Current Market Dynamics and Future Vision of the Care Cycle
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Transcript of Current Market Dynamics and Future Vision of the Care Cycle
Tim Irish
Analysts’ Meeting June 15th, 2005
Current Market Dynamics andFuture Vision of the Care Cycle
2Philips Medical Systems
Overview
• Market and Customer trends
• The Care Cycle and Molecular Medicine
3Philips Medical Systems
Healthcare Expenditures will grow from ~8% of worldwide GDP to ~10% in 2010
49%
28%
8%
2%
13%
North AmericaWestern EuropeJapanChina/Hong KongRest of the World
Worldwide Healthcare Expenditure: US$3,300 bln in 2002
North America makes up 49%of the worldwide spent
Source: Medistat
0 %
2 %
4 %
6 %
8 %
1 0 %
1 9 5 0 2 0 0 0 2 0 1 0Source: WHO
Healthcare is the world’s largest service sector
4Philips Medical Systems
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
50%
40%
30%
20%
10%
0%
12%
20%
30%
1950 2000 2050
% of people over 60 years, Western World
Sources: United Nations, Victor R. Fuchs (Stanford University)
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
50%
40%
30%
20%
10%
0%
12%
20%
30%
1950 2000 2050
% of people over 60 years, Western World
Sources: United Nations, Victor R. Fuchs (Stanford University)
Demographics and economic developments add to long term growth
As national economies develop, healthcare investments follow…
5Philips Medical Systems
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
50%
40%
30%
20%
10%
0%
12%
20%
30%
1950 2000 2050
% of people over 60 years, Western World
Sources: United Nations, Victor R. Fuchs (Stanford University)
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
50%
40%
30%
20%
10%
0%
12%
20%
30%
1950 2000 2050
% of people over 60 years, Western World
Sources: United Nations, Victor R. Fuchs (Stanford University)
Share of Medical Expenditure
Demographics and economic developments add to long term growth
Source: Medistat
As national economies develop, healthcare investments follow…
All other countries Top 5 countries
6Philips Medical Systems
$1 of Healthcare creates $2.5 of economic value through better outcomes
Source: Medtap report, The Value of Investment in Healthcare, 2005
7Philips Medical Systems
Healthcare delivers huge benefits
• Benefits from increased spendings since 1980, USA:
• From a human perspective: – 470,000 less deaths– 2,300,000 less people with
disabilities– 206,000,000 days less spent in
hospital• From an economic perspective:
– Delivering $ 1600 bln of economic value
Source: Medtap report, The Value of Investment in Healthcare, 2005
Iron lungs during Polio epidemic in the 1950’s
8Philips Medical Systems Sources: Russ Coile, Futurescan 2003, SG-2
Imagingearlier diagnosis saves lives and reduces costs
Minimally invasive surgeryreducing patient trauma and costs
Healthcare ITRight Information at the right time
enables better treatment and lower costs
Molecular MedicinePreventing disease from happening
Medical technology continues to transform Healthcare
Around 70% of the survival improvement in heart attack mortality is a result of changes in technology.” Cutler & McClellan, 2001
9Philips Medical Systems
“Imaging is key to lower Healthcare costs and improved patient outcome”Imaging is about:• Better diagnosis for better treatment• Earlier detection to catch disease early • Minimally invasive surgery to avoid trauma
and shorten procedure time McKinsey, 2004
“Continued advances in Imaging modalities will transform medicine during this decade”SG-2, 2004
10Philips Medical Systems
$1 of imaging saved $ 3 in hospital costs
- 4%Imaging costs/patient
12%Increase in number of patients imaged
8%8%cost growthImaging costsHospital costs6 year CAGR
Beinfeld et al., Radiology, 2005; 17,200 patients, 1996 – 2002
Big cost savings by Imaging in large teaching hospital
11Philips Medical Systems
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
Ever expanding range of clinical applications
12Philips Medical Systems
Diagnosis of blood vessels –Heart, Brain, Body; skeletal trauma (e.g., broken bones), chest & lungs, gastro-intestines (digestive tract), high-resolution mammography
Ever expanding range of clinical applications
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
13Philips Medical Systems
Cardiology:Detection, diagnosis and treatment of heart disease, heart attack, acute stroke, vascular disease;Ob/gyn;General Body: kidneys, liver, thyroid, and blood vessels. Also being used for breast imaging
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
Ever expanding range of clinical applications
14Philips Medical Systems
Ever expanding range of clinical applications
Cardiac & Vascular;NeurologicDiagnosis;Pelvic/abdominal, Spine, Lungs; Accidents/trauma casesCancer Detection;CT Angiography (CTA)
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
15Philips Medical Systems
Ever expanding range of clinical applications
Soft tissue, suchas the brain and nervous system;Spine, skeleton, joints: bone, cartilage, ligament, tendon, and images of inside the bone;Cardiovascular/angiography: (MRA);‘Functional’ fMRI;Abdominal;Pediatric
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
16Philips Medical Systems
Ever expanding range of clinical applications
SPECT:Coronary artery disease;Bones, lungs, brain, blood, gastrointestinal organsPET:Primary cancer and metastases;Neurology –stroke, Alzheimer’s, Parkinson’s
X-Ray
Ultrasound
CT
MR
Nuclear Medicine
17Philips Medical Systems
Growth in imaging procedures driven by innovations in technology & clinical applications
0
50
100
150
200
250
300
350
400
450
1963 1973 1983 1993 2003
NM
CT
MR
US
CV X-Ray
GeneralX-Ray
Avg. 10-Year CAGR
15%
25%
10%
5%
6%
2%
TOTAL 4%
Total Excl GXR 10%Source: Frost & Sullivan
18Philips Medical Systems
02000400060008000
100001200014000160001800020000
2004 2014
MR heartCT bloodvesselsCT chestMR spineCT abdomen
Procedure Volume will continue to grow….Example: USA
8%
5%7%
26%13%
Source: SG2, June 2005
19Philips Medical Systems
Creating long term growth in Imaging Market
Growth of Diagnostic imaging equipment market (orders)
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
US$
Asia/Pac.(rest of)JapanLatin AmericaEMEANA
Source: Nema, Cocir, JIRA, PMS analysis
On average by 5% per year
20Philips Medical Systems
Customer Dynamics
Continuation of established trends• Privatization of Healthcare• Consumerism• Pay-for-Performance programs• Staffing shortages • Productivity opportunities
through new technology• Increased New hospital
construction
New dynamics are becoming manifest:• More large, multiyear,
partnership deals with higher margins and risks– Strategic partnerships
21Philips Medical SystemsSource: Healthcare Advisory Board 2004
45% 44% 42% 41% 41% 40% 41% 41%
56% 58% 59% 59% 60% 59% 59%
1998 1999 2000 2001 2002 2003 2004
Percent of Hospitals with Positive Margins
Percent of Hospitalswith Negative Margins
0% Medicare Margin
Hospitals and Health care systems continue to be financially challenged. Example: USA
22Philips Medical Systems
Community hospitals in the USASimilar trends in many Western countries
Customers are slowly consolidating
Source: American Hospital Association, 312-422-3000, sha.org
Number of Community HospitalsTotal number of hospitals and beds
840
880
870
860
850
830
8201995 1996 1997 1998 1999 200 2001 2002
5,194
5,134
5,0575,015
4,9564,915 4,908 4,927
23Philips Medical Systems
Capital Financing:Full-service financing
resources include strategies for tax-free capital and variable
term financing
Support and Services:Biomedical service and a
complete program of consulting and marketing
assistance for your facility
Construction and Planning:Coordination of all aspects of new
facility planning and implementation thru a consortium of industry experts
Technology Procurement:Alliance-level pricing for
products and services and ongoing technology availability
updates Research:Mutually significant projects and collaborations defined with short and long-term objectives
Education and Training:Philips offers a comprehensive on-line CE program to keep technologist credits up to date. New-user physician training programs provide revenue generation opportunities
Partnership Elements
Buying needs are changing towards longer term partnerships
24Philips Medical Systems
University of Alabama, Birmingham
Univ.
20th
6th
UAB Campus Master PlanUAB Campus Master Plan
18th
Today• Largest University Health System
in Southeastern United States
• Complex includes 5 City Blocks• 2.1 Million Square Feet• 13 Major Free Standing Buildings
2010• 75 City Blocks• 12 Million Square Feet• 17 Free Standing Buildings
25Philips Medical Systems
Overview
• Market and Customer trends
• The Care Cycle and Molecular Medicine
26Philips Medical Systems
Changing Care Cycle: Liver Cancer
Information &Decision support
Follow Up
Diagnostics
Therapy
Lab
Symptoms
Ward
ICU
Rest in Peace
Surgery
27Philips Medical Systems
Changing Care Cycle: Liver Cancer
Information &Decision support
Follow Up
Diagnostics
Therapy
Lab
Symptoms
28Philips Medical Systems
Changing Care Cycle: Stroke
Information &Decision support
Follow Up
Diagnostics
Therapy
Symptoms
Rest in Peace
40% Mortalitytoday
SurgeryICU
Ward
Ward
30% loss of independence
29Philips Medical Systems
Changing Care Cycle: Stroke
Information &Decision support
Follow Up
Diagnostics
Therapy
30Philips Medical Systems
The ingredients of Molecular MedicineBiomarkers In Vitro Diagnostics Image-guidedDiscovery In Vivo Imaging therapeutic agents
Linking disease to bio-molecules
Courtesy: Ciphergen
Targeted therapeuticsDiagnosing Disease
31Philips Medical Systems
Changing Care Cycle: Preventing heart attacks
Information &Decision support
Follow Up
Diagnostics
Therapy
32Philips Medical Systems
…Breakthrough in Biochips for molecular biomarkers
Building on Philips competences:• Sensitive and compact magnetic
detection techniques • Magnetic nanoparticles as detection
probes for bio-molecules • Semiconductor technology• Order of magnitude more sensitive
than current technologies
33Philips Medical Systems
Philips unique‘Lab-on-a-chip’ solution
Size: ~10 x12 cm0,5 micron structures
…Tomorrow’s Modality: new Molecular Diagnostics platforms
To fight sepsis:
• An estimated >1.5 mio sepsis cases (US and Europe only) every year in hospitals with an increasing rate of mortality
• Utilizing Philips in-house competencies in Miniaturization and Integration, to reduce diagnosis from days to hours
34Philips Medical Systems
…Tomorrow’s Modality Today: Unique Molecular Imaging platform…
First high end SPECT-CT Unique information
35Philips Medical Systems
To build the new Medical Paradigm: Molecular Medicine
The Future
Your own biochemistry becomes the basis for diagnosis and treatment
Molecular imaging will screen people with genetically inherited & life-style risks
36Philips Medical Systems
Conclusions
• Healthcare and medical technology add both human and economic value
• Very predictable growth outlook based on established growth drivers (demographics, chronic illness, technology, privatization and consumerism)
• Technology innovation to accelerate – ever faster, ever more accurate and much earlier (more screening)
• The future lies in linking new technology applications to the Care Cycle
• Massive opportunities to increase both clinical outcomes and health economics through Care Cycle improvements
37Philips Medical Systems