Resetting the Vision for Medical Devices: How You and Your Company Can Thrive in the Emerging Global Healthcare Market - Thomas M. Loarie, Mercator MedSystems, Inc.

Globalization
of the
Medical Technology Industry
gy y
2012 Medical Device Manufacturing and R&D Summit

Thomas M. Loarie, Executive Chairman
Mercator MedSystems, Inc.

Key Events 1960-2012
Back to the Future

•For Profit Hospitals

House Calls Hospital •HMOs •Segmentation
•Doc in the Box •Hospitals
M&A

1960 1970 1980 1990 2000 2010

Health Reform

Key Events in MedTech 1960-2012

Cuts in Funding to AeroDefense •Health Reform
•ACOs
•M&A Hospitals
•TEFRA
•Kessler FDA
•DRGs
M&A
•M&A
•FDA A t
FDA Act •Segmentation
•Marketing
Globalization

1960 1970 1980 1990 2000 2010

•The Great
Social •GoldStandard Recession
Security •Emergence of •FDA Modernization Act •Implosion of
Act of Multi-National
Multi National •CMS takes front seat
CMS Venture Capital
1965

Shifting Healthcare Priorities
Convergence of Forces = Change

• Aging
g g p p
population

• Chronic disease

• Increase in public spending

•P
Pressure on govt. spending
t di

• Globalization of medtech

• Global middle class is
booming

• 4 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

World Population Ageing 1950-2050

5 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

Health Expenditures as
% of GDP


Globalization of U.S. Medical Care

• Global
distribution of U.S.
developed devices and drugs

• OUS clinical research

• Reverse brain drain
• physicians & engineers

• Manufacturing expanded OUS

• U.S. multi-nationals expanding
OUS p oduct research
product esea c


The Global Middle Class is Booming

P. 12

Geopolitical Center is Shifting to Indian
Ocean from Atlantic

Shifting Healthcare Priorities
Responses

• Utilization cuts
• Health Reform
• Harmonization of regs
• Science based adoption
• Globalization of delivery
• Destination medicine
•NNew h lth
healthcare access
• Global competition
• Global consolidation


Health Reform

• Incentives shifting from financial to clinical
– Quality and patient satisfaction are the metrics of the
future
– Decision shift from clinicians to “value committees”
– Shift to value from incremental improvements
p

• ACOs
– Higher volume to fewer but larger customers


Globalization of Delivery

Ascension Health Alliance Invests in Cayman
Medical Tourism Project (April 2012)
• Medical care
g ,
– for those living on the island,
– the Caribbean region
– and the USA.
• P t i with N
Partnering ith Narayana H d
Hrudayalaya H
l Hospitals of I di
it l f India
– Adapt his Indian hospital technique of providing healthcare at low
cost to a relatively high cost destination.
• The Health City is a US $2 billion project.


Globalization of Delivery

• UnitedHealth buys Brazilian provider, Amil, for
almost $5 billion
– Securing strong position in emerging market
– Almost 200 million people
– Market characterized as "under-penetrated”
American World Clinics


Destination Medicine


Destination Medicine
AKA Medical Tourism


Global Competition

Minneapolis Star Tribune
September 28, 2012 - 9:30 PM
28

Medtronic s
Medtronic's Chinese Buy Advances Global Strategy
Article by: JAMES WALSH

In June, Medtronic Inc. CEO Omar Ishrak told an investors' conference that
part of his company s mission for the future was "expanding access and
company's expanding
enhancing value" in China.
In August, Ishrak told Medtronic shareholders that China "is a big piece" of
Medtronic's expectations for 20 percent annual growth in emerging markets.
M d i ' i f l hi i k

• JNJ, Boston, Medtonic open research centers in China

•28 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

urin


The Emerging U.S. Healthcare Eco-System
A Different Focus for Medtech


Generic Therapeutic Devices
A threat to legacy margins


Combating OUS Competition
Frugal Innovation


eHealth
Facilitating Continuity of Care

Big Need - Solutions to Manage Costliest
Chronic Diseases


Expansion into Emerging Markets

Productivity Continues to Improve


Regulation and Legislation


The U.S. Advantage

• Labor advantage
• Globally competitive
– Goldman Sachs 25,000 (13,100 U.S.)
– A l 60 400
Apple 60,400
– Microsoft 90,412
• America is ethnically blind
– Google’s Sergy Brin
– Univ of Chicago s Prof Ruoboni
Chicago’s


Resetting the Vision for Medical Devices: How You and Your Company Can Thrive in the Emerging Global Healthcare Market - Thomas M. Loarie, Mercator MedSystems, Inc.

Resetting the Vision for Medical Devices: How You and Your Company Can Thrive in the Emerging Global Healthcare Market - Thomas M. Loarie, Mercator MedSystems, Inc.

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Resetting the Vision for Medical Devices: How You and Your Company Can Thrive in the Emerging Global Healthcare Market - Thomas M. Loarie, Mercator MedSystems, Inc.