3. Industry Overview Contents 2 Diagnostics Industry Overview Market & Products Segmentation Socio-economic Status Total APAC Diagnostics Market & Outlook Regional Diagnostics Market & Outlook Diagnostics Market Age Vs. CAGR Diagnostics Market Revenue by Segment & CAGR 1. 2. 3. 4. 5. 6.
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6. Socio-economic Status Industry Overview 5 China, South Korea and India have the highest growth rate in healthcare spending. Together with the large population, these 3 countries are the most attractive market in healthcare industry. Aging populations correlate to the increase in medical expenditure associated with old age.
7. Industry Overview Laboratory Automation Outlook Total Laboratory Automation (TLA) is increasingly being favored by large hospital clusters and pathology chains as a solution to rising diagnostic test costs. Home Care Monitoring Outlook Increased usage of home care monitoring devices in Asia Pacific for blood pressure and blood glucose monitoring as patients volume rises. Industry Outlook The fastest growth was recorded by the molecular biology segment followed by coagulation and point of care (POC). Increased adoption of nucleic acid testing-(NAT) based infectious diseases and viral assays (molecular diagnostics), blood glucose testing (POC), cardiac markers and glucose (clinical chemistry), coagulation self-monitoring and bacteriology culture (microbiology) supported a compound annual growth rate of almost 9% for the overall IVD market between 2007 and 2008. APAC Diagnostics Market & Outlook CAGR 8.5% Revenue US$ Billion Clinical Diagnostics Market Revenue ( APAC) 2007-2008 6
8. India ~US$ 340 M CAGR of 12.1% Stromg Performance in POC,Diabetes Molecular, Histopathology & Cytology China ~US$ 1.4 B CAGR of 14.5% Highest growth expected in POC, Diabetes, histology, molecular assay & rapid test. Korea ~ US$ 265 m CAGR of 13.5% Steadily increasing growth rate for Diabetes & Hemostatis. POC gaining market Taiwan ~US$ 178 M CAGR of 9.8% Growth dominated by Diabetes Malaysia ~US$ 45 m CAGR of 10.5% POC, Immunoassay & Molecular is driving the growth Indonesia ~ US$ 79 M CAGR of 11% POC, Immunoassay & Molecular is driving the growth Industry Overview Japan ~US$ 3.8 Bn CAGR of 4.0% Moderate growth of Hemostasis & POC segment Others ~US$150 m Including Thailand, Bangladesh, Cambodia, Pakistan, Sri Lanka, and Vietnam Philippines ~ US$ 45.5 M CAGR of 8% Focus on Hematology, Clinical Chemistry Regional Diagnostics Market & Outlook Singapore ~US$ 24 M CAGR of 5.5% Focus on Immuno-Assay, Histology, POC, Hematology 7
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14. Market Dynamics Contents 13 Current Industry Challenge Market Dynamics Drivers & Restraints Competitive Structure Market Players & Positioning Mega trends & Paradigm Shift 1. 2. 3. 4. 5.
15. Mega trends & Paradigm Shift Rise of the Consumer New era of proactive medicine and empowerment of the consumer. Patients demand more information from healthcare providers Increase in evidence-based healthcare or the illustration (providing evidence) of the effectiveness of a test in order to justify its use, e.g. cardiac risk markers. In particular, advances in genomics, proteomics, pharmacogenetics and theranostics are anticipated to result in the optimization of diagnosis and therapy tailored to the individual Key role in improving patient outcomes and cost-savings due to earlier and more precise diagnoses and patient monitoring Evidence based Healthcare Personalized Medicines Upsurge in IVD Tests More educated ‘power patients’ seek info, want more control. Disease management programs Direct-to-consumer marketing of drugs, clinical diagnostics Adherence, compliance programs push + reward patients Employers becoming more aggressive in pushing preventative care Wellness movement Consumer directed health plans force consumers to pay more attention to HC choices More information resources available to patients Healthcare Vs. Sickcare From bench top instruments with innovative assays to larger systems, which are integrated with different software and automation components Integrated Solution By investing in R&D and Collaboration & partnership with smaller companies across the world to overcome the vast gap of different geographical differences Expanding capabilities- Alliances Figure below illustrate various dimensions and market trends shaping the direction of Healthcare industry form Therapeutic to Preventative medication era. This paradigm shift highlights equal contribution of patients together with clinicians & suppliers. The outlook based on this shift will bring noticeable changes to the way Healthcare providers deliver their services. Source: Frost & Sullivan Growth Consulting Practice Healthcare APAC Copyright @2009 Market Dynamics 14
17. Drivers & Restraints APAC (2008-10) Market Dynamics Largest pool of Ageing population. Newer premium-priced assays replacing conventional tests. Government funded disease prevention programs. Strengthening IP law in Asia, Harmonizing the regulations across the region (among ASEAN region) Lack of health care facilities in rural areas. Low level of R&D from local manufacturers Lack of proper coverage under health care insurance in most developing countries. Lack of a universal connectivity standard lead to higher equipment and management costs at POC Industry consolidation suppress the future of small to medium participants in the value chain Lack of awareness by health care professionals of range and utility of sophisticated IVD tests. Public plays a passive role in health care - low expectations from providers. Fragmented information delivery to patients encumbers patient’s realization of overall importance of IVD testing Increasing expenditure on health care as total outgo. Increased private participation of Healthcare providers & Insurance companies Increasing affluence of the people who demand better medical services. Changing the profile of diseases – from therapeutic to preventative; from general profile to premium priced lifestyle tests Source: Frost & Sullivan analysis, mass media, market expert interviews, Drivers Restraints 16
18. Competitive Structure Market Dynamics INDUSTRY COMPETITORS Intensive Rivalry among existing firms ALTERNATIVE TECHNOLOGY POTENTIAL ENTRANTS BUYERS SUPPLIERS Threat Level: HIGH Asian market remains competitive with presence of global companies as well as local giants esp. in Japan, Korea & Taiwan. The distributors look for high quality products with reasonable margins. In those regions where products are supplied / distributed by the importers, distributors for local companies have a high margin and hence inclined to supply the products procured locally. Threat Level: MEDIUM Technological advanced companies would have advantage as trends are moving towards capital-intensive instruments & facilities. Strategic Alliances brings added capabilities to the market players to remain competitive. Threat Level: HIGH The recent acquisition activities, especially of Bayer diagnostics by Siemens indicates the potential growth & possibilities of Capitalized companies to have a grand entry to the diagnostics market. The consolidation by pharmaceutical companies into this market would bring the competition to a new height. Threat Level: Medium The Vast application of diagnostics products & frequent usage gives low to medium bargaining power to the buyers to substitute with. Cost & quality remains a sensitive issue for the buyers. 17
19. 18 Market Players & Positioning Market Dynamics Low High Breadth of Current Applications Degree of Innovation Biotechnology Companies developing Diagnostics Tests Pharmaceutical Companies with Diagnostic Divisions Diagnostics Companies High Roche Abbott Siemens Medical Solutions Diagnostics Becton Dickinson Beckman Coulter Bio-Rad GE Healthcare Sysmex Bio-Merieux Gen-Probe AffyMetrix Qiagen OCD Medical Equipment Vendors with Diagnostic Divisions Characterised by many consolidation activities, current market reflects a very strong bonding with Life sciences players. As seen in the diagram, most of the global players believe in integration of Diagnostics products as a vital aspect to sustain their healthy growth. Market Share of Players –APAC 2008 Peculiar to Asian region only, indigenous market players hold a very substantial market share of close to 45% especially in China, Japan & India.
20. Market Outlook & Future Trend Contents 19 Transformation of Medical Device Industry Market Outlook & Future Trend Translating Technological Advancement Key Areas of Alliance and Partnership Key Opportunities Prioritized 1. 2. 3. 4.
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24. Market Outlook & Future Trend Key Opportunities Prioritized The positioning of various product lines indicate the potential opportunity in products based on growth in Asian market & its penetration status. Choosing a mixed profile would depend on the company’s objective to grow in specific product line and country of interest as displayed on next slide. Penetration Rate ( High) Penetration Rate ( Low) Growth Rate ( High) Growth Rate (Low) Penetration rate is defined as the maturity of the product segment and its application. The lower penetration rate means higher untapped market potential for growth. Growth rate is considered as the future projected CAGR till year 2012. A high growth rate is any rate above 10% vis-à-vis industry average of 8.5%. 23 Clinical Chemistry Immunoassay Molecular Diagnostics SMBG POCT Hematology Coagulation Microbiology
25. Market Outlook & Future Trend Strong Med Weak High Med Low IVD Future Growth Opportunity Current Market Attractiveness The objective of this diagram is for illustrative purpose only which positions various Asian countries on two dimension i.e. Current & Future opportunities available in market. The notable argument of this diagram could be to highlight the markets depending on its maturity( in terms of current acceptance rate of IVD devices & reagents) and how the country is developing to bring growth for the same. The Current Attractiveness of Market is defined in terms of overall size, historical growth rates, competitive structure, legal & regulatory requirements and acceptance rate of various IVD technologies. The Future Growth Opportunity is defined as the overall future IVD market favourability on the same dimensions as explained above. In addition, factors which decide the growth potential are socio-economic drivers & restrains in that particular country, forecasted market size, and expected technological advancement in diagnostics industry. Key Opportunities Prioritized 24
