1. HCV portable diagnostic device Ajith Jinjil Daniele Quercia Lauren Ares Richard Dias Azedo

2. Outline Customer pain and our proposal HCV in the world and in the UK In-vitro and molecular diagnostics Value chain and business model GP practices & barriers to adoption Team analysis Summary and conclusions

3. Customer pain that our venture proposes to resolve:  Medical practitioners cannot screen all patients for HCV as they have to send away blood samples to laboratories for testing  This results in few patients being screened for HCV because of: the large number of samples required, the associated cost, and the time required for taking samples, carrying out the tests and obtaining the results

4. Our proposed offering: A portable HCV testing device Our venture will enable medical practitioners to: Administer a diagnostic test at point-of-care Provide almost instantaneous results Enable doctors to screen all patients Make timely decisions on medical treatment and further tests Operation requires little training Help to reduce cost for diagnosis, therapy and healthcare in the middle-term

5. Daniele Quercia Value curve 1.Testing time 2.Testing costs 3. Portability 4. Effectiveness 5. Number people screened 6. Information provided 7. Testing flexibility 8.Chances of error 9.Invasiveness of procedure 10.Ease of use 11.Expertise required 12.Fit with current practices 13.Responsibility of results 14.Doctor Time 15.Timeliness of treatment The following graph shows the dimension values for the portable diagnostic device vs the traditional lab offering (constant dimension value equal to 0):

6. HCV in the world and the UK 170 million people across the world (3% of world population) are infected with chronic hepatitis C Wildly varying prevalence rates across countries In England 200,000 people are chronically infected (0.4% of UK population) Five out of every six people with chronic hepatitis C are unaware of their infection To diagnose all infected cases, the whole population should ideally be screened ( UK population 2001: 58,789,194) Anti-viral therapy costs £10,000; Liver transplant costs £68,000. Estimated savings from therapy instead of liver transplant: 1,044,000,000 over twenty years

7. (2) (1) Year200220032004200520062007200820092010 Number of new infections380033582968262323182048181016001414 = 31037 new patients since 2000 (3) (4) UK new HCV patient trends

8. Global market for HCV testing Estimate of UK market: 2.596 billion * 6% = 156 million (2005) = 376 million (2008)

9. Trends HCV receiving more attention by health authorities around the world  Focus on preventive care and therapy Increasing government spending on healthcare in the UK Healthcare reform - trend toward cost containment

10. Macro-market assessment: Attractive

11. In-vitro diagnostics industry IVD is a mature market  More than 20 billion blood tests are performed annually worldwide. Traditional IVD is dominated by a few large players Patents and licenses for nearly all existing applications are claimed Competition is intense at the market level and is focused on cost in diagnostics

12. Total world market for IVD in 2003 – 28 billion USD 7% annual growth Projection for 2008 – 39 billion USD UK share ~ 6%

13. IVD includes  Hospital-based  Over-the-counter  Point-of-care Estimated industry size of P-O-C segment in UK: = 67 million (2003) = 94 million (2008) IVD industry segments

14. Molecular diagnostics (NAT) Definition: Diagnostic tests of fluid samples using biochips Numerous small players emerging  More than 400 companies are involved in molecular diagnostics Lots of competing technologies  Convergence of semi-conductor industry and bioscience Smaller companies have to:  Establish distribution and sales collaborations  Obtain right to use patents and licenses  Get regulatory approval through clinical trials Technology problems  Cost, integration and live applications

15. Molecular diagnostics (NAT) Molecular diagnostics is the fastest-growing subset of the IVD industry with 15% annual growth

16. Molecular diagnostics (NAT)

17. 1.Threat of entry: Medium (On-going R&D, Patents, Regulation); 2.Existing rivalry: High (mail-in test, labs at hospitals, many large and small competitors in the IVD industry); 3.Substitutes: None; 4.Buyer power: Low-Medium (fragmented, switching costs); 5.Supplier power: Medium-High (suppliers with patents). Five-forces assessment

18. Macro-industry assessment: Unattractive

19. Where we are: Customer pain and our proposal HCV in the world and in the UK In-vitro and molecular diagnostics Value chain and business model GP practices & barriers to adoption Team analysis Summary and conclusions

20. Value chain in IVD-NAT

21. Business model Concept and Design Device design completed internally  Two components: Instrument and cartridge Raw materials License non-proprietary technologies such as bio-sensor and reagents Manufacturing Outsource the assembly and manufacturing Clinical trials Enter into partnership agreement for clinical trials Marketing, sales and distribution Enter into partnership agreement for sales and distribution

22. Sales and GM forecast

23. Net operating margin forecast

24. Cash requirements analysis

25. Business model assessment Favorable Recurring nature of cartridge sales High margins on instruments and cartridges Low capital requirements Unfavorable Unfavorable cash cycle High cost of cartridges High R&D costs High SG&A costs

26. Overall micro-industry and business model assessment: Moderately attractive

27. GP practices in the UK There are 10,683 GP practices in England  Expected to decline slightly in future Declining number of patients per GP  A decrease of 12.5% per year Low and declining rate of incidence of HCV in the UK

28. Barriers to adoption Practice issues Low rate of incidence Condition doesn’t require immediate diagnosis Doctors are very protective of time Changing behavior from laboratory testing Structural issues Patient counseling Information management Sufficiency of infrastructure Ethical and legal issues

29. Overall micro-market assessment: Unattractive

30. Team analysis Mission, aspirations and propensity for risk  Empowerment of doctors  Improving disease diagnosis  Medium propensity for risk Ability to execute on the CSFs  R&D  Sales and distribution  Partnerships Connectedness up, down and across  Limited connections with R&D institutions

31. Summary and conclusions Feasible Macro market  Growth and large infected population Micro industry  Viable but may not be sustainable Infeasible Micro market  Barriers to adoption Macro industry  Structure Team  Inability to execute on CSF

32. Overall: Infeasible

33. Alternatives Develop device for acute infectious conditions  Meningitis Other target segments  Hospital emergency rooms and ICUs Other geographic markets License the technology

34. Any questions?

35. Research questions and results  Would the possibility of having instantaneous results on HCV be something that medical practitioners and health organizations would be prepared to pay for?  Would other diseases be better targets?  Would other markets be more attractive than the UK?  Is there a true need for instantaneous medical diagnostics?  Would competition arrive so rapidly from so many fronts as to preclude the ability to generate significant returns?  Are there so many patents and regulation as to make development unfeasible?