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1 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.© Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Executive Intro
Joseph Galatowitsch, PresidentRoss Meisner, Managing Partner
2 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.2 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
About Dymedex Consulting
Dymedex reduces market risk for medical companiesWe deliver systematic, proprietary market assessments that help you understand critical market nuances, identify and address pitfalls in commercialization, and maximize revenue growth
We apply the scientific method to the discipline of medical Market Development
Scientific methods have greatly improved success rates in nearly every field, e.g.,• Business accounting principles (P & L, balance sheet) in the early 1900s• Manufacturing (e.g., Edwards Deming)• Product development, engineering, and quality control systems• Major sports teams• Traffic management
3 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Effectively assessing market risk is a widely misunderstood and under-valued endeavor
Misunderstanding #1: I only need to know the size of the market– Market size is not a single number, it’s a response surface based on many factors and features of
the market, patients, business model, clinical strategy, investments, and more
Misunderstanding #2: I need a really big market size in case I can only get a small piece– You don’t need a massive market to ensure a significant ROI for investors – but you do need to
know the time, investment, and revenue potential associated with key adoption inflection points
Misunderstanding #3: A basic working knowledge of the market is all we need– A detailed understanding of the nuances of your market landscape is critical for making good
decisions relative to nearly every other aspect of your business (development, clinical, regulatory)
Misunderstanding #4: Once we launch we will be able to quickly drive growth– Frequently at launch less than 5% of the realizable market is actually accessible – potentially for
several years – until structural barriers to adoption are addressed
Misunderstanding #5: Our KOL advisors are key to our market development strategy– Physician input is important, but they can’t help you understand everything necessary to access
the total market
4 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Technology adoption rates vary wildly, some taking decades to reach full potential
Technology adoption follows the classic ‘S-shaped’ curveIt is predictable based on understanding the underling dynamics and factors– If it’s predictable, it can be influencedMany technologies (not on this chart) failed to achieve broad adoption
Source: NY Times, 2008
5 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Dymedex’s Constrained Dynamic Adoption (CDA) Model helps predict medical technology adoption
Milestone 1 is the gateway to broad market adoptionMilestone 2 is a strategic inflection point that can happen soon after Milestone 1– Can be a significant decline in revenue based on how small incidence is in relation to prevalence
Milestone 3 is the fully realized market – which can take many years to achieveR, I, and T must be defined for each milestone to make informed strategic decisions
R1
R2
R3
I1
T1
I2
T2
I3
T3
3R = Revenue ($ mil.)I = Investment ($ mil.)T = Time (years)
M2: Penetration of “easily accessible”
segments
1
2
M1: Completion of nfrastructure and Technology barriers
Rate of growth dictated by Indication Attractiveness
6 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Three major workflows inform the Dymedex CDA Model
Barriers toAdoption
Behavior Change
Pillars of AdoptionSufficiency Analysis
Timing and Investments to Reach Milestones
MarketSize
Patient Indications Population Dynamics Net Sources of Revenue
Annual Revenue Potential (ARP) at each Milestone
Calculus of Penetration
Attractiveness
Accessibility by Segment
Growth Rates andInflection Points 0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Penetration of BPH Incidence by Scenario
Max-growthScenario
BaselineScenario1
2
Growth forecast by Scenario
7 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Dymedex provides a rigorous analysis of the market landscape and defensible roadmap for the business vision
Data matters (garbage in = garbage out)– We utilize peer-reviewed published data to
inform our analysis• And we stratify data by level of quality
– We use well established tools and methods to extract the most reliable data we can from the organization (fully documented)
Analysis and synthesis of data is a combination of:– Logic and statistics– Understanding and application of key
relationships and dynamics
Drivers and modeling is:– Statistically sound and validated by experts in
both statistics and epidemiology– Well proven, with dramatic examples of the
predictive power of the tools
We’ve analyzed over 35 medical products– Over 150 patient indications– U.S. Europe, Japan, Emerging Markets
Broad application– Diagnostics or therapeutics– Capital equip., implantables, disposables– New technologies or mature products
Proven Forecast Accuracy
Pacing market saturation in 2002 ICD market slow-down in 2006 Spinal fusion market inflection in 2007 Diabetes pump market growth profile Neurostim for pain, movement, incontinence, obesity, depression Coronary stents and heart valves
8 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
After launch, a firm’s value is based on meeting expectations
Theoretical market size plays a secondary role in valuation
Having a trusted understanding of the market is a prerequisite to meeting expectations
Bench Test
Animal First in Man
Safety & Efficacy
LAUNCH! Market Performance0
10
20
30
40
50
60
70
80
90
EnterpriseValue
Value-Enhancing Milestones
Meet or Exceed
Expectations
MixedResults
Fail to MeetExpectations
Rigorous, credible, and defendable opportunity
definition can increase early valuation
Post-launch valuation depends on meeting expectations set
in the commercialization strategy
9 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Dymedex delivers an in-depth understanding of the market, segments, barriers, and investments translated into a validated growth forecast
Market Landscape Attractiveness and Revenue Potential
Accurate Forecasts Driven by Investments, Attractiveness, and Segments
Gaps, Strategies, Investments required to drive broad adoption
Pre-Disease
(23M)
All US Adults(232M) “Identified
Disease”(12M)
Controlled on 1-3 Rx(or being titrated)
“Controlled Disease” (2M)
Resistant Disease(8M)U
nd
iag
no
sed
Dis
ea
se (1
0M
)
Fal
se D
iagn
osis
(1M
)
Hyper-reactive patients (20%)
0%
100%
CRT-DARP = $3.1B
3. 140-160, any drugs, no CCM
ARP = $3.1B
ICD - PPARP = $3.0B
1. >160, no BAT muting, no CCM
ARP = $2.5B
ICD - SPARP = $2.0B
2. >160, BAT muting, no CCMARP = $1.3B
4. All >140, any drugs, with CCM
ARP = $0.7B
Patient Accessability
Indi
catio
nAc
tiona
bilit
y
0% 100%
KEY:Circle size = total ARPGreen = untapped market potentialPurple = Industry revenue
INDICATION ATTRACTIVENESS BY MARKET SEGMENT
Key:Circle size = market opportunity
• Indication clarity
• Clinical & economicbenefit
• Patient aggregation• Referral network
Segment 2 ($1.3B)Segment 1
($2.5B)
Segment 3 ($3.1B)
Segment 4 ($0.7B)
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Total Revenue by Market Segment
1.>160,no-mute 2.>160 muted 3.140-159, no CCM 4.All >140 w/CCM
$ Mil.
“Perfect Patients”
Segment 1 Segment 2 Segment 3 Segment 4
STAGE 3 BAT (today), and BAT (launch)
MARKET INFRASTRUCTURE1 2 3 Target 5
MARKETSCORE
Condition Mgmt (Independent of Tech.) 0
Diagnostic Tests For the Technology 0 TODAYClinical Evidence 0 43%Practice Guidelines 0Reimbursement and Coverage 0 FORECASTProvider Economics 0 53%Provider Capacity 0
TECHNOLOGY READINESS1 2 3 Target 5
TECHNOLOGYSCORE
Operational Disruption 0
Procedure Scalability 0 TODAYEase of Use 0 55%Maintenance 0Outcomes - Therapy 0 FORECASTPatient Factors 0 62%Vendor Support 0
On a 1-5 scale a score of 4 signals sufficiency for the early majority to
adopt
Pillar sufficiency at launch is well below
what is needed (75%) for broad adoption
10 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Example: The 2004 U.S. ICD/CRT market was one of the largest and most lucrative med-tech markets
ICDs took over 10 years to get to 50k implants/yearBetween 2001 and 2005 the market more than tripled (36% CAGR)Then what happened?
It may take 20+ years (at current growth rates) to reach M3Source: Analyst reports, company reports, Dymedex analysis
2000 2001 2002 2003 2004 2005 2006 2007 20080
50
100
150
200
250
300 Industry Plan
DymedexModelActual
USICD
Implants(thousands)
M1
Guidant sold just prior to Milestone 2 M2
11 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
The benefit of investing in a Dymedex assessment: Increased credibility and confidence in the road ahead
A clear, data-driven understanding of the market landscape:
1. To inform critical and expensive strategic decisions: • Regulatory, clinical, go-to-market, product development, market development
2. To more effectively set and meet expectations with all stake-holders• Minimize the risk of “over-scaling” the business• Maintain credibility, confidence, and momentum
3. To support funding/fund-raising activities• Clear quantification of the opportunity and road-map to broad utilization
4. To help maintain control over the strategic direction of the business• Drive and sustain organizational alignment, enthusiasm, and focus• Limit second guessing and the use of ‘one-off’ or selective information
5. To maximize and sustain market success and enterprise value• Strategies to drive rapid and sustainable market adoption
12 © Copyright 2015. Contents owned by and under license from Dymedex Consulting, LLC.
Joseph Galatowitsch, President– Joe has 26 years in the global medical
technology industry at 3M’s medical supplies business and at Medtronic. Joe pioneered the discipline and implementation of market development at Medtronic.
Ross Meisner, Managing Partner– Ross has 20 years experience building
high-tech and med-tech companies. He has co-founded four start-up companies, managed two international joint ventures, and directed international market development at Medtronic.
Dymedex Consulting
▲ Established 2007▲ Founders have analyzed over 150
medical technologies, markets, and indications
▲ “I firmly believed we understood our market and our path for growth, but Dymedex provided such new insights into the market opportunity and the barriers to adoption that their analysis has become a foundation for our business strategy.”
– CEO, therapeutic system company
▲ “Your market assessment caused us to recast our go-to-market strategy, and now helps me present the true potential of our company to investors with complete confidence.”
– CEO, pre-launch diagnostic company
▲ “Joe pioneered elegant new market and portfolio assessment methodologies at Medtronic. His new strategic insights dramatically improved our ability to objectively value and effectively manage Medtronic's extensive therapy portfolio.”
– Executive Vice President, Medtronic
▲ “It would have taken us a year to do this ourselves, and it would not have been nearly as actionable.”
– Director, large med tech company
▲ “I only wish we had hired Dymedex 3 years ago! Their analysis has made an incredible difference in our approach and understanding of the market”
– CEO, public med tech company
4570 Churchill Street, Suite 200St. Paul, MN 55126(651) 217-5990www.dymedex.com