GE Presentation

GE Healthcare Systems Going Forward

Team B13Chris ChenBrian LeeRobyn MossMatt Stewart

Introduction Recommendation Risks Execution Summary 2

Agenda

• Case Overview• Recommendation– Product Rationale

• Assumptions, Challenges, Risks• Execution• Summary


The Added Value of Healthymagination to GEHS

Smart Spending

Smart Saving

Smart spending - Making smart investments that make a difference lead to research and development in technology innovations, capital financing for growth companies and grants.

Smart Saving - Lowering costs, expanding capacity and improving performance enable healthcare providers to care for more people with existing facilities and to extend access to wider populations.

1) Not just new products, but a tool for Marketing• Differentiation from competitors

2) Sustainable advantage in Customer loyalty• Less dependence on individual products

3) Disruptive Innovation• Introducing new standards of quality, access

and cost to the healthcare industry


Healthcare Industry and GEHS Overview

Healthcare is a booming industry– $2.5 Trillion sector in US, 16% US GDP (projected to hit 31% by 2035)

GEHS and Medical Imaging Technologies– In 2007 GE dominates MRI and CT (40%, 50% of market share respectively)– Ultrasound is the 3rd largest modality of Medical Imaging, a $2 Billion industry

• GEHS in close competition with Philips to gain majority market share by 2010

Healthymagination– $6 Billion Initiative launched in 2009 by GEHS as a commitment to quality, access,

and cost issues around the global Healthcare industry– Requires a 15% increase in one of the three categories (quality, access, cost)

Which Ultrasound products should GEHS introduce?– HepEcho, TEEmax, UltraLipo, and Omega

Brian Lee


Recommendation: HepEcho, Omega, TEEmax

Introduce HepEcho and Omega first as they are the best candidates for healthymagination and they are in attractive markets. Introduce TEEmax after further evidence generation.

• Annotations

•Cost reductions of > 15% •Large hospitals and mid-size clinics•Buyers are more than hepatologists•Japan has Gov’t run healthcare•Current medical needs are not met

HepEcho

•Access to new markets > 15%•Collaborate with NGO•Partner w/ Indonesian Gov’t•Multi-year warranty plan•Lowering costs

Omega

PROFITS+

HEALTHYMAGINATION

TEEmax


Healthcare Spending to Increase• Increasing healthcare demands of aging Japanese

population necessitate dramatic increase in healthcare spending (current spend 7% of GDP in 2009, compared to 16.3% of GDP in US1).

• Intense competition likely as companies look to gain share of increased spend

HepEcho provides lower cost, high quality imaging for a growing Japanese marketAffordable, High-Quality Product• Versatile LOGIQ E9 imaging technology, affordably price for mass appeal• Positioned to meet the needs of hepatologists looking for improved diagnostic results• Lower price point will expand target market to include both large academic hospitals and mid-

sized clinics

19851990

19952000

20052010

20152020

20250

10

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4.1 5.9 8.9 11.2 11.6 12.8 16.1 19.7 24.1

1620.6

2730.1

33.137.5

42.347.2

52.3Column2

National Med-ical Care Ex-penditure

Trillion Yen

Estimate

Growing Healthcare Spend in Japan1

1. Mori, Dr. Takato and Nagano, Dr. Amie. “From Silver to Gold: The Implications of Japan’s ageing population”. GE and Economist Intelligence Unit.

HepEcho poised to gain market share as low-priced solution focused on diagnostic and preventative medicine.


HepEcho: Meeting the Changing Needs of the Japanese MarketMeeting Changing Customer Needs Requires Innovation• Rapidly aging Japanese population influencing market needs

– Focus on tools aimed at diagnosis, prevention, treating chronic illnesses• Japan exploring opportunities for new avenues of healthcare delivery

– Emphasis on home-based care for elderly will make mobility and versatility of tools more important1

1. Ministry of Health, Labour and Welfare of Japan. 2011 Annual Report. http://www.mhlw.go.jp/english/org/pamphlet/dl/pamphlet-about_mhlw.pdf#page=14

Highlight innovative benefits of Healthymagination platform

Work with Japanese government to identify opportunities to innovate and educate healthcare industry of products

Develop promotions to get HepEcho in test markets

Targeted Marketing


Omega: Fulfilling needs in Emerging markets

Omega addresses the issue of midwives lacking proper equipment to detect and understand pregnancy risks• Price-sensitive target market (Indonesia)

For midwives in Indonesia, price is the most important factor At around $3,000, Omega is affordable and economically justifiable

• Omega addresses scarcity of OB/GYNs in Indonesia, especially in rural areas Compared with hospitals & OB/GYNs, midwives are considerably more

accessible and affordableIncreases

AccessIncreases

QualityNew

Market


Omega: Solutions for Barriers to Value Creation and DeliveryBarriers to Value Creation and Delivery

How will Omega be distributed, especially in rural areas? Who will train midwives and spread product awareness?

Proposed Solutions:

1) Collaborate with local NGOs (i.e. ICM, GMC) Product distribution through established supply channels Midwife education and training Spreading of product awareness

2) Partner with the Indonesian Government Government subsidies increase affordability Government endorsement adds credibility and increases awareness

3) Provide a multi-year warranty Alleviates midwives’ concerns regarding economic feasibility Instills confidence in product quality & reliability

4) Lower the price Increases Omega’s demand and unit sales Improves Omega’s economic feasibility


New Markets + New Strategy = Risk

Low

Low

High

High

Prob

abili

ty o

f Occ

urre

nce

Impact of Risk

Omega

HepEcho

Barriers to Entry

Competition

Buyer Power

Distribution

Barriers to Entry

CompetitionDistribution

Buyer Power


Execution: Focus on NPI’s 3 Steps to Success

Test Market

M1

M2

M3

Supply Chain Coordination

Cost & Schedule

HEPECHO: Established supply chains, GE HealthCare Hino Factory OMEGA: Less established & highly fragmented, Indo 15000+ islands will need to utilize Korean manufacturing facilities

HEPECHO• Shinjuju, Tokyo• Pop 312, 418• Most Hospitals per

1000 population

HEPECHO: $36MOMEGA: $6M

OMEGA• Jakarta’s rural areas • Developed infrastructure • 35% of births are

unassisted

Hit Scale 18 months

Beta Phase 6-18 months

Est Chains 3-6 months

Questions

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Appendix

• SWOT Analysis• Healthymagination D

etails• Medical Imaging Ana

lysis • Japanese Healthcare

Market• Indonesia Midwifery

• TeeMax• UltraLipo

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Healthymagination: Success thus far

• 43 Innovations have been validated to improve cost, quality and access by 15%

• 234 million lives affected • Over 60+ countries

COST• Decrease treatment timeQuality • New technologiesAccess• Medical equipment to developing markets

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Medical Imaging Analysis: Ultrasound Imaging

• $25.3 Global Billion market & growing • Competition– GE 30%– Philips 27% – Other 43%

OPPORTUNITY Japan + Rest of Asia = 28% Global Market

Asia = 60% of worlds population

2004 2005 2006 2007 2012 CAGR%

1332.0 1423.2 1520 1625.2 2273 6.9

Ultrasound Projections

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Indonesia: It is Getting Better

WhoWhere

Infant Mortality

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Japan’s Healthcare Industry

Unique Social Healthcare Benefits1

• Lowest healthcare costs yet healthiest population• Pay insurance premiums in relation to their income, insurance companies

don’t compete for services

Facts2

• Life Expectancy – 83 yrs, • Health care spending – 8% GDP • Doctors per 1000 -- 21

http://www.equityhealthj.com/content/8/1/51-http://prescriptions.blogs.nytimes.com/2009/08/25/health-care-abroad-japan/2 http://www.who.int/countries/usa/en/

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TEEmax and the Healthymagination Initiative

We propose to delay the introduction of TEEmax until more evidence of value creation can be established • TEEmax is a product that current research tells us is much harder to reach the 15%

improvement • The scope of this product is limited and it’s impact on global health issues is far

less relevant• Currently Philips has a similar product on the market, Live 3D TEE, which will be

hard to overtake in market share without a strong marketing push, that association with Healthymagination would provide

TEEmax is an attractive investment• The product fulfills a direct need currently catered to by only one supplier, Philips• The product is an add on to existing machines for which we already have buyers

and distribution established• E4D Technology is multifunctional to apply to different objectives• Market segments for cardiac ultrasound is growing as instances of heart disease

increase around the world

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UltraLipo: Opportunity Outside NPI and Healthymagination

Potential New Product for Non-Healthymagination platform• Non-traditional use for ultrasound, cosmetic application with

few clinical benefitsDoes not meet the Strategic Filter for NPI• “Solve a clinically relevant problem, with a demonstrable

improvement in imaging quality that the clinician would recognize, where there are a wide range of applications for the product”

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SWOT analysis for 4 proposed products

HepEcho SWOTStrengths: Fulfills a direct need that currently is insufficiently met, Japanese healthcare system is government run so ability to find large bulk buyers and institutionalized systems is high,

based on core technology that GE is already a leader inWeaknesses: costly project and a high retail sales point, eliminates smaller independent firms from buying so shrinks your buyer pool, a lot of hospitals each serving small size populations, so

only a few locations will want to buy based on proximity to other locations who don’t have one, this is a specialized tool geared at hepatologists onlyOpportunities: Current ultrasound options are insufficient for proper liver cancer detection, 85% mortality rate for detected liver cancer world wide, Japan alone accounts for 5.3% of deaths

from liver cancer, over $400 million market for hepatologists who use ultrasounds already,Threats: Introducing a new product takes education and time to accept into general practice, competitor expected to release a similar imaging system as direct competition, TEEmax SWOTStrengths: Product is an addition to an existing product currently owned by many hospitals and firms, there is a clear need and a current market for such a machine, Weaknesses: Limited scope of use of product (surgeons performing replacement of mitral valve procedures), Costly project requiring 20Million to start. Opportunities: cardiac ultrasound is growing to a billion dollar segment, pioneering E4D technology can cross over to new product developmentsThreats: Philips is already in the game with the Live 3D TEE, clinical team is unsure if TEEmax can reach healthymaginations growth goal of 15%,

UltraLipo SWOTStrengths: Outside of typical healthcare segment, entering a new market, non invasive, based on existing companies it is profitable and highly desired, not treated in a medical setting but a

spa like setting, the alternative to UltraLipo is invasive medical surgery which is high risk and much more expensive. Typically an out of pocket procedure, relatively simple technologyWeaknesses: Does not stay within the realm of Healthcare, does not promote the GE mission of providing better healthcare to more people, lack of a clinically relevant benefit, Opportunities: Industry is just beginning globally and has yet to be approved by the US government (still early movers in US), Target market is weight loss patients which is a large market

globally, Brazil is the highest numbers of liposuction procedures, estimated global market of over 1 billion, noninvasive lipo-surgeries are expected to grow by 17.9% in the next half decade,

Threats: Existing Israeli company already created the market for ultrasound use in this capacity, No manufacturers have yet to receive FDA approval in the US

Omega SWOTStrengths: Capitalizing on a market, Indonesia, that needs better service and equipment for pre-natal care, low cost requirements of 6 million, easy to use and affordable $3000, Weaknesses: most OBGYN’s are located in central cities, not in rural areas, so a lot of the patients that need the extra medical attention aren’t going to have access regardless of product,

Midwives don’t have as high enough incomes to afford an ultra sound machine, Product has a “novelty” value,Opportunities: Outlet through Midwives is accessible, new emerging market with an incredibly large population, first mover advantages, Threats: Distribution may be much harder trying to reach individual midwives than large hospitals and firms, access a single woman can have to the machine is limited if it is targeted towards

midwives rather than institutions,

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Market Figures (HepEcho & Omega)

• HepEcho: Potential Worldwide Market : 700,000 annual diagnoses for liver cancer Japan: 32,000 deaths annually attributable to liver cancer

o Current Market estimated at $400 milliono 8,794 hospitals in 2008o 8.5% of GDP spent on healthcare in 2008; less than 9.6% of GDP on average across OECD countries in 2009

• Omega: Indonesia: 230 Million people

o Estimated 4,140,000 births per year (18 per 1,000 people)o Estimated 59,800 midwives (26 per 100,000 people)o Conservative Estimate of Sales (1 of 4 midwives purchase) – 14,950 units soldo Aggressive Estimate of Sales (2 of 4 midwives purchase) – 29,900 units soldo 59.3 birth defects per 1000 people; est. 245,502 birth defects per year (March of Dimes study)o Estimated midwife price per birth – $45 (2008)o Initial Investment: $6 Million dollarso Projected unit price: 3,000*

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Sources

• http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aIzv9oPDe_.4• Fujimura, Naoko. “Japan’s Elderly Population Rises to Record, Government Says”. Bloomberg News.

September 17, 2007.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aIzv9oPDe_.4

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