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commit te d to a h e a lt hy wor l d .

ta b l e o f c o n t e n t s

I.

Letter from the Chief Executive Officer...................................................................................p2

II.

Introduction: Our Business, Our Core Values and Our ........................................................p4 Sustainability Priorities spotlight: Covidien Innovations in Healthcare ...................................................................... p8 sidebar: Facts about Covidien .................................................................................................. p14 spotlight: How Evidence-Based Medicine is Changing Healthcare . .................................... p16

III. Organizational Change: Building a Healthier Culture.......................................................... p18 spotlight: Covidien Innovation Awards Recognize Individual and Team Leadership.......... p23 spotlight: An Interview with Joe Almeida, Medical Devices.................................................. p24 IV. Employee Health and Safety: Creating a Safer, Healthier ....................................................p26 Work Environment spotlight: Working Together to Achieve Health and Safety Excellence................................. p32 V.

Environmental and Energy Impacts: Reducing Our . ..........................................................p34 Environmental Footprint spotlight: Thinking Globally, Acting Locally – It All Adds Up ............................................. p42 spotlight: An Interview with Jim Clemmer, Medical Supplies.............................................. p44

VI. Remediation Sites: Taking a Proactive Approach..................................................................p46 VII. Product Quality and Safe Use: Ensuring the Confidence of ..................................................p50 Customers, Patients and the Community spotlight: Covidien Works to Improve U.S. Supply of Molybdenum 99............................... p55 spotlight: An Interview with Matt Harbaugh, Pharmaceuticals............................................p56 sidebar: Humane Treatment of Laboratory Animals............................................................... p57 VIII. Product Stewardship: Taking Responsibility for the Environmental .................................... p58 Impacts of Our Products spotlight: C  ollaboration, Innovation and Forethought Pay Off at . ..................................... p61 Covidien’s Raleigh Site spotlight: C  ovidien’s SharpSafety Team Keeps Waste out of Landfills by Taking a .............p63 Renewable Approach to Product Manufacturing IX. Global Supply Chain: Creating a Sustainable Supply Chain.................................................. p64 spotlight: How Becoming a SmartWay Shipper Saves Money and the Environment........p67 SM

X.

Community Involvement: Making a Difference Where We Work and Live........................ p68 spotlight: C  asa Hogar Maria Inmaculada Orphanage – Giving Children a Chance ........... p71 in Tijuana, Mexico spotlight: Lending 160 Hands to Plant 800 Trees in the Dominican Republic . .................. p74 spotlight: Providing Aid and Giving Hope in Canada .......................................................... p74 p|1

letter from the chief executive officer

as a young company, we are setting ambitious goals for the future as we build upon multiple initiatives to preserve our environment. I am pleased to present Covidien’s first corporate responsibility report, “Committed to a Healthy World.”

This report offers a snapshot of our wide-ranging commitment to social responsibility around the world.

– Incorporating design features in our products to minimize their effect on the environment

WE CONTINUE TO FOCUS ON:

– Continuously evaluating products and processes to reduce environmental impact

–E  thical conduct in all our business practices –P  rotection of the environment –P  rotection of the health and safety of our employees –A  ctive involvement in the communities in which we operate Although Covidien was launched only in June 2007, our commitment to protecting the environment and to being socially responsible is firmly rooted in our Company’s ethos. As a manufacturer of medical products and pharmaceuticals, we recognize that we have a responsibility to reduce our impact on the environment and to conserve natural resources. This is a fundamental, not a discretionary, consideration in our decision-making. Managing our impact on the environment and our energy use can reduce our operating costs and those of our customers. We also strive to improve the quality of life in the communi-

– Proactively pursuing new technologies that support global conservation This report contains many examples of our progress against these initiatives. We have set aggressive energy conservation goals and pledged to improve energy performance and increase our use of renewable energy sources. Through conservation and engineered solutions, we aspire to save up to five percent of our total energy costs over the next decade. In the coming years, we look forward to broadening our sustainability initiatives as we set measurable goals and work toward creating a healthier world now and for future generations. Covidien remains committed to assuring the well-being of its employees, customers and local communities. We will work to enhance the quality of life for patients and improve outcomes for our customers and shareholders.

ties where we operate and where our employees and customers work and live. More broadly, we can help preserve the resources that people everywhere need to live longer, healthier lives.

Best,

Our current environmental efforts are focused on enhancing the design of Covidien products and packaging, upgrading manufacturing processes and implementing an environmentally sound business philosophy. Initiatives that support these activities include:

Rich Meelia Chairman, President and Chief Executive Officer

– Assuring that our facilities meet or exceed all environmental regulatory standards – Conserving natural resources by employing source reduction, reuse and recycling p|2

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introduction

Our Business, Our Core Values and Our Sustainability Priorities In everything we do, we are guided by our core values: accountability, collaboration, compassion and diversity.

p|4

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To remain a global leader in our industry, Covidien must take responsibility for making healthcare more affordable and available.

OUR BUSINESS

Covidien is a $10 billion global healthcare products company dedicated to innovation and long-term growth. We manufacture and sell medical devices and supplies, diagnostic imaging agents and pharmaceuticals. We’re a new company with deep roots.

accountability, collaboration, compassion and diversity. C R E AT I N G A C U LT U R E O F C H A N G E

It’s a new world. Healthcare costs continue to escalate rapidly, creating huge economic pressures on societies around the world.

In June 2007, Covidien separated from Tyco

In many locations, such as developing countries and

International, where we operated our business as Tyco

disadvantaged parts of developed countries, many

Healthcare and were known for acquiring venerable

people lack access to quality healthcare.

brands such as Kendall, Mallinckrodt and Autosuture. Since separating, we have focused on developing

At Covidien, we are singularly focused on delivering

innovative medical solutions for better patient outcomes

better patient outcomes. But we know that we also must

and on creating value through clinical leadership

demonstrate up front that we can do this safely and

and excellence.

cost-effectively.

As part of our pursuit of excellence, we are committed

We need to prove that our products provide value so

to fostering innovation. In addition to acquiring

that our customers – physicians, hospitals, pharmacists

companies with superior products, we create innovative

and others – can justify their cost and regulators can

new products through our increasingly substantial

justify their reimbursement fees. In proving value, we

investments in research and development (R&D). We

must look at both direct effects, such as reductions in

launched 60 new products in 2008 and 2009, compared

infection rates or in-patient days or more definitive

with fewer than 20 in 2005 and 2006, the last two years

disease diagnosis, as well as indirect effects, such as lower

before our launch as Covidien.

rehabilitation costs or fewer lost work days for patients.

Our goal is to make healthcare better and more cost-

We intend to be a leader in this new world. We are

effective worldwide. Towards this end, we are tackling

embracing important new practices, such as evidence-

some of the most challenging and costly medical

based medicine for our medical products and Risk

problems, such as Type 2 diabetes, cancer, chronic

Evaluation and Mitigation Strategies (REMS) for our

pain, respiratory problems and vascular disease. We

pharmaceuticals. We are creating a culture of change to

work with our customers to create breakthroughs that

accelerate the adoption of these best practices.

reduce the duration and risk of surgical procedures, keep people out of hospitals, decrease infections and

NEW BEST PRACTICES FOR A NEW WORLD

help people live longer, healthier lives. (See Spotlight:

evidence-based medicine: We collaborate with medical

Covidien Innovations in Healthcare.)

professionals to prove both the clinical and economic

Through our philanthropic programs, we strive to extend quality, affordable healthcare to all the com-

p|6

In everything we do, we are guided by our core values:

value of our products, using definitive evidence obtained via innovative clinical trials that we fund.

munities in which we operate – and beyond – and to

For example, we are working with our medical team

improve the quality of life in those communities.

to prove how extending metabolic surgery procedures p|7

spotlight

Covidien Innovations in Healthcare

SILS™ Port:

LigaSure Impact™:

Duet TRS™ Reload:

The first device specifically

An energy-based device that

Duet TRS Reload addresses the

indicated for multiple instrument

revolutionizes how surgeons

unmet needs of customers. It

access to the abdomen through a

perform open-procedure surgeries

offers a preloaded buttress, elimi-

single incision. The port is designed

such as hysterectomies, saving an

nating the extra steps involved

to be inserted through a small,

average of 35 minutes of surgical

with manual loading. The material

20mm incision, which can result in

time per procedure.

stays in place during firing,

a “hidden scar” when used in the

reducing waste in the operating

umbilicus, a cosmetic advance over

room and increasing efficiency.

traditional multi-port laparoscopy.

Mallinckrodt™ TaperGuard Endotracheal Tube:

EXALGO™

The next-generation endotracheal

A once-daily administration for the

tube that significantly minimizes

management of moderate to severe

many of the risks associated with

pain in opioid-tolerant patients

post-intubation pulmonary

requiring continuous, around-

complications and ventilator-

the-clock opioid analgesia for an

associated pneumonia.

extended period of time—the only

(hydromorphone HCl) Extended-Release Tablets (CII):

long-acting hydromorphone product on the market, offering an important additional tool for physicians treating patients for chronic pain.

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Evidence-based medicine and REMS are helping us make the right decisions for our customers, our patients and our business.

(such as gastric bypass surgery) to more Type 2

REMS (Risk Evaluation and Mitigation Strategies): The

diabetes patients can reduce both global morbidity

U.S. Food and Drug Administration (FDA) Amendment

rates and long-term healthcare costs. Traditionally,

Act of 2007 allows the FDA to require drug companies

only morbidly obese patients have been eligible for

to implement a REMS program to ensure the appropri-

these procedures.

ate and safe use of all approved pharmaceuticals. This includes providing documented plans for ensuring

than 60 countries. We are creating a culture

safe use of the products, which may include

that encourages innovation, risk-taking and creative

medication guides for patients, communications

thinking – not just in product innovation, but also in

plans, elements to assure safe use, assessments and

process innovation to make better use of resources

pharmaceuticals business.

implementation systems.

throughout the entire product lifecycle, from sourcing

We are now applying those skills and rigor to other areas

Covidien has made a corporate commitment to REMS

to retirement. Our employees have responded and are

of our business, most notably medical devices. In the

and additional voluntary programs and tools to better

rising to meet this challenge.

medical device industry, it has been customary to prove

ensure the safe use of our pharmaceutical products.

direct effects in clinical trials, while ascertaining indirect

This process is central to our ethics as a pharmaceuticals

effects later. This is no longer sufficient. To better ascer-

provider. It also is a strategic differentiator for our

We firmly believe that good sustainability practices

tain indirect effects, we are striving to become a leader

Company, placing us at the forefront of the industry.

are consistent with effective products. In fact, sustain-

in the application of evidence-based medicine to medi-

As the largest supplier of controlled pain medications in

cal devices, and we are off to a good start. (See Spotlight:

the United States, based on the number of prescriptions,

How Evidence-Based Medicine is Changing Healthcare.)

a strategy centered on safe use is critically important to

We have, of course, traditionally engaged in clinical trials as part of the regulatory approval process for our products. As a result, we have developed extensive skills and rigor in managing clinical trials, particularly in our

These values are: Accountability Collaboration Compassion

THE SMARTEST THING WE CAN DO AS AN EMPLOYER IS TO CREATE A CULTURE THAT LETS OUR EMPLOYEES LIVE THEIR VALUES.

Diversity When the Company’s values become embedded in everything we do, everybody wins: our shareholders,

S U S TA I N A B I L I T Y I S K E Y T O O U R B U S I N E S S

customers, patients, partners, the communities in which we operate and our employees. A C C O U N TA B I L I T Y

able product design and manufacturing can reduce our costs, as well as increase the perceived value of our

We each take responsibility for delivering outstanding

products and make their outcomes more meaningful.

results to our partners, patients and teammates, while

We have hired a corporate chief medical officer and

us. As we expand our portfolio into branded pharma-

Our customers want to know that Covidien will help

standards of ethical conduct.

chief medical officers for all of our business segments,

ceutical products focused on providing patients with

them meet their sustainability goals. Consumers want

as well as medical directors who can help us evaluate the

access to advanced pain therapy medications, this safe

to know that Covidien is a trusted corporate citizen

clinical and economic benefits of our products in the

use approach – including REMS where applicable – and

before they take one of our drugs or undergo a surgical

field. We are working even more closely with consumers,

safety surveillance are essentially built into every drug

procedure that uses our products or devices. We want

who are taking a much more active role in choosing the

that we sell.

everybody to feel secure and satisfied when they do

therapies used to treat their bodies. We need to understand the value – both direct and indirect – to them of better patient outcomes.

We also must produce our products in a responsible manner that treats the environment as a precious

business with Covidien, see our brands in a clinic or pharmacy or drive by our facilities in their communities.

affirming our commitment to integrity and the highest

We are actively working with all levels of management to ensure that our culture encourages appropriate risktaking, openness and learning from one another. We are creating programs that encourage broader employee engagement in decision-making, virtual teams, problem-solving, and business ethics.

and finite resource. By putting in place policies and

To do well as a business, we need to do right by the

C O L L A B O R AT I O N

We train physicians and other practitioners in the proper

measurable programs, we are applying the same

environment, the communities we operate in and all the

We are integral partners working with our colleagues

use of our medical and surgical products to ensure both

discipline and rigor to promoting sustainability that

people we touch. It is as simple as that.

and customers to generate innovative ideas that solve

the products’ safe use and their speedy adoption as

we bring to developing our products.

broadly as possible. Our medical directors and clinical advisors conduct and supervise this training. Our education model is dedicated to offering meaningful, compliant programs that enhance learning opportunities

p|10

To do well as a business, we need to do right by the environment, the communities we operate in and all the people we touch. It is as simple as that.

Evidence-based medicine and REMS are helping us make the right decisions for our customers, our patients and our business.

O U R C O R E VA L U E S

At Covidien, our goal is to become the leading global healthcare products company by supporting the lifesaving work of medical professionals and enabling

challenging healthcare problems. Through our Voice of the Customer programs, we collaborate with healthcare professionals to help raise the standard of patient care.

for healthcare professionals in accordance with industry

Our biggest asset in achieving our sustainability goals is

the best possible patient outcomes. Our desire to

For example, our Duet TRS™ Reload is the only surgical

guidelines and professional best practices.

our people: all 42,000 employees in 140 facilities in more

achieve this is rooted in our core values.

reload with a preloaded absorbable reinforcement p|11

OUR SUSTAINABILITY PRIORITIES BECAUSE WE ARE LARGE AND GLOBAL, OUR SUSTAINABILITY INITIATIVES CAN GENERATE A MULTIPLIER EFFECT. AND, AS A YOUNG COMPANY, WE HAVE A CLEAN SLATE TO BE BOLD AND TRY NEW THINGS.

material designed to improve acute haemostasis, pneu-

for Neighborhood Wellness, which provides funds,

mostasis and burst pressure. This revolutionary system

product donations and employee time for important

is preloaded to improve operating room efficiency and

health-related causes that our employees care about.

reduces operating room waste and handling errors.

These interests include childhood obesity prevention,

Our Performance Improvement Project (PIP) is a collaborative program with hospital infection control teams to help them reduce the incidence of healthcareassociated infections and surgical site infections. By helping hospital staff use our antimicrobial wound care

patient education and cleft palate surgery for children in India. Our employees also have rolled up their sleeves in their own communities to build bike paths and perform maintenance work on veterans’ hospitals and health centers.

products more effectively, we have helped our customers D I V E R S I T Y cut the incidence of these infections without changing We strive to fully understand our marketplace, our their protocols. customers, our communities and our employees and We need to work more collaboratively with all external to enter into our relationships with a sense of honesty,

COMMITTED TO OUR PEOPLE:

COMMITTED TO OUR COMMUNITY:

COMMITTED TO OUR ENVIRONMENT:

COMMITTED TO OUR PRODUCTS:

stakeholders, and we are getting better at this. For

We are committed to

We are committed to

We are committed to

We are committed to

protecting the health and

contributing to the availability

reducing energy consumption

designing products and

safety of our employees. We

of quality, affordable health-

and carbon emissions in all of

packages that minimize our

fairness and trust.

example, in 2009 we worked with People for the Ethical Treatment of Animals (PETA) to achieve a mutually

We address diversity from the broadest possible

acceptable corporate policy for the treatment of

perspective through our Cross-Cultural Inclusion

strive to obtain the necessary

care in the communities where

our facilities and to investing

environmental impact as we

laboratory animals. We also are working closely with

initiative, or CCI. The CCI initiative enables employees

resources to provide a safe

we live and work. Many of our

in alternative and renewable

comply with all government

legislators and government leaders to help reduce the

to share their cultural differences, work experiences and

working environment for

resources go to humanitarian

energy sources.

manufacturing guidelines

cost of healthcare.

skills so that we can better serve our customers while

all of our employees and

projects that improve the care

and meet the needs of our

customers and to promote

and treatment of people in

customers and patients.

best practices that protect

underserved communities

the environment and ensure

around the world.

providing more learning and advancement opportuniC O M PA S S I O N

ties for our employees.

We are caring professionals committed to improving

We also listen and learn through Voice of the Employee

the health and well-being of patients around the world.

and Voice of the Customer surveys.

We are passionate about what we do, even when there is no expectation of personal reward. Our employees understand that they work in an industry in which customer needs occur around the clock and often times are critical. We go above and beyond to ensure healthcare providers get what they need, when they need it.

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As a global healthcare products company, Covidien has a responsibility to actively take part in preserving our environmental resources, while continuing to provide innovative medical solutions to our customers and enhancing the quality of life for patients. We are setting ambitious goals for the future as we build on long- standing corporate initiatives to preserve the environment. Our global sustainability program, “Committed to a Healthy World,” encompasses four broad categories:

health and safety.

Accountability. Collaboration. Compassion. Diversity. This is Covidien. By functioning as a unified company with a single vision based on these values, we can do it right. We can increase efficiency; leverage our resources across the organization; attract and retain top talent; innovate

Community involvement and philanthropy come

across business units to provide complete solutions;

naturally to our employees. We have created a

and, most important, provide maximum value for

charitable giving platform, the Covidien Partnership

our customers and their patients.  p|13

fac ts a b o u t cov i d i e n

a leading global manufacturer of

Covidien is:

Covidien’s key brands include:

medical devices and supplies,

Kendall

diagnostic imaging agents and

Mallinckrodt

pharmaceuticals, with 2009 revenue

Nellcor

of $10.3 billion

Puritan Bennett

a company with 42,000 employees

Valleylab

dedicated to R&D, spending $427

We offer high-quality products with instantly recognizable names that provide the basis for improved patient outcomes. Some of these include:

million on R&D in 2009, an increase

Monoject Magellan Safety Needle

worldwide in over 60 countries, with products sold in more than 140 countries

of 25 percent over 2008 Covidien operates in three business segments: Medical Devices, including: endomechanical, soft-tissue repair, energy, oximetry and monitoring,

™

Valleylab™ RF Ablation System Kangaroo ePump™ Enteral Feeding Pump Optiray™ (Ioversol) Contrast Media

Pharmaceuticals, including: specialty

We supply medical, surgical, electrosurgical, respiratory therapy, imaging and pharmaceutical products to the following customers:

pharmaceuticals, active pharmaceu-

Hospitals

airway and ventilation, and vascular products

tical ingredients, radiopharmaceuticals and contrast media products Medical Supplies, including: nursing care, SharpSafety, medical surgical and OEM products

Acute care facilities Nursing homes Rehabilitation centers Ambulatory surgery centers Physician offices

Covidien provides: Advanced surgical tools and supplies Sutures and wound care products Needles and syringes Contrast media and radiopharmaceuticals for diagnostic imaging Vascular therapies

Free-standing imaging centers

WE ARE GUIDED BY THREE PILLARS OF SUSTAINABILITY:

01 02 03

Execute business practices that preserve and protect the environment

Contribute to the social and physical well-being of the communities in which we have operations

 emonstrate fiscal responsibility, D ensuring that activities are economically sustainable, technologically feasible and operationally viable

Over the next year, we will formulate a Company-wide strategy for sustainability and set clear priorities, specific goals and objectives and performance measurements. A Company-wide strategy is important because these priorities are interrelated. For example, how we design and package our products can reduce energy and water use and materials waste along our entire supply chain. Many of our suppliers have their own sustainability goals, as do our customers. Because we are large and global, our sustainability initiatives can generate a multiplier effect. And, as a young company, we have a clean slate to be bold and try new things. Our most important natural resource is our diversity: the people that make up our global workforce, together with the skills, ideas and passion they bring to their work. Sustainability is a reflection of our core values, and our employees have demonstrated their own interest in sustainability by initiating environment- and energysaving programs, community service projects, product donations and other efforts at the local level. As we move forward, we will learn from what our employees have done and follow their lead. We will adopt practices that provide more leadership opportunities for employees at all levels and encourage cross-cultural exchanges of skills and knowledge. We also recognize the incredible value that our diverse supplier and customer bases provide. Our programs will leverage their ideas and passion in making the world a healthier place.

Respiratory care devices Generic and branded pharmaceuticals

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spotlight

How Evidence-Based Medicine is Changing Healthcare

Covidien is focused on improving

leg. Closure patients can walk away

The team also conducted an exten-

the lives of patients. As a result,

from the procedure and be back to

sive review of clinical activity for

we research and develop products

everyday activities – either at home

the Closure system. It looked at the

that fulfill previously unmet clinician

or at work – typically within a day.

number of procedures (500,000+

needs and improve patient outcomes. In doing this, we also seek existing alternative technologies that satisfy these criteria to add to our portfolio. Once we identify a technology that does these things, we can evaluate it using an evidence-based medicine approach. Covidien’s acquisition of VNUS Medical Technologies is a great example of this approach and its benefits to patients and to our shareholders. VNUS® Closure® is a clinically proven, minimally invasive procedure that treats varicose veins and their underlying cause, venous reflux, with little or no pain. Venous reflux disease may result in symptoms such as leg pain, swelling, fatigue, skin ulcers and painful varicose veins. The Closure system provides an alternative to painful veinstripping surgery or laser vein ablation. It employs a disposable radiofrequency (RF) catheter that controllably heats and closes

p|16

With a healthy vein, one-way valves keep blood flowing toward the heart (left). Varicose vein valves are weakened and let blood flow back in the reverse direction (right).

VNUS was also attractive because it was the only provider of RF ablation (RFA) technology for varicose veins in the U.S. and the technology leader, offering efficacy of between

to date in the U.S.), the number of published papers and book chapters on the technology and the summary of patient outcomes, comparable to the outcomes of other technologies.

97 percent and 100 percent with

Finally, the team conducted a study

minimal bruising and pain.

of the economics of the Closure

Before acquiring VNUS, Covidien conducted an extensive study of the varicose vein market. our team :

– Observed more than 30 endovascular ablation cases performed by 10 different physicians, using RF ablation and other technologies – Identified several alternative technologies for evaluation – Developed a distinguished list of key opinion leader (KOL) advisors – Identified potential medically necessary markets of 27.5 million patients in the U.S. and 31.6 million patients in Europe for the year 2009 – Projected a need in the U.S. alone

diseased veins in a procedure that

for nearly 1.8 million procedures

can take 30 minutes or less per

by the year 2027

system. It looked at the savings generated by less pain, shorter recovery times and fewer lost work days for patients. It also looked at reimbursement trends, concluding

VNUS

that office-based RF endovascular

MINIMALLY INVASIVE PROCEDURE THAT TREATS

ablations using the Closure system

VARICOSE VEINS AND THEIR UNDERLYING CAUSE,

would be profitable for physicians

VENOUS REFLUX, WITH LITTLE OR NO PAIN.

®

CLOSURE

®

IS A CLINICALLY PROVEN,

even if health insurance reimbursement rates continued to decline. The Covidien team had the tangible evidence – both clinical and economic – that it needed to make the right decision: Acquire VNUS. VNUS was acquired in June 2009, expanding our vascular product line. VNUS provides an excellent, cost-effective solution to a health problem that afflicts millions of people and causes unnecessary pain and disfiguration.

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o r g a n i z at i o n a l c h a n g e

Building a Healthier Culture At Covidien, we aspire to be a global leader and innovator, both in our industry and in our contributions as a corporate citizen. Our Company was launched in 2007 and our culture is still rapidly evolving. To reach our full potential, we are working to develop a culture that unleashes the creative talents and passion of all of our employees.

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We also are committed to creating a culture that

different languages and have lived in different cultures.

Company’s commitment to integrity, trust and honesty.

congresses or conferences. This policy is designed to

adheres to the highest standards of integrity and ethical

They have a great diversity of:

The program includes a 24-hour-a-day Integrity

reduce the risk of improper influence over healthcare

Helpline. Every call, including anonymous complaints,

professionals while still promoting ethical collaboration

receives a response. In Europe, we follow the EU

and professional education.

behavior in all of our dealings – with our employees, our customers, our partners and the communities in which we live, work and do business.

– Cultural insight, which enables us to understand geographic markets – Work experiences, which help us to maximize the

GOALS AND MANAGEMENT APPROACH

We are proactively working to foster a culture that promotes learning, openness and innovation. We are revising our employee evaluation criteria to promote appropriate risk-taking, sharing and communicating (even when it means bad news). We are setting up an internal knowledge-management repository so employees can readily exchange information about successes and failures, thus learning from each other. We are using new tools to foster employee collaboration and openness.

– Skills, which help us better serve our customers and their needs

The position of European Ombudsman is filled by Covidien’s European General Counsel.

Covidien’s Comprehensive Compliance Program for Interactions with Healthcare Professionals (the “CCP”) seeks to harmonize global industry codes with

I N T E R A C T I O N S W I T H H E A LT H C A R E

applicable laws and Covidien’s own principles of

PROFESSIONALS

ethical business conduct. Working within the CCP

By knowing what resources we have and making it

Covidien is a member of AdvaMed (the Advanced

and industry codes, we aim for productive and ethical

easier for employees to share them, we make every

Medical Technology Association) in the U.S., and

relationships with healthcare professionals that advance

we adhere to the voluntary AdvaMed Code of Ethics

medical science, patient care and technology innovation.

on Interactions with Healthcare Professionals. The

For example, when we train physicians and healthcare

AdvaMed Code explicitly prohibits providing excessive

professionals in the proper use of our products, we do

entertainment, hospitality or gifts to healthcare

so in training facilities and clinical settings, and not in

professionals. The AdvaMed Code also provides

resorts or similar venues.

employee more valuable and fulfilled. As a result, we benefit from employees who want to learn and are inventive in applying new knowledge and experiences. (See Spotlight: Covidien Innovation Awards Recognize Individual and Team Leadership.)

guidelines for proper consulting and royalty arrange-

Maintaining ethical relationships with healthcare

We still need to improve training for managers, how-

In 2009, we made significant progress with CCI,

ments with healthcare professionals. The PhRMA

professionals is essential to our business. As part of our

ever, so they can better recognize and solve problems

including identifying short-term and long-term goals

(Pharmaceutical Research and Manufacturers of

goal of becoming an industry leader in evidence-based

before they worsen. We have online training programs

and establishing key action items.

America) Code on Interactions with Healthcare

medicine, we have hired chief medical officers for each

Professionals, which our pharmaceuticals business in

of our business segments, as well as clinical advisors to

the U.S. follows, is substantially similar. We also are

assist them. We are funding innovative clinical trials for

for managers that we continue to expand and improve.

ETHICS

Covidien is committed to the highest ethical standards.

committed to compliance with all state and federal

Organizationally, our global compliance program

laws, regulations and policies applicable to interactions

DIVERSITY

reports into the Compliance Committee of our Board of

with healthcare professionals.

We approach diversity from the broadest possible global

Directors. One aspect of the compliance program is the

Outside of the U.S., Covidien is an active member

perspective. Our Cross-Cultural Inclusion initiative

Covidien Ombudsman. The Ombudsman is a Covidien

of many regional and country industry associations,

(CCI) was created in 2008 and is led by a steering

employee who is an independent and impartial resource

including Eucomed in Europe, where we comply

committee that includes Covidien CEO Rich Meelia

with whom our employees, suppliers, investors or

with the Eucomed Guidelines on Interactions with

It is no longer enough simply to ensure that our 42,000

and other high-level executives. International teams of

customers may raise and address their compliance

Healthcare Professionals. Company employees also

employees operate with integrity. Covidien now also

managers and employees support CCI by focusing on

concerns. The primary function of this office is to ensure

serve as members of the boards of several such

must assure the ethical business conduct of more than

three areas: cross-cultural competencies, innovation

that all compliance issues are resolved quickly, fairly and

organizations.

20,000 third-party distributors working on our

and talent management.

at the proper level in the organization. The Ombudsman

ACHIEVEMENTS

The goal of CCI is to tap into the resources of our global workforce at all levels to better serve our diverse

p|20

effectiveness of our business operations

guidelines and discourage anonymous complaints.

works independently but liaises with our Human Resources, Legal and Corporate Audit departments.

Covidien is also an industry leader in the management

our products, and we work with physicians and other healthcare professionals in conducting these trials. We know that, to attract the best people, we need to have the highest possible ethics. DISTRIBUTOR COMPLIANCE PROGRAM

Company’s behalf.

of ethical support for the education of healthcare

Our Distributor Compliance Program ensures that all

professionals. The Company has enacted a global policy

of our distributors know that doing business on behalf

customer base and to create new opportunities for

We also have created an ethics program that makes

eliminating the direct payment or reimbursement of

of Covidien means representing an industry leader

employees. We have talented employees who speak

employees active participants in reinforcing the

healthcare professionals’ expenses to attend third-party

that operates with the utmost integrity. We have nine p|21

spotlight

Covidien Innovation Awards Recognize Individual and Team Leadership

regional compliance managers who report to our global compliance director. These regional managers work with our partners to reduce non-compliance risks by: – Assessing the Company’s third-party distributors and other sales agents in order to help them strengthen their compliance controls – Making tools and training available to educate third-party business partners on our compliance expectations The program will help reduce Covidien’s risk of non-compliance with global anti-corruption laws and principles, including the U.S. Foreign Corrupt Practices Act (FCPA), local anti-bribery/anti-corruption laws, the Sarbanes-Oxley Act of 2002, international conventions, industry codes of conduct, general ethical principles and our own internal policies.

OPPORTUNITIES FOR 2010 AND BEYOND

As a young company that has grown by acquisition, we are continuously building a unified culture. We are working on innovative programs such as CCI, and these initiatives have the leadership and commitment of our senior management team. In 2010, we will finalize CCI competencies and incorporate them into our hiring, development and promotion practices. We also will create guides and toolkits to launch the CCI program to employees internationally. In 2011, we will develop short-term, cross-functional job-rotation experiences for employees at all levels and will implement a Company-wide University Relations Program that includes global rotation opportunities. We also will conduct a Voice of the Customer survey to better understand the needs of our global customer base.

In 2009, Covidien created the Innovation Awards Program to foster innovation at all levels and in all areas of the Company and to reward employees for their contributions. The grand prize – the Chairman’s Innovator Award – funds a project of the winner’s choice. IN 2009, AWARDS RECOGNIZED INNOVATIONS IN SUCH AREAS AS: Pharmaceuticals –

Surgical Devices –

Energy-based Devices –

Surgical Devices and

Developed a novel drug

Established networks and

Won the Chairman’s Innovator

Energy-based Devices –

tablet that was able to be

identified resources within

Award for work in software

Collaborated to invent three

manufactured using equip-

India and China for a multi-

design and implementation

devices for the emerging

ment that was already in the

tude of needs. This innovation

for several products and

field of advanced minimally

plant, but was not being fully

enhanced Covidien’s ability

tissue research tools that

invasive surgery: 5mm

utilized by other products.

to deliver local products for

will accelerate future

Articulating LigaSure™, 3.7mm

This innovation enabled the

local needs.

research projects.

Small Jaw LigaSure™ and a

project team to take the

Flexible and Articulating 7mm

project to FDA submission

Electrosurgical Device. By us-

in 14 months, a record

ing expertise within Covidien,

within Covidien’s

the collaboration drastically

pharmaceuticals business.

reduced project lead times and preserved proprietary technical information.

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p|23

“Ideally, we can treat the disease more effectively with less risk and fewer debilitating side effects for the patient.”

spotlight

An Interview with Joe Almeida, P R E S I D E N T, M E D I C A L D E V I C E S

José (“Joe”) Almeida oversees the Surgical Devices, Energybased Devices, Respiratory & Monitoring Solutions and Vascular Therapies Global Business Units, as well as the Japan, Asia, Canada and Latin America regions. These businesses account for approximately 60 percent of total revenue at Covidien.

Q.

What is the mission of Covidien’s Medical

Q.

How is your business helping make healthcare

Q.

What are you doing to help solve the problem of

Devices business?

more affordable and broadly available?

healthcare-associated infections?

A. Our goal at Covidien is to support the lifesaving work of medical professionals and enable the best possible patient outcomes. Medical Devices plays a vital role in carrying this out.

A. One way is by taking an evidence-based medicine approach to our devices. Evidence-based medicine involves demonstrating, up front, both the clinical value of our devices and the economic value they provide to our customers, patients and society. The definitive evidence we provide by sponsoring clinical studies and economic analyses ensures that important procedures become available more rapidly and broadly. Covidien intends to be a leader in evidence-based medicine. In addition to being the right thing to do for patients, this would give us a huge competitive advantage.

A. Reducing healthcare-associated infections is a big goal for us, and we are addressing it in a couple ways.

We deliver critical technologies that change the ways in which we treat difficult diseases. Good examples are the VNUS® Closure® technology, a less-invasive approach to treating vascular disease, and our energy-based surgical devices, which use energy to dissect and repair tissues. By “energy,” we mean laser, microwave, radiofrequency or ultrasound technologies, instead of more traditional methods such as stitches or staples. Ideally, we can treat the disease more effectively with less risk and fewer debilitating side effects for the patient. People can get back to work and their regular lives much faster. Our products are not only life-changing for patients, but also game-changing for society as a whole. For example, our devices are used in metabolic/bariatric surgery. These surgeries can help obese patients reduce their weight and control their Type 2 diabetes, which is a major health concern and contributor to healthcare costs. Eighty percent of patients who undergo metabolic surgery will be able to control their Type 2 diabetes. This can have a profound effect on their lives and on society.

But it’s not enough to prove the value. We need to make sure that our products get used properly. Training facilitates the spread of technology and reduces costs because it results in fewer problems in the field. We have opened training centers in Boulder, Colorado; Shanghai, China; Fuji, Japan; Norwalk, Connecticut; and Elancourt, France. We also are associated with several training hospitals. We continuously improve our training to make it more effective. We select candidate surgeons carefully and ensure that they are highly qualified to perform procedures using our products.

First, we utilize continual innovation in our product design. For example, we have lined our catheters with silver, which may reduce infection, and we have improved the controls on our Puritan Bennett ventilators, to help patients come off ventilators sooner. The Puritan Bennett™ 840 ventilator provides medical professionals with reliable, proven ventilation tools and technology for safe and effective ventilation of patients. This includes a full suite of features focused on both patient safety, and the safety of hospital staff and hospital visitors, including heated expiratory filters, which trap pathogens from the expiratory breath, helping limit the spread of hospital-acquired infections.* Second, we have a collaborative program with hospital infection control teams to help them reduce the incidence of healthcare-associated infections. We are working to introduce system changes that can reduce the chance of infection occurring during care at hospitals.

We’re constantly innovating – not just in technology, but also in processes and best practices that help improve success rates.

* T hiessen RJ. The impact of severe acute respiratory syndrome on the use of and requirements for filters in Canada. Respir Care Clin N Am. 2006;12(2):287-306.

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p|25

e m p l o y e e h e a lt h a n d s a f e t y

Creating a Safer, Healthier Work Environment Employee health and safety is vitally important to Covidien, our management team and our employees. Our commitment to employee health and safety is expressed in our global Environmental, Health & Safety (EHS) policy, the beginning of which reads: “Covidien is committed to protecting the health and safety of our employees and protecting the environment. We will provide safe working conditions for all our employees, contractors, vendors and customers. We will be good neighbors in our communities by ensuring that our facilities do not pose unreasonable risks and by participating in community activities related to EHS. We strive to conserve energy, water and raw materials and reduce waste. In all our activities, we will comply with all applicable laws. We will design our products in a manner that eliminates unreasonable risks from their manufacture, use and disposal. We will seek to continuously improve our EHS performance.”

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p|27

Table 1: Employee Health and Safety Performance Metrics FY2004-FY2009 GOALS AND MANAGEMENT APPROACH

Our goal is to create a world-class EHS culture by making our senior management accountable, by

and procedures and in a manner that eliminates unreasonable risk to others and the environment – Notify management of unsafe conditions or practices,

educating and enlisting the support of our employees

unlawful activities and activities that present unrea-

and by establishing strong systems. Our EHS team takes

sonable risks to public health or the environment

a proactive approach to identifying trends and incorporating best practices into our business processes. S E N I O R M A N A G E M E N T A C C O U N TA B I L I T Y

– Report accidents, occupational illnesses and safety and environmental incidents to management

1.50

1.26

1.08

0.90

0.68

0.48

0.45

0.30

0.27

Environmental Incidents Serious Injuries

Our employees care greatly about health and safety at

The EHS team ensures that our Company has programs in place for compliance in all matters regarding the environment, employee health and workplace safety.

1.6

1.57

38

31

28

15

73

63

54

35

agement systems and performs site audits to monitor

excellence and provide leadership regarding this policy

workplace accidents, ergonomics, cleanliness and other potential risks. – We have a Compliance Audit Program that inspects

and in which managers and supervisors answer

our manufacturing plants, distribution centers and

employees’ questions and act on concerns promptly

R&D centers on a three-year cycle.

and thoroughly – We have developed our own EHS Management Sys-

1.08

1.0

0.90

0.8 0.6

0.68 0.54

0.48

0.41

0.30

0.0 FY04

FY05

FY06

Together to Achieve Health and Safety Excellence.)

as Covidien EHS standards. Locations are required to

number of serious injuries.

achieve these objectives EMPLOYEE SUPPORT

Every employee is also responsible for complying with this policy. Employees must: – Work in accordance with regulations, standards

federal regulatory agencies on external audits. The EHS team also evaluates its own processes and procedures to ensure its own compliance with recognized EHS standards. Apart from audits, the group

FY09

percent of sites that need additional focus in order to

stand their EHS responsibilities

– We work with registrars, customers and numerous

FY08

pliance with our standards. (See Spotlight: Working

rate (TRIR)1, lost time incident rate (LTIR)2 and

– Provide the necessary resources and support to

FY07

Our Focus Sites Program annually identifies the 20

OHSAS-18000 international EHS standards as well

each year.

0.27

0.2

meet their goals, including the total recordable incident

complete self-assessments in the first fiscal quarter of

0.45

0.4

tems assessment tool incorporating ISO-14000 and

EHS performance of their facilities and departments

LTIR

1.50

receive the necessary education and training to under-

– Hold managers and supervisors accountable for the

TRIR

1.26

In the areas of health and safety, it establishes man-

commitment to environmental, health and safety

– Ensure that managers, supervisors and employees

40 N/A

1.8

1.2

feel free to raise EHS issues without fear of retribution

28 N/A

Figure 1: TRIR and LTIR Performance FY2004-FY2009

SYSTEMS

– Maintain open communications, in which employees

FY09

0.41

1.4

– Inform all employees of this policy and of our

FY08

1.57

active role in creating new ideas and programs.

THE SENIOR LEADERSHIP TEAMS:

FY07

0.54

implementing our global policy and for developing and

safety laws and regulations.

FY06

Total Recordable Incident Rate (TRIR)

their facilities and in their communities. Many take an

with this and all applicable environmental, health and

FY05

Lost Time Incident Rate (LTIR)

The leaders of Covidien’s businesses are responsible for maintaining a system designed to ensure compliance

p|28

FY04

We also have implemented our own EHS Management Systems certification program. Facilities that score >85 percent on their assessments are invited to apply for Covidien’s BEST (Building an Environmental and Safety Tradition) certification, which involves a thorough EHS Management Systems review by Global Business Unit and Corporate EHS teams in a two-tier approach.

ACHIEVEMENTS

1. TRIR is the number of recordable incidents per 200,000 hours worked.   2. LTIR is the number of incidents resulting in at least one lost day per 200,000 hours worked.

Over the last several years, we have made steady progress toward our employee health and safety goals, including reducing TRIR and LTIR, the number of environmental incidents and the number of serious injuries. (See Table 1.) For fy2009, TRIR was 0.68, and LTIR was 0.27. (See Figure 1.) When we achieved world-class rates for TRIR and LTIR in 2008 (below 1.0 and 0.33, respectively, for the pharmaceuticals and medical devices industries), we revised our goals to maintain that level of

encourages sites to promote EHS activities, including

In addition, facilities compete for annual EHS awards

performance. We continue to track our progress

safety training programs. 

for excellence, improvement and innovation in com-

below those thresholds. p|29

F I N E S A N D N O T I C E S O F V I O L AT I O N S

IN 2009, SEVEN OF OUR PLANTS EARNED COVIDIEN’S BEST CERTIFICATION FOR THEIR EHS MANAGEMENT SYSTEMS. THESE SEVEN PLANTS JOINED FOUR PREVIOUS AWARD-WINNERS. IN ADDITION, THE PONCE FACILITY HAS RECEIVED THE PUERTO RICO MANUFACTURERS ASSOCIATION PRESIDENTIAL SAFETY AWARD FOR SEVEN CONSECUTIVE YEARS.

In fy2009, we paid $21,090 in fines, a slight increase from 2008, but far below fines paid in previous years. Notices of Violations have climbed this year, which has been characterized by a policy of increased frequency of inspections by regulatory agencies. B E YO N D T H E N U M B E R S

Other Covidien achievements include: For the 18-month period ending April 2009, four plants had no recordable illnesses or injuries. In the month of February 2009, our Surgical Devices business logged a total of more than one million work hours and, throughout the entire month, did not have a single recordable injury – a first since the business unit was formed more than 10 years ago. In 2009, seven of our plants earned Covidien’s BEST certification for their EHS Management Systems. These seven plants joined four previous award-winners. In addition, the Ponce facility has received the Puerto Rico Manufacturers Association Presidential Safety Award for seven consecutive years.

Employee Wellness Programs, Community Wellness Programs, Workers Compensation Claims Reduction and Radiation Workers’ As Low As Reasonably Achievable (ALARA) Reductions. OPPORTUNITIES FOR 2010 AND BEYOND

We have achieved world-class rates for TRIR and LTIR and have set future goals to maintain that level of performance. We are committed to behavior-based safety, the ultimate goal of any strong EHS culture. Behavior-based safety involves improving employee behavior to a level where employees recognize risk and assume accountability for their safety and the safety of others in their work areas. To achieve this, we are implementing the DuPont STOP™* behavior-based safety model at two sites and other industry models at six other sites. By the end of 2010, our goal is to increase the number of manufacturing plants with behavior-based safety programs and achieve more than 60 percent active documented employee participation in EHS programs.

Four Covidien facilities in Mexico were awarded the Safe Industry certification, the highest recognition offered by the Mexican government for safety performance. In order to protect our employees and address our business opportunities, Covidien has established ongoing efforts in the following areas as well: Pandemic Influenza Planning, Motor Vehicle Fleet Safety, p|30

p|31

spotlight

Working Together to Achieve Health and Safety Excellence

Covidien employees’ dedication to health and safety excellence is exemplified by the achievements of the winners of the Company’s annual Environmental, Health & Safety Awards. These included:

EXCELLENCE GOLD

EXCELLENCE SILVER

EXCELLENCE BRONZE

GREATEST IMPROVEMENT

INNOVATION

Juarez-Henequen, Mexico

Boulder, Colorado

Camden, South Carolina

Galway, Ireland

North Haven, Connecticut

In FY2009, this plant reported only

For the second consecutive year, the

This facility had no recordable

In both of the two prior years,

In addition to decreasing its recordable

one recordable incident, achieved

plant/administration site continued

incidents in FY2009, a significant

this plant lowered its recordable

incidents by 61 percent, the North Haven

a 100 percent safety corrective

its very low recordable incident rate

improvement from earlier years.

incidents by more than 62 percent

plant achieved BEST certification for its

action closure rate and had no

and reported no environmental

The plant also moved from the

and had no environmental

health and safety management systems

environmental incidents. In addi-

incidents. The site also improved its

EHS Focus List in FY2008 to gain

incidents. In FY2009, the Galway

in FY2009. But this facility’s real story

tion, Juarez-Henequen improved

safety management systems score

BEST certification in FY2009,

facility achieved BEST certification

was innovation: it commissioned

its EHS systems and attained BEST

to 93.5 percent, maintaining the

reflecting major gains in employee

after moving from the FY2008 EHS

Covidien’s largest cogeneration power

certification for its health and

BEST certification that it initially

participation. Both management

Focus List. One factor in the

plant, producing electricity and steam for

safety systems. Continuous

earned in 2007. Additionally, the

and staff exceeded goals for

plant’s substantial progress was

site operations while reducing carbon

improvement efforts have produced

plant expanded its Green initiative

hazard observations. In addition,

strong employee participation in

dioxide emissions by 22,000 tons per

measurable gains in wellness

and introduced “Total Life” as a

the plant achieved a 50 percent

the Covidien Cup, an internal

year. Greater effort by North Haven’s

programs and in pollution

multi-faceted cultural campaign to

reduction in raw materials use,

competition in which employee

Warehouse Department enabled the

prevention, prompting Mexican

sustain world-class performance.

resulting in 20 percent less

teams vied for the best

plant to direct 47 percent of its solid

wastewater load.

safety improvements.

waste to be recycled. The plant also

authorities to present the facility with the coveted “Safe Industry”

innovated in its safety programs,

award. As a further encouragement

reaching the milestone of more than

to the development of a facility-

one million hours without a

wide safety culture, employees’

recordable incident.

children are regularly invited to visit the plant to participate in special safety and environmental activities.

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e n v i r o n m e n ta l a n d e n e r g y i m pa c t s

Reducing Our Environmental Footprint We recognize our responsibility to minimize our impact on the environment and our energy consumption. This commitment is not discretionary, but imperative. It’s clearly tied to our long-term sustainability and profitability. It can reduce our operating costs and those of our customers, improve the quality of life in the communities where we operate and where our employees work and live, and help preserve the resources that people everywhere need to live longer, healthier lives. We are making steady progress toward most of our goals, but we need to do more. We continue to put in place more formal, measurable programs. Some of our early successes in energy conservation have come from employee-initiated projects in facilities around the world. (See Spotlight: Thinking Globally, Acting Locally – It All Adds Up.) The passion, creativity and initiative of our people are our biggest assets in reducing our impact on the environment and our global energy consumption.

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p|35

5 10 20 o u r e n v i r o n m e n ta l

&

e n e rg y g oa l s

%

%

%

Increase in use of renewable

Per square foot reduction in

Per square foot reduction in

resources by 2018

energy use by 2013

energy use by 2018

GOALS AND MANAGEMENT APPROACH

We announced our corporate energy policy in August 2008. Covidien’s Energy Policy describes an energy conservation program designed to reduce energy demand and improve the environment. This policy also outlines the steps we will take to implement the conservation

costs. We measured 12 energy indicators in more than 170 locations around the globe, including all manufacturing facilities, major distribution centers, research and development centers and major administration and commercial locations.

program, including sustainability activities such as

The assessment identified a total of 2.2 billion kilowatt

Leadership in Energy and Environmental Design

hours of energy, costing an estimated $150 million, and a

(LEED) and Design and Construction Guidelines.

carbon footprint of 800,000 metric tons.

Our goal is to decrease our carbon footprint and lower

We are now using this data as a baseline for measuring

energy demand by 20 percent over the next 10 years. To

total reductions and for use by individual facilities to

achieve this, we are investing in energy-efficient equip-

track and measure their own performance. Every

ment, renewable energy sources and alternative genera-

Covidien facility reports energy consumption data

tion systems. We also are encouraging all employees to

monthly through our EHS group’s enterprise-wide

become more efficient and find ways to reduce waste.

information management system. Our Corporate

Over the next several years, we will perform energy assessments of all Covidien facilities. From these assessments, we will develop energy projects that

Real Estate and Center of Excellence (CoE) for Energy staff review the data before it is entered into the energy baseline.

meet an internal rate of return greater than 25 percent,

We need to normalize the baseline data to reflect

with an anticipated payback of fewer than five years.

constantly changing factors such as acquisitions,

Similarly, we established our baseline environmental metrics in 2008 and continue to collect measurements on a monthly basis. In 2009, we consumed 17 million cubic meters of water and generated 11,000 tons of hazardous waste and 31,000 tons of non-hazardous waste. Going forward into 2010, we also are collecting monthly metrics for external recycled material and internal reclamation to improve our manufacturing efficiency. Our management approach is to work with stakeholders and set sustainable environmental measures for waste,

divestitures, consolidations, organic growth and changes in weather from year to year. We created an energy baseline in 2008 using the latest raw data reported from the facilities. Currently, we use three different normalization metrics: – Kilowatt-hour per SF, (kWh/ft2) – Kilowatt-hour per cost of production (COP), (kWh/$$COP) – Kilowatt-hour per labor hour worked, (kWh/Lhr)

emissions and water consumption in accordance with

C R E AT I N G M O R E E F F I C I E N T M A N U F A C T U R I N G

our business opportunities and lifecycle analysis.

FAC I L I T I E S WO R L DW I D E

PRIORITIES AND STATUS

p|36

electrical energy and fuels consumption and associated

Our 15 most energy-intensive sites are all manufacturing facilities; they account for 75 percent of our total energy

We have completed a worldwide energy-consumption

footprint. Within our manufacturing sites, we also have

assessment to document energy usage, including

identified our most energy-intensive activities, which p|37

We have implemented a landfill methane-generated steam expansion at one of our manufacturing sites. This project alone will help us achieve our annual target of increasing our renewable energy portfolio.

generally are the same from site to site. These activities,

in Boulder, Colorado. We are looking forward to

We use the GHG Protocol published by the World

which include steam systems, compressed air systems,

incorporating the next generation LEED v3 into future

Business Council for Sustainable Development and the

Heating, Ventilation and Air Conditioning (HVAC),

construction projects.

World Resources Institute (WRI) to ensure a consistent

lighting and chilled water for process, are the focal point of our energy reduction efforts and constitute the majority of our energy projects.

such as EHS, Operational Excellence, Legal, Real Estate, Accounting, Procurement and Tax – to find cost

and internationally recognized method for determining our carbon footprint. As part of the GHG emissions calculation process, we are using a control approach,

Our strategy for creating more efficient manufacturing

savings, to promote standardization and safety and to

as defined by the GHG Protocol, to establish organiza-

facilities worldwide has four components:

encourage best practices in engineering and energy

tional boundaries and calculate our GHG emissions. We

reduction projects.

have determined that Scope 1 – Direct Emissions (for

– Expertise and Experience – Outreach and Education

example, combustion equipment and site processes) and funding: Covidien is allocating capital funds to improve

Scope 2 – Indirect Emissions (for example, electricity

the efficiency of our operations. Additionally, to date,

and other purchased utilities) will be included in the

– Funding

we have secured significant funding from grants from

– Internal Recognition

multiple sources, including state and federal rebates

expertise and experience: The CoE for Energy is an engineering support group for our Global Business Units (GBUs). The CoE comprises multi-disciplinary

accounting process.

and incentives. Funding ranges from $30,000 for a

Scope 3 – Other Indirect Emissions will not be included,

small lighting upgrade project to $2 million for a large

due to the limited control we would have over these

cogeneration plant.

emissions. Scope 3 emissions include business travel in commercial airlines, supply chain emissions and third-

engineering skills, including engineers trained in

internal recognition: Recognizing the accomplish-

Certified Energy Management (CEM). Our experience

ments of individuals and teams is key to sustaining

in construction and energy projects enables us to

support and momentum for energy management initia-

support and manage energy reduction initiatives for

tives. Rewarding particular efforts sets the example for

all facilities worldwide.

what constitutes success and helps motivate employees.

outreach and education: We continuously educate

REDUCING GREENHOUSE GAS

projects, a landfill methane expansion, a landfill

GBUs, departments and facilities about our engineering

(GHG) EMISSIONS

methane cogeneration project and multiple steam-to-

We collected baseline data for fy2008 to calculate

power cogeneration projects.

greenhouse gas emissions to establish our GHG base-

We have implemented a landfill methane-generated

line. In fy2009, we continued to collect energy metrics

steam expansion at one of our manufacturing sites. This

policy and energy reduction goals. We run training sessions at individual manufacturing facilities and make CoE presentations at manufacturing leadership meetings, the Operational Excellence annual competition and management meetings of EHS and engineering.

p|38

The CoE has also teamed with diverse departments –

to calculate GHG emissions. In addition, we are supporting our U.S. facilities to determine whether they

party distribution chain emissions. U S I N G R E N E WA B L E E N E R G Y

In the past year, we assessed alternative energy sources: multiple solar energy systems, a few wind energy

project alone will help us achieve our annual target of increasing our renewable energy portfolio.

We promote LEED certification of new construction

are subject to the new U.S. Environmental Protection

projects through our intranet by providing links to

Agency (EPA)-proposed rule for mandatory GHG

Currently, we are considering several renewable

detailed LEED literature and training programs.

emissions reporting. We also will monitor developments

energy projects. Among them are a few conventional

We currently have one LEED certified facility, a

in carbon cap-and-trade legislation in the U.S.

cogeneration projects, a steam-to-power cogeneration

commercial office space in Bedford, Massachusetts, and

Congress. Cap-and-trade is an environmental policy

project, a wind power agreement project and a solar

two proposed LEED projects in development: a new

tool that delivers results with a mandatory limit on

energy project. We also are investigating a woody-

world headquarters for our Surgical Devices unit in

emissions, while providing sources with flexibility in

biomass project to implement a steam-to-power

New Haven, Connecticut, and a new R&D laboratory

how they comply.

cogeneration project at our Hobart, New York, facility. p|39

We had no EPA recordable spills or releases in 2009.

Most renewable energy projects still deliver limited financial returns. We are focusing on different types of cogeneration projects, mostly because they fit well with our industrial manufacturing environment, produce attractive returns and significantly reduce our energy footprint. We are looking at solar, wind, geothermal, fuel cells and other alternative technologies on a caseby-case basis; they typically take longer to pay back their investment than allowed for by our payback criteria. In identifying projects, we audited 14 facilities where there were more than 50 potential projects. The projects developed during fy2009 require a combined capital investment of $12 million, but will generate approximately $4.5 million in savings annually. We are still executing these projects and have spent only a portion of the committed capital. The latest estimate shows a total of $4 million remaining; we will carry over the rest to the next fiscal year. As of the end of fy2009, we had approximately $10 million of energy projects under review. We expect this number to increase significantly as we move through fy2010 and continue to perform additional energy audits, expanding the program across the Company. E N V I R O N M E N TA L I N C I D E N T S

For fy2009, we had 15 environmental incidents, compared with 28 in the prior year. We had no EPA recordable spills or releases in 2009. (See figure 2.) Our goal for 2010 is fewer than 12 incidents.

p|40

ACHIEVEMENTS

Our principal goal is to reduce our energy use by 20 percent during the next 10 years, or a 2 percent average reduction every year for the next 10 years. In our first year, we exceeded this goal. We developed and committed to a total of 57 projects across our sites worldwide. These projects will produce a total of 3.5 percent reduction in energy use based on our fy2008 energy baseline.

Air Exceedances Wastewater Exceedances Spills & Releases

Figure 2: Environmental Incidents FY2004 – FY2009 45 40 35 30 25 20

OPPORTUNITIES FOR 2010 AND BEYOND

For fy2010, we plan to increase the amount of capital committed to renewable energy projects (exclusive of the fy2009 capital carryover). We are in the process of developing and implementing energy-alternative projects – mostly cogeneration projects across our manufacturing sites. We also have expanded our landfill methane gas operation in Raleigh, North Carolina, to increase our renewable energy sources by 0.5 percent, right on target with our energy policy goals.

15 10 5 0 FY04

FY05

FY06

FY07

FY08

FY09

For fy2010, we will formally train key employees in Environmental Lifecycle Assessment. The training will be followed by establishing working groups to identify opportunities to affect the lifecycle of our products and services. Based on this effort and the environmental metrics previously collected, we will establish sustainable environmental goals for consumption, as well as for reduction of emissions, effluents and waste.

p|41

spotlight

Thinking Globally, Acting Locally – It All Adds Up OUR NORTH HAVEN, CONNECTICUT, FACILITY USES 5 MEGAWATTS OF COGENERATION CAPACITY, WHICH IS EQUIVALENT TO TAKING 4,383 CARS OFF THE ROAD EVERY DAY.

OUR TIJUANA, MEXICO, FACILITY RECYCLES 100 PERCENT OF ITS PROCESS WASTE WATER, WHICH IS REUSED IN PROCESSING OR IS TREATED AND LATER USED FOR LAWN IRRIGATION.

OUR RALEIGH, NORTH CAROLINA, FACILITY TAPS INTO A LOCAL LANDFILL TO USE LANDFILL GAS TO OFFSET ITS CURRENT ENERGY USAGE.

OUR FACILITY IN BOULDER, COLORADO, HAS INSTITUTED AN “ALTERNATIVE TRANSPORTATION PROGRAM” ENCOURAGING EMPLOYEES TO REDUCE THEIR IMPACT ON THE ENVIRONMENT.

Our Chesterfield, United Kingdom,

Our North Haven, Connecticut,

Our facility in Tijuana, Mexico, has

facility converts hazardous waste

facility uses a thermal storage

instituted a recycling program for

tar to a form that is sent offsite as

system, or “ice farm.” Ice is made

its product cables that eliminates

alternate fuel for a cement kiln.

during off-peak hours and used for

nearly 1.8 million cables from

cooling during the day.

landfills each year.

Our St. Louis, Missouri, facility uses a thermal oxidizer air pollution

Our Webster Groves, Missouri,

control device that provides

facility received the 2007 Gold

production plant steam from

Award from the Missouri Water

waste heat.

Environment Association (MWEA) for industrial pretreatment.

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spotlight

An Interview with Jim Clemmer, P R E S I D E N T, M E D I C A L S U P P L I E S

James (“Jim”) C. Clemmer runs Covidien’s $1.7 billion medical supplies business, which includes the well-known Kendall, Curity and SharpSafety brands. Kendall products are high-value commodity products that are sold to hospitals and doctors and are manufactured at 16 Covidien plants, mostly in the United States. The business also partners with factories in China to design and make new products, such as rolls of tape and wires for electronic devices.

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Q.

How important is

sustainability to the Medical Supplies business?

A. It’s very important to us because a majority of our products are disposable. Customers are particularly interested in what we’re doing to make products that minimize their waste streams. We need to collaborate closely with customers to understand their needs to make the right changes. If we do this right, it will give us a competitive edge. We’ve used innovation to differentiate and make our medical products competitive with lower-priced imports. We are now applying the same kind of innovative thinking to sustainability.

Q.

What are you doing to create

Q.

What would constitute

good sustainability practices?

success for Covidien?

A. We are looking at ways to reduce our use of materials and to recover energy in our plants. We’ve significantly expanded our use of recycled paper – and it costs us the same as if we printed on nonrecycled, thanks to the cooperation of our printing partner. We also use sterilized recycled gauze from a high-quality provider in Georgia.

A. I would like to see Covidien increase its use of recycled materials. I think this is doable and my team is working on a plan, including metrics to measure our progress.

“We are looking at ways to reduce our use of materials and to recover energy in our plants.”

Meanwhile, our division has the highest Quality Improvement Program (QIP) score in the Company. So product quality and good sustainability practices can go hand-in-hand. (See more about QIP in section VII. Product Safety: Ensuring the Confidence of Customers, Patients and the Community.)

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r e m e d i at i o n s i t e s

Taking a Proactive Approach Our operations, like those of other medical products companies, involve the use of substances regulated under environmental laws, primarily in manufacturing and sterilization processes. Covidien is subject to various federal, state and local environmental protection and health and safety laws and regulations, both within and outside the United States.

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We have worked cooperatively for several years with both the U.S. Department of Energy and, most recently, with the U.S. Corps of Engineers to address historic contaminants at this (St. Louis, Missouri) facility from government programs associated with operations during World War II.

GOALS AND MANAGEMENT APPROACH

ACHIEVEMENTS

Although Covidien is a relatively new company, we have been built from companies that have been operating in some locations for more than 100 years. With this history, we have “legacy” environmental issues that we manage, minimizing the current impact on the

The Company has numerous remediation projects at currently operating facilities. At our St. Louis, Missouri, facility, for example, we have worked cooperatively for several years with both the U.S. Department of Energy and, most recently, with the U.S. Corps of Engineers to

communities where they are located. Our understanding of the impact of chemicals on human health and the environment has developed over time, requiring us to address various “legacy” environmental issues through remediation projects. While operations would have been in compliance with laws existing at the time, our understanding of the impact of contaminants has changed significantly over the last century. Working closely with state and federal regulators, we have become more proactive in our approach to remediation in order to more quickly complete projects to allow development and beneficial reuse opportunities for these sites.

address historic contaminants at this facility from government programs associated with operations during World War II. We also staged the management and completion of remediation projects by Covidien and the U.S. Corps of Engineers to meet the goals and objectives of both programs to remediate certain areas of the site. Working cooperatively, we have moved both projects forward in a timely manner to address remediation of the historic contamination at this site.

We have dedicated significant financial resources and personnel to fulfill our commitment to manage remediation issues appropriately. We also want to make sure that any clean-up efforts do not create new issues for the local community and environment. Our employees live and work there, too. We invest significant time and money in obtaining expert support as necessary to help us create the most practical and effective approaches, as well as in establishing monitoring systems to measure our progress. We have developed a rigorous internal process for evaluation and management of these sites. We continue to examine innovative technologies to address timing of closure and completion of site remediation so that the properties can be returned to productive use.

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We also have participated in projects at formerly owned facilities that have been returned to productive use through our efforts and cooperation with current property owners. In California, we conducted remediation of contaminated soils so that a multi-purpose residential community could be developed, and we continue to remediate groundwater at this site without any impact to the residents. Additionally, we are working with the current owner of a facility we formerly owned in Utah to address historic site issues, which will allow future redevelopment of the property for mixed commercial/residential use. One of Covidien’s most complicated remediation sites is in Orrington, Maine. Mallinckrodt LLC, a Covidien company, owned and operated a chlor-alkali manufacturing facility there from 1967 until 1982. This facility was sold to other companies, which continued to manufacture chemicals for the paper industry in Maine until 2001. While the final remediation approach for this facility has not been agreed upon by Mallinckrodt and the Maine Department of Environmental Protection (DEP), Mallinckrodt has taken steps to

mitigate the impact of this historic contamination to the environment. Mallinckrodt has undertaken several stabilization and remediation measures for the Orrington site. Mallinckrodt’s efforts are designed to reduce the risk of mercury releases to the groundwater, nearby river or atmosphere. These efforts have included stabilization of on-site landfills; a phased dismantling and removal of buildings, equipment and infrastructure; and the removal of additional structures that may have been affected by plant operations. Mallinckrodt hired a developer to prepare an evaluation of the site’s potential for development that can be used as a template for the Town of Orrington’s reuse of this industrial property. Mallinckrodt also hired Camp Dresser & McKee, an outside engineering firm, to operate an ongoing wastewater treatment system at the site. OPPORTUNITIES FOR 2010 AND BEYOND

Covidien will continue to evaluate the “legacy” liability portfolio of sites to employ innovative approaches and technologies to develop sites for beneficial reuse. Reuse could be industrial, commercial or residential, depending upon the site. In addition, we also are examining the possibility of donating unused property to communities for recreational or conservation purposes. Covidien has started to incorporate an evaluation of greenhouse gas impacts into its remedial project review and will begin to require an assessment of greenhouse gas impacts in all project plans.

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p r o d u c t q ua l i t y a n d s a f e u s e

Ensuring the Confidence of Customers, Patients and the Community As a manufacturer of medical devices and pharmaceutical products, we have a responsibility to ensure that we maintain the highest quality standards for our products. Our customers and their patients must be confident that our products will work as designed and that we stand behind them 100 percent. Consequently, we take a rigorous approach to maintaining quality that spans the product lifecycle: from design and manufacturing through use and disposal by our customers and their patients.

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GOALS AND MANAGEMENT APPROACH

We intend to be an industry leader in product quality by implementing programs that go beyond what is

that our operators use. An internal QIP assessment team assesses and scores

competitive advantage.

facilities annually using a scale of 1 to 5. Depending on

challenge devices under simulated use conditions and under stresses that exceed normal or indicated use.

the results of the assessment, facilities may be awarded

demonstrate improvements in all four work-stream

product design and manufacture to a minimum

year. We are currently evolving the QIP assessment

level, with expectations of zero defects, across all

model in order to further raise standards to create

product lines.

platinum and black levels of achievement.(See Figure 1- QIP Assessment: Evolution.)

exceeds regulations described in the Code of Federal

QIP is also incorporated into our due diligence check-

Regulations (FDA Quality System Regulations),

list for acquisitions as part of evaluating the quality of

International Standard ISO 13485, Canadian Medical

products we are considering acquiring.

(Japan). We have a process for managing post-market

SAFE USE

feedback and customer complaints that is compliant

REMS (Risk Evaluation and Mitigation Strategies):

with federal and international standards.

The FDA Amendment Act of 2007 allows the FDA to

Q UA L I T Y

require drug sponsors to implement a REMS program to ensure the appropriate and safe use of all approved

We are focused on establishing and maintaining a

pharmaceuticals. This includes sponsors’ providing

Quality Culture at every level of our organization. Our

documented plans for ensuring the safe use of their

Quality Improvement Program (QIP) was created to

products, which may include medication guides for

provide a singular binding focus on corporate-wide

patients, communications plans, elements to assure

quality, compliance and service improvements.

safe use, assessments and implementation systems.

QIP defines four work streams, or sets of associated

Covidien has made a corporate commitment to REMS

activities that are important for product quality:

and additional voluntary programs and tools to better

quality culture, operating systems, management systems

ensure the safe use of our pharmaceutical products. As

and quality systems. It includes assessment tools and

we expand our portfolio into branded pharmaceutical

processes that help our people identify and prioritize

products focused on providing patients with access

product quality areas. It defines processes for continu-

to advanced pain therapy medications, this safe use

ous improvement, from management down to the

approach – including REMS where applicable – and

operator levels, and for two-way communication, so

safety surveillance are essentially built into every drug

that problems or improvements can be identified and

that we sell.

True World Class Benchmark Assessment

PLATINUM

ously challenged to improve. All operations must areas and must improve overall by a minimum 0.2 a

Device Regulations and Pharmaceutical Affairs Law

BLACK

Bronze, Silver or Gold status. Each facility is continu-

Our goal is to keep quality problems resulting from

Covidien is a FDA-registered company that meets or

Figure 1 - QIP Assessment: Evolution

tion. It complements the Lean and Six Sigma practices

legally required. Leadership in quality confers a

Our product testing protocols are designed to

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addressed at the appropriate levels of the organiza-

GOLD

Bridge between Existing QIP Assessment & World Class Benchmark

Existing QIP Assessment: Continued successful execution of basics

3+

SILVER

BRONZE

4+

Existing QIP Assessment: Installation of basics

2+ 1+

WHITE

At the end of 2009, 23 percent of our facilities had attained Gold status and 77 percent had achieved Silver status. This was an improvement from a baseline of 75 percent Bronze, 23 percent Silver and 2 percent Gold in 2007. For sites scoring below 4.0 (Gold status), we apply standard assessment criteria as we seek to improve their quality. For sites that already have attained Gold status, we apply a more advanced set of criteria to ensure they maintain their status and continue to seek improvements.

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spotlight

Covidien Works to Improve U.S. Supply of Molybdenum 99 The incorporation of QIP, along with the implementation of global product monitoring systems, web-based training and improved internal metrics and reporting systems, has helped us to improve both our product quality and regulatory compliance record.

Through our Professional Affairs and Clinical Education (PACE) organization, we also train physicians and other practitioners in the proper use of our medical and surgical products to ensure their safe use. We have hired clinical professionals to provide instruction at our global training centers.

percent Bronze, 23 percent Silver and 2 percent Gold in 2007. For sites scoring below 4.0 (Gold status), we apply standard assessment criteria as we seek to improve their quality. For sites that already have attained Gold status, we apply a more advanced set of criteria to ensure they maintain their status and continue to seek improvements.

B&W Solution-Based Reactor, which will produce the Mo 99 medical isotope

ACHIEVEMENTS

The incorporation of QIP, along with the implementation of global product monitoring systems, web-based training and improved internal metrics and reporting systems, has helped us to improve both our product quality and regulatory compliance record. FDA Form 483 Observations: The FDA regularly inspects FDA-registered companies to ensure compliance with federal quality standards. Companies that deviate from these standards receive what is known as a “Form 483 observation.” In 2009, Covidien had 14 FDA inspections, with only two ending with Form 483 observations. By comparison, in 2005 we had 20 inspections, with eight ending with Form 483 observations. QIP: At the end of 2009, 23 percent of our facilities had attained Gold status and 77 percent had achieved Silver status. This was an improvement from a baseline of 75 p|54

OPPORTUNITIES FOR 2010 AND BEYOND

We intend to use QIP to continuously improve our quality and regulatory compliance and increase our efficiency while doing so. We will use independent assessments to create the next level of challenge by 2012. We also plan to expand programs throughout our supply chain wherever possible. Working closely with Global Sourcing and Operations, the Quality organization is actively developing our supplier base to increase the overall quality, reliability and consistency of our vendors. Our goal is to improve both the quality of the components we purchase and the processes used to produce these components.

In January 2009, Covidien

further diversifying supply options,

performing critical patient

announced an agreement with

reducing the amount of waste gen-

procedures. Covidien’s work with

Babcock & Wilcox Technical Services

erated by current reactor production

B&W could help to diversify supply

Group, Inc. (B&W) to develop

and supporting the U.S. National

by providing a future U.S.-based

technology for the manufacture

Nuclear Security Administration’s

source of Mo 99.

of molybdenum 99 (Mo 99) using

nonproliferation efforts.

low-enriched uranium (LEU).

The collaboration combines

Currently, just a handful of reactors

Covidien’s expertise in radiophar-

Mo 99 is the key isotope used in

provide the global supply of medical

maceuticals production and global

the production of Technetium 99m

isotopes. Unplanned shutdown of

regulatory approvals with B&W’s

(Tc 99m), the world’s most widely

these reactors, for maintenance or

patented liquid phase nuclear

used radioisotope for nuclear medi-

safety reasons, has led to periodic

technology. The agreement with

cine procedures. This collaboration

shortages of isotopes. Because

B&W also supports Covidien’s goal

is an initial step toward establishing

Mo 99 has a half-life of only 66

to help clinicians diagnose disease

a large-scale U.S. supply of medical

hours, shortages can have an effect

as early as possible.

isotopes, which could benefit the

almost immediately, preventing

nuclear medicine community by

or delaying physicians from p|55

spotlight

HUMANE TREATMENT OF LABORATORY ANIMALS

An Interview with Matt Harbaugh, C H I E F F I N A N C I A L O F F I C E R , P H A R M AC E U T I C A L S Our mission is to create and deliver innovative healthcare solutions, developed in ethical collaboration with medical professionals, which enhance the quality of life for patients and improve outcomes for our customers and shareholders. To ensure the highest level of care, we are committed to developing, testing and providing training on the safe

Matthew (“Matt”) Harbaugh is the CFO for Covidien’s $2.5 billion pharmaceuticals business, which offers a broad spectrum of contrast media and delivery systems, nuclear medicine (radiopharmaceuticals) and pharmaceutical products. The business is based in St. Louis, Missouri.

Q.

What areas of sustainability

practices are most important for the pharmaceuticals business?

A. First is waste reduction. Every one of our products starts with a chemical process: the reduction of substances using organic solvents. We need to continuously look for ways to improve our chemical processes and packaging to reduce waste. Reducing waste enables us to lower cost of goods sold and deliver more affordable pharmaceutical products to our customers. Second is product safety. We are the largest importer of opiate-based medicinal products in the United States. We must not only produce products that meet FDA requirements, but also help ensure their safe use in the field – including prevention of abuse. While government agencies and law enforcement are technically responsible for preventing abuse, we need to be accountable for this as well. Third is energy use. We have 12 plants, some of which might be potential candidates for solar energy and other renewable energy sources.

Q.

How well are you doing in

these areas?

Q.

What are your sustainability

aspirations for your business?

and effective use of new and improved medical technologies. Whenever possible, inanimate methods and models are used for

A. On waste reduction, we need to do better. We have introduced a corporate-wide packaging sustainability initiative.

A. I would like to see us evaluate the use of alternative energy sources at our facilities worldwide, in line with our corporate energy policy. I also want us to continuously On product safety, I give us an A, look for creative ways to be more for accountability. Risk management cost-effective, because that helps and proper prescribing of opioids us lower the cost of healthcare and generics are part of Covidien’s for patients. DNA, and we have risk programs and/or pharmacovigilance for every pharmaceutical product we sell. Covidien has made a corporate commitment to REMS, or Risk Evaluation and Mitigation Strategies, for relevant products. The REMS initiative includes strategies to ensure that our products are used safely and not abused in the field. On energy use, I am really encouraged by the creativity of our plant managers. Several of our plants have implemented energysavings programs on their own. For example, our Raleigh, North Carolina, facility taps into a local landfill to use landfill gas to offset its current energy use.

these purposes. When objectives concerning safety and efficacy of medical technologies cannot be adequately addressed through these alternatives, it may become necessary to use laboratory animals. The use of animals to ensure safe and effective technology ultimately minimizes risks to patients during clinical treatment. It is our commitment, policy and highest priority to treat laboratory animals humanely and with respect. Lab sessions are conducted only after the appropriate Institutional Animal Care and Use Committee (IACUC) approval is obtained. We require that all sponsored sessions are conducted in accordance with the Animal Welfare Act (Title 7 United States Code Section 2131 et. seq.) and the National Academy of Sciences Guide for the Care and Use of Laboratory Animals. Our position is supported by regulatory standards regarding the use of laboratory animals in the process of developing new drugs and medical devices. Additionally, we comply with guidelines stating the need for animal studies prior to any human exposure, as outlined in the World Medical Association’s Declaration of Helsinki, Ethical Principles for Medical Research Involving Human Subjects. As a worldwide leader in healthcare products, we hold ourselves to the highest standards for the evaluation, development and implementation of alternative teaching and training modalities.

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p r o d u c t s t e wa r d s h i p

Taking Responsibility for the Environmental Impacts of Our Products Our policy at Covidien is to design our products in a manner that eliminates unreasonable risks across their lifecycles. Covidien’s products sustain and improve lives, and product safety is vitally important to our success. There are many opportunities to improve the environmental impact of our products – in how we find sources of raw materials, manufacture our products and inform clinicians and patients of their appropriate use and disposal. Our improvements also can create economic efficiencies and benefits for healthcare professionals and patients alike – both of which promote a more sustainable approach.

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spotlight

Collaboration, Innovation and Forethought Pay Off at Covidien’s Raleigh Site GOALS AND MANAGEMENT APPROACH

To date, we have focused on responding to regulatory requirements for extended producer responsibility in such areas as: – Packaging

In 2009, we hired a Product Stewardship Program Manager who is responsible for providing guidance on the application of global product stewardship legislation and standards on Covidien’s products and for developing programs to continuously improve the impact of Covidien’s products across their lifecycles.

– Waste electrical and electronic equipment ACHIEVEMENTS

– Batteries In these areas, we continue to ensure compliance with requirements to recover, recycle and dispose of affected

We recognize the value of taking a sustainable approach

products and packaging in an environmentally sound

to packaging – both to the environment and to our

manner. Where appropriate, we also strive to design

bottom line. We established a packaging sustainability

our products to make it easier to dismantle and dispose

initiative to create products that make better use of

of them.

resources from manufacturing through disposal.

Regulators are increasingly focusing on materials and

The Covidien Packaging Engineering Center of

substances found in products to identify and communi-

Excellence is responsible for defining, developing and

cate the risks of potentially hazardous substances. Two

launching the packaging sustainability initiative.

key pieces of legislation that currently affect Covidien are the European Union’s Registration, Evaluation, Authorization and Restriction of Chemical substances (REACH) Regulation and the global Restriction of Hazardous Substances (RoHS) legislation. To comply with EU REACH, we were able to prevent interruption to our manufacturing and sales operations by working aggressively across internal teams to protect our supply chain and to pre-register affected substances in a timely fashion. We continue to be proactive with

The goal of this program is to establish a corporate-

Covidien has set aside more than

began an energy improvement

$20 million for facility managers

project that is anticipated to save

to finance energy improvement

the business more than $225,000

projects at their sites.

annually while protecting the local environment.

“The Pharmaceuticals site has successfully used landfill gas to power its boilers for some time, and the process actually creates an

underground steam boiler pipe-

excess of untapped power,”

line has been installed to connect

Chambers says. “It became clear

packaging systems from a lifecycle perspective. We

Raleigh’s Active Pharmaceuticals

that we should jump on this

conduct Voice of the Customer discussions to gain a

Ingredients (API) boiler to the

underutilized source and put it to

detailed understanding of hospitals’ waste streams and

Imaging operations’ steam main

work for the Imaging facility.”

packaging systems. This strategy focuses on creating sustainable designs that will support and optimize

determine the most appropriate packaging disposal/ recycling scenarios and solutions.

down the supply chain.

selection, continuous manufacturing process improve-

the strategic importance of acting now to ensure affected

Improvement Fund. In total,

in Raleigh, North Carolina, recently

Improvement initiative, a new

substance registration and communication up and

the requirements of the RoHS legislation, we recognize

ENERGY IMPROVEMENT WILL SAVE THE BUSINESS MORE THAN $225,000 ANNUALLY

The team at the Covidien facility

Funded by the Covidien Energy

wide environmental strategy and design criteria for

Our guiding principles include: sustainable material

Although medical devices are currently excluded from

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PA C K A G I N G S U S TA I N A B I L I T Y I N I T I AT I V E

boiler some 1,500 feet away. The Pharmaceuticals plant uses steam to heat process vessels and for distillation. Imaging will make clean, pure steam to power the site’s sterilizers and make “Water for Injection” to

ment, supply chain optimization and value-added

formulate Imaging’s products.

benefit provision to our customers through reduction

Charles Chambers, Imaging Facility

of materials at the point of disposal or reuse.

Manager, brought the project to the

The new, cost-effective piping system also provides a more reliable source of energy, while making the plant more green and energy-efficient.

attention of the Covidien COE for

products are RoHS-compliant ahead of the expected

To meet these guiding principles, we consider the

introduction of medical devices into the

following factors when designing new packaging and

potential energy improvement

RoHS legislation.

improving upon current packaging:

projects on behalf of the Energy

Energy, which actively explores

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spotlight

– Increasing use of recycled content

OPPORTUNITIES FOR 2010 AND BEYOND

– Using packaging materials derived from

S U B S TA N C E S O F C O N C E R N

renewable sources – Optimizing packaging designs to use the least amount of packaging necessary – Using packaging materials that can be readily recycled – Avoiding packaging materials with known negative impacts on the environment – Increasing use of reusable packaging systems To support the implementation of the packaging sus-

Covidien’s SharpSafety Team Keeps Waste out of Landfills by Taking a Renewable Approach to Product Manufacturing

Our stakeholders are interested in our use of various substances of concern, and we strive to provide

Covidien’s SharpSafety business has taken a renewable approach to

information on these substances and their use. We are

manufacturing its products, using recyclable materials and energysaving processes.

examining how we can improve methods for identifying

Among its environmental initiatives, the SharpSafety facility in Crystal

such substances in our products and for managing and

Lake, Illinois, has instituted a recycling program. Scrap materials that do

communicating this information.

not make it into the manufacturing line are reground and reused. Last year, the facility saved and reused 1.8 million pounds of material that otherwise

P R O D U C T TA K E - B A C K

would have been shipped to landfills.

Due to the nature of many Covidien products, “takeback” when their use is finished (outside of the scope of

OTHER INITIATIVES IN CRYSTAL LAKE INCLUDE:

regulatory requirements such as the European Union

RECLAIM PROGRAM: The

PRODUCT WEIGHT REDUCTION:

future packaging designs. Internally, the modeling will

Waste Electrical and Electronic Equipment [WEEE]

SharpSafety facility purchases un-

The new manufacturing process

help establish corporate and business-unit packaging

Directive) is not always technically feasible. However,

used materials from other Covidien

reduces product weight by three to

design goals, including elimination of PVC, identifica-

as a recycling infrastructure is developed in countries

plants and incorporates the

five percent, saving raw materials

around the world, Covidien can build on existing

materials into the manufacturing

and reducing disposal costs for cus-

tion of targeted source reductions and expanded use

experiences of product take-back and explore further

of the sharps container product line.

tomers. This process is expected to

of recycled content. Externally, the modeling will assist hospitals in identifying innovative packaging designs

opportunities to expand the number of products that

that will support overall waste stream reduction.

we take back after their use. Product take-back has the

tainability initiative, we have purchased an eco-footprint software tool to model and benchmark our existing and

T R A I N I N G H E A LT H C A R E P R O V I D E R S

potential to provide not only environmental benefit, but also financial benefit to our customers.

Since most of our products are either prescribed by or used by healthcare professionals, we strive to make sure

L I F E C YC L E M A N AG E M E N T

1.8 MILLION POUNDS OF MATERIAL SAVED AND REUSED.

The facility has reclaimed 27 tons of material that otherwise would have been shipped to landfills. CLOSED LOOP WATER AND OIL SYSTEM: This system reduces the amount of water used to cool polypropylene in container

save approximately 722,000 pounds of polypropylene resin annually. All SharpSafety containers continue to meet the regulatory standards for medical devices. FACILITY LIGHTING UPGRADE: The plant utilizes more efficient and environmentally friendly fluores-

these professionals are trained to use our products safely

It is important to manage environmental impacts across

manufacturing. The only water lost

and efficiently. On an annual basis, we provide both live

cent lighting fixtures. These new

the full lifecycle of each of our products. By taking a

is through evaporation. The system

fixtures reduce lighting-related energy consumption by 50 percent

and online training to thousands of healthcare providers

holistic view, we can identify opportunities for

has the capability to conserve

on the responsible and proper use of our products.

improvement that will protect the environment, benefit

significant amounts of water and

and eliminate the use of bulbs

P R O D U C T TA K E - B A C K A N D R E - U S E

stakeholders ranging from our employees to patients

nearly 7,000 gallons of oil annually.

containing mercury.

and increase the financial viability of our products.

Hospitals for a Healthy Environment (H2E) awarded the SharpSafety

Even though most of our products are intended for

facility the 2007 Champions of Change Award for demonstrating

only a single use, Covidien has worked with regulators

Existing projects will evolve in all three of these areas,

to allow our pulse oximetry monitoring leads to be

with cross-functional teams collaborating to identify

re-manufactured for reuse. Similarly, our surgical

and implement solutions that will support our

business has developed a program for reusing sterilized

policy to eliminate unreasonable risks across our

tain a high level of safety and clinical value for its customers. SharpSafety

orthoscopic surgical tools.

products’ lifecycles.

is the first sharps disposal provider to receive this prestigious award.

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industry leadership in environmentally responsible healthcare. The award recognized the facility for taking sustainable environmental responsibility for its sharps disposal containers, while seeking to main-

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g l o b a l s u p p ly c h a i n

Creating a Sustainable Supply Chain Covidien’s Global Supply Chain organization is dedicated to the deployment of bestin- class strategies, processes and systems that contribute to the delivery of quality products that meet the needs of our customers. Covidien currently relies on more than 25,000 suppliers to provide a wide variety of products, materials and services that directly or indirectly contribute to the development of our products. We rely on the quality, effectiveness and stability of our suppliers’ operations to expand our brand and to continuously deliver value to our stakeholders and to the healthcare market. Covidien’s Global Sourcing and Logistics organizations are committed to developing a sustainable supply chain by strategically aligning key supply chain processes to the Company’s environmental, social and economic goals.

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spotlight

GOALS AND MANAGEMENT APPROACH S U S TA I N A B L E S O U R C I N G

Covidien’s Global Sourcing organization will enhance its sustainability efforts by developing and implementing specific, comprehensive and measurable sustainability strategies and policies within the sourcing process and by requiring the deployment of like strategies from its supply base. The Global Sourcing organization recently dedicated an employee to leading the organization’s sustainable sourcing initiative, including the establishment of

In addition to SPM, the Supplier Scorecard and the Supplier Risk Matrix also were developed to monitor and encourage improved performance by evaluating key service, quality, financial and governmental metrics. This integrated technology allows us to leverage supplier data across Covidien’s operations, proactively institute risk mitigation plans and identify and support supplier development opportunities. This application is a key component in creating a sustainable supply chain, and we will continue to expand it to help achieve our sustainability goals. SUPPLIER DIVERSITY

environmentally preferable sourcing policies and sustainability programs that support the environmental, social and economic goals of the Company. This employee will facilitate the adoption of a Companywide sourcing strategy that will standardize and drive sustainability across the supply chain. ACHIEVEMENTS SUPPLIER PERFORMANCE MANAGEMENT

In 2007, in an effort to foster excellence in supplier performance and to ensure the transparency of supplier financial and operational activities, Covidien launched its Supplier Performance Management System, or SPM. It was designed to facilitate collaboration between Covidien and our suppliers in order to increase visibility and accountability. Within SPM, each supplier has a record that holds critical information, such as: – Supplier Quality Audits – Certifications – Diversity Status – FDA Registration Number – Profile Questionnaire – Supplier Corrective Action Requests (SCAR) This system also provides a repository for critical supplier documents, including contracts and certification documents. p|66

In 2008, the Covidien Supplier Diversity Program was launched to foster mutually beneficial supply base relationships with diverse suppliers. The goal of this program is to ensure the inclusion of diverse suppliers within the strategic sourcing process and to ensure continuity within the supply chain by leveraging diverse alternative sources of supply. Covidien instituted a supplier diversity policy in 2008 to formalize our commitment to consider and include diverse suppliers within the strategic sourcing process. In 2009, Covidien sourced over $200 million to more than 2,000 minority-owned, woman-owned, veteranowned, small disadvantaged and federal HUBZone businesses. Our goal is to continuously increase our year-over-year spend with diverse suppliers and to proactively engage in the development of diverse suppliers across the supply chain. LOGISTICS

Covidien is a major shipper within U.S. and international markets and uses various modes of transportation within our supply chain strategy. Our long-term goal is to reduce our carbon footprint and the overall impact of our logistics operations on the environment by reducing fuel consumption and related emissions of CO2 and other gases. In 2009, Covidien took a pivotal step in accomplishing this goal by becoming a part of the U.S. Environmental Protection Agency’s SmartWay Transport Partnership. SM

OPPORTUNITIES FOR 2010 AND BEYOND

The Global Supply Chain organization will continue to develop and implement best-in-class sustainability practices with a focus on three areas. ENVIRONMENTAL STEWARDSHIP – In order to create a

How Becoming a SmartWay Shipper Saves Money and the Environment In late 2008, Covidien became a

improving the efficiency of our

member of the SmartWay Transport

West Coast drayage operations

Partnership, a program sponsored

for inbound ocean containers

more environmentally sustainable supply chain, the Global Sourcing organization will begin establishing supplier expectations for product and process stewardship, energy consumption, packaging guidelines, etc. We will strive to establish guidelines for accountability and transparency within these processes and will expect

by the U.S. Environmental Protec-

comparable practices and continuous improvements from our suppliers. We also will establish environmentally preferable sourcing policies aimed at lessening the impact of Covidien on the environment.

pollution and greenhouse gas

tion Agency (EPA).

– Achieving and maintaining a SmartWay Transport Partner score

The program is an innovative col-

of .96 out of a maximum of 1.25,

laboration between the freight

which is considered in the range

transportation industry and the

of good to very good environ-

federal government to reduce air

mental performance

emissions, improve fuel efficiency and strengthen the freight sector.

We calculated the savings from using more-efficient power units through an EPA-developed model.

Shippers such as Covidien qualify

This model compares carbon

for the program by using a mix of

our employees, families, stakeholders and communities is of the utmost importance to Covidien. The Global Sourcing organization’s goal is to contribute to our internal initiatives, and set expectations for our supply base, in the areas of workforce diversity, supplier diversity, community involvement, labor practices, ethics and the business code of conduct.

dioxide (CO2), particulate matter

carrier and logistics companies that

(PM) and nitrous oxide (NOx) emis-

meets the EPA’s requirements for

sions generated by our trucks. The

environmental performance. The

formula estimates the emissions

higher the SmartWay scores of their

generated by trailer or trailer

carriers, the higher the scores of the

equivalents shipped by truck,

shippers who employ them.

multiplied by average trip length.

ECONOMIC DEVELOPMENT –The Global Sourcing

provider by its SmartWay Shipper

organization’s goal is to execute and improve financial controls, as well as to support transparency in financial reporting. We also will continue to use our Supplier Performance Management System, Supplier Scorecard, Supplier Risk Matrix and other tools to provide visibility into the performance and financial metrics of our suppliers.

Index Factor (SIF) score, and then

We are committed to the SmartWay

adding the results from all provid-

Transport Partnership program.

ers. Shippers with a SmartWay score

When the cost of modifications

of 0.5 or higher qualify to use the

prevented us from economically

SmartWay Partner logo. Partners

achieving SmartWay Transport

commit to improve their environ-

Partner status for the private fleet

mental scores over a period of

of over-the-road equipment that we

three years.

maintain for customer deliveries,

SOCIAL WELL-BEING – The social well-being of

Shippers’ scores are calculated by multiplying the percentage of freight they ship with each service

Covidien met or exceeded all of its goals for 2009, including: – Reducing our carbon footprint by nearly 30 percent from truck operations by using more fuel-efficient power units (model year 2007 or newer) supplied by our carrier  – Lowering our cost per shipment, as well as reducing emissions by

This enables us to compare projected emissions with and without using more fuel-efficient power units, adjusted for drayage.

we converted our fleet lanes to common carriers that all are SmartWay Partners. Covidien is looking to adopt other recommended best practices for shippers, including: – No-idling policies at loading docks, to reduce vehicle emissions – Evaluating and modifying busi-

more than 10 percent over those

ness practices at our distribution

of a non-compliant carrier by

centers and warehouses p|67

c o m m u n i t y i n vo lv e m e n t

Making a Difference Where We Work and Live Although Covidien only launched in 2007, we have a lengthy history of philanthropy that dates from our legacy organizations. This philanthropy includes monetary contributions to a broad range of causes, such as education, culture, the arts and healthcare, as well as product donations for medical care, emergency response and disaster relief worldwide. Despite this tradition of giving, categorizing and measuring the full extent of our ad-hoc contributions in order to evaluate our Corporate Social Responsibility was challenging. This was because, historically, corporate giving was managed with inconsistent guidelines and few processes, and the business units acted independently.

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spotlight

GOALS AND MANAGEMENT APPROACH

Today, with support from our senior leadership team and Board of Directors, corporate philanthropy and community outreach initiatives at Covidien reflect the range of our businesses and our key objectives. Through a focused and localized community involvement strategy – the Covidien Partnership for Neighborhood Wellness – we partner with important local organizations to improve access to quality, affordable healthcare, as well as to provide resources for research and treatment of specific diseases and chronic illness. Additionally, by introducing clear guidelines and a structured grant application process along with Covidien community liaisons at key sites, we can measure our progress more accurately. We can identify gaps in our support, both in the U.S. and globally, and make improvements at all levels and within each program.

communities. Through a three-year grant with the

to work with one of our other partners, the National

CASA HO GAR MARIA INMACU LA DA O R PH A NAG E –

National Association of Community Health Centers

Association of Community Health Centers, to develop

(NACHC), 36 challenge grants of up to $50,000 apiece

a “Childhood Obesity Toolkit” for healthcare practi-

have been awarded to fund health center projects aimed

tioners. The toolkit includes screening and assessment

at expanding medical services in the U.S. Another

information, goal-setting tools, obesity prevention

Giving Children a Chance in Tijuana, Mexico

partner, Project HOPE, uses our funding to advance

protocols, tip sheets, a resource catalog and informa-

children’s health initiatives, increase clinical training and

tion on healthy foods. The toolkit is being evaluated

provide life-saving equipment at the Shanghai Children’s

by selected health centers and will be distributed more

Medical Center in China – supporting its state-of-the-art

broadly in 2010 and 2011.

treatment and rural community outreach to a broader patient population. Over $5,000,000 in funding has been donated to Covidien’s Corporate Partners since 2007. Compassion, a Covidien core value, is taken seriously by our employees. We reward employee volunteerism through grants to nonprofit organizations where our employees donate their time. More than 100 Volunteer Incentive Program (VIP) grants, up to $1,000 each, have been awarded to organizations nominated by employees in locations all over the world. The Company also has a

ACHIEVEMENTS PHILANTHROPY

generous “Company match” program in some countries, under which eligible organizations may receive one-forone matching funds.

Since its inception in 2007, the Covidien Partnership for Neighborhood Wellness has made more than 100 grants, ranging in value from $5,000 to $100,000, to a wide array of nonprofit organizations worldwide, enabling them to provide healthcare to underserved groups and to expand health education programs, especially those aimed at preventing obesity in children.

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P R O D U C T D O N AT I O N S

Disaster and Humanitarian Relief: A wide array of Covidien healthcare products valued in the millions of dollars has been donated each year through our three principal product donation partners – AmeriCares, Direct Relief International and MedShare – working under the guidelines of the World Health Organization and the United Nations. Over several years, these organizations have created networks of in-country

Casa Hogar Maria Inmaculada is an

Employees at our Kenmex facility

specialists who are at the forefront of delivering our

orphanage and refuge center for

took it upon themselves to continue

products where they are most needed, often as part of

children in Tijuana, Mexico. Two

to donate to the orphanage and

international disaster relief efforts. Victims of Hurricane

Covidien Partnership for Neighbor-

created a team, Caritas Felices

Katrina (August 2005), the calamitous Australian bush

hood Wellness grants provided

Kenmex (Happy Faces Kenmex). It

scholarships to more than 40

gathered additional cash donations,

children in desperate need of food,

as well as clothing for the children,

Prevention of childhood obesity is a key focus area

fires in February 2009 and devastating earthquakes in

for our philanthropy. Community organizations have

China (May 2008), Italy (April 2009), Haiti (January

received funding to advance their programs to help

shelter and education, ultimately

and held a food and games

2010) and Chile (February 2010) are among the many

keeping them safe from violence,

celebration at the orphanage.

children and their families confront childhood obesity

individuals who have benefited from our product

drugs and crime.

through better education, promotion of good nutrition

donations. In addition, our products were distributed to

and physical activity. These organizations include the

aid victims of typhoons, earthquakes and a tsunami in

Boys & Girls Clubs in Boston and Dorchester, Mas-

Southeast Asia.

Recipient organizations have included Muscular

sachusetts; YMCA of North Attleboro, Massachusetts;

Dystrophy Ireland; the Casa Hogar Maria Inmacu-

EnTeam Organization, Hyde Park Outreach, Neighbor-

lada orphanage in Tijuana, Mexico; and the St. Louis

hood Houses and St. Louis Children’s Hospital Founda-

Children’s Hospital Foundation. (See Spotlight: Casa

tion in St. Louis, Missouri; North County Health Project

Hogar Maria Inmaculada Orphanage – Giving Children

in San Marcos, California; and the Obesity Prevention

a Chance in Tijuana, Mexico.)

Foundation in Reno, Nevada.

Covidien has carefully chosen a small number of

As a further impetus to the prevention of childhood

east Asia. In the Dominican Republic, we worked with

Corporate Partners that also promote wellness in our

obesity, we funded a program with The Obesity Society

a Tufts-New England Medical Center physician and

Medical Mission Support: Covidien’s business units regularly provide product donations to U.S. caregivers who volunteer their time and expertise to assist underserved populations all over the world. Products from across our businesses have been donated to support medical missions in Latin America, Africa and South-

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Babies Without Borders to bring medical equipment

schools, daycare, community care centers and

Another area in which we have demonstrated progress

and training to a women’s hospital in rural

homeless shelters in their communities. Not long after

is in our measurement process, even though we are still

Santo Domingo.

receiving a Covidien Partnership for Neighborhood

relatively new at grant-giving. Every organization that

Wellness grant, the Boston Healthcare for the

receives a Covidien Partnership for Neighborhood

Homeless Program (BHCHP) was a recipient of a

Wellness grant is required to complete an “impact

Our work with Major League Baseball’s Boston Red Sox

number of these wound-care packages. Having

report” at six-month intervals until its project is

Foundation cornerstone programs, focused on health

established this Company-community partnership,

completed. These self-assessments cover:

and wellness, has afforded opportunities for Covidien

the organizations continue to build on their relation-

employees to volunteer to repair and make improve-

ship by hosting on-campus drives to provide critically

ments at a veterans’ rehabilitation hospital and a medi-

needed items to BHCHP. These contributions help

cal detoxification unit in the Boston area.

BHCHP carry out its commitment to provide and

E M P LOY E E VO LU N T E E R I S M

During the past three years, Covidien has sponsored National Health Center Week in partnership with NACHC. Community health centers across the United

– Financial goals – Staffing requirements

healthcare for homeless men, women and children

– Board member participation/commitment

throughout the Boston area.

– Qualitative commentary on overall program achievements

States hosted health fairs, facility tours, press conferenc-

– Antimicrobial wound care products were donated

es and visits by national, state and local political leaders

as part of an effort through Covidien’s “Strike Out

As a healthcare products company servicing a broad

in order to expand the visibility of the role that health

Infection” campaign, which stresses preventive

number of medical professionals in multiple healthcare

centers play in addressing basic healthcare necessities.

measures people can take to avoid staph infections.

settings, Covidien adheres to the AdvaMed and PhRMA

Covidien employees joined their local communities all

These measures include using antimicrobial dressings

codes of conduct. Across global business units and

over the U.S. and volunteered their time to participate

to cover and protect wounds, practicing good hand

throughout regional markets, Covidien has established

in this partnership.

hygiene and asking hospital staff about infection-

Grants & Compliance Committees, chartered to assure

prevention programs.

compliance with the principles of these codes in our

Days of Caring A number of Covidien facilities around the world participate in “days of caring” or other community-serviceday events. For example, a total of 1,100 employees in our Mansfield and Waltham, Massachusetts, offices gave back to local communities by donating 2,700 hours to 23 different service projects in 2009. here are some examples: – Our employee volunteers stuffed and dressed more than 200 teddy bears that were later donated to local police and fire departments to give to children in emergency situations. These teddy bears serve as an emotional first aid for children who are traumatized by accident, abuse, injury or a death in the family. – Covidien employees delivered over one million wound dressings, bandages and gauze rolls to local p|72

assure access to high-quality, comprehensive

– Social impact and community outreach

POSITIVE STEPS

charitable activities with healthcare professionals and providers.

Centers of Excellence exist in many functional areas at Covidien and, as in many large companies, some functions do not interact extensively. However, a few passionate, dedicated employees questioned our practice of destroying perfectly usable specialty burn cream stored in our Atlanta distribution center simply because its exterior packaging was less than pristine. After conferring with regulatory and other experts

OPPORTUNITIES FOR 2010 AND BEYOND

strategic focus: The Covidien growth strategy should

as community liaisons, reaching out into their communities to identify additional charitable organizations and encourage them to apply for grant funding. product donations-committed partnerships: Each of our product donations partners has multiple programs requiring additional financial and product support. We are currently meeting with these groups to identify and evaluate those programs that could benefit from additional donations. For example, a program of Direct Relief International (DRI) supports obstetric fistula repair in Africa. According to DRI, “Obstetric fistula is a hole in the birth canal caused by prolonged labor without prompt medical intervention. Women are left with chronic incontinence and are stigmatized.” Grant funding and products from Covidien will be used for fistula repair surgery, making a tremendous difference in the health and lives of these women. patient assistance programs: We have not yet introduced an employee and/or patient assistance program (PAP) across the Company. Given the wide breadth of products within our portfolio, it is impossible to address every individual request for patient assistance. However, we will evaluate opportunities to provide patient assistance within one or two specific product categories as a start, and we will then decide whether a PAP is feasible and, if so, on what scale.

introduce new areas of philanthropic focus as well. We will refine our giving strategy as we become champions of healthcare solutions in early cancer detection and patient safety and create new product innovations.

within the Company, management reversed previous

globalization: While we can cite dozens of examples

practice and put in place a process to deliver this highly

of good works, particularly in the U.S., we also recog-

sought-after burn cream to patients. This is just one of

nize that our international facilities’ adoption of the

many examples in which caring employees collaborated

Covidien Partnership for Neighborhood Wellness has

to reduce disposal costs, keep good product out of

been slower than we would like. To address this, a cadre

landfills and expand patient care.

of Covidien employees has stepped forward to serve p|73

spotlight

Lending 160 Hands to Plant 800 Trees in the Dominican Republic Covidien’s San Isidro facility in the

Isidro, in partnership with the

Dominican Republic has adopted a

country’s environmental ministry,

hill in conjunction with the Green

participated in a reforestation

Quisqueya Plan, issued by that

project on their hill. The project

nation’s Secretary of State of

supported the United Nations

Natural Environment and Resources.

Environment Program’s worldwide

The Plan consisted of a nationwide

tree planting campaign, “Plant for

program to reforest large areas of

the Planet.” The program’s goal was

the country by planting several

to plant seven billion trees world-

million trees.

wide by the end of 2009 – one tree

The hill, Managua Hill in

for each person on the planet. Covidien Employees -

Bayaguana, has been renamed

San Isidro Plant

“the Covidien Hill.” It is located 60 kilometers (37 miles) from Santo

Employees walked four miles

Domingo, where the Comatillo

to the hill and planted more than

River begins.

800 trees.

On World Environment Day in June 2009, Covidien employees in San

Providing Aid and Giving Hope in Canada In Canada, the Covidien Partner-

(Acidose Lactique), a genetic disease

ship for Neighborhood Wellness

that afflicts children in a number

supports several community-based

of communities in Quebec. We

efforts in the Montreal area.

contributed funds to “Le grand défi

For example, we support Parados,

Pierre Lavoie’’ (“Grand Challenge

Centraide and other nonprofit

Pierre Lavoie”), a cycling tour that

organizations that help those

raises funds to support research on

living in poverty and suffering from

this and other genetic diseases and

illness. In the West Island commu-

also seeks to instill healthy habits in

nities of Montreal, our donations

the youth of Quebec.

aided burn victims, a hospice care facility and a women’s shelter. Covidien also provided funding to support research for Lactic Acidosis

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