What’s Hot in the Healthcare Industry

What’s Hot in the Healthcare Industry

Trends, Opportunities, and Challenges Through the Eyes of Survey Participants

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Dear Sir/Madam,

Thank you for taking the time to complete Frost & Sullivan’s inaugural ‘2013 Search for Growth’ survey. We received 1,835 completes from executives in more than 40 countries who selected, in total, more than 20,000 hot topics. Frost & Sullivan’s research team used the findings, and your open text feedback, to select and prioritise the topics that were deemed to be poised for the greatest growth and have since conducted (or have in the pipeline) primary research on over 70% of the topics that you selected. As a token of our thanks, we have put together some insights for you from the survey on each vertical market. We also teamed up with the design consultancy Orb to create an infographic that highlights the top 3 growth areas by vertical market and provides estimated aggregate growth rates for the hot spots in those markets. If you would like to speak with our analysts about the findings, or any of the markets forecast to grow at the highest rates, please send me an email and I will arrange it for you.

We also had 5 iPad winners and sent copies of the Mega Trends book to the first 100 respondents— thanks to you all also, we trust you liked the prizes.

After the excellent feedback we received on the last survey, we are going to repeat it to provide you with benchmarks on market growth. We will also benchmark your estimates of the growth rates with those of our research team, which we are particularly excited about.So thanks again for your time, and if you have any questions, please do get in touch.

Kind regards,Noel Anderson

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Contents

Section Slide Number

Survey Coverage 4

Healthcare Market Outlook 9

Healthcare—Convergence with Other Industries 16

Healthcare—What Participants Saw as Hot Topics in 2013 20

Three Big Predictions for the Rest of the Decade 22

The Frost & Sullivan Story 24

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Survey Coverage

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9% 11% 2% 8% 10% 9%

6%7%

9% 1% 3%

16% 8%

2%

24%

22%12%

9%10%

7%

11%

9%

6%

10%7%

11%

12%

16%

9%

14%14%

15%

13%

13%

13%

5%4%

5%

4%

6%

21%24%

59%

9%19%

34%

1% 2% 4% 1% 2% 1%

Measurement & Instrumentation

Information & Communications Technologies

Industrial Automation & Process Control

Healthcare

Energy & Power Systems

Chemicals, Materials & Food

Automotive & Transportation (including Logistics)

Aerospace & Defence

Other

Industry—By Region

A key enabler of growth, healthcare pervades almost all aspects of the production process and service provision across Frost & Sullivan’s research coverage areas.

Source: Frost & Sullivan

EIA: Europe, Israel, and AfricaMENASA: Middle East, North Africa, and South AfricaAPAC: Asia-Pacific

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GlossaryM&I: Measurement & InstrumentationICT: Information & Communication TechnologiesHC: Healthcare EPS: Energy & Power SystemsA&D: Aerospace & Defence BFS: Business & Financial ServicesA&T: Automotive & Transportation IPC: Industrial Automation & Process ControlCMF: Chemicals, Materials & Food EBT: Environmental & Building Technology

CEO/Leadership 6%

R&D/Innovation

18%

SalesLeadership

11%

Market Research 8%

Marketing21%

Corporate Strategy

11%

Other 11%

Corporate De-velopment 6%Investors/Finance 2%

Competitive Intelli-gence 5%

Industry and Function

In line with the importance of Frost & Sullivan’s core business units, the A&T, HC, and ICT industries have the highest sample share.

A&D 6%

A&T16%

CMF 9%

EPS 10%

EBT 4%BFS

5%

HC 14%

IPC 5%

ICT21%

M&I 1%

Other 9%

Industry Function in Organisation


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21% 16% 29% 20% 23% 27%

23% 22%27%

27% 18% 20%

56% 62%44% 53% 59% 53%

Small (annual revenue up to USD 100 million)

Medium (annual revenue of USD 100 million up to USD 1 billion)

Large (annual revenue over USD 1 billion)

Overall N. America L. America EIA MENASA APACn=1410 n=464 n=54 n=508 n=135 n=258

Company Size—By Region

N=1410 (excl. NA/Don’t know n=410)Q96 What are your expected annual revenues globally in 2012 in US dollars?

Of respondents, 56% work in large organizations with over $1 billion annual revenues. In North America, the share of large companies is the highest.

Company Size:


Company Size by Region, Global, 2012

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Overall (n=1,820)

A&D(n=113)

A&T(n=287)

CMF(n=171)

EPS(n=185)

EBT(n=71)

HC(n=247)

IPC(n=88)

ICT(n=383)

M&I(n=26)

2.2 2.31.9

2.52.1

2.6

1.6

3

2.1

3.8

Industries Tracked in 2013

Respondents track an average of 2.2 industries. HC, ICT, A&T, and EPS will be the most tracked industries in 2013.

Number of Industries Tracked in 2013

By Function

CEO/Leadership

(n=118)

R&D/Innovation

(n=334)

Sales Leadership

(n=209)

Corporate Development

(n=105)

Market Research(n=148)

Competitive Intelligence

(n=83)

Investors/Finance(n=43)

Marketing(n=375)

Corporate Strategy(n=197)

2.3 2.3 2.2 2.3 2.2 2.0 2.5 2.1 2.2

By Region

North America(n=556)

Latin America(n=354)

EIA(n=690)

MENASA(n=162)

APAC(n=358)

2.2 2.4 2.1 2.6 2.2


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Healthcare Market Outlook

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Last Decade Current Decade Next Decade

Types of Companies

Market Dynamics

Main Focus

Revenue

Pharmaceuticals—Business Outlook

Approximately $328 billion (pharma) (total drugs market - $353 billion)

Approximately $766 billion (pharma)

(total drugs market - $830 billion)

Approximately $1,350 billion (pharma)(total drugs market - $ 1,487 billion)

Focus was on better screening of drug candidates and faster market launch because the clinical development process is risky and lengthy.

Commercialization of drug candidates is the main focus. Non-core competencies, including activities such as drug discovery, drug development (early stage clinical development), and manufacturing, are being outsourced.

Convergence with drug discovery, drug development, and drug delivery

M&As and alliances with pharmaceutical firms

Very high ROI for successful drug candidates (those with successful market launch and positive clinical trial data on efficacy and safety), for example, Pfizer's Lipitor (Atorvastatin)

M&As and alliances with biotech firms

Acquisition, and alliances with drug discovery, drug development companies, and academic institutions reduces the growing R&D productivity gap for the pharmaceutical companies. De-risking of R&D and drug development with cost-effective model is the main driver for the growth of pharmaceutical firms.

M&As and alliances with drug discovery, drug Development, and drug delivery companies

Focus is on less competitive, niche disease segments, and; thereby, shifting away from the blockbuster model.

Big pharma, biopharmaceutical companies, small and medium pharmaceutical firms, CROs, CMOs, generics

Big pharma, small and medium pharmaceutical companies, CMOs, CROs, generics

Integrated companies


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Types of Companies

Market Dynamics

Main Focus

Revenue

Biotechnology—Business Outlook

Approximately $25 billion Approximately $63 billion Approximately $136 billion

Main focus was on drug discovery, leveraged by a healthy funding scenario.

Focus is on niche disease segments such as cancer and autoimmune diseases.

Personalized medicine - more efficient drug development process, based on the research on disease pathophysiology and genetic risk factors

The high growth rate and increasing number of licensing and collaboration deals in the biotech industry attracted investments, not only from pharmaceutical companies but also from investment banks and VCs due to the high future prospects of the industry. Moreover, increased funding and support from the government were the other key drivers for growth of the biotechnology industry.

Lucrative disease segments with premium pricing opportunities such as oncology are the main growth driver. Success of various ,onoclonal antibodies (mAb) such as Rituxan/ MabThera (rituximab) and Avastin (bevacizumab) is a key impetus for growth.

Potential high ROI on personalized medicine will be the main growth driver.

Drug discovery, biopharmaceutical companies, biotech firms, CROs, CMOs, and biosimilar companies

Drug discovery, drug development companies, CROs, CMOs, and biotech firms

Integrated companies


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Current Decade Next Decade

Types of Companies

Market Dynamics

Main Focus

Revenue

Clinical Diagnostics—Business Outlook

$24,504.2 Million $40,208.3 Million $78,234.7 Million

Immunochemistry and clinical microbiology were the largest segments mainly because the human genome had just been sequenced and; therefore, molecular techniques were under development or on their way to the market. Immunochemistry and culture-based techniques were the onlyavailable technologies.

As opposed to tests that needed to be scaled up to be performed at the central lab, tests now need to be scaled down to be performed at the point of care, but at the cost of a lab test. Molecular diagnostics are now recognised as a very effective alternative to culture- based and ELISA-based techniques.

Personalised medicine will be mainstream, and technologies that will enable the personalisation of medicine, such as molecular diagnostics and point of care testing, will grow. Companion diagnostics will be a main area with significant revenue, although it is currently not significant enough to form a part of the IVD market.

There was need for a validated technique that could be scaled up to the volumes of central laboratories, which offered actionable results at economic costs. EIA and culture-based were best-suited at that time and; thus’ were the most widely used techniques.

Need for speed and need at the point-of care are the key drivers of today. Biomarkers-based diagnostics are driving growth in many segments, such as molecular diagnostics, point of care, and tissue diagnostics.

More personalised and quicker diagnosis at the point of need will continue to be key drivers in 2020. The transition towards personalised medicine will lead to the generation of significant quantities of data per patient, making information storage and management more critical in the future.

Laterally integrated diagnostic companies are composed of biomarker companies, OEM manufacturers, and the present diagnostic leviathans. Leaders in data storage and management in other fields such as Google could potentially be expected to enter the healthcare space in a big way.

EIA reagents and equipment suppliers and reagent suppliers for both EIA and culture techniques such as Abbott, Bio-Rad,Bayer, Roche, Beckman Coulter, bioMerieux, Sigma Aldrich

Diagnostic companies with multiple areas of focus include Roche, Siemens, J&J, Abbott, Beckman Coulter, Bayer, bioMerieux, Sysmex, Alere, Becton Dickinson, Instrumentation Laboratory, Qiagen, Radiometer, and Gen-Probe.

Last Decade


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Types of Companies

MarketDynamics

Main Focus

Revenue

Medical Devices—Business Outlook

$153.40 Billion $271.55 Billion $509.25 Billion

More emphasis on quality of treatmentand cure because treatment time wasnever a constraint. Invasive procedureswere the golden standard.

Faster diagnosis and prompt therapy along with patient safety using minimalinvasive technologies

Minimal invasive technologies becoming the preferred choice; therefore, reducing therapy duration and post-operative complications.

Consistently increasing number of chroniccardiovascular diseases led to most pertinent surgical intervention when absolutely required.

Improved diagnostic imaging capabilities coupled with advanced minimally invasive technologies has led to increased procedural volume and product uptake.

Advancement in minimally invasive technology in the form of fully automated, robot-assisted, minimally invasive cardiac surgery and continuous diagnostic pre-operative imaging

Presence of individual imaging, devices,and pharmaceutical companies, for example, Johnson and Johnson, GE Healthcare, and Merck and Co.

Individual companies have started moving towards intersection, for example, BD and Novartis.

A definite intersection of applications and product line between established companies. For instance, a leading vendor from the cardiac imaging industry collaborating with participants from the cardiac devices and consumables industries.


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ProjectedImpact on the

HealthcareIndustry

High Impact

Low Impact

CertaintyLow High

2010 – 2020

Top 10 Global Healthcare Trends

Monoclonal Antibodies

Cancer Vaccines

Gene Therapy

Transcatheter Valves

Hygiene Compliance Monitoring


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Global Perspective—Life Sciences Industry Hotspots

Central and Eastern Europe

China

India

Brazil

• API manufacturing hub• Increasing competency in R&D outsourcing• Anti-infectives and cardiovascular drugs –

fastest-growing markets• Improved IP laws – potentially attractive

climate for FDI

• US-Singapore FTA—Asia-Pacific manufacturing hub

• Highly competent facilities for clinical trials and drug development

• Favourable investment policies—Asia-Pacific headquarters of major foreign pharma companies

• Highly skilled labor and low costs—attractive market for partnerships (CRO, CMO) (APIs)

• Pharmaceutical companies with global presence

• US FDA approved labs are preferred destinations for R&D outsourcing.

• Weak IP protection is a concern.

• High unmet needs in cardiovascular and respiratory disease treatments• Increasing private healthcare expenditure—co-payments are on the rise• Markets are dependent on parallel imports for innovative medicines.• Poland, Czech, and Hungary demonstrating healthy R&D climate.

• Approval of ‘generics law’—patients choose between branded and generic drugs

• Marketing strategy focused on patients, moving away from physicians

• Emerging market with large potential for R&D outsourcing

• Latin American hub for FDI and exports to neighboring nations

• Government policies favour generics use, so branded drugs’ revenues are low.

• Recognized potential for CRO and CMO growth is still in development phase.

Singapore

Argentina


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Healthcare—Convergence with Other Industries

Key Industries Tracked in Addition to Company’s Core Markets, 2013

A&D = Aerospace & DefenceA&T = Automotive & TransportationCMF = Chemicals, Materials & FoodEPS = Energy & Power SuppliesEBT = Environment & Building Technologies

HC = HealthcareIPC = Industry & Process ControlICT = Information & Communication TechnologyM&I = Measurement & Instrumentation

Industry Cross-interest 1 Cross-interest 2 Cross-interest 3 n

A&D ICT 39% A&T 26% EPS 20% 111

A&T EPS 25% ICT 24% EBT 9% 282

CMF EPS 37% A&T 36% EBT 27% 167

EPS EBT 24% A&T 20% IPC 18% 180

EBT EPS 44% ICT 26% CMF 21% 57

HC ICT 18% CMF 15% M&I 8% 238

IPC EPS 42% A&T 26% CMF 26% 78

ICT HC 23% A&T 19% EPS 19% 371

M&I A&T 42% EPS 38% IPC 38% 26


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Healthcare—Convergence with Other Industries

Key Areas of Technology and Business Model Convergence

Connected Health

Life Sciences

Advanced Medical Technology

ICT CMF

Robotic Diagnostics, Automation - Lab-on-Chip, LIMS, Robotic

Surgery

M&I

Active Pharmaceutical

Ingredients, Excipients and Intermediates, Drug Delivery,

Device Coatings

mHealth, Health Information Exchange Systems,

Chronic Disease Management

Healthcare

IPC A&T

Supply Chain, Warehousing,

Freight Forwarding Bulk

Drugs, Chemicals,

Biologics, and Finished Dosage.

Cryostorage of Devices

Valves, Heat Exchangers, Centrifuges,

Dryers, Bioreactor


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Interest in Mega Trends

Overall (n=1820)

A&D

A&T

CMF

EPS

EBT

HC

IPC

ICT

M&I

73%

66%

73%

81%

76%

77%

67%

64%

75%

77%

22%

23%

23%

17%

19%

23%

27%

31%

20%

12%

5%

11%

4%

2%

4%

6%

5%

4%

12%

Interested Undecided Not interested




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Ranking of Mega TrendsHealth, wellness, and well-being is the highest ranked Mega Trend.

New Business Models: Value for Many

Future of Mobility

Social Trends

Beyond BRIC: The Next Game Changers

Connectivity and Convergence

Future Infrastructure Development

Smart is the New Green

Health, Wellness, and Well-being

Urbanization: City as a Customer

Innovating to Zero

Bricks and Clicks

53%

51%

44%

43%

42%

40%

38%

31%

29%

27%

11%

51%

51%

37%

62%

44%

38%

37%

15%

30%

30%

10%

45%

73%

45%

45%

45%

42%

35%

18%

38%

25%

10%

47%

37%

37%

50%

18%

40%

53%

38%

37%

42%

10%

50%

34%

31%

43%

33%

60%

55%

12%

33%

26%

14%

46%

24%

41%

39%

44%

44%

59%

27%

49%

32%

12%

60%

38%

52%

43%

39%

23%

18%

81%

14%

23%

8%

48%

50%

24%

43%

43%

36%

38%

22%

33%

26%

9%

62%

74%

54%

30%

70%

40%

25%

19%

20%

19%

10%

43%

29%

14%

57%

21%

43%

29%

21%

7%

21%

7%

Overall A&D A&T CMF EPS EBT HC IPC ICT M&I




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Healthcare—What Participants Saw as Hot Topics in 2013

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Mobility in Healthcare/mHealth 51%

2 Cloud in Healthcare: Current Issues 45%

3 Regulatory Environments 44%

4 Cancer Market Outlook 39%

5 Remote Monitoring 38%

6 Drug Delivery Market 35%

7 Patient and Consumer Engagement 32%

8 Healthcare Dashboards 31%

9 Electronic Health Records/Electronic Medical Records 31%

10 Growth Drivers Impacting the Medical Devices Segments 30%

11 Drug Discovery Research Outsourcing Market 28%

12 Homecare Market Trends - Demand, Addressable Segments, Infrastructure, and Policy 25%

13 Video Telemedicine 24%

14 Cardiovascular Therapeutics - Dyslipidemia/CHD Prevention 24%

15 Changing Profiles of Influencers and Decision-makers Impacting Medical Device Choice 22%

Healthcare: Identification of Hot Topics, Global, 2013


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Why is mHealth, Cloud in Healthcare and Regulatory Environment considered as Hot Topics by Survey Participants?

• The unprecedented spread of mobile technologies as well as advancements in their innovative application to address health priorities has evolved into a new field known as mHealth (mobileHealth). It is largely supported by mobile devices, such as mobile phones, patient monitoring devices, personal digital assistants (PDAs), and other wireless devices. The penetration prospects of mHealth technologies is significant in the following areas: wireless vital signs monitoring, location-aware tele-monitoring systems, and Bluetooth wireless technology-enabled health trackers. It is an exciting area of opportunity for healthcare growth and will provide innovative solutions for stakeholders, both providers and patients alike, across the spectrum.

• As more healthcare IT and patient monitoring tools are integrated, every hospital facility will eventually have to acquire a fully-enterprise wireless solution. The most innovative mobile healthcare solutions that best meet pressing healthcare needs will be adopted as the gold standard.

• Enterprise-wide healthcare informatics will improve quality of medical services and efficiency of operations while reducing expenditures. Cloud computing is considered to be a key enabler for enterprise-wide solutions. Implementing cloud computing technologies appropriately can help healthcare providers improve the quality of medical services and the efficiency of operations, share information across geographic locations, and manage expenditures. The concept can be applied in a variety of ways, including data storage and data loss prevention, maintaining patient information records, and authorized sharing of information.

• The advantages that cloud computing provides can change the dynamics of the healthcare informatics industry over time. The need for efficient sharing of information across locations in a synchronised manner would be a key driver for cloud computing in healthcare.

• Recent healthcare reforms and policy initiatives across many countries emphasises quality of care more than quantity. In the absence of a sufficient proof of clinical benefit, reimbursements may pose a major hurdle.

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Three Big Predictions

2The healthcare and life sciences industry will consolidate further in this decade with many big pharma companies seeking alternatives to the blockbuster model.

3

1

As healthcare is geared towards a personalized medicine model, companion diagnostics will alter drug development and the commercialization process of drug candidates. Combining biomarkers and drugs will result in enhanced therapeutic efficacy and safety.

The rise of new technologies capable of integrating medical devices into a connected platform enhances the functionality of devices, reduces the man power burden, and minimizes errors.


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