JPMorgan Healthcare Conference - Boston Scientificinvestors.bostonscientific.com/~/media/Files/B/Boston-Scientific-IR/... · Bronchial Thermoplasty (BT) System 14 Proprietary treatment

JPMorgan Healthcare ConferenceJanuary 11, 2012

Hank KuchemanChief Executive Officer

Boston Scientific Corporation @ JPMorgan Healthcare Conference, January 11, 2012

Safe Harbor - Forward Looking Statements

This presentation contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by the statements in this presentation can be found in our most recent Form 10-K and Form 10-Qs under the heading “Risk Factors” and “Safe Harbor for Forward-Looking Statements”. Participants are cautioned not to place undue reliance on any of our forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which they may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements.

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Disclaimers

This presentation includes products that have not been approved or cleared by the U.S. Food and Drug

Administration and are not available for sale in the U.S.

All future product approval and launch dates are based on best estimates of completion of regulatory

submissions, review and/or approval or clearance, as well as other business considerations.


• Clear global leader in our $30B served market

• Significant new product introductions

• Global expansion through emerging markets

• Innovation driven by R&D realignment and investment

• Sizeable cost reduction opportunities

• Strong and stable adjusted(1) free cash flow

• Balanced capital allocation strategy

Significant Value Creation Opportunity

(1) Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuringand restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.

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Global Leader in our $30B Served Market

Other$6.8

(23%)ABT

$2.3(7%)

JNJ $2.7(9%)

STJ

$4.1(14%)

MDT

$6.8(22%)

BSX(2)$7.5(25%)

2010 Worldwide Revenue(1)

($, billions)

(1) Represents estimated revenue in medical device markets served by BSC(2) Excludes Neurovascular business ($340M in BSX revenue), which was divested in 2011

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Anatomy of Strength: 23 No. 1’s or No. 2’s

All categories are WW market share & estimates except: Guide Wires, Balloons, Diagnostic Catheters and Guide Catheters, Atherectomy, Embolic Protection, and Inflation Devices, which are US only

1 4 2 1 2 2 1 1 1 2 3 3 3 3 2 3 1 3 1 2 3 2 1 1 1 1 1 1 1 3 1 1 4 3 3 3

ABT 2 1 1 2 4 2 4

BCR 2 5 5 4 2 3 4

CNMD 4 4 5 4 4

Cook 5 2 2 3 3 3 2 2 3 5 2

JNJ 4 5 5 3 1 1 1 3 2 1 2 1 1 2

MDT 3 3 3 4 3 3 2 1 1 1 1 1 4 1

OLYP 3 2 5 2 3 2 5 2

STJ 4 2 2 2 2 3 3 1 3 2

Others 5 2 4 5 4 2 3 2 1 4 4 4 4 4 4 5 1 3 4 1 4 1 2 1Note: All categories are WW market share estimates except: Guide Wires, Coronary Balloons, Diagnostic Catheters, Guide Catheters, Coronary Atherectomy, Embolic Protection, Inflation Devices and Remote Patient Management (RPM), which are US onlySource: Data as of June 20116


Market Dynamics

• Global ECONOMIC pressures impacting pricing

• MODERATE, JOBLESS RECOVERY impacting procedures

• Increased OVERSIGHT and TRANSPARENCY

• ALIGNMENT of physicians, healthcare systems and/or payers

• Increased REGULATORY requirements

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How We Will Win With

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In the Near Term

by increasing our profitability and optimizing our organization

In the Medium Term

by accelerating sales growth and operating leverage


PtCr ELEMENT Stent Series

Unique, proprietary Platinum Chromium (PtCr) stent alloyImproved visibility/radiopacityHigh radial strength – allowing increased flexibility/deliverabilityReduced recoilIncreased stent conformability

PtCr ELEMENT™ DESEMEA Market Share

US Market Share (ION only)

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Worldwide DES Market: $4+ Billion growing low-single digits(1)

FDA & CE mark approvedU.S. approval in Q4 2011 - ~6 months ahead of goal; launch in-processJapan approval expected by mid-2012

Source: BSC Estimates(1) Based on 5 year CAGR estimate


INCEPTA™ - ENERGEN™ - PUNCTUA™

ICDs and CRT-Ds with 4-SITE™

Continues BSC advantages in size and shape

Industry-leading projected longevity with warranty up to 10 years

Advanced algorithms designed to minimize RV Pacing and reduce inappropriate shocks

DF-4 lead connection with proprietary EZ-4 tool to simplify procedure

HF diagnostics available in ICDs

Worldwide ICD Market: ~$7 Billion growing low-single digits(1)

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FDA & CE mark approved

EU launch mid-2011

Full U.S. launch expected early 2012Source: BSC Estimates(1) Based on 5 year CAGR estimate


INGENIO™ Pacemaker Platform

RF TelemetryRemote Patient ManagementNovel algorithm to reduce RV pacing6Fr family of leadsEnhanced programming for the Minute Ventilation (MV) SensorMR Conditional system

Worldwide Pacemaker Market:Stable(1) at $4+ Billion

CE mark approvedFDA approval expected H1 2012U.S. & EU launches expected H1 2012

Source: BSC Estimates(1) Based on 5 year CAGR estimate


Peripheral PortfolioPTA Balloons and CTO Devices

Best in class balloons across all platforms: .014”, .018”, .035”

Mustang™ 0.018” and Charger™ 0.035” -Workhorse balloons with powerful dilatation and superior deliverability

Coyote™ 0.014” - New level of deliverability, crossability, and ultra-low profile

TruePath™ and OffRoad™– New CTO crossing and re-entry devices

Worldwide Peripheral PTA/CTO Market:~$0.6 Billion growing mid-single digits(1)

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Mustang and Coyote approved and launched in U.S. and EU in 2011

Charger and TruePath FDA approved with full U.S. launch expected in 2012

OffRoad CE mark approved with full launch expected in 2012

(1) Based on 5 year CAGR estimate Source: BSC Estimates


Genesys HTA® SystemEndometrial Ablation for Abnormal Uterine Bleeding

Redesigned for simple set-up and intuitive operation

Compelling clinical outcomes - 53% amenorrhea at 3 years

Redundant safety features - only global endometrial ablation (GEA) device under direct visualization

Versatility to treat irregularly shaped cavities

High patient tolerability for in-office procedures

Worldwide GEA Market:~$0.4 Billion growing mid-single digits(1)

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CE mark approved; launched in EU in 2010

FDA approved; fully launched in U.S. in 2011

(1) Based on 5 year CAGR estimate Source: BSC Estimates


Alair®

Bronchial Thermoplasty (BT) System

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Proprietary treatment for patients with severe asthmaPublished 5-year safety data (RISA) and 2-year efficacy data (AIR2)Launched in 7 countries and >90 sitesCat. III CPT®(1) codes and CMS pass-through payment establishedPlan to expand to 20+ countries and ~200 sites by YE 2012

Worldwide BT market projected to be $1+ Billion in 2020

FDA and CE Mark approved

Leveraging global Endo sales capabilities

Source: BSC Estimates

(1) CPT Copyright 2011 American Medical Association. All rights reserved.


NEJM 2009;360:2601-2602

Watchman®

Left Atrial Appendage Closure Device

Designed to prevent ischemic stroke in AFibpatients as an alternative to long-term drug therapyPROTECT-AF trial (~800 patients) showed 38% relative risk reduction vs. long-term warfarin therapy Launched in 20+ countriesAspirin Plavix Registry enrolledExpect to complete PREVAIL enrollment & submit PMA in 2012Plan to expand to 20+ new countries by YE 2012

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Worldwide LAAC market projected to be ~$0.5 Billion in 2020

CE mark approvedFully launched in EU in 2011FDA approval and U.S. launch expected in 2013



Deep Brain Stimulation (DBS)

16Source: BSC Estimates16

High unmet need in refractory population

2nd largest Neuromodulation market today with significant growth opportunity beyond Movement Disorder indications

First DBS device with current steering –designed for accurate stimulation

Unique visualization technology in development – Intelect GUIDE system

Worldwide DBS market projected to be $1+ Billion in 2020

DBS for Parkinson’s DiseaseVANTAGE (EU trial) – expected completion 2012FDA approval projected following completion of a U.S. trial


Emerging Markets DES

0

500

1,000

2010 2011 2012 2013

China India

~20% CAGR

0%

25%

50%

WW US China &India

DES Market Revenue ($M)

BSC DES Market Share (1)

Single-digit DES market shares far below WW and US levels

Industry-leading PtCr Element platform approved and launching in both countries

Significant 2011 investments in commercial resources, product registrations, distribution and support

5-year, $150M investment in China manufacturing and training capabilities underway

(1) As of Q3 201117 Source: BSC Estimates


Total Est. AnnualCost Reduction

~$650M - $750M

MedTech Tax(2)

Net Mfg.VIPs

~$200M

(~$150M(2))

Plant NetworkOptimization(1)

~$100M(1)

ProjectTransformation

~$200M

Net Corp.SG&A

~$100M - $200M

Promus®Element™

~$200M

Significant Cost Reduction Opportunities

(1) Substantially complete end of Q4’11(2) Expected implementation in 2013


Expected to benefit near-term earnings and cash flow

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FDA approval Nov 2011 Japan approval expected by mid-2012

Direct COGS reductions of 5%/yr

Net savings exiting 2013 from July 2011 restructuring program

R&D realignment & leverage in 2011+


(1) Adjusted Free Cash Flow excludes any potential amounts related to acquisition-, divestiture- and litigation-related items, significant tax audit settlements and restructuring and restructuring-related items. For reconciliations of our non-GAAP financial measures, please refer to the Investor Relations section of our website at www.bostonscientific.com.


Balanced Capital Allocation Strategy

AchievementsReached targeted debt level of ~$4B; no debt maturities until 2014

Reached investment grade status with 2 of 3 credit rating agencies

Announced ~$1.3B share repurchase plan in July and bought back ~5% of outstanding shares in H2 2011

Significant Future Capacity for:Acquisitions• Priority Growth Areas• Near-Term Revenue Contribution

Stock repurchases

Risk contingencies• Legal• Tax

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Estimatethrough

2016

Adjusted Free Cash

Flow

$7.5B+

Q3 2011 Cash on

Hand

$0.3B

$7.8B+


How We Will Win With

In the Near Term

by increasing our profitability and optimizing our organization

In the Medium Term

by accelerating sales growth and operating leverage

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Sudden Cardiac Arrest

Peripheral Vascular Disease

Structural Heart Disease

Hypertension

Our 12 Priority Growth Areas

Coronary Artery Disease

Atrial Fibrillation

Endoluminal Surgery

Diabetes/Obesity

Deep Brain Stimulation

Autonomic Modulation Therapy

Women’s Health

Endoscopic Pulmonary Intervention

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Next-Generation SYNERGY DES

Ultrathin Abluminal-only, BioerodablePolymer (Rollcoat Technology)Acute performance benefits of PtCr ElementReduced polymer load absorbed within 4 mo.Potential to reduce DAPT dependencePotential to reduce late stent thrombosisStrong EVOLVE I clinical data – 0% restenosis

CE Mark approval expected as early as late 2012 with full launch anticipated in 2013EVOLVE II (U.S. IDE trial) – expected to begin as early as mid-2012U.S. & Japan approval expected in 2016

Source: BSC Estimates22

Primary endpoint data presented at TCT 2011


Lotus™Percutaneous Aortic Valve


Pre-loaded23mm & 27mm diametersFully repositionable True retrievabilityAdaptive Seal designed to prevent Paravalve Aortic Regurgitation

Deploy Retrieve

Release

REPRISE I (feasibility study) expected H1 2012 REPRISE II (CE Mark trial) expected to begin in H2 2012EU launch expected H2 2013

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Worldwide PAVR market projected to reach ~$3B in 2020


Significant unmet need for drug-refractory patientsTherapeutic approaches fit well with existing BSC capabilities:– Catheter technology– Ablation technology– Stimulation technology

Currently working on multiple approaches

Arterial Baroreceptors

RenalInfluence

First Human Use (renal denervation) expected in 2012CE Mark approval and EU commercialization expected in 2013U.S. trial expected to begin in 2014

All dates are BSC Estimates24

Resistant Hypertension

Worldwide market projected to reach ~$3B in 2020


Significant value creation opportunity

2011 2016

Growth Drivers

2012 2013 2014 2015

CRV Integration

OptimizationPrograms

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Thank You

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JPMorgan Healthcare Conference - Boston Scientificinvestors.bostonscientific.com/~/media/Files/B/Boston-Scientific-IR/... · Bronchial Thermoplasty (BT) System 14 Proprietary treatment