Ophthalmology Capital Markets

2

$-

$10

$20

$30

$40

$50

$60

2011 2012 2013 2014 2015 2016 2017

Ophthalmology to reach $48 Billion in 2017

Key Market Drivers: Aging populations Increased incidence of diabetes Rising wealth in emerging markets New product innovations.

5 Major Disease Conditions: Glaucoma Age related Macular Degeneration Conjunctivitis Dry Eye Conditions Cataracts

Ophthalmology Drugs market is expected to grow at a slower pace compared with the devices market. This is due to the patent cliff and a less-than-robust pipeline of future products.

Advancements in technologies, high prevalence rates of refractive error, cataract, and glaucoma, increasing demand for the diagnostic procedures and low compliance with pharmaceuticals will propel the devices market.

CAGR ~ 5.12%

Source: BCC Research: Ophthalmic Devices, Diagnostics, and Surgical Equipment: Global Markets; MarketsandMarkets: Ophthalmology ; MedCity News: Global Ophthalmology Market; Valeant; Mckinsey

Market Growth$ in Billions

3

Total Transaction Size Transaction Distribution

Capital RaiseAlthough the number and total size of transactions declined, the number of transactions more than $50 million has increased when compared to the prior years.

$597

$308

$271

$482

$347

33

2023 22

19

0

10

20

30

40

50

60

70

80

$0

$100

$200

$300

$400

$500

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$700

2008 2009 2010 2011 2012

# of Transactions

Mil

lion

s

12% 10%

22%

9%5%

21%30%

26%

18%21%

12%

15%

13%

5%11%

48%

40%35%

59%

63%

6% 5% 4%9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012

>$50MM

$10-49MM

$5-9MM

$1-4MM

<$1MM

4

Total Transaction Size Transaction Distribution

M&A TransactionsTotal transaction value dropped to $872 Million in 2012, from $12 billion in 2011.

63%

50% 50%54%

50%

13%

10% 11%

15%

13%

10%

17%

23%

50%

6%

20% 6%

10%

11%

8%6% 6%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008 2009 2010 2011 2012

>$5B

$1-5B

$500-1B

$100-500MM

$50-100MM

<$50MM

$12,457

$4,409

$35,740

$12,808

$872

16

10

18

13

6

0

10

20

30

40

50

60

70

80

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

2008 2009 2010 2011 2012

# of Tran

sactions

Mil

lion

s

5

Capital Flow Analysis

($ in millions except stock price)

Company NameStockPrice

52 Week High/Low

LTM TotalRev

MarketCap TEV

Total Debt /LTM EBITDA

TEV/LTM Total Rev

TEV/LTM EBITDA

3 Yr. RevenueGrowth

LTMGross

MarginLTM

EBITDA Margin

Johnson & Johnson $90.40 99% $69,992 $253,923 $248,147 0.7x 3.5x 11.1x 3.8% 68.2% 32.0%Pfizer $28.68 92% 57,601 203,434 209,042 1.6x 3.6x 8.3x 1.1% 81.0% 44.0%Novartis (Alcon) $73.43 94% 57,798 180,436 195,601 1.2x 3.4x 11.0x 6.8% 67.9% 29.7%Merck $48.23 96% 46,207 145,636 153,016 1.3x 3.3x 9.0x 11.4% 65.1% 35.4%Allergan $90.14 77% 5,918 27,723 27,664 1.2x 4.7x 14.8x 8.4% 86.9% 31.6%Regeneron $262.71 93% 1,586 25,557 25,712 0.7x 16.2x 41.0x 57.3% 51.6% NMEssilor $107.07 91% 6,578 22,598 23,263 0.8x 3.5x 15.6x 15.1% 55.8% 22.3%The Cooper Companies $125.07 97% 1,538 6,085 6,414 0.7x 4.2x 14.8x 11.2% 64.2% 28.2%Ginko $19.35 97% 134 1,750 1,729 0.5x 12.9x 36.3x 0.0% 63.1% 35.5%St. Shine Optical $29.07 98% 146 1,466 1,433 0.5x 9.8x 25.4x 19.7% 44.4% 38.5%STAAR Surgical $10.76 98% 66 395 383 1.5x 5.8x 91.1x 7.9% 69.4% 6.3%Mani $37.38 96% 91 419 348 0.0x 3.8x 9.6x -0.4% 60.7% 39.3%

Median 0.8x 4.0x 14.8x 8% 65% 32%

SV Life Sciences Advisers 30 Alcon 6 # of Companies 173 Versant Ventures 25 Allergan 5 # of Investors 579 Domain Associates 22 Bausch & Lomb 4 Investors / Company 3.3 Atlas Venture 15 Novartis 4 # of Rounds 361 De Novo Ventures 15 Opko Health 4 # of Rounds / Company 2 InterWest Partners 15 Abbott Medical Optics 3 Avg. Round Size ($M) $16Clarus Ventures 13 Carl Zeiss Meditec 3 Total Invested $5,851Polaris Partners 11 # of Exits 8 Aisling Capital 10 M&A Exits 4 Brentwood Venture Capital 10 Qianjiang Yongan Pharmaceutical 2/5/2010 $107 Public Offering Exits 4 HBM Partners 10 Jazz Pharmaceuticals Public Limited Company 3/8/2007 $108 # of Illiquid Companies 165 Alta Partners 9 Oldtech 9/12/2003 $137 Illiquid Capital ($M) $4,135Kleiner, Perkins, Caufield & Byers 9 Alcon 2/22/2002 $2,302 Illiquid Capital (3 Yrs) ($M) $1,219Novo A/S 9 Lexicon Pharmaceuticals 2/9/2000 $220 % of Illquid Capital (3 Yrs) 29%Omnes Capital 9 Ocular Sciences 5/19/1997 $119

Healthios, Inc -- Not for for distribution

Initial Public Offerings / Date / TEV ($M)

PUBLIC CAPITAL MARKETS

Size Trading Multiples O perating Statistics

PRIVATE INVESTMENT

Most Active Venture Investors / Rounds Most Active Strategic Acquirors / Deals Liquidity

6

Most Recent Notable M&A Transaction

Financial Metrics

Bausch + Lomb Position

Expected 2013 Bausch + Lomb financials Revenue of ~$3.3 billion

• Pharmaceuticals = ~$1.4B • Vision Care = ~$1.3B • Surgical = ~$0.6 B

Adjusted Gross Margins = ~62% Adjusted EBITDA of ~$720 million

At least $800 million in synergies expected by the end of 2014

Expect to integrate into Valeant’s corporate structure

Immediately accretive ~40% accretive to Valeant’s 2013 Cash EPS 1

Transaction value approximately $8.7 billion Expected to close in the third quarter

~4.6x Net Debt/ Pro Forma Adjusted EBITDA Company expects leverage to be below 4.0x by

the second half of 2014

Comprehensive product portfolio Products presence across all key market segments:

IOL, Anterior Phaco & VitRet, Visco, Instruments Support cataract, refractive and therapeutic procedures

from a single platform

Pipeline Biotrue ONEday Multifocal Contact Lens Next Generation SiHy(Silicone Hydrogel) Monthly

Contact Lens PeroxiClear Mapracorat Latanaprostene Bunod Ocular Redness Therapy Trulign Toric Premium IOL enVista Toric IOL (US) Technolas 317 Excimer Refractive Laser Platform

Valeant acquires Bausch + Lomb for $8.7 billion.

Source: Valent; McKinsey

7

Most Recent Notable M&A Transaction

Agreement Terms

Key Features

Under the terms of the agreement, Abbott will acquire OptiMedica for $250 million, net of cash, plus additional payments totaling up to $150 million upon completion of certain development, regulatory or sales milestones

Abbott acquires OptiMedica for $400 million.

Source: Valent; McKinsey

Provides Abbott with an entry point into the rapidly developing laser cataract surgery market

 Catalys™ Precision Laser System FDA Approved & CE Mark Includes 3D Optical Coherence Tomography

technology. Catalys™ laser system is indicated for use

in patients undergoing cataract surgery for removal of the crystalline lens, with the following intended uses: Anterior capsulotomy Phacofragmentation Creation of single and multi-plane arc

incisions in the cornea.

8

Most Recent Notable M&A Transaction

Agreement Terms and Strategy

Synergy

Shire: Upfront payment of $160 million. SARcode shareholders will be eligible to receive

additional undisclosed payments upon achievement of certain clinical, regulatory, and/or commercial milestones. 

Shire is acquiring the global rights to LIFITEGRAST(for treatment of dry eyes) and will evaluate an appropriate regulatory filing strategy for markets outside of the United States.

Shire anticipates launching LIFITEGRAST in the United States as early as 2016 pending a positive outcome of the phase 3 clinical development program and regulatory approvals.

Premacure: HGT-ROP-001 for the prevention of retinopathy of

prematurity As a part of the transaction, Shire will purchase with

upfront payment and certain contingent payments based on the achievement of pre-specified development and commercial milestones. 

Looking to combine technology from recent acquisition of Premacure and Shire.

Introduction of a new late-stage phase 3 SPD606 (LIFITEGRAST) product and phase 2 HGT-Rop-001 - clinical program to Shire’s research and development portfolio. 

Three clinical trials – OPUS-1, OPUS-2 and SONATA – currently make up the phase 3 clinical development program for LIFITEGRAST.

Shire acquires SARcode Bioscience for $160 million and acquires Premacure for a undisclosed amount.

Source: Valent; McKinsey