As you may know, it has been our tradition to co-sign our annual letter to shareholders. This year, we are departing from that practice and writing separate letters, affording me the opportunity to speak with you about the current regulatory environment. I do so from two perspectives. First, this is an area of activity for which I have responsibility within the company. Second, I am serving currently as chairman of our industry trade association, the Health Industry Manufacturers Association (HIMA). This Washington, D.C.-based organization is the largest medical technology industry association in the world, representing more than 800 manufacturers of medical devices, diagnostic products and medical information systems. HIMA's mission is to be an effective advocate for a legislative and regulatory climate that advances health care by assuring early patient access to the benefits of medical technology.

From both perspectives, I believe it is valuable to share with our shareholders some regulatory matters of importance to the medical device and associated industries and, of course, to Becton Dickinson. Where Becton Dickinson is concerned, there are several areas having regulatory implications for our future. These are innovation, global marketing and safety.

With regard to innovation, I am pleased to report that the industry made significant progress through passage of the Food and Drug Administration Modernization Act (FDAMA), which was signed into law in November 1997. I was proud to have served as Chairman of HIMA's committee working for this reform. Over the years, as FDA's standards became increasingly restrictive, regulatory delays and confusing, often contradictory regulatory demands, greatly impeded the introduction of new and breakthrough technologies. Passage of FDAMA will be helpful to the industry, and more important, to patients, as it restores balance to the regulatory process and speeds patient access to new technology without compromising patient or user safety.

The industry plans to work with Congress as the new law is implemented to ensure that the far-reaching regulatory reforms in FDAMA are properly translated into new FDA policies and procedures. To its credit, in the past year the FDA has reduced its review times, an important factor in enabling new technologies to reach the market faster. Review times, however, remain longer than the statutory requirements and, particularly for innovative and lifesaving products, must decrease further if the U.S. is to remain the leader in new health care technology.

As the flow of innovative new products from Becton Dickinson's product pipeline increases, time to market will become even more important to our ability to compete effectively. As our products involve more complex and sophisticated technologies, greater demands will be placed on the regulatory system to deliver a timely, consistent and predictable review process.

Moreover, regulatory requirements must be taken into account to strategically plan the manufacturing and marketing of new products. As we move into new product areas, through innovation and acquisition, our ability to reach global markets promptly becomes key. Our recent acquisition of MDD, for example, gives us access to a number of unique catheter products that we hope to bring to the U.S. We must strive to ensure that regulatory hurdles do not prevent timely introduction of these products to the U.S. market and that patients have access to the benefits of new devices.

Becton Dickinson has long been dedicated to the protection of health care workers and to delivering the highest quality of care to patients. We are pleased that government leaders have begun looking at ways that public policy can advance and promote health care worker safety. There is early-stage legislation in the U.S. Congress that would require use of protection products, and California has already passed a law to this effect. The Occupational Safety and Health Agency has signaled its intent to become involved by issuing a Request for Information on the risk to health care workers of exposure to blood-borne pathogens.

We have, for over a decade, been the leader in educating health care workers and providing them with medical supplies and devices with advanced protection features. Over that period, we have developed and marketed a wide array of enhanced protection devices. In the past five years, the company has invested more than $100 million in safety innovation. Recently, we formed a company-wide organization, headed by one of our senior executives, to coordinate efforts in protecting health care workers around the world and to move us ahead rapidly in this global initiative.

We believe the time has come for government action to ensure that all caregivers have the option of using medical "sharps" with advanced protection features whenever they believe it is appropriate. Caregivers also should be allowed to continue to use traditional products when they deem it warranted. Government action, of course, should not come at the expense of product innovation, which should be encouraged. These results can best be achieved through a coalition of manufacturers, health care providers, and other interested parties working with government leaders.

The medical device industry and, more particularly, Becton Dickinson have a bright future, but we will need to remain vigilant and involved in the regulatory process. I'm pleased to share these perspectives with you, not only because of your stake as a Becton Dickinson shareholder, but because we are all individual health care consumers.

John W. Galiardo
Vice Chairman of the Board
and General Counsel