ObamaCare - a new opportunity

in US Healthcare Market Opportunity Day 17.5.2013

Eero Toivainen, Finpro

Healthcare and pharmaceuticals market in the US

• The US medical and healthcare

market is the single biggest market

in the world – the healthcare

expenditures comprise 47.5% of

the global expenditures

• The market is growing at almost a

10% rate and the share of

imported products and

technologies is 32% and rising.

• The US is also the center for

healthcare innovations as many of

the most successful healthcare

devices, practices and

technologies originate in the US

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The Drivers of the Business Opportunity

• Healthcare reform (ObamaCare), a growing elderly population with an associated disease burden, changing regulatory guidelines, new drug launches, and a growing mobile and wellness sector are main drivers

– In order for to meet the future demand, the industry needs new ideas, technologies, and partners from abroad

– Many of the companies in the industry are investing in executive education and preparing new processes to learn how to work with European SMEs and start-ups

• The new healthcare mindset stems from healthcare reform (ObamaCare) and the necessity to cut costs and improve the quality of care

– Hospitals are now accountable and are being penalized for readmissions within 30 days.

– There is a new need for “hospital at home” and new easy to use home care solutions – prevention and mobile are growing

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Healthcare Reform (ObamaCare)

• ObamaCare is aimed at reforming the American health care

system

• The objective is regulating the health insurance industry while

improving the quality of care and reducing costs

• New technologies, services, and mindset are needed –

American companies are looking outside for the solutions

• Total Health – the concept of integrating prevention, wellcare,

lifestyle and healthcare is creating a new opportunity for new

players

• ObamaCare will expand Medicaid and Medicare enabling

approximately 50 million new people to be insured, thereby

creating a need for new products and services

• ObamaCare will come into effect on 2014 and now is the time

to become involved in the industry

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Healthcare and pharmaceuticals market in the US

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Hospital care 31 %

Physician and clinical services

20 %

Dental care 4 %

Nursing home and home health

8 %

Prescription drugs 10 %

Research, structures and equipment

investments 6 %

Other Items 21 %

Breakdown of the healthcare expenditures in the US by

category, 2011

Source: US Gov.

Life Science Opportunities in the US

• Healthcare and medical devices

• Disease specific pharmaceuticals and biotechnology product

• Hospital equipment and operating room solutions

• Electronic medical data and HCI

• Exercise and wellness hardware, software and interfaces,

preventive medicine

• Personalized medicine

• Food and food additives.

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Pharmaceuticals, medical devices and operating

room equipment

• Pharmaceutical market is a

several hundred billion dollar

business in the US

• Generic pharmaceuticals, a $53

billion dollar industry, is expected

to be one of the fastest-growing

sectors in the country with average

expected growth of 6.3% until

2017

• Medical devices, hospital and

operating room solutions and

equipment are also lucrative and

growing market segments

• Additional emerging field is the

electronic medical data and

electronic records market

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Pharmaceuticals, medical devices and operating

room equipment

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98,6

123,9

164,4

220,5

0

50

100

150

200

250

2005 2010 2015 2020

Medical Devices Market in the US, $bn

Source: GlobalData

CAGR

5.5%

Pharmaceutical Market by Segment in the US

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247

307

380

471

19 22 27 34

0

100

200

300

400

500

2005 2010 2015 2020

Prescription Drugs OTC Drugs

Pharmaceutical Market by Segment in the US, $bn

CAGR

4.4%*

*Prescription + OTC

Biotechnology

• The US biotechnology revenues formed

ca. 70% of global public biotech

companies’ revenues in 2011

• The decline in revenues of US biotech

companies in 2011 was driven by three

large acquisitions by non-biotech

acquirers – after normalizing for these

acquisitions, the revenues increased by

12%

• In 2011 the US FDA approved more new

drugs than at any time since 2004

• 70% of the approvals were approved in

US before they received approval

anywhere else in the world

• As in prior years, cancer continues to

dominate the US clinical pipeline

• Neurology will become increasingly

important in the years ahead as aging

populations increase the number of

neurodegenerative diseases

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The US Clinical Pipeline by Indication

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Cancer 44%

Neurology 10%

Infectious disease 9%

Metabolic and endocrine

6%

Autoimmune 4%

Cardiovascular 4%

Respiratory 4%

Other 19%

The US Clinical Pipeline by Indication, 2011

Source: Ernst &Young

Biotechnology revenues in the US

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*Publicly traded biotechnology companies in the four established clusters – the United States, Europe, Canada and Australia

Biotechnology revenues in the US and the rest of

the world* (Public company data; USD billion)

61

65,1

56,2

61,1 58,8

19,3 21,7 22,1 23 24,6

0

20

40

60

80

2007 2008 2009 2010 2011

US

ROW*

Source: Ernst &Young

Hospital Equipment and Medical Devices

• US medical device market constitutes 40% of global markets and is

estimated to top $200 billion in 2020

• The biggest segments are the orthopedic devices,

in Vitro Diagnostics (IVD), cardiovascular devices, and ophthalmic

devices

• During 2010-2020 the fastest growing segments are expected to be

the orthopedic devices, IVD, and hospital supplies

• Especially the patient monitoring device market is expected to grow

rapidly in the coming years

• Major drivers are aging population, high healthcare spending, early

diagnosis of diseases, high prevalence of chronic diseases, sedentary

lifestyle of US population, and health tourism

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Medical Device Market in the US by segment

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Orthopedic Devices 16 %

In Vitro Diagnostics 15 %

Cardiovascular Devices

12 % Ophthalmic Devices 10 %

Hospital supplies 6 %

Others 41 %

Medical Device Market in the US by segment, 2010

Source: GlobalData

Medical Device Market in the US

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98,6

123,9

164,4

220,5

0

50

100

150

200

250

2005 2010 2015 2020

Medical Device Market in the US, $bn

Source: GlobalData

CAGR

5.5%

Healthcare Informatics and Mobile Health

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• The global mHealth market is expected grow at a CAGR of 41.5% and to reach

$10.2bn by 2018

• US is the largest market for mHealth solutions with a size of $660m or ca. 50% of

the global market

• The monitoring services is the largest and fastest growing mHealth segment

constituting 60% of the total market followed by diagnostic services and healthcare

systems

• Cardiac rhythm management, sleep therapy and ambulatory ECG are the main

monitoring device segments – sleep therapy, blood pressure monitoring, glucose

monitoring and medication adherence are predicted gain more momentum

• Strong growth forecasted for mHealth applications while an additional emerging

field is the electronic records market

• Cloud computing, spread of smartphones, ease of use functionalities, rising health-

care spending, and demand for independent aging solutions and post-acute care

service are driving the growth of mHealth

Healthcare Informatics & Mobile health

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$1.3

bn $10.2 bn

Global mHealth market size & segments, $billion

2012 2018

Source: Global Data

80%

Software &

services

12%

Hardware

8%

Networks &

connectivity

Healthcare Informatics & Mobile health

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The metric only accounts for devices that use fixed wireless, cellular, and

fixed line connections.

Source: Berg Insight

Connected home medical monitoring devices, million units

(World 2011-2017)

The most important Health & Life Science Clusters in the US

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Bay Area Life

Science Biotech,

Informatics, VC, Mobile

Los Angeles Biotechnology,

Pharmaceutical,

Medical devices

Seattle R&D, Drug

Development, VC, HIT

New York/

New Jersey/

Philadelphia Pharma, Mobile,

Biotech, Medical

Devices, VC

Boston Biotech,

Pharma, VC, mobile,

devices, HIT

Florida Bioscience, LifeScience,

Medical Devices

Raleigh

Durham, NC Pharma & Biotech

Research, JVs

San Diego Biotechnology ,

Mobile Health IT,

Devices, VC

DC, MD FDA, NIH,I-

270 corridor

”NA Alley”

Atlanta

Bioscience

HIT

Chicago Life Science

Denver: Agriculture, Bioscience

Houston

Research

Indianapolis Life science, implants

Minneapolis Agriculture,

Medical devices

Finpro Gazelle US for Health Science Companies

• A five-stage program, that will take place in Helsinki and US healthcare hubs

• The Bootcamp (4-5.6) facilitator and trainer is Christian Haller

– A trusted advisor and strategist for business executives in the medical technology

and consumer products industries

– Works with executives at start-ups and Fortune 500 companies to conceive, finance,

develop, manufacture and market first of a kind products and new technologies

– A serial internal entrepreneur at MPR, where he has successfully built numerous

new companies

• The program is run by experienced people and gurus from the markets and

industries

• In the US, leading medical experts join the team and work with each company

21/05/2013 20 © Finpro

1 2 5 4 3 Situation

Analysis

Bootcamp Mentoring

&

Coaching

Discovery Entry

Options

Testimonials from Gazelle Bootcamp Graduates 2012

“Absolute must to attend before any business!”

“If thinking of going to the US, do this course!”

“Any start-up should go through this, hands down!”

“It will make you think”

“This session really helps focus your attention on things…”

5/21/2013 21 © Finpro

Financing options

21/05/2013

22 © Finpro

Preliminary Funding Company Development

Grant Joint Purchase Training

Tekes R&D Grant Tekes De minimis grant Tekes Young Innovative

Companies

Go Global Plus

(ELY/Finpro) value17.5 k€,

with approx 75 % support

Finpro Growth Market

Program (TEM/Finpro) value

20 k€ with 50% support

Finnpartnership

Finnvera

Finpro’s programs with funding and financing options

Public financing and funding options

Your contacts in Finland:

Eero Toivainen

Senior Consultant

eero.toivainen(a)finpro.fi

Tel +358 40 343 3379

Kimmo Aura

Regional Sales Manager, Americas

kimmo.aura(a)finpro.fi

Tel +358 40 504 8317

5/21/2013 © Finpro 23

Your contacts in the US:

Val Kratzman

Head of Trade center

val.kratzman(a)finpro.fi

+358 20 4695 806

Maria Mäkelä

Consultant

maria.makela(a)finpro.fi

+358 20 4695 850

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