Business Overview 2006 - Synthes

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Sustainability. Outlook For the coming year Synthes’ main objectives are to maintain and increase market shares across the globe and achieve double-digit sales growth in the teens. We are confident that with our full product pipeline we are well prepared to advance the company’s sustainable development in the long term. Cable System 32
Synthes. Annual Report 2006 Sustainability. Outlook Never in its history has Synthes achieved less than 10% organic sales growth. We do not expect 2007 to be any different. Focus on high potential products Many demanding tasks lie ahead in the different business areas. Trauma North America currently has a full and exciting product pipeline. Some of these products, which mostly build on core concepts such as the Locking Compression Plate (LCP) system, will be introduced to the market in 2007, while others will continue to mature during the course of the year. We will strive to maintain our leading market position in Trauma, and see room to further increase our market share in the subsegment of intramedullary nailing as well as in the field of specialty LCP plates. Our Spine division will focus on the successful continuation of the Prodisc-L introduction in the US, which will depend highly on achieving excellent clinical outcomes as well as on the relaxation of the tight reimbursement policies for this type of device. In addition, we will work diligently to obtain a timely premarket approval (PMA) from the FDA for our cervical artificial disc, the Prodisc-C. With these products and many other innovative devices in virtually every product category, we are confident that we will maintain or increase share in the various segments of the spine market. Potential for increasing market shares In Europe, Synthes has already benefited from being able to operate uniformly in all its markets. In countries where we assumed responsibilities from Mathys three years ago, we have subsequently established qualified and specialized sales forces. However, our market shares in these countries, particularly in the areas of Spine and Craniomaxillofacial, do not yet compare to those in countries in which Synthes has been active for a longer period of time. Thus, we expect to see further momentum for improvement of market share as well as a per capita productivity increase in these newer European markets. In Central and Eastern Europe, where we started from a very low base a few years ago, we are experiencing growth rates that are well above average, and expect this development to continue in 2007. prices by generating even more volume growth. Despite some uncertain external factors, we are confident that we will continue our competitive pace in these markets with our current product offering. In addition, the new product approval pipelines look strong, particularly for spinal implants. We see definite potential for increasing our share in the Spine and Cranio-maxillofacial markets across the entire region. We also believe there is a great deal of potential for further expanding our position in the Trauma business segment. Educational activities throughout Asia Pacific will continue to be a top priority: we currently have dedicated training facilities in Japan, China and at our headquarters in Australia, and we plan to establish a further training center in India during the coming year. As for the rest of world, we expect the successful performances in Latin America and in the Middle East and Africa to continue. Both these regions offer solid volume growth potential for 2007. We also believe it is important to continue to expand our sales force presence and increase our training activities in these regions, often in cooperation with the AO Foundation. Focus on sustainable growth Synthes’ primary goal is to maintain a low double-digit sales growth rate; we strongly believe that this approach is the best way to ensure the company’s overall profitability in the long run. That said, we continue to search for ways to increase our manufacturing efficiency and leverage our operation in terms of size, as well as making the most of the manifold investments we have made in the past to guarantee future sales growth and profitability for our shareholders. In the Asia Pacific region we are continuing to see more government intervention in both pricing and regulatory requirements. In some countries such as India, regulatory systems are in the process of being introduced. In others, including Australia and New Zealand, the governments are requesting evidence-based clinical data to justify the approval or reimbursement of new medical devices. Price reductions for trauma products in Japan will continue. It will require a special effort from our sales teams to compensate for lower average selling 33
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Business Overview 2006 - Synthes

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