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Healthcare 2020: What’s in it for the Asian

Diagnostics Industry

Diagnostics Asia 2010, Singapore24-26th August 2010

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Agenda

• Top 10 Trends and Crystal Gazing• Disease diagnostics – A Changing Landscape• Growing importance of value based tests• Opportunities in the Asian market

3

Top 10 Global Healthcare Trends

ProjectedImpact on the

HealthcareIndustry

High Impact

Low Impact

CertaintyLow High

2010 – 2020

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Patients Become Healthcare Kings And Queens, Medical Communities Become Interconnected, Doctor-Patient Relationship Goes Virtual

Patient centred care

2010 20202015

Power PatientGeneration

Major Trend

Patients Become Customers

Personalised Healthcare

Web: Power Patients Unite

Hospitals Go Virtual

SmarterDrugs

Devices Become Monitors

Innovation vs. Knowledge

CyberDocs

Prevention Before Cure

1

2

3

4

5

6

7

8

9

10

Baby Boomer retirement startsPatients becomehealthcare Kings and Queens

Patients gain access tohealth quality information

Consumerismholistic health and well being

One stop shopCustomised products Home services

Genetic testingTargeted clinical trials

Information based medicine

Major diseases understood at molecular levelWellness care Presymptomatic diagnostics

& treatments

Online sufferer groups and evenonline research driven by Power Patients

Google becomes major stop along therapy path

Increasing web-based provider-to-patient and patient-to-patient interaction

All departments/buildings within hospitals are connected

Medical communities (1°, 2° care) become interconnected

Regional/Country-wide connectivity

Non-invasive delivery Drug cocktails will enhance productivity, memory,and physical performance

Disease management Remote patient monitoring Self-monitoring

War for medical talentMedical professionals keep up with knowledge growth

Baby Boomer retirement starts

Virtual face to face doctor- patient relationship

Perform routine diagnostics with predictive precision

Cheaper care available to more people in need

Early treatment Implementation of IT Precise therapy becomes reality

5

Forces Shaping the Evolution of Healthcare

Molecular & Personalised Medicine

Cost Access &Quality ofCare

Proficient Use of Information(eHealth)

Technology People Processes

6

Ageing Related And Chronic Diseases, Account for Significant Percentage of Healthcare Costs

30% of the population

consumes 90% of health

care resources

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Global Healthcare

Spend Profile Screen

Earlier health earlier diagnosisEarlier health

earlier diagnosis

Incre

asin

g L

ifesp

an

Qualify FeedbackInterveneLocalise

The most advantageous way to combat many diseases such as diabetes or cancer is to predict susceptibility, characterise and begin preventive treatment before the onset of the disease

The most advantageous way to combat many diseases such as diabetes or cancer is to predict susceptibility, characterise and begin preventive treatment before the onset of the disease

Screening and Localising diseases is the most efficacious and cost effective approach to improving the quality of life.

Screening and Localising diseases is the most efficacious and cost effective approach to improving the quality of life.

Predict, 5% Predict, 9%

Predict, 22%Diagnose, 15%

Diagnose, 19%

Diagnose, 27%

Treat, 70%Treat, 60%

Treat, 35%

Monitor, 10% Monitor, 12% Monitor, 16%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2007 2012 2025

Global Healthcare Spend

Disease prediction and early diagnosis is likely to lead the global healthcare spending

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Predictive tests

Disease Management

Gene Mapping & Functional Analysis

Tailored Treatments- Genomic/Proteomics based

Preventative Programmes

Health Management

Bio Chips: Controlled Released

Delivery Systems

Telemedicine

Remote Patient Monitoring

Drug Delivery

IT / Digital Information Systems

Nanotechnology

Convergence is allowing a preventative approach to healthcare

Medical Devices

Medical Technologies

Life Sciences

Technology…….Enables it

Economics………………Require it

Demographics………….Demand it

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The vertical alignment in the healthcare sector impacts clinical diagnostics

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Value based clinical tests are adding growth values in the IVD market

High growth areas in the next 5 years:

• Molecular diagnostics

• POCT

• Tissue diagnostics

High growth Asian IVD markets

• China (ranks 6th largest in 2009 and expected to 3rd in 2015)

• India (ranks 10th largest in 2009 and expected to 9th in 2015)

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Source : Frost & Sullivan

Predict Diagnose TreatInform

Screening and evaluate risk pre-

disposition

Symptom based diagnosis

Diagnosis

Prognosis/Assessment

General Staging

Surgical Staging

Surgery guidance

Therapy selection

Therapy planning

Therapy

Monitoring long term

Follow up Diagnosis of recurrence

e.g. PCR, Immunoassay

e.g. CT,MR , PET/CT and

Nuclear medicine

e.g. PACS, electronic health

records and medication

management

e.g. CT/MRI radiation treatment,

Mammography IVD Test and PET/CT new marker

IN VITRO ITIN VIVO

PHARMA

INTEGRATION of in vivo, in vitro, and IT in the advancement of personalised medicine

IN VIVO

IN VITRO

Integration of in-vivo, in-vitro, and IT add more value to IVD tests in the form of personalised medicine

• Earlier Diagnosis• Gain more specific

disease information• Define best

individual therapy• Knowledge based

decision support through integrated IT

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Europe and US based companies dominate the global IVD market

Key Asian companies that are active globally

Sysmex

Mindray

Domestic companies dominate local markets

Transasia – Dominant player in the Indian IVD market

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Note: All figures are rounded; the base year is 2009. Note: All figures are rounded; the base year is 2009.

APAC offers better growth opportunities

6.9 7.3 7.8 8.5

31.7 33.6 35.6 37.5

0

10

20

30

40

50

60

2009 2010 2011 2012

Rest of the World

APAC

38.640.9

43.446

17.8%17.8%

18.5%18.5%

Market Drivers

Market Restraints

IVD Revenues, US$ Bn, 2009-2012

APAC Share

CAGR7.3%

CAGR7.3%

CAGR6%

CAGR6%

• Lab automation

• Home care monitoring

• Emphasis on early detection

• High cost of genomics and proteomics

tests

• Mutually exclusive target customers

• Reimbursement issues

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Destination Asia ??

Established markets

Asia

Decreasing/Stable

Decreasing/Stable

IncreasingIncreasing

HighHigh Medium to HighMedium to High

ShortageShortage HighHigh

OrganizedOrganized FragmentedFragmented

Reimbursement hassles

Reimbursement hassles

IncreasingIncreasing

Test volumes

Adoption level of new

test/technology

Skilled laboratory personnel

Laboratory services

Patient affordability

5%

10%

15%

20%

500 mln

1000 mln

1500 mln

2000 mln

Gro

wth

rat

e

Market Size

(USD)

Molecular diagnostics

POCT

SMBG

2010 market estimates of high growth areas in AsiaHighly favorable market characteristics in Asia

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Earlier launch of diagnostic tests in the Asian markets is a future trend

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20082008 Test Development

Asian/E.U. Launch

20122012U.S. Market Launch

LEARNING, KNOW-HOW FROM TESTS LAUNCHED IN ASIA/EU CAN EXPEDITE FDA CLEARANCE AND U.S. LAUNCH

20112011

20132013

U.S.

Diagnostics assay development done at a U.S. R&D facility is likely to benefit from clinical data generated from use of tests in APAC countries.

India

Large market, low operating costs, and excellent local skills allow for low set up costs and ease of technology adoption leading to high revenues.

China

Tests launched in China and clinical data generated from them can be used to improve standardization of tests.

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REFERENCE LAB TESTING EXPANDING TO DEVELOPING WORLD

Advanced Markets

Reference labs based in the U.S.,such as Quest Diagnostics Inc., are looking for high growth Asian markets

India

India has growing middle class with increasing buying power and demand for better healthcare services.

China

China has a growing aging population and increasing healthcare spending.

India, China and S. Korea have some of the highest growth rates for healthcare spending in APAC and along with the growing aging population and middle class, represent attractive markets for clinical testing. Additionally, the increased prevalence of lifestyle diseases such as diabetes, cardiovascular diseases, and certain cancers contributes to the increasing need of testing. U.S. based national reference laboratories have already taken the lead to expand into these growing markets. Global expansion of clinical lab testing is likely to be influenced by innovation, cost and readiness of the countries.

Reference labs expand services to developing countries

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Populous countries in Asia lead from the front

Changing dynamics poses more opportunities in the Indian market

Government has announced fiscal incentives to boost investment in healthcare delivery

Government has announced fiscal incentives to boost investment in healthcare delivery

Better regulations is encouraging new players in the insurance sector

Better regulations is encouraging new players in the insurance sector

Urban population is becoming more fitness and health conscious

Urban population is becoming more fitness and health conscious

Fragmented laboratory market is showing signs of consolidation

Fragmented laboratory market is showing signs of consolidation

Preventive screening is gaining importance

International screening companies are already developing strategies to enter cardiac screening markets

Preventive screening is gaining importance

International screening companies are already developing strategies to enter cardiac screening markets

Pathology and clinical testing laboratories are likely to join hands

Standardisation and automation is set to gain new grounds

Pathology and clinical testing laboratories are likely to join hands

Standardisation and automation is set to gain new grounds

Point-of-care testing is gaining importance outside emergency care centres

New growth opportunities are seen in infectious disease testing areas

Point-of-care testing is gaining importance outside emergency care centres

New growth opportunities are seen in infectious disease testing areasWellness industry is seeing

healthy double digit growth

Wellness industry is seeing healthy double digit growth

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Snapshot of potential opportunities – India

ProjectedRevenues

In2015

High Revenues

Low Revenues

Growth Rate (2010-2015)Low High

Molecular testing

Point-of-care Testing

Glucose Testing

Cardiac Biomarker Testing

Pharmacogenomics

Biochemistry

Hematology

Urine testing

Immunology

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Growing emphasis on improving healthcare will boost Chinese diagnostics market

More establishment of rural clinics and country-level hospitals

More establishment of rural clinics and country-level hospitals

Emergence of private laboratories market

Emergence of private laboratories market

Increasing out-of-pocket expenditure

Increasing out-of-pocket expenditure

Willingness to adopt newer technologies

Willingness to adopt newer technologies

More inclination towards molecular testing

More growth opportunities in areas like HIV,HPV and HBV testing

More inclination towards molecular testing

More growth opportunities in areas like HIV,HPV and HBV testing

Higher disease incidence demands frequent monitoring – Point of care tests are gaining importance

Cardiac and diabetes offers higher growth

Higher disease incidence demands frequent monitoring – Point of care tests are gaining importance

Cardiac and diabetes offers higher growth

Health check-up services is getting popular

New growth opportunities for cardio-vascular biomarkers

Health check-up services is getting popular

New growth opportunities for cardio-vascular biomarkers

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Snapshot of potential opportunities – China

ProjectedRevenues

In2015

High Revenues

Low Revenues

Growth Rate (2010-2015)Low High

Molecular testing

Point-of-care Testing

Glucose Testing

Cardiac Testing

Microbiology

Biochemistry

HematologyUrine testing

Immunology

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Strategies of global companies provide opportunities for regional players

Geographic expansion to keep up its top line growth

Expand product portfolios to stay competitive

Develop cost effective test with novel biomarkers

Acquisition targets

Partnership opportunities todevelop new product

Contract research organizations likely to get more projects

Is the opportunity for Asian diagnostics industry dependent

more on its global counterparts?

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Conclusion

• Asian companies hold around half of domestic market share- Local presence and market know-how will be a huge driving factor- Highly cost-effective

• Companies like LG and Samsung are focusing on POCT and have potential to dominate

- Presence in electronic goods market likely to provide good visibility and easy entry to global markets

- Has potential to product efficient product at a highly competitive price

• China (Beijing Genomics Institute) is developing capabilities to become workhorse for human genome sequencing

- Could seriously challenge US companies which is looking this area as a high growth sector

“Asian diagnostics industry is looking beyond tapping regional opportunities”

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“We accelerate growth”

Our Capabilities

August 2010, Singapore

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Medical Im aging

BiotechnologyClinical

DiagnosticsDrug Discov ery

Technologies

Healthcare IT Healthcare Serv ices

Medical Dev ices

Pharmaceuticals

Technology R esearch - Em erging technologies , patent inform ation, R&D b reak throughs , forecas ting, im pac t analys is , contac t inform ation…

Market R esearch- Qualitative & quantitative e.g. drivers , res traints , m ark et shares , s izes , growth rates , com petit ive ins ights , opportunities …

Economic R esearch – Glob al, Regional & Country spec ific trends e.g. dem ographic , soc ioeconom ic , polit ical & regulatory landscapes…

Voice of the customer/ End-U ser R esearch - Unm et needs , perceptions , satis fac tion, b rand awareness , selec tion c riteria, priorit ies …

Financial R esearch – Financ ial analys is , due diligence, b us iness plan validation, inves tm ent idea generation, M&A support

Our comprehensive healthcare coverage

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Healthcare consulting projects

Assessment of Core Competencies Best opportunities? Unmet needs? Optimal features? Benchmarking? Competitive environment? Opportunities in other verticals?

Business PlanningOptimal business model? Current and future market positions? Marketing and sales tactics? Company’s value in the marketplace?

Market AssessmentMarket potential? Market growth? Market players and shares? Trends? Capturable share and how? Obstacles to overcome? Distribution? Regulatory environments?

Pricing/Reimbursement StudiesPerceived product value? Cost effectiveness? Reimbursement options? Who will bear the cost? Price/feature tradeoffs?

Market Entry StrategiesHow to increase share? How to maintain margins? Needed market competencies? Value chain? Product extension opportunities?

Product Launch/PositioningProduct line structuring? Optimal features? Target segments? Potential customers? Forecasted adoption? Best messages? Needed resources?

Investment Decision SupportGrow, harvest, or divest? Diversify? Internal development or in-license? Maximize ROI? Communicate value to investors?

M&A and Corporate PartneringPartnering strategy? Partner type? Possible targets? Target value and fit? Drawbacks? Integration/culture problems?

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Frost & Sullivan’s syndicated report examples in clinical diagnostics

•U.S. Point-of-care Testing Markets • Indian In-vitro Diagnostics Market • Self Monitoring of Blood Glucose Systems Market in India •European Point of Care (POC) Infectious Disease Market•European Immunoassay Market•Eastern European IVD Market•Western European IVD Market•EU Emerging POCT Markets•Mass Spectrometry in Clinical Diagnostic Applications•European Immunochemistry Analysers Markets•European Haematology Diagnostics Markets•European Coagulation Testing •European PCR Reagents Markets •European Personalised Medicine and Pharmacogenomics Markets•European POCT Market •European Immunodiagnostics Automation Markets•European Molecular Diagnostics Market•European Primary Care Cardiac Diagnostics Market•European Clinical Diagnostics Automation Markets•European Immunohistochemistry Diagnostics Markets•European Primary Care Diagnostics Markets•Opportunities for Proteomics Technology Markets in Europe•Faecal Occult Blood Testing - UK and French Markets•Cardiac Diagnostics Markets in Europe - Risk Markers•European Acute Cardiac Diagnostics Market•European Market for Biochips in Clinical Research Applications

APPLICATION AREAS

*Non-exhaustive

DISEASE AREAS

INDUSTRY ISSUES

OTHERS

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Frost & Sullivan’s syndicated report examples in clinical diagnostics

•European Cancer Diagnostics Market•Diabetes Diagnostics•Autoimmune Diagnostics•European HIV/AIDS and Hepatitis B/C Molecular Diagnostics Market•Infectious Disease Diagnostics Market in Sub-Saharan Africa

APPLICATION AREAS (contd…)

*Non-exhaustive

DISEASE AREAS

INDUSTRY ISSUES

OTHERS

•Strategic Analysis of the Global In Vitro Diagnostics Market •Industrial Consolidations in the European IVD Market•Strategic Alliances in the Global IVD Markets•Asia Pacific Healthcare Outlook Focus: Australia •Global Clinical diagnostics CEO 360 report•360 Degree Outlook and Growth Strategies in the APAC In-Vitro Diagnostics Industry

•European Reference Laboratories Market•European Point-of-Care Connectivity Markets•European Primary Care Diagnostics Markets

•Examples Of Some Potential 2009 topics•European Markets for Blood Banking Services•European Tissue Diagnostics Market•Global POCT Market

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Thank You