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Looking at the Healthcare Industry for Growth Opportunities: What New Entrants to the Market Need to Know Charlie Whelan Director of Consulting Healthcare.

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Presentation on theme: "Looking at the Healthcare Industry for Growth Opportunities: What New Entrants to the Market Need to Know Charlie Whelan Director of Consulting Healthcare."— Presentation transcript:

1 Looking at the Healthcare Industry for Growth Opportunities: What New Entrants to the Market Need to Know Charlie Whelan Director of Consulting Healthcare Frost & Sullivan October 2009

2 2 Strength of healthcare driven by Strong fundamental demand driven by aging population, government investment, emerging economies investing in healthcare infrastructure Domestic healthcare reform will open opportunities to those companies who can adapt to the new landscape with innovative products and services Healthcare: Why now? As older domestic industries face challenges (automotive, textiles, heavy manufacturing, etc.), smart companies see healthcare as a clean, 21st Century industry to invest in Healthcare will soon represent about 20% of the total U.S. economy (GDP). You cannot afford not to have a strategy focused on healthcare. Healthcare reform, the economic downturn and other major trends in the industry will open up new opportunities for companies with an outside perspective that can bring value to the system In the next five years we will see the emergence of the next generation of major healthcare technology companies. Timing and market entry will be critical. Healthcare: A Hot Vertical to Focus On

3 3 A Few Companies Making Major Healthcare Plays

4 4 More Companies Leveraging their Strengths Types of CompaniesCore Strengths Materials, component and OEM manufacturers Specialized technical knowledge, product innovation, manufacturing efficiencies and scale Finished goods manufacturers in non- healthcare sectors New market for existing products, product innovation Service providers not currently in healthcare Service innovation, efficiencies and cost reduction Information technology companies Data management, connectivity, analytics, cost savings, etc. Contract manufacturersSpecialized services, cost savings Consumer goods companies Product innovation, distribution channels, marketing clout Distributors and retailersMarket access, consumer information, supply chain management

5 5 55 Healthcare Touching Nearly Every Sector Telecommunication Companies Telemedicine Remote patient monitoring Linking patient to providers Expanded apps could include health info and advice in some markets Consumer Product Companies As consumers face a growing number of choices, healthcare manufacturers have to increasingly find ways to differentiate and manage brand portfolios effectively Strengthen relationships with retailers by catering to retail price, product distribution demands Retailers are branding homecare devices and providing HC services via clinics, in addition to the pharmacy expansion Chemical Companies The $1 trillion chemical industry is expected to grow by $500 billion in ten years – 50% from Biotechnology Employers & Government Key links in a consumer driven HC environments Convergence of Health Benefit Administration, Care Mgmt and Constituent Engagement Integrated Healthcare Management Agriculture & Food Companies Genetically enhanced crops are the next in a natural progression of agricultural innovation Biotech crops were planted in 18 countries in 2004 By 2010, it is projected that 15 million farmers will grow genetically modified crops on up to 375 million acres in 30 countries

6 6 An enormous ground swell of organizations operating across the healthcare value chain to better track and evaluate costs and outcomes in order to improve both. Implicit in this is standardization of reporting methods and, ultimately, standards of care. Healthcare becomes more like other service industries Great collaboration and information sharing across value chain Greater transparency of prices/ costs and outcomes Increased development of standards of care and incentives to adopt Increasingly challenging market for new technologies Focus on economics Longer time to market for new technologies Tighter market for “physician-preference” items, declining influence of clinical decision makers More decision making on purchasing occurring at higher levels within a customer organization, at system-levels or by GPOs More locked out accounts and a more competitive market with customers signing longer-term, exclusive contracts to enjoy lower prices More “generics” – technologies providing same value at lower price, stripped down feature sets What Will the Future of Healthcare Look Like?

7 7 When considering new healthcare services opportunities targeted to consumers, Frost & Sullivan believes the greatest opportunities will be focused on: Providing interactivity and collaboration Improving decision making Improving transparency and benchmarking Improving quality and outcomes, particularly for underserved conditions or with underserved populations Improving compliance and adherence Eliminating wasted money, time and effort Improving patient satisfaction Lowering costs Improving quality of life Developing and implementing best practices and standardization Shifting care from high-cost/high-skill areas to lower cost/ lower skill areas Improving efficiencies and saving time Improving safety and reducing risk Adding delight! How Can New Entrants Add Value to Healthcare?

8 8 U.S. Medical Devices Industry Estimated 2008 Spending on Devices ($Bil) Estimated Growth Rate on Purchase of Medical Devices (2008-2013) 0% 20% 4% 16% 8% 12% Source: Frost & Sullivan and published articles Note: Diameter of Bubbles Reflects Spending on Purchase of Devices, Usually by Providers ($US Bil) Cardiovascular $24.9 Orthopedics $17.0 Surgery $11.7 DI Cap Equip $10.3 Ophthalmic $10.2 Patient Monitoring $9.4 Wound Care $8.1 Audiology $4.8 Neurology $3.1 Urology & Gynecology $2.8 Infusion Pumps $2.5 Mobility Aids $2.3 Aesthetic Surgery $1.6 PAP Therapy $1.3 Respiratory $1.2 Disinfection/ Sterilization $0.7 Anesthesia $0.5 Endoscopy $0.4 2008 Total Market: $112.6 Bil 8.8% CAGR

9 9 Higher liability and risk Very diverse customer segment Strong organic market growth Small industry – lots of internal word of mouth Unique Qualities of Medical Technology Industry Customer demands for high degree of evidence for purchase Strong domestic manufacturing base Operating within a reimbursement-driven market Biocompatibility issues Higher regulation and testing/ validation requirements from FDA; need to meet ISO standards Complex distribution and purchasing processes

10 10 Technology Battery and power transmission technology Sensing technology Materials sciences – particularly polymers and shape- memory alloys Information technology and informatics Wireless and mobile communications technology Nanotechnology Technologies to enable drug-device integration Enabling technologies for minimally-invasive or non- invasive technologies Microelectronics Lab-on-a-chip Video games and digital media Robotics and artificial intelligence Biologics and tissue engineering Microbe detection, identification and elimination RFID Display technologies Optical technologies (NIRS, OCT, etc.) Semiconductors Opportunity Areas Strategic Ability to lower production costs, improve operational efficiency or improve outcomes Synergies and co-promotion opportunities Access to new distribution channels Access to new customers Value chain efficiencies Facilitating greater collaboration and integration of care Support in global expansion Financing in a market where venture capital has grown tighter

11 11 Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best in class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 35 offices on six continents. The company is uniquely qualified to support non-traditional healthcare companies as they seek to expand into the healthcare space, since Frost & Sullivan covers both the healthcare market and many of the industry segments non-traditional clients are rooted in. For more information, contact Jake Wengroff at 210-247-3806 or For Additional Information

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