Tom Loarie, Mercator MedSystems - Speaker at the marcus evans Medical Device Manufacturing Summit Spring 2012, held in Las Vegas, NV, delivered his presentation entitled Resetting the Vision for Medical Devices: How You and Your Company Can Thrive in the Emerging Global Healthcare Market

1. www.MercatorMed.com

2. Globalization
of the
Medical Technology Industry
gy y
2012 Medical Device Manufacturing and R&D Summit
Thomas M. Loarie, Executive Chairman
Mercator MedSystems, Inc.

3. Shifting Priorities
3 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

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

5. Career Events 1968-2012
•Drug Device
AHSC •Division President Di iti
•Diagnositics
•eHealth
•Sales/Mktg •Ventures •IPO
R&D
•R&D •Financial Mkts
•China
1960 1970 1980 1990 2000 2010
Honeywell International •ADVAMED
Mfg Engineer •Manufacturing •Govt Policy
g
•Logistics

6. 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 i
•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

7. Key Events 1960-2012
•For Profit Hospitals
House Calls Hospital •HMOs •Segmentation
•Doc in the Box
Hospitals
•Hospitals
M&A
1960 1970 1980 1990 2000 2010

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9. Economics and Global Politics
• Security
• Prosperity
• Values
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11. Geopolitical Center is Shifting to Indian
Ocean from Atlantic

13. The Global Middle Class is Booming
P. 13

14. World Population Ageing 1950-2050
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16. China
P. 16

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18. Frugal Innovation
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20. Lessons for Medtech
• 2.5% vs. 20-30% market growthGraying of great
powers (Butter not guns)
• Will parents want one child to be in military?
(China)
• Healthcare spending on the rise globally
• Skilled labor flows
• Implications
– Treatment guidelines
– Reference pricing
20 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

21. Lessons for Medtech
• Low Cost Chinese Competition is Coming
• Growth in Asia is just beginning
• Markets are untapped
• This will be the growth market for next 20 years
• Numerous Local players with cost advantages
• Stent Market shifted over night
• Multinationals went from >70% to <30%
• L
Lepu, Mi
Microport, Bi
t Biosensors all winning
ll i i
• These players are not as rational about price
21 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

22. Lessons for Medtech
• Also taking share in Europe
• Mi d
Mindray
• Kung Hui
• They will compete here
• Multinationals still struggling with business model
- hi h cost and hi h margin model
high t d high i d l
22 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

23. So what to Do
• Change creates great opportunity
• Affordability matters now more than ever – Focus on Value
• Healthcare purchase decisions now driven by value
• Better care or physician profit is simply not enough
• Fee for service model is coming to a close
• Hospital managers have more say than physician employees
• Hospital value analysis committees rule the day
• Make sure you develop cost effectively – Focus on Capital Efficiency
• Healthcare venture has veered off course
• Funds grew large
• Led to complex investments with greater capital and risk
• Though exciting ideas, time & money required high exit valuations
• With lower valuations, purchase prices are generally l
l l ti h i ll lower
• Capital efficiency provides optionality
P. 23

24. Healthcare Reform

25. 25 | © 2012 Mercator MedSystems | All Rights Reserved | 5/15/2012

27. Coordination of Care
New Y k H
N York Hospitals L k t C
it l Look to Combine, F
bi Forming a Giant
i Gi t
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29. New Point of Access

31. Lessons for Medtech
• Physician eTools
• Coordinated Care
• Home Health
• Sensors
• Data

32. The U.S. Advantage
• High education
• High technology
High reward
• High reward
• Country of Laws
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33. Soft Power - Education
• U.S. is #1 educational power in world
• 17 of top 20 Universities in world are in U.S.
– Exceptions are Oxford, Cambridge, Univ of Tokyo
• Of top 500
t
– U.S. = 154
– Germany = 39
– UK = 38
– China = 23
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35. Innovation

36. 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
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