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Medication Delivery: Poised For Growth Peter Arduini President, Medication Delivery

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Medication Delivery:Poised For Growth

Peter ArduiniPresident, Medication Delivery

Agenda

Medication Delivery’s Portfolio Is Poised For Accelerated Growth

Infusion Systems

Baxter Pharmaceuticals and Technologies

– Global Anesthesia– Enhanced Injectables

Innovation Through Technology

Camille FarhatGeneral Manager, Infusion Systems

Medication Delivery Overview– Overview– IV Therapy

Daniel TasséGeneral Manager, Baxter Pharmaceuticals and Technologies

Ken Burhop, Ph.D.Vice President, Global Scientific Lead

Peter ArduiniPresident, Medication Delivery

Key Takeaways

2007 – Accelerating Growth In Medication Delivery

High degree of confidence in achieving our “Base Case” of 6% - 8% top line growth

New products and business development provide opportunities for accelerated growth beyond the “Base Case”

Acute focus on continued margin expansion

The Medication Delivery Business

$1.3

$0.3

$1.5

$0.8

Infusion Systems

Global Anesthesia

2006 Medication Delivery Sales ($ in Billions)

Established global reach with internationally recognized brand

Market leading product portfolio

World class manufacturing and R&D capabilities

Competitive Advantages

Medication Delivery 2006 Sales = $3.9 Billion

IV Therapy

Enhanced Injectables

Global Reach And Brand Recognition

75 Years of brand excellence

Operating globally for over 50 years

In 2006, nearly 47% of sales outside the US

Strong channels and customer relationships

Manufacturing on 6 continents

Competitive Advantages2006 Medication Delivery Salesby Region

Well Established Global Capabilities

Asia Pacific

Latin America

Europe23%

US53%

10%

Other 4%

10%

Market Leading Products For Acute Care

Global Anesthesia

#2

IV Solutionsand Nutrition

#1

Pumps and Specialty Systems

#2

Access Sets

#1

Enhanced Injectables

#1

Our Global Product Families Are #1 Or #2 In Key Markets

Key Product Families

#1 or #2 Market Position

$3+ Billion in Sales

Pharma Partnering

#1

~80% of Revenues from Market-Leading Products

World Class Capabilities

Parenteral expertise

Device system engineering

Plastics and material science

Lyophilization

Fluorochemistry

R&D CapabilitiesManufacturing Capabilities

Manufacturing And R&D Capabilities Are Key Differentiators

Aseptic production

Plastic and moldings expertise

High volume / Low cost assembly

Cytotoxic expertise

Nutrition and Solution

Inhaled Anesthetics

Challenging Growth Over The Last Three Years

$4.0 $3.9$4.0COLLEAGUE and other infusion pumps

Propofol generic competition

Rocephin generic competition

20052004 2006

Growth ChallengesMedication Delivery Sales ($ in Billions)

~$450 Million Impact Over The Last Two Years

Medication Delivery Growth Plays

Diverse Array Of Growth Opportunities

IV SolutionsIV SolutionsIncrease Profitability

New products – AVIVAPrice / Mix management

Global AnesthesiaGlobal AnesthesiaShare Growth

Global expansionTechnical innovation

Infusion SystemsInfusion SystemsNew Growth Paradigm

24 Month product cycleRedefining the value proposition

Nutrition Nutrition Growth / Market Development

Geographic expansionNew product innovations in premix

FocusThemes

Medication Delivery Growth Plays

“The Rebirth Of Medication Delivery”

Business DevelopmentBusiness DevelopmentTarget Rich Opportunities

Strategic tuck-insDisciplined approach

Promising TechnologiesPromising TechnologiesWildcards

Hylenex: $500+ million potentialPromaxx: $500+ million potential

Enhanced InjectablesEnhanced InjectablesProduct Differentiation

Enhanced molecules drive growthOngoing platform development

Pharma PartneringPharma PartneringGrowth and Returns

Service and solution orientationUnique technical capabilities

FocusThemes

2006 2011“ Base Case”

LRP

Driving Revenue Growth In Medication Delivery

6% - 8%CAGR

$3.9B

Solid “Base Case” Strategy DeliveringMid To High-Single Digit Sales Growth

Aspiration

Global Anesthesia

Infusion Systems

Enhanced Injectables

IV Therapy

The IV Therapy Business

Global reachWorld class capabilities

– Science and technology– Manufacturing (Shingo Prize

winner)Innovation

– Packaging technologies– Nutrients– Devices and software– Manufacturing quality

Competitive Advantages

#1 Leadership Position

2006 Medication Delivery Sales ($ in Billions)

$1.3

$0.3

$1.5

$0.8

Infusion Systems

Global Anesthesia

IV Therapy

Enhanced Injectables

IV Therapy Market Size And Growth

Innovation In An Area Of Historical Strength

2006 2011

Core StrategiesPrice optimization

Drive product extension of non-PVC bags

Geographic and clinical development

Innovate packaging, solutions and formulations

$5.3$4.6

Market Dynamicsand Core Strategies

Global IV Therapy Market ($ in Billions)

Market DynamicsIV market in the US operating at or near capacity

Increasing demand for ready-to-use products

Interest increasing in non-PVC packaging

2% - 4%CAGR

Source: IMS Hospital Supply Index, Company 10k and Baxter Estimates

Non PVC, DEHP free and latex free

Temperature tolerance

Designed for difficult to admix drugs

Proprietary ENLIGHTENEDHRBC bar code

Price premium

Expanding AVIVA Launch In The US

Baxter Has Key Competitive Advantages With AVIVA

Key Product Attributes

Manual Compounding

Potential for medication errorsPreparation timeNumber of steps

Simplicity / Convenience

Low

High

Innovation Path

Parenteral Nutrition…Broad Portfolio Offering

Automated Compounding

Multi-Chamber Bags

High

Nutrition Products Provide Simplicity And Convenience

15 Minutes10 Steps

46 Minutes22 Steps

60 Minutes30 Steps

Global Expansion With Multi-Chamber Bags

Expand Market ShareWestern Europe

Business DevelopmentChina

Growth MarketUS

Growth Through Geographic Expansion And Clinical Development

Nutrition Summary

Invest in clinical evidence to enable expansion and share growth

Expand globally into both large and high growth markets

Continued innovation of premix products, macro-nutrients and micro-nutrients

Double-Digit Sales Growth Opportunity

How We Grow

2006 2011

8% - 10%CAGR

$0.5

$0.8

Baxter Nutrition Revenue($ in Billions)

“Base Case” LRP

IV Therapy Summary

Geographic expansion (e.g., China)

Optimize price in view of the IV industry operating at or near capacity in the US market

Geographic expansion and clinical development to grow Nutrition markets

Leverage plastics and materials science capabilities in fluid and nutritional packaging

Re-Energizing Our Core Business With Geographic Expansion And New Products

Infusion Systems:New Growth Paradigm

Camille FarhatGeneral Manager, Infusion Systems

Medication Delivery

The Infusion Systems Business

Installed base of over 500k large-volume pump channels

Productivity leader with standard sets

Manufacturing expertise

Integrated, multi-functional, and disciplined innovation-focused R&D

Competitive Advantages

The Pieces Are In Place For Accelerated Growth

2006 Medication Delivery Sales ($ in Billions)

$1.3

$0.3

$1.5

$0.8

Infusion Systems

Global Anesthesia

IV Therapy

Enhanced Injectables

Infusion Systems Market Size And Growth

Well Positioned To Take Advantage Of Market Trends

Core StrategiesBack in the market with device hardware

Grow leadership in access sets

Develop new applications

Expand geographically

Market Dynamicsand Core Strategies

Global Infusion Systems Market ($ in Billions)

Market DynamicsGrowth in ICU beds

Growth in surgeries

Focus on safety: infection reduction, medication error prevention, & workflow

2006 2011

$2.7

$2.1

4% - 6%CAGR

Source: MarketStrat Infusion Pumps Worldwide, July 2006

Access sets anti-microbial nanotechnology

COLLEAGUE with CXE (smart software) and CE Mark (multi-lingual)

Connectivity

Re-entry to acute care pain market with I-Pump

Local wound site pain offering

Broad portfolio of products

#1 or #2 Market position globally

History of game-changing innovations

Infusion Systems Is More Than COLLEAGUE

Resume Growth With 2007 Launches

Our Strong Base Upcoming Launches

Pain, oncology, and anti-infectives

Hospitals, infusion clinics and homecare agencies

Preferred for simplicity and portability

Market to grow 3x (2006 - 2011)1

Grow pain segment

– Europe: Physician training and clinical evidence

– US: Marketing and reimbursement focus

Expand oncology in US

– Leverage channel strength and key opinion leaders relationships

OpportunitiesApplication of Elastomerics

Optimizing Our Best-In-Class Infusors

Leveraging Our Current CapabilitiesFor Growth In Ambulatory Pump Market

Note 1: MarketStrat Infusion Pumps Worldwide, July 2006

Evolving Customer Requirements

Reduced Medication

Error

Reduced Infection

Greater Integration of Systems

Zero Medication Errors

Zero Blood Stream Infections

Interoperability

Patient and Care Unit Centric

– Workflow

– Clinical Information

+5% Accuracy

Ease of Use

Standardization

Needle-free Set

Req

uire

men

ts

Enhanced Safety Through Smart Products

Pharmacist

Risk Managers

CIO+

Tomorrow

Clinicians

Biomed

Cus

tom

ers

Today

Today’s Model

Sell pumps

Set usage

Repair / Service at minimal profit

Today

Pump

Sets

New Business Paradigm

Sell pumps

Set usage

Repair / Service at minimal profit

Today

Sell pumps + network connectivity

Smart sets

Services: uptime, remote diagnostics, asset management, training ….

Continuous easy software upgrades and reporting

Tomorrow

Pump

SmartSets w/Feedback

Networked Services

Upgrades& Decision Support

Embedded 2-way connectivity

Continuous clinical monitoring

Disease specific decision support with smart alerts and alarms

Remote diagnostics and tracking

Push/pull downloads on demand

Smart System Pillars

Answering Customer Needs Through Smart Systems

Integrating Devices + Access Sets + ITEnables “Autopilot”

“Autopilot”

Our Approach To Smart Systems

Therapy Specificand Set

Interdependence

Scaleable Hardware with Software Upgradeability

Nurses’, Biomed’s, and Patient’s Best

Friend

In Pumps

Error Forgiving Diagnostic SetsBlood Stream

Infection Elimination

In Access Sets

In Technology

Two Way Data Exchange

Clinical and BiomedApplications

“True” Closed Loop Therapy

Clear And Integrated Approach …Enhance Safety And Productivity

Capabilities- Systems engineering- Subsystem expertise- Fluid mechanics- Patient safety- Software

Processes

Device Center of Excellence

Evolving all sub-systems over the Next 24 Months

2 – 3 New Device Introductions

New Products

Building Leadership In The Pump Business

Power management

User interface

Pump head technology

Connectivity

Clinical applications

Biomed applications

Technology Platforms

Platform Approach Drives Speed, Quality And Innovation

Sets

Pumps

IT

Autopilot

In US, 41 States require, suggest or are considering legislation on infection reporting1

In the US, over 3.5 million hospital acquired infections (HAI) yearly2

+350k BSI annually2 with 23 days longer stay, ~$250k per infection, and 18% increase in mortality3

Impact on the Market

Transforming The Industry –Blood Stream Infections (BSI)

Hospitals Are Seeking Solutions To The Significant Additional Costs Of BSI

Sterilized

Clinician access point infection protection

Sets

IT

Autopilot

Pumps

Source: 1) www.consumersunion.org, 2) CDC Special Report, Emerging Infectious Disease, Vol 7, No 2, April 2001, 10% HAI assumption 3) Pennsylvania Health Cost Containment , Hospital Acquired Infections, www.PCH4.org

Total US opportunities for BSI are well over 3 billion

Intended Customer Benefits

Prevents 99.9% of the 6 most common hospital based pathogens

Not contributory to antimicrobial resistance

Decreased hospital stay and costs

Proprietary Nano-Coating Process

First Game-Changing Technology Since Baxter Introduced Needle-Free

Baxter Advantage

Ideally suited for mass production within our manufacturing capabilities

Exclusive rights for needle-free access

Leverageable across businesses

Sets

IT

Autopilot

Pumps

Bacterial Colonization Sepsis

Uncoated Coated

Information Technology Sets

IT

Autopilot

Pumps

Department

Clinical Information & Productivity

Hospital Information Systems

Interoperability

Biomed

Real Time Info & Asset Management

Baxter

Remote Services Capabilities

Phase 3

Rule-based infusionsClinical Decision Support Ubiquitous 2-way comm.True closed loop

Improved Outcome

Clinical Integration

IT Evolution

SafetyProductivity

Outcome

Phase 1

5-rightsRemote alarmsInfusion data

Therapy Delivery … Error Reduction

Phase 2

Data mergeBiomed applicationsClinical applicationsSmart alerts & alarmsFaster event to action

Productivity … integrated info

Data Integration

Sets

IT

Autopilot

Pumps

Enhancing Revenue Growth

Pump

SmartSets w/Feedback

Networked Services

Upgrades& Decision Support

Remote Diagnostics

Asset Management

Software Apps & Upgrades

Install & connect

Decision Support

Smart Sets

Service Repair

Standard Sets

PumpsTomorrowToday

Innovation Will Provide New Sources Of Revenues

Sets

Pumps

IT

Autopilot

2006 2011

Infusion Systems Summary

Deployment … Solidify customers’ trust

Innovation and new product introductions

Expand geographically and develop new applications

Aggressive development and integration of platforms to enable ”Autopilot”

The Future Starts Now

How We GrowBaxter Infusion Systems Revenue($ in Billions)

6% - 8%CAGR

$0.8

$1.1

“Base Case” LRP

Global AnesthesiaAnd

Enhanced Injectables

Daniel TasséGeneral Manager, Baxter

Pharmaceuticals and TechnologiesMedication Delivery

The Global Anesthesia Business

Of the three modern inhaled anesthetics (IA)

– 2 are available from a few competitors

– 1 is unique to Baxter

– Only Baxter offers all three

Channel and clinical sales strength

Unique technical capabilities– IA chemistry

– Manufacturing and engineering

– Product reliability

Competitive Advantages

Unique Position In The Global Anesthesia Market

2006 Medication Delivery Sales ($ in Billions)

$1.3

$0.3

$1.5

$0.8

Infusion Systems

Global Anesthesia

IV Therapy

Enhanced Injectables

2006 2011

Global Anesthesia Market Size And Growth

Market DynamicsUnit volume growth = 6% CAGR1

Increase in number of surgeries

No disruptive technologies on the horizon

Inhaled Anesthetics (IA) usage evolves

Core StrategiesIncrease our share of total market

Methodical geographic expansion

Drive clinical development of IA

$1.2

Market Dynamicsand Core Strategies

Global Inhaled Anesthetic Market($ in Billions)

Share Growth Opportunity In Profitable Market

2% - 4% CAGR

$1.4

Source and Note 1: IMS Data, Company 10k, and Baxter Estimates

Baxter Portfolio Advantage

Baxter Gases

Suprane (Desflurane)

Sevoflurane

Forane (Isoflurane)Ignoring price, only 10% of usage would change1

74% of clinicians use all three gases1

Forane (Isoflurane)

Sevoflurane

Suprane (Desflurane)24%

41%

35%

Share of Procedures1

Unbiased clinical partnership to help achieve the best patient outcome

Why Baxter

Offering All Three Gases Is A Significant Clinical And Economic Value Proposition

Note 1: US Inhalation Market Quantitative Tracking Research study by Inform Research for Baxter

Sustainable Anesthesia Leadership

SupraneSevoflurane

IsofluraneClinical Development and Selling

Manufacturing Expertise

IA System Validation

Ongoing Innovation

Skilled Scientists

Global Inhaled Anesthetic Market LeadershipRequires Broad Competencies

Global Anesthesia Summary

Drive share growth through– Full line position

– Geographic expansion

Technical competencies to deliver inhaled gases globally

Clinical expertise and customer intimacy

On Track To Market Leadership

How We GrowBaxter Global Anesthesia Revenue ($ in Billions)

2006 2011

11% - 13%CAGR

$0.3

Aspiration

“Base Case” LRP

The Enhanced Injectables Business

Proprietary technologies

– Enhanced packaging

– Formulation technologies

– Enhanced delivery

World class manufacturing

– Parenterals

– Facilities design

– Complex molecules

Scientific and technical expertise

Services and solutions orientation

Competitive Advantages

Providing Hospitals And Pharma Partners With World Class Capabilities

2006 Medication Delivery Sales ($ in Billions)

$1.3

$0.3

$1.5

$0.8

Infusion Systems

Global Anesthesia

IV Therapy

Enhanced Injectables

Serving Two Core Customers

Baxter Injectables ~ $1.2 BMolecules to Hospital Customers

Enhanced Injectables2006 Sales = $1.5 Billion

Providing Hospitals And Pharma Partners With World Class Capabilities

Pharma Partnering~ $300 Million

Other~ $200 Million

Enhanced Packaging~ $600 Million

Amps and Vials~ $400 Million

Pharma Partnering ~ $0.3 BProprietary Molecules

Emphasis of DifferentiationEmphasis of Differentiation

The Value Of Enhanced Drug Delivery

Number of CompetitorsMany Few

Customer Continuumof Clinical BenefitsLess More

Ampoules and Vials

Focus On Higher ValueAnd Clinically Differentiated Platforms

Enhanced Packaging

Formulation Technologies

Enhanced Delivery

Enhanced Drug Delivery Platforms

Enhanced Packaging

Formulation Technologies

Enhanced Delivery

Promaxx Sustained release injectable and inhaled drug formulations

Hylenex Removes barriers to absorption and dispersion, allowing hydration and administration of drugs Sub-Q

Solomix Pre-attached vial to bag for non-stable drugs; improved shelf life

Platform by which an insoluble drug can be made solubleNanoedge

Liquid Premix Ready-to-use liquid drugs; medication error

Frozen Premix Ready-to-use frozen for non-stable drugs; medication error

Clearshot Clear, break-resistant syringe, well suited for sensitive biologics

Platforms Description and Benefits

Broadest Portfolio Of Delivery PlatformsWith Demonstrated Clinical Benefits

Value Of Differentiation –Ceftriaxone Example

~$11.00 / gram

Price stability

Zero competitors

~$4.00 / gram

Rapid price erosion

8 – 10 competitors

Marketplace Rewards Enhanced Drug Delivery

Reduced risk of medication error

Reduced risk of contamination

Reduced steps and labor required

Frozen PremixVials

–– ++

Enhanced Injectables – Our Approach

Opportunities Exist For Both Partner And Baxter Molecules

Baxter’s Approach

Baxter Injectables (Off-Patent)Selective enhancement of molecules

Build on channel strength

Leverage enhanced delivery platforms

Core Strategy

Pharma Partnering (Proprietary)Solve customer problems

Provide dependable supply

Leverage enhanced delivery platforms

PharmaPartnering

BaxterInjectables

Enhanced Packaging

Enhanced DrugDelivery Platforms

Formulation Technologies

Enhanced Delivery

Enhanced Injectables – Market Implications

Growing Market That Plays To Baxter’s Enhanced Injectables Capabilities

Molecules Coming Off Patent66 Molecules over the next ten years, 23 are biologics4

Life Cycle Management~50% of New Drug Application approvals are reformulations3

Biologics Growth13% CAGR increase by 2010, an increase of $26 billion2

Pharma OutsourcingExpected to increase from 32% today to 37% in 20111

Baxter Injectables

Pharma Partnering

Note 1: 2005 PharmaSource Report; Note 2: June 2006 DataMonitor Report “Biologics Driving Growth to 2010”Note 3: January 2004 DataMonitor Report “Injectable Drug Delivery”; Note 4: Orange Book and Newport Horizon

Pharma PartneringWorld Class Capabilities

We Solve Our Customers’ Problems

Fill / Finish Capabilities Enhanced Drug Delivery

Bloomington, Indiana andHalle, Germany

Fully dedicated to contract services includes clinical, commercial and cytotoxic manufacturing capabilities

Supply assurance – product available when needed at the highest quality

Manufacturing expertise to solve our client’s problems

Facility of the YearAwarded by the Internal Society of Pharmaceutical Engineers (ISPE)

Enhanced packaging

Formulation technologies

Enhanced delivery

Industry leading scientific team

Pharma Partnering Summary

Service and solutions orientation

Unique enhanced drug delivery platforms

Strong technical capabilities

Deep relationships with top pharma partners

Strong Double-Digit Sales Growth

How We GrowBaxter Pharma Partnering Sales($ in Billions)

2006 2011

14% - 16%CAGR

$0.3

Aspiration

“Base Case”LRP

Enhanced Injectables Summary

Demonstrated expertise in enhanced drug delivery platforms and manufacturing capabilities

Pharma partners require our expertise to differentiate and increase the value of proprietary molecules

Expertise applied to Baxter molecules delivers clinical value to hospitals driving market and margin growth

Leveraging Platforms To Create Value

Innovation Through TechnologyHYLENEX And PROMAXX

Ken Burhop, Ph.D.Vice President, Global Scientific Lead

Medication Delivery

Emphasis of DifferentiationEmphasis of Differentiation

The Value Of Enhanced Drug Delivery

Number of CompetitorsMany Few

Customer Continuumof Clinical BenefitsLess More

Ampoules and Vials

Focus On Higher ValueAnd Clinically Differentiated Platforms

Enhanced Packaging

Formulation Technologies

Enhanced Delivery

PROMAXX

HYLENEX

Why HYLENEX?

Only FDA-approved recombinant hyaluronidase human injectionIndicated for:

– Increase absorption and dispersion of other injected drugs– Subcutaneous (Sub-Q) hydration

Provides Clinicians A Better Solution To Serve Patients With Difficult Venous Access

HYLENEX – Mechanism of Action

Enables Enzymatically Augmented Subcutaneous Infusion For Delivery Of Drugs And Fluids

Hyaluronic acid is a gel-like substance found in tissues throughout the body (e.g., skin, eyes) that inhibits the spread of subcutaneously-infused fluids

HYLENEX digests the hyaluronic acid to temporarily degrade the gel and enable fluids and other drugs to be delivered more effectively

The hyaluronic acid is naturally regenerated within 24 hours

Problems with IV Administration Sub-Q Administration with HYLENEX

Difficult venous access Easy access via multiple sites

HYLENEX Solves Many Of The ProblemsAssociated With IV Administration

Brings IV Like Performance Without The Burden Of IV

Must change site every 3 days Sub-Q can remain up to 7 days

Requires skilled nursing / surveillance Nurse / nurse aide (or family) can do it

Phlebitis Bruising

Potential complications

HYLENEX Vial Butterfly Needle

Avoids many complications

Study Results –Hydration With Lactated Ringers (LR)

INFUSE-LR Study (n = 48)LR Flow Rates: HYLENEX vs. Placebo

400 cc

Without Without HYLENEXHYLENEX

400 cc

With With HYLENEXHYLENEX

HYLENEX Makes Sub-Q Hydration Possible

Sub-Q Administration with HYLENEX

HYLENEX accelerated flow rate: ~ 4x vs placebo

Significant swelling without HYLENEX

Reduced swelling with HYLENEX

Preferred by 92% of subjects & investigators

Subject 105

Study Results – Morphine Study

Provides a superior effect of morphine over time (Pk) when compared to Sub-Q morphine alone and closer to IV morphine

Time to maximum concentration reduced by 42%: 19.1 min with placebo to 11.2 min with HYLENEX

Sub-Q Administration with HYLENEX

Better Than Traditional Sub-Q And Closer To IV Administration Of Morphine

INFUSE-Morphine StudyPharmacokinetic (Pk) Profile

010203040506070

0 3 6 9 12 15 18 21 24 27 30

Minutes

80

130

180

230

280

Morphine IV

Morphine SQ + HYLENEXMorphine SQ + Saline

Plas

ma

Mor

phin

e C

once

ntra

tion

(ng/

mL)

What Thought Leaders Are Saying

Broad-Based Support From Key Opinion Leaders

“I love working on things that can change medicine and can make a difference for society. HYLENEX is just such a project that has the potential to change medicine.” Chris Ramsook, MD, Assistant Clinical Professor, University of Arizona College of Medicine,

Program Director, Pediatric Emergency Medicine Fellowship, Phoenix Children’s Hospital

“Please let me know what I can do to help. I really want this product to be used everywhere.” Ken Yen, 2005 AAP’s Young Scientist Award, DIVA score, Assistant Professor, Children’s

Hospital of Milwaukee

“This will revolutionize pediatric medicine. Just think of a world without having to continually jab IV’s and never have to do IO’s [intraosseous infusions].”Coby Allen, MD, Texas Children’s Hospital, Assistant Professor of Pediatrics, Baylor College of Medicine

Uncontrolled Protein

Precipitation

What Is PROMAXX?

A sophisticated formulation technology platform for complex molecules

Addresses substantial unmet needs for:– New product development– Life cycle management

Proprietary Formulation Technology Platform

PROMAXX Microspheres

PROMAXX Platform Applications

Nucleic Acid Delivery

PROMAXXMicrospheres

Monoclonal Antibody Delivery

Sustained Release

0102030405060708090

100

0 5 10 15 20 25 30

Time (Hours)

Cum

ulat

ive

Perc

ent R

elea

sed

(%)

Target Cell

Targeted Delivery

The Power And Versatility Of ProMaxx As A Drug Delivery Platform

Pulmonary Delivery

Inhaled Insulin Phase I - Trial Study Results*

* Data presented at upcoming scientific meetings

Low bioavailability relative to injected – Exubera bioavailability is ~10%

Pulmonary Delivery Issues

Need for enhancing agents (additional excipients)

Local adverse events such as cough and shortness of breath

Tangible Benefits For Patients And Clinicians

Bioavailability more favorable than dry powder systems– Reduce inhaled drug dose– Lower costs

PROMAXX Advantage

Essentially pure insulin (no additional excipients)

No evidence of coughing or shortness of breath

Technology Innovation Summary

HYLENEXOpportunity to be a $500+ million business

Expanded relationship with Halozyme for HYLENEX kits and coformulations

Enables enzymatically augmented subcutaneous infusion

$1 Billion Opportunity With Platforms Of Significant Clinical Potential

PROMAXXOpportunity to be a $500+ million business

Trials and continued platform development are on track

PROMAXX is an ideal differentiator for proprietary and Baxter molecules

2006 2011“ Base Case”

LRP

Driving Revenue Growth In Medication Delivery

6% - 8%CAGR

$3.9B

Aspiration

IV SolutionsIV SolutionsIncrease Profitability

Global AnesthesiaGlobal AnesthesiaShare Growth

Infusion SystemsInfusion SystemsNew Growth Paradigm

Nutrition Nutrition Growth / Market Development

Business DevelopmentBusiness DevelopmentTarget Rich Opportunities

Promising TechnologiesPromising TechnologiesWildcards

Enhanced InjectablesEnhanced InjectablesProduct Differentiation

Pharma PartneringPharma PartneringGrowth and Returns

Solid “Base Case” Strategy

Inhaled Anesthetics

COLLEAGUE

Nutrition

Portfolio Optimization

Creating Value Through Margin Expansion

Cost and Yield Improvements

Concentrated & Redirected Promotional Focus

Mix Shifts / Product Upgrades / Price Improvement

AVIVA

IV Solutions Pricing

Enhanced Injectables

Several Near-Term Margin Expansion Opportunities In Medication Delivery

Pharma Partnering

Enhanced Injectables

Infusion Systems

IV Therapy Global Expansion

Summary

2007 – Accelerating Growth Of Medication Delivery

High degree of confidence in achieving our “Base Case” of 6% - 8% top line growth

New products and business development provide opportunities for accelerated growth beyond the “Base Case”

Acute focus on continued margin expansion

Baxter Investor ConferenceMarch 14, 2007