Global Wellness Technology Business - High Potential for Future Success. Pasi Sorvisto

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1 Global Wellness Technology Business - High Potential for Future Success Pasi Sorvisto

2 What kind of Business we are talking about? Spending on healthcare in U.S. is 14% and in Europe 8,5% of GDP. In 2002 spending on healthcare in EU was 780 billion euro. In U.S billion euro. (Year 2005: GER 220 Billion, UK 114 Billion) In 2001 global health technology market was approximately $170 billion. U.S. $75 billion EU $40 billion Japani $25 billion Rest of World $30 billion Healthcare IT market is growing very fast, estimated growth 10% annually. In U.S. healthcare IT market was estimated to be (in 2003) $23,6 Billion. European market has been estimated to be half of the U.S. market, but growth rate is similar. Source: Tulevaisuuden terveysteknologiat ja järjestelmät raportti. Tekes, Pasi Sorvisto

3 The values of companies, comparison Medicine companies >US$ 1000 Billion Healthcare technology companies US$ Billion Mobile technology companies US$ 90 Billion Telecommunication networks companies US$ 30 Billion Source: Jouni Ihme, Innokas Medical Ltd Pasi Sorvisto

4 Venture Capital Investments in 2004 Venture Capitalist s set their bets on 5-7 year scope. Source: Renewal and New Frontiers - Global Private Equity: Venture Capital Insights Report (Ernst&Young) Pasi Sorvisto

5 Medical Technology Industry Market 2003 World market: 184 Billion EURO Europe: Billion EURO USA:...79 Billion EURO Japan:...20 Billion EURO The European market, valued at about 55.2 billion Euro and representing 30% of the global market, is among the top three markets for medical technology. U.S. represents 43% of the Global Market. European market: 55.2 Billion EURO Germany: Billion EURO France:... 9 Billion EURO Italy: Billion EURO UK: Billion EURO The four biggest European markets - Germany, France, Italy and the UK - account for more than 72% of the European market. Pasi Sorvisto

6 Finnish Health Technology Industry Examples of Revenues medical/health technology (approximately 2 billion EURO) GE Healthcare (ent. Instrumentarium Oyj) 1,2 B Planmeca Group 420 M Thermo Electron (ent.labsystems) 96 M Orion Diagnostica 40 M Innokas Medical 5 M export from Finland approximately 680 M software TietoEnator Public&Healthcare 239 Million pharmaceutical Orion Pharma 514 Million Leiras 68 Million Pasi Sorvisto

7 U.S. Assistive Technology Sales by Type ($ Millions) Segment AAGR% Daily living aids 2, , , Mobility aids 2, , , Communication aids (except computers) 1, , , Others* 1, , , Subtotal (excluding eye glasses and contacts) 8, , , Eye glasses and contacts 20, , , Total (including glasses and contacts) 29, , , If U.S. Market is approximately 45% of global market, total global market for assistive technology is approximately $68 Billion. Pasi Sorvisto

Sporting Goods Industry Revenues Sporting goods, Apparel and Athletic Footwear $52,2 Billion Sports Equipment $18,2 Billion Sports Apparel $24 Billion Athletic Footwear $10 Billion Sports Instruments

8 Sporting Goods Industry Revenues Sporting goods, Apparel and Athletic Footwear $52,2 Billion Sports Equipment $18,2 Billion Sports Apparel $24 Billion Athletic Footwear $10 Billion Sports Instruments not included Finnish Sporting Goods Industry Total revenue in Finnish based or owned companies = 2,5 Billion euros (e.g. Amer-Salomon Acquisition) More than 2/3 is equipment and electronics Finns are Market Leaders in many categories: Polar Electro: #1 Heart Rate Monitors Suunto: #1 Diving Instruments Amer Group: #1 Sporting Goods Exel: #1 Nordic walking Raita Sport: #1 Ice Hockey Rinks (Year 2003, not included Amer Group total revenue) Source: etc. Pasi Sorvisto

9 Pasi Sorvisto

10 Public & Private R&D-funding Available Tekes: FinnWell Healthcare Technology Program Program duration: Program volume: approx. 150 M of which Tekes provides 50% Allocation: Research 30 M Public service providers 20 M Companies R&D 100 M Sitra Health technology and healthcare is one of the six strategic programs Corporate Finance typical investment focus on early growth companies, 0,5-1 M product or service should represent Best Practice concept of healthcare interest also in changes in healthcare structure, processes, quality, and efficiency separate Life Science -portfolio Sources: Tekes (Kalevi Virta) and Sitra (Timo Haikonen), 2005 Pasi Sorvisto

11 The Competitive Advantages of Our Health Technology Industry (by Hannu Ahjopalo, FiHTA) availability of versatile engineering skills at a moderate cost availability of scientifically top-notch, still pragmatic medical experts straightforward and unbureaucratic cooperation between the industry, universities and hospitals a small country and small home markets have taught humility, and forced the industry to networking Pasi Sorvisto

12 But, still we have our own challenges which can be solved!

13 The Competitive Disadvantages of Our Health Technology Industry (by Hannu Ahjopalo, FiHTA) Small domestic market Very thin venture capital markets locally Companies poor visibility in the international VC markets Fragmented structure of the industry and research institutions no real clusters have emerged The government has not made sufficient efforts to attract foreign investors as a comparison, e.g. Irish government: Spends 100 times more (through Industrial Development Agency) in attracting foreign direct investments than Invest in Finland Has invested in IT infrastructure, education of the workforce, and building financial incentives, and succeeded For instance, Ireland has become #3 in the global pharmaceutical industry Pasi Sorvisto

14 maturity/ value Growth of the business require deep understanding of the market We have to focus in products and companies, for which we are able to recognize strong growth phase in market place. Copyright Pasi Sorvisto, 2004 Playing Arena time and/or stake holders & customers Pasi Sorvisto

Complex Puzzle of Business Development Business

development, new product development ) Values

e.g. trust, respect, commitment, credibility,

15 Complex Puzzle of Business Development Business opportunity Generate RPV (By Clayton Christenssen) Product Resources (e.g. human, knowledge, financial, technology ) Processes (e.g. strategy implementation/ deployment, business development, new product development ) Values (both ethical and guiding values which are effecting every day decision making; e.g. trust, respect, commitment, credibility, reliability, profitability ) Marketplace Solution Financial model & Revenue Customer need Management & Strategy Financing Timing Pasi Sorvisto Copyright Pasi Sorvisto, 2004

16 Business Builders Academic Society (basic and applied research) Idea Generators Transfer Organizations ( Välittäjät ) Incubators Incubator Funding Seed- Funding Companies (technology and service) Product Development Clinics Business Development Funding Markets and Business Environments (Domestic, Europe, Global) R&D- Funding Venture Capital New Companies Growth and Competitiveness Pasi Sorvisto

Bringing Discipline to Investment in Innovation and Growth Risk and opportunity are inherent components of any innovation investment decision, and managing both is a crucial balance point for

17 Bringing Discipline to Investment in Innovation and Growth Risk and opportunity are inherent components of any innovation investment decision, and managing both is a crucial balance point for technology companies. There is widening gap between heightened market demands for innovation and companies ability to manage innovation investments process effectively. Participants: 152 senior technology business executives, globally The success of a technology company in today s intensely competitive environment is directly tied to the effective financial management of its innovation investments. Pasi Sorvisto

18 Framework: Innovation Value Chain Ernst&Young, 2005 Pasi Sorvisto

19 Finding the Right Balance Point Ernst&Young, 2005 Pasi Sorvisto

20 Total Solution: Professional Innovation Process Deep understanding of the market and business environment require lot of information and analyzing: customer needs - jobs to be done market climate and timing competing products, technologies and companies competing business models and strategies alliances marketing and sales channels best scientists and partners regulation Professional Innovation Process is capable to select most potential projects by deep understanding of the market and business environment steer resource allocation and execution guarantee proceeding and high quality of the best projects enable learning and development by results. Product, Service, and Business Concept Definition Calculations, Definition of Required Resources Technical Specifications Recognition of Opportunities Professional Idea Maturity Enhancing Process Technical Product Development Piloting and Testing Markets Product and Business Launch Ramp Up Pasi Sorvisto, 2005 Pasi Sorvisto

Develop YOUR business in Medicon Valley Dedicated to helping you develop your business, Medicon Valley offers:

MEDICON VALLEY / 2011 03 Develop YOUR business in Medicon Valley Dedicated to helping you develop your business, Medicon Valley offers: > A pool of highly qualified life-science university graduates and