What’s Hot in the Healthcare Industry

Trends, Opportunities and Challenges through the Eyes of Key Players in the Healthcare Sector in 2012

April 2012

2

• Frost & Sullivan takes no responsibility for any incorrect information supplied to us by manufacturers or users.

• Quantitative market information is based primarily on interviews and, therefore, is subject to fluctuation.

• Frost & Sullivan research services are limited publications containing valuable market information provided to a select group of customers in response to orders.

• Our customers acknowledge, when ordering, that Frost & Sullivan research services are for their internal use and not for general publication or disclosure to third parties.

• No part of this research service may be given, lent, resold or disclosed to non-customers without written permission.

• Furthermore, no part may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the permission of the publisher.

• For information regarding permission, write to:Frost & Sullivan

4 Grosvenor Gardens,

London SW1W 0DH

The United Kingdom

© 2012 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.

Disclaimer

3

Certification

• We hereby certify that the views expressed in this research service accurately reflect our views based on primary and secondary research with industry participants, industry experts, end users, regulatory organisations, financial and investment community and other related sources.

• In addition to the above, our robust in-house forecast and benchmarking models, along with the Frost & Sullivan decision support databases, have been instrumental in the completion and publishing of this research service.

• We also certify that no part of our analyst compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this service.

4

Table of Contents

About Frost & SullivanAbout Frost & Sullivan 2626

Ø Key Perspectives on Growth in the Healthcare Industry in 2012Ø Market Highlights for 2012Ø Advanced Medical Technologies MarketsØ Life Sciences MarketsØ Connected Health Markets Ø Healthcare Markets Convergence with other IndustriesØ Global Hot Spots in the Healthcare IndustryØ Four Big Predictions for 2012

What’s Hot in 2012What’s Hot in 2012 10 - 24 10 - 24

11

12

13

16

19

22

24

25

Ø About this Market InsightØ Methodological NoteØ Industry & Company SizeØ Role & Function

IntroductionIntroduction 5-9 5-9

6

7

8

9

5

Introduction

6

About this Market Insight

Thank you once again for participating in our important customer research survey. Your contribution helped raise €1,500 towards the World Wildlife Fund, so many thanks again.

Some particularly interesting generic findings and outputs from the survey include:

• Frost & Sullivan placing a much greater focus on researching the markets that you felt were 'hot' and

poised for growth • 54% of respondents think that a understanding of future mega trends is an integral part of their long term strategic planning process• New product launch is the way to gain the fastest growth in today’s economy• 47% of the respondents still associate Frost & Sullivan with ‘market reports’ which represents about 5% of our gross sales• 40% of respondents rated Frost & Sullivan as better than its competition

The following market insight focuses on the hot topics in chemicals, materials and food. It provides the results from the hot topics analysis, where growth can be found through industry convergence and is designed to help you find new opportunities to grow your business.

We hope to run these surveys every year and have taken all your feedback into consideration to ensure that future surveys are quicker to fill out, targeted and focused. Many thanks again.

Noel AndersonVice President – Growth Partnership ServicesEurope, Israel and Africa

7

Methodological Note

Methodology: Online survey with e-mail invitation from Frost & Sullivan address list

Field time: December 2011

No. of Interviews: N=586 in totalsee details on next two charts

Respondent: Clients and prospects of Frost & Sullivan in Europe

Reporting notes: Due to rounding errors, percentages in charts, tables, etc. may not sum to 100

Comment by Michael L. Ranke, VP Customer Research Europe:First of all I would like to thank you very much for your time in participating in the survey which was launched at not a particularly good time, December. The number of N=586 interviews achieved is therefore highly successful, allowing for a robust analysis on an over all level.The majority of results on the following slides are based on 1,439 responses, as most of you answered that you were tracking 2.5 industries on average. This caused the actual questionnaire to take longer than we anticipated. As a result, the n=1,439 is an excellent sample size. Thank you so such, I trust you will gain great value in the findings.

8

Industry and Company Size

N=586Q1 Which industry do you work in? Q102A What are your expected annual revenues globally in 2011 in Euro?

The sample has a fairly balanced split by industry and company size

Large(over €1 bn.)

Medium(€100 million up to €1 bn.)

Small(up to €100 mil.)

Source: Frost & Sullivan analysis

Company Size(Annual revenues globally in 2011

excl. NA/Don’t know, n=419)

Industry

A&D = Aerospace & DefenceA&T = Automotive & TransportationCMF = Chemicals, Materials & FoodEPS = Energy & Power SuppliesEBT = Environment & Building Technologies

HC = HealthcareIPC = Industry & Process ControlICT = Information & Communication TechnologyM&I = Measurement & InstrumentationPPE = Personal Protective Equipment

9

Role and Function

N=586Q2 Which of the following best describes your role within your organisation?Q3 Which of the following best describes your function within your organisation?

Frost & Sullivan is well connected to all roles and functions in an organisation

Role in Organisation Function in Organisation

Source: Frost & Sullivan analysis

10

What’s Hot in 2012

11

Key Perspectives on Growth in the Healthcare Industry in 2012

2Health care that is customised to monitor, diagnose, educate, and intervene regardless of location or time-will be common.

3In life testing’ will take over the current clinical trial process. Continuous data monitoring can be done by the regulators during the testing process. Clinical trials will eventually become shorter

4Just –in time manufacturing, novel delivery

methods and direct to consumer distribution will be adapted from other industries like the automotive industry

5Availability of hybrid and transformative

technologies propel growth and drive increased utilization of services in medical imaging markets

1 Health economics dictate a shift in spending –

away from treating and towards predicting, diagnosing and monitoring.

Source: Frost & Sullivan analysis.

12

Market Highlights for 2012

• The economic downturn, global initiatives like the going green concept, have had an impact on the healthcare system and manufacturers. These reforms have a huge impact on the market participants at various levels.

• Home care is the key area of focus for most markets. The transition in the distribution structure, product features are likely to be an area of investment for market participants.

• Cardiology is a disease area with huge burden to the healthcare system. The need to reduce the burden on expenditure would increase the need for imaging, diagnostics and treatment therapies. It is a sector that is technologically driven, and there is no dearth of investments in R&D.

• Companies in the healthcare sector are moving their focus from a fragmented approach that focuses on multiple diseases towards specialised business models such as the niche therapeutic areas.

• Convergence of healthcare is paving the way for new drug delivery mechanisms, personalised and targeted medicines.

• A growing middle class in developing nations provides new clinical diagnostics market opportunities. With increasing purchasing power in the developing world, more people will gain access to private healthcare services, due to an increase in disposable income which will enable health insurance coverage.

Key Market Highlights

13

1. Advanced Medical TechnologiesWhat Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Emerging Trends in Home Monitoring 81%2 Medical Imaging Markets Outlook - 2012 80%3 Cardiac Patient Monitoring 70%4 Emerging Applications in Telemedicine 70%5 Reforms and Changes in the Healthcare System and

Impact on technology66%

6 Trends in Medical Imaging Cardiology Applications� 66%7 Computed and Digital Radiography Market 49%8 Service Solution Providers with Hospitals as End-Users 48%9 Molecular Imaging Market 43%10 Computed Tomography ( Covers Cone Beam CT) 37%11 Respiratory Devices Market 34%12 Cancer Therapy Devices Market 32%13 PACS Professional and Technical Services Markets 29%14 Emerging Trends on PACS Applications� 29%15 Pain Management Devices Market 27%16 Urology Devices Market 25%17 Anaesthesia Equipment 23%

Advanced Medical Technologies Markets: Identification of Hot Topics (Europe), 2012

Source: Frost & Sullivan analysis.

14

1. Advanced Medical TechnologiesWhat Participants see as Hot Topics in 2012 (Contd ...)

• Growing home care market has increased competition. It requires different kinds of servicing capabilities, product features and marketing and sales strategies.

• The imaging market with a huge product portfolio is an ever changing and technologically driven market. It is important to understand the current trends in the total market.

• Cardiology has the chances of recurrent problems, when not supported appropriately. Hence understanding the developing cardiac monitoring market is a key area of focus.

• The Telemedicine market is growing with increasing demand due to a shortage of resources. There has been a increase in acceptance across new applications sectors.

• Increasing healthcare expenditure, changing demographics and challenges posed to hospitals have had an impact on the entire system, hence there are many regulations, reforms, initiatives to overcome the burden. Tracking these reforms and their impact to the market participants is a key area of focus this year.

Market Themes for 2012Advanced Medical Technologies Markets:

Top 5 Market Topics (Europe), 2012

Source: Frost & Sullivan analysis.

Emerging Trends in Home MonitoringMedical Imaging Markets Outlook - 2012Cardiac Patient Monitor-ingEmerging Applications in TelemedicineReforms and Changes in the Healthcare System and Impact on t

15

1. Advanced Medical Technologies Primary Focus Regions

• North America is one of the largest market for most of the medical technology products. This region has higher acceptance for innovative products, which cover most of the segments we track.

• Latin America is the next key area of focus, over Europe, because of the improving standards of care in these developing economies.

• Economic downturn in European Union has affected various markets and healthcare system, thus increasing interests in knowing the latest trends.

• Eastern Europe, primarily Poland and Russia have had many reforms to improve healthcare systems. There are many projects developed to invest in healthcare in the next 3-5 years, which is likely to be interesting to the market participants.

Geographic Focus for 2012Advanced Medical Technologies Markets:

Primary Regions of Focus for EU Players (World), 2012

Source: Frost & Sullivan analysis.

16

2. Life SciencesWhat Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Cancer Diagnostics Markets 71%2 Cardiac Diagnostics Markets 63%3 Haematology Diagnostics Market 51%4 Rapid Microbiology Tests Markets 51%5 Alzheimers Disease Medication Market� 41%6 Prenatal and Neonatal Diagnostics 39%7 Vaccines Market 35%8 HIV Diagnostics Markets 34%9 Colorectal Cancer Market 33%10 CRO Market 28%11 Asthma/COPD Market 26%12 Hepatitis B and C Market 17%13 CHD Market 13%14 Human Growth Hormone Market 9%

Life Sciences Markets: Identification of Hot Topics (Europe), 2012

Source: Frost & Sullivan analysis.

17

2. Life SciencesWhat Participants see as Hot Topics in 2012 (Contd ...)

• The rapid change in technology has paved the way for higher specificity and selectivity in cancer diagnostics tests. Convergence of platform technology companies with cancer diagnostic companies is inevitable.

• Cardiac marker testing is moving towards the point of care for acute myocardial infarction (AMI) testing, as well as for congestive heart failure (CHF) testing.

• New class of disease modifying drugs such as Bapineuzumab, Solanezumab, and Semagacestat are expected to command premium pricing and be the major driver of the total Alzheimer's disease market's growth.

• Oncology, Autoimmune & Inflammatory therapeutic segments contribute approximately 75% of the total Monoclonal Antibodies therapeutics market. A strong pipeline favours market growth of Monoclonal Antibodies.

Market Themes for 2012Life Sciences:

Top 5 Market Topics (Europe), 2012

Source: Frost & Sullivan analysis.

Cancer Diagnostics MarketsCardiac Diagnostics MarketsHaematology Diagnostics MarketRapid Microbiology Tests MarketsAlzheimers Disease Med� -ication Market

18

2. Life Sciences Primary Focus Regions

• The European and U.S. pharmaceutical and biotechnology industry is in a state of transition. Greater incorporation of biotech assets and technology portfolio diversification is critical for future growth prospects.

• The Outsourcing of manufacturing to Eastern-Europe, Asia and Latin America is expected to gain momentum due to increasing pressure on cost savings.

• Increasing private healthcare expenditure – co-payments is on the rise in Europe.

• China and other emerging countries such as India, Brazil, Turkey would drive pharmaceuticals and biotech market growth.

• Cancer remains the leading area of development in the biotech pipeline for companies based in the U.S and Europe.

Geographic Focus for 2012Life Sciences Markets:

Primary Regions of Focus for EU Players (World), 2012

Source: Frost & Sullivan analysis.

19

3. Connected HealthWhat Participants see as Hot Topics in 2012

Rank Market Topic % of Respondents Nominating as Hottest Topic

1 Health Information Exchange Systems Market

67%

2 Hardware in Healthcare IT Market 56%3 ERP Solutions in Healthcare Market 45%4 PHR and Patient Portals Market 44%5 Professional Services in HCIT Market 40%6 Medication Safety Software Solutions Market 35%7 Digital Pathology Systems Market 16%

Connected Health Markets: Identification of Hot Topics (Europe), 2012

Source: Frost & Sullivan analysis.

20

3. Connected HealthWhat Participants see as Hot Topics in 2012 (Contd ...)

• Convergence and integration to areas central to connected health including: Healthcare IT, remote monitoring, video telemedicine, mHealth.

• Patient centricity is the key element for healthcare providers and health information exchange is becoming the centre stage of connected health.

• Healthcare IT services market is growing with increasing demand due to the need for enhance healthcare delivery models .This has ensured that hospitals invested in services to effectively use the healthcare IT solutions.

• Patient portals and PHR are key solutions that are connecting the patient with the care setting and are enabling them to play an active part in ensuring quality healthcare services

Market Themes for 2012Connected Health:

Top 5 Market Topics (Europe), 2012

Source: Frost & Sullivan analysis.

Health Information Ex-change Systems MarketHardware in Healthcare IT MarketERP Solutions in Healthcare MarketPHR and Patient Portals MarketProfessional Services in HCIT Market

21

3. Connected HealthPrimary Focus Regions

• Europe is one of the largest markets for connected health products and services. This region has a higher acceptance for innovative IT products.

• North America is the next key region, as there is a considerable amount of focus on improving healthcare services through the use of Healthcare IT solutions

• Economic downturn in European Union has affected various markets and healthcare system, thus increasing interests in knowing the latest trends in other emerging regions.

• Latin America and Eastern Europe, primarily Poland and Russia have had many reforms to improve healthcare systems and these regions are expected to witness increase in investment in healthcare IT solutions to meet the growing demands from clinicians and patients.

Geographic Focus for 2012Connected Health Markets:

Primary Regions of Focus for EU Players (World), 2012

Source: Frost & Sullivan analysis.

22

Healthcare MarketsConvergence with other Industries

Source: Frost & Sullivan analysis.

Key Industries Tracked in Addition to Company’s Core Markets (Europe), 2012

Core Market Cross-interest 1 Cross-interest 2 Cross-interest 3 n

A&D Security 50% ICT 29% Electronics 24% 42

A&T Electronics 24% ICT 19% EPS 12% 86

CMF A&T 40% EBT 36% EPS 30% 53

Electronics M&I 53% EPS 47% IPC 47% 15

EPS EBT 32% IPC 21% A&T 15% 73

EBT EPS 58% ICT 15% M&I 15% 26

HC CMF 18% ICT 14% M&I 8% 90

IPC EPS 74% A&T 41% EBT 26% 27

ICT A&T 30% EPS 24% HC 21% 66

M&I EPS 25% EBT 25% IPC 25% 8

PPE A&D 17% CMF 17% EPS 17% 12

Security ICT 39% A&D 33% EBT 33% 18

A&D = Aerospace & DefenceA&T = Automotive & TransportationCMF = Chemicals, Materials & FoodEPS = Energy & Power SuppliesEBT = Environment & Building Technologies

HC = HealthcareIPC = Industry & Process ControlICT = Information & Communication TechnologyM&I = Measurement & InstrumentationPPE = Personal Protective Equipment

23

Healthcare MarketsConvergence with other Industries (Contd ...)

• Healthcare players see the greatest convergence today from within their own sector as well as the CMF and ICT teams. This is due to the fact that the dynamic biomaterials market has a huge impact on the success of many medical devices. Information Technology holds an important role in supporting hospitals to tackle resource scarcity and drive efficiency.

• Convergence of healthcare is driving the need for newer devices and procedures. Devices need to be futuristic, hence be support and need for information technology.

• The pressure on the novel materials and coating has been an never ending research tale.

Key Areas of Technology Convergence

24

Global Hot Spots in the Healthcare Industry

U.S.Huge healthcare market and growing, large opportunities, niche players will be more successful

CanadaRelatively high government spending on healthcare, small number of local market players, sizeable market

Germany/SwitzerlandHigh spending on healthcare, large market with not too many market players, increasing focus on eHealth and digitisation

UK/Scandinavian CountriesHigh government spending on healthcare IT, large market, high number of healthcare IT players.

IndiaLarge market, low operating costs, excellent local skills, high local competition, Distribution hub to the Middle- and South-East of Asia

Hong KongHigh government spending on healthcare, small domestic market, gateway to China

Australia & New ZealandHigh government spending on healthcare IT, small number of local market players, increasing focus on eHealth and digitisation

Sub-Saharan AfricaLimited current government spending on healthcare IT, increases planned in the future. Private sector developing increasing focus on eHealth. Moderate number of players mainly operating from South Africa.

Brazil & MexicoTwo largest healthcare markets in Latin America and growing at a sustained pace

Venezuela & ColombiaConstituting part of the Andean Region are the fastest growing countries in many HC categories due to large public investment

25

Four Big Predictions for 2012

2 There will be further consolidation in the Life Sciences industry with increasing M&A activity

3 Increasing adoption of automation would drive growth in Clinical diagnostics market

1 Emerging countries such as China, India, Turkey, Brazil & Mexico would be key growth markets

Source: Frost & Sullivan analysis

4 Molecular diagnostics and Point of Care Testing would be key growth segments

26

About Frost & Sullivan

27

Who is Frost & Sullivan?

The Growth Consulting Company

– Founded in 1961, Frost & Sullivan has over 50 years of assisting clients with their decision-making and growth issues.

– Over 1,700 Growth Consultants and Industry Analysts across 40 global locations

– Over 10,000 clients worldwide - emerging companies, the global 1,000 and the investment community

– Developers of the Growth Excellence Matrix – industry leading growth positioning tool for corporate executives

– Developers of T.E.A.M. Methodology, proprietary process to ensure that clients receive a 360o perspective of technology, markets and growth opportunities

– Three core services: Growth Partnership Services, Growth Consulting and Career Best Practices

28

Frost & Sullivan Offers very Unique Support

In-depth Understanding of

your Industry

• Aerospace & Defence• Automotive &

Transportation• Chemicals, Materials

& Food• Electronics & Security• Energy & Power

Systems• Environmental Building

Technologies• Healthcare• Industrial Automation

& Process Control• Information

& Communication Technologies

• Measurement & Instrumentation

Customer Research Know-how

• All quantitative and qualitative methodologies

• Both B2B and B2C studies

• Professional market research practitioners with extensive experience

• Advanced Analytics

Consulting

• Idea Generation for Growth Pipeline

• Comprehensive Evaluation of Opportunities

• Reduced Risk and Enhanced Accuracy

• Best Practices in Strategy Implementation

• Foundation for Visionary Perspective

• Innovative Growth Strategies

Global Footprint with 40+ offices in over

30 countries

• North America

• Latin America

• Western Europe

• Eastern Europe

• Middle East

• Africa

• Asia Pacific

29

How our Unique Position Benefits You

The RightStudy Design

The RightStudy Design

The RightQuestionsThe RightQuestions

The RightMethods

The RightMethods

The RightAudienceThe RightAudience

The RightInterpretation

The RightInterpretation

Study set-up combining advanced research techniques with industry know-how

Combining best practice design together with appropriate sector specific terminology

Combining the knowledge of whom to target with being well known among difficult to reach target groups

Research methods combing the research objectives with country and industry specifics

Interpretation of data in concert with our intimate industry knowledge and insights

Powerful value added and actionable insights and recommendations

Powerful value added and actionable insights and recommendations

30

BrandEquityImage and Positioning

Product Development

0

20

40

60

80

100

1

Price

Navigation

Phone

Portability

Digital Radio

Multi-Media

Customer Satisfactionand Value

Market Feasibility

Market Segmentation

Usage and Attitudes

Value Based Pricing• Scenario simulations• What-if analysis

Distribution Channel Testing

Advertising /Communications Testing

Project Types

31

Holistic Interpretation and Analysis

At the end of a project you will receive a sound evaluation of your task

Soundevaluation of

your taskin a 360º perspective

Analytical Context

BusinessContext

IndustryContext

Experience Context

ConsultingContext

Market ResearchContext

Final reports in pyramid conceptManagement Summary

Focus on key messagesRecommendation led

Final reports in pyramid conceptManagement Summary

Focus on key messagesRecommendation led

Global ContextGlobal

Context