siemens medical solutions...• clear market leader in coagulation testing • testing for...

Erich R. Reinhardt

July 30th, 2007

Siemens Medical Solutions

Siemens Medical Solutions © 2007 July 30th, 2007

This document contains forward-looking statements and information – that is, statements related to future, not past, events. These statements may be identified by words as “expects,” ”looks forward to,” “anticipates,” “intends,” “plans,” “believes,”“seeks,” “estimates,” “will” or words of similar meaning. Such statements are based on our current expectations and certain assumptions, and are, therefore, subject to certain risks and uncertainties. A variety of factors, many of which are beyond Siemens’ control, affect its operations, performance, business strategy and results and could cause the actual results, performance or achievements of Siemens worldwide to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. For us, particular uncertainties arise, among others, from: changes in general economic and business conditions (including margin developments in major business areas); the challenges of integrating major acquisitions and implementing joint ventures and other significant portfolio measures; changes in currency exchange rates and interest rates; introduction of competing products or technologies by other companies; lack of acceptance of new products or services by customers targeted by Siemens worldwide; changes in business strategy; the outcome of pending investigations and legal proceedings; our analysis of the potential impact of such matters on our financial statements; as well as various other factors. More detailed information about our risk factors is contained in Siemens’ filings with the SEC, which are available on the Siemens website, www.siemens.com, and on the SEC’swebsite, www.sec.gov. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the relevant forward-looking statement as expected, anticipated, intended, planned, believed, sought, estimated or projected. Siemens does not intend or assume any obligation to update or revise these forward-looking statements in light of developments which differ from those anticipated.

Safe Harbour Statement


Our Vision

We help our partners to provide …

Prevention / Early detection

…high quality and patient-centered care ...

... with best processes…

… and with proven outcomes.

... along the healthcare continuum…

Prevention / Early detection Diagnosis Therapy Care


Our Strategy

Quality Cost

throughInnovationProcess-optimization

of Healthcare delivery

Prevention / Early detection Diagnosis Therapy Care

Proven Outcomes

Two words:Improve Workflow


Global Mega Trends Support Our Strategy

Growing demand for healthcare

MajorImplication

Demographic change

i.e. agingand growingpopulation

RelevantMega Trend

Capturing of efficiency potential in healthcare systems

Risinghealthcare costs

MajorChallenges

DiagnosticOpportunities

Screen and evaluate risk pre-dispositionEarlier diagnosisGain more specific disease information Define best individual therapy for each patient Knowledge-based decisionsupport through integrated IT

Our Portfolio reflects these growth opportunities


Strong Track Record in Business Performance

Double digit group profit for six years in a row

Med Sales and Profit Margin Highlights

Shaping the market with “trendsetting” innovations, e.g., Somatom DefinitionConsistently gaining market share6)

- MR: +14 %- MI: +6 %- CT: +5 %

Strategic portfolio expansion to form the world’s firstIntegrated Diagnostic Company by entering into IVDAverage productivity increase of roughly 8 % p.a.

11.2 %Margin: 12.8 %13.4 % 15.1 %1) 14.8 %2) 12.3 %4)

Book-to-bill:

Growth:5) 10 %9 % 6 % 6 %3) 6 %

1) Includes 90 bpt extraordinary gain from Electro Medical Systems 2) Includes 170 bpt extraordinary gain from Electro Medical Systems 3) Comparable due to divesture of Electro Medical Systems 4) Based on IFRS 5) Currency adjusted 6) Total market share gain from 2002 – 2006 in %-points

8.27.67.6 7.47.2

2001 2002 2003 2004 2005 2006

1.17

7.1

1.11 1.06 1.15 1.13 1.13

€bn


Therapy

Diagnosis

In VitroDiagnostics

(IVD)

In VivoDiagnostics

(Imaging)

Prevention, Early detection

OngoingCare

Workflow Oriented IT

Screening Solutions• Mammography• Lung Scan

Monitoring forDisease Recurrence• Imaging Solutions

Imaging Solutions• X-ray• Magnetic Resonance• Computed Tomography• Ultrasound• Molecular Imaging

• SPECT• PET

Contrast Agents• PET

Treatment Systems• Radiation Oncology• Interventional

Angiography• Cardioangiography• Lithotripsy

In Vitro Diagnostics• Clinical Chemistry• Immunodiagnostics• Molecular Testing• Hematology• Urinalysis• Blood Gas• Diabetes• Laboratory Automation• Integrated platforms• Hemostasis• Cardiac POC testing• Microbiology• Blood screening Bayer Diagnostics, DPC CTI

In Vitro Screening• Diabetes - Glucose• Cancer - PSA• Cardiac - BNP,

Cholesterol, Troponin

In Vitro Testing• Cancer - Tumor

markers• Diabetes - HbA1C

• Asthma - Therapeutic Drug Monitoring

• In Vitro Tests

Dade Behring

Recent Acquisitions Created the First Integrated Diagnostics Company


0.4 0.61.7

3.41.1

2.11.4

1.8

0.8

1.11.0

0.7

1.0

0.8

2.8

4.1

1.5

2.1

5.5

7.8

3.8

4.3

2006 2012E

20.5

€bn 29.4

OtherMolecular3)

Hematology2)

Immuno-diagnostics

2.4%

6%

7%

5%

Clinical Chemistry

POCBlood screen. IA

CoagulationMicrobiology

Pathology

4%

6%5%

11%

12%

5%

CAGR2006-12E

Worldwide IVD market(1) overview 2006

(1) Excluding glucose self-testing systems and applied sciences, including blood screening(2) Including clinical flow cytometry (3) Including molecular blood screening

IVD market position 2006

0.3

0.9

1.1

1.4

1.5

1.9

2.3

3.2

3.3

OCD (J&J)

1.4Siemens & Dade Behring

Dade Behring

Olympus

Roche

Siemens

1.9

BioMerieux

Abbott

BeckmanCoulter

€bnCAGR 2006-12E:

6% p.a.

Immuno hemat.

7%

Dade Behring – a Unique Opportunity to Reach the #1 Position in IVD


Total IVD market(1)

Roche 16%Abbott 11%Siemens 10%Beckman C. 7%Dade Behring 7%

# 1# 2# 3# 4# 5

# 2 # 1- 2 # 1 # 3# 1

€20.5 bn

Siemens + Dade Behring

Resultingmarket-position:

Combined # 1 in Central Lab(Clinical chemistry + Immunodiagnostics)

• Sales synergies with our hema-tology business

• Sales synergies with our Molecular business

• Gain access to important know-how in bacteriology

Clinical chemistry

Immuno-diagnostics MicrobiologyCoagulation

€3.8 bn €5.5 bn €1.4 bn€0.8 bn

Roche Dade Behring Beckman C. OCD (J&J)OlympusSiemens

Abbott Siemens Roche Beckman C. BiomerieuxOCD (J&J)Dade Behring

BiomerieuxBeckton D.Dade Behring Thermo F. Biorad

Dade Behring Instr. Labs StagoRocheSysmexBeckman C.

(1) IVD market 2006, excluding glucose self-testing systems and applied sciences, including blood screening

Portfolios of Siemens and Dade Behring are highly ComplementaryTherein:


940

1,7391,6581,5601,4361,281

15.7%

12.8%12.3%11.7%

10.4%

3.1%

Dade Behring is a Strong Player in the Central Laboratory

1) Excluding restructuring of $ 21.3m in 2006 and €(1.0)m in 1. HY 20072) Excluding 2002 fresh start impact and impacts on gain / losses on existing debt3) Free cash flow = cash flow from operations – capital expenditureSource: Dade Behring company filings

2002 2003 2004 2006 1. HY.20072005

Revenue and EBIT

+7.9% p.a.

1)

1)

FCF3) 143 118 144 103145

48 80 120 90125Net income

Leader in providing seamlessly integrated analyzer platforms for chemistry and immuno testing

Large installed base (~ 40.000 instruments)

Strong customer focus and service excellence

Strong business momentum

Strong cash generation

Key strengths

2)

$m


• Clear market leader in coagulation testing• Testing for coagulation and measurement of

platelet dysfunction

Hemostasis / coagulation

• Strong position in automated microbiology• Microscan® product line for bacteria identification and

determination of antimicrobial susceptibility

Automated microbiology

• Highly automated infectious disease testing for blood screening, presence in Europe and Asia

• Broad assay menu

Infectious disease testing

• First fully integrated platform (chemistry + immuno)• Cardiac Point-of-Care testing (immuno)• Number 2 position in Clinical chemistry

Clinical chemistry & Immunodiagnostics

Dade Behring Has a Unique Product Offering

66%

Clinical chemistry / Immunodiagnostics

18%

Hemostatis

10%Microbiology 5%

Infectious diseases Other (1%)

Revenue split 2006

Source: Dade Behring 10K, Annual report


Acquisition of Dade Behring Offers Significant Synergies

EBIT impactfrom revenue synergies

COGS impact

Revenue synergies

Cost synergies

R&D impact

SG&A impact

Total synergies :

AssumptionsSynergies

2010

• Benefiting from Siemens' market presence in high volume segment

• Cross-selling of Siemens platforms to Dade Behring customers

• Plant consolidation• Bundling/purchasing and

distribution/logistics• Possible further reduction upside

through platform consolidation

• Higher efficiency of R&D departments• Scale effects

• Combination of sales and administrative functions

• Efficiency increase

Synergies 2014

~60 €m

~240 €m

~300 €m~160 €m

Net present value of total synergies1) : €1.8 bn

~140 €m

~20 €m

1) after one-time costs

In addition: Productivity improvement

> 7% p.a.

Productivityimprovement

–


Acquisition of Dade Behring Further Strengthens Our Portfolio

Deal structure

• Submission of a public take over bid over 100% of Dade Behring shares at US$77 per share amounting to approx. US$ 7 bn or €5 bn

• Expected closing Q2 FY 2008 (subject to receipt of regulatory approvals and other customary closing conditions)

Strategic rationale

• Achieving leadership in attractive In Vitro Diagnostics market• Highly complementary product and technology portfolios and excellent fit of

lab customer base• Complementary approach in laboratory workflow optimization – a segment

with double digit growth rate (lab automation and integrated analyzers)• High synergies in all relevant processes with a net present value of €1.8 bn1)

Impact on Siemens

• EPS accretive as of 2010• Improving EBIT margin of Siemens Medical Solutions by 2009• Strengthening Siemens’ position in highly profitable and high growth

healthcare sector

1) after one-time costs


First Integrated Diagnostics Company

X-Ray ComputedTomography

MagneticResonance

MolecularImaging

Ultrasound

In-vivo diagnostics (major medical imaging systems)

Immuno-diagnostics

Clinical Chemistry

Nucleid AcidTesting

Hematology Lab Automation

UrinalysisNear PatientTesting

Healthcare IT

In-vitro diagnostics (major medical laboratory systems)


Key Take Aways

Strengthening Siemens’ role as innovation and cost leader in healthcare –net present value of synergies of €1.8 bn

Siemens Med and Dade Behring have highly complementary product portfolios and strong technology position

IVD is an attractive market with high margins and high growth rates

Improving EBIT margin of Siemens Medical Solutions by 2009

EPS accretive as of 2010

Strong management team

Med will be the leader in In Vitro Diagnostics


Reconciliation and Definitions for Non-GAAP Measures (I)

Group profit from Operations is reconciled to Income before income taxes of Operations under Reconciliation to financial statements on the table Segment information. See our Financial Publications at our Investor Relations website under www.siemens.com.

Return on Capital Employed (ROCE) is a measure of how capital invested in the Company or the Group yields competitive returns. For the Company, ROCE is calculated as Net income (before interest) divided by average Capital employed (CE). Net income (before interest) is defined as Net income excluding Other interest income (expense), net and excluding taxes on Other interest income (expense), net. Taxes on Other interest income (expense), net are calculated in simplified form by applying the current tax rate which can be derived from the Consolidated Statements of Income, to Other interest income (expense), net. CE is defined as Total equity plus Long-term debt plus Short-term debt and current maturities of long-term debt minus Cash and cash equivalents. Because Siemens reports discontinued operations, Siemens also calculates ROCE on a continuing operations basis, using Income from continuing operations rather than Net income. For purposes of this calculation, CE is adjusted by the net figure for Assets classified as held for disposal less Liabilities associated with assets classified as held for disposal.

For the Operations Groups, ROCE is calculated as Group profit divided by average Net capital employed (NCE). Group profit for the Operations Groups is principally defined as earnings before financing interest, certain pension costs and income taxes. Group profit excludes various categories of items which are not allocated to the Groups since the Managing Board does not regard such items as indicative of the Groups’ performance. NCE for the Operations Groups is defined as total assets less tax assets, provisions and non-interest bearing liabilities other than tax liabilities.Average (Net) Capital employed for the fiscal year is calculated as a “five-point average” obtained by averaging the (Net) Capital employed at the beginning of the first quarter plus the final figures for all four quarters of the fiscal year. For the calculation of the average during for the quarters, see below:

Average calculation for CE*:Year-to-Date

4 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2 + CE ending Q3) / 4Q3

3 Point average: (CE ending Q4 Prior year + CE ending Q1 + CE ending Q2) / 3Q2

2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2Q1

Quarter-to-Date

2 Point average: (CE ending Q3 + CE ending Q4) / 2Q4



2 Point average: (CE ending Q4 Prior year + CE ending Q1) / 2Q1

* NCE for Operations Groups


Reconciliation and Definitions for Non-GAAP Measures (II)

Our cash target is based on the Cash Conversion Rate (CCR), which serves as a target indicator for the Company’s or the Group’s cash flow. For the Company, CCR is defined as the ratio of Free cash flow to Net income, where Free cash flow equals the Net cash provided by (used in) operating activities less Additions to intangible assets and property, plant and equipment. Because Siemens reports discontinued operations, this measure is also shown on a continuing operations basis, using Income from continuing operations, Net cash provided by (used in) operating activities – continuing operations and Additions to intangible assets and property, plant and equipment for continuing operations for the calculation. For the Groups, CCR is defined as Free cash flow divided by Group profit.All values needed for the calculation of ROCE and CCR can be obtained from the Consolidated Financial Statements and Notes to Consolidated Financial Statements.

Group profit, Net capital employed and Free cash flow for the Company and the Groups can be found on the table Segment information. Our Consolidated Financial Statements are available on our Investor Relations website under www.siemens.com. Siemens ties a portion of its executive incentive compensation to achieving economic value added (EVA) targets. EVA measures the profitability of a business (using Group profit for the Operating Groups and Income before income taxes for the Financing and Real estate businesses as a base) against the additional cost of capital used to run a business (using NCE for the Operating Groups and risk-adjusted equity for the Financing and Real estate businesses as a base). A positive EVA indicates that a business has earned more than its cost of capital, and is therefore defined as value-creating. A negative EVA indicates that a business is earning less than its cost of capital and is therefore defined as value-destroying. Other organizations that use EVA may define and calculate EVA differently.

To measure Siemens’ achievement of the goal to grow at twice the rate of global GDP, we use GDP on real basis (i.e. excluding inflation and currency translation effects) with data provided by Global Insight Inc. and compare those growth rates with growth rates of our revenue (under IFRS). In accordance with IFRS, our revenue numbers are not adjusted by inflation and currency translation effects.

Return on equity (ROE) margin for SFS was calculated as SFS’ Income before income taxes divided by the allocated equity for SFS. Allocated equity for SFS for the financial year 2007 is €1.041 billion. The allocated equity for SFS is determined and influenced by the respective credit ratings of the rating agencies and by the expected size and quality of its portfolio of leasing and factoring assets and equity investments and is determined annually. This allocation is designed to cover the risks of the underlying business and is in line with common credit risk management standards in banking. The actual risk profile of the SFS portfolio is monitored and controlled monthly and is evaluated against the allocated equity.


Financial calendar

JulyJuly 25Third quarter financial results FY07 – conference call

NovemberNovember 8Preliminary figures for FY07November 9Annual analyst conference, Munich

JanuaryJanuary 24Annual General Meeting, first quarter financial results FY08 –conference call


Siemens Investor Relations Team

Webpage: http://www.siemens.com/investorrelations

e-mail: [email protected]

Telephone: +49-89-636-32474

Fax: +49-89-636-32830

Marcus Desimoni +49-89-636-32445

Michael Sen +49-89-636-33780

Florian Flossmann +49-89-636-34095

Irina Pchelova +49-89-636-33693

Christof Schwab +49-89-636-32677

Susanne Wölfinger +49-89-636-30639

siemens medical solutions...• clear market leader in coagulation testing • testing for...

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