aal investment forum 2010 - life sciences and ict from a vc point of view

© 2010 OrbiMed Advisors, LLC. All Rights Reserved. CONFIDENTIAL

1

This document does not constitute an offer of securities. Such an offer will only be made by means of a Confidential Memorandum to be furnished to investors at a later date. The manager may make changes to this document without notification.

Click to edit Master subtitle style

Life Sciences and ICT from a VC point of view

Nissim Darvish, MD, Ph.D.,Senior Managing Director

Odense Denmark


2

The Communications Revolution

TelegraphyMorse (1873)Telephon

yBell (1876)

WirelessMarconi (1896)

Cellular Bell Labs (1972)

InternetARPANET (1970)

World Wide WebNASA Illinois (1993)

2010


3

e-Health-or the Marriage of ICT and Healthcare: The HICT

• e-health = Healthcare practice which is supported by electronic

• processes and communication (Source: Wikipedia)

• ICT can improve the speed and the automation of the information management (capturing, transmission , processing and storage) in a secure, scalable and efficient way.

1. Better quality of care2. More efficient use of scarce resources (1)3. Better quality of life patients4. Better quality of life Healthcare professionals5. Better Financials

HICT can be translate

1 Redundancy and inefficiency account for 25-40% of cost (eHealth taskforce report 2007-EC)


4

HCIT Drivers Du Jour

• The Patient/Consumer pressure will dramatically change the delivery of healthcare

• The abundance of information and data will have to be organized in a useful way for decision support for medical staff and patients

• Medical knowledge and medical decisions have to be available in primary care/home settings and at the point of care

• Integrated care with the emphasis on systems of care ex. Kaiser, in the US and Torbay in the UK to compete with other Integrated care givers

• The need for increasing healthcare provider efficiency and reducing cost


5

HCIT-Basket of applications

Monitoring

Asset Management

Patient Records

Medical Equipment

Disease Management

E-PharmaHCIT


6

Entrepreneurs – Venture Capital

Entrepreneurs create and build value based on opportunity and personal motivation to innovate.

Venture capitalists provide the currency for entrepreneurs to build theirideas into valuable companies


7

Entrepreneurs – Venture Capital

VCs are RETURN SENSETIVE


8

VC Lifescience Investment 1995-2010 YTD

1.72.4

3.2 3.5

4.7

7.5

5.75.3 5.3

6.3 6.4

7.7

9.1

8

6.2

3.4

0

1

2

3

4

5

6

7

8

9

10

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Year

$Bill

ion

0

5

10

15

20

25

30

35

40

% L

S

Series2 Series1

Series2 1.7 2.4 3.2 3.5 4.7 7.5 5.7 5.3 5.3 6.3 6.4 7.7 9.1 8 6.2 3.4

Series1 24 23 23 18 9 8 15 26 28 29 28 29 30 28 34 30

Year

YTD

$Billion % from Total VC

Money Tree Data

$B


9

HCIT and Related Services Private Capital Raising

Only10% of the investments in LS go to HCIT


10

HCIT Market

• The healthcare information technology market is estimated to be $53.8 billion by 2014, growing at a CAGR of 16.1%. The market is expected to grow mainly due to:

• electronic medical records,• electronic health records• computerized physician order entry system• Non clinical systems.

The main driving element for global healthcare information technology market is the changing government regulationsand government initiatives tobring down the healthcare costs.


11

The 3P model for HCIT Investment

Patients Physicians/ Practitioners

Processes

The three fundamental elements of healthcare ICT investment: practitioners, patients, and processes. All three are of equal importance and should be prerequisites to funds HCIT.

•Adapted from Cisco Internet Business Solutions Group


12

HCIT-Basket of applications

Monitoring

Asset Management

Patient Records

Medical Equipment

Disease Management

E-PharmaHCIT


13

Patient Records- Electronic Records


14

94 93 9284

7673 72

66 65 6459

5447

3227

21 20 18

11 8 3

66

5956

77

10095 94

72

81

0102030405060708090

100

FI UK EE NL

NO DK IS IT BG BE

SK FR DE ES

EU27 HU PT CZ

LU IE AT

SE CY

MT

RO EL SI PL LT LV

EU GPs using a computer during consultation, in % (EC Study 2007)

Source: empirica: ICT and eHealth use among GPs in Europe 2007, Bonn April 2008

Random samples of 6,789 GPs in 29 countries


15

% GPs Connected to Secondary Healthcare(hospitals and/or specialist)

0

10

20

30

40

50

60

70

80

90

100

EU27 BE BG CZ DK DE EE EL ES FR IE IT CY LV LT LU HU MT NL AT PL PT RO SISK FI

SE UK IS NO


16

% Connectivity to Health Authorities

Health authorities

64

51

29

2116 15 13 13 13 11 11 11

7 7 7 5 5 5 4 4 3 3 110 9

1817 17

78

1318

0

10

20

30

40

50

60

70

80

90

100

EU

27

EU

27+

2

EE

DK

UK LT IT PT

FR IS SI

ES PL

NO IE AT

MT FI

BE

SE

BG

RO NL

LV CZ

LU HU

DE

SK

CY

EL



17

% Link to insurers (reimbursers)

Admin data with reimbursers routinely

45 43

2623

1915 14

10 8 8 5 5 4 3 3 3 3 2 2 1 1 0 05 4

1915 15

48

13

21

0

10

20

30

40

50

60

70

80

90

100

EU

27

EU

27+2 DK NL

UK

FR PL LT AT

NO IE SI

CZ

BG SE FI EE PT

HU SK

DE

MT

CY EL BE

ES

RO IT IS LV LU



18

For HCIT – Electronic Records to work ? •Infrastructure and Technical challenges

• Secure/reliable wireless connection• Battery

•Errorless sensors •Business model •Cost•Interoperability•Privacy and confidentiality•Workforce •Incentive: Doctors/patients/payers/hospitals •Government priorities are driving the change


19

HCIT Median Deal Valuation


20

Medical Equipment – Medical Devices


21

Wireless Medical Devices

Patient Web Viewer

Physician

Monitoring CenterWireless LAN

Cellular

Proprietary

DECT

ECGTempBlood PressureWeightGlucose Oxy meterSwallowable pill


22

In-stent Stenosis

• Self Monitoring Stent: Detect restenosis

Measure Blood Pressure Continuously

Yogesh Gianchandani and his team at the University of MichiganReport #C245, "Worldwide Coronary Stents Market, 2008-2017," published May 2009 by MedMarket

Diligence.

Worldwide Coronary Stents Market

2.5

5.0

7.5

http://mediligence.com/rpt/rpt-s175.htm

http://mediligence.com/rpt/rpt-s175.htm


23

Closed Loop Devices

• Automatic dosing control based upon measured result• Improved accuracy• Benefits also to pharmaceutical trials

ApplicationsAsthma flow meter / inhalerDiabetes glucose meter /injection devicesCardiac Rhythm management


24

Key Healthcare Industry Segments

Medical Devices Pharma/Biotech HC Services and HCIT

% Volume ($)1997-2010

18% 72% HC-Services 8%E-Health 2%

Drivers for M&A – Rise of emerging markets; areas for growth and low cost manufacturing– Acquisition to extend core competencies

– Expiring drug patents– Increasing demand for products, services and technology from emerging markets– Global competition

– Regional consolidation– Huge demand for quality healthcare and increased healthcare spending

Level ofConsolidation

Moderately fragmented With the 50 largest Companies generating 60% of total market revenue

Highly concentrated withover 50% of the market held by 15 multinationalcompanies

Highly fragmented with the 50 largest companies generating only 15% of total market revenue


25

Healthcare M&A 2007-2009

M&A International Inc report , Fall 2009


26

Ageing and ICT

• Social• • 80+ population: doubles until 2050• • 60+ population: from 20% in 1995 to 25% in 2020• • 50+ population: 21% has severe vision/hearing/dexterity problems• • Today 4 working for 1 retired, in 2050 only 2 working for 1 retired• • Cost of pensions/health/long-term care: up by 4-8 % of GDP (2025)• • Shortfall of care staff

Economy • • Wealth and revenues in Europe of persons over 65 is over 3000 B€• • Smart homes market will triple between 2005 and 2020• • Early patient discharge by tele-health: reduced cost of 1,5 B€ p.a. (DE)• • Tele-care technology at home: Empowerment of elderly and efficiency • gains of 25% (UK)• • Telecare market >5 B€/year by 2015 in Europe


27

Summary

The healthcare IT is dynamic growing sectorIT solutions can radically improve efficiency

and productivity There are different segments within HCIT, each one of this sector possess different value and challenges

In the future, we expect to see:– Greater levels of integration between devices– An increasing presence of ‘application

services’– Increasing use of implantable medical

devices; therapeutic, monitor and diagnostic


28

This document does not constitute an offer of securities. Such an offer will only be made by means of a Confidential Memorandum to be furnished to investors at a later date. The manager may make changes to this document without notification.

Click to edit Master subtitle style

Nissim Darvish, MD, Ph.D.,Senior Managing Director

Odense Denmark

aal investment forum 2010 - life sciences and ict from a vc point of view

Health & Medicine