dymedex exec overview 1 brief

© Copyright 2010. Contents owned by and under license from Dymedex Consulting, LLC.Copyright 2011 Dymedex Consulting, LLC. Contents are proprietary Dymedex information.

Executive Overview

Dymedex Consulting

Joseph Galatowitsch, President, Managing PartnerRoss Meisner, Managing Partner

www.dymedex.com

1/8/2011© Copyright 2011. Contents owned by and under license from Dymedex Consulting, LLC.

The value of investing in a Dymedex assessment

A clear, data-driven understanding of the market opportunity:

1. To inform key early and expensive strategic decisions: • Regulatory, clinical, go-to-market, product development

2. To more effectively set and meet expectations with all stake-holders

3. To support future fund-raising activities

4. To help maintain control over the strategic direction of the business• Minimize arm-chair quarterbacks pulling leaders in multiple directions• Drive organizational alignment, enthusiasm and focus

5. To prevent “over-scaling” the business

6. To maximize and sustain early market success

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Strategic Market Development is a key business discipline

Classic Product Marketing:

▲ Focused on establishing superior customer value vs. competitive products

▲ Concerned with:– Competitive offerings– Product positioning vs. competition– Product performance & features– Product pipeline– Product mix and ASP– Customer relationships– Customer service– Branding

▲ Measured by relative price, market share, and company revenue growth

Market Development:

▲ Focused on establishing a technology as a standard of care

▲ Concerned with:– Total market opportunity– Adoption and penetration– Reimbursement & coverage– Evidence & benefit (clinical & econ.)– Practice guidelines & metrics– Technology readiness– Customer economics– Behavior change– Care pathways and networks

▲ Measured by industry revenue and growth vs. total industry potential

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Market Development is a unique marketing discipline that focuses on understanding the realizable potential of an opportunity and then strategically applying resources to

fully address the barriers to achieving that potential.


The scientific method has greatly improved success in nearly every field. Dymedex applies it to Market Development.

▲ Development of business accounting principles and measures in the early 1900s (balance sheet and P & L) revolutionized the management of business and facilitated the scaling of business size and complexity, which in turn revolutionized business productivity

▲ Development of the scientific method in applied science has dramatically accelerated the rate of discovery in every field of study

▲ Edwards Deming revolutionized manufacturing by the simple application of scientific method

▲ Every major sports team has leveraged the scientific method to improve their success

▲ The foundations of scientific methods are:– Standardization of measures and definitions– Development of tools to measure inputs and results– Gathering and synthesis of information– Developing an understanding of the ‘system’ that is targeted for control– Development of strategies to influence the system in desirable ways

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Dymedex’s Constrained Dynamic Adoption (CDA) Model can help predict non-linearities in technology adoption

▲ Milestone 1 is the gateway to broad market adoption▲ Milestone 2 is a strategic inflection point that can happen soon after Milestone 1

– Can be a significant decline in revenue based on how small incidence is in relation to prevalence

▲ Milestone 3 is the fully realized market - which can take many years to achieve▲ R, I, and T must be defined for each milestone to make informed strategic decisions

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R1

R2

R3

I1

T1

I2

T2

I3

T3

3R = Revenue ($ mil.)I = Investment ($ mil.)T = Time (years)

M2: Penetration of “easily accessible”

segments

1

2

M1: Completion of infrastructure and Technology barriers

Rate of growth dictated by Indication Attractiveness


Dymedex analysis is typically an eye-opening assessment that brings the business vision to a defensible reality

▲ CDA model factors establish an objective and rigorous basis for accurate forecasting

– Annual Revenue Potential (“ARP”) is a box that adoption and growth must operate within

– Early majority is a hard gate• 50% of people are slower to adopt

– Patient indications have very different growth potentials

• Benefit, motivation & accessibility

– Calculus of I & P and penetration constrains growth potential

– Broad and rapid adoption is driven by many challenging factors

▲ Historical and future analysis of over 30 medical technologies

– Over 150 indications– Over 30 countries

▲ Proven forecast accuracy– Pacing market saturation in 2002– ICD market inflection in 2006– Spinal fusion market inflection in 2007– Diabetes pump market– DBS and stim. for pain, UI, obesity,

depression and others– Coronary and peripheral stents, valves, – Medtronic growth trajectory from 2005-2010

▲ Broad application– Diagnostics or therapeutics– Capital equipment, implantables,

disposables, procedures– New technologies or mature products

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0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Penetration of BPH Incidence by Scenario

Max-growthScenario

BaselineScenario1

2

Growth forecast by Scenario

Three major workflows inform the Dymedex CDA Model

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Barriers toAdoption

Behavior Change

Pillars of AdoptionSufficiency Analysis

Timing and Investments to Reach Milestones

MarketSize

Patient Indications Population Dynamics Net Sources of Revenue

Annual Revenue Potential (ARP) at each Milestone

Calculus of Penetration

Attractiveness

Accessibility by Segment

Growth Rates andInflection Points


Our analysis is fact-based, rigorous, and transparent

▲ We simply use scientific method and rigorous, logical analysis and synthesis to:– Quantify the realizable size of the opportunity

• Defining the ‘box’ and it’s various ‘compartments/segments’ provides valuable insights into both the possible and likely growth dynamics within the box

– Quantify the barriers to broad adoption• It’s about human behavior, not the technology itself• We objectively assess all the factors that influence the likelihood of adoption by the ‘average’

user. The more factors that are favorably addressed the more likely broad adoption will occur• Informed by our analysis of many successful and unsuccessfully adopted medical technologies

– Quantify how fast adoption can occur (relative and absolute)• Incremental benefit, ability to definitively diagnose, patient motivation, accessibility of patients

▲ From this foundational analysis and an understanding of the ‘calculus of penetration’ we can more confidently assess future revenue projections and strategic revenue milestones:

– Time and investment to broad adoption– Major inflection points (magnitude and timing)

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Broad adoption progresses through 5 distinct stages: this process can take decades!

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1. Prescribers

2. Providers

3. Primary Referrers

4. Secondary Referrers

5. Allied Health Professionals

6. Patients and Patient Groups

7. Other Stakeholders

1. Screening Tools

2. Protocols

3. Expert Systems

4. Core Metrics

5. Pay for Performance

6. Legal/Financial Incentives

7. Professional Sanctions

BEHAVIOR CHANGE SYSTEMS• Patient

indications

• Market assessment

• Technology assessment

• IP strategy

• Business plan

• Funding

• Proof of concept

• Marketing plan

• Design for manufacture

• Regulatory

• Reimburse

• Clinical strategy

• Launch planning

• Cost controls

• Pricing discipline

• Service & support

• Iteration

• Globalexpansion

• New threats

1. Condition Management

2. Diagnostic Test3. Evidence4. Published

Guidelines5. Reimbursement6. Provider

Economics7. Provider

Capacity

1. Operational Preparation

2. Procedure Scalability

3. Ease of Use4. Maintenance5. Outcomes6. Patient

Factors7. Vendor

Support

INFRASTRUCTURE TECHNOLOGY

SellAssessOpportunity

1 DevelopProduct

2 Build The Bridge

3 ManageMaturity

5

Launch SOCValidate

DriveUtilization

Foundation

4


Roger provides well-established science to characterize physician behavior

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Early Majority (34%):• Comfortable with incremental improvements• Need references from reputable sources and peers (Guidelines)• Need to see the value/evidence• Don’t want to help fix the product• Will self-adopt if all their needs are being met

Late Majority (34%):• No surprises• Will adopt to stay abreast of the new standard• Skeptical of what’s new (high bar for change)• Want change to be easy• Followers

Laggards (16%):• Will only change via threat – legal, professional

Innovators (3%):• Actively seeking to make change• Willing to work with technologies that are not perfected• Experimental, motivated to discover new technology limits

Early Adopters (13%):• Opinion leaders, see the strategic benefit of new technology• Looking for solutions to existing compromises• Comfortable with change• Can live with less than perfect results and tools

Of the physicians who inform your business decisions, which

segment do they represent?


Adoption rates vary by patient segments▲ Perfect Patients….

– That group for whom your technology/therapy will offer the greatest benefit with the most consistency

– Beachhead indication for standard of care– Easiest to identify

▲ Subsequent Indications– Based on the logical sequencing of how

physicians/clinicians would migrate the therapy/technology

– Typically they have decreasing benefit – May be less easy to identify– Will be slower adoption

▲ Indication decisions drives:– Clinical & regulatory strategy– Launch strategy– KOL strategies

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Disease Population

Fourth Tier Candidates

Third Tier Candidates

Less Clear benefit or evidence

More difficult, more complex, older

Second Tier Candidates

Perfect Patients

If you don’t define them, physicians will


Integration of patient & physician segments informs revenue milestones and adoption (growth) rates

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Com

pelli

ngN

on-

Com

pelli

ng

Faster adopting Slower adopting

R2Opportunity

R1Opportunity

R3Opportunity

< 5%?

< 50%?

PATI

ENT

SE

GM

EN

TS

PHYSICIAN SEGMENTS

Incidence Rate

Ado

ptio

n

time

Perfect Patientswith Early Adopters


Quantify the market potential based on the “dynamic calculus” of incidence and prevalence

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Prev.

Inc.

Annual Inc.

Prev.

Diabetes Common Cold

D = 50 yrs

D = 1 week


Calculating revenue at R1, R2 and R3 may reveal a netmarket potential far different than one might initially think

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Total Gross Prevalence = 1 millionIncidence = 200k

ASP = $1,000$1 billion market

Secondary Patients = 300kIncidence = 60kAt R3 = $60 mil.

Early Majority (R2) = $27 mil. Early Adopters = R1 = $9 mil.

Perfect Patients = 50kIncidence = 10k

At R3 = $10 millionEarly Majority = R2 = $5 mil.

Early Adopters = R1 = $1.5 mil.

R3 = $150 mil. (100%)

Exclusions = 250k Prev.(Medical & Economic)

Traditional view?

R2 = $32 mil. (21%)

R1 = $10.5 mil. (7%)

“All the rest”Inc. = 80k

R3 = $80 mil.R2 = ~$0R1 = ~$0


ABOUT DYMEDEX CONSULTING

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Good decisions based on unreliable market information are not good decisions.

Dymedex synthesizes established science with proven proprietary tools to deliver unique market insights that inform critical decisions.

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Only 12% of med-tech ventures return significant returns to investors, and over 50% fail despite seasoned leadership and funding.(1)

(1) Patient Capital, National Venture Capital Association’s Medical Industry Group, at www.nvca.org

Make a compelling case for investment

1 In-depth, research-based analysis of the market, perfect patients, target physicians, prioritized segments,

Annual Revenue Potential (ARP), and growth forecast

Accelerate or revive

revenue growth

Proven methods to identify critical strategic andtactical barriers to full adoption, and investments

required to reach standard-of-care (maximum) volumes

Optimize portfolio

performance

Standard, objective, transparent framework that enables comparison, revenue forecasting, and

strategic prioritization of a portfolio of investments

2

3

Dymedex helps you: By providing unique insights:

http://www.nvca.org/�


DMX Analytical Process

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Gathering of relevant peer-reviewed published

papers

Client and physician input into current

treatment practices, indications and patient stratification methods

Distillation and organization of data points

from papers, client and physicians

Synthesis of data into a quantified model of the disease, condition and

relevant segments

Evaluation of outlier data and an assessment of the overall confidence

of the analysis

Evaluation and quantification of trends in

underlying incidence, duration and prevalence

Estimates for clinical and economic

exclusions

Integration of disease model and historical unit volumes into a dynamic market model track and

project penetration

Sensitivity analysis and integration into final

conclusions

1 2 3

4 5 6

7 8 9


About Dymedex Consulting

▲ Joseph Galatowitsch, President & Managing Partner

– Joe has 26 years in the global medical technology industry at 3M’s medical supplies business and at Medtronic. Joe pioneered the discipline and implementation of market development at Medtronic.

▲ Ross Meisner, Managing Partner

– Ross has 20 years experience building high-tech and med-tech companies. He has co-founded four start-up companies, managed two international joint ventures, and directed international market development at Medtronic.

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▲ Established 2007▲ Based in Shoreview, MN▲ Founders have analyzed over 150

medical technologies, markets, and indications

▲ “I firmly believed we understood our market and our path for growth, but Dymedex provided such new insights into the market opportunity and the barriers to adoption that their analysis has become a foundation for our business strategy.”

– CEO, CHF Solutions

▲ “Your market assessment caused us to recast our go-to-market strategy, and now helps me present the true potential of our company to investors with complete confidence.”

– CEO, Harbinger Medical

▲ “Joe pioneered elegant new market and portfolio assessment methodologies at Medtronic. His new strategic insights dramatically improved our ability to objectively value and effectively manage Medtronic's extensive therapy portfolio.”

– Executive Vice President, Medtronic

▲ “It would have taken us a year to do this ourselves, and it would not have been nearly as actionable.”

– Director of Market Research, St. Jude Medical

Sample ClientsAMS Medtronic

CHF Solutions Piper Jaffray

Intricon SetPoint Med.

Mayo Clinic St. Jude Medical

dymedex exec overview 1 brief

Documents

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realized market

early market success

copyright copyright

dymedex analysis

pacing market saturation

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company revenue growth