Open Innovation in Medical Devices (Emerging Market Perspective) D. A. Prasanna

1. Open Innovation in Medical Devices (Emerging Market Perspective)D. A. Prasanna Accelerating Pharma time-to-market, cost effectively Europe Americas Asia

2. Sharing experience in Open Innovation This talk is based on my experience • in the MedTech industry • growing GE 100 fold in a decade in India through innovation • as a Strategic Advisor to InnAccel, a MedTech Accelerator and • In Ecron Acunova CRO bringing new devices to market faster

3. Emerging Markets are attractive but need Affordable MedTech

4. Affordability makes care accessible, expands market Key: PC: Per Capita HC: HealthCare BRC: Brazil, Russia China USA Pop: 313 mil PC GDP: $51K PC HC Spend: $8,895 50000 BRC Pop: 1.7 bill PC GDP: $8,221 PC HC Spend: $822 8000 BRC Pop: 1.7 bill PC GDP: $4,375 PC HC Spend: $459 4000 INDIA Per capita GDP (2012 $) Pop: 1.4 bill PC GDP: $3,183 PC HC Spend: $223 2000 INDIA Pop: 1.2 bill PC GDP: $1,535 PC HC Spend: $58 1000 2012 2025 Per Capita HC Spend estimated at 7% of GDP and 10% of GDP for India and BRC respectively in 2025

5. Affordabilityis largely unmet in medical technology Medicines and doctor’s service have become affordable in emerging market …MedTech remains unaffordable…

6. Affordable MedTech- A large economic opportunity USA MT Spend: $225 B PC MT Spend: $643 600 USA MT Spend: $120 B PC MT Spend: $381 400 BRC MT Spend: $156 B PC MT Spend: $86 80 Per capita MT Spend INDIA 40 MT Spend: $42 B PC MT Spend: $30 BRC MT Spend: $36 B PC MT Spend: $21 20 Key: PC: Per Capita MT: MedTech 10 MT Spend: $5.4 B PC MT Spend: $4.4 I 2012 2025

7. Emerging markets are… • Alternate care environments • (~50% of babies in India are born at home today, necessitating new products for neonatal care - until they can get to a hospital) • Lack of skilled professionals • Inadequate infrastructure ...fundamentally different for MedTech Innovators

8. Open innovation is “the use of purposive inflows and outflows of knowledge • to accelerate internal innovation • and expand the markets………..” • Henry Chesbrough • Helps move mind-set beyond device cost & features to • Affordable procedure for the Patient/Doctor • Viable investment for the Hospital…. • Leading to a totally different Product…or Process solution!

9. Market Specific Affordable Products Solutions • Transportation – Auto-Rickshaw • Affordable • Road Conditions (congested roads) • Appropriateness (often used by 1-2 pax only) • Diagnostics – Portable Ultrasound • Defeatured version of Japanese design • Clinical excellence at an affordable price • Increased access via portability Look outside for ideas and integrate them with internal technology leading to a new product/solution for a new low-end market

10. Innovative Affordable Solution Around Product Godrej & Boyce Manufacturing, has developed a $70 fridge that runs on batteries, known as “the little cool” Tata Motors has produced a $2,200 car, the Nano.

11. Innovative affordable solutions around ‘Process’ 3nethra is a screening device for 5 leading causes of preventable blindness and an algorithm to automatically screen patients; available at one sixth of equivalent devices in the market Narayana Hrudayalayahas made open heart surgery affordable (one tenth the cost in western countries!) while maintaining the same standards of reliability Aravind Eye Hospitals have reduced eye surgery costs by over 80% by applying standardization principles from McDonalds Exploit the frugal innovation culture to design and launch new products

12. Innovation- in Client’s Process & our Product Affordable solution needs open innovation

13. Defining Market Specific Unmet Need If I had asked my customers what they wanted, they would have said a faster horse. - Henry Ford II

14. Innovation in client’s process- • Client Problem • Innovative Solution • Built in the product • Diagnostics • Remote access by Engineer • Reaches site with right part • Scanner up <4hrs • More Doctors buy • Patient fee/scan low • 14hrsX 7days working • Need Breakdown fix <4 hrs • Fault diagnosis and fix takes 24 hours

15. Innovation in client’s process- • Client Problem • Innovative Solution • Work flow design for lower space • Installation days at site minimized • Medical facility redesign & construction service • CT Scanner cannot fit in space available • Suite modification disrupts patient service affects income • CT viable @ low patient fee • If disruption is reduced • From 9 months Disruption reduced to 1 month

16. Changing the way our customers work Customer Delight To Customers We Are In The Business To Help Hospitals Become #1 In Their Business !

17. Innovation at clinic

18. Building affordable Product around Client viability • Client Problem • Innovative Solution • Consumables like CT Tubes and Ultrasound probes ECG leads from France, USA, Japan • Cost/scan high due to consumables • Innovative business model with a defence electronic firm in India to produce at 1/4th the cost • Building affordable products around client Grew GE 100X in a decade

19. Innovation with Digital Health “Is Apple going to eat medical device companies' lunch?” “Could Digital Health Make Most Medical Devices Obsolete?” What can incumbent medical device companies do to protect themselves against the onslaught of Google, Apple, IBM’s foray into MedTech? SMAC (Social, Media, Cloud, Mobile) have emerged as powerful forces driving businesses yet medical device companies can embrace these trends to create a differentiation

20. Owning the Disease – A New Business Model… …where companies deliver solutions across the care continuum using open innovation Constant patient engagement to communicate insights • Preventative health and wellness • Diagnostics • Therapies • Post-treatment processes • Chronic disease management Data and analytics leading to key insights from across areas A new paradigm that makes healthcare affordable for self pay markets

21. Questions? da.prasanna@ecronacunova.com