Executive Summary: Alphaeon is uniquely positioned to meet the
needs of the cash-pay segment & engage specialty physicians...
Current State of Healthcare Market

Confidential

2
Current market is composed of healthcare reimbursed based on
medical need & cash-pay lifestyle enhancement healthcare
The ...
Current State of Cash-Pay Market Segment

Confidential

4
The cash-pay healthcare sector is composed of segments focused
on improving the quality of life of the consumer
Cash-Pay S...
The global cash-pay market presents an ~$18Bn opportunity and
is slated to grow to ~$29Bn in 2016 (10% CAGR)
Global Cash-P...
The cash-pay segments are currently composed of the following
products & therapy sub-segments:
Neuromodulators
Fillers
Bre...
The Baby boomers demand and are more willing to pay for quality
of life enhancements than previous generations
Drive for Q...
Decline in physician reimbursement and regulatory pressure are
driving physicians to perform more cash-pay procedures
Impa...
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  • Life sciences vc strategy deck samples

    1. 1. Executive Summary: Alphaeon is uniquely positioned to meet the needs of the cash-pay segment & engage specialty physicians Cash-Pay Segment Alphaeon Overview • Healthcare market is composed of two segments: • Alphaeon will transform the market by establishing a deregulated cash-pay only business that directly engages customers as shareholders – Reimbursed segment, defined by medical need – Cash-pay segment, offering lifestyle enhancement • Global cash-pay segment offers a $18bn opportunity and is poised to grow at 10% CAGR – Medical Aesthetics and Ophthalmic are the most attractive sectors within the segment Market Landscape • Cash-pay segment dominated by Big Strategics (Pharma & Medical Device) – Entered the market to hedge against decline in reimbursement • Big Strategics have low expertise in office-based sales & DTC marketing • These players “disintegrate” targets following acquisition, stunting innovator culture • Big Strategics also extend regulations around physician interaction and promotions to cash-pay businesses following acquisition, resulting in negative synergy – Big Strategics today cannot outbid smaller companies during acquisitions due to negative impact of regulations – Physician input will drive Alphaeon strategy • Alphaeon will be exempt from regulations limiting marketing & sales and physician financial participation in healthcare companies • Alphaeon will acquire platforms within Medical Aesthetics and Ophthalmic & expand via “bolt-on” acquisitions • Acquisition targets will operate independently while leveraging a combined practice management force • Alphaeon will adopt a customer-centric model delivering practice management to customers – Generalist practice partners will compose the majority of Alphaeon sales force • Alphaeon is well-positioned to enter the market today due to historic lows in valuation of cash-pay businesses and low deal flow • Alphaeon will provide >30% IRR Returns to investors and plans to IPO within two to three years of first platform acquisition Confidential 1
    2. 2. Current State of Healthcare Market Confidential 2
    3. 3. Current market is composed of healthcare reimbursed based on medical need & cash-pay lifestyle enhancement healthcare The global healthcare market size valued at $1.2 trillion in 2011 (Pharma: $880Bn & Medical Device: $312Bn) 1. Reimbursed Healthcare • Government reimbursed healthcare sectors address “medical need” of patients • Includes “covered services” • Currently, products are automatically entered into review for reimbursement Medical Need 2. Cash-pay Healthcare 1 3 2 3. Cross-over • Some products & services fall into both categories • Medical need assessed on a case-by-case basis • Government nonreimbursed healthcare includes products that offer life enhancements to the patient rather than addressing “medical need” • Patients pay out-ofpocket (i.e. cash-pay) • Includes “non-covered” products and services Lifestyle Enhancement Medical Need with Lifestyle Benefit Sources: “Medical Device Revenue to Top $300Bn This Year,” Kalorama Information, Jan 2011; Global Pharma Market Forecasts, IMS Health, Dec 2010 Confidential 3
    4. 4. Current State of Cash-Pay Market Segment Confidential 4
    5. 5. The cash-pay healthcare sector is composed of segments focused on improving the quality of life of the consumer Cash-Pay Sector Definition • Cash-pay segments offer consumers quality of life enhancements and are differentiated by lack of reimbursement (i.e. patients pay out-of-pocket) and medical need • While segments below are typically cash-pay, certain procedures/products may be reimbursed when medical need is established (for instance, breast reconstruction under Medical Aesthetics) • Similarly, some lifestyle enhancement procedures outside of the listed segments fall into cash-pay bucket Medical Aesthetics Weight Loss Ophthalmic Cash-Pay Sector Dentistry Illustrative examples throughout this presentation will focus on the Medical Aesthetics and Ophthalmic segments ENT & Sleep Enhancement Confidential 5
    6. 6. The global cash-pay market presents an ~$18Bn opportunity and is slated to grow to ~$29Bn in 2016 (10% CAGR) Global Cash-Pay Market Revenue & Growth $19 $18 $17 $16 $15 $14 $13 $12 $11 $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 CAGR to 2016 18% 17% $17.5 16% 13% 14% 12% 10% 9% 10% 9% 7% $5.0 $4.6 8% CAGR % $Bn 2011 Revenue 6% $4.1 $3.4 4% 2% $0.5 0% Total Medical Aesthetics Dentistry Ophthalmic ENT & Sleep Enhancement Weight Loss Sources: Global Cash-Pay Market, Medical Insights, April 2012 Confidential 6
    7. 7. The cash-pay segments are currently composed of the following products & therapy sub-segments: Neuromodulators Fillers Breast Implants Phototherapy Liposuction Body Shaping Cosmeceuticals Chemical Peels Eyelash Products Refractive Surgery (incl. femtosecond lasers) Premium IOLs Medical Aesthetics Surgical Equipment (incl. LASIK) Diagnostic Equipment Ophthalmic $5.0Bn Incentives Weight Loss Devices Weight Loss Pharmaceuticals $4.1Bn Weight Loss Dentistry $0.5Bn $4.6Bn ENT & Sleep Enhancement $3.4Bn Injection Snoreplasty Radiosurgery Implants Gum Lift Dental Bridges Bonding Diagnostics Braces 4D Imaging Veneers Teeth Whitening Pillar Procedure Laser Surgery (Snoring & Septoplasty) Confidential 7
    8. 8. The Baby boomers demand and are more willing to pay for quality of life enhancements than previous generations Drive for Quality of Life • Desire for improved quality of life from aging baby boomers drives growth in cash-pay market Premium Lens (PC-IOL) Cash-Pay Market – As baby boomers reach 65+ age bracket, approval of cosmetic surgery in the age group has skyrocketed • Baby boomer generation is wealthier than previous generations and more willing to pay out-of-pocket for better care and results – Baby boomers control ~50% of US discretionary income • $612M Baby boomers accounted for over a third of cosmetic procedures in 2011 % of 65+ Population Indicating Approval of Cosmetic Surgery (ASAPS Survey) 77% $416M $241M $305M $118M 2008 2009 2010 2011 2012 2013 Cosmetic Procedures by Age Group (2011) % Cosmetic Procedures 8% 1% 28% 40% $490M % of US Population 14% 20% 27% 19-34 35-50 19% 20% 18 and under 21% 51-64 65+ 2000 2010 43% Sources: Presbyopia Devices Report, Market Scope, 2009; Attitudes on Cosmetic Surgery Survey, American Society of Aesthetic Plastic Surgery; 2011 Statistics on Cosmetic Surgery American Society for Aesthetic Plastic Surgery Confidential 8
    9. 9. Decline in physician reimbursement and regulatory pressure are driving physicians to perform more cash-pay procedures Impact on Physicians • Diminishing reimbursement in surgical procedures challenges traditional practice economics and physicians’ commitment to prescribing the best products for their patients irrespective of cost Decline in Cataract Reimbursement – Medicare reimbursement has fallen dramatically over the last decade – 27% cut in reimbursements scheduled for March 1 delayed until 2013 but continues to threaten physicians • Heightened regulations bar physicians from directly engaging with pharma manufacturers in the drug discovery and development process • Physicians face an all or nothing choice to opt-in/opt-out of Medicare and must accept all Medicare patients if opted-in • Due to regulatory restrictions and poor practice economics, physicians are increasingly marginalized within the healthcare field and less satisfied within their profession US Reimbursement Rate for Cataract Procedures (CPT Code 66984) $958 $929 $795 $773 $748 $743 $669 $671 $684 $684 $684 $610 $626 $549 $550 $550 $550 $435 Proposed Medicare cut 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 1 54.6% Decrease 1 Projection based on expected cut in reimbursement rates of 27% in 2013 Source: Reimbursement schedule, Centers for Medicare & Medicaid Services Confidential 9

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