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Performance Benchmark: Optimizing Staff
Levels to Drive Growth in Medical Devices




                    1            BEST PRACTICES,   ®
                                                       LLC
Research Objectives and Priorities
Best Practices, LLC conducted this research to identify Marketing Staffing and Performance
levels across the Medical Devices industry. Research partners participated in a benchmark field
study that identified performance levels across a broad range of key business performance
factors.

     Study Objective & Methodology                            Key Study Factors


    Benchmark research examined the                   What staffing and productivity
    Marketing Staffing and Performance                levels exist across healthcare
    levels of health care business units              business models?
    to understand optimal performance
                                                      What growth and profit margin
    ranges.
                                                      levels characterize high
    Analysts segmented benchmark                      performance?
    participants into three groups with
                                                      What strategic marketing activities
    different business models and
                                                      are most important and consume
    dynamics.
                                                      the greatest resources?
    The benchmark field work
    developed and analyzed the
    importance of more than 15 critical
    performance factors.


                                               2                             BEST PRACTICES,   ®
                                                                                                   LLC
Probe Multiple Dimensions of Marketing Productivity
The field research study engaged 16 executives at medical devices companies in the field
research and probed twelve critical marketing productivity factors across three broad business
segments.


                                                       16 Survey
                                                      Respondents




              Branded                                    Generic
                                                                                                  Medical
              Pharma                                     Pharma
                                                                                                  Devices
              products                                   Products




   Strategic              Tactical            Strategic            Tactical             Strategic             Tactical
   Marketing             Marketing            Marketing           Marketing             Marketing            Marketing


  Product Category Benchmarks   Staffing Levels Benchmarks        Profit Margin Benchmarks    Strategic Activity Benchmarks

       Customer Segment
                                     Unit Sales Benchmarks       Time Allocation Benchmarks   Tactical Activity Benchmarks
         Benchmarks
    Organizational Structure                                      Product scope & coverage
                                 Growth Rate Benchmarks                                        Activity Impact Benchmarks
         Benchmarks                                                     benchmarks

                                                             3                                      BEST PRACTICES,           ®
                                                                                                                                  LLC
Field Research Overview:
                  The Universe of Learning &
                       Benchmark Class




Copyright© 2006            4            BEST PRACTICES,   ®
                                                              LLC
Universe of Learning: Medical Device Leaders
Sixteen executives representing either full-company or business unit perspectives shared
benchmark data for eleven companies for marketing resources and activities supporting medical
device products.




                                              5                            BEST PRACTICES,   ®
                                                                                                 LLC
Sales Growth Rates Reflect Product Type
Successful medical device products have the potential to grow rapidly, thereby winning marketing
resources to create demand.




                                           Sales Growth Rate Benchmarks for Product Categories
  R e v e n u e G ro w th R a te s




                                     19%
                                                                                         16%
                                     17%
                                     15%
                                                   12%                                                   Mean
                                     13%                              11%                15%
                                     11%                                                                 Median
                                      9%
                                                                      10%
                                      7%
                                                    8%
                                      5%
                                              Generic Product    Medical Device   Branded Rx Product
N = 57
                                                                       6                       BEST PRACTICES,   ®
                                                                                                                     LLC
Medical Device Portfolio Growth
Growth rates in the Medical Device segment typically range between eight and fourteen percent
averaging between ten and eleven percent. High-growth portfolios, being smaller and more
focused, can reach as high as twenty-five percent annually while the lowest-growth portfolio
lagged at 3 percent.

          Please provide the approximate growth rate for your product portfolio.

               Max                                                    25%


     75th Percentile                                 14%


              Mean                         11%


            Median                      10%


     25th Percentile               8%


                Min         3%


                       0%    5%      10%             15%    20%    25%        30%
                                              Growth Rate
(n=16)
                                                 7                          BEST PRACTICES,   ®
                                                                                                  LLC
Medical Device Tactical Marketing Staffing
Medical Device tactical marketing appears to be more labor intensive than device strategic marketing. The
average benchmark for tactical marketing staff is approximately four FTEs per $100 million in revenue
generated, twice that of strategic FTE benchmarks. The most efficient tactical performer supports $100 million in
revenue with less than one FTE.


             Number of Tactical Marketing FTEs per $100 Million Revenue


                Max                                                                        16.2


     75th Percentile                                       7.0


               Mean                              4.9


             Median                        3.5


     25th Percentile                 2.4


                 Min       0.7


                       0         2         4           6         8   10   12     14   16          18
                                                  FTEs per 100 Million Revenue
(n=13)
                                                                 8                         BEST PRACTICES,   ®
                                                                                                                 LLC
New Product Development Dominates Strategic Activity
Medical device strategic marketing staff invest their time across multiple marketing fronts. New
product commercial development wins greatest time investment with more than 43% of time
allocated here – followed by managing product enhancements, branding and other varied
marketing activities.
 Time & Activity Benchmarks for Device Strategic Marketing Staff
                        Medical Device Strategy Groups
                                                           Benchmark Class

New product commercial development                               44%

Troubleshoot new product issues (post-launch)                    6%

Branding                                                         9%

Managing product enhancements and / or changes                   15%

Marketing communication & promotion                              6%

Medical education, events and promotion                          7%

Data management                                                  4%
Communicating product changes and
                                                                 5%
enhancements

Supply management                                                4%

(n=15)                                          9                             BEST PRACTICES,      ®
                                                                                                       LLC
About Best Practices, LLC
Best Practices, LLC is a research and consulting firm that conducts work based on the simple
yet profound principle that organizations can chart a course to superior economic performance
by studying the best business practices, operating tactics and winning strategies of world-class
companies.




                        Best Practices, LLC
                         6350 Quadrangle Drive, Suite 200,
                               Chapel Hill, NC 27517
                                   919-403-0251
                         bestpractices@best-in-class.com
                             www3.best-in-class.com




                                                10                            BEST PRACTICES,      ®
                                                                                                       LLC

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Performance Benchmark Optimizing Staff Levels to Drive Growth in Medical Devices Report Summary

  • 1. Performance Benchmark: Optimizing Staff Levels to Drive Growth in Medical Devices 1 BEST PRACTICES, ® LLC
  • 2. Research Objectives and Priorities Best Practices, LLC conducted this research to identify Marketing Staffing and Performance levels across the Medical Devices industry. Research partners participated in a benchmark field study that identified performance levels across a broad range of key business performance factors. Study Objective & Methodology Key Study Factors Benchmark research examined the What staffing and productivity Marketing Staffing and Performance levels exist across healthcare levels of health care business units business models? to understand optimal performance What growth and profit margin ranges. levels characterize high Analysts segmented benchmark performance? participants into three groups with What strategic marketing activities different business models and are most important and consume dynamics. the greatest resources? The benchmark field work developed and analyzed the importance of more than 15 critical performance factors. 2 BEST PRACTICES, ® LLC
  • 3. Probe Multiple Dimensions of Marketing Productivity The field research study engaged 16 executives at medical devices companies in the field research and probed twelve critical marketing productivity factors across three broad business segments. 16 Survey Respondents Branded Generic Medical Pharma Pharma Devices products Products Strategic Tactical Strategic Tactical Strategic Tactical Marketing Marketing Marketing Marketing Marketing Marketing Product Category Benchmarks Staffing Levels Benchmarks Profit Margin Benchmarks Strategic Activity Benchmarks Customer Segment Unit Sales Benchmarks Time Allocation Benchmarks Tactical Activity Benchmarks Benchmarks Organizational Structure Product scope & coverage Growth Rate Benchmarks Activity Impact Benchmarks Benchmarks benchmarks 3 BEST PRACTICES, ® LLC
  • 4. Field Research Overview: The Universe of Learning & Benchmark Class Copyright© 2006 4 BEST PRACTICES, ® LLC
  • 5. Universe of Learning: Medical Device Leaders Sixteen executives representing either full-company or business unit perspectives shared benchmark data for eleven companies for marketing resources and activities supporting medical device products. 5 BEST PRACTICES, ® LLC
  • 6. Sales Growth Rates Reflect Product Type Successful medical device products have the potential to grow rapidly, thereby winning marketing resources to create demand. Sales Growth Rate Benchmarks for Product Categories R e v e n u e G ro w th R a te s 19% 16% 17% 15% 12% Mean 13% 11% 15% 11% Median 9% 10% 7% 8% 5% Generic Product Medical Device Branded Rx Product N = 57 6 BEST PRACTICES, ® LLC
  • 7. Medical Device Portfolio Growth Growth rates in the Medical Device segment typically range between eight and fourteen percent averaging between ten and eleven percent. High-growth portfolios, being smaller and more focused, can reach as high as twenty-five percent annually while the lowest-growth portfolio lagged at 3 percent. Please provide the approximate growth rate for your product portfolio. Max 25% 75th Percentile 14% Mean 11% Median 10% 25th Percentile 8% Min 3% 0% 5% 10% 15% 20% 25% 30% Growth Rate (n=16) 7 BEST PRACTICES, ® LLC
  • 8. Medical Device Tactical Marketing Staffing Medical Device tactical marketing appears to be more labor intensive than device strategic marketing. The average benchmark for tactical marketing staff is approximately four FTEs per $100 million in revenue generated, twice that of strategic FTE benchmarks. The most efficient tactical performer supports $100 million in revenue with less than one FTE. Number of Tactical Marketing FTEs per $100 Million Revenue Max 16.2 75th Percentile 7.0 Mean 4.9 Median 3.5 25th Percentile 2.4 Min 0.7 0 2 4 6 8 10 12 14 16 18 FTEs per 100 Million Revenue (n=13) 8 BEST PRACTICES, ® LLC
  • 9. New Product Development Dominates Strategic Activity Medical device strategic marketing staff invest their time across multiple marketing fronts. New product commercial development wins greatest time investment with more than 43% of time allocated here – followed by managing product enhancements, branding and other varied marketing activities. Time & Activity Benchmarks for Device Strategic Marketing Staff Medical Device Strategy Groups Benchmark Class New product commercial development 44% Troubleshoot new product issues (post-launch) 6% Branding 9% Managing product enhancements and / or changes 15% Marketing communication & promotion 6% Medical education, events and promotion 7% Data management 4% Communicating product changes and 5% enhancements Supply management 4% (n=15) 9 BEST PRACTICES, ® LLC
  • 10. About Best Practices, LLC Best Practices, LLC is a research and consulting firm that conducts work based on the simple yet profound principle that organizations can chart a course to superior economic performance by studying the best business practices, operating tactics and winning strategies of world-class companies. Best Practices, LLC 6350 Quadrangle Drive, Suite 200, Chapel Hill, NC 27517 919-403-0251 bestpractices@best-in-class.com www3.best-in-class.com 10 BEST PRACTICES, ® LLC