Emerging Market Innovation:Emerging Market Innovation:GILGIL--100 HC Index100 HC Index

Are your Strategies for Emerging Healthcare and Life Are your Strategies for Emerging Healthcare and Life Sciences Markets Innovative and Structured? Sciences Markets Innovative and Structured?

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Reenita DasSenior Vice President Latin America and APAC,

Healthcare

Today’s Presenters

Importance of Emerging

Markets to HC

Dr. Vinod Aggarwal Frost & Sullivan’s GIL-100 HC

2

Dr. Vinod AggarwalChief Economist

Frost & Sullivan’s GIL-100 HC

Index

Greg CaressiSenior Vice President, NA, Healthcare

Leveraging the GIL-100 HC

Index

Poll Question

Which emerging market are you considering entering next?

• BRICS- (Brazil, Russia, India, China, South Africa)

• Emerging Latin America

• Emerging Middle East and Africa

• Emerging Asia Pacific

3

• Emerging Europe

Importance of Emerging Markets to Healthcare

Reenita Das

4

Emerging Markets Contribute Almost 30% Revenue for Leading Pharmaceutical and Healthcare Companies

PhilipsSales growth (CAGR) in healthcare segment across

Cerner Over the past 3 years, it has implemented turnkey projects in the UAE, Qatar, Saudi Arabia and Malaysia amongst other emerging geographies

GEGroup revenue in 2011 increased 29% in Latin America and 28% in China. 2012 GE Healthcare revenue from emerging markets estimated at $5.6 billion

Microsoft Has set up the Technology for

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Source: Frost & Sullivan analysis.

markets

healthcare segment across 2007-2011 was 14.6% for growth markets and 6.2% for mature markets

PfizerY-o-Y growth in 2011 increased 10.6% in emerging markets while growth declined by 1.6% across other geographic segments

Has set up the Technology for Emerging Markets (TEM) group with healthcare as a key area of research

SanofiSales from emerging markets grew 8.3% Y-o-Y in 2012 while total sales increased a modest 0.5%

Evolving Trends Across Emerging Markets Create Opportunities for Healthcare Businesses

Top 5 Healthcare Industry Trends

Key Unmet Needs

• Aging population• Increasing incidence of

chronic diseases• Higher lifestyle related

diseases• Rising healthcare costs• Changing regulatory

environment

• Equitable and affordable healthcare

• Early detection and diagnosis

• Operational efficiency• Sustainable business

models• Competitive workforce

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Trends

• Biologics and biosimilars; Vaccines; Molecular diagnostics• Diagnostics imaging• Health Information Exchange• Technologies to support long-term care• Medical tourism

Emerging Opportunities

Diverse challenges that can exist in an Emerging

MarketRegulatory

Need for local partners and/ or networks

Product customization

Competition from

Robust business planning

Infrastructural development

Emerging Market Entry Strategies Need to Address a Mix of Several Business Issues

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MarketRegulatory challenges

Competition from local players

Risks in entering Emerging Markets• Financial risk• Risk to business continuity• Product risk• Risk to branding• Risk to corporate image• Market risk

Source: Frost & Sullivan analysis.

Poll Question

What is the biggest challenge you have faced when entering an emerging market?

• No structured analytics to support investment strategy

• Difficulty in evaluating sales opportunities

• Insufficient information about emerging markets beyond BRIC

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• Lack of understanding of regulatory challenges

The GIL-100 HC Index Dr. Vinod Aggarwal

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Its all about Growth, Innovation and Leadership

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The GIL Index: Applying Methodologies to Establish Top Investment and Sales Potential Across the Globe

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Systematic macro scanning a must for geographical expansion decisions and to prioritize countries with potential investment opportunities

The GIL Index: Overview of Methodology

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GIL HC 100 Index: Country Banding

Countries that have moved up 6-10

Countries that have moved up 11 places and above in the sales/ investment attractiveness index

Achievers

Leaders

Best Practice

Top 100 countries were used as a base list (GDP> $20 billion)

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GIL rankings are compared with GDP rankings to arrive the range for delta. Based on delta values countries are classified into

Achievers, Leaders and Best Practice Countries. This process excludes countries with negative delta, GIL rankings less than GDP

rankings.

Countries that have moved up 0-5 places in the Sales/Investment attractiveness index from their original GDP rank

moved up 6-10 places in the sales/investment attractiveness index from their original GDP rank

attractiveness index from their original GDP rank

Achievers

LeadersBest Practice

GIL- 100 HC Index: Top Countries from a Sales Attractiveness Standpoint

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Achievers

Leaders

Best Practice

GIL- 100 HC Index: Top Countries from an Investment Attractiveness Standpoint

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Case Study: India

GIL HC Sales Attractiveness Comparison GIL HC Investment Attractiveness Comparison

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A number of healthcare related initiatives have been proposed and some launched to improve overall healthcare: • Universal Healthcare (UHC) in Rural and Urban Areas during 2012-2017 • National Rural Health Mission (NHRM)• National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and

Stroke (NPCDCS)• National Programme for Healthcare of the Elderly (NPHCE)• Telemedicine

Note: 0 – 10 denotes the GIL Attractiveness Score, 0 being the lowest and 10 the highest; Source: Frost & Sullivan analysis

India: Regional Hub R&D and Pharmaceutical Manufacturing

� Rising middle class and per capita income

� Strong focus on R&D- partnering with research labs

� Pharmaceutical companies promoting drug discovery and

innovation

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Middle Class Bulge

Research and Development

Drug Discovery & Clinical Trials

Leveraging the GIL-100 Index for HC

Greg Caressi

18

for HC

WorkshopsEmerging Market

Growth Monitor (EMGM)

Global Economic Tracker- Insights and

Trends (GET-IT) Other Services

12 month access to:

• Emerging Market

12 month access to:

• Quarterly updates on

economic trends and

• GIL-100 Index Workshop

OR

• Dedicated portal on frost.com

Emerging Market Innovation

Navigating Economic Uncertainty by Leveraging Data-driven Growth Insights

19

• Emerging Market

Growth-Executive

Insights

• Integrated Emerging

Market Country Industry

Forecasts and Decision

Support Databases

• Growth, Innovation,

Leadership (GIL -100)

Index

• Economic Insights

economic trends and

opportunities

- BRICS

- Emerging Markets

- Europe

- Africa and

Middle East

- Latin America

- Asia Pacific

- North America

- Western Europe

- Rest of the World

OR

• Country Pipeline System

OR

• ECG Workshops

• Emerging markets

sales intensity

matrix (E)

• Country pipeline

system (C)

• GIL-100 Index (G)

• Workshops at GIL

• Interactive Database

• Ask the Expert/Briefings

• Access to Chief Economist

Emerging Market Innovation (EMI) Value Proposition for Healthcare and Life Sciences

Economic Insights

• Economic insights are designed to leverage a

systematic data foundation and develop valuable

insights on growth trends that are currently impacting

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insights on growth trends that are currently impacting

global markets

• They delve into pertinent economic issues and present

analysis and actionable insights that are imperative for

impending business decisions

Emerging Markets GIL 100 IndexMedical Tourism

Making all the Right Moves : Structuring your Emerging Market Strategy

• How should your company prioritize emerging markets beyond BRIC countries based on the factors most relevant to your company and products?

• If I move manufacturing to India today, will I be able to export cost-competitively five years from now?

• Which countries make the most sense as

Top Line Growth

Bottom Line Growth

Sales Attractiveness

Investment Attractiveness

Growth Drivers

Companies are shifting toward emerging markets for manufacturing and also to penetrate high growth domestic markets

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• Which countries make the most sense as manufacturing centers based on IP protection, labor costs and access to export markets?

“We were delighted with the Macro-to-Micro perspectivethat Frost & Sullivan proposed as part of supportingour quest to develop a systematic Country PipelineSystem. A data driven decision approach that typicallychallenges a "gut feel" approach to the next bigmarkets was important for us…”

– Senior Management of a leading automation company

?Tier II

Poland, Malaysia, Mexico, Philippines

Tier IChina, India, Brazil

Sample Analysis: Three-Phased Project Process

PHASE I PHASE II PHASE III

AS

SE

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0 C

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Evaluate and weight/ rank 30 target countries for market expansion on

FIT

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Growth Opportunity:Available customer base

Business MilieuBusiness MilieuBusiness setup requirements, Taxation,

Population Density

Diabetes Epidemiology

Evaluate top countries for market expansion

An interactive strategy development session between Frost & Sullivan and Client to

Prioritize and select the best countries for growth based on capabilities, fit and external opportunities.

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BR

OA

D A

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ES

SM

EN

T O

F T

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30

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Business setup requirements, Taxation, Labor Laws, etc.

Corporate EnvironmentCorporate EnvironmentEase of doing business, corruption perception, trading and infrastructure

Growth ProspectsGrowth ProspectsMarket sizing and forecasts, market trends

Country Risks

Political, economic and financial risks

Market AnalysisMarket AnalysisValue chain analysis, customer analysis and competitive landscape

Diabetes Epidemiology

Economics

Infrastructure

Other

Healthcare Spending

opportunities.

Generate a roadmap for target countries and market entry strategies in Phase IV

Sample Analysis: Phase I Methodology – A Two-Staged Filtering Process

First filter* % Weight

Population Density; per sq km 15

Diabetes cases 20

Total Healthcare Expenditures Per Capita

10

Per Capita Imports from US of Surgical Appliances and Supplies

5

% of Total Healthcare Spending from Out-of-Pocket

5

Second filter* % Weight

Private vs. Public Pay / Economics

TBD

Regulatory Process

TBD

Logistics TBD

30 Countries

3 – 6 Countries

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from Out-of-Pocket

Innovation Ecosystem 10

Estimated # of Physicians 5

Private Healthcare Expenditure as % of GDP

15

Government Effectiveness 5

Regulatory Quality 10

Total 100

Logistics TBD

Reimbursement / Economics

TBD

Total 100

* Metrics Used for First Pass Country Assessment** Metrics Used for First Pass Country Assessment (With Specific Sub-Components to be Determined)

1 – 2 Countries

Sample Analysis: Top Four Country Opportunities

60%

70%

80%

90%

100%

Reg. Quality

Gov't Effectiveness

Pvt. HC Exp's per Capita

# Physicians

24

0%

10%

20%

30%

40%

50%

60%

#1 #2 #3 #4

Innovation Ecosystem

Out-of-Pocket HC Spending

Per Capita US Imports

HC Exp's Per Capita

Diabetes Cases

Population Density

GIL-100 Index Workshop

Macro Micro

A ½ day onsite workshop session where a team of qualified and trained Frost & Sullivan facilitators and analyst

conduct presentations and guide clients on how to prioritize growth opportunities and define growth strategies.

Workshop requirements & content must be defined and agreed in advance.

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½ Day WorkshopGIL-100 Index Detailed Country Investigation

In Scope Not In Scope

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Q&A

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For Additional Information

Britni Myers

Corporate CommunicationsHealthcarebritni.myers@frost.com

Reenita DasSenior Vice President, Asia Pacific and Latin AmericaHealthcarerdas@frost.com

29

Greg Caressi

Senior Vice President, North Americagcaressi@frost.com

Dr. Vinnie AggarwalChief Economist Economic Research & Analyticsvinnie.aggarwal@frost.com

The Frost & Sullivan Story

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Pioneered Emerging Market & Technology Research

• Global Footprint Begins

• Country Economic Research

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• Best Practice Career Training

• MindXChange Events

Partnership Relationship with Clients

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Visionary Innovation

• Mega Trends Research

• CEO 360 Visionary Perspective

• GIL Think Tanks

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