Charles Cazabon


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  • T $484M (126 cos); HS, $299M (56 cos); cleantech: $192M (28 cos);revamp of FDA 510K approval process cited as reason for loss of investment
  • (2010 to 2020: # of 65 yr olds will incr by 35% vs 10% for US population
  • (coverage for new products, new CPT codes and RUC process)Difficult to raise capital
  • Outsourcing sales and distribution
  • Charles Cazabon

    2. 2. Agenda> BDC> The Medtech Industry> The Venture Capital Industry> Opportunities> Risks> Conclusion 2
    3. 3. Accelerate entrepreneurs’ successBDC’s Mission Help create and develop Canadian businesses through financing, venture capital and consulting services, with a focus on small and medium-sized enterprises (SMEs)We share the entrepreneurial spirit that drives Canadian businesses – Our dedicated and experienced employees are helping more than 28,000 clients reach their full potential – Over 100 Business Centres across Canada to provide our clients with solutions that meet local economic realities – Close to $17.7 billion of assets under management 3
    4. 4. BDC Venture Capital> Investing since 1975> BDC is a major provider of risk capital to companies with high growth potential and promising strategic positions, operating in the high technology and biotech sectors> Our focus is on business in the areas of health care, information technology, cleantech and funds> Invest >$100MM/year> As at March 31, 2011 assets totalled approximately $480M incl. $114M in indirect (22 funds) and $366M in direct 4
    5. 5. Medtech –Introductory Statement Medical innovation will not benefit patients unless you can build a successful business around it. (Institute for Health Technology Studies, April 14, 2011) 5
    6. 6. Medtech - The Requirements> Safe and clinically effective products> Market need> Provider buy-in> Someone to pay for the product> A company that develops, manufactures and sells the product at a profit 6
    7. 7. Medtech - The Industry> Worldwide medical equipment & supplies market = $220B> US industry consists of 11,000 companies with sales of $75B> Cdn industry consists of 2,500 companies and sales of $6B> High G.M. (40-60%) and R&D that represents 10% of sales (product obsolescence)> Dependence on large customers 7
    8. 8. Venture Capital Industry -Introduction> Returns are based on capital gains> 5 to 15 year hold> Low conversion rate> 2/6/2 » 1/5/4 success rate> Exits are essential to success: public issue, M&A or “put”.> More money is almost always needed 8
    9. 9. Venture Capital Statistics > US: VC investment in the US totaled $21.8B in 2010, 19% incr. in $ over 2009 level (3,277 deals) > US: Medical devices & equipment received $3.4B in 2008; $2.5B in 2009; and $2.3B in 2010 (324) deals (PWC/NVCA Money Tree Report) > Canada: VC invested $1.1B in 354 companies (all sectors) in 2010 ($1.4B in 2008, 337 co’s) 9
    10. 10. Venture Capital Statistics cont’d.> Fund raising totaled $819M down 24% and lowest level in 16 yrs> M&A activity somewhat positive but prices are depressed (valuation multiples at Mar 2011 were 0.5x sales and 3.1x EBITDA); public company eps multiple was 13.5x at Mar 2011 vs 20x at end of 2008 10
    11. 11. OPPORTUNITY - Why Medtech?> Demographics> Indispensable nature of products> New sectors are emerging – robotic surgery – portable devices – minimally invasive surgery (material science technologies) – wireless technology (real time data) 11
    12. 12. OPPORTUNITY - Why Medtech?cont’d.> Healthcare cost containment> European regulatory pathway> Less expensive to develop than biotech 12
    13. 13. The Risks> Increasing time, expense and uncertainty of innovation – Health reform uncertainties – Increasing time/expense of FDA approval process – Increasing time/expense to obtain reimbursement 13
    14. 14. The Risks cont’d.> Trend to taking innovations to China, India, Brazil: radical innovation to occur there?> Competition from biotech products e.g. tissue replacement> No patent cliff, e.g. blockbuster knee, but steadier 14
    15. 15. Conclusion> Need for innovative business model & financing strategy as well as innovative technology> Low cost model to partnering (3 years)> Rely on strategic alliance to fund regulatory costs and development; partner has option to purchase> Angel investing 15
    16. 16. THANK-YOU Charles Cazabon BDC Venture Capital 514-496-0708 1-888-info-BDC