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ANNUAL REPORT 2006

Straumann Holding AGPeter Merian-Weg 124002 BaselSwitzerlandwww.straumann.com

STRAUMANN

Straumann is a global leader in implant dentistry and oral tissue regeneration. For a brief overview of our company, our vision, mission, and core beliefs, please see pp. 8–11.

COMMITTED TO SIMPLY DOING MORE FOR

DENTAL PROFESSIONALS

‘Simply doing more’ is the guiding principle we use to position our products and services and to highlight our day-to-day operations in the interest of dental professionals and patients. Having pioneered many of the most infl uential technologies and techniques in our fi eld, we have a tradition of doing more to advance oral implantology and patient care. As this annual report demonstrates, 2006 was no exception in this respect.

LAUGH AND THE WORLD SEES ALL YOUR TEETH.

YOUR EYES NARROW, YOUR NOSTRILS FLARE AND

YOUR TEETH BECOME THE FOCAL ATTRACTION OF

YOUR FACE. THE BEAUTY OF CONFIDENT LAUGHTER

DIES WHEN TEETH ARE LOST. STRAUMANN DENTAL

IMPLANTS RESTORE MORE THAN TEETH AND MORE

THAN A SMILE: THEY PUT NATURAL ATTRACTION

BACK INTO A LAUGHING FACE. THE PORTRAITS IN

THIS REPORT SHOW JUST HOW VALUABLE THAT IS.

(in CHF million)

675600525450375300225150750 2002 2003 2004 2005 2006

(in CHF million)

2001751501251007550250 2002 2003 2004 2005 2006

.

16001400120010008006004002000 2002 2003 2004 2005 2006

(in CHF million)

180160140120100806040200 2002 2003 2004 2005 2006

(in %)

250200150100500-500 2002 2003 2004 2005 2006

REVENUES BY REGION KEY FACTS & FIGURES• NET REVENUE CLIMBS 18% TO CHF 599 MILLION

• NET PROFIT RISES 11% TO CHF 142 MILLION (23.7% MARGIN)

• FREE CASH FLOW INCREASES FIVEFOLD TO CHF 126 MILLION

• NEW PRODUCTS LAUNCHED; FULL PIPELINE TO DRIVE FUTURE GROWTH

• MARKET POSITION MAINTAINED; EXPANSION OF DIRECT DISTRIBUTION CONTINUES

• COMPETENCIES ENHANCED; ALMOST 200 JOBS CREATED

Rest of World2%

Europe63%

Asia/Pacific10%

North America25%

KEY FIGURES

(in CHF million) 2006

2005Change

(in %)

Net revenue 599 510 18Operating result before depreciation and amortization (EBITDA) 218 181 20Operating profi t (EBIT) 175 156 12Net profi t 142 128 11Cash generated from operating activities 176 145 21Investments/Acquisitions 50 122 (59)Free cash fl ow 126 23 552Value added (economic profi t) 98 93 5

HEADCOUNT

. 2006

2005Change

(in %)

Employees at 31 December 1 534 1 342 14

PROFITABILITY

(in CHF) 2006

2005

Return on assets (ROA) 24 27Return on equity (ROE) 31 35Return on capital employed (ROCE) 38 43

SHARE INFORMATION

(in CHF) 2006

2005Change

(in %)

Ordinary dividend paid per share 2.501 2.00 25Share price at year-end 295.00 304.50 (2)

1 CHF 3.00 proposed for 2006, payable in 2007 subject to shareholder approval.

CASH FLOW AND INVESTMENTS

■ Cash fl ow ■ Investments

NET REVENUE

OPERATING AND NET PROFIT

EMPLOYEES

■ Operating profi t ■ Net profi t

SHARE PRICE

■ Straumann ■ SPI

CONCERNING FORWARD-LOOKING STATEMENTS

This report contains certain ‘forward-looking statements’, which can be identifi ed by the use of terminol-ogy such as ‘scheduled’, ‘to plan’, ‘will’, ‘expected’, ‘consider’, ‘anticipate’, ‘forecast’, ‘expectation’, ‘improve’, ‘maintain’, ‘believe’ or similar wording. Such forward-looking statements refl ect the current views of management and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Straumann Group (“Group”) to differ materially from those expressed or implied. These include risks related to the success of and demand for the Group’s products, the potential for the Group’s products to become obsolete, the Group’s ability to defend its intellectual property, the Group’s ability to develop and commercialize new products in a timely manner, the dynamic and competitive environment in which the Group operates, the regulatory environment, changes in currency exchange rates, the Group’s ability to generate revenues and profi tability, the Group’s ability to realize expansion projects or projects to establish subsidiaries in a timely manner, and the Group’s ability to recruit and retain key employees. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report. Straumann is providing the information in this report as of this date and does not undertake any obligation to update any forward-looking statements contained in it as a result of new information, future events or otherwise.

TRADEMARKS

Straumann® Emdogain, Straumann® Emdogain PLUS, Straumann® BoneCeramic, Straumann® CARES, SLA®, SLActive, Straumann® Dental Implant System, Straumann® TempImplant, synOcta®, Straumann® Membrane are either registered trademarks or trademarks of Straumann Holding AG and/or its affi liated companies.

FTSE4GOOD INDEX

FTSE Group confi rms that Straumann Holding AG has been independently assessed according to the FTSE4Good criteria, and has satisfi ed the requirements to become a constituent of the FTSE4Good Index Series. Created by the global index company FTSE Group, FTSE4Good is an equity index series that is designed to facilitate investment in companies that meet globally recognised corporate responsibility standards. Companies in the FTSE4Good Index Series have met stringent social, ethical and environmental criteria, and are positioned to capitalise on the benefi ts of responsible business practice.

IMPRESSUM

Published by: Institut Straumann AG, BaselLayout concept and realization: Eclat AG, Erlenbach/ZurichConsultant on sustainability chapter: sustainserv, Zurich and BostonIndependent expert interviews: Abbott Chrisman, Oliver KlaffkePhotography: Board, Management, locations: Derek Li Wan Po, Howard BrundrettPrint: Neidhart + Schön AG, Zurich

Basel, 1 February 2007

CONTENTS

ANNUAL REPORT 2006

OPERATIONAL REVIEW

Letter to shareholders 4Straumann in brief 8Markets and regions 14Products and services 24Production and logistics 34Innovation and partnership 38 Research and development 38 Partnership 42Sustainability 46 Our responsibility 46 Employees 50 Customers 52 Communities 54 Environmental protection 56

INDEPENDENT EXPERT OPINIONS Access to treatment 63Building implant practices 64 Education in implant dentistry 65New materials 66 Regulatory developments 67

CORPORATE GOVERNANCE Principles 69Group structure and shareholders 69Capital structure 73Board of Directors 75Executive Management 79Compensation... 81Shareholders’ rights of participation 84Changes in control and defense measures 84Auditors 84Information policy 85

FINANCIAL REPORT 2006 87

APPENDIX 159

4

DEAR SHAREHOLDER,

After several years of continual dynamic growth and sub-stantial expansion, our company made signifi cant progress in 2006 towards becoming a medium-sized international company

MORE THAN A YEAR OF TRANSITION

Some observers have described the year as one of transi-tion for Straumann. We believe it was more: over the past 12 months we have established a base and set the stage for su-perior performance and future growth. At the same time, we have continued to do our ‘homework’ by delivering peace of mind to our customers through proven reliable and simple product concepts coupled with service excellence. We underpinned our leadership position in Europe, our main region. We tackled the issues and worked on the fundamen-tals for achieving our ambitions in North America, and we started to focus more on the emerging opportunities in Asia. We generated solid growth throughout 2006, with full-year net revenue increasing 16% in local currencies (18% in Swiss francs) to CHF 599 million, while operating and net profi ts reached CHF 175 million and CHF 143 million, respectively. After substantial infrastructure and capacity expansion in

the past years, we expect a phase of normal capital expendi-ture going forward. However, the absorption of these costs, especially those related to the build-up of manufacturing in Andover and the production of new technologies, obviously affected our ability to expand margins further.

REGIONAL PERFORMANCE AND STRATEGY

From a regional perspective, Europe contributed some 63% of net revenues and grew 19% in local currencies to CHF 381 million. With the integration of our Danish distribu-tor, we completed our strategic aspiration to gain direct ac-cess to all customers in Western Europe. While some Euro-pean markets such as Switzerland, Sweden and Italy have higher penetration levels, other countries such as France and the UK still have tremendous treatment-substitution potential. This is evident from the fact that the European dental implant and oral tissue regeneration market – which we have continued to outpace – continues to yield high-teen growth rates. In the continuing absence of reimbursement, our future growth will be supported by the overall strength-ening of Europe’s economy and improving consumer senti-ments in the European region. Hence, we will continue to invest in the expansion of our European sales and marketing organizations.

Gilbert Achermann, President and CEO; Dr h.c. Rudolf Maag, Chairman

LETTER TO SHAREHOLDERS

Straumann Annual Report 2006 Operational Review LETTER TO SHAREHOLDERS

5

Our North American franchise has not yet developed in line with our ambitious expectations, yet we achieved full-year revenue growth of 12% in local currencies to CHF 149 million. Despite this, we maintained our position in this important market and continued to improve our profi tability. While we are confi dent that we will be able to further accelerate growth, it will be diffi cult to close the gap on the local mar-ket leader in the foreseeable future by organic growth alone. We are therefore open to considering strategic options for extrinsic growth in the North American market provided they make sense and enhance shareholder value.In the Asia/Pacifi c region, full-year revenues grew 12% to CHF 57 million. We continue to experience volatile quarterly sales development there owing to the lack of direct market presence. The exception, of course, is Australia, which has performed well and has now been complemented by direct distribution in New Zealand. Our stra-tegic goal is still to secure direct ac-cess to customers in all key markets throughout the region in the coming years. At the beginning of 2007, we signed a memorandum of understanding that paves the way for us to acquire the Straumann-related busi-ness of our Japanese distributor. Once completed, the trans-action will give us direct access to our customers in Japan as of the second-half of this year. It is important to achieve transitions seamlessly in order to maintain the leadership position that has been built up over the years by our trusted partners.

ORGANIZING FOR GROWTH

Globally expanding businesses require continuous organi-zational and structural adaptation to ensure scalability, ef-fectiveness, consistency and quality. In the fourth quarter, Straumann carried out a reorganization program group-wide to streamline processes and improve operational ex-cellence. As a result, we began 2007 with a consolidated divisional structure and a more focused leadership team. Importantly, we have defi ned responsibilities more clearly for: the innovation and sales processes, lifecycle manage-ment, fi nances and operations. To boost our sales power, we

have created a new position at the Executive Board level for a Head of Global Sales, who will be appointed in 2007. We have also created an additional sales region in Europe, and have continued to recruit and train new sales personnel in all regions. These improvements will help us to implement global strategies consistently, to become more effective at the operational level, to further improve productivity, and to master processes effi ciently throughout the organization.

AN APPROPRIATE MIX OF SKILLS

For the second consecutive year we have been ranked among the top 100 companies in the Europe’s 500 survey published by BusinessWeek magazine. With our workforce expanding to 1534, we have continued to create jobs and career opportu-nities. In addition to attracting new talent, we have provided more training for our employees and managers to help them

advance and to master the challenges of future growth. Clearly we will have to continue to import talent and com-

petencies from other industries and larger organizations, but we are nonetheless committed to developing our own people to ensure consistency and an appropriate mix.Change and rapid growth place high demands on the energy and fl exibility of our staff and managers. On behalf of our stakeholders, we would like to thank all our employees for their continued contributions, initiative, commitment and loyalty throughout the past year.

SHAPING A UNIQUE CULTURE

At the outset of 2006, we formalized and published fi ve core beliefs that will shape our company culture and our business in the future. We also launched our new corporate visual identity to further strengthen the power of the Straumann brand. We then initiated a corporate alignment initiative to train our entire organization about our beliefs, our brand, and other factors that make us stand above an increasingly crowded marketplace. We consider that cultural alignment and consistency have a key part in the execution of strategy. All newcomers to Straumann worldwide will receive identi-cal training. Similarly, all our staff have received instruction

‘WE HAVE CONTINUED TO CREATE

JOBS AND CAREER OPPORTUNITIES’


6

on ethical business behavior in our Code of Conduct, which we began to implement in 2006. The Code is designed to en-sure that we do things ethically, legally and properly wher-ever we operate. Our business success has enabled us to continue our com-mitment to making dental treatment available to the un-derprivileged through a variety of projects in developing regions and in our own neighborhoods. These and our other efforts towards long-term sustainability are some of the fac-tors that have contributed to our continued inclusion in the ‘FTSE4Good’ index.

INNOVATION FROM THE LABORATORY BENCH TO THE FACTORY FLOOR

The changing dynamics and challenges underline the impor-tance of innovation and service orientation. We maintained our leadership in scientifi c innovation and we are proud to report that, here too, we continued to ‘do our homework’ diligently in 2006. Nowhere is this better illustrated than with our unrivalled implant surface technology SLActive, which brings a new standard of care to patients. Throughout the year, our extensive clinical program continued to gener-ate remarkable, strong data that further confi rm the predict-ability and reliability of SLActive. Independent experts now suggest that up to eight in ten patients have one or more risk factors and could benefi t from SLActive1. This, and the fact that – despite high overall success rates – every four minutes an implant fails some-where2, emphasizes the need for genuine improvements like SLActive. As a result, more and more leading clinicians worldwide are adopting this technology as their product of choice. This was exemplifi ed in the successful North Ameri-can launch of SLActive and its continued roll-out in Europe. Apart from introducing numerous small – but nonetheless signifi cant – improvements to our existing range, we also continued the roll-out of our fully-synthetic bone substitute Straumann BoneCeramic, which we also launched as a com-bination with Straumann Emdogain, called Emdogain PLUS.

As always, simplicity and reliability continue to be our main philosophies when bringing products and services to our customers. For us, service excellence means being a trusted, consistent partner for customers around the world. It in-volves helping them to grow their practices and to deliver better treatment outcomes to their patients.Strong demand for our products placed considerable chal-lenges on our production capability in 2006. Whilst our build-up in Andover continues ahead of target, we were challenged to meet demand for SLActive for much of 2006. This has driven innovation on the factory fl oor and prompted our engineers to develop new high-volume equipment that will boost output and ensure the highest standards of qual-ity. Not only will this enable us to step up our production and marketing initiatives for SLActive, it will also prepare us

for the forthcoming introduction of an exciting new implant line extension. The core of this project is a bone-level

implant that will offer additional treatment options to clini-cians. It is already undergoing initial clinical development and will give us access to a signifi cant market segment in 2008. This is just one of the exciting projects in our pipeline, which is the richest in the history of the company. It will allow us to deliver state-of-the-art solutions for any customer fran-chise and product category in the coming years. These pro-jects and other initiatives give Straumann an excellent basis for continued growth in an attractive market – provided, of course, that they offer evidence-based benefi ts for custom-ers and patients.

1 Barter, S. Make a difference in your most challenging cases. Data presented at European Association for Osseointegration 15th Annual Scientifi c Meeting, 5–7 October 2006, Zurich, Switzerland.2 Based on an implant success rate of 97% and an estimated 4.8 million implants placed in 2005.

‘WE MAINTAINED OUR LEADER-

SHIP IN SCIENTIFIC INNOVATION’


7

STRONG PARTNERSHIPS WITH ACADEMIA

Our activities in research and education are driven through the International Team for Implantology (ITI), an indepen-dent global network that includes prominent academics at the world’s leading universities and dental schools. This ensures high standards in education, treatment quality and patient care. It also links Straumann closely with leading universities and academia. The ITI staged numerous highly successful scientifi c congresses around the globe through-out 2006, and increased its membership dramatically.

OUTLOOK

Our many achievements in 2006 were driven by our com-mitment to simply doing more for dental professionals. We have begun 2007 mindful of our core belief ‘achieving more is our future’. Looking ahead, we remain very optimistic about the inher-ent growth opportunities in the fi eld of implant dentistry and oral tissue regeneration. We believe that the global mar-ket will prosper further and grow in the mid-teen range over the coming years. By virtue of our innovation and service leadership, we are confi dent that, in the coming years, we will be able to grow above market in terms of revenue, while expanding our margins thanks to further improvements in operational excellence. In 2006, the fi rst dental implant in an outreach program was placed in Alaska. It was part of our sponsorship of the American Prosthodontics Society’s ‘Teeth for Alaska’ mission. A few months later, 12 000 kilometers away, we be-gan serving customers directly in New Zealand. These two events at opposite ends of the earth illustrate the breadth of our continuing efforts to bring a better standard of care to patients around the world. This Annual Report provides details and insights to give you a fuller picture. In preparing it we followed the reporting guidelines of the Global Report-ing Initiative (GRI), refl ecting the importance we attach to sustainability. For the third year running, we are privileged

to include the opinions of leading independent experts to provide you with an even broader view of what is happen-ing in our extremely exciting environment. Finally, we want to thank you, our shareholders, and our other stakeholders for the continued support and confi dence in Straumann.


Dr h.c. Rudolf Maag Gilbert Achermann Chairman President and Chief Executive Offi cer


8

OUR COMPANY

Headquartered in Basel, Switzerland, the Straumann Group is a global leader in implant dentistry and oral tissue regen-eration. In collaboration with leading clinics, research insti-tutes and universities, the Group researches and develops implants, instruments, and tissue regeneration products for use in tooth replacement solutions or to prevent tooth loss. The Group manufactures implant system components and instruments in Switzerland and the US, and oral tissue regeneration products in Sweden. Straumann also offers comprehensive services to the dental profession worldwide, including training and education, which is provided in col-laboration with the International Team for Implantology (ITI). Altogether, Straumann employs 1534 people worldwide, and its products and services are available in more than 60 countries through the Group’s 18 distribution subsidiar-ies and broad network of distribution partners. More about the company structure, organization and management can be found in the Corporate Governance chapter (pp. 69-85).

OUR VISION

To be the partner of choice in implant dentistry and oral tis-sue regeneration.

OUR MISSION

We are committed to creating success for customers in im-plant dentistry and tissue regeneration. By ‘simply doing more’, we deliver superior solutions that enable dental pro-fessionals to provide the best possible care to patients.

OUR CORE BELIEFS

SPECIALIZATION IS OUR SOUL

For more than half a century we have concentrated our scientific expertise and our passion for excellence on re-searching and delivering superior solutions. Our success comes from a clear strategic focus in implant dentistry.

SIMPLICITY IS OUR STRENGTH

We translate complex technology and procedures into user-friendly solutions to improve the standard of patient care. For us, simplicity also means being straightforward in all our relationships to build trust and respect.

CUSTOMERS ARE OUR INSPIRATION

We are dedicated to the success of every customer and the well-being of every patient. That is why we always seek to understand the customer’s perspective and deliver more than implants.

RELIABILITY IS OUR TRADEMARK

We deliver peace of mind. Our customers and patients rely on us for thoroughly researched, predictable solutions. We never compromise on quality.

ACHIEVING MORE IS OUR FUTURE

We strive relentlessly to provide better solutions and to cre-ate higher value for our stakeholders and employees. We must always believe in our ability to achieve more.

STRAUMANN IN BRIEF

WHO WE ARE, WHAT WE STAND FOR, WHERE WE ARE HEADED, AND WHAT MAKES US SPECIAL

Straumann Annual Report 2006 Operational Review STRAUMANN IN BRIEF

9

OUR STRATEGY

BUSINESS FOCUS

Our strategy is to maintain our focus on implant dentistry and tissue regeneration and related fi elds where we want to become the partner of choice. While market dynamics and our own range of products and services provide potential for continued attractive organic growth, we are carefully monitoring trends and evaluating opportunities in implant dentistry, tissue regeneration and closely related fi elds, with the goal of complementing our portfolio, exploiting syner-gies, and enabling us to bring further meaningful innova-tions and benefi ts to customers and patients. Our objective is to capitalize on the market growth potential by increasing awareness for our solutions among dental professionals and patients, continuing to introduce product innovations with proven clinical benefi ts, and building unparalleled brand awareness.

DIRECT ACCESS TO CUSTOMERS AND BROAD GEOGRAPHIC FOCUS

We continue to believe that, in order to serve our customers best, it is essential to have direct access to them. Our inten-tion, therefore, is to continue to gain greater control over our distribution channels, wherever possible and appropriate, allowing us to offer superior solutions and service based on closeness to customers. We are committed to maintaining and solidifying our lead-ing position in Europe through continued investments in sales, marketing, and education. In addition, we will develop selected Eastern European markets in the coming years. In North America, we are continuing our efforts to strengthen our current presence, not ruling out extrinsic growth op-portunities to increase our share of voice. In Asia/Pacifi c, we aim to establish a direct presence in all key markets and to open an Asian regional offi ce in the near future.

INNOVATIONS WITH PROVEN BENEFITS

We believe that continued product and service innovation, tailored to the different customer segments and skill levels, is key to our future success. Innovations must deliver ge-nuine benefi ts to patients and customers, and an acceptable cost-benefi t ratio. The benefi ts need to be compelling and substantiated by clinical evidence, which in turn is the basis for our proposition of value creation.

SOLID FINANCIAL BASE AND FOCUS ON LONG-TERM

SHAREHOLDER VALUE

Straumann has a solid fi nancial base and strategic fi nancial fl exibility. We have signaled our intention to return excess liquidity to our shareholders in the absence of major stra-tegic undertakings, such as operational expansion or value enhancing acquisitions.


10

OUR HISTORY

The history of the Straumann Group has three distinct eras and spans more than half a century. It began in the Swiss village of Waldenburg in 1954 with the foundation of a re-search institute bearing the name of its founder, Dr Ing. Reinhardt Straumann. Between 1954 and 1970 the company specialized in alloys used in timing instruments and in ma-terials testing. Among Straumann’s renowned inventions in this period were special alloys that are still used in watch springs today.A breakthrough in the use of non-corroding alloys for treat-ing bone fractures prompted Dr Fritz Straumann, the found-er’s son, to enter the fi elds of orthopedics and dental im-plantology, which began the second phase of the company’s history. Between 1970 and 1990, Straumann became a leading manu-facturer of osteosynthesis implants. A management buy-out of the osteosynthesis division in 1990 led to the creation of Stratec (subsequently Synthes) as a separate company.Thus, 1990 marked the beginning of the Straumann Group as it is known today. Thomas Straumann, grandson of the founder, headed the remaining part of the fi rm, which em-ployed just 25 people focused exclusively on dental implants. In 1998, Straumann Holding AG became a publicly traded company on the Swiss Exchange. Through the acquisition of Kuros Therapeutics (2002) and Biora (2003), Straumann en-tered the promising fi eld of oral tissue regeneration.Another major milestone in the company’s history was in 1980 when Straumann established a partnership with the International Team for Implantology, forming a symbiosis of research expertise and industrial know-how. The 1980s also marked the company’s geographic expansion, with subsid-iaries in Germany (1980) and the US (1989).

The following are examples of the groundbreaking achieve-ments that have established Straumann as a leading innova-tor in implant dentistry:• 1974 The one-stage surgical procedure, the rough implant

surface, and an implant design that respects biologic width.

• 1986 The Morse taper connection, still widely used today.• 1997 SLA, the fi rst macro- and microtextured rough surface, which reduced implant osseointegration time by half.• 2005 SLActive, the fi rst hydrophilic surface, which cuts

healing times by half again.

OUR BRAND

Research has shown that the great majority of consumer/purchasing decisions are driven by emotional factors, e.g. brand association, rather than rational considerations.3 With several hundred implant manufacturers around the world competing for the trust of customers, strong branding and corporate identity are assets that differentiate Straumann in an increasingly crowded and competitive marketplace. Fur-thermore, brand awareness is more important at the profes-sional level than among consumers, because the selection of the implant system is made by the dentist, not the patient. In 2005 and 2006, Straumann conducted customer surveys in key markets, which confi rmed that brand recognition by dental professionals is one of the three main criteria that infl uence the choice of implant system. In two surveys, cus-tomers told us that we should be bolder in adopting a more emotional approach in our branding without compromis-ing our reasoned and scientifi c values. Using this and other fi ndings, we revised and developed our branding strategy and corporate identity to leverage the power of our brand according to market-relevant criteria, and to differentiate Straumann from the competition.

3 Kenning, Deppe M, Schwindt W, Kugel H, Plassmann H. Wie eine starke Marke wirkt. Harvard Business Manager 2005; 3:53-57.


11

The surveys confi rmed that customers expect continued ser-vice excellence, expert support – for instance, in education/training and sales/marketing, – and they expect to gain from networking with experts and colleagues through platforms such as the International Team for Implantology. This endorses our philosophy of providing more than im-plants with our guiding principle of ‘simply doing more’. This is not merely a catchphrase; it is our company culture, and should be expressed in every interaction with customers. Hence, branding is not the initiative of a single department, it has to be supported by all our staff. To this end we initiated a ‘Corporate Alignment Program’ throughout the company in 2006 to ensure that all Straumann employees are ‘committed to simply doing more for dental professionals’. The program also provided instruction on our strategy, company focus, his-tory, and core beliefs, in addition to understanding the im-portance of consistency in branding.In mid-year, we introduced a new Straumann Brand De-sign to support and communicate our company values and brand. The white background represents ‘simplicity’, while the rich green background, which is closely connected to Straumann’s tradition and identity, symbolizes ‘reliability’. The implant icon is a further symbol of Straumann’s history, commitment and specialization in implant dentistry.

PROTECTING THE STRAUMANN BRAND

It is a priority for the company not only to enhance but also to protect the value of the Straumann brand. For this rea-son, we have increased our trademark protection activities and have built up a broad and strong trademark portfolio. In 2006, a number of warning letters were sent to infringing parties. One legal action for trademark infringement was pursued by Straumann in 2006 against a major competitor and is currently in progress. The Group regularly scrutinizes competitor products, materials and activities, and will con-tinue to defend its trademark position vigorously wherever appropriate.

Elements in Straumann’s new corporate visual identity


LAUGHTER IS FOLLOWED BY A PHASE OF RELAXATION. LAUGHING FOR A SINGLE MINUTE IS JUST AS

RELAXING AS 45 MINUTES OF WHOLE-BODY RELAXATION EXERCISES. STRAUMANN PRODUCTS RESTORE

LAUGHTER AND ARE MEDICINE FOR THE SOUL.

LAUGHTER SHIFTS THE BODY

INTO TOP GEAR, STIMULATING

17 MUSCLES IN THE FACE AND

80 THROUGHOUT THE BODY.

AIR IS FORCED THROUGH THE

LUNGS AT 60 MILES PER HOUR,

AND THE HEART BEATS AS

FAST AS IT DOES IN A SPRINT.

14

MARKETS AND REGIONS AS A LEADER IN ALL OUR ESTABLISHED MARKETS AND A PIONEER IN EMERGING MARKETS, WE ARE DEDICATED

TO THE SUCCESS OF CUSTOMERS AND THE WELL-BEING OF PATIENTS ALL OVER THE WORLD.

DENTAL IMPLANTS: A LASTING SOLUTION TO

A GROWING NEED

Implant-borne tooth restorations closely mirror natural teeth and offer distinct advantages over conventional treat-ments. One of the major benefi ts of dental implants is that they provide a stable foundation for replacement teeth and help preserve the neighboring teeth and bone structure. The survival rates of implants are very high and are based on extensive clinical data.4 In addition, long-term overall costs are lower than with conventional treatment.5 Furthermore, implants have been shown in clinical studies to improve the quality of life and well-being of patients.6

Implants can be used to replace individual teeth (by secur-ing a crown to a single implant) or multiple teeth (bridges or dentures secured to multiple implants).

TREATMENT OPTIONS FOR TOOTH LOSS

Single-tooth replacement with conventional crowns and bridge (left) and with an implant-based solution (right) that preserves the neighboring teeth

Implant solutions for multiple-tooth replacement, including full dentures

The most common cause of tooth loss is not accidents but periodontal disease, which affects the majority of adults. In fact, 5–20% of any population suffers from severe forms of the disease.7 Despite their proven advantages over conven-tional treatment, implant-based restorations are generally not reimbursed by insurance schemes.

TO REFER, OR NOT TO REFER

The global implant dentistry market can be generally cat-egorized according to two models depending on the ex-tent to which patients are referred. In the referral system, implants are predominantly placed by specialists or oral surgeons, and the referring doctor or generalist completes the prosthetic restoration. By contrast, in the non-referral model, both procedures are more commonly performed by the same doctor. The world’s largest single market, the US, is predominantly referral-based. In Europe, countries such as Germany, the Netherlands, and Sweden are characterized by the referral system, whereas Italy, Spain, France and others are predominantly non-referral. In countries where referrals are less common, Straumann offers a surgical support service to ensure that practitio-ners get off to a successful start in implant techniques. Else-where, in places where the referral model predominates, our marketing efforts are geared towards building and sup-porting the corresponding referral networks. The aim is to connect dentists who are starting out in implant prosthetics with experienced surgeons who can offer effective support during diagnosis, treatment planning and prosthetic resto-ration.In addition, we provide local support through medical prod-uct specialists and regional training courses tailored to all levels, particularly the less experienced, helping to ensure that fi rst cases are successful and result in patient satisfac-tion.

Straumann Annual Report 2006 Operational Review MARKETS AND REGIONS

15

MARKET SIZE AND GROWTH

It is diffi cult to determine the size and growth of the over-all market accurately because distribution models, prod-uct portfolios and disclosure levels vary widely within the sector. According to recent estimates, the global implant dentistry market was worth CHF 2.4 billion in 2006 and is thought to have grown 16–17% in 2006. Europe accounts for roughly half the market, while North America represents about a third. Taking into account the numerous small local manufacturers, particularly in Asia/Pacifi c and in the rest of the world, the overall market is probably somewhat larger.

MARKET PENETRATION

Estimated prevalence of tooth loss and treatment rates in the industrialized world

* Australia, Japan, South Korea, Taiwan, Brazil Source: Straumann estimates

GLOBAL IMPLANT MARKET BY REGION

Source: Straumann estimates (based on business intelligence and end-market revenues where available)

Europe North America RoW*

Population 380 million 330 million 410 million

Affected people 180 million 155 million 265 million

People seeking treatment 20 million 15 million 21 million

People eligible for implant treatment 10 million 8 million 11 million

People treated with implants 1.3 million 0.5 million 0.8 million

Prevalence of tooth loss 45–50% 45–50% 60–65%

Annual treatment rate 10–12% 9–11% 6–8%

Exclusion for medical/other reasons 40–60% 40–60% 40–60%

Implant treatment rate 12–14% 6–8% 5–7%

Europe50–55%

North America30–35%

Rest of Worldapprox. 5%

Asia/Pacific10–15%


4 Schwartz-Arad D, Herzberg R, Levin L. Evaluation of long-term implant success. J Periodontol 2005; 76: 1623–1628.5 Bragger U, Krenander P, Lang NP. Economic aspects of single-tooth replacement. Clin Oral Implants Res 2005; 16: 335–341.6 Heydecke G, Thomason J, Lund J, Feine J. The impact of conventional and implant-supported prostheses on social and sexual activities in edentulous adults: Results from a randomized trial 2 months after treatment. J Dent Res 2005; 33: 649–657.7 Epidemiology of Periodontal Diseases. American Academy of Periodontology report. J Periodontol 2005; 76:1406–1419.

16

Implant dentistry is predominantly a substitution market, and despite the double-digit market growth over the past years, market penetration remains remarkably low. Of more than 600 million people affected by tooth loss in the devel-oped world, less than 60 million seek treatment every year (see table on previous page). About half of these would be eligible for implant treatment based on their medical and fi nancial status, but it is esti-mated that less than 1 in 10 eligible patients is treated with implants. In Europe, the implant treatment rate is about 13%, in contrast to North America and the rest of the developed world where the comparative rates are only about 7% and 6%, respectively.

MARKET SHARE

The market continues to be dominated by a small number of major players, with the top fi ve companies accounting for around 85% of the total market. Apart from the established global players, numerous smaller suppliers are trying to en-ter or further penetrate this highly attractive growth mar-ket. Most of them have little clinical documentation, or lack a broad, in-depth service offering. Often, they compete on a local level only. Straumann maintained its global number two position in 2006, controlling around a quarter of the market, while No-bel Biocare continues to lead the market with a market share of more than 30%. Other major global players are Biomet/3i, Zimmer, Dentsply, Astra Tech and Osstem.

ESTIMATED GLOBAL IMPLANT MARKET BY SHARE

Source: Straumann estimates (based on market intelligence and end-market revenues for the first 9 months of 2006, where available)

GROWTH DRIVERS AND TRENDS

The main driver for market growth is the increasing accep-tance of implants due to their advantages over conventional tooth replacement. In addition, demographic trends, such as the aging population and increasing wealth, further support market growth. Furthermore, dental implant training and education of dental practitioners remains a key prerequisite for meeting patient demands and driving market growth. Indeed, the limited number of dentists currently offering dental implant treatment, especially in North America and Asia, underpins the huge growth opportunity in these mar-kets. Lastly, most suppliers currently focus their activities on developed countries, leaving a huge untapped potential in the emerging economies over the medium-term. The success of implants has increased the expectations of patients and practitioners. Consequently, patients’ expecta-tions have moved beyond impeccable function to include lasting esthetic quality, fast and painless replacement pro-cedures, and good value for money. However, in the dis-cussion of treatment prices, it is often overlooked that im-plant components account for only about 15–20% of overall

Nobel Biocare33%

Straumann26%

Zimmer9%

Biomet/3i13%

Dentsply5%

Others14%


17

treatment costs. Furthermore, consumers and customers are not always mindful of the fact that overall ‘lifetime’ costs of implant-based solutions are more favorable than conven-tional alternative treatments in most cases.

OUTLOOK

Over the next few years, we expect the global market to con-tinue to grow at least at 15%. Straumann’s goal is to continue to grow above this by virtue of innovation and our superior service offering.

STRAUMANN’S EXPANDING GLOBAL PRESENCE

In 2006, a team supported by Straumann placed the fi rst dental implant in an outreach program in Alaska. Shortly after, at the other end of the world, we began serving cus-tomers directly in New Zealand. Between these latitudes our products and services are sold in over 60 countries through 18 sales and marketing subsidiaries (see p. 166) and a broad network of distributors. In 2006, Europe continued to be the largest market region in terms of sales, followed by North America and Asia/Pacifi c.

STRAUMANN SALES IN 2006 BY REGION

EUROPE

Based on available data, we estimate that the European den-tal implant and oral tissue regeneration market grew in the low-teens in 2006. By contrast, Straumann sustained the strong growth achieved in the previous year, with revenues up 19% in local currencies (20% in CHF) to CHF 381 million. While Germany continued to be the main contributor to European sales, a good performance was posted by Straumann Iberia, the Group’s third largest subsidiary in Europe after Italy, and ahead of Switzerland. The UK and France also posted the most dynamic regional growth rates, and perfor-mances elsewhere were generally solid with all countries yielding double-digit underlying growth. The performance was lifted by the successful introduction/roll-out of new products. Our third-generation implant sur-face technology SLActive became available throughout Eu-rope on all our main implant types. We also extended Strau-mann CARES, our individualized abutment service, broadly in Europe, and we completed the roll-out of our fully-syn-thetic bone augmentation product, Straumann BoneCeramic, which was also launched as a convenient product combina-tion under the brandname Emdogain PLUS.

Rest of World2%

Europe63%

Asia/Pacific10%

North America25%


18

Our share of voice among dental professionals was ampli-fi ed through highly successful ITI congresses in Europe, which attracted some 4000 participants. We also initiated a pilot project in Austria to help increase patient informa-tion through the national media. If the results are promis-ing, the campaign will be broadened to other countries.With the acquisition of our Danish distributor, which be-came effective at the beginning of 2006, we achieved our ambition of controlling all our distribution channels in Western Europe.

A CHANGING HEALTHCARE ENVIRONMENT

The frequency of implant-based procedures varies from country to country. Treatment with implants is for example about 10 times more common in Switzerland than in the UK based on implants per population. The reasons for the dis-parity lie mainly in the number of dentists offering implant treatment, the education level of dentists, patient aware-ness, and factors such as average income, oral hygiene, and, fi nally, the various healthcare and reimbursement systems. Following changes in healthcare reimbursement in Sweden in 2005 and the Netherlands in 2006, Straumann enjoyed positive growth in those countries. In the UK, changes in the National Health Service did not have a negative impact on our sales. On the contrary, the UK has become one of our fastest growing European markets, enabling us to relocate its headquarters and combine it with a new training center close to London’s Gatwick hub.

Straumann UK’s new headquarters and training center in the Pegasus building near London’s Gatwick airport

The debate about healthcare insurance and reimbursement in Germany continues, but no prognosis can be made in the current absence of details regarding proposed legislation. It is also diffi cult to gauge what effect the increase in VAT will have on German consumer spending and whether this in turn will affect implant dentistry.

OUTLOOK (EUROPE)

Although market penetration rates measured in the annual number of treated patients are higher in Europe than else-where, the European dental implant market is estimated by independent sources to grow annually in the low to mid teens over the coming years. Our goal is to maintain market leadership through continued investment in sales, market-ing and education. We believe that we have the basis to out-pace the market over the coming years.Having achieved our ambition of gaining direct distribution in all major Western European countries, we will seek con-tinuous operating improvements in all our established mar-kets. Furthermore, we shall take advantage of the expansion of the European Union and work towards further developing emerging Eastern European markets.


19

NORTH AMERICA

The North American market for dental implants contin-ues to grow strongly due to increased awareness through media coverage, dental meetings, and the broader inclusion of implant dentistry into dental school curricula. Further-more, the market upside continues to be extraordinary, as it is estimated that only around 7% of the North American dental implant market is currently served. In addition to the growing number of professionals placing implants, patient demand continues to rise – driven by in-creasing attention paid to personal esthetics and a healthy, active life-style particularly among the wealthier aging population. These positive market factors helped us increase North American revenues by 12% (in l.c.) in 2006 to CHF 149 million, which corresponds to 25% of Group revenues.For the US, which is the world’s largest single market, 2006 was marked by many achievements and challenges for Straumann. We continued to settle into our new North American headquarters in Andover, Massachusetts. The build-up of production moved ahead faster than planned, with more than 800 000 components produced to our high precision standards (see p. 34 for further details). Our new state-of-the-art training facility in Andover hosted a signifi -cant portion of the thousands of customer education and training events countrywide.We increased our US sales force and began 2007 with double the team we had at the outset of 2004. Importantly, we have improved our structure, territory planning and customer coverage, and the training of our sales representatives. Dur-ing the year, talent retention became particularly important, prompting us to review our incentive program and reward system for performance and loyalty. We also refi ned our hir-ing standards.

EXECUTIVE INTERVIEW

FOCUS: MARKET USA

WHAT IS THE MOST DIFFICULT CHALLENGE FOR STRAUMANN USA

TODAY?

Dynamic growth and competition compel us to differenti-ate Straumann from our rivals through superior technology and service. We made signifi cant progress on this in 2006 with the successful introduction of SLActive, the systematic upgrade of personnel and improved business processes. Har-monizing these changes to drive above-market growth and productivity gains in 2007 is our biggest challenge today.

HAVE CUSTOMER- AND STAFF-LOYALTY BEEN A PROBLEM?

In 2006, we earned the trust and business of new custom-ers and we established an attractive loyalty program. In the near term, new products and a bone-level implant line will further strengthen our competitiveness.Our requirements for higher performance, dedication to organizational development, utmost integrity and commit-ment have led to personnel changes. These are not due to an underlying problem, but are the result of thoughtful prepa-ration for future success. I am pleased to observe renewed spirit and energy throughout our US operation.

IS MORE AGGRESSIVE MARKETING TO GENERAL DENTISTS AND

PATIENTS THE ANSWER?

With only some 15% of dental professionals surgically active in placing implants, the US dental implant market is under-penetrated and offers huge potential. Targeted initiatives to raise awareness among generalists and patients are positive. To ensure sustainable treatment success, our strategy uses a team approach with the surgical specialist, the restorative generalist and the dental technician. This approach is sup-ported through educational events and programs to build referral relationships.

CAN YOU NARROW THE GAP ON THE MARKET LEADER BY

ORGANIC GROWTH?

I believe we can. How quickly depends on our execution of three specifi c growth strategies: Leading the market with needed, scientifi cally proven technologies; partnering with specialists and referring practitioners, and investing more aggressively in the future generation of surgical dentists. The fi rst two will secure short- and mid-term market share gains. The latter will expand the marketplace and seed it with key clinicians who view our dental implant system as the reference standard.

Jim Frontero, President & CEO Straumann USA


20

Two highly experienced managers with impressive track re-cords in the healthcare industry were appointed to lead our efforts in North America. Jim Frontero was nominated CEO and President of Straumann USA, LLC in October, and Alain Laroche was hired in August to head our Canadian organi-zation. At year-end, we employed more than 300 people in North America.One of the most important initiatives was the regional launch of SLActive. Its rapid adoption by existing and new customers alike revealed that the North American market values scientifi cally docu-mented innovation with genuine benefi ts. Greater-than-anticipated demand combined with limited supply in the fi rst six months prompted us to restrict sales to early adopters, thus constraining full-year revenues. We have since been able to broaden supply.

OUTLOOK (NORTH AMERICA)

Based on the favorable substitution potential, low penetra-tion level and particularly interesting referral market oppor-tunities, the North American implant market is expected to grow favorably in the high teens. Despite our past invest-ment and operational efforts, we have not yet captured sig-nifi cantly greater share of voice in the US. One approach to this would be to explore opportunities for extrinsic growth. However, our immediate approach in 2007 will be to con-tinue our internal initiatives to accelerate sales growth, fo-cusing particularly on leadership, sales productivity and ed-ucation initiatives. Optimized resource alignment, improved business processes, and effi ciency increases in our sales or-ganization, combined with full availability of SLActive, will help drive growth in 2007 and beyond.

ASIA/PACIFIC AND REST OF THE WORLD

With the exception of Australia and New Zealand, Strau-mann serves the Asia/Pacifi c (APAC) region through dis-tributors and thus reports only a portion of the total market sales. In 2006, our revenues in the APAC region increased 12% (in CHF) to CHF 57 million. While consistent strong growth was posted by the new Australian subsidiary, the main developed

markets (Japan, Korea and Tai-wan) experienced slower growth than in the previous year, due in part to the aggressive tactics of

competitors, particularly copycats. This, and the strong fl uc-tuations in ordering patterns reinforces our resolve to gain direct market presence in these areas in order to ward off competition and ‘own’ our customer relationships. A small but signifi cant move in this direction was taken in New Zealand, where we took over distribution in January 2007, having discontinued the existing agreement. We also succeeded in taking over the existing sales personnel, mak-ing the transfer seamless. In the rest of the world, where revenues rose 12% to CHF 12 million, Straumann also operates through distributors, with the exception of Brazil. Although the latter is the larg-est market in the region, it is characterized by numerous ‘low-price’ local manufacturers, making business diffi cult. In spite of this, we achieved very strong growth there in 2006.

‘ONE OF THE MOST IMPORTANT

INITIATIVES WAS THE REGIONAL

INTRODUCTION OF SLActive’


21

EXECUTIVE INTERVIEW

FOCUS: EMERGING MARKETS

Dr Patrick Louvel,

Head of Asia/Pacific and RoW

We strengthened our product range, launching SLActive in several markets in both regions, where it has been very well received. In Japan and Korea, the two main Asian mar-kets where the product has not yet been introduced, we are working towards approval for a launch in 2008. The regu-latory environment is becoming increasingly stringent, as reforms in Japan and Korea demonstrate. This might have the positive effect of constraining copycat competitors and others who are unable to fulfi l the new requirements.As in other regions, Straumann’s position and reputation as a provider of clinically proven innovative products was leveraged in 2006 through highly successful ITI congresses, for instance in Australia, Brazil and Japan. These were, how-ever, eclipsed by the fi rst ITI Asia Congress in Shanghai in December, which proved to be the biggest scientifi c event in implant dentistry to be held in China so far.

OUTLOOK (ASIA/PACIFIC AND REST OF THE WORLD)

We will continue to tap the long-term growth potential of the APAC region through our market expansion strategy. Our ambition is to establish direct presence in all key markets, and we have been negotiating with our distribution partners for some time with the target of transferring distribution in the main countries. At the beginning of 2007, we signed a memorandum of understanding that paves the way for us to acquire the Straumann-related business of our Japanese distributor. Once completed, the transaction will give us di-rect access to our customers in Japan as of the second-half of this year. Beyond these efforts, we will build a presence in developing markets and explore new emerging opportuni-ties, in addition to preparing the way for an APAC regional headquarters.

WHICH EMERGING MARKETS ARE THE MOST INTERESTING?

China and India obviously spring to mind fi rst, not just be-cause of their huge populations but also because of their fast-growing economies and middle-class populations. Per-haps less obvious are countries such as Thailand and Singa-pore, which are attracting health tourism with well-trained professionals, good facilities and reasonable costs.

WHAT ARE THE HURDLES TO MARKET ENTRY?

One obstacle is on the regulatory side. Registering new products and treatments can take long and be costly. Fur-thermore, because implant dentistry is not included in stan-dard university education programs, the responsibility for providing adequate training and education falls on the ma-jor manufacturers. Apart from this, the complexity of some markets and poor transparency can be further hurdles.

CAN PEOPLE AFFORD TOOTH REPLACEMENT TREATMENT?

That’s a good question! Only a fraction of the population in China, India or other emerging markets can. So, it would be illusionary to think that we could address hundreds of thou-sands of dentists and billions of people! Nevertheless, 300 million people are thought to have a middle-class income and the population is growing rapidly and is able and will-ing to pay for implant restorations.

ARE YOU NOT LATE IN ADDRESSING THESE REGIONS?

I don’t think so. These markets are still at a very early stage and their current volume is relatively small. However, they have enormous growth potential in the near future. A Chi-nese proverb teaches that a thousand-mile journey starts with a small step and I personally believe that this is the right time to address them.

IS THERE A WINNING FORMULA FOR THAT PART OF THE WORLD?

In principle there should be no difference from other coun-tries – you just have to factor in certain cultural differences and accept that things may work differently there. You also have to balance speed and risk. If you get these things right you won’t be far from a winning formula.


LAUGHTER ALSO RELIEVES HEADACHE, INSOMNIA AND FATIGUE. STRAUMANN TECHNOLOGY HELPS

PEOPLE TO LAUGH AGAIN – AND TO LAUGH LONGER.

LAUGHTER RELEASES ENDORPHINS,

THE ‘FEEL-GOOD’ HORMONES,

IN THE BRAIN. THESE SUPPRESS

ADRENALIN, THE ‘STRESS AND

AGGRESSION’ HORMONE.

LAUGHTER STRENGTHENS THE

IMMUNE SYSTEM, EXERCISES

THE LUNGS, REDUCES THE SEN-

SATION OF PAIN, AND LOWERS

THE RISK OF HEART ATTACK.

24

PRODUCTS AND SERVICES WE TRANSLATE COMPLEX TECHNOLOGY AND PROCEDURES INTO USER-FRIENDLY SOLUTIONS TO

IMPROVE THE STANDARD OF PATIENT CARE.

PRODUCTS

A FOCUSED PORTFOLIO COVERING A BROAD RANGE OF

INDICATIONS

Straumann’s core belief that ‘specialization is our soul’ is re-fl ected clearly in our product portfolio, which is focused ex-clusively on implant dentistry and oral tissue regeneration.The Straumann Dental Implant System comprises surgical implants and prosthetic components (abutments) that con-nect the implant with the crown of the replacement tooth (see fi gure right). These are complemented by a range of matching precision instruments and handling components. Every item is crafted to the highest quality standards, to ensure long-term safety and reliability. To complement our dental implant system, we manufacture products that are used in oral tissue regeneration, either to support implant procedures or to help preserve teeth after treatment for peri-odontal disease.Because we believe that simplicity is our strength, we con-stantly endeavor to achieve maximum fl exibility and pre-dictability from a minimum number of components and procedures. We also seek to improve handling and conve-nience, to shorten treatment times, and to enhance the stan-dard of patient care. In each case, our aim is to achieve op-timum treatment outcomes, complete patient satisfaction, and peace of mind for the dental professional. In essence, reliability is our trademark.

* In development

Simplified illustrations summarizing Straumann’s product range

The availability and indications of the products illustrated and mentioned in this report may vary according to country.

BoneCeramic

Membrane*

Individualized abutments

(e.g. CARESCeramic/Titanium)

Abutments(e.g. synOcta

screw-retained abutment)

Implants(e.g.

Standard Plus)

Emdogain Emdogain PLUS

Copings(e.g. gold, titanium, plastic)

Straumann Annual Report 2006 Operational Review PRODUCTS AND SERVICES

25

Standard Plus implant

The flexible solution for trans-, semi- or

subgingival implant placement in the esthetic region

Tapered Effect implant

The answer for immediate and early

implantation

Narrow Neck

For limited intra-dental space

Regular Neck

Regular applications

Wide Neck

Molars

Standard implant

The pioneer in one-stage or transgingival healing – our proven classic

synOcta

For screw-retained crowns

Solid abutment

For cemented

crowns

LOCATOR

For removabledentures

CARES Ceramic

Forindividualized

solutions


A SOLUTION FOR ALL INDICATIONS

Designed for maximum fl exibility with a minimum num-ber of components, the Straumann Dental Implant System includes three implant lines that cover the complete range of indications in implant dentistry:Straumann implants are fi nished with the SLA or SLActive surface, which offer the option of immediate loading/func-tion.8 In the US, Straumann received FDA clearance for this application back in 1999. We also supply a broad range of versatile prosthetic compo-nents (abutments and copings) machined to the fi nest toler-ances to fi t on our implants with absolute precision for long-lasting results. There are two fi xture types which allow the crown to be cemented or screw-retained. Dentures can be clipped on and off the implant abutment using various at-tachments, e.g. the LOCATOR.9 Our prosthetic range includes abutments with various corrective angles, and Straumann CARES, a CAD/CAM service for individualized abutments in ceramic or titanium.Supported by more than 3000 publications, the Straumann Dental Implant System is one of the longest and most ex-tensively documented systems on the market.

ORGANIZED TO SERVE THE CUSTOMER

Straumann’s Products & Marketing division was organized around three main business units (BUs) in 2006: Surgical, Prosthetics, and Regenerative – each serving the key cus-tomer segments of the market. The following section high-lights some of the main achievements of each BU, which co-incided with numerous further small improvements to our dental implant system.

8 With good primary stability and appropriate occlusal loading. In fully edentulous cases, four or more implants must be rigidly splinted together. 9 Trademark of Zest Anchors Inc., CA, USA.

Each line has a variety of lengths, diameters, and three neck sizes.

Illustrations from Straumann‘s comprehensive range of implants and prosthetic components

26

SURGICAL

Based on available data, the average early success rate for dental implants is around 97%. From this statistic, and the fact that 4.8 million implants were placed in 2005, it can be extrapolated that one implant fails roughly every 4 minutes. Current estimates suggest that 80% of patients requiring an implant have one or more risk factors that could compromise treatment outcome, such as: age, poor bone quality, aggres-sive loading, diabetes, alcohol consumption, smoking etc.10

Furthermore, as treatment with dental implants becomes more common, the criteria for patient selection are expected to slacken and the number of diffi cult cases being treated will grow. It is expected that the number of less experienced practitioners placing implants will rise, and that patients will seek even faster procedures. These trends underline the increased need for tested, reli-able, time-saving systems that are even easier to use and which achieve predictable optimal results even in challeng-ing indications/patient situations. Straumann’s third gen-eration implant surface technology SLActive is a major step towards meeting that need.

SLACTIVE: PIONEERING THE NEXT GENERATION OF SURFACE

TECHNOLOGY

In 2006, our Surgical BU concentrated on the roll-out of SLAc-tive following its successful European debut in the latter part of 2005. The much-awaited North American launch came in March 2006 at the Academy of Osseointegration congress in Seattle, accompanied by the presentation of clinical fi ndings confi rming that SLActive reduces healing times by half, to just 3-4 weeks, in patients, in addition to improving predict-ability.11,12

Driven by clear clinical benefi ts and now available on a broad range of Straumann implants, SLActive exceeded our initial expectations for North America, and market penetra-tion in Europe also accelerated. To cater for the high demand, we increased our production capacity with a second semi-automated production line.

THE SCIENTIFIC EXCITEMENT CONTINUES

SLActive is one of the most thoroughly tested modern im-plant innovations on the market. We were pleased to an-nounce interim results from a large randomized multicenter study at the European Association for Osseointegration (EAO) meeting in Zurich in October, proving the high treat-ment predictability even in soft bone and time-critical load-ing protocols. This unique trial has included more than 380 SLActive implants and demonstrates good bone-level main-tenance. One of every six cases showed bone gain.13 The im-plant survival rate in challenging protocols including imme-diate loading was 98%.

10 Barter S. Make a difference in your most challenging cases. Data presented at European Association for Osseointegration 15th Annual Scientifi c Meeting, 5-7 October 2006, Zurich, Switzerland.11 Cochran DL. Improving osseointegration: the next step. Data presented at the Academy of Osseointegration 21st Annual Meeting, 16-18 March 2006, Seattle, WA, USA.12 Ganeles J. Faster is better: the art and science of accelerated healing and restoration. Data presented at the Academy of Osseointegration 21st Annual Meeting, 16-18 March 2006, Seattle, WA, USA.13 Zöllner A. Individualised implant prosthetics with Straumann CARES. Data presented at the European Association for Osseointegration 15th Annual Scientifi c Meeting, 5-7 October 2006, Zurich, Switzerland.


27Straumann Annual Report 2006 Operational Review PRODUCTS AND SERVICES

SLA SLActive

New bone

In addition to this, a number of exciting discoveries were pre-sented, including preclinical results suggesting that SLActive promotes the growth of new bone to fi ll bone defects (see fi gure).14 If this is so, it might make the addition of bone-in-ducing agents, such as bone morphogenetic proteins (BMPs) to future implant surfaces commercially unattractive.

Histological cross-sections at 12 weeks after implant placement

These histological cross-sections (courtesy of Profs J. Becker and F. Schwarz) were produced in a preclinical study that compared conventional implants with third-generation SLActive implants. In each case there was an identical large bone defect next to the implant. After 12 weeks, new bone had grown up and along the SLActive surface and had completely filled the defect in contrast to the conventional SLA surface, where the defect remained unchanged.

The EAO also provided a platform to launch SLActive on our narrow-neck implant for limited inter-dental spaces in the front region of the mouth. In fatigue-strength tests conduct-ed in 2006, this implant outperformed leading competitors despite having the smallest diameter.Based on the observations of independent research teams around the world, we believe that SLActive is the new gold standard for dental implants. Its success in 2006 indicates that the professional community shares this view. The full potential of the new surface has yet to be explored and we will continue to broaden the clinical fact base. In the mean-time, our current assumption is that the conversion pattern from SLA15 to SLActive will be similar to the switch-over from the TPS15 surface to SLA in the late nineties.

A PREMIUM MORE THAN JUSTIFIED BY VALUABLE PROVEN BENEFITS

Throughout the year, it has been clear that customers and patients are prepared to pay a premium for the valuable benefi ts SLActive offers in terms of faster osseointegration and lower failure risk. The average premium of 30% above the SLA surface enables us to recoup the substantial R&D investment and to cover the higher manufacturing costs. It also contributes to current and future research.

LINE EXTENSIONS

In the course of 2006, we began testing a new bone-level im-plant line to extend our current range of implants. Our goal is to offer dental professionals every implant option with less complexity, in Straumann quality, and with the unique proven benefi ts of our SLActive surface. Pending results from multicenter clinical trials, our goal is to begin launch activi-ties early in 2008. Other line extensions under investigation include reduced-diameter implants, with increased strength and uncompro-mised osseoconductivity. We have also entered the pre-clini-cal phase for a new tooth-colored implant material, intended for high-end esthetic applications. Pending favorable results, both these projects might enter clinical trials in 2007. In addition to major development undertakings, we have continued to invest signifi cant resources in the further im-provement of our system in general. For instance, our en-gineers have developed a new drill with improved cutting characteristics and innovative drill stops for precise drill-bed preparation and increased safety. These are just two small examples of the meaningful innovations designed to help customers in their daily practice in 2007 and beyond.

14 Schwarz F, Herten M, Sager M, Wieland M, Dard M, Becker J. Bone regeneration in dehiscence-type defects at chemically modifi ed (SLActive) and conventional SLA titanium implants: a pilot study in dogs. J Clin Periodontol 2007; 34: 78–86.15 See glossary on p. 170 for explanation of abbreviations.

28

PROSTHETICS

SIMPLIFYING AND CUSTOMIZING

Our Prosthetics business unit continued its efforts through-out 2006 to further streamline the number of components in our range of abutments and copings (e.g. with a new single-piece gold abutment). At the same time, we consider-ably strengthened our position in the edentulous segment thanks to the compatibility of the Straumann Dental Im-plant System with a very broad range of popular denture fi xture components. We also introduced an innovative tooth-colored coping for our regular and narrow-neck implants. This is made of a special polymer reinforced with titanium for additional strength. It provides a versatile base for crowns or cement-retained temporary bridges and is thus ideal for soft-tissue conditioning. As the polymer is easy to modify ‘chair-side’, a reliable, highly esthetic provisional restoration can be prepared in minutes. Thus, in appropriate indications, the implant and the provisional tooth could be placed in a very short time. In such situations, fast loading can be made more predictable by the exceptional speed of osseointegration with SLActive.

Schematic illustration of new solutions for restricted space in the esthetic zone

COMPUTER AIDED DESIGN AND MANUFACTURING (CAD/CAM)

We believe that CAD/CAM technology will shape the future of implant dentistry and will affect pre-operative planning, guided implant insertion and the manufacture of individu-alized prosthetics.Part of our response to this trend was the launch of Strau-mann CARES, our individualized CAD/CAM abutment ser-vice. By using Straumann CNC precision machines, CARES fa-cilitates the production of reliable individualized abutments from titanium and/or zirconia, an exceptionally strong and highly esthetic white ceramic. In 2006, we extended CARES to the majority of the European market. We are monitoring developments on these subjects closely and ensure that our product portfolio and services are com-petitive and attractive.

PRE-OPERATIVE PLANNING

Careful and comprehensive planning is of utmost impor-tance to every treatment in implant dentistry. ITI education-al programs stress the importance of thorough pre-operative diagnosis, evaluation and planning as the basis for excellent, long-lasting results. Straumann has offered several conven-tional planning tools, including drill guides and X-ray tem-plates to customers for some time. More recently, attention has been drawn to software-based planning, which featured prominently at dental events in 2006. Reliable planning software has been developed by several external specialist providers and is commonly available for use with the Strau-mann Dental Implant System.

Schematic illustration of software-based treatment planning

CT scan

Surgery using drill template

Data transfer + planning of implantation sites

High-strength small-diameter implant•Wide range of indications•Single-tooth replacement•Fixed partial dentures (bridges)•Hybrid prosthetics

Strong esthetic provisionals•Titanium/polymer•Easy and fast to shape•Minimal chair-time•Individual soft-tissue management

Unique SLActive surface•Fast osseointegration•High security•High predictability


29

REGENERATIVE

The Straumann Regenerative System offers treatment op-tions for both tooth preservation and tooth replacement. Our aim is to provide dental professionals with unique, sci-entifi cally proven and easy-to-use solutions for predictable soft- and hard-tissue regeneration – in trusted Straumann quality.

THE WAY TO NEW VITAL BONE

Straumann BoneCeramic addresses a signifi cant need for bone augmentation in implant dentistry. Approximately one in fi ve people needing tooth replacement lacks adequate bone to provide suffi cient stability for a dental implant. In such cas-es, the patient’s bone can be augmented using a bone graft, either before implant placement or at the same time. The patient’s own bone (autologous graft) is considered the best source but quantities are limited and the harvesting procedure can be associated with complications and pain. One approach is to use material from another human or from animals. We believe that a more attractive alternative is provided by synthetic materials, but available products can be limited by their absorption or handling characteristics.Straumann BoneCeramic is a fully synthetic material with excellent structure absorption and handling characteristics – qualities that, we believe, make it the bone-augmentation material of choice. In 2006, we completed the roll-out of Straumann BoneCe-ramic in North America and we launched the product in Eu-rope. Market demand prompted us to introduce a new con-venient 1g unit size for use in larger defects and sinus fl oor elevations. We also introduced Straumann BoneCeramic in initial markets in the Asia/Pacifi c region and Latin Ameri-ca. The roll-out in these regions will continue as regulatory clearances are obtained.During the year, we expanded our extensive clinical pro-gram which currently involves 6 studies at 14 centers and will ultimately include more than 140 patients. The next set of results will be presented in April during the ITI World Symposium in New York.

AN INGENIOUS BARRIER TO UNWANTED TISSUE

Another key component in many bone-augmentation pro-cedures are barrier membranes, which are applied on top of the bone-augmentation material to prevent infi ltration by unwanted tissue.Commonly used membranes are fabricated in standard sizes and have to be adapted by the clinician for each case. Straumann’s new membrane uses an innovative hydrogel technology that can be applied directly without modifi ca-tion. Importantly, it is resorbable, which means it does not have to be surgically removed. These characteristics make it easier and faster to use. The results of preclinical studies confi rming the product’s effi cacy as a barrier membrane and its simplifi ed handling benefi ts were presented at the EAO in 2006.16 In addition to the extensive preclinical program, a clinical investigation involving 37 patients comparing the hydrogel membrane with conventional materials was successfully completed. Results will be published at the forthcoming ITI World Symposium. Pending regulatory clearance, we expect the fi rst market introduction of the product in 2007.

TRUE REGENERATION

Periodontal disease is a major cause of tooth loss. Although oral hygiene is generally improving, demographic develop-ments indicate that periodontal disease will continue to be a major issue in the future.17

16 Jung R. Bone regeneration – development of new solutions for the clinic. Data presented at the European Association for Osseo integration 15th Annual Scientifi c Meeting, 5–7 October 2006, Zurich, Switzerland.17 Petersen PE, Ogawa H. Strengthening the prevention of periodontal disease: the WHO approach. J Periodontol 2005: 76(12): 2187–2193, also DMS IV, Kassenzahnärztliche Bundesvereinigung und Bundeszahn- Ärztekammer, November 2006.


30

Straumann Emdogain is a leading treatment for the regen-eration of periodontal defects. It is a well-documented, ef-fective and easy-to-apply gel that supports the regrowth of hard and soft tissues, leading to the regeneration of tooth at-tachment. Since its introduction in 1996, Emdogain has been used to treat more than 1 million patients and has been the subject of more than 300 scientifi c publications.In 2006, several scientifi c studies were published confi rm-ing the long-term effectiveness of Emdogain treatment. One of the most impressive was a peer-reviewed publication on the 5-year results of a long-term study in 82 patients. Statistically signifi cant increases in tooth at-tachment were observed after one year. Remarkably, tooth attach-ment increased further at fi ve years after treatment, en-dorsing Emdogain’s long-term effectiveness in regenerative periodontal surgery.18 Enamel Matrix Derivative (EMD), which constitutes the protein component of Emdogain, con-tinues to be a major topic of research.

EMDOGAIN PLUS

Launched in Europe at the 2006 EuroPerio meeting in Madrid, Straumann Emdogain PLUS is a convenient combination that harnesses the regenerative capabilities of Emdogain with the mechanical stability of Straumann BoneCeramic. Used to save teeth that have been heavily damaged by peri-odontal disease, it supports regeneration of the tissues thatanchor the tooth, and provides the support necessary to fi ll wide defects. Emdogain PLUS is specifi cally indicated as an

18 Heden G, Wennstrom JL. Five-year follow-up of regenerative periodontal therapy with enamel matrix derivative at sites with angular bone defects. J Periodontol 2006; 77(2): 295–301.19 Sculean A. Histological evaluation of the regenerative potential of Straumann Emdogain in combination with a new bone graft material in periodontal defects around human teeth. Jepsen S. A randomized, controlled, multi-centre clinical trial to evaluate the effect of Straumann Emdogain with Straumann BoneCeramic in intrabony defects. Data presented at Europerio 5 congress, 29 June –1 July 2006, Madrid, Spain.

adjunct to regenerative surgery in wide defects, for use in periodontal pockets greater than 6 mm, or where soft-tissue support is required. Additional uses typically include root furcation defects and extraction sites. Here, too, we have an ongoing clinical program and initial data were presented at the EuroPerio meeting in Madrid.19

OUTLOOK (PRODUCTS)

We will continue to optimize our range of products and ser-vices with meaningful innovations, remaining true to our

philosophy of introducing products that offer clear benefi ts to customers and patients in terms of clinical ad-vantages and increased value. We will continue adapting our port-

folio and will add new products where it makes sense and preserves simplicity. In 2007, we will work towards making SLActive a standard treatment option for patients everywhere. Complement-ing our in-market products, we have an exciting pipeline to focus on in 2007 and beyond. For example, we shall devote resources to expanding the treatment options of our range with a bone-level implant extension line, and we will con-tinue to expand our oral regenerative system.

SERVICES

SPECIAL SOLUTIONS

Straumann has a tradition in responding to individual needs. For this, we have a Special Products team of experienced spe-cialist technicians and product developers who produce so-lutions for non-standard tasks. In the course of a year, Special Products receives more than 150 requests from around the world for individual tailor-made solutions. Special Products also has the important responsibility of sup-plying prosthetic components and instruments to fi t Strau-mann implants that have been superseded in our product range by newer designs. As the long-term satisfaction and well-being of our customers and patients are paramount,

‘EMDOGAIN HAS BEEN USED TO TREAT

MORE THAN ONE MILLION PATIENTS

AND HAS BEEN THE SUBJECT OF MORE

THAN 300 SCIENTIFIC PUBLICATIONS’


31

we are committed to supplying prosthetic parts and instru-ments for every implant system that we have ever produced. Patients with Straumann implants can therefore have com-plete peace of mind that high-quality ‘Straumann-original’ replacement components are available to fi t implants that have been in place for up to 30 years.

PATIENT HEALTH AND SAFETY AND CUSTOMER SUPPORT

The health and safety of patients is the overriding priority at Straumann. The safety and effectiveness of our products are scrutinized throughout product conceptualization research, development and manufacturing, where it is ensured that production routinely follows the specifi cations laid out in the product development, storage and distribution pro-cesses. These processes are described in detail in our quality system which is audited externally for compliance with the regulations of European authorities, the US Food and Drug Administration (FDA), and other regulatory bodies around the world. Traceability, which is important in the medical device indus-try, is an integral part of our quality system and is regularly audited internally and externally. Each Straumann implant component is traceable back through each production step to the original titanium rod from which it was machined. At the beginning of 2007, our Biora facility in Sweden received a warning letter from the FDA concerning observations made during a routine inspection in October 2006. The observa-tions predominantly concerned quality system documen-tation and procedures with regard to bone-graft materials. The import of Biora products into the US was stopped and we informed customers and stakeholders. We are working together with the FDA to address the issues expeditiously. Apart from this, we are not aware of any incidents of non-compliance with regulations and voluntary codes concern-ing health and safety of products in the whole Straumann Group during the year under review.With regard to the safe and proper handling and use of our products, Straumann offers a large number of training courses for customers at every level that ultimately benefi t safety and quality of life of the patients. Concerning market-

ing and sales, all our representatives are trained in implant procedures. Customers make use of an assistance service we offer, whereby a trained representative or specialist can attend during the procedure to offer assistance regarding Straumann products. Straumann subsidiaries operate tele-phone ‘hotline’ services for customers needing assistance and can quickly link callers to experienced specialists. Health and safety are built on our uncompromising approach to quality. Complaints – which come mainly from customers and rarely from patients – are tracked, analyzed and handled by a dedicated unit. Any complaint that appears to be a po-tentially serious issue is immediately referred to our Product Safety Offi cer, who may initiate immediate investigation/action up to and including a recall.

OUTLOOK (SERVICES)

Additional education courses will also be offered through-out the coming year in new regions to meet the growing requirements of the dental community and to provide more people with access to the standard of care in tooth replace-ment.We continue to hold the view that oral implantology is a team approach, combining various disciplines and expertise to ensure optimum treatment outcome. We will continue our commitment to simply doing more for the profession-als who constitute such teams, including oral surgeons, pros-thodontists, general dentists, and dental technicians, and we will also continue to tailor our services to customer groups and individual patients (for example with services such as CARES and specialty products) with the goal of becoming the partner of choice in implant dentistry and oral-tissue regeneration.


LAUGHTER IS VOCALIZED BY THE EXPULSION OF SEVERAL IDENTICAL SOUNDS ‘HA-HA’, ‘HEE-HEE’ OR

SIMILAR. EXPRESSIONS OF DELIGHT AND AUDIBLE SIGNALS OF JOY WHICH STRAUMANN’S DENTAL

IMPLANT TECHNOLOGY MAY HELP TO RESTORE.

HAPPY PEOPLE LAUGH UP TO 400

TIMES A DAY. LAUGHTER USUALLY

LASTS FOR 2 SECONDS AND RARELY

MORE THAN 7. A VOCALIZED LAUGH

(‘HA’!) LASTS APPROXIMATELY 75

MILLISECONDS AND IS SEPARATED

FROM THE NEXT BY 210 MILLI -

SECONDS.

34

PRODUCTION AND LOGISTICS TO MEET GROWING DEMAND WE HAVE EXERCISED OUR INNOVATION SKILLS ON THE FACTORY FLOOR TO

HARNESS ADVANCED AUTOMATION TECHNOLOGIES.

INNOVATION TO MEET GROWING DEMAND

To keep apace of the continuing rapid growth in demand for dental implants and oral tissue regeneration products, we further increased our production and logistics capabili-ties in 2006, investing in people and additional machining and/or processing capacity. The biggest challenge facing us is the need to match the increasing volume of sales with pro duction that is cost-effective and guarantees Straumann quality.One of our approaches has been to use the power of ad-vanced automation technologies used in other sectors. A leading project in this regard is a fully-automated machine cell for producing dental implants from titanium blanks. We installed a twin cell at the end of 2006, which will sub-stantially increase production fl exibility and capacity. At the same time, we have been working on a unit – the fi rst of its kind – that will automate the manufacture of our third-generation implant surface, SLActive. At year end, we began validation in preparation for operation in 2007. It will pro-vide greater fl exibility to meet the strong growth in demand with a high degree of reliability.

A new fully-automated machine cell for producing dental implants from titanium blanks installed in Villeret

VILLERET

At our main manufacturing plant in Villeret, Switzerland, we completed the project to organize production into two independent lines: one for surgical products (implants) and the other for prosthetic components (abutments). In addi-tion, we expanded our implant surface production capabili-ties, not only in terms of manufacturing capacity, but also with regard to skilled staff and quality assurance. We also began preparations to meet the challenges of producing our new implant line extension, which is currently in development.With regard to personnel, we created more than 50 new positions in Villeret in the course of 2006, bringing our team to approximately 330. These signifi cant investments in people, processes, capacity and organizational structure have equipped our Villeret facility to meet requirements for the mid-term. Both our Villeret and Basel sites successfully completed an audit according to ISO 13485 conducted by TÜV towards the end of 2006, which included all the essential production pro-cesses.

ANDOVER

Throughout 2006, we continued the build-up of our Ando-ver production site, which opened in mid 2005. Further CNC production machines were added as well as processing equipment for anodizing, vibratory fi nishing, washing and packaging. The site now operates two shifts and supplies packaged products, ready-for-sale. It successfully completed a routine ISO 13485 audit by the British Standards Institute in 2006.

Straumann Annual Report 2006 Operational Review PRODUCTION AND LOGISTICS

35

Andover employs a production team of 70, more than 30 of whom were recruited in 2006. The team has exceeded our expectations in terms of productivity and quality per-formance, helping to meet the growing market demand. In 2007 and beyond, we shall continue to expand in Andover. Our attention will continue to focus on maintaining quality standards and on recruiting and training specialists.

MALMÖ

Clean-room production unit in Malmö

Our Malmö unit is devoted to the specialized production of oral tissue regeneration products, which are manufactured under clean-room conditions, and involve protein extraction and purifi cation processes. Capacity was expanded in 2005 to cater for growing demand. The team in Malmö currently comprises more than 30 specialists responsible for the com-plex manufacturing process and biological research.A routine inspection in Malmö by the FDA in October 2006 led to a warning letter at the beginning of 2007 with regard mainly to quality system documentation and procedures. We are working with the FDA to resolve this. At the outset of 2007, the facility passed an audit by the European Notifi ed Body Nordic Institute of Dental Materials (NIOM).

LOGISTICS, SUPPLY CHAIN MANAGEMENT

2006 saw further process improvements in the logistics chain between production in Villeret, central logistics in Ba-sel, and warehouse management in our subsidiary compa-nies. In essence, we restructured production logistics in Vil-leret with the aim of shortening production lead times and reducing capital tied up in work in progress. Beyond this, we are in the process of managing all inven-tories at subsidiaries from our logistics center at the Basel headquarters. The order and delivery process involved is largely automated in our SAP system. Minimizing invento-ries throughout the logistics chain without compromising 100% delivery reliability for customers is the challenging ongoing objective.

OUTLOOK

In 2007, we shall continue to optimize the production and logistics chain, with particular emphasis on reducing lead times and goods in stock, in addition to optimizing produc-tion costs.In Andover, we will install additional production processes and capacity, gradually fi lling the extensive reserve space available.In Malmö, we will focus on strengthening our quality sys-tem procedures and documentation.At the Villeret site, our attention will be on the marked in-crease in demand for the SLActive implant surface and on ensuring capacity for producing our new implant line ex-tension.

Straumann Annual Report 2006 Operational Review PRODUCTION AND LOGISTICS

MUTUAL LAUGHTER IN THE WORKPLACE STRENGTHENS INTERPERSONAL RELATIONSHIPS AND

COLLABORATION. STRAUMANN’S STATE-OF-THE-ART DENTAL IMPLANT SOLUTIONS ARE A

MEANINGFUL CONTRIBUTION TO RESTORING THE LAUGHTER OF PEOPLE AROUND THE WORLD.

LAUGHTER HAS AN EFFECT ON

STUBBORNNESS AND OUR

THINKING PATTERNS. HUMOR

CAN CHANGE OUR PERSPECTIVE,

AND A LAUGH CAN MELT RIGID

PATTERNS OF THOUGHT, OPEN-

ING THE DOOR TO CREATIVE

SOLUTIONS.

38

INNOVATION AND PARTNERSHIP

WORLD-RENOWNED EXPERTISE AND POWERFUL

COLLABORATIONS

Innovation at Straumann is guided and driven by all fi ve of our core beliefs: specialization, simplicity, reliability, cus-tomer needs, and achieving more. We concentrate on a fo-cused number of purpose-driven innovations that open up new treatment possibilities, add simplic-ity, and improve the standard of care – all in the patient’s long-term interest. We are dedicated to the thorough testing of new products and to long-term product surveillance. Our policy is to launch new products initially on a controlled basis to validate their clinical benefi ts fully and to ensure that they perform as they should. Regulatory clearance to market a product does not mean that there is a large amount of pub-lished clinical data on the product. We consider that it is our responsibility to do more.Straumann has made continuous efforts to accelerate its in-novation process during the past two years. The impact of these efforts has resulted in a full development pipeline with several major projects in the pre-clinical and clinical phase. Approximately 50 pre-clinical and clinical trials are currently in progress, including two quality-of-life studies.Our research and development (R&D) activities span 16 dif-ferent countries; our model relies on a dedicated internal specialist team that is ‘plugged into’ an extensive global net-work of external partners at leading universities and insti-tutes. Our in-house expertise, which has earned recognition from researchers and clinicians worldwide, covers the full range of relevant scientifi c disciplines – from materials sci-ence and cell biology to oral surgery and prosthetics. The ITI, our academic partner, plays a signifi cant role in our collab-orative efforts in research, not only in basic research but also in pre-clinical studies and extensive clinical investigations.

RESEARCH

Straumann’s research goes beyond implantology and in-cludes tissue regeneration – in contrast to most of our com-petitors. This provides deeper insights into the pathways and dynamic biological processes involved in tissue regeneration around implants. Our two centers of research excellence are

housed at Group Headquarters in Basel, Switzerland, and in our regenerative prod-uct facilities in Malmö, Sweden. The latter offers an excellent environment for ex-

perimental work, with state-of-the-art surgical technologies and tools for external research and cooperation with part-ners from academia.

In 2006, Straumann built up an extensive array of in vitro cell culture methods for various projects, as seen here in the Basel center of research excellence.

‘OUR CURRENT PIPELINE IS

THE STRONGEST IN THE

HISTORY OF OUR COMPANY’

RESEARCH AND DEVELOPMENT – STRAUMANN INVESTS APPROXIMATELY 5% OF REVENUES ANNUALLY

IN THE DISCOVERY AND TESTING OF NEW TREATMENT OPTIONS, MAKING US ONE OF THE HIGHEST CONTRIBU-

TORS TO R&D IN OUR INDUSTRY.

Straumann Annual Report 2006 Operational Review INNOVATION AND PARTNERSHIP

39

Our discovery efforts and basic research activities in 2006 included the investigation of new materials, technologies, and designs for implant systems and surfaces. Initial pre-clinical tests with our new bone-level implant line extension project were successfully completed, and results to date are promising. Various types of scaffold (e.g. bone replacement materials and PEG technology) were researched. Over the past year, we have built up an extensive array of in vitro cell culture methods. This platform has been designed for maxi-mum versatility to address scientifi c and medical questions arising both inside and outside the company. It enables us to investigate developments accurately that cannot be studied in vivo. The main focus of this research is on the growth, sur-vival, attachment, and differentiation of cells that make up bone or connective tissue.

CLINICAL DEVELOPMENT

We believe that clinical research is crucial to product de-velopment. Our clinical research team collaborates with an extensive global network of clinical investigators to ensure that our products are evaluated in a patient setting.No fewer than 26 Straumann clinical studies are currently in progress. In addition, more than 35 investigator-initiated clinical investigations with Straumann products are under-way and are supported by Straumann. The clinical research programs are focused on the performance of innovative new products, such as SLActive, and long-term outcomes with well-established products. During the year, interim results were presented from an international multicenter study with SLActive implants, the largest randomized controlled trial of its kind on immediate and early loading of implants with single-tooth and 2–4 unit restorations. In addition, we obtained the results of a randomized controlled trial evalu-ating the stability of SLActive implants in the fi rst six weeks after implant placement. The results have been submitted for publication.

The latter part of 2006 saw the beginning of two large clini-cal trials, which will involve more than 50 centers worldwide to evaluate line extension projects, most notably our new bone-level implant line. With recruiting in progress, prelimi-nary results are expected in early 2008.

SCIENCE ENDORSED AT THE HIGHEST LEVEL

In 2006, Straumann’s research team was rewarded through numerous publications in highly respected peer-reviewed journals, endorsing the quality of our science. These includ-ed no fewer than fi ve new studies on SLActive, which were published or accepted for publication. Important results on our new hydrogel membrane were also published, while nu-merous posters and presentations on our key products were featured at major congresses worldwide.For the second consecutive year, a total of more than 80 publications investigating Straumann products appeared in independent peer-reviewed journals, adding to the body of scientifi c evidence substantiating our claims.

A FULL PIPELINE

Our current pipeline is the strongest in the history of our company, both with regard to the quantity and quality of projects and the market potential they offer. The main devel-opment projects and their estimated potential are outlined in the following table:


40

Project Key benefi t Pre-clinical Clinical Planned introduction Planned roll-out Potential

SLActive Hydrophilic surfacecuts healing time to 3–4 weeks

11 studies completed

3 large- scale studies ongoing >500 implants

2005 Europe2006 N. America

2008 Japan >30% of implant unit sales by end 2008

Lineextensions

Expanded options for treatment approaches

Studiesongoing

Program started

2008 Addressable segment:

~50% of im-plant market

New implant material (1)

Tooth-colored implantfor high-end esthetics

Studies ongoing

Program to start 2007

2009 Addressable segment:

~10–20% of future market

New implant material (2)

Smaller size, same strength and osseoconductivity

Studies ongoing, promising in vitro results

Program to start 2007


Addressable segment:

~10–20% of future market

CARES Reliable, customizedhigh-end esthetics

Extensive durability testing

2 trials ongoing >60 patients

2005 Europe(key markets)

2006 Europe2007 N. America2008 Asia

Up to 10% of prosthetic volume

StraumannBoneCeramic

Fully-synthetic, optimal handling, morphology and resorption

Bi-phasic calcium phosphates extensively documented

6 studies 14 centersongoing>140 patients

2005 N. America2006 Europe2006 initial APAC

2008 Asia (J) Addressable market: up to 25% of all implant procedures

StraumannEmdogainPLUS

Convenient combination for wide periodontal defects

Components extensively documented

3 studiesongoing>100 patients


2007 APAC(key markets)

Addressable market: up to 10% of perio-dontal surgical treatments

Membrane Resorbable,easy to use

4 studies 1 study, 40 patients,further studies planned


Addressable market: >50% of guided bone regeneration procedures

CONTINUING LEADERSHIP IN EVIDENCE-BASED INNOVATION


41

QUALITY-OF-LIFE STUDIES

Extensive long-term investigations supported by Straumann are continuing to demonstrate the signifi cant positive im-pact that dental implants have on the quality of patients’ lives, especially edentulous patients. These include the tre-mendous impact of the comfort and stability of implant-retained overdentures on the patients’ satisfaction with treatment, and also far-reaching effects such as greater con-fi dence in social interactions and better nutrition, leading to an improvement in the patients’ overall well-being.

OUTLOOK

The Group will continue its commitment to R&D and ex-pects to maintain the overall level of funding at approxi-mately 5% of sales. Results from several important investi-gations are expected in 2007. These include further clinical data with SLActive, Straumann BoneCeramic, Emdogain PLUS, and our new bone-level implant line extension. In ad-dition, further scientifi c observations on the clinical effects of implant treatment on the diet and nutrition of edentu-lous patients are expected. Current multicenter trials will be expanded. Approval has already been given for several other Straumann-sponsored multicenter studies as well as inves-tigator-initiated clinical studies, all of which will commence during 2007.

The André Schroeder Research Prize is an annual award pre-sented by Straumann to promote new scientifi c fi ndings in oral implantology and related fi elds. First presented in 1992 in honor of the late Professor Schroeder, a pioneer in dental implantology, the prize is one of the most prestigious in the fi eld. The 2006 cash prize of CHF 20 000 and gold medal were awarded to Karthikeyan Subramani, a 28-year-old research-er from India, for his scientifi c investigation of the cell adhe-sive properties of polyethylene glycol (PEG) hydrogel and its potential as a carrier for growth factors. Mr Subramani’s work looked at PEG hydrogels coated on a surface using photolithographic techniques20. The gels were shown to be ideal for incorporating proteins, such as osteo-inductive growth factors, which were released over time to provide a signal to cells. Most impressively, the project suc-ceeded in creating micropatterns on the hydrogel surface. The patterns were made up of tiny defi ned areas (wells or grooves), as small as 50 micrometers, which contained the osteoinductive growth factor VEGF (vascular endothelial growth factor). The adjacent areas, on the other hand, were empty. The study showed that bone-forming cells (osteo-blasts) clearly migrated to the areas containing VEGF. It is postulated that this research might lead to modifi ed implant surfaces that guide and promote differentiated tissue/bone attachment to specifi c areas, while preventing attachment to others. It may therefore offer intriguing pos-sibilities to implant designers in the future as they seek to improve treatment outcomes and further enhance the stan-dard of patient care.

20 Subramani K. Fabrication of PEG hydrogel micropatterns with osteoconductive growth factors and evaluation of effects on bone cell activity and function. STARGET 2006; 3: 34–39.

13TH ANDRÉ SCHROEDER

RESEARCH PRIZE


42

THE ITI, A UNIQUE PARTNER FOR MORE THAN A

QUARTER OF A CENTURY

The ITI’s reputation for integrity as an independent academ-ic network of specialist professionals in the fi eld of implant dentistry is the result of 27 years of committed work in this area. As a result, more than 3000 Fellows and Members now contribute to spreading the ITI philosophy around the world. Many leading academics belong to the ITI, providing Strau-mann unique access to and collaboration with a network of academics representing universities, dental schools and other academic institutions. Implant dentistry has become the standard of care in tooth replacement, but there are still no global standards or well-documented modules for mandatory training. Providing practitioners with tools to broaden their skills in implant dentistry is central to the work of the ITI in order to ensure the highest possible standards of treatment.The focus of the ITI has always been on three major areas: research, development, and education, each of which is weighted according to the prevailing needs. In 2006, the promotion of education took a prominent place in view of the increasing demand for trained implant dentists. Inde-pendent analysts suggest that the world implant dentistry market will continue to grow at about 15% or more annually, which means that either the capacity or number of dentists placing implants will have to double in the next fi ve years.

ITI TREATMENT GUIDE SERIES

In October, the ITI launched the fi rst volume of its ITI Treat-ment Guide series: ‘Implant Therapy in the Esthetic Zone: Single-Tooth Replacements’, which was greeted with enthu-siasm. The ITI Treatment Guide series is intended as a com-pendium of evidence-based implant-therapy techniques for use in daily practice. It is written by highly experienced clinicians, who provide a richly illustrated step-by-step ap-proach to defi ned clinical situations, with the emphasis on sound diagnostics, evidence-based treatment concepts and predictable outcomes.

The Treatment Guide series is just one of the approaches the ITI is taking to provide practitioners with well-formulated and accurate information on procedures and methodology. The ITI is also developing a curriculum to provide practitio-ners with a tool that classifi es indications according to their degree of complexity: straightforward, advanced, or complex (SAC).

The first volume of the ITI Treatment Guide series, published

in 2006

NATIONAL SECTIONS

Without a framework of application, even the best tools can-not achieve the desired results. This framework is provided by the ITI’s 19 national sections, which were expanded in 2006 to include Argentina, Austria, Greece and South Korea. Each section organizes an extensive program of educational activities in the form of study groups, training sessions and workshops that are aligned to the global standards of prac-tice set by the ITI Education Core Group. In 2006, the sections organized 12 national congresses attracting approximately 8000 participants. A further signifi cant highlight in 2006 was the fi rst ITI Asia Congress in Shanghai in December, which drew 1000 par-ticipants and outstanding speakers from all over the world, including China, Korea, Taiwan, Japan and Thailand.

PARTNERSHIP – MEETING CUSTOMERS’ NEEDS IMPLIES NOT ONLY PROVIDING THEM WITH TOP-QUALITY

PRODUCTS, BUT ALSO ENSURING THAT THEY HAVE ACCESS TO THE LATEST DEVELOPMENTS IN IMPLANT DENTISTRY

AND EDUCATIONAL MATERIALS. WE WORK CLOSELY WITH THE ITI TOWARDS THESE GOALS.


43

Participants visiting the Straumann stand during the first ITI Asia Congress in Shanghai, which was the largest scientific event of its kind in implant dentistry to be held in China.

The ITI informs its membership through its new journal: Forum Implantologicum, which was launched towards the end of 2005 and has now appeared three times. Forum Im-plantologicum provides a platform for the broad exchange and active discussion of knowledge and opinions. It contains articles of both scientifi c and organizational interest and is available to ITI Fellows and Members exclusively.

SCHOLARSHIP ACTIVITIES

The ITI complements the aforementioned activities by an-nually awarding some 20 scholarships at one of the ITI’s 14 Scholarship Centers in Europe, the USA or Japan. With a sti-pend of USD 30 000 for each scholar, it is an opportunity for young practitioners to gain international experience under the guidance of an experienced mentor, as well as an invest-ment in the future of implant dentistry. For the fi rst time in 2006, the ITI offered a number of Re-search Scholarships which complement the Clinical Scholar-ships awarded since 1997. Many former scholars take a very active role not just in the ITI in general but also in their home country by propagating the ITI approach, which is built on a strongly scientifi c base.

NEUTRAL FUNDING

The ITI has been funding research projects in implant den-tistry and related tissue regeneration since 1988, bringing the total amount of funding to more than USD 20 million. This support ensures that products and treatment methods that the ITI recommends are founded on solid scientifi c re-search. This ongoing contribution makes the ITI the world’s largest non-governmental provider of funding to research in implant dentistry, tissue regeneration and related fi elds.

ITI WORLD SYMPOSIUM 2007

The ITI also devoted considerable resources in 2006 to the organization of the 2007 ITI World Symposium in New York. This World Symposium will run under the heading ‘Reality and myth in clinical implant dentistry’, and as such demon-strates its intention to put the many procedures and tech-niques that are offered on the market under the microscope and study their effi cacy. More than 80 speakers and mod-erators will share their knowledge with a broad audience, providing not only the tenets of theory but also the fruits of clinical practice.

OUTLOOK

In 2007, the ITI will continue to focus on education – among others, the fi rst SAC consensus conference will take place during which experts will debate and defi ne the parameters of straightforward, advanced and complex treatment proce-dures in order to further support practitioners towards ex-cellence in their work.


LAUGHTER IS HUMAN AND IS A BASIC EXPRESSION OF WELL-BEING. STUDIES USING STRAUMANN

PRODUCTS SHOW THAT DENTAL IMPLANTS CAN SIGNIFICANTLY ENHANCE WELL-BEING AND

QUALITY OF LIFE.

IT IS POSTULATED THAT LAUGHTER

IS ONE OF THE MOST FUNDAMEN-

TAL FORMS OF COMMUNICATION

BECAUSE IT IS TRIGGERED BY A

REGION OF THE BRAIN THAT IS

CLEARLY OLDER THAN THE SPEECH

REGION. THIS IS ENDORSED BY

THE FACT THAT BABIES LAUGH

JUST A FEW DAYS AFTER BIRTH.

46

SUSTAINABILITY

At Straumann, we believe that partnership and trust are a foundation for long-term business success. In 2006, we continued to engage in open dialogue with stakeholders who determine our performance, or on whom we have a major impact. We invited customers to share their ideas in a new online feedback channel; one of our subsequent responses to this was to increase patient information. We asked management and employees to provide input into a reorganization that will opti-mize processes and drive future growth. The ITI provides us with a broad, unique platform for dialogue with the dental profession; this was used extensively in 2006. Throughout the year, we also engaged with investors and representa-tives of the fi nancial community, and we collaborated with a number of non-profi t groups to focus our charitable activi-ties on dental treatment for people who otherwise would not have access to it.

NEW CODE OF CONDUCT KEY TO SUSTAINABLE GROWTH

Our vision and mission express the priority we place in all of our activities on the success of our customers and the quality of care provided to patients. They highlight our com-mitment to ‘simply doing more’, which applies not only to serving customers and patients, but to all our external in-teractions and internal processes. To support this credo, the Board of Directors and the Executive Management developed a Code of Conduct in 2005 that goes beyond legal require-ments. The Code has been translated into six languages and was rolled out in 2006 across the entire Straumann Group. It refers to national and local rules; for example, those of the FASMED (Federation of Swiss Medical Devices’ Trade and Industry Association). Rather than formal subscriptions to other external economic, environmental or social charters or association memberships, this Code of Conduct is the basis of Straumann’s identifi cation with and management of sus-

tainability issues and goals. It formalizes the commitment of our company and employees; for example, never to be party to anti-competitive behavior or corruption, to abstain from discrimination, to be truthful and honest in marketing and to respect human rights. We also commit to high stan-

dards in patient and employee health and safety and to protecting the environment in all our activities. In 2006, Straumann appointed a US Com-pliance Offi cer, who is responsible for

inquiries and complaints in Straumann‘s North American companies, and a Chief Compliance Offi cer, who is respon-sible for the Straumann Group as a whole. In addition, we set up two compliance hotlines. Employees are obliged to report any violation or suspected violation of the Code of Conduct, or any other suspected misconduct and are guaranteed pro-tection from retaliation. Questions and concerns addressed to the Compliance Offi cers are discussed with the General Counsel on a regular basis. During 2006, the Compliance Offi cers received four reports collectively of alleged viola-tions or suspected misconduct, including two incidents of unethical behavior, which were deemed serious enough to discontinue the employment relationship in order to protect Straumann from future harm. All our business units are analyzed by our legal department for risks of corruption, and no incidents involving corruption were reported in 2006. Furthermore, we have not been in-criminated in any legal actions for anti-competitive behavior.

In 2006, Straumann continued to meet FTSE‘s corporate respon-sibility criteria and is a constituent company in the FTSE4Good Index Series.

OUR RESPONSIBILITY – AN INTEGRAL PART OF STRAUMANN’S BUSINESS GOALS IS TO PROVIDE

LONG-TERM VALUE FOR SHAREHOLDERS AND STAKEHOLDERS – CUSTOMERS, PATIENTS, EMPLOYEES, AND

COMMUNITIES – WHILE PROTECTING THE ENVIRONMENT.

‘WE CONTINUED TO ENGAGE

IN OPEN DIALOGUE WITH

STAKEHOLDERS WHO DETER-

MINE OUR PERFORMANCE’

Straumann Annual Report 2006 Operational Review SUSTAINABILITY

47

Straumann places strong emphasis on responsible and sus-tainable behavior to continue to earn the trust and support of customers, patients, employees, and society at large. This is the foundation of our business success. To the dental pro-fessionals we serve as customers, we provide peace of mind through scientifi cally proven, reliable and simple product concepts coupled with service excellence. Our unrivalled im-plant surface technology, SLActive, which brings a new stan-dard of care to patients, is only one example of our focused efforts to make our customers successful and protect them from business risks. Staff competence and motivation are key to the quality of service we provide to our customers. Complementing in-formal dialogue mechanisms, we plan to conduct our fi rst broad employee survey in 2007. And our strengthened com-petence development program will help us in the coming years to support our employees to develop their full poten-tial. Our responsible business conduct also includes progress in environmental monitoring. 2006 has seen the integration of all our research and production sites in our environmental reporting, although a proportion of the data are still prelimi-nary.Longer life spans of a continuously aging global population mean increasing demand for dental implant treatment, pro-viding long-term growth potential for Straumann. However, for underprivileged groups, implant treatment is often unaf-fordable. We continue charitable activities to support access to treatment and to basic dental care. As part of our spon-sorship of the American Prosthodontics Society’s ‘Teeth for Alaska’ mission, the fi rst dental implant was placed in an outreach program in 2006. 12 000 kilometers away we be-gan serving customers directly in New Zealand. These two events at opposite ends of the globe illustrate the breadth of our activities as we grow our business in a responsible manner. I want to thank our staff, customers and other partners for their invaluable contributions in this respect, which have been recognized by Straumann’s continued inclusion in the ‘FTSE4Good’ index that facilitates investments in companies showing strong corporate responsibility.

CEO STATEMENT

Gilbert AchermannPresident and CEO


48

CLEAR RESPONSIBILITIES AND A LONG-TERM,

PRECAUTIONARY APPROACH

Environmental management is carried out by local environ-mental offi cers at our research and production sites. This en-sures closeness to operations and is overseen by the Head of Operations. Product responsibility issues are monitored by our Product Safety Offi cer (reporting to the Head of Opera-tions), and compliance with our Code of Conduct – including human rights – by our Chief Compliance Offi cer (reporting to the General Counsel and the CEO, where appropriate). Labor aspects fall within the responsibilities of the Head of Corporate Human Resources, and dialogues with external stakeholders are the responsibility of the Head of Corporate Communications (both reporting to the CEO). These clear responsibilities secure that sustainability aspects are man-aged at top executive level.At the governance level, strategic sustainability manage-ment is ultimately the joint responsibility of all directors. There are no formal procedures for determining qualifi -cations of Members of the Board, for example on environ-mental and social issues, or for assessing the Board’s perfor-mance on them; nor are there formalized intervals at which the Board considers those issues. However, the long tradition

of success at Straumann is based on its Board of Directors taking a long-term view on business performance. This in-cludes protecting the reputation Straumann has gained as a responsible business partner and employer with a good environmental record.To protect our partners, as well as our reputation, Straumann generally applies the precautionary principle to risk man-agement. For example, our products are designed and pro-duced with stringent requirements concerning safety and effectiveness. But in the rare case of complaints indicating potentially serious product safety issues, our Product Safety Offi cer can call an incident meeting at extremely short no-tice and can initiate immediate response up to and includ-ing a recall and corrective/preventive action. In addition to this, our production processes are optimized on environmental protection wherever possible without compromise on quality and health and safety, and we have extended our environmental monitoring, with Malmö gain-ing ISO 14001, and Andover preparing for the same certifi ca-tion in 2007.


49

‘OUR SUSTAINABILITY REPORTING

FOLLOWS THE GUIDELINES OF THE

GLOBAL REPORTING INITIATIVE’

OUR ROLE IN SUSTAINABLE DEVELOPMENT

Sustainability can be understood as the right of the cur-rent generation to satisfy its needs without compromising the right of future generations to do the same. A number of ‘fi rst-tier’ issues of sustainable development have been formulated in the UN Millennium Development Goals. Most of these are related to poverty, hunger, educa-tion, and life-threatening illness, and are not impacted by Straumann as a provider of dental-im-plant and tissue-regeneration systems that improve quality of life but are not life-saving. UN Millennium Development Goals that have application in our internal operations are: the promotion of gender equality – where we have a clear policy of equal opportunity – and the promotion of environ-mental sustainability. As a manufacturer of high-value but small and light devices produced in well-contained facilities, we have moderate environmental impacts, but nonetheless monitor and minimize them carefully. The main impacts of Straumann on sustainability, and the implications of sustainable development for Straumann, are related to ‘second-tier’ sustainability issues. As populations in developed economies age, demand for the restoration of dental function and esthetics increases. This provides busi-ness opportunities for Straumann, which in turn contributes to patients’ quality of life. Straumann’s business potential is infl uenced by the general economic development in its key markets, which in the continuing absence of reimbursement determines the ability of patients to afford treatment with Straumann products. This means that we have to focus on markets with a certain degree of consumer affl uence; for example, Europe, North America, and parts of Asia. But we

also support access to dental treatment for underprivileged patients across the globe from Alaska to Cambodia and in the local community of our headquarters. Among responsibilities to our stakeholders, the provision of proven and reliable products to our customers that allow the highest quality of care for their patients is key. The sci-

entifi c base of our products, and the high quality of service provided by our competent and motivated employees, allow us to excel in our industry and

to achieve high treatment success rates and customer sat-isfaction (see p. 52). Our goal is to maintain these levels of proven excellence during our foreseen growth over the com-ing years. The importance that Straumann attaches to sustainability is underlined by the fact that sustainability reporting guide-lines of the Global Reporting Initiative (GRI) were followed in preparing the present Annual Report.

Straumann‘s 2006 Annual Report is one of the first in the world to implement the new GRI-G3 standard and to successfully pass an Application-Level Check by GRI. Straumann is the first Swiss company and the first in the Med-Tech field to achieve this.


50

EMPLOYEES – WE STRIVE TO CREATE HIGHER VALUE FOR OUR STAKEHOLDERS AND EMPLOYEES.

INPUT FROM OUR STAFF HELPED US IN REFOCUSING OUR ORGANIZATIONAL STRUCTURE FOR FUTURE

GROWTH AND VALUE CREATION.

ORGANIZING FOR GROWTH

With our workforce expanding to 1534, we continued to cre-ate new jobs and career opportunities. To prevent size and complexity slowing us down, we initiated a reorganiza-tion project Group-wide focusing on innovation and sales processes, as well as portfolio and life-cycle management, with the goal of shortening time to market, enhancing in-novation and achieving sales excellence. This meant change for a number of people. We inform our staff as early as pos-

sible about such organizational changes, and solicit their suggestions in advance. In this instance, 10% of our global workforce, including all executives, were surveyed for their ideas on bringing Straumann even closer to market needs. Personal discussions and information workshops comple-mented this initiative. As part of the reorganization, the Group’s Executive Manage-ment comprises an Executive Management Board of three (plus one position vacant), supported by an Executive Man-agement Group of eight (see pp. 79–80). This accelerates de-cision making and provides greater representation of busi-ness units and sales regions at top management level.

INVESTING IN STAFF COMPETENCE

In addition to attracting new talent, we provided more train-ing for our employees and managers to help them advance and to master the challenges of future growth. In Switzerland alone, where we employ 687 people, we invested approxi-mately CHF 3 million in the ongoing development of staff competence. This included, for example, introductory cours-es for all new staff members and training for apprentices, in addition to management development activities supported by our membership of the IMD learning network.While we do not track the average number of hours spent on education and training activities, 2006 saw a major train-ing initiative with our Corporate Alignment project that involved our entire global workforce for a minimum of one day. The Straumann Core Beliefs were discussed in detail at Corporate Alignment workshops that were followed up with group application sessions to link these core beliefs to every employee’s daily work.Improving staff competence is a high priority as it relates directly to the quality of our products and our customer ser-vices. In 2006, we began developing a ‘people strategy’ with Group-wide systematic processes for ‘Search & Select’, ‘De-velop & Coach’, and ‘Reward & Retain’ in order to strengthen our employee development, to retain top performers and tal-ent, and to secure contingency and succession planning.

Rest of World4%

Switzerland45%

North America20%

Rest of Europe31%

2002

2003

2004

2005

2006

673

750

903

1342

1534

EMPLOYEES (WORLDWIDE)

EMPLOYEES BY REGION

EMPLOYEES BY FUNCTION

Research & Development7%

Marketing & Sales42%Administration

18%

Production & Logistics33%


51

ATTRACTIVE EMPLOYMENT CONDITIONS

Straumann provides attractive remuneration and a culture of open dialogue and respect. As we clearly surpass all local regulations for minimum wages, these have no real impact on our compensation policy. Our salaries are based on com-petence and geared to be at least in or above the mid-range of locally customary salaries, defi ned as the median point of compensation in our industry. Our incentive compensation model is based on economic profi t, and we offer a share pur-chase program for a large number of staff (see p. 73). As part of our employee development processes, all employees re-ceive annual performance and career development reviews.While all of Straumann’s units allow freedom of association in compliance with relevant laws and regulations, there is a general preference for fl exible agreements and informal employee dialogues rather than union representation. Our labor contracts are therefore individually negotiated rather than based on collective bargaining. Two examples of our re-cent efforts to maintain open dialogue are Executive Board breakfasts with randomly selected employees at our Group headquarters, and ‘Town Hall’ meetings in our country orga-nizations with the CEO and local management. Beginning in 2007, the Executive Management Board will conduct up to fi ve fi eld trips a year which will include staff dialogue ses-sions in our regional organizations. At 12%, staff fl uctuation is not remarkable, given our dynamic business environment. The quality of our process design and our health & safety training have contributed to there being virtually no ab-sences related to workplace accidents. The absence rate re-lated to sickness was very low at 2%.

EQUAL OPPORTUNITIES

Straumann is committed to fair and equal treatment of all its employees. Our Code of Conduct, rolled out in 2006, re-quires all members of staff to abstain from discrimination (defi ned in internal regulations as: discrimination protec-tion on grounds of gender, race, background, religion and

sexual orientation). We offer equal employment chances to disabled persons. Our code and regulations prohibit sexual harassment and mobbing, and require respect for human rights. In 2006, all of our staff received detailed informa-tion on the code, including its strict rules on corruption, and confi rmed that they had read and understood it and will conduct themselves accordingly. Employees are guaranteed protection from retaliation when reporting breaches of the code in good faith, and can do so either to their supervisors or directly to two Compliance Offi cers. We provide fair compensation, which is not infl uenced by gender or any other non-performance related criteria. We continue to monitor staff diversity, and the percentage of women in the global workforce over the past three years was approximately 45%, with no signifi cant changes from the previous year. The current Executive Management of 11 includes one woman. The overall proportion of women in managerial positions Group-wide is 27%. To allow both men and women fl exibility in balancing work and family obliga-tions, we offer part-time employment in many positions: 7% of our workforce make use of this option.

OUTLOOK

In 2007 we plan to implement the ‘people strategy’, which includes comprehensive standards for a competency-based appraisal system. We also plan to conduct our fi rst full em-ployee survey in 2007. Having consistently expanded our workforce at an annual average rate of 20%, we will focus on recruiting in sales and production in 2007. Clearly we will have to continue to import talent and competencies from other industries and larger organizations, but we are none-theless committed to developing our own people to ensure consistency and an appropriate mix.


52

CUSTOMERS – WE PROVIDE PEACE OF MIND TO OUR CUSTOMERS. THE QUALITY OF OUR IMPLANT AND

REGENERATIVE SYSTEMS AND SERVICES SECURES LONG-TERM TREATMENT SUCCESS FOR PATIENTS, REDUCING

BUSINESS RISK FOR DENTAL PROFESSIONALS WORKING WITH US.

PARTNERSHIP – THE BASIS FOR SUCCESS

With the exception of distributor markets, we sell our prod-ucts and services straight to dental professionals around the world, who then sell them to their patients. Our customers are therefore surgeons, prosthodontists, periodontists, den-tal technicians, general dentists, and other members of the dental profession. We work closely with them to secure the best outcome for patients, emphasizing the importance of teamwork between the general dentist, the implant special-ist, and the dental technician for achieving optimum lasting results and patient satisfaction.

STRAUMANN’S CUSTOMER BASE BY SEGMENT

STRAUMANN’S CUSTOMER BASE BY REGION*

* Includes estimates for Straumann distributors

Based on all cases reported to us worldwide in 2006, the probability of success of a healed and correctly prosthetical-ly treated Straumann implant in a healthy patient is great-er than 99.9%. This translates into enhanced quality of life for patients, and decreased business risks for dental pro-fessionals.Consistent, predictable, successful outcomes are built on well-documented and well-disseminated state-of-the-art in-formation about how to use our products in each indication. One initiative in this regard in 2006 was the distribution of ITI treatment guides to our customers. Focusing on implant therapy for single-tooth edentulous spaces in the esthetic zone, it provides an extensive explanation of the entire pro-cess, from the assessment of the patient’s individual esthetic risk profi le to ideal three-dimensional implant placement and proven prosthetic management options. This comple-mented other communication tools such as our high caliber customer magazine STARGET, which includes a large num-ber of educational case studies and research updates. With a print run of 90 000 copies, STARGET ranks among the lead-ing publications sponsored by industry in our fi eld.

CONSTANT DIALOGUE WITH OUR CUSTOMERS

Constant dialogue is a prerequisite for partnership with cus-tomers. In 2006, we contacted all our customers specifi cally to encourage their participation in a new online feedback channel.Straumann has recently conducted targeted customer satis-faction surveys in key markets. Having surveyed Germany, our biggest European market in 2005, we commissioned an independent research institute with a survey in the US in 2006 to gauge customer satisfaction. Of 800 dental profes-sionals surveyed, 73% reported excellent services and sup-port, and identifi ed training and education as important factors determining the choice of implant manufacturer. 90% of our target customer group already knew the Strau-mann brand and a similar proportion expressed satisfaction with Straumann. In particular, customers recognized our

General dentists62%

Dental technicians19%

Specialists19%

Europe55%

Asia/Pacific &Rest of World

16%

North America29%


53

competent service, the simplicity of our systems, and our scientifi c base. The survey also revealed that customers con-sidered awareness among patients to be a key factor for the future of the implant dentistry market.

TARGETED COMMUNICATION TO PATIENTS

One of our responses to this in 2006 was to produce new in-formation packages to help customers inform their patients. These include leafl ets explaining implant procedures and post-surgery care, posters and other display material for use in dental practices.In addition, we redesigned our company website making it easier for patients to access information. We increased in-formation activities about implants in one European mar-ket as a pilot project. The goal is to inform patients, in close collaboration with dental professionals, about tooth restora-tion solutions using implants. We have also informed about treatment benefi ts in a product-neutral manner. To our knowledge, we have not received any public censures for non-compliance of marketing communication regula-tions or voluntary codes.

HIGHEST QUALITY OF CUSTOMER EDUCATION

With regard to proper use and handling of our products, which are important aspects for safety and optimal treat-ment outcome, Straumann offers a broad education program in implantology and oral tissue regeneration. The courses are designed for various customer groups: surgeons, pros-thodontists, general practitioners, nurses, technicians etc. and for all levels of competence. The curriculum is built on the ITI consensus guidelines, which themselves are based on clinical science, with the goal of teaching the skills needed to provide the best possible treatment for each situation. The syllabus of continuing education helps to ensure the safety of patients and the success of customers.

We endeavor to arrange courses and training opportunities as close to the customer as possible. In 2006, this resulted in a signifi cant increase in the number of courses and training opportunities around the world, particularly in Asian and Eastern European markets and in the Middle East. Specifi c courses on new products and related topics were offered to customers and our Education and Training team grew corre-spondingly. The teaching at most of our courses is provided by ITI specialists and internationally renowned speakers and is in collaboration with well-known universities. In addition to clinical training and education, we also offered courses on economic and organizational aspects of dental practices to help customers develop their businesses.

CONGRESS PLATFORMS FOR PRODUCT ROLL-OUTS

Straumann took advantage of corporate forums, symposia and similar platforms at major dental congresses (includ-ing the annual meetings of the Academy of Osseointegra-tion, the European Association for Osseointegration, the American Academy of Periodontology) to present scientifi c research data and practical experience supporting new and in-market products to the dental community. Internation-ally renowned speakers gave presentations on SLActive, Em-dogain, Straumann BoneCeramic, Emdogain PLUS and CARES.

OUTLOOK

We plan to increase our support for customers in key mar-kets around the globe. One step will be new customer ser-vice programs to provide customers with unique services such as education programs, surgery assistance, case-docu-mentation support and on-site support.Also, additional education courses will be offered throughout the coming year in new regions to meet the growing require-ments of the dental community and to provide more people with access to the standard of care in tooth replacement.


54

COMMUNITIES – WE CONTRIBUTE TO QUALITY OF LIFE WITH INNOVATIVE PRODUCTS AND CHARITABLE

DONATIONS FOR DENTAL TREATMENT, AND ACT RESPONSIBLY AS A LOCAL EMPLOYER.

Our goal is to help people who have lost teeth or oral tissue, and to ensure that the ability to chew and an attractive smile stay with them for the long term. As a leader in implant dentistry and oral tissue regeneration, Straumann‘s most important contribution to a healthy community is therefore the development and production of safe and effective treat-ments for restoring dental function, thus offering patients a signifi cant improvement in their quality of life.

CHARITABLE DONATIONS FOCUSED ON OUR CORE

COMPETENCIES

The benefi ts of implant treatment and even general den-tistry are often not affordable for underprivileged groups. This is the key area of charitable work where Straumann can make a difference given our know-how, products and network of relations with dental professionals. For this rea-son, we focused our charitable activities in 2006 with strong emphasis on access to dental care. A Corporate Sponsoring Committee reviews and coordinates our major activities in this area according to clearly defi ned sponsorship policies and principles that were established at the end of 2005. In 2006, we supported non-profi t programs on dental care around the globe. In Alaska, we contributed to an initia-tive by the American Academy of Prosthodontics to provide dental treatment to native Americans in remote areas. This included placing the fi rst dental implant in an outreach pro-gram in Alaska. In Bhutan, we supported a team of interna-tional specialists treating cleft-palate patients, including in-fants who had not been able to breast-feed prior to surgery. We contributed to a project to treat 300 young patients in a children’s home in Nicaragua, and instruct them in dental hygiene. We supported a project to provide dental treatment and prevention to fi ve children’s villages in Cambodia, ben-efi ting 800 young patients. Further dental treatment pro-grams were supported in Tanzania and Cameroon.

A young patient in Cambodia receiving dental care in a project sponsored by Straumann

At our headquarters, we started supporting dental care for low-income patients in Basel City through the Louise-Au-bry-Kappeler foundation. This collaboration provides the foundation with additional means, and Straumann with an effective mechanism to ensure that its charitable support for dental treatment goes to patients that need it most.

ECTODERMAL DYSPLASIA – A KEY ENGAGEMENT

Ectodermal Dysplasia (ED) is a genetic disorder in which there is abnormal development of the skin and associated structures (hair, nails, teeth, sweat glands etc). ED sufferers often have few or no teeth. The American National Founda-tion for Ectodermal Dysplasia (NFED) is committed to pro-viding help and hope to people affected by ED irrespective of where they live. More than 4400 individuals affected by ED in 65 countries receive services, including fi nancial as-sistance for dental care. In 2006, Straumann donated USD 25 000 to the Foundation and was recognized as the out-standing ‘Corporate Sponsor’. In 2007, we plan to comple-ment further fi nancial contributions by helping the Foun-dation to fi nd additional dental professionals who may be willing to volunteer free treatment for ED patients. This is another example of our efforts to support charitable work in collaboration with customers and other dental profession-als, and in line with the principle that partnership is the cor-nerstone for success.


55

A DEEPER UNDERSTANDING OF THE SOCIAL BENEFITS OF

IMPLANT TREATMENT

Implant treatment not only restores function, it also enhanc-es the quality of life, particularly for edentulous patients. A long-term scientifi c study at McGill University in Montreal, supported by Straumann, is assessing some of the benefi ts of anchoring dentures with implants and quantifying the over-all savings in health-care costs associated with them.Results to date show that, in addition to better chewing abil-ity, edentulous patients have greater satisfaction, comfort and esthetics with implant-fi xed ‘overdentures’ than con-ventional dentures21,22. Anchoring dentures with implants correlates with improved nutrition, weight gain, benefi cial body fat, and key blood constituents. Age-related reduction of the latter is associated with disease23. The use of overden-tures has a wide social impact: patients studied were less likely to avoid social interaction, conversation or sport and felt less uneasy during intimate/sexual activity24. One of the interesting observations in 2006 was that the incidence of denture stomatitis, a common infection in denture wearers, is signifi cantly reduced by implant fi xtures. Investigations are continuing with the aim of evaluating nutritional and dietary aspects and diabetes.

VALUE CREATION AS A LOCAL EMPLOYER WITH HIGH

ETHICAL STANDARDS

Probably our most important contribution to supporting the communities at our locations is the preservation of exist-ing jobs and the creation of new ones. In 2006, we created almost 200 new jobs Group-wide and were recognized for our contribution to employment by the Europe’s 500 survey published by BusinessWeek magazine. Straumann ranked among the top 100 companies for the second consecutive year and was the second highest ranked Swiss company. We hire people regardless of their origin and without discrimi-nating for or against members of the local community.

In its employment relations, as well as in all other busi-ness aspects, Straumann applies high standards of ethical behavior. Our Code of Conduct (discussed on p. 46) requires the company and our employees to uphold human rights at all times. Child labor and forced labor are not signifi cant risks in any of the locations where we operate, and we have strict internal regulations prohibiting both throughout our organization. It is important for Straumann to work with suppliers who also respect human rights. For this reason we have obtained written confi rmation from all our titanium suppliers that they do not use child labor. In our sponsorship engagements, we maintain political neutrality and do not provide fi nancial and in-kind contributions to politicians or political parties, make statements on public policy positions or participate in political lobbying.

OUTLOOK

In 2007, we will continue to focus our sponsorship activities on areas that are related to our business and in which Strau-mann can make a meaningful difference. These will include: charitable provisions of dental treatment for underprivileged people in the local community of our headquarters, support for people affected by ED, and dental relief and oral hygiene projects in underprivileged regions. We plan to continue our support for these and similar undertakings in 2007, and we expect to be able to continue job creation globally based on continued growth in demand for our products.

21 Awad MA, Lund JP, Dufresne E, Feine JS. Comparing the effi cacy of implant-retained mandibular overdentures and conventional dentures among middle-aged edentulous patients: satisfaction and functional assessment. Int J Prosthodont 2003; 16: 117–122.22 Thomason JM, Lund JP, Chehade A, Feine JS. Patient satisfaction with mandibular implant overdentures and conventional dentures 6 months after delivery. Int J Prosthodont 2003; 16: 467–473.23 Morais JA, Heydecke G, Pawliuk J, Lund JP, Feine JS. The effects of mandibular two-implant overdentures on nutrition in elderly edentulous individuals. J Dent Res 2003; 82: 53–58.24 Heydecke G, Thomason JM, Lund JP, Feine JS. The impact of conventional and implant-supported prostheses on social and sexual activities in edentulous adults. Results from a randomized trial 2 months after treatment. J Dent 2005; 33: 649–657.


56

ENVIRONMENTAL PROTECTION – WE ARE NOW ABLE TO REPORT ENVIRONMENTAL PERFORMANCE

FOR ALL OUR RESEARCH AND PRODUCTION SITES WORLDWIDE AND HAVE INCLUDED ENVIRONMENTAL PROTEC-

TION IN OUR NEW CODE OF CONDUCT.

ENVIRONMENTAL RESPONSIBILITY

We believe that environmental protection is an integral part of doing business responsibly. To raise awareness through-out our organization, environmental protection has been included in our new Code of Conduct. This not only requires every employee to comply with all laws and internal regu-lations regarding the environment, it also requires manag-ers to encourage all employees to approach environmental protection as part of their daily responsibility. Our internal guidelines spell this out in further detail. All applicable laws and regulations relating to environmen-tal protection, and health and safety in the workplace are an integral part of our management system, and our company is regularly assessed by internal and external inspectors to ensure compliance. We voluntarily commission regular ex-ternal audits in-line with our guiding principle of ‘simply doing more’. Our core belief is not to compromise on quality or the safety and health of any employee at work. We are committed to conserving resources, recycling, con-tinuously improving products and processes, periodically defi ning environmental goals and reviewing our progress towards them, and motivating our staff to take responsibil-ity for environmental protection.

ENVIRONMENTAL MANAGEMENT SYSTEM EXTENDED

In previous years we reported on environmental perfor-mance at our two Swiss sites, which are ISO 14001 certifi ed. At the end of 2005, our Malmö site also achieved ISO 14001 certifi cation and is now included in our environmental re-porting. As our Andover facility is in the fi nal stages of prep-aration for future ISO 14001 certifi cation, we have chosen to include its environmental data in this report, which will obvi-ate a further change in the level of reporting next year.

To facilitate comparison with the prior year, we have adapt-ed the format of the data table on p. 59. The 2005 numbers shown relate to environmental performance at Villeret and Basel as published in our previous Annual Report. For com-parison purposes, we have presented the 2006 subtotals for Villeret and Basel in addition to the totals for all four sites.

ENVIRONMENTAL REPORTING FOLLOWS OUR CORE

PROCESSES

Our environmental management and reporting is in-line with the main physical processes carried out within the company. Our main product group in terms of weight is den-tal implants. These are made from titanium, which is bio-compatible and well suited for implants thanks to its very low chemical reactivity. For example, in our SLActive implant range, production starts with extensive material testing of the titanium rods we purchase. CNC precision lathes are used to machine the rods into implants, with the titanium scrap resulting from the cutting process being recycled for non-medical applications. To facilitate traceability through each production step all the way back to the original titani-um rod, a laser is used to inscribe each implant with a serial number. The implants are then pre-cleaned, and a defi ned part of the surface is sand blasted and etched with acid. To preserve the surface activity of SLActive implants, part of the production is carried out in a nitrogen atmosphere, and the implants are stored in isotonic saline solution produced with purifi ed water. The Straumann Dental Implant System is produced princi-pally at our Villeret plant, while a comparatively small but increasing proportion is made at our US production facil-ity at Andover. The main part of our research and develop-ment activities are carried out at our Basel headquarters. At our Malmö site, production and research are focused on oral tissue regeneration products. Production steps carried out there show environmental aspects typical for biophar-maceutical facilities. However, the plant at Malmö is much smaller than our production sites at Villeret and Andover,


57

and considerably less product in terms of weight is produced there. In addition to research and production, physical activi-ties of Straumann include those typical for any organization of our size, for example: space heating and other energy use with its related CO2 emissions, ordinary water consumption, and solid waste production. Our performance on those is-sues is published, as far as data availability allows, for the four sites Villeret, Basel, Andover and Malmö. The other activi-ties of the Straumann Group are mainly concentrated on market-ing and distribution, and operate much smaller facilities. Their environmental impact is not reported here, because it is clearly minor compared with our production, research and headquarter sites, and because meaningful data are not available.With the extension of our environmental reporting system, and the corresponding integration of data sets and measure-ment methods developed in different contexts, some data are preliminary; for example, water consumption data from Malmö. There are also some open issues in the harmoniza-tion of conversion methods in our reporting on indirect CO2 emissions from electricity .

ENVIRONMENTAL PERFORMANCE IN LINE WITH

BUSINESS GROWTH

In many cases, our environmental performance numbers in-creased more or less in proportion to our sales or headcount growth, indicating that we were able to keep our high stan-dard of environmental protection even in the challenging context of our continued rapid growth. This applies, for ex-ample, for our consumption of titanium, that makes up the bulk of our product by weight. A reduction in titanium scrap was achieved, indicating successful optimization of machin-ing. With regard to cutting oil, we switched to a new type in the course of 2005 with better characteristics for titanium processing and a better safety profi le. However, it cannot be fi ltered and reused, which is why the amount of recycled

oil in Villeret and Basel increased in 2006, and the absolute amount decreased. With regard to cleaning solvents, Villeret and Basel continue to use hydrotreated light petroleum25, while the new production plant in Andover uses a slightly different material (n-hexane). In Villeret, we introduced a modifi cation to the closures on cleaning solvent containers, which has led to a considerable increase in the proportion of

light petroleum recycled.Our environmental reporting has been refi ned to distinguish clearly between solvent waste, and waste water that contains small concen-

trations of solvents and other pollutants. This shows that ac-tual solvent waste in Villeret and Basel was very moderate both in 2005 and 2006.Concerning refuse, per capita reductions were achieved in Villeret and Basel, although our 5% reduction goal in Basel was not quite met. For Andover, waste per capita is higher than for our Swiss sites and will be tracked to see if a de-crease can be achieved. The refuse collected at these sites was incinerated by the respective municipal waste disposal facilities. In the Malmö facility, which is much smaller, the property owner handles refuse disposal collectively for the entire site, and data are not available. With regard to paper consumption, we restated the 2005 fi gure to include Villeret (only Basel was reported in 2005). Regarding performance, we achieved reductions in paper consumption in Villeret and Basel combined, not only per employee but also in absolute terms. Electricity consumption increased only slightly per capita in Villeret and Basel compared with 2005. With respect to heating energy, slight reductions per capita were achieved in Villeret and Basel. The per capita number for Basel, very low compared with the other sites, partly refl ects the very high standard of insulation at our new headquarters, but is also related to the fact that in Basel we have research and offi ce facilities rather than production.

25 CAS No. 64742-49-0

‘WE WERE ABLE TO KEEP OUR HIGH STAN-

DARD OF ENVIRONMENTAL PROTECTION

EVEN IN THE CHALLENGING CONTEXT OF

OUR CONTINUED RAPID GROWTH’


58

A signifi cant part of water consumption is related to the pro-duction of purifi ed or highly purifi ed water. In 2006, we sig-nifi cantly expanded our pure water production equipment in Villeret primarily to cater for the production of SLActive. This was the main contributor to the overall increase in wa-ter consumption. The untreated waste water reported contains comparatively low concentrations of cleaning detergents, solvents, acid, and oil, and is disposed of separately by external authorized specialist contractors. Untreated waste water arises at our Swiss facilities when maintenance work has to be carried out on our waste-water treatment station. Maintenance in 2006 made it necessary to treat a larger amount of waste-water externally than in the previous year. We are still working towards improving and harmonizing our measurement methodology with regard to reporting on CO2 emissions. The main part of our energy use is in the form of electricity. As we report the sum of direct and indirect CO2 emissions, electricity-related emissions are predominant in our reporting. As more information on CO2 intensity of elec-tricity supplied by local utilities becomes available, we will endeavor to incorporate it in our reporting. For Villeret and Basel, we used a very conservative methodology in the past, based on average values for the integrated West European grid, rather than on locally relevant values, which can be ex-pected to be clearly lower in the case of our Swiss sites. We have kept this conversion factor for Villeret and Basel in the current report to facilitate comparability with the previous year. The resulting value shows that CO2 emissions per em-ployee at those sites were virtually unchanged. Overall, CO2 emissions are higher than in the 2005 reporting, as emis-sions from Andover and Malmö have now been included. For these two sites, we have chosen more accurate local conver-sion factors, pertaining to New England for Andover and to the local electricity mix for Malmö. It is one of our goals for next year to harmonize CO2 reporting methods across our sites and to adapt them further to current local data, allow-ing our reporting to refl ect emissions from electricity use more accurately26.

Reducing environmental impacts at our sites is not restricted to those environmental performance aspects that we track and report regularly. It also includes activities less central to our production and operations that offer potential for im-provement, especially if they are cost-effective. An example in 2006 was the successful installation of a new multi-cool-ing system for processes in Malmö. This system replaced the remaining HCFC coolant with the more environmentally friendly HFC, and also reduced the total amount of coolant by 25%.

OUTLOOK

In 2007, we plan to continue the preparation of Andover for ISO 14001 certifi cation. We will also focus on further harmo-nizing methods for tracking, measuring and comparing en-vironmental performance at all our research and production sites worldwide.

MAJOR ENERGY USE IN 2006

26 Conversion for Villeret and Basel was based on averages for the continental European interconnected power system (UCPTE 88). Conversion for Andover was based on data for New England from the US Environmental Protection Agency’s Emission & Generation Resource Integrated Database (eGRID). Conversion for Malmö was based on information supplied by the local utility.

Electricity75%

Heating gas19%

District heat6%


59

Performance indicator Unit

2006 All 4 sites

(sum or individually)

2006 Villeret and

Basel (sum or individually)

2005 Villeret and Basel (sum

or individually)

Raw materials & suppliesTitanium Consumption kg 12 224 11 308 10 731

Recycled (consumption minus product) kg 5 294 4 600 6 068Consumption/sales kg/CHF million 20 21

Various oils Consumption kg 56 562 50 625 65 660Recycled kg 39 499 38 872 22 089Recycled/sales kg/CHF million 66 43

Cleaning solvents Consumption kg 40 491 39 680 37 320Recycled kg 27 781 27 781 20 447

Acid Recycled kg 31 813 31 813 28 639Recycled/sales kg/CHF million 48 56

MiscellaneousDiverse waste Hydroxide sludge kg 5 192 5 192 3 675

Contaminated materials kg 12 027 10 482 12 405Solvents kg 574 150 120

Refuse Villeret kg 41 762 41 762 38 779Per capita, Villeret kg/employee 126 126 138Basel kg 65 940 65 940 59 800Per capita, Basel kg/employee 185 185 190Andover kg 39 094Per capita, Andover kg/employee 261

Paper Consumption sheet 4 852 250 3 200 000 3 360 000Consumption per capita sheet/employee 5 565 4 658 5 676

EnergyElectricity Consumption kWh 11 445 073 6 859 719 5 712 002

Consumption per capita kWh/employee 13 125 9 985 9 600Heating Natural gas, Villeret kWh 1 696 654 1 696 654 1 508 538

Per capita, Villeret kWh/employee 5 126 5 126 5 388District heat, Basel kWh 621 272 621 272 594 464Per capita, Basel kWh/employee 1 745 1 745 1 887Natural gas, Andover kWh 1 182 164Per capita, Andover kWh/employee 7 881District heat, Malmö kWh 289 000Per capita, Malmö kWh/employee 8 300

WaterWater Consumption m3 18 390 10 624 7 313

Consumption per capita m3/employee 21 15 12Pure water Consumption m3 4 747 4 412 2 154Untreated waste water Disposal kg 32 579 31 603 6 605EmissionsCO2 CO2 (excl. vehicle fuel) kg 5 401 253 3 432 992 2 887 180

CO2 (excl. vehicle fuel) per capita kg/employee 6 194 4 997 4 852

SUMMARY OF ENVIRONMENTAL PERFORMANCE FIGURES


HEARTFELT LAUGHTER IS CHARACTERIZED BY A SIMULTANEOUS ELEVATION OF BOTH CORNERS OF THE

MOUTH, AND WRINKLES IN THE SHAPE OF A CROW’S FOOT AROUND THE EYES. A PERSON WHOSE LAUGH

IS RESTORED BY A STRAUMANN SOLUTION HAS EVERY REASON TO LAUGH WHOLE-HEARTEDLY.

RESEARCHERS HAVE IDENTIFIED

18 DIFFERENT TYPES OF LAUGHTER

RANGING FROM SCORN TO

THE FRIENDLY CHUCKLE. ONLY

ONE TYPE EXPRESSES GENUINE

SPONTANEOUS PLEASURE.

62

INDEPENDENT EXPERT OPINIONS*

ACCESS TO TREATMENT 63(Per-Ingvar Brånemark)

BUILDING IMPLANT PRACTICES –

A US PERSPECTIVE 64(Cynthia Bollinger)

EDUCATION IN IMPLANT DENTISTRY –

A VIEW FROM THE UK 65(Paul Stone)

NEW MATERIALS 66(Heinz Kniha and Michael Gahlert )

REGULATORY DEVELOPMENTS 67(David Williams)

* In each case, the personal opinions expressed are those of the interviewee and may not refl ect the views of Straumann.

63

Orthopedist Per-Ingvar Brånemark, MD, PhD and Director of P-I Brånemark Institute in Bauru, Brazil, developed osseointegration in the 1950s and has been active in the field ever since.

FOR MANY PEOPLE, DENTAL IMPLANTS ARE AN UNAFFORDABLE

LUXURY. WOULD YOU AGREE?

What I call the ‘Hollywood solution’, which gives priority to esthetics, is luxury. A solution that enables someone to eat properly and look into the eyes of the person they are talking to is good medicine. No one should die with their teeth in a glass of water by their bed.

DO YOU SEE BENEFITS FOR ALL LEVELS OF SOCIETY?

The most common amputation is tooth extraction. When you meet someone who has lost a fi nger or a hand or a leg, you feel sorry for them, but when you see a person having problems with their dentures, it’s easy to laugh at them. Oral invalidity is much more serious than people think. There is both a physical and psychological defect that has to be taken care of to restore human respect. Many patients over the years have told me they would rather lose a fi nger than their teeth because their personality is in their face. In our clinic for poor patients in Brazil, we see a remarkable social impact on patients and their families – and many of them are only in their twenties.

SHOULD RESOURCES BE CHANNELED FIRST TOWARDS ORAL

HYGIENE AND BASIC DENTISTRY PROGRAMS?

Teeth should be kept clean all the time of course, but human beings don’t always manage. We have to do something if we can. In Brazil alone, 25 million people have no teeth in their lower jaw. In China it’s 250 million. It costs much more if they are not treated because they function at just 50% instead of 100%.

WHAT ARE THE MAIN BARRIERS TO MAKING TREATMENTS WITH

IMPLANTS AVAILABLE IN POORER REGIONS?

One serious problem is that dentistry is detached from medicine. Edentulism isn’t perceived as a medical need. Ask-ing patients, instead of politicians, experts and professors, would be a good start to identifying those who need help. Surgery to restore a hand or leg is covered by the state or by insurance in many countries, but people who are losing or have lost their teeth just aren’t a priority.

WHAT IS BEING DONE TO OVERCOME THESE BARRIERS?

At our clinic in Brazil, 80% of the patients don’t have to pay. Donations come from various quarters, and dental teams from Brazil and other countries donate their time. We sim-plify the procedures and use very simple but workable im-plants. Less is more! I think many companies would be will-ing to provide the necessary hardware at low cost. All the time we ask the patient, is this good enough for you? Very few of these patients want beautiful teeth, they just want a safe solution that enables them to eat – and to hold their head up.

WHO SHOULD BE THE MAIN DRIVERS IN MAKING TREATMENT

MORE ACCESSIBLE?

The dentists of course! Politicians also have to understand. Some do, because they have dental problems themselves.

HOW SHOULD DENTISTS LEARN TO DO IMPLANTS?

The companies should present unbiased information, includ-ing how to avoid doing something that is not good enough, but they should not tell doctors what to put in or how to do it. That should be learned through the profession, not the mar-keting experts. I believe in learning from mistakes through honest mentoring and seminars.

ACCESS TO TREATMENT: PER-INGVAR BRÅNEMARK

‘I BELIEVE THAT COMMERCIAL COMPANIES SHOULD NOT HAVE ANY SAY ON WHAT YOU PUT IN AND HOW

YOU DO IT, BUT INFORMATION SHOULD BE AVAILABLE, INCLUDING WHAT NOT TO DO. A NEW TECHNOLOGY OR

A MODIFICATION SHOULD NOT BE PROMOTED BY ADVERTISING. I BELIEVE THE ONLY RELIABLE THING IS THAT

COMPANIES PRESENT DOCUMENTS BY UNBIASED PEOPLE.’

Straumann Annual Report 2006 Operational Review INDEPENDENT EXPERT OPINIONS

64

Since 1985, Cynthia Bollinger has consulted dentists, specialists and industry on practice management, education and marketing. She is the founder and Director of the Institute for Dental Implant Awareness (IDIA) based in Los Angeles, California.

WHAT DRIVES GROWTH IN THE IMPLANT MARKET?

Education is more important than technological innovation. In the early 90s, Straumann’s design for posterior tooth re-placement expanded the market signifi cantly, but since then minor improvements have not brought similar growth. The untapped market lies in patients whose dentists do not see implant dentistry as superior to traditional bridgework. Ef-fective education will increase the number of patients who select implants.

IS THERE A TREND FOR GENERAL DENTISTS TO PLACE AS WELL AS

RESTORE IMPLANTS?

To expand the market, some companies are aggressively encouraging general dentists to do surgery, bypassing the traditional team concept. The marketing ‘hype’ is creating the perception that this trend is inevitable. But there is an increase in complications and it could lead to a black eye for implant dentistry, and we could lose everything we’ve built over the past 20 years. I believe long-term success lies in the referral-based team model.

IS TREATMENT COST AN OBSTACLE TO GROWTH IN THE MARKET?

No. Once patients understand that implant treatment is a more conservative, longer-term solution that preserves bone and doesn’t compromise the adjacent teeth, cost is only an obstacle in about 5% of cases. If so, practices can help pa-tients with fi nancing in various ways.

IS IMPLANT DENTISTRY THE BEST WAY FOR GENERAL DENTISTS TO

BUILD THEIR BUSINESS?

Restoring implants that have been placed by specialists is a great business. Since most insurance companies don’t cover implants, and therefore do not ‘dictate’ fees, a fair fee can be based on time and materials. On the other hand, placing im-plants is not a good business for general dentists unless they want to retrain and specialize. The legal standard of care for performing surgery requires knowledge of and experience with the procedures, as well as the ability to predict, diag-nose and manage any potential complications.

HOW CAN QUALITY AND BUSINESS BE BALANCED AND

SUSTAINED?

Focus on what is provided on a regular basis. If dentists en-joy and excel at what they do, their patients get the best. Too much diversifi cation doesn’t work clinically or fi nancially.

HOW SHOULD PATIENTS CONSIDERING IMPLANTS SELECT

A DENTIST?

Most patients trust their dentist and don’t question train-ing or experience. Unfortunately, some dentists place im-plants with inadequate training. I think it’s incumbent upon the professional to make sure they are adequately qualifi ed – and patients should feel free to ask.

IS THERE A NEED FOR A WATCHDOG?

If everybody in the profession is fully aware, then a watchdog is not necessary. Right now, dentists are believing the hype coming from reputable companies. The IDIA has started a campaign to make the profession aware of the legal stan-dard of care for placing implants, and to provide materials for better patient education. We don’t want to be a watch-dog, but we have decided to take an active role in maintain-ing the integrity of implant dentistry.

BUILDING IMPLANT PRACTICES – A US PERSPECTIVE: CYNTHIA BOLLINGER

‘MANUFACTURERS HAVE AN ETHICAL RESPONSIBILITY TO ACT IN THE BEST INTERESTS OF THE DENTAL

PROFESSION AND THE PATIENTS. DON’T MAKE FALSE OR QUESTIONABLE REPRESENTATIONS. GIVE COMPLETE

INFORMATION. LAUNCH PRODUCTS THAT HAVE A SOUND BASIS IN SCIENCE AND NOT JUST WHAT MIGHT

DO WELL IN THE MARKETPLACE.’


65

Consulting Oral Surgeon Paul Stone teaches postgraduates at the Edinburgh Dental Institute. He is Secretary General of the European Association of Osseoin-tegration, Chair of the Royal College of Surgeons of Edinburgh Advisory Board on Implant Dentistry and a Fellow of the ITI.

EDUCATION IN IMPLANT DENTISTRY – A VIEW FROM THE UK: PAUL STONE

‘THE ETHICAL OBLIGATION OF COMPANIES IS NOT TO MISLEAD THE PEOPLE WHO USE THEIR PRODUCTS. THEY

HAVE TO REPRESENT THE TRUTH AS IDENTIFIED BY SCIENTIFIC RESEARCH, AND BE BIG ENOUGH TO ADMIT THAT

SOMETIMES THEY GET IT WRONG. THEY ALSO HAVE A DUTY OF CARE TO SUPPORT EDUCATION AND TRAINING,

ALTHOUGH NOT NECESSARILY TO DELIVER IT. THE PATIENT DEPENDS ON THE INTEGRITY OF THE DENTIST, WHO

IN TURN, DEPENDS ON THE COMPANIES.’

-

ARE TODAY‘S DENTISTS ADEQUATELY TRAINED FOR

IMPLANT WORK?

Every undergraduate dental school in the UK now teaches about implants, but they don’t train the students for com-petence. A large number of older dentists missed this edu-cation and need to catch up. Dentists involved in implant dentistry fall into two categories: those who recognize their limitations and take it upon themselves to train extensively and continuously, and those who seek fi nancial rewards with minimal training. Fortunately, these are the minority that are more likely to get into trouble.

IF THE MARKET FOR IMPLANT DENTISTRY CONTINUES TO GROW

AT THE CURRENT RATE, IT WILL DOUBLE IN THE NEXT FIVE YEARS.

CAN THE DENTISTS KEEP UP?

In the UK, most implants are placed by general dentists in practice. I don’t expect much of an increase in the activity of the specialists, as most are working to capacity already. The general practitioners who currently do only a few implants will undergo further training and absorb some of the new work as their confi dence and experience grows.

WHO SHOULD FUND EDUCATION IN IMPLANT DENTISTRY?

The dentists, because they are the main benefi ciaries. I’m not a great fan of companies offering free courses. Education choices should be based on content, not fi nancial incentives.

CUT-PRICE AND COPYCAT MANUFACTURERS CONTRIBUTE LITTLE

TO EDUCATION. IS THIS ACCEPTABLE?

Copycat manufacturers also contribute very little to research, development, and scientifi c literature. Without a scientifi c basis they can’t really educate. If they did, they would expose the weaknesses of the products they are trying to market.

IS THERE A DANGER THAT ACADEMIA IS BEING ‚BOUGHT‘ BY

INDUSTRY?

Academia is vulnerable because it needs funding. At the same time industry wants new developments tested in an academic environment. Even though industry might be well meaning, it can easily infl uence the outcome of scientifi c re-search. The biggest problem occurs when a single company is exclusively attached to a single academic institution. A broad spread of involvement is better for all.

SHOULD DENTAL SCHOOLS ENTER EXCLUSIVE EDUCATIONAL

COLLABORATIONS WITH COMPANIES?

Understandably, the dental implant an undergraduate be-comes familiar with is often the one he or she will choose to use later in professional practice. Education at this level should be more generic. It’s great for different companies to provide funding, components, or laboratory support, but ‘ex-clusivity’ is inappropriate.

HAVE DENTAL CONGRESSES BECOME BUSINESSES RATHER

THAN SCIENTIFIC EVENTS?

Congresses are potentially big business and there are more of them so dentists are overloaded with choice and informa-tion. Picking out the real gems is made more diffi cult because the ‘show business’ of some companies and presenters can cast a shadow over the science, research, and education that should be the core.

WHAT ARE THE MOST PRESSING EDUCATION ISSUES FOR THE

NEXT FEW YEARS?

We need to look carefully at training and lifelong learning – who provides it and how we help people fi nd a way through the maze of lectures, congresses and courses. A move to-wards the development of internationally agreed guidelines and standards seems an obvious target to aim for, but this will require the cooperation of many different National So-cieties and Governing Bodies.


66

WHAT ARE THE ADVANTAGES OF CERAMIC IMPLANTS?

Dr Gahlert: Ceramic implants are particularly suitable with regard to oral hygiene because, for example, they are rarely colonized by bacteria.Esthetic appearance is a major advantage: ceramic implants have a strikingly natural look. Being whiteness they closely resemble real teeth, giving a more natural effect. This should not be underestimated, particularly for a dental implant in the front of the mouth. Ceramic implants are also very well tolerated by the body, which is demonstrated by the good wound healing and soft-tissue regeneration after im-plantation.On the other hand, a ceramic implant is more diffi cult to in-sert than a conventional titanium implant. In contrast to the latter, ceramic implants have a one-piece design and there-fore have to be placed in exactly the right position because subsequent correction with a secondary component is more restricted than with titanium implants.

WHAT TYPE OF PATIENT BENEFITS MOST FROM CERAMIC

IMPLANTS?

Prof. Kniha: Ceramic implants are especially suitable for pa-tients who have lost a front tooth or teeth and want an im-plant restoration. Here, esthetics are particularly important, and the natural coloring of ceramic ensures that the implant blends in and does not stand out. But it is not just the color: the overall appearance and interplay between the teeth and gums are also important. The natural state can be imitated more closely with ceramic implants. Apart from the cos-metic considerations, ceramic implants are also particularly indicated for patients who are averse to having a titanium implant. In these cases, ceramic implants offer a good alter-native solution.

DOES PRICE PLAY A ROLE?

Dr Gahlert: From our experience, price does not play a role for most patients. Once they are convinced of the advantages of a product, they are perfectly prepared to pay a higher price. In return, they get a technically advanced, tested product.

ARE CERAMIC IMPLANTS JUST AS GOOD AS TITANIUM IMPLANTS?

Prof. Kniha: Ceramic implants are certainly not as advanced as the best of their titanium counterparts. One major differ-ence is in the surface texture, which affects the in-growth of the bone into the implant surface. Nowadays, the surface of titanium implants is roughened in order to ensure better and faster anchorage in the bone. The surface of the ceramic implants currently being tested is still smooth, although re-searchers are now working on a process for increasing the roughness of ceramic surfaces.

WILL CERAMICS DRIVE TITANIUM IMPLANTS OFF THE MARKET?

Dr Gahlert: That is unlikely since titanium has been on the market for decades and is very well established. Moreover, it will continue to be the material of choice for jaw areas with soft bone. Ceramic will probably secure a market share of around 20% and be used primarily in cases where cosmetic appearance is important.

WHAT IS YOUR EXPERIENCE WITH CERAMIC IMPLANTS?

Prof. Kniha: We were one of the fi rst groups to be scientifi -cally involved with ceramic implants in preclinical trials and also under clinical conditions with the aim of obtaining re-liable data on their behavior. Our experience has been that the implants become fi rmly anchored in the bone. What we now lack are studies involving a large number of patients so that we can obtain more information about the properties of ceramic implants.

Prof. Dr med. Dr med.dent. Heinz Kniha and Dr med.dent. Michael Gahlert run a joint orthodontic practice in Munich, Germany.

NEW MATERIALS: HEINZ KNIHA AND MICHAEL GAHLERT

‘PRECLINICAL TESTING AND RESEARCH ARE ESSENTIAL BEFORE A MEDICAL PRODUCT IS USED IN HUMANS.

THE CHOICE OF COMPONENT MATERIAL MUST SATISFY THE HIGHEST REQUIREMENTS.’


67

HOW ARE MEDICAL DEVICES REGULATED?

In the US, the Food and Drug Administration regulates de-vices and pharmaceuticals to protect the health of the pa-tient. In Europe, pharmaceuticals are similarly regulated while devices are considered manufactured goods. The CE mark they need to enter the single market is based on prod-uct safety and on demonstrating a quality manufacturing system. Medical devices are divided into four classes de-pending on how much evidence a company has to produce to get CE safety approval. Class 1 contains things like gloves and tools. Class 2a holds items placed in the body temporar-ily, like feeding tubes. 2b is implants, and 3 is implants for vital systems, like heart valves.

ARE THE REGULATORY ENTRY BARRIERS FOR DENTAL IMPLANTS

COMPARATIVELY LOW?

No. In Europe dental implants are regulated in class 2b, like hip replacements. The rules are generic, so regulators cannot set entry barriers higher or lower for any one type of device.

DO THE REGULATIONS ALLOW PROBLEMATIC COPYCAT

MANUFACTURING?

The point of the single market is to have a level playing fi eld. So-called copycats have to provide their own preclinical safety data, but they can piggyback on the experience of the larger companies. Whether that’s a good or bad thing ob-viously depends who you are. It would be legally diffi cult to make it harder for them.

WILL THE REGULATORY ENVIRONMENT FOR MEDICAL DEVICES

CHANGE IN THE NEXT FIVE YEARS?

Caution is increasing as the EU expands, especially where an implant failure would kill the patient or so many are used that generic failure would affect vast numbers of people. Many orthopedic devices are being moved into class 3, and dental implants may move with them. The US is going in the opposite direction, as regulators are under pressure to get the latest and best technology to the patient as quickly as possible, especially where product life-cycles are short.

DO YOU EXPECT TO SEE MORE COMBINATION DEVICES IN IMPLANT

DENTISTRY AND HOW WOULD THEY BE REGULATED?

Interest is growing in devices that include pharmaceutical elements which increase the speed or strength of bone at-tachment. In Europe, both elements must be tested sepa-rately, while the US tests them together. There is pressure to change the European regulations, but progress is slow because the legal standards for regulating devices and phar-maceuticals are different. Some companies use diffi cult regu-lation processes to justify higher prices.

IS THERE ANY HOPE OF REGULATIONS BEING GLOBALLY

HARMONIZED?

It is diffi cult because the legal frameworks are so different and some countries would rather have their own procedures. I’m not sure if there is a great political will to do it, to be hon-est. Probably the more important issue is using pre-clinical and clinical data obtained in one jurisdiction for regulatory approval in another one. It’s not yet universal, but it is get-ting better.

Prof. David Williams DSc, FREng, is Director of the UK Centre for Tissue Engineering at the Universities of Liverpool and Manchester, and Scientifi c Director of STEPS, the European Commission Frame-work VI Program on a Systems Approach to Tissue Engineering Products and Processes.

REGULATORY DEVELOPMENTS: DAVID WILLIAMS

‘IF A COMPANY WANTS TO GET REGULATORY APPROVAL THEY HAVE TO SUBMIT ALL OF THE RELEVANT DATA.

IT IS VERY IMPORTANT TO INCLUDE THE NEGATIVE RESULTS IN THE DOSSIER. THERE ARE SOME OTHER ETHICAL

ISSUES IN TISSUE ENGINEERING, NOTABLY THE WHOLE DEBATE ABOUT STEM CELLS. MY OWN VIEW ON THIS IS

THAT IT IS NOT NECESSARY TO USE EMBRYONIC STEM CELLS IN MOST SITUATIONS. YOU CAN ACTUALLY USE

STEM CELLS FROM THE PATIENTS THEMSELVES.’


Straumann Annual Report 2006 Operational Review XXXXXXXXXXXXXXX 68

Principles 69Group structure and shareholders 69Capital structure 73Board of Directors 75Executive Management 79Compensation of, participation by, 81and loans to the Board of Directors andthe Executive ManagementShareholders’ rights of participation 84Changes in control and defense measures 84Auditors 84Information policy 85

CORPORATE GOVERNANCE

69

WE ARE COMMITTED TO A POLICY OF OPEN, TRANSPARENT AND CONTINUOUS INFORMATION.

OUR COMMITMENT TO RESPONSIBLE CORPORATE GOVERNANCE MEANS LEADERSHIP BALANCED BY

CONTROL, SAFEGUARDING THE INTERESTS OF OUR SHAREHOLDERS.

Straumann Annual Report 2006 Operational Review CORPORATE GOVERNANCE

PRINCIPLES

Straumann’s principles of, and rules on corporate gover-nance are laid down in the Articles of Association, the Rules for Organization and Operation, the Code of Conduct, and the Charters of the Board Committees. These principles and rules are the basis of corporate governance disclosures, which are in compliance with the Directive on Information relating to Corporate Governance published by the SWX Swiss Exchange, where Straumann’s shares are traded.

GROUP STRUCTURE AND SHAREHOLDERS

GROUP STRUCTURE

Registered in Basel, Switzerland, Straumann Holding AG is the parent company of the Straumann Group. Straumann Holding AG has been listed in Switzerland since 1998 and its shares (STMN) are traded on the main segment of the SWX Swiss Exchange. Information on the shares is provided be-low and on pp. 71 and 163.Headquartered in Basel, Switzerland, the Straumann Group includes a total of 18 fully-owned distribution companies around the world (see table on the next page). The Group sells products and services through twelve distri-bution companies in Europe and through its headquarters in Switzerland. There are two sales companies in North Ameri-ca, one in the Asia/Pacifi c region and two in Latin America. Two companies – the headquarters in Switzerland, the other in North America – manufacture implants, while one fur-ther company in Europe produces and develops regenera-tive products. Apart from this, Straumann Holding AG holds shares in a subholding company in Sweden.

Straumann Holding AG directly or indirectly holds 100% of the capital and voting rights in all Group companies. As laid down in the Rules of Organization and Operation, the CEO or the respective Regional Head, the CFO and the General Counsel are generally Members of the Board of Directors in all Straumann companies and represent the parent compa-ny as the shareholder. The following developments took place in 2006: in Janu-ary, Straumann integrated its Danish distribution organi-zation and established its own distribution organization in Mexico.In June, Straumann completed the purchase of all outstand-ing shares in Biora AB, the Swedish biologics company ac-quired through a friendly takeover in 2003. The outstand-ing shares represented 6.3% of the overall share capital of Biora AB.At year-end, Straumann took over distribution of its prod-ucts and services in New Zealand, as the agreement with the former distributor expired. New Zealand now has its own dedicated sales team and is served through Straumann Australia.In the fi rst quarter of 2007, Straumann’s Villeret production site in the Swiss Canton of Bern will become a separate le-gal entity from Institut Straumann AG. This will be effected by transferring the corporate seat of Institut Straumann AG from Basel to Villeret and renaming it Straumann Villeret SA. All non-production assets will be transferred into the newly-founded Institut Straumann AG with its corporate seat in Basel. For the purpose of this transfer, Straumann Ser-vices AG was established in December, and will be renamed Institut Straumann AG in the fi rst quarter of 2007.

70 Straumann Annual Report 2006 Operational Review CORPORATE GOVERNANCE

Straumann Holding AGBasel, SwitzerlandCHF 1 561 598

■ Headquarters, sales and distribution, production

■ Sales and distribution

■ Production

■ Holding and subholding

At 31 December 2006

Straumann GmbHVienna, AustriaEUR 40 000

Straumann SA/NVZaventem, BelgiumEUR 100 000

Straumann Danmark ApSGreve, DenmarkDKK 125 000

Straumann OYHelsinki, FinlandEUR 32 000

Straumann SARLMarne-la-Vallée, FranceEUR 192 000

Straumann GmbHFreiburg, GermanyEUR 170 000

Straumann LtdCrawley, Great BritainGBP 100 000

Institut Straumann AGBasel, SwitzerlandCHF 9 000 000

Straumann Italia srl Milan, Italy EUR 270 000

Straumann Services AGBasel, SwitzerlandCHF 100 000

Straumann HoldingSweden ABMalmö, SwedenSEK 100 000 Biora AB Malmö, Sweden SEK 950 152

Biora BioEx AB Malmö, Sweden SEK 100 000

Bioventures BV Amsterdam, Netherlands EUR 18 151

Straumann BVIjsselstein, NetherlandsEUR 18 151

Straumann ASOslo, NorwayNOK 1 000 000

Straumann SAMadrid, SpainEUR 60 101

Straumann ABGothenburg, SwedenSEK 100 000

Straumann Manufacturing, IncAndover, USAUSD 1

Straumann USA, LLC Andover, USA USD 1

Straumann Canada LtdBurlington, CanadaCAD 1 500 000

Straumann Mexico SA de CVMexico City, MexicoMXN 19 407 008

Straumann Brasil LtdaSão Paulo, BrazilBRL 466 000

Straumann Pty LtdVictoria, AustraliaAUD 100

GROUP LEGAL STRUCTURE

71

OPERATIONAL GROUP STRUCTURE

Towards the end of 2006, the Group streamlined its opera-tional structure from seven to three divisions:

Finance & Operations

The Finance & Operations division incorporates all fi nance-related functions, Operations (Purchasing, Corporate Quality Management and Assurance, Production, Logistics), Group Audit and Information Technology.

Marketing & Products

The two divisions ‘Products’ and ‘Marketing & Product Sup-port’ were combined into a single division called ‘Marketing & Products’, and are structured into distinct business units responsible for product innovation and life-cycle manage-ment.

Sales

The third division, ‘Sales’, comprises the various country or-ganizations grouped into multiple regional responsibilities.

The new structure became effective on 1 January 2007.

LISTED AND UNLISTED COMPANIES

Straumann Holding AG is the sole listed company in the Straumann Group.

Name Straumann Holding AGDomicile Basel, SwitzerlandShare capital CHF 1 561 598*Registered shares 15 615 978*Nominal value CHF 0.10Market capitalization CHF 4 591 million*Listed at SWX Swiss ExchangeSecurity ID 0 01228 007ISIN CH 0012 280 076Bloomberg STMN SWReuters STMN.STelekurs (Investdata) STMN

* At 31 December 2006

SHAREHOLDERS

REGISTERED SHAREHOLDERS

On 31 December 2006, 12 902 shareholders were registered. Share ownership is as follows:

Registered shareholders

Registered shareholders

Shares held 31 Dec 2006 31 Dec 2005

1–100 8 433 7 566101–1000 4 109 4 1151001–10 000 311 31810 001–100 000 40 57100 001–1 000 000 7 71 000 001 and more 2 2Total 12 902 12 065

CEO

Finance& Operations

Marketing & Products

Corporate Services

Sales


72

SHAREHOLDINGS ON 31 DECEMBER 2006 MAJOR SHAREHOLDERS

In May 2006, the Company was informed that Dr h.c.Thomas Straumann, who is a member of the Board of Directors, sold 645 000 of his shares to Dr h.c. Rudolf Maag, Chair-man of the Board. This corresponded to 4.1% of the over-all share capital and brought the respective stakes held by Messrs. Straumann and Maag to 32.4% and 12.3%.The following major shareholders, as defi ned by Art. 663c of the Swiss Code of Obligations, were registered as owning more than 5% of the share capital on 31 December 2006.

No other shareholder is registered as holding more than 5% of the share capital. To the Company’s knowledge, no shareholders’ agreements or other agreements between the shareholders exist.

CROSS-SHAREHOLDINGS

Straumann has not entered into any cross-shareholdings with other companies relating to equity or voting rights.

Major shareholders51%

Non-registered16%

Private individuals

13%

Institutional shareholders

20%

Switzerland69%

Non-registered 16%

Rest of World1%

USA 6%

Rest of Europe 3%

Great Britain 5%


(in %)31 Dec

200631 Dec

2005

Dr h.c. Thomas Straumann(Member of the Board) 32.4 36.6 Dr h.c. Rudolf Maag (Chairman of the Board) 12.3 8.2 Simone Maag de Moura Cunha 6.0 6.1 Total 50.7 50.9

73

CAPITAL STRUCTURE

(in CHF 1 000)31 Dec

200631 Dec

200531 Dec

2004

Equity 506 752 419 989 311 628Share capital 1 562 1 558 1 552Reserves 32 057 46 601 36 336Retained earnings 473 133 370 319 273 591Conditional share capital 38 42 48Number of registered shares 15 615 978 15 576 761 15 519 120Nominal value per share (in CHF) 0.10 0.10 0.10Registration restrictions none none noneVoting restrictions none none noneOpting-out, opting-up none none none

ORDINARY SHARE CAPITAL

As per 1 January 2007, the share capital is composed of 15 615 978 registered shares, each with a nominal value of CHF 0.10. The share capital is fully paid up. On 31 December 2006, Straumann Holding AG did not have any authorized share capital and had not issued any participation certifi -cates or profi t participation certifi cates.

CONDITIONAL SHARE CAPITAL

A conditional share capital of CHF 300 000 was resolved at the extraordinary General Meeting on 6 May 1998. Follow-ing the share split of 1:20 in 2001 and the reductions in nomi-nal value in 2001 and 2002, the conditional share capital at the end of 2006 amounted to CHF 38 402 and the number of conditional shares at the end of 2006 to 384 022. The condi-tional share capital is intended for use in equity participa-tion plans for employees and management (see following sections for details).

EMPLOYEE SHARES

In 2006, employees had the right to purchase Straumann shares for 75% of the share price on 31 December 2005, with shareholders’ preemptive rights being excluded. All employ-ees are entitled to buy between 10 and 100 shares per calen-dar year. The shares are subject to a 2-year lock-up period. From the beginning of 2007, the price will be 75% of the av-erage share price over the period of 7 trading days following the ex-dividend day.

STOCK OPTION PLAN

At Straumann, options with a lock-up period are used as a compensation instrument with the intention of fostering and rewarding longer-term business decision making. Part of the compensation paid to the Board of Directors, Executives and other members of Senior Management takes the form of stock options. The options have a term of up to 6 years and a vesting period of 1–3 years. The exercise price is equal to the share price on the previous 31 December. The value of the options is determined at grant date and expensed as person-nel expense from the service commencement to the end of the vesting period. In order to facilitate valuation and transferability of options granted under this plan, the options are structured as ‘Pri-vate Placement’. Since 2000, a Swiss bank has functioned as ‘market maker’ for the quoted and private placement war-rants. One option is equal to 50 warrants. The warrants is-sued are shown in the following table.


74

Apart from the above, 4 315 non-tradable options were grant-ed for the fi scal year 2006 for management compensation schemes in certain countries. Including the above, the num-ber of options (1 option = 50 warrants) outstanding under the stock compensation plan developed as follows:

2006 2005

As of 1 January 202 675 199 535Earned options 48 000 51 480Exercised options (39 217) (48 340)Forfeited options (5 227) —As of 31 December 206 231 202 675

Options available for exercise 86 505 63 382

(See p. 82 for options granted to the Board of Directors and the Executive Management.)

The options outstanding are available as follows:

In year

Options available for

exercise

Options

expiring at year-end

2006 86 505 02007 96 821 14 6932008 131 883 50 5242009 47 136 45 8782010 — 47 1362012 — 48 000Total 206 231

In 2006, 39 217 options were exercised and exchanged for the corresponding number of shares.

SUMMARY OF ALL VALID WARRANTS ISSUED IN THE STRAUMANN

STOCK OPTION PLAN

Name/Symbol YearSecurity

ID numberMarketmaker Type/ratio Number Strike price Expiry

STMN/UBSW Wt 12.07 (STMN07)

2002 1623715 UBS Derivatives

American 50:1

1 766 800 135.00 12.2007



American 50:1

2 529 550 187.90 12.2008



American 50:1

2 334 700 236.00 12.2009



American 50:1

2 574 000 304.50 12.2010

STMCR* Wt 12.12 (STMN12)

2006 2882303 Credit Suisse Derivatives

American 50:1

2 184 250 295.00 12.2012

Total warrants outstanding 11 389 300

* Traded on the SWX Swiss Exchange


75

Name Age* Nationality Member since Elected in Elected until

Dr h.c. Rudolf Maag (Chairman) 60 Swiss 2002 2005 2008 Oskar Ronner (Vice Chairman) 61 Swiss 2000 2006 2009Dr Sebastian Burckhardt 52 Swiss 2002 2005 2008Dominik Ellenrieder 48 Swiss 2001 2004 2007Jürg Morant 62 Swiss 2002 2005 2008Dr h.c. Thomas Straumann 43 Swiss 1990 2004 2007

* At 31 December 2006

RESTRICTIONS ON THE TRANSFERABILITY OF SHARES AND

NOMINEE REGISTRATIONS

• There are no restrictions on the transferability of Strau-mann Holding’s shares.

• A register of shares and their owners is maintained. The Company must be informed of any changes. • The person recorded in the register of shares is considered

to be a shareholder in relation to the Company. • Proof of acquisition of title in the shares is a prerequisite

for entry in the register of shares. • On request, purchasers of shares will be entered in the

register of shares as shareholders with voting rights if they expressly declare that they have acquired the registered shares in their own name and for their own account. Only if a purchaser is not willing to make such a declaration, will he/she be registered as shareholder without voting rights.

• After hearing the affected parties, the Company may delete entries in the register of shares if these are based on false statements made by the purchaser. • The Board of Directors decides on the admissibility of nominee entries.

BOARD OF DIRECTORS

In 2006, the Board of Directors of Straumann Holding AG consisted of six non-executive members. All members are elected by the General Meeting for a 3-year period of offi ce. Re-election is permitted and, on 24 March 2006, Oskar Ron-ner was re-elected for a further 3-year term by the General Meeting. The Board re-appointed Rudolf Maag as its Chair-man and Oskar Ronner as Vice Chairman. The average age of the members of the Board of Directors is 54.


76

DR H.C. RUDOLF MAAGSwiss (born 1946), Chairman of the Board, Chairman of the Finance and Audit Committee

Rudolf Maag has a long, distinguished career in fi nance and business administration. It began in 1968, when he joined the Basel-based UTC trading company. In 1973 – the year in which he obtained his MBA with distinction at INSEAD – he moved to the Agro Division of the Swiss multinational San-doz AG. There he held a series of senior management posi-tions: Head of Planning and Financial Control, Director of Marketing USA, Head of the Brazilian Division, and Head of Business Development and Acquisitions. In 1986, he was ap-pointed Commercial Director of Institut Straumann AG. In 1990, following a management buy-out, he created Stratec Medical, of which he was Vice Chairman and CEO. In 1999, following the merger with Synthes USA, he became Vice Chairman and CEO of Synthes-Stratec and held both posi-tions until 2000, when he left the company. He has since as-sumed various Board of Directors mandates and is involved in private equity fi nanced start-ups and spin-offs. Rudolf Maag has been a member and Chairman of the Board of Directors of Straumann since 2002, and is elected until 2008. In 2006, he was awarded an honorary doctorate by the University of Basel, Switzerland.

OSKAR RONNER Swiss (born 1945), Vice Chairman of the Board, Chairman of the Human Resources Committee (formerly Compensation and Nomination Committee)

Oskar Ronner graduated with an MBA from Harvard Busi-ness School in 1978 and with a MSc in mechanical and indus-trial engineering from the Federal Institute of Technology

(Zurich) in 1970. After General Management and CEO posi-tions in the aircraft industry, he joined Gebr. Sulzer AG, Win-terthur, in 1988 as President of the Sulzer Medica Division, at the same time holding the post of CEO of Intermedics Inc, Angleton (Texas, USA). From 1990 to 1994, he was member of the Executive Board and Executive Vice President in charge of the Industry Division of Elektrowatt AG, Zurich, and was subsequently the company’s President and CEO until 1998. Between 1994 and 1996, he was also Executive Vice Presi-dent at Credit Suisse Holding, the major shareholder of Elek-trowatt AG. When Elektrowatt Building Technologies (the former Industry Division plus the acquired Landis & Gyr AG) was bought by Siemens in 1998, he was appointed President and CEO of what is now Siemens Building Technologies AG, a post he held until 2003. Oskar Ronner has been a member of the Board of Directors of Straumann since 2000, and is elected until 2009. Other key directorships include Von Roll AG.

DR SEBASTIAN BURCKHARDT Swiss (born 1954), Member of the Finance and Audit Committee

Sebastian Burckhardt began his studies in the fi elds of eco-nomics and law and obtained his doctorate law degree at the University of Basel. He is a qualifi ed lawyer and public notary in Switzerland, and was admitted to the New York bar following studies at New York University Law School. He is a partner at VISCHER, Attorneys-at-law, in Basel. Sebastian Burckhardt has been a member of the Board since 2002 and is elected until 2008. Other key directorships in-clude: Dolder AG, Petroferm Inc, Cell Int. AG, and the School for Healing of the Deaf and Persons with Speech Impedi-ments (Riehen, Switzerland).


77

DOMINIK ELLENRIEDER Swiss (born 1958), Chairman of the Technical Committee, Member of the Human Resources Committee (formerly Compensation and Nomination Committee)

A graduate of the University of Basel, where he obtained a degree in economics, Dominik Ellenrieder was Head of In-ternational Sales at Protek AG (later Sulzer Medica). In 1990, he joined Stratec Medical, where he held a series of manage-rial positions with increasing responsibility (development, product management, operations of affi liated companies). In 2000, he founded Kuros Therapeutics AG, where he was Chairman of the Board until 2002.Dominik Ellenrieder has been a member of the Board of Di-rectors of Straumann since 2001 and is elected until 2007. Other key directorships include Medartis AG, Kuros Biosur-gery AG, and Sentec AG.

JÜRG MORANT Swiss (born 1944), Member of the Finance and Audit Committee, Member of the Technical Committee

Jürg Morant’s academic background includes medical stud-ies at the University of Bern and business management at the University of St Gallen, reinforced by INSEAD’s Senior Executive Program. His business experience started with the Pharma Division of Ciba-Geigy, where he rose to be Group Head, Pharma Marketing Services. In 1982, he was appointed CEO of Documed AG, which he took over in 1986. He then led the company, renamed MediMedia, through a phase of international expansion and consolidation which culmi-nated in its sale to Havas (part of Vivendi Universal) in 1999.

He was appointed CEO Europe and member of the Execu-tive Committee of Vivendi Universal Health, where he was also member of the Audit Committee. From 2004 to 2005, he was a member of the Executive Management of the Ga-lenica Group. Jürg Morant has been a member of the Board of Directors of Straumann since 2002 and is elected until 2008. Other key directorships include Hotel ‘Les Trois Rois’.

DR H.C. THOMAS STRAUMANNSwiss (born 1963), Member of the Human Resources Committee (formerly Compensation and Nomination Committee), Member of the Technical Committee

Thomas Straumann’s skills in precision engineering were complemented by his studies at the Basel Management School, from which he graduated in 1988. In 1990, he was responsible for restructuring Institut Straumann AG and was CEO and Chairman of the Board of Directors until 1994. He was Chairman of the Board of Straumann Holding AG until 2002. Thomas Straumann has been a member of the Board of Di-rectors of Straumann since 1990 and is elected until 2007. Other key directorships include Hotel ‘Les Trois Rois’ (Chair-man), Centervision AG (Chairman), Medartis AG (Chair-man), Grand Hotel Bellevue (Chairman), Tschudin+Heid AG (Deputy Chairman), Von Roll Holding Ltd. (Member of the Board), Moser Schaffhausen Ltd. (Member of the Board), Pre-cision Engineering Ltd. (Member of the Board). Member of the Board of Directors and Board of Trustees of ITI and IBRA. In 2004, he was awarded an honorary doctorate by the Uni-versity of Basel, Switzerland.


78

CROSS INVOLVEMENT

There are no interdependent memberships in the Board of Directors of Straumann Holding AG and any other company.

OPERATING PRINCIPLES OF THE BOARD OF DIRECTORS

The Board of Directors meets at least four times a year and as often as business requires. In 2006, the Board of Directors held eight meetings. The members of the Executive Manage-ment participate in Board meetings in an advisory capacity. Dr Andreas Meier (General Counsel) acts as Secretary to the Board of Directors (non-member). The Board of Directors consults external experts where necessary when discussing specifi c topics. The Board of Directors is responsible for the strategic management of the Company, supervision of the Executive Management and fi nancial control. The Board of Directors reviews the Company’s objectives and identifi es opportunities and risks. In addition, it appoints the mem-bers of the Executive Management. The Board of Directors is a quorum if a majority of its members is present. Valid reso-lutions require a majority of the votes cast. In the event of a draw, the Chairman of the Board holds the casting vote.

COMMITTEES OF THE BOARD OF DIRECTORS

In July 2006, the Board of Directors expanded the number of its permanent committees to three: the Finance and Au-dit Committee, the Human Resources Committee (formerly the Compensation and Nomination Committee) and the newly formed Technical Committee. The Board relies on the recommendations of these Committees to facilitate the effi -cient and effective organization of its work. Each Committee comprises three non-executive Board Members. In 2006, the Finance and Audit Committee met fi ve times, the Human Resources Committee twice and the Technical Committee twice.

FINANCE AND AUDIT COMMITTEE

Members: Dr h.c. Rudolf Maag (Chair), Dr Sebastian Burck-hardt, Jürg Morant. This Committee’s main tasks include: • Examination of the effectiveness of the external auditors

and the internal controls • Review of the instructions for management in terms of

fi nancial risks and compliance therewith • Discussion of the fi nancial statements with the CFO and

the head of the external auditors • Review of the services provided by the auditors, their

remuneration, and their independence • Review of the risk management procedures.

HUMAN RESOURCES COMMITTEE (FORMERLY COMPENSATION AND

NOMINATION COMMITTEE)

Members: Oskar Ronner (Chair), Dominik Ellenrieder, Dr h.c. Thomas Straumann. This Committee’s main tasks include: • Recommendation of the compensation to be paid to

members of the Board and Executive Management • Development of the principles for the market- and perfor-

mance-driven compensation of all employees • Defi nition of the details of the stock option plans and the

principles governing grants made under them • Drawing up of the employment contracts for the mem-

bers of the Executive Management.


79

TECHNICAL COMMITTEE (AS OF 1 JULY 2006)

Members: Dominik Ellenrieder (Chair), Dr h.c. Thomas Strau-mann, Jürg Morant.The main tasks of this new committee include:• Observation and evaluation of the market situation • Review of Straumann‘s product range and the positions of

the Group’s most important competitors • Evaluation of Straumann’s future position (3-5 years‘ time) • Identifying key projects and assessing their planning and

implementation.

EXECUTIVE MANAGEMENT AND ASSIGNMENT OF

RESPONSIBILITIES

The Board of Directors has delegated responsibility for the management of the Company to the CEO, Gilbert Acher-mann, and the Executive Management. Together with the Executive Management, he is responsible for the overall management of the Straumann Group. The respective re-sponsibilities and powers are laid down in the Rules for Or-ganization and Operation. The Board of Directors has not delegated any management tasks to companies outside of the Company.

INFORMATION AND CONTROL MECHANISMS FOR EXECUTIVE

MANAGEMENT

The Straumann Group’s management information system (MIS) covers the areas of management reporting, business and fi nancial reporting. The information is provided to the Board of Directors on a quarterly basis and to the Executive Management on a monthly basis. Additional Group management tools include strategic planning and its breakdown into business and operational planning. Risk management and monitoring procedures are evaluated at regular intervals by the Finance and Audit Committee.

EXECUTIVE MANAGEMENT

In 2006, the Executive Management (Committee) comprised seven or more members for three quarters of the year. At the beginning of the year, Dr Patrick Louvel joined Straumann as Executive Vice President Sales Asia/Pacifi c & Distributors. In June 2006, Marco Gadola joined as new CFO and Execu-tive Vice President Finance, taking over from Martin Gertsch, who left at the end of January 2006. Russell Olsen, Execu-tive Vice President Sales North America, left the company in February, while Marianne Bürgi, Executive Vice President Marketing and Product Support, decided to leave towards the end of the year.In August, the Group began a program to optimize processes and structures in order to shorten time to market and to fur-ther enhance innovation capabilities. The resulting organi-zational improvements became effective at the beginning of January 2007. As a result, the Group’s Executive Manage-ment now comprises an Executive Board of four positions, one of which is vacant. The Executive Management Board is responsible for the op-erational management of the Straumann Group in-line with the instructions issued by the Board of Directors. Its tasks are laid down in the Organizational and Business Regulations. The Executive Management Board is also responsible for the global strategy and stakeholder management. It is sup-ported by an Executive Management Group, responsible for driving regional and business strategy implementation.

2006 2007

Executive Management Board (4)

Executive Management Group (8)

Executive Committee(7/8)

Global strategy and stakeholder management

Drive regional and business strategy implementation


80

Under the leadership of CEO Gilbert Achermann, the Execu-tive Management Board includes CFO Marco Gadola, who heads Finance and Operations, and Dr Sandro Matter, who heads Marketing and Products. The fourth member, who will be responsible for Global Sales, has yet to be appointed.

GILBERT ACHERMANNSwiss (born 1964), President and Chief Executive Officer

Gilbert Achermann holds a degree from the HWV business school in St Gallen and an Executive MBA from IMD in Lau-sanne. His extensive experience in the fi eld of corporate fi -nance and investment banking, in particular capital restruc-turing, was gained through a series of senior positions both in Switzerland and the US, in the two Swiss banks which merged to form UBS. Mr Achermann joined Straumann from UBS in 1998 as Chief Financial Offi cer. He was appointed CEO in 2002.Gilbert Achermann is a member of the Board of Directors and Board of Trustees of the academic network Internation-al Team for Implantology (ITI).

MARCO GADOLASwiss (born 1963), Finance & Operations Division/CFO

Marco Gadola graduated from Basel University in business administration and economics and completed an accelerat-ed management development program at the London School of Economics. He joined Straumann in June 2006 from Hero, the Swiss-based international food group. He was appointed

CFO at Hero in 2001 and was in charge of fi nance, informa-tion technology and supply chain. He also had full fi nancial and commercial responsibility for several Hero group com-panies. Previously, Mr Gadola spent nine years at the inter-national construction tool manufacturer Hilti, where he held a number of senior commercial and fi nance-related posi-tions in various countries. Before joining Hilti, he worked for Sandoz International Ltd. as an Audit Manager and for Swiss Bank Corporation, Basel, in Corporate Finance.

DR SANDRO MATTER Swiss (born 1964), Marketing & Products Division

Sandro Matter earned a Master’s degree in chemistry at the Swiss Federal Institute of Technology in Zurich, followed by a doctorate in materials sciences at the same institution. His business career began at Synthes-Stratec, where he was responsible for biomaterials product management and de-velopment from 1997 to 2002. He was a co-founder of Ku-ros Therapeutics. He joined Straumann in 2002 as Head of the Biologics and Research Division and became Head of the Products Division in 2005. He was appointed to his current position at the end of 2006.


81

The Executive Management Group includes the regional sales heads, the heads of the three Business Units (Surgical, Prosthetics and Regenerative), the head of Operations and the head of Human Resources. Other than Gilbert Achermann’s membership of the Board of Directors and Board of Trustees of the ITI, none of the members of the Executive Management: • performs any activities in governing or supervisory

bodies of signifi cant foreign or domestic organizations, institutions or foundations under private or public law

• holds any permanent management or consultancy func-tion for signifi cant domestic or foreign interest groups

• holds any offi cial function or political post.

MANAGEMENT CONTRACTS

The Board of Directors and the Executive Management Board run the business directly. They have not delegated any man-agerial powers to persons or companies outside Straumann.

COMPENSATION OF, PARTICIPATIONS BY, AND

LOANS TO THE BOARD OF DIRECTORS AND THE EXECUTIVE

MANAGEMENT

COMPONENTS OF THE COMPENSATION PACKAGE

A value-based compensation program was introduced for the Board of Directors, the Executive and Senior Manage-ment in 2003. The aim of the program is to link the variable compensation paid to participants in the plan to the long-term added value generated by the Straumann Group. The concept builds on the principle of ‘Economic Profi t’ (EP) and is based on a multi-year plan that complies with sharehold-ers’ expectations. In addition to measuring sales growth and profi tability increases, the main advantage of the EP concept is that funds used to achieve these increases can be assessed, and the resulting additional costs of capital can be taken into account. In addition to the individual fi xed salaries, the variable compensation component takes the form of an in-dividual cash remuneration (cash bonus). The multiplier for calculating the available bonus is derived from the economic

profi t improvement per fi scal year. The available bonus is credited to a bonus bank and only paid out in part, with the balance being carried forward to the next year. This allows the Company to take both positive and negative fl uctuations in its business development into account and to take a long-term approach to variable compensation. In addition to the variable compensation, a fi xed number of options, determined on an individual basis, are also granted. The options, which are issued as warrants (1 option = 50 war-rants), have a term of up to 6 years and a vesting period of 1–3 years. The exercise price of the options is the share price at the end of December. The value of the options is deter-mined in line with the Black-Scholes method at grant date and amortized as personnel expense over the vesting period (see p. 137). In 2006, the members of the Board of Directors received compensation amounting to CHF 999 072. The highest total compensation paid to a member of the Board of Directors in the year under review was CHF 266 419. In 2006, the collec-tive members of the Executive Management received com-pensation amounting to CHF 5 443 555. The compensation paid to the CEO in the year under review was CHF 1 021 728, and the compensation paid to Executives leaving the com-pany in 2006 totaled CHF 635 549. Post employment benefi ts amounted to CHF 229 711 (see p. 145).As of 2007, the following changes apply to the terms and conditions of the existing stock option program. The option term has been extended to 6 years and a cliff vesting period of 2 years applies for all newly granted options. The exercise price is equal to the share price on the grant date (1 January).


82

The options (1 option = 50 warrants) granted for the 2006 fi s-cal year are based on the year-end share price of CHF 295.00 and are valid until December 2012. They have a vesting pe-riod of 2 years and a value of CHF 70.00 per option at grant date, as shown in the following table:

COMPENSATION 2006

(in CHF 1 000)Number of

persons Salaries Cash bonus

Value of options at

grant dateFringe

benefi ts

Total compensation

2006

Total compensation

2005

Chairman of the Board of Directors 1 – 126 140 – 266 272Members of the Board of Directors 5 – 348 385 – 733 747Total 6 – 474 525 – 999 1 019

CEO 1 455 146 385 36 1 022 1 043Members of the Executive Management 6 1 456 706 1 423 201 3 786 3 264Executive Management leaving 2 175 437 0 24 636 708Total 9 2 086 1 289 1 808 261 5 444 5 015

Total 15 2 086 1 763 2 333 261 6 443 6 034

Number of persons Number of options Value at grant date

(in CHF) Total value

(in CHF 1 000)

Chairman of the Board of Directors 1 2 000 70.00 140Members of the Board of Directors 5 5 500 70.00 385Total 6 7 500 525

CEO 1 5 500 70.00 385Members of the Executive Management 6 20 326 70.00 1 423Executive Management leaving in 2006 2 0 70.00 –Total 9 25 826 1 808

Total 15 33 326 2 333


83

1 Straumann‘s previous Annual Report states options earned in 2005 and granted in 2006. The fi gures presented here refer to options held on 31 December.

MANAGEMENT TRANSACTIONS

‘Management transactions’ include transactions by the Members of the Board of Directors and the Executive Man-agement. In 2006, Straumann reported the following man-agement transactions, which include the transaction men-tioned in the ‘Major Shareholders’ section on p. 72.

LOANS AND GUARANTEES TO MANAGEMENT

The Company did not make any loans or guarantees to man-agement in 2006.

RELATED-PARTY TRANSACTIONS

All transactions with related parties are based on standard commercial contracts concluded at arm’s length. In 2006, the Basel-based law fi rm VISCHER, Attorneys-at-law, in which

Dr Sebastian Burckhardt is a partner, received fees amount-ing to CHF 302 046 (CHF 203 525 in 2005) for legal and tax consultancy services. The contribution to the ITI Foundation amounted to CHF 8 260 081 (CHF 7 842 476 in 2005). Apart from this, no business relationships with related companies or individuals existed.

PARTICIPATION IN THE SHARE CAPITAL (31 DECEMBER)

Number of persons

Number of transactions

Value of purchasing transactions

(in CHF 1 000)

Value of selling transactions

(in CHF 1 000)

Management transactions in shares 8 9 200 939 199 950Management transactions in options 3 5 – 1 177Total 11 14 200 939 201 127

Number of shares 2006

Number of shares 2005

Number of options 2006

Number of options 20051

Chairman of the Board of Directors 1 915 908 1 282 408 6 000 4 000Members of the Board of Directors 5 081 616 5 731 556 14 500 11 000Total 6 997 524 7 013 964 20 500 15 000

CEO 4 700 2 600 9 596 4 596Members of the Executive Management 610 770 22 259 32 654Total 5 310 3 370 31 855 37 250

Total 7 002 834 7 017 334 52 355 52 250


84

SHAREHOLDERS’ RIGHTS OF PARTICIPATION

All shareholders who are entered in the share register as having voting rights are entitled to attend the General Meet-ing and have the right to vote. Each registered share entitles the holder to one vote. There are no voting restrictions. All shareholders may be represented at the General Meeting by written proxy. There are no statutory quorums. Invitations to the General Meeting are issued in writing at least 20 days before the Meeting and are published once in the Company’s journals of record, the Schweizerisches Han-delsamtsblatt (SHAB – Swiss Offi cial Gazette of Commerce), the Neue Zürcher Zeitung and on the company’s website, www.straumann.com. For organizational reasons, new en-tries cannot be made in the share register 20 or fewer days before the General Meeting. Shareholders who sell their shares prior to the General Meeting are no longer entitled to vote. The invitation to submit proposals for agenda items will be announced by publication once in the aforementioned pub-lications and on the company’s website. Shareholders indi-vidually or jointly representing 400 000 shares may request items to be included in the agenda. Shareholders individually or jointly representing at least 10% of the share capital may request the holding of an ex-traordinary General Meeting. The request must be made to the Board of Directors in writing, stating the agenda items and motionsShareholders have the right to receive dividends and hold other such rights as defi ned in the Swiss Code of Obligations.

CHANGES IN CONTROL AND DEFENSE MEASURES

The statutes of Straumann Holding AG do not contain provi-sions for opting-out or opting-up. There are no provisions for changes in control regarding members of the Board of Di-rectors, the Executive Management, or other management staff.

AUDITORS

The General Meeting elects the auditors on an annual ba-sis. In 2006, PricewaterhouseCoopers AG (PwC), Basel, was elected as the auditor and Group auditor of Straumann Hold-ing AG. The auditor in charge was Thomas Brüderlin, Swiss Certifi ed Public Accountant, who took over the mandate in 2005.

The worldwide fees paid to the auditors PwC are as follows:

(in CHF 1 000) 2006 2005

Audit 714 555 Tax consultancy and other consultancy services

991 712

Total 1 705 1 267

The Board of Directors supervises and checks the external auditors through the Finance and Audit Committee, which met fi ve times in 2006.


85

INFORMATION POLICY

Straumann is committed to a policy of open, transparent and continuous information. In accordance with the rules of the Swiss Exchange (SWX), Straumann publishes detailed sales fi gures on a quarterly basis as well as annual and half-yearly reports. Detailed information is provided at the Shareholder’s Annual General Meeting, which was attended by 722 shareholders in 2006. Where necessary or appropri-ate, the Company also publishes additional information on signifi cant events.The CEO, CFO and Head of Corporate Communication are responsible for communication with investors. In addition to personal contacts, discussions, and presentations in Eu-rope and North America, Straumann held two fi nancial re-sults conferences for the media and analysts in 2006, each attended by around 50 participants. Both of these confer-ences were transmitted on the internet. In addition, Strau-mann held two teleconferences for the media and analysts and several non-fi nancial media events, including two me-dia conferences. Apart from this, the company frequently publishes media releases and briefi ng documents, which are archived and available from the Company’s website: www.straumann.com. Straumann’s calendar of reporting dates and investor relations events planned for 2007 is print-ed on pp. 164-165 and is also published and updated on the Company’s website: www.straumann.com.

Research analysts from 17 banks/fi nancial institutions cover developments at the Straumann Group and are listed on p. 164 of this report as well as on the Straumann website. Straumann Holding AG’s journal of record is the Swiss Offi -cial Gazette of Commerce (SHAB). The statutes of Straumann Holding AG and an excerpt from the commercial register can be downloaded as a PDF fi le from the company information section of Straumann’s website. This, and more information on the Company, is available via the internet at www.straumann.com.


86 Straumann Financial Report 2006 Straumann-Group NOtes tO the cONsOlidated fiNaNcial statemeNts

financial report 2006

Management summary 88Risk assessment 92Selected financial information 94

straumaNN GrOup

Consolidated balance sheet 100Consolidated income statement 101Consolidated cash flow statement 102Consolidated statement of changes in equity 103Notes to the consolidated financial statements 104Report of the Group auditors 146

straumaNN hOldiNG aG

Balance sheet 150Income statement 151Notes to the financial statements 152Proposal of the Board of Directors 155for the appropriation of the available earnings Report of the statutory auditors 156

88 Straumann Annual Report 2006 Financial Report maNaGemeNt summary

executive interview

focus: financial challenges present and future

Marco Gadola, CFO, Executive Vice President Finance & Operations

What have beeN the majOr fiNaNcial challeNGes fOr straumaNN iN 2006?

The biggest challenge has been managing our production costs, which have been impacted on the one hand by the further build up of our new facility in Andover, and on the other by the production of our new SLActive technology, which is more complex and expensive to produce than the conventional SLA implant surface. To compensate for the increase in the Cost of Goods Sold, we have had to steer and reduce our operating expenses and align them so that our selling and innovation power aren’t compro-mised. And lastly, we have worked hard to optimize our tax structure.

has aNythiNG chaNGed frOm aN accOuNtiNG pOiNt Of vieW?

Not essentially. In contrast to the previous years, when there were many IFRS changes, 2006 was a relatively ‘light’ year.

hOW has straumaNN’s fiNaNce team maNaGed With the rapid OrGaNizatiONal GrOWth?

The installation of SAP across the organization has been important. Now it’s a question of tuning and making sure we have the right systems and processes for the future in place: for example a harmonized chart of accounts, comprehensive profit-center accounting, and value-driver reporting. We also changed the organization of our finance organization at headquarters by establishing dedicated Group Account-ing, Group Controlling and Internal Audit functions and by strengthening the controlling of the sales regions and business units.

What – apart frOm tOp-liNe GrOWth – are the biGGest fiNaNcial challeNGes fOr 2007?

We want to improve the EBIT margin, which will mean tight expense management and production efficiency gains to offset the negative gross margin effect of SLActive as its share of our sales increases.

are curreNcies likely tO have a biG impact?

Obviously, I can’t predict how the main currencies that affect us will move. The great majority of our revenues are generated in Euros or US dollars and consolidated in Swiss francs. To limit our exposure(to the potential transaction risk) we enter into currency hedging forward contracts if appropriate.


straumaNN achieves Net reveNue GrOWth Of 18 %

In 2006, the Straumann Group’s net revenue climbed 16 % in local currencies (l. c.) to CHF 599 million. After currency translations, the growth rate in Swiss francs amounted to 18 %. Operating profit rose 12 % to CHF 175 million, contributing to an 11 % increase in net profit to CHF 142 million. The operating and net profit margins reached 29.3 % and 23.7 % respectively, while earnings per share climbed to CHF 9.09, corresponding to an improvement of 11 %.

OperatiONal aNd strateGic achievemeNts

One of our biggest undertakings in 2006 was the full-scale roll-out of our unique third-generation implant surface, SLActive, on all our major implant types throughout of our two largest regions, Europe and North America. Another major achievement was the build-up of our production plant in the USA, which opened in mid 2005. The costs associated with this project and the production of SLActive weighed considerably on the gross margin and constrained overall profit growth.

iNNOvatiON aNd NeW lauNches

In addition to SLActive, we introduced two new regenerative products, Straumann BoneCeramic and Emdogain PLUS, in Europe. To support and position these and other products, and to drive innovation, we continued to invest in research & development. In 2006, we had a larger number of ongoing clinical studies in more centers worldwide than ever before. In addition, we continued our marketing efforts for new and in-market products, for instance through a strong presence at major congresses and meetings.

iNfrastructure

Following the large-scale relocations of 2005, the only major change in infrastructure in 2006 was the transfer of our UK country headquarters to larger, more accessible premises. The production expansion in the US continued according to plan: we added further CNC machines, almost doubled our production team, and began operating in two shifts. As a result, our US production capacity doubled.

distributiON chaNNels takeN Over

With regard to distribution channels, we achieved our aspiration of gaining direct access to all our cus-tomers in Western Continental Europe following the integration of our Danish distributor at the begin-ning of 2006. At year-end we took over direct distribution in New Zealand. Shortly after, we signed a memorandum of understanding that paves the way for us to acquire the Straumann-related business of our Japanese distributor. Once completed, the transaction will give us direct access to our customers in Japan as of the second-half of 2007.

iNcreased GlObal WOrkfOrce

We continued to invest in recruiting and training new talent, creating just under 200 new jobs world-wide and bringing our global workforce to 1534 at year-end. We conducted an extensive corporate alignment program to train every employee about our core values, brand, new visual identity and other key differentiators, and we carried out a major reorganization program to streamline and drive inno-vation and sales excellence.

management summary

90

OrGaNic GrOWth expaNds 15%

15 % points of revenue expansion were generated organically. 1 % point was due to ‘acquired’ businesses, namely our Danish distributor (which was integrated at the beginning of 2006) and our distribution in Australia (which we took over in mid 2005). Currency developments, which were influenced mainly by the US Dollar and the Euro, amounted to just over 1 % point.

eurOpe

European revenues rose 19 % in local currencies (20 % in CHF) to CHF 381 million, which corresponds to 63 % of Group revenues. While Germany continued to be the main contributor to our European business, particularly strong performances were achieved in the UK and France. Belgium and Spain also posted dynamic growth. Elsewhere, performances were generally solid with all countries yielding double-digit underlying revenue growth.

NOrth america

In North America, revenues grew 12 % in local currencies (14 % in CHF) to CHF 149 million, lifted by the introduction of SLActive. North America continues to generate 25 % of Group revenues, and although the year was short of our ambitious expectations for the region, key managerial appointments were made and important initiatives in sales and education were taken. As a result, we believe that Straumann is positioned for stronger regional growth in 2007.

asia/pacific aNd rOW

In the Asia/Pacific region, revenues increased 12 % (in CHF) to CHF 57 million. The region was character-ized by strong quarterly fluctuations reflecting the fact that customer access is predominantly through distributors. Consistent strong growth was posted by our new Australian subsidiary, which took over distribution in New Zealand at year-end.

Elsewhere, in the rest of the world, revenues climbed 12 % in Swiss francs to CHF 12 million, on top of the particularly strong performance of the prior year.

OperatiNG prOfit (ebit) rises 12%

The aforementioned production expansion costs and our innovative product mix lifted the cost of goods sold from 18.2 to 19.9 % of net revenue, with the result that the gross profit margin was squeezed to 80.1 %. Operating costs remained more or less stable as a proportion of net revenue despite the many initiatives outlined above. In percent of net revenue, selling costs rose slightly from 38.7 to 38.9 %, while research and development eased from 5.2 to 5.1 %, and general administration costs rose from 7.9 to 8.2 %. The EBITDA margin increased to 36.4 % from the prior year level of 35.5 %. Depreciation and amortization rose strongly – primarily due to the aforementioned production factors and an impairment charge related to our for-mer headquarters in Waldenburg. These costs, combined with gains from licensing and successful litiga-tion, resulted in an operating profit of CHF 175.3 million and an EBIT margin of 29.3 %.

Net prOfit iNcreases 11%

The Group’s net profit rose 11 % to CHF 142 million and would have been considerably higher had it not been for the unfavourable impact of foreign exchange rates on financial income. In the second half of 2006, we successfully optimized our tax structure in Sweden leading to a full-year tax rate of 18.4 %. As a result, the net profit margin reached 23.7 %. Earnings per share consequently increased 11 % to CHF 9.09.

Straumann Annual Report 2006 Financial Report maNaGemeNt summary


free cash flOW iNcreases fivefOld

Cash generated from operating activities climbed 21 % to CHF 176 million, leading to a continued strong operating cash-flow margin of 29.4 %. Following the high investment cycle of 2005, Straumann’s capex returned to a ‘normal’ level of 7 % in 2006. Cash used for investments in 2006 amounted to CHF 49.8 mil-lion, including CHF 7.8 million for the acquisition of the remaining Biora shares and our Danish distributor. A net cash amount of CHF 15.7 million was used for treasury shares. This and a lower level of acquisitions than in 2005 resulted in a five-fold increase in free cash flow to CHF 126.4 million.

After a dividend payment of CHF 39 million, liquidity amounted to CHF 172 million at year-end. Total as-sets increased by CHF 114 million to CHF 650 million, due mainly to the higher cash balance. Net working capital increased only slightly from CHF 35.5 million to CHF 38.1 million or 6.1 % of net revenue.

The equity ratio decreased from 78.8 to 77.9 % mainly due to the treasury share purchase. Return on equi-ty (ROE) decreased to 31 %, while return on capital employed (ROCE) decreased to 38 % due to our opera-tional expansion. Based on a weighted average cost of capital of 9 %, Straumann achieved an economic profit of CHF 98.4 million, an increase of CHF 5.2 million over the prior year.

33% divideNd ON Net prOfit

On the basis of the full-year performance, the Board of Directors will propose an ordinary dividend of CHF 3.00 per share to the General Meeting of the Shareholders. This corresponds to a total dividend of CHF 46.8 million and a payout ratio of 33 %, which is approximately in line with the previous year.

OutlOOk

Looking ahead, we remain very optimistic about the inherent growth opportunities in the field of im-plant dentistry and oral tissue regeneration. By virtue of our innovation and service leadership, we are confident that, in the coming years, we will be able to grow above market in terms of revenue, while expanding our margins, thanks to further improvements in operational excellence.

92

risk assessment

Business execution risks

The implant dentistry and dental tissue regeneration market is growing rapidly due to, among other factors, the low level of penetration, the aging population, the increasing level of education on implantol-ogy and the growing awareness among patients and dental professionals of the benefits of implants and oral tissue regeneration products. Today, there are no discernible reasons why this market should not continue to offer attractive prospects for future growth.

One of the main challenges facing Straumann is the need to expand organizationally in order to capture the significant market potential. Straumann’s future revenues depend on the Group’s ability to expand its business with existing customers, to increase its customer base, and to develop innovative products and services that meet customers’ needs and to bring them to market in a timely manner. In addition, competitive conditions have intensified as the number of companies supplying cheaper ‘copycat’ alterna-tives has increased in all markets.

Recent concerns about bone loss in connection with a specific implant design marketed by a competitor have highlighted the potential risks associated with product safety and performance. Straumann seeks to minimize these by going well beyond the minimum legal requirements and conducting thorough large-scale trials, followed by controlled selective introductions and long-term product surveillance wherever appropriate.

‘leap-frog’ technologies

While interesting and promising results in basic research of novel tooth replacement technologies may continue to emerge, we believe that such technologies do not pose a substitution risk to current implant treatment methods in the medium-/long-term.

potential changes in healthcare regulation

Reimbursement or subsidization of implant treatment is rare, which places treatment costs largely on the patient. Even though materials make up only about 15 % of the overall treatment costs, implant manufacturers may nevertheless be touched by changes in healthcare regulation affecting the total cost burden on the patient, as was experienced with the change in healthcare regulation in Germany in 2005.

financial risk management

Approximately 85 % of Group sales are generated in currencies other than the Swiss franc and are there-fore exposed to translation risk. Straumann invoices its subsidiaries in local currencies. Therefore, foreign transaction risks only concern the headquarters. Our transaction exposure to continental European currencies is approximately 56 %; to the US, Canadian and Australian dollars, and the British pound it is collectively 44 %. Our exposure to Asian currencies including the Yen is negligible. To limit the potential transaction risk on foreign currency cash flows, Straumann enters – if deemed appropriate – into cur-rency hedging forward contracts; limited, however, to its major foreign currencies, the USD and the Euro.

Straumann has no considerable concentration of commercial credit risk, as no individual customer accounts for a substantial share of Group sales.

Straumann Annual Report 2006 Financial Report risk assessmeNt

93

To reduce investment risk on cash and cash like positions, Straumann manages the liquid funds centrally. The available funds are invested mainly into short- and mid-term money market instruments. Liquidity risk is minimized by ensuring that sufficient cash and cash equivalents are maintained to cover opera-tional needs. For strategic acquisitions, Straumann may consider entering into loan agreements, with the goal of repaying loans with operating cash flow within a reasonable time frame. Straumann aims to maintain an equity ratio of at least 50 %.

Straumann’s interest expenses are minimal, as the Group has no significant interest-bearing liabilities.

Further information on financial risk can be found on pages 114 – 115.

legal and intellectual property risks

Straumann operates in a competitive market in which intellectual property rights are of significant importance. The Group therefore actively pursues a strategy of protecting its intellectual property, espe-cially its know-how, patents and trademarks. Consequently the Group is currently, and may continue to be engaged in litigations related to intellectual property, either as a claimant or a defendant. The Group is also involved in other litigations which are not IP-related and are not considered to be material.

internal audit

Straumann has created an internal audit position, which became effective on 1 January 2007. One of its tasks will be to focus on assessing internal processes and controls and improving them if necessary, with the objective of safeguarding the Group’s material and immaterial assets.

insurance policies

Straumann covers its inherent key business risks in the same way that it covers product or employer liability risks, i.e. through corresponding insurance policies held with reputed insurance companies.

pension liaBility risks

The Group offers its staff competitive pensions. The pension funds are managed locally and invested by independent financial institutions. The investment strategy is determined by the Pension Fund Board and executed by the financial institution. Neither Straumann nor the trustees are allowed to influence the specific investment decision. The pension funds publish regular reports for all members. At 31 Decem-ber 2006, the Swiss pension fund, which covers the largest staff contingent was more than 100 % covered.

Straumann Annual Report 2006 Financial Report risk assessmeNt

94 Straumann Annual Report 2006 Financial Report selected fiNaNcial iNfOrmatiON

operating performance

(in chf million) 2006 20051

Net revenue 599.2 509.6Growth in % 17.6 21.2

Gross profit 479.7 416.6

Margin in % 80.1 81.8

Operating result before depreciation and amortization (EBITDA) 217.8 181.1

Margin in % 36.4 35.5

Growth in % 20.3 16.1

Operating result before amortization (EBITA) 185.2 162.2

Margin in % 30.9 31.8

Growth in % 14.2 18.5

Operating profit (EBIT) 175.3 155.9

Margin in % 29.3 30.6

Growth in % 12.4 22.2

Net profit 141.9 128.2

Margin in % 23.7 25.2

Growth in % 10.7 27.5

Earnings per share (in CHF) 9.09 8.22 Value added (economic profit) 98.4 93.2

Increase in value added 5.2 13.1

Increase in value added in % 5.5 16.4

In % of net revenue 16.4 18.3

Number of employees (year-end) 1 534 1 342Number of employees (average) 1 483 1 236

Sales per employee (average) in CHF 1 000 404 412

1 The presentation of 2005 figures has been adapted to the 2006 format throughout this report.

selected financial information


financial performance

(in chf million) 2006 20051

Cash and short-term bank deposits 171.8 94.2 Net working capital (net of cash) 38.1 35.5


Inventories 59.0 48.1

Inventory days 161 162

Trade receivables 85.3 69.6

Trade receivable days 47 42

Balance sheet total 650.1 536.3

Return on assets in % (ROA) 23.9 27.3

Equity 506.8 420.0

Equity ratio in % 77.9 78.8

Return on equity in % (ROE) 30.6 35.0

Capital employed 506.8 420.0

Return on capital employed in % (ROCE) 37.8 42.6

Cash generated from operating activities 176.2 145.4


Investments 49.8 122.0


Capital expenditures 42.1 59.4

Acquisitions 7.8 61.7

Free cash flow 126.4 23.4


Dividend 39.0 31.1

Pay-out ratio in % 30.5 31.0



sales By region

(in chf million) h1 h2 total 2006 total 2005

Europe 194.6 185.9 380.5 316.1Growth in % 18.5 22.5 20.4 20.6

Growth in local currencies in % 17.4 20.0 18.6 20.5

In % of net revenue 63.7 63.3 63.5 62.0

North America 74.2 75.1 149.3 131.3

Growth in % 22.5 6.1 13.7 19.0


In % of net revenue 24.3 25.6 24.9 25.8

Asia/Pacific 30.1 26.9 57.0 51.1

Growth in % 17.7 5.3 11.5 25.8

In % of net revenue 9.9 9.2 9.5 10.0

Rest of the World 6.5 5.9 12.4 11.1

Growth in % 17.8 5.9 11.9 54.1

In % of net revenue 2.1 2.0 2.1 2.2

total 305.4 293.8 599.2 509.6

Growth in % 19.3 15.9 17.6 21.2


In % of full-year sales 51.0 49.0 100.0 100.0


Quarterly sales By region

(in chf million) Q1 Q2 Q3 Q4 total 2006

Europe 99.9 94.7 80.4 105.5 380.5 Growth in % 25.5 11.8 17.2 26.9 20.4

Growth in local currencies in % 24.6 10.6 15.6 23.7 18.6

In % of net revenue 62.9 64.6 61.0 65.2 63.5

North America 36.9 37.3 36.7 38.4 149.3

Growth in % 27.8 17.7 9.3 3.2 13.7


In % of net revenue 23.2 25.4 27.8 23.7 24.9

Asia/Pacific 19.1 11.0 12.4 14.5 57.0

Growth in % 35.4 (3.9) 14.3 (1.4) 11.5

In % of net revenue 12.0 7.5 9.4 9.0 9.5

Rest of the World 3.0 3.5 2.4 3.5 12.4

Growth in % (0.9) 40.1 2.5 8.5 11.9

In % of net revenue 1.9 2.4 1.8 2.2 2.1

total 158.9 146.5 131.9 161.9 599.2

Growth in % 26.5 12.4 14.3 17.1 17.6


In % of full-year sales 26.5 24.5 22.0 27.0 100.0

Straumann GrOuP

Consolidated balance sheet 100Consolidated income statement 101Consolidated cash flow statement 102Consolidated statement of changes in equity 103Notes to the consolidated financial statements 104Report of the Group auditors 146

100 Straumann Annual Report 2006 Financial Report straumann group

COnSOLIDatED BaLanCE SHEEt

aSSEtS

(in CHF 1 000) notes 31 Dec 2006 31 Dec 2005

Property, plant and equipment 1 129 468 132 233Investment properties 2 9 000 12 200Intangible assets 3 156 032 142 229Financial assets 4 400 432Deferred income tax assets 14 24 821 25 428total non-current assets 319 721 312 522

Inventories 6 58 974 48 141Trade receivables 8 85 348 69 648Income tax receivables 1 152 632Other receivables 9 13 123 11 144Cash and short-term bank deposits 10 171 807 94 195total current assets 330 404 223 760

total assets 650 125 536 282

EquIty anD LIaBILItIES

(in CHF 1 000) notes 31 Dec 2006 31 Dec 2005

Share capital 11 1 562 1 558Retained earnings and reserves 505 190 416 920total equity attributable to the shareholders

of the parent company 506 752 418 478

Minority interests 12 0 1 511total equity 506 752 419 989

Provisions 13 1 925 2 378Deferred income tax liabilities 14 16 368 16 226Pension liabilities 21 4 514 3 487total non-current liabilities 22 807 22 091

Trade payables 25 001 24 220Income tax liabilities 29 580 26 881Provisions 13 39 149Other liabilities 7/15 65 946 42 952total current liabilities 120 566 94 202

total liabilities 143 373 116 293

total equity and liabilities 650 125 536 282

The notes on pages 104 to 145 are an integral part of these consolidated financial statements.

101Straumann Annual Report 2006 Financial Report straumann group

COnSOLIDatED InCOmE StatEmEnt

(in CHF 1 000) notes 2006 20051

net revenue 16/27 599 204 509 553

Cost of goods sold (119 455) (92 905)Gross profit 479 749 416 648

Other income 17 8 257 3 078Selling costs (232 863) (197 051)General administrative costs (49 346) (40 333)Research and development costs (30 476) (26 404)Operating profit 175 321 155 938

Financial income 24 1 649 3 099Financial expense 25 (3 003) (543)Profit before income taxes 173 967 158 494

Income taxes and deferred income taxes 14 (32 039) (30 287)net profit 141 928 128 207

Attributable to: Shareholders of the parent company 141 725 127 863Minority interests 12 203 344

Basic earnings per share (in CHF) 26 9.09 8.22Diluted earnings per share (in CHF) 26 9.07 8.19

1 2005 reclassified due to the reallocation of the ‘outbound freights’ from ‘cost of goods sold’ to ‘selling costs’.


102

COnSOLIDatED CaSH fLOw StatEmEnt

Straumann Annual Report 2006 Financial Report straumann group Straumann Annual Report 2006 Financial Report straumann group

(in CHF 1 000) notes 2006 20051

Operating profit 175 321 155 938

Depreciation, amortization and impairment 1/2/3 42 519 25 117Change in provisions (354) (497)Change in pension assets/liabilities 905 (382)Issuance of share options and employee shares 3 039 2 705Gains and losses from disposals of property, plant and equipment 415 (123)Changes in net working capital 28 (16 721) (17 128)Foreign exchange impact on intra-group payments 778 0Foreign exchange gains and losses (2 288) 2 181Interests paid (716) (543)Interests received 1 649 919Income tax paid (28 317) (22 777)net cash from operating activities 176 230 145 410

Purchase of property, plant and equipment 1/2 (28 461) (49 673)Purchase of intangible assets 3 (13 631) (11 467)Acquisition of subsidiaries, net of cash acquired 5 (2 924) (61 697)Acquisition of minority interests 5 (4 837) (943)Proceeds from the sale of financial assets 38 1 788net cash used in investing activities (49 815) (121 992)

Dividends paid (39 040) (31 135)Proceeds from options exercised/shares issued 5 512 8 368Repayment of loans 0 (14 079)Purchase of treasury shares (18 005) 0Sale of treasury shares 2 345 0net cash used in financing activities (49 188) (36 846)

Effect of exchange rate differences on cash held 385 518net increase/decrease in cash and short-term bank deposits 77 612 (12 910)

Cash and short-term bank deposits at 1 January 10 94 195 107 105

Cash and short-term bank deposits at 31 December 10 171 807 94 195

1 Prior year’s presentation has been adapted to the 2006 format.


103Straumann Annual Report 2006 Financial Report straumann group Straumann Annual Report 2006 Financial Report straumann group

COnSOLIDatED StatEmEnt Of CHanGES In EquIty

attributable to the shareholders of the parent company

(in CHF 1 000) notesshare

capital

Capital reserves

and share premium

treasury shares

other reserves

translation reserves

retained earnings

minority interests

total equity

Balance at 1 January 20051 1 552 36 336 0 0 (1 982) 273 591 2 131 311 628

Currency translation adjustments 1 180 (21) 1 159Effect of cash flow hedges, net of tax 0total gains and losses recognized

directly in equity 0 0 0 0 1 180 0 (21) 1 159

Net profit 127 863 344 128 207total recognized income and expense 0 0 0 0 1 180 127 863 323 129 366

Dividends paid (31 135) (31 135)Issue of share capital 11 1 8 367 8 368Issue of share options and employee shares 11/22 5 2 700 2 705Acquisition of minority interests 12 (943) (943)Purchase of treasury shares 0Sale of treasury shares 0Balance at 31 December 2005 1 558 47 403 0 0 (802) 370 319 1 511 419 989

Balance at 1 January 2006 1 558 47 403 0 0 (802) 370 319 1 511 419 989

Currency translation adjustments 7 870 12 7 882Effect of cash flow hedges, net of tax (301) (301)First time recognition defined benefit plans 129 129total gains and losses recognized

directly in equity 0 0 0 (301) 7 870 129 12 7 710

Net profit 141 725 203 141 928total recognized income and expense 0 0 0 (301) 7 870 141 854 215 149 638

Dividends paid (39 040) (39 040)Issue of share capital 11 5 508 5 508Issue of share options and employee shares 11/22 4 2 355 684 3 043Acquisition of minority interests 12 (1 726) (1 726)Issuer’s own equity instruments 15 (15 000) (15 000)Purchase of treasury shares (18 005) (18 005)Sale of treasury shares 2 345 2 345Balance at 31 December 2006 1 562 55 266 (29 976) (301) 7 068 473 133 0 506 752


The share capital is presented by 15 615 978 issued shares (2005: 15 576 761 issued shares) of CHF 0.10 par value, fully paid in. The number of treasury shares amounted to 54 500 (2005: 0).


104

nOtES tO tHE COnSOLIDatED fInanCIaL StatEmEntS

Straumann Annual Report 2006 Financial Report straumann group

COrPOratE InfOrmatIOn

Straumann Holding AG is a public company whose shares are traded on the Swiss Exchange (SWX).

Headquartered in Basel, Switzerland, the Straumann Group is a global leader in implant dentistry and oral tissue regeneration. In collaboration with leading clinics, research institutes and universities, the Group researches and develops implants, instruments and tissue regeneration products for use in tooth replacement solutions or to prevent tooth loss. The Group manufactures implant system components and instruments in Switzerland and the US, and dental tissue regeneration products in Sweden. Straumann also offers comprehensive services to the dental profession worldwide including training and education, which is provided in collaboration with the International Team for Implantology (ITI). Altogether, Straumann employs 1534 people worldwide, and its products and services are available in more than 60 countries through the Group’s 18 distribution subsidiaries and broad network of distribution partners.

The consolidated financial statements of Straumann for the year ended 31 December 2006 were autho-rized for issue in accordance with a resolution of the Board of Directors on 1 February 2007.

Summary Of SIGnIfICant aCCOuntInG POLICIES

Basis oF preparation

The consolidated financial statements of Straumann have been prepared in accordance with Interna-tional Financial Reporting Standards (IFRS). They are based on the financial statements of the individual Straumann companies prepared for the same reporting period using consistent accounting policies. The consolidated financial statements are prepared using the historical cost convention, except for finan-cial assets and liabilities, which are carried at fair value.

All figures included in these financial statements and notes to the financial statements are rounded to the nearest CHF 1000 except where otherwise indicated.

CHanges in aCCounting poliCies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

Straumann has adopted the following new and amended IFRS and IFRIC interpretations during 2006. Adoption of these revised standards and interpretations did not have any material effect on the financial statements of the Group. They did however give rise to additional disclosures:

(a) Amendments to published standards effective in 2006• IAS 19 (Amendment): Employee Benefits: IAS 19 is mandatory for Straumann’s accounting periods beginning on or after 1 January 2006. It intro-

duces the option of an alternative recognition approach for actuarial gains and losses. It may impose additional recognition requirements for multi-employer plans where insufficient information is avail-able to apply defined benefit accounting. It also adds new disclosure requirements. As Straumann does not intend to change the accounting policy adopted for recognition of actuarial gains and losses and does not participate in any multi-employer plans, adoption of this amendment only impacts the format and extent of disclosures presented in the accounts.

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• IAS 21 (Amendment): Net Investment in a Foreign Operation: As of January 2006, Straumann has adopted the amendments to IAS 21. As a result, all exchange dif-

ferences arising from a monetary item that forms part of Straumann’s net investment in a foreign operation are recognized in a separate component of equity in the consolidated financial statements, regardless of the currency in which the monetary item is denominated. This change has had no signifi-cant impact as at 31 December 2006 or 31 December 2005.

• IFRIC 4: Determining whether an Arrangement contains a Lease: Straumann adopted IFRIC Interpretation 4 as of 1 January 2006, which provides guidance in determin-

ing whether arrangements contain a lease to which lease accounting must be applied. This change in accounting policy had no significant impact on Straumann as at 31 December 2006 or 31 December 2005.

(b) Standards, amendments and interpretations effective in 2006 but not relevantThe following standards, amendments and interpretations are mandatory for accounting periods begin-ning on or after 1 January 2006 but are not relevant for Straumann’s operations in the period under review:• IAS 39: (Amendment), Cash Flow Hedge Accounting of Forecast Intragroup Transactions• IAS 39: (Amendment), The Fair Value Option• IAS 39: and IFRS 4 (Amendment), Financial Guarantee Contracts• IFRS 1: (Amendment), First-time Adoption of International Financial Reporting Standards• IFRS 6: Exploration for and Evaluation of Mineral Resources• IFRIC 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds and• IFRIC 6: Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment.

(c) Interpretations to existing standards that are not yet effective and have not been early adopted by Straumann.The following interpretations to existing standards have been published that are mandatory for Strau-mann’s accounting periods beginning on or after 1 May 2006 or later periods but which Straumann has not adopted early:• IFRS 7: Financial Instruments: Disclosures, and the complementary Amendment to IAS 1, Presentation of

Financial Statements – Capital Disclosures: IFRS 7 introduces new disclosures relating to financial instruments. This standard does not have any

impact on the classification and valuation of Straumann’s financial instruments.• IFRS 8: Segment Reporting (effective for annual periods beginning on or after 1 January 2009): IFRS 8 requires an entity to adopt the ‘management approach’ to reporting on the financial perfor-

mance of its operating segments. Generally, the information to be reported would be what manage-ment uses internally for evaluating segment performance and deciding how to allocate resources to operating segments. The impact of IFRS 8 on Straumann’s operations is currently being evaluated.

• IFRIC 8: Scope of IFRS 2 (effective for annual periods beginning on or after 1 May 2006): IFRIC 8 requires consideration of transactions involving the issuance of equity instruments – where the

identifiable consideration received is less than the fair value of the equity instruments issued – to es-tablish whether or not they fall within the scope of IFRS 2. Straumann will apply IFRIC 8 from 1 January 2007, but it is not expected to have any significant impact on Straumann accounts.


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• IFRIC 9: Reassessment of Embedded Derivatives (effective for annual periods beginning on or after 1 June 2006):

IFRIC 9 requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the con-tract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract, in which case reassessment is required. As none of the Straumann entities have changed their terms of their contracts, IFRIC 9 is not relevant to Straumann’s operations.

• IFRIC 10: Interim Financial Reporting and Impairment (effective for annual periods beginning on or after 1 November 2006):

IFRIC 10 prohibits the impairment losses recognized in an interim period on goodwill, investments in equity instruments and investments in financial assets carried at cost to be reversed at a subsequent balance sheet date. Straumann will apply IFRIC 10 from 1 January 2007, but it is not expected to have any significant impact on Straumann’s accounts.

• IFRIC 11: Group and Treasury Share Transactions (effective for annual periods beginning on or after 1 March 2007):

IFRIC 11 requires a share-based payment arrangement in which an entity receives goods or services as consideration for its own equity instruments to be accounted for as an equity-settled share-based payment transaction, regardless of how the equity instruments needed are obtained. Straumann will apply IFRIC 11 from 1 March 2007, but it is not expected to have any significant impact on Straumann’s accounts.

(d) Interpretations to existing standards that are not yet effective and not relevant for Straumann’s operations.The following interpretations to existing standards have been published that are mandatory for Straumann’s accounting periods beginning on or after 1 May 2006 or later periods but are not relevant for Straumann’s operations:• IFRIC 7: Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary

Economies (effective from 1 March 2006): IFRIC 7 provides guidance on how to apply the requirements of IAS 29 in a reporting period in which

an entity identifies the existence of hyperinflation in the economy of its functional currency, when the economy was not hyperinflationary in the prior period. As none of the Group’s subsidiaries use the cur-rency of a hyperinflationary economy as its functional currency, IFRIC 7 is not relevant to Straumann’s operations.

Basis oF ConsoliDation

The consolidated financial statements of Straumann include the financial statements of Straumann Holding AG and all its domestic and foreign subsidiaries drawn up to 31 December each year. Subsidiaries are consolidated from the date on which control is transferred to Straumann and cease to be consolidated from the date on which control is transferred out of Straumann.

investments in suBsiDiaries

In cases where Straumann Holding AG directly or indirectly holds a majority of voting rights or otherwise exercises any other form of direct or indirect control, the assets and liabilities, expense and income of the companies concerned are included in full in the consolidated financial statements. Minority interests in the profit and equity of subsidiaries are disclosed separately.


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The purchase method of accounting is used to account for the acquisition of subsidiaries by Straumann. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minor-ity interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.

Sales are made and services performed at arm’s length between Straumann companies. Intercompany profits from inventory and supplies not yet realized through sales to third parties are eliminated. Inter-company transactions and balances are eliminated in the consolidated financial statements.

investments in assoCiates

Investments in associates are accounted for using the equity method of accounting. These are entities in which Straumann has significant influence (20 – 50 % ownership) and which are neither subsidiaries nor joint ventures of Straumann. The investment in associates is carried in the balance sheet at cost plus post-acquisition changes in Straumann’s share of net assets of the associates, less any impairment in value. The income statement reflects Straumann’s share of the results of operations of these associates. Straumann did not own any investment in associates during the period under review.

interest in joint ventures

Interest in joint ventures is accounted for by proportionate consolidation, which involves recognizing a proportionate share of the joint venture’s assets, liabilities, income and expenses with similar items in the consolidated financial statements on a line-by-line basis. No joint venture was held by Straumann during the period under review.

segment reporting

A geographical segment is engaged in providing products or services within a particular economic envi-ronment that are subject to risks and returns which differ from those of segments operating in other economic environments.

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments.

Foreign CurrenCy translation anD transaCtions

The consolidated financial statements are expressed in Swiss francs (CHF). The functional currency of each Straumann company is the applicable local currency. Transactions in foreign currencies are ac-counted for at the rates prevailing at the dates of the transaction. Translation differences from financial transactions are included in the financial result along with any related hedge effects.

Gains and losses resulting from foreign currency transactions and from the adjustment of foreign- currency monetary assets and liabilities at the balance sheet date are recognized in the income state-ment.

Assets and liabilities of foreign entities are translated into Swiss francs using the balance sheet exchange rates at year-end. Income and expenses are translated on a monthly basis at monthly average exchange rates. The exchange differences arising on consolidation are taken directly to the translation reserve within equity.


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Exchange differences arising on intercompany loans of an equity nature that essentially form part of the company’s net investment in the foreign entity are classified as translation reserve within equity until the disposal of the net investment, at which time they are included in income as part of the gain or loss on disposal.

Currency unit 31 Dec 2006average

2006 31 Dec 2005average

2005

EUR 1 1.60 1.57 1.56 1.55GBP 1 2.38 2.31 2.28 2.26SEK 100 17.88 17.00 16.48 16.68NOK 100 19.66 19.55 19.34 19.30USD 1 1.21 1.26 1.31 1.24CAD 1 1.05 1.11 1.13 1.03BRL 100 56.19 57.58 56.28 51.20AUD 1 0.95 0.94 0.96 0.95MXN 1 0.11 0.12 0.12 0.11DKK 1 0.21 0.21 0.21 0.21

tangiBle assets

Tangible assets are stated at cost, less accumulated depreciation and any impairment in value. Deprecia-tion is computed on a straight-line basis over the estimated useful life of the asset or the lease term. The useful lives applied are 30 years for manufacturing and administration buildings, and three to ten years for production facilities, machinery, equipment and vehicles. Land is not depreciated as it is deemed to have an indefinite life. Leasehold improvements are depreciated over the lease term including optional extension of the lease period.

The carrying value of tangible fixed assets is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If this occurs, Straumann estimates the future cash flows expected to result from the use of the asset and its eventual disposal. If the sum of such expected cash flows is less than the carrying amount of the asset, an impair-ment loss is recognized in the amount by which the asset’s book value exceeds its fair market value.

investment property

Investment property is held for long-term purposes and is not operationally used by Straumann itself. Such properties are treated as non-current investments and are carried at cost, less accumulated depreci-ation and any impairment in value. Depreciation is computed on a straight-line basis over the estimated useful life of the investment property. The useful lives applied for such properties are 20 – 30 years. Land is not depreciated as it is deemed to have an indefinite life. The carrying value of investment property is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If this occurs, the market value as determined by external appraisers. If the market value is less than the carrying amount of the asset, an impairment loss is recog-nized in the amount by which the asset’s book value exceeds its fair market value.


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intangiBle assets

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of Straumann’s share of the net identifiable assets of the acquired entity at the date of acquisition. Goodwill on acquisitions of entities is included in intangible assets. Separately recognized goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity disposed.

Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each of those cash-generating units represents the lowest level of separately identifiable cash flows.

Patents, licenses and brands with definite useful lives

Costs related to patents, licenses and brands acquired are capitalized and amortized on a straight-line basis over their useful life, but not exceeding five years.

Patents, licenses and brands with indefinite useful lives

Costs related to patents, licenses and brands acquired are capitalized and not amortized. The carrying amount of patents, licenses and brands with indefinite useful lives is reviewed annually for impairment and, in addition, when events or changes in circumstances indicate that the carrying value is not recover-able.

Research and development costs

Research and development costs are expensed as incurred. An intangible asset arising from development expenditure on an individual project is recognized only when Straumann can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the asset and the ability to measure reliably the expenditure during the development. Deferred development costs are amortized on a straight-line basis over the period of their expected benefit, but not exceeding three years, starting from the date of full commercial use of the product. Capitalized development costs for products which are not yet amortized are tested annually for impairment.

Other intangibles

Intangible assets acquired in a business combination are identified separately and recognized at fair value at the date of acquisition. The mentioned intangible assets have a definite useful life and are amor-tized. Amortization is calculated using the straight-line method over three to five years.

Other purchased intangible assets such as computer software are capitalized at cost in the balance sheet and amortized over a period of three to five years or over the duration of their effective use.

Costs associated with developing or maintaining IT systems are recognized as an expense, except for those costs that are directly associated with ERP (Enterprise Resource Planning) projects whose economic benefits are expected to exceed costs for longer than 1 year. Expenditure which enhances or extends the performance of ERP systems beyond their original specifications is recognized as a capital improvement and added to the original costs. These costs are recognized and disclosed as other intangibles. Amortiza-tion is calculated using the straight-line method over three years.


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impairment oF non-FinanCial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

leasing

Leases of assets under which Straumann essentially assumes all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the future value of the leased property or, if lower, at the present value of the minimum lease payments. The assets acquired under these contracts are depreciated over the shorter of the estimated useful life of the asset or the lease term. The corresponding financial obligations are included in the liabilities. Leases of assets under which all the risks and rewards of ownership are effectively retained by the lessor are classified as operating leases, and payments made are charged to the income statement as they occur. No finance lease was held by Straumann during the period under review.

inventories

Inventories are valued at the lower of cost or net realizable value. Costs of raw materials are determined using the weighted average purchase price. Work-in-progress and finished goods are valued at manu-facturing costs, including the cost of materials, labor and production overheads. The net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. Provisions for impairments are set up in the case of slow-moving and obsolete stock.

traDe reCeivaBles

Trade receivables are recognized initially at fair value and subsequently remeasured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment for trade receivables is established when there is objective evidence that Straumann will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the differ-ence between the asset’s carrying amount and the present value of estimated future cash flows.

CasH anD CasH equivalents

This item includes cash in hand and at banks, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

For the purpose of the cash flow statement, cash and cash equivalents consist of cash and cash equiva-lents as defined above, net of short-term bank overdrafts.


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FinanCial assets

Straumann classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition and re-evaluates this designation at every reporting date.

Financial assets at fair value through profit or loss

This category has two subcategories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short-term. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realized within 12 months of the balance sheet date. During the period under review, Straumann did not hold any investments in this category.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when Straumann provides money, goods or services directly to a debtor with no intention of trading the receivable. They are included in current assets, except for maturities greater than 12 months after the balance-sheet date. These are classified as non-current assets. Loans and receivables are included in trade and other receivables in the balance sheet.

Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the intention and ability to hold to maturity. During the period under review, the Group did not hold any investments in this category.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance-sheet date. During the period under review, the Group did not hold any investments in this category.

Purchases and sales of investments are recognized on trade date. This is the date on which Straumann commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are de-recognized when the rights to receive cash flows from the investments have expired or have been transferred and Straumann has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortized cost using the effective inter-est method. Realized and unrealized gains and losses arising from changes in the fair value of the finan-cial assets at fair value through profit or loss category are included in the income statement in the period in which they arise. Unrealized gains and losses arising from changes in the fair value of non-monetary securities classified as available-for-sale are recognized in equity. When securities classified as available-for-sale are sold or impaired, the accumulated fair-value adjustments are included in the income state-ment as gains and losses from investment securities.


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The fair values of quoted investments are based on current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent ‘arm’s-length’ transactions, reference to other instruments that are substantially the same, discounted cash-flow analysis, and option-pricing models refined to reflect the issuer’s specific circumstances.

At each balance-sheet date Straumann assesses whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as ‘available-for-sale’, a significant or prolonged decline in the fair value of the security below its cost is considered in determin-ing whether the securities are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from equity and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are sub-sequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

provisions

Provisions are recognized when Straumann has a present obligation (legal or constructive) as a result of a past event, where it is probable that a cash outflow will be required to settle the obligation, and where a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settle-ment is determined by considering the class of obligations as a whole. taxes

Current income taxes are calculated on the basis of the results of the reporting period of the individual companies, and are recognized as current tax liabilities. Deferred income taxes are provided for using the liability method on all temporary differences at the balance-sheet date arising between the tax basis of assets and liabilities and their carrying values for financial reporting purposes. Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets relating to tax loss carry-forwards are recognized when it is probable that such tax losses can be utilized in the future.

sHareHolDer’s equity

Dividends are recognized in equity in the period in which they are approved by the company’s sharehold-ers. Where the parent company or a subsidiary purchases the company’s equity, the consideration paid (including any attributable transaction costs) is deducted from the total shareholder’s equity as treasury stock until the shares concerned are withdrawn. Where treasury stock is subsequently sold or reissued, any consideration received is also included in shareholders’ equity.


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employee BeneFits

Pension obligations

The employees of all Straumann companies are eligible for retirement benefits under defined benefit and defined contribution plans provided through separate funds, insurance plans, or unfunded arrangements. The pension plans are generally funded through regular contributions made by the employer and the employee and through the income generated by their capital investments, taking account of the recom-mendations of independent actuaries. Where, due to local conditions, a plan is not funded, a liability is recorded in the financial statements. In the case of defined contribution plans, the net periodic pension cost to be recognized in the income statement equals the contributions made by the employer.

In the case of defined benefit plans, the net periodic pension cost is assessed using the projected unit credit method. The defined benefit obligation is measured at the present value of the estimated future cash flows. The net periodic pension cost less employee contributions is included in the personnel expenses where the employees are located. Plan assets are recorded at their fair value. Significant gains or losses arising from adjustments posted, changes in actuarial assumptions, and amendments to pen-sion plans, are recognized over the average remaining service lives of the related employees, where these differences exceed 10 % of the higher amount of the discounted value of the obligation and the fair value of assets at the beginning of the year under review.

Cash bonus plan

As part of the annual compensation, a cash target bonus is defined for each employee as well as for man-agement. This cash target bonus is multiplied based on the improvement of the economic profit. For the management team, the bonus is subject to a partial retention in a ‘bonus bank’.

Straumann recognizes a liability and an expense when contractually obliged or where a past practice has created a constructive obligation.

Share-based compensation

The parent company offers management a stock option plan as part of the management equity com-pensation program. The options have a term up to six years and are subject to a vesting period of one to three years. The value of the options is equivalent to the market value at grant date, calculated using the Black-Scholes method based on the share price at year-end. The options granted are recognized as person-nel expenses from service commencement date until the end of the vesting period.

Employees have the right to buy between ten and 100 shares on the basis of the employee equity com-pensation program. The parent company offers employees a discount of 25 % based on the average share price over the seven trading days period following the ex-dividend day, which is recognized as personnel expenses at the date of the creation of the shares. The shares are subject to a two-year lock-up period.

The Annual Shareholder Meeting of the parent company has created conditional share capital for both plans. Non-employee shareholders are excluded from subscribing for these shares.

Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for such benefits. Straumann recog-nizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.


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revenue reCognition

Sales of goods

Sales represent amounts received and receivable for goods supplied to customers after deducting trade discounts, cash discounts and volume rebates and excluding sales and value added taxes. Revenues from the sale of products are recognized upon transfer to the customer of all significant risks and rewards, usu-ally upon shipment.

Sales of services

Sales of services are recognized when the services are rendered.

License revenue

License revenue is recognized on an accrual basis in accordance with the substance of the relevant agree-ment. Revenue from licensees is disclosed as ‘other income’.

FinanCial risk FaCtors

Straumann operates worldwide and is therefore exposed to a variety of financial risks such as foreign exchange risk, credit risk, liquidity risk, and cash flow and fair value interest rate risk. Straumann’s over-all risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the financial performance. Straumann uses derivative financial instru-ments to hedge certain financial risk exposures. Special guidelines exist for risk management, and are monitored by Straumann management. Straumann only concludes contracts with selected high-quality financial institutions of good reputation.

Risk management is carried out by a central treasury department (Corporate Treasury) under policies approved by the Board of Directors. Corporate Treasury identifies, evaluates and hedges financial risks in close cooperation with Straumann’s operating units.

Foreign exchange risk

Straumann operates internationally and is exposed to foreign exchange risk arising from various cur-rency exposures, primarily with respect to the US dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign opera-tions.

To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities of Straumann use forward contracts, transacted with Corporate Treasury. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. Corporate Treasury is responsible for managing the net positioning each foreign currency by using external forward currency contracts.

Each subsidiary designates contracts with Corporate Treasury as fair value hedges or cash-flow hedges, as appropriate. External foreign exchange contracts are designated at Group level as hedges of foreign exchange risk on specific assets, liabilities or future transactions on a gross basis.

Straumann’s risk management policy is to hedge anticipated transactions (mainly export sales) in each major currency for a maximum of 12 months based on budget and currency expectations. Approximately 85 % (2005: 85 %) of projected sales in each major currency qualify as ‘highly probable’ forecast transac-tions for hedge accounting purposes.

Straumann has certain investments in foreign operations, whose net assets are exposed to foreign cur-rency translation risk. Currency exposure arising from the net assets of Straumann’s foreign operations is not hedged.



Credit risk

Straumann has no significant concentrations of credit risk. It has policies in place to ensure that sales of products are made to customers with an appropriate credit history.

Liquidity risk

Prudent liquidity-risk management implies maintaining sufficient cash and cash equivalents and the availability of funding through an adequate amount of committed credit facilities.

Cash-flow and fair-value interest rate risk

As Straumann has no significant interest-bearing liabilities and has no significant income from interest-bearing assets, the income and operating cash flows are substantially independent of changes in market interest rates.

Accounting for derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into, and are subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss de-pends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. Straumann designates derivatives as either fair value hedges, cash flow hedges, hedges of net investments in foreign operations, and derivatives that do not qualify for hedge accounting.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.

Cash-flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash-flow hedges are recognized in equity. The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Amounts accumulated in equity are transferred in the income statement in the periods when the hedged item will affect profit or loss. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a liability, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset or liability.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast trans-action is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement.

Hedges of net investments in foreign operations

Hedges of net investments in foreign operations are accounted for similarly to cash-flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in equity; the gain or loss relating to the ineffective portion is transferred immediately in the income state-ment. Gains and losses accumulated in equity are included in the income statement when the foreign operation is disposed of.

Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any de-rivative instruments that do not qualify for hedge accounting are recognized immediately in the income statement.


relateD parties

A party is related to an entity if the party directly or indirectly controls, is controlled by, or is under com-mon control with the entity, has an interest in the entity that gives it significant influence over the entity, has joint control over the entity or is an associate or a joint venture of the entity. In addition, members of the key management personnel of the entity or close members of the family are also consid-ered related parties as well as post-employment benefit plans for the benefit of employees of the entity.

Transactions with related parties are conducted at arm’s length.

government grants

Government grants are recognized at fair value where there is reasonable assurance that the grant will be received and all attaching conditions will be complied with. Straumann did not receive any govern-ment grants in the period under review.

CritiCal aCCounting estimates anD assumptions

The preparation of financial statements in conformity with IFRS requires the use of certain critical ac-counting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies. Straumann makes estimates and assumptions concerning the future. The resulting accounting will not necessarily equal the related actual results. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the con-solidated financial statements are discussed below.

Goodwill

Straumann tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. The underlying calculations require the use of estimates (Note 3: Intangible assets).

A sensitivity analysis shows that a deterioration of free cash flow of 10 % below the projected level would not result in an impairment of goodwill.

Income taxes

Straumann is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Group recognizes liabilities for tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Investment properties

Straumann reports its former headquarters in Waldenburg, Switzerland as investment properties. Mean-while two long-term leasing contracts were concluded for both buildings with third-party lessees. A review of the carrying amount based on these contracts resulted in an impairment of CHF 2.95 million recognized in the income statement in 2006.


2006

(in CHF 1 000) Land Buildingsmachinery and

fixtures

Furniture, equipment,

cars

property, plant and equipment

2006

Cost At 1 January 799 87 266 84 271 66 234 238 570 Change in consolidation scope (see Note 5) 350 350 Additions 4 636 11 155 12 670 28 461 Disposals (3 755) (3 279) (3 744) (10 778) Currency translation adjustments (889) (460) (200) (1 549) At31December 799 87258 92037 74960 255054

Accumulated depreciation At 1 January 31 682 39 361 35 294 106 337 Depreciation charge (see Note 18) 9 236 9 516 10 697 29 449 Disposals (3 755) (3 194) (3 209) (10 158) Currency translation adjustments (8) 57 (91) (42) At31December 37155 45740 42691 125586

Netbookvalue 799 50103 46297 32269 129468

20051

(in CHF 1 000) Land Buildingsmachinery and

fixtures

Furniture, equipment,

cars

property, plant and equipment

2005

Cost At 1 January 2 130 89 192 59 639 50 998 201 959 Change in consolidation scope 1 226 120 1 346 Additions 156 8 500 24 617 16 400 49 673 Disposals (36) (36) (1 716) (1 788) Reclassifications to ‘investment properties’ (see Note 2) (1 487) (12 444) (13 931) Currency translation adjustments 828 51 432 1 311 At31December 799 87266 84271 66234 238570

Accumulated depreciation At 1 January 29 795 32 831 27 175 89 801 Depreciation charge (see Note 18) 3 595 6 498 8 768 18 861 Disposals (12) (26) (1 078) (1 116) Reclassifications to ‘investment properties’ (see Note 2) (1 731) (1 731) Currency translation adjustments 35 58 429 522 At31December 31682 39361 35294 106337

Netbookvalue 799 55584 44910 30940 132233


Repair and maintenance expenses for property, plant and equipment for the business year 2006 amount-ed to CHF 4.2 million (2005: CHF 4.1 million).

1 ProPerty,PlANtANDequiPmeNt


2 iNvestmeNtProPerties

(in CHF 1 000) 2006 2005

Cost At 1 January 13 931 0Reclassification from ‘Property, plant and equipment’ (see Note 1) 0 13 931At31December 13931 13931

Accumulateddepreciationandimpairment

At 1 January 1 731 0Depreciation charge (see Note 18) 250 0Impairment (see Note 18) 2 950 0Reclassification from ’Property, plant and equipment’ (see Note 1) 0 1 731At31December 4931 1731

Netbookvalue 9000 12200

Fairvalue 9000 12200

Investment properties are treated as non-current investments and are carried at cost, less accumulated depreciation and any impairment in value. This refers to the former headquarters in Waldenburg com-prising two buildings.

An impairment loss of CHF 2.95 million was recognized to writedown the investment properties to its current fair value. An independent valuation was obtained in August 2006 to determine fair value, which is the amount for which the investment properties could be exchanged between a knowledgeable, will-ing buyer and a knowledgeable, willing seller in an arm’s-length transaction at the valuation date.

(in CHF 1 000) 2006 2005

Rental income 473 0Direct operating expenses arising from investment properties that generate rental income 67 0Direct operating expenses that did not generate rental income 95 132

From the beginning of 2006, the two buildings were fully rented out.


3 iNtANgibleAssets

2006

(in CHF 1 000) goodwillDevelopment

costsother

intangibles total 2006

Cost At 1 January 116 864 17 731 28 802 163 397 Change in consolidation scope (see Note 5) 2 067 2 067 Additions 3 178 6 698 6 933 16 809 Disposals (183) (2 360) (2 543) Currency translation adjustments 4 712 203 274 5 189 At31December 126821 24449 33649 184919

Accumulated amortization and impairment At 1 January 5 471 15 697 21 168 Amortization charge (see Note 18) 3 133 6 737 9 870 Disposals (183) (2 338) (2 521) Currency translation adjustments 202 168 370 At31December 8623 20264 28887

Netbookvalue 126821 15826 13385 156032

20051

(in CHF 1 000) goodwillDevelopment

costsother

intangibles total 2005

Cost At 1 January 50 145 12 441 18 287 80 873 Change in consolidation scope 65 853 4 994 70 847 Additions 656 5 290 5 521 11 467 Disposals 0 Currency translation adjustments 210 210 At31December 116864 17731 28802 163397

Accumulated amortization and impairment At 1 January 3 813 11 092 14 905 Amortization charge (see Note 18) 1 658 4 597 6 255 Disposals 0 Currency translation adjustments 8 8 At31December 5471 15697 21168

Netbookvalue 116864 12260 13105 142229



(in CHF 1 000) 2006 2005

Breakdown of development costs at 31 December Development projects 9 323 10 190Projects in commercial use 6 503 2 070

At cost 12 570 5 089

Accumulated amortization (6 067) (3 019)

Netbookvaluedevelopmentcosts 15826 12260

Additions to development costs amounting to CHF 6.7 million (2005: CHF 5.3 million) include costs relating to the design and testing of new products lines.

Other intangibles include patents and capitalized IT-related costs.

ImpaIrment test For gooDwILL

Goodwill is allocated to cash-generating units (CGU) for the purpose of impairment testing. The goodwill has been tested for impairment. The recoverable amount of a CGU is determined based on value-in-use calculations. These calculations use cash flow projections based on financial budgets approved by man-agement covering a five-year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed the long-term average growth rate for the implant dentistry and dental tissue regeneration.

Based on the impairment tests conducted none of the listed goodwill positions were impaired.

A summary of the goodwill allocation per cash-generating units is presented below:

(in CHF 1 000) 2006 2005

Straumann Italia srl, Milan, Italy 68 206 66 307Biora AB, Malmö, Sweden1 50 625 44 974Straumann SA, Madrid, Spain 5 131 4 987Straumann Danmark ApS, Greve, Denmark 2 265 Straumann Pty Ltd, Victoria, Australia 594 596totalgoodwill 126821 116864

1 Cash flows and assets used for the purpose of impairment testing are those originally acquired with Biora AB, Sweden regardless of their subsequent transfer within the Group.


The following key assumptions have been made for the goodwill impairment test in 2006 of Straumann Italia srl and Biora AB:

(in %)straumann

Italia srl Biora aB

Gross profit margin1 39.4 60.0Terminal growth rate2 2.5 1.5Weighted average cost of capital (WACC)3 15.0 11.9

1 Budgeted gross profit margin.2 Used for calculating the terminal value.3 Pre-tax discount rate applied to the cash-flow projections.

Management determined budgeted gross margin based on past performance and its expectations for the market development. The growth rates used are consistent with the forecasts included in industry re-ports. The WACCs used are pre-tax and reflect specific risks relating to the relevant cash generating units.

4 FiNANciAlAssets

(in CHF 1 000) 2006 20051

Long-term loans 0 120Long-term rent deposits 354 230Liability insurance 43 40Other long-term financial assets 3 42At31December 400 432



5 iNvestmeNtsiNsubsiDiAries

The consolidated financial statements of Straumann include the financial statements of Straumann Holding AG and the subsidiaries listed in the following table:

purpose Currencyshare

capital

Interest and voting rights

2006 (in %)

Interest and voting rights

2005 (in %)

Institut Straumann AG, Basel, Switzerland Production / Sales CHF 9 000 000 100 100Straumann Services AG, Basel, Switzerland Sales CHF 100 000 100 –Straumann GmbH, Freiburg, Germany Sales EUR 170 000 100 100Straumann USA LLC, Andover, USA Sales USD 1 100 100Straumann Ltd., Crawley, UK Sales GBP 100 000 100 100Straumann B.V., Ijsselstein, Netherlands Sales EUR 18 151 100 100Straumann SARL, Marne-la-Vallée, France Sales EUR 192 000 100 100Straumann AB, Gothenburg, Sweden Sales SEK 100 000 100 100Straumann AS, Oslo, Norway Sales NOK 1 000 000 100 100Straumann Oy, Helsinki, Finland Sales EUR 32 000 100 100Straumann SA, Madrid, Spain Sales EUR 60 101 100 100Straumann Canada Ltd, Burlington, Canada Sales CAD 1 500 000 100 100Straumann GmbH, Vienna, Austria Sales EUR 40 000 100 100Straumann Brasil Ltda, São Paulo, Brazil Sales BRL 465 999 100 100Straumann SA / NV, Zaventem, Belgium Sales EUR 100 000 100 100Straumann Holding Italy srl, Milan, Italy Holding EUR 1 510 000 – 100Straumann Italia srl, Milano, Italy Sales EUR 270 000 100 100Straumann Manufacturing Inc, Andover, USA Production / Holding USD 1 100 100Straumann Pty Ltd, Victoria, Australia Sales AUD 100 100 100Straumann Mexico SA de CV, Mexico DF, Mexico Sales MXN 19 407 008 100 100Straumann Danmark ApS, Greve, Denmark Sales DKK 125 000 100 –Straumann Holding Sweden AB, Malmö, Sweden Holding SEK 100 000 100 100Biora AB, Malmö, Sweden Production / Sales SEK 950 152 100 94Bioventures BV, Amsterdam, Netherlands Patents EUR 18 151 100 94Biora BioEx AB, Malmö, Sweden Patents SEK 100 000 100 94Biora Ltd, London, UK Dormant GBP 2 – 100

straumann HoLDIng ItaLy srL, ItaLy

Straumann Holding Italy srl was liquidated in July 2006. The purpose of this company was limited to the holding of the investment of Straumann Italy srl.

BIora LtD, uk

Biora Ltd was liquidated in December 2006. Biora Ltd was a dormant company since March 2004.


BusIness ComBInatIons

Straumann Danmark ApS, DenmarkIn January 2006, Straumann acquired 100% of the share capital of its former third-party distributor in Denmark, DenTech Danmark ApS, which was renamed Straumann Danmark ApS. The acquisition occurred on 31 January 2006, and net revenue and profit of the combined entity correspond to the consolidated net revenue and net profit of Straumann as of 31 December 2006. These amounts have been calculated using Straumann’s accounting policies.

Details of net assets acquired and goodwill are as follows:

(in CHF 1 000)purchase

consideration

Cash paid 3 400 Direct costs relating to the acquisition 0 Fair value of net assets acquired (1 333) totalgoodwill(seeNote3) 2067

The goodwill is attributable to the continuous growth expectation of the acquired business, the significant market expansion potential and key personnel.

The assets and liabilities arising from the acquisition are as follows:

(in CHF 1 000) Fair valueacquiree’s

carrying amount

Current assets 1 968 1 968Non-current assets (see Note 1) 350 350Liabilities (985) (985)Netassetsacquired 1333 1333

(in CHF 1 000) 2006

Purchase consideration settled in cash 3 400 Cash and cash equivalents acquired (476) cashoutflowonacquisition 2924

straumann servICes ag, swItzerLanD

In addition, a new subsidiary Straumann Services AG was established in December 2006 for the purpose of splitting Institut Straumann AG into a production and sales unit in the first quarter 2007.

BIora aB, sweDen

In June 2006, Straumann acquired all outstanding shares and votes of Biora AB, Sweden, the biologics company acquired by Straumann through a friendly takeover in 2003. Following successful arbitration with the minor shareholders, Straumann purchased the outstanding shares for SEK 17 per share (the price paid in the original offer in 2003) plus interest as from June 2003. The outstanding shares represented 6.3 % of the overall share capital of Biora AB, and the amount paid, including interest, totaled CHF 4.8 mil-lion (see Note 12).


The excess of the cost of an acquisition of minority interests over the fair value of net identifiable assets acquired is recorded as goodwill.

6 iNveNtories

(in CHF 1 000) 2006 2005

Raw materials (at cost) 10 915 6 794Work in progress (at cost) 21 626 16 554Finished goods (at the lower of cost and net realizable value) 26 433 24 793totalinventoriesatthelowerofcostandnetrealizablevalue 58974 48141

The amount of write-down of inventories recognized as an expense is CHF 3.0 million (2005: CHF 1.2 mil-lion) which is recognized in cost of goods sold.

7 DerivAtiveFiNANciAliNstrumeNts

(in CHF 1 000) 2006 2005

Assets Liabilities Assets LiabilitiesForward foreign exchange contracts – cash flow hedges 0 401 0 0Forward foreign exchange contracts – fair value hedges 0 467 0 0totalcurrentposition(seeNote15) 0 868 0 0

The Group began using derivative financial instruments for the first time in 2006.

The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months and, as a current asset or liability, if the maturity of the hedged them is less than 12 months.

ForwarD ForeIgn exCHange ContraCts

The notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2006 are CHF 112.2 million (EUR 70.0 million). The corresponding amount in 2005 was zero.

Gains and losses recognized in the hedging reserve in equity on forward foreign exchange contracts as of 31 December 2006 will be released to the income statement at various dates between three months to seven months from the balance sheet date.

8 trADereceivAbles

(in CHF 1 000) 2006 2005

Trade receivables 87 840 71 563Provision for impairment (2 492) (1 915)totaltradereceivables 85348 69648


The trade receivables are contractually due within a period of 30 to 90 days.

There is no concentration of credit risk with respect to trade receivables, as Straumann has a large number of customers who are dispersed internationally.

The changes of provisions for impaired trade receivables are booked against net revenue in the income statement.

9 otherreceivAbles

(in CHF 1 000) 2006 20051

Value added tax 5 170 2 774Withholding tax 1 252 189Prepayments 4 823 6 280Rent deposits 647 21Vendors with debit balances 46 0Accrued income 218 752Others 967 1 128totalotherreceivables 13123 11144


10 cAshANDshort-termbANkDePosits

(in CHF 1 000) 2006 2005

Cash at banks and on hand 121 773 94 195in EUR 10 009 16 367

in CHF 79 500 52 825

in SEK 27 796 17 819

in USD 1 361 4 630

other currencies 3 107 2 554

Short-term bank deposits 50 034 0totalcashandshort-termbankdeposits 171807 94195

Cash at banks earns interest at floating rates based on daily bank deposit rates.

Short-term bank deposits are made for varying periods of between one and three months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term bank deposit rates.

The effective interest rates on short-term bank deposits obtained during 2006 vary between 1.5 % and 1.8 % (2005: not applicable).

The Group entered into a Discounted Share Purchase Program (DSPP) for treasury shares with a financial institution. In this connection, a cash amount of CHF 15 million is restricted until the final fixing date of the DSPP as on 5 June 2007.

126

11 shArecAPitAl

(in CHF 1 000) 2006 2005

At 1 January 1 558 1 552Issuance of new shares

Compensation plan – shares 0 1

Compensation plan – options 4 5

At31December 1562 1558

The share capital is presented by 15 615 978 issued shares (2005: 15 576 761) of CHF 0.10 par value, fully paid in.

In 2006, share capital increased by CHF 3922 (2005: CHF 5764). In the course of 2006, 39 217 (2005: 48 340) options were exercised at an average strike price of CHF 140.55 (2005: 127.80). No shares were issued in current year for the employee share plan (2005: 9301 shares).

Treasury shares are valued at weighted average cost and have been deducted from equity. The fair value of the treasury shares as of 31 December 2006 amounted to CHF 16.1 million (2005: zero). As of 31 Decem-ber 2006, the number of outstanding shares amounted to 15 561 478 (2005: 15 576 761) and the number of treasury shares to 54 500 (2005: 0). During the financial year 132 treasury shares were sold, 64 834 purchased and 10 202 transferred to the employee share plan.

The number of shares outstanding developed as follows:

2006 2005

Number of shares At 1 January 15 576 761 15 519 120Issuance of new shares

Compensation plan – shares 0 9 301

Compensation plan – options 39 217 48 340

Treasury shares Sold 132 0

Purchased (64 834) 0

Transferred to employee share plan 10 202 0

At31December 15561478 15576761

The additional share capital was created from conditional share capital that can be used for the employee share plan and the option plan for management. Non-employee shareholders are excluded from sub-scribing for these shares. The effective amount of registered conditional share capital at year-end was CHF 38 402 equivalent to 384 022 shares with a par value of CHF 0.10 each at year-end (2005: CHF 42 324 equivalent to 423 239 shares with a par value of CHF 0.10 each at year-end).


127

(in CHF) 2006 2005

Conditional share capital At 1 January 42 324 48 088Issuance of new shares

Compensation plan – shares 0 (930)

Compensation plan – options (3 922) (4 834)

At31December 38402 42324

2006 2005

Conditional shares (number) At 1 January 423 239 480 880Issuance of new shares

Compensation plan – shares 0 (9 301)

Compensation plan – options (see Note 22) (39 217) (48 340)

At31December 384022 423239



12 Minority interests

(in CHF 1 000) 2006 2005

At 1 January 1 511 2 131Minority interests in profit 203 344Purchase of minority interests Biora AB (1 726) (943)Currency translation differences 12 (21)At 31 December 0 1 511

The Straumann Holding Sweden AB, a subholding company of Straumann Holding AG, acquired the remaining minority interests of Biora AB (corresponding to 6.3 % of the shares of Biora AB) and is now the sole shareholder of Biora AB (see Note 5).

13 Provisions

(in CHF 1 000) Warranties other total 2006

total 2005

At 1 January 656 1 871 2 527 1 902Change in consolidation scope 0 1 362Utilization (70) (46) (116) (234)Reversal (446) (195) (641) (726)Additions 160 160 223Currency translation adjustment 4 30 34 0At 31 December 144 1 820 1 964 2 527

current 2006 39 0 39

non-current 2006 105 1 820 1 925

total provisions 2006 144 1 820 1 964

current 2005 70 79 149

non-current 2005 586 1 792 2 378

total provisions 2005 656 1 871 2 527

The ‘warranty provision’ relates to the settlement with the insurance company of a previous insurance case.

‘Other provisions’ include CHF 1.4 million indemnities required by law in Italy for external sales agents.


14 incoMe tAxes AnD DeferreD incoMe tAxes

(in CHF 1 000) 2006 2005

Income tax expense Current income tax expense 30 516 26 369Deferred income tax expense 1 523 3 918total income tax expense 32 039 30 287

Effective current income tax rate (in %) 18.4 19.1

reConCiliation From inCome tax expense at tHe appliCable tax rate to eFFeCtive inCome tax expense

The applicable Group tax rate of 27.4 % (2005: 24.6 %) is a weighted tax rate, calculated from the income tax expense based on the results before taxes of each Group company, adjusted by extraordinary non-recurring items, multiplied with the individual applicable tax rate. This rate reflects the actual economic benefit in the different tax legislations. The following elements explain the difference between the income tax expense at the applicable Group tax rate and the effective income tax expense.

(in CHF 1 000) 2006 2005

Income tax expense at the applicable Group tax rate 47 659 38 909Taxes on items not tax deductible (712) 277Changes in recognition of tax losses or tax credits 4 0Previously unrecognized tax losses or tax credits used to offset current taxes (633) (886)Tax losses or tax credits from current year that are not recognized 1 (2)Effect of changes in tax rates or the imposition of new taxes (1 339) 0Current taxes from previous years (585) 0Tax impact on items not taxable (12 378) (9 101)Others 22 1 090effective income tax expense 32 039 30 287


tax loss Carry ForWards

(in CHF 1 000) 2006 2005

Tax loss carry forwards Available tax loss carry forwards at 1 January 68 996 90 253Less tax loss carry forward adjustments to beginning balance (5 711) 0Tax loss arising from current year 846 0Tax loss expired during current year 0 0Tax loss utilized against current profit (24 733) (21 257)Available tax loss carry forwards at 31 December 39 398 68 996

Deferred tax assets of CHF 10.2 million (2005: CHF 15.8 million) were recorded in respect of available tax loss carry forwards and tax credits of CHF 33.5 million (2005: CHF 53.1 million). Deferred tax assets for un-used tax losses are recognized to the extent that it is probable that future taxable profits will be available against which the unused tax losses can be utilized in the respective countries, or to the extent that the individual enterprises have sufficient taxable temporary differences.

Previous years’ utilization of tax loss carry forwards are mainly related to taxable financial restructuring gains.

92.8 % (2005: 92.3 %) of tax loss carry forwards are within Europe.

Unused tax loss carry forwards for which no deferred tax has been recognized will expire as follows:

(in CHF 1 000) 2006 2005

2007 0 02008 0 02009 0 02010 0 02011 0 0after 2011 5 864 3 256Unused tax loss carry forwards at 31 December 5 864 3 256


deFerred inCome taxes

Deferred income tax assets and liabilities by type of balance sheet items:

(in CHF 1 000) 2006 2005

assets liabilities net assets liabilities net

Property, plant and equipment 505 (2 040) 136 (3 956) Intangible assets 4 383 (3 927) 0 (3 042) Inventories 6 142 (3 749) 5 370 (2 994) Trade receivables 419 (1 363) 690 (1 134) Provisions (non-current) 2 200 (4 117) 2 808 (3 730) Pension liability 99 0 0 0 Trade payables 2 0 0 0 Other liabilities 831 (1 172) 655 (1 370) subtotal by balance sheet items 14 581 (16 368) (1 787) 9 659 (16 226) (6 567)

Deferred income tax assets on tax loss carry forwards 10 240 0 15 769 0 total deferred income tax assets

and liabilities 24 821 (16 368) 8 453 25 428 (16 226) 9 202

Deferred income tax assets have been offset with liabilities on an individual basis where there is a legally enforceable right to do so and it is possible to settle on a net basis, and if the underlying asset and liability is settled simultaneously.


15 other liAbilities

(in CHF 1 000) 2006 20051

Accrued wages and social security 25 217 21 274Customer bonuses/Sales commissions 5 446 4 567Discounted Share Purchase Program (DSPP) 15 000 0ITI Foundation (see Note 30) 1 588 1 821Value added tax 3 331 1 529Other tax liabilities 2 228 1 735Marketing/freight/shipping 3 966 731Accrued legal and rent expenses 2 179 2 227Customers with credit balances 1 657 308Hedged firm commitments (see Note 7) 868 0Other 4 466 8 760total other liabilities 65 946 42 952


On 4 December 2006, the Group entered into a Discounted Share Purchase Program (DSPP) for treasury shares with a financial institution for the amount of CHF 15 million until the final fixing date of the DSSP, 5 June 2007, the Group can purchase maximum 54 924 Straumann Holding AG shares at an exercise price of CHF 273.10. Until 31 December 2006, the financial institution acquired 6591 Straumann Holding AG shares under this program.

16 net revenUe

(in CHF 1 000) 2006 20051

Sales of goods 589 085 500 519Sales of services 9 557 8 263Other sales-related income 562 771total net revenue 599 204 509 553


17 other incoMe

(in CHF 1 000) 2006 20051

License income 2 529 1 012Rental income 673 135Gain on disposal of property, plant and equipment 106 184Other 4 949 1 747total other income (see note 18) 8 257 3 078


The position ‘Other’ includes an amount of CHF 3.5 million from successful legal settlements.


18 oPerAting exPense As Per nAtUre of exPense

(in CHF 1 000) notes 2006 20051

Operating expense as per nature of expense Other income 17 8 257 3 078Cost of material and goods 19 (58 262) (52 111)Personnel expense 20 (175 212) (143 012)Depreciation of property, plant and equipment 1 (29 449) (18 861)Depreciation and impairment of investment properties 2 (3 200) 0Amortization of intangible assets 3 (9 870) (6 255)Other operating expense 23 (156 147) (136 454)total operating expense (423 883) (353 615)

1 The 2005 presentation has been adapted: Reallocation of ‘outbound freights’ from ‘raw material and consumables used’ to ‘other operating expense’ (see Note 19/23).

19 cost of MAteriAl AnD gooDs

(in CHF 1 000) 2006 20051

Raw materials and consumables used 69 095 64 707Change in inventories and work-in-progress (10 833) (12 596)total cost of material and goods (see note 18) 58 262 52 111

1 The 2005 presentation has been adapted: Reallocation of ‘outbound freights’ from ‘raw material and consumables used’ to ‘other operating expense’ (see Note 23).

In the fiscal year 2005, outbound freight expenses were stated under ‘raw materials and consumables used’. To increase transparency, Straumann has reported ‘outbound freights’ under ‘sales expenses’ for 2006. The 2005 presentation has been adapted. Accordingly, based on this reallocation, raw materials and consumables used decreased and sales expenses correspondingly increased by CHF 6.5 million in the prior year.

Raw materials and consumables used includes inventory write-offs of CHF 3.0 million (2005: 1.2 million).

20 Personnel exPense

(in CHF 1 000) 2006 2005

Wages and salaries 137 423 111 809Social security cost 27 364 21 510Other personnel expense 10 425 9 693total personnel expense (see note 18) 175 212 143 012


21 Post-eMPloyMent benefits

Apart from the legally required social security schemes, the Group has several independent pension plans, principally in Switzerland, USA and Italy. The assets are principally held externally. For certain Group companies, however, no independent assets exist for the pension plan and other long-term em-ployee benefit obligations. In these cases, the related liability is included in the balance sheet.

The amounts recognized in the balance sheet are as follows:

(in CHF 1 000) 2006 2005

At 1 January 3 487 3 340Change in conslidation scope 777 405Currency loss 127 0Expense recognized in income statement 5 328 3 828Employer’s contributions (5 205) (4 086)At 31 December 4 514 3 487

(in CHF 1 000) 2006 2005

Balance sheet Fair value of plan assets 64 619 56 002Present value of benefit obligation (76 071) (67 635) (11 452) (11 633)

Present value of unfunded benefit obligation (4 103) 0Unrecognized actuarial losses 11 041 8 146Pension liabilities in the balance sheet (4 514) (3 487)

The amounts recognized in the income statement are as follows:

(in CHF 1 000) 2006 2005

Net pension costs for defined benefit plans Service cost (7 670) (5 648)Interest cost (2 101) (1 735)Expected return on plan assets 2 086 1 534Actuarial losses outside corridor recognized in year (173) (772)Past service cost recognized in year (6) 0Actuarial losses recognized due to asset ceiling (945) 0Curtailment 0 69Other pension cost 31 0Periodic pension cost (8 778) (6 552)

Employee contributions 3 450 2 724expense recognized in the income statement (5 328) (3 828)


The movement in the defined benefit obligation over the year is as follows:

(in CHF 1 000) 2006 2005

Development of defined benefit obligation Present value of benefit obligation (67 635) (51 863)Change in consolidation scope (334) (10 845)Service cost (7 669) (5 648)Past service cost (6) 0Interest cost (2 101) (1 735)Curtailments 0 69Benefits paid (1 331) 496Actuarial gains (969) 1 890Foreign currency exchange losses (129) 0Present value of benefit obligation (80 174) (67 636)

The movement in the fair value of plan assets of the year is as follows:

(in CHF 1 000) 2006 2005

Development of plan assets Fair value of plan assets 56 002 36 096Change in consolidation scope (443) 10 440Expected return on plan assets 2 086 1 534Employer contributions 5 205 4 086Employee contributions 3 450 2 724Benefits paid 1 331 (496)Actuarial gains/(losses) (3 013) 1 618Foreign currency exchange gains 0 0fair value of plan assets 64 618 56 002

The actual return on plan assets in 2006 is CHF – 0.9 million (2005: 4.0 million).

Plan assets are comprised as follows:

(in CHF 1 000) 2006 2005

Cash 10 533 16.3% 4 480 8.0%Bonds 24 038 37.2% 26 265 46.9%Equity 17 059 26.4% 21 001 37.5%Properties 3 813 5.9% 4 032 7.2%Other 9 175 14.2% 224 0.4%total 64 618 100.0% 56 002 100.0%


The expected return on plan assets was determined by considering the expected returns available on the assets underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption yields as at the balance sheet date. Expected return on equity and property invest-ments reflect long-term real rates of return experienced in the respective markets.

Expected contributions to post-employment benefit plans for the year ending 31 December 2007 are CHF 5.3 million.

(in CHF 1 000) 2006 2005

Present value of defined benefit obligation (76 071) (67 635)Fair value of plan assets 64 619 56 002Deficit (11 452) (11 633)

experience adjustments on plan liabilities (4 436)

experience adjustments on plan assets (3 013)

The principal actuarial assumptions for the plan in Switzerland and Italy that are determined with respect to local conditions were as follows:

switzerland 2006 2005

Discount rate 3.00% 2.75%Expected return on plan assets 4.00% 3.75%Average future salary increase 2.00% 1.50%Expected future pension increase 0.25% 0.25%Average retirement age (in years) 62 62Inflation rate 1.00% 1.00%

italy 2006 2005

Discount rate 4.40% 4.25%Expected return on plan assets n/a n/aAverage future salary increase 3.00% 3.50%Expected future pension increase 0.00% 0.00%Average retirement age (in years) 65 65Inflation rate 2.00% 2.00%


22 shAre-bAseD PAyMents

Part of the compensation paid to the Board of Directors, Executive Management and other members of senior management takes the form of stock options. The options have a term of up to six years and a vesting period of one to three years. The options, which are issued in the form of warrants (one option = 50 warrants), can be exercised 1:1 into shares. The fair value of the options granted is determined using the Black-Scholes valuation model. The calculation of the option value was performed by independent specialists, applying the following significant inputs into the model:

2006 2005

Black-Scholes parameters Dividend yield (in %) 1.10 0.90Expected volatility (in %) 22.00 22.50Risk-free interest rate (in %) 2.80 2.14Expected life of options (years) 6.00 5.00Weighted average share price (CHF) 295.00 304.50

The options granted are recognized as personnel expense from service commencement to the end of the vesting period. In 2006, 48 000 options were granted. 39 217 options were exercised during 2006 and a corresponding number of shares issued. The weighted average share price at the date of exercise was CHF 295.00 (2005: CHF 304.50).

The option program developed as follows:

2006 2005

Equity compensation plan – outstanding options At 1 January 202 675 199 535Granted options 48 000 51 480Exercised options (see Note 11) (39 217) (48 340)Forfeited options (5 227) 0At 31 December 206 231 202 675

options available for exercise at period-end 86 505 63 382

Unvested options are forfeited when an employee leaves the company.

138

The options are structured as private placement. Since 2000, a Swiss bank has functioned as market maker for the quoted and private placement warrants. The range of exercise prices of the options outstanding at period-end is between CHF 135.00 and CHF 304.50. The exercise period and the expiry date of the outstanding options are as follows:

options available

for exerciseoptions expiring

at year-end

2006 86 505 02007 96 821 14 6932008 131 883 50 5242009 47 136 45 8782010 47 1362012 48 000total 206 231

In 2006, Employees had the right to buy shares on the basis of the employee equity compensation pro-gram. Straumann offered employees a discount of 25 % based on the share price on 31 December 2005. This discount was recognized as personnel expense at the date of the issue of the shares. The shares are subject to a two-year lock-up period. During the reporting period, employees subscribed to 10 202 of those shares. Share-based payments for option and employee share plans are shown under personnel expense.


139

The cost of share-based payment was as follows:

(in CHF) 2006 2005

Employee share plan 684 327 548 759Option plan 2 354 861 2 151 192total share based payments 3 039 188 2 699 951

23 other oPerAting exPense

(in CHF 1 000) 2006 20051

Administration expense 27 613 24 831Sales expense 82 848 71 879Contribution to the International Team for Implantology Foundation (see Note 30) 8 260 7 842External research and development expense 4 979 4 871Other operating expense 32 447 27 031

Rental 16 023 13 916

Maintenance, repairs and utilities 10 400 9 179

Insurance and other fees 3 615 3 363

Other minor items 2 799 1 626

Operating exchange result (390) (1 053)

total other operating expense (see note 18) 156 147 136 454

1 The 2005 presentation has been adapted: Reallocation of ‘outbound freights’ from ‘raw material and consumables used’ to ‘other operating expense’ (see Note 18/19).



24 Financial income

(in CHF 1 000) 2006 2005

Interest income 1 649 918Exchange gains, net 0 2 181Total financial income 1 649 3 099

25 Financial expense

(in CHF 1 000) 2006 2005

Interest expense (716) (543)Exchange loss, net (2 287) 0Total financial expense (3 003) (543)

26 earnings per share

BasiC earnings per sHare

Basic earnings per share are calculated by dividing the net profit for the year attributable to ordinary share-holders of Straumann Holding AG by the weighted average number of ordinary shares outstanding during the year, excluding ordinary shares purchased by the Group and held as treasury shares (see Note 11):

2006 2005

Net profit attributable to shareholders (in CHF 1 000) 141 725 127 863Weighted average number of ordinary shares 15 588 406 15 560 767Basic earnings per share (in chF) 9.09 8.22

DiluteD earnings per sHare

Diluted earnings per share are calculated by dividing the net profit for the year attributable to ordinary shareholders of Straumann Holding AG by the weighted average number of ordinary shares outstand-ing during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential of outstanding options into ordinary shares. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.


2006 2005

Net profit used to determine diluted earnings per share (in CHF 1 000) 141 725 127 863Weighted average number of ordinary shares outstanding 15 588 406 15 560 767Adjustments for:

– Share option program 33 511 46 205Weighted average number of ordinary shares for diluted earnings per share 15 621 917 15 606 972Diluted earnings per share (in chF) 9.07 8.19

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of completion of these financial statements.

27 segmenT inFormaTion

The primary segment reporting format is determined to be geographical segments as Straumann’s risk and rates of return are affected predominately by differences in the geographical areas. As Straumann is organized into one business segment only, no secondary information is reported by business segments.


(in CHF 1 000) europe north america asia/pacificrest of World

Corporate/ unallocated eliminations group

2006 Segment assets 557 768 64 481 3 973 5 803 0 632 025Corporate/unallocated assets 18 100 0 18 100consolidated total assets 557 768 64 481 3 973 5 803 18 100 0 650 125

Segment liabilities 104 993 15 764 788 561 0 122 106Corporate/unallocated liabilities 21 267 0 21 267consolidated total liabilities 104 993 15 764 788 561 21 267 0 143 373

Capital expenditures 44 178 5 227 76 333 49 814Net revenue to external customers 380 551 149 273 56 979 12 401 599 204Net revenue with other segments 83 067 (83 067) 0Total net revenue 463 618 149 273 56 979 12 401 0 (83 067) 599 204

other income 4 343 0 0 233 3 681 0 8 257

Segment result before depreciation and amortization 181 433 8 549 1 245 (837) 27 450 0 217 840Depreciation/amortization 31 136 5 072 118 196 3 047 0 39 569Impairment 2 950 2 950operating profit 147 347 3 477 1 126 (1 033) 24 403 0 175 321

Financial result (1 354)Income tax expenses (32 039)net profit 141 928

(in CHF 1 000) europe north america asia / pacificrest of World

Corporate/ unallocated eliminations group

20051 Segment assets 447 799 65 122 3 422 3 519 0 519 862Corporate/unallocated assets 16 420 0 16 420consolidated total assets 447 799 65 122 3 422 3 519 16 420 0 536 282

Segment liabilities 92 915 15 621 494 554 0 109 584Corporate/unallocated liabilities 6 709 0 6 709consolidated total liabilities 92 915 15 621 494 554 6 709 0 116 293

Capital expenditures 100 248 19 526 1 688 530 121 992Net revenue to external customers 316 060 131 297 51 110 11 086 509 553Net revenue with other segments 67 224 0 0 0 (67 224) 0Total net revenue 383 284 131 297 51 110 11 086 0 (67 224) 509 553

other income 3 020 18 0 3 37 0 3 078

Segment result before depreciation and amortization 153 606 7 392 132 (358) 20 281 0 181 053Depreciation/amortization 21 265 2 922 47 91 790 0 25 115operating profit 132 341 4 470 85 (449) 19 491 0 155 938

Financial result 2 556Income tax expenses (30 287)net profit 128 207



28 changes in neT working capiTal

(in CHF 1 000) 2006 2005

Changes in net working capital Inventories 9 849 10 193Trade receivables 16 058 11 292Other receivables 3 702 (2 589)Prepaid expenses and accrued income (2 668) 3 015Trade payables (179) (3 041)Other liabilities 1 212 (2 554)Accrued expenses and deferred income (11 253) 812Total changes in working capital 16 721 17 128

29 conTingencies anD commiTmenTs

(in CHF 1 000) 2006 2005

operating lease commitments 104 088 101 457

The maturity schedule is as follows:

Within 1 year 14 257 12 740

After 1 year but not more than 5 years 54 469 48 617

More than 5 years 35 362 40 100

Rental and operating lease expenses 16 023 13 916

The majority of the operating lease commitments are in connection with non-cancellable operating lease agreements for the global headquarters and the US headquarters. The non-cancellable leases have remaining terms of between five and 15 years. In addition, the Group entered into various cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

(in CHF 1 000) 2006 2005

contingent liabilities

Guarantees 0 63Securities 3 640 3 930

Contingent assets anD liaBilities

In the US, the Company has entered into USD 3.0 million letter-of-credit facilities as a deposit for future lease payments.

Some Group companies are involved in litigation arising from the normal course of their business and might be liable to pay compensation. The costs relating to these lawsuits may not be partially or fully covered by insurance. However, it is the view of the Group’s management that the outcome of such liti-gation will not significantly affect the Group’s financial position.


30 relaTeD-parTy TransacTions

The International Team for Implantology (ITI) Foundation, the pension fund, VISCHER Attorneys-at-law, the Board of Directors and the Executive Management were all identified as related parties. In period under review, the following related-party transactions were made:

(in CHF 1 000) 2006 2005

Transactions – purchase of services International Team for Implantology Foundation (see Note 23) 8 260 7 842Pension fund 4 902 4 070VISCHER, Attorneys-at-law 302 204Total related-party transactions 13 464 12 116Open balances at period-end International Team for Implantology Foundation (see Note 15) 1 588 1 821Pension fund 0 0VISCHER, Attorneys-at-law 26 60Total open balances due to related parties, included in other liabilities 1 614 1 881

The payments to the ITI Foundation are based on a collaboration agreement between Straumann and the ITI. The payments to VISCHER Attorneys-at-law were made for tax and legal consulting and are priced at arm’s length.


BoarD oF DireCtors anD management Compensation

Compensation of the Board of Directors depends on the course of business. The Board of Directors re-ceives a cash bonus and a fixed number of options, which are issued in the form of warrants (one option = 50 warrants). The options have a term of up to six years and are subject to a vesting period of one to three years. The price of the options is based on the share price at the end of December. The fair value of the options granted is determined using the Black-Scholes valuation model.

The compensation of the management consists of a fixed portion and a variable portion, which depends on the course of business. Besides a fixed salary, management receives an individual performance-based bonus and a fixed number of options. The options have a term of up to six years and are subject to a vest-ing period of one to three years. The price of the options is based on the share price at the end of December. The fair value of the options granted is determined using the Black-Scholes valuation model.

(in CHF 1 000) 2006 2005

Salaries and other short-term employee benefits 4 110 4 295Termination benefits 0 0Post-employment benefits 230 239Other long-term benefits 0 0Share-based payments 2 333 1 739Total 6 673 6 273

31 evenTs aFTer The Balance sheeT DaTe

There are no events after the balance sheet date to be disclosed.


reporT oF The group auDiTors

reporT oF The group auDiTors To The general meeTing

oF sTraumann holDing ag, Basel

As auditors of the group, we have audited the consolidated financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity and notes – pages 100 to 145) of Strau-mann Holding AG for the year ended December 31, 2006.

These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence.

Our audit was conducted in accordance with Swiss Auditing Standards and with the International Stan-dards on Auditing, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law.

We recommend that the consolidated financial statements submitted to you be approved.

PricewaterhouseCoopers AG

Thomas Brüderlin Gerhard SiegristAuditor in charge


147 Straumann Financial Report 2006 Straumann-Group straumann group

Straumann Financial Report 2006 Straumann Group NOtes tO the cONsOlidated fiNaNcial statemeNts 148

Straumann Holding

Balance sheet 150Income statement 151Notes to the financial statements 152Proposal of the Board of Directors 155for the appropriation of the available earningsReport of the statutory auditors 156

150

BalanCE SHEEt

aSSEtS

(in chf 1 000) Notes 31 dec 2006 31 dec 2005

Intangible assets 2 926 2 863Investments 2 80 846 86 145Intercompany loans 276 105 206 498total non-current assets 359 877 295 506

Treasury shares 11 668 0Intercompany receivables 37 440 11 796Other receivables 167 88Cash and cash equivalents 15 070 11 434total current assets 64 345 23 318

total assets 424 222 318 824

Equity and liaBilitiES

(in chf 1 000) Notes 31 dec 2006 31 dec 2005

Share capital 3 1 562 1 558General reserve 1 540 1 540Additional paid-in capital 45 035 38 302Special reserve 2 000 2 000Reserve for treasury shares 14 976 0Available earnings 335 028 258 679total equity 400 141 302 079

Other provisions 17 783 12 188total non-current liabilities 17 783 12 188

Tax liabilities 4 315 3 767Intercompany payables 0 6Other liabilities 1 983 784total current liabilities 6 298 4 557

total liabilities 24 081 16 745

total equity and liabilities 424 222 318 824

Straumann Annual Report 2006 Financial Report straumaNN hOldiNg

151

inComE StatEmEnt

inComE StatEmEnt

(in chf 1 000) 2006 2005

Income from investments 97 077 97 642Financial income 12 019 6 461License income 28 576 24 213Other income 3 681 735income 141 353 129 051

Administration expense (4 761) (4 635)Depreciation and amortization (3 063) (790)Financial expense (497) (834)Expenses (8 321) (6 259)

Profit before taxes 133 032 122 792

Income and capital tax expense (2 667) (2 200)net profit 130 365 120 592


152

notES to tHE finanCial StatEmEntS

gEnEral

Straumann Holding AG is a public company whose shares are traded on the Swiss Exchange (SWX). As the parent company of the Straumann Group, the purpose of Straumann Holding AG is to acquire, dis-pose and manage investments in the field of dental and medical technology. These financial statements were drawn up in accordance with the regulations of the Swiss Code of Obligations.

1 guarantEES

In favor of its subsidiaries, the company has issued ‘letters of subordination’ in a total amount of CHF 3.5 million (2005: 5.4 million).

2 invEStmEntS

In January 2006, Straumann acquired 100% of the share capital of its former third-party distributor in Denmark, DenTech Danmark ApS, which was renamed Straumann Danmark ApS. In addition, a new subsidiary Straumann Services AG was established in December 2006 for the purpose of splitting Institut Straumann AG into a production and sales unit in the first quarter 2007.

Straumann Holding AG holds the following investments:

(in chf 1 000)

interest and voting rights

(in %) 2006

investment value 2006

interest and voting rights

(in %) 2005

investment value 2005

Institut Straumann AG, Basel, Switzerland 100 9 000 100 9 000Straumann Services AG, Basel, Switzerland 100 100 – –Straumann GmbH, Freiburg, Germany 100 31 980 100 31 980Straumann USA LLC, Andover, USA 100 1 100 1Straumann Ltd, Crawley, UK 100 4 415 100 4 415Straumann B.V., IJsselstein, Netherlands 100 58 100 58Straumann SARL, Marne-la-Vallée, France 100 301 100 301Straumann AB, Gothenburg, Sweden 100 26 100 26Straumann AS, Oslo, Norway 100 4 183 100 94Straumann Oy, Helsinki, Finland 100 633 100 102Straumann SA, Madrid, Spain 100 6 726 100 6 726Straumann Canada Ltd, Burlington, Canada 100 1 415 100 1 415Straumann GmbH, Vienna, Austria 100 730 100 730Straumann Brasil Ltda, São Paulo, Brazil 100 2 564 100 372Straumann SA/NV, Zaventem, Belgium 100 147 100 147Straumann Holding Sweden AB, Malmö, Sweden 100 2 470 100 2 470Straumann Manufacturing Inc, Andover, USA 100 10 419 100 10 419Straumann Holding Italy srl, Milan, Italy – – 100 17 882Straumann Pty Ltd, Victoria, Australia 100 1 100 1Straumann Mexico SA de CV, Mexico DF, Mexico 100 2 142 100 6Straumann Danmark ApS, Greve, Denmark 100 3 535 – –Balance sheet 80 846 86 145


153

(in 1 000) Purpose currency share capital

Details of the investments Institut Straumann AG, Basel, Switzerland Production/Sales CHF 9 000This company holds:

– Straumann Italia srl, Milano, Italy Sales EUR 270Straumann Services AG, Basel, Switzerland Sales CHF 100Straumann GmbH, Freiburg, Germany Sales EUR 170Straumann Ltd, Crawley, UK Sales GBP 100Straumann B.V., IJsselstein, Netherlands Sales EUR 18Straumann SARL, Marne-la-Vallée, France Sales EUR 192Straumann AB, Gothenburg, Sweden Sales SEK 100Straumann A / S, Oslo, Norway Sales NOK 1 000Straumann Oy, Helsinki, Finland Sales EUR 32Straumann SA, Madrid, Spain Sales EUR 60Straumann Canada Ltd, Burlington, Canada Sales CAD 1 500Straumann GmbH, Vienna, Austria Sales EUR 40Straumann Ltda, São Paulo, Brazil Sales BRL 466Straumann SA/NV, Zaventem, Belgium Sales EUR 100Straumann Holding Sweden AB, Malmö, Sweden Holding SEK 100This company holds:

– Biora AB, Malmö, Sweden (Biora Group) Production/Sales SEK 950Straumann Manufacturing Inc, Andover, USA Production/Holding USD 1This company holds:

– Straumann USA LLC, Andover, USA Sales USD 1Straumann Pty Ltd, Victoria, Australia Sales AUD 1Straumann Mexico SA de CV, Mexico D.F., Mexico Sales MXN 19 407Straumann Danmark ApS, Greve, Denmark Sales DKK 125

3 Equity

The share capital of CHF 1.562 million (2005: CHF 1.558 million) consists of 15 615 978 (2005: 15 576 761) registered shares with a par value of CHF 0.10 each.

(in %) 31 dec 2006 31 dec 2005

Major shareholders Dr h. c. Thomas Straumann (Member of the Board) 32.4 36.6Dr h. c. Rudolf Maag (Chairman of the Board) 12.3 8.2Simone Maag de Moura Cunha 6.0 6.1total 50.7 50.9

There are no shareholder commitment contracts or other material agreements between shareholders.


154

cONditiONal share caPital

In 2006, share capital increased by CHF 3922. The additional share capital was created from conditional share capital that can be used for the employee share plan and the option plan for management. Non-employee shareholders are excluded from subscribing for these shares.

39 217 options were exercised in the option plan for management during 2006 and a corresponding number of shares issued.

The effective amount of registered conditional share capital on 31 December 2006 was CHF 38 402 (384 022 shares with a par value of CHF 0.10 each) at year-end.

4 trEaSury SHarES

The reserve for treasury shares was valued using the weighted average purchase price method. On the balance sheet of Straumann Holding AG, it amounted to CHF 14.976 million on 31 December 2006 (pre-vious year CHF 0), and thereby covers the treasury shares recognized as assets on the balance sheets of Straumann Holding AG and Institut Straumann AG at year-end.

The number of treasury shares held directly or indirectly by Straumann Holding AG changed in 2006 as shown in the table below:

Shares held by: Straumann Holding AG Balance at 31 December 2005 0 Acquisitions in 2006 42 500 Disposals in 2006 0 Balance at 31 december 2006 42 500

Institut Straumann AG Balance at 31 December 2005 0 Acquisitions in 2006 22 334 Disposals in 2006 (132) Transferred in 2006 to employee share plan (10 202) Balance at 31 december 2006 12 000


155

(in chf 1 000) 2006 2005

Balance brought forward 219 639 138 087Profit of the year 130 365 120 592Increase reserve for treasury shares (14 976) 0available earnings 335 028 258 679

Proposal of the Board of Directors:

–Dividend (CHF 3.00 for 15 615 978 shares) (46 848) (39 040)to be carried forward 288 180 219 639

Until the time of the shareholders’ General Meeting, 158 231 free options could be exercised and converted into shares. The maximum dividends related to such options if exercised would be CHF 0.475 million.

ProPoSal of tHE Board of dirECtorS for tHE aPProPriation of tHE availaBlE EarningS


156

rEPort of tHE Statutory auditorS

rEPort of tHE Statutory auditorS to tHE gEnEral mEEting

of Straumann Holding ag, BaSEl

As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes – pages 150 to 155) of Straumann Holding AG for the year ended December 31, 2006.

These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal require-ments concerning professional qualification and independence.

Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the accounting records and financial statements and the proposed appropriation of avail-able earnings comply with Swiss law and the company’s articles of incorporation.

We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG

Thomas Brüderlin Gerhard SiegristAuditor in charge



157 Straumann Financial Report 2006 Straumann-Group straumaNN hOldiNg

Straumann Financial Report 2006 Straumann-Group NOtes tO the cONsOlidated fiNaNcial statemeNts 158

APPENDIX

Five-year overview 160Information for investors 162Contact addresses 165Country organizations (addresses) 166GRI Index 167Glossary 169Index 172

160 Straumann Annual Report 2006 Appendix five-Year Overview

OPErAtINg PErfOrmANcE

(in chf million) 2002 2003 2004 20051 2006

Net revenue 274.9 343.9 420.3 509.6 599.2 Growth in % 18.7 25.1 22.2 21.2 17.6

Gross profit 220.8 274.9 342.4 416.6 479.7

Margin in % 80.2 80.0 81.5 81.8 80.1

Operating result before depreciation and amortization (EBITDA) 93.7 120.0 156.0 181.1 217.8

Margin in % 34.1 34.9 37.1 35.5 36.4

Growth in % 21.6 28.4 30.0 16.1 20.3

Operating result before amortization (EBITA) 81.2 102.3 136.8 162.2 185.2

Margin in % 29.5 29.7 32.6 31.8 30.9

Growth in % 24.5 27.0 33.8 18.5 14.2

Operating profit (EBIT) 75.1 97.5 127.0 155.9 175.3

Margin in % 27.3 28.4 30.2 30.6 29.3

Growth in % 21.3 30.2 30.2 22.2 12.4

Net profit 56.0 80.9 100.5 128.2 141.9

Margin in % 20.3 23.5 23.9 25.2 23.7

Growth in % 37.4 43.3 24.2 27.5 10.7

Earnings per share (in CHF) 3.62 5.22 6.44 8.22 9.09 Value added (economic profit) 38.7 59.2 80.1 93.2 98.4

Increase in value added 4.7 20.5 20.9 13.1 5.2

Increase in value added in % 13.8 52.9 35.4 16.4 5.5

In % of Group revenue 14.1 17.2 19.1 18.3 16.4

Number of employees (year-end) 750 903 1 104 1 342 1 534 Number of employees (average) 721 845 1 006 1 236 1 483 Sales per employee (average) in CHF 1 000 381 407 418 412 404


fIvE-yEAr OvErvIEw

161Straumann Annual Report 2006 Appendix five-Year Overview

fINANcIAl PErfOrmANcE

(in chf million) 2002 2003 2004 20051 2006

Cash and short-term bank deposits 70.3 88.4 107.1 94.2 171.8 Net working capital (net of cash) 41.1 31.6 17.0 35.5 38.1

In % of net revenue 14.9 10.6 5.8 5.2 6.1

Inventory 38.0 34.7 35.5 48.1 59.0

Inventory days 256 190 162 152 161

Trade receivables 33.6 42.4 48.8 69.6 85.3 Trade receivables days 41 40 39 42 47 Balance sheet total 251.0 351.8 404.5 536.3 650.1

Return on assets in % (ROA) 24.2 26.8 26.6 27.3 23.9

Equity 188.9 256.7 311.6 420.0 506.8

Equity ratio in % 75.3 73.0 77.0 78.8 77.9

Return on equity in % (ROE) 33.3 36.2 35.4 35.0 30.6

Long-term financial debt 14.2 14.2 0.0 0.0 0.0 Capital employed 203.1 270.9 311.6 420.0 506.8

Return on capital employed in % (ROCE) 41.1 41.1 43.6 42.6 37.8

Cash generated from operating activities 69.7 118.0 145.5 145.4 176.2

In % of net revenue 25.3 34.3 34.6 28.5 29.4

Investments 22.8 84.8 66.1 122.0 49.8 In % of net revenue 8.3 24.7 15.7 23.9 8.3 Capital expenditures 15.3 26.9 65.5 59.4 42.1 Acquisitions 7.5 57.9 0.6 61.7 7.8 Free Cash Flow 46.9 33.1 79.4 23.4 126.4

In % of net revenue 17.0 9.6 18.9 4.6 21.1

Dividend 9.3 17.4 48.1 31.1 39.0

Pay-out ratio in % 22.8 30.9 59.4 31.0 30.5


162

INfOrmAtION fOr INvEstOrs

Straumann Annual Report 2006 Appendix iNfOrmatiON fOr iNvestOrs

cAPItAl structurE

(in chf 1 000) 31 dec 2006 31 dec 2005

Equity 506 752 419 989Share capital 1 562 1 558Reserves 47 033 47 403Retained earnings 473 132 370 319Conditional share capital 38 42Number of registered shares 15 615 978 15 576 761Nominal value per share (in CHF) 0.10 0.10Registration restrictions none noneVoting restrictions none noneOpting-out, opting-up none none

NumbEr Of shArEhOlDErs

shares 31 dec 2006 31 dec 2005

1 – 100 8 433 7 566101 – 1 000 4 109 4 1151 001 – 10 000 311 31810 001 – 100 000 40 57100 001 – 1 000 000 7 71 000 001 and more 2 2total 12 902 12 065

shArEhOlDErs by cAtEgOry

(in %) 31 dec 2006 31 dec 2005

Major shareholders 50.7 50.9Institutional shareholders 20.2 19.6Private individuals 13.2 13.0Non-registered shareholders 15.9 16.5

mAjOr shArEhOlDErs

(in %) 31 dec 2006 31 dec 2005

Dr h.c. Thomas Straumann (Member of the Board) 32.4 36.6Dr h.c. Rudolf Maag (Chairman of the Board) 12.3 8.2Simone Maag de Moura Cunha 6.0 6.1total 50.7 50.9

163Straumann Annual Report 2006 Appendix iNfOrmatiON fOr iNvestOrs

shArE PrIcE DAtA

(in chf) 2006 2005

First trading day 304.00 03.01. 236.00 03.01.

Lowest 235.30 22.08. 236.00 03.01.

Highest 330.00 17.05. 358.50 03.10.

Last trading day 295.00 29.12. 304.50 30.12.

Average 295.26 279.91

Tax value 295.00 304.50

Total shareholder return (in %) (2.30) 29.90

Market capitalization 31 Dec (in CHF million) 4 591 4 743

shArE EArNINgs AND DIvIDEND

(in chf) 2006 2005

Earnings 9.09 8.22Ordinary dividend 3.00 2.50

stOck EXchANgE INfOrmAtION

Listing SWX Swiss Exchange (STMN)Bloomberg STMN SWReuters STMN.SInvestdata STMNExpected ex date 4 April 2007Security ID 001 228 007ISIN CH 0012 280 076

shArE PrIcE

(in%)

250200150100500-50 2002 2003 2004 2005 2006

Straumann SPI

164

RESEARCH COVERAGE

Bank am Bellevue: Karin Bendler, +41 44 267 67 67Bank Sal. Oppenheim: Stephan Vollert, +41 44 214 22 85Bank Vontobel: Christoph Gubler, +41 58 283 63 43Cheuvreux: Thomas Bernhardsgrütter, +41 44 218 17 03Citigroup: Cora Scowcroft, +44 20 7986 4047Credit Suisse: Christoph Gretler, +41 44 333 79 44Deutsche Bank: Yi-Dan Wang, +44 20 7545 9999Goldman Sachs International: Hans Boström, +44 20 7552 5991Helvea: Daniel Jelovcan, +41 43 388 92 63JP Morgan: Thomas Jones, +44 20 7742 6657Kepler Equities: Florian Gaiser, +41 43 333 66 06Lehman Brothers: Ed Ridley-Day, +44 20 7102 1366MainFirst Bank: Liz Mitchell, +44 20 7647 8023Merrill Lynch: Michael Jüngling, +44 20 7996 2247Neue Zürcher Bank: Zubin Dastoor, +41 44 288 82 45UBS: Maja Pataki, +41 44 239 13 65Zürcher Kantonalbank: Sibylle Bischofberger Frick, +41 44 292 37 34

INFORMATION POLICY

The Straumann Annual Report is published in February and presented at the analysts and press con-ference. It is also available online at: www.straumann.com/annualreport. The half-year interim report is published in the form of a media release in August. Other media releases include the quarterly sales reports published in May for the fi rst quarter and in November for the third quarter. Where necessary or appropriate, Straumann also publishes additional information on key signifi cant events. Press releases and presentations can be downloaded from the Straumann homepage at www.straumann.com.

CALENDAR

KEY REPORTING DATES IN 2007

7 February: 2006 full-year results30 March: Annual General Meeting3 May: Q1 sales9 August: Q2 sales and H1 results2 November: Q3 and 9M sales

PLANNED INVESTOR RELATIONS EVENTS AND CONFERENCES IN 2007

Members of Straumann‘s Executive Management and/or Investor Relations team plan to take part in the following events, subject to availability.

19 February: Roadshow, UBS, Zurich 20 February: Roadshow, Credit Suisse, London

Straumann Annual Report 2006 Appendix INFORMATION FOR INVESTORS / CALENDAR

165

21 February: Roadshow, Bank Sarasin, Dublin22 February: Roadshow, Kepler Equities, Frankfurt23 February: Roadshow, Cheuvreux, Paris20 March: Reverse roadshow, Citigroup, Basel27 March: Morgan Stanley, Swiss Biotech and Medtech Trip, Basel29 March: Kepler Equities, Small and Mid Cap Seminar, Zurich

24 April: Roadshow, Transatlantic IR, New York15–16 May: Merrill Lynch, 4th Annual Pan-European Med Tech Conference, LondonEarly June: Reverse roadshow, Cheuvreux, Basel22–23 August: UBS, Swiss Mid Cap Conference, Zurich13 August: Roadshow, Vontobel, Zurich14 August: Roadshow, Merrill Lynch, London15 August: Roadshow, Helvea, Edinburgh16 August: Roadshow, Vontobel, Paris17 August: Roadshow, Frankfurt5–6 September: Goldman Sachs, European Medtech and Healthcare Services Conference, London26–27 September: UBS Life Science/Credit Suisse Swiss Equities, New York28 September: Investor Day, AndoverEarly November: Reverse roadshow, Vontobel, Health Care Days, Basel 29 November: Credit Suisse, Swiss Health Care Conference, Zurich

SELECTED DENTAL MEETINGS IN 2007

15–17 February: 5th World Congress of Osseointegration, Venice, Italy8–10 March: 22nd Annual meeting of the Academy of osseointegration, San Antonio, USA20–24 March: International Dental Show (IDS) 2007, Cologne, Germany21–24 March: 85th Meeting of the International Association for Dental Research, New Orleans, USA25–29 April: 29th Asia Pacifi c Dental Congress, Jakarta, Indonesia26–28 April: ITI World Symposium, New York, USA10–12 May: International Osteology Symposium, Monaco5–7 October: 3rd European Conference on the Reconstruction of the Periodontally Diseased Patient, Paris, France24–27 October: FDI World Dental Congress, Dubai, U.A.E.25–27 October: 16th Annual European Association for Osseointegration (EAO) Congress, Barcelona, Spain29 November–1 December: Gemeinschaftskongress DGI, ÖGOCI, SGI, Vienna, Austria

CONTACTS AND ADDRESSES

GROUP HEADQUARTERS

STRAUMANN HOLDING AG

Peter Merian-Weg 12, 4002 Basel, Tel. +41 61 965 11 11, Fax +41 61 965 11 01

General enquiries: Corporate Communication, Tel. +41 61 965 11 11, Fax +41 61 965 11 03 Investor and Media Relations: Mark Hill, Tel. +41 61 965 13 21, Fax +41 61 965 11 03Publications and further information: [email protected] or [email protected]

Straumann Annual Report 2006 Appendix CALENDAR / CONTACTS AND ADDRESSES

166

AUSTRALIA

Straumann Pty Ltd7 Gateway CrtPort Melbourne, VictoriaTel. +61 3 9646 7060Fax +61 3 9646 7232

AUSTRIA

Straumann GmbHFloridsdorfer Hauptstrasse 1Florido Tower1210 ViennaTel. +43 1 29 40 660Fax +43 1 29 40 666

BELGIUM

Straumann SA/NVBelgicastraat 3Building 5031930 ZaventemTel. +32 2 790 10 00Fax +32 2 790 10 20

BRAZIL

Straumann Brasil LtdaRua Funchal 263Conjunto 123/124Vila Olímpia04551-060 São PauloTel. +55 11 30 89 66 83Fax +55 11 30 89 66 84

CANADA

Straumann Canada Ltd4145 North Service RoadSuite 303Burlington ON - L7L 6A3Tel. +1 905 319 29 00Fax +1 905 319 29 11

DENMARK

Straumann Denmark ApSHundige Strandvej 1782670 GreveTel. +45 46 16 06 66Fax +45 43 61 25 81

FINLAND

Straumann OYFredrikinkatu 48A00100 HelsinkiTel. +35 89 694 28 77Fax +35 89 694 06 95

FRANCE

Straumann France10, place d’ArianeSerris77706 Marne-la-ValléeCedex 4Tel. +33 1 64 17 30 00Fax +33 1 64 17 30 10

GERMANY

Straumann GmbHJechtinger Strasse 979111 FreiburgTel. +49 761 450 10Fax +49 761 450 11 49

ITALY

Straumann Italia srlVia Principe Eugenio 3020155 MilanTel. +39 02 34 54 151Fax +39 02 33 10 32 62

MEXICO

Straumann Mexico SA de CVRubén Darío # 281int. 1702 Piso 17Col. Bosque de Chapultepec11580 México DFTel. +52 55 5282 6262Fax +52 55 5282 6289

NETHERLANDS

Straumann BVEinsteinweg 153404 LE IjsselsteinTel. +31 30 604 66 11Fax +31 30 604 67 28

NORWAY

Straumann ASWesselsgate 80165 OsloTel. +47 23 35 44 88Fax +47 23 35 44 80

SPAIN

Straumann SAEdifi cio Twin Golf AC/Peru, 628290 Las Matas (Madrid)Tel. +34 91 630 82 14Fax +34 91 344 95 17

SWEDEN

Straumann ABFabriksgatan 1341250 GothenburgTel. +46 31 708 75 00Fax +46 31 708 75 29

SWITZERLAND

Institut Straumann AGPeter Merian-Weg 124002 BaselTel. +41 61 965 11 11Fax +41 61 965 11 01

UNITED KINGDOM

Straumann LtdPegasus 3Pegasus PlaceGatwick RoadCrawleyWest Sussex, RH10 9AYTel. +44 1293 651230Fax +44 1293 651239

USA

Straumann USA, LLC60 Minuteman RoadAndover, MA 01810Tel. +1 978 747 2500Fax +1 978 747 2490

COUNTRY ORGANIZATIONS

Straumann’s products and services are available in more than 60 countries through our subsidiaries and broad network of distributors.

Straumann Annual Report 2006 Appendix CONTACTS AND ADDRESSES

167

GLOBAL REPORTING INITIATIVE (GRI)

SCOPE OF SUSTAINABILITY REPORTING WITH REGARD TO GRI

Straumann’s 2006 Annual Report integrates elements of sustainability reporting based on the guidelines disseminated by GRI, a non-profi t, multi-stakeholder organization that strives to provide companies with a systematic basis for disclosure regarding sustainability performance. The aim is to give stakeholders a framework that facilitates comparison and understanding of disclosed information. It has not been possible to incorporate every GRI performance indicator into the format of this annual report; full cover-age would require a comprehensive dedicated sustainability report. As we at Straumann believe that sustainability is an integral part of business success, we consider that the integration of sustainability topics in our annual reporting is important because it provides the context to what we have or have not been able to achieve. It also increases transparency on our sustainability performance for our sharehol-ders and other stakeholders including customers, employees, and members of the communities in which we operate.

Straumann’s 2006 Annual Report is one of the fi rst in the world to implement the new GRI-G3 standard and to successfully pass an Application-Level Check by GRI. Straumann is the fi rst Swiss company and the fi rst in the Med-Tech fi eld to achieve this. As GRI-G3 was launched in October 2006, best practices have not yet been established and the integration of GRI-G3 into our annual reporting has to be understood as the beginning of an ongoing project that we will strive to improve in coming years.

GRI CONTENT INDEX

To help readers locate specifi c GRI-related information, the following table provides an overview of the main GRI elements discussed in this report, including: Economic (EC), Environmental (EN), Human Rights (HR), Labor (LA), Society (SO), and Product responsibility (PR) performance indicators, as well as Disclosures on Management Approach (DMA) to these topics. The GRI indicators referenced have been covered to the extent that data were available and as far as the format of Straumann’s annual report allows. While a number of GRI points are discussed in more than one place, the table indicates those places in which the main information on each indicator is to be found. In cases where substantial information is presented in more than one place, multiple references are given.

Straumann Annual Report 2006 Appendix GLOBAL REPORTING INITIATIVE

168

Report part Pages GRI content elements

Key Facts & Figures Inside front cover 2.8Letter to shareholders 4–7 DMA-ECStraumann in Brief 8–11 2.1, DMA-ECMarkets and Regions 14–21 2.7, DMA-ECProducts and Services 24–31 2.2, DMA-PR, PR1, PR2, PR5Production and Logistics 34–35 2.9Innovation and Partnership Research and Development 38–41 Partnership 42–43Sustainability Our Responsibility 46–49 1.1, 1.2, 2.10, 4.7-4.17, DMA-EC, DMA-EN, DMA-LA,

DMA-HR, DMA-SO, SO2, SO4, SO7, DMA-PR Employees 50–51 4.8, EC5, DMA-LA, LA1, LA2, LA4, LA7, LA10,

LA12-LA14, DMA-HR, HR3, HR5-HR7, SO3 Customers 52–53 2.7, PR5, PR7 Communities 54–55 2.10, 4.8, DMA-EC, EC7, DMA-HR, HR2, DMA-SO, SO5, SO6 Environmental protection 56–59 EN3-4, EN8, EN16, EN21-22Independent Expert Opinions 63–67 DMA-EN, EN1, EN3, EN4, EN8, EN16, EN22Corporate Governance 68–85 2.3-2.6, 2.9, 4.1-4.6Financial Report 2006 87–156 EC3, EC4Appendix 159–174 2.8, 3.1-3.13

NOTES ON PARAMETERS OF THIS REPORT

This Annual Report reviews the business year 2006 and draws certain comparisons with previous years. It aims to provide suffi cient detail to give shareholders a clear overview of developments in 2006, as well as to address main points of concern to other stakeholder groups, including customers, employees, and members of the community. The information given pertains to the whole Straumann Group unless stated otherwise. There were no major changes in subsidiaries, leased facilities or outsourced operations in the year under review that signifi cantly affect comparability with the previous Annual Report unless stated. The Environmental Protection chapter is an exception because we were able to expand the scope or our performance reporting to include, for the fi rst time, data from our Malmö and Andover facilities. This is discussed in detail on p. 56. Apart from this, no reporting changes were made that have signifi cant relevance to GRI topics. The data measurements for reported GRI indicators follow GRI guidelines as far as data availability has allowed. We have not sought external assurance of the GRI information given, but have used the standards for our internal auditing wherever practical.

Straumann Annual Report 2006 Appendix GLOBAL REPORTING INITIATIVE

169

GLOSSARY OF SELECTED TERMS AND ABBREVIATIONS USED IN THIS REPORT

DENTAL/MEDICAL TERMS

ABUTMENT A component that connects the implant with the prosthesis and protrudes into the oral cavity (see illustrations on pp. 24-25)

BONECERAMIC Straumann’s fully synthetic bone substitute for bone augmentation procedures

BRIDGE An appliance used literally to bridge the gap left by missing teeth by using one or more false teeth fi xed to crowns anchored to tooth stumps or implants

CAD/CAM Computer Aided Design/Computer Aided Manufacturing; computer system is used both for designing a product and for controlling manufacturing processes

CARES Straumann’s Computer Aided Restoration Service (see p. 25)

CAT Computerized Axial Tomography: adds x-ray images using a computer to generate cross-sectional views

CNC LATHE Computerized Numerically Controlled lathe used to machine implants and other components

COPING A covering or cap that fi ts on an abutment and usually made of metal, ceramic or plastic (see illustration on p. 24)

CROWN A tooth-shaped cap attached to a tooth stump or implant prosthesis

DENTAL TECHNICIAN Dental professional who manufactures patient-specifi c crowns, bridges, dentures and other dental prosthetics according to the dentist’s specifi cations

EDENTULOUS Having no teeth

GBR Guided Bone Regeneration

GTR Guided Tissue Regeneration

HYDROGEL A colloid suspension in which the microscopic particles (between 1 nm and 1 μm) are in the external (dispersion) phase and water is in the internal (dispersed) phase

HYDROPHILIC Readily absorbing or attracting water, or having chemical groups that interact with water

HYDROPHOBIC Not readily absorbing or attracting water, or adversely affected by water

ITI International Team for Implantology (see pp. 42–43)

LOADING Subjecting an implant to biting pressure by fi tting a temporary/permanent crown

MEMBRANE A barrier used in GBR and GTR to prevent rapidly growing soft tissue occupying space into which new bone should form and to stabilize bone augmentation materials

Straumann Annual Report 2006 Appendix GLOSSARY

170

ONE-STAGE PROCEDURE Surgical procedure whereby the implant is placed but not covered by the gum tissue during healing, so no second surgical procedure is necessary to uncover the implant

OSSEOINTEGRATION The integration of an implant with the surrounding bone

OSTEOINDUCTIVE A substance with the ability to induce bone growth

PERI-IMPLANTITIS Infl ammation of the tissues around an implant that can lead to disintegration of bone and implant loss

PERIODONTIST Dental professional specialized in the periodontal tissue and bone surrounding the teeth and in treating diseases that affect them

PHOTOLITHOGRAPHY A process used in the fabrication of semiconductors to transfer a pattern to the surface of a substrate

POLYETHYLENE GLYCOL A hydrophilic polymer (macromolecule of repeating units) that interacts with (PEG) cell membranes and promotes fusion of cells

PROSTHODONTIST A dental professional who carries out the prosthetic restoration on natural teeth and implants

SLA Sand blasted with Large grit and Acid etched. SLA refers to Straumann‘s second generation implant surface technology introduced in 1998, which – with the exception of SLActive – is the gold-standard in terms of osseointegration time.

SLActive Straumann‘s third generation implant surface technology, which – by virtue of its hydrophilic properties – cuts healing times by half (see p. 26)

‘SUBSTANTIAL Medical devices, including dental implants, can be cleared for sale in a EQUIVALENCY’ fast-track process if they are recognized by regulatory authorities as substan - tially equivalent to existing products that already have marketing clearance

synOcta Prosthetic system combining Morse taper and octagonal connections

TITANIUM Metallic substance isolated from minerals as a an iron-gray powder; available in many forms and used in many dental and orthopaedic applications

TPS Titanium Plasma Sprayed – the implant surface technology preceding SLA

VASCULAR A growth factor produced by cells that stimulates the formation of new blood ENDOTHELIAL GROWTH vesselsFACTOR (VEGF)

ZIRCONIA ZrO2 – the white oxide of zirconium used on account of its infusibility and luminosity in dental prosthetics, enamels and glazes

ZIRCONIUM A grayish-white, strong, ductile metallic element obtained from zircon and used in ceramic and refractory compounds, as an alloying agent


171

FINANCIAL TERMS

AMORTIZATION Systematic allocation of the depreciable amount of an intangible asset or goodwill over its useful life

DEPRECIATION Systematic allocation of the depreciable amount of a tangible asset

EARNINGS PER SHARE Net profi t divided by the number of shares(EPS)

EBIT Earnings before interest and taxes; also referred to here as operating profi t

EBITDA Earnings before interest, taxes, depreciation and amortization

EBIT MARGIN Operating profi t (EBIT) divided by group sales in %

ECONOMIC PROFIT (EP) Operating profi t minus taxes and minus cost of capital

EQUITY RATIO Shareholder equity divided by total assets in %

ERP Enterprise Resource Planning

GOODWILL Future economic benefi ts arising from assets that are not capable of being individually identifi ed and separately recognized

GROSS PROFIT MARGIN Gross profi t divided by group sales in %

IFRS International Financial Reporting Standards

NET PROFIT MARGIN Net profi t divided by group sales in %

PAY-OUT RATIO Dividend paid divided by previous year’s net profi t in %

REVENUES Sales , see p. 114

ROA Return on assets; net profi t divided by average assets in %

ROCE Return on capital employed; earnings before interest and taxes divided by average capital employed in %

ROE Return on equity; net profi t divided by average equity in %

SALES See ‘sales of goods’ and ‘sales of services’ on p. 114

WACC Weighted average cost of capital


172

A

Absence (due to accidents/ sickness) 51Abutments 24, 25, 28, 34, 169Accidents, workplace 51Accounting policies and prin-ciples 88, 104, 105-107, 114-116, 123, 146, 156Acquisitions 9, 10, 18, 69, 89-91, 93, 95, 102, 103, 107-111, 120, 123, 128, 152, 154, 161Administration costs 90, 139, 151Annual General Meeting 85, 164Amortization 90, 94, 102, 109-112, 119, 120, 133, 142, 151, 160, 171Andover 4, 6, 19, 34, 35, 48, 56-59, 69, 88, 122, 152, 153, 166Asia/Pacifi c 4, 5, 9, 15, 17, 20, 21, 29, 40, 49, 52, 53, 69, 79, 90, 92, 96, 97, 142Auditors 78, 84, 146, 156

B

Balance sheet 95, 100, 106, 107, 109-113, 124, 131, 134, 145, 146, 150, 152, 154, 161Biora 10, 31, 69, 70, 91, 120, 121-123, 128, 153Board of Directors 46, 48, 69, 72, 73, 75-84, 91, 104, 114, 137, 144-145, 155, 156Bone-level implant 6, 19, 27, 30, 39, 41Bone-level maintenance 26BoneCeramic 6, 17, 24, 29, 30, 40, 41, 53, 89, 169Bonus 81, 82, 113, 145Borrowings 112Brand(s), branding 5, 9, 10, 11, 109Business combinations 123Business focus 9Business units 25, 28, 50, 71

C

Calendar of events 164, 165Capital structure 73, 162CARES 17, 24, 25, 28, 31, 40, 169

Cash and short-term deposits 110, 125, 145Cash equivalents 93, 110, 114, 123, 150Cash fl ow 91, 95, 103, 106, 108-116, 120, 124, 161Cash fl ow statement 102, 110, 161CEO, Straumann 4, 19, 20, 47, 48, 51, 69, 71, 79-83, 85Ceramic 25, 28, 66, 169, 170Child labor 55Clinical trials and development 6, 27, 29, 30, 38-41, 89Code of Conduct 6, 46, 48, 51, 55, 56, 69Compensation 51, 73, 74, 78, 81, 82, 113, 126, 127, 137, 138, 145Competition and competitors 6, 19, 20, 21, 27, 38, 79, 92Conditional shares 73, 127Contact addresses 166Contingencies 143Core beliefs 5, 7, 8, 11, 24, 38, 50, 56Corporate Governance 69Cost of goods 88, 90, 101, 124Costs, treatment 14, 17, 55, 63, 92Costs, fi nancial 4, 81, 88-90, 101, 106, 109-112, 119, 120, 134, 143Credit risk 92, 114, 115, 125Customers 4-11, 17, 19, 25, 27, 30, 31, 42, 46, 49-50, 52, 53, 89, 90, 92, 125, 142

D

Denmark/Danish distributor 4, 18, 69, 70, 89-91, 120, 122, 123, 152, 153, 166Dentures and overdentures 14, 25, 28, 41, 55, 63, 170Depreciation 90, 94, 102, 108, 110, 117, 118, 133, 142, 151, 160, 171Derivative(s) 74, 106, 115, 124Diversity (women, gender) 51Dividend(s) 84, 91, 95, 102, 103, 112, 137, 155, 161, 163, 171

E

Earnings per share 89, 90, 94, 101, 140, 141, 160, 171EBIT 88, 90, 94, 160, 171EBITDA 90, 94, 160, 171Ectodermal dysplasia 54Education 7-9, 11, 16, 31, 42, 43, 49, 50, 52, 53, 64, 65, 90Emdogain 6, 24, 30, 53Emdogain PLUS 6, 17, 24, 30, 40, 41, 53, 89Emerging markets 4, 14, 16, 18, 21Emissions 57-59Employee benefi ts 104, 113, 134, 145Energy consumption 57-59Environmental protection and monitoring 47-49, 56-59, 105Equal opportunity 49, 51Equity 73, 91, 93, 95, 100, 103-107, 111-113, 115, 124, 126, 135-138, 146, 150, 153, 162, 171Europe 4-6, 9, 14-18, 26, 28, 29, 40, 49, 50, 52, 53, 55, 58, 67, 69, 72, 85, 89, 90, 96, 97, 142Executive Management 46, 50, 51, 74, 78-81, 137, 144, 165

F

FDA 25, 31, 35Financial assets 100, 102, 104, 106, 111, 121Fluctuation, staff 51Forced labor 55Free cash fl ow 91, 95, 116, 161FTSE4Good 6, 47, inside back cover

G

General dentists 19, 31, 52, 64, 65Germany 10, 14, 17, 18, 52, 70, 90, 92, 122, 152, 153, 166Glossary 169Goodwill 106, 108, 116, 119, 120, 121, 123, 171Government grants 116GRI 7, 49, 167

INDEX

Straumann Annual Report 2006 Appendix INDEX

173

H

Headquarters 8, 18, 19, 21, 35, 38, 49, 51, 54-57, 69, 88-90, 92, 104, 116, 118, 143, 165Healthcare regulation 18, 92Hedging (hedge) 88, 92, 103, 105, 107, 111, 113-115, 124, 132History 7, 10, 38Human rights 46, 48, 51, 55

I

IFRIC 104-106IFRS 88, 104, 105, 116, 146, 171Impairment 90, 102, 105-112, 116, 118-121, 124, 133, 142Implant system 8, 10, 19, 24, 25, 28, 31, 39, 56, 104Income statement 101, 107, 110-113, 114-116, 124, 125, 134, 146, 151, 156Independent experts 63-67Information policy (inform) 85, 164Innovation 5-7, 9, 17, 20, 26, 27, 30, 34, 38, 40, 50, 71, 79, 88, 89, 91Insurance 14, 18, 63, 64, 93, 121, 128, 139, 143Intangible assets 100, 102, 109, 119, 120, 131, 150, 171Intellectual property 93Internal audit 88, 93Interviews Bollinger, Cynthia 64 Brånemark, Per-Ingvar 63 Frontero, Jim 19 Gadola, Marco 88 Gahlert, Michael 66 Kniha, Heinz 66 Louvel, Patrick 21 Stone, Paul 65 Williams, David 67Inventories 35, 95, 100, 110, 124, 131, 133, 143, 161Investment property 100, 108, 116-118Investments 9, 34, 91, 95, 106-108, 111, 112, 114, 115, 118, 122, 136, 150-153, 161Investments in subsidiaries 106, 122

Investor relations 85, 165Investor relations calendar 164, 165ISO certifi cation 34, 48, 56, 58ITI 7, 8, 18, 21, 28, 29, 38, 42, 43, 46, 52, 53, 80, 83, 104, 132, 144

J

Jobs 5, 50, 55, 89Joint ventures 107

K

Key fi gures inside front cover Kuros 10, 77, 80

L

Launches see ‘Product launches’Leap-frog technologies 92Lease(s) 105, 108-110, 116, 143Legal structure 70Liabilities 93, 100, 102, 110, 112, 116, 121, 123, 124, 131, 132, 134, 136, 142-144, 150Liquidity risk 93, 114, 115Litigation 93, 143Loans 81, 83, 93, 102, 108, 111, 121, 150Logistics 34, 35, 50

M

Malmö 35, 38, 48, 56-59, 69, 120, 122, 152, 153Management 46, 50, 51, 73, 74, 78-83, 89, 105, 110-113, 115, 120, 121, 126, 137, 143-145, 154Management transactions 83Margin(s) 4, 88-91, 94, 121, 160, 171Market penetration 16, 18, 26Market share 16, 19, 66Markets 4, 5, 9, 10, 14, 16, 18, 20, 21, 29, 40, 49, 52, 53, 92, 113, 136Meetings and Congresses 165Membrane 24, 29, 39, 40, 169Minority interests 100-103, 107, 124, 128Mission 46

N

Narrow-neck implant 25, 27, 28Non-derivatives 111North America 4-6, 9, 15-17, 19, 20, 26, 29, 40, 46, 49, 50, 52, 69, 85, 89, 90, 96, 97, 142

O

Operating expense 88, 118, 133, 139Operating profi t 89, 90, 94, 101, 102, 142, 160Options, stock 73, 74, 78, 81-83, 102, 103, 113, 126, 127, 137-141, 145, 155Other income 101, 132, 133, 142, 151Outlook 7, 17, 18, 20, 21, 30, 31, 35, 41, 43, 51, 53, 55, 58, 91

P

Patents 93, 109, 120, 122Payables 100, 131, 143, 150Payout ratio 91Pensions 93, 100, 102, 113, 131, 134, 136, 144Periodontal disease 14, 24, 29Personnel expense 73, 81, 112, 113, 137, 138Pipeline 7, 30, 38, 39, 40Post-employment benefi ts 116, 134, 136, 145Process improvement 5, 35, 50, 79Product launches 5, 6, 17, 20, 21, 26-30, 38, 42, 43, 89Production 4, 6, 19, 26, 31, 34, 35, 48, 50, 51 , 56-58, 69-71, 88-90, 108, 110, 122, 123, 152, 153Products 6, 8, 9, 11, 17, 19, 21, 24, 25, 30, 34, 35, 38, 39, 48-50, 52-56, 71, 89, 92, 104, 107, 113, 114, 166Profi t 4, 51, 73, 88-91, 94, 101-103, 106, 107, 111, 112, 115, 121, 123, 128, 130, 140-142, 151, 155, 160, 171Property 100, 102, 108, 109, 116, 117, 118, 131, 132, 136Prosthetics 14, 24, 25, 28, 31, 34, 38, 40, 52, 169, 170Provisions 84, 100, 102, 110, 111, 116, 124, 125, 128, 131, 150


174

Q

Quality of life 14, 31, 38, 41, 49, 52, 54, 55

R

Raw materials 59, 110, 124, 133Reallocation 101, 133, 139Receivables 95, 100, 110, 111, 113, 124, 125, 131, 143, 150, 161Reclassifi cation 101, 117, 118Regenerative system 29, 30, 52Regions 5, 6, 14, 21, 29, 31, 50, 53, 55, 89Related-party transactions 83, 144Revenue recognition 114Risk, fi nancial 92, 93, 107, 113, 114, 121Risk assessment 92Risk factors 6, 26, 107ROA 95, 161, 171ROCE 91, 95, 161, 171ROE 91, 95, 161, 171RoW 15, 21, 72, 90Rounding 104

S

Safety 24, 27, 31, 46, 48, 51, 53, 56, 57, 67, 92Salaries/wages 51, 81, 82, 133, 136, 145Sales force 19Sales/revenue 5, 17, 92, 96, 97, 132, 160Scholarships 43Segment information 52, 105, 107, 141, 142

Selling costs 90, 101Services 6, 8, 9, 17, 24, 28, 30, 31, 50, 52-54, 69, 92, 104, 106, 107, 110, 113, 132, 144, 166Share capital 73, 83, 84, 100, 103, 113, 122, 123, 126, 127, 150, 152-154, 162Share price 73, 81, 82, 113, 137, 138, 163Share purchase program 51, 125, 132Share-based payments 106, 137-139, 145Shareholder’s equity 112, 171Shareholders 4, 9, 46, 69, 71-73, 75, 81, 84, 85, 91, 100, 101, 103, 112, 113, 123, 126, 128, 140, 153-155, 162, 163Shares 69, 71-75, 83, 84, 91, 101-103, 112, 113, 123, 126-128, 132, 137, 138, 140, 141, 150, 152-155, 162SLA 10, 25, 27, 88, 170SLActive 6, 10, 17, 19-21, 25-28, 30, 34, 35, 39-41, 47, 53, 56, 58, 88-90Sponsorship 7, 41, 54, 55Statutes 84, 85Strategy 4, 5, 9-11, 19, 21, 50, 51, 79, 93Straumann Services AG 69, 122, 123, 152, 153Subsidiaries 8, 10, 17, 20, 31, 35, 92, 102, 104, 106, 107, 112, 114, 122, 123, 152, 166Surgical 10, 14, 19, 24, 34, 38, 40, 170Surgical BU 25, 26Surveys 10, 11, 47-53Sustainability 6, 7, 46-49

synOcta 24, 25, 170

T

Tangible assets 108, 171Taxes 101, 112-114, 116, 129, 131, 151TE implant 25Titanium 24, 25, 28, 31, 34, 55-57, 59, 66, 170Tooth replacement 8, 14, 16, 21, 28, 29, 53, 64, 92, 104Treasury shares 91, 102, 103, 106, 125, 126, 132, 140, 150, 154, 155TPS 27, 170

U

UK 4, 17, 18, 89, 90, 122, 152, 153Unions 51USA 19, 20, 43, 72, 89, 122, 134, 152, 153, 166

V

Villeret 34, 35, 56-59, 69, 70Vision 8, 46

W

Waldenburg 10, 90, 116, 118Warning letter 11, 31, 35Waste 57, 59Water consumption 58, 59Wide Neck implants 25Working capital 91, 95, 102, 143, 161


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