“Choice of Business Model – A Key Strategy in the Medical Displays Market in Europe”
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Transcript of “Choice of Business Model – A Key Strategy in the Medical Displays Market in Europe”
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“Choice of Business Model – A Key Strategy in the Medical Displays Market in Europe”
Dr. Gideon Praveen Kumar , Industry Analyst
Healthcare
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Functional Expertise� Three years of research and consulting experience in the healthcare domain, over and above
• Helping with research production planning• Helping with recruiting new hires into the team• Mentoring new hires and junior analysts
Industry Expertise� Six-plus years in the healthcare sector, with focus on medical imaging, diagnostic monitoring and medical devices
• Medical imaging modalities MRI, CT, Interventional radiology, medical displays and PACS• Diagnostic monitoring equipment, cardiac monitors, high acuity monitors and CIS solutions markets• Extracorporeal and implantable devices • Design, analysis and prototype management in the medical devices space.
What I bring to the Team• Years of healthcare experience through working with hospital personnel, scientists and academic experts• Extensive client interaction and strategic project management• Collaborative alliance with a global team of analysts and consultants• Critical acclaim for having published several papers in international conferences and journals
Career Highlights� R & D expert prior to joining Frost and Sullivan� Published 32 articles in International journals and conferences on medical technology� Have 2 patents on design and analysis of percutaneous aortic valve stents� Completed one funded project on fabrication of aortic valve stent� Registered referee for 5 International journals on biomedical engineering � External guide for many graduate and post graduate students in the area of biomedical engineering � Guest lecturer at VIT University, Division of Biomedical Engineering� Invited/plenary speaker at many international conferences in biomedical engineering
Education� Bachelors in Physical Medicine and Rehabilitation Christian Medical College and Hospital, India, 2003� Masters in Biomedical Engineering, VIT University, India, 2007� PhD in Biomedical Engineering , VIT University, India, 2010
Dr Gideon Praveen Kumar
Dr. Gideon Praveen Kumar Industry AnalystHealthcare, EIA
Frost & SullivanChennai
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2.
Agenda
Medical Displays – Market Segmentation
Market Facilitatory Factors
Focus Points
Market Drivers and Restraints
Business Model Analysis
Market Revenues and Forecasts
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Market Segmentation
Mammography Displays These monitors are used for mammography. These displays are again DICOM calibrated from 5MP to 10 MP for mammography applications and are at the high end of the cost spectrum.
Mammography Displays These monitors are used for mammography. These displays are again DICOM calibrated from 5MP to 10 MP for mammography applications and are at the high end of the cost spectrum.
PACS Displays
These monitors are used for radiology, in which high resolution and greyscale rendering are absolutely critical. These displays are DICOM calibrated from 2 to 3MP greyscale for radiology and are at the high end of the cost spectrum. This segment mostly comprises of the displays used for diagnostic viewing in PACS workstation.
PACS Displays
These monitors are used for radiology, in which high resolution and greyscale rendering are absolutely critical. These displays are DICOM calibrated from 2 to 3MP greyscale for radiology and are at the high end of the cost spectrum. This segment mostly comprises of the displays used for diagnostic viewing in PACS workstation.
Clinical Review DisplaysThese display monitors are designed for use in ICUs, ERs, small clinics and by private practitioners, where contrast is more important. The displays are typically 1-MP colour monitors and have DICOM calibration.
Clinical Review DisplaysThese display monitors are designed for use in ICUs, ERs, small clinics and by private practitioners, where contrast is more important. The displays are typically 1-MP colour monitors and have DICOM calibration.
Acquisition DisplaysThis segment refers to displays that are used by the medical imaging modalities such as computed tomography (CT), magnetic resonance imaging (MRI), interventional radiology (IR), digital radiography (DR), computed radiography (CR) and fluoroscopy for image acquisition and viewing. These displays are used only to view the image during the acquisition of the same.
Acquisition DisplaysThis segment refers to displays that are used by the medical imaging modalities such as computed tomography (CT), magnetic resonance imaging (MRI), interventional radiology (IR), digital radiography (DR), computed radiography (CR) and fluoroscopy for image acquisition and viewing. These displays are used only to view the image during the acquisition of the same.
Surgical Displays These display monitors are used specifically for surgery. These are mostly 1-MP colour displays and but can also have a maximum resolution of 2MP.
Surgical Displays These display monitors are used specifically for surgery. These are mostly 1-MP colour displays and but can also have a maximum resolution of 2MP.
Segmentation
Source: Frost & Sullivan
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MinimallyMinimallyInvasive Invasive
SurgeriesSurgeries
Increased Number ofIncreased Number ofPrivate PractitionersPrivate Practitioners
Advances in Image ProcessingAdvances in Image ProcessingSoftware Software
Increasing Demand for PACS InstallationsIncreasing Demand for PACS InstallationsBeyond Radiology DepartmentsBeyond Radiology Departments
Increased Demand for Colour Images amongstIncreased Demand for Colour Images amongstRadiologistsRadiologists
Low Impact
Market Facilitating Factors – Image Management Solutions and Medical Displays
MinimallyMinimally
Invasive Invasive
SurgeriesSurgeries
Role of Clinical Decision Making Role of Clinical Decision Making Processes Processes
Increasing Demand for PACS InstallationsIncreasing Demand for PACS InstallationsBeyond Radiology DepartmentsBeyond Radiology Departments
Increased Demand for Colour Images amongstIncreased Demand for Colour Images amongstRadiologistsRadiologists
Advances in ImageAdvances in ImageProcessing SoftwareProcessing Software
High Impact
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Market Drivers and Restraints
Driv
ers
Re
stra
ints
Driv
ers
Denotes Long term Impact
Denotes Current Impact
Demand for Colour Images
Digitisation Initiatives
Legislation for Use
Long-Term Relationship
Image Quality Image Processing IT
Advancements
Focus on TV and LCD Market
High Cost of Certain Segments
DICOM Compliance Regulations Fluctuating Exchange Rates
Re
stra
ints
Minimal Invasive
Surgeries Adoption of Clinical
Review Displays
Source: Frost & Sullivan
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Competitive Structure
TIER I>56 per cent market share
TIER II and IIILocal/niche participants
<44 per cent market share
Competitive Factors
-Image quality
-Workflow efficiency
-Contrast
- Luminance
-Price
-Business Model
- Vendor Relationship
NDS Surgical Imaging
Sony Corporation
Others
Totoku
NEC
Eizo
Barco
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Revenue Forecasts
11.4CAGR
YearRevenue (Million $)
Revenue Growth Rate (%)
2009 259.8 -
2010 268.6 12.4
2011 301.9 13.2
2012 341.8 13.8
2013 388.9 14.5
2014 445.3 15.2
2015 513.0 15.7
Frost & Sullivan estimates that the total European medical displays market was worth $268.6 million in 2010. The growth rate exhibited during the year
was 12.4 per cent. Few of the key drivers for this growth include use of displays in the cardiology PACS sector and increasing demand for displays
with better image quality and better features such as contrast and luminance. Another driver could be the increased adoption of clinical review
displays, which has a market share of about 42 per cent of the total units shipped in 2010. Market growth is expected to be augmented by the growing
sales of mammography displays, as well as clinical review display monitors. It is also expected that the sales of surgical display monitors will increase
in the coming years. However, the increased sales would be achieved through a decrease in the average selling prices of such display units.
0.0
100.0
200.0
300.0
400.0
500.0
600.0
2009 2010 2011 2012 2013 2014 2015
Revenues ($ Million)
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Growth Rate (%)
$ Million %
Note: All figures are rounded. Source: Frost & Sullivan
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Business Model Analysis
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Existing Business Models
Source: Frost & Sullivan.
Displays Manufacturers
Distributors
Resellers
End users
OEM Manufacturer/System Integrators
B2C
B2B
B2B – Business-to-businessB2C – Business-to-consumer
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Advantages and Limitations of Business Models
Response ofMonitor
Manufacturer
Price RequirementIn a B2B strategy, monitor manufacturers sell the monitors to the systems integrators. The system integrators then sell the monitors along with the equipment as one package. The price of the total package is decided by the system integrators. In a B2C strategy, the monitor vendors have a chance to negotiate and sell directly to hospitals with varying profit margins
MaintenanceIn a B2B strategy, after-sales service and maintenance is done exclusively by systems integrators. The monitor manufacturers’ role becomes inconsequential. In a B2C strategy, after-sales and maintenance is managed by both systems integrators and monitors manufacturers. The former in the acquisition display segment and the latter during replacement of a display or upon the recommendation by the PACS vendor .
Customised SolutionsIn a B2B strategy, the systems integrators interact directly with the hospitals. This helps them to understand the changing demands of clients. The medical display vendors manufacture customised products based on feedback from systems integrators. In a B2C strategy, the medical display vendors interact directly with the hospitals, which help them to identify needs and act accordingly.
Source: Frost & Sullivan.
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Vendor Business Model Analysis
Barco
NEC
GE Healthcare , Siemens Healthcare , Philips
Healthcare, Hologic, Agfa, Fuji, Carestream,
McKesson
GE Healthcare , Siemens Healthcare , Philips
Healthcare Toshiba, Shimadzu, Carestream,
Sectra, Agfa, Hologic
End-user
End-user
Resellers
Distributors
Systems Integrators
Systems Integrators
Completely B2B
B2C and B2B
Predominantly B2C
NDSsiNDSsi
GE Healthcare , Siemens Healthcare , Karl
Storz, Pentax Imaging,Olympus, Macquet and
Drager Medical
EizoEizo
SonySony
Pentax Imaging,Olympus, Macquet and Drager
Medical
End-user
Source: Frost & Sullivan
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Display Selection Parameters
• There is a shift in legislation
and there would be different
types of displays within
departments in hospitals
PricePerformance
Ratio
Adherence to regulations
Ease of systems
integration
Product Range
End-userDemand
Imageconsistency
NEC and Eizo have beenaggressive with pricing in theirB2C sales strategy
Technology is selected on the basis of: • Lumination• Contrast
• Changing end user demand• Interacting with systems
integrators and hospitals• B2C approach had an edge over
getting end user demands
• Good product profile.• Direct impact on brand.• Positive impact on customer perception.
• Easily integrated to PACS systems• Displays should be be integrated to any
modality without much hardship. Such should be its ease
• Of integration
Strategic
Reasons
Source: Frost & Sullivan
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Success Factor Analysis
B2CLow Low Colour1 MPClinical review
B2CLow Low Colour1- 2MPSurgical
B2B and B2CMediumMedium Colour and grey scale
1 – 2 MPAcquisition
B2B and B2CHigh High grey scale 5 MPMammography
B2B and B2CHigh High Colour and grey scale
3 MPDiagnostic /PACS
Entry of New Player
Overall level of competition
Business ModelCriticality of After sales
service
Pricingcolour/greyscale
Mega-pixels DISPLAY
SEGMENT
ATTRIBUTES
Source: Frost & Sullivan
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
1 2 3 4 5
The number of stars represents the possible success rate of a new company’s entry.
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New entrant trying to venture into this market should concentrate on the point of care devices
[clinical review displays being one, which helps in making decisions at the point of patient care].
CONCLUDING
POINTS
Entering this market depends on the profile of the new entrant and its vision
Getting into the high end diagnostic display segment would be extremely difficult.
A combination of B2B and B2C would be an ideal option in the market today. A 60 : 40
approach would be profitable to establish brand equity in this market.
In the long run, switching to a 70:30 sales model in favor of B2C will improve market
share of a company, as a saturated PACS market will lead to replacement of displays
Key Take-Away’s
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For Additional Information
Dr Gideon Praveen Kumar Industry Analyst - Medical Technologies Healthcare+91 44 6160 [email protected]
Katja Feick
Corporate Communications
Healthcare
0049 (0) 69 7703343
Noel Anderson
European Vice President
New Business Development
+44 (0)207 343 8389