Cornerstones of our strategy redefined

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The third quarter of 2008 was, as in the preceding months, marked by
severe turbulence on international financial markets. The Swiss
Market Index (SMI) retreated -4.4% in the third quarter, the German
Stock Index (DAX) suffered an even greater loss of -9.2%. BB MEDTECH
shares also closed the quarter with a negative performance, declining
by -5.0%. However, the Net Asset Value of BB MEDTECH was stable
(+0.4%) and thus held up better than the total market over the
quarter. During the first nine months of the year the Net Asset Value
per share receded by -22.6% (adjusted for dividends) to CHF 59.67. BB
MEDTECH's share price fell by -29.1% (adjusted for dividends) to CHF
52.00 during the same period while the SMI retreated by -21.6% and
the DAX -27.7%. Financial market turmoil caused the discount between
the share price and NAV to widen from 5% to 13%. We will continue to
buy back shares to limit this discount. Shareholders' equity
(excluding treasury shares) amounted to CHF 703 mn as at September
30, 2008. The Deutsche Börse informed us that our stock is no longer
included in the TecDax Index as at September 22 due to low local
trading volumes. It appears to have become generally more difficult
for foreign stocks to be listed there.

Within the scope of the constant refinement of BB MEDTECH's
investment strategy, the Board of Directors has redefined the
company's strategic cornerstones. It is our intention to be an
active, long-term investor in one to three companies and to work
together with their top management to achieve a significant increase
in value. We were quite successful doing so in the past, as the
example of Nobel Biocare shows, and are convinced that we can repeat
this success story going forward. The relevant medtech expertise of
BB MEDTECH's Board of Directors and management team as well as our
extensive network in the industry are key aspects of our investment
strategy. At the present time we are evaluating several investment
candidates in this area. This segment of the portfolio comprising
participations in which BB MEDTECH plays an active role will account
for up to but not more than half of shareholders' equity. An
additional 10 to 15 participations in mid-sized companies positioned
in highly attractive segments of the medical technology market will
be taken to optimize the port-folio structure. The geographic focus
will remain on Europe and North America and may be augmented with
individual participations in Asia. Thorough fundamental company
analyses and close contact with the management of our portfolio
companies on a regular basis remains the core element of our
long-term investment strategy. With this approach we
expect to significantly outperform the broader market. Temporary
share price fluctuations must be expected as a
consequence of high return expectations and the concentrated
portfolio structure.

We continued to realign and further diversify the BB MEDTECH
portfolio during the third quarter in accordance with this strategy.
Major changes were the reduction in our Sonova participation and the
re-investment of these proceeds in new participations, which included
Mindray (5% of shareholders' equity), our first investment in a
Chinese company, and
Illumina (5%), an American company that enhances our portfolio focus
on molecular diagnostics. The weighting in Sonova was significantly
reduced to 4% of shareholders' equity (13% as at June 30, 2008).
Detailed analysis of the global hearing instrument market and the
major players in this market compelled us to take a cautious stance
regarding the short and mid-term outlook and we accordingly reduced
our exposure. Our core holding Qiagen performed well in the third
quarter (+8.2% in EUR), prompting us to realize some of the gains.
Our position in Fresenius (14%), another core holding, was increased
somewhat while Tecan (11%) was slightly reduced. We took advantage of
volatility in Nobel Biocare and
reduced our position to 6% of shareholders' equity during periods of
strength. The participation in Galenica was reduced to 2% after its
good performance in the wake of the half-year results and also
because of the possibility that a com-petitor's product would obtain
regulatory approval. Masimo's very pleasing performance prompted us
to take some
profits, reducing this participation to 1% of shareholders' equity.

The new participations Mindray and Illumina are fast-growing
companies with a convincing product portfolio, a good market position
and strong management. Mindray, domiciled in China and listed on the
New York Stock Exchange, develops and markets medical technology
devices in the market segments of patient monitoring and life support
products, medical imaging systems and in-vitro diagnostic products.
In its domestic market Mindray is one of the market leaders and
growing rapidly, driven by government spending on China's healthcare
system as well as the company's short innovation cycles and constant
efforts to expand its product portfolio. Mindray's increasing
internationalization, supported by the recent acquisition of the
patient monitoring business of Datascope in the US, creates
additional growth potential. California-based
Illumina is the market leader in biological chip systems for gene
expression analysis and genotyping. Furthermore, the
acquisition of Solexa last year established Illumina as market leader
in next-generation DNA sequencing systems. In ad-dition to the
applications based on these innovative technologies in the research
market, Illumina is also positioned in the highly promising market of
molecular diagnostics. Thanks to its outstanding technological
position, Illumina serves as an ideal partner for rapidly developing
biomarker companies and thus stands to also benefit from this
segment's fast growth.

As at September 30, 78% of BB MEDTECH's assets were invested. The
high cash allocation is attributable to the ongoing portfolio
realignment as well as the uncertainty and volatility of today's
market environment. As already mentioned in our previous letter to
shareholders, we are confident that the current weakness on stock
markets also offers opportunities to selectively expand our portfolio
in the coming months in accordance with our investment strategy and
thereby generate substantial value added for our shareholders.
Despite the negative year-to-date performance BB MEDTECH's share
price has still increased by +163% from the beginning of 2000 to the
end of September 2008 (incl. dividend payouts).

The composition of BB MEDTECH's portfolio as at September 30, 2008 is
the following (in % of equity):


Qiagen 20.7%
Fresenius preferred shares 10.6%
Fresenius common shares 3.1%
Tecan 11.4%
Nobel Biocare 6.0%
Illumina 5.4%
Mindray 5.4%
Celera 5.1%
Sonova 3.8%
Galenica 2.3%
Masimo 1.1%
Optos 0.9%
Millipore 0.8%
Epigenomics 0.8%
Stratec Biomedical Systems 0.5%
Vascular Innovation preferred shares1) 0.7%

SWAP agreement on treasury shares 0.1%
Put option Nobel Biocare (short) (0.4%)
Put option Nobel Biocare (short) (0.3%)
Call option Nobel Biocare (short) (0.0%)
Call option Nobel Biocare (short) (0.0%)

Total securities CHF 548.2 mn 78.0%

Liquid funds (net) CHF 226.5 mn 32.2%
Other assets CHF 11.5 mn 1.6%
Other payables CHF (83.3) mn (11.9%)

Total shareholder's equity CHF 702.9 mn 100.0%
Own shares (in % of company) 19.1%


1) unlisted company

The Quarterly Report is available on www.bbmedtech.com


For further information please contact:
Bellevue Asset Management AG, Seestrasse 16, CH-8700 Kusnacht/Zurich
Alexandra Avila, phone +41 44 267 67 09



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BB Medtech AG
Vordergasse 3 Schaffhausen Switzerland

WKN: 898194 ;
ISIN: CH0000428661; Index: TECH All Share, TecDAX, Prime All Share;
Listed: Prime Standard in Frankfurter Wertpapierbörse, Geregelter
Markt in Frankfurter Wertpapierbörse;

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