-focused companies have led the large caps and have shown strong recoveries from 2005, with Amerigroup leading the pack, up 74.6%, followed by WellCare and Molina, which posted returns of 58.8% and 25.6%, respectively. 12/05/06

(1) Consists of PHS, HUM, SIE and HS (PHS includes 4/24/01 to 12/20/05; HS from 2/06/2006 to present). (2) Consists of AGP, CNC, MOH and WCG (CNC from 1/31/02; MOH from 7/3/03; WCG from 7/1/04).

Integreon


Overview of the Medicare Market Population growth trends underlying Medicare Advantage will be favorable for the foreseeable future.

Aging of US population

• People aged 65+ are expected to reach 20% of population by 2030 (72 million)

• Comprise over 39% of total health care expenditures

Medicare expenditures growth of over 9% per year (excluding Part D)

• Part D expected to comprise 20% of Medicare spending by 2010

Medicare as a percentage of GDP is expected to grow from 2.7% in 2004 to 4.2% by 2014

Significant Number of Medicare Beneficiaries (In millions)

534742

0

25

50

75

2005 2010 2014

12% CAGR

0

25

50

75

Rapidly Growing Medicare Expenditures ($ in billions)

9% CAGR

$336

$817

$573

0

250

500

750

$1,000

2005 2010 20150

250

500

750

$1,000

Integreon


Healthcare Facilities Overview

Hospital

High Acuity

Most sophisticated

Long-Term Intensive Care

High Acuity

Skilled Nursing

Medium-Low Acuity

Medicare/ Medicaid Certified

Assisted Living

Low Acuity

Home Health

Cheaper Alternative

Home

CONTINUUM OF CARE

Most Expensive Least Expensive

Hospital

High Acuity

Most sophisticated

Long-Term Intensive Care

High Acuity

Skilled Nursing

Medium-Low Acuity

Medicare/ Medicaid Certified

Assisted Living

Low Acuity

Home Health

Cheaper Alternative

Home

CONTINUUM OF CARE

Most Expensive Least Expensive

Source: Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds (2006).

Health Care

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