Global Medical Devices Industry Study

8/8/2019 Global Medical Devices Industry Study

1/30

Hello, Im from HCL!. We work behind the scenes, helping our customers to shift paradigms & start revolutions. We use digital engineering tobuild superhuman capabilities. We make sure that the rate of progress far exceeds the price. And right now, 58,000 of us bright sparks are busydeveloping solutions for 500 customers in 20 countries across the world.

How can I help you?

www.hcltech.com

[email protected]

Global Medical Devices Industry Study

LAUNCHING MEMERGING

60


2/30

Professor Ashok JhunjhunwalaIIT Chennai

Innovation happens when three types get together:

a professor, an experienced businessperson anda student who does not know it can't be done

Partners in Research

?Prof. (Dr.) A.K. Ray, IIT Khar?Dr. Vikram Sheel Kumar, MD

This Study is based ofeedback with over

Medical Devices & E

companies, Associate

Medical Doctors and

2


3/30

Most product development conglomerates are under pressure to brintime work harder to address the needs of ever-narrowing customer sesimple increase in the R & D budget will magically improve new produstudy by AMR Research found that 7 out of 10 new products launchefundamental challenge.

This pressure is particularly acute in fast-paced markets, such as those fo

goods, and is further heightened in emerging markets where competitioare unique. CEOs wonder how their product-development organization

Unfortunately, while companies are now looking to make better produinnovations in product development have hit a plateau. As per McKinhave adopted standard product-development processes, with disciplinedecision making, and cross-functional development teams. While these products much more efficient, further improvements are returning sminfusing new innovation into the s ystem.

Product companies are increasingly looking to outsource design enginOutsourcing is being perceived to be the key strategy to lower costs . Hecosystem partners who can help them reduce the risk of new product who can incubate ideas and provide fresh innovative solutions.

HCL with its business aligned global R&D network along with a teamservices, intends to create an ecosystem where subject matter experts

provide solutions for Medical Device Companies.

INFUSE INNOVATION INTO PRODUCT DEVELOPMENT

4


4/30

Having studied in premier institutthe healthcare sector?I studied engineering to learn how tolearn how to indentify the importanindustry is how ideas and innova tionsco-founded Dimagi, a health informnational health smart card program fo2006, I co-founded Cogito Health Imethods to assess the mental state of to assist my maverick neurosurgeorthopedic surgeon to create Doctohospitals in India.

Being a funded investigator on muyou also have won numerous hoinnovators in the world by the MITYear. What motivated you to startI returned from Harvard to Delhi topatients could find two essential elemand excellent healthcare

How is this service relevant for emOur work is very emerging markets cas Ozonucleolysis to South Asia established a network of hospitals a(India) where we train doctors in our excellent healthcare and today have aand Orthopaedics.

How can medical device companiWe are the pioneers in Interventiolooking for appropriate devices for discharged from our hospitals, but mpatient for life. We are also set up to in innovations in pain or orthopaedic

Conversation with an Innovator & Humanitarion

The spectacular advancements in the realm of medical science & technology that our globehas witnessed in the recent decades have been largely possible because of a marriagebetween medicine & technology. A number of very important inventions have significantlyaltered the healthcare scenario of the global population during last half a century. Millions ofpeople all over the globe have been able to enhance their quality of life, yet billions more arestill waiting to enjoy the fruits of this revolution.

The integration of the breathtaking innovation in technological arena with the hugeempirical knowledge-base accumulated by the medical experts in the healthcare sector canbe effectively utilized to design and develop low cost and efficient equipments, so thatmedical diagnostics can be made affordable to this huge section of our fellow human beingsacross the continents. Such equipments should incorporate adequate facilities forautomated early detection of various diseases. The developments which our globe haswitnessed in the area of microelectronics, biophotonics, bioinformatics, biomaterialsciences and tissue engineering may be effectively employed to treat innumerable patientsleading a near healthy life. The need for development of low cost biocompatible prostheticdevices or the biosensors, such as blood flow sensor utilizing MEMS devices cannot be overemphasized. Such devices with provisions for wireless communication would go a long wayin tele monitoring of health parameters.

With the expansion of telecommunication and networking (including satellite and opticalcommunication) the need of the hour is to employ telemedicine and telesurgery for vastpopulation including those coming from remote regions. Here again development ofefficient lossless compression strategies will facilitate the massive deployment oftelemedicine throughout the country. In many parts of the country much of the bandwidthhas been created by government and private service providers, which is not efficientlyutilized. Deployment of telemedicine utilizing this unused bandwidth will be extremelyuseful for the economically challenged people. Our mission should be to provide a platformof interdisciplinary research and development in the field of medical science & technology,which can lead to a better integrated healthcare delivery system in emerging markets.

Latest innovations in medicine may be considered as resonance due to synergy betweenbiological empiricism and quantitative science & engineering. This process of scientificunification always entrains the rhythm of research and development. To maintain interactiveresearch environment and better pooling of resources, it is imperative to developcollaborat ions between universities , R&D laboratories and industries . A dedicate dresearch and development station will initiate and act as a catalytic factor amongst themedical and engineering experts for innovation. With support from all corners we maypledge to make our endeavor a success.

Prof. (Dr.) A.K.RayHead School of Medical Science and Technology

IIT-Kharagpur

Let all our songsGather together their diversestrains Into a single currentleading to an ocean of light- we salute thee

- Gurudev Rabindranath Tagore

Opinions of a Pioneer & Savant

6


5/30

Research Process 9

Executive Summary 10

Successfully Launch Medical Devices in Emerging Market 11

Chapter 1 Understand the Market 12

Chapter 2 Create indigenous products 22

Chapter 3 Create a New R&D Network 32

Chapter 4 Collaborate to Innovate 40

Participate & be the Change 48

About HCL56

TABLE OF CONTENTSResearch Process

?This study is part of the annon survey of 283 Presidents, Researchers & business leadEquipment industry.

?In 2007, HCL had partneredundertook an online survey

envisioning the medical dev

?As part of our research in 2queries. Each were designedrequirements of end users aleaders in this industry

?Participants?President / CTO -4%?VP / Directors - 43%?Mangers - 29%?Analysts 2%?Medical doctors 9%?Research Associates 14

?Process?Face to face i nteractions?Online survey?Telephonic conversations

283 respondents

81% from USA11% from EU8% from APAC

20% are companies with revenuegreater than $10 Billion

30% are companies with R&D spendof over $500 Million

8


6/30

The medical device market is about 50 percent of the world pharmaceuticalmarket in terms of relative size, but is also growing faster than its drugcounterpart. It is dominated by U.S. companies as 16 of the top 25 companies areU.S.- based with 72 percent of the revenue.

MX, a industry trade publication, in its May/June 2008 issue of Business Strategiesfor Medical Technology Executives, estimates that the medical device market willreach sales of $336 billion in 2008. According to MX, although the top 25

companies represent the lion's share of sales (almost 60 percent), there are anestimated 20,000 medical devices companies around the world.

With double digit growth, why should medical device companies look at emergingmarkets? What is the prerequisite to successfully launch a medical device inemerging market? To answer these question we reached ou t to more than 280executives in Medical Devices companies along with Researchers & businessleaders engaged in Medical Devices & Equipment industry. The discussionsresulted in providing a unique perspective on the future of medical devicescompanies.

Our interactions and further analysis provides many striking insights into theirplans and the problems faced while launching medical devices for emergingmarkets.

?Medical devices companies are being affected by the financial crisis: With thefinancial meltdown, most people in developed nations are delaying or lowering

their medical & Health insurance. Thus in the long run will affect the sales ofmedical devices & equipments.

?Looking at opportunities in BRIC nations: On an average 8 out of 10 medicaldevice executives are looking to strategically target emerging markets.Companies are actively engaged in entering the BRIC nations in the near future.

?Create custom solutions: There are more than 4 mill ion doctors & nurses i nIndia & China alone. In countries where medical insurance is just starting to pickup, doctors have a valuable role in prescribing medical devices. 73% of doctorsfeel the need of low cost devices designed specifically for the local environment

?Great need to innovate: More than 85% of the respondents feel the need topartner with research institutes and outsourcing partners to improvetechnological innovation. In fact more than three fourths believe the need tohave a common platform to collaborate and innovate.

The findings across companiehighlight a striking similarity in by medical device companies.The view is further refined suggestions by thought leaders.

Thus to successfully launch

companies must:

Executive Summary Successfully Launch Medical Devices in Emerging Ma

With focus on emerging markets, weare looking for data that will help usenter emerging market. We are alsolooking for a comprehensive vendorthat focuses on innovation and will be apartner on our journey

Director Procurement,Top 3 Pharma & Medical Device

conglomerate

KCreate a NewR&D Network

10

4


7/30

Global Financial Crisis

Economic woes had little effecttwo recessions. Both came at a of the current decade -- whecyclical downturn and able to

faster than underlying health co

This time, though, a weak econotroublesome trend: For employbecome too expensive.

"What we're seeing is a markcustomer that people can literaSheryl Skolnick, an analyst wiuninsured is growing faster thbigger at the expense of the U

JournalChapter 1

Why are top executives looking at emerging markets?What are the challenges faced by medical devices companies?

UNDERSTAND THE MARKET

12


8/30

The Emerging Markets are now the major eng ines of economic growth . Theageing baby-boomers with active lifestyles, emerging middle classes andfinancial stability are some of the key factors creating the tremendous pull inhealthcare industry.

Emerging Markets Major Growth Engine

SourceWORLD ECONOMIC OUTLOOK,October 2007,Globalization and Inequality,International Monetary Fund

Emerging Markets - Growth engines

INDIAGDP: $1,100,695 Mill

Key Drivers?Strong economy, with Govt. ?Public / Private Partnerships?

Unmet healthcare needs in b?Growing middle-class of aro?1/3rd capable of affording qu?Top 20 Medical devices Mark

CHINAGDP: $3,280,224 Mill

Key Drivers

?High Govt. spending in near t?Health insurance coverage: 2?Value segment growth?Medical Devices market US$?Fast growing middle class,?Demand for the best healthc

Emerging Markets Now the Major Engine of Global Growth

(Percent of world growth)

Contributions to Real GDP Growth

Based on PPP Weights35

30

25

20

15

10

5

0

China India United States Euro area Russia Japan Brazil

2007

14

2006


9/30

BrazilGDP: $1,313,590 Million

Key Drivers

?Govt. is encouraging medical hospital modernization?Public & Private modernizing obsolete medical equipments?

The highest expenditure is in the large cities, such as Sao Paulo or Rio deJaneiro?Top 10 Medical devices Market in world

RussiaGDP: $1,289,535 Million

Key Drivers

?Medical equipment and supplies is estimated at US$1,818 million?Healthcare system remains bureaucratic and inefficient?80% of the market is supplied by imports?10% AAGR since 2004-2007?Top 20 Medical devices Market in world

Medical Equipment Market

BRIC Projected Medical Equipm

2005-10 (US$ millions)

?The four BRIC countries hav

?Continuing strong economicthat these economies are be

?May overtake the worlds deover the next 20 years.

Source:The Market for Medical Devices in Brazil,Russia, Ind

January 2006 by Espicom Business Intelligence,Chiches

2005 2006

Brazil 2,866 3,016

Russia 1,832 2,010

India 1,318 1,380

China 2,554 2,720

Total 8,570 9,126

16


10/30

In 2007, HCL had partnered with Knowledge @ Wharton and undertookan online survey to understand the predisposition of envisioning themedical device company of the future. We had many respondents looking toenter the emerging markets. However in 2008, the polarization is startling.More than 85% of the respondents are clearly looking to enter theemerging markets.

Emerging Markets are Attractive Alternatives With Opportunities come challenges

With a fast-growing market, moit sounds like the recipe for a bmanufacturing is one of healthca

But medical device manufactumanage that growth. Compepractice may differ conside

development costs are high. Ma

However, unlike developed natthe need of medical insurance. Wonly afford low cost devices. Gup the drive to ensure fair price

The changing medical needs of theemerging countries are favoringmultinational companies. The BRICcountries medical device andequipment markets are currently valuedat US$9.5 billion.

Stuart Morris-Hipkins,President

Smiths Medical

Yes,85%

Not Sure,5%No,10%

Cost and timing of regulatory process aswell as predictability of the regulatoryprocess is always weighed against marketpotential- this equation inhibits aggressivedevelopment in emerging markets

Stanton Rowe,Corporate Vice President

Edwards Lifesciences

Is your organization strategically targeting emerging markets?

Increasing Costs & Time to Mark

Adopting Technological Innovatio

Regulatory Compliance

Long Product Life Cycle

What are the top challenges fac

18


11/30

Director Procurement of a Top 3 Pharma & Medical Device conglomeratesays that the only way to succeed is when both the company and the vendorcollaborate & innovate to address business goals.

Eight years ago, when HCL Technologies began offering outsourcingservices to U.S. medical device manufacturers, most of the executives withwhom Pradep Nair spoke viewed outsourcing as strictly a matter of cost

savings. According to Nair, VP & Global Head of HCL Life Sciences,Healthcare & Chemical Practice, today, they are looking for solutions tomore complex technical problems and business issues. Four years ago, Iwas a vendor to a customer while now that very relationship is evolving to apartnership.

This change can only come about when the service providers can go beyondoffering engineering services and staff augmentation and rather add value tothe engagement by leveraging best practices and local knowledge. HCL isunique in its approach as it creates 3 levels of innovation Idea generation,engagement models and design innovation., he explains.

Thus the fastest-growing markets are going to be accessible only tocompanies that learn to make the same equipment for a fraction of the costand at the same time launch new, cutting-edge products faster than theircompetition.

Overcoming the Challenges Case Study - Understand the Market

A diversified health care gianttherapeutic segments was loodefibrillator

Products?A next generation external

existing device

Business Problem?Existing device was designed

In the current market scenar?Existing device was not robus?Design was complicated

serviceability issues?The new device had to addre

Solution?Joint ownership of product

Software engineering? Joint market study was u

requirements?Rapid execution of design de?Short development life cycle

Transformational impact on pro

Patients need affordable implants andmedical devices- the diseases are global

just need local solutions.

Dr. Vikram Sheel,Vice President

Doctor Kares Hospital

20


12/30

Top therapeutic segments being targeted for India

In Emerging Markets, devicesdevices, high-tech supplies and digit growth in this industry. Wseveral areas (e.g., ICD), the significantly.

The healthcare industry in Indithose who could afford it haneighboring countries, Middle Etreatment.

In India, healthcare is deliveredsector. The public healthcare sycentral and state government wsubsidized rates to low income

What are the medical practitioners looking for in a device whilerecommending it to a patient? Where do you need to invest to address

the needs of demanding patients, doctors & government regulations?

CREATE INDIGENOUS PRODUCTS

Chapter 2

Limited regulatory issues with theexception of a concern over IP and patentprotection. We also see both the US andEU regulatory commissions demandinglonger, broader scale clinical trials

Head R&DDiversified Healthcare Conglomerate

Cardiology

General surgery

Diabetic

Nephrology

Medi

Othe

None

What are the major therap

22


13/30

In India more than 50% of the total health expenditure comes fromindividuals as against a state level contribution of below 30%. Thegovernment funds allocated to healthcare sector have always been low inrelation to the population of the country. In the private sector healthcareindustry, healthcare facilities are run for profit by companies.

With the recently passed healthcare bill by Government of India, already a

substantial improvement can be perceived in health infrastructure. TheGovernment is upgrading and increasing the total number of hospitals,clinics and clinical laboratories in urban and rural areas.

According to a recent trade report by Royal Danish Embassy, New Delhi &Trade Commission of Denmark, Bangalore, this is expected to drive growthin medical devices sector. The medical devices and equipment segment isexpected to witness considerable imports of medical imaging equipment,cardiac care equipment, and medical laboratory equipment during theforecast period. Telemedicine services in India are also expected to grow,which, in turn, should create demand for diagnostic medical equipment suchas X rays, CT-scanners, dopplers, ultrasound, electrocardiographs, and soon.

Cost Pressure A Major Challenge

Medical device firms may soonwith for several years now dollars to invest in essential R&D

On the one hand, the India andyear while on the other hansubstantial changes in product d

The biggest one: learning to builsays Pradep Nair, VP & Global Practice, HCL Technologies . In twhereas in India, the market wil

Indian Medical Infrastructure15,097 hospitals.500,000 doctors750,000 nurses870,000 hospital beds.

China Medical Infrastructure17,800 hospitals.1,200,000 doctors1,308,000 nurses70% of the population lives in rural areas

5%

Yes

No

Is affordability

24


14/30

In a recent move by the Government of India, Diagnosis and treatment ofdiseases may soon become less expensive. In a move to bring expensivemedical devices such as stents, catheters, orthopedic implants and heartvalves under the price negotiation, the government has asked the NationalPharmaceutical Pricing Authority (NPPA) to collect data on price, supplyand availabilit y of medical devices in the country. The government isunderstood to have told the price regulator to examine pricing of medicaldevices in the country vis--vis other countries having similar purchasingpower. It is learnt that the government is in the process of framing guidelinesfor compulsory price negotiation with companies for their new products

both patented medicines as well as medical devicesat the time of givingmarketing approvals. The data gathered by NPPA would provide thegovernment with a reference basket to negotiate prices of medical devicesaccordingly. NPPA has also recommended to the government that thereshould be differential pricing for medical devices used in the treatment ofcardiac ailments in government hospitals so that less affluent people couldalso afford treatment. The move is significant as the cost of sophisticatedmedical devices add substantially to the already spiraling medical bills.

Rising Expectations & Upcoming Regulations

Source:Economic Times,Govt asks NPPA to collect data on price of medical devices

Source:n=50 doctors,APAC

As per Harvard International China) was predominant in thimported devices were not scrrequired to be registered. Back interest in the free importatiolearning within the domestic meChina would no longer rely so

are changing. The Ministry of Hhealthcare distribution by impoDevelopment and Reform Comfor medical devices due to risinChina Association of the MedAssociation to oversee these result in high demand for meFurthermore, it could discouraChina. The extent to which a sgovernment into the tough potechnological access is yet to be

After sales serviceAvailability

Quality

Affordability

Ease of use

What different aspects you consider before recommending medical device?

Low cost

Different needs

What are the reasons fo

The hand held devices in the markethave high aberrations in their reading.According to ADA (American DiabeticAssociation), the errors should notexceed 5%, however, the typical devicesavailable in India have an error of 20%

Dr Bhaskar Ganguli,General Physician

The regulations being implemented inIndia are a knee jerk reaction and aretypically slow in its implementation.Though there certainly is a need foraffordable medical devices, however, theneed for quality & reliability is higher.

Dr. Deepu Banerjee,Senior Consultant & Neurosurgeon

Wockhardt Hospital

26


15/30

Manufacturers in the medical device market thus face the challenge ofmaintaining profitability despite s lumping average price per unit. Accordingto analysts, while growth in unit sales increased by more than 15.6% from2007, the average price per unit reduced by 8.9% per year from 2007.

Solutions for life style diseases, & diagnostics, such as Medical Imaging,Cardio vascular devices, diabetes measuring systems which are the least

price sensitive, as well as more open to premium solutions, must be a keytarget for device vendors.

The survey highlights that more than 37% of companies are unsure of thecost reduction. However most analysts and doctors agree that the deviceslaunched in emerging markets should be priced between 21- 40% less thantheir costs in developed nations depending on the therapeutic segments.

How to price a device in Emerging Markets? Overcoming the Challenges

A 2007 survey of 1,130 CEOs bycollaboration and partnershipspursuing more collaborative competitive threats and avoid cthe Indian software alliance, anconsultancy, forecasts that 70emerging markets by 2010.

Prof. (Dr.) A.K Ray, says that, creating low-cost innovative burgeoning growth opportuniti

Analysts agree that faster spemedical device manufacturing substantially better device ebegin to prescribe it. Over unprepared companies. For instthe market in 1994, and by 200Between 2002 and 2007, demdwindled by nearly 90%.

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%Less than 20% 20% to 40% 41% to 60% more t han 60% N ot Su re

At What percentage of original cost of medical device an average

Indian patient willing to buy it ?

"Profitability for device manufacturershinges on ease of use, portable devicesand low cost reusable components.

Dr. Vikram Kumar Sheel,MD, PhD Harvard-MITDoctor Kares Hospital

28


16/30

Case Study - Create indigenous products

The leading producer of mediclow cost, portable, multi lingual

Product Details?The client already had a me

like US & EU. However they

device was highly successful i

Business Problem?The current product could n

market in terms of cost & po?Due to fluctuating power sup

range of voltage range a nd ha?The device also needed to ha

Solution?The design team looked to

features, thus meeting the em?The team created the desi

functional analysis was unddesign transfer.?The costly R&D resources

pressing product developme

The new device was one thirduser friendly. The product will be

As per Hussain Mooraj, Vice President, AMR Research, Medical devicecompanies can overcome the challenges of emerging markets by partneringwith vendors who not only have global presence but can provide rapidprototyping services. While they feel that reducing cost is importanthowever they feel that faster time to market is an equally importantadvantage. Medical Device companies must also ensure that their productsin emerging markets also adhere to global regulations also are of key

importance.

Wayne McDonnell, Research Director, AMR Research, says that MedicalDevices must also focus on improving manufacturing practices and focus onoptimizing supply chain & distribution. As companies will be focusing oncreating large volume of devices for the burgeoning middle income group inthe emerging markets, maintenance & after sales services.

Yes

No

Other

Do you feel that your company should make use of an offshore firm for

designing and developing products meant for emerging markets?

21.6%

4.8%

73.6%

Companies should now focus ontweaking existing products and launchthem in new markets. Ramping upoffshore product development whiletying up with leading research institutesin emerging markets further adds tocreating a structured methodology forinnovation at low cost."

Head New Market Initiatives,Top 3 Medical Device Conglomerate

30


17/30

Companies are opening captHowever medical devices comp

As per Debunking The Offshorby Sudin Apte, Sr. Analyst & CResearch Most technology psource of bulk staffing. They dointo offerings or for financing ofrom the many emerging specia

To succeed, firms must strengthfocus on process initiatives. Rmodel, companies must look torole to add innovation. Also move beyond the staff augmentoward productivity advantage new technology, but also toproviders growing domain com

Medical device compani es havethe entire design & developmenDesign engineering firms and oentire design responsibilitcommercialization have thus be

Offshore Development Center Myths & Realities

How to look beyond hedging cost? What are the key characteristics tolook for in an offshore partner?

Any new approach that can create business aligned solutions?

CREATE A NEW R&D NETWORK

Chapter 3

HCL too began as an offshoredevelopment center due to cost arbitrage.However, due to constant endeavor ofadding value to our clients, thisrelationship has evolved to that of apartner. We equal ly share theresponsibility of creating business alignedsolutions & successfully launchingproducts in the market.

Pradep Nair,VP & Global Head Life Sciences,Healthcare & Chemical Practice

HCL Technologies

32


18/30

Changing Trends

While on one hand, 72% of the respondents agree that developing medicaldevices for Emerging markets require different skill set, however, only 11%perceive offshore partners as source of innovation.

In 2007, when HCL conducted a joint survey with Knowledge@Wharton,executives were asked to suggest the areas within the R&D process thatoutsourcing can help. The two top areas were Software solutions & Productverification & validation. However, in 2008, the two top areas are Softwaresolutions & Hardware Engg (Mechanical and Electrical).

This change is because a 73% of the executives feel that Full productdevelopment outsourcing is the mantra for future. Thus they are looking forpartners who can provide concept to manufacturing services.

How much of your product development work do you Outsource / Offshore?

0-20% 21-40% 41-60% 60% and above

200

150

100

50

0

What are the areas within the R&

Other

Software Solutions

Hardware Engg (Mechanical and Electrical)

Product Verification & Validation

Clinical Trials

0

2007

2008

16%

11%

Yes 73%

No 16%

Not Sure 11%

Full product development is th

development outsourcing can be one

your

More than 73.6% of those surveyedbelieve that they should make use of anoffshore product development firm fordesigning & product development foremerging market.

Prof. (Dr.) A.K Ray,Head School of Medical Science &

TechnologyIIT Kharagpur

34


19/30

The challenge is no longer really keeping up quality levels or finding a vendorwith sufficient expertise, the question is more, how are you going to handleall the organizational issues?

Indian product development vendors, a sizable number of mid-sizecompanies and few large ones, largely offer cost arbitrage through their

1services . Few offer domain expertise or innovat ion.

About 70 per cent of global product development work happens in Indiaand the offshore product development market is estimated to be about $35billion in four years. China currently holds 20 per cent market share and isfast developing.

Choosing the right Vendor

What are the different skill sets needed for developing medical devices

for emerging markets

Other

Understanding of latesttechnological and usage trends

Understanding of usage pattern

Ability to develop low cost devices

Understanding of patients need

35

79

123

123

131

0 20 40 60 80 100 120 140

The (Indian) market is not matneed to re-jig their work flowroadmap for capacity ramp-up ais not. Accordingly they can

16collaborate.

While HCL has been providingover 36 years, Companies neeincluding investment, in producdevelopment lacks well-establisvendors can leverage some of th

What are the issues you co

Vendor TrackRecord

RiskMitigation

Plan

100

80

60

40

20

0

93

80

36


20/30

Overcoming the Challenges

HCL thus Launched Business Aligned R&D to deliver Better BusinessResults to customers. Business Aligned R&D is realized when organizationsmobilize a sustainable, global ecosystem of innovation resources, partnersand talent to successfully implement a business strategy

Case Study Business Aligned Global R&D Network

Companies with Global footprint in R&DDeliver Significantly Higher Business Results

Broad Allocation inLow-Cost Countries

Companies that deploy 60 percentor more of their R&D outsidetheir home countries tend tooutperform their less-globalpeers.

Companies that invest more than10 percent of their total R&Dspend in LCCs such as China andIndia do better than othercompanies

Global-Driven Footprint Overweighted GlobalFootprint

Companies that invest a higherpercentage of R&D resources thansales abroad also outperformothers

Focused Global Footprint

Companie s with a moreconcentrated and focused globalR&D footprint perform betterthan those with a more dispersedfootprint

local-Driven=100 local-Overweight=100 Dispersed Footprint=100 Limited LCC Allocation=100

Firms with Global R&D outperform others by an average of 25% on all key business parameters

100 100

120 120

140

130

110 110120

150

130 130

140

165

110

125 125

A leading provider of radiograpproduct on emerging technolog

Product Overview?The medical device conglo

products on Emerging Techn

Business Problem?The product needed to be co?Being an emerging technolog?Due to the nature of the p

locations (India & Japan)?The product needed to reac?Being a Late entrant to mar

existing old generation of pro

Solution?Concept to manufacturing ac?Multiple concepts were creat?Effort was spent on Image

Storage and Media Managem?Globalize the Product - In

European locales?Being a new & emerging

Compliances and Interoper?Due to high offshore pre

development was kept minim?Multi geography requiremen

concept

The company achieved on tiCommitments of good quality &

Source:Booze & Company Analysis

38


21/30

As per Gartner, Innovation is form of a product, process or se

However, most executives focuR&D expenses do not guarant

just an input. Affirmative action &

Many organizations are overwhin key aspects of their businorganizations are expected to dto continually innovate to renew

What is Innovation?

Lif

What is innovation? Why collaborate to innovate?What is 3 way innovation process?

COLLABORATE TO INNOVATE

Chapter 4

In almost any high tech industry,innovation is the engine that drivessuccess, and medical technology is noexception. Yet innovation is both thechallenge and the solution. In the next fewyears, medical technology innovations willfundamentally transform the health carelandscape, providing new solutions toaddress chronic diseases conditions andrevolutionize the way treatments areadministered.

Stuart Morris-Hipkins,President,

Smiths Medical

3 wa

40

Th

one3 Product


22/30

Why Collaborate to Innovate?

There are many writings, articleeach medical device company eactionable task would be a herc

Susan Landry, Gartner, says Crepressing day-to-day work priostress. Engineer healthy "stresinnovation.

The IBM CEO report clearlhave embraced collaboration asuccess will lie in their ability tomarkets and with new productsproduct innovation usually playsuccess and sustainability year af

HCL thus created a 3 step innWith senior management buy-inis self sustaining, reliable and con

14%

10%

Yes 76%

No 14%

Not Sure 10%

Connectivity, IT solutions, continuedevolution of battery/power longevity aremajor technical challenges shaping theindustry. Also completely newinnovation is taking longer to develop

VP R&D,Top 10 Medical Devices Company

Most companies today expect IT to play a central role in driving innovation.It is also equally important for conservative technology adopters to unleashcreativity to drive innovation. While all agree that innovative solutions canhelp them create a differentiator in the market, most of them are at a losswhen the burden of day to day activity st ifles their endeavor.

Krishnan Chatterjee, Head of Business Marketing, HCL opines that the onlyway that innovation can be industrialized is when a number of affirmativeactions come together and finally create the desired Impact.

The only issue is how does an employee remain motivated to continue theefforts. Also employees who aremotivated and seek to create the radicalchanges feel the need to remain connected with each other. Also once theidea has been generated, they need a streamlined process to convert theidea to an actionable item.

Thus it has often been seen that after the strategy & innovatin evangelistleaves the organization or gets other high priority items, the whole exercisedwindles and comes to a screeching halt.

Challenges Faced

42


23/30

3 way Innovation Process - Method - R&D ROI+

Product Architecture

VLSI Services

CAD/CAE/Testing

Board Design

Embedded Engineering

Software EngineeringProductEngineering

Right Product

Full ProductLifecycle Services

Application&Infrastructure

ManagementPractices

Investm

en

Infras

EcosystemPartnership

Create MaOpportun

Full LifecycleServices

RealizeInnovati

ComponentDevelopment

ExploitCapabilit

11000 HCLites

Most companies today have standard product-development processes, withdisciplined time lines, strict design reviews, "gates" to decision making, andcross-functional development teams. While these changes have made thedevelopment of new products much more efficient, further improvementsare returning smaller gains.

On the other end of the spectrum are thought leaders, innovators,intelligent individuals spread across the globe.

The biggest hurdle was bridging the gap between process orientedcompanies and innovators. Thus an Innovation Hub has been designed thatwould be in between the two extremes says Aniruddho Mukherjee,

Strategic Initiatives Evangelist, HCL Technologies. The hub would be acommon platform where senior executives, analysts, thought leaders,engineers, doctors & individual innovators can have a 2 way communicationand discuss technological trends and share best practices. Here conceptswill be converted to reality. People will be made accountable and will createbusiness aligned solutions.

3 way Innovation Process - Idea - Innovation Hub

Industry Exposure

Work with

Leading companies

Real

timeproject

Tap the

potential

Best

practices

RecognitionAffordable

solutions

Med Device OEM Innovators

InnovationHUB

44

The introductionofsomething

newor improved2

1

3

Idea

MethodProduct


24/30

Case Study Innovation in Medical Device R&D

The client is a leading device markets advanced medical devicopen surgical procedures

Product Overview?The device is designed to p

monitoring the vital signs dur?Also need was felt to create

Class III medical devices dur

Business Problem?The client was looking at an e

realization of a product.?Development of PC based Da?Development of Automated

Solution?A multi-functional, multi-sk

forming a core team. An onslocation for better coordinat?Communication with vario

Programmable power supplyequipments was i ncorporat?

Support at different phase oprocess, Device testing proce?A team of doctors was go

requirements?Expertise from Aero Automa

for the client

The design architecture is capabof 5 years. IDE submission was do

3 way Innovation Process - Product - Studio R&D

46

START

Weekly Meeting?Deliverables?

Risk?Client R&D?HCL R&D?Client Marketing

END USER INPUTS?Client Inputs for

HCL

Marketing Inputs?Competitor?Features

Stakeholder?Client R&D?HCL R&D?Client MARKETING?Client Procurement

STEP 3: R&D Innovation

Client and HCLDiscussions

Voiceof

Customer

Voiceof

Business

Dedicated Resource,Quarterly output,StoredIdeas,cross verticalinnovation & best practices,Reusable components

Park The IdeaFor Later

Search PatentDatabase

Update ReusableComponent Database

Resultsin

CHAOS

RISK BENEFIT ANALYSIS

COST BENEFIT ANALYSIS

GO /NO GO

?

HCL Innovation Hub

Assign to DesignEngineering team

Verify and validate the designensure objectives have been met

Use Ideas from Studio R&D

Use R&D ROI+ framework toget best ideas across industry verticals

GENERATE MULTIPLE CONCEPTS

Evaluate the innovation quotientOf the concept

Brainstorm and select the bestConcept

ImplementationPhase 1

.

.Implementation

Phase n

STEP 4STEP 5STEP 6

STEP 2

GO

NOGO

DOCUMENTLESSONS LEARNT

The introductionofsomething

newor improved2

1

3

Idea

MethodProduct


25/30

Webinar Series Launching Medical Devices for Em

Technology Perspective

1. Prof. (Dr.) A.K Ray, 2. Pradep Nair , Globa3. Date 20 January 204. Time 11 am -12 no

End User Perspective

1. Dr. Vikram Sheel Ku2. Matthew Sawtell, He3. Date 20 February4. Time 11 am -12 no

Business Perspective

1. Leading Analyst2. Date 20 March 203. Time 11 am -12 no

Medical Device Compa

1. Top 10 Medical Dev2. Date 20 April 20093. Time 11 am -12 no

PARTICIPATE & BE THE CHANGE

48


26/30

The Mentors drives collaboration, within the Innovation hub, throughsocial communities and creates the largest free-flowing discussion on the

interlinked future of business and technology

THE INNOVATION HUB

50

Technology has been a catalyst that are shaping our future. Threquire Senior executives, freshto innovate. But why do we neand collaborate?

The benefits of online collabora

?It reduces operational barrie

?Several companies have offbecomes important to find project informed and engage

?Collaboration of multiple importance of change, makright solutions at both speed

The innovation hub, an online cenable senior executives, analyindividual innovators to havtechnological trends and share b

Here concepts will be converte

and will create business aligned

Collaborate & Innovate


27/30


28/30

Wave 2.0 - Innovation Hub

Editors

Mentor

?Seeks Solutions for?Detail of one Exist

launched in 12 to 2the site?Mentor is looking f

Editors

Thought Leader

?Leads the Joint Visi?Enables Collaborat?Enables Knowledge?Rank the solutions?Shares his insight

The Innovation Lab (Participating team)

?Create Business cases?Look at Best Practices?Look at Re-use?Create a unique solution using

existing technology?Focus on emerging market

Response 1Response 2

Research Institutes 1

Wave 2.0 - Innovation HUB depending upon the feedback from wave 1.0

?Exclusive portal for medical devices executives, analysts, medicaldoctors, research associates & engineers

?Participating Companies are encouraged to post 1 device each whichthey want to launch in emerging market in next 12 to 24 months

?HCL ties up with IITs (premier Indian technology institute) & otherresearch institutes across the globe

?Participants post solutions with in 3 months. Due to passwordprotection only HCL , participant, Mentor & CTO can view the solution

?Quarterly Communication initiated between CTOs, analysts &academicians

?Top 20 technology solutions are selected based on technology solution& business case.

?Prizes given to the top 5 solutions by HCL

?For the Top solution HCL under takes feasibil ity study

?Study is submitted to CTOs

?Vendor selected by CTO Creates the commercial version & 50% ofproject cost is paid to research group.

?Best practices documented & it becomes a self sustaining Process.

54


29/30

56

Services Footprint Vertical PresenceServices Footprint Vertical Presence

Total Revenues $5.0 B

Clients 500

Employees 58000

Countries 20

Highlights

Total Revenues $5.0 B

Clients 500

Employees 58000

Countries 20

Highlights

HCL InfosystemsHCL Technologies

?HindustanComputersLimited(HCL)born

The HCL Heritage - A Powerful legacy of R&D and Innovation spanning 3 Decades

1978 1986 19981989 2001-02 2000-05 2005-06 2006 2007-08

?HCLsuccessfullyships in-housedesignedmicro-computeratthesametimeasAppleIndiancomputerindustryis born

?HCLbecomesthe largestITcompanyinIndia

?Introducesmulti-processorUnix-3yearsaheadofSun&HP

?HCLsR&Dand TechnologyServicesspun-offas HCLTechnologies-marksadvent intosoftwareservices

?Servicesportfoli oenhancedto includeEnterpriseservices, BPOservices&Infrastructureservices

?Partnershipmodels evolvedtoJVs&Strategicpartnerships?JVswith DeutscheBank, BT,JAG,etc

?MegaDeals?Multi-Servicesapproachenables leadershipinEmergingServices

?Consolidationof TransformationServicesacrossHCLto provideSeamless?IntegratedTransformation Services throughEnterpriseTransformation Services

?Growth ofFull ServicesOutsourcing clientsoutpacesother categories?IBMandtheothermultinationalsarebecomingi ncreasinglynervousabout HCL- Economist

About HCL

BPO

EASCustomerApplication(Industry Solution)

InfrastructureServices

EnterpriseResearch &DevelopmentServices

Telecom

Retail

M&E

LSHOthers

Hi-Tech

FS

15

13

11

36

2516

8

66 6

30

28

1976

Reference

1. Debunking The Offshore PrApte, Forrester Research

2. Indian Offshore Suppliers: TMoore and William Mar tore

3. The Indian Healthcare Sect

4. China Ministry of Health In

Development5. What Went Wrong Wit

Rozwell, Gartner

6. Q&A for 'How Do I DrivSusan Landry, Kathy Harris,

7. The ergonomics of InnovaMcKinsey Quarterly

8. ht tp : //on l ine .ws j .com20081107.pdf

9. http://blogs.wsj.com/healthto-carry-the-load-of-healt

10. http://content.healthaffairs

11. http:/ /www.businessw/tc20080324_828167.h

top+story

12. http://www.technomedica.

13. http://www.asianhhm.comdevices_bric-nations.htm

14. www.eksporttilindien.umA715-C66C5B981AD3/0/H

15. http://wistechnology.com/a

16. h t t p : / / w w w . t h e h i n/stories/200804185189040

17. http://edgeperspectives./innovation_and_.html

18. http://www.harvardir.org/a


30/30

Ravi Vij, is the Head of Marketiover a decade of experience inarea of interest are organizatioHe currently focuses on strategChemical Pract ice for HCL in th

Authors

Aniruddho Mukherjee, is the StDevices Practice . A computer enhancing the human & deviceinterface design of a Heart ratand has been involved in Projectof the leading life sciences & Europe & APAC region.

58

Documents

Global Medical Devices Industry Study