UCSF Diagnostics Cohort Fall 2013
Todd Morrill Channels 1

Remember how we will fit
DX into the BMC? 2

But to simplify your discovery
process… week 4/5 week 2/3 3

This week you presented your
understanding of: Value Propositions (syllabus) Critical for product-market fit Some validation from interviews Customer Segments (syllabus) Critical for product-market fit Some validation with interviews Ecosystem diagram (additional for Dx) The ecosystem affects almost all relationships for the business Initial guesses Reimbursement (additional for Dx) Reimbursement decisions grossly affect your Customer Segments and further development of the BMC Preliminary hypotheses 4

Next week you will present
: Value Propositions (syllabus) Critical for product-market fit More validation from interviews Customer Segments (syllabus) Critical for product-market fit More validation from interviews Channels How your product reaches your customer Some validation from interviews Ecosystem diagram (additional for Dx) The ecosystem affects almost all relationships for the business Flow directions and units ($, data, restrictions, etc.) Reimbursement (additional for Dx) Reimbursement decisions grossly affect your Customer Segments and further development of the BMC Preliminary hypotheses, any new data you have collected. 5

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© 2012 Steve Blank

Where do you buy? Purchase
Best source Also ok Not so good Never Clothing Boutique on Union St. Gilt.com Chain store in the mall Gas station, restaurant Gasoline Gas station Freeway rest stop area Costco Internet Fast food Specialized restaurant Franchised food chain Safeway Macy’s Groceries Safeway Local food exchange Internet Your neighbor Air ticket Kayak.com Airline website Costco Travel Street vendor Higher education Research university Private medical Community foundation college Vocational institute You make choices every day about where and from whom you will buy. So will your customers 7

From whom do your Customers
want to get the product?        Yourself Through someone else (Abbott, Roche, etc.) At a lab (Quest, your CLIA lab, specialty reference laboratory) At a drugstore Bundled with other goods or services (panel testing) On-line On their cell phone 8

Channels in Dx • “Direct”
sales to a laboratory • • • • Hospital labs Quest / Labcorp CLIA labs $350,000+ per supported salesperson (T&E, field tech support, etc.) and can be as much as $500,000 • “Direct” sales as a laboratory – Building a CLIA lab – Still need salespeople! • Distributors (esp. outside the US) will take 35%+ margin Reimbursement • Retail requires many intermediaries • Direct to consumer (?) 9

Remember from week 1: Largest
Dx Companies • • • • • • • • • • • Roche Siemens Danaher Abbott ThermoFisher Becton Dickinson Johnson & Johnson Alere Sysmex bioMerieux Bio-Rad Smaller Dx Companies • • • • • • • • • • • Idexx Digene/Qiagen Genomic Health OraSure Myriad Genetics GE Hologic Complete Genomics Illumina Asuragen Sequenom 10

Platform Executors Technology Innovators Entrepreneurial
Innovators This industry does not have many flexible channels • • • • Established platforms Routine analyses Sell to laboratories Large sales force • • • • Niche markets Complex analyses Focused sales Technology superiority • Novel platforms • Novel technology • Technological superiority • Niche markets • Channel innovation? • (so what is the bad news?) 11

Channel Innovation Retail (!) Direct
to Consumer – DTC Companion Dx WalMart

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Physical and Virtual Channels: IMPORTANT
OPPORTUNTIES Channel: Product: Physical Product: Virtual Physical Concrete from Al’s Cement Food from Safeway Insurance policy from Hal Lean Launchpad course Channel: Virtual Amazon.com Netflix DVDs Angry Birds phone app Ebooks 14

Physical and Virtual Channels: IMPORTANT
OPPORTUNTIES (someday) Channel: Product: Physical Product: Virtual Physical Channel: Virtual Concrete from Al’s Cement Food from Safeway Amazon.com Netflix DVDs Food from Safeway.com Insurance policy from Hal Lean Launchpad course Disneyland eTicket from Safeway Angry Birds phone app Ebooks On-line movie viewing from Safeway.com Safeway is trying to reach you through MULTIPLE channels. Why? 15

Physical and Virtual Channels: IMPORTANT
OPPORTUNTIES (someday) Channel: Product: Physical Product: Virtual Physical Channel: Virtual IVD assay kit CLIA lab test Laboratory Developed Test (LDT) • Usage monitoring and consumables replacement • On-line purchase of DTC diagnostics • Health status testing Kiosk for testing using proprietary algorithms Mobile app for with health status algorithm Don’t be afraid to consider novel channel approaches. Be aware of the realities of the industry. 16

Customer interviews?
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Next week you will present
: Value Propositions (syllabus) Critical for product-market fit More validation from interviews Customer Segments (syllabus) Critical for product-market fit More validation from interviews Channels How your product reaches your customer Some validation from interviews Ecosystem diagram (additional for Dx) The ecosystem affects almost all relationships for the business Flow directions and units ($, data, restrictions, etc.) Reimbursement (additional for Dx) Reimbursement decisions grossly affect your Customer Segments and further development of the BMC Preliminary hypotheses, any new data you have collected. 18

Buck says: Get me sum‘em
Kustama Intviyus! Tuenny auda doot. 19