Positioning Your Product for SuccessProduct Positioning September 22, 2010 8 Example InFUSE® Investing in the proper clinical trials resulted in significant success for Medtronic’s

Putting Your Best Foot Forward for Launch

Positioning Your Product for SuccessSeptember 22, 2010

Product PositioningSeptember 22, 2010 1

Strategy Consulting for Medtech Industry Leaders

Operating at the intersection of science, technology and business strategy, Health Advances provides clients with innovative solutions based on deep industry insight, analytical rigor and an objective perspective across the medtech market. Our staff of physicians, scientists, engineers and business people have analyzed markets and opportunities for well over 1,000 medtech products in virtually every clinical specialty.

Product and Market Assessment

Corporate Business Strategy

Partnering and Acquisitions

R&D Portfolio Prioritization

Pricing and Reimbursement

Experience. It’s What Sets Us Apart.


Why Is Product Positioning Important

Understanding a Product’s Winning Value Proposition and Positioning is Critical

Changing Medtech Environment

Increasing Economic Scrutiny

Potentially More Difficult

Path to Approval

Increasing Need for Data


Survey RespondentsHealth Advances surveyed senior executives to identify lessons learned from product launches.

Survey Respondent Rolesn = 23

14

6

3

0

5

10

15

Marketing Executive CEO, CFO, or COO Other

Resp

onde

nts

Role at Launch

Source: Health Advances survey of medtech executives, 2010.


Survey RespondentsThe experience of the companies ranged from start-ups to well-established firms with extensive launch experience.

Company Experience at Time of Launchn = 23

87

1

7

0

2

4

6

8

10

1st Product Launch

2-5 Product Lines

Previously Launched

6-15 Product Lines

Previously Launched

16+ Product Lines

Previously Launched

Resp

onde

nts



1.0

1.5

2.0

Clinical Data

Understandingand

Articulation of Value

Proposition

Sales Reps Understanding of

Economics

Understanding of Decision-

Makersand Referral

Patterns

Better Market Analysis, Including Patient

Segmentation

More Marketing

Expenditures

Investment

Product Launch Lessons LearnedOverall, companies would have invested more resources on clinical data and value proposition.

What You Would Have Done Differently in Your Product Launch To Be Even More Successful?


Impa

ct


Product Launch Lessons LearnedThe need to spend more resources on clinical data and the value proposition was even more apparent when comparing successful and unsuccessful launches.


1.0

1.5

2.0

2.5

3.0

Clinical Data

Understandingand


Proposition


Economics


Makersand Referral

Patterns


Segmentation

More Marketing

Expenditures

Investment

Unsuccessful Launches Successful Launches

Source: Health Advances survey of medtech executives, 2010. Unsuccessful Launches n = 15. Successful Launches n = 8.

Impa

ct


Clinical DataCompanies can fall into the trap of rushing to market without data for market adoption or reimbursement; this is not surprising given the demands of investors.

Data Required for 510(k) or PMA

Data Required for Reimbursement Arguments

Data Required for Adoption


Example InFUSE®Investing in the proper clinical trials resulted in significant success for Medtronic’s InFUSE product.

Source: Health Advances analysis, company annual filings, FDA PMA filing, company press releases, Datamonitor.

$50MM

$253MM$350MM

$570MM

$704MM

$815MM

2002 2003 2004 2005 2006 2007 2008

FDA approval for spinal fusions

(n=413 patients)

FDA approval for tibial shaft fractures

(n=299 patients)

HDE for posterolaterallumbar spine pseudoarthrosis

FDA approval for oral maxillofacial and dental

procedures (n=312 patients)



1.0

1.5

2.0

2.5

3.0

Clinical Data

Understandingand


Proposition


Economics


Makersand Referral

Patterns


Segmentation

More Marketing

Expenditures

Investment

Unsuccessful Launches Successful Launches

Product Launch Lessons LearnedIn addition to clinical data, executives wish they spent more time gaining a greater understanding and improving the messaging of the value proposition.

Source: Health Advances survey of medtech executives, 2010. Unsuccessful Launches n = 15. Successful Launches n = 8.

Impa

ct


Why is Value Proposition Important?An incomplete understanding can lead to suboptimal product positioning that may slow adoption and/or decrease revenue.

Example Situations Potential Positioning Implications

Need clinical effectiveness/outcomes data?Greatest value not understood/promoted?

Need to position the product based on the strongest (and potentially different) value

proposition for each decision-maker?

Price higher and only focus on the niche market?

A subset of customers see the value

Value proposition varies by department, decision-maker,

market segment, etc.

Value is greater for a niche but not a strong enough driver for the total

market


The Strength of Product AttributesThe value proposition is a mix of economic, clinical, safety, and convenience benefits. The key is understanding the strengths of these attributes when positioning a product.

Value MapSM

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Source: Health Advances analysis.


Clear Examples of Value PropositionNeedle safety and drug eluting stents are extreme examples where the strength of one attribute was so strong that the positioning was obvious.

Benefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Example: Needle SafetyBenefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Example: Drug Eluting Stents



0.0

1.0

2.0

3.0

4.0

Clinical Benefit Safety Benefit Convenience Benefit Economic Benefit

Product Properties

Product BenefitsProducts rarely have one clear benefit. Survey respondents indicated that the benefits of most products were a mix of clinical, safety, and convenience which edged out economics.

What Are the Benefits of This Product?Average Score, Max=4.0

Source: Health Advances survey of medtech executives, 2010. n=23.

Significant Benefit

No Benefit

Benefit


Multiple BenefitsThe success of office-based endometrial ablation procedures can be attributed to a combination of clinical, economic, and convenience benefits.

Benefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Example: Office-Based Endometrial Ablation



Glaucoma Laser PositioningLasers were initially thought of as the last step prior to surgery after 2-3 lines of drugs had failed for glaucoma patients.

First Line Drug Therapy

Add Second Line Drug Trabeculectomy

(Surgery)

Shunt or Valve

Procedure (Surgery)

Add Third Line Drug

OR

Laser Trabeculoplasty

Degree of InvasivenessLess Invasive

More Invasive

Drug TherapyMinimally

Invasive Laser Surgery

Surgery

Source: Health Advances interviews and analysis.


Glaucoma LaserPhysicians began to realize that the laser ensured compliance by decreasing the burden of multiple eye drops per day, and moved the procedure earlier in the treatment paradigm.

Source: Health Advances interviews and analysis.

Degree of InvasivenessLess Invasive

More Invasive

Drug TherapyMinimally

Invasive Laser Surgery

Surgery


First Line Drug Therapy

Add Second Line Drug Trabeculectomy

(Surgery)

Shunt or Valve

Procedure (Surgery)

Add Third Line Drug

OR



Value Proposition: Patient ComplianceLumenis began advertising “assured compliance” as a strong value proposition to use the laser earlier in treatment paradigm.

Compliance for those patients that found drug regimens burdensome

At that time, it was less expensive for CMS patients to have a procedure than the cost of drug therapy


Glaucoma Laser PositioningIn the end, the positioning was convenience to the patient with a potential economic benefit (to patients and physicians), rather than a purely clinical benefit.

Benefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Example: Glaucoma LasersBenefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Example: Glaucoma Lasers



Lessons Learned: Exubera®Exubera was predicted to overtake the insulin market with the convenience of reducing injections. However, avoiding injections was not as strong a value especially given the cumbersome device.

Source: Health Advances’ interviews and analysis.

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Positioned as “needle-free” insulin delivery

But the bulky non-discreet device was not convenient

Additional lung function tests were required


Complex Value Propositions with Multiple Decision-MakersWithin a hospital value proposition and positioning is further complicated by multiple decision-makers with differing views of a product’s value.

Executive SuiteGPO

IDN Management

CardiacSurgeon

Orthopedic Surgeon

New TechnologyRecovery

Nurse SupervisorPerfusionist

OR Supervisor Anesthesiologist

Materials Management

Distributor

Biomedical Engineering

Competitive Corporate Contracts

Infection Control

Regulations

CEO CFO VP



The value proposition and positioning may vary by type of decision-maker, and the degree of influence within a decision-maker segment may vary by subspecialty. CT Surgeon

Neurosurgeon Transplant surgeon Oncologic surgeon Urologist Orthopedic surgeon General surgeon

Example Hospital Decision-Making Hierarchy

Surgeons

C-Suite

Infection Control

Medical Oncologists

Nursing

CRNA ICU nurse Oncology nurse PACU nurse

Note: Illustrative.


Value MapFor each decision maker a Value Map is created to understand how the positioning varies.

Surgeons

C-Suite

Infection Control

Medical Oncologists

Nursing

Note: Illustrative.


Value Mapping: Understanding the Value Proposition by Influencer

0.0

1.0

2.0

3.0

4.0

Economics Clinical Safety Convenience

Rela

tive

Valu

e

Attribute by Specialty

Infection Control

Administrator

Medical Oncologist

Surgeon

Value MappingSM

Value Mapping demonstrates that infection control has significant influence over the decision for this product and the value proposition focuses on safety and clinical.



Example: Power PICC’s Varying Value PropositionMost decision-makers viewed power PICCs as a moderate benefit at a significant price premium; the strength of the nurses’ convenience benefit facilitated fast sales growth.

Benefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience

Perspective of Non-Access Nurse Decision-Makers

Access Nurse Perspective

Benefits

StrongerWeaker

Strength

Economic

Clinical

Safety

Convenience



Economic

Clinical

Safety

Convenience

Economic

Clinical

Safety

Convenience

Pyxis: Evolving Value and PositioningThe value and positioning of Pyxis systems (automated medication storage cabinets) shifted over time to adapt to the evolving healthcare environment.

Drug Charge Capture

Costs

Tracking of Narcotics

Safety

Medication Error

Preventions

TodayStreamline the Supply

Chain Safety

Costs

Economic

Clinical

Safety

Convenience

Economic

Clinical

Safety

Convenience



Summary Recommendations Identify (early in development) a Product’s data needs and how they differ

– FDA

– Reimbursement

– Clinical adoption (may be linked to reimbursement)

Understand the Product’s Value Map

– Identify the most compelling attributes and the impact on product positioning

– Understand how the attributes vary by decision-maker

– Understand which decision-makers are most influential

Confirm that the clinical trial data and the value proposition supports each other (e.g. if the value is saving time, collect time savings data)

During the course of the Product’s lifecycle, identify the need to transition the positioning as the product matures and market dynamics evolve


Thank You

Susan PosnerVice President

[email protected]

Health Advances LLC9 Riverside Road

Weston, MA 02493

781-647-3435www.healthadvances.com

Documents

Positioning Your Product for SuccessProduct Positioning September 22, 2010 8 Example InFUSE® Investing in the proper clinical trials resulted in significant success for Medtronic’s