Slide Presentation for March 16, 2010 Annual Business Review

EX-99.1 2 dex991.htm SLIDE PRESENTATION FOR MARCH 16, 2010 ANNUAL BUSINESS REVIEW Slide Presentation for March 16, 2010 Annual Business Review

Sigma-Aldrich Corporation

Enabling Science to

Improve the Quality of Life

March 16, 2010

Exhibit 99.1

Cautionary Statement

•Our presentation today will include forward looking statements relating to the Company’s future performance, goals, strategic actions

and initiatives and similar intentions and beliefs, including expectations, goals, beliefs, intentions and the like regarding future sales,

earnings, cash flow, share repurchases and other matters. These statements involve assumptions regarding Company operations,

investments and acquisitions and conditions in the markets the Company serves. Although the Company believes its expectations are

based on reasonable assumptions, such statements are subject to risks and uncertainties including, among others, certain economic,

political

and

technological

factors.

Actual

results

could

differ

materially

from

those

stated

implied

during

this

review

contained

other Company communications due to, but not limited to, such factors as (1) declining global economic conditions, (2) changes in

pricing and the competitive environment and the global demand for our products, (3) fluctuations in foreign currency exchange rates, (4)

changes in research funding and the success of research and development activities, (5) dependence on uninterrupted manufacturing

operations, (6) changes in the regulatory environment in which the Company operates, (7) changes in worldwide tax rates or tax

benefits

from

domestic

and

international

operations,

including

the

matter

described

Note

–

Income

Taxes

–

the

Consolidated

Financial

Statements

the

Company’s

Form

10-K

report

for

the

year

ended

December

31,

2009,

(8)

exposure

litigation,

including

product liability claims, (9) the ability to maintain adequate quality standards, (10) reliance on third party package delivery services, (11)

failure to achieve planned cost reductions in global supply chain initiatives and restructuring actions, (12) an unanticipated increase in

interest

rates,

(13)

failure

planned

sales

initiatives

our

Research

and

SAFC

businesses,

(14)

other

changes

the

business

environment in which the Company operates, and (15) the outcome of the matters described in Note 11-Contingent Liabilities and

Commitments-in the Company’s Form 10-K report for the year ended December 31, 2009. The Company does not undertake any

obligation to publicly update the matters covered in this presentation.

•With over 60% of sales denominated in currencies other than the U.S. dollar, management uses currency-adjusted growth, and

believes

useful

investors,

judge

the

Company’s

controllable,

local

currency

performance.

Organic

sales

growth

data

presented

this

review

proforma

data

and

excludes

currency

impacts.

While

are

able

report

historical

currency

impacts

after

the

fact,

are unable to estimate changes that may occur later in 2010 to applicable exchange rates and thus are unable to reconcile the projected

non-GAAP currency adjusted internal growth rates to reported GAAP growth rates for 2010. Any significant changes in currency

exchange rates would likely have a significant impact on our reported growth rates due to the volume of our sales denominated in

foreign currencies.

•Management reports both GAAP and adjusted sales and income comparisons to reflect what it believes are ongoing and/or

comparable

operating

results

excluding

currency

impacts.

Management

excludes

this

item

judging

its

historical

performance

and

assessing

its

expected

future

performance.

Management

also

uses

free

cash

flow,

non-GAAP

measure,

judge

its

performance

and

ability

pursue

opportunities

that

enhance

shareholder

value.

Management

believes

this

non-GAAP

information

useful

investors

as well. Reconciliations of GAAP to non-GAAP information are included in the Company’s February 10, 2010 earnings release posted

on its website, www.sigma-aldrich.com

Sigma-Aldrich Corporation

Jai Nagarkatti

Chairman, President and

Chief Executive Officer

Agenda

Enabling science to improve the quality of life

Summary

Growth Drivers

Portfolio Assessment and Financial Roadmap

Our Overarching Objective / Plan Overview

Our Overarching Objective

To build on our core capabilities and

leverage our financial strength to

deliver sustainable above-market

growth and create value for our

Employees, Customers and Shareholders

Overview

How should you measure success?

Plan to achieve our objective

Our markets and global trends

Who is Sigma-Aldrich?

Who is Sigma-Aldrich?

Delivering Value Through a Diversified Portfolio

Sigma-Aldrich

($ Million)

2009 Revenue

$2,148

2009 EBITDA

$ 592

2009 Free Cash Flow

$ 396

Delivering strong financial performance despite a challenging economy

70%

Research

Consumables

30%

Fine

Chemicals

& Services

Who is Sigma-Aldrich?

•Research Business

•

Customers

–

Academia

–

Pharma

& Biotech

–

Industrial

–

Hospitals

–

Testing Labs

•

Products

(170,000; 48,000 Manufactured)

–

Reagents

–

Chemicals

–

Biochemicals

–

Standards

–

Lab Supplies

–

Kits

•Manufacturing (SAFC)

•

Customers

–

Pharma

–

Biotech

–

Hitech

•

Capabilities

–

Chemical Synthesis

(API’s, Intermediates)

–

Isolation, Extraction,

Purification

–

Fermentation

–

Assay Development

–

Media Formulation

–

Services

A Life Science company enabling researchers and manufacturers

to improve the quality of life

Markets and Global Trends

Markets

Sigma-Aldrich participates in space with significant room for growth

Markets and Global Trends

Global Economy Shifting East

*As determined by FTSE Global Equity Index; Source: Global Insight's World Overview

Projected GDP Growth

GDP in $ Trillions

Sigma-Aldrich’s plan to capture opportunity: expand presence in emerging markets

Market and Global Trends

Shift Towards Biology

Sigma-Aldrich’s plan to capture opportunity:

build reputation through innovation in Biology

Pharmaceutical R&D Increasingly

Focused on Biologics

Market and Global Trends

Exponential Importance of the Internet

Sigma-Aldrich’s plan to capture opportunity:

Aggressive investment to enhance customer experience

*World Internet Stats

Internet Users Have Increased by

Nearly 10 Times in the Past Decade*

Market and Global Trends

Focus on Energy, the Environment and Food Safety

Sigma-Aldrich’s plan to capture opportunity: focused approach in Analytical,

Chemistry and Materials Science to support research and manufacturing

Global Renewable Energy Growth

2008-2018 ($ Billions)

Plan to Achieve Objective

Approach

•

Site Consolidation

Revitalize or divest

underperforming assets

Redeploy

ABC

= Focus on Analytical, Biology, Chemistry and Materials Science

•

Systems

•

E-Business

•

Sales Process

Supply Chain and

go-to-market approach

Optimize

•

Innovation (ABC

)

•

Global Reach

•

Unique Manufacturing

To build and strengthen

our core capabilities

Invest

•

Analytical (A)

•

Biology (B)

•

Chemistry (C)

•

Materials Science (

)

On opportunities where

we have sustainable

competitive advantage

Focus

above-market growth and create value for our employees, customers and shareholders

To build on our core capabilities and leverage our financial strength to deliver sustainable

Plan to Achieve Objective

•

Share repurchase

Capital structure

Financial strength

•

Competitive pricing strategy

Pricing

Sourcing knowledge

•

Optimize Supply Chain

•

Leverage Process

Improvement

Operations

Operating excellence

Earnings

Expansion

•

Business development and

inorganic growth

Capital structure

Financial strength

•

Support bench-to-bulk

demand

Fulfill demand

Unique manufacturing

•

Expand in faster growth

countries

Geographic

Global footprint

ABC

focus

Innovation

Unrivalled scientific

knowledge

Top Line

Growth

Initiatives

Leverage

Competitive Advantage

Leverage core competencies through targeted initiatives to create value

Plan to Achieve Objective

Impact of Top Line Growth Initiatives

4% Incremental contribution to top line growth

0.5%

Expand Web and B2B capabilities

Realign sales effort

Optimize

Go-to-Market

1.0%

Apply our

technologies

customers’

unique

and

evolving

supply chains

SAFC/Unique

Mfg. Capabilities

1.0%

Increase presence and assets in faster growth economies

Geographic

Expansion

Leverage chemistry knowledge to offer

products for materials research and

manufacturing

Chemistry

Increase focus on biology

Expand traditional product portfolio and build

new targeted platform technologies

Biology

1.5%

Expand into attractive areas of detection

and analysis

Analytical

Innovation

ABC

Focus

Incremental Impact

Initiatives

ABC

Targets High Growth Markets

M&A activity will supplement organic growth

Sigma-Aldrich Market Share

How to Measure Success

Strategic actions build sustainable value

200-300 bpts

Expand cumulative operating margins by 2014

> $2 Billion

Free cash flow (five years)

7-8%

Top line organic growth (normal economic conditions)

Incremental Impact

Five-Year Financial Targets

Management Team

Portfolio Assessment and

Financial Roadmap

Rakesh

Sachdev

Sr. Vice President,

Chief Financial Officer and

Chief Administrative Officer

Outline

Capital Structure and Use of Cash

Investment Thesis

Looking Ahead

–

Sales Growth Drivers

–

Profitability Drivers

Portfolio Assessment

Historical Performance and Trends

2009 Results Recap and 2010 Guidance

2009 –

Key Business Highlights

•

Strong financial year, despite economic environment

–

Several

records

achieved

–

EPS

Free

Cash

Flow

•

Research Biotech growth driven by

–

Innovative new antibody products

–

Regenerative medicine

–

Epigenetic products

•

Fine Chemicals (SAFC) benefited from sale of components for

H1N1 vaccine and Industrial media for biological drugs

•

Continued growth in CAPLA markets

–

Contribution of 21% of total sales

•

Strongest growth achieved in academic markets

•

Increased e-commerce sales to 45% of world-wide research-based

products from 42% in 2008

•

Knock-out rats recognized as a Top 5 Innovation in 2009 by

The Scientist Magazine

Full Year 2009 Financial Results

2009 Performance drove EPS and free cash flow to a new record.

Free cash flow improvement driven by $70M reduction in inventory

Pre-tax Margin Improved in 2009

2009 pre-tax margins improved 60 bpts

despite currency headwinds and restructuring charges

2010 Guidance

Historical Trends –

Profitable Sales Growth

Continued a 35 year track record in EPS growth

•

Demonstrated historic performance

•

Robust

business

model

–

even

downturn

Historical Performance –

Shareholder Returns

•Share Price

Consistently achieving high ROE.

Share price has outperformed the peer and broad market indices

Sigma-Aldrich Portfolio Snapshot

Mapping Old With New

~50% of research business comes from biology products and services

Biology focus

in Research Markets

*Estimated

Portfolio Snapshot

Another Look

Research Portfolio

Well-positioned for Growth

(~70% of Total Company)

•

Lower growth (~5%)

•

Stable profitable business

$7.4B

•

Broad offering of 18,000 products

•

Basic tools for Biochemical research

Traditional Biochemistry

(Cell Culture Media, Enzymes,

other Lab Essentials)

•

Chemistry growth ~3-4%

Mat. Sci. growth >10%

•

Capital efficient

•

Stable, profitable

business

$3.5B

•

Applications span life and Materials

Science

•

Established leadership position and

recognized brand

•

Broadest offering of 50,000 products

Chemistry/

Materials Science

(Chemical Synthesis of

Small Molecules, Isotopes,

Materials for Electronics)

•

High growth (>10%)

•

Technology investments

$2.3B

•

Help understand complex biological

pathways and systems in living cells

•

Enhance research in Life Science

workflow from “discovery to drug”

Biology

(Biomolecules, Functional

Geonomics, Cell-based

Assays, Transgenics)

•

Higher growth (>10%)

$3.5B

•

Diverse end markets

Environmental, Biotech, Food & Beverage,

Pharma, Testing and Analysis

Analytical

(Reagents, Standards,

Separation Consumables)

Financial Impact

Addressable

Market

Characteristics

Research Portfolio

Significant opportunities in $17 billion addressable market

SAFC Portfolio Positioned

for Value Creation

(~30% of Total Company)

•

Asia growth

•

Benefit from global recovery

•

Diverse applications –

LED lights,

LCDs,

semiconductors, solar panels

Hitech

Materials

(Organic Metals, Oxides)

•

Higher growth

•

Optimizing manufacturing footprint

•

Vertically integrated

•

Momentum in late clinical trial

and commercialization projects

Bioscience

(Media for Manufacture of Large

Molecules for Biopharma)

•

Capital intensive

•

High contribution margins

•

Products difficult to handle and

produce –

unique manufacturing

Custom

Pharma

(High potency API’s, Viral

Vaccines, Fermentation)

•

Capital efficient

•

Moderate growth

•

Larger quantities of research

products

•

Quality systems

Supply Solutions

Financial Impact

Characteristics

SAFC Portfolio

Significant opportunities in $60+ billion addressable market

Sales Growth –

Where?

Above Average Market Growth

Sales Growth –

How?

Initiatives to achieve above market growth rates

Profitability Drivers

Net 200-300 basis point improvement in operating margin over 5 years

Restructuring Activities

Selective reduction in workforce

Voluntary early retirement program

Improve customer service levels

Exiting five manufacturing sites in U.S. and Europe

Recently

Announced

Actions

Total one-time costs of actions estimated at $31 million,

with annual savings of $15-20 million in 12-18 months

Improve operating efficiency

Lower overall fixed cost structure

Align manufacturing and distribution footprint with demand

Activities

Will drive margin expansion

Capital Structure

(At December 31, 2009)

Solid liquidity position to fund growth

Historical Use of Cash

(2005 to 2009)

Uses

$(0.3)

Net

0.3

Dividends

0.9

Share buy-back

$ 0.6

Acquisitions/Investments

$ 1.5

Free cash flow

0.5

Capital expenditures

$ 2.0

Operating cash flow

$ Billions

Funded

with debt

Over $1 billion returned to shareholders through share buy-back and dividends

Future Uses of Cash

2010 and Beyond

•

Fund organic growth through

technology, partnerships,

licensing and go-to-market

investments

•

Fund inorganic growth

•

Cash dividends

•

Share repurchases

•

Debt reduction

Expect free cash flow to be in excess of $2 billion over next five years

Inorganic Growth Criteria

Investment Thesis

Why Sigma-Aldrich Now?

Value Creation

Sigma-Aldrich Advantage

•

Manufacturing and distribution footprint

optimization

•

Demonstrated ability to achieve earnings and

cash flow savings from global supply chain and

process improvement initiatives

•

Margin expansion from profitable sales growth

•

Solid liquidity position to fund both organic and

inorganic growth

•

Increasing

focus

eBusiness

channel

market

•

Emerging Markets becoming a larger contributor

•

Uniquely positioned in high growth markets of

Analytical, Biology, Materials Science and niche

Fine Chemicals

Over five years:

200 -

300 bpts

margin expansion

> $2 billion

cumulative free

cash flow

Earnings

Power

Expansion

7 -

Organic Growth

Plus

Inorganic Growth

Sales

Growth

Analytical

Frank Wicks

President, Research Essentials/

Research Specialties

Analytical Chemistry Is:

The study of the

chemical/biochemical

composition of matter

It asks and answers three

fundamental questions:

•

What is the material present?

•

How much is present?

•

What is the quality?

Platform recognized for its innovation and breadth

Typical Analytical Process

Material to be

Analyzed

Analyzer

System

Sample

Induction

Sample Collection

Sample Preparation

(Separation)

Detection

Data Collection

and Analysis

Results

Important Questions Answered

by Analytical

•

How do the manufacturers of your multi-vitamin tablets

know they contain the right amounts of the right vitamins?

How do they know the tablets don’t degrade or spoil?

–

Analytical Chemistry

•

How do researchers know if they have synthesized

the right chemical, prepared the right mixture or

fabricated the right material?

–

Analytical Chemistry

•

How do we determine the safety of our food or

the cleanliness of our environment?

–

Analytical Chemistry

•

How do pharmaceutical scientists determine the

safety and efficacy of new drug candidates?

–

Analytical Chemistry

How Analytical Fits Within Our

Research Business Growth Strategy

ABC

Our customers use analytical

technology combined with

chemistry, biology and/or

materials science in all

stages of their workflow from

“Discover to Apply”

Analytical

Market

Overview

Market growth of 5%

Source: SDI, Analyst Reports, Team Analysis

* Includes instruments (HPLC, GC, TLC, LPLC, IC, flash chromatography), consumables, standards and reagents

Market by Product Type

Global

Analytical

Market

Overview

•Market by customer segment

•

Environmental

–

Testing pollutants in water,

air and soil

•

Biotech

–

Sample prep and analysis of large

bio-molecules, bio-markers, etc.

•

Food & Beverages

–

Testing nutrients, ingredients,

additives and impurities

•

Pharmaceutical

–

Characterization, efficacy

–

Control of API’s, impurities and

metabolites

Source: SDI, Analyst Reports, Team Analysis

* Includes instruments (HPLC, GC, TLC, LPLC, IC,

flash chromatography), consumables, standards and reagents

Analytical Innovative Solutions

For Environmental, Food Safety and

Pharmaceutical Testing

•Hydranal

•

The “gold standard”

for water content testing

•SPME

•

Positively impacts environment by reducing

chemicals required for analytical testing

•dSPE

•

Facilitates accurate testing of pesticide

residues for fruits/vegetables

•Ascentis

Express

•

Accelerates drug discovery and development

with significant separation cycle time reduction

Improving the quality of life

Analytical Growth Strategy

•

Become

the

“Aldrich”

analytical

standards

and

reagents

•

Chemical analysis

–

Increased emphasis in food safety and the environment

•

Additional capability for collaborative innovation

with academia and industry

–

Increased R&D and business development

•

Bioanalytical

–

Leverage internal “Bio”

capabilities to expand

in this fast-growing segment

•

Material analysis

–

Build on synergies with Materials Science initiative

to develop material analysis capabilities and products

•

Expand in high-growth emerging markets

•

Inorganic growth

–

Providing niche technologies as product areas

Expanding analytical innovation

Going Forward

To achieve >10% top-line sales growth,

we will become the leading provider of

analytical consumables and know-how

•

Known as “the source”

for the

highest quality analytical consumables

•

The commercial partner-of-choice

for analytical consumable innovators

•

A valued, sought-after problem-

solving partner for chemical and

biochemical analysis

Chemistry

Frank Wicks

President, Research Essentials/

Research Specialties

Chemistry Is:

The science of matter and

the changes it undergoes

Sigma-Aldrich –

“Organic molecules used

in scientific research”

Market Overview

•

$1B in size

•

The users are most often the buyers

•

Main segments are Pharma, Biopharma,

Academia, Industrial

•

Pharma

segment hard hit by consolidation

of the industry, trend towards big molecules

and general cost savings in R&D

•

Academia and governmental segments

are growing

•

Main growth in Asian and South American markets

Market

growth

Chemistry

•

Chemical

Synthesis

–

most

comprehensive

product

range of simple molecules to enable creation of

more complex molecules

•

Organic

Building

Blocks

–

basic

molecules

used

especially in drug discovery

•

Stable

Isotopes

–

isotopically

labeled

products

used

in pharmaceutical and research applications

•

Chemistry

Services

–

sourcing

and

custom

packaging to enable drug discovery

•

Materials

Science

–

application

chemistry

for

molecules with properties of high technological

value; e.g. materials used in electronic devices

Materials Science is a fast growing market segment

Chemistry

Growth Strategy

•

Aldrich is the premier brand with 40% market share

•

Broadest

selection

50,000

products

–

add

1,000

new

annually

•

Sales

channels

–

mainly

catalog

and

e-channels

•

One-half million catalogs distributed

•

Aldrichimica

Acta

–

leading

organic

chemistry

journal

will

deliver

growth

Materials Science

Frank Wicks

President, Research Essentials/

Research Specialties

Materials Science Is:

A field of study that focuses on

specific groups of materials with

particular properties of high

technological value and their

applications towards devices

How Materials Science Fits

Within Sigma-Aldrich’s Chemistry

Growth Strategy

•

Chemical knowledge for Life Science

applications carries over to high technology

•

Faster growing applications area –

capturing flat panel displays,

environmental

•

Over the past 6 years we have:

–

Positioned the Aldrich brand in

the Materials Science market

–

Built R&D capacity

–

Implemented a strong

marketing communication platform

–

Introduced 150 new products per year

•

We offer products across the materials

spectrum from hard to soft materials

(ie. inorganics

to metal-organics to organics

to polymers)

Materials Science

Market Overview

Global Materials Science R&D Market

•

$0.5 billion

•

Competition is fragmented

•

Market

growth

–

Big and growing in size and diversity

–

Funding intact

–

Our target markets are still in early phases of

life cycle and new niches are popping up

Development market twice the size of research market

Key Drivers

Macro Trends

Electronics –

green technology

•

Expanded materials spectrum –

metals, ceramics, organics,

electronics

Alternative energy –

government spending

and green technology

•

Growing

customer

base

Biomedical

engineering

–

heavy

R&D

investment, innovation driven by healthcare

•

Well funded user industries investing

high-performance

materials

Materials Science Market ($B)

Materials Science

Growth Strategy

Use innovation focused approach to

fill the gaps:

•

Accelerate new product introduction on

existing platforms

•

Create new offerings for development

customers

•

Enhance analytical capabilities

•

Polymers

•

Metals

•

Ceramics

Expand our market reach to non-

traditional Sigma-Aldrich customers:

•

Only a third of the materials researchers

are chemists

•

Target engineers and physicists engaged

in materials research

•

PR campaign and branding

Sell more proactively:

•

Intensify web marketing

•

Start custom project selling

•

Focus on Supply Solutions type sales

•

Build and train local sales force and

technical service

Reach non-traditional customers

Going Forward

•Objective: > 10% growth

•Scope:

•

To supply high quality materials and services to scientists and engineers

engaged in fundamental and applied materials science research worldwide

and

the

development

innovative

products

select

markets,

such

alternative energy, biomedical devices and electronics

•Key Growth Strategies

•

Expand customer, market and geographical reach to materials scientists and

engineers worldwide, innovative product and service offerings and based on

deep and dominant positions in focused materials chemistry technologies

(ultra-high purity organics, ultra-high purity inorganic salts; polymers; metals

& ceramics preparation and acquire bolt-on capabilities that further

differentiate our position)

Deliver > 10% growth

Biology

David Smoller

President, Research Biotech

Biology Is:

•A natural science concerned with the

study of life and living organisms

•Challenge

•

Understanding the dynamics of the complex

biological pathways and molecular

interactions within living cells

Biology Segments

Comprehensive portfolio of life science products – $800 million

How Biology Fits within our

Research Business Growth Strategy

•

Biology is a complimentary

technology to chemistry in the

life science workflow from

“Discovery to Drug”

•

Life science research moving

towards understanding complex

biological pathways and entire

biological systems

•

R&D grants awarded to laboratories

researching diseases and

therapeutics, especially in areas

relating to stem cell and epigenetic

research

•

Uses same logistics, production,

distribution network, global footprint

•

Same customers

Biochemistry / Biology Market

Business Unit

Market Size ($ Millions)

Market Growth

Biomolecules

$1,900

Functional Genomics

900

Cells & Cell Based Assays

600

Protein Assays

600

Transgenics

& Services

2,000

Genomics

1,800

Cell Culture

RE/RS

500

Specialty Biochem

and Enzymes

RE/RS

900

Lab Essentials

RE/RS

800

$10,000

Sigma is “Where Bio Begins”

for our Customers

Biology Segments

Comprehensive portfolio of life science products – $800 million

Basic tools for Biochemical research

Largest Breadth of Traditional

Biochemistry Products

•

Offer over 18,000 products

•

Add 500 new products each year to

support the latest cutting edge research

•

Largely sold through the catalog

and e-channels

–

Over one-half million catalogs distributed

•

Over one-million names with up-to-date

contact information

•

Target-market information to specified

“communities”

in niche product areas

Largest Breadth of Traditional

Biochemistry Products

•

Cell Culture

–

Complete range of media and components

to grow a variety of cell types

•

Specialty Biochem

and Enzymes

–

Industry leading offering of products

for basic Biochemical research

•

Lab Essentials

–

Broad range of the most common

biochemicals; such as buffers,

carbohydrates and amino acids

Will deliver 5% growth annually

Biology Segments

Comprehensive portfolio of life science products – $800 million

Leading Biomolecule

Provider

Biological Rich Content

•

Leading biomolecule supplier with 4,000

bioactive small molecules and thousands of

proteins and peptides used for life science

research

•

Number one oligo synthesis world-wide with

manufacturing in all regions of the world

•

More than 26,000 monoclonal and

polycolonal

antibodies, including the

industry’s most highly-characterized,

validated Prestige Antibodies

Biologically rich content products

Leading the Industry

Functional Genomics and Regenerative Medicine

•

Unparalleled gene editing technology

–

CompoZr™

Zinc Finger Nucleases (ZFN)

•

Cutting-edge gene silencing products

–

Mission

siRNAs

and the largest set of

validated

lentivirus

based

shRNA

clones

•

Innovative set of reagents for regenerative

medicine including

–

Stemgent

reprogramming

kit

develop

induced pluripotent

stem (iPS)

–

HyStem

™

, customizable synthetic

extracellular matrix (ECM)

New Paradigm in Animal Models

•

Most relevant model system for

your research

–

Rat

–

Mouse

–

Other

•

Addresses currently unmet needs

–

ADME

–

CNS disease

–

CV disease

–

Hypertension

–

Immunodeficiency models

–

Increased productivity

Sigma

Publishes

Science

the

First

Rat

Sigma Acquires Ace Animals, Inc.

•

High quality research rodents

to the biomedical industry

since 1973

•

Brings rodent breeding and

distribution capabilities and

marries

them

our

SAGE™

Labs

animal creation business

Leveraged ZFNs

Cell-based Assays

ZFNs

used to label organelles in a living cell

Power of ZFNs

Stem Cell Research

YFP

Pluripotent Stem Cells

Connecting with Scientist

Information and Social Networking

Going Forward

•

To achieve double-digit top line sales growth –

become leader in specific market segments

within the cell biology market and differentiated

animal models market by:

–

Acquiring new biologically rich content products

–

Leverage portfolio of biologically rich content

products, services and information

–

Enable customers to achieve an even deeper

understanding of biology

Sigma is the only company that is positioned to do this

Biology Segments

Overall growth >7%

5% Growth

>10% Growth

Go To Market

Gerrit

van den Dool

Vice President, Sales

Go To Market

Customer Profiles

•

Biologists

•

Often very repetitive use and purchasing profile

•

Application and technology driven

•

Chemists

•

The quickest means to an end

•

Technology and product availability

•

Economic Buyers

•

Short-term product costs

•

Relationship

•

Procurement Organizations

•

Total costs of ownership, sourcing, services

Different customer types

“My reps should bring me

new ideas; updated equipment

and reagents -

that is

really helpful.”

-Biologist

“What I really like about my rep

is the ability to call someone

when I have problems and

know that they will fight to get

my problem resolved.”

-Enterprise Researcher

Go To Market

Coverage Strategies

Initiatives

Varied customers require different approaches

Go To Market

Adjustments

•

Biologists require higher touch

•

Realign sales force to achieve

more focused coverage

•

No substantial change in total

sales force

Biologists require higher touch

Level of “Optimal”

Rep Interaction

1 Contact preference of at least once every 1-6 months

2 Contact preference of at least once every 1 months

3 Excluding post purchase technical support

Percent

Go To Market

Strategic Accounts

Customized approach for global customers

Coordinate efforts across Research and SAFC for

Biopharma customers at this level

Coordinate efforts across all segments at this level

Specialized management level personnel to cover

Global accounts

SAFC

Gilles Cottier

President, SAFC

SAFC Is:

Unique manufacturing capabilities for

Life Science and High Technology

commercial applications

SAFC

Leverages Our Research Business

•

Leverage research assets

•

Utilize our scientific knowledge

•

Leverage same customer base from

research to commercial applications

Fine Chemicals Market

Enabling science to improve the quality of life

Unique Manufacturing Capabilities

Application Examples of

Our Technologies

•

Late phase Antibody Drug Conjugates

(ADCs) and viral products for various

cancer treatments

•

Adjuvants

and critical raw

materials for vaccines

•

High purity compounds for

Light Emitting Diode (LED)

lights utilized in new generation

light bulbs,TVs and mobile devices

•

Solid Form State Chemistry

•

High Potency Ingredients

•

SMB Chromatography

•

Extraction & Purification

•

Fermentation

•

Viral Vaccine

•

Zinc Finger Nuclease (ZFN)

•

Critical Cell Culture Components

•

High Potency Conjugation

•

New Materials for Silicon

Semiconductors and

Compound Semiconductors

Pipeline getting stronger

SAFC Project Pipeline

Pharmaceuticals and Biopharmaceuticals

SAFC Strategy

•

Pursue selective commercial opportunities utilizing

distinctive technologies and competencies which

leverage our scientific knowledge and allow us to

maximize our return

•

Get closer to large life science customers

with comprehensive capabilities offer

•

Leverage quality leadership position

•

Address unique and evolving supply chain needs

of customers

•

Expand in faster growing, emerging markets

•

Improve profitability through plant process

improvements, facility rationalization and

manufacturing center of excellence

$100 million additional sales within next three years

SAFC Growth Initiatives and

Unique Manufacturing Capabilities

•

Cell lines engineering with Zinc Finger

Nuclease (ZFN) for commercial therapeutic

protein production

•

High Potency Active Pharmaceutical

Ingredient (HPAPI) and viral particles

for cancer and vaccines

•

Compound semiconductors for

Light Emitting Diode (LED) market

Cell Line Engineering with

ZFN Technology

Market Dynamics

Pharmaceutical Biologics

•

Has become an established

production process in biological

pharmaceutical production

•

>10% anticipated growth for

the next 5 years

Technology is maturing,

but relative to Chemistry is:

•

Higher production cost by

a factor of 10

•

Modestly characterized

•

Less dependable

Cell line engineering enable significant improvement in productivity

and reliability of commercial therapeutic protein production

Source: Evaluate Pharma

Cell Line Engineering with

ZFN Technology

•Unique Capabilities and Benefits

•

ZFN versus traditional cell line engineering approach

–

Cut cell line development time by 50% (six months versus 12 months)

–

Ability to modify more than one gene simultaneously (trait stacking)

–

Enables cell line engineering for small to mid-sized biotech companies

and emerging biopharma

•

Customer Benefits

–

Increased cell growth and productivity

–

Enhanced efficacy and protein quality (glycosylation)

–

Increased knowledge of production systems (= reduced regulatory hurdles)

–

More reproducible production systems (= speed to the clinic)

–

Reduced host and viral proteins for ease of purification and safety

–

Shift our customers’

constraints to the molecule, not the production system

Acquired exclusive rights for ZFN technology

for

bioproduction

systems

October

2009

Cell Line Engineering with

ZFN Technology

HPAPI and Viral Particles for

Oncology/Vaccine

Technology Trends

•

Increasing complexity

and potency of drugs

•

Monoclonal antibodies

to reach and react with

cancer specific tissue

•

Blend technologies to

achieve targeted and

specified results

•

Vaccines for

cancer prevention

Oncology is becoming number one therapeutic area

Source: World Pharma

Frontiers

HPAPI and Viral Particles for

Oncology/Vaccine

•Technology Investment

Investment of over $90 million in the last three years,

expanding

‘technology

solutions’

throughout

the

drug

development

lifecycle

100

HPAPI and Viral Particles for

Oncology/Vaccine

•Unique Manufacturing Capabilities

•

World leader for high potent active

pharmaceutical ingredient production

•

Largest and leading CMO for production

of viral vectors

•

Leading capability in antibody

drug conjugation

•

One of the world’s largest-scale

high-potency fermentation facilities

Leadership

position

Double

digit

growth

for

these

technologies

2009

101

Compound Semiconductors for LED

Market Dynamics

Source: Phillips Lighting 2009

Source:

‘LED

LCD

Roadmap

and

Market

Forecast

Maker’

December

2009,

Displaybank

Global LED LCD TV Market Forecast

General Illumination Market

Lighting will undergo the same upheaval as the film and music business

102

Well positioned to capture market explosive growth

Compound Semiconductors for LED

•Unique Capabilities

•

SAFC Hitech

–

leader in manufacturing and distributing key

metal organics for the LED Market

–

Trimethyl

Gallium,

Trimethyl

Indium,

Triethyl

Gallium,

Trimetyl

Aluminium

•

Global manufacturing footprint

–

Well positioned to supply growing markets in Asia,

North America and Europe

•

Direct selling model to all major players for general lighting

and backlighting in key U.S., European and Asian markets

–

Strong customer intimacy model

103

Going Forward

•Our Key Growth Initiatives

•

Well positioned to respond to fast growing

end-markets

•

Balanced portfolio between innovative

technologies and traditional capabilities

•

Aligned to mega-trends

–

Shift from chemistry towards biology

–

Increasing complexity and potency of drugs

–

Focus on environmentally friendly products

SAFC objective > 7% growth

Geographic Expansion

Eric Green

Vice President and Managing

Director, International

105

Market Drivers and Trends

•

Emerging markets will represent

43%

of global GDP by 2018

•

Developing countries aggressively

boosting R&D funding

•

Pharmaceutical companies

increasingly rely on off-shoring

and out-sourcing

•

Local companies are emerging

Emerging markets have significant growth potential

As determined by FTSE Global Equity Index

Source: Global Insight’s World Overview

106

International Markets

(Asia Pacific and Latin America)

Mexico

Brazil

Argentina

Chile

•

10%

•

90%

South Korea

Japan

China

Taiwan

Vietnam

Malaysia

India

Singapore

Australia

New Zealand

Direct presence in 14 International countries

107

Emerging regions playing larger role

Strong Performance In

International Markets

108

Current International Profile

109

Key Growth Drivers

110

Country specific modes of customer interaction remain essential

Go-To-Market

•Expand sales force coverage

•

Invest in technical selling to support

ABC

strategy

•

Extend reach into new geographies

•Optimize pricing strategy

•Drive e-adoption

•

Invest in web localization

•

“Ease of Use”

is our key enabler

111

Infrastructure remains a key differentiator as we drive demand

Infrastructure Expansion

•

Expand distribution capabilities

•

Existing geographies

•

New geographies

•

Continue to differentiate

through service

•

Optimize inventory management

•

Adapt our logistics capabilities

to support new product lines

Bangalore DC & Packaging

Planned Expansion

112

Localization of Supply

•

Qualify and develop in-country

sources for selected product