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2006 Health Policy Forum Presentation

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2006 Health Policy Forum Presentation

  1. 1. Safe Harbor Impact on Health Care Manufacturers William McIlhargey [email_address]
  2. 2. Presentation Focus <ul><li>Manufacturing Sectors </li></ul><ul><li>Market Segments </li></ul><ul><li>Sector Influence </li></ul><ul><li>Go-To Market Model </li></ul><ul><li>Reaction to Change </li></ul><ul><li>Industry Remodeling </li></ul><ul><li>Resulting Impact </li></ul>February 2006 WPM Enterprises - 978-500.9666
  3. 3. Manufacturing Sectors <ul><li>Commodity </li></ul><ul><ul><ul><li>supply oriented </li></ul></ul></ul><ul><ul><ul><li>distribution dependent </li></ul></ul></ul><ul><ul><ul><li>minimum direct sales coverage </li></ul></ul></ul><ul><li>Differentiated </li></ul><ul><ul><ul><li>value differentiation </li></ul></ul></ul><ul><ul><ul><li>ships direct & thru distribution channels </li></ul></ul></ul><ul><ul><ul><li>sales force is margin dependent </li></ul></ul></ul><ul><li>Highly Preference </li></ul><ul><ul><ul><li>“ pure play” and/or “skill based” technology </li></ul></ul></ul><ul><ul><ul><li>focus on clinical buyer </li></ul></ul></ul><ul><ul><ul><li>distributes direct to consumer </li></ul></ul></ul>February 2006 WPM Enterprises - 978-500.9666
  4. 4. Market Segments <ul><li>GPO’s </li></ul><ul><li>IDN/Health Care Systems </li></ul><ul><li>Community Urban/Rural Centers </li></ul><ul><li>Peripheral Markets </li></ul><ul><li>Wholesalers/Distributors </li></ul>February 2006 WPM Enterprises - 978-500.9666
  5. 5. Sector Influence <ul><li>Commodity Business </li></ul><ul><li>Narrow margins demand volume orientation </li></ul><ul><li>Channel strategies married to distribution industry </li></ul><ul><li>Attention demands GPO collaboration </li></ul><ul><li>Seek innovative marketing platforms </li></ul><ul><li>Fees used to position volume </li></ul>February 2006 WPM Enterprises - 978-500.9666
  6. 6. Go-To Market Model February 2006 WPM Enterprises - 978-500.9666 Providers GPO’s Distributors Commodity $$ % $$ contract volume services & programs %
  7. 7. Sector Influence <ul><li>Differentiated Business </li></ul><ul><li>Economic value can be positioned in market </li></ul><ul><li>Share of market determines direct channels </li></ul><ul><li>Where plausible (physical characteristic) will use distribution channels </li></ul><ul><li>GPO relations is an extension of value & market share </li></ul><ul><li>Focus will be on sales development </li></ul>February 2006 WPM Enterprises - 978-500.9666
  8. 8. Go-To Market Model February 2006 WPM Enterprises - 978-500.9666 Providers GPO’s Distributors Differentiated % $$ contract volume $$ contract position $$ % % distribution
  9. 9. Sector Influence <ul><li>Highly Preference Business </li></ul><ul><li>Clinical value establishes position </li></ul><ul><li>Large sales force clinically trained </li></ul><ul><li>Token exposure to national/regional groups </li></ul><ul><li>Local discounting to minimize exposure </li></ul><ul><li>Minimal fee involvement </li></ul><ul><li>Believe price/volume models not effective </li></ul>February 2006 WPM Enterprises - 978-500.9666
  10. 10. Go-To Market Model February 2006 WPM Enterprises - 978-500.9666 Providers GPO’s Distributors Highly Preference $$ % $ contract volume contract exposure
  11. 11. Industry Market Model February 2006 WPM Enterprises - 978-500.9666 Providers GPO’s Distributors Highly Preference Differentiated Commodity
  12. 12. Reaction to Change <ul><li>Commodity Issues </li></ul><ul><li>Retention and growth of volume </li></ul><ul><li>Distribution industry reaction </li></ul><ul><li>Price stability to maintain share </li></ul><ul><li>Fee redistributed to new programs (distributor?) </li></ul><ul><li>Other channel opportunities to consider </li></ul><ul><ul><ul><li>co-marketing </li></ul></ul></ul><ul><ul><ul><li>internet </li></ul></ul></ul><ul><ul><ul><li>branding interests </li></ul></ul></ul><ul><ul><ul><li>OEM </li></ul></ul></ul><ul><ul><ul><li>free market </li></ul></ul></ul>February 2006 WPM Enterprises - 978-500.9666
  13. 13. Reaction to Change <ul><li>Differentiated Issues </li></ul><ul><li>Advantage of further fragmentation </li></ul><ul><li>Pricing mixed – dependent on penetration </li></ul><ul><li>Long term implications of distributor relations </li></ul><ul><li>Fees would be split </li></ul><ul><ul><ul><li>improving margin </li></ul></ul></ul><ul><ul><ul><li>expanding sales & marketing </li></ul></ul></ul><ul><ul><ul><li>promoting clinical justification </li></ul></ul></ul>February 2006 WPM Enterprises - 978-500.9666
  14. 14. Reaction to Change <ul><li>Highly Preference Issues </li></ul><ul><li>Business as usual – limited relationship with centralized economic buyer </li></ul><ul><li>Minimal fee impact given vanilla contracts – bottom line </li></ul><ul><li>No change in pricing/discounts </li></ul><ul><li>May provide a more attentive platform for local negotiations </li></ul>February 2006 WPM Enterprises - 978-500.9666
  15. 15. Business Remodeling February 2006 WPM Enterprises - 978-500.9666 Providers GPO’s Distributors Highly Preference Differentiated Commodity
  16. 16. Resulting Impact February 2006 WPM Enterprises - 978-500.9666 Highly Preference Differentiated Commodity DIRECT MARKET EXPOSURE GPO’S VALUE PROPOSITION

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