1. Alexander Bishop Justin Gibbs Bethaditya Winarno Jie Zhang Healthcare Sector Recommendation

2. Agenda Healthcare Sector Recap Recommendation Q&A

3. SectorS&P 500 WeightSIM Weight+/- Consumer Discretionary9.83%6.69%-3.14% Consumer Staples11.58%12.11%0.53% Energy11.14%11.48%0.33% Financials16.00%8.98%-7.01% Health Care12.65%13.99%1.35% Industrials10.28%12.76%2.48% Information Technology18.77%19.67%0.90% Materials3.42%3.29%-0.12% Telecommunication Services2.82%3.48%0.65% Utilities3.51%2.72%-0.79% Cash0.00%4.63% Dividend Receivables0.00%0.20% Health Care Recap

4. SIM Holdings SecurityTicker%age AssetsEq shares out Amgen Inc.AMGN2.50% 995.000 CareFusion Corp.CFN0.84% 221.645 Gilead Sciences Inc.GILD3.22% 899.925 Johnson & Johnson Co.JNJ3.68% 2,759.100 Teva Pharmaceutical Industries Ltd.TEVA3.75% 923.960

5. Buy 72 bp of Gilead Buy 100 bp of Teva Sell 84 bp of Care Fusion Reduce 50 bp of Amgen Recommendation

7. Gilead Sciences Founded in 1987 Biopharmaceutical company that discovers, develops and commercializes therapeutics Specializes in HIV/AIDS therapies and Hepatitis B therapies Derives the majority of revenues through product sales

8. Gilead Advantages HIV Franchise Atripla and Truvada account for nearly 70% of patients on HIV therapy Patients on antiretroviral therapy has grown by 4% on an annual moving total basis Truvada and Atripla sales have increased 30% Gilead captures 85% treatment naïve patients Hepatitis B Franchine CV Therapeutics Cayston approval

9. Gilead- Advantages Government Action Veterans Administration Medicare California Ryan White Healthcare Act US Dept. of Health and Human Services Non-retail sales

10. Gilead- Advantages Patent Expiration

11. Gilead- Advantages Pipeline

12. Gilead- Risks Truvada and Atripla account for 70% total revenues Royalty revenue and Tamiflu Pipeline FX Exchange Healthcare reform and reimbursements Competition

13. Gilead- Revenue Growth 31% between 08 and 09, topped $7 billion

14. Gilead- Valuation Analysis Relative to S&P 500HighLowMedianCurrent P/Trailing E13.9.862.0.89 P/Forward E5.8.821.7.90 P/B7.91.64.43.6 P/S34.15.19.35.1 P/CF12.71.33.21.4 Relative to IndustryHighLowMedianCurrent P/Trailing E7.41.01.31.0 P/Forward E3.4.971.3.97 P/B5.2.32.42.2 P/S3.4.71.91.3 P/CF5.21.21.91.2

15. Gilead- Valuation Analysis Absolute Valuation HighLowMedianCurrentTarget Multiple Target Value/ share Your Target Price (F x G) A.B.C.D.E.F.G.H. P/Forward E94.413.226.713/2183.9170.38 P/S71.36.113.96.197.7669.84 P/B23.66.812.47.6116.2668.86 P/EBITDA131.0410.3723.611.15164.2568 P/CF135.514.633.414.6213.2668.46 Current Price: $47.10 Target Price: $69.11 Implied Upside: 46% DCF Target Price: $68.36 DCF Upside: 45% Weighted Average Upside: $68.74, 45.5%

16. Gilead- DCF

17. Gilead- Sensitivity Matrix

18. Gilead- Performance YTD

19. Gilead- Performance 1yr

20. Gilead- Performance 3yr

21. Gilead- Performance 10yr

23. Lines of business API- Active Pharmaceutical Ingredients. Vertical integration Higher operating margins Core competency

24. Generic drugs 75% of sales Must be bioequivalent of their predecessors. Can’t be marketed until patents are expired or proven illegitimate.

25. Branded drugs Increased investment, expected output to be doubled between 2007 and 2012 Risky

26. Macro drivers in Teva’s favor Aging of the population

27. Increasing health concerns

28. Increased government spending leads to cost cutting efforts=generic drugs have an advantage

31. Global medical technology company providing healthcare products and services Offer products in areas of intravenous, infusion, medication and supply dispensing, respiratory care, infection prevision, and surgical instruments. 2 main lines of business:  Critical Care Technologies  Medical Technologies and Services Company Overview (CFN)

32. CFN Status Quo Market Cap: 5.75 B SIM Weight: 0.84% Current Price: $29.7 Target Price: $27.8 Upside:6.81%

33. Market Performance (6 months)

35. Valuation Absolute Valuation HighLowMedianCurrent#Your Target Multiple *Your Target E, S, B, etc/Share Your Target Price (F x G) A.B.C.D.E.F.G.H. P/Forward E15.312.614.415.215.571.5724.49 P/S18.616.317.6 1.5816.2825.72 P/B1.20.81.11.21.2320.9425.75 P/EBITDA1.50.01.11.59.063.2929.8 P/CF1.00.60.71.07.93.8130.06 Target Price = $ 28.16 Relative to IndustryHighLowMedianCurrent P/Trailing E0.970.820.920.94 P/Forward E1.41.11.2 P/B0.40.30.4 P/S0.60.00.40.6 P/CF0.80.1 0.8

36. Leverage: Demographic factors Technology leadership and innovation Favorable valuation Risks: Inability to enhance existing products or introduce new products Subject to complex and costly regulation 2 nd Quarter earnings drop & below expectation Uncertainty after the spinoff from Cardinal Health Significant amount of indebtedness

38. Decrease Amgen Inc. (AMGN) by 50 bps Current Weight: 250 bps Price: $57.2412 Month Target Price: $77 Open: $56.75% Change: 35% High: $57.2652 Week High: $64.76 Low: $56.2152 Week Low: $44.96 Market Capitalization: $56.88BYield: N/A Shares Outstanding: 995MAverage Daily Volume: 6.3M Prolia (Osteoporosis drug) likely to be approved by FDA Decrease weight to avoid loss due to failure to secure Prolia, maintain significant weight to maintain exposure to future revenue growth No near future patent expiration Favorable tax incentives due to increased profits and operations in international locations (Puerto Rico) tax rate dropped to 11.5% from 20% Advancing pipeline, long term potential growth, wide variety of drugs in various phases in the pipeline

40. Questions?