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Go-to-Market Strategy: Launching a Diabetes Treatment in China
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Go-to-Market Strategy: Launching a Diabetes Treatment in China

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Complete go-to-market strategy for launching an endoscopic diabetes treatment in China. Presentation includes landscape assessment and strategic analysis of the diabetes treatment market in China.

Complete go-to-market strategy for launching an endoscopic diabetes treatment in China. Presentation includes landscape assessment and strategic analysis of the diabetes treatment market in China.

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  • Animate so box comes up at the end on all slides
  • Animate so box comes up at the end on all slides
  • Animate so box comes up at the end on all slides
  • China Executes Former Drug Regulator: http://www.nytimes.com/2007/07/11/business/worldbusiness/11execute-web.html?_r=1&ref=chinaFrame this better, so they know why it is here.
  • Animate so box comes up at the end on all slides
  • China introduced a national health reform blueprint in 2009 Plan: develop a national health insurance system that will provide universal coverage for basic health care by the end of 2020 Includes: targeted improvements to public health infrastructure, the medical care delivery system (particularly primary-level care), public health safety, the pharmaceutical system, and hospitals by changing financing incentives. In 2008, China’s health expenditures totaled 4.8% of the gross domestic product (GDP): government contributions comprised 49.9 percent and private 50.0%.1Economic disparities mean that wealthier households have greater access to health care and related technologies. Low-income and rural households face significant barriers to access affordable care and medicines. Traditional Chinese Medicine is the preferred treatment option for many and is integrated into the national health care system and training for health care practitioners.
  • China introduced a national health reform blueprint in 2009 Plan: develop a national health insurance system that will provide universal coverage for basic health care by the end of 2020 Includes: targeted improvements to public health infrastructure, the medical care delivery system (particularly primary-level care), public health safety, the pharmaceutical system, and hospitals by changing financing incentives. In 2008, China’s health expenditures totaled 4.8% of the gross domestic product (GDP): government contributions comprised 49.9 percent and private 50.0%.1Economic disparities mean that wealthier households have greater access to health care and related technologies. Low-income and rural households face significant barriers to access affordable care and medicines. Traditional Chinese Medicine is the preferred treatment option for many and is integrated into the national health care system and training for health care practitioners.
  • The quality and quantity of healthcare is substantially lower than that in the developed world for the average Chinese person. Physician Density - 1.1 physicians/1,000 population [US 3.2] (2010) Hospital Bed Density - 2.6 beds/1,000 population [US 3.0] (2009)Doctors are generally less skilled in rural areasPrimary care sector is underdeveloped leading to overcrowding at the large urban hospitalsPatients reluctant to go to rural healthcare institutions opting instead for treatment in urban centersPrivate sector hospitals (6% of beds) cater mostly to wealthy elite or specific specialist treatments
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measureshttp://www.idf.org/node/4371/
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Chinese consumers have increasing voice in health care decision-making and research treatment optionsFamily heavily influences all medical decisionsWestern and Traditional medicines exist side-by-side in the marketplaceInvasive procedures are seen as “life-saving” measures
  • Animate so box comes up at the end on all slides
  • Forecast for the Future of Diabetes in China:Prevalence of type 2 diabetes is projected to grow from 90 million people in 2012 to 180 million in 2030.The prevalence rate for the overall population above age 20 is projected to grow from 9.2% in 2012 to 14.7% in 2030. Incidence of new diagnosed cases is projected to grow from 2 million in 2007 to 7.2 million in 2025Total annual number of deaths related to type 2 diabetes in projected to grow from 1.5 million in 2007 to 4.2 million in 2025. Study showed by 2025, 60% of the world’s 380b diabetics would be in Pacific-Asia
  • Baseline – the growth of population from 2007-2025 as predicted by the UN (12 million add’l cases)Urbanization –the rate of urbanization will increase from 43% in 2005 to 52% in 2017; projecting an increase of 1.7% from 2007-2025 (Add’l 16 million cases)Risk factors - poor nutrition, overweight, obesity (36 million add’l cases)Age – the proportion of older people is increasing significantly (16 million add’l cases)
  • “The government of China is dedicated to diabetes care and prevention. We have introduced several programmes to raise public awareness of diabetes through education and train community-level healthcare professionals in diabetes care,” said Madame Kong Lingzhi, Deputy Director-General, Bureau of Disease Prevention and Control, Chinese Ministry of Health.
  • Animate so box comes up at the end on all slides
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • For those over 60, the prevalence for severe is about 1/3 higher or 15.6%Without chronic conditions(n = 727) 8.0 ± 1.6 111 (15.3) 213(29.3) 403(55.4)With chronic conditions(n = 784) †8.2 ± 1.6 95 (12.1) 195(24.9) 494(63.0)Cardiovascular conditions(n = 457) 8.0 ± 1.5 64(14.0) 121(26.5) 272(59.5)Neuropathy(n = 268) 8.0 ± 1.6 40(14.9) 66(24.6) 162(60.4)Cerebrovascular conditions(n = 103) 8.2 ± 1.7 16(15.5) 23(22.3) 64(62.1)Nephropathy conditions(n = 160) 8.3 ± 1.7 19(11.9) 34(21.3) 107(66.9)Ocular conditions(n = 221) 8.6 ± 1.7 19(8.6) 43(19.5) 159(71.9)Foot diseases(n = 12) 8.1 ± 2.0 3(25.0) 3(25.0) 6(50.0)http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2906445/pdf/1477-7525-8-62.pdf
  • Animate so box comes up at the end on all slides
  • Threat of new entrants is more about the product in general less specific to China – Clinical Trial requirements not as strict in China
  • Animate so box comes up at the end on all slides
  • Minimum qualifications for test market: Volume to generate $30M in revenue Skilled Physicians Ability to PaySuccess Factors: Clear Right to WinMarket Need
  • Rural population=656560000*8.3% prevalence =74.7M diabetics* 52% mod to severe=38,844,000 Ability to pay: 941net income/year * 9% healthcare expenditure= $85/year total healthcare expenditure
  • Add descriptors of these segments to the slidesMarket size= urban pop* urban prevalence * age prev. * severe prev * affluent= =690790000*11%*43.7%*12%*6%= 12,661
  • Market size= urban pop* urban prevalence * age prev. * severe prev * affluent= =690790000*11%*35%*15.6%*6%= 12,661
  • Add descriptors of these segments to the slidesMarket size= urban pop* urban prevalence * age prev. * severe prev * affluent= =690790000*11%*43.7%*12%*6%= 12,661
  • Add descriptors of these segments to the slidesMarket size= urban pop* urban prevalence * age prev. * severe prev * affluent= =690790000*11%*43.7%*12%*6%= 12,661
  • Animate so box comes up at the end on all slides
  • Animate so box comes up at the end on all slides
  • Maybe move positioning statement to earlier slide- positioning slide
  • How many public Vs. private hospitals
  • Revisit strategy: This is who we are going after and this is what we want to say Animate it so the first thing that comes up is all three brands, then drop other two and talk about novo
  • Intro the purchase funnel prior to this
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Nitan was more focused on us marketing to the consumer and to the doctors likely because they can already reach the doctors through their pre-established relationships that they have. However I still believe participating in conventions, tradeshows, conferences with the Chinese Medical Doctor Association is a main point.“in a 2010 survey, 56 percent of Chinese consumers said they regarded online advertising as credible, up from 29 percent in 2009” (Source: McKinsey consulting) http://csi.mckinsey.com/Knowledge_by_region/Asia/China/Chinas_new_pragmatic_consumers“in 2010, 64 percent of respondents said word of mouth from family and or friends influenced their purchasing decisions, compared with 56 percent in 2008.” (McKinsey
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Web site mock-up
  • Web site mock-up
  • Web site Mock-Up
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Web site mock-up
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.
  • Web site mock-up
  • Need to show examples of some of these thingsAds in business magazines, example web site, give details about “Awareness”How does app add value?Check brochure for positioning.What is the message we are giving to the doctors.Add summary slide talking about challenges and how we tried to overcome them.Add next steps slide about how we epand out to our other markets.

Go-to-Market Strategy: Launching a Diabetes Treatment in China Go-to-Market Strategy: Launching a Diabetes Treatment in China Presentation Transcript

  • Launching a Type 2Diabetes Treatmentin ChinaGo-to-Market Strategy
  • Today’s Presentation Current Trends Healthcare System Diabetes in China Diabetes Treatments Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • Current Trends Current Trends Healthcare System Diabetes in China • Aging Population • Emerging Middle Class Diabetes • Urbanization Treatments • Growing Economy • Safety & Reliability Issues Strategic Analysis • Concern for Public Health Potential Markets Entry Strategy Marketing Mix
  • Current TrendsAging Population:• Population growth rate in Population by Age China – 0.493% (World Fact Book)• One-child policy• Increased life expectancy 0-15 13% 19% 15-20 20-39 8% 28% 40-59 60+ 32% Children will be caring for multiple dependent parents and age- related illness will be on the rise.
  • Current TrendsEmerging Middle Class:• Growing consumer spending on food, housing & healthcare• Top 10% of population possess more than 40% of the wealth• Increased Earnings• Increased disposable income
  • Current TrendsEmerging Middle Class: There is a growing consumer segment in China that expects, and is willing to pay, for the best products on the market.
  • Current TrendsUrbanization:• People in China are migrating to urban Chinas Rural and Urban areas for jobs Population, 1950-2030 (UN• Wealth & resources are concentrated in Estimates, 2003) urban areas• Much of rural China is still comprised of subsistence farmers There is a massive disparity between the availability of wealth, resources and labor in urban vs. rural China.
  • Current TrendsGrowing economy open to foreign trade:• Economy grew on average +10.14% from 2001 to 2010• Rigorous tax system with lucrative incentives designed to attract foreign investment and boost exports• No debt, significant reserves• 20% CAGR in pharmaceutical market China has a stable and rapidly growing economy, making it an important player in the global market.
  • Current TrendsSafety & Reliability Issues:• Contaminated baby milk powder recalled after four Chinese infants died and at least 6,000 more fell ill• Chinese-made batches of the blood-thinning drug heparin recalled after 81 patients died• Mattel orders the third Chinese toy recall, saying it would take back more than 800,000 units globally that contain “impermissible” levels of lead Chinese consumers tend to have a preference for Western goods due to a history of safety issues and affluent Chinese are willing to go outside of the system to access goods.
  • Current TrendsGrowing Concern with Public Health:• Negative health effects brought on by aging of the population, urbanization, industrializ ation, and globalization• Old Chinese public health models cannot meet present requirements.• Main issues: poor capacity to respond to public health emergencies, severe inequality of health care services, and lagging development of public health information systems. Public health issues, like diabetes education, diagnosis and treatment are at the top of the government’s priorities.
  • Healthcare in China Current Trends Healthcare System Diabetes in China • Reform • Current System Diabetes Treatments • Availability • Consumers • Western vs. TCM Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • Healthcare in ChinaHealthcare Reform:• Medical costs are growing faster than income• 2009 goal to develop a national health insurance system by the end of 2020 which includes:  Universal coverage for basic services  Targeted improvements to public health infrastructure, safety, the pharmaceutical system, and hospitals  Essential Drug List that fixes prices for essential pharmaceuticals The Chinese government is focused on making quality medical care affordable and accessible for all citizens as the cost of treatment rises faster than wages.
  • Healthcare in ChinaCurrent Healthcare System: Currently in China, covered consumers pay:  50% for medically necessary or emergency medical services  50-100% for all other medical care  50-100% for pharmaceuticals or medications  100% for “elective” procedures 40% of urban and 57% of rural resident are not covered by healthcare Even with insurance, few costs are covered and the majority of Chinese consumers are very worried about their ability to afford medical care.
  • Healthcare in ChinaAvailability of Health Services in China:Availability of health-related service varies greatly depending onyour physical location.
  • Healthcare in ChinaChinese Health Care Consumers:•Consumers with progressive DM spend22% of their current household income forhealthcare vs. 9% for average consumer•Actively research and pursue treatmentoptions•Collectivist: Family & friends heavilyinfluence all medical decisions Chinese consumers do not passively listen to their doctors; the family will actively research and evaluate various treatment options.page 15 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms. Both exist side-by-side in the Chinese market, are covered by insurance, and are considered valid treatment options for different purposes and conditions.page 16 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms.• Slower acting, milder side effects • Quickly alleviates symptomspage 17 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms.• Slower acting, milder side effects • Quickly alleviates symptoms• Consumers prefer TCM to cure the underlying • Consumers prefer WM when the time-frameillness when the time-frame is longer or when shorter and a medical diagnosis has been madethe cause of symptoms is uncertain •Consumers increasingly prefer WM when there is a sense of urgency in treatmentpage 18 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms.• Slower acting, milder side effects • Quickly alleviates symptoms• Consumers prefer TCM to cure the underlying • Consumers prefer WM when the time-frame shorterillness when the time-frame is longer or when the and a medical diagnosis has been madecause of symptoms is uncertain •Consumers increasingly prefer WM when there is a sense of urgency in treatment• TCM to treats a problem • WM fixes a problempage 19 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms.• Slower acting, milder side effects • Quickly alleviates symptoms• Consumers prefer TCM to cure the underlying • Consumers prefer WM when the time-frame shorterillness when the time-frame is longer or when the and a medical diagnosis has been madecause of symptoms is uncertain •Consumers increasingly prefer WM when there is a sense of urgency in treatment• TCM to treats a problem • WM fixes a problem•Consumers who prefer TCM tend to be more •Consumers who prefer TCM see it as a way to by-focused on a living a healthy lifestyle pass healthy lifestyle changespage 20 confidential / for EES internal use
  • Healthcare in ChinaChinese vs. Western Medicine:Traditional Chinese Medicine (TCM) Western MedicineUsed for thousands of years, TCM is a holistic Western medicine is the type of medical treatmentsystem of health and healing, based on the that is most popular in North America and Westernnotion of harmony and balance, and employing European countries, based on the use of drugs andthe ideas of moderation and prevention. surgery to treat symptoms.• Slower acting, milder side effects • Quickly alleviates symptoms• Consumers prefer TCM to cure the underlying • Consumers prefer WM when the time-frame shorterillness when the time-frame is longer or when the and a medical diagnosis has been madecause of symptoms is uncertain •Consumers increasingly prefer WM when there is a sense of urgency in treatment• TCM to treats a problem • WM fixes a problem•Consumers who prefer TCM tend to be more •Consumers who prefer TCM see it as a way to by-focused on a living a healthy lifestyle pass healthy lifestyle changes To have an invasive procedure would require more than a doctor’s recommendation, a sense of urgency and a belief that the procedure could fix a serious condition would be needed.page 21 confidential / for EES internal use
  • Diabetes in China Current Trends Healthcare System Diabetes in China • Global Rank • Global Prevalence Diabetes • Market Growth Treatments • Drivers of Growth • Demographics Strategic Analysis • Education & Awareness Potential Markets Entry Strategy Marketing Mix
  • Diabetes in China Top 10 Countries with the Highest Cases of Diabetes China has more cases of diabetes than any other country in the world.
  • Diabetes in China Prevalence of Diabetes (%) Top 10 most populated countries China’s rate of diabetes is high relative to other countries and continues to climb.
  • Diabetes in ChinaMarket Growth: 2025-2030: 180MM Total Cases of Diabetes CURRENT 14.7% Prevalence Rate SITUATION: 7.2MM New Cases Per Year 90 MM 9.2% 4.2MM Diabetes-related Deaths 2 MM 1.5MM Market growth is projected to be significant. Total cases, prevalence, new cases and mortality are all on the rise.
  • Diabetes in China Drivers of Diabetes Growth 200 180 160 140 120 100 80 60 40 20 Population growth, urbanization, risk factors, and age are all factors driving the growth of the diabetic population in China.
  • Diabetes in ChinaDemographics: Gender Diabetes Cases by Gender 45.70% 54.30% Men Women There are a significant number of cases in both men and women.
  • Diabetes in ChinaDemographics: Age Population and Diabetes Cases millions by Age Group 500 435 400 380 300 200 172 100 43.7 35 13.92 0 20-39 40-59 60+ Age Population Cases of Diabetes The highest percentage of diabetes cases is in the 40-59 age range, but the greatest number of cases is in the 20-39 age range. This is much younger than other countries.
  • Diabetes in ChinaDemographics: Weight Status Diabetes Pre- Diabetes Underweight 4.5% 11.2% (BMI<18.5) Healthy 7.6% 13.1% Weight (BMI 18.5-24.9) Overweight 12.8% 19.9% (BMI 25.0-29.9) Obese 18.5% 26.7% (BMI>30.0)Their overall obesity rate is growing and the Chinese populationhas a higher diabetes prevalence rates at lower BMI’s than in theU.S.
  • Diabetes in ChinaDemographics: Income & Geography Prevalence (%) estimates of diabetes (20-79 years) by income group Urban vs. Rural Prevalence 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Rural UrbanDiabetes is much more prevalent in urban areas and upper-income groups. Studies show up to 5 times as many cases inurban than rural areas.
  • Diabetes in ChinaEducation & Awareness: Known Cases•13% of total medical expenditures in China aredirectly caused by diabetes: RMB 173.4 billion orUS$25 billion•Early diagnosis can lower the risk of complications bymore than 50% 39.3%•Diabetes education significantly improves A1C levels 60.7%in diagnosed patients•Organizations currently working to educate Chinesecitizens include: Chinese DiabetesSociety, International Diabetes Foundation, ChineseMinistry of Health, WHO, Doctors Without Undiagnosed DiagnosedBorders, United Nations, Project HOPE•Corporate partners like Bayer & Elli Lilly are alsosignificantly involved in the effortThe education and awareness diabetes is very limited in China.More than half of people who have diabetes don’t know theyhave it which is costly in terms of dollars and their health.
  • Diabetes Treatments Current Trends Healthcare System Diabetes in China • Options Diabetes • Costs Treatments • Diabetic Stages Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • Diabetes TreatmentsBreakdown of Treatment Utilization in China: Pharma Insulin TCM Lifestyle 80% 12% 24% 61% Pharma 4% Insulin 5% 9% Lifestyle Only Only TCM Only Only • Glucobay • Lantus • Acupuncture • 50-60% Diet • Januvia • Humulin • Herbal Medicine Modification • Actos • Humalog • Diet Therapy • 90% Exercise 3+ • Avandia • Novolin • Meditation times/week • Metformin • Byetta • Massage • Glibenclamide • Biocon • Glipizide • Glufast • Galvus Primary diabetic treatments in China include pharmaceuticals, injectables, Traditional Chinese Medicine and lifestyle changes. The proportion of patients using each method is shown above.
  • Diabetes TreatmentsApproximate Out-of-Pocket Cost (USD) of Diabetes Treatments inChina (per year): Pharma Insulin TCM Lifestyle 80% 12% 24% $125-250 $120 $100-180 $0 Yearly diabetic medication for urban residents is about 5-10% of their disposable income and for rural residents it is about 15- 20%.page 34 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their •Regularly see their •Periodically see clinician clinician clinician •Focus on lifestyle • Worried about disease •Intrusion on their daily changes and prevention progression life • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugarpage 35 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their clinician •Regularly see their •Periodically see clinician • Worried about disease clinician •Focus on lifestyle changes progression •Intrusion on their daily life and prevention • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugar Treatments Controlled with diet On a combination of Insulin dependant and exercise and pharmaceutical drug maybe oral medication therapies or TCMpage 36 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their clinician •Regularly see their •Periodically see clinician • Worried about disease clinician •Focus on lifestyle changes progression •Intrusion on their daily life and prevention • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugar Treatments Controlled with diet and On a combination of Insulin dependant exercise and maybe oral pharmaceutical drug medication or TCM therapies A1C < 7.5 7.5-8.5 >8.5page 37 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their clinician •Regularly see their •Periodically see clinician • Worried about disease clinician •Focus on lifestyle changes progression •Intrusion on their daily life and prevention • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugar Treatments Controlled with diet and On a combination of Insulin dependant exercise and maybe oral pharmaceutical drug medication or TCM therapies A1C < 7.5 7.5-8.5 >8.5 Associated None Single Multiple Conditionspage 38 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their clinician •Regularly see their •Periodically see clinician • Worried about disease clinician •Focus on lifestyle changes progression •Intrusion on their daily life and prevention • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugar Treatments Controlled with diet and On a combination of Insulin dependant exercise and maybe oral pharmaceutical drug medication or TCM therapies A1C < 7.5 7.5-8.5 >8.5 Associated None Single Multiple Conditions % of Diabetic 48% 39% 12-13% Populationpage 39 confidential / for EES internal use
  • Diabetes TreatmentsClassification of Diabetic Stages: Early Moderate Severe Characteristics •Newly diagnosed • Regularly see their clinician •Regularly see their •Periodically see clinician • Worried about disease clinician •Focus on lifestyle changes progression •Intrusion on their daily life and prevention • Try to stay compliant with •Experiencing serious their diets complications •Trouble controlling blood sugar Treatments Controlled with diet and On a combination of Insulin dependant exercise and maybe oral pharmaceutical drug medication or TCM therapies A1C < 7.5 7.5-8.5 >8.5 Associated None Single Multiple Conditions % of Diabetic 48% 39% 12-13% Population It is important to use disease progression as a way to further segment the diabetic population, because treatment options and patient characteristics are different at each stage.page 40 confidential / for EES internal use
  • Strategic Analysis Current Trends Healthcare System Diabetes in China • SWOT • Porter’s Five Forces Diabetes Treatments •Key Takeaways Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • TOWS Strategic Alternatives MatrixStrategic AnalysisSWOT: Internal Strengths Internal Weaknesses 1. J&J Brand awareness 1. New entry to market 2. J&J Existing Sales Force 2. Elective procedure (not paid via ins) 3. J&J Training Facilities for doctors 3. 1 year limited use 4. Fewer side effects than alt 4. Muted effects after 1st use 5. Scalability of product 5. Low priced alternatives 6. Yearly (vs. daily) maintenance 6. Unappealing procedureExternal Opportunities External Threats1. Large and growing market 1. Pharmaceutical strengths2. No direct substitute (currently) 2. Possible entrants of substitutes3. Pockets of high income in China 3. Limited skilled doctors in China4. Urbanization movement 4. Limited awareness of diabetes5. Insulin dependancy intolerance 5. Government power6. Prevalance in 20-30 age bracketpage 42 confidential / for EES internal use
  • Strategic Analysis Porter’s Five Forces: Threat of New Entrants – Low Barriers to entry: • Finances needed to get approved in clinical studies • Patents Rivalry – Low Bargaining Power of Bargaining Power of Suppliers – Low • No direct Buyers - High competition• Supplies to make the sleeve for same • Chinese consumers are inexpensive and easily product in have numerous options sourced China to treat their diabetes Threat of substitutes – Medium • Insulin is inexpensive, subsidized by government
  • Strategic AnalysisKey Takeaways: Opportunities Challenges • Large and growing diabetic population • Weak purchasing power of Chinese consumers • Rapid growth in emerging diabetes care market which could translate into first- • Low-cost and easily accessible mover advantage treatment alternatives • No direct substitutes • Cultural resistance to surgical procedures • Growing affluent population • Lack of knowledge about the • Growing concern regarding the safety of seriousness of diabetes medicine available in China • Government proactively encouraging economic investment and health care initiativespage 44 confidential / for EES internal use
  • Potential Markets Current Trends Healthcare System Diabetes in China • Market Segments • Analysis Diabetes Treatments • Selection Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • Potential Markets Mission Critical Work Hard, Play Hard Caregivers Moderate and severe Wealthy, urban, severe Wealthy, urban families diabetics living diabetics who’s busy who are taking care of in rural China who are Westernized lifestyles aging parents with in desperate need of make daily insulin severe diabetes and effective, long-term therapy inconvenient desire a safer more treatment. and difficult to manage. convenient treatment than insulin.
  • Mission Critical Moderate and severe diabetics living in rural China who are in desperate need of effective, long-term treatment. Market Size 28.3M Severe to Moderate Diabetics Skilled Physicians Physicians: 1.3-.06 doctors per 1,000 people Hospitals: 1 hospital every 257-1047 km2 Ability to Pay Rural net income =$812/year 9-22% expected healthcare cost=$85-$179/yearBenefits: Limitations:- Large underserved market - If government or NGO won’t cover- Minimal competition from pharma or costs of device and insulin procedure, consumers will not have- Partnering with government or NGO to ability to pay. bring resources to this population - If there are complications, patients may would be good PR for J&J and fulfill not have immediate access to medical their philanthropic mission care.- There is a serious need for a low - Launching a new product in a high- maintenance treatment option due to need population leaves J&J open to lack of availability of continuing accusations of “experimenting” on the medical care. poor - J&J is a low-risk company and this is a high risk option
  • Work Hard, Play Hard Wealthy, urban, severe diabetics who’s busy Westernized lifestyles make daily insulin therapy inconvenient and difficult to manage. Market Size 239,086 (urban, diabetes, 40-60, severe, affluent) Skilled Physicians Physicians: 5.8 doctors per 1,000 people Hospitals: 1 hospital every 1.4 km2 Ability to Pay Urban Net Income= Global & Mass Affluent: >$15,900 22% expected healthcare cost = >$3498Benefits: Limitations:- J&J currently has strong presence in - It may be hard to convince even severe urban hospitals and connections with diabetics to have this type of skilled physicians procedure, due to:- Targeting severe diabetics is an • Comparatively low cost for advantage due to: alternative treatments • Culturally, only very serious • Cultural resistance to surgical conditions are treated surgically procedures • Clear right to win against • Collectvism, which may make it insulin, more difficult against difficult to find early adopters of a pharma. radically different idea.- Takes price out of the equation and allows J&J to compete on convenience and effectiveness.- Younger generation more open to
  • Caregivers Wealthy, urban families who are taking care of aging parents with severe diabetes and desire a safer more convenient treatment than insulin. Market Size 248,933 (urban, diabetes, 60+, severe, affluent) Skilled Physicians Physicians: 5.8 doctors per 1,000 people Hospitals: 1 hospital every 1.4 km2 Ability to Pay Urban Net Income= Global & Mass Affluent: >$15,900 22% expected healthcare cost = >$3498Benefits: Limitations:- Highest growth rate for severe - It may be hard to convince even severe diabetes is among 60+ population diabetics to have this type of procedure,- Researching and accessing best care due to: for aging parents is very important to • Comparatively low cost for alternative Chinese families treatments- Low-maintenance therapy would help • Cultural resistance to surgical to ease the burden for children taking procedures care of one or more ageing parents. • Older generations being more risk- adverse and closed to western ideals • The possible perception that children are “experimenting” on parents
  • Target Market Selection
  • Target Market Selection Work Hard, Play Hard Wealthy, urban, severe diabetics who’s busy Westernized lifestyles make daily insulin therapy inconvenient and difficult to manage. We chose this segment, because: • Younger segments are less risk-adverse and more accepting of Western practices • Busy, working professionals are willing to pay a premium for convenience • Young, affluent consumers are attracted to high-end (high-priced) Western goods • Urgency of treatment and control is greatest among younger people with severe complications
  • Entering China Current Trends Healthcare System Diabetes in China Diabetes Treatments • Competitive Set • Positioning • Growth Potential Strategic Analysis Potential Markets Entry Strategy Marketing Mix
  • Entering ChinaCompetitive Set: Insulin• In 2010, Novo Nordisk, Eli Lilly and Sanofi-Aventis accounted for 90.6% of China’s insulin market, while Tonghua Dongbao, the largest domestic company, only accounted for 3.7%• In 2009, China’s insulin market size reached up to RMB5.3 billion, but still accounted for less than 6% of the global market.• CAGR for growth in Chinese Insulin Market=26.8%
  • Entering ChinaPositioning:1. CONVENIENT– Right to Win• No more need for insulin• No need to check your sugar levels and inject insulin multiple times night and day• Yearly, rather than daily maintenance2. EFFECTIVE – Right to Win Positioning Statement• Make claims on more improvement in A1C than insulin DiaGuard is the one• Induce weight loss where insulin causes weight gain diabetes treatment that provides severe• While its implanted, you will get better results than if on insulin diabetics with a safe, effective, convenient therapy which has been3. SAFE – Right to Play clinically proven to reduce• Skilled specialists trained and supported by J&J A1c more significantly and• Very few side effects when compared to other have fewer side effects than treatments insulin.• As safe to use as insulin .
  • Entering ChinaGrowth Potential• The first year target for the foothold Projected Revenue Growth 12000000 market is $30M or 15,000 patients, $98.3M which is 6% of the target market 10000000 segment 80000000• Capturing a 6% share of the target USD 60000000 market would equate to a 0.14% share in the overall Chinese insulin market 40000000 20000000• Based on the 26.8% CAGR for growth in the Chinese Insulin Market, we 0 project revenue in 5 years to reach 2012 2013 2014 2015 2016 2017 $98.3M Starting with a base of 15,000 patients or $30M in revenue in year one, would grow to $98.3M in revenues in year five.
  • Marketing Mix Current Trends Healthcare System Diabetes in China Diabetes • Product & Branding Treatments • Pricing • Placement Strategic Analysis • Promotions: o Benchmarking o Advertising Regulations Potential Markets o Consumer Attitudes o Purchase Funnel Entry Strategy Marketing Mix
  • Marketing Mix Product & Branding• Brand Name: DiaGuard • Cultural significance of the “Guardian” concept • Descriptive name helps relay information about the product • Global affluent in China prefer Western brands • English brand helps with global portability
  • Marketing MixPricing•We are not competing on price, because of low cost of alternatives andaffluent target market. We are competing on convenience and effectiveness.•Due to the Chinese consumers’ limited ability to pay, we recommend $2000per procedure as the max price when entering this market • Assuming a 22% healthcare expenditure vs 9% average, $2000 is still more than 50% of total yearly healthcare expenditures for affluent Chinese consumers • Minimum price set by J&J is $1500-$2000•Addressing the Gray Market: • Due to the developing medical care market in China, people are not currently traveling to China for medical procedures • Our buyers are not price sensitive, so they would not be “shopping” for lower prices Although we are not competing on price, even affluent Chinese consumers have a limited ability and willingness to pay. We recommend entering the market at a price of $2000.
  • Marketing MixPlacement • 57-75% of middle-class• 2 types of hospitals: consumers would seek specialty 1. Public (81%) medical care at a private hospital • State owned, operated and subsidized by the government • 58-83% of middle-class • Dominate healthcare market consumers believe private 2. Private (19%) hospitals have greater • Primarily foreign-owned or technical expertise joint-venture • Affordable only to affluent • Willingness-to-Pay at Private consumers Hospital: .4% would pay 8 • Small, focus on out-patient times more, 12% would pay 3 procedures to 4 times more, 43% would pay 2 to 3 times more than at public facility We recommend placement in private hospitals. Affluent consumers are more likely to seek specialty care, have greater confidence in, and are willing to pay more at private hospitals.
  • Marketing MixPromotions: Benchmarking-Promote diabetes awareness - Create partnerships with World Diabetes Foundation, the Ministry of Health, and selected key opinion leaders- Physician training - Facilitate physician trainings in both small and large cities- Patient education - facilitate education programs to support patients in using their medicine and facilitate lifestyle changes and prevention - NovoCare telephone hotline – diabetics directly communicate with trained diabetes management specialists - NovoCare Education – run by the Novo Care Club with more than 300 members - Changing Diabetes Bus: promote diabetes awareness, provide feedback to already diagnosed diabetics, facilitate local education initiatives Currently, market leaders are taking a holistic approach to their promotions. Their focus is on awareness, training and education. We recommend J&J take a similar approach with DiaGuard.page 60 confidential / for EES internal use
  • Marketing MixPromotions: Advertising Regulations-2009: Medical ads must be accurate in and SHALL NOT EXAMPLE:INCLUDE: – Assertion or guarantee of effectiveness NO: “Diaguard is more – Description of the efficacy rate or recovery rate – Comparison to other devices, drugs or therapies in effective than insulin at effectiveness or safety treating diabetes.” – Non-scientific descriptions of the characteristics or mechanisms – Research findings that cannot be confirmed YES: “In a clinical – Implications that the device is a cure-all study, DiaGuard was – Promising words such as safe, no side effects, refund if shown to reduce HA1c ineffective, or exclusive words like only, exact, newest levels by __%, compared technology, most advanced – Words that imply the device is necessary for daily life or to ___% with insulin.” curing disease – Words that indicate the device may help the user deal with common life pressures, improve performance, make the user more energetic, taller or more talented. Significant regulations on medical advertisements exist, prompting ads in this industry to be more informational or educational in nature.page 61 confidential / for EES internal use
  • Marketing MixPromotions: Consumer Attitudes Toward Medical Advertising• > 16% of all advertising expenditures are spent on Medical advertising. It is one of the most heavily advertised product categories in China.• 19% of Chinese consumers report using advertising as a source of information about medical treatments (compared to only 2% in US)• Chinese consumers hold positive attitudes toward advertising in general and specifically medical-related advertising• Consumers distrust over-stated claims but appreciate information on new products• 45% report they looked online for information about health care treatment options in the past year• 44% report searching online for information provided by a specific doctor; notably, more than half of those with a chronic condition (55%) say they searched for such information. Consumers have positive feelings toward informational medical advertising and they actively seek out information about treatment options.page 62 confidential / for EES internal use
  • Marketing MixPromotions: Consumer Sources of Information • As trusted sources of information on effective and safe treatments, consumers rely on: • 53%: Doctors at academic medical centers • 41%: Reports from medical associations/societies • 38%: Internet (such as Baidu, Google or Baidu Wenku) • 37%: Doctors at community hospitals • 28%: Pharmacies • 27%: Health insurance companies/health plans • 24%: Employers (e.g., health benefits office) • 23%: Pharmaceutical or Medical Device Manufacturers Chinese consumers use a variety of resources, beyond medical professionals, to gain information about treatment options. We sought to incorporate these sources into our purchase funnel.page 63 confidential / for EES internal use
  • Marketing MixPromotions: Purchase Funnel Awareness Interest Consideration Trial Re-Trialpage 64 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Awareness Consumer Awareness Process influenced by: 1) Physician Recommendation 2) Patient/Family-Initiated Research for Better Treatment 3) Diabetic Education and Communications J&J Marketing Methods: - Partnership with Government and NGOs - Sponsorship of major social and cultural Events - Participate in diabetes awareness functions and medical conventions - Ads in business magazines or newspaperspage 65 confidential / for EES internal use
  • Marketing Mix Purchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Partnerships Social Media & Internet Print & Other Chinese Medical Doctor Weibo - A cross between Facebook Association: and Twitter that has +250MM users in Advertise in print publications An established network of China and is growing an additional commonly read by our target +2MM doctors in China +10M users per month group, upscale food magazines, travel & leisureChinese Ministry of Health and Baidu – Baidu is the largest internet World Health Organization: search engine in ChinaLeaders in promoting diabetes Seek out potential spokes person to awareness and education Utilize Weibo to promote diabetes awareness comment, educate, diabetes Example – Jeremy Lin (Athlete – awareness and drive traffic to our own NBA)Participate in Diabetes related website, pay Baidu for diabetesconferences and events with a search results drive traffic to our focus around driving website awareness on all treatment options “in a 2010 survey, 56 percent of Chinese consumers said they regarded online advertising as credible, up from 29 percent in 2009” page 66 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Interest Consumer Interest Process influenced by: 1) Convincing information about how the product will solve their specific problem 2) Easy of access to additional information J&J Marketing Methods: - Use medical sales force to educate endocrinologists - Make informational brochures available for MD’s to give to patients and to display in waiting room - E-newsletter from physicianpage 67 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Sample Brochure:
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Consideration Consumer Consideration Process: Patient & Family need information that: 1) Gives detailed information about the procedure, benefits, cost and availability 2) Gives testimonials/success stories from current patients J&J Marketing Methods: - Website for additional research (benchmark: endobarrier.com) - Include information specific to patients and family members, because this is a family decision - Testimonials from past patientspage 69 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial diaGUARD Contact Us Helping you fight the diabetes  Sign up for our challenge NewsletterWhat is diaGUARD? How it works? Is it for you? Support Contact Us How do I get my diabetes under control? In a 60 minute procedure performed in an outpatient center, a protective sleeve is placed just beyond the stomach within the first portion of your intestine. As a result of getting this procedure and changing the way your body processes food, you can expect better control of your diabetes, as compared to other available treatments.
  • Marketing Mix Purchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial diaGUARD Contact Us Helping you fight the diabetes challenge  Sign up for our NewsletterWhat is diaGUARD? How it works? Is it for you? Support Contact Us Videos: - How it is put in - How it works - How it is removed - Living with diaGUARD
  • Marketing Mix Purchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial diaGUARD Contact Us Helping you fight the diabetes challenge  Sign up for our Newsletter What is diaGUARD? How it works? Is it for you? Support Contact UsIs the diaGUARD right for you?Are you a patient who:• Has been unable to manage their type 2 diabetes with medication or lifestyle modifications?• Are you tired of daily monitoring and injections?• Are diabetes and constant insulin injections stopping you from living the life you deserve?• Looking for a safer and more convenient solution?
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trialDrive traffic to www.diaguard.com by :• Search Engine Optimization through Baidu.com, China’s number one search engine (both natural and paid search).• Sending our newsletters (email blasts)page 73 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Trial Consumer Trial Process: Patient & Family need information that: 1) Validates efficacy & safety of procedure 2) Makes procedure seem “socially acceptable” J&J Marketing Methods: - Published studies in academic journals - Testimonials from doctors - Online “Community”: It’s important to feel accepted and part of a grouppage 74 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Academic Studies: MD Testimonials: Online Community: SNSChinese Medical Web sites of private RenRen: “For Everybody”Association: Publishes the hospitals performing most popular SNS in Chinamost heavily cited and procedurecirculated journals. Kaixin001.com: Another very Web MD-type service in popular social network.The Chinese Academy of China - Users are mostly "whiteMedical Sciences: Second collar middle class" andto CMA in citation and Diaguard.com typically come from a "firstcirculation. tier cities.“ - Extremely popular among people who work for multinational companies and other white collar companies. - Wealthy user base.
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Re-Trial Consumer Re-trial Process: Patient & Family need information that: 1) Demonstrates and monitors their success 2) Provides value-added services 3) Creates personal relationship J&J Marketing Methods: - Smart Phone App to: provide ongoing support, track success and countdown to next procedure - Health-coaching- 24/7 supportpage 76 confidential / for EES internal use
  • Marketing MixPurchase Funnel: Awareness>Interest>Consideration>Trial>Re-trial Diabetes Apps: Benefits of Health Coaching:dLife: U.S. Benchmark -Increases compliance & helps with disease managementAllows user to:- log glucose levels -Lowers overall health costs for- find recipes and nutrition information consumers- Watch dLife videos- Connect with the dLife community -Creates long-term relationship- Connect with experts to get answers and decreases switching to diabetes-related questions behavior- graph daily, weekly, or monthly glucose levels and track trends - Having medical professionals- E-mail information from app to available to offer 24/7 health yourself or your health care provider. support gives value-added service
  • Marketing Mix Promotions: Purchase Funnel Summary Awareness Interest Consideration Trial Re-Trial• Partnership with • Use medical sales • Website for • Published studies • Smart Phone App Government and force to educate additional research in academic to: provide NGOs endocrinologists (benchmark: journals ongoing endobarrier.com) support, track• Sponsorship of • Make informational • Testimonials from success, and major social and materials available • Include information countdown to next cultural events in MD waiting room specific to patients doctors procedure and family• Participate in • Supply doctors with members, because • Accepting diabetes awareness materials for this is a family “Community”: It’s • Health-coaching- functions and patients that makes decision important to know 24/7 support medical conventions it easy to access that others support additional • Testimonials from the decision • E-newsletter & on-• Ads in business information past patients line community magazines or newspapers• Cross-promote with insulin at the pharmacy page 78 confidential / for EES internal use
  • Next Steps Once a foothold has been established, we suggest: 1. Move into Caregiver segment • Procedure will now be seen as more socially acceptable and less risky • Can use the power of “Word-of-Mouth” Mission Critical Advertising Caregivers Moderate and severe Wealthy, urban families 2. Build the support to make diabetics living Mission Critical a who are taking care of in rural China who are success aging parents with in desperate need of • Entering in a high-end severe diabetes and effective, long-term market establishes desire a safer more treatment. this as truly convenient treatment philanthropic vs. than insulin. experimental • Proven safety & efficacy will help to gain financial support