1. IVEY MEDICAL TECHNOLOGY INNOVATION
SYMPOSIUM – JUNE 10, 2011
London, Ontario

2. Agenda
> BDC
> The Medtech Industry
> The Venture Capital Industry
> Opportunities
> Risks
> Conclusion
2

3. Accelerate entrepreneurs’ success
BDC’s Mission
Help create and develop Canadian businesses through financing,
venture capital and consulting services, with a focus on small and
medium-sized enterprises (SMEs)
We share the entrepreneurial spirit that drives Canadian businesses
– Our dedicated and experienced employees are helping more than 28,000 clients
reach their full potential
– Over 100 Business Centres across Canada to provide our clients with
solutions that meet local economic realities
– Close to $17.7 billion of assets under management
3

4. BDC Venture Capital
> Investing since 1975
> BDC is a major provider of risk capital to companies with
high growth potential and promising strategic positions,
operating in the high technology and biotech sectors
> Our focus is on business in the areas of health care,
information technology, cleantech and funds
> Invest >$100MM/year
> As at March 31, 2011 assets totalled approximately
$480M incl. $114M in indirect (22 funds) and $366M in
direct
4

5. Medtech –Introductory Statement
Medical innovation will not benefit patients
unless you can build a successful
business around it. (Institute for Health
Technology Studies, April 14, 2011)
5

6. Medtech - The Requirements
> Safe and clinically effective products
> Market need
> Provider buy-in
> Someone to pay for the product
> A company that develops, manufactures
and sells the product at a profit
6

7. Medtech - The Industry
> Worldwide medical equipment & supplies market
= $220B
> US industry consists of 11,000 companies with
sales of $75B
> Cdn industry consists of 2,500 companies and
sales of $6B
> High G.M. (40-60%) and R&D that represents
10% of sales (product obsolescence)
> Dependence on large customers
7

8. Venture Capital Industry -
Introduction
> Returns are based on capital gains
> 5 to 15 year hold
> Low conversion rate
> 2/6/2 » 1/5/4 success rate
> Exits are essential to success: public issue, M&A
or “put”.
> More money is almost always needed
8

9. Venture Capital Statistics
> US: VC investment in the US totaled $21.8B in
2010, 19% incr. in $ over 2009 level (3,277
deals)
> US: Medical devices & equipment received
$3.4B in 2008; $2.5B in 2009; and $2.3B in 2010
(324) deals (PWC/NVCA Money Tree Report)
> Canada: VC invested $1.1B in 354 companies
(all sectors) in 2010 ($1.4B in 2008, 337 co’s)
9

10. Venture Capital Statistics cont’d.
> Fund raising totaled $819M down 24% and
lowest level in 16 yrs
> M&A activity somewhat positive but prices are
depressed (valuation multiples at Mar 2011 were
0.5x sales and 3.1x EBITDA); public company
eps multiple was 13.5x at Mar 2011 vs 20x at
end of 2008
10

11. OPPORTUNITY - Why Medtech?
> Demographics
> Indispensable nature of products
> New sectors are emerging
– robotic surgery
– portable devices
– minimally invasive surgery (material science
technologies)
– wireless technology (real time data)
11

12. OPPORTUNITY - Why Medtech?
cont’d.
> Healthcare cost containment
> European regulatory pathway
> Less expensive to develop than biotech
12

13. The Risks
> Increasing time, expense and uncertainty
of innovation
– Health reform uncertainties
– Increasing time/expense of FDA approval process
– Increasing time/expense to obtain reimbursement
13

14. The Risks cont’d.
> Trend to taking innovations to China, India,
Brazil: radical innovation to occur there?
> Competition from biotech products e.g. tissue
replacement
> No patent cliff, e.g. blockbuster knee, but
steadier
14

15. Conclusion
> Need for innovative business model & financing
strategy as well as innovative technology
> Low cost model to partnering (3 years)
> Rely on strategic alliance to fund regulatory
costs and development; partner has option to
purchase
> Angel investing
15

16. THANK-YOU
Charles Cazabon
BDC Venture Capital
514-496-0708
charles.cazabon@bdc.ca
1-888-info-BDC www.bdc.ca