MARKET FOR PET RADIOPHAMACEUTICALS AND PET IMAGING TABLE OF CONTENTS Section 1.0 2.0 Page PET MARKET OVERVIEW 1 1.1 Changes in PET Reimbursement 3 1.2 National Oncologic PET Registry (NOPR) 5 1.3 Therapy Planning and Treatment Monitoring 6 1.4 PET Reimbursement for Alzheimer's Disease 7 1.5 Impact of PET-CT 8 1.6 Cardiology Applications of PET 9 1.7 Research in PET Tracers 10 1.8 Changes in Market Environment 12 1.9 Growth of Primary Applications for PET in Oncology 14 1.10 Overview of PET Scanner Sales 15 1.10.1 Impact of New Technology 17 1.10.2 Growth of Mobile PET 18 GROWTH IN PET PROCEDURE VOLUME 19 2.1 Expanded Reimbursement for PET 21 2.2 Distribution of PET Procedures 22 2.3 Oncology PET Procedures 24 2.4 Overlap Between PET and SPECT Imaging in Oncology 26 —————————————————————————————————————————— Bio-Tech Systems, Inc. i Report 240 TABLE OF CONTENTS Section Page 2.5 3.0 Experience with Targeted SPECT Agents for Oncology 27 2.4.2 Comparative Advantages of PET in Oncology 28 Clinical Requirements And Projections For PET 29 ANALYSIS OF THE FDG MARKET 30 3.1 Price Per Dose and Delivery Charges 31 3.2 Historic And Forecast Sales of FDG 32 3.2.1 Distribution of FDG Sales 34 3.2.2 Oncology Sales of FDG 35 3.2.3 Rubidium Sales for Cardiology PET 37 3.3 3.4 4.0 2.4.1 Analysis of FDG Suppliers 38 3.3.1 Economics of Producing and Delivering FDG Doses 38 3.3.2 Market Distribution of Commercial FDG Suppliers 41 3.3.2.1 PETNet Pharmaceuticals 41 3.3.2.2 Other Commercial Distributors Of FDG 43 Challenges In The Production and Distribution of FDG 46 MARKET FOR PET IMAGING EQUIPMENT 47 4.1 Market Overview 47 4.2 Product Focus of PET Manufacturers 55 4.2.1 Siemens Molecular Imaging 56 4.2.2 GE Medical Systems 58 4.2.3 Philips Medical Systems 60 4.2.4 Positron Corporation 62 —————————————————————————————————————————— Bio-Tech Systems, Inc. ii Report 240 TABLE OF CONTENTS Section Page 4.3 4.4 5.0 6.0 7.0 US and Worldwide Distribution of PET Scanner Sales 63 4.3.1 Domestic Unit Sales of PET Scanners 64 4.3.2 Domestic Sales Volume Distribution 65 4.3.3 Worldwide Sales Distribution of PET scanners 66 Mobile PET Sales 67 4.4.1 Prospects for Mobile PET 68 4.4.2 Providers of Mobile PET 70 4.4.3 Reimbursement Issues and Factors Affecting Growth 72 US AND WORLDWIDE SALES FORECASTS FOR PET 74 5.1 US Sales Forecasts for PET Scanners 74 5.2 Combined PET-CT Systems 79 5.3 Sales of Mobile PET Systems 79 5.4 Worldwide Sales Forecast for PET Scanners 80 GROWTH OF US AND WORLDWIDE INSTALLED BASE 82 6.1 Growth of the Domestic installed Base 82 6.2 Growth of Installed Base of Mobile Scanners 82 6.3 Worldwide Installed Base of PET 85 6.4 Estimated PET Procedure Volume Based on Scanner Utilization 85 6.5 Comparison of PET and SPECT Installed Base 88 END-USER PROFILE 90 7.1 Overview of the User Environment 90 7.2 Organization of Nuclear Medicine Departments 91 —————————————————————————————————————————— Bio-Tech Systems, Inc. iii Report 240 TABLE OF CONTENTS Section Page 7.2.1 Important Functional Differences with PET 92 7.2.2 Interaction of PET with Radiology 93 7.3 Allocation of Hospital Nuclear Medicine Equipment 94 7.4 Comparative Utilization Parameters 96 7.4.1 Distribution of Imaging Procedures 96 7.4.2 Relative Diagnostic Activity 98 7.4.3 Relative Procedure Volume 98 7.4.4 Imaging Activity Index 7.5 101 In-Hospital Hot Lab Versus Commercial Pharmacies 103 7.5.1 Unit-Dose Packaging 104 7.5.2 Pricing Practices 104 7.5.3 Other Services 105 7.5.4 Issues of Board Certification 106 —————————————————————————————————————————— Bio-Tech Systems, Inc. iv Report 240 MARKET FOR PET RADIOPHAMACEUTICALS AND PET IMAGING LIST OF EXHIBITS Exhibit Page 1 HISTORIC AND FORECAST PET PROCEDURE VOLUME FOR CARDIOLOGY, NEUROLOGY AND ONCOLOGY BY PROCEDURE TYPE FROM 2002-2012 23 2 HISTORIC AND FORECAST PET PROCEDURE VOLUME IN ONCOLOGY BY TYPE OF DISEASE FROM 2003-2012 25 3 HISTORIC AND FORECAST SALES OF FDG DOSES FOR CARDIOLOGY, NEUROLOGY AND ONCOLOGY BY PROCEDURE TYPE FROM 2002-2012 33 4 HISTORIC AND FORECAST SALES OF FDG FOR ONCOLOGY APPLICATIONS BY DISEASE TYPE FROM 2002-2012 36 5 HISTORIC AND FORECAST SALES OF RUBIDIUM DOSES FOR CADIOLOGY PET PERFUSION STUDIES FROM 2002-2012 39 6 2006 DISTRIBUTION OF COMMERCIAL FDG SUPPLIERS IN THE U.S., NUMBER OF END-USERS, ANNUAL DOSES SOLD AND SALES VOLUME 42 7 U.S. SALES OF PET SCANNERS FROM 2002-2005, MANUFACTURER’S UNIT SALES AND MARKET SHARE 48 8 U.S. SALES OF PET SCANNERS FROM 2002-2005, MANUFACTURER'S SALES DOLLAR VOLUME AND MARKET SHARE 49 9 WORLDWIDE SALES OF PET SCANNERS FROM 2002-2005, MANUFACTURER’S UNIT SALES AND MARKET SHARE 50 10 WORLDWIDE SALES OF PET SCANNERS FROM 2002-2005, MANUFACTURER’S SALES DOLLAR VOLUME AND MARKET SHARE 51 11 U.S. SALES OF MOBILE PET SCANNERS FROM 2002-2005, MANUFACTURER’S UNIT SALES AND MARKET SHARE 52 12 U.S. SALES OF MOBILE PET SCANNERS FROM 2002-2005, MANUFACTURER’S SALES DOLLAR VOLUME AND MARKET SHARE 53 —————————————————————————————————————————— Bio-Tech Systems, Inc. v Report 240 LIST OF EXHIBITS Exhibit Page 13 DISTRIBUTION OF MOBILE PET UNITS AMONG MOBILE PET PROVIDERS, UNITS PURCHASED BY EACH MOBILE PET COMPANY FROM 2000-2005 71 14 HISTORIC AND FORECAST U.S. UNIT SALES AND SALES DOLLAR VOLUME OF PET SCANNERS FROM 2002-2012 75 15 HISTORIC AND FORECAST U.S. SALES OF MOBILE PET SCANNERS, MANUFACTURER’S UNIT SHIPMENTS AND SALES VOLUME FROM 2002-2012 76 16 HISTORIC AND FORECAST WORLDWIDE UNIT SALES AND SALES DOLLAR VOLUME OF PET SCANNERS FROM 2002-2012 77 17 GROWTH OF U.S. INSTALLED BASE OF PET SCANNERS AND CAMERA-BASED PET SYSTEMS FROM 2002-2012 83 18 GROWTH OF MOBILE PET INSTALLED BASE IN THE U.S . FROM 2002-2012 84 19 GROWTH OF WORLDWIDE INSTALLED BASE OF PET SCANNERS AND CAMERA-BASED PET SYSTEMS FROM 2002-2012 86 20 ESTIMATED PROCEDURE VOLUME BASED ON SCANNER UTILIZATION IN 2005 87 21 2005 NUCLEAR CAMERA SHIPMENTS, INSTALLED BASE AND REPLACEMENT RATES FOR NEW AND REFURBISHED CAMERAS IN HOSPITALS AND IMAGING CLINICS 89 22 COMPARATIVE ALLOCATION OF DIAGNOSTIC FACILITIES BY HOSPITAL BED SIZE IN 2005 95 23 COMPARATIVE UTILIZATION PARAMETERS FOR DIFFERENT IMAGING MODALITIES IN 2005 97 24 DISTRIBUTION OF HOSPITAL DIAGNOSTIC IMAGING PROCEDURES IN THE U.S. BY HOSPITAL BED SIZE IN 2005 99 25 RELATIVE PROCEDURE VOLUME AMONG DIFFERENT IMAGING MODALITIES, PERCENTAGE RELATIONSHIP BY HOSPITAL BED SIZE IN 2005 100 26 RELATIVE ACTIVITY INDEX AMONG DIFFERENT IMAGING MODALITIES, 102 PROCEDURES PER BED PER YEAR BY HOSPITAL BED SIZE IN 2005 —————————————————————————————————————————— Bio-Tech Systems, Inc. vi Report 240