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Top 30 medical device companies.
Five years. Does it seem like an eternity or quicker than a flash?In the medical technology business--much like life--clearly it dependson your point of view. Perhaps, if you're on the research andproduct development side, it could seem like an excruciatingly longseries of trials and errors as you drive a new device to market. Ifyou're dealing with a product recall regulatory and compliancehurdles, customer relations issues and reengineering challenges, dayscan seem like years.

On the flip side, financial successes can seem fleeting. When
Medical Product Outsourcing launched its inaugural issue in June
2003--our first Top Companies Report--the drug-eluting stent was the
new, industry-changing "blockbuster" device. Until that point,
the pharmaceutical industry had been the land of bottom line-altering
blockbuster products. The drug-coated stent changed all that. Change,
however, is the operative word and we've seen what's happened
to the stent market in five (arguably short) years. It tumbled following
mixed-message studies that longer-term effects of the devices
weren't as safe as originally thought. But the market for the tiny
mesh devices has begun a recent rebound (two new players, Medtronic and
Abbott, have joined early leaders Johnson & Johnson and Boston
Scientific--which should alter the playing field even more). Things
change quickly.

What hasn't changed is the device market's strength.
Though the industry has had to deal with challenges as it matures, solid
fundamentals, a growing international marketplace and a consistent focus
on new product development have fueled expansion.

According to research by Chicago, IL-based Navigant Consulting, the
worldwide medical device market in 2007 was $220 billion, up from $203
billion in fiscal 2006. Some more liberal estimates have even put the
total as high as $270 million. The US device market generated $75.6
billion in revenue for 2007, and a compound annual growth rate of 9% is
expected from now until 2013, according to research firm Frost &
Sullivan.

Factors such as an aging population in North America and Western
European countries and an increase in chronic diseases such as diabetes
bode well for continued near-term success. But, as a review of the
companies on this year's Top 30 list will clearly indicate,
international markets--both as manufacturing and sales
centers--increasingly are helping buoy sales and are expected to do so
even more in years to come. Developing economies in Asia (more than just
China), Latin America and Eastern Europe all provide opportunities.

As you examine the list, you'll also notice that consolidation
continues, and it's not just the big guys gobbling up the startups.
Buyouts and private equity shaped the industry in 2007 with big bucks.
Dade-Behring, a member of past Top Companies lists, was acquired by
imaging and diagnostic powerhouse Siemens. Billion-dollar players such
as Kodak Healthcare (now Carestream), Bausch & Lomb and Biomet
became privately held firms in 2007. Biomet stays on this year's
list as it continues to publish its financial data (though not obligated
to do so). Carestream did not respond to MPO's requests for
information, and Bausch & Lomb declined to participate. And as we go
to press, drug-maker Novartis is making a move to purchase eye-care
giant Alcon for a whopping $39 billion. So, once again, the list is ever
changing.

As you read our report, please take note that while the device and
diagnostic companies are ranked according to sales reported for FY 2007
(though we do provide some 2008 figures to date, where possible), some
may include non-device sales within a division, such as combination
products, drug delivery, software or device-related services. Not all
companies publicly break out just the device portion of total revenues.
We consulted numerous public documents and contacted company officials
as needed to arrive at the best estimates. Also note that foreign
currency conversions were done based on the conversion rate at the end
of the fiscal reporting period being discussed.

The MPO Staff

1 Johnson & Johnson

$21.7 Billion ($61.1B total)

KEY EXECUTIVES:

William Weldon, Chairman and CEO

Dominic J. Caruso, VP, Finance and CFO

Brian Perkins, VP, Corporate Affairs

Donald M. Casey Jr., Worldwide Chairman, Comprehensive Care Group

Nicholas Valeriani, VP, Strategy and Growth

Sheri S. McCoy, Worldwide Chairman, Surgical Care Group

NO. OF EMPLOYEES: 119,200

GLOBAL HEADQUARTERS: New Brunswick, NJ

When it comes to medical devices, there's no ignoring the
800-pound gorilla in the room. The powers that be at New Brunswick,
NJ-based Johnson & Johnson claim their device and diagnostics
businesses make up the world's largest medical technology business.
Certainly, with 2007 revenues in excess of $21 billion (35% of the
company's total sales), there's no arguing with that boast.

In 2007, J&J's device businesses achieved total growth of
7.2% compared with 2006 (domestic sales increased 3.2% and international
sales increased 11.1%--4.6% from operations and 6.5% from
currency).That's impressive expansion in light of a significant
decline in the market for drug-eluting stents (DES), which took a toll
on sales of the Cypher sirolimus-eluting coronary stent manufactured by
the company's Cordis division.

For example, in the second quarter of the 2007 fiscal year, Cordis
sales declined 21% overall due to lower Cypher sales, and US sales were
down 26%.

Despite the declining numbers, J&J is optimistic that the
market is poised to turn around. During the first quarter of 2007--on
Feb. 1--J&J completed the $1.4 billion acquisition of Menlo Park,
CA-based Conor Medsystems, Inc., a cardiovascular device company
developing controlled drug-delivery technology focused on DES to treat
coronary artery disease.

The company recently announced that it plans to file with the FDA
in 2010 for US approval of Cypher Elite, an improved version of
J&J's Cypher stent already on the market. Company officials
also plan to seek European and US approvals for the Nevo
sirolimus-eluting heart stent in 2009 and 2011, respectively.

"We have begun clinical trials on Nevo," said Dominic J.
Caruso, vice president of Finance and chief financial officer, noting
that the company is using sirolimus, which is the drug used on its
existing Cypher stent on the stent platform it acquired when it bought
Conor Medsystems. "It's also a redesign of the stent
itself," he added. Using Conor's reservoir stent technology,
the company can use more than one drug on a stent, including
antiplatelet agents to mitigate the risk of developing blood clots,
which has been a concern with the technology.

Overall, the company's stent sales slid 34% in 2007. J&J
is predicting only 1% compound annual growth for all DES worldwide
between 2007 and 2012 and noted the total market for these devices would
be $4 billion by 2012.

According to J&J, excluding the impact of the DES market
decline, the company recorded total growth of nearly 13% across its
device and diagnostics businesses. Expansion was attributed to its
Vistakon unit's disposable contact lenses; LifeScan's blood
glucose monitoring and insulin delivery products for diabetes care;
Ethicon Endo-Surgery's minimally invasive products; DePuy's
orthopedic joint reconstruction and sports medicine businesses;
Ortho-Clinical Diagnostics' professional products; and
Ethicon's wound care and women's health products.

"We enjoy strong competitive positions across our diverse
franchises, with more than 80% of [medical device and diagnostic] sales
coming from businesses in the No. I or No. 2 market positions,"
William C. Weldon, chairman and CEO, wrote in a letter to
shareholders." Our vision care business surpassed the $2 billion
mark for the first time in its history."

Part of the year's success at J&J was due to a series of
important product launches and regulatory approvals, including US
approval of the Realize adjustable gastric band, a device for treatment
of morbid obesity; the Animas 2020 insulin pump, which the company said
is the smallest full-featured insulin pump on the market; and Genesearch
breast lymph node assay, a novel molecular diagnostic tool for detecting
the spread of breast cancer to lymph nodes while the patient is
undergoing surgery. This assay helps breast cancer patients and their
doctors avoid the challenges of a second surgery to remove cancerous
lymph node tissue following results of a biopsy. It was cited by TIME
magazine as the second leading medical breakthrough of 2007.

"We are well-positioned in 2008 with a robust pipeline and
strategic development programs in orthopedics, biosurgicals, bariatric
surgery, vision care and other major categories," Weldon wrote.

During a June 2008 meeting with members of the investment
community, various company officials outlined their growth expectations
from J&J's medical device units during the next several years,
with orthopedic and surgical care products leading other sectors.

The company expects an average of 6% annual growth in revenue from
its surgical care unit during the next four years, reaching $40 billion
in 2012. Orthopedic products will get a 9% annual boost to $48 billion,
according to J&J's projections.

Sheri McCoy, group chairman of J&J's Ethicon surgical
business, said the company is focusing on developing less-invasive
surgical products and looking to emerging markets to help fuel growth.
More than half of surgical sales now come from outside the United
States, according to McCoy. The focus on international sales has
prompted the opening of a surgical training center in Russia this year,
with plans to open one in Brazil next year. Meanwhile, the company
already has a manufacturing plant in China. The push to tap emerging
markets is a common theme throughout each of the company's
divisions.

Michael Mahoney, the group chairman of J&J's DePuy
orthopedic division, said the unit gets more than 40% of its revenue
from outside the United States and claims the No. 2 spot in the global
market, while retaining the top spot in the domestic market. Brazil,
Russia, India and China had record growth last year, and the company is
making investments to build on that momentum.

"We recognize the potential of the marketplace and see the
opportunity to gain share," Mahoney told analysts. The company has
been introducing a range of new product platforms that include more
durable materials and instruments for minimally invasive surgery. Those
are both necessary to stay on top, he said, as patients in several
segments are increasingly younger, including hip replacement patients,
who are demanding better implants and less-invasive techniques. The
DePuy unit was the largest revenue contributor within the medical device
division, accounting for $4.59 billion in sales in 2007.

Overall, medical device sales are J&J's second-largest
revenue driver--behind pharmaceutical sales.

For the first quarter of 2008, the company continued to report
device and diagnostics growth--however, as seen in 2007, it was limited
by continued slow stent sales. The company recorded $5.7 billion in
revenue for the first quarter, a 7.2% increase compared with the first
quarter of 2007, with operational growth of 1.4% and a positive impact
from currency of 5.8%. Domestic sales increased 0.2%, while
international sales increased 13.8% (2.6% from operations and 11.2% from
currency). Sales, excluding the impact of lower sales of DES, grew
nearly 5% operationally, the company said.

Cordis sales were down 15% operationally, with similar results
domestically and internationally. Cypher sales were approximately $400
million, down 27% on an operational basis versus the prior year. Sales
in the United States of approximately $170 million were down 28%. A
reduction in percutaneous coronary intervention (angioplasty or stent
placement) procedures, a lower penetration rate of DES and lower prices
resulted in an estimated market decline in the United States of
approximately 25% versus the first quarter of 2007, according to Louise
Mehrotra, vice president of Investor Relations.

But not all Cordis news was bad. Growth drivers within the Cordis
franchise include the Biosense Webster electro-physiology business
(cardiac navigation and therapeutic and diagnostic catheters), which
achieved double-digit operational growth in the quarter, with ultrasound
products continuing to be strong contributors. The neurovascular
business also achieved strong growth in the quarter due to the re-launch
of the Trufill DCS Orbit Coil system and the Cordis Enterprise stent in
2007.

According to Mehrotra, the DePuy franchise had operational growth
of 4% when compared with the same period in 2007, with US growth at 2%
and international business growing by 6% operationally. Hip growth on a
worldwide basis was 9%, led by the strong results in the United States.
On an operational basis, worldwide knee growth was 2%, while spine was
flat, she reported. Sales for the company's Mitech sports medicine
business grew 11%.

Ethicon Endo-Surgery achieved operational growth of 6% in the first
quarter of 2008, with US sales growing 3% and sales internationally
growing on an operational basis by 9%. Strong results were achieved in
the energy business due to the success with the harmonic scalpel. In
addition, the Endocutter, a key product in performing bariatric
procedures and advanced sterilization products, also contributed to
growth in the quarter, company officials said during a conference call
with reporters and analysts. Ethicon worldwide sales grew operationally
by 1%, with US sales down 1% and sales outside the Unites States growing
operationally by 3%. Sales of sutures and women's health products
were flat, while meshes and hemostasis devices achieved solid growth.
The diabetes franchise grew operationally by 6% in the first quarter of
2008. The US business grew by 4%, while international grew 8% on an
operational basis. Growth in the United States was driven by the strong
double-digit growth of the Animas pump business. The success of the
LifeScan One-Touch Ultra diabetes testing line has been the major driver
of growth in international markets. J&J's Vision Care franchise
achieved double-digit operational sales growth of 12%, with sales in the
United States increasing 16% and international sales rising 9%.

2 GE Healthcare

$17 Billion ($172.7B total)

KEY EXECUTIVES:

Jeffrey R. Immelt, Chairman and CEO

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

Peter McCabe, CEO, Surgery

John R. Chiminski, President and CEO, Medical Diagnostics

NO. OF EMPLOYEES: 46,000 (319,000)

GLOBAL HEADQUARTERS: Fairfield, CT

In the face of FDA warning letters and cuts in imaging
reimbursements by Medicare, GE Healthcare posted relatively modest gains
in 2007. Though the year was a mixed bag, the healthcare imaging giant
still holds on to the No. 2 spot on MPO's list of Top 30 performing
companies. The imaging industry has been fighting reimbursement cuts
that were part of the Deficit Reduction Act of 2005, which President
Bush signed into law in 2006.

GE Healthcare, based in Chalfont St. Giles, United Kingdom, is a
leading maker of diagnostic imaging equipment, such as magnetic
resonance imaging (MRI), ultrasound and computed tomography scanners.
The company also makes cardiology diagnostic equipment as well as
contrast agents used in imaging procedures. In addition, GE Healthcare
manufactures clinical equipment such as patient monitors and
ventilators; develops life-sciences technology for drug discovery; makes
clinical and financial management software for healthcare providers; and
provides a range of services from consulting to equipment financing for
hospitals.

The company's revenues rose 3% to $17 billion in 2007. Profit
of $3.1 billion in 2007 was 3% lower than in 2006. These numbers are
well short of the $20 billion in revenue and $4 billion in profit the
company had predicted for 2007. The company said increased sales in the
international diagnostic imaging, clinical systems and life-sciences
businesses were partially offset by price pressures on US equipment
sales and lower sales of surgical imaging equipment resulting from
regulatory suspensions of equipment shipments. In January 2007, GE
Healthcare executives signed a consent decree with the EDA prohibiting
the manufacture and distribution of specified GE OEC Medical Systems
X-ray surgical imaging systems at facilities in Salt Lake City, UT and
Lawrence, MA until the devices and facilities have been shown to be
compliant with the FDA's current good manufacturing practice
requirements.

The ban was lifted in early June this year and the FDA said the
company had satisfied the agency's correction requirements. The OEC
9900 Elite C-arm, a fluoroscopy device that uses X-rays to reveal
real-time imagery of a patient's internal structure, is the first
product to receive manufacturing and shipping authorization.

"Coming out of this, we're a better business,"
remarked Pete McCabe, president and CEO of GE Healthcare Surgery."
The OEC 9900 C-arm is the most reliable product produced in our
business' 30-year history. Our quality system, alongside customer
focus and technical innovations, is a foundation of our business. In the
last year, we've been able to strengthen it to levels that will
ensure we continue to differentiate our products and services as the
best in the marketplace. We look forward to again being a leader in this
highly competitive field."

According to the company, every day, seven out of 10 surgeons rely
on an OEC C-arm in their operating rooms. In fact, during GE Healthcare
Surgery's stop-ship, many customers held their equipment orders,
some waiting more than 18 months, the company claimed. To respond to the
demand, GE Healthcare Surgery has added additional shifts and resources
to work through its backlog as quickly as possible, company officials
said.

In November 2007, the company received another warning from the
FDA. The agency sent a letter to the company citing defective devices
discovered during FDA field tests that involved two GE Healthcare X-ray
devices used in a hospital near New Orleans, LA and assembled at the
company's Pewaukee, WI facility. During the tests, systems were
found in which the protective barrier was not in place during the X-ray
process to intercept the X-ray beam as required by federal law.

In positive FDA-related news, GE Healthcare received FDA approval
in August 2007 for its new mobile mammography for breast cancer
screening. The mobile Senographe Essential is built on the
company's Senographe Essential platform, the next generation of
GE's full-field digital mammography systems. In May, the company
received FDA clearance for its Carescape Patient Data Module for mobile
patient monitoring.

[ILLUSTRATION OMITTED]

To bolster the company's inorganic growth and broaden its
diagnostic offerings, GE had announced plans in January 2007 to acquire
Abbott's in-vitro and point-of-care diagnostic businesses for $8.13
billion. By July, however, the deal had fallen apart and the companies,
whose boards both approved the merger, said they were unable to agree on
final terms. In other merger news, GE Healthcare completed the
acquisition of Allendale, NJ-based Dynamic Imaging, a developer of
Web-based image and information management. The purchase will allow GE
to expand its healthcare information technology offerings. Terms of the
deal were not disclosed. The acquisition builds on GE Healthcare's
strategy to combine early diagnosis with information technology to
enable a new "early health" model of care focused on earlier
diagnosis, pre-symptomatic disease detection and disease prevention. The
early health theme is one often cited by GE executives.

"Predict, diagnose, treat and monitor is common medical
practice today, but now we don't have to wait so long," said
Joe Hogan, senior vice president and CEO of GE Healthcare, during a
meeting with press, industry analysts and physicians in May 2007.
"The diagnostic tools are available today, and we can substantially
change the overall system."

GE Chairman and CEO Jeffrey Immelt agreed.

"By doing a better job on diagnostics, you can do a better job
of therapy. And that's where we're investing," Immelt
said during the same meeting. "High-field imaging, PET [positron
emission tomography] scanning and other imaging tools are getting more
effective. We're working on the overall patient experience.
We're also working on taking more devices and imaging tools into
the home."

Immelt also said emerging markets would be another vehicle for GE
Healthcare to expand its business. He noted China and India as the
biggest emerging markets but also said the Middle East and Africa are
changing even more rapidly. He said the company is building plants to
manufacture healthcare products in Saudi-Arabia to address a projected
$20 billion market in the region by 2010.

For the first quarter of 2008, GE Healthcare had revenues of $3.9
billion for the three months ended March 31--almost identical to the
same period last year. The firm said that the market remained volatile,
with orders for diagnostic imaging down by 13% in the first quarter.
However, GE remained optimistic, with international markets posting
diagnostic imaging revenues that increased by 8%. Life-sciences sales in
Europe were up by 24%. Overall profits for the quarter dropped 17% to
$528 million from $637 million in 2007.

"Our focus on globalization has helped sustain the company
during the US slowdown," said Immelt.

Unfortunately, due to declining demand for medical imaging
services, the company was forced to lay off hundreds of employees from
its Waukesha, WI operations in June this year. GE Healthcare spokesman
Brian McKaig said the layoffs would affect fewer than 400 employees, but
he did not provide specific totals. McKaig said the medical imaging
equipment manufacturer has been hurt by passage of the federal Deficit
Reduction Act, which caps Medicare reimbursement levels for medical
imaging procedures. McKaig also said in a statement that governments,
insurance companies and state legislatures are taking a number of
actions aimed at reducing the amount spent on imaging.

In other noteworthy personnel news, Mark Kramer, the former
director of the Office of Combination Products at the FDA who had nearly
two decades of experience at the agency, joined GE Healthcare in June
2007 as its new vice president of Regulatory Affairs. Kramer is tasked
with leading the regulatory function for medical devices across GE
Healthcare and will work closely with global regulatory bodies to
formulate strategic business plans.

3 Siemens Healthcare

$14 Billion ($103B total)

KEY EXECUTIVES:

Peter Loscher, President and CEO, Siemens AG

Jim Reid-Andersen, CEO, Siemens Healthcare

Klaus P. Stegemann, CFO, Siemens Healthcare

Heinrich Kolem, CEO, Customer Solutions Group for Siemens Medical
Solutions USA

Bernd Montag, CEO, Siemens Healthcare, Imaging and IT

Donal Quinn, CEO, Siemens Healthcare, Diagnostics

NO. OF EMPLOYEES: 49,000 (480,000)

GLOBAL HEADQUARTERS: Munich, Germany

According to Siemens, its broad product portfolio provides answers
to the "world's toughest questions confronting industry,
energy, the environment and healthcare."

That may be the case, but judging by the company's bottom-line
growth for fiscal 2007 (ended Sept. 30), Siemens also may have the
answer when it comes to financial performance.

Overall company revenue (the company had six main business areas in
fiscal 2007: Information and Communications, Automation and Control,
Power, Transportation, Medical, and Lighting) increased 9% to $103
billion, while net income increased 21% to $5.6 billion. Though net
income expanded, according to company officials, it was hindered by
substantial corporate costs associated with ongoing legal trouble.
Profit across all geographic areas increased by double digits--led by
Europe (excluding Germany), which grew by 34%. Research and development
spending also increased--by 9.6%--and the company's medical
division represented 31% of total R&D expenditure, up from 28% in
2006.

[ILLUSTRATION OMITTED]

For Siemens Medical Solutions--now called Siemens Healthcare as
part of a reorganization begun this year--revenue rose 20% to $14
billion, primarily as a result of the acquisitions in in-vitro
diagnostics, the company said. The profit picture for the company (which
provides diagnostic and therapeutic technologies, including imaging and
laboratory diagnostics, therapy and healthcare information technology
solutions), while rosy, was impacted by cuts to imaging payments by the
US government. Profit for Siemens Healthcare, which has US headquarters
in Malvern, PA, increased substantially (34%) to reach $1.9 billion.

In 2007, Siemens created a new Diagnostics division--rolling in
recent diagnostics acquisitions--as part of a targeted strategy to
create an integrated diagnostics company by combining the entire imaging
diagnostics, laboratory diagnostics and clinical IT value chain under
one corporate umbrella. During fiscal 2007, Siemens announced a
significant addition to its Diagnostics group's portfolio (the deal
closed during the first quarter of fiscal 200 cool . Dade Behring, Inc., a
leading clinical laboratory diagnostics company, was purchased for
approximately $7 billion.

"Complementing last year's acquisitions of Diagnostic
Products Corporation and Bayer Diagnostics, this transaction positions
Siemens as a leader in the highly attractive and rapidly growing market
for laboratory diagnostics," former President and CEO Erich
Reinhardt said at the time. "The implementation of integrated IT
and clinical solutions from Siemens will help improve workflow
efficiency throughout the healthcare enterprise, from admissions and
administration to the laboratory and the radiology department. This will
enable our customers to increase the quality of patient care while
simultaneously reducing costs."

In May 2008, Donal Quinn was named the new head of Siemens'
Diagnostics group, succeeding Jim Reid-Anderson, who became the new CEO
of Siemens Healthcare that month following the resignation of Reinhardt
in the wake of legal problems at the company. Both Reid-Anderson and
Quinn had worked at Dade Behring.

Reinhardt resigned his position as board member and CEO of Siemens
Healthcare in April this year. His departure is related to what the
company called "compliance violations" and "unacceptable
behavior" by the former Siemens Medical Solutions group relating to
internal controls and the accuracy of documentation. Reinhardt was not
accused of any wrongdoing and will continue to serve as a consultant to
the company in the short term. Reinhardt took over as head of the
Medical Solutions Group in 1994.

The restructuring in the Healthcare division was part of a much
broader corporate cleanup. Last year, an internal investigation
conducted by a law firm hired by the company revealed evidence of
bribery and other corporate improprieties within Siemens, which resulted
in a number of resignations and dismissals across multiple business
units. Evidence of bribery goes back to the year 2000.

As part of the company's restructuring, Siemens brought on
board a new CEO, Peter Loscher, who took over last July. He came from
pharmaceutical giant Merck & Co., Inc. and is the first CEO in
Siemens' 160-year history to be brought in from outside the
company. The board felt an outsider would be better equipped to initiate
a thorough cleanup and recast the company's image.

The company's businesses were broken down into three broad
divisions covering industry, energy and healthcare beginning in January
this year. Loscher also put the leaders of those three sectors onto the
central managing board in Munich, ending a system in which a leader of a
major business had his or her own managing board and reported to Munich
headquarters without being based there. Siemens officials say the old
way allowed corruption to spread and inhibited accountability.

In October 2007, a German court fined Siemens $306 million in
connection with bribery activities in its communications equipment
business, which it has sold off or folded into joint ventures over the
last two years. In the United States, the Department of Justice and the
Securities and Exchange Commission have begun investigations.

For the first six months of 2008 (ended March 31), Siemens
Healthcare reported $8.5 billion in revenue (approximately 20%
improvement compared with the same period last year) and $1.1 billion in
profit (roughly a 6% gain over the first half of FY07). Profit margin
was "strongly affected" by integration costs associated with
the acquisition of Dade Behring, the company reported. Some of those
costs, however, were offset by new orders that rose 10% year-over-year
in the second fiscal quarter. Imaging and IT business continued to
deliver solid profitability despite increasing challenges in market
conditions, officials said.

One way the company hopes to offset any future losses is by cutting
jobs. In July, parent company Siemens AG announced it would cut 16,750
jobs, or 4.2% of its global workforce, to streamline operations and save
approximately $2 billion in costs. The company plans to consolidate its
businesses from 1,800 separate legal entities to fewer than 1,000.

4 Medtronic

$12.3 Billion

KEY EXECUTIVES:

Art Collins, Chairman

William A. Hawkins, President and CEO

Gary Ellis, Sr. VP and CFO

Susan Alpert, Sr. VP and Chief Regulatory Officer

Pat Mackin, Sr. VP and President, CRDM

Scott R. Ward, St. VP and President, CardioVascular

Richard E. Kuntz, MD, Sr. VP and President, Neuromodulation

Stephen La Neve, St. VP and President, Spinal and Biologics

Christopher J. O'Connell, St. VP and President, Diabetes

NO. OF EMPLOYEES: 38,000

GLOBAL HEADQUARTERS: Minneapolis, MN

The company whose products benefit nearly 6 million patients
annually boasted double-digit percentage gains for four of its eight
business units by the end of its fiscal 2007, ended April 27 that year.
Medtronic Chairman Art Collins ended his tenure as president and CEO
(positions from which he transitioned in August 2007) on a strong note,
with fiscal 2007 net sales of $12.3 billion, 9% growth from $11.3
billion for fiscal 2006. Net earnings also grew 10% to $2.8 billion. The
increases were led by growth in the Vascular, Diabetes, Spinal and
Navigation, and Neurological businesses, as well as international sales.

Current President and CEO Bill Hawkins should be poised to continue
Medtronic's long-term growth, as the company had more than 200
clinical trials underway or planned by the close of the fiscal
year--fitting for a corporation that increased its fiscal 2007 R&D
spending by 11% to nearly $1.24 billion (about 10% of the company's
revenue). The strategy of looking to future innovation has paid off
handsomely in the past, as approximately two-thirds of fiscal
2007's revenue came from sales of products introduced within the
previous two years. Aiding the effort was the addition of more than
2,000 employees as well as facility expansions to increase capacity. New
facilities in the United States, Puerto Rico, Switzerland and Ireland
played a role, too.

Medtronic arguably is best known as a market leader for pacemakers
and defibrillators, and it managed to ride out a particularly rough year
for the latter group of products. Although Cardiac Rhythm Disease
Management (CRDM) sales of nearly $4.88 billion were flat at 2% growth
for fiscal 2007, this number could have been worse had pacing systems
not posted a 6% gain to $1.895 billion, compliments of product launches
including Adapt, Versa and Sensia pacemakers. As the overall US market
for implantable cardioverter defibrillators (ICDs) declined in 2007, the
company's depreciation was only 1% for this category due to strong
international sales--total US sales for ICDs dropped 9% to $2.08
billion, while international sales climbed 29% to $835 million with
sales growth for the wireless Virtuoso ICD and the Concerto cardiac
resynchronization therapy defibrillator. Overall CRDM sales grew 2% for
fiscal 2008 to $4.96 billion. While ICD sales dropped 1% again, the
company believes an eventual turnaround in the US market as well as
opportunities in what it terms an underpenetrated worldwide market
should bring favorable change in the future.

In the fourth quarter of fiscal 2007, Medtronic opted to separate
its Physio-Control unit from the CRDM segment. The unit, which is a
subsidiary offering external defibrillators, emergency response systems,
data management solutions and support services used by hospitals and
emergency workers, posted a 7% decrease for the year, going from $412
million in fiscal 2006 to $385 million in fiscal 2007. Physio-Control
products made at Medtronic's Redmond, WA facility were temporarily
suspended in January 2007 due to quality issues. This voluntary action
reduced US sales by 20%, though the company said this impact was
partially offset by 19% growth in international sales, which were aided
by sales of the Lifepak CR Plus Defibrillator. The company's
recently announced fiscal 2008 results for the year ended April 25,
2008, showed that Physio-Control once again was impacted by the quality
problem, as sales decreased 15% from 2007 revenues to $329 million.

Medtronic's largest-growing segment in fiscal 2007 was the
Vascular business, which had a sales increase of 28% to $1.2 billion.
Coronary Vascular sales grew 31% to $918 million, primarily due to
international sales of the Endeavor drug-eluting stent, which generated
$300 million in revenue for the year, along with $260 million in sales
for the Driver bare metal stent product line. Endovascular/Peripheral
product sales grew 20% as the company capitalized on its fourth-quarter
2006 US launch of the AneuRx AAAdvantage Stent Graft System and
increased international sales of the Valiant Thoracic Stent Graft
System.

The Cardiac Surgery segment--including heart valve products,
perfusion systems, positioning/stabilization systems for heart
surgeries, surgical accessories and surgical ablation products--grew 6%
to $704 million in fiscal 2007. Growth was fueled mostly by the Valves
(9% growth) business, which had a 10% increase in tissue valve sales for
products such as the Mosaic line, the Melody Transcatheter Pulmonary
Valve and Ensemble Transcatheter Delivery system outside the United
States. The Perfusion (4% growth) business also was a main driver, due
to stronger international sales for Medtronic's cardiopulmonary and
cannulae product lines.

In April 2007, Medtronic combined its Vascular and Cardiac Surgery
segments. The newly named CardioVascular business reported total net
sales of $2.13 billion for fiscal 2008. The US launch of the Endeavor
stent in the fourth quarter was a main driver of the Coronary stent
unit's 27% growth for the year to $710 million.

In fiscal 2007, Medtronic posted an impressive gain in the Diabetes
segment, which grew sales 20% in fiscal 2007 to $863 million. Within
this segment, external pump sales were $389 million, representing 32%
growth from fiscal 2006 due to strong sales of the Paradigm REAL-time
sensor-augmented pump system that integrates continuous glucose
monitoring and insulin pump functionality. This system also helped
Medtronic's Diabetes segment continue to prosper in fiscal 2008,
with an 18% annual sales increase to approximately $1.02 billion.

Neurological business, Medtronic's fourth-largest sales
segment for fiscal 2007, grew 16% with total net sales of $1.183
billion. Within this category, Neurological Implantables grew 15% to
$962 million, driven by sales of products such as the RestoreADVANCED
and PrimeADVANCED neurostimulation systems for pain management and
Activa Therapy for treatment of movement disorders associated with
Parkinson's disease and essential tremor. Increased sales of the
Synchromed II drug delivery pump also helped. Gastroenterology and
Urology products increased 21% collectively to $221 million, with gains
led by sales of the InterStim product line for treatment of overactive
bladder and incontinence and the Prostiva line for treatment of an
enlarged prostate. Overall, the Neurological segment changed in fiscal
2008 with the divestiture of the Gastroenterology and Urology
diagnostics product lines, and the category was renamed as the
Neuromodulation segment. This business increased 11% to $1.3 billion for
the fiscal year; when adjusting for the divestiture of the
aforementioned product lines, the unit actually grew 15%.

[ILLUSTRATION OMITTED]

For Medtronic's Spinal and Navigation segment, sales grew 13%
in fiscal 2007 to $2.54 billion. Within the company's minimal
access technology portfolio, CD Horizon Sextant II, a percutaneous
lumbar fixation system with minimal access technologies that reduce
procedural steps, was the main growth driver. Capstone and Crescent
Vertebral Body Spacers also led to growth within the Spinal
Instrumentation business. Biologics, with had net sales of $696 million
(a 22% increase from fiscal 2006), had continued success with the Infuse
Bone Graft; introduced in fiscal 2003 for spine, Infuse received FDA
approval in late fiscal 2007 for use in certain oral maxillo-facial and
dental regenerative bone grafting procedures. Navigation increased 18%
to $127 million due to strong sales of the PoleStar N20, an
intra-operative MRI Guidance System and O-arm Imaging System, a
multi-dimensional surgical imaging platform for use in spine and other
orthopedic surgery. For fiscal 2008, Spinal revenue was even healthier
than it was in fiscal 2007, with revenues totaling $2.98 billion, a 23%
increase.

The Ear/Nose/Throat (ENT) segment, which also contains neurologic
technology-related products, posted a single-digit gain of 8% in 2007,
bringing its total net sales to $539 million. Core ENT sales were $278
million, a 5% increase from fiscal 2007. Medtronic said these sales were
impacted by the loss of revenue from the company's third-quarter
fiscal 2006 sale of its tanometry product line. Neurologic Technologies
had a net sales gain of 11% to $261 million for fiscal 2007.

Given the previously cited fiscal year 2008 results, it should come
as no surprise that Medtronic brought back the days of double-digit
gains for overall net sales--the company recorded a 10% increase to
$13.5 billion compared with fiscal 2007.

"Medtronic had a strong close to the year," said Hawkins.
"The stabilization of the ICD market, the launch of our Endeavor
drug-eluting stent and strong performance in virtually every business
and geography provides positive momentum as we begin our new fiscal
year." For fiscal 2009, the company expects revenue of between $15
billion and $15.5 billion.

The company is looking to streamline operations and restructure its
organization. Earlier this year, Medtronic announced it would reduce its
staff by approximately 1,100 as part of its global restructuring and in
response to a slower ICD and stent market. This spring, Michael DeMane,
chief operating officer, also left the company. Several other additions
were named, however, including the appointment of Jean-Luc Butel as
president of Medtronic International. Steve LaNeve, formerly president
of Medtronic Japan, also was named senior vice president and president
of Medtronic's Spinal and Biologics business, replacing Pete
Wehrly, who left the company.

5 Cardinal Health

$12 Billion ($87B total)

KEY EXECUTIVES:

Robert D. Walter, Executive Director

R. Kerry Clark, CEO and Chairman

Jeff Henderson, CFO

Dave Schlotterbeck, Vice Chairman and CEO, Clinical and Medical
Products

Jeff Henderson, CFO

Dwight Winstead, Group President, Clinical Technologies and
Services

Mike Lynch, Group President, Medical Products and Technologies

NO. OF EMPLOYEES: 43,500

GLOBAL HEADQUARTERS: Dublin, OH

For Cardinal Health, fiscal 2007 was a good year that "marked
a return to strong growth with a more focused business model that we
expect will provide a foundation for continued growth in the years to
come," wrote CEO R. Kerry Clark in a letter to shareholders.

As the year began, the company didn't waste any time on
creating that "more focused business model."

Cardinal kicked off FY07 with plans to divest its $1.8 billion
Pharmaceutical Technologies and Services division, which manufactures
and packages 100 billion doses of medication a year for pharmaceutical
and biotech firms. The unit employed roughly 10,000 people at more than
30 facilities worldwide. In April 2007, private equity firm the
Blackstone Group (which is part of the group offering to purchase
orthopedic manufacturer Biomet) stepped up as a buyer for $3.3 billion.
Proceeds from the sale were used to repurchase Cardinal Health stock.

The company also reorganized its divisions during the first quarter
of 2007 into the following four segments: Healthcare Supply Chain
Services--Pharmaceutical; Healthcare Supply Chain Services--Medical;
Clinical Technologies and Services; and Medical Products Manufacturing.
This change was made to better align operations with the needs of
customers and take advantages of internal synergies, according to the
company.

More change came in May with a deal valued at $1.42 billion (in
addition to the assumption of $50 million in debt). Cardinal Health
purchased 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 implants.
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. The purchase of
Viasys signaled Cardinal's intention to become a larger player in
the respiratory care market.

Clark, who took over as chairman and CEO in November, succeeding
Cardinal Health founder Robert D. Walter (who became executive director
and plans to retire at the end of the company's 2008 fiscal year),
characterized 2007 as "a breakout year" for the company's
Clinical Technologies and Medical Products sectors, which manufacture a
range of products including intravenous infusion devices, automated
dispensing and respiratory systems, in addition to infection prevention
products. In total, the units accounted for more than 25% of the
company's profit. Revenue for fiscal 2007 (ended Sept. 30) was $4.5
billion, up 11% from fiscal 2006, and profit was $584 million, an
increase of 20%.

With an expanding profit margin of 13%, Cardinal Health's
management expects the divisions to be an important driver of
consolidated operating margins. Clinical Technologies and Services ($2.7
billion in revenue) grew 11%, while Medical Products Manufacturing ($1.8
billion) increased sales by 12%. Factors favorably impacting the bottom
line included manufacturing cost reductions ($20 million) driven by
strategic sourcing and expense control related to the company's
restructuring program, as well as growth from manufactured gloves and
respiratory product lines.

The Healthcare Supply Chain Services--Medical unit reported $7.5
billion (4% growth) in revenue and $318 million in profit. The increase
primarily was driven by increased volume from existing customers and a
surge in new customer accounts, according to Cardinal Health.

Growth didn't just come in balance sheet terms, however. In
October, construction began on a $50 million, 250,000-square-foot
expansion at the company's headquarters in Ohio. The new West
Campus facility will be home to the Healthcare Supply Chain Services
sector.

Cardinal Health, the largest company in Ohio by revenue, employs
nearly 3,500 people across the state, including 2,700 in Central Ohio.
With the completion of the West Campus facility, Cardinal Health planned
to add more than 700 additional jobs.

Fiscal 2007 also saw the conclusion of an ongoing legal battle for
the company. Cardinal reached a final settlement with the Securities and
Exchange Commission (SEC) and settled several related lawsuits
concerning historical financial reporting practices that date back to
fiscal 2000 and 2004. Under the agreement approved by the SEC, Cardinal
Health paid a civil penalty of $35 million, retained an independent
consultant to review certain company policies and procedures, and will
be enjoined from future violations of certain provisions of the federal
securities laws. Since the investigation began, Cardinal Health has made
a number of important changes to its financial reporting and disclosure
practices; hired a new chief financial officer, chief accounting officer
and controller; and enhanced its Finance department staff to support the
company's size and growth. The company also created the position of
chief ethics and compliance officer, which it filled in 2005.

So far, fiscal 2008 hasn't been without its share of inorganic
growth. In March 2008, Cardinal Health announced plans to acquire the
assets of privately held Enturia Inc. for $490 million. The cash
transaction includes Enturia's leading line of infection prevention
products--sold under the ChloraPrep brand name--which are used in
hospitals and surgery centers to disinfect the skin before surgical and
vascular procedures to help prevent bloodstream and surgical site
infections, two of the most common types of healthcare-associated
infections (HAI) among patients.

There's growth potential in the market. According to the US
Centers for Disease Control and Prevention in Atlanta, GA, one in 20
patients, or nearly 2 million people per year, acquire an HAI, which
results in nearly 100,000 deaths. Catheter-related bloodstream
infections represent 19% of HAIs, and surgical site infections represent
23%. Beginning in October this year, the US Centers for Medicare and
Medicaid Services no longer will reimburse hospitals for the added cost
of treating certain HAIs, placing an increased economic burden on
hospitals.

On the organic growth side, for the third quarter of fiscal year
2008 (ended March 31, the most recent results as of press time), the
Medical Products and Technologies segment grew revenue by 48% to $679
million, driven by the acquisition of Viasys Healthcare and strong
growth within the core infection prevention and medical specialty
businesses. Segment profit grew 72% to $80 million on the Viasys
addition, strong organic growth and the benefit of foreign exchange, the
company reported.

Revenue for the Clinical Technologies and Services business
increased by 11% to $747 million, driven by continued growth in customer
installations for medication and supply dispensing products and infusion
pumps. Segment profit increased by 29% to $127 million from a favorable
product mix and improved operating leverage from expense management
initiatives, the company reported. Segment profit for the quarter was
partially offset by a $6.5 million reserve for a recall of integrated
circuits and connectors on certain Alaris System infusion pumps.
Cardinal Health officials indicated that the company would be ready to
resolve the problem by the end of the 2008 calendar year. Alaris units
were recalled by the company in 2007 after learning of a defect that
could lead to over-infusion.

"Our Clinical and Medical products sector continued to deliver
strong year-over-year growth, reflecting our leadership positions in
medication dispensing, infusion, respiratory and infection prevention
products," Clark said. "We will continue to invest in these
businesses to strengthen our offerings for the future."

For the first nine months of FY08, the company's overall
revenue was $68 billion, a 6% increase.

One area, in particular, that management cited for future growth
was international sales. In fiscal 2007, less than 10% of the
company's earnings came from business outside the United States.
For 2008, the company plans to more aggressively pursue sales beyond US
borders.

6 Baxter International

$11.3 Billion

KEY EXECUTIVES:

Robert L. Parkinson, Jr., Chairman and CEO

Joy A. Amundson, President, BioScience

Peter J. Arduini, President, Medication Delivery

Bruce McGillivray, President, Renal

Robert M. Davis, Chief Financial Officer

J. Michael Gaffing, VP, Global Manufacturing Operations and Supply
Chain Operations

John J. Greisch, President, International

NO. OF EMPLOYEES: 46,000

GLOBAL HEADQUARTERS: Deerfield, IL

Though 2008 may be turning into the year of heparin for Baxter
International, the company delivered solid financial performance for
2007, reporting a 22% increase in net profit.

With an eye toward its robust product pipeline, Baxter
International managed to expand its geographic presence while
accelerating its R&D investments in 2007--achieving success in the
process. With total net sales of $11.3 billion, the drug and device
manufacturer posted an increase of 9%, compared with $10.4 billion for
2006; of the 2007 total, $4.8 billion came from US sales, with the rest
coming from international sales. Furthermore, net income was $1.7
billion, or $2.61 per diluted share, including after-tax special items
of $119 million or 18 cents per diluted share. On an adjusted basis,
excluding special items, the company reported net income of $1.8
billion, or $2.79 per diluted share, an increase of 25% compared with
2006.

Given its strong financial position, Baxter broke its own record
for R&D spending, increasing its investment to $760 million, a 24%
increase from $614 million in 2006. As a result of its pattern of
year-over-year increases on R&D expenditures, the company gained
approval for or launched more than 12 new products and advanced many of
the programs in its product pipeline.

"2007 was a very successful year for our company," said
Robert L. Parkinson, Jr., chairman and CEO." We met or exceeded
expectations on all key financial metrics throughout the year. We are
also particularly pleased with the improved profile of our earnings, the
strength of our overall financial position, and most importantly, the
progress we have made in accelerating innovation. We're very well
positioned to continue to meet our commitments, leverage the benefits of
our diversified healthcare model, and deliver enhanced value to our
various stakeholders in 2008 and beyond."

Each of the company's three major units--BioScience,
Medication Delivery and Renal--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 non-device
product lines.

For 2007, net sales were $4.6 billion for BioScience, representing
6% growth compared to $4.4 billion in 2006. Medication Delivery sales
were $4.2 billion, compared to $3.9 billion previously, marking 8%
growth. The Renal segment posted a sales increase of 8% as well with
2007 total net sales of $2.2 billion, compared to $2.1 billion in 206.

Bioscience mostly is non-device-related products, as it
manufactures recombinant and plasma-based proteins for treatment of
hemophilia and other bleeding disorders; plasma-based therapies for
treatment of immune deficiencies; biosurgery and other products for
regenerative medicine; and vaccines. The major drivers of
BioSciences' growth in 2007 included sales volumes for
Baxter's advanced recombinant therapy, Advate--sales of the
blockbuster drug exceeded $1.2 billion. In the company's
regenerative medicine product line, Floseal and Coseal sealants,
classified as medical devices by the FDA, were the primary growth
drivers.

The Medication Delivery segment, which includes IV Therapies ($1.4
billion, 9% growth), Global Injectables ($1.5 billion, 4% growth),
Infusion Systems ($860 million, 5% growth), Anesthesia ($422 million,
33% growth) and "Other" products ($43 million, a 4% decrease
from 2006), had marked progress in 2007 compared with 2006--that year,
total net sales had decreased 2%.

In the Infusion Systems segment, increased international sales of
disposable tubing sets used for IV administrations played a role in
2007's growth achievement. In addition, international sales of
Colleague infusion pumps rebounded.

The Colleague line of infusion pumps are used to give controlled
amounts of medications or other fluids to patients intravenously or
other direct line into the bloodstream. In 2005, the FDA sent warning
letters and seized the devices (including Syndeo infusion pumps) from
the company's Illinois warehouses due to problems including
under-infusion by the device, battery failures, false alarms and failure
to alarm. The company signed a consent decree with the agency and agreed
to stop manufacturing and distributing in 2006. Before resuming sales in
the United States, the company had to agree to continue to service pumps
currently in use and supply additional pumps to customers when medically
necessary.

By February 2007, Baxter received clearance from the FDA to resume
sales. But in July 2007, the FDA issued a recall of Colleague and
Flo-Gard infusion pump models related to the falsification of service
and repair data. The recall initially pertained to 534 infusion pump
devices in the United States brought in for routine maintenance or
corrections at the company's Phoenix, AZ service center. In the
course of ongoing quality control processes, the company discovered
falsified repair, test and inspection data sheets, which included
electrical safety data. Consequently, it is possible that pumps sent to
be serviced, repaired or corrected were returned without service being
performed on them. As a result, three employees in the Phoenix service
center were dismissed. In August, Baxter extended the recall to include
an additional 986 Colleague devices.

Final 2007 sales figures for the device were not
"significant," according to the Baxter's annual report.
But, "resolving issues with the Colleague infusion pump has been
Baxter's top priority," said Peter Arduini, corporate vice
president and president of Baxter's Medication Delivery business,
after the FDA granted 510(k) pre-market notification clearance to
Baxter. "Baxter remains committed to our infusion systems customers
and will continue to invest in this business to enhance the delivery of
lifesaving medications."

The Renal segment's product lines are broken down into two
categories: those for peritoneal disease (PD Therapy) and hemodialysis
therapy (HD Therapy). PD Therapy reported net sales of $1.8 billion, a
10% gain from $1.6 billion in 2006, while HD Therapy had net sales of
$448 million, a 4% increase from $431 million in the prior year. Latin
America, Asia and the United States were the top sales regions for PD
Therapy. HD Therapy attributed its sales growth to higher revenues
stemming from Baxter's Renal Therapy Services businesses, which
operate dialysis centers.

Looking specifically at the company's overall medical device
portfolio, some of the notable 2007 product introductions included the
V-Link Luer-activated device with VitalShield protective coating (the
first needleless W connector containing an antimicrobial coating) and
the Gelfoam Plus Hemostasis Kit (for control of bleeding during surgical
procedures). In the United States and Canada, Baxter also launched
Baxject II, a needleless transfer device with built-in filters for
Advate. In February 2007, the FDA also cleared Baxter's upgraded
Ipump Pain Management System. In terms of product development
activities, the company completed enrollment in a Phase II clinical
trial using Baxter's proprietary Isolex technology to select CD34+
adult stem cells from patients with chronic myocardial ischemia
re-infusion into their hearts as a means to restore blood flow.

During the year, strategic alliances and acquisitions also played a
role in Baxter's continued gains. For example, Baxter signed an
agreement with Nycomed to market and distribute its TachoSil patch (a
collagen sponge coated with lyophilized clotting ratters used for
hemostasis and tissue sealing) in the United States upon FDA approval.
Baxter also expanded its relationship with Halozyme to include the use
of Hylenex (a subcutaneous delivery technology that enhances absorption
of injectable products) and the use of Halozyme's Enhanze
technology in the development of a subcutaneous route of administration
for Baxter's liquid formulation of IV immune globulin. In the HD
and PD Therapy categories, Baxter collaborated with DEKA for the
development of a next-generation home HD machine for renal disease.
Finally, the company acquired just about all the assets of MAAS Medical,
a provider of infusion systems technology.

On the organization front, the 2007 fiscal year included a little
bit of streamlining. In March, Baxter completed the sale of its
Transfusion Therapies business to Texas Pacific Group (TPG) and Maverick
Capital Ltd. (private investment groups) for $540 million. TPG and
Maverick Capital, Ltd. established a new independent company called
Fenwal Inc. With the acquisition, Fenwal 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.

The end of 2007 and beginning of 2008 brought Baxter a new
challenge in the form of a recall of the blood thinner heparin. The main
ingredient in some of Baxter's heparin, made in China from pig
intestines, was found to be contaminated. Some medical devices contain
or are coated with heparin. In June 2008, the FDA updated the number of
deaths of patients who took heparin, nearly doubling it to 149, but said
a link could not be established between the deaths to contaminated forms
of the blood-thinning drug. An earlier FDA probe found chemical
contaminants in some batches of Baxter's heparin. Officials
previously had said there were 81 deaths among patients treated with
heparin since January 2007. Baxter began recalling lots of the drug in
January.

The contamination has resulted in numerous lawsuits against Baxter
and other companies that manufacture heparin. The problem also has
spurred multiple hearings on Capitol Hill regarding the industry's
and the FDA's review of foreign suppliers to the pharmaceutical and
medical device industries. The FDA also said in a posting on its Web
site that contamination could lead to inaccurate test results from
diagnostic devices that monitor heparin or use it as part of the device
itself.

Baxter has said the main ingredient for its heparin probably was
contaminated before reaching its supplier in China.

Despite the setbacks, the company seems off to a good financial
start in 2008. The first quarter of 2008 showed steady progress for
Baxter, which recorded $2.9 billion in sales, a 13% increase from $2.7
billion reported for the same period in 2007. The largest sales gain, at
13%, was achieved by the BioScience segment, with sales totals for the
quarter of $1.2 billion. Medication Delivery sales grew 8% to $1.1
billion for the quarter, and Renal sales increased 6% to $558 million.

"Our strong and improving financial position reflects the
continuing momentum in our business," said Robert J. Parkinson,
Jr., chairman and CEO. "Our favorable outlook for the full year
allows us to continue to accelerate our investments in research and
development programs that will improve treatment for patients, expand
access to care and enhance the quality of life for people around the
world."

As such, Baxter raised its earnings outlook for 2008 (excluding the
impact of foreign exchange) to sales growth of 5% to 6%.

7 Philips Healthcare

$9.5 Billion ($39.4B total)

KEY EXECUTIVES:

Gerard Kleisterlee, President, CEO and Chairman

Pierre-Jean Sivignon, Exec. VP and CFO

Stephen H Rusckowski, Exec. VP and CEO, Philips Healthcare

NO. OF EMPLOYEES: 27,441 (118,09 cool

GLOBAL HEADQUARTERS: Amsterdam, The Netherlands

Much like some other companies on this year's list of top
companies, the medical device unit of Philips has gone through an
organizational and brand transformation. Philips now calls its Medical
Systems division Healthcare, which, according to the company, brings
together Medical Systems and its growing Home Healthcare
business--formerly Consumer Healthcare Solutions.

With this move, Philips Healthcare, headquartered in Andover, MA,
wants to bridge both ends of the healthcare cycle.

"We believe the link bridging the hospital and the home is
going to be increasingly important in delivering better patient outcomes
while containing costs," said CEO Gerard Kleisterlee. "Given
the unsustainably high healthcare costs in many markets and increased
emphasis on both efficiency and patient comfort, we are seeing a gradual
shift towards diagnosing, treating and monitoring patients in their
homes rather than in hospitals. Demand for home healthcare is also
growing due to the increasing number of elderly people and the rising
incidence of chronic diseases."

But Philips isn't just paying the move lip service. This
year's report about the company will read more like a laundry list
of dens, as the company made a number of key acquisitions throughout the
year to align operations with its new corporate vision.

Its blockbuster buyout for 2007 was the purchase of Murrysville,
PA-based Respironics, a manufacturer of respiratory and sleep therapy
products (covering both hospital and home health markets) for
approximately $5.1 billion in cash. The deal was announced before the
end of fiscal 2007 and closed in the first quarter of fiscal 2008.

"A core part of Philips' healthcare strategy is to take a
leading position in the high-growth sector of home healthcare,"
said Steve Rusckowski, CEO of Philips Healthcare. "This
acquisition, with its significant strategic and financial benefits to
Philips Healthcare, is another important step in carrying out this
strategy."

John L. Miclot, president and CEO of Respironics, said partnering
with Philips would "create additional growth opportunities for our
company, and we believe that our company will benefit significantly by
being part of a larger, growing and dynamic organization."

[ILLUSTRATION OMITTED]

For its 2007 fiscal year, Respironics reported sales of
approximately $1.2 billion. Almost three-quarters of Respironics'
sales were achieved in the company's Sleep and Home Respiratory
business, which consists of diagnostic and therapeutic devices for
sleep-disordered breathing and chronic respiratory diseases. The
remainder is in the hospital setting and includes noninvasive and
invasive ventilation, respiratory monitoring, neonatal products and
respiratory drug-delivery technology for the treatment of respiratory
diseases.

Philips also made a number of other important purchases.

In two more December deals, Philips announced a merger agreement
with clinical IT and service provider VISICU, based in Baltimore, MD,
and Emergin, in Boca Raton, FL--both companies add to Philips'
patient monitoring business. VISICU, purchased for $430 million, makes
clinical IT systems that enable critical-care medical staff to actively
monitor patients in hospital intensive care units from remote locations.
The merger will boost the creation of products to give more clinical
decision support to hospital staff, while allowing personnel to monitor
greater numbers of critically ill patients, according to Philips.
Emergin develops software that rapidly transmits medical alarm signals
throughout hospitals. It had sales of approximately $18 million in 2007.

In October, Philips snatched up Windsor, CT-based Raytel Cardiac
Services from SHL Telemedicine Ltd. for approximately $110 million in
cash. Raytel develops home cardiac-monitoring systems that doctors
prescribe to heart patients. The company will be integrated into Home
Health within Philips.

In August, Philips bought E1 Paso, TX-based XIMIS, a healthcare IT
company that focuses on systems to help reduce errors and streamline
workflow in hospital radiology wards. Details of the transaction were
not disclosed.

Finally, Brazil's leading general X-ray manufacturer,
VMI-Sistemas Medicos, was acquired in June. Philips plans to boost
VMI's Brazilian exports to other countries in Latin America, which
currently represents approximately 5% of the newly acquired
division's business.

In a divestiture among all the acquisitions, Philips sold 70%
ownership interest in MedQuist (a provider of medical transcription and
clinical documentation technology and services) to CBaySystems Holdings
Ltd. As the company restructured, Philips considered MedQuist a
"non-core holding."

For fiscal 2007, the Healthcare division reported $9.5 billion in
total sales (based on conversion after at the end of the reporting
period), a nominal increase compared with last year (0.3% in euros).
Excluding the 2% positive impact of portfolio changes and the 5%
unfavorable currency effect, comparable sales growth was 4%. Earnings
before interest taxes and amor




 
 
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