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Top 30 medical device companies.

Not So Lonely at the Top

For the past five years, the editors of Medical Product Outsourcing have taken an in-depth look at the movers and shakers making headlines and history in the medical device industry.

Each company featured on our list of the top 30--as in years past--is here by virtue of its sales prowess. No company on this roster of medtech powerhouses had less than $1.5 billion in revenue for fiscal year 2006. That said, there's more to being a top company than strictly generating revenues. Success, particularly in the multifaceted and demanding world of medical technology, usually isn't an accident. Organizations competing at this level are driven to reinvent the wheel for each new fiscal year, as stockholders demand consistently improved performance. Even privately held companies must answer to investors at some level.

As of late, medtech firms may be sharing some of the pharmaceutical industry's critical spotlight (current questions about ethical issues in the orthopedic industry provide a prime example), but the device industry is still in a growth mode and continues to be attractive to investors. Double-digit revenue growth is not unheard of; in fact, it's rather commonplace. Most of the companies are US based, and right now many American industries would be covetous of that kind of year-over-year expansion. Even with payment and reimbursement challenges, current market projections and healthcare demographics would seem to bode well for the device industry's continued success.

There are some themes worth noting. As we've reported for the last five years, new product development is the name of the game. Medical device firms not only look to expand markets and add capabilities to currently approved devices, but there remains continued emphasis on finding the next blockbuster therapies as the true means by which to drive (and sustain) bottom line growth, both through R&D as well as mergers and acquisitions. Venture capital is booming (see Top of the News on page 12), and established companies are ready to gobble up the next well-funded start-up or small-cap firm with the right technology. Private equity investors also have recognized the benefits of the device industry, and their involvement is being felt in a big way. Though this year's list hasn't been overly affected--the list is compiled based on annual revenue from fiscal year 2006--our issue for 2008 will be marked by noticeable change. Kodak's Health Group has gone private and Biomet is close to accepting a deal. It's likely we'll see more before 2007 comes to a close.

As you read our report, please take note that while the device and in vitro diagnostic companies profiled are ranked according to estimated sales they reported for FY 2006 (though we do provide some 2007 figures to date, where possible), some may include non-medical sales within a division, such as combination products, drug delivery, software or device-related services. Not all companies publicly break out just the device or IVD portion of total revenues. We consulted numerous public documents and contacted company officials as needed to arrive at the best estimates. Please also note that--as was the case last year--Bausch & Lomb certainly belongs on this list, but as of press time still had some significant gaps in its financial filings. The company may not have those headaches for too much longer, as it too has seen the private equity light. The company recently announced an agreement with firm Warburg Pincus to be acquired for $65 per share in a deal worth $4.5 billion.

The MPO Staff

1 Johnson & Johnson $20.3 Billion ($53.3B Total)

KEY EXECUTIVES:

William Weldon, Chairman and CEO Dominic J. Caruso, VP, Finance and CFO Brian Perkins, VP, Corporate Affairs Nicholas Valeriani, Worldwide Chairman, Medical Devices & Diagnostics Group Ajit Shetty, VP, Worldwide Operations

NO. OF EMPLOYEES: 122,200

WORLD HEADQUARTERS: New Bruncswick, NJ

Johnson & Johnson (J&J) may have lost the bidding battle for Guidant in 2006 to rival Boston Scientific, but it certainly didn't lose the war. As Boston Scientific struggles to turn around the flailing manufacturer of implantable cardioverter defibrillators, J&J has gone about other acquisitions in an attempt to infuse its product line with new cutting-edge technology in growth markets.

Some have even speculated that Boston Scientific could, in turn, be a takeover target for J&J. Only time will tell, but New Brunswick, NJ-based J&J--which has 250 companies under its corporate umbrella--certainly has the financial muscle to do it, with nearly $11 billion in earnings sitting in company coffers.

The company's medical device and diagnostics comprised 38% of company revenue, which totaled $20.3 billion in 2006, a 6.2% increase. For the year, roughly 40% of the company's device and diagnostics sales came from products introduced in the past five years.

While J&J claims much of its growth has been organic, since the beginning of 2006, the company has acquired six medical device companies.

Hand Innovations, LLC, a provider of plating technology for wrist and hand fractures, adds to DePuy Orthopaedics' fast-growing trauma business. Future Medical Systems, SA, a company that develops arthroscopic systems, also is expected to add to DePuy's sports medicine business with an emphasis on minimally invasive procedures.

Johnson & Johnson hopes the acquisition of West Chester, PA-based Animas Corporation, a provider of insulin delivery system, will allow its LifeScan division to enter the diabetes treatment market. J&J bought the company for $518 million. Even more important, this acquisition is an initial step in LifeScan's plan to develop integrated solutions for total management of a patient's disease, the company said. The acquisition of Vascular Control Systems by J&J's Ethicon "adds momentum" to the group's women's health portfolio with the addition of less invasive treatment options for uterine fibroids and related symptoms, the company said.

Two acquisitions, in particular, were intended to bolster the company's cardiovascular businesses. Ensure Medical adds complementary post-catheterization closure technology for the femoral artery but adds to Cordis Corporation's R&D talent pool with a premier advanced R&D facility for interventional cardiology near San Francisco, CA, according to J&J. Conor Medsystems, based in Menlo Park, CA, which J&J purchased for $1.4 billion, has a unique controlled drugelution delivery technology the company said it plans to use across a range of therapeutic categories.

On the distribution front, Cordis signed an agreement with Brivant Ltd. for three interventional guidewire products that will be marketed under an umbrella brand known as Regatta. Cordis also signed an agreement with ClearStream Technologies Group, PLC for distribution rights to the Crescendo PTCA (percutaneous transluminal coronary angioplasty) balloon dilation catheter in all countries except the United State, Japan and Canada. In addition, BioSense Webster, part of the Cordis franchise, secured exclusive worldwide rights to distribute Siemens Medical Solutions' cardiac catheters.

Looking at the bottom line, overall US sales for J&J were $10.1 billion, an increase of 6.5%. International sales were $10.2 billion, an increase of 5.9%, with 6.2% from operations and a negative currency impact of 0.3%.

The DePuy franchise achieved $4.1 billion in sales in 2006, which was a 6.7% increase over prior year. This growth primarily was due to DePuy's orthopedic joint reconstruction products, Mitek sports medicine products and the trauma business.

The Cordis franchise achieved sales of $4.1 billion in 2006, an increase of 2.6% compared to 2005. Sales of the Cypher Sirolimus-eluting stent, the largest product in the Cordis franchise, were relatively flat. The modest growth was caused by lower average selling prices, negative media and a regulatory focus concerning drug-eluting stents and the corresponding lack of market growth, the company said.

There were strong performances by the Biosense Webster and endovascular businesses in 2006. During the fiscal third quarter of 2006, the company received FDA approval to market the Precise Nitinol Stent and the Angioguard Emboli capture guidewire to treat carotid artery disease. In addition, Cordis received CE Mark approval in Europe for the Cypher Select Sirolimus-eluting stent for use in the treatment of severe arterial disease in the leg.

The Ethicon Endo-Surgery franchise achieved sales of $3.4 billion in 2006, an 8.7% increase compared to 2005. A major contributor of growth continues to be endocutter sales, which include products used in performing bariatric procedures for the treatment of obesity, an important focus area for the franchise. Strong results also were achieved with the success of the Harmonic scalpel, an ultrasonic cutting and coagulating surgical device, which received approval in January 2006 for expanded indications to include plastic surgery, according to J&J. There was also strong growth in advanced sterilization products.

The LifeScan franchise achieved $2.1 billion in sales in 2006, an increase of 8.6%.

Sales in the Vision Care franchise reached $1.9 billion in 2006, a growth rate of 10.9%, with growth led by the Acuvue Oasys contact lenses. The Ortho-Clinical Diagnostics franchise achieved $1.5 billion in sales in 2006, a 5.7% increase. Growth was achieved in clinical laboratory and immunohematology sales in both the United States and international markets, the company said.

For the first quarter of 2007, J&J reported sales of $15 billion, a 15.7% increase, and net earnings were $2.6 billion. Worldwide medical device and diagnostics sales were $5.3 billion for the quarter, a 6.2% increase. Primary contributors to the growth, according to J&J, were Vistakon's disposable contact lenses; Ethicon Endo-Surgery's minimally invasive products; Ethicon's wound care and women's health products, and DePuy's orthopedic joint reconstruction, sports medicine and trauma businesses. Growth was partially offset by challenges faced by the drug-eluting stent market.

2 GE Healthcare $16.6 Billion ($163B Total)

KEY EXECUTIVES: Jeffrey R. Immelt, Chairman and CEO Ferdinando "Nani" Beccalli-Falco, President & CEO, International Joseph M. Hogan, President and CEO, GE Healthcare Mark L. Vachon, President and CEO, Global Diagnostic Imaging, GE Healthcare Omar S. Ishrak, President and CEO, Clinical Systems, GE Healthcare

NO. OF EMPLOYEES: 319,000

WORLD HEADQUARTERS: Fairfield, CT

GE Healthcare, the first General Electric business unit headquartered outside the United States (Chalfont St. Giles, United Kingdom), has distinguished itself by more than simple geography. With net sales in 2006 of $16.6 billion, the UK-based division reported a 9% bump in net sales compared to FY 2005. The healthcare division makes up a little more than 10% of GE's staggering $163.4 billion in revenue for the year (an increase of 10%). GE Healthcare also reported a $3.1 billion profit for 2006, up from the $2.7 billion reported in 2005.

GE Healthcare, which employs 46,000, is comprised of the following primary business units: diagnostic imaging, global services, clinical systems, life sciences, medical diagnostics, integrated IT solutions and interventional cardiology and surgery.

"We have invested to build a substantial Healthcare business, which could double in size over the next five years," GE's CEO Jeff Immelt wrote in a letter to shareholders. "We are a leader in diagnostics with the capability to improve access to care, find diseases earlier and treat them more effectively. In 1996, our Healthcare business had $4 billion in revenues and $550 million in operating profit. We were basically a US diagnostic imaging company. The Healthcare results were buried as part of the 'Technical Products and Services' segment with a bunch of businesses no longer in GE. However, we believed that Healthcare would benefit from demographic forces and was in a great market for GE. We knew we could generate good returns, so we invested."

For 2007, the company is predicting $20 billion in revenues and $4 billion in operating profit for its healthcare division.

In a move to further strengthen its healthcare portfolio and broaden its diagnostic offerings, GE announced plans in January to acquire Abbott's in vitro and point-of-care diagnostic businesses for $8.13 billion. Abbott's molecular diagnostics and diabetes care businesses were not part of the transaction.

Immelt called Abbott's diagnostic business "the premier platform in this industry" and said the acquisition reflects GE Healthcare's strategy to combine early diagnosis with information technology to promote an "early health" model of care focused on earlier diagnosis, presymptomatic disease detection and disease prevention. The business units sold to GE generated approximately $2.7 billion in sales in 2006.

"Through this acquisition, we create the opportunity to integrate our broad-based competencies in diagnostics, life sciences and healthcare information technology," said Joe Hogan, president and CEO GE Healthcare. Last year, both Hogan and Immelt outlined an aggressive strategy to build on opportunities in information technology and electronic health records.

For the first quarter of 2007, GE Healthcare's revenues took a marginal dip compared to the same period last year. For the period ended March 31, revenues were $3.6 billion compared to $3.7 billion for 2005. However, profits for the quarter improved by 5% from $496 million in the prior year to $520 million this time around.

On a supplier note, in May, GE agreed to sell its plastics division to Saudi Arabia's largest industrial company, Saudi Basic Industries Corp., for $11.6 billion. GE Plastics, based in Pittsfield, MA, is a $6.65 billion supplier of plastics used in healthcare, automotive, consumer electronics and other industries.

GE Healthcare reached an agreement with the FDA in January this year to halt production of some X-ray systems while the company works to resolve manufacturing problems. The deal applied to devices manufactured by the GE OEC Medical Systems units in Salt Lake City, UT and Lawrence, MA. The FDA found the facilities did not meet federal manufacturing standards and warned GE about the problems in a March 2005 letter. Subsequent inspections in August 2006 revealed that the company had not adequately fixed the problems.

According to GE, the company voluntarily stopped shipping the products in September last year.

The GE X-ray systems affected by the FDA order include the 9900 Elite C-Arm System, 9900 Elite NAV C-Arm System, 9800 C-Arm System, 2800 UroView System, 6800 MiniView System, Insta-Trak 3500 NAV System and ENTrak 2500 NAV System, as well as their components and accessories.

3 Medtronic $11.3 Billion

KEY EXECUTIVES:

Art Collins, Chairman and CEO William A. Hawkins, President and COO Gary Ellis, Sr. VP and CFO Susan Alpert, Sr. VP and Chief Quality and Regulatory Officer Stephen Mahle, Exec. VP and President, CRM Scott R. Ward, Sr. VP and President, Cardiovascular

NO. OF EMPLOYEES: 37,000

WORLD HEADQUARTERS: Minneapolis, MN

Medtronic--the leader in the $6 billion implantable cardioverter defibrillator (ICD) market--continues to post gains, despite a sales slowdown for the small devices with the large $30,000 price tag.

For fiscal year 2006 (ended April 28), the company reported $11.3 billion in net sales, while net earnings showed a significant 42% bump to $2.6 billion compared to 2005. For 2006, revenue for six of the company's seven divisions (Cardiac Rhythm Disease Management; Spinal and Navigation; Neurological; Vascular; Diabetes; Cardiac Surgery; Ear, Nose and Throat; and PhysioControl) reported double-digit growth.

Cardiac Rhythm Disease Management reported annual revenue of $5.2 billion, representing growth of 13%. Medtronic's largest product line, ICDs, generated annual revenue of $2.9 billion, an increase of 24%.

The company's Neurological business reported annual revenue of $1 billion, which represents 10% growth compared to fiscal 2005. During FY 2006, the FDA approved the RestorePRIME Neuromodulation System for chronic pain.

Medtronic Vascular, which manufactures stent technology, reported annual revenue of $939 million, a 10% increase. During this period, the company's AneuRx AAAdvantage abdominal aortic aneurysm stent graft with the Xcelerant delivery system received FDA approval.

Strong sales results for the Diabetes unit--S722 million and 11% growth--were driven by sales of insulin pumps, according to Medtronic. Late in the fiscal year, the company received FDA approval for the Paradigm REAL-Time Insulin and Continuous Glucose Monitoring System, which Medtronic said is the world's first insulin pump integrated with continuous glucose monitoring.

Defibrillator sales may be slipping, but for fiscal 2007 (ended April 27) profit rose 10% to $2.8 billion and revenues hit a record $12.3 billion, a 9% increase. Though Medtronic's defibrillator sales grew more than 20% annually in fiscal 2005 and 2006, for the first quarter of fiscal 2007, the company reported its first decline in orders--a 6.3% dip--compared to a year earlier, after a series of battery failures and product recalls damaged patient and physician confidence. Medtronic's second quarter of fiscal 2007 ended with 4.2% higher sales than the previous year, before defibrillator sales turned down again, falling once again to 1.7% in the third quarter of 2007, compared to a year earlier. The high-power defibrillation unit of the company's Cardiac Rhythm Disease Management division ended the year fiat compared to fiscal 2006 (a decline of less than 1%). Overall, at fiscal year end in 2007, the company reported $4.9 billion for its Cardiac Rhythm Disease Management division compared to $4.8 billion for 2006.

According to industry analysts, ICDs are critical to Medtronic per formance because of the devices' 75% profit margins. Medtronic officials maintain that the market still has plenty of room for growth. Of the 1.3 million US patients medically eligible for the devices, only about 35% have had the device implanted, the company said. Despite the optimism, Medtronic officials are preparing for slower sales. In June, the company announced plans to cut 350 to 500 jobs within its Cardiac Rhythm Disease Management division.

Employees will be given the option of transfers to other areas of the company, early retirements or voluntary buyout packages. The company will resort to involuntary measures, such as layoffs, to achieve the cuts if not enough employees enroll in the voluntary program.

In an attempt to shock defibrillator sales back to life, Medtronic began a $100 million promotional campaign in September after recalls prompted caution among doctors and patients and hurt fiscal 2007 first-quarter sales.

A casualty of more streamlining is Medtronic's Physio-Control division. In January, the unit suspended shipments of automated external defibrillators after the FDA identified quality-control issues at a facility in Redmond, WA. Shipments may resume in the next six to 12 months, the company said. Medtronic has said it plans to spin off Physio-Control, which recently eliminated 300 jobs.

Not content to lead the industry in the ICD market, Medtronic also is going after securing a position among the drug-coated stent players. The company has been engaged in ongoing trials for its Endeavor line. The results of recent studies have shown positive three- and four-year results, demonstrating that Endeavor doesn't cause the potentially deadly blood clots that have been associated with the older-generation heart stents currently approved in the United States--Boston Scientific's Taxus and Cypher, manufactured by Johnson & Johnson's Cordis division.

Medtronic said it expects to gain approval for the Endeavor following review by an FDA advisory panel in September. Endeavor already has been approved for use in Europe, and the company has seen its Vascular division reap the benefit. Coronary Vascular annual revenue of $918 million was a 31% increase compared to fiscal 2006. Growth was driven by strong Endeavor sales outside the United States, the company said. Endovascular and Peripheral Vascular reported annual revenue of $287 million, a 20% increase.

To add to its growing stent lineup, the company currently is involved clinical trials for its Endeavor Resolute line. Resolute combines Endeavor with BioLinx, a proprietary, biocompatible polymer designed by Medtronic. BioLinx is different from other polymers in that its outer surface is water friendly, which leads to high biocompatibility with the body. At the same time, the interior of the polymer is hydrophobic, which helps to control the drug release, according to Medtronic.

This August, Medtronic will undergo yet more change when Chief Executive Art Collins retires. He'll be replaced by President and Chief Operating Officer William Hawkins. Collins, who has been with the company since 1992, will remain as chairman until August 2008. He was named CEO in 2001 and became chairman in 2002.

For fiscal 2008, Wall Street is predicting Medtronic revenue to grow in the low double digits. Collins has said that he is "cautiously optimistic" that that ICD market is showing signs of recovery.

4 Baxter International $10.4 Billion

KEY EXECUTIVES: Robert L. Parkinson, Jr., Chairman, CEO and President Joy A. Amundson, Corporate VP, President, BioScience Peter J. Arduini, Corporate VP and President, Medication Delivery Bruce McGillivray, Corporate VP and President, Renal Robert M. Davis, Corporate VP and Chief Financial Officer J. Michael Gatling, Corporate VP, Manufacturing John J. Greisch, Corporate VP and President, International

NO. OF EMPLOYEES: 44,500

WORLD HEADQUARTERS: Deerfield, IL

While most of the news being generated by Baxter International in fiscal 2006 and into 2007 seems to be on the pharmaceutical and biologics side, the company still maintains a strong focus as a medical device firm. Amid the news of stem cell clinical trials to treat coronary artery disease, bird flu studies and advances in the company's hemophilia treatment portfolio is a strong device component.

The company is comprised of three major segments: BioScience (42% of sales or $4.4 billion in 2006), Medical Delivery (38% of sales; $3.9 billion) and Renal (20% of sales; $2.1 billion). Each unit sells non-device products such as drugs, though many are marketed with a device component or in conjunction with a device. Baxter does not break down revenues by device and nondevice product lines.

The BioScience division manufactures plasma-based and recombinant proteins used to treat hemophilia and other chronic blood-related conditions, as well as biosurgery products for hemostasis, wound-sealing and tissue regeneration; vaccines; and blood and blood-component separation and collection systems. The company's Renal division is focused on dialysis systems. The Medication Delivery sector produces IV solutions and administration sets, premixed drugs and drug reconstitution systems, prefilled vials and syringes for injectable drugs, electronic infusion pumps, and other products used to deliver fluids and drugs to patients.

For fiscal 2006, Baxter's worldwide sales increased 5% to $10.4 billion. Domestic sales totaled $4.6 billion, an increase of 5% from last year, while international sales increased 6% (with no impact from foreign exchange) to $5.8 billion. Profit was $1.4 billion, including special charges of $64 million, mostly the result of ongoing corrective action for its Colleague line of infusion pumps. Excluding special charges, the company reported 2006 income from continuing operations of $1.5 billion, an increase of 16% compared to last year.

To bolster an expanding product line, Baxter increased research and development spending 15% in 2006 to more than $600 million, the highest level in the company's 75-year history. CEO Robert L. Parkinson, Jr. pledged that Baxter would continue to grow R&D spending faster than sales.

Despite the promise of new technology, the company is still dealing with a few old headaches. More than a year after FDA regulators seized Colleague infusion pumps from a Baxter distribution facility due to user interface issues, the seizure continues to have a procedural and financial impact.

In February, Baxter Healthcare FDA received clearance on its Colleague 510(k) pre-market notification. The company began modifying pumps and submitted manufacturing and service documentation to FDA in advance of deploying upgrades. The compa ny said it would continue to communicate and work directly with customers in the coming months to establish deployment schedules and begin remediation activities.

Baxter completed deployment activities in key markets outside the United States, with 58,000 pumps in 55 countries upgraded, and resumed sales of the infusion pumps in those markets. In June 2006, Baxter and FDA outlined the steps to resume domestic sales. Currently, there are more than 200,000 Colleague infusion pumps in US hospitals, the company said.

On a more positive regulatory note, the company received clearance from the FDA on its upgraded Ipump Pain Management System 510(k) notification. The device primarily is used in hospitals for controlled delivery of pain medicines. Baxter placed Ipump Pain Management Systems on hold in July 2005 and subsequently developed upgraded hardware and software for the product.

In additional device-related news, Baxter completed the sale of its Transfusion Therapies business to private equity firms Texas Pacific Group (TPG) and Maverick Capital Ltd. for $540 million in March. TPG and Maverick Capital, Ltd. in turn established a new independent company called Fenwal Inc., which becomes one of the world's largest suppliers of products and services to the transfusion medicine industry, with a product portfolio of manual and automated blood-collection products and storage equipment, approximately 3,500 employees and five manufacturing facilities worldwide. Baxter agreed to provide certain manufacturing, distribution and support services to Fenwal for varying periods of time following the close.

Despite some shaky financial performance during the past few years, for the first quarter of 2007, the company reported sales and earnings above expectations and raised its outlook for the full year. First-quarter net income increased 43% to $403 million. Strong sales, improved margins and lower interest expense drove financial performance, the company said. Worldwide sales totaled $2.7 billion in the first quarter, an increase of 11%.

Medication Delivery revenues increased 8% to $990 million. Renal revenues increased 6% to $525 million. Given strong first-quarter financial results, Baxter is raising its sales and earnings outlook for full-year 2007. The company now expects to achieve sales growth of 4% to 5%.

5 Siemens Medical $10.1 Billion ($107AB TotaD

KEY EXECUTIVES:

Peter Loscher, President and CEO, Siemens AG Dr. Erich R. Reinhardt, President and CEO, Siemens Medical Solutions Klaus P. Stegemann, CFO, Medical Solutions Group of Siemens AG Heinrich Kolem, PhD, President, Siemens Medical Solutions USA Michael Reitermann, President, Siemens Medical Solutions, Molecular Imaging Division

NO. OF EMPLOYEES: 480,000

WORLD HEADQUARTERS: Munich, Germany

Siemens Medical Solutions, the healthcare division of multinational industrial giant Siemens AG, is yet another example of growth and expansion in this year's Top Companies Report--though 2007 brings with it a little shake-up.

For fiscal 2006 (ended Sept. 30), the company reported sales of $107.4 billion, up from $96 billion, a 16% increase. The company maintains that half of its sales growth is organic and not the result of acquisitions. According to recent financial statements, the majority of its business units reported double-digit growth for the fiscal year. Companywide gross profit was $28.9 billion, up from $27.1 billion. Siemens also expanded its workforce in fiscal 2006 more than 75,000. In addition, the company pumped up its spending on research and development by 16% to $7 billion.

Europe (excluding Germany, which accounts for 19%) made up the largest percentage of the company's sales, followed close behind by the Americas at 26%. The Asia-Pacific region was the source of 15% of Siemens' sales success for the year.

In its 2006 annual report, the company's medical division is called a "top earnings performer." Siemens Medical Solutions, which employs more than 33,000 people and is headquartered in Malvern, PA and Erlangen, Germany, showed steady results with $10.1 billion in Siemens Medical Solutions, the healthcare division of multinational industrial giant Siemens AG, is yet another example of growth and expansion in this year's Top Companies Report--though 2007 brings with it a little shake-up.

For fiscal 2006 (ended Sept. 30), the company reported sales of $107.4 billion, up from $96 billion, a 16% increase. The company maintains that half of its sales growth is organic and not the result of acquisitions. According to recent financial statements, the majority of its business units reported double-digit growth for the fiscal year. Companywide gross profit was $28.9 billion, up from $27.1 billion. Siemens also expanded its workforce in fiscal 2006 more than 75,000. In addition, the company pumped up its spending on research and development by 16% to $7 billion.

Europe (excluding Germany, which accounts for 19%) made up the largest percentage of the company's sales, followed close behind by the Americas at 26%. The Asia-Pacific region was the source of 15% of Siemens' sales success for the year.

In its 2006 annual report, the company's medical division is called a "top earnings performer." Siemens Medical Solutions, which employs more than 33,000 people and is headquartered in Malvern, PA and Erlangen, Germany, showed steady results with $10.1 billion in sales in 2006, an 8% increase. Profit increased 9% to $1.3 billion.

By 2050, there will be more people older than 60 than there are younger than 14 worldwide, according to Siemens. It's based on that kind of statistic that Siemens expects to drive the medical business sector's continued growth.

"As the world's population grows and ages, the need for healthcare products, services and solutions will increase. We're convinced that breakthroughs in the fields of early diagnosis and intervention as well as high-performance IT solutions for optimizing clinical and administrative workflows are the keys to success," according to the most recent annual report. As a result, Siemens has been structuring itself as a full-service diagnostic, imaging and IT solutions provider. In 2006, much of that structure came in the form of acquisitions.

In June last year, Siemens signed an agreement with Bayer to acquire the chemical and pharmaceutical company's Diagnostics Division, which the company said would enable it to expand its position in the high-growth molecular diagnostics market. The purchase price for Tarrytown, NY-based Bayer HealthCare Diagnostics, which had sales of $1.78 billion and a double-digit profit margin in fiscal 2005, was roughly $5.2 billion. The deal was completed in January this year. Bayer HealthCare Diagnostics also is a market leader in clinical chemistry with a leading position in near-patient testing, laboratory automation and hematology (blood cell diagnostics), Siemens said.

"Demographic change is greatly increasing global demand for healthcare services and thereby generating excellent growth opportunities for Siemens," said Klaus Kleinfeld, then president and CEO of Siemens. "The acquisition of Bayer HealthCare Diagnostics is part of our targeted strategy to create the healthcare industry's first integrated diagnostics company by combining the entire imaging diagnostics, laboratory diagnostics and clinical IT value chain under one roof."

In July 2006, the company completed the acquisition of Diagnostic Products Corporation (DPC), a Los Angeles, CA-based immunodiagnostics company, for $1.9 billion. DPC develops and manufactures body fluid analyzers and tests, such as those related to cancer and cardiac disease, as well as hormone and allergy conditions. In more than 100 countries, DPC offers comprehensive immunodiagnostic solutions to hospitals, clinics and laboratories across the globe, according to Siemens.

Michael Ziering, CEO of DPC, called Siemens Medical Solutions a "perfect match" for his company in terms of corporate philosophy, business practice and future direction. The two acquisitions make Siemens Medical Solutions the No. 2 provider of immuno-diagnostic technology worldwide, the company claimed. Both companies also build on the company's 2005 purchase of Knoxville, TN-based CTI Molecular Imaging, a provider of molecular in-vivo diagnostics technology.

This year, though the company appears to be on financial track, there's a changing of the guard at the top. At the beginning of the month, Peter Loscher took over as president and CEO of Siemens, replacing Klaus Kleinfeld, who left the company at the end of June. Kleinfeld, who had been with Siemens two-and-a-half years, chose not to renew his contract, which was up in October. Loscher previously served as president of Global Human Health for pharmaceutical giant Merck in Whitehouse Station, NJ. Prior to joining Merck, Loscher served on the corporate executive council of Siemens rival General Electric. He joins Siemens in the wake of investigations into bribery allegations by authorities in Germany. Kleinfeld has denied any wrong-doing, and no charges have been filed against him.

6 Cardinal Health $10 Billion ($81B Total)

KEY EXECUTIVES:

Robert D. Walter, Chairman and Founder R. Kerry Clark, President and CEO Dave Schlotterbeck, CEO, Clinical & Medical Products Jeff Henderson, CFO Mike Lynch, Group President, Medical Products Manufacturing

NO. OF EMPLOYEES: 40,300

WORLD HEADQUARTERS: Dublin, OH

While Cardinal Health experienced 10% revenue growth overall, resulting in $81 billion for fiscal 2006 (ended June 30), the company's Medical Products and Services division grew at a slower rate--2%--to reach $10 billion. Earnings for the division increased 4% to $647 million.

Cardinal Health's Medical Products and Services unit distributes medical and laboratory products, representing approximately 2,000 suppliers in addition to its own line of surgical and respiratory therapy products. The company also manufactures sterile and nonsterile procedure kits; single-use surgical drapes; gowns and apparel; exam and surgical gloves; fluid suction and collection systems; respiratory therapy products; surgical instruments; special procedure products; and other products.

The company's officials attributed the 2% revenue growth to new customer accounts and product launches; increased volume from existing customers; and international revenue growth due to new customers, primarily in Canada.

In August, the company suspended production, sales, repairs and installation of its Alaris SE for merly the Signature Edition--infusion pump following the seizure of approximately 1,300 units by the FDA. Earlier in the month, the company said it voluntarily initiated corrective action. According to the FDA, an over-sensitive keypad on the device could lead to the over-infusing of patients. Cardinal Health sent warning letters to customers. Approximately 140,000 Alaris SE infusion pumps had been distributed in the year prior to the seizure. Cardinal Health officials were quick to point out that the device represented only 1% of annual revenue for its Clinical Technologies and Services division.

The company reached an agreement with the FDA in February on the process it would follow to resume the manufacture and sale of the infusion pumps. The company submitted a remediation plan for the seized pumps and engaged an independent expert to inspect Alaris manufacturing facilities and certify operations.

With the beginning of fiscal 2007, the company seemed to be in a reorganization mode with a series of divestitures and acquisitions.

In November, Cardinal Health announced plans to sell its $1.8 bil lion Pharmaceutical Technologies and Services division, which manufactures and packages 100 billion doses of medication a year for pharmaceutical and biotech firms. The unit employs roughly 10,000 people at more than 30 facilities worldwide. In April, private equity firm the Blackstone Group (which is part of the group offering to purchase orthopedic manufacturer Biomet) stepped us as a buyer for $3.3 billion.

"In the coming years, Cardinal Health will focus more on our products and services that help providers improve safety and productivity of healthcare," said CEO Kerry Clark. "We believe there is greater customer and shareholder value in the expansion of our supply chain and medical and clinical products businesses domestically and internationally."

On the acquisition side, Cardinal Health announced last July it would purchase MedMined, a privately held medical analytics firm that helps hospitals track and prevent hospital-acquired infections. Terms of the deal were not disclosed. In October, Cardinal Health scooped up--again with no terms disclosed--Care Fusion, a manufacturer and developer of wireless barcode patient identification systems used in hospitals.

Most recently, in a deal valued at $1.42 billion (in addition to the assumption of $50 million in debt), Cardinal Health announced in May the purchase of Viasys Healthcare, a manufacturer of respiratory care devices as well as neurological, audio and vascular diagnostics, disposable medical products used in surgical procedures and orthopedic implant manufacturing. Cardinal Health expects the acquisition to boost its role in the $4 billion respiratory care market, as well as expand its medical product offerings. Viasys posted 2006 revenue of $610 million.

Overall, for the first three quarters of fiscal 2007 (ended March 31), the company reported sales of $64.6 billion, an increase of 11%. For the third quarter, revenue for the Medical Products Manufacturing division also increased 11% to $458 million. The company said growth was led by strong demand for surgical drapes, gowns and masks; exam gloves; and special procedure products. Profit for the unit grew 4% to $47 million for the quarter.

Cardinal Health also recently announced a $600 million settlement in a lawsuit in which shareholders had alleged the company inflated its earnings and also accused it of accounting irregularities.

Looking ahead, the company said its long-term goals are to reach revenue growth of 8% to 10% in fiscal 2008. "We see more substantial profit growth coming from the clinical and medical products segments as strong demand for our market-leading products generates additional customer opportunities worldwide, and operational changes provide greater leverage to the bottom line," Clark said.

7 Tyco Healthcare $9.6 Billion ($41B Total)

KEY EXECUTIVES:

Edward Breen, Chairman and CEO, Tyco International

Thomas Lynch, CEO, Tyco Electronics

Richard Meelia, CEO, Tyco Healthcare Christopher Coughlin, Exec. VP and CFO, Tyco International

NO. OF EMPLOYEES: 238,200

WORLD HEADQUARTERS: Pembroke, Bermuda

This time next year, MPO's Top Companies Report will include a brand new company-well, sort of. This prediction isn't really going out on a limb. In January 2006, Tyco announced plans to separate the company's portfolio of diverse businesses into three independent public companies: Tyco Electronics, Tyco Healthcare and the combination of Tyco Fire & Security and Engineered Products & Services.

The split went into effect this June, and Tyco Healthcare is now Covidien, based in Mansfield, MA. Tyco International shareholders will receive one share of Covidien stock and one share of Tyco Electronics for each of their shares, the company said. Tyco has said the separation, costing up to $1.6 billion, will let each company better focus on building value by setting its own strategy for acquisitions, alliances and use of resources, while giving investors clearer choices. The split was expected to take place much earlier this year but was pushed back due to delays with US regulators.

Covidien is an original name inspired by the themes of collaboration and life, the company said. It was selected for its global meaning and appeal from among some 6,000 possible names in a rigorous process that began more than nine months ago.

"Covidien was the result of a careful process that focused on distilling from our customers, employees and industry experts the attributes of a best-in-class healthcare business," said Eric Kraus, senior vice president, corporate communications. "We're confident that our new identity as Covidien will help us strengthen our ongoing partnership in the lifesaving work of medical professionals, creating far-reaching benefits for improved patient care."

However, before we start looking too far forward, we need to take a small step back to look at performance for Tyco Healthcare for fiscal 2006.

Tyco Healthcare consists of three business units, which include Medical Devices & Supplies, Pharmaceuticals and Retail. The company's product lines include disposable medical supplies, monitoring equipment, wound closure products, advanced surgical devices, medical instruments and bulk analgesic pharmaceuticals.

For Tyco as a whole, revenue rose more than 4%, from a little more than $39 billion in fiscal 2005 to nearly $41 billion in fiscal 2006. Net income also rose from $3 billion to more than $3.7 billion.

Net revenue for the Healthcare group increased 1% in 2006 to $9.6 billion, compared to roughly $9.5 billion in 2005. Tyco said the increase largely was driven by the surgical segment within its Medical Devices & Supplies unit, including strong demand for laparoscopy, ablation and vessel sealing as well as, to a lesser extent, sutures. Increases were partially offset by the adverse impact of voluntary product recalls in Imaging and lower volume sales within the Respiratory product line, in addition to the negative changes in foreign currency exchange rates of $93 million.

Operating income decreased to $2.2 billion from $2.3 billion in 2005. In addition to sluggish performance in Respiratory and Imaging, the company said additional investments in research and development contributed to a weaker profit picture.

Fiscal 2006 also brought with it a series of acquisitions for Tyco Healthcare. The company acquired more than 90% ownership in Floreane Medical Implants SA for approximately $123 million in cash. Floreane develops surgical support implants for parietal, urological and gynecological surgery. The remaining outstanding shares would be acquired if they become available. Tyco also acquired Airox SA, a home respiratory ventilation systems business based in France, for approximately $108 million.

Another takeover target was Waltham, MA-based Confluent Surgical Inc. for $246 million. Confluent Surgical manufactures a neurosurgical sealant that was the first product to receive FDA approval for use in cranial dural repair. This sealant, along with several other products in the company's pipeline, is intended to improve patient outcomes by reducing leaks or adhesions across various surgical specialties. In the next six years, the biosurgery market, which is estimated at $900 million, is expected to double in size, according to Tyco's estimates.

"Confluent Surgical is an excellent strategic fit for Tyco Healthcare. This acquisition will expand US Surgical's Syneture suture product portfolio, as well as the Autosuture division's surgical stapler franchise," said Rich Meelia, CEO of Tyco Healthcare.

8 Philips Medical Systems $8.5 Billion ($35.6B) Total)

KEY EXECUTIVES:

Gerard Kleisterlee, President, CEO and Chairman Pierre-Jean Sivignon, Exec. VP and CFO Rick Harwig, Chief Technology Officer Stephen H Rusckowski, CEO, Philips Medical Systems

NO. OF EMPLOYEES: 121,732

WORLD HEADQUARTERS: Amsterdam, The Netherlands

For almost 100 years, Philips has been an innovator in medical care, among many other industries. Today, the multibillion-dollar company has a significant portion of diverse technology segments, including medical diagnostic imaging and patient monitoring systems, lighting solutions, personal care, home appliances and consumer electronics.

For fiscal year 2006 (ended Dec. 31), overall company sales were $35.6 billion, up from $30.4 billion in 2005. Income after taxes rose only slightly, however, to $1.4 billion. The United States is the single largest sales center for the company, generating almost $10 billion of the company's total sales. (Editor's Note: Figures were converted to dollars using the exchange rate on the last day of the company's reporting period.)

The company's Medical Systems division--based in Best, The Netherlands and Andover, MA--reported revenue of $8.5 billion, up from $7.5 billion in 2005.

Philips Medical Systems, which employs more than 31,000 personnel (19% of the Philip's total workforce), is broken down into three businesses:

* Imaging Systems: X-ray machines, CT, MR, ultrasound and nuclear medicine imaging equipment, used to create images of various parts of the body in varied detail for radiologists and cardiologists

* Customer Services: Consultancy, equipment financing, asset management and equipment maintenance and repair

* Clinical Solutions: Healthcare IT systems as well as patient monitoring and cardiac devices

Sales growth, according to Philips, was experienced across all categories except MedQuist, the company's medical transcription service company. Growth was strongest in the Computed Tomography and Nuclear Medicine units, each of which generated above 10% sales growth. According to the company, 53% of sales were generated by products released within the last three years.

In November, Philips Medical named Stephen Rusckowski as its new CEO, succeeding Jouko Karvinen, who had been CEO since 2002. Since 1984, Rusckowski has held numerous management positions with the healthcare division of Hewlett-Packard/Agilent Technologies. He was the general manager of Agilent's Healthcare Solutions Group when Philips acquired the business in 2001.

"Steve has a long track record running successful growth businesses in healthcare, both at Philips and before," said CEO Gerard Kleisterlee "We're confident he's the right leader for the next phase of growth and expansion at Medical Systems."

In the 2006 annual report, company officials outlined a growth strategy in developing markets. In June this year, Philips Medical Systems took a step toward expanding its international reach by acquiring VMI-Sistemas Medicos (VMI), a diagnostic imaging company based in Minas Gerais, Brazil. No financial details on the transaction were disclosed.

"By acquiring VMI, Philips can offer customers in Brazil and across Latin America a more complete medical diagnostic imaging product portfolio. This is our first acquisition of a healthcare company in a developing economy, and it endorses the company's global strategy of focusing on healthcare and investing in emerging markets, looking for solutions especially developed to address local needs," said Rusckowski. According to Philips, between 2003 and 2006, growth in the Brazilian market for medical diagnostic imaging and monitoring equipment was robust, expanding at close to 20% per year, compared to annual growth rates in the global market of between 4% and 5%.

While not part of the company's emerging market strategy, Philips announced in April it would acquire Cherry Hill, NJ-based Health Watch, a privately held provider of personal emergency response services, for approximately $130 million in cash. According to the company, this acquisition represents a further step for Philips in building its presence in the business-to-consumer healthcare market. Health Watch will add more than 100,000 US customers to Philips Lifeline's existing base of more than a half-million subscribers in North America.

Since being acquired by Philips in the first quarter of 2006, Lifeline Systems' sales grew in excess of 15%. Today, seniors represent around 15% of the population in the developed world, and that number is expected to almost double in size over the next 25 years. Personal emergency response services already are the largest category of home healthcare solutions purchased out of pocket by older adults and their caregivers, according to Philips.

For the first quarter of 2007, Medical Systems sales remained relatively flat, having achieved $1.94 billion, compared to $1.7 billion for the first quarter of 2006. Cardiac Care and Magnetic Resonance were the strongest sales drivers so far for the year, the company said.

9 Boston Scientific $7.8 Billion

KEY EXECUTIVES:

Peter Nicholas, Co-founder and Chairman Jim Tobin, President and CEO Sam Leno, Exec. VP of Finance and Information Systems and CFO Paul LaViolette, COO James Gilbert, Group President, Cardiovascular

NO. OF EMPLOYEES: 28,000

WORLD HEADQUARTERS: Natick, MA

Some say it bit off more than it could chew. But Boston Scientific remains steadfast that its $27 billion gamble to outbid Johnson & Johnson for control of Guidant in April 2006 was the right one. Along with Guidant's technology, the company also purchased high-priced legal headaches. Boston Scientific now is involved in numerous lawsuits related to product recalls of Guidant-designed implantable cardioverter defibrillators (ICDs).

Natick, MA-based Boston Scientific, the No. 3 manufacturer of the implantable heart devices after Medtronic and St. Jude Medical, has estimated that damages and costs to cover legal expenses will be roughly $732 million.

According to analysts who cover the company, critical issues for Boston Scientific in the coming months are progress in resolving a warning letter with the FDA, a turnaround in ICD and drug-eluting stent markets as well as cutting costs.

To reduce costs, Boston Scientific is going to have to announce job cuts, according to market experts. The company also may spin off its Endosurgery business to raise capital. An initial public offering could raise $800 million to $1 billion in much-needed cash for the company. Boston Scientific announced in March it was considering the move. The Endosurgery group had $1.3 billion in sales for 2006.

"The Endosurgery group has a remarkably consistent record of growth and profitability, having achieved leading market shares for most of its key product lines," said Jim Tobin, Boston Scientific's president and CEO. "The potential IPO of a minority interest in our Endosurgery group would highlight its success and stability and create a direct investment vehicle in these specialty device markets, while giving us greater financial flexibility. This action would help to achieve our goals of maximizing shareholder value by unlocking the group's potential, while maintaining our position as a leading diversified medical device company."

The company also could sell its 15% share of Houston-based Cyberonics to raise additional funds.

In a recent research note, JP Morgan analyst Michael Weinstein said Boston Scientific undoubtedly will seek buyers for several businesses it has acquired in recent years, including the Meadox vascular graft business, which had 2006 sales of around $100 million; Guidant's cardiac surgery business, which reported 2006 sales of $200 million; the Namic fluid-management business, which recorded 2006 sales of $80 million; and the EP Technologies Cardiac Pathways catheter ablation business, with 2006 sales of $140 million.

"Collectively, these businesses generate just over $500 million in sales and could fetch $1 billion or more from a combination of strategic buyers and private equity," Weinstein wrote. "Their sale would accelerate the paydown of the company's $8.9 billion in debt."

The numbers for 2006 fiscal year (ended Dec. 31) were a mixed bag. Net sales for the year were $7.8 billion, compared to $6.3 billion in 2005. Though sales were robust, they couldn't stop a reported net loss of $3.6 billion. Reported results for 2006 included net special charges (after-tax) of approximately $4.5 billion, which consisted primarily of costs related to the purchase of Guidant. The company reported net income of $628 million in 2005.

For the first quarter of fiscal 2007 (ended March 31), net sales were $2.1 billion, compared to $1.6 billion for the first quarter of 2006. First-quarter 2007 operating results include the cardiac rhythm management (CRM) and cardiac surgery businesses that were part of the Guidant purchase. CRM group sales for the first quarter of 2007 were $539 million, which included $398 million from ICD sales, as compared to CRM sales of $489 million for the fourth quarter of 2006, which included $356 million from ICD sales.

For comparison purposes--as though Boston Scientific had acquired Guidant on Jan. 1, 2006-worldwide CRM sales for the first quarter of 2006 would have been approximately $562 million, including $419 million of ICD sales. Sales of drug-eluting coronary stent systems for the first quarter also slipped, reported at $468 million, compared to $633 million for the first quarter of 2006 and $506 million for the fourth quarter of 2006. Reported net income was $120 million, compared to $332 million for the same period in 2006.

"While drug-eluting stent sales were lower than we hoped due to market dynamics, our performance within the market remained strong, and we continue to expect market fundamentals to improve over time," Tobin said. "CRM sales were higher than anticipated, achieving double-digit sequential growth for the second consecutive quarter. We are also continuing to make substantial progress on quality, most notably resolving the deficiencies in the CRM warning letter, which has been the number one priority for our CRM Group. This important milestone is solid evidence we are moving in the right direction."

During the first quarter, however, the company reduced its CRM staff by almost 600 workers.

In May, in the midst of the financial upheaval that appears to be coming down the pike for the company, Boston Scientific hired a man who will have his hands full in the coming months. Sam Leno was hired as chief financial officer and executive vice president of Finance and Information Systems. From 1971 to 1994, he served in a number of finance, accounting and leadership positions for Baxter International Inc./American Hospital Supply Corp. During his tenure at Baxter, he worked closely with Jim Tobin, who then served as the chief operating officer of Baxter.

Leno replaced Larry Best, who retired to pursue an interest in private investing within the life sciences field.

10 Becton, Dickinson & Co. $5.8 Billion

KEY EXECUTIVES:

Edward J. Ludwig, Chairman, President and CEO John R. Considine, Sr. Exec. VP and CFO Gary M. Cohen, Exec. VP and President, Medical William A. Kozy, Exec. VP and President, Diagnostics David T. Durack, St. VP, Corporate Medical Affairs

NO. OF EMPLOYEES: 27,000

WORLD HEADQUARTERS: Franklin Lakes, NJ

According to Ed Ludwig, chairman, president d CEO of Beckton, Dickinson and Co. (BD) in Franklin Lakes, NJ, his company's revenue and earnings growth for fiscal year 2006 exceeded expecta tions and provided "continuing confidence that our strategy is sound and our implementation disciplined."

BD manufactures medical surgical systems, including anesthesia and infusion therapy devices, injection products, sharps disposal products and surgical products. The company also produces a wide range of diabetes care devices, diagnostic systems, and has been a leading manufacturer of engineered-safety devices to protect healthcare workers.

For fiscal 2006 (ended Sept. 30), BD reported record revenues of $5.8 billion, representing an 8% increase compared to fiscal year 2005. Of the company's three divisions--Medical, Diagnostics and Biosciences-the Medical Division was the clear revenue driver at $3.2 billion, which is an increase of 8%. The division is comprised of four units: Medical Surgical Systems, Diabetes Care, Pharmaceutical Systems and Ophthalmic Systems. BD attributes strong sales in the Pharmaceutical Systems and Diabetes Care units as two of the most significant contributors to the division's success for 2006--both grew at 14% and 12%, respectively, for fiscal 2006.

Overall, international sales marginally outpaced US sales. Revenues in the United States were $2.8 billion, a 9% increase compared to last year's sales, while international sales were $3 billion, an increase of 6%.

According to BD, revenue growth in the Medical Surgical Systems unit primarily was driven by the growth in safety-engineered products and pre-filled flush syringes. The Diabetes Care unit's revenue growth reflected strong sales of pen needles worldwide.

In September, BD announced its plan to exit the blood glucose monitoring (BGM) market. The company said the move would impact its distribution of blood glucose meters in addition to sales of related test strips, which will continue to be distributed until December of this year. BD said the decision to exit the market would not affect other Diabetes Care products, including insulin syringes, pen needles and lancets, but added that it has made a commitment to provide test strips until patients find alternative products. BD entered the blood glucose monitoring market in early 2003 with the introduction of the BD Logic blood glucose monitor.

"After careful consideration, we concluded that our future outlook in the increasingly competitive BGM market did not justify the levels of investment and additional resources necessary to continue,"

Ludwig said in a letter to shareholders. "We remain solidly committed to our overall Diabetes Care business, as we have been since pioneering the development of insulin injection devices in 1924. Revenue derived from insulin delivery products exceeds $500 million annually and grew more than 9% this year over fiscal 2005."

The company's Diagnostics Division reported sales of $1.8 billion, a 6% increase from 2005. The BD Biosciences segment reported revenues of $877 million. The company cited flow cytometry instruments and reagents and a recently discontinued distribution agreement as the strongest growth factors.

In September, BD announced plans to purchase TriPath Imaging, based in Burlington, NC. TriPath, which manufactures cancer diagnostic products, is expected to broaden BD's line of diagnostics. The deal, worth $350 million, was completed in December.

Facility expansion seems to be part of BD's game strategy for 2007. The company is planning a $34 million capital investment in a 64,500-square-foot facility in Quebec, Canada, where it currently leases space. The facility is intended to meet growing demand for its molecular diagnostic tests for the rapid detection of bacterial organisms, including those known to cause healthcare-associated infections. Construction is scheduled for completion in May 2008.

BD also recently announced plans to expand its Treyburn facility in Durham, NC to consolidate and increase US manufacturing capacity for its Discovery Labware products, including BD Falcon products. The $25 million capital investment project is expected to create 28 new positions in 2007 and a total of 100 by the end of 2008, building on the 285 employees at present. Approximately 50,000 square feet of manufacturing space will be added.

Financially, the first half of 2007 also is in expansion mode and on track to meeting company and analyst expectations. For the first two quarters, the company reported $3 billion in net sales. The first quarter was an 8% rise compared to the same quarter for 2006. Second quarter was an 11% increase. For the sixmonth period ended March 31, the BD Medical segment reported 10% revenue growth.

11 Stryker Corp. $5.4 Billion

KEY EXECUTIVES:

John W. Brown, Chairman Stephen R MacMillan, President and CEO J. Patrick Anderson, VP, Corporate Affairs Dean H. Bergy, VP and CFO Luciano Cattani, VP and Group President, International Michael R Mogul, President, Orthopedics Stephen S. Johnson, VP and Group President, MedSurg James E. Kemler, VP and Group President, Biotech, Spine,

Osteosynthesis and Development

Katherine A. Owen, VP of Regulatory Affairs and Quality Assurance

NO. OF EMPLOYEES: 18,800

WORLD HEADQUARTERS: Kalamazoo, MI

Stryker experienced double-digit increases in earnings and sales for fiscal 2006, which ended on Dec. 31. Stryker claims the No. 3 spot by sales for 2006 in the $30 billion orthopedic implant market-the company also has successful endoscopy and surgical products businesses.

The double-digit climb is nothing new for this company; Stryker has grown its sales in this range for six consecutive years. Net sales increased by 11% to $5.4 billion in fiscal 2006, while net earnings increased almost 21% to $778 million, up from $644 million in 2005. The company said increases in its Orthopedic (57% of the company's sales) and MedSurg (38% of sales) businesses helped to drive the positive year-end results.

"Our unique set of businesses delivered a strong finish to 2006, especially in the US," said Stephen P. MacMillan, president and CEO, stressing the diversity of his company's product line. "We have the size and scope to stand strong when turbulence hits. If one sector of our business hits a soft spot, another carries the day," he wrote in his annual report letter to shareholders.

Domestic sales were $3.6 billion for the year, increasing 12.4%, while international sales hit $1.8 billion, increasing 8.4%. Worldwide sales of orthopedic implants were $3.1 billion, an increase of 9.1%, based on higher shipments of reconstructive implants (hip, knee and shoulder), trauma, spinal and craniomaxillo-facial implant systems; bone cement; and the bone growth factor OP-1, the company said. Roughly 66% of Stryker's total sales are based in the United States.

MedSurg equipment also experienced significant growth--15.8%--reaching $2 billion for the year, driven by strong sales of surgical equipment; surgical navigation systems; endoscopic, communications and digital imaging systems; as well as patient handling and emergency medical equipment, according to Stryker.

One bleak spot in the company's otherwise positive financial picture was its Physical Therapy Services division, which reported revenues of $258.4 million for the year, a 1.6% decrease. Net earnings were only $6.3 million for the year, a 43% drop. In June this year, Stryker announced that it was selling its outpatient physical therapy business, Physiotherapy Associates, to Water Street Healthcare Partners, a Chicago, IL-based private equity firm, for $150 million in cash. Stryker said the business, ultimately, wasn't close enough to its core device business.

New product rollouts continue to play a role in the company's ongoing success. For example, in August 2006, the company received FDA 510(k) clearance for its advanced hip bearing system, LFIT Anatomic Femoral Heads with X3 Polyethylene liners. The system combines Stryker's Low Friction Ion Treatment technology with X3 advanced bearing technology and is anatomically sized for more natural hip performance, according to the company. The result is total hip replacement designed to help minimize dislocation and its associated healthcare costs, while providing an attractive alternative to metal-onmetal bearings, Stryker said.

Despite pricing pressures in certain orthopedic sectors, company officials remain optimistic about 2007 due to underlying growth rates in orthopedic procedures and the company's broad range of products in orthopedics and other specialties, despite the potential for increased pricing pressures in certain markets. Stryker expects a net sales increase in the range of 11% to 13%. Positive currency gains also are expected to have minimal impact. For the first quarter of 2007 (ended March 31), Stryker reported net sales of $1.5 billion, up 12.7%. Net earnings jumped 65% to $243 million. The majority of the company's sectors experienced double-digit growth.

12 Abbott Laboratories $5 Billion ($22.5B Total)

KEY EXECUTIVES:

Miles D. White, Chairman and CEO Richard A. Gonzalez, President and COO Richard W. Ashley, Exec. VP, Corporate Development Thomas C. Freyman, Exec. VP, Finance and CFO Joseph M. Nemmers, Jr., Exec. VP, Diagnostics and Animal Health Divisions John Capek, Sr. VP, Abbott Vascular Robert B. Hance, Sr. VP, Diabetes Care Operations Edward L. Michael, Sr. VP, Medical Products

NO. OF EMPLOYEES: 67,000

WORLD HEADQUARTERS: Chicago, IL

Abbott's medical products business continues to undergo significant transformation. In 2004, the company spun off its hospital products business as Hospira.

In early 2006, Abbott altered its medical products portfolio yet again when it acquired the vascular and endovascular businesses of the former Guidant Corp. from new owner Boston Scientific, for which it paid $4.1 billion in cash In addition, plans called for Abbott to pay Boston Scientific milestone payments of $250 million at FDA approval of Guidant's drug-eluting stent, and an additional payment of $250 million upon a similar approval in Japan. Abbott also provided Boston Scientific with a five-year, $900 million interest-bearing loan. In addition, Abbott purchased approximately 64 million shares of Boston Scientific stock for $1.4 billion.

In yet another profile-altering move in the first quarter of this year, Abbott announced plans to divest its core laboratory diagnostics business to General Electric for $8.13 billion.

Abbott now claims the No. 3 position in the nearly $10 billion vascular care market. It hopes to become a market leader with Xience V, a next-generation drug-eluting stent, which already has begun sales in Europe and Asia. In June this year, Abbott submitted its premarket approval (PMA) application for FDA approval. The PMA includes safety and efficacy data from the Xience V Spirit family of clinical trials, which demonstrated superior results for Xience VM over the Boston Scientific's Taxus Paclitaxel-Eluting Coronary Stent System in the primary endpoint of reducing vessel re-narrowing (angiographic late loss), the company said.

Beyond Xience V, Abbott Vascular is developing additional next-generation technologies, such as a bioabsorbable drug-eluting stent, which could address clinical challenges that still exist. Abbott's endovascular business includes carotid stents, embolic protection devices, balloons and wires. In this emerging frontier of vascular disease, Abbott said it is the only company that offers two carotid stent platforms. Carotid stenting is a less-invasive alternative to surgery for patients at risk of stroke from a partially blocked carotid artery, the major blood vessel in the neck that supplies blood to the brain. The Xact and RX Acculink stents are used with the Emboshield and RX Accunet embolic protection devices to catch plaque (emboli) fragments that may be released during the stenting procedure.

In addition to its vascular division, Abbott's medical product unit also includes molecular diagnostics, diabetes care, spine and animal health.

The company has established a leading position in the large and growing blood glucose monitoring market. In 2006, Abbott launched is FreeStyle Freedom blood glucose meter, which features virtually pain-free testing, using the world's smallest blood sample size, in addition to offering fast five-second test time, the company said. Abbott also markets FreeStyle Flash (FreeStyle Mini), the world's smallest meter, and Precision Xtra (Precision Optium/Xceed), a home-use meter that measures glucose and ketone levels.

For the fiscal year ended Dec. 31, Abbott reported overall company sales of 22.5 billion, up from $22.3 billion in 2005. Net earnings, however, registered a steep decline from $3.4 billion in 2005 to $1.7 billion for fiscal 2006, due mostly to the acquisition Guidant's vascular business. Sales from the diagnostic and vascular businesses totaled $5 billion. Together, the units reported earnings of $315 million ($431 for diagnostics and a $115 loss for vascular.) In its end-of-year results, Abbott did not break out sales and earnings for its diabetes and spine businesses. The company's pharmaceutical business is the clear sales driver, reporting more than $12 billion in sales for 2006, though reported sales were down from $13.7 billion in 2005.

13 B. Braun $4.2 Billion

KEY EXECUTIVES:

Ludwig Georg Braun, Chairman of Management Board Michael Ungenthum, Vice Chairman of Management Board, Chairman Executive Board of Aesculap AG & Co, KG, Aesculap Division Caroll Neubauer, Head of North American Region Wolfgang Feller, Head of Avitum Division Meinrad Lugan, Head OPM and Hospital Care Divisions

NO. OF EMPLOYEES: 34,000

WORLD HEADQUARTERS: Melsungen, Germany

On this year's list, B. Braun enjoys the distinction of being the only privately held company to take its place here, based on fiscal 2006 figures. All that will change next year after the wave of private equity investment changes the landscape somewhat for companies such as Biomet, Kodak and Bausch & Lomb. But no matter what kind of financial winds may change the fortunes of some of the companies on this list, B. Braun certainly is the only company in the lineup that's been a privately held organization for more than 160 years.

For fiscal 2006, the company reported sales of $4.2 billion, a 9.8% increase compared to last year. Net profit grew 17% to $228 million. The company attributed strong sales performance of large-volume infusion solutions and intravenous (IV) catheters as the main factor driving growth. The service sector also recorded high sales growth of 25%.

The United States, Latin America and Eastern Europe remain the strongest sectors for B. Braun. Europe (excluding Germany) and Africa combined are the largest percentage of the company's sales (36.9%). North America is the second largest market at 24.7%. Germany is third with 21.9% of the company's sales. B. Braun said it was able to generate 7% growth in Germany despite the impact of new tax laws.

B. Braun's Hospital Care division, which offers products and services for infusion therapy and for basic clinical care in intensive medicine, operating areas and anesthesia, reported 2006 sales of roughly $2 billion (a 9.3% increase). High growth was the result of infusion pumps and disposable medical products as well as with IV solutions and indwelling IV cannulas, the company said. While markets in North America and Europe remained strong, B. Braun Russia recorded the best increase in sales, in excess of 70%.

The Aesculap surgical division increased sales 8.2% to $1.2 billion. Growth was driven by expanding markets in Central and Eastern Europe and in North and Latin America. For 2006, the company focused on the rollout of its activL lumbar artificial disc.

A double-digit increase---13%--also was reported for B. Braun's Outpatient division, which is focused on diabetes care, skin and wound management, clinical nutrition, as well as stoma and incontinence care. The division recorded sales of $585 million for 2006. The main areas of growth were Spain, the United Kingdom, the United States and Brazil. In Chile, B. Braun opened a new production facility for enteral nutrition products in April 2006.

As a systems supplier for hemodialysis and extracorporeal blood treatment, the B. Braun Avitum division manufactures and sells products and services for the treatment of chronic and acute kidney failure and for therapeutic apheresis. Sales grew by 12.9% to $369 million, although sales in some countries were affected by developments in government healthcare policy regarding reimbursements for dialysis treatment. In spite of tough competition, most markets performed very well. Growth was driven by business in the United States.

In the next three years, B. Braun said it plans to invest approximately $1.5 billion in its operations-half of which is slated for Germany. Outside Germany, the company plans to expand production facilities for infusion solutions and accessories in Pennsylvania, which the company said would result in 300 new jobs. At its facility in Bethlehem, PA, B. Braun operates one of the largest medical device contract manufacturing businesses in the world.

A new infusion solutions production facility also is planned for Spain.

For fiscal 2007, B. Braun expects healthcare market conditions to remain steady, and the company is aiming for sales growth of 10%. The company also predicts higher profit growth of at least 15%.

14 3M Healthcare $4 Billion ($22.9B Total)

KEY EXECUTIVES:

George W. Buckley, Chairman, President and CEO Patrick D. Campbell, Sr. VP and CFO Robert D. MacDonald, Sr. VP, Marketing and Sales Brad T. Sauer, Exec. VP, Healthcare Business

NO. OF EMPLOYEES: 75,000

WORLD HEADQUARTERS: St. Paul, MN

3M's commercials say: "We don't make the products you buy; we make the products you buy better. Actually, in the case of its healthcare division, 3M did, in fact, make quite a few products--and then turned around and sold them for $4 billion (net sales for the 2006 fiscal year, ended Dec. 31).

Net sales for the healthcare division marked an increase of 6.7% ($3.76 billion for fiscal 2005) and were the second-largest contributor (17.5%) to 3M's bottom line behind the company's Industrial and Transportation division. The company's total revenue for 2006 was $22.9 billion, an increase of 8.3%. 3M's net income for the year was $3.9 billion, up from $3.2 billion in 2005.

For the healthcare division, 3M reported operating income for 2006 of $1.8 billion, a significant 65% increase from $1.1 billion in 2005. The large jump was due to the company's sale of its pharmaceutical business at the end of 2006, according to 3M. The company said growth in its healthcare division was driven by steady sales from core medical and dental businesses.

While most people may think of 3M as an industrial supplier or, at the very least, the company that brought mankind the Post-it note or Scotch tape--the company supplies a wide range of medical products.

In the medical and surgical areas, 3M manufactures medical tapes, dressings, wound closure products, orthopedic casting materials, electrodes and stethoscopes. In infection prevention, 3M produces surgical drapes, masks and preps, as well as sterilization assurance equipment. Other products include drug delivery systems, such as inhalers, transdermal skin patches, as well as dental and orthodontic products. In health information systems, the company produces computer software for hospital coding and data classification, as well as provides related consulting services.

As mentioned earlier, the company sold its pharmaceutical operations in the Americas, Asia-Pacific and Europe to different buyers for each region. The deals for Asia-Pacific and the Americas closed in the fourth quarter of 2006 (for which the company realized a net gain of a little more than $1 billion), while Europe wrapped up in January (netting the company $422 million). Sales prices for all three units totaled $2 billion. As part of the deal, 3M's Drug Delivery Systems division will continue to supply its technology to the divisions' new owners. The company said the divestiture of its branded pharmaceutical business would allow it to focus on its core medical products business.

As part of the expansion of its medical products line, 3M announced in April the creation of a new Medical Diagnostics business unit that will focus on developing and commercializing rapid diagnostic products for the detection of infectious pathogens, including methicillin-resistant Staphylococcus aureus and other treatment-resistant microbes.

"We see many market trends pointing to the need for rapid, easy-to-use microbial diagnostics that will aid in the prevention and control of infections in hospitals in the United States and abroad," said Angela Dillow, global business manager, 3M Medical Diagnostics.

The company steadily has been building the base of its diagnostic capabilities. In February, it acquired Acolyte Biomedica Ltd., a UK-based company that manufactures automated microbial screening technology for the rapid detection, diagnosis and treatment of infectious disease.

For fiscal 2007, CEO George Buckley called results for the company's first quarter "an exceptionally strong start," and the numbers seem to prove him correct. Overall earnings for the quarter were $1.4 billion, up 52% from the first quarter of 2006. The sale of the company's European pharmaceutical operations helped facilitate the impressive results. Revenues were $5.9 billion, up 6.1% from 2006. Excluding the impact of divested branded pharmaceuticals business, sales increased nearly 10%. The healthcare business reported sales of $962 million, up 24.4%. The company said all healthcare businesses generated significant growth, though drug delivery systems had the most significant impact.

15 Zimmer Holdings $3.5 Billion

KEY EXECUTIVES:

David C. Dvorak, President & CEO Cheryl R. Blanchard, PhD, Sr. VP, R&D and Chief Scientific Officer Sheryl L. Conley, Group President, Americas and Global Marketing and Chief Marketing Officer James T Crines, Exec. VP, Finance and CFO Bruno A. Melzi, Chairman, Europe, Africa and Middle East Chad F. Phipps, Sr. VP, General Counsel and Secretary

NO. OF EMPLOYEES: 6,900

WORLD HEADQUARTERS: Warsaw, IN

In line with its strategic initiative to "Enable, Innovate and Grow," Zimmer Holdings cast itself into various endeavors in 2006 that will allow the company to continue on its mission to excel in each of its four core divisions. However, the challenges plaguing the orthopedic industry affected Zimmer, as they did its competitors. This time around, Zimmer failed to grow sales by double digits, as it had in past years.

Zimmer reported sales of $3.5 billion in 2006, a 6% increase from the previous year. With an established presence in more than 100 countries, sales around the world experienced singledigit increases. The Americas contributed $2.1 billion, Europe offered $931 million and the Asia Pacific added $488 million to sales.

Zimmer's four core divisions also experienced single-digit increases, with the exception of the spinal unit, which rose 11% from 2005. Although the reconstructive and trauma units experienced slight sales increases, the bright spot for the company was its dental segment (part of the Reconstructive unit), which grew by 21%. Orthopedic Surgical Products was the only division in 2006 to experience a slight decrease in sales, which were down 4% from the prior year.

The year brought about a series of new innovations; however, the biggest advancement in Zimmer innovations was the introduction of gender-specific knees for women, which debuted in early 2006 after a five-year effort to develop the product. The Gender Solutions Technology line fueled a 13.5% rise in total earnings in first quarter of 2006. Zimmer has plans for gender-based hips to launch in this year and in 2008. Eventually, the complete line will be designed to address anatomical differences based on gender and, in the future, ethnicity. To help promote its new line, Zimmer launched its first major direct-to-consumer advertising campaign.

For Zimmer, the introduction of new products did not stop with gender-specific implants. In fact, Zimmer introduced a total of 20 new products in 2006. New versions of existing products, such as a coated screw version of the Dynesys spinal system, were part of the lines rolled out. Among other spinal innovations was the Vista-P PEEK VBR Implant.

Zimmer's trauma division introduced new offerings as well, including the MIS Femoral Nailing Solutions. Meanwhile, the dental unit came out with the OnePiece Implant and Hex-Lock Contour Abutments, as well as Puros Dermis and Pericardium regenerative membrane products.In the restorative unit, Zimmer was granted regulatory approval from the FDA to begin selling ceramic hip replacements, known as the Trilogy AB Cermic-on-Ceramic Acetabular System.

"During the year, we experienced a tremendous flow of new products and reached a Zimmer record 24% of sales coming from new products, including $229 million in the fourth quarter," said Raymond Elliott, Zimmer's former president and CEO.

In an effort to boost its line of surgical instruments, Zimmer entered a five-year agreement in July with Brasseler USA, which allows the company to sell and distribute Brasseler's powered surgical instruments and consumables in the United States.

Zimmer, along with ISTO Technologies, also announced the start of its clinical trial for Neocartilage, a living tissue-engineered graft under investigation as a therapy for knee problems. Zimmer plans to market the product as DeNovo ET Engineered Tissue Graft.

The company increased its product catalog through numerous acquisitions in 2006. The company acquired Musculoskeletal Management Systems LLC, known as Human Motion Institute brand. Additionally, Zimmer acquired the intellectual property rights, inventory and associated assets of the Cyclone Anterior Cervical Plate System, a versatile, low profile ACP system that complements the company's spine division.

Zimmer got its feet wet in dental implants by opening Zimmer Dental in June 2006. The Zimmer Institute, located in Carlsbad, CA, is a professional training center that specializes in helping clinicians practice contemporary implant dentistry.

In addition, a new 130,000-square-foot R&D manufacturing facility for the Zimmer Trauma division was opened alongside the company's headquarters in Warsaw, IN.

Zimmer forecasts a positive outlook for 2007 with anticipation that its direct-to-consumer advertising campaign will aid the launch of new implants.

Zimmer's acquisition of Endius Inc., a private business that develops minimally invasive spine products and techniques, also will contribute to Zimmer's willingness to stay on top of its game. With net sales up 10% to $950 million in the first quarter (ended March 31) of 2007, the company expects sales growth of 10% to 11% in each of the remaining quarters this year.

But will all the changes occurring at Zimmer allow for that kind of growth? For now, the company is in major transition, as former CEO Ray Elliott retired in May. Elliott served as chairman, president and CEO of Zimmer for its entire run as a public company since its spinoff from Bristol-Myers Squibb in 2001. He was president of Zimmer since 1997.

David C. Dvorak group president, global businesses, and chief legal officer, recently took over the helm.

16 St. Jude Medical $3.3 Billion

KEY EXECUTIVES:

Daniel J. Starks, Chairman, President and CEO John C. Heinmiller, Exec. VP and CFO Christopher G. Chavez, President, Neuromodulation Division Michael J. Coyle, President, CRM Division George J. Fazio, President, Cardiovascular Division Michael E Rousseau, President, US Division Jane J. Song, President, Atrial Fibrillation Division

NO. OF EMPLOYEES: 11,000

WORLD HEADQUARTERS: St. Paul, MN

St. Jude Medical continued its growth in 2006, besting 2005"s sales results by 13%. The St. Paul, MN-based manufacturer of cardiac and neuromodulation devices reported net sales of $3.3 billion for 2006 compared to $2.9 billion for the prior fiscal year. Net earnings for 2006 were $548 million, a significant increase compared to $393 million in 2005.

Despite recent increased scrutiny of implantable cardioverter defibrillator (ICD) devices by the FDA and in the press, St. Jude's growth in 2006 continued to be fueled by its successful Cardiac Rhythm Management (CRM) division. The market for ICDs has slipped during the past few years after high-profile industry recalls, though analysts have predicted a rebound for 2007.

The CRM division accounted for roughly $2 billion-or 62%--of St. Jude's total sales. Results for CRM- which includes ICD and pacemaker products--represented a 7% improvement in 2006 compared to 2005. St. Jude's ICDs and pacemaker products grew 9% and 4% in net sales, respectively, for 2006. ICD product sales were $1.1 billion for 2006, while pacemakers were $956 million.

St. Jude now claims the No. 2 market share position for CRM products, behind market-leader Medtronic, following the purchase of Guidant by Boston Scientific. During an analyst meeting in February this year, Mike Coyle, CRM division president, predicted the ICD market would return to growth and that St. Jude would continue to gain market share. He also called the company's performance "solid" in 2006 despite "difficult market conditions."

St. Jude expects pacemaker market growth of 2% to 4% in 2007, in addition to 3% to 9% ICD market growth. Beginning in 2008, according to figures presented by Coyle at the meeting, the global ICD market should be capable of sustaining 10% to 15% growth over the balance of the decade, based on international market expansion, continued penetration in the United States as a primary prevention tool and expanding indications for ICD therapy globally, among others.

St. Jude's three other divisions-Atrial Fibrillation, Neuromodulation and Cardiovascular--also reported sales growth. Atrial Fibrillation experienced a 28% increase to $326 million for 2006 compared to 2005. The company's Advanced Neuromodulation Systems unit, which St. Jude acquired in 2005 for $1.3 billion, reported a 17% increase in sales to $179 million. The company's Cardiac Surgery and Cardiology divisions--combined into a singular Cardiovascular Division at the beginning of this year--reported $741 million in product sales, a 4% increase compared to 2005. The division includes St. Jude's line of vascular closure devices and heart valve products.

"Our cardiology and cardiac surgery businesses will be stronger together," explained CEO Daniel Starks, adding that streamlining the businesses would allow the companies to take advantages of savings, boost operating efficiencies and invest more in research and development. "The creation of a new Cardiovascular division, together with the expansion of our sales force and recent new product introductions, are part of a comprehensive program to position St. Jude Medical to deliver a minimum 15% growth in 2007 and beyond," Starks added.

In 2006, the company released more than 20 new products, calling it one of the most successful periods for new product releases in their history. Most notably, the FDA cleared or approved:

* Anglo-Seal VIP, the next generation of the company's vascular closure device

* Merlin Patient Care System, a universal programmer for ICDs and pacemakers

* Atlas II ICD and the Atlas II HF CRT-D (cardiac resynchronization therapy defibrillator)

* EnSite System 6 Software for Cardiac Mapping and Navigation, for 3-D cardiac models during an electrophysiology procedure. Physicians use the models to collect information about the heart's electrical activity and assist in diagnosing and treating many arrhythmias, including atrial fibrillation

Company officials are planning on that many or more launches for this year. Most recently, St. Jude received FDA approval for the Current ICD and Promote CRT-D, the company's newest devices for treating patients with potentially lethal heart arrhythmias and heart failure. They are the first devices to be built on the company's new consolidated hardware and software platform to support implantable cardiac devices.

Financially, fiscal 2007 already has started with double-digit growth. For the first quarter, ended April 17, St. Jude reported $887 million in net sales, an increase of 13%. ICD product sales ($302 million) for the first quarter of 2007 increased 15% compared to the same period last year, while pacemaker sales ($247 million) grew 12%. Sales of atrial fibrillation products continued to grow at impressive rates--up 26%. Early this year, St. Jude also initiated a repurchase program of up to $1 billion in common stock.

"The investments we made in new people, new products and new programs in 2006 already are beginning to favorably impact our results," Starks said. "Over 75% of our revenue grew at double-digit rates during the quarter."

17 Fresenius $2.8 Billion ($8.5B Total)

KEY EXECUTIVES:

Dr. Ben Lipps, Chairman and CEO

Lawrence Rosen, CFO

Roberto Fuste, CEO, Asia-Pacific

Dr. Emanuele Gatti, CEO, Europe, Latin America, Middle East and Africa.

Rice Powell, Co-CEO, North America, and President, Products & Hospital Group

Mats Wahlstrom, Co-CEO, North America and President, Services Division

NO. OF EMPLOYEES: 56,803

WORLD HEADQUARTERS: Bad Homburg, Germany

For fiscal year 2006, Fresenius Medical Care set an ambitious goal of reaching the $8 billion mark in revenues. With $6.8 billion in revenue for 2005, there was still quite a bit of work to be done for the provider of dialysis products and services.

But by the end of the fiscal year, the company had reached its goal and then some. For FY 2006, Fresenius reported $8.5 billion, a significant 26% increase. Net income also increased by double digits-18%--to $537 million. In addition, the company reached another milestone in 2006: its 10th anniversary.

Revenue from dialysis products, which account for 25% of the company's overall revenue, reached $2.8 billion in fiscal 2006, including revenue from its own dialysis clinics.

The global dialysis market grew by approximately 5% to $55 billion in 2006, and the dialysis product market reached a value of $9 billion, according to Fresenius. The company reported that the three largest suppliers of dialysis products hold a worldwide market share of nearly 70%. Fresenius claims a 30% market share, followed by Baxter with 22% and Gambro with 15%.

For Fresenius, both its North America (which accounts for 71% of the company's revenue) and international markets contributed to strong performance. Growth in North American revenue was "above average," according to the company--mostly due to the acquisition of the Renal Care Group in Nashville, TN in March for $3.5 billion. With the additional dialysis centers under its belt, the company saw revenue form North America jump 32% to $6 billion. International revenue grew 13% to $2.7 billion. Worldwide, Fresenius had 2,108 clinics in 2006 (1,680 in 2005), serving approximately 163,517 patients (131,450 in 2005).

On the product side, much of the growth is attributed to demand for the Optiflux series and 2008K dialysis machines. Both machines, the company said, were designed specifically to meet the needs of its largest single market--the United States. In July 2006, Fresenius' North American division dodged a legal bullet for the 2008 series of devices when a jury in Oakland, CA ruled that the company did not infringe on four patents from Baxter International. Baxter was seeking $87 million in damages from Fresenius for patent infringement associated with the 2008K hemodialysis machine and an injunction barring Fresenius from continued selling of the machine.

Going forward, the company said it plans to "significantly expand" its dialyzer production facilities in the United States within the next two years, adding production lines to its facility in Ogden, UT. Fresenius already has set into motion plans to increase from 27 million to 34 million dialyzers annually at its Ogden facility.

Due to some of its recent success and readjusted market projections, Fresenius has bumped up its goal for the end of the decade. The company now expects to generate revenue of $11.5 billion by 2010, up from the $10 billion it previously had predicted. In the near term, Fresenius is hoping for revenue of $9.4 billion this year, which would be an increase of 11% compared to 2006. Net income is expected to be between $675 million and $695 million, an increase of 26% to 29%.

So far for 2007, the company seems to be on target. Net revenue for the first quarter, compared to the first quarter a year ago, increased by 33% to $2.3 billion, and dialysis product revenue increased by 18% to $560 million. North America revenue showed significant growth for the quarter, up 37% to $1.6 billion. Much of the growth remains fueled by continued strong sales of the 2008K hemodialysis machines, the company said.

"The advantages of being the world's only vertically integrated dialysis provider are increasingly evident as we compete in the global marketplace," said Ben Lipps, CEO, describing the company's recent financial performance.

17 Smith & Nephew $2.8 Billion

KEY EXECUTIVES:

David Illingworth, CEO

Joseph DeVivo, President, Orthopaedic Reconstruction

Mark Augusti, President, Orthopaedic Trauma and Clinical Therapies

Michael Frazzette, President, Smith 8, Nephew Endoscopy

Joe Woody, President, Advanced Wound Management

NO. OF EMPLOYEES: 8,830

WORLD HEADQUARTERS: London, United Kingdom

As a key player in the orthopedic reconstruction business, Smith & Nephew proved in 2006 that it will continue to exercise dominance in orthopedic devices. Amid a flurry of product launches and acquisitions, the company increased its annual revenue by 9% compared with 2005, totaling $2.8 million in 2006.

The year started with a decision to split its orthopedic business unit into two separate global units: Orthopaedic Reconstruction and Orthopaedic Trauma and Clinical Therapies. These two newly formed units contributed $919 million (10% growth) and $497 million (13%), respectively, to FY 2006 revenue.

Some of the most notable product launches in the Reconstruction unit included the Journey knee, the Birmingham Hip Resurfacing system (in the United States) and Emperion hip system. Adding to the bottom line in 2006 were the late-2005 launches of Legion and Anthology. New products contributed 15% of the unit's total sales in 2006.

Meanwhile, the Trauma group launched an upper extremity system for the Peri-Loc Periarticular Locked Plating System, as well as the Intertan Intertrochanteric Antegrade Nail for treatment of femoral fractures, the Meta Nail for fractures of the femur and tibia, and the Exogen 4000+ Bone Healing System. The company also received FDA approvals for 6.5 mm and 8 mm Cannulated Screws (April), Caption Disposable Platelet Concentrator (May) and Peri-Loc B Plates (September). The Trauma group also formed a strategic alliance with Q-Med AB (a Swedish company) as a means of gaining share of Q-Med's propriety technology for the production of stabilized non-animal hyaluronic acid for orthopedic applications. As part of this agreement, Smith & Nephew gained rights to market, sell and distribute Durolane single-injection hyaluronic acid therapy (approved in Europe and Canada).

Nonoorthopedic units had mixed results. The Endoscopy segment grew 9% in 2006, adding $665 million to the company's total sales. Some of its notable launches included the Calaxo Osteoconductive Interface Screw, the Bioraptor Hip Suture Anchor, the Hip Positioning System and the Kinsa Suture Anchor. In addition, the company launched digital products, such as the 660HD Image Management System and the Condor Control System.

Advanced Wound Management had a flat year, with $698 million in sales, a 1% increase. The division launched enhanced Allevyn NonAdhesive dressings in Europe, which expands upon the Allevyn Adhesive and Sacrum introduced in early 2006.

In terms of total revenue for Smith & Nephew, nearly half of all sales occurred in the United States, which contributed nearly $1.4 billion, an 8% increase since 2005. Europe contributed $867 million, a rise of 6% over the last year. Other regions, including Japan, added $547 million to the bottom line, reflecting a 12% increase

In attempts to bolster its sales in Europe, Smith & Nephew shelled out $72 million in July 2006 for OsteoBiologics Inc., which markets bioabsorbable bone graft substitutes and provides the only off-the-shelf bioabsorbable implant for articular cartilage repair on the European market.

In legal news, Smith & Nephew was granted a favorable court ruling against Synthes in October 2006. The dispute drew its roots in November 2002, when Smith & Nephew brought Synthes to court on issues related to patent infringement. A permanent injection mandated that Synthes could no longer sell or promote the Synthes Trochanteric Fixation Nail and Proximal Fixation Nail products in the United States for the use of repairing intertrochanteric fractures.

Of course, the year wouldn't complete for the orthopedic industry, it seems, without a subpoena for the major players. Smith & Nephew was one of five companies in the industry to receive subpoenas from the US Attorney's Office concerning possible antitrust law violations relating to the sale of implants. Investigations are ongoing.

The year wrapped up with Smith & Nephew expressing interest and then terminating speculation that it would merge with Biomet Inc. and become one business. Biomet has since been the target of a private equity group (for more information, read Top of the News on page 12).

Foreseeable change is in the air for Smith & Nephew, with the first half of 2007 reflecting a time of executive realignment, more product launches and key acquisitions.

Major switches in executive posts were unveiled in early 2007, with the most significant announcement being that Smith & Nephew's chief executive, Sir Christopher O'Donnell, would retire on July 31. A nearly 20-year employee of the company who served in his post since 1998, O'Donnell was responsible for streamlining the company from nine divisions to its current four. His replacement is David Illingworth, former COO, who assumed responsibility as chief executive on July 1.

In the first half of 2007, Smith & Nephew's Advanced Wound Management business hit the ground running in mergers and acquisitions. In January, the division announced an agreement with UDL Laboratories Inc., a subsidiary of Mylan Laboratories Inc., to exclusively distribute Biobrane Biosynthetic Wound Dressing outside the United States. In line with the company's expansion initiatives, the Advanced Wound Management division announced in March an agreement with Covalon Technologies for its advanced range of collagen dressings and became the sole distributor of ColActive.

Additionally, in May, the division agreed to purchase BlueSky Medical Group Inc. for $15 million (plus additional payments depending on performance). BlueSky manufactures negative pressure pumps and wound dressing kits. According to Smith & Nephew, its strategy in purchasing this company is to enter the "fastest growing segment of the advanced wound care market."

In the same month, Smith & Nephew entered into a global distribution agreement with Teknimed SA to distribute, market and sell Teknimed's Spine Fix bone cement product (for treatment of spinal compression fractures) in North America, Europe and Australia.

Most recently, Smith & Nephew acquired Plus Orthopedics Holding AG, a private Swiss company, in June, for $889 million. According to Smith & Nephew, this purchase will double the company's share in the European reconstruction market, and the combined company will become the third largest orthopedic business in Germany. The acquisition also increases Smith & Nephew's presence in Asia. Plus Orthopedics, an implant manufacturer, had $300 million in revenues in 2006.

19 Hospira $2.6 Billion

KEY EXECUTIVES:

Christopher B. Begley, CEO

Terrence C. Kearney, COO

Thomas E. Werner, Sr. VP, Finance, and CFO

Edward A. Ogunro, Ph.D, Sr. VP, R&D, Medical Affairs, and Chief Scientific Officer

Brian J. Smith, Sr. VP, General Counsel and Secretary

NO. OF EMPLOYEES: 15,000

WORLD HEADQUARTERS: Lake Forest, IL

According to the company's Web site, Hospira's name, which was chosen by its employees, was derived from the words hospital, spirit, inspire and the Latin word spero, which means hope. And the company's upward climb during the past couple of years shows that hope--and dedication to achieving long-term goals--has paid off.

Since its spinoff from Abbott Laboratories in 2004, the company has focused on a strategy of investing for growth and improving margins and cash flow. While Hospira had some ups and downs during 2006--with somewhat flat numbers for the first three quarters of the year--the company achieved an upswing in the fourth quarter (ended Dec. 31) with a 9.3% increase compared with the same quarter in 2005. In addition, that quarter had a nearly 80% boost in profit as net income jumped from $26.6 million in fourth-quarter 2005 to $47.4 million in the same period of 2006.

Overall net sales in 2006 grew 2.4% to $2.69 billion (compared to $2.63 billion in 2005), which was better than the 0.7% decrease seen in 2005 when compared with 2004. US sales were responsible for 83% of total sales in 2006.

With the company reaching its long-term goals sooner than expected since its spinoff, Hospira's CEO, Christopher Begley, said in the annual report that the company is now looking to set higher standards, including achieving "higher single-digit growth rates."

The year 2006 marked a time during which the company invested in an IT infrastructure, expanded R&D initiatives and added new product pipelines. The company's Specialty Injectable Pharmaceuticals division launched 10 new products, including several injectable generic products. While the division encountered fewer sales in 2006, having gone from $845 million in 2005 to $808 million in 2006, the company said this decrease was a result of Hospira's 2005 termination of the Berlex imaging agent distribution agreement. When looking at the numbers excluding Berlex, the division actually increased sales, the company said.

In the Medical Management Systems division, the company estimated that last year, more than 400,000 of its electronic drug delivery pumps were in use. The division had an increase of 7.4% in 2006, totaling $855 million in net sales. (In 2005, the division only grew by 1.7%.) In this division, which includes infusion therapies and supplies, product launches included the VisIV next-generation non-PVC, non-DEHP IV container.

The company also has a contract manufacturing division, which held steady in 2006 but expects to see a slight slowdown in 2007, as several contracted products have lost or will lose patent protection this year. The decreased demand could negatively impact 2007 by about $50 million, the company said.

The manufacturer of hospital products, with 18 manufacturing plants, has been busy re-aligning its operations over the past year or so. Hospira closed its Donegal, Ireland facility late in 2006, and expects to close its Ashland, OH facility sometime this year. In addition, its Montreal, Canada facility will close in 2008, and production will be phased out of the company's North Chicago, IL facility by 2010. In line with the planned closure of the Chicago facility, Hospira began a $60 million expansion at its McPherson, KS facility in 2006 to accommodate the activities that will be shifted there when the Chicago operations cease.

As part of its growth strategy, Hospira also has been strengthening its profile through collaborations and acquisitions. The company acquired Australia-based BresaGen Ltd. for $17.1 million in the second half of 2006. BresaGen offers Hospira a biogenerics line of pharmaceuticals, including protein and peptide manufacturing and cell line development capabilities.

In November, Hospira also formed an alliance with German-based STADA Arzneimittel AG and BIOCEUTICALS Arzneimittel AG.

A large purchase was set in motion at the end of 2006 and came to fruition in February 2007, when Hospira completed its acquisition of Australia-based Mayne Pharma Ltd. for approximately $2 billion in cash. Mayne will offer Hospira numerous oncology products, among others, to the company's portfolio and expand the company's presence globally, the company said. Operating under the Specialty Injectable Pharmaceuticals division, this acquisition will contribute half of the division's sales moving forward, according to Begley. In addition, it is projected double sales outside the United States.

Thus far, 2007 is shaping up to be a good year for the company. Hospira forecast 2007 sales in the range of $3.4 billion to $3.48 billion. In a call to analysts in late February, the company said it expected sales of its infusion therapies to grow by 3% to 4%, but even more impressively, it forecasted sales of medication management systems to grow by about 20% by the end of the year.

For the first quarter of 2007, ended March 31, the company already showed signs of its newfound strength, having grown net sales 17.8% to $782.8 million compared with $664.3 in the same period in the prior year.

Product launches have been implemented to help the company achieve its goals. In April 2007, the company launched a new wireless platform for its medication infusion devices, including its Plum A+ single-channel infusion device and plans to add it to its Plum A+ 3 triple-channel device, LifeCare PCA patient-controlled analgesia system and Symbiq infusion system later this year.

"Hospira's year is off to a good start," Begley said. "We continued to advance the business during the quarter and remain on track with our earnings expectations for the full year. We continue to believe that 2007 will mark another year of significant progress for Hospira, as we build on the momentum we've created by executing our growth strategies."

20 Beckman Coulter $2.5 Billion

KEY EXECUTIVES:

Scott Garrett, President and CEO

Mike Whelan, Group VP, High Sensitivity Testing Group

Scott Atkin, Group VP, Chemistry, Discovery and Automation Business Group

Bob Kleinert, (Acting) Group VP, Cellular Business Group

Pam Miller, Sr. VP, Supply Chain Management

Russ Bell, Sr. VP and Chief Scientific Officer

Bob Boghosian, Sr. VP, Quality and Regulatory Affairs

NO. OF EMPLOYEES: 10,340

WORLD HEADQUARTERS: Fullerton, CA

Like a roller coaster, 2006 was a series of twist and turns for Beckman Coulter, a manufacturer of biomedical testing instrument systems, as the company faced and overcame various challenges in its financial performance. With shaky numbers reported in the first half of of the year, the company proved itself capable of finishing the year on a positive note.

With a focus on immunoassay, clinical laboratory automation, geographic market expansion and molecular diagnostics, Beckman Coulter reported revenue of $2.53 billion in 2006, up 3.5% from FY 2005. About 75% of the company's revenue came from sales in the clinical diagnostics market.

The company is divided into four main product areas, which include cellular systems, chemistry systems, immunoassay systems and discovery and automation. Each sector was valued at $806.3 million, $677.1 million, $484.4 million and $560.7 million, respectively, in sales for 2006. Products contributed $2.1 billion to overall sales in 2006, with services rounding out the balance. Beckman Coulter's product stronghold is immunoassay testing, which in the past few years has been the company's primary growth driver and an area where most high-value tests come to market.

Product highlights in 2006 included the introduction of the UniCel DxC 600i, which combines chemistry and immunoassay into a consolidated system, and the AutoMate 800 system, which has the ability to automate sample preparation in the clinical laboratory.

Looking back at the start of FY 2006, sales took a slight hit in the first quarter, but the company's income remained undeterred. In the first quarter, ended March 31, sales were down 1.2% from FY 2005 to $569 million. The loss was attributed to a previously announced shift in a leasing policy towards more operating-type leases. Despite the negative effects of the leasing policy change, net earnings were $32.6 million. Net earnings in the United States increased 5.1% from the first quarter of 2005. International sales, however, were not as affirmative and decreased 3.2% from the first quarter of 2005.

Shortly after the close of the first quarter, Beckman Coulter resolved an outstanding legal dispute with Applera Corp. related to claims of certain Beckman Coulter patents and Applera's allegations of breach of contract with respect to certain licensed technology. Under terms of settlement, Beckman Coulter would grant royalty-bearing licenses to Applera for its patents related to replaceable gels for capillary electrophoresis instruments and DNA sequencers and to its patent for a heated lid for thermal cyclers. Applera would grant Beckman Coulter licenses bestowing rights in the diagnostics market to its patent for nucleic acid sequencing and real time thermalcycling.

By the second quarter of 2006, which ended June 30, quarterly revenue took a minor hit and went down .4% to $616 million from 2005's second quarter.

In July 2006, Beckman Coulter remained steadfast in its efforts to improve financial performance. The company sold its minority equity investment in APG to Applera for $50 million. In the same month, Beckman entered an agreement with Quest Diagnostics Inc. to have its cellular technology automate Quest's hematology line. Also in July, Beckman Coulter acquired a product license for all real-time polymerase chain reaction (PCR) patents and pending patent applications owned and controlled by Roche Diagnostics. Beckman Coulter shelled out a license fee of $27.5 million to Roche.

Beckman Coulter finally made a turnaround in the third quarter, ended Sept. 30, with revenue up 6.4% to $631 million.

In October, Beckman Coulter signed an agreement to acquire Lumigen, Inc., a manufacturer of novel detection chemistries for high-sensitivity testing in clinical diagnostics and life science research, for a reported $185 million.

By the fourth quarter, which ended Dec. 31, 2006, Beckman Coulter stayed on its positive financial track with reported revenue of $712 million, up 8.6%.

If the first half of 2007 is any indication, the company will undergo a series of changes this year with the decision to close of one of its facilities, various acquisitions and newly established agreements.

In January, Beckman Coulter announced the closure of Palo Alto, CA operations by the end of 2008 in an effort to reduce operating costs. The facility develops and manufactures centrifuges, a major product line in the company's Discovery and Automation product area. The company said it would shift operations to other Beckman Coulter facilities.

Beckman Coulter, through acquisitions and partnerships, has been able to boost its product offerings in the first half of 2007. With the acquisition of Diagnostic System Laboratories, Inc., Beckman Coulter received an exclusive license in April to manufacture and market Access Inhibin A, an automated assay for quantitative determination of dimeric inhibin A levels in human serum and plasma.

Also in April, Premier Inc. and Beckman Coulter formed new agreements in which the healthcare purchasing network will provide a full range of Beckman Coulter's core laboratory systems and supplies.

In May, Beckman Coulter and Bio-Rad Laboratories extended their development and manufacturing agreement related to immunodiagnostic testing for blood virus and infectious disease. As part of the eight-year extension, Bio-Rad will develop new immunoassays for Beckman Coulter's Unicel and Access immunoassay systems.

The company has remained in the spotlight this spring over its battle to acquire Inverness Medical Innovations Inc. After initially offering $85 a share, Beckman Coulter was challenged by Biosite, which swooped in with a $90 per share offer. Although Beckman Coulter sweetened its initial deal by rising to the $90-per-share purchase price, ultimately Biosite emerged the victor after it upped its offer to $92.50 a share and Beckman Coulter bowed out. Had the company won the bid, it would have paid about $1.67 billion in the deal.

20 Kodak Health Group $2.5 Billion ($13.3B Total)

KEY EXECUTIVES:

Antonio M. Perez, Chairman and CEO

Frank S. Sklarsky, EVP and CFO

Ted McNeff, Director, Worldwide Operations, COO and VP

Kevin J. Hobert, Sr. VP and President of Kodak's Health Group

NO. OF EMPLOYEES: 40,900

WORLD HEADQUARTERS: Rochester, NY

Conducting a review of the Kodak Health Group's 2006 performance in mid-2007 is much like profiling a company s CEO after he or she already has moved on to another organization. In December, Kodak announced that it would sell its healthcare imaging arm to a subsidiary of Toronto, Canada-based Onex Corp., one of Canada's largest investment firms.

Under terms of the agreement, Kodak received $2.35 billion, plus up to $200 million in additional future payments if Onex achieves certain returns with respect to its investment. The health imaging business-including medical solutions, dental systems and molecular imaging--had reported two straight years of quarterly losses. Kodak stressed that the 8,100 employees would remain part of they newly spun-off organization. Kevin Hobart, president of Kodak's Health Group, along with a majority of the company's management, will remain under the new ownership. On a side note, Kodak said it would be laying off a significant portion of its workforce in 2007 as part of a cost restructuring plan.

Soon after the purchase was announced, the company's name was changed to Carestream Health, Inc. In 2005, Kodak began using the Carestream name for a line of its digital medical imaging and IT products.

"Kodak's Health Group is a business with significant market presence and intellectual property assets," said Antonio Perez, Kodak's chairman and CEO. "This sale maximizes shareholder value by obtaining a full and fair valuation for this business, and allows Kodak to increase its financial flexibility. We now plan to focus our attention on the significant digital growth opportunities within our businesses in consumer and professional imaging and graphic communications."

Perez had floated the idea of selling the division in May 2006. The deal with Onex was announced in January and closed on April 30. In addition to refocusing Kodak on its core businesses, Perez also said increasing competition in the medical imaging arena made the divestiture a good move for the company. Competitors in health imaging include GE Healthcare, Siemens AG and Philips Electronics NV.

For fiscal 2006, Kodak's Health Group reported revenue of $2.5 billion, down from nearly $2.7 billion in 2005. Gross profit for the Health Group was $912 million for 2006 as compared with $1 billion for the year prior, representing a decrease of $109 million, or 11%. Kodak's overall sales have slipped in recent years as well. Revenue was $13.3 billion in 2006, compared to $14.3 billion in 2005, a 9% decrease. Domestic and international sales slipped 9% and 6%, respectively. Gross profit was $3.4 billion for 2006 as compared with $3.6 billion for 2005, representing a decrease of $250 million, or 7%.

In one of the first product announcements as Carestream, the company rolled out what its calls the first integrated digital medical imaging system featur ing a portable X-ray generator and computed radiography system. The device was designed in conjunction with Siemens Medical Solutions and is available in the United States and Europe. The company said more than a dozen customers have placed orders for the KODAK Point-of-Care CR-ITX 560 System since it began shipping in May. The system is scheduled for availability later this year in China and other countries.

According to Carestream, the system is ideal for a wide range of healthcare facilities--including hospitals, trauma units, clinics and nursing homes--where immediate capture and access to patient images at the point of care is a vital part of accurate, time-critical diagnoses.

"Not only does the CR-ITX 560 eliminate the need to carry cassettes to remote CR readers, it also enables technologists to verify image quality at the patient's bedside," said Michael Marsh, president, Digital Capture Solutions, Carestream Health.

22 Olympus Medical Systems $2.4 Billion ($8.6B Total)

KEY EXECUTIVES:

Tsuyoshi Kikukawa, Representative Director and President

Masaaki Terada, Director, St. Exec. Managing Officer

Tsuyoshi Kikukawa, President, Olympus Corp.

Haruhito Morishima, President, Olympus Medical Systems Corp.

Rick Harbuck, Group VP, Olympus America, Medical Systems Group

Michael C. Woodford, Exec. Managing Director, Olympus Medical

Systems Europa GmbH

NO. OF EMPLOYEES: 33,022

WORLD HEADQUARTERS: Tokyo, Japan

For the year ended March 31, 2006, overall net sales for Olympus Corp. exceeded $8.6 billion, up 20.2% from the prior year. FY 2007, which closed at the end of March, didn't quite measure up to the gains seen in 2006 but did close with an 8.6% gain.

Solid financial growth and a wide array of new product offerings contributed to a steady year for Olympus Medical Systems, which continues to explore new methods on expanding its reach domestically and overseas.

Olympus Medical Systems obtained solid marks with 15.5% growth of $2.35 billion reported in net sales in FY 2006. The bulk of sales came from overseas, with $1.7 billion attributed to international sales and more than $600 million in sales reported domestically. The largest growth between FY 2005 and FY 2006 occurred in Asia (48.9%), with doubledigit increases also seen in North America (16.9%), Japan (11.3%), Europe (10%) and other regions (27%).

The company closed its FY 2007, ended March 31, with sustained growth in net sales totaling $2.7 billion, a 17% increase from FY 2006. Once again, the company achieved a double-digit increase (22.2%) overseas, but sales were flat (2.5% growth) domestically.

The company's stronghold in the endoscope product line reaped 18.5% growth in FY 2006, reaching $1.5 billion in sales. In FY 2007, sales grew another 22% over the prior year, reaching $1.8 billion. Sales of minimally invasive products, which include surgical endoscopes and endo-therapy devices, grew 10.1% to $806 million in FY 2006 and climbed another 7.2% in FY 2007 to $836 million.

New products continue to fuel the company's growth. For example, at the end of 2006, Olympus Medical Systems set its sight on accelerating the process of bringing the Olympus 5.5 mm hysteroscopy system to market for Conceptus, Inc.'s Essure, a permanent birth control system, by establishing a strategic alliance. The Essure is the first hysteroscopy-based sterilization method that has received FDA approval in the United States.

In addition, early 2007 brought the launch of Olympus's new Endo-Flush Endoscope Flushing Pump EFP250. Released in February, the pump replaces manual flushing by using a syringe with an automatic pump in the cleaning process.

In more recent product news, in June, Olympus Medical Systems added the Single Balloon Enteroscope System to its list of product offerings to support endoscopic diagnosis and the treatment of conditions in the small bowel area. A month earlier, Olympus and VisEn Medical Inc. also announced three new types of VisEn In Vivo Near Infrared Fluorescence Probes. The probes were made available in Japan and four other Asian markets. Parent company Olympus Corp. has pursued overall expansion by opening two new eco-friendly facilities. The Mishima Facility in Sunto-gun, Shizuoka Prefecture, which opened in April 2007 in Japan, now houses development, quality assurance and customer support operations for Olympus Corp.'s diagnostic business, among other uses. (The diagnostic business, which falls into the company's Life Sciences division and encompasses Olympus's blood analyzers, had a slower climb in FY 2006, with sales only growing by 8.7% to just under $400 million.)

In addition, KeyMed Ltd., a consolidated subsidiary of the Olympus Corp. that manufactures medical and industrial equipment, established a new plant for its medical devices at Southend-on-Sea in the United Kingdom in May 2007.

22 Synthes $2.4 Billion

KEY EXECUTIVES:

Hansjorg Wyss, Chairman, CEO

Michel Orsinger, President, COO

Robert Donohue, CFO, President, Synthes Canada

NO. OF EMPLOYEES: 8,451

CORPORATE HEADQUARTERS: West Chester, PA

With multiple additions to its product line and a consistent focus on international growth, Synthes, a Swiss medical device manufacturer with US headquarters in Pennsylvania, achieved double-digit sales in its trauma, spine and cranio-maxillofacial (CMF) lines. For FY 2006, net sales were $2.4 billion, up 15.1% from 2005.

Sales in North America were higher than any other division and contributed $1.5 billion toward the company's overall total. Global sales presented remarkable figures in FY 2006 as well, with products in Europe, Asia Pacific and various other countries achieving sales of $519 million, $220 million and $127 million, respectively.

With the addition of 824 new employees last year, Synthes is climbing the ladder to continued growth--this progression follows a similar pattern seen in 2005, when the company increased its workforce by nearly 14%.

Each of the company's business units had noteworthy achievements in 2006.

Synthes' trauma unit, the company's largest division, sustained a market share of 55%, aided by the introduction of 40 new products in 2006. The expansion of the Locking Compression Plate (LCP) system was an integral factor in sustaining growth. Since 2002, Synthes has introduced 32 different LCP product lines and, in the fourth quarter, expanded these existing systerns. In intramedullary nailing, the Expert Lateral Femoral Nail was the main market launch in FY 2006. The introduction of the Headless Compression Screw in the sub-segment for mini-fragments was characterized by the company as another important highlight.

Synthes' CMF division maintained a 50%-plus market share in North America, with one of the top growth drivers being the Low Profile Neuro System. However, introductions of the Sternal Fixation System, the Patient Specific Implant and the PlusDrive System also contributed to the company's success.

Spine growth was derived from the Interbody Fusion, Anterior Thoracolumbar, Cervical and Biomaterials product portfolios. Synthes' spinal division concentrated its efforts on the launch of its Prodisc-L artificial lumbar disc after the FDA approved the device for US markets (it already was available in Europe). Synthes reported that in 2006, the company introduced more high-impact spine products than any previous year.

Along with product initiatives, Synthes strengthened its market presence in other ways. While continuing its ongoing collaboration with the AO Foundation, Synthes acquired various assets of the group, including the Synthes trade names, brands, as well as patents and know-how, in August. In addition, Affinergy Inc., a Duke University spinoff with a proprietary site-specific biological delivery system, signed an exclusive development and license agreement with Synthes in September to work across all three of Synthes' markets.

The company received some mixed news last fall regarding a patent infringement lawsuit. In early October, a judge ruled that Synthes' Trochanteric Fixation Nail (TFN) devices and Proximal Femoral Nail (PFN) products infringed on a Smith & Nephew patent. However, later that month, the court amended the prior decision by allowing Synthes to continue selling TFN devices with the caveat that the company could not sell or promote the use of the present TFN products to treat intertrochanteric fractures.

Looking at 2007, the company faced some upheaval with a notable realignment in executive management. Michel Orsinger, former president and COO of the company for the past two-and-a-half years, was promoted to the post of CEO in April. Synthes' former CEO, Hansjorg Wyss, will remain as chairman of the board.

Regarding the future, Synthes pointed out in its 2006 annual report that it has never achieved less than 10% organic sales growth and does not expect 2007 to be any different. The beginning of 2007 already reflects higher net sales of $658 million reported in the first quarter, an increase of 14.2% from the same period last year. The company credits its expanding product lines in all three of its divisions as the leading catalyst.

24 Terumo $2.2 Billion

KEY EXECUTIVES:

Takashi Washi, Chairman

Akira Takahashi, President

Takahiro Kugo, Sr. Managing Executive Officer

Hachiro Hara, Sr. Managing Executive Officer

NO. OF EMPLOYEES: 11,572

WORLD HEADQUARTERS: Tokyo, Japan

Acquisitions and partnerships made it a defining year for Japanese medical device manufacturer Terumo Corporation, which boosted its sales by 7.4% over the prior year in the midst of corporate expansion in FY 2006 and beyond.

Terumo manufactures more than 1,500 medical products in its four Japanese-based factories and has 31 other locations throughout the world. The company's North American headquarters is located in Somerset, NJ. With a strong international presence that shows no sign of ceasing, Terumo had sales of $2.18 billion in FY 2006, ended March 31, 2006. Net income was $286 million, up 13%.

With FY 2007, ended March 31, having closed, the company shows continued strength in annual performance. While FY 2006 had shown an increase of 7.4% over FY 2005, the company managed to grow sales by 11.9% in FY 2007, with a total of $2.362 billion.

Each of the company's business segments have continued to grow, albeit some more so than others. Sales in the company's Catheter and Cardiovascular System segment have grown dramatically, with a 19% rise from $785 million in FY 2006 to $935 million in FY 2007. In addition, the company's largest source of sales, the General Hospital Products division, grew from $1.15 billion in FY 2006 to $1.18 billion in FY 2007. The Home Health Care Products division's sales were just about flat. The company, which does not disclose individual product sales, said in a recent Web presentation that its top performers for FY 2007 were its cardiovascular systems, angiographic catheters and syringes.

The company remained steadfast in its effort to increase growth initiatives in early 2007. In January, the company completed its purchase of Chile-based company Salymed Ltda. and renamed it Terumo Chile Ltda. Since 1980, Salymed Ltda. had been the exclusive distributor of Terumo in that market and has sold syringes, blood bags and cardiovascular systems. Terumo already has 100% owned subsidiary distributors in Mexico and Brazil, and, with the addition of another overseas affiliate, the company hopes to further strengthen its presence in the Latin American market.

Terumo continued its shopping spree in March, when its subsidiary Vascutek Ltd. acquired the tissue heart valve division of Kohler Chemie Ltd. Vascutek Ltd. developed a biological valve conduit (made of biological valve and synthetic vascular graft), BioValsalva, for aortic root repair.

During this time, Terumo announced the opening of its long-anticipated new production plant in Vietnam. The company will use this facility for operations pertaining to disposable medical devices, including closed infusion systems and infusion sets. With Japan and other Asian markets a strategic focus for the company, two other plants are planned to be built on the same site.

A month later, Terumo launched a joint venture with Olympus Corp. and Olympus Biomaterial Corp.. to pursue specialization in the biomaterials market. Olympus Biomaterial Corp., which focuses on biomaterials and regenerative medicine, was integrated with Terumo's collagen business and renamed Olympus Terumo Biomaterials Corp.

Looking ahead, the company is in the midst of awaiting CE Mark approval to launch its Norobi drugeluting stent in Europe. (The company also received a CE Mark for its Duraheart left ventricular assist system in February.)

24 Alcon $2.2 Billion ($4.9B Total)

KEY EXECUTIVES:

Cary Rayment, Chairman, President and CEO

Jacqualyn Fouse, Sr. VP and CFO

Kevin Buehler, Sr. VP and Chief Marketing Officer

Gerald D. Cagle, Sr. VP of R&D

Andre Bens, PhD, Sr. VP, Global Manufacturing and Technical

Operations and Chief Scientific Officer

NO. OF EMPLOYEES: 13,000

WORLD HEADQUARTERS: Hunenberg, Switzerland

Alcon may be majority owned by Nestle, but you won't find a chocolate bar or bag of Purina Dog Chow in sight--though sight is the key word we're looking for. Alcon is a manufacturer of ophthalmic surgical devices and pharmaceutical products, in addition to a consumer vision care line of solutions and eye drops.

Based in Hunenberg, Switzerland--with US operations in Fort Worth, TX, where it originally was founded--the company had a strong year with particularly rosy profit picture.

Alcon reported sales of $4.9 billion for fiscal 2006, compared to $4.5 billion in 2005. Net earnings jumped significantly to $1.4 billion, compared to $931 million for fiscal 2005, a 50% increase. Sales in 2006 were balanced with a near-even split between sales generated in the United States and in international markets, the company said. While all major regions contributed to growth, emerging markets were the fastest growing part of Alcon's business, growing 21%. Emerging markets now account for 14.6% of its sales, and the company said markets such as China, India, Russia and Latin America retain significant potential for future growth. Developed markets, which represented 85.4% of Alcon sales in 2006, grew at a combined rate of 10.7%.

Though growing 9.3% for 2006, the company's surgical division lagged behind its pharmaceutical (13.5%) and consumer vision care (17.4%) counterparts as sources of overall sales expansion for the year. Surgical sales increased to $2.2 billion in 2006, representing faster growth (by about two times) than the overall market. According to Alcon, the average annual growth rate for its surgical product line has been 10.2% during the last five years.

The company said its strategy for the surgical group is to offer a complete line of products for all aspects of cataract, vitreoretinal and refractive surgery, allowing it to meet most of an eye surgeon's needs. In particular, Alcon's AcrySof series of intraocular lenses for cataract surgery experienced sales growth of 16.2%. Sales of the AcrySof IQ lens jumped 163.2%, while sales of the multifocal AcrySof ReSTOR lens increased 88.5% to $102.2 million--though the company noted sales growth softened during the year as the US market for presbyopic-correcting lenses flattened. Alcon maintains that vitreoretinal products represent an area of consistent long-term growth and that it is the market leader in products for surgery on the back of the eye.

In July last year, Alcon reached a settlement with Santa Ana, CA-based Advanced Medical Optics (AMO). The settlement brought an end to all pending lawsuits, including an AMO initiated case concerning Alcon's Infiniti vision system and the Advantec and Everest software upgrades for its Legacy brand surgical system, as well as three suits filed by Alcon against AMO concerning AMO's Sovereign, Sovereign Compact and Prestige surgical systems in addition to various viscoelastic products. Resolution of the legal activities also allowed both parties to continue marketing their current phacoemulsification product lines on a royalty-free basis and contained provisions designed to reduce the likelihood of patent disputes on future product offerings. Alcon paid AMO $121 million.

"This comprehensive settlement resolves numerous complex patent issues involving our two companies," said Cary Rayment, Alcon's chairman, president and CEO, following the settlement. "Alcon will continue to market all existing phacoemulsification platforms while focusing our development efforts on technological advancements that will continue to revolutionize cataract surgery."

So far, for fiscal 2007, Alcon reported surgical sales rose 10.6% to $581 million for the first quarter (ended March 31). Overall, company sales increased 14.3% to $1.3 billion, with earnings increasing 17% to $346 million.

26 C.R. Bard $2 Billion

KEY EXECUTIVES:

Timothy M. Ring, Chairman and CEO

John H. Weiland, President and COO

Todd C. Schermerhorn, Sr. VP, CFO

Brian P. Kelly, Group VP

Amy S. Paul, Group VP

Brian R. Barry, VP, Regulatory and Clinical Affairs

NO. OF EMPLOYEES: 9,400

WORLD HEADQUARTERS: Murray Hill, NJ

For 2006, C.R. Bard, which develops and markets vascular, urology, oncology and surgical specialty products, kept up its momentum with continued double-digit growth. The company reported net sales of $2 billion, an overall increase of 12%. Net income also was up 17%. The rise was aided by continued double-digit increases in three of its divisions.

The oncology unit had the most impressive increase in sales with 19% growth, achieving a total of $481.3 million. Urology products were up 12%, reaching $587.9 million, while sales of vascular products grew 10% to $479.6 million. Sales of the company's surgical specialties unit rose 7% to $357.4 million.

The company attributed much of its overall success to continued increasing investment in R&D--Bard spent $146 million on R&D in 2006 compared with $114.6 million in 2005, a steep increase from the $53 million spent on R&D in 2001. This steady increase in this type of investment has had a substantial affect on growth, with $500 million in net sales coming from products launched or acquired in the past three years alone. In addition, the company noted that 2006 produced 500 patentable ideas and more than 200 US patent application filings, up 110% and 70%, respectively, from 2005.

In 2006, Bard launched the Sherlock catheter tip location system to help clinicians avoid mishaps when placing a peripherally inserted central catheter in a patient. The complete Sherlock product line continues to expand this year as the company continued to roll out the complete line of products in early 2007 and plans to offer improvements--such as a larger sensing area and an improved user interface--throughout the year.

In other product news, a new disposable version of the Salute fixation system was launched at the end of 2006 to eliminate costs associated with cleaning and re-sterilization of reusable devices. The original product, introduced in 2004, has garnered 25% of the hernia fixation market in the United States alone.

In conjunction with the company's R&D growth initiative, C.R. Bard opened two new facilities. In 2006, a 200,000-square-foot manufacturing facility opened its doors in Humacao, Puerto Rico to support production growth and new product acquisitions. The facility currently manufactures products for the Davol unit, Bard Peripheral Vascular and Bard Access Systems. In early 2007, a 104,000-square-foot sterilization facility opened in Madison, GA to help facilitate quicker sterilization for all the company's products, as the site's location is only a few miles from Bard's global distribution center.

Acquisitions also figured heavily into Bard's strategy for continued growth. In January 2006, the company acquired self-expanding nitinol stent technology from Gainesville, FL-based Parallel Simulation Technology LLC. Along with this acquisition, Bard purchased Venetec International Inc., a manufacturer of StatLock catheter securement products, in March 2006 for $166 million. Bard's medical division, located in Covington, GA, now markets the line.

In similar fashion, Bard formed a strategic allegiance in January 2007 with TyRx Pharma Inc., a privately held company in Monmouth, NJ, for some of its TyRx technologies. TyRx specializes in combination medical products utilizing biomaterials.

At the end of 2006, Bard patched up some unfinished business by reaching a $49 million settlement agreement with Rochester Medical Corporation, a disposable device manufacturer, that filed suit in March 2004 against C.R. Bard and several other companies, alleging anti-competitive conduct in the markets for standard and anti-infection Foley catheters and urethral catheters.

The future looks bright for Bard, if its first-quarter 2007 financials are any indication. For the quarter ended April 24, net sales were $528.2 million, an increase of 13% from the year prior. This year is a major milestone for the company as well: Bard is celebrating its 100th anniversary.

26 Biomet $2 Billion

KEY EXECUTIVES:

Jeffrey R. Binder, President and CEO

Daniel P. Florin, St. VP and CFO

J. Pat Richardson, VP, Finance and Treasurer

William C. Kolter, President, Orthopedics

Glen A Kashuba, Sr. VP and President Trauma and Spine

Robert E. Durgin, Corporate VP, Global Regulatory Affairs

NO. OF EMPLOYEES: 6,300

WORLD HEADQUARTERS: Warsaw, IN

The past year has been one of change for Biomet Inc. From high-profile management changes, to questions of stock option impropriety, and ongoing takeover deals, Biomet made its fair share of headlines in 2006 and continues to do so in 2007. In the midst of the various corporate intrigue, the Warsaw, IN-based company showed steady, if modest, growth in overall net sales and profits for fiscal year 2006, which ended May 31, 2006.

For fiscal 2006, Biomet reported $2 billion in net sales, compared to $1.9 billion for 2005. Net income for 2006 was $406 million, up from $351 million for the previous fiscal year. By product segment, reconstructive device sales grew 10% to $1.38 billion; fixation sales increased 2% to $251.4 million; spinal product sales experienced growth of 4% to $222 million; and "other product" sales increased 5% to $173 million.

In particular, Biomet attributed its strong knee sales growth of 14% in the United States and 13% worldwide to continued demand for its Vanguard Complete Knee System and the Oxford Unicompartmental Knee System. In 2006, the company introduced the Vanguard SSK (Super Stabilized Knee) Revision System.

Hip sales increased 11% worldwide and 8% in the United States during fiscal year 2006. Hip products driving the year's expansion, according to Biomet, were the M2a-Magnum Large Metal Articulation System, the Taperloc Hip Stem, ArComXL Polyethylene and the C2a-Taper Acetabular System. Additionally, ReCap Total Resurfacing System sales were strong in Europe during fiscal year 2006, Biomet said. Also in 2006, Biomet received FDA clearance to market Regenerex acetabular cups and augments, which the company expects to drive increased hip sales this year.

On the management front, in March 2006, Biomet founder and CEO Dane Miller abruptly resigned. After almost a year without a permanent chief executive, Biomet announced that Jeffrey R. Binder--a 15-year veteran of the orthopedic device industry--would join the company as president, CEO and a member of the board of directors. Binder replaced Daniel Hann, who served as interim chief executive following Miller's departure. Hann later resigned in the wake of stock option backdating improprieties.

When an option is "backdated," the vesting date on stock options is altered to make them more valuable. The process is not illegal under the stipulation that it is documented properly and reported to investors. An investigation by a special committee covered 17,000 grants to purchase approximately 17 million Biomet shares on more than 500 different grant dates from 1996 through 2006. Biomet restated its most recent annual report to reflect the disparity in the recorded expenses for stock option grants and the actual expenses for the grants, which were estimated at $50 million. The committee reported that most of the options issued during the period in question were not priced at the fair market value on the date of their respective grants.

"The company's chief financial officer and general counsel during the period were or should have been aware of certain accounting and legal ramifications, respectively, of issuing an option with an exercise price lower than the fair market value on the date of issuance," according to the committee, which also noted that Biomet "failed to maintain adequate books and records concerning its stock option grants."

Following the committee's findings, Gregory Hartman, senior vice president of finance and the company's chief financial officer and treasurer, and Hann, executive vice president of administration and a member of the board of directors, resigned in March this year. In June, Daniel Florin joined the company as its new CFO, previously serving as vice president and corporate controller for Boston Scientific.

Most industry analysts, however, see the stock option probe as having a minor impact on the company's overall performance. It certainly didn't keep Biomet from becoming an attractive takeover target.

In December 2006, Biomet announced plans to go private after a group of private equity investors (including Dane Miller) agreed to acquire the orthopedic manufacturer for $10.9 billion, beating an offer from orthopedic rival Smith & Nephew. In May, however, the private equity group, called LVB Acquisition (which includes Texas Pacific, Blackstone Group, Kohlberg Kravis Roberts & Co., and Goldman Sachs & Co.), raised the offer to $11.4 billion after Biomet shareholders rejected the initial $10.9 billion offer for being too low.

Despite transitions in leadership and ownership, Biomet remains focused on expansion. In late 2006, the company announced that it allotted $21 million to expand its operations in Warsaw, which is expected to create another 260 jobs in the area. The first part of the plan calls for the company reconfiguring a 30,000-square-foot building to accommodate the company's spinal implant manufacturing operations. The project, which will take about two years, will cost about $4.2 million and create 100 new jobs. Next, the company will construct a 60,000-square-foot addition. This project will take four years to complete, cost $17 million and create a minimum of 160 jobs. As of press time, it's unclear whether the takeover will alter the company's planned facility expansion.

For the first quarter of 2007, Biomet reported a 5% increase in net sales to $508 million compared to the same quarter of 2006. Net income inched 2% to $102 million. Company officials pointed to strong sales of orthopedic reconstructive devices (9% increase worldwide at $352 million) and dental reconstructive implants. However, sales of Biomet Trauma and Biomet Spine (formerly EBI) were approximately $12 million below management's expectations for the first quarter of fiscal year 2007.

The company has made numerous changes at its Biomet Trauma and Biomet Spine subsidiary, including the appointment of Chuck Niemier, former COO International Operations, as president, and the appointments of a new vice president of finance and vice president of sales.

"We are also making significant progress with the implementation of a new computer system, sales support systems, the in-sourcing of the manufacture of spinal hardware products and expanding the research and development team," said Hann, interim CEO at the time. "Additionally, since May 31, 2005, the company has eliminated over 330 positions at the former EBI operations. We believe that the new management team and infrastructure changes at Biomet Trauma and Biomet Spine will allow the Company to provide greater focus on the spine and trauma markets and to our customers."

Also for the first quarter of 2007 (ended August 2006), worldwide knee sales showed double-digit growth at 11%. Notably, other double-digit gains came from worldwide extremity sales at 12% during the quarter, and dental reconstructive implant sales increased at 11% worldwide. For the first nine months of fiscal 2007, net sales increased 5% to $1.6 billion.

28 Dentsply $1.8 Billion

KEY EXECUTIVES:

Bret W. Wiser Chairman, CEO and President

Christopher T, Clark, Exec. VP and COO

William R. Jellison, CFO and Senior VP

Rachel P. McKinney, Sr. VP, Global Human Resources

James G. Mosch, Sr. VP

Bob Size, Sr. VP

NO. OF EMPLOYEES: 9,400

WORLD HEADQUARTERS: York, PA

Reorganization is the name of the game for Dentsply, which had a turnaround year in 2006. After experiencing a net loss in 2005, the dental manufacturer set its sight on business collaborations and restructuring to enhance growth.

It will be interesting to see where the company is headed in the future, as Dentsply's longtime chairman and CEO, Gary Kunkle, retired at the end of 2006. During his 10-year tenure, sales nearly tripled. Bret Wise, former president and COO of Dentsply, assumed the role of chairman and CEO on Jan. 1.

For 2006, net sales totaled $1.8 billion, a 5.6% rise from $1.72 billion reported in 2005. Net income was reported at $223.7 million. The overall growth in net sales was characterized by steady but unremarkable growth in each quarter of the fiscal year, ended Dec. 31, with percentage increases in the 4.8% to 6.2% range.

With a pivotal focus on specialty dental products, Dentsply has established itself in 22 nations on six continents. The US market contributed 42% of sales in 2006, with Europe following at 38%. Japan added 4% to sales and other parts of the world offered 16%.

Dentsply's specialty product line--consisting of orthodontic, endodontic and dental implant products and materials--contributed the bulk of sales in 2006, at 40% of the share. Dental laboratory equipment added 22% to overall sales, and consumables (eg, impression and restorative materials, anesthetics, bonding agents, etc.) contributed 38%.

According to the company, Dentsply introduces approximately 25 new products each year. Among 2006 product launches were the Cercon Eye, a tabletop scanner for producing digital images of dental prosthetic devices; In-Ovation C, an orthodontic product that uses clear ceramic brackets with arch wire; Radica, a composite system in prosthetics; and XP Bond, which adheres light-cured restorative materials to enamel and dentine without priming.

In terms of the company's other activities, the past year has been marked by major restructuring efforts as Dentsply continues to streamline operations and pursue growth.

In 2006, the US sales force for the consumables division was moved under a single sales organization, referred to as Dentsply North America. The company said this entity has become the largest combined sales force in the market and offers lead sharing, cross marketing and more efficient distribution.

In August, Dentsply sold its injectable anesthetic facility and equipment to Pierrel, a pharmaceutical contract manufacturing and drug development company based in Milan, Italy, for $19.5 million. As a result, Dentsply unveiled plans to outsource production of its injectable anesthetic line and partner with industry leaders in the anesthetic field.

One of Dentsply's most significant moves in 2006 occurred when the company decided to consolidate its US distribution base during the third quarter. With this move, the company now partners with 28 key dealers that formerly were responsible for more than 90% of sales and growth. According to Dentsply officials, this move was made to form closer relationships with these dealers while improving collaboration.

Finally, toward the end of 2006, Dentsply combined its US implant and endodontic divisions into one unit.

Acquisitions also figured into the company's longterm strategy. Last year, Dentsply acquired a 40% interest in Materialise Dental N.V. for its digital dentistry capabilities. In addition, Wise noted in the 2006 annual report that previous acquisitions of European company GAC SA and US-based Raintree Essix and Glenroe Technologies contributed strong growth for Dentsply that year.

Dentsply continues to embark on continued success, with first-quarter results for 2007 reflecting substantial financial growth. Net sales were up 9.7% to $472.9 million, an increase that has been attributed to the sale of specialty products such as implants, orthodontic products and the company's all-ceramic Cercon products. All product lines experienced double-digit sales growth in the quarter ended March 31. Net income was reported at $58.5 million, up 22.6%.

29 Dade Behring $1.7 Billion

KEY EXECUTIVES:

Jim Reid-Anderson, President and CEO

Lance C. Balk, Sr. VP, General Counsel

Randy Daniel, President, Global Customer Management

John M. Duffey, Sr. VP, CFO

David G. Edelstein, Sr. VP, RA/QA/HSE and CIO

Donal Quinn, COO

NO. OF EMPLOYEES: 6,300

WORLD HEADQUARTERS: Deerfield, IL

With a sole focus on clinical diagnostics, Dade Behring continues to break its own records, with $1.74 billion revenue reported in 2006, a 5% jump over 2005.

The company attributed its Dimension product line as the leading revenue driver, since it became the "largest global brand in central-lab diagnostic testing in 2006," according to the company's annual report.

The company is segmented into four core product lines, which include Chemistry/Immunochemistry, Hemostasis, Microbiology and Infectious Disease Diagnostics. Each division contributed $1.1 billion, $317 million, $166 million and $89 million, respectively.

Within the United States, revenue was reported at $805.9 million and internationally, at $933 million. Over the past four years, the company increased R&D spending by 14% annually, indicating the company's commitment to creating new product lines. In 2006, the company's range of instruments grew 6.5% to 40,600.

Dade Behring attributes solid financial growth to its expansive line of products. "An ongoing driver of our success has been new product introductions," said John Duffey, chief financial officer of Dade Behring.

The company's main focus in the second half of 2006 revolved around the launch of Dimension Vista 1500 Intelligent Lab Systems. The company previously received regulatory clearance for the analyzer and numerous tests. The system is the industry's first analyzer for high-volume clinical labs and enables the company to extend its presence in the clinical diagnostics industry. The system doubles the company's market opportunity and enhances its ability to deliver revenue growth, according to Dade Behring officials.

Three new drug tests were launched--the Tacrolimus Test, an automated Ecstasy test and the CardioPhase hsCRP as part of the Dimension product line. According to the company, Dade Behring was the first in the industry to have the hsCRP test cleared by the FDA for both risk assessment of cardiovascular disease and risk stratification for the prognosis of recurrent events.

Dade Behring also introduced the Quadriga BeFree infectious disease testing system for marketplaces outside the United States. Additionally, the BCS XP System was added to its family of coagulation analyzers. Dade Behring also introduced the MicroScan microbiology test panels, with streamlined extended spectrum B-Lactamase (ESBL) tests for confirmation of ESBLs in certain bacteria.

While many companies' strategies include acquisitions, Dade Behring's approach centered around the formation of several partnerships in 2006 and beyond. In November, the company signed a license and cooperation agreement with Euro-Diagnostics, granting rights to Dade Behring for the use of cyclic citrullinated peptides .

This year, Dade Behring already has established two key agreements that will boost the company's future endeavors in clinical diagnostics. The company signed a three-year agreement with Novation. The agreement grants Novation continued access to all of the company's chemistry instruments and reagents.

Additionally, the company signed a multi-year agreement with Premier Inc., which will provide continued access to its entire chemistry and hemostasis diagnostic systems.

Along with these agreements, Dade Behring announced in January that it had a license agreement with Radbound University Nijmegen Medical Center for rights to its new coagulation test, the Nijmegen Hemostasis Assay. In March, a partnership was formed with Immunalysis to distribute four of its prescription medication screening tests (for drugs including oxycodone, tramadol, buprenoprphine and merperidine).

Product rollouts continued in 2007 as well. Dade Behring launched the QCC PowerPak for Dimension systems. In March 2007, the company unveiled plans to distribute drug tests manufactured by Immunalysis.

30 Varian Medical $1.6 Billion

KEY EXECUTIVES:

Timothy E. Guertin, President and CEO

Tai-Yun Chen, Corporate VP and Corporate Controller

Elisha W. Finney, Sr. VP and CFO

Robert H. Kluge, Corporate VP and President, X-Ray Products

J. A. (Andy) Thorson, VP, Business Development

Dow R. Wilson, Exec. VP and President, Oncology Systems

NO. OF EMPLOYEES: 3,900

WORLD HEADQUARTERS: Palo Alto, CA

It wouldn't take one of its imaging systems to create a clear picture of the impressive growth that Varian Medical has realized in the past year. Significant double-digit gains marked the company's record fiscal 2006 performance. The company's technology is focused on cancer therapies and X-ray imaging.

Varian's Oncology Systems business manufactures systems for treating cancer with radiation, including hardware and software for image-guided radiation therapies, as well as brachytherapy (internal) radiotherapy (which involves placing seeds or sources in or near a tumor). Varian Surgical Sciences produces technology for stereo-tactic radiosurgery and neurosurgery for the treatment of cancer and other disorders of the central nervous system.

The company's X-ray Products business manufactures X-ray tubes and flat-panel imagers for CT and other diagnostic imaging, mammography and radioscopic/fluoroscopic imaging.

Tim Guertin, who has been CEO about a year and a half, called 2006 a year of "major transition and rapid growth."

For fiscal 2006 (ended Sept. 29), annual revenues grew 16% to $1.6 billion. Net earnings were $245 million, compared to $207 million in fiscal 2005.

"Robust demand for advanced products for image-guided radiotherapy (IGRT), stereotactic radiosurgery, brachytherapy and filmless X-ray imaging contributed to our growth in net orders, revenues and net earnings during the quarter and the fiscal year," Guertin said. "We ended fiscal year 2006 on a particularly strong note that sets the stage for continued growth in fiscal year 2007 and beyond."

Going forward, Guertin has outlined an ambitious plan to grow Varian into a $3 billion enterprise in the next five years.

The Oncology Systems division reported fiscal year net orders of $1.5 billion, up 13%, with 19% growth in North America and 6% growth in international markets. Gains in Europe were offset by a weak Asian market, the company said.

"North American cancer treatment centers are again leading a major market transition toward IGRT and image-guided radiosurgery," Guertin added. "Our OBI [On-Board Imager] devices together with our linear accelerators are being used more commonly to target smaller tumors more precisely."

The company said that, at the end of fiscal 2006, more than 325 installations of its OBI devices--which allow real-time imaging of tumors while on the treatment couch--were complete or in progress. Guertin said Varian's Trilogy accelerator for both radiotherapy and radiosurgery, as well as our brachytherapy and software products, contributed significantly to the growth in net orders and revenues.

For the company's X-ray sector, sales were $228 million, up 17%. Growth largely was driven by Varian's flat-panel digital detectors for filmless Xray imaging. During the quarter, the company completed construction of a new flat-panel production facility at its Salt Lake City, UT, manufacturing plant.

Fiscal 2007 is shaping up to be a growth year as well--two key acquisitions to date are aiding that growth. In January, Varian Medical completed the acquisition of Accel Instruments GmbH, a privately held supplier of scientific research instruments and proton therapy systems for cancer treatment based near Cologne, Germany. The company paid approximately $30 million.

"With Accel Instruments, we have the opportunity to build a several hundred million dollar business based on improving cancer care with a clinically practical and affordable system for proton therapy," Guertin said following the purchase. In 2006, Accel had approximately $30 million in annual revenues.

In May, Varian completed the acquisition of Bio-Imaging Research, Inc., a supplier of X-ray imaging products for security and inspection. Varian paid approximately $21 million to acquire the privately held business based in Lincolnshire, IL, which will expand its non-medical Xray business.

For the second quarter of 2007 (ended March 30), Varian Medical reported net earnings of $61 million, compared to $56 million for the same period in 2006. Revenues for the quarter rose 7% to $443 million, including $9 million from Accel Instruments.

Varian also reported that Oncology Systems revenues for the quarter were lower than expected due in large measure to a higher percentage of IGRT installations, which require greater site preparation and longer construction cycles. Guertin said the X-ray Products business continued to post excellent results with growth in orders, sales and profits in both tube and filmless X-ray detector product lines.

Due to low growth of orders in Oncology Systems for the first half of fiscal 2007 and longer average times in backlog, the company lowered guidance for the rest of fiscal 2007. The company now expects growth in the low double digits above fiscal 2006. During the first quarter, Varian had predicted growth of 13% or more for the year.
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Date:Jul 1, 2007
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