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Year in Review

A First Look at 2010 Results: Stryker

STRYKER
$7,320.0MM, +8% (U.S. $4,792.8MM, +11%; ex-U.S. $2,527.2MM, +2%)

Orthopaedic Implants $4,308.4MM, +3% (U.S. +5%, ex-U.S. +1%)
* Hips +3% (U.S. +5%, ex-U.S. +1%)
* Knees +3% (U.S. +6%, ex-U.S. -2%)
* Trauma +7% (U.S. +11%, ex-U.S. +5%)
* Spine +1% (U.S. -1%, ex-U.S. +6%)

MedSurg Equipment $3,011.6MM, +15% (U.S. +19%, ex-U.S. +4%)
Note: MedSurg includes patient handling and emergency medical equipment.

Also note, full year segment growth is not available for MedSurg. Instead, below we include 4Q10 growth for Instruments and Endoscopy.

4Q10 MedSurg Equipment
* Instruments +10% (U.S. +11%, ex-U.S. +9%)
* Endoscopy +5% (U.S. +2%, ex-U.S. +11%)

* Seeing emerging markets as opportunities, particularly China, India, Korea; noting strong growth in Japan
* Assumes joint replacement market will grow at similar rates as 2010
* 4Q U.S. hips and knees continued to experience pricing pressure, partially offset by mix
* No current signs pointing to worsening pricing trends in hips/knees
* Realizing price premiums for ADM and Rejuvenate hips (launched in early 2010)
* Not fully ramped up on new recon launches, but certainly on track
* The impact of metal-on-metal in the marketplace at minimum eliminates challenging head winds; may create opportunity to gain some hip market share (seeing a little bit of movement in metal-on-metal, but can’t get granular at this point)
* Ex-U.S. impacted (particularly in knees in Europe) by distributor changes, obsoleted products, some slowness in rolling out instrumentation for Scorpio knee
* Overall European market dynamics may still be soft for 1H11
* Still on track for 2011 clearance for OtisMed customized cutting blocks (not yet narrowing down whether 1H or 2H)
* In 1Q11, closed sales of OP-1 platform for orthopaedic bone applications to Olympus
* Still feel great about Triathlon knee; reported U.K. registry data that showed Triathlon has lowest revision rate (See BARE BONES®, 12/10.)
* Ongoing price pressure in spine, similar to what market is seeing; thinks there’s a stabilization trend
* iVAS balloon off to a steady start (See ORTHO-KNOW, 5/10.); nothing meaningful right now, but “we like the trajectory”
* Feeling well-positioned to continue delivering good results in trauma in 2011
* Notes that we are “clearly seeing a more cautious FDA…in the long run, we need a strong FDA that has the credibility of Congress and can be tough on us, but also, we’ve all got the same thing in mind, which is safe products for patients and improving patient outcomes…we are assuming there will be more data required in the future, particularly for ‘mid-tier’…the 510(k) process has been working really well for so many things…we’ve just got to hope for calmer heads to prevail.”