2006 HPLC Market Analysis

180,000 operating systems worldwide This figure is growing by ~6% every year Total revenue in 2006 was $3225M* To put this in perspective – single Quad MS – $136M up 10% from * All figures are approximate and in USD Overall Market

The $3225M can be broken down into: –Service $510M –Aftermarket $1504M –New systems $1220M (Aftermarket constitutes consumables, computers, post sale detectors, cabling and software upgrades) HPLC Product Segment

The largest number of new LC systems ordered is in the conventional HPLC – $764M – 920-LC target segment Fast LC/UPLC – $113M GPC – $52M Amino Acid analysis – $35M Semi-Prep – $180M In short the target areas for the 920-LC and 940-LC are aimed at 85% of the combined HPLC market New System Breakdown

180,000 LC systems worldwide North America – 38%, Europe – 31% Japan – 14% Asia and Latin America - 11% ROW – 6% Geographical Distribution of LC Systems

Pharma – 45,000 systems Government and Academia – 45,000 systems Chemical/Agriculture and food – 25,000 systems Independent test/CRO labs – 15,000 systems Biotech – 15,000 systems Preparative systems – 31,000 Installed Base by Markets

Average system price is steady at ~$45-50K This includes, gradient pump, autosampler, absorbance detector, data system and service charges Basic systems ~$30K UPLC systems ~$80-90K Preparative systems - ~$40-50K Average Cost of Systems

The HPLC market grew by 6% last year, In 2006 the number of retired systems was estimated to be ~13,275 The number of new systems sold worldwide was 23,000 Indicates a large proportion of the business is available with existing customers Market Growth

Pharma market – 28% of sales, continuing to grow worldwide and rapidly in Asia Independent labs and contract research organisations constitute 10% of market and continue to grow at 6% Academia and government sectors – 25% of sales Biotech – 10% and continues to grow rapidly Demand by Industry

Research and Development – 37% of market – driven by performance and sensitivity Quality control – pharma industry – 31% of market – driven by reliability and low cost Analytical services – 18% – environmental analyses method development – 10% of market – driven by performance and productivity gains Teaching – 4% of market – driven by low costs, robustness Demand by Function

94% of systems have an absorbance detector – almost half are PDA 5-7% have RI, ELSD, Fluorescence 95% of systems had an autosampler 40% were purchased with a data system 64% were purchased with service contract What Type of Systems?

Customer survey revealed the most common areas of improvement are: –Analysis software – 44% –Column switching – 31% –System control – 25% –Autosampler – 18% –Cycle time – 14% –Fraction collection – 14% –Set up – 11% –Calibration – 10% Desired Areas of Improvement

Analysis Software – NEW Galaxie version and system driver Column Switching – NEW pre-plumbed, software integrated, automated valves System Control – NEW system interface – one page, one place system control Autosampler – NEW autosampler with better precision, carry over and speed Cycle time – NEW autosampler and control with preplumbing for fast, reliable cycles Fraction collection – NEW collector and software driver –“real time” and reliable Set-up – NEW arrives set up, single system driver pre-configured – fast installs Calibration –IMS to aid all calibration parameters –Analytical –Galaxie is very strong Good News

We have systems that the market is asking for. Targeted and appropriate for the larger sections of the market. Present Varian as a supplier for all the software, services, consumables and associated technologies to be a viable, premium level, vendor. Conclusion of the 920-LC and 940-LC