Note: During the January 9 th Boston Scientific presentation at the JP Morgan Healthcare Conference, slide 26 incorrectly presented for 2006 the mid-point of our previously announced range of worldwide drug-eluting stent revenue. The estimated mid-point should have been reflected as $2.4 billion as opposed to $2.3 billion. JP Morgan Healthcare Conference January 9, 2007 Larry Best EVP and Chief Financial Officer
Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 The presentations at this meeting contain forward-looking statements. The Company desires to take advantage of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protections of the safe harbor with respect to all forward-looking statements. Therefore, the Company wishes to caution each participant at this meeting to consider carefully the specific factors discussed with each forward-looking statement in these presentations and other factors contained in the Company s filings with the Securities and Exchange Commission as such factors in some cases have affected, and in the future (together with other factors) could affect, the ability of the Company to implement its business strategy and may cause actual results to differ materially from those contemplated by the statements expressed herein. 2
Growth History and Goals ($M) Low Range Estimate $8,647 $7,800 Positioned for Long-Term Growth $6,283 $5,624 $3,476 $1,191 $1,551 $1,831 $2,234 $2,842$2,664 $2,673 $2,919 3 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06E '07 Low Range Note: As reported actuals through 2005, 2006 as reported estimate, 2007 low range estimate Estimate
The New Boston Scientific 2007 Low Range Estimate of $8.6B CRM 23% Neuromodulation 4% two DES platforms DES 26% Endosurgery 17% Other Cardiovascular 30% 4
The New Boston Scientific: Achieving Leadership is Our Goal $ 27B Global Market Cardiovascular $ 9B Global Market $ 1.5B Global Market Endosurgery Neuromodulation Interventional Cardiology Cardiac Surgery Endoscopy Pain Management CRM Electrophysiology Oncology Auditory Peripheral Interventions Vascular Surgery Urology Gynecology Neurovascular Positioned for Growth with 3 Operating Groups in 12 Growth Markets Internal Estimates 5
Boston Scientific Best Positioned in Cardiovascular Market Changing Competitive Dynamics of a $27B Market IC CRM Boston Scientific 1 2? Medtronic St. Jude Abbott JNJ 4-3 2 1 3? - - Note: BSC-Guidant based on Wall Street Case and Company estimates, reflecting trailing twelve months and full year of combined operation. All others based on Wall Street Research. 6
Opportunities for 2007 and beyond
Goals for 2007 Satisfy FDA on Quality Accomplish Lifting of FDA Warning Letters Obtain Product Pipeline Approvals Reduce Debt associated with GDT Acquisition Focus on Spending Discipline Strengthen Balance Sheet Prepare for Re-acceleration of Growth 8
CRM Market Opportunities
WW CRM Market $20 B US Defibrillator market recovery will boost WW market Int l markets are at lower penetrations than US and have attractive long-term growth potential 4% - 8% $10.7 - $12.1 $10 B 16% $9.4 - $9.6 $0 B 2000 2004 2005 2006 2007 2008 2009 Defibrillator Revenue Range Pacemaker Internal Estimates 10
WW Defibrillator Market $20 B Largely under-penetrated markets Clear and compelling clinical science Aligned with practice guidelines Appropriate reimbursement coverage $10 B Expanding number of implanters 7% - 13% $7.0 - $8.4 29% $5.6 - $5.7 $0 B 2000 2004 2005 2006 2007 2008 2009 US Revenue Range International Internal Estimates 11
CRM Strategy Phased Approach Restore Trust & Confidence 2006 2007 2008 2009 2010 2011 Regain Market Position Put in place new leadership team Transparent product performance communications Improve quality and reliability processes Clear the warning letter Commitment to quality and reliability Focus sales force & enhance sales and marketing execution Restore product cadence: LATITUDE VITALITY NXT ACUITY TELIGEN & COGNIS Move Toward Leadership Continue focus on quality and reliability Best-in-class sales and marketing execution Build on Heart Failure advantages Continue tradition of innovation 12
CRM Warning Letter Status Clearing the St. Paul site Warning Letter continues to be the top priority of the CRM organization. Completed all 65 commitments that were made to FDA in response to its Warning Letter observations Conducted a broad review of our Quality System (beyond the scope of the FDA s observations) Met with FDA to outline our progress relative to these Quality System improvements 13 Inspections completed in Q4, 2006
Restore Product Cadence 1H07 2H07 2008 Remote Patient Management Heart Failure SCD Prevention LATITUDE expansion emr Integration Cadence of Enhancements ACUITY Steerable ACUITY Spiral ACUITY LDS COGNIS IS-4 Family VITALITY NXT IS-4 Family TELIGEN Note: Anticipated approximate launch timing for US; International timing may differ Not available for sale in the US. CAUTION: Investigational Device. Limited by Federal Law to investigational use. 14
LATITUDE Connecting Patients with Caregivers Patient s Home Boston Scientific CRM ICD or CRT-D HF Managing Physician & RN LATITUDE Communicator LATITUDE Web Server Objectives Heart Failure management Compliance with Guidelines emr LATITUDE Weight Scale Device Managing Physician & AHP LATITUDE BP Monitor Objectives Device management Arrhythmia management Note: RENEWAL 3 RF is currently the only device approved for use with the wireless LATITUDE system in the U.S. 15
Moving Toward CRM Market Leadership 16
Neuromodulation Market Opportunities
U.S. Neuromodulation Market ($M) Neuromodulation is a fast growing market with Spinal Cord Stimulation being the largest segment $965 $1,160 $1,430 $1,770 $2,135 $2,500 CAGR 19% 24% 2004 2005 2006 2007 2008 2009 Neuromodulation excluding SCS market, but including deep brain stimulators, drug pumps, sacral nerve stimulators, vagus nerve stimulators Spinal Cord Stimulation Market $1B+ SCS market with 20% annual growth 18 Source: Millennium Research Group (July 2006); Bank of America Equity Research (June 2006)
U.S. Pain Management Market Share By Last 8 Quarters 6% 24% 12% 24% 13% 27% 14% 26% 18% 24% 21% 24% 23% 23% 24% 23% 70% 64% 60% 60% 58% 55% 54% 53% Q4 04' Q1 05' Q2 05' Q3 05' Q4 05' Q1 06' Q2 06' Q3 06' MDT ANS BSC Source: Based on Analyst Calls and reports with internal analysis; * U.S. IPG sales only; For ANS, No OEM data or international revenue is included 19
Auditory Market Opportunity ($M) 20 12 14% organic market growth Divisional growth 20%+ Bilateral adoption accelerates to 26% Bilateral plus expanded indications can exceed 30% $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 CAGR 06 08 ~ 20% Auditory Growth Potential Organic + Bilateral + Hybrid CAGR 08 11 ~ 20% - 26% CAGR 11 on ~ 26% - 30% 2006 2007 2008 2009 2010 2011 2012 2013 Expanded Indications from Hybrid w/drug & Slim Growth to 30% Significant Bilateral Adoption / Growth to 26% Internal Estimates
Refractory Migraine The Next Pain Market? U.S. Refractory Migraine Opportunity ~28 M migraine sufferers (13% US adults) Massive Costs: $3 B Drugs $13 B Employer Burden Refractory Patient Options ~2.8 M patients refractory to existing therapies (10%) 21 Source: American Migraine Study II, 2001 Market Opportunity ~1.9 M severe refractory migraine patients candidates for neuromodulation (66%) Penetration 5% Market size ($) $1 Billion
Neuromodulation Sales Growth and Goals ($M) $330 CAGR $232 $115 20% $148 $87 $80 $78 $215 157% $145 $67 $70 $13 2004 2005 2006 2007E Pain Management Auditory 22
DES Market Opportunities
Evolution of PCI: The dominant coronary revascularization since 1990 40 30 Over the last 30 years, percutaneous coronary intervention (PCI) has undergone progressive improvements in success, safety, and durability, as serial new technologies have been launched. While each innovations solved a serious prior problem, it has sometimes introduced rare new adverse events (e.g., in-stent restenosis, stent thrombosis). Event Rate 20 10 Failure Em CABG Restenosis Stent thrombosis VLST Current results of DES-PCI are the BEST they have ever been 24 0 POBA early POBA late Stent early Stent late DES 1977 1985 1994 1997 2003-present Innovations over time
DES Market Dynamics
DES Market Dynamics (excluding Japan) ($B) $1.6 $3.9 $4.8 $4.8 $0.1 $0.1 $0.1 $0.3 Internal Estimates $1.7 $2.1 $2.1 $1.4 $2.1 $2.6 $2.4 $0.2 2003 2004 2005 2006E BSC JNJ MDT Other 26 Note: During the January 9 th Boston Scientific presentation at the JP Morgan Healthcare Conference, slide 26 incorrectly presented for 2006 the mid-point of our previously announced range of worldwide drug-eluting stent revenue. The estimated mid-point should have been reflected as $2.4 billion as opposed to $2.3 billion. This slide reflects this correction.
TAXUS Program Keys to Success with Changing Market Dynamics Reinforce TAXUS Safety No increase in adverse patient events compared to BMS 50% reduction in patient re-intervention Demonstrate continued TAXUS efficacy Highlight most recent clinical data Reinforce TAXUS deliverability advantage Highlight Express 2 /Cypher and Liberté / ENDEAVOR comparisons Demonstrate the Pipeline Create global enthusiasm around TAXUS Liberté 27
TAXUS Liberté Stent Second Generation DES - #1 O.U.S Proven Efficacy* Thinner struts Open cells DES design SV, LV, WH BWR Side Branch Access 2H 2007 Launch-USA *The TAXUS Liberte stent system is not available in the U.S. Caution: Investigational Device. Limited by Federal Law to investigational use 28 Excludes Japan.
Japan DES Market and Penetration Size ($M) $700 $600 $500 67% $157 71% $139 72% $136 DES Penetration 80% 70% 60% $400 $300 $200 $278 $456 $512 $548 50% 40% 29 $100 $0 $121 25% 30% 20% 2004 2005 2006 2007E DES Market Size ($M) BMS Market Size ($M) DES Penetration TAXUS Express Launch Expected Q3, 2007 Internal Estimates
TAXUS and PROMUS Stents A Powerful Combination TAXUS Paclitaxel-Eluting Coronary Stent System The Best DES Solution Unsurpassed Deliverability Proven Clinical Outcomes PROMUS Everolimus-Eluting Coronary Stent System A Promising DES Solution Promising Clinical Outcomes A Deliverable Olimus The only company offering two DES platforms 30
PROMUS Stent Launch Update Private-labeled Xience V Stent Manufactured by Abbott Right to 50% of Abbott capacity CE Marked in October 2006 BSC Launch Timeline: December Limited launch Q1, 07 Expanded launch Q2, 07 Full launch 31
DES Pipeline USA Timing Investing for Sustained DES Leadership 2006-2010 Planned DES Pipeline Cadence TAXUS Liberté Stent TAXUS Express Expansion TAXUS Express Japan Mid - 2007 2H 2007 2H 2007 Second generation with improved deliverability 2.25/4.0 sizes First generation TAXUS Liberté Expansion #1 PROMUS Stent 2H 2007 2H 2008 2.25mm & 32mm Most deliverable olimus TAXUS Element Stent 2009 Third generation with improved performance TAXUS Liberté Expansion #2 1H 2009 Large vessel 4.5/5.0 & 38 mm TAXUS² Petal Stent Barrolimus 2010 TBA Bifurcation Element + Everolimus Odyssey TBA Disruptive technology CAUTION: TAXUS Express 2 2.25&4.0mm, TAXUS Liberté and PROMUS are investigational devices. Limited by U.S. Federal law to investigational use. Not for sale. TAXUS Barracuda under development. Not for sale. TAXUS Petal, Barrolimus and Odyssey are under development and not available for sale. 32 Internal Estimates
Carotid Market Opportunities
Carotid Market Development Market Size (Stent plus Embolic Protection Device) ($M) $1,000 $750 $750 $950 High $1,100 Low $800 $700 2006-2012 CAGR: 24-31% $500 $250 $0 $130 $80 $50 $60 $80 $105 $140 $165 $220 Int l US $500 $525 $400 $350 $325 $225 $275 2004 2005 2006 2007 2008 2009 2010 2011 2012 U.S. CMS Reimbursement: HR Asx, SX nhr Internal Estimates HR= High Risk; nhr = non High Risk; Asx = Asymptomatic; SX = Symptomatic 34
Carotid Solutions - Potential to Leadership System: Now Approved NexStent & FilterWire EZ Carotid WALLSTENT & FilterWire EZ Clinical: US Regulatory Approval Status: Q4/06 Q3/07 EU Performance: Leadership Position 35 Internal Estimates
Endosurgery Opportunity
Worldwide Endosurgery Sales ($ M) Long-Term Predictable Double-Digit Growth $520 $625 +20% $682 +9% $746 +9% $851 +14% $972 +14% $1,227 $1,088 +13% +12% $1,345 +10% +13% CAGR 37 1998 1999 2000 2001 2002 2003 2004 2005 2006E
Worldwide Endosurgery Divisional Sales ($M) Long-Term Predictable Double-Digit Growth Oncology Uro & Gyn Endoscopy $520 $102 $132 $286 $625 +20% $108 $144 $373 $682 +9% $115 $156 $411 $746 +9% $127 $169 $451 $851 +14% $142 $196 $514 $972 +14% $166 $226 $580 $1,227 +13% $1,088 +12% $186 $261 $641 $207 $324 $697 $1,345 +10% $221 $371 $753 +13% CAGR 38 1998 1999 2000 2001 2002 2003 2004 2005 2006E
Endosurgery Group Core Products and Pipeline Priorities Businesses Core Franchises 2006-2007 Key New Products Pipeline Priorities (2011 Market Potential) Urology & Gynecology: Stone Management BPH Pelvic Floor Single-Incision Sling Slings & Pelvic Floor Reconstruction NG HTA AUB Endoscopy: Biliary Stents Hemostasis Biopsy & Polypectomy RJ4 Spy Resolution II Wallflex Biliary Benign indication expansion Procedural expansion into the Biliary System Endoscopic Ultrasound (EUS) Dilatation Wallflex Enteral Enteral Feeding Oncology: Venous Access-PASV RF Ablation Peripheral Embolization Drainage & Biopsy PASV Power PICC Interlock Detachable Coil Surgical Resection RF Market Expansion Implantable Venous Access Ports Bioactive Coatings Broad Base Launches Long-Term Growth 39
Boston Scientific has never been better positioned for long-term growth
The New Boston Scientific 2007 Low Range Estimate of $8.6B CRM 23% Neuromodulation 4% two DES platforms DES 26% Endosurgery 17% Other Cardiovascular 30% 41
Growth History and Goals ($M) Low Range Estimate $8,647 $7,800 Positioned for Long-Term Growth $6,283 $5,624 $3,476 $1,191 $1,551 $1,831 $2,234 $2,842$2,664 $2,673 $2,919 42 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06E '07 Low Range Note: As reported actuals through 2005, 2006 as reported estimate, 2007 low range estimate Estimate
Execution... People, Technology, Opportunity 43
JP Morgan Healthcare Conference January 9, 2007 Larry Best EVP and Chief Financial Officer