What are the Leading Transformers and Disruptors for the Global Medical Device Industry?


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A number of macroeconomic and regulatory events came to a head in 2010, resulting in a significant period of transition for the vast majority of major medical technology manufacturers. The ramifications of those shifts are evidenced in the rebooted market strategies and overhauled organizational structures of medical device companies looking to better adapt to a changing market landscape.

In 2013 and moving forward, most market participants have similar goals of controlling costs, positioning business in growing treatment areas, and expanding the organization’s footprint in emerging markets. Given continued industry pressures and headwinds, the execution of strategies to achieve those goals is paramount to long-term market viability.

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What are the Leading Transformers and Disruptors for the Global Medical Device Industry?

  1. 1. What are the Leading Transformers and Disruptors for the Global Medical Device Industry? Venkat Rajan, Industry Manager Advanced Medical Technologies April 4, 2013© 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property ofFrost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
  2. 2. Today’s Presenter Venkat Rajan Industry Manager -Advanced Medical Technologies Frost & Sullivan•Oversees analyst team charged with tracking the advanced medicaltechnologies industry, spanning medical devices, medical imaging, andpatient monitoring.•Provide market intelligence solutions to help clients across the supplychain spectrum to identify market opportunities and develop strategiestailored to their business goals.•8+ years of market intelligence gathering and custom consultingexperience
  3. 3. Five Signs A Medical Technology Company Might Need to Reinvent its Business Model •Customers view its product/services as commoditized.Eroding Customer •Customers see limited differentiation between available devices.Value Proposition •Diminished customer enthusiasm for new product upgrades.Profit Model Under •Declining YOY margins. Pressure •Competitors going out of business, consolidating, exiting market. •Significant internal cost cutting necessary to maintain viability.Market Disruptors •Business exposed to technology obsolescence, due to new advances. on the Horizon •New technologies capable of providing comparative product/service value either cheaper, faster, simpler, or to a broader addressable customer base. Internal •High employee turnover rates, due to career apathy. Infrastructure •Strategy focused on maintenance as opposed to expansion. Deteriorating •Team slow to adapt and/or innovate.Investment Dollars •Limited VC/investment buzz for market and its future. Flowing in •Limited academic curiosity and interest in advancement.Opposite Direction •Public companies struggling to maintain stock price.
  4. 4. Three Big Predictions for 2013 Hyper pressurized cost containment environment is likely to accelerate 1 deeper cost cutting measures from companies adjusting to realities of the new market place. Patient influence in treatment selection magnified due to, increasing access to information and greater shifts in financial burdens. The launch of 2 health exchanges and rollbacks in employer covered plans could lead to greater striation of coverage into distinct tiers. Emerging market needs drive decision making for companies around M&A strategy and product development. In the past complications of the HC 3 system, financial resources, and on the ground infrastructure required; prevented companies from fully investing in emerging market strategies. Source: Frost & Sullivan analysis.
  5. 5. Core Segments Under Pressure $342 B Global Medical Technologies Market Sector Share Medical Devices Market: Segmentation by Product Class, Global, 2012 Other (Including: OrthoOther Durable Medical 14%28% Equipment, Hospital Supplies, Consumables) Treatment Cardiology 29% Devices 11% 72% Neuro Robotics- 2% Navigation Woundcare 2% 6% Respiratory- Anesthesia 5% Aesthetics Minimally 2% Invasive Surgery Uro-Gyno Audiology Opthalmology 11% 2% 6% 10% Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
  6. 6. Opportunity Paradigm Matrix for Medical DevicesExpanding Personalized Medicine Bionic Eye Bionic Limbs Renal Denervation Health Management Apps Transcatheter Valves Heart Sleeves for CHF Bronchial Thermoplasty Wearable Monitoring Blood Vessels Mental Rehabilitation through Video Games Bioresorbable Stents Radiosurgery Robot Assisted Remote Symptoms Spine Surgery Breast Repair Market Monitoring NeurostimulationOpportunity Skin Substitutes Home/Portable Hemodialysis Implantable CRM Pain Stimulators Surgical Tools BMPs Joint Reconstruction Resistance Equipment Hearing Aids Drug Eluting Stents Cardiac Surgery Mechanical Valves Mature Corrective Eye Wear Dialysis Rehabilitate Repair Replace Regenerate Source: Frost & Sullivan analysis.
  7. 7. Technology Convergence in Medical Devices Devices leveraging long and short range wireless communications,Medical Device cloud computing, big data analytics, and information security for Connectivity enhancing care. Nanotechnology provides benefits of biocompatibility and functionally Nanotech at an unparalleled scale, that is better able to influence diseases Advances happening at a cellular level. Flexible electronics and displays currently being developed for Flexible commercial electronic devices, have tremendous applications for Electronics hospital care settings . Augmented reality devices which can overlay information and images Augmented via smart glass technologies could have tremendous applications in Reality improving clinical workflow. As the cost and size of 3D printing technologies continues to become 3D Printing more scalable to healthcare settings, they have the potential to produce customized implants, surgical tools, and bioprinted tissues..
  8. 8. Emerging Markets Driving Growth Medical Technologies Market: Percent of Revenue by Region Global, 2012 Established markets (U.S., Western Europe, Japan), saturated and project single digit Other growth for the next decade. 20% Brazil Navigating complexities of HC markets in India 1% 1% China, India, and Brazil have proved Spain challenging for developers. 2% United States Russia 42% 2% France Outside of BRIC nations, other highly 4% targeted countries include Australia, Turkey, UK 4% Indonesia, Malaysia, and Mexico. China 7% Tactics focused on major cities and regions Germany Japan 8% 9% not countries have proved most impactful.Note : All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
  9. 9. Shifting Strategies in Global Market Place Tax incentives that built Ireland China has become aCompanies in to a med tech Israel has critical battle ground forshifting hub, could be proven to be a companies against bothresources to copied in other hub for research establishedcapitalize on parts of the and innovative multinationals andemerging globe. start up emerging local players.markets and low companies.cost Prioritization ofmanufacturing Turkey for many Pacific Rim emergingabroad. companies is as a destination for equal if not medical tourism, and higher than a hub for contract certain BRIC manufacturing. nations. India has proved Local manufacturing more utility as a test lab for ‘built in built presence critical Patient demographics, Growth in South for’ approaches than to market economy, healthcare Africa leading to true market returns. penetration in infrastructure, and major Skilled workforce LATAM. regulatory pathway opportunities. could create more make Australia an ideal opportunities for focus point for outsourced launching products manufacturing. Source: US FDA Sullivan prior to Frost & approval. analysis. Note : All figures are rounded. The base year is 2012.
  10. 10. The Med Tech CEO’s Perspective Cutting costs and management of1 internal resources is more critical to market viability than growing top line. Innovate, but innovate differently. Shifts2 in healthcare spend change the factors impacting market traction. Overhaul sales strategies to optimize3 for a consolidated customer base driven by outcomes and value. Maximize emerging market strategies4 by targeting regions and cities not countries. Leverage increasing role of patient in5 determining treatment selection and burden of pay for healthcare services. Source: Frost & Sullivan analysis.
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  14. 14. For Additional InformationBritni Myers Venkat RajanCorporate Communications Industry ManagerHealthcare Advanced Medical Technologies(210) 477-8481 (210) 247-2427britni.myers@frost.com vrajan@frost.com