Opportunity Analysis for EMS Providers in the Medical Industry

EMS providers competitive positioning at a crossroad

Kiran Unni, Research Director

Measurement and Instrumentation

November 2013

© 2013 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.

2 NAE4-11

Currently, the penetration rate is

still less than 15%

The medical industry offers

significant opportunities for

growth and offers the potential

for elevated role of strategic

partner

Key differentiating factor is its

ability to convince OEMs that EMS

expertise spans much beyond

manufacturing services.

Strengths

World EMS Medical Market: Market Snapshot, 2013

Market Stage

Growing

Compound Annual

Growth Rate

10.0-

12.0%

2013-2019

Number of

Competitors

About 100

(2013)

Competitive Factors

Performance

Price

Reliability

Quality

Low cost of ownership

Service

Services Offered

Manufacturing

Procurement

Other Supply Chain Services

Design and Engineering

Support

Market Overview

3

Drivers and Restraints

Denotes long-term impact

Denotes current impact

Source: Frost & Sullivan analysis.

Driv

ers

R

estra

ints

Driv

ers

R

estra

ints

Increasing cost pressures

Increasing electronic

content High quality levels

encourages outsourcing Manufacturing challenges

boost EMS opportunities

Access to build in-

market/for-market-

global footprint

Liability flow down prevents OEMs from

outsourcing all services High Levels of regulatory compliance and

investment deters EMS penetration

Total EMS Medical Market: Key Market Drivers and Restraints, Global, 2013-2019

EMS design expertise

encourages outsourcing

potential

Reluctance to outsource

slows EMS opportunities

4

Key Challenges

EMS Medical Market: The Need to change OEM perception is vital for continued success

Transition from a Tactical Partner to a Well-rounded Solutions Provider

Changing Mindsets of Traditional OEMs

Lack of Infrastructure to Support Expanding Role

Privacy Concerns and Regulatory Compliance

Long Sales Realization Cycle

Changing Competitive Landscape

Market Education

5

Business Opportunity

Cardiovascular, remote diagnostics, and patient monitoring products are the fastest growing segments in the EMS medical market. The high growth market penetration provide a great business opportunity for existing and potential EMS providers to capitalize on.

Integration of wireless communication protocols, robotics, electronic content, convergence with sensors and other key trends provide an opportunity for EMS providers, focused on developing solutions with the potential, for long-term success.

Develop networked supply chain and solutions to enable seamless transition from first stage of engagement to product launch. Facilitate smart OEMs to improve efficiency and profitability through strategic outsourcing.

Develop the ability to combine software and hardware to better capitalize on emerging role as a complete solutions partner as opposed to low-cost manufacturing provider.

MARKET OPPORTUNITY

BUSINESS CONCEPT

Existing Asset

Ability to Integrate

Engineering and Design Optimization

Flexibility

Manufacturing Bandwidth

?

?

KEY SUCCESS FACTORS

Source: Frost & Sullivan

6

Mapping of CAGRs of Key Product Segments

Projected

Impact on the

Growth Rate of

Industry

High Impact

Low Impact

Market Potential

Low High

Cardiovascular 11.2%

Imaging 11.4%%

Patient Monitoring 11.7%

Others 11.2%

High Growth Impact

Low

Growth

Impact

Medium

Growth

Impact

Note: All figures are rounded. CAGR is calculated between 2012-2019 Source: Frost & Sullivan analysis.

*Others includes urology, infusion systems, orthopedics, therapeutic, ophthalmology, general surgery, minimally invasive surgery, and hemodialysis markets..

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Mega Trends in the Medical Industry – Medical Devices

Are “Disappearing”

Disappearing in Size – devices increasingly smaller,

biologic and biomimetic

Disappearing in Cost – greater customer pricing pressure, reimbursement cuts, excise

tax, and higher regulatory hurdles shrinking margins and discouraging innovation

focused on premium products

Disappearing in Use – more seamless incorporation into

existing workflows and care pathways

Disappearing Business Model – the data pulled from a device and services

associated with it will become a bigger revenue source than the devices

Disappearing Hype – evidence-based technology evaluation and ROI matter more

than ever

Disappearing from the Hospital – increasing innovation

occurring outside acute care settings

Miniaturization

Portability

9840-30 7

Medical Industry: Key Trends for Medical Devices, Global, 2012-2020

8

Market Size

High

Low

Low High

Gro

wth

Po

ten

tia

l

Nanotechnologies

Nanobots

Remote Diagnostics

Interventional Medicine

Minimally Invasive Surgery

Robotically-assisted

surgery, implants

deployed under MIS

guidance.

Transcatheter heart valve,

embolization beads,

bioabsorbable stents.

Wearable sensors, wireless

sensing technology, remote

diagnostics and communication

through mobile phones, PDAs,

notebooks.

Targeted drug delivery, cellular

manipulation, in-situ surgery, artificial red blood cells, artificial immune response

system. Lab-on-chip, nano

fluidics, imaging probes,

anti-microbial coatings,

bioactive coatings, in

situ sensors, structural

materials

Future Opportunities and Megatrends for EMS Providers

Future Opportunities and Megatrends for EMS Providers, 2017–2025

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Benefits of an EMS Partnership The ability to address dynamic needs of convergence and collaboration to optimize

performance.

Consulting

Manufacturing

Software Design support Services

Supply chain

The convergence of diverse systems to create

solutions meets market requirements at fast

turnaround times for time-to-market strategy.

A Solutions Based Approach:

• Achieve faster time to production for new designs 1

• Partnering to meet compliance requirements and sharing cost 2

• Ability to leverage flexible and responsive manufacturing 3

• Intelligent partnerships catering to product roadmap support 4

• Elevate strategic and competitive performance 5

Key Benefits

Source: Frost & Sullivan

10

Integrated Operations

Integrated customer

management

Integrated manufacturi

ng for increased flexibility

Ramp-up on building design and engineering capabilities

Financial stability- for long-term

commitment

Leveraging internal and

acquired capabilities

Product roadmap

visualization ability

Resource optimization

Key Success Factors for EMS Providers,

2013–2020

Integrated Strategies

Integration of resources, operations, and technology

To drive…

Collaborative environment with OEMs

Open communication

and real-time data flow

Supply chain superiority

Proactive focus

• Growth and complexity

• New challenges

• New opportunities

Motivate OEMs-Execute

decisions more quickly for

reduced operational cost and

increased production efficiency

Source: Frost & Sullivan

Best Practices and Strategies for Success

11

The Last Word—Three Big Predictions

2 Consolidations and strategic alliances will be driven by the demand for

increasing competitive positioning and design capability in the EMS

medical market.

3 Increasing demand for engineering and design support, supply chain

services, and complete build will help booster EMS growth in the medical

industry.

1 Remote diagnostics, patient monitoring, cardiovascular, neurology,

consumer medical products, and single use products will spur EMS

growth.

Source: Frost & Sullivan analysis.

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For More Information:

Jeannette Garcia

Corporate Communications

Measurement and Instrumentation

(210) 477-8427

jeannette.garcia@frost.com