Leadership:Leadership:Nuclear Nuclear MedicineMedicine

and PETand PET

Ian FarmerIan FarmerDecember 5, 2001December 5, 2001

Robert E. Henkin MD, FACNP, FACRProfessor of Radiology

Loyola University Medical CentreDepartment of Radiology

Chicago

AgendaAgenda

•• Nuclear Medicine, the ModalityNuclear Medicine, the Modality

•• Market size and growth, trends and driversMarket size and growth, trends and drivers

•• Our position versus competitionOur position versus competition

•• Winning on Clinical Excellence without compromiseWinning on Clinical Excellence without compromise

•• SummarySummary

What Nuclear Medicine is:What Nuclear Medicine is:

•• CT, X-ray, Ultrasound and MR provide anatomical informationCT, X-ray, Ultrasound and MR provide anatomical information

•• Nuclear medicine provides physiological information:Nuclear medicine provides physiological information:–– How the body/organs functionHow the body/organs function–– Disease detection before anatomical changes are apparentDisease detection before anatomical changes are apparent–– Diagnostically complementary to anatomical informationDiagnostically complementary to anatomical information

•• Nuclear medicine clinically important inNuclear medicine clinically important in–– Heart Disease, Cancer and Brain Disorders Heart Disease, Cancer and Brain Disorders

•• Two types of imaging deviceTwo types of imaging device–– Nuclear gamma camerasNuclear gamma cameras–– Positron emission tomography (PET) scannersPositron emission tomography (PET) scanners

How diagnostic images are produced:How diagnostic images are produced:

Gamma CameraGamma Camera

PET Scanner•• Patient receives injectionPatient receives injection

(chemically tagged radioactive tracer)(chemically tagged radioactive tracer)

•• Circulates in bloodstreamCirculates in bloodstream

•• Chemical type targets biology/organChemical type targets biology/organof interest & deposits radioactivityof interest & deposits radioactivity

•• Scanner detects radioactivityScanner detects radioactivity& creates image of biology/organ& creates image of biology/organ

CT showed mass in left shoulderBut missed abdominal lesions

Before Therapy PET on 11/20/00 After Therapy PET on 2/18/01

Normal post-therapybone marrow uptake

PET Case Study:PET Case Study:Melanoma Staging & Follow-upMelanoma Staging & Follow-up

Myocardial Perfusion SlicesMyocardial Perfusion Slices

Normal HeartNormal Heart

RVEF = 34% / LVEF = 53%RVEF = 34% / LVEF = 53%

Nuclear Cardiology ImagesNuclear Cardiology Images

AgendaAgenda

•• Nuclear Medicine, the ModalityNuclear Medicine, the Modality

•• Market size and growth, trends and driversMarket size and growth, trends and drivers

•• Our position versus competitionOur position versus competition

•• Winning on Clinical Excellence without compromiseWinning on Clinical Excellence without compromise

•• SummarySummary

25%50%

6%19%

17%

38%

11%

34%

U.S. NMNon U.S. NMU.S PETNon U.S. PET

Source: NEMA, 2001 Strategic Plan and PMS Internal analysisSource: NEMA, 2001 Strategic Plan and PMS Internal analysis

Nuclear Medicine market trends and driversNuclear Medicine market trends and drivers

•• Fast deployment of a new technologyFast deployment of a new technology–– PET for Cancer ManagementPET for Cancer Management

•• Older population growth leading to increased NuclearOlder population growth leading to increased NuclearCardiology procedures in the U.S.Cardiology procedures in the U.S.

'00 NM MARKET (~$ 800 Mln) '04 NM MARKET (~$ 1.3 Bln)

13%13%CAGR forecastCAGR forecast

PET SCANNER MARKET ($ Million)

0

200

400

600

800

1997 1999 2001 2003 2005 2007Source: Frost & Sullivan ’00 & PMS Internal analysisSource: Frost & Sullivan ’00 & PMS Internal analysis

PET Scanner Market Projected to reach $700MPET Scanner Market Projected to reach $700Min ‘07in ‘07

•• Acceptance of PET benefits in cancer managementAcceptance of PET benefits in cancer management•• Expanded reimbursement for PET in the USExpanded reimbursement for PET in the US•• Fast paced PET technology innovationFast paced PET technology innovation

Outcome:Patient

Inoperable

Chemotherapy

PET Case Study: Lung Cancer StagingPET Case Study: Lung Cancer Staging

•• 78 Year Old Female, Heavy Smoker78 Year Old Female, Heavy Smoker•• Positive Chest CT for Large Abnormality in LungPositive Chest CT for Large Abnormality in Lung•• PET Identified PET Identified MetastaticMetastatic Disease Disease

Expanded reimbursement increasing utilizationExpanded reimbursement increasing utilization

• • • • • • • • Solitary Pulmonary NodulesSolitary Pulmonary Nodules• • • • • • • • NSC Lung Cancer stagingNSC Lung Cancer staging•••••••• Recurrent Colorectal CancerRecurrent Colorectal Cancer•••••••• Hodgkin’s & non-Hodgkin’s Hodgkin’s & non-Hodgkin’s LymphomaLymphoma•••••••• Recurrent or Meta-static MelanomaRecurrent or Meta-static Melanoma•••••••• Broad coverage, diagnosis, staging Broad coverage, diagnosis, staging Lung, Esophageal, Colorectal, Lung, Esophageal, Colorectal, Lymphoma, Melanoma, Head & neckLymphoma, Melanoma, Head & neck•••••••• Myocardial viability with FDGMyocardial viability with FDG•• Epilepsy (refractory seizures)Epilepsy (refractory seizures)•••••••• Breast CancerBreast Cancer•••••••• Alzheimer’sAlzheimer’s

19981998

19991999

2000-2000-20012001

FutureFuture

8585

125125

280280

575575

9.1%9.1%

21.9%21.9%

44.3%44.3%

62.1%62.1%

IndicationsIndicationsYearYear New CasesNew Cases(‘000’s per year in US)(‘000’s per year in US)

% Cancer Types% Cancer TypesReimbursedReimbursed

U.S. officeU.S. officebasedbasedCardiologyCardiologygrowinggrowingat 16% CAGRat 16% CAGR

Europe/AsiaEurope/Asia•• LessLess

CardiologyCardiology•• LowerLower

growthgrowth

Cardiology continues to drive US marketCardiology continues to drive US marketgrowthgrowth

Source: TMG Census Reports 1995-99, MDI 2000 and PMS Internal analysis

0

5

10

15

20

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Proc

edur

es P

er Y

ear

(Mill

ions

)

Total Cardiac Non-Cardiac

4.4% CAGR

0.7% CAGR

10% CAGR

Historical Projected

5% CAGR

~10% CAGR

0-1% CAGR

US NM PROCEDURE TRENDS/PROJECTIONS

Future applications in Nuclear CardiologyFuture applications in Nuclear Cardiologyprovide significant opportunities for growthprovide significant opportunities for growth

Clinic applicationClinic application

Plaque detectionPlaque detectionAngiogenesis Angiogenesis evaleval..CHF diagnosisCHF diagnosisEP applicationsEP applicationsMyocarditisMyocarditis

Biochemical ProcessBiochemical Process

Platelet activationPlatelet activationApoptosisApoptosisApoptosisApoptosisApoptosisApoptosisApoptosisApoptosis

Imaging agentImaging agent

Tc-99m GPITc-99m GPITc-99m Tc-99m AnnexinAnnexin V VTc-99m Tc-99m AnnexinAnnexin V VTc-99m Tc-99m AnnexinAnnexin V VTc-99m Tc-99m AnnexinAnnexin V V

40004000

00

20002000

Num

ber o

fN

umbe

r of

publ

icat

ions

publ

icat

ions

Apoptosis Publications / YearApoptosis Publications / Year

19721972 19771977 19821982 19871987 19921992 19971997

AgendaAgenda

•• Nuclear Medicine, the ModalityNuclear Medicine, the Modality

•• Market size and growth, trends and driversMarket size and growth, trends and drivers

•• Our position versus competitionOur position versus competition

•• Winning on Clinical Excellence without compromiseWinning on Clinical Excellence without compromise

•• SummarySummary

Nuclear Medicine CompetitorsNuclear Medicine Competitors

•• Philips (acquired ADAC 2000, Marconi 2001)Philips (acquired ADAC 2000, Marconi 2001)–– Market leader in Nuclear gamma camerasMarket leader in Nuclear gamma cameras–– Entered PET in 1998, currently #3 shareEntered PET in 1998, currently #3 share–– Distribution strength in North AmericaDistribution strength in North America

•• SiemensSiemens–– #2 worldwide in Nuclear gamma cameras#2 worldwide in Nuclear gamma cameras–– Market leader in PET scannersMarket leader in PET scanners–– Distribution strength in Europe and Japan (Toshiba)Distribution strength in Europe and Japan (Toshiba)

•• GE (acquired GE (acquired ElscintElscint 1997, SMV 2000) 1997, SMV 2000)–– #3 worldwide in Nuclear gamma cameras#3 worldwide in Nuclear gamma cameras–– #2 worldwide in PET, leveraging CT strength#2 worldwide in PET, leveraging CT strength–– Distribution strength in North America and AsiaDistribution strength in North America and Asia

0

10

20

30

40

50

60

70

80

1996 1997 1998 1999 2000 2001Source: Philips-ADAC, Biotech

U.S. PET Market ShareU.S. PET Market Share

Philips-ADACSiemensGE

U.S.U.S.(100% = $ 410 (100% = $ 410 MlnMln))

23%

26%

42%

9%

28%

25%

37%

10%

WorldwideWorldwide(100% = $ 600 (100% = $ 600 MlnMln))

Nuclear Gamma Camera Market Shares 2000Nuclear Gamma Camera Market Shares 2000

Source: TMG, NEMA, 2001 Strategic Plan and PMS Internal analysis

PhilipsGESiememsOther

Philips-ADAC Philips-ADAC ““FIRSTSFIRSTS””

‘‘91 91 Dual Head CameraDual Head Camera‘‘93 93 Variable Angle CameraVariable Angle Camera™™’’96 96 Cardiac Attenuation Cardiac Attenuation

CorrectionCorrection™™’’9696 PET on a Gamma CameraPET on a Gamma Camera’’0101 Open Gantry CameraOpen Gantry Camera’’0101 GSO based PETGSO based PET

Customer perception of Technology LeadershipCustomer perception of Technology Leadership

Source : TMG independent post / SNM survey: n = 29

3%

13%

18%

53%

13%

Philips-ADACMarconiGESiememsOther

Technology Leader inTechnology Leader inNuclear Medicine EquipmentNuclear Medicine Equipment

0%

20%

40%

60%

80%

100%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001YTD

% R

eten

tion

Industry AverageIndustry Average

Source: TMGSource: TMG

Philips-ADAC

Philips - ADAC Customer RetentionPhilips - ADAC Customer Retention

Clinical Excellence in Products + ServiceClinical Excellence in Products + Service= Retention & Share Growth= Retention & Share Growth

AgendaAgenda

•• Nuclear Medicine, the ModalityNuclear Medicine, the Modality

•• Market size and growth, trends and driversMarket size and growth, trends and drivers

•• Our position versus competitionOur position versus competition

•• Winning on Clinical Excellence without compromiseWinning on Clinical Excellence without compromise

•• SummarySummary

PET Competitive Developments 2001-2002PET Competitive Developments 2001-2002

PET Scanner Detector InnovationPET Scanner Detector Innovation•• Faster scans for throughput,Faster scans for throughput,•• Better image quality for smaller tumorsBetter image quality for smaller tumors

Philips: Allegro GSOPhilips: Allegro GSO

Combining PET and CT Scanners in one deviceCombining PET and CT Scanners in one device•• Physiological and Anatomical information from one scanPhysiological and Anatomical information from one scan

Philips: GeminiPhilips: Gemini

PhilipsSIEMENSGE

Exact

HR+

Advance

Allegro

CPET

800 900 1000 1100 1200 1300 1400 1500 1600 1700Price

Perf

orm

ance Accel

PET Detector InnovationPET Detector InnovationPhilips Allegro providesPhilips Allegro provides

best performance and price premiumbest performance and price premiumPET Price PerformancePET Price Performance

Source: Customer Surveys, 2001 Strategic Plan and PMS Internal analysisSource: Customer Surveys, 2001 Strategic Plan and PMS Internal analysis

Allegro:Allegro:Premium PET Providing Speed & QualityPremium PET Providing Speed & Quality

•• Price premiumPrice premium

•• High throughput:High throughput:<30 min. WB studies<30 min. WB studies

•• Best image qualityBest image quality

Gemini PET- CT: Unique open designGemini PET- CT: Unique open design

•• Combines industry best:Combines industry best:PET – AllegroPET – AllegroCT – MX8000CT – MX8000

•• Increases Acceptance/Growth:Increases Acceptance/Growth:Patient – OPENPatient – OPENPhysician – InterpretationPhysician – Interpretation

•• Highest margin Philips-ADAC productHighest margin Philips-ADAC product

CardioMDCardioMD: Ideal fit for cardiology offices: Ideal fit for cardiology offices

•• Cardiology Office, fastest growing Nuclear MedicineCardiology Office, fastest growing Nuclear Medicinesegmentsegment

•• Unique & Differentiated offeringUnique & Differentiated offering

•• Low cost designLow cost designdelivers high marginsdelivers high margins

SKYLightSKYLight™: State of the Art Nuclear Medicine™: State of the Art Nuclear Medicine

•• Unique and DifferentiatedUnique and Differentiatedproduct in mature marketproduct in mature market

•• Open & Flexible ValueOpen & Flexible Valuecreates Price Premiumcreates Price Premium

Philips Research ProjectsPhilips Research Projects

•• Improvements in PET designImprovements in PET design–– New cone beam reconstructionNew cone beam reconstruction–– New detector materials and designsNew detector materials and designs

•• PET/CT Image FusionPET/CT Image Fusion–– Organ segmentationOrgan segmentation–– Image registration - correct for breathing motionImage registration - correct for breathing motion

•• Solid state system applicability to NMSolid state system applicability to NM

AgendaAgenda

•• Nuclear Medicine, the ModalityNuclear Medicine, the Modality

•• Market size and growth, trends and driversMarket size and growth, trends and drivers

•• Our position versus competitionOur position versus competition

•• Winning on Clinical Excellence without compromiseWinning on Clinical Excellence without compromise

•• SummarySummary

SummarySummary

Strong market growth for Nuclear MedicineStrong market growth for Nuclear Medicine•• PET market growth WorldwidePET market growth Worldwide•• Nuclear Cardiology procedure growth in USNuclear Cardiology procedure growth in US

Excellent products for market share gainsExcellent products for market share gains•• Significant new technology in PETSignificant new technology in PET

–– Allegro: most advanced PET scanner availableAllegro: most advanced PET scanner available–– Gemini: unique open PET/CT designGemini: unique open PET/CT design

•• Continued leadership in Nuclear MedicineContinued leadership in Nuclear Medicine–– CardioMDCardioMD: ideal for the office-based cardiology: ideal for the office-based cardiology–– Skylight: first open gantry gamma cameraSkylight: first open gantry gamma camera

Share gains from Philips distribution outside USShare gains from Philips distribution outside US