MEDICATION DELIVERY David Ferguson GM, Medication Delivery May 21, 2018
Safe Harbor Statement This presentation includes forward-looking statements concerning Baxter s financial results, R&D pipeline, including planned product launches (many of which are subject to regulatory approval) and results of clinical trials, business development activities, capital structure, cost savings initiatives, Baxter s long range plan (which includes financial outlook for 2018, 2020 and 2023) and other growth strategies. The statements are based on assumptions about many important factors, including the following, which could cause actual results to differ materially from those in the forwardlooking statements: demand for and market acceptance of risks for new and existing products; product development risks; product quality or patient safety concerns; continuity, availability and pricing of acceptable raw materials and component supply; inability to create additional production capacity in a timely manner or the occurrence of other manufacturing or supply difficulties (including as a result of a natural disaster or otherwise); breaches or failures of Baxter s information technology systems, including by cyberattack; future actions of regulatory bodies and other governmental authorities, including FDA, the Department of Justice, the New York Attorney General and foreign regulatory agencies; failures with respect to compliance programs; future actions of third parties, including payers; U.S. healthcare reform and other global austerity measures; pricing, reimbursement, taxation and rebate policies of government agencies and private payers; the impact of competitive products and pricing, including generic competition, drug reimportation and disruptive technologies; global, trade and tax policies; accurate identification of and execution on business development and R&D opportunities and realization of anticipated benefits (including the recent acquisitions of Claris Injectables and two surgical products from Mallinckrodt plc); the ability to enforce owned or in-licensed patents or the patents of third parties preventing or restricting manufacture, sale or use of affected products or technology; the impact of global economic conditions; fluctuations in foreign exchange and interest rates; any change in law concerning the taxation of income (including current or future tax reform), including income earned outside the United States; actions taken by tax authorities in connection with ongoing tax audits; loss of key employees or inability to identify and recruit new employees; the outcome of pending or future litigation; the adequacy of Baxter s cash flows from operations to meet its ongoing cash obligations and fund its investment program; and other risks identified in Baxter s most recent filing on Form 10-K and other Securities and Exchange Commission filings, all of which are available on Baxter s website. Baxter does not undertake to update its forward-looking statements. 2
Medication Delivery Market Overview 1 Global Market Size ~$23B CAGR 2 ~3% ~$27B IV Therapies Comprehensive portfolio of essential IV solutions #1 U.S. Baxter Position 2% - 3% 2018 2023 IV Therapies Infusion Systems Infusion Systems Infusion pumps and disposables for delivery of IV therapy #2 U.S. Baxter Position Medication Delivery Market Is Expected To Grow ~3% Through 2023 2 1 Market estimates and Baxter position based on internal estimates. 2 2018-2023 Compounded Annual Growth Rate. 3
Medication Delivery Market Dynamics Supply Constraints IV solution supply issues continue to challenge healthcare providers Hospital Cost Pressures Consistent pressure to reduce expenditures and streamline care Preventable Adverse Events 1.2M preventable adverse events per year associated with injectable medications 1 Medication Errors 98,000 deaths per year related to medication errors 2 Opportunity To Reduce Cost Pressure, Increase Efficiency And Avoid Medication Errors To Enhance Care For Patients And Customers 1,2 See slide 14 for references. 4
Medication Delivery Portfolio Infusion Systems IV Therapies $2.7B Viaflex & Viaflo IV Solutions Mini-Bag Plus 66% 34% Sigma Spectrum Infusion Pump IV Sets 2017 Sales One-Link Needle-free IV Connector An Established Market Leader In IV Therapies For More Than 80 Years 5
Strategic Growth Drivers Portfolio Innovation ~$400M 2023 New Product Revenue1 Market Development Increase IV solutions manufacturing network flexibility Improve mix toward balanced solutions Launch Evo IQ Platform in key international markets Spectrum IQ New Pump Platform Enter Adjacencies Leveraging infusion presence to enter specialized monitoring space Integrated solution for pain management Robust Product Pipeline Drives Above-Market Growth Of 3% - 4% Through 20232 1All references to new products in this presentation include new product launches, line extensions and geographic expansions, unless otherwise noted. 2All references in this presentation to future financial expectations assume commercial execution and regulatory approvals, as applicable, consistent with Baxter s plans. CAGRs for years 2018-2023 assume constant foreign exchange rates. 6
Portfolio Innovation Medication Delivery Pipeline Next-Generation OneLink Market Development Enter Adjancencies MiniBag+ Enhancements IV Network Flexibility PIVA Specialized Monitoring 7 additional product launches Arisure Closed System Transfer Balanced Fluids Evo IQ Market Expansion Advanced Infusion Platforms Spectrum IQ Infusion Pump Viaflo Expansion ICNet Infection Prevention Evo IQ Infusion Pump Evo IQ Syringe Pump Next Generation Global Infusion Pump Monitoring Technology 2018 2019 New Product 2020-2023 GEO Expansion Key Launch Delivering ~$400 Million Of New Product Sales In 2023 7
Portfolio Innovation Key Launches Market Development Enter Adjancencies New Spectrum IQ LVP pump for the U.S. & Canada to accelerate market share growth New Pump Platform includes LVP & Syringe Pumps, common drug library and enterprise gateway Differentiated EMR integration - auto-programming functionality with on-screen 2D barcode Comprehensive platform to meet all hospital critical infusion pump needs Building on industry-leading evidence-based drug library The only integrated asset tracking solution New platform easily allows integration with other devices and patient monitoring Addressing technology obsolescence with wireless software updates New Pump Launches Enhance Market Position 8
IV Solutions Portfolio Innovation Market Development Enter Adjancencies Initiative Result Manufacturing Flexibility Clinical Evidence Generation Educational Program Geographic Expansion Increase ability to import essential IV solutions by >100M units to the U.S. market from plants around the world Demonstrate improved outcomes for Plasma-Lyte compared to 0.9% NaCl in critically ill patients Increase clinical usage of balanced solutions; current utilization <25% Introduction of balanced solutions to 15 new markets Investing In Our Core Portfolio To Maintain Market Leadership 9
Infusion Pumps Portfolio Innovation Market Development Enter Adjancencies Evo IQ Pump Platform includes LVP and syringe pumps, drug library and wireless gateway to compete in global markets Initial launches include UK, Ireland, Australia & New Zealand with further geographic expansion within EMEA, LATAM & APAC Ability to address incremental $2-3B annual market opportunity through hardware and related disposables Creating A Platform For Infusion System Global Growth 10
Enter Adjacencies Portfolio Innovation Market Development Enter Adjancencies Clinical Need: Specialized Monitoring Current methods to guide fluid therapy are limited and invasive Complication rate Solution: Hemorrhage Sepsis Dehydration Fluid Volume Level Heart failure Renal failure Liver failure Inadequate Ideal Excessive PIVA Non-invasive real-time monitoring of patient s fluid status In-Hospital Pain Management Clinical Need: Hospital-based Patient-Controlled Analgesia (PCA) involves high-risk medications Solution: 56,000+ ADVERSE EVENTS LINKED TO PCA PUMPS FROM 2005-2009 1 PCA Infusion Pump A pump integrated with patient monitoring can dramatically increase the safety of patients A comprehensive, advanced pump platform including LVP, syringe and PCA will accelerate Baxter share growth in the hospital pump market 1 See slide 14 for references. 11
Transformative Innovation Personalized Therapy Infection Control Clinical Need: Clinical Need: Patients in the general wards are mostly alone and unmonitored1 250,000 catheter-related blood stream infections (CRBSI) occur in the U.S. per year3 48% of unexpected mortality across 64 hospitals were general ward patients2 CRBSI cost ~$56,000 per infection with a 25% mortality rate3 Solution: Bedside Brain Use of diagnostics and informatics with an integrated system to guide therapy decisions and automate care for an individual patient Fluid Status 12 Solution: Infection Prevention A broad catheter care and maintenance portfolio can help reduce the rate of CRBSI 1-3See Slide 14 for references. 12
Medication Delivery Summary Strong foundation in IV Therapies, innovation, and greater leverage of production capacity provide a platform for above-market growth of 3% - 4% 1 Grow presence in the infusion pump market with platform enhancements, expansion into new markets, and a next generation platform Additional growth will be driven by entrance into new markets such as specialized monitoring and pain management Transformational opportunities exist with clinical decision support technology and through portfolio expansion into infection prevention 1 2018 2023 CAGR 13
References Market Dynamics (Slide 4) 1) Am Health Drug Benefits 2012 Nov;5(7):1-10 2) Zimlichman E, Henderson D, Tamir O, et al. Health Care-Associated Infections Enter Adjacencies (Slide 11) 1) CDC Data: https://www.cdc.gov/sepsis/datareports/index.html Transformative Innovation (Slide 12) 1) PMID: 21331207, 21751906 2) Institute for Healthcare Improvement. 3) Zimlichman E, Henderson D, Tamir O et al. Health Care-Associated Infections 14