Imaging started with Wilhelm Roentgen over 100 years ago but it is the period since 1975 with the establishment of cross sectional techniques such as CT and MR and more recently the replacement of analogue technologies that has shown the greatest growth. The importance of early diagnosis and the role of imaging in delivering this goal has made these technologies key in most clinical settings.
Worldwide revenues from imaging exceed USD 40 billion. Equipment costs range from thousands of dollars for entry level ultrasound to over $5 million for the latest generation of PET/MR. But while PET/MR sales amount to less than $100 million annually ultrasound sales exceed $8 bn due the ubiquity of the technique.
Primarily working at the business unit level MO works with management to fully understand their market and to reveal future opportunities
Very few products sell themselves requiring companies to bring their offerings to the attention of potential customers usually through an in-house sales organisation or a distributor. Using resources most effectively requires an understanding of the market. Optimally one would like to know who will purchase in the next three years. With high value items this may be achievable but typically one wants to get as close to this goal as possible.
Working with a supplier and the potential distributor to formulate a view of the market that both can use as the basis of an ongoing relationship. Assessing the current market and through interviews identifying customer's likely intentions going forward. Reviewing the regulatory position and the implication that this has for distribution and the take up of the product allowed MO to build a five year projection of what could be acheived.
Growth opportunities
Over the last twenty years the landscape especially in developed markets has changed. There has been considerable market consolidation such that in many product areas there are three or four competitors. Product innovation is increasingly challenging and customers, governed by purchasers, are more inclined to be content with mid-range or last generation offerings. Markets are increasingly replacement. Customers see themselves in a generic rather than branded landscape forcing suppliers to look for new sources of revenue. Managing how the product is used, maintaining supplies, and improving uptime are where suppliers see opportunities to add value and therefore revenues.
Very few products sell themselves requiring companies to bring their offerings to the attention of potential customers usually through an in-house sales organisation or a distributor. Using resources most effectively requires an understanding of the market. Optimally one would like to know who will purchase in the next three years. With high value items this may be achievable but typically one wants to get as close to this goal as possible.
Having a good handle on the size of your market, your share and how the market is changing over time is a given but many companies rely on inaccurate information resulting in a false view of where they stand. Many market reports fulfil a role to enhance shareholder value - markets are always growing - and opportunities boundless. Fine if you need finance but disastrous as a base for investment decisions.
Putting together a picture of a market is similar to assembling a jig saw puzzle. First define the boundaries, focus on simple discrete entities and then attempt to fill in the spaces and hope there are clouds in the sky. A market leading supplier in an imaging segment selling primarily through distributors knew what they shipped but very little else. Most importantly the overall size of the markets, share by segment - both end user and technology type, trends over time and future opportunities. Through interrogation of the company's own data, interviews of key opinion leaders and companies familiar with the space we were able to build up a series of country profiles identifying our clients position both in the markets they served and the total market. Highlighting where they had opportunities to grow share and where we believed there were opportunities for the market to grow.
Suppliers are looking to get the maximum return for their products. Persuading customers of the potential savings that adoption of a product may deliver provides a competitive advantage. This may be because it offers a technical advantage which can be monetarised. Equally a technology may provide the customer with a new revenue stream by offering an alternative to an existing application used elsewhere.
MO has undertaken a number of due dilligence projects looking at the dynamics of the markets which target companies operate in. This may entail reviewing the projections of the candidate or providing evidence de novo.
Healthcare IT remains a parochial affair with many suppliers making software solutions specifically for a local market. The main driver is that each country organises healthcare in a unique manner. ICD10 is probably the only common currency. The need to tailor offerings offers opportunities as large multinationals are often disinterested allowing local providers to build an attractive position in their home market. These companies make an attractive proposition for investors looking for a steady income stream and a base to bolt on other acquisitions.
We have looked at a number of such companies for investors focussing on the market perceptions of the company and its offerings and the reliability of the data provided by this target.
We have supported a number of transactions both directly for purchasers and in conjunction with major consultancies. Our clients benefitting from the special understanding we have of medical technologies.
Commercial due diligence projects have involved the evaluation of specific segments and geographies looking at market size, penetration, competitive pressures and future growth opportunities.
A growing number of countries have organisations which assess health technologies. These include:
Health technology assessment is increasingly important in persuading payers to support a technology. Manufacturers and suppliers need to factor this into their marketing plan.
Siemens put forward to NICE a new technology Virtual Touch ™ tissue quantification (VTq) which enables the elasticity of the liver to be measured by ultrasound and correlates well with the degree of fibrosis in the liver obviating the need for liver biopsy which is both invasive and expensive. Medical Options reviewed the published literature, identified the clinical pathways and developed an economic model to show the benefit of VTq. Siemens obtained a NICE medical technology guidance [MTG27] in September 2015.
The biggest risk is having the technology appraised and then rejected. But the biggest challenge is having your technology assessed.