An innovation makeover changing times for MedTech · 2018-12-12 · Few medtech companies are aggressively using digital technologies - social, mobile, analytic, and cloud (SMAC)

An innovation makeover – changing times for MedTech

15 May 2014

www.pwc.co.uk

PwC

Agenda

Innovation

Global Innovation Survey 2013

MedTech Scorecard

“Owning The Disease”

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15 May 2014 IMDA Members’ Evening - Athlone

PwC

The obligatory Apple slide!

Far out

• Software-defined UI with FingerWorks multi-touch

• Complete rethinking of phone functionality

• iOS – the mobile version of OS-X

• Fully-spec’d HTML browser

• Touch screen using Corning ‘Gorilla glass’

• Accelerometer and proximity sensors

• Sealed case allowing thin battery

Play safe

• GSM (2G) baseband 850/900/1800/1900 MHz

• Low-end 2MP camera

Beyond the product

• Direct relationship with end-user via iTunes

• Operator exclusive deals with revenue sharing

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Don’t look just to products to create and capture value

Products/ Services

Process Technologies

Supporting Technologies

Technology Innovation

Value Proposition

Value Network

Target Customer

Business Model Innovation

Source: Making Innovation Work, Davila, Epstein, Shelton: Wharton School Publishing, 2006

• Fulfill unmet needs

• Create solutions

• Create new value

• Charge for what is valued

• Find new ways to deliver value

• Deliver value faster, better, and cheaper

• Connect through partners

• Find non-consumers

• Orchestrate the ecosystem

• Improve performance and features

• Enhance packaging integral to customer value

• Improve production efficiency (manufacturing, assembly, etc.)

• Increase service levels

• Integrate IT systems

• Enhance logistics/ inventory planning tools

Customer

Insight

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How much innovation you need dictates how you should innovate

Breakthrough Innovation

Incremental Innovation

Radical Innovation

2 3

1

Te

ch

no

log

y

Close to Existing

New

Business Model New

Possible Operating Models:

Traditional R&D +

7 Potential Sources of Breakthrough

Innovations

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Global Innovation Survey – Headlines

Leading innovators:

1. Have grown 1.5 x more than the least innovative

over the past three years and are forecast to grow 2.0 x over the next 5 years

2. Targeting a greater proportion of breakthrough and radical innovations

3. Extending their innovation focus to business models, operating systems and customer experience

4. Exploring a wider range of innovation operating models

5. Collaborating more extensively with customers and external partners

6. Taking a more disciplined approach to innovation, with a well-defined strategy

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Innovation Operating Model – Putting it together to work as a cohesive whole

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Principal goals and targets for the business; rationale for why innovation is sought or required

Amount and type(s) of innovation desired and focus areas

1 Business Objectives & Rationale

2 Innovation Strategy

Inn

ov

ati

on

Op

er

ati

ng

Mo

de

l D

ime

ns

ion

s

Leadership Culture Talent Ecosystem Metrics

3 4 5 6 7

Strong senior executive support and strong innovation management team

Level of entrepreneur-ship, openness and level of commitment to new ideas

Right skillsets, functions & team size

Ability to leverage and incorporate partners/clients/ others into solutions

Appropriate measurement criteria. Appro-priate incentives for team

Portfolio

Governance

Organisation

Funding

Processes

8 9 10 11 12

Ability to ideate, develop mix of solutions and sufficiency of pipeline

Appropriate parties as decision-makers; executive sponsorship

Appropriate structure for innovation (centralized, decentralized or hybrid)

Sufficiency of funding and effectiveness of funding process

Efficiency and effectiveness of end-to-end system

PwC

HRI MedTech Innovation Scorecard

• Follow-on from GIS 2013

• More than 50 unique companies participated in the research including those doing business in:

• In-vitro diagnostics, disposable medical products, medical equipment, diversified life sciences, implantable devices

• Other healthcare companies

• New players in medtech

• Interviews with more than 30 top executives

• Web-based innovation scorecard that assesses companies based on leading practices in organizing, managing and fostering innovation

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The context –MedTech’s perfect storm?

R&D-focused innovation no longer generating as much growth and profitability

VC funding and deal value/activity still below pre-Great Recession levels

Increasing competition from emerging markets and new entrants

Regulatory reform demanding value not volume

Global emphasis on increased access, lower costs, and better outcomes

Social, mobile, analytics and cloud disruptive technologies

1

2

3

4

5

6

1

Source: Medtech companies prepare for an innovation makeover, PwC Health Research Institute, 2013

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The importance of innovation in medtech is growing

vs. 43% today

51% in 5 years across all industries

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Key findings – 1

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New integrated services and business models that address clinician and consumer needs are becoming as or more important than product innovation.

• Focus on product innovation remains king.

• Medtech executives were almost 2X likely than other industry executives to say that product innovation was top priority in the coming year (46% compared to 28%).

PwC

Key findings – 2

Medtech executives expect a higher level of innovation over the next three years, but they lack formal innovation processes and structures to help them achieve their goals.

• More balanced focus on incremental, breakthrough and radical innovation over the next three years.

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Key findings – 3

Few medtech companies are aggressively using digital technologies - social, mobile, analytic, and cloud (SMAC).

• 50% of medtech companies appear to be using SMAC to at least some degree for patient engagement, health management and remote monitoring.

• Few companies (11%) are using SMAC aggressively to create new business models.

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Key findings – 4

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Medtech companies are looking to open innovation as a key approach to drive future growth.

• Finding the right external partners to collaborate with is difficult.

• Medtech companies co-create with customers or external partners on less than one-third of their innovative products and services.

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Key findings – 5

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New entrants are staking their claim in medtech.

• 17 Fortune 50 companies have entered the medtech space in a variety of ways.

• These new entrants are driving innovation at the pace of technology, not healthcare, change.

• Medtech companies must get ready to compete with or partner with them or risk being displaced.

PwC

Business model innovation – Owning the Disease Case study 1 – Philips providing the total solution

Reduce

variability within

supply chain to

reduce costs of

expensive

technology

Results:

• Improve outcomes & deliver more effective and cost-efficient care

• Build a new services business model to address current & future clinical, operational and equipment needs

Provides medical

equipment,

training, and

maintenance

Offers access to

other Philips

businesses (e.g.,

lighting)

Employees will

work in-house at

Georgia Regents

to develop

systems, offer

ideas, and

promote

patient health

Allows Philips to

test new

products and

conduct

research and

development

programs

Incorporate

more Philips

healthcare

products into

areas of care,

including

radiology,

oncology, and

cardiology

Innovation via alliance

between provider &

manufacturer

Outcomes Driven Cost Effective Efficient

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Business model innovation – Owning the Disease Case study 2 – Merck Serono owning growth hormone therapy

Innovation in the new

healthcare paradigm

Molecular Dx

screening IDs

patients who

would benefit

from treatment

Wireless Easypod

injection device

records dosage

data and

transmits to

clinicians

Nurse call center

intervenes when

notified by device

of patient non-

compliance

Clinical nurses in

physician’s office

assist in treating

patient

EHR Integrates

patient

information

Value-based

reporting to NHS

demonstrates

compliance and

improved

outcomes

Results:

• Sales growth in a declining, off-patent brand

• Sales force reduction

• Smaller administrative costs; improved margin

• Enhanced patient outcomes at lower cost

• Better clinical integration

• More care provided in home settings at lower cost

Personali

zed

System-

based

Value

driven

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Business model innovation – Owning the Disease Case study 3 – Medtronic providing continual care services

Medtronic’s acquisition of Cardiocom helps it offer more comprehensive heart failure treatment value to

hospitals under cost-cutting pressure

Cardiocom‘s

telescale and

other tele-

monitoring

devices will help

it provides

instant feedback

to patients and

can reduce

readmissions

CardioSight

Reader can be

used to obtain

important details

on a patient; a

Heart Failure

Management

Report or Cardica

Compass Trends

Report is quickly

sent to the doctor.

Data allows

doctors to see

how well device

and medications

are working

together and how

heart function

may change over

time

Merck’s cardiac

resynchronization

therapy devices

help the heart

beat in a more

coordinated

fashion

Medtronic’s

CareLink Network

helps doctors

check a patient’s

condition and

device status

remotely when the

patient is traveling

Medtronic’s

Insertable Cardiac

Monitor helps

doctors identify

whether

unexplained

fainting is related

to an irregular

heartbeat or other

cardiac related

problems.

Business Model

Innovation

Diagnosis Treatment Engagement Analysis Support Data

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Business model innovation – Owning the Disease Case study 4 – Sanofi owning diabetes

Sanofi drove 15% growth in insulin sales by becoming “a 360° partner delivering best-in-class and integrated

solutions to diabetic patients”

AgaMatrix iPhone

app shows patient

relationship

between insulin,

glucose, and other

factors to drive

effective

management

AgaMatrix

iBGStar glucose

meter syncs data

with app;

glucose/insulin

data can be

emailed to

providers

App provides

individualized

glucose pattern

charts that can

analyzed by

providers

Diagnosis Treatment Engagement Analysis Support Data

Sanofi insulin

drugs

Partnership with

Healthy

Interactions

to foster greater

dialogue between

patient and

provider

Myriad RBM

molecular Dx

screening IDs

patients who

would benefit from

treatment

Business Model

Innovation

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Owning the Disease...

Key points of Owning the Disease business model innovation

… differentiates a product by creating value beyond the product, which can enable a “commodity” to

become superior

… improves efficacy by improving engagement and adherence, which increases confidence

among clinicians, payers and patients

… harnesses SMAC technologies in a comprehensive and patient/consumer oriented manner and provides

more support to clinicians and evidence to payers

… is a platform strategy where you must decide if you will create and lead the platform, participate in

someone else’s platform, or both

… delivers impressive results when deployed effectively

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Key take-aways

Look beyond the product to create new value.

• Medtech must use several innovation levers if they capture new value streams and answer the emerging needs of all healthcare stakeholders including physicians, payers and patients.

• Bundling products and services can create value and provide a defense in the face of new entrants.

Collaborate to get closer to the patient.

• Opportunities exist for medtech companies to bridge the gap of time and distance between patients and clinicians.

• Medtech companies must integrate into the broader patient experience and the healthcare industry itself. They must develop a consumer orientation.

Be ambidextrous.

• Innovation is all about the concept of fast frequent frugal failure through rapidly iterating MVPs. Companies that create an environment conducive to this notion will develop high value solutions over time through a Lean Startup approach.

• Needs of innovation are different from those of day-to-day business which should be run efficiently along lean 6 Sigma principles.

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Download the reports, interrogate the data

Global Innovation Survey 2013

www.pwc.com/gx/en/innovationsurvey/index.jhtml

HRI MedTech Innovation Scorecard

www.pwc.com/us/innovationscorecard

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http://www.pwc.com/gx/en/innovationsurvey/index.jhtml

http://www.pwc.com/us/innovationscorecard

Thank you.

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separate legal entity.

PwC

Patrick Heslin, Product Innovation & Development +44 7738 844872; [email protected]

A graduate of University College Dublin, Patrick is a Chartered Mechanical Engineer with over 25 years’ experience in industry and consulting and is a member of PwC's Product Innovation and Development team based in London.

Having started his career as a design engineer with an automotive OEM he subsequently led the product development function of a global automotive Tier 1.

More recently Patrick has been responsible for the engineering and project management activities of an international company in the medical device sector where he oversaw the development and launch of a range of products.

Patrick’s consulting experience has been gained across several sectors including Medical Device, Pharma, Automotive and Consumer Electronics.

24 15 May 2014 IMDA Members’ Evening - Athlone

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Antoinette Ryan, Pharma & Life Science R&D Lead +353 1 792 6549; [email protected]

A graduate of University College Cork, Antoinette is a Chartered Tax Advisor with more than 15 years tax experience, working with companies in the Pharmaceutical and Life Science Industry.

Since the introduction of the R&D tax credit in Ireland, Antoinette has led PwC’s Pharmaceutical and Life Science R&D offering. Working with some of Ireland’s largest companies in the Industry, Antoinette has extensive R&D credit experience in the Industry.

She has led teams delivering R&D tax credit training, preparing and reviewing R&D reports and also has in-depth experience of Revenue audit of R&D claims.

Antoinette also has an excellent working relationship with Revenue’s policy division in Dublin Castle and has an in-depth knowledge of Revenue’s expectations and interpretations in the context of R&D audits.

25 15 May 2014 IMDA Members’ Evening - Athlone

Documents

An innovation makeover changing times for MedTech · 2018-12-12 · Few medtech companies are aggressively using digital technologies - social, mobile, analytic, and cloud (SMAC)