MEDTECH 2014 Opening Keynote
•Descargar como PPTX, PDF•
1 recomendación•974 vistas
John Babitt, Partner, Life Sciences, Transaction Advisory Services, Ernst & Young LLP, presented at MEDTECH 2014 on The State of Change: A Look at the Evolving Healthcare Landscape and the Effect on Life Science Organizations Today and Tomorrow.
Recomendados
Recomendados
Más contenido relacionado
La actualidad más candente
La actualidad más candente (20)
Destacado
Destacado (17)
Similar a MEDTECH 2014 Opening Keynote
Similar a MEDTECH 2014 Opening Keynote (20)
Más de MedTechAssociation
Más de MedTechAssociation (8)
Último
Último (20)
MEDTECH 2014 Opening Keynote
- 2. John Babbit Partner, Life Sciences, Transaction Advisory Services EY
- 3. Progressions Navigating the payer landscape MEDTECH2014 Redefining Innovation in the Face of Healthcare Reform Global Life Sciences Report 2014
- 4. A long tradition of industry insights Page 4 Progressions 2014 Global life sciences report Navigating the payer landscape Beyond borders 2014 Global biotechnology report Pulse of the industry 2013 Medical technology report
- 6. Global medtech headlines ► The leading challenge facing medtech companies is to find ways to differentiate themselves and their products in an increasingly commoditized market. ► The search for growth takes a few new twists. ► Record fundraising – large debt offerings to fund stock buy-backs, Page 6 M&A ► Venture backed capital increases and the return of the IPO market ► M&As including megadeals on the rise ► Inversions ► Current market trends point toward sustained M&A activity
- 7. Overview: Follow the money 2013 by the numbers Page 7 Global market cap 65% Follow-ons raise US$9.4b (Second highest total since 2008) IPOs raise US$3.5b (Second only to 2000) Broader market rally Product successes (led by a few US commercial leaders) Global revenues 10% (best showing since GFC) Global R&D 14% (outpacing revenues for first time since GFC) Global net income 15% Variance across key markets Global numbers dominated by strong US performance In Europe, Canada and Australia product and financing story not as strong; companies more cautious about R&D spending
- 8. Financial performance Behind the numbers Page 8
- 9. Global Med Tech/Dx Market Trends Large cap Med Tech trends reflect issues faced by pharma more than a decade ago ► The medical technology sector is weathering a perfect storm caused by three concurrent trends: the move toward value-based health care, growing regulatory pressures and resource constraints within the industry itself ► Med Tech’s customer base is shifting as payers, health systems and patients become more influential than they have been in the past. This shift undermines Med Tech’s fundamental business model. Companies must find new ways to create, deliver and capture value. ► Unfortunately, companies of all sizes face significant resource constraints precisely when they need to be investing in new kinds of innovation. Financing has become increasingly scarce for small companies. ► Although US continues to dominate the global Med Tech market, China and India have the highest expected growth rates Source: Capital IQ and EY analysis Page 9 Page 9 8.7% Top 10 Medical device companies revenue 7.5% 2.4% 4.6% growth story 4.1% 4.5% 1.1% 3.9% 5.3% 4.3% 2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E
- 10. US/EU financial performance Pure-play companies – 2013 Page 10 Net income(US$b) +16% 20 15 10 5 Employees (000s) +5% 750 500 250 0 2012 2013 Revenues (US$b) +5% 200 150 100 50 R&D expense (US$b) +7% 15 10 5 0 2012 2013 0 2012 2013 0 2012 2013 Source: Ernst & Young, Capital IQ and company financial statement data.
- 11. Medical technology at a glance, 2012-13 (US$b, data for pure-plays except where indicated) Page 11 GSK Q2’13 results
- 12. Selected US medtech public company financial highlights by region, 2013 (US$m, % change over 2012) Page 12 GSK Q2’13 results
- 13. US market capitalization relative to leading indices Page 13
- 14. M&As in US and Europe Page 14
- 16. In both the US and Europe, biotech stocks outperformed broader indices ► US market capitalization relative to leading indices ► In Europe, a similar trend. Year-over-year market capitalization of European biotechs increased 60% ( as of January 2013) Page 16
- 17. Financial performance: The big picture Revenues near US$100b Page 17 In US$b Beyond borders − EY global biotechnology report 2014
- 18. Financing: The big picture IPOs return to US, Venture holds steady Page 18 Beyond borders − EY global biotechnology report 2014
- 19. Innovation capital rebounds in US & Europe Page 19 Beyond borders − EY global biotechnology report 2014
- 20. In the US, IPOs bounce back to the future 3.5 3.0 2.5 2.0 1.5 1.0 0.5 Page 20 40 35 30 25 20 15 10 5 0 0.0 Amount raised Number of IPOs Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Amount raised (US$b) Number of IPOs Beyond borders − EY global biotechnology report 2014
- 21. Mergers & acquisitions Biotechs buying, pharma in retreat Page 21 Beyond borders − EY global biotechnology report 2014
- 22. In US, new drug approvals return to historic average Page 22
- 23. Point of view Redefining innovation Page 23
- 24. A perfect storm Three trends are disrupting medtech Page 24 The move to value-based health care Regulatory pressures Resource constraints 1 2 3
- 25. The move to value-based health care Escalating costs Budgetary pressures Large unmet needs Page 25 Value-based health care: ►Comparative effectiveness research ►Health technology assessments ►Accountable care organizations ►Disease management programs
- 26. Regulatory pressures Page 26 US 501(k) process reform Sunshine Act Proposed PMA process for Class III devices in Europe Increased uncertainty impact on investment
- 27. Resource constraints Innovation capital in the US and Europe Page 27
- 28. Medtech revenue growth has slowed, dragging down R&D spend… Page 28
- 29. …leading to “lost” revenues of US$131 billion… Page 29
- 30. …and leading to “lost” R&D spending of US$12 billion Page 30
- 31. Healthcare budgets have stagnated for the first time in years 15% 10% 5% 0% -5% -10% -15% Page 31 Average annual growth in health spending across OECD countries in real terms, 2000-2011 2000-09 2009-11 Source: OECD Growth rates for Australia, Denmark, Japan, Mexico and Slovak Republic refer to 2009-10 instead of 2009-11 Growth rates for 2009-11 are not available for Luxembourg, and Turkey.
- 32. Page 32 Implications for the Life Sciences business model
- 33. Life Science’s "new" customers: an expanding customer base ► Value-based health care ► New incentives Page 33 Payers ► Greater financial risk ► More control over health decisions ► Consolidation ► Centralized purchasing decisions Patients Hospital systems
- 34. Expanding beyond traditional product offerings in three new ways Page 34 Beyond the product ► Services and solutions ► Standalone offerings or complementary to existing products Beyond treatment ► Across the cycle of care ► Prevention, disease management, remote monitoring, etc. Beyond the hospital ► Mobile products and services that keep patients out of the hospital ► "Health care everywhere"
- 35. Expanding beyond traditional business models Page 35 Beyond the product Beyond the hospital Beyond treatment GE Healthcare’s Transforming Cities campaign Working with providers, payers and patients to monitor and improve health outcomes in selected cities’ populations Baxter/Chinese National Institute for Hospital Administration Deploying sustainable care and delivery models for dialysis patients Medtronic/Cardiocom (acquisition) Medtronic’s moves into services by acquiring a telehealth devices company Covidien’s Sandman program Improving sleep disorder treatment with patient education and encouragement GE Healthcare’s Get Fit campaign Via behavioral economics, urging patients to adopt healthy lifestyles Medline’s Advancing Health Together program Tools, services and education to help nursing facilities improve quality Proteus Digital Health Ingestible sensor inside pill to monitor adherence and key health indicators Cardiio Smartphone app that monitors heart rate using camera Source: Ernst & Young, media reports
- 36. The pace of change
- 37. The pace of change is accelerating Page 37 3-5 years ago Today 3-5 years from now Early debate, uncertainty about move to value Sweeping reforms in US, Germany, France, UK, others P4P spreads to other markets; specialty drug prices pressure on drug costs increases Most people had never heard of “big data” Growing number of analytics initiatives with large amounts of diverse data Real-world data, prescriptive analytics pharma’s ability to control message PI technologies were novelties Increasingly common; Unobtrusive, non-invasive; payers starting to pay Drugs increasingly competing with non-drug interventions, e.g., PI technologies Much data opaque (cost, quality, relationships, clinical trial data) Transparency (apps, govt. initiatives, “Bad Pharma”, industry responses) Transparency scrutiny, pressure; Trust a source of competitive advantage
- 38. What’s ahead? In 3-5 years, health care could look significantly different For the first time, US patients will carry smart cards with all their health information on them — making it easy for providers to quickly access their medical histories. Rita Shane, Cedars-Sinai Page 38 big data optimal treatments Value-based pricing US specialty drug costs — accounting for only 4% of spending today, but growing at 20% annually — will face unprecedented scrutiny. Robert Galvin, Equity Healthcare variation in care Even after the European economic crisis recedes, the pressure from payers will continue to increase. There simply isn’t enough money to pay for health care in the ways of the past. Eduardo Sanchiz, Almirall and formal HTA processes are going to become much more visible in Switzerland. Thomas Szucs, Helsana Group Payers may challenge today’s pricing environment, which allows for annual price increases on products. Adrian Thomas, Johnson & Johnson Formularies will be replaced by “Population Health 2.0,” where new tools and will match individual patients to at the time of diagnosis. Colin Hill, GNS Healthcare Significant leading to poorer outcomes is just not going to be acceptable. Paul Bleicher, Optum Labs The drive for transparency will accelerate dramatically. Many are unprepared or simply hoping it won’t happen, but it will — and it’s a game-changer. Jack Bailey, GlaxoSmithKline Consumerization is coming sooner than most expect. More and more US employers are going to put workers on insurance exchanges, motivating patients to become engaged consumers. Romesh Wadhwani, Symphony Health Solutions In the Netherlands, decisions that factor in cost-effectiveness — so far, a politically touchy matter — will become unavoidable and very real. Martin van der Graaff, Zorginstituut Nederland
- 39. Non-Traditional Healthcare Player Transactions / Alliances ► Technology leaders with size and scale see the ► ƒOverlap with existing technology applications / Page 39 Broad Technology Diversified / Government / Business Services Media/Communications / Information Services Select Potential Buyers Strategic Rationale Select M&A / Partnerships EY Perspective fragmented, high growth HCT industries as very attractive adjacencies capabilities coupled with expertise in technology service and consulting related solutions provide synergistic cross selling opportunities ► While strategies may vary significantly, most broad Technology leaders are either actively trying to continue to build existing healthcare platforms or are evaluating the sector to determine appropriate entry point ► Leading multi-national / Diversified / Government companies will continue to view healthcare as a critical end market and should be active in evaluating acquisitions to further build their businesses ► Strategic approach to the healthcare sector has varied as large media / communication / information companies have been both sellers (e.g. Thomson / Walters Kluwer) and buyers (e.g. Verisk / Experian / Harris) in recent years ► IBM / Wellpoint’s JV to leverage Watson to develop evidence based protocols ► GE / Microsoft’s JV focus on healthcare infections and chronic case management ► ƒOracle’s acquisition of Phase Forward (2011) ► ƒGoogle’s failed Google Health initiative and success with Google Flu trends ► ƒLawson’s acquisition of Healthvision Solutions (2010) ► Healthcare remains an attractive market for traditional multinational / industrial companies due to growth dynamics relative to more mature business segments ► ƒBusinesses with strong service capabilities (e.g. BAH, SAP, Deloitte) are attracted to healthcare due to ability to utilize core consulting expertise to impact the highly complex and inefficient healthcare end market ► ƒMedia / Communications companies have traditionally viewed the healthcare sector as a natural end-market for their core businesses (e.g. Reed Elsevier, Thomson) ► ƒInformation Services companies have recently been aggressive in building healthcare segments via acquisition (e.g. Verisk, Experian) ► ƒVerisk’s acquisitions of Bloodhound Technologies (2011) and MediConnect (2012) ► ƒExperian’s acquisition of Medical Present Value (2011) ► ƒHarris Corporation’s acquisition of Carefx (2011) ► ƒReed Elsevier’s acquisition of MEDai (2008) ► ƒMulti-nationals have large healthcare IT segments built in part through acquisition: ► GE’s acquisition of IDX Systems (2005) ► Philips’ acquisition of VISICU (2007) ► ƒOther Diversified / Government focused companies remain active healthcare acquirors: ► General Dynamics’ acquisition of Vangent (2011) ► ADP’s acquisition of AdvancedMD (2011)
- 40. Surveying the payer landscape
- 41. Understanding payers Payers want cost containment and budgetary certainty Page 41 … they are less interested in outcomes-based approaches but Drugs are 10% of health care spending … payers see drug costs as the biggest problem but Pharma is generally well aligned with payers on data and CER measures … there is a disconnect on comparative trials but Payers are preoccupied with implementation challenges and need help but … pharma has a trust deficit … … … …
- 42. Payers want cost containment and budgetary certainty … … but they are less interested in outcomes-based approaches
- 43. Drugs are 10% of health care spending … … but payers see drug costs as the biggest problem
- 44. Pharma is generally well aligned with payers on data and CER measures … … but there is a disconnect on comparative trials
- 45. Payers are preoccupied with implementation challenges and need help … … but pharma has a trust deficit 88% 78% 57% 47% 43% 20% 15% 13% 42% 67% 75% 67% 67% 50% 50% 25% Drug prices are a major driver of health care cost increases Boosting drug adherence is critical for lowering health care costs Pharma companies have data that is vital for measuring and improving outcomes With beyond-the-pill services, pharma companies can be trustworthy partners Pharma companies have data that is credible for measuring and improving outcomes Pharma products are significantly differentiated from the standard of care With beyond-the-pill services, pharma companies can be unbiased between their products and those of competitors Pharma companies bring affordable products to market Payers Pharma Source: EY Progressions 2014 Payer Survey. Length of bars indicates percentage of respondents who strongly or somewhat agree with each statement
- 47. A complex and fragmented landscape The devil in the details ► Different standards and implementation ► Behavioral attributes It’s all relative ► Disease segments ► Product types ► Influence of other KOLs We’re all payers now ► Coverage Pricing Prescription ► New “payers”: providers, employers, patients The challenge: understanding and strategically approaching a large, fragmented market
- 48. Value dossiers Page 48 Personalized medicine Adherence Decision support m-health Prescriptive analytics Capitated models Drugs/devices Services and solutions Health care delivery Universal adoption Ad-hoc experiments Little/no activity Where’s pharma/medtech?
- 49. Guiding principles for navigating the payer landscape Make the right comparisons Payers and health care systems are changing rapidly. Focus on where the ball is going to be, not where it has been. 1 Approach payers strategically and comprehensively A complex, rapidly changing payer environment demands a strategic and comprehensive approach. 2 Develop data-driven insights and interventions Build the complete picture, target the small share of patients driving the bulk of costs. 3 Create customer-centric solutions Payers want solutions that look across disease franchises, span the cycle of care and are unbiased between the products of different manufacturers. 4 Rebuild trust through transparency Without trust, pharma’s data and solutions will get little traction with payers. 5
- 50. Thank you Stay tuned! Download the report: ey.com/medtech Participate in our blog: LifeSciencesBlog.ey.com Follow us on Twitter: @EY_LifeSciences Page 50
- 51. Pulse of the industry 2014: October 6th @ AdvaMed 2014 Page 51
Notas del editor
- Pulse in 6th year…released annually at AdvaMed Theme of this year’s report is “Redefining innovation“ The move to value-based health care is making patients and payers more influential — requiring new business models for these new customers. However, precisely when companies need to invest heavily in business model innovation, their resources have become constrained.
- Key findings: Financial growth slows Payer and regulatory uncertainty have slowed revenue growth, leading to “lost” revenues of an estimated US$131 billion for medtech commercial leaders between 2008 and 2012 Revenue growth for public companies in the US and Europe remained slow in 2012, increasing only 2% to US$339.6 billion, well below pre-crisis growth rates. Tight funding environment for most companies While capital raised remained relatively steady at US$29.5 billion, most of the funding went to a few large companies. Debt represents the vast majority of total funding, with debt offerings by a handful of commercial leaders contributing 82% of the industry’s total financing. Venture capital was down 21% in the period ending 30 June 2013 to US$3.5 billion, the lowest level in more than a decade. Innovation capital — the funds available for the vast majority of pre-commercial companies — declined by 11% to the lowest level in at least seven years. There were only 12 IPOs in the US and Europe in the year ending June 30, 2013, with total proceeds down 52% to US$202 million, the lowest total seen since the midst of the great recession. Deal-making holds steady The value of M&A’s involving US and European medtech companies increased 23% to US$47 billion. However, after adjusting for a US$15.8 billion mega-deal, the value of M&A fell 19% to US$31.2 billion.
- While fund-raising totals have increased at an impressive rate in recent years, the vast majority of this funding has gone to medtech’s commercial leaders (defined as firms with revenues in excess of US$1 billion). This pattern continued during the 12-month period ending June 2013, when commercial leaders raised 82% of total industry financing — US$24.3 billion, largely in the form of debt. Conversely, the funds raised by the rest of the industry (what we refer to as “innovation capital”) were down 11% to US$5.2 billion — the lowest amount raised in at least the past seven years. In 2007-08, innovation capital made up nearly two-thirds of all medtech financing, compared to less than 20% in 2012-13.
- Pre-commercial companies are not the only ones to find themselves with limited resources. Larger, commercial entities have also experienced a marked slowdown in growth in recent years, largely as a result of the pressures described above. From 2000 to 2007, the revenues of US and European companies grew at an average of 13% per year. Since 2008, that growth rate has slowed to just 7%.
- If post-2008 revenue growth had been sustained at the 13% historic rate, the medtech industry would have brought in an additional US$131 billion in revenue between 2008 and 2012. As a result of these “lost” revenues, companies have less funds to invest in research, development or acquisitions — precisely the activities that would allow them to address the challenges they face.
- “Lost” R&D of US$12 billion between 2008 and 2012....annual R&D growth dropped from 15% to 7%
- The decline in medtech revenues has not been mirrored by a parallel decline in healthcare budgets, until quite recently. So medtech has captured a smaller slice of the broader healthcare budget, which it needs to win back. Source for graph: http://www.oecd.org/els/health-systems/health-spending-continues-to-stagnate-says-oecd.htm (Underlying data sent separately)
- Successful experiments are already under way in which medtech companies are expanding their offerings in three ways: • Beyond the product, with services and solutions • Beyond treatment, by focusing on prevention and real-time management • Beyond the hospital, with offerings that enable health care everywhere
- But even with such a checklist of characteristics of successful patient-centric business models, it is very difficult for large, mature incumbents to disrupt themselves. Clayton Christensen of Harvard has documented this in industry after industry. New models and offerings are often dismissed as novelties or niches, or disregarded because they initially have small revenue streams (think smartphone apps and many of the other new offerings in today’s evolving HC ecosystem). And while customer centricity is a good thing, the danger for mature companies is that they are often too vested in paying attention to their existing customers (who are not interested in disruptive innovations because they do not – initially – meet their needs). So what can life sciences companies do?