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The Top 10 Technology and Business Model Changes Poised to Disrupt the Medical Technology Industry

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"The Top 10 Technology and Business Model Changes Poised to Disrupt the Medical Technology Industry" was presented at MD&M West by Frost & Sullivan Advanced Medical Technologies Principal Analyst …

"The Top 10 Technology and Business Model Changes Poised to Disrupt the Medical Technology Industry" was presented at MD&M West by Frost & Sullivan Advanced Medical Technologies Principal Analyst Venkat Rajan. For more information, contact Jennifer Carson Corporate Communications - Direct: (210) 247-2450, E-mail: jennifer.carson@frost.com - or visit www.frost.com.

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  • 1. The Top 10 Technology and Business Model Changes Poised to Disrupt the Medical Technology Industry Presented at MD&M West 2014 Venkat Rajan February 2014
  • 2. Frost & Sullivan Analyst Team Provides Broad, Cross Industry Coverage • • • Leveraging insights into the present and future of industry convergence Built on a foundation of market, competitive, and technology analysis Supporting our clients to see the future of their industry through the lens of global shifts Life Sciences Advanced Med Tech Connected Health 2
  • 3. Frost & Sullivan’s Complete Growth Lifecycle Partnership Research, Ideation, Strategy, and Implementation Expertise Understanding the universe of opportunities and prioritizing them by size, fit, risk, and other factors is a required starting point for any growth project. 1 2 5 3 But taking action on the opportunities is significantly more complex, requiring organizational alignment, a cohesive strategy, and ownership for the plan. 4 Pivot Point: Turning insights into action
  • 4. How Well Do You Know the Affordable Care Act (ACA): Opportunity Impact Dashboard Home Care $ Wellness Services Inpatient Care Outpatient Care Primary Care Pharma $$ Ambulatory Care HCIT Reimbursement Imaging Diagnostics Govt. & Industry Payors Providers Medical Device Supply Chain 4
  • 5. The Market You Knew is Eroding Eroding Customer Value Proposition Profit Model Under Pressure Market Disruptors on the Horizon Internal Infrastructure Deteriorating Investment Dollars Flowing in Opposite Direction • Customers view its product/services as commoditized • Customers see limited differentiation between available devices • Diminished customer enthusiasm for new product upgrades • Declining YOY margins. • Competitors going out of business, consolidating, and exiting market. • Significant internal cost cutting necessary to maintain viability. • Business exposed to technology obsolescence due to new advances • New technologies capable of providing comparative product/service value either cheaper, faster, simpler, or to a broader addressable customer base • High employee turnover rates due to career apathy • Strategy focused on maintenance as opposed to expansion • Team slow to adapt and/or innovate • Limited VC/investment buzz for market and its future • Limited academic curiosity and interest in advancement • Public companies struggling to maintain stock price 5
  • 6. Medical Devices — Business Outlook Recent History Current REVENUE $150 Billion $340 Billion $500 Billion MAIN FOCUS How to diagnose? How to treat? Minimally invasive Devices as the first line of treatment, devices to prevent, improve well being. MARKET DYNAMICS Technologies geared towards extending life. Technology to improve outcomes (mitigate risk). Integrated platforms to provide comprehensive continuum of care. Focus on quality of life. Companies that could make treatments safer and easier to perform. Winners: Cardio, Ortho, Surgery Companies that understand consumer behavior, needs, and pain points. Winners: ?Apple, Google? TYPES OF COMPANIES WHO EXCELLED Companies that advanced standard of care. Winners: Big Imaging Future Source: Frost & Sullivan 6
  • 7. Top 10 Disruptors in Med Tech Mobility • Portability, versatility over specialization Cloud in HC • Remote systems for analysis and computation Big Data in HC • Analytics to make better and quicker decisions Aging in Place • New care setting, new devices, new payment model Regenerative • Moving beyond repair and replace 3D Printing • Novel manufacturing solutions for device testing, development, and customization Private Labeling • Reduce supply costs Consumer Power • Consumer as the influencer (financial decisions, satisfaction scores, etc.) Optimizing Delivery • Cutting the waste (care delivery, care coordination, administrative excess, redundancy) E-Commerce • Cutting the costs in the supply chain (price transparency, direct purchasing, etc.) 7
  • 8. Optimization of Operations 8
  • 9. Creating Value in the System Customers Needs… Outcomes • Supporting a value-based purchasing strategy Time Savings Satisfaction/ Experience • Shifting procedures to outpatient settings • Reducing hospital-acquired infections (HAIs) • Reducing readmissions Costs/ Risk Service • Others… …Opportunities for Competitive Positioning Patients Patient Empowerment Efficiency • Reducing unnecessary spend • Competitive differentiation • Maintain relationships • Generate new revenue • Support price strategy Data/ Information • Identify new customer needs and opportunities • Others… 9
  • 10. Consumers Believe mHealth Will Improve Convenience, Quality, and Cost Surveys of consumers show an increasing interest and enthusiasm for using mobile devices to engage with healthcare providers In the next three years, patients agree that… Top drivers for patients to begin using or increase using mHealth Ability to access by my healthcare providers more conveniently/effectively 52% mHealth applications / services will make healthcare substantially more convenient for me 46% mHealth applications / services will substantially reduce my overall healthcare costs Ability to reduce my own healthcare costs 43% Ability to take greater control of my health 32% Ability to obtain information that is difficult or impossible for me to obtain from other sources 28% Ability to access better quality healthcare 48% mHealth applications / services will improve the quality of healthcare I receive 46% 25% Source: The Economist Intelligence Unit (2012 ) and PWC: Emerging mHealth: Paths for Growth (2013) and Frost & Sullivan 10
  • 11. Next Steps for mHealth Adoption • Personal devices • Professional solutions Regulation FDA guidance finally released Impact to date on funding Business model success Waiting for reimbursement? Will ACOs be the tipping point? Sustainable consumer models? Value Clinical efficacy still unproven? Long-term value to individuals? 11
  • 12. Cloud Solutions are Aligned with Healthcare Shifts Collaboration in research means moving partners to the data Cloud allows scale in storing big data Big Data Genomics Care collaboration and transitions in care require flexible access and merged data sets Cloud is a key enabler of mobilizing data for use by consumers and enterprise users Social Media Mobility Cloud Care Coordination Lab Point of Care Patient Source: Frost & Sullivan analysis 12
  • 13. Opportunities to Leverage Big Data New Data Sets, New Tools, New Business Models Clinical Decision Support (Accelerate dissemination of research findings) Individualization of Treatment and Interaction Comparative Effectiveness and Outcomes Research Clinical Trial Design Direct-to-Consumer Analytics Micro segmentation of Cohorts and Consumers Source: Frost & Sullivan 13
  • 14. Consumerization Quantified self Increased individual financial responsibility Behavioral economics Social networks and online health resources “We have not been able to accelerate to that next level of providing that customer experience that people come to expect when interfacing with a hotel or other industry” Source: Frost & Sullivan 14
  • 15. What are Consumers Looking for from Healthcare Engagement?      Convenience Engagement Personalization • Breaking down “bricks and • Clear explanations of condition • Preference-based care mortar” approach to healthcare • Content to help patients vs. evidence-based care • 24/7 access to personal health understand health status information via web portal • Customized approach • Shared decision making to communication • Ability to communicate with • “In the loop” — treat patient providers via e-mail • “Respect my wishes for like a member of the privacy and security” • Test results and other data healthcare team delivered via mobile devices • “I want all my information in • Online scheduling and bill pay • E-visits one place so my community has access.” Source: Frost & Sullivan 15
  • 16. Interoperability Platform Smart phone or tablet Oximeter Monitors Electronic Medical Record Medication Station MEDICAL DEVICE CONNECTIVITY Infusion Pumps Workstation Other Diagnostic Devices or Biometric Sensors Point-to point connectivity enables standardized electronic records, remote healthcare and diagnostics, remote clinical care, electronic medical records, and mobile healthcare. 16
  • 17. Key Configuration Considerations Categorizing Devices Categorization of devices based on use and data transmission. Episodic devices obtain a single set of measurements at a fixed time. Continuous tracking devices are continuously capturing data and device performance information; some are stand alone while others can transmit across an enterprise network. System Deployment Deployment is tied to how the device fits in the clinical workflow. Does it require a point of care component, or is central station monitoring sufficient? Patient Association Patient association is critical to effective implementation of connectivity solutions. Initiation can either be patient centric or location centric. Ensuring tracking across the workflow and proper patient disassociation is of equal importance. Data Validation and Security Change Management Synchronized time stamping, security from malware, downtime protocols, and integration of data with an EMR are among the most challenging issues to adoption of interoperability systems. Protocols for change management as devices get replaced or upgraded are important to factor into the network, and consider contingencies of how changes to one might affect another. It requires coordination from both institutions and OEMs. 17
  • 18. Technologies Changing Healthcare Patient Satisfaction 3-D Printing — Prototyping/Manufacturing Smart Tracking Technologies Dedicated Information Management Sterilization Automated Point of Care Testing 18
  • 19. Technologies Changing Healthcare (continued) Cognitive Computing Operational Efficiency Device Connectivity Platforms 19
  • 20. Technologies Changing Healthcare (continued) E-commerce Platforms 3-D Printing — Individually Customized Medical Devices Devices as SaaS Platform 20
  • 21. Contact Details Jennifer Carson Corporate Communications Direct: (210) 247-2450 E-mail: jennifer.carson@frost.com Frost & Sullivan 7550 IH 10 West, Suite 400 San Antonio, TX 78229 United States www.frost.com 21