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Digital Transformation in the MedTech Industry

Erik Cotman

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New technologies, empowered consumers, disruptive new entrants, and an aging population are changing healthcare

1. Demographics

• Aging society

• Increased ethnic diversity

2. Consumer Empowerment

• Greater responsibility

• Demand for value

3. S.M.A.C.

• Social, mobile, analytics, and cloud merge

4. New Entrants

• Non-traditional players disrupt status quo

5. Care Anywhere

• Accessible healthcare through mobile, retail

In this New Health Economy, as the traditional lines between segments blur, you cannot operate within a silo

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Rising healthcare costs are prompting healthcare systems to reward for better outcomes, better quality, cost savings and value

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Increase in chronic disease

Ageing population

Increasing system costs

Inefficiency and waste

Fragmentation of care

More volume than value

Consumerism

Reform/Talk of reform

Providing Care, a balancing act

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There is a trend from inpatient care to outpatient services

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Primary Care Centre

Mobile platform to

connect patients to the

care network and enable

continuity of care

1

Analytics and its

dissemination with

other care settings to

make effective

decisions thus driving

higher quality care

within the network

2

home

Acu

te C

are

Research Facility Tertiary Care Centre

Standard-of-Care

Medical Learnings and

Discovery

Collaboration platform to facilitate

real-time use of patient data to

enable dynamic triaging and

learning

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Technology via remote monitoring, telemedicine and mobile devices will help usher a move towards home care

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Mobile system gives physicians and caregivers remote access to a patient's vital signs from anywhere within the hospital.

A device lets doctors conduct real time consultations using a revolving robot.

Patch cardiac rhythm monitor provides continuous monitoring for up to 14 days.

Sensor mat is placed under mattresses to monitor a patient's presence, sleep pattern, heart rate and breathing rate.

Sensors on the patient and throughout the home detects falls, wandering, missed medication

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Moving from Healthcare to Health

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Source: PwC analysis (2014)

Fitness and wellness is a fast growing market across the globe

$1.49 trilliontotal global ancillary/wellness

market size

$391B

Global nutrition

market

$236.5B

Sporting goods

and apparel

$595B

Weight loss

industry

$8.02B

Mobile

health apps

$114B

Alternative

medicine

$48B

Medical

tourism

$3.1B

Wearable

devices

$113. 4B

Natural &

organic foods

$109.5B

Supplements

$43B

Natural and

organic

personal care &

household products

$125.1B

Functional

foods

$19.4B

RPM/

Telemedicine

$78.4B

Global fitness

industry

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Do it yourself healthcare

Digital Natives make decisions to engage or not in 1/20 of a second.

DIY Patient?

Sources: MillwardBrown, Nielsen Norman Group

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US consumers are ready to abandon traditional care models for more digital, do-it-yourself options

Percent of US respondents answering “Very likely” and “Somewhat likely” to consider these

alternatives:

Check for ear infection using device attached to phone

46.9%54.8%

Evaluation of minor skin conditions

Ah

Use an at-home strep test

58.6%

Source: PwC Health Research Institute, April 2014, “Healthcare’s New Entrants: Who will be the industry’s Amazon.com?”

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Digital is not a set of channels. It’s a cultural shift in behavior.

This is the new reality also in Europe.

BEHAVIORAL SHIFT

9PwC

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Consumers in other countries also are open to new ways of receiving care

Source: PwC Sweden: The doctor is in – your smartphone: Is Sweden ready for digital and virtual care? 2015; PwC Canada - Making

Care Mobile, 2014; PwC Germany: Health Care & Pharmaceuticals New Entrants Consumer Survey, 2014

48% of Germans

are willing to invest their own money, for example in an app to book appointments

43% of Germans

are open to the offers by new entrants. The only requirement is the same quality

40% of Swedish

consumers are open to virtual care and DIY solutions over traditional care options

33% of Swedish

consumers are open to a physician visit via a smartphone

79% of patients

in Canada do or would use email services with their doctor

67% Canadians

would consider using vHealth options for their own care or for someone they care for

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Blurring lines between traditional players combined with Digital DNA from new entrants are shaping new Digital Innovation Zones

Healthcare providers

Government

Healthcare payers

Pharmaceuticals and life sciences

Retail and consumer

Financial services

Telco

Technology

ConsumerPrimary Caregiver

Specialty Caregiver

Family Caregiver

Payer, Employer, other risk-bearing entity

USERS

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DIGITAL INNOVATION ZONES

Care Transparency

Digital Therapy & Delivery

Care Coordination

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This fertile ecosystem is attracting diverse, sophisticated new entrants into healthcare

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3 Telecom

7 Retailers

4 Finance

14Traditional Healthcare Companies

24New

Entrants

12Non

healthcare players

2 Automotive 3 Consumer Products

5 Technology

Fortune 50

Large Conglomerates Start Ups & Niche Players

Source: PwC Health Research Institute, April 2014, “Healthcare’s New Entrants: Who will be the industry’s Amazon.com?”

Any trademarks included are trademarks of their respective owners and are not affiliated with, nor endorsed by, PricewaterhouseCoopers LLP.

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…and are being enabled and driven by collaborative plays between pharma life sciences and new entrant players

Teva Pharmaceuticals and IBM Partner to Build Global e-Health Solutions on the IBM Watson Health Cloud

Proteus Digital Health and Otsuka Seek FDA Approval for World’s First Digital Pill

Roche and Qualcomm join forces for next-gen remote patient monitoring solution

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Biogen CEO says the biotech aims to develop wearable and ingestible devicesWearables

Novartis to Begin Human Testing of Google’s Smart Contact Lens in 2016

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SENSOR

DRUG ELUTING DEVICE

SECONDARY DATA USE

Heart rate, blood glucose, etc.

Patch, sensor,watch

Trials, Watson

HealthyCircles

“CONNECTED” APPLICATION

INTERACTION HUB “INDIVIDUAL” APPLICATION

iPhone MyFitnessPal

ECOSYSTEM

Collaboration in a multi-stakeholder ecosystem will be a critical part of New health

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Technology Investment – Show Me the Money

Source: Rock Health Funding Database

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Where do you want to be...?

© 2015 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the

network of member firms of PricewaterhouseCoopers International Limited, each of which is a

separate and independent legal entity.

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.

This is about a different way to

organize ourselves and to sell and deliver to

our customers

The new consumer is the new patient and has new expectations

All healthcare stakeholders– Payers

and Providers - are looking at new

business models that impact our Industry

Digital transformation crosses commercial,

R&D, and supply chain

The rise of a new era. It is called Digital

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MedTech needs new services and business models to survive and grow, through radical innovation

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The Level of Innovation

The degree of technology and businessmodel change determine the level ofinnovation.

MedTech companies should:

• Be ambidextrous;• Collaborate to get

closer to the patient;• Measure innovation T

ec

hn

olo

gy

Ch

an

ge

Business Model Change

Incremental

Break through

Radical

Low

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Becoming the disruptor, not the disrupted.

Move Digital

Move Partnerships

Move Patient Centric

Move Value

Move ForwardPwC

The term innovation needs redefining in anenvironment that rewards VALUE –measured in affordable patient outcomesand customer satisfaction – over Volume.

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Thank you

www.pwc.com/us/healthcarenewentrants

www.pwc.com/global-health

erik.cotman.rbr@be.pwc.com

+32495273624

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