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Fueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentAPACMed&L.E.K.ConsultingSeptember 2024Contents1.Foreword.32.Approach.43.Executive summary.54.APAC early-stage innovation is at risk.114.1.Funding under threat:declines in medtech investment.114.2.Direct cost challenge:rising costs and operational uncertainties.124.3.The ecosystem should step in to support innovation.145.Building a more supportive ecosystem.165.1.Regulatory authorities:acceleration through approval,market access and payment.175.2.Governments:funding and incentives fueling the medtech innovation engine.275.3.Universities and research institutions:nurturing the seeds of innovation.315.4.Large medtech firms:catalysts of innovation in a challenging market.345.5.Investors(family offices):fuel for the engine.405.6.Industry associations and accelerators:a unified voice for innovation.415.7.Startup companies:the basis of ecosystems.426.Recommendations for implementations.447.Acknowledgments.488.References.502 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment1.ForewordEarly-stage medtech innovation is a lifeblood of healthcare systems around the world.Many of todays leading medtech conglomerates began as small,visionary startups.These companies,once fledgling enterprises,have grown into industry titans,driving forward the frontiers of medical science and technology.However,the journey from a small business to a global giant is fraught with challenges,particularly within the healthcare sector which is characterized by a high-risk,high-reward profile.The medtech industry stands at a pivotal juncture.The inherent risks associated with healthcare innovation regulatory hurdles,elongated R&D timelines,fragmented commercial opportunities,a varied reimbursement environment and significant capital requirements create formidable barriers to entry,and therefore to growth.Despite these challenges,the potential rewards for successful innovations are unparalleled,offering transformative benefits to patient care and public health.However,the landscape for early-stage medtech companies in the Asia-Pacific(APAC)region has become increasingly challenging.Recent market developments have intensified the struggle for survival among these innovators.Investment in the medtech sector has seen a marked decline,a trend exacerbated by economic uncertainties and shifting investor priorities.Concurrently,the cost of operations has surged,driven by inflationary pressures,supply chain disruptions,R&D costs and the escalating expenses associated with regulatory and market access pathways.This confluence of decreasing investment and rising costs threatens to stifle the very innovation that is essential for the evolution of medtech.Medtech startups,which are typically more agile and capable of pioneering disruptive technologies,find themselves in a precarious position.Without adequate funding,many promising ventures face the grim prospect of stagnation or failure,unable to bring their groundbreaking ideas to fruition.To ensure the continued delivery of innovative and lifesaving treatments,the medtech industry in APAC in the public and private sectors alike must address the critical issue of insufficient capital flow into early-stage innovation.Ecosystem-level support is required to reinvigorate investment and support the growth of these nascent enterprises.Dr.Chris L.Hardesty Head of SME Portfolio,APACMedStephen SunderlandHead of APAC,L.E.K.Consulting3 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment2.ApproachIn developing this special whitepaper,the L.E.K.Consulting team has drawn upon extensive experience in all corners of the medtech industry as well as a diversity of primary and secondary sources.For a key source of current insight on the ecosystem,L.E.K.conducted 12 one-on-one discussions with key market participants,including policy advisors,large medtechs and medtech startup executives.These discussions aimed to,respectively,elucidate current and anticipated trends in the industry,understand medtech company initiatives and their impact on the innovation ecosystem,and determine actionable and impactful support for startups in advancing early-stage innovation.Additionally,L.E.K.held two discussion sessions with the APACMed team and its steering committee to further enrich the existing research.For secondary research,L.E.K.drew upon information from government statistical offices,third-party data providers and disclosures by industry analysts to obtain factual evidence about the current market landscape and dynamics.4 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment3.Executive summaryAPAC early-stage medtech innovation is at riskThe medtech investment landscape in the APAC region has experienced a notable downturn since its peak in 2021.Venture financing and M&A deals have decreased by 22%and 37%,respectively,over the past two years(through 2023).This decline is driven by global factors such as market volatility,rising interest rates and geopolitical instability,as well as specific regional challenges.These challenges are compounded by escalating operating costs,including increased inflation pressure,supply chain disruptions,research costs and regulatory hurdles,which collectively strain the financial sustainability of startups.The participants in APACs medtech innovation ecosystem are grappling with critical issues that require urgent attention.Despite these challenging conditions,the regions pivotal role in advancing medtech innovation for the world is recognized.Addressing inadequate capital allocation is crucial for sustaining innovation and delivering lifesaving interventions.This requires a collective effort from all stakeholders,across the public and private sectors,to foster a more favorable investment climate through enhanced collaboration and strategic initiatives.Yet a significant gap remains in the ecosystems ability to support innovation effectively.L.E.K.s sentiment survey rates the maturity of the APAC medtech ecosystem at at 2(out of 5),compared with 5 in the U.S.,highlighting the need for further development to better nurture and sustain medtech advancements.This whitepaper delves into stakeholder perspectives and identifies key areas for improvement within the ecosystem.5 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentAction from the whole ecosystem is needed to support successful medtech startupsAddressing the decline in innovation investment in APAC requires proactive measures among stakeholders,including regulatory authorities(approval,market access and payment),governments(direct funding and incentives),universities and research institutions,large medtech firms,investors(specifically family offices in this report),industry associations and accelerators,as well as startup companies themselves.By collectively addressing barriers and implementing strategic initiatives,these stakeholders can accelerate the quantity,quality and pace of medtech innovation in the region.Figure 1:Medtech ecosystem stakeholders required for innovation to scale In this report,we detail the challenges and potential areas of development faced by each stakeholder,drawing from our conversations with interviewees and L.E.K.s proprietary sources.By incorporating insights from case studies that highlight best practices,we offer informed recommendations.The main body of the report provides an in-depth analysis,while this section summarizes the key challenges and suggestions.Source:L.E.K.research and analysis6PatientsEnhancing the medtech startup ecosystemHCP(end users)Regulatory authorities(approval,market access and payment)Governments(funding and incentives)Universities an research institutionsABCDEFGLarge medtech firmsInvestors(family offices)Startup companiesIndustry associations and accelerators6 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentA.Regulatory authoritiesChallenges highlighted by innovation communityPotential areas of development A1.More streamlined and flexible processes are needed to accelerate the real-world implementation of innovation,reduce development costs,and create more opportunities for groundbreaking advancements A2.Clearer guidance,more accessible communication mechanisms and approachable channels are essential to help startups more effectively navigate the complex regulatory landscapeA3.Enhancing integrated and targeted support particularly in a landscape where approval,market access and payment are managed by separate authorities can significantly improve startups ability to successfully commercialize their productsRegulatory approval Develop accelerated approval pathways for breakthrough and high-need medical products Improve communication through comprehensive materials and a robust process-tracking system,which will provide greater transparency and efficiency Establish pre-and in-process communication mechanisms for innovative startups,and provide support and guidance to navigate regulatory landscapes Initiate cross-recognition of clinical trial data and registration between APAC jurisdictions to enhance efficiency and reduce the burden on startups Implement clear guidelines and align local regulations with international standards(e.g.,U.S.FDA,EU CE)to streamline approval processes and reduce redundancyMarket access Allow fast-track access programs for hospital listings,including rapid evaluation and reimbursement support Refine the listing criteria for public tenders,focusing on innovation and impact rather than just costs Encourage early adoption by hospitals to foster easier validation of new technologies and real-world testingPayment Align regulatory approval and payment/reimbursement mechanisms to ensure quick listing for reimbursement upon approval Implement value-based pricing and outcome-based reimbursement models that incentivize innovation,rewarding new technologies that demonstrate high effectiveness and efficiency7 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentB.GovernmentsChallenges highlighted by innovation communityPotential areas of development Direct fundingB1.Direct funding support is crucial for medtech companies to successfully scale upB2.Some rigidity in funding mechanisms,which at times could be the bootstrap of the development processB3.Lengthy application processes,preventing timely access to government funding B4.Additional requirements(e.g.,local employment or manufacturing)along with investment,impeding startups ability to innovate and growIndirect funding and nonfinancial incentivesB5.Limited relevance of indirect funding to startups,as the funding is often awarded after commercialization,rendering it less pertinent to early-stage innovations Provide holistic support for innovation to maximize the impact of direct funding;establish“medtech office”format agency to coordinate all government agencies that provide funding Enhance indirect funding and nonfinancial incentives by tailoring mechanisms to the evolving needs of startupsC.Universities and research institutionsChallenges highlighted by innovation communityPotential areas of development C1.Intellectual property(IP)ownership concern due to involvement of multiple stakeholders,which may cause disputes and hinder the progress of innovation C2.Concern about talent leakage from the university,which may result in reduced willingness to collaborate with startupsC3.Resource constraints,in that universities may not be able to allocate resources to support extensive research projects,as they are struggling with limited funding and personnelC4.Lack of understanding about commercialization among university professors and researchers due to their devotion to research and academic pursuits,reducing the likelihood of product success Provide R&D support by establishing dedicated research centers and connecting startups with subject matter experts to enrich research quality and facilitate real-world testing Foster talent development by offering mentoring workshops to better navigate the business environment and innovation landscape Foster knowledge transfer by developing interdisciplinary programs to equip innovators with the diverse skills needed for medtech innovation Foster partnerships between startups and relevant stakeholders by organizing conferences and networking events8 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentD.Large medtech firmsChallenges highlighted by innovation communityPotential areas of development D1.Limited market size of startups,as the fragmentation of the APAC region(e.g.,market access)inevitably causes startups to limit their geographical focusD2.Assets emphasis on achieving commercial success(vs.addressing unmet needs),due to pressure to deliver quick returns and limited resources among startupsD3.Overweighting toward“me-too”products instead of innovative products,as the core technology(having already been validated)reduces development risks and R&D costsD4.Lower return on investment compared with the U.S.due to the immaturity of capital markets,stringent price controls and a limited exit channel within the APAC regionD5.Limited communication channels between startups and multinational companies(MNCs)HQs,resulting in misalignments regarding startup offerings and MNCs investors pursuits Build a success story in APAC by highlighting achievements(e.g.,successful product launches)in order to enhance credibility,attract interest from potential partners and serve as a powerful testament to the potential of medtech innovation in APAC Steer startups through complicated international markets by providing guidance and support on regulatory requirements,IP concerns and market entry strategies Establish efficient communications forums for startups to effectively exchange information and align expectations with those of relevant stakeholdersE.Investors(family offices)Challenges highlighted by innovation communityPotential areas of development E1.Generally weak familiarity with the leading edge of healthcare technology and care deliveryE2.Limited expertise in healthcare and medtech,preventing funds from thoroughly assessing the potential of and making an informed judgment on investment in a productE3.Reduced appetite for high risk investments among APAC family offices due to increased geopolitical and economic uncertainty Adequately educate family offices on the importance of and opportunities within the medtech sector,to prompt the onboarding of personnel with in-depth medtech expertise Establish introductory forums in APAC to provide startups an opportunity to communicate their vision and product value proposition to family offices 9 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentF.Industry associations and acceleratorsIndustry associations and accelerators must step up and champion the cause of early-stage innovation by amplifying the voices of startups.While individual startups may struggle to influence government policy due to their limited scale,a united front can create a resonant voice within the ecosystem.Industry associations can play a pivotal role in this by gathering input from startups and advocating on their behalf,transforming their collective concerns into policy initiatives.In addition to serving as a unified voice,associations play a crucial role in fostering innovation by acting as a meeting ground for corporations and startups.Both groups often seek innovative solutions but may face challenges due to limited resources and matchmaking opportunities.By facilitating these connections,associations and accelerators help scale innovation efforts and create valuable synergies.Accelerators,with their proximity to startups,could provide targeted support that can significantly enhance a startups development journey.They offer resources,mentorship,and strategic guidance that prepare startups to be more attractive to investors.By accelerating growth and refining their business models,accelerators position startups for investment more effectively and expediently than they might achieve on their own.This support not only increases the likelihood of securing investment but also enhances the overall impact and success of the innovative solutions being developed.G.Final thoughts for startup companiesLast but not least,startups hold the keys to the transformative engine our medtech ecosystem desperately needs.But with great potential comes great responsibility.The journey begins with a commitment to the“right”innovations those that fill the gaps in healthcare that others have overlooked.This requires startups to robustly understand the clinico-economic challenges facing the other stakeholders in the ecosystem.By crystallizing a clear innovation value proposition,startups can access funding and strategic partnerships that might otherwise remain hard to reach.A well-mapped innovation development pathway ensures that everyone from the founders to the investors marches in step,reducing the risk of costly delays and setbacks.And lets not forget the power of communication.Keeping key stakeholders in the loop isnt just good business its essential for turning breakthrough ideas into tangible,world-changing realities.10 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment4.APAC early-stage innovation is at risk4.1.Funding under threat:declines in medtech investmentAs most of us have perceived,the market has seen a consistent decline in medtech startup investments across the APAC region in recent years.Since a peak in 2021,both venture financing and M&A deals in medtech have experienced a significant drop,with reductions of 22%and 37%,respectively,over the past two years(see Figure 2).Figure 2:Medtech venture funding and M&A deal value in APAC Medtech venture financing,APAC region(2018-23)USD billions1.11.73.94.53.92.7024620181920212223CAGR:60GR:-22%Medtech M&A deal value,APAC region(2018-23)USD billions2.93.33.35.33.72.10.41.30.62.82.21.02.52.02.72.51.51.1024620181920212223CAGR:22GR:-37al Count971281411256566Note:APAC=Asia-Pacific;CAGR=compound annual growth rateSource:GlobalData;L.E.K.research and analysisOthersChina11 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentSeveral factors have contributed to the decline in investment,encompassing both global influences and region-specific challenges within APAC.Globally,market volatility and rising interest rates have led to diminished investor confidence,resulting in decreased funding for medtech innovation.Heightened geopolitical instability also creates uncertainty and risk in access to a global marketplace and supply chains,further challenging investment.In addition,several region-specific challenges further intensify the decline in investment.Most notably,China,one of the foremost hubs for medtech innovation in APAC,experienced a stock market crash in recent years.Consequently,venture capital funding has tightened and investor confidence has been significantly shaken,leading to a reduction in funding.1Moreover,indirect factors such as reimbursement and regulatory challenges also contribute to the decline in investment.2 A complex and unpredictable reimbursement landscape creates uncertainty regarding the financial returns from new medtech products.Simultaneously,challenges in market access and stringent regulations often deter investments.These issues are particularly pronounced in emerging countries within the region,where the regulatory landscape is less transparent.Similarly,in emerging countries,the theme of market access increasingly revolves around cost control.3 Consequently,innovation is not adequately rewarded within the payment system,making it challenging for startups to sustain themselves.4.2.Direct cost challenge:rising costs and operational uncertaintiesThe challenges within the medtech innovation ecosystem cannot be attributed solely to the decline in investment;rising research expenses have significantly impacted the sustainability of startups as well.The costs of raw materials,manpower and lab rental have all increased substantially in recent years(see Figure 3).Policymakers efforts to contain post-pandemic inflation have led to a cyclical increase in global interest rates,making it increasingly difficult for startups to attract attention from investors given the high-risk-high-return nature of healthcare startups and the fact that capitalists can get higher returns from lower-risk assets.As one consequence of the high-interest-rate environment,we have observed a trend of rising R&D facility rental costs,with at least a 10%increase across all APAC countries,from Singapore to India.This directly adds to the financial burden on startups,particularly in their early stages.Key medtech raw materials like polyethylene and titanium have also seen significant price hikes over the past two years,partly due to geopolitical crises such as the Ukraine war and the Red Sea crisis.These increases not only drive up direct costs but also result in longer lead times,creating additional challenges for startups that operate at a smaller scale.12 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentThe cost of manpower is also rising.The hiring cost for fresh graduate researchers is reported to have increased by up to 7%since 2019,and more so for higher-quality talent.This further exacerbates the financial pressures faced by early-stage medtech companies and impacts their attractiveness to investors.Figure 3:Rising medtech research costs Interest rate movement,select APAC countries(2019-23)Indexed;2019=100Midpoint rents of R&D facilities in science parks(2021-22)USD per sq.ft.per annum0200400600201920212223ChinaSingaporeSouth KoreaAustralia202120220153045604121121045271512Interest rate hike signifies higher cost of borrowing for startups to conduct researchBiopolis,SingaporeZhongguancun,BeingPangyo TechnoValley,SeoulGenome Valley,Hyderabad10)%xx20%7%4%4%Annual growthProducer Price Index of key medtech raw materials(2019-23)Indexed;2019=100Average annual gross salary of fresh graduate researcher(2019-23)USD thousands20192023xxAnnual growth0140120100160180201920212223PolyethyleneTitaniumStainless steel051015202530354045SingaporeHong KongSouth Korea31.141.233.839.625.129.0Note:APAC=Asia-PacificSource:Trading Economics;Federal Reserve Economic Data;CBRE;University Graduate Employment Survey;L.E.K.research and analysisBeyond the direct cost increases,additional indirect barriers further compound the financial strain on startups.The high barriers to entry in each APAC market and the unjustifiable return on investment required to navigate regulatory and market access challenges,present significant hurdles.Fragmented commercial opportunities in markets close to home,along with regulatory inconsistency and delay,are necessitating larger resources to navigate these challenges and adding complexity to operations.In terms of market access and processes,new product registration typically takes six months to a year in Indonesia,Malaysia and Thailand,with approval in Singapore potentially accelerating the process in Thailand.Conversely,13 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentVietnams registration process can take three to four years.Additionally,countries like Indonesia,China and India have a policy preference for locally manufactured products,while other jurisdictions appear to be more open to imports.The public reimbursement environment also varies significantly across APAC countries.Indonesia,Thailand and Vietnam have over 90%of their populations covered by government reimbursement,whereas Malaysia lacks a formal public reimbursement system yet subsidizes public hospitals.These differences create invisible costs and significant barriers to the growth of startup companies,potentially limiting their scale and rewards.4.3.The ecosystem should step in to support innovationAs the innovation community raises its concerns,it is imperative for the medtech industry to strategize on how best to support the advancement of new technologies.These technologies are,after all,the lifeblood of healthcare innovation.Despite the current suboptimal conditions for innovation development in APAC,the industry acknowledges the regions pivotal role over the next five years.According to L.E.K.s sentiment survey,confidence in the medtech ecosystem in APAC averages 3.3(out of 5).However,this confidence is expected to rise to 3.5 in three years and 3.9 in five years (see Figure 4).Figure 4:Confidence in the APAC medtech ecosystem The confidence level of APAC medtech ecosystem(2024,2027,2029)#of response,N=9;scale 1-5,5 being the highestNote:APAC=Asia-PacificSource:L.E.K.survey and analysis64235610246810As of todayIn 3 yearsIn 5 years9995(highest)4321(lowest)14 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentTo sustain the delivery of innovative and lifesaving treatments,the medtech industry must urgently address the issue of inadequate capital allocation to promising APAC innovations.This challenge requires a collective effort from all ecosystem stakeholders to cultivate a more favorable investment climate.Through enhanced collaboration and strategic initiatives,the industry can secure the necessary funding for early-stage medtech companies,ensuring a continuous flow of groundbreaking technologies that will revolutionize patient care and improve public health outcomes across the region.Yet a pressing question remains:Is the ecosystem prepared?L.E.K.s sentiment analysis reveals that the maturity rating of the APAC ecosystem stands at an average of 2,compared with 5 in the U.S.This disparity indicates that the APAC ecosystem is not yet fully equipped to curate innovation effectively(see Figure 5).Figure 5:APAC medtech ecosystems maturity Assessment of APAC medtech ecosystems maturity(2024)#of response,N=9;scale 1-5,5 being the highest(US level)Note:APAC=Asia-PacificSource:L.E.K.survey and analysis5(highest,benchmark US)4321(lowest)2520246810As of today9 15 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.Building a more supportive ecosystemAddressing the decline in innovation investment in APAC requires collective,proactive measures among stakeholders,including regulatory authorities(approval,market access and payment),governments(funding and incentives),universities and research institutions,large medtech firms,investors(specifically family offices in this report),industry associations and accelerators,and startup companies themselves(see Figure 6).By collectively addressing barriers and implementing strategic initiatives,these stakeholders can accelerate the quantity,quality and pace of medtech innovation in the region.Figure 6:Medtech ecosystem stakeholders required for innovation to scale Source:L.E.K.research and analysis6PatientsEnhancing the medtech startup ecosystemHCP(end users)Regulatory authorities(approval,market access and payment)Governments(funding and incentives)Universities an research institutionsABCDEFGLarge medtech firmsInvestors(family offices)Startup companiesIndustry associations and acceleratorsIn the following sections,our aim is to provide a comprehensive summary of the significant advancements and contributions made by various stakeholders in the APAC region over recent years.We delve into the myriad challenges encountered in fostering and supporting innovation within this dynamic landscape.Finally,we offer recommendations aimed at enhancing the ecosystem,ensuring it becomes an ever more fertile ground for groundbreaking innovations and sustained growth.16 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.1.Regulatory authorities:acceleration through approval,market access and paymentRegulatory authorities play a pivotal role in accelerating the regulatory process and providing market access support,which are crucial to bolstering startups innovation efforts.In this white paper,we focus on the key areas of approval,market access and payment.These three components are intrinsically linked,guiding a product from initial approval through adoption and utilization to its eventual compensation within the healthcare system.By examining these elements,we aim to shed light on the pathways and challenges that startups face in bringing innovative healthcare solutions to market(see Figure 7).Figure 7:The role of regulatory authorities Note:FDA=U.S.Food and Drug Administration;BPOM=Badan Pengawas Obat dan Makanan(Indonesian National Agency of Drug and Food Control);HSA=Health Sciences Authority in Singapore;APAC=Asia-Pacific;PPS=Public Procurement Service in Korea;LKPP=Lembaga Kebakan Pengadaan Barang/Jasa Pemerintah(Indonesian National Public Procurement Agency);GPD=Government Procurement Department in Malaysia;JKN=Jaminan Kesehatan Nasional(Indonesian National Health Insurance);NHIS=National Health Insurance Service in Korea Source:L.E.K.research and analysisPotential improvement areasKey stakeholdersKey areasRegulatory approvalFDA or equivalent(e.g.,China FDA,BPOM Indonesia,Singapore HSA)Develop accelerated approval pathways for breakthrough and high-need medical deviceImprove communication through robust process tracking system,which provides greater transparency and efficiencyEstablish pre-and in-process communication mechanisms for innovative startups and provide support/guidance to navigate regulatory landscapesInitiate cross-recognition of clinical trial data and registration within APAC to enhance efficiency and reduce burden on startupsImplementing clear guidelines and align local regulations with international standards(e.g.,FDA,CE)to streamline approval processes and reduce redundancyMarket accessHospital management authorityGovernment procurement authority(e.g.,Korea PPS,Indonesia LKPP,Malaysia GPD)Allow fast track access program for hospital listing,including rapid evaluation and reimbursement supportRefinement of listing criteria for public tenders,focusing on innovation and impact rather than just costsEncourage early adoption by hospitals to foster easier validation of new technologies and real-world testingPaymentPublic insurance(e.g.,Indonesia JKN,Korea NHIS,PhilHealth)Align regulatory approval and payment/reimbursement mechanisms to ensure quick listing for reimbursement upon approvalImplement Value-Based Pricing and outcome-based reimbursement models that incentivize innovation,rewarding new technologies that demonstrate high effectiveness/efficiency17 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentThe key performance indicators across all regions for regulatory authorities are largely similar:ensuring that safe and effective products are approved,listed and appropriately reimbursed.However,it typically takes at least three to five years for an innovative product to gain approval and be utilized within a healthcare system,even for just one jurisdiction.And timing is critical for innovations.Startups are eager to achieve positive cash flow from their product launches as soon as possible and as widely as possible to ensure their survival and continued growth.Thus,the ecosystem needs to strike a delicate balance:ensuring that qualified products receive timely rewards while maintaining rigorous standards.Accelerating the regulatory pathway without compromising safety and efficacy is essential to fostering a supportive environment for innovation.5.1.1.Regulatory challenges in fostering an ecosystem Despite these progressive initiatives,startups still encounter challenges in navigating the diverse regulatory landscape across the countries in the region.Some of the most common hurdles include prolonged approval processes,lack of internationally recognized standards,unclear communication and insufficient targeted support mechanisms.Prolonged and inflexible processesNavigating the labyrinthine regulatory approval processes in the APAC region is both intricate and resource-consuming,demanding extensive data collection and stringent compliance with diverse agency requirements.For high-risk products,such as innovative implants,the approval administrative journey alone typically takes up to two years.4,5,6 Only a select few regions have introduced acceleration programs aimed at expediting these timelines,leaving many startups grappling with opaque documentation requirements and convoluted approval pathways.The challenges do not end with regulatory approval.Once a product is green-lighted,it often takes an additional one to two years to secure hospital listings and insurance reimbursement,further protracting the timeline.This prolonged process not only delays real-world implementation and inflates development costs but also stifles the opportunity for groundbreaking innovations to make a meaningful impact in healthcare settings.Unclear guidance,inaccessible communication mechanisms and unapproachable channelsA recurring theme in our discussions with startups is the significant challenge posed by the lack of clear guidance,or even access to it.This absence of direction exacerbates the already formidable hurdles faced by emerging companies striving to bring their innovations to market.18 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentThe APAC region presents its own unique set of challenges,characterized by a mosaic of countries each with its own regulatory body and at varying stages of regulatory and market access development.Startups often need to consider global standards such as the U.S.Food and Drug Administration(FDA)or European Conformity(CE)certification for broader market recognition,adding another layer of complexity.Innovation frequently introduces new categories of medical devices that can be difficult for some regions to evaluate effectively.This encompasses artificial intelligence(AI)-integrated innovation that has seen significant growth in the past few years at a speed that outpaces regulatory development.In many countries,regulatory requirements remain unclear and opaque,creating a significant understanding gap between regulatory authorities and startups.This lack of transparency hinders startups from efficiently navigating the regulatory landscape and addressing the necessary requirements for approval.Unlike larger companies that can dedicate market access or regulatory affairs teams to navigate these complexities,startups must rely on their own limited capabilities.The lack of access to effective communication channels with regulatory authorities further compounds the problem.Lack of integrated and targeted supportApproval,market access and payment are typically managed by three distinct authorities,necessitating an integrated regulatory support system across these areas.Without such cohesion,the support provided to startups is effectively diminished.Startups are seeking accelerated approval,faster market listing and reimbursement rates that value the innovation delivered.While there have been some improvements across the region,instances of an integrated system that links these elements are rare.For instance,accelerated approval processes are seldom connected to expedited hospital listings and enhanced reimbursement.The Chinese governments Green Channel policy,designed to accelerate the approval process for medical devices(and described further below),serves as a case in point.Although it is intended to streamline regulatory approval,the lack of corresponding support in the market access and payment sectors often accompanied by increased price pressures diminishes its overall attractiveness to startups.Other challengesWhile these challenges cited by startups(as listed above)are the most prevalent and significant in the APAC region,they are by no means the only hurdles.The areas mentioned have garnered the most attention due to their widespread impact and the incremental improvements seen thus far.19 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentStartups also face increasing pricing pressures,heightened clinical trial requirements and a lack of cohesive industry association connections across the region.These additional challenges complicate market access and stretch limited resources,making the environment particularly daunting for emerging companies.5.1.2.Case studies Case study 1 Chinas Green Channel One notable initiative is Chinas Green Channel,which aims to streamline regulatory approval processes for medical devices.This program provides a fast-track pathway for devices that offer significant advancements or address unmet medical needs within the country.To an extent,the Green Channel has significantly contributed to the surge of innovation in Chinas medical technology sector.Under the Green Channel framework,eligible medical devices benefit from faster review times,simplified application procedures and direct communication channels with regulatory officials.7 These streamlined processes enable innovators to navigate the approval process more efficiently,fostering a conducive environment for medical device development and market entry(see Figure 8).Figure 8:Features and impact of Chinas Green Channel Note:FDA=U.S.Food and Drug Administration;BPOM=Badan Pengawas Obat dan Makanan(Indonesian National Agency of Drug and Food Control);HSA=Health Sciences Authority in Singapore;APAC=Asia-Pacific;PPS=Public Procurement Service in Korea;LKPP=Lembaga Kebakan Pengadaan Barang/Jasa Pemerintah(Indonesian National Public Procurement Agency);GPD=Government Procurement Department in Malaysia;JKN=Jaminan Kesehatan Nasional(Indonesian National Health Insurance);NHIS=National Health Insurance Service in Korea Source:L.E.K.research and analysisKey featuresEligibility criteriaFast-track reviewReview time through the green channel is reduced to an overall period of 60 working days,compared to 90-120 days through the standard pathStreamline proceduresThe program includes simplified application procedures and direct communication channels with regulatory officials,helping innovators navigate the approval process more efficientlyBe Class II/Class III medical devices or IVDs with significant clinical valueOwn valid invention patentsHave China PTO coverageComplete the preliminary study on prototype with traceable dataHave an authorized in-country legal entity Accelerated innovationWith the reduced time to market,the Green Channel promoted rapid deployment of innovative medical technologies,which enhances patient care and address critical health issues more efficientlyCompetitive advantageProducts that go through the innovative Green Pathway can gain a significant competitive edge for sales and marketing and future market competition.Products will also gain more market exposure.Enhanced public healthThe program supports public health initiatives by ensuring that innovative and potentially life-saving medical devices are made available to patients in a timely manner Impact of the China Green Channel20 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentCase study 2 ASEAN Medical Device Directive Beyond China,efforts to harmonize regulatory standards in the region are progressing,exemplified by the ASEAN Medical Device Directive(AMDD).This initiative seeks to establish uniform regulatory requirements among the 10 ASEAN member states,thereby facilitating regional market access.8The harmonization of the regulatory framework for medical devices,as delineated in the AMDD,encompasses various critical aspects.These include,but are not limited to,the definition and classification of medical devices,premarketing requirements,the format for approval dossiers(i.e.,a common submission dossier template),labeling requirements and the postmarketing alert system.9While member states are progressing at different paces in aligning their regulations with the AMDD,as of March 2022,Singapore,Malaysia,Indonesia and Thailand had successfully completed this transition.The remaining member states are making significant strides toward full alignment.10,11To keep up with recent advancements and trends in the medical device space,the ASEAN Medical Device Committee updates the AMDD on a yearly basis.21 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentCase study 3 In mature systems,different authorities are linking up to support innovation Leading countries in the medtech innovation ecosystem have established mechanisms to support innovation through a targeted and integrated system encompassing approval,market access and payment.A critical first step is the clear definition of“innovation”in each market,which serves as a gateway to various forms of support.Leading countries in the medtech field have recognized the importance of this and provided a precise definition of innovation in medical devices(see Figure 9).Clinical value often stands as the cornerstone of this definition,enabling products that meet these criteria to benefit from streamlined market access processes,such as faster approval timelines and prioritized reimbursement listings.22 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentFigure 9:Innovation definition and assessment from example countries Note:NICE=UK National Institute for Health and Care Excellence;CMS=US Centers for Medicare&Medicaid Services;FDA=U.S.Food and Drug Administration;NHS=National Health Service;G-BA=Federal Joint Committee in Germany;NUB=Neue Untersuchungs-und Behandlungsmethoden(New Examination and Treatment Methods)in Germany;MHLW=Ministry of Health,Labour and Welfare in Japan;PLAC=Prostheses List Advisory Committee in Australia;DRG=Diagnosis Related Group;HTA=Health Technology AssessmentSource:FDA;NHS;G-BA;MHLW;PLAC;L.E.K.discussion,research and analysisProvide more effective treatment or diagnosis of life-threatening or irreversibly debilitating human diseases or conditions*USCountryUKDEJPAUNICE-approved,proven,cost-effective,market-ready innovations Innovative medical devices with proven medical and economic needMedical devices with new function classificationBrand-new technologiesOr products with superior clinical performanceCMS defines innovation and provides supportive programs in market access;FDAs breakthrough devices is well recognizedNHS releases list of innovative technologies covered by funding program each yearG-BA develops a comprehensive innovative medical device evaluation process(NUB assessment)MHLW has separate reimbursement classification for medical devices to reflect better pricing for innovative productsPLAC proposes requirement for increased benefit application of innovative medical devices Faster market access to public insurance and higher DRG payment standard Clear definition Emphasize clinical outcome Recognition across FDA and payorsFaster market access with dedicated sourcing of funding for timely updated innova-tive technologies Temporary payment before DRG inclusion with higher payment standardPricing premium for innovative devices through individual evaluation processPricing premium for innovative devices with increased benefit through self-application mechanism A publicly available and annually renewed list of eligible innova-tive technology Assign clear status for innovative devices eligible for funding Set tiered definition of innovative devices and differentiate each by reimbursement Clear criteria for incremental innovation certification with emphasis on clinical outcome Thorough examination by the FDA review team based on clear standards An independent organization(NICE)to provide HTA assessment including clinical and cost-effectiveness assessment NUB assessment process that includes medical and economic need assessment Clinical experts involved Clinical advisory groups involved in review of increased benefit applicationKeydefinitionAssessment and ApprovalBenefitsKey learningsDefinitionAssessment23 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentGiven the challenges discussed above,it is crucial to explore solutions and learn from approaches adopted in other regions to address the regulatory challenges effectively.The U.S.and Germany are examples of how streamlining market access and having a clear definition of“innovation”could benefit the innovative landscape in a country(see Figure 10).United States:The FDA has implemented the Breakthrough Device designation in the registration phase,specifically for devices that meet the“More Effective”criteria,thereby fulfilling the“Substantial Clinical Improvement”requirement in Centers for Medicare&Medicaid Services(CMS)programs.CMS,responsible for reimbursement and payment within the public system,has outlined clear criteria for innovative devices across various supportive programs.These programs facilitate accelerated payer inclusion and recognize the FDA-designated breakthrough device status.12This cross-recognition of innovation definitions has significantly benefited innovative devices,enabling faster market revenue ramp-up and expedited market access.The alignment between FDA and CMS allows for accelerated market entry with temporary charging codes and quicker access to national coverage.Germany:Regulatory authorities issued new evaluation criteria that cover both clinical needs and health economics of innovative medtech,with the goal of providing temporary reimbursement for new treatment.Clearer definition of assessment criteria offers a more streamlined market access process.Moreover,innovative devices are allowed to be excluded from Diagnosis Related Group categorization,providing clinical accessibility for these devices even though they are still in an early or immature stage.1324 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentFigure 10:Case study from the U.S.and Germany on regulatory improvements Note:FDA=Food and Drug Administration;CMS=Centers for Medicare&Medicaid Services;NUB=Neue Untersuchungs-und Behandlungsmethoden(New Examination and Treatment Methods);DRG=Diagnosis Related GroupSource:U.S.FDA;CMS;G-BA;L.E.K.research and analysisUnited StatesGermanyIntroduction of new assessment criteria for innovative medtechGermany has a comprehensive evaluation process(NUB),with criteria covering both clinical needs and health economics,which aims to provide temporary reimbursement for new treatment methodProvisions for DRG exclusion for innovative devicesDRG exclusion programs improve clinical accessibility of innovative medical devices in early/immature stage,and help provide sufficient patient data for accelerating DRG inclusionGovernment cofunding scheme for innovative medical devicesCofunding scheme from the government that is closely linked to the NUB assessment provides support on medtech innovation,particularly the costly ones while ensuring the impact and efficacy of the devicesKey learningsFostering cross recognition of definition of“innovation”between FDA and reimbursement authority simplifies the market access stage and allows innovative products to quickly get acknowledged by public insuranceKey learningsA clearly defined assessment criteria and exclusion from DRG are proven to streamline the market access process for early-stage products;linking assessment with government funding provide a clearer support schemeCross-recognition of innovative definitionU.S.FDA and CMS have an aligned definition of innovative devices,allowing for accelerated market access with temporary charging code and quick access to national coverageU.S.public health coverage authority,CMS,outlines clear criteria for innovative devices in various programs for accelerated insurance inclusionFDA assigns clear definitions and assessment standards for Breakthrough Device Designation(BDD);allowing accelerated registration access5.1.3.Key improvement areasRegulatory authority can be further divided into three main areas:regulatory approval,market access and payment.While closely linked,these areas involve different stakeholders and,therefore,nuances in how each party can contribute to advancing the startup environment.Regulatory approvalRegulatory authorities are responsible for evaluating and granting approval for the commercialization of medical devices.These agencies assess the safety,efficacy and quality of medical devices through a rigorous review process,which is typically conducted by the equivalent of the U.S.FDA in each country.25 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentTo address the challenges posed by the time-consuming approval process,regulatory authorities should implement accelerated approval pathways for devices that represent clinical breakthroughs or meet urgent medical needs.Actions to consider could include:Accelerated approval pathways for innovation:Establish accelerated approval pathways for breakthrough and high-clinical-need medical devices to expedite market entry and patient access.Enhanced awareness:Improve education channels through the development of comprehensive materials and a robust process tracking system to ensure transparency and efficiency.Communication mechanisms for startups:Establish pre-and in-process communication mechanisms specifically for innovative startups,providing them the support and guidance they need to navigate regulatory landscapes.Especially for some first-in-class devices,preprocess communication with the authority is essential in order to build a more efficient cycle.APAC cross-recognition:Initiate the cross-recognition of clinical trial data and registration within the region to enhance efficiency and reduce the burden on startups.Global connections:Implement clear guidelines and align local regulations with international standards(such as FDA and CE)to streamline approval processes and reduce redundancy.Market accessHospital management authorities and government procurement authorities are key stakeholders in granting market access for medical devices.These agencies are responsible for listing devices in hospitals and conducting public tenders,ensuring that the devices are available for patients in need.To address the challenges in market access,actions to consider could include:Fast-track access programs:Implement fast-track access programs for hospital listings,including rapid evaluation and reimbursement support,to accelerate the adoption of innovative medical devices.Refined listing criteria:Refine the listing criteria for public tenders to prioritize innovation and clinical impact over cost alone,ensuring that groundbreaking technologies receive the recognition and support they deserve.Encouragement of early adoption:Foster early adoption by hospitals to facilitate easier validation and real-world testing of new technologies,thereby accelerating their integration into healthcare systems.PaymentThe last stage of obtaining market access is to gain reimbursement listing in public insurance schemes.And it is one of the most important steps,as the listing determines what the company will be paid.Actions to consider could include:26 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment Aligned approval and payment:Synchronize regulatory approval processes with reimbursement mechanisms to ensure that products are quickly listed for reimbursement once approved,streamlining the pathway from approval to market access.Value-based pricing:Implement value-based pricing and outcome-based reimbursement models that incentivize innovation,rewarding new technologies that demonstrate high effectiveness and efficiency.To ensure that innovation is compensated distinctly from commodity products and that investment in innovation is appropriately rewarded,it is crucial to sustain a viable return on innovation.5.2.Governments:funding and incentives fueling the medtech innovation engineGovernment funding and incentives,while often not the primary source of growth financing for startups due to their project-based nature,lengthy processes or modest amounts,can nonetheless serve as valuable complements to private-sector funding.Such support also offers credibility and government endorsement,which can be instrumental in building a startups image.In the current climate,where external funding from investors is slowing down,such government funding and incentives are crucial in propelling the medtech innovation ecosystem forward and stimulating research,development and commercialization of medical technologies.Government support can manifest in various forms,including:Direct funding/investment:Support for the development of startups through direct investments or grants,or even partial ownership Indirect funding:Includes grants,tax incentives and subsidies that can alleviate financial pressures and encourage continued innovation Nonfinancial incentives:Talent development programs and infrastructure support schemes that help build a robust ecosystem for innovationSeveral governments in APAC have launched noteworthy initiatives to support the ecosystem.For instance,both Singapore and South Korea have dedicated startup grants with a specific focus on healthcare innovation.These countries also provide various incentives to support the operations of these innovative companies,fostering an environment where medtech startups can thrive(see Figure 11).27 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentFigure 11:Government funding and incentives in Singapore and South Korea Note:IP=intellectual property;RIE=Research Innovation&Enterprise Grants;NRF=National Research Foundation;CDG=Capability Development Grant;BMS-IDF=Biomedical Sciences Industry Development Fund;RISC=Research Incentive Scheme for Companies;PIC=Productivity and Innovation Credit Scheme;JTC=Jurong Town Councill;NRF=National Research Foundation of Korea;MSIT=Ministry of Science and IT of South Korea;KDDF=Korea Drug Development Fund;KIAT=Korea Institute for Advancement of Technology;JHU=Johns Hopkins UniversitySource:Government databases;organization websites;L.E.K.research and analysisTypes of incentivesDirect fundingIndirect fundingNon-financial incentivesSingaporeEnterprise SG,SG InnovateNRF,A*Star,RIECDGIDFRISCPIC,Enterprise Development GrantsBMS-Workforce skills qualificationEntrePassIncubator and accelerator programsJTC-Biomedical HubN/AStartup Korea,Biotech Startup FundNRF,MSIT grant,KDDFN/AMSIT investment in medtech and biopharmaTax incentives and R&D preferred tax credit ratesN/AKIAT,JHU Cooperation CenterE-7 special ability visaIncubator and accelerator programsBuilding of national biofoundryStrengthening of IP lawStartup grantsResearch grantsOperational funding supportGovernment affiliated investmentR&D tax incentivesTraining grantsTalent developmentTalent specific visasIndustry partnership programInfrastructure support schemesOthersSouth Korea28 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentThe effectiveness of these governments support extends beyond just the comprehensiveness of the assistance;the substantial amount of financial backing provided is equally crucial.For example,the Singapore government demonstrates a strong commitment to fostering innovation within the medtech ecosystem by offering financial support for startup and research programs,with grants ranging from USD 180,000 to USD 370,000 per program.Given the size of the companies operating in Singapore,this level of financial backing represents a powerful signal that the government is actively fostering a supportive and thriving ecosystem.Such substantial funding helps lower the barriers for startups and research entities,enabling them to advance their innovations and scale their operations effectively.More important,much of this funding is nondilutive,meaning that startups do not need to give up equity to receive these incentives.This feature is particularly valuable to emerging companies,as it allows them to retain control over their ventures while benefiting from government support.5.2.1.Medtech startups challenges in accessing government incentivesHowever,startups still face several challenges when accessing such government funding and incentives.Direct fundingLimited scale of direct funding support:Different governments will typically have different budget focus areas,depending on the development level of the country and national priorities.Even then,government funding for innovative products,particularly in the medtech industry,is still lacking in many countries in the region,which hampers startups ability to scale,especially since external funding sources are declining.Limited flexibility in funding mechanisms:Predominantly,government funding is project based,with milestones established prior to agreement finalization.However,startups often face numerous uncertainties and emergencies,necessitating adjustments to these milestones.In some cases,overly rigid milestones can be the bootstrap of development progress.Lengthy application processes:Funding and incentives from government often involve lengthy applications and multilevel approvals from various authorities,making it long and tedious for startups to access the support.Moreover,incentives from government are not always clearly outlined,with many requiring case-by-case assessments,which makes the process opaque and unpredictable for the startups.Additional requirements from government:Government funding often carries additional requirements beyond financial returns,such as stringent IP stipulations and tax considerations.These mandates can impede startups ability to innovate and scale,potentially dissuading them from pursuing government funding altogether.29 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentIndirect funding and nonfinancial incentivesLimited relevance of indirect funding to startup companies:Indirect funding typically arrives as a reward after commercialization,rendering it less pertinent to early-stage innovations.For instance,tax incentive schemes,though prevalent in many countries,may not benefit non-revenue-generating startups that lack chargeable income.Common mechanisms that use eligible expenses to offset chargeable income are less impactful and less appealing compared with refundable tax offset systems,such as those in Australia (see Figure 12).Figure 12:R&D tax incentive comparisons between Singapore and Australia Note:EIS=Enterprise Innovation SchemeSource:IRAS;EY R&D global tax guide;L.E.K.research and analysisSingaporeAustraliaOverview of R&D tax incentivesR&D expenditure coverage Tax incentive schemes Under the EIS R&D tax incentive scheme,Singapore provides a 100%tax deduction for in-house R&D conducted wholly in Singapore:Additional 300%tax deduction on the first USD 298K on staff costs(excluding directors fees)and consumables Additional 150%tax deduction on the balance of qualifying R&D expenditure over USD 298K Refundable tax offset at corporate tax rate of the entity(25%-30%)plus an 18.5%premium for entities with an aggregated turnover of less than USD 13.5M Nonrefundable tax offset at corporate tax rate plus an incremental premium of 8.5%-16.5%(based on the companys R&D intensity)for entities with an aggregated turnover of USD 13.5M or more No cap on amount of eligible R&D expenditure Convert up to USD 74.5K of the total qualifying expenditure into cash at a conversion rate of 20%Reduced corporate tax rate of 5%or 10%on qualifying IP Tax deduction of 400%on the first USD 298K expenditureMore attractive mechanisms in Australia Only those activities performed in Singapore are eligible for the enhanced deduction However,qualifying R&D expenditures associated with overseas activities are eligible for a 100se R&D deduction For outsourced R&D payments,60%of the costs are deemed as qualifying expenditure unless otherwise justified All activities performed outside Australia are also eligible for the enhanced deduction Annual R&D expenditure must exceed USD 13.5K Phase IV trials only eligible if they are being carried out as experiments for the purpose of resolving further medical research Convert entire tax offset,i.e.,25%-30%,plus the premium as cash The cap for eligible R&D expenditure is USD 99.5M per year,with no cap on the amount of refundable R&D tax offsetCap for eligible R&D expenditureClinical trial costsStaff costsConsumablesEligibility requirementsCash refund optionIP registration,licensing and acquisition 30 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.2.2.Key improvement areasThe way forward in addressing the improvements needed in government funding and grants is a complex topic,as it varies significantly across different regions and grant types.Below are some key areas for improvement,with more detailed suggestions requiring targeted analysis.Holistic support for innovation:To maximize the impact of direct funding,governments should adopt a proactive stance in supporting the startups they invest in.Beyond financial returns,governments can leverage their authoritative position to offer additional support,such as assistance with clinical trials and preferential market access.Mechanism and process optimization:Governments should enhance indirect funding and nonfinancial incentives by tailoring their mechanisms to better meet the evolving needs of startups.This includes balancing governmental key performance indicators(e.g.,employment,tax revenue,efficient funding use)with the actual needs of startups,such as timely support and flexible terms.5.3.Universities and research institutions:nurturing the seeds of innovationUniversities and research institutions can also support the innovation ecosystem through their contribution in research capability and as a knowledge source.These institutions also serve as incubators for talent and innovators.Many innovative products were developed at universities and research institutions,often in collaboration with medtech providers and other industry stakeholders.Though many campuses have started to provide dedicated support for innovations,some barriers still persist in supporting medtech innovation.5.3.1.Barriers to supporting medtech innovationConcerns about IP ownership:Collaborating with universities in innovation endeavors often sparks concerns regarding the ownership of IP.Given the diverse contributions from multiple parties involved in the development process,disputes over IP ownership can emerge,potentially hindering the advancement and commercialization of new technologies.Concerns about talent leakage:When universities engage in collaborations with startups,they often face concerns about talent poaching,fearing that such partnerships could deplete their intellectual capital and hinder their own research endeavors.Resource constraints:Universities often have limited funding,infrastructure and personnel that they can allocate to support extensive research projects.Moreover,universities might not have a lot of flexibility in deploying their resources,as the funding decisions often involve multiple stakeholders.31 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentLack of understanding about commercialization:The expertise of university professors and researchers is focused on research and academic pursuits,and thus they often lack the business skills required for successful product commercialization.5.3.2.Case studies of university-backed medtech innovation fosteringSeveral university-backed schemes in the U.S.offer exemplary programs to foster innovation.For example,the University of California,San Francisco(UCSF)Clinical&Translational Science Institute offers support throughout the development and commercialization journey of innovative medtech devices to facilitate the transition from research to market.14 This includes technology validation,clinical trial operational support,provision of regulatory guidance and,through UCSF Innovation Ventures,advisory for commercialization strategies.Eko Devices,a medtech company developing devices to detect cardiovascular and pulmonary disease,is an example of the many startups that have undergone clinical validation at UCSF.Stanford Universitys Biodesign Program provides a combination of coursework,hands-on projects and mentorship from industry experts to accelerate the development of innovative medtech products.These include fellowship programs that offer rigorous support in identifying innovation opportunities and their translation into products,and also hands-on training and mentorship programs(such as the Invention Accelerator Program)to give guidance from early preclinical/clinical testing all the way to business model development.Biodesign moreover offers numerous grants(e.g.,Spectrum Medtech Grants for up to USD 50,000 for one year)to further support the realization of innovative products.Successful medtech startups such as Auris Health,iRhythm Technologies and Earlens have emerged from this program.15Within the APAC region,Kyoto University Innovation Capital(Kyoto-iCAP)is a venture capital firm with 100%investment from Kyoto University that supports the development and commercialization of innovative seeds in numerous sectors,including medtech.Specifically,through the two schemes offered(ECC-iCAP and EIR-iCAP),select researchers can obtain hands-on support from experienced entrepreneurs leading mentorship and training programs to accelerate and ensure a successful product development and commercialization pathway.16 Kola-Gen Pharma,developing devices for ophthalmic disorders,and Cleanhearing,developing a tinnitus treatment system via electromagnetic and acoustic stimulation of the cerebral cortex,are examples of the many startups that have emerged from Kyoto-iCAP.5.3.3.Key improvement areasIn the rapidly evolving landscape of medtech innovation,universities play a pivotal role in enhancing the ecosystem.By providing support in research and development,fostering talent,facilitating knowledge transfer,and building strategic partnerships,universities serve to significantly contribute to the growth and success of medtech startups.These institutions offer a wealth of resources and expertise that can help startups navigate the complex journey from concept to commercialization(see Figure 13).32 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentR&D support:Universities can enhance the medtech innovation ecosystem by establishing dedicated research centers and labs.Universities can also connect startups with subject matter experts to enrich research quality and facilitate real-world testing,offering access to clinical facilities and valuable feedback for refinement.These initiatives enable startups to allocate resources more efficiently,access specialized knowledge and validate their technologies in practical settings.Talent development:Mentoring workshops focused on problem-solving and fostering an entrepreneurial mindset among innovators are beneficial for startups in navigating the business environment.Moreover,universities can develop upskilling courses targeted to innovators that address the evolving needs in the industry.Knowledge transfer:Since universities have access to faculties and capabilities from various areas,developing interdisciplinary programs that combine medicine,engineering and business will be highly beneficial in equipping innovators with the diverse skills needed for medtech innovation.Many universities also have incubation programs that offer product and business development support for startups.Fostering of partnerships:As reputable and established institutions,universities have the capacity to initiate collaborations between startups and hospitals,medtech companies and other industry stakeholders.This could be done through organizing conferences and networking events that connect startups with potential investors and collaborators.Figure 13:Universities role in enhancing the ecosystem Source:L.E.K.research and analysis Establish dedicated research centers and labs so startups can spend lower cost on lab rentals Provide expertise and resources in research by linking startups with subject matter experts in the university Assist in facilitating real-world testing and providing feedback As an established institutions,universities have the capability to promote collaborations with hospitals,medtech companies,and businesses to collaborate with startups Organize conferences and networking events to connect startups with potential investors and collaborators Develop interdisciplinary programs that combine medicine,engineering,and business to equip innovators with diverse skills needed for medtech innovation Create incubation programs that can offer product development and business development support Offer mentoring workshops that promote problem-solving and innovation in medtech Foster entrepreneurial mindset among innovators to better navigate the business environment of life sciences innovation Develop courses for upskilling that matches the current needsR&D supportTalent developmentUniversities role in enhancing the ecosystemKnowledge transferFoster partnership33 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.4.Large medtech firms:catalysts of innovation in a challenging market5.4.1.Large medtech firms role in enabling innovation ecosystemsIn the dynamic landscape of the medtech industry,large medtech companies serve as pivotal stakeholders,driving the innovation ecosystem forward.Amid a notably subdued private market and an equally quiet initial public offering(IPO)market,these industry giants have emerged as the predominant exit channels for numerous startups.Concurrently,large medtech companies are ardently striving to enrich their product pipelines with cutting-edge innovations,recognizing the unparalleled potential of large medtechs commercialization capabilities.To harness the full spectrum of innovation,large medtech companies deploy a variety of strategies within the buy-and-build paradigm(see Figure 14).These include developing greenfield strategies,such as establishing innovation centers,as well as forming joint ventures and engaging in M&A.Several notable examples highlight the involvement of large medtech companies in the regions innovation ecosystems,showcasing their commitment to fostering technological advancements and supporting burgeoning startups for innovation,to best reap the full potential of the commercialization arms.Figure 14:Participation of large medtech firms in innovation in APAC Build strategyBuy strategyBuild strategyIncubator ProgramsJoint VentureMinority investmentLicense in/license outM&ABuild innovation centers in APACSelected examples(medtech corporates often engage in strategies across the spectrum)Create incubator and foster innovationsForm JV to collaborate on new technologies Invest in innovative medtech players,and position for M&AUse licensing structure to capture local marketExecute merger and acquisition transactionsNote:APAC=Asia-Pacific;JV=joint ventureSource:L.E.K.research and analysisPhilipsBoston ScientificOlympusJohnson&JohnsonMicroPortNDR Medical TechnologyGenesis MedTechShockwave MedicalMedtronicDK Medical TechnologyWEGOMedtronic IceCure MedicalBoston Scientific M.I.TechWeve observed a recent trend of large medtech firms exploring different types of investment in the APAC region.Here are a few examples of their involvement in the medtech innovation ecosystem.34 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment“Buy”strategy Strategic investment in innovation enterprises:Examples include Medtronic Chinas launch in May 2023 of a Phase II fund intended for innovative medtech diagnostics/therapeutics for cardiovascular and neurological diseases Acquisition of innovation enterprises:Examples include 1)Boston Scientifics USD 230 million majority-stake acquisition in June 2022 of M.I.Tech,a Korean startup focused on endoscopic and urologic procedures,and 2)Boston Scientifics USD 523 million majority-stake acquisition in December 2022 of Acotec Scientific,a Beijing-based startup focused on cardiovascular treatment devices Cooperation with innovation enterprises:Examples include Strykers collaboration in November 2022(undisclosed deal value)with Novelbeam Technology,a Chinese startup developing optical instruments,for the accelerated joint development of an endoscopic camera system(expected development timeline reduction of 30 months)“Build”strategyHowever,as mentioned above,buying has slowed in recent years with fewer M&A deals and investment in the region.Even so,large medtech companies can support the ecosystem by building innovators and incubator programs.Top global medtech companies have established their R&D capabilities in APAC,mostly in China,Singapore and India (see Figure 15).Figure 15:Top 10 medtech multinational companies*and their R&D/innovation centers in APAC*Based on FY2022 revenueNote:APAC=Asia-PacificSource:Company websites;company annual reports;L.E.K.research and analysis1358China,Singapore R&D/innovation centersChina,Singapore R&D/innovation centersChinaR&D/innovation centersChinaR&D/innovation centersIndiaR&D/innovation centersIndia,ChinaR&D/innovation centersIndia,ChinaR&D/innovation centersChina,India,JapanR&D/innovation centersChina,SingaporeR&D/innovation centersIndiaR&D/innovation centersxNumber of innovation/R&D centers in top 10 medtechMedtronicAbbottJohnson&JohnsonSiemens HealthineersGE HealthcareStrykerCardinal HealthPhilipsBoston ScientificBD35 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.4.2.Barriers hindering large medtech company investments in APACDespite the burgeoning innovation development trends in the region,investment in medtech remains notably lower compared with that in the United States and Europe.Data reveals that mergers and acquisitions in the APAC region have consistently accounted for only 10%-15%of the global deal value over the past three years(see Figure 16).This significant disparity prompts critical examination:Why does the region lag in medical technology investment,and what can be done to address this imbalance?Figure 16:Medtech M&A deal value,by region Note:APAC=Asia-PacificSource:GlobalData;L.E.K.research and analysis0102030405082%5019201977!72#USAPACOthers5%Medtech M&A deal value,by region(2019-23)USD billionBased on discussions with medtech leaders in the region,we have identified several challenges and barriers to investment(see Figure 17).Here are some key insights:Limited market size due to narrow geographical focusMany medtech products developed in the APAC region are primarily designed with a focus on the home market,often overlooking the broader regional and international markets.Given the fragmented nature of the APAC region,it is typically challenging for startups to target multiple countries simultaneously.As a result,many startups choose to concentrate on their home markets,where the founders have a greater familiarity and established networks.Startups in the APAC region face additional hurdles when attempting to enter global markets.These challenges include navigating a complex array of regulatory environments,addressing IP concerns and making the substantial investments needed to meet international standards.The regulatory and compliance requirements can vary significantly from one country to another,creating a formidable barrier for companies looking to expand beyond their local markets.36 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentConsequently,APAC startups,unless they have demonstrated significant success and capability in the U.S.or EU markets,are often not the top priority for mergers and acquisitions when large medtech companies consider strategic investments.The difficulties associated with international expansion and the relatively narrow focus on regional markets can make APAC startups less attractive as acquisition targets compared with those with established footprints in more mature markets.Emphasis on achieving commercial success vs.addressing unmet needs The pressure to deliver quick returns on investment,coupled with limited resources for high-risk ventures,often drives medtech acquirers to prioritize products with established market demand.This emphasis on achieving commercial success and rapid profitability frequently overshadows the pursuit of innovative solutions that could address critical gaps in healthcare.Heavier focus on“me-too”products over innovationIn the APAC medtech sector,there is a significant focus on me-too products rather than on groundbreaking innovations.Such products,which are essentially variations of existing technologies,are often preferred due to their lower development risks and reduced research and development costs,given that the core technology has already been validated.These products generally compete on price,offering more cost-effective solutions for healthcare providers and patients.The price-centric nature of me-too products makes them particularly attractive to large medtech companies investing in the APAC region.By focusing on products that can achieve immediate market acceptance and cost-efficiency,companies can mitigate the financial risks associated with higher-risk innovations.This approach,while providing quick market entry and financial returns,often diverts attention away from pioneering,high-risk innovations that could potentially address more significant gaps in healthcare but require longer development timelines and greater investment.Lower return on investmentHistorically,the return on investment for medtech deals in the APAC region has been lower compared with that of other regions.The median revenue multiple for medtech transactions in APAC is approximately 5.0 x,whereas in the United States it was around 8.3x for the period from 2019 to 2023.This disparity can be attributed to several factors,including the immaturity of capital markets,stringent price controls on healthcare expenditure and,crucially,a tightening exit channel within the APAC region.In addition,the exit options for medtech investments have traditionally been through IPOs or strategic investments.However,recent market conditions,such as the crackdown on Chapter 18A companies on the Hong Kong Exchange,have made the IPO route increasingly challenging.Furthermore,strategic investments have historically not been a major channel for exits,contributing to a more constrained investment environment.These developments 37 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investmentcast a shadow over the prospects for medtech innovation in APAC,as they limit the avenues available for realizing returns on investments and raise concerns about the overall investment climate in the region.Limited communications between startups and large medtech companies in APACBeyond the fundamental market dynamics and product-related factors,a more subtle but significant challenge is the communication channel between startups and medtech companies.This challenge manifests in two primary areas:ensuring conversations are held with the appropriate stakeholders,and achieving efficiency in these discussions to align with both parties needs.Innovators frequently encounter difficulties related to pace,trust and commitment of resources when collaborating with larger corporations.These issues often arise from a lack of understanding of each others needs during discussions.Innovators may perceive that their concerns are not adequately addressed,leading to inefficiencies and frustration.Effective deal-making in APAC medtech requires engaging the right decision-makers,as key decisions often rest with global headquarters.Building strong relationships and aligning with HQ priorities are crucial steps.Additionally,the negotiation process can be slowed by back-and-forth discussions between regional and global HQs,highlighting the need for more efficient communication.Figure 17:Startups views on barriers to partnership with corporations Note:IP=intellectual propertySource:L.E.K.Consulting and Galen Growth Digital Health Index Survey;L.E.K.research and analysisSlow processTrust(e.g.abuseof power imbalance)Lack of accessto resourcesInitiationAlignment of goalsDifferences inorganizational cultureContracts andnegotiations(IP issues)29%7%Percentage of respondents indicating as the top 3 barriers38 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.4.3.Key improvement areasBuilding a success story in APACFor the ecosystem to support and build a compelling success story in the APAC medtech sector,it is essential to focus on creating and demonstrating tangible value.This involves showcasing successful case studies and innovations that have made a significant impact within the region.Highlighting achievements such as successful product launches,effective market penetration strategies,and positive outcomes for healthcare providers and patients can enhance credibility and attract interest from potential partners and investors.Establishing a track record of success helps build trust and serves as a powerful testament to the effectiveness and potential of medtech innovations in APAC.Leading medtechs in the APAC region play a crucial role here.They can accelerate start-ups market access by leveraging their industry expertise and extensive networks.Additionally,they serve as strategic connectors between regional successes and global headquarters,effectively transforming local achievements into compelling global narratives that underscore APACs innovation potential.Steering startups through complicated international marketsStartups aiming to expand beyond their local APAC markets must effectively navigate the complexities of international markets.This involves understanding and addressing diverse regulatory requirements,IP concerns and market entry strategies tailored to each region.Providing startups with guidance and support on these aspects can facilitate smoother market entry and reduce barriers to global expansion.Leveraging local expertise and forming strategic partnerships with regional stakeholders can also help startups overcome challenges and successfully penetrate new international markets.Establishing efficient communication forums in APACDeveloping efficient communication channels is crucial for fostering collaboration between startups and medtech companies.Establishing dedicated forums and platforms for dialogue can enhance the exchange of information and align expectations.These forums should facilitate direct interactions with key decision-makers and stakeholders,ensuring that conversations are productive and address both parties needs.By creating structured and transparent communication pathways,both startups and medtech companies can better understand each others goals,build trust and develop mutually beneficial partnerships.39 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment5.5.Investors(family offices):fuel for the engineAs of 2023,roughly 19%of the 20,000 family offices globally are located in APAC,17 and their growth in number is expected to generally outpace that of the rest of the world,largely due to the expected increase in ultra-high-net-worth individuals(those exceeding USD 30 million in net worth)in China(88,000 in 2022 to 132,000 in 2027)and India(12,000 in 2022 to 19,000 in 2027).18 Overall investment flowing to the APAC region is also expected to increase in the next five years.19 Currently,only roughly 17%of family offices have their largest regional allocations in APAC,but 35%have suggested they will increase their investments in APAC due to its growth potential and sectorial opportunities,particularly in technology(e.g.,AI,healthtech).Given the recent decline in medtech startup investment from traditional investors(i.e.,private equity and venture capitalists),the growth of and interest from family offices presents an opportunity for medtech startups.However,given the limited involvement of family offices within the healthcare and medtech sector and the associated high risk,there are certain barriers that must be overcome.5.5.1.Challenges facedLimited awareness of the forefront of healthcareFamily offices are typically known to operate in traditional investments,including publicly traded stocks,bonds and real estate.While these may include healthcare companies,it is likely their awareness of novel medtech startups is limited such that the emergence of a promising startup will go unnoticed.20Limited expertise in healthcare and medtechThe medtech sector is considered a highly convoluted field,with its stringent regulatory requirements and constantly evolving treatment landscape.Especially when it comes to evaluating which medtech startup to invest in,there is a need to thoroughly understand the products clinical value proposition,how it is differentiated from its competitors and how it addresses unmet needs,which poses a high barrier of entry for family offices with limited experience.40 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentReduced appetite for high-risk investments among APAC family officesHistorically,Asias family offices had a bigger risk appetite due to a low-interest-rate environment and high expectations of Chinas post-COVID-19 recovery.However,reduced performances from notable Asian stocks(including a reduction of around 15%in Hong Kongs Hang Seng index in 2023 and around 13%in Chinas CSI 300 Index),due to increased geopolitical risks and economic uncertainty,have left investor risk appetite somewhat stagnant.21 In contrast,the strong performances recorded by the S&P 500 and the STOXX 600 in the U.S.and the EU,respectively,have boosted the risk appetite of family offices in these respective regions.As such,there may be greater hesitation,at least in the short term,to invest in medtech startups,especially in the Asia/APAC region.5.5.2.Improvement areasAdequate education and onboarding of expertsGlobally,family offices are increasingly seeking to hire personnel with specialized knowledge in specific sectors to make more informed investment decisions.Due to the family office area being less mature in APAC,the demand for heightened professionalism in APAC is more prominent compared with the rest of the world(32%vs.25%,respectively,responded to increasing such hires).22 Through appropriate education on the importance of and opportunities within the healthcare sector,and within medtech in particular,family offices in APAC may be more keen to prioritize hiring personnel with in-depth medtech expertise,fostering an environment that is more conducive to investing in medtech startups.Establishing introductory forums in APACThe medtech startup space is predominantly financed by traditional investors,resulting in forums targeting and being tailored to their interests,and limiting the opportunities for family offices to take part.Creating a platform for medtech startups to interact with and communicate their vision and their products value proposition to family offices will increase not only awareness but also the chances of investments from family offices.5.6.Industry associations and accelerators:a unified voice for innovationIndividual startups,due to their size and limited resources,often struggle to have their concerns recognized by policymakers and industry leaders.This lack of influence can leave many startups feeling unheard,as they typically lack the dedicated government affairs or external relations staff necessary to effectively communicate their needs to the appropriate authorities.41 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentTo create a more supportive environment for these emerging companies,industry associations and accelerators must take on the role of powerful advocates.It is imperative that these organizations not only amplify the voices of startups but also champion their causes on a larger scale,ensuring their concerns are given the attention they deserve.When startup companies unite under the banner of an industry association,their collective voice can carry significant weight.Industry associations are uniquely positioned to gather insights directly from startups,gaining a deep understanding of their specific challenges and needs.By acting as a cohesive and representative voice,these associations can advocate for the systemic changes necessary to foster a more favorable ecosystem for innovation.Accelerators,meanwhile,are deeply embedded in the startup journey,working closely with companies during their most formative stages.This proximity grants them an unparalleled understanding of the obstacles that startups face,from regulatory barriers to challenges in market access.As both observers and active participants in the innovation ecosystem,accelerators are positioned to identify industrywide challenges and offer strategic,actionable solutions.Their role goes beyond providing mentorship and funding;they are also well suited to advocate for broader changes that will benefit the entire startup ecosystem.In conclusion,the path to a robust startup ecosystem lies in the collective efforts of industry associations and accelerators.These organizations must evolve from supportive partners into vocal leaders,ensuring that the needs of startups are not only heard but also acted on and driving the changes necessary for sustained innovation and growth.5.7.Startup companies:the basis of ecosystemsLast but not least,medtech startups themselves are pivotal in enhancing the APAC innovation ecosystem.By actively engaging and collaborating within the ecosystem,these startups not only advance their own innovations but also contribute to the overall growth and development of the sector.Their proactive involvement helps build a stronger,more dynamic medtech landscape in APAC.It is no exaggeration to say that startups are typically at the forefront of innovation,especially with their ability to take greater risks than established companies in the field.However,several factors are key for a startup company to be successful,as we heard directly from ecosystem stakeholders during our research.42 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentPursuing the“right”innovation that addresses unmet needsStartups often fall short in thoroughly understanding the nuanced unmet needs of the healthcare market,which inevitably leads to underwhelming products.To mitigate this,it is crucial to conduct thorough market research and engage with relevant stakeholders(e.g.,senior clinical advisors or large medtech companies)to understand the markets unmet needs and where innovation is heading.Defining a clear product value propositionAmbiguity in product value proposition often leads to challenges in securing funding/partnerships and hinders product adoption after launch.As such,it is pivotal for startups to clearly define and articulate the clinical value of their product and how the product is distinguished from its competitors.Having a clear product development pathway Many startups encounter challenges due to the lack of strategic planning and defined milestones,which results in delays and inefficiencies.To mitigate this,newer startups should follow examples of historically successful,more experienced startups to implement structured roadmaps that outline key objectives and timelines.Initiating active communication Regardless of how innovative the product may be,the lack of effective communication from startups with key stakeholders will undermine the products potential.Communication with ecosystem stakeholders is crucial throughout the entire journey,from research and design to testing and commercialization.Startups should not passively wait for these stakeholders to engage;instead,they must proactively establish and maintain these communication channels.43 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem Investment6.Recommendations for implementationsA.Regulatory authoritiesChallenges highlighted by innovation communityPotential areas of development A4.More streamlined and flexible processes are needed to accelerate the real-world implementation of innovation,reduce development costs,and create more opportunities for groundbreaking advancements A5.Clearer guidance,more accessible communication mechanisms and approachable channels are essential to help startups more effectively navigate the complex regulatory landscapeA6.Enhancing integrated and targeted support particularly in a landscape where approval,market access and payment are managed by separate authorities can significantly improve startups ability to successfully commercialize their productsRegulatory approval Develop accelerated approval pathways for breakthrough and high-need medical products Improve communication through comprehensive materials and a robust process-tracking system,which will provide greater transparency and efficiency Establish pre-and in-process communication mechanisms for innovative startups,and provide support and guidance to navigate regulatory landscapes Initiate cross-recognition of clinical trial data and registration between APAC jurisdictions to enhance efficiency and reduce the burden on startups Implement clear guidelines and align local regulations with international standards(e.g.,U.S.FDA,EU CE)to streamline approval processes and reduce redundancyMarket access Allow fast-track access programs for hospital listings,including rapid evaluation and reimbursement support Refine the listing criteria for public tenders,focusing on innovation and impact rather than just costs Encourage early adoption by hospitals to foster easier validation of new technologies and real-world testingPayment Align regulatory approval and payment/reimbursement mechanisms to ensure quick listing for reimbursement upon approval Implement value-based pricing and outcome-based reimbursement models that incentivize innovation,rewarding new technologies that demonstrate high effectiveness and efficiency44 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentB.GovernmentsChallenges highlighted by innovation communityPotential areas of development Direct fundingB1.Direct funding support is crucial for medtech companies to successfully scale upB2.Some rigidity in funding mechanisms,which at times could be the bootstrap of the development processB3.Lengthy application processes,preventing timely access to government funding B4.Additional requirements(e.g.,local employment or manufacturing)along with investment,impeding startups ability to innovate and growIndirect funding and nonfinancial incentivesB5.Limited relevance of indirect funding to startups,as the funding is often awarded after commercialization,rendering it less pertinent to early-stage innovations Provide holistic support for innovation to maximize the impact of direct funding;establish“medtech office”format agency to coordinate all government agencies that provide funding Enhance indirect funding and nonfinancial incentives by tailoring mechanisms to the evolving needs of startupsC.Universities and research institutionsChallenges highlighted by innovation communityPotential areas of development C1.Intellectual property(IP)ownership concern due to involvement of multiple stakeholders,which may cause disputes and hinder the progress of innovation C2.Concern about talent leakage from the university,which may result in reduced willingness to collaborate with startupsC3.Resource constraints,in that universities may not be able to allocate resources to support extensive research projects,as they are struggling with limited funding and personnelC4.Lack of understanding about commercialization among university professors and researchers due to their devotion to research and academic pursuits,reducing the likelihood of product success Provide R&D support by establishing dedicated research centers and connecting startups with subject matter experts to enrich research quality and facilitate real-world testing Foster talent development by offering mentoring workshops to better navigate the business environment and innovation landscape Foster knowledge transfer by developing interdisciplinary programs to equip innovators with the diverse skills needed for medtech innovation Foster partnerships between startups and relevant stakeholders by organizing conferences and networking events45 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentD.Large medtech firmsChallenges highlighted by innovation communityPotential areas of development D1.Limited market size of startups,as the fragmentation of the APAC region(e.g.,market access)inevitably causes startups to limit their geographical focusD2.Assets emphasis on achieving commercial success(vs.addressing unmet needs),due to pressure to deliver quick returns and limited resources among startupsD3.Overweighting toward“me-too”products instead of innovative products,as the core technology(having already been validated)reduces development risks and R&D costsD4.Lower return on investment compared with the U.S.due to the immaturity of capital markets,stringent price controls and a limited exit channel within the APAC regionD5.Limited communication channels between startups and multinational companies(MNCs)HQs,resulting in misalignments regarding startup offerings and MNCs investors pursuits Build a success story in APAC by highlighting achievements(e.g.,successful product launches)in order to enhance credibility,attract interest from potential partners and serve as a powerful testament to the potential of medtech innovation in APAC Steer startups through complicated international markets by providing guidance and support on regulatory requirements,IP concerns and market entry strategies Establish efficient communications forums for startups to effectively exchange information and align expectations with those of relevant stakeholdersE.Investors(family offices)Challenges highlighted by innovation communityPotential areas of development E1.Generally weak familiarity with the leading edge of healthcare technology and care deliveryE2.Limited expertise in healthcare and medtech,preventing funds from thoroughly assessing the potential of and making an informed judgment on investment in a productE3.Reduced appetite for high risk investments among APAC family offices due to increased geopolitical and economic uncertainty Adequately educate family offices on the importance of and opportunities within the medtech sector,to prompt the onboarding of personnel with in-depth medtech expertise Establish introductory forums in APAC to provide startups an opportunity to communicate their vision and product value proposition to family offices 46 APACMed|L.E.K.ConsultingTOPFueling the APAC Medtech Innovation Engine:An Ecosystem InvestmentF.Industry associations and acceleratorsIndustry associations and accelerators must step up and champion the ca
2024-09-29
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Digital healthcare:the new frontier Upgrading healthcare systems in a digitally-driven,post-pandemic world2.While the pandemic isnt behind us,it has gone on long enough that many of us now know how to make homemade bread.And in this post-pandemic-ish world,staff shortages as well as technological innovations are at an all-time high.The pandemic accelerated the healthcare industrys path towards digital transformation and improved consumer healthcare.Since we are in no need of a breadmaking guide as we have all been sorted into expert makers or expert eaters we will be navigating the ins and outs of digital healthcare:How do you build a solid foundation for digital transformation in healthcare?Digital transformation is an ongoing effort with no true end state.But if your consumers arent pleasantly surprised by the outcome,youve missed the mark.Well look at Christus Health and Penn Medicine as leaders in the space.What are other hospitals and healthcare systems doing and how can you get inspired to improve?Well look at telehealth and explain why reexamining the post-pandemic changes in the retail world can once again provide inspiration and guidance for healthcare systems.And,of course,what comes next?From chatbots and natural learning processing,what new technology and ways of working will keep you at the cutting edge of impactful consumer experiences?Well look quickly at the approaches underway at Childrens Hospital in Eastern Ontario and Johns Hopkins.Lets dive in.Laying the foundation for innovation /Digital Health Transformation Fails Without Accurate Data/How to Keep PHI Out of Digital Targeting and PersonalizationLooking ahead:better patient communication /Healthcares Future:Chatbots and Natural Learning ProcessingTakeaways:from data to digital to patient communicationRedesigning todays patient engagement strategies /Telehealth Access and Experiences Done Right /What Hospital Systems Can Learn from the Retail World:A Fresh TakeContents010203Upgrading healthcare systems in a digitally-driven,post-pandemic world3Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Many healthcare organizations are working to provide digital experiences that meet or exceed consumer expectations.But fragmented,inconsistent data is still a deep institutional problem.The reality is that many organizations show the same fact 8 different ways across 8 different systems,with different levels of accuracy or completeness.This is a terrible experience for the consumer.But with proper data and system alignment,it could be a great one.Information across multichannel systems needs to be unified,validated,governed,and properly distributed as part of a successful digital healthcare transformation.If you find a doctor on a provider search application but the call center doesnt have this doctor in their database,this creates a frustrating user experience.The patient needs to hear the same facts with one voice,no matter which system they communicate through if not,the organization risks loss of patients,missed appointments,or other misalignments that are costly at scale.So,whats the good word,doc?When hospitals get acquired,physicians and locations have data in disparate systems.The data alignment process may seem like a given as medical institutions merge.But data migration and system integration often dont get proper attention.Laying the foundation for innovationDigital Health Transformation Fails Without Accurate Data 1.1014Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world 4There are two important factors to consider when aligning data:/Consistent taxonomy /Unified source of truth A consistent taxonomy,or a categorization of facts,is essential to differentiate between services and needs.An ambulatory clinic can do a concussion assessment,but if a patient has a brain tumor,they need to see a specialist like a neurosurgeon,making taxonomy and data sharing critical.Christus Health worked with Valtech to develop an intricate and detailed taxonomy to make provider and location search more relevant and convenient.A sprained ankle would likely require the location filter to find the closest available physician.A bigger emergency,like heart surgery,would require both relevance and location filters,to find the best specialist for the case.Christus Healths taxonomy allows for both searches and displays what the user actually needs.After taxonomy,a unified source of truth is necessary to keep track of information like:/Doctor credentials /Doctor contracts /Physician schedules /And physician locations If there is no unified source of truth,institutional siloes would own different pieces of the puzzle which makes it difficult to ensure a smooth and consistent user experience.If the HR database manages doctors credentials while the IT database tracks the locations where the doctors work,are those two systems tightly integrated?Penn Medicine solved this problem by putting together a complex Master Data Management platform,as well as a business rule management system to assemble“truth”from 20(yes,20!)different data sources.In partnership with Valtech,they successfully unified data across platforms and eliminated information siloes.45Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Which puzzle pieces do we need?All data should come from a Master Data Management platform or a Content Logistics platform./Either of these can serve as the single source of truth that collects accurate data and serves as the point of origin for any other platform.A website is not the holy grail./It doesnt“own”or originate the source of truth and should not feed data to all other connected platforms,it should deliver the content as a personalized marketing experience to users.Call centers and chatbots,are the two most direct forms of communication with users and need to be tightly aligned when it comes to the information they deliver./Call center teams do not generally communicate with the website content team,which creates a significant risk of misalignment.If a user is searching for information on COVID-19 vaccines,each of these resources(chatbot,call center,website)should have the same answers to questions like“Where can I get a vaccine?”and“Does this clinic accept walk-ins for vaccination?”.EMR Consumer Health Portals like Epic and Cerner are important channels when it comes to patient retention./These portals are a unique patient experience with these healthcare systems resources.The information they provide,such as post-operative instructions and care,needs to be aligned with the website,as well as any other means of communication.If a patient received different post-op information in the paper given to them after surgery,on the website and in their portal,this would make for a frustrating and potentially harmful patient experience.56Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world How do we solve this healthcare Rubiks cube?The secret ingredient:a move beyond siloed applications as conflicting sources of information,towards unification through Master Data Management platforms such as Kyruus and Yext,or Content Logistics platforms.Data unification holds the digital experience together.The cost of skipping or incorrectly completing this process will be substantial,corrupting any system,operating improvements,or innovations made in the future.They would not run correctly or efficiently without a solid foundation of accurate,unified data.Think of it like solving a Rubiks cube:if you dont have the right information on how to solve it,the moves you make will only lead to more mismatched squares.A close integration between the strategic and tactical processes related to the new digital experiences is what clarifies the data that is needed,in what form and with what metadata.Put it all together!What are your next steps?/People:The teams for digital,customer service,operations and clinical should all take active roles in this alignment.Direct and consistent lines of communication between these teams is essential to creating a unified and sustainable ecosystem./A governance model is also important to establish accountability,and it signals that data unification is not an afterthought,it is a big and intentional undertaking./Sustainability and change management:A sustainable solution is adaptable to change,is constantly being monitored,and does not require manual updates on every platform that presents a piece of information.This has been particularly important in a pandemic context,when visitation policies were constantly being changed during the height of COVID-19.7Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Protected Health Information(PHI):Whats the right balance to strike between personalized patient experiences and conforming to HIPAA?Weve seen healthcare systems err on the side of too strict or too lenient when defining types of data and how to use them.Heres some guidance from our health experts.For healthcare providers looking to add personalization to their offerings,heres how to do that while navigating PHI regulations.PHI,A Trap for Digital Marketing Healthcare is highly regulated,and Protected Health Information(PHI)the information that medical institutions,insurers,billing systems,researchers,doctors and nurses may know about your healthis extensively regulated,as it should be,by HIPAA(the“Health Insurance Portability and Accountability Act”of 1996)to protect the privacy of patients.What PHI Isnt Why ISNT that data considered PHI?Because of the context:the interaction that provided the information about user interests and intentions did not occur within a true medical interaction.What does that mean?A patient of the neurology department browses a set of neurological conditions,and that becomes part of their online profile for personalization and targeting purposes.If those interactions were to happen within a secure form,like a clinics online appointment registry,where the patient selected conditions to discuss with a healthcare provider,that would be a true medical interaction.In this case,the data is PHI and cant be used for any form of targeted marketing.PHI In Action Many institutions dont comfortably get these distinctions,and often make one of two mistakes:/Too strict:They clamp down on anything that even looks like PHI before it can be properly categorized,even if the data is obtained about a person from public,non-privileged interactions,because of fear it may secretly be PHI./Too lenient:They use information from billing systems or EMR to build profiles that are mistakenly used for marketing.This is less common because the whole industry is on high alert to prevent marketers from gaining access to privileged information.Thats why CRM vendors working in healthcare tend to be very clear about the PHI boundaries to keep it out of their systems.It is important to ensure that clients understand where the boundaries are,what can and cannot be done.To make data safe for marketing uses,companies take many precautions to make sure their work in systems that profile and automate marketing to users is PHI-free.How to Keep PHI Out of Digital Targeting and Personalization1.28Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world At the beginning of the pandemic,it seemed that almost overnight telehealth became a critical pathway to connecting patients with providersand vice versa.Where a more robust telehealth experience may have been a goal in a digital roadmap or a slow moving“proof of concept,”it became an urgent priority,and many health systems have been forced to convert telehealth into the primary method of providing care to patients.This has been done largely without time to think about how the telehealth experience affects the way that the patient accesses care or to create a comprehensive solution that fully meets patient needs and expectations.TRedesigning todays patient engagement strategiesTelehealth is the lovechild of the pandemic and evolving consumer needs.With telehealth continuing to advance and become a more expected option for healthcare providers,making a successful telehealth platform that is accessible to patients has never been more important.Telehealth Access and Experiences Done Right 2.1029Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world It is important to remember the key principles and foundations of a good UX are crucial to delivering a valuable and meaningful telehealth experience to patients.Here are some of our best practices to keep in mind as you build or expand your telehealth presence within your health system.Make it Extremely Easy-to-Use and Easy-to-Access As with any other experience,it is important to make sure that the patient finds your telehealth experience easy-to-use and easy-to-access when they come into contact with it.In order to help eliminate any barriers or roadblocks in the patients journey,features such as clear appointment availabilities and email confirmations with direct links to important information are essential to creating a smooth and easy customer experience.As the infamous IBM quote states:“Ease of use may be invisible,but its absence sure isnt.”9Sell the Alternative to In-Person Care As the world navigates through COVID-19,more and more people are using telehealth out of necessity.In the long term,its going to be important to continue to support telehealth as a quality alternative to in-person care wherever possible.Patients may shop around and compare different telehealth providers before they schedule an appointment,and this makes it even more critical to incorporate helpful peer-to-peer insights,such as patient testimonials,that are proven to support the decision-making process.Ensure that Telehealth is Findable Across Pathways Making sure that patients can find your telehealth offering is hugely important,no matter their entry point on the website.This means that it is critical to make sure that you have information about telehealth offerings at various locations and conversion points.To make sure that your telehealth offerings are findable,telehealth terminology and labeling need to be consistent across the health system and aligned with the terminology that your patient base is most familiar with.1/3/2/10Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Keep Telehealth Offerings Transparent&Trustworthy Plainly said,if a health system or provider presents themselves in an organized,transparent way,then patients are going to have more trust in putting the care of their health in that system or providers hands.It is important to be transparent around bill payment options,insurances,the patients responsibilities and what will happen during an appointment so the patient can determine whether a telehealth visit is right for them.Deliver Accessible Telehealth Experiences Lastly,ensure that patients across a spectrum of abilities,ages and languages have equitable access to telehealth offerings.As with other parts of your digital experience,make sure to follow best practices to meet the requirements outlined in Web Content Accessibility Guidelines(WCAG)and ADA compliance regulations.Eliminate medical jargon,use plain language as much as possible and make information available in different languages according to your patient base.If you dont have the tools in-house at your health system,work with your digital partner to run an accessibility scan across your telehealth experience to make sure that your content is following accessibility best practices so you can remediate any problem areas.Summing Up the Way Forward Creating more integrated and thoughtful approaches to telehealthespecially focused on patient accessare critical as we navigate through the next phases of medicine.With patients becoming more accustomed to telehealth as an option for care,its going to be critical for the organization as a whole to deepen the support for telehealth in order to stay competitive in a tight marketplace.Investing in the right tools and in a quality user experience around telehealth that improves findability,provides educational content,supports ease-of-use,encourages credibility,and maintains accessibility is going to be make-or-break for both mission and competitive survival.104/5/userid:145584,docid:525904,date:2024-09-27,11Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Retail and Health:different stakes The consumer expectations of convenient and on-demand service are incredibly similar.Effective retail strategies can be translated into actionable blueprints for hospital programs.The goal is to improve systems and approaches currently used in hospitals to be more efficient and personalized,tactics that many retailers know inside and out.Customer retention:the biggest hurdle for hospitals to overcome Customer retention is a cornerstone of retail strategies.Major retail brands retain customers through loyalty programs,as well as marketing automation and personalization all this in an omnichannel approach.Hospitals,on the other hand,while they are dedicated to patient retention,often lack clear strategies and repeatable processes to change the overall patient experience.What hospitals have to learn:Omnichannel platforms can give hospitals a full view of the patient using a multi-channel approach that unifies patient information across channels and facilitates some of the tactics that most modern hospital systems are now using for marketing automation and personalization.Retail approaches align overall customer experience to how consumers think.The right technology delivers contextual experiences related to predicted user journeys.Hospitals can personalize interactions in low-risk ways,the same way retail does,to build loyalty and enable greater engagement.Some hospitals are clearly at the forefront Christus Health,an international not-for-profit health system,developed a highly customized EPIC integration that is the epitome of personalized convenience.They created an online platform that facilitates the use of several of their services,used in 4 states and Latin America.It has custom solutions based on each locations specific needs,aligning geolocative personalization with complex user journeys.The platform allows for several patient actions,including finding a doctor and booking an ER visit.What Hospital Systems Can Learn from the Retail World:A Fresh Take 2.2Retail and health have one big similarity:people expect convenience in both industries.Patients are drawn in by lower quality,high convenience retail medicine options.The search for a total healthcare experience that emulates consumer expectations in retail is sky-high.And while the truism“hospitals have a lot to learn from retail”is a tired one,we think it bears repeating with a fresh,contextual view.12Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world The Childrens Hospital in Eastern Ontario(CHEO)offers a food services program that perfectly encapsulates a personalized omnichannel approach.The program is app-based,with a made-to-order service(think Uber Eats).Patients can order food at any time.The food service department has access to the patients records to ensure that their order complies with the doctors notes on what they can eat.If they have surgery the following day,for example,they may need to fast in preparation.This feature of cross-sharing information between platforms was also applied to the app,filtering the options shown to the patients based on their chart foods that they cannot consume are not shown on the app until the notes in the chart are updated.This program,the only one of its kind in Canada,makes the case for how a hospital setting can benefit from an omnichannel,personalized patient-centric approach in a mobile experience form.It presents advantages to the patient as well as all the caregivers(nurses,doctors,food staff,etc).At Johns Hopkins,they decided to focus on serving patrons in common vernacular.Hopkins content strategy centered around personalization,automation and effective communication with patients as well as potential patients.“Aging”and“teen mental health”,for example,were more intuitive for website visitors than“rheumatology”or“cardiovascular department”.Colloquial delivery of medical content generated greater customer engagement and more accessible positioning.The challenges specific to the hospital setting are not deterrents but differentiators.The logistics of technological innovation in a hospital setting are unique,with plenty of players and stakeholders involved.Many hospitals have several systems already in place that run simultaneously but separately.The focus of a retail-inspired strategy in a hospital setting would be to unify systems to connect information for patients.The expectation of an Amazon-type experience,with personalization and convenience in the user journey,can be tricky to execute in a hospital setting but it is indeed possible.CHEOs food services program is a great example of a personalized experience,and a testament to a hospitals ability to connect patient information across platforms,regardless of the many challenges hospital systems face.Christus Health also unified its service offerings into one platform,allowing patients and potential patients to access a variety of services on a single platform.The lessons learned in retail cannot be replicated exactly in the hospital setting but they can inspire a similar approach,focused on personalization,convenience and efficiency.The hospital-specific challenges are important to keep in mind,but they are not blockers.Instead,they simply showcase the differences between the retail and healthcare industries.When applying a retail-inspired approach,these challenges are the factors to be considered in a plan made for a hospital setting.This approach would reduce redundant paperwork interactions,making the digital and office experiences more aligned.It would also create greater strategy consistency across all experiences,paralleling the thinking applied in retail.13Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world Chatbots run on Natural Learning Processing emerged as a key channel of communication during the pandemic.Patient communication is the new frontier for improved consumer health experience.The potential of chatbots is currently underuti-lized.Natural language search the little search bar that takes complete questions and answers them with smart results is also growing in popularity.Both techniques are perfect for con-sumers who are looking to“have a conversa-tion”rather than read through lengthy research.They offer friendlier and lower friction ways to engage with healthcare systems.What used to be an underperforming“add-on”in digital healthcare is now crucial and supports diversi-fied types of communicational experiences.Chatbots are like a genie in a bottle,but with a pre-written script.Chat is a more limited version of a call-center conversation,with prefabricated responses and smart search results.A good chatbot presents links to web pages or provides relevant responses sourced from common data from the website or call center.This ensures consistency in answers across platforms chatbots,website,call center and more.Natural Language Processing or NLP is a form of machine learning that makes an educated guess on what the user is talking Looking ahead:better patient communication Healthcares Future:Chatbots and Natural Learning Processing 3.10314Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world about through a multi-step process that progressively narrows down its guesses.If the process does not provide a satisfactory response,the user gets a“bail-out”where they can then communicate with a human at a call center,for example.Chat presence on a website can be very versatile.Most chat platforms can be integrated in a more sophisticated way.For example,the chatbot can be aware of what part of the website the user is visiting,assuming they have accepted tracking.Its no Swiss Army Knife,but a chatbot can have so many creative uses.As long as you build appropriate support,the sky is the limit!Think of Natural Language search as your nerdy older brother who always answered your“Why”questions as a kid.Natural Language search uses NLP like chatbots to hone in on relevant results.However,Natural Language search is less tightly programmed than chatbots;it simultaneously has more room for error and a broader reach to all subjects.Unlike chatbots,there are no pre-programmed or highly focused intents.For example,if you search“Where is the parking garage for the Cancer Center?”,the search results will be links that direct you to the most relevant web pages to answer your question.Users generally like to formulate their searches as questions,as if they are having a conversation.Natural Language searchs wider reach allows people to use this kind of comfortable wording and get helpful results.An example:Some platforms,like Yext Answers,are AI-powered.Rather than linking to web pages,Yext Answers employs Natural Language search to provide direct answers that are modeled in the Yext master data management system.The user search data from Natural Language search is telling and can help companies further formulate user-centric content.This is an improvement over conventional search without creating a whole new paradigm of interaction.Not all chatbots and NLP platforms are created equally.So how do you pick one?Dedicating lots of training time for healthcare chatbots is what sets vendors like Loyal Health and Gyant apart and gives them a huge edge over others.Training the NLP for different areas and healthcare intents allows chatbots to accurately understand what the user is talking about.Features and integrations are also differentiators.Chatbots need to have a usable backend for teams and companies to be able to develop an efficient practice around them.They also need to be highly integrated with outside data sources to make sure the facts in their 15Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world answers are up-to-date and accurate.Poorly integrated data represents a common pain point for chatbot platforms.“Enterprise conversation management”goes a step further than chatbot-only platforms.They use the same conversation logic and facts across multiple other channels and can include voice,telephone automation and more.Cognigy,an enterprise software provider for conversational AI automation,is a great example of a platform that aligns all the chat and voice channels at once.What about developing a chat practice?Strong conversational design and a vivid brand experience are the secret sauce.Responses that fit a brands tone while emotionally connecting with,surprising,and delighting the user are all important factors in developing a chat practice.As for the nitty gritty,master data management is essential to securing the relationship between the chat and the facts.Those integrations need to be governed and long-lasting.Chat experiences require frequent attention,with people who are responsible for monitoring how accurate and user-friendly the responses are as the chat evolves over time.Who takes responsibility?Resources are often tight in consumer healthcare and there is often one person that owns content strategy and one person that owns user experience.Either of these roles can take on a leadership position and own the chat practice,given available time.Despite all the data integrations,the role of owning the chat practice is most tightly aligned with user experience,not just technology.1516Digital healthcare:the new frontier/Upgrading healthcare systems in a digitally-driven,post-pandemic world from data to digital to patient communication Takeaways:Weve covered a lot of topics in this paper.If you had to sum it all up for your board,heres what to say:The data imperative:/Accurate data alignment is necessary to create a clear and positive user experience on every platform available.Without this first step,every future improvement or undertaking will be hindered by unclear,uncategorized,and confusing data./Protected Health Information can and should be kept out of your digital marketing strategies with careful and clear definitions.Data needs to be revised before it can be used to personalize consumer experiences.Consumer healthcare is digital healthcare:/Hospitals can model their strategies after the retail industrys omnichannel approach to improve customer retention,while focusing on personalization and efficiency./The pandemic has fueled the rise of telehealth.Now that we have the time to improve it,focus on findability,ease-of-use,sellability,transparency,and accessibility.Patient communication is the future of improved consumer health experience and digital health transformation.The two key tools:chatbots and Natural Language search./The key to a strong chat practice is developing powerful conversational design and a rich brand experience./Natural language search improves upon conventional search by formulating fine-tuned user-centric content,while having a broader reach to subjects than chatbots.The work you do is critical.And Valtech is here to help you navigate the now and tomorrow.Valtech is one of the best companies in the world for digital transformation across all sectors.Valtechs Health practice combines strategy,innovation,and technology to level up your consumer experience.We work with the leading healthcare systems in North America over the last three decades to help them build efficient and modern consumer experiences.where experiences are At Valtech Health,we consistently launch,scale,and optimize digital transformations for global leaders in consumer health,pharmaceuticals,medical technology,and health insurance.We understand that digital transformation impacts people,processes,and technology,and change across those fronts is challenging.That is why we support our clients in evolving their digital platforms,to achieve their business goals and meet consumer needs and expectations.Our healthcare practice,staffed by a global team of experts,is broad and includes consulting,technology platforms and integrations,strategy,user experience,analytics,operations,managed services,custom applications,and more.Moreover,our access to data and insights across industries,such as retail and hospitality,inspires the solutions we can implement with our healthcare clients.We are trusted by leading brands such as Novo Nordisk,Sanofi,Novartis,Bristol Myers Squibb,Alcon,Philips,CAE,Saintas,Johns Hopkins Medicine,Penn Medicine,CHRISTUS Health,and Shriners Hospitals for Children.For more information,visit our healthcare practice at
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WELLNESS&HEALTH SERVICESREPORTExplore M&A Activity,Capital Market Conditions and Current Trends for the Wellness&Health Services Industry720.221.9220|SDRVENTURES.COMInvestment Banking&Securities Offered Through SDR Capital Markets,LLC,Member FINRA&SIPC.1H 2024720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1WELLNESS&HEALTH SERVICES 1H24:WHAT TO KNOW WellnessWellness&HealthHealth ServicesServices covercover a a lotlot ofof groundground in in thethe marketmarket.TheresTheres perhapsperhaps nothingnothing moremore personalpersonal thanthan howhow consumersconsumers feelfeel.TheresTheres a a lotlot ofof consumerconsumer interest,interest,butbut alsoalso a a lotlot ofof headwindsheadwinds forfor providersproviders ofof healthyhealthy productsproducts andand healthcare,healthcare,includingincluding labor,labor,governmentgovernment regulations,regulations,and,and,increasingly,increasingly,costscosts.InIn healthcare,healthcare,providersproviders sawsaw a a boostboost in in M&AM&A activity,activity,butbut alsoalso increasingincreasing regulatoryregulatory oversight,oversight,notnot justjust fromfrom federalfederal agenciesagencies butbut latelylately fromfrom statesstates.WillWill a a recentrecent SupremeSupreme CourtCourt rulingruling turnturn thatthat trendtrend around?around?PatientsPatients areare payingpaying a a lotlot forfor servicesservices.WereWere watchingwatching toto seesee howhow muchmuch consolidationconsolidation statestate andand federalfederal governmentsgovernments willwill acceptaccept amidamid pricingpricing pressurespressures andand consumerconsumer complaintscomplaints.HealthyHealthy foodsfoods andand novelnovel workoutworkout programsprograms havehave beenbeen popular,popular,butbut consumersconsumers maymay bebe startingstarting toto cutcut backback onon spending,spending,seekingseeking insteadinstead demonstrateddemonstrated valuevalue forfor theirtheir moneymoney.HowHow BetterBetter-ForFor-YouYou (BFY)(BFY)foodsfoods andand fitnessfitness programsprograms incorporateincorporate AIAI andand developdevelop clear,clear,honesthonest communicationscommunications maymay bebe thethe keykey toto marketmarket advancesadvances.RegulatoryRegulatory Uncertainty,Uncertainty,FickleFickle Consumers,Consumers,AndAnd WellnessWellness&HealthHealth ServicesServicesWellness&Health Services is a broad category that touches all our lives.From supplements to medical care to exercise trends,weve seen plenty of activity,and for good reason.This category is all about who we are,how we care for ourselves and loved ones and,frankly,how we feel each day.Consumer spending in this sector is deeply personal.Its estimated Americans spend$4.5 trillion a year on healthcare(doctors and such),about$13,500 per person annually,and another$5,300 a year each on“wellness,”including healthy eating,wearable tech,wellness tourism,and fitness.Globally,the wellness industry alone saw an estimated valuation of$5.6 trillion in 2022 and its growing,according to a survey of scientists,CEOs,and academics.1,2 Theres a lot of money in this sector,generating a lot of interest.Hospital M&A activity picked up as 2023 gave way to 2024 with hospitals either scaling up to keep pace or being acquired as they fell behind.Activity in the broad healthcare sector steamed into 1Q24 with nearly 30 big deals as the biopharma subsector led the way.Despite headwinds from relatively high interest rates,labor costs and shortages,a nasty cybersecurity2Established in 2002,SDR Ventures has developed deep M&A and capital transaction knowledge and expertise.SDR offers transaction advisory,private capital formation and business consulting services across a wide range of industries.We serve business owners and operators of privately held companies and provide them with a professional-class experience.ABOUT SDRTransaction ActivityActive BuyersPublic BasketM&A Market ActivityAbout SDR VenturesWELLNESS&HEALTH SERVICES CONTACTSCONTENTSThe information contained herein is based on sources we believe reliable but is not guaranteed by us and is not to be considered all-inclusive.It is not to be construed as an offer or consultation of an offer to sell or buy any securities.Scott MitchellScott MitchellManaging DirectorWellness&Health Services TMorgan HoffmanMorgan HoffmanSenior AssociateWellness&Health Services TDrew ChamberlainDrew ChamberlainAnalyst IIWellness&Health Services T720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1shock to UnitedHealth Group,and increased antitrust scrutiny,observers predict continued hot and heavy activity in the sector.3,4,5,6 Meanwhile,private equity has its eyes on fitness and wellness investments,with a global uptick in activity predicted through 2024,including interest in exercise equipment,nutrition,and digital mental health and wellbeing.The interest that began before the pandemic remains strong in the“better-for-you”(BFY)sector of healthy foods including healthy snacking,plant proteins,antioxidants,probiotics,and Omega-3s.Were watching steady interest in sleep-aid supplements and weight loss drugs,while the vitamin ingredients market valued at$4.6 billion in 2023 is projected to push$8 billion in the next decade with a compound annual growth rate nearing 6%over the next 10 years.Were seeing a growing interest in younger,niche,brands.For example,“maker of everything,”Unilevers,$6 million investment in Parelel Health,startup producers of prenatal and postnatal vitamin supplements,part of Unilevers$2 billion lean into its Health and Wellbeing group.Actress Halley Berry took a stand in front of the U.S.Capitol,urging lawmakers to invest in menopause treatments.Consumers have taken an interest in taking care of themselves,and providers are rushing to serve them.7,8,9,10,11,12,13,14,45 As noted,this is a big,broad sector,and theres a lot of money moving around.But there is reason to be cautious and seek counsel as needed.Not everything is always as it seems.Fads come and go,and new developments can have seismic consequences.HealthcareHealthcare:WhatsWhats TheThe GovernmentsGovernments NextNext Move?Move?Of course,all the PE and corporate M&A interest in the world is perhaps in jeopardy if governments get in the way.Even as U.S.federal regulators and researchers acknowledge that M&A across healthcare is driving up consumer costs,states are getting restless at the slow pace of federal involvement and are looking to make their own moves to slow the market.Its a big field and a big country.State officials fear the Federal Trade Commission(FTC)cant keep track of every transaction,especially smaller acquisitions that impact rural areas.Now several states are looking to give their own regulators a say in M&A activity.When California gets involved in scrutinizing rollups and PE interest,the industry takes notice.More than a dozen states are mulling new regulations in a bid to tame rising costs of care.A Minnesota proposal would ban outright private equity and real estate companies from purchasing healthcare providers.15,16,17 As weve seen,nothings a sure thing for healthcare investors.Even Walmart proved vulnerable to labor costs and the cost of care,shutting down earlier this year all 51 of its“Walmart Health”centers in the five states where they operated,along with its telehealth service,Walmart Health Virtual Care.UnitedHealth Group in 1H24 shuttered its own Optum Virtual Care telehealth business following a steep drop in consumer interest following the COVID pandemic.Industry leaders acknowledge signs of oversaturation in telehealth,and the sector may need to regroup and focus on what consumers not only want,but what they will pay for.Once sky-high telehealth provider Amwell,trading near$43 a share during its COVID-era runup,faced delisting from the NYSE as shares cratered.The company implemented a 1-for-20 reverse stock split to stay in the market.And Steward Health Care System,with 30 hospitals in eight states,filed for bankruptcy protection earlier this year,marking the largest hospital bankruptcy in decades.18,19,20,21,22 But there are bright spots.If providing actual care is in flux,pharmaceuticals are having a nice run,thanks in a large part to wildly popular weight loss drugs.Novo Nordisk saw so much demand for its weight loss drug Wegovy that it bought a Danish drug manufacturer for$11 billion to keep up(attracting FTC scrutiny,of course).And Swiss pharma company Roche announced its own weight loss drug,this time in a pill form rather than an injection,something consumers may prefer.Gilead Sciences shelled out$4.3 billion to buy CymaBay Therapeutics to acquire the companys potentially breakthrough liver treatment drug.Novartis spent$3 billion to acquire MorphSys,maker of a myelofibrosis drug.And Boston-based Vertex Pharmaceuticals unveiled its new,experimental medication that blocks even severe pain without the risk of addiction other drugs,such as opioids,have shown.23,24,25,26,273720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1SittingSitting OnOn It It WontWont MakeMake It It SmallerSmallerThe exercise and fitness sector has shown us you either keep pushing or you get left behind.The global market for home fitness equipment continues to boom with a market valued at$12 billion in 2023 and a nearly 5GR predicted for the rest of the decade.But consumers are asking:What have you done for us lately?COVID home workout darling Peloton announced its fifth round of layoffs as the popularity of the subscription bike training program waned.Meanwhile,consumers are looking at a growing back-to-the-weights garage gym trend(Rogue Fitness,as an example).Consumers are fickle.Free weights are now the growth segment.AI is tailoring workouts.Consumers are increasingly price conscious,and innovators are seeking“next generation”experiences to lure consumers.What have you done for us lately?28,29,30,31,32If were talking about wellness,you are what you eat.But also what you can spend.Consumers may be pulling back on purchases of“better for you”brands(BFY)because of cost.“Gut health”and“food as medicine”have had a good run.But were watching for signs of increasing consumer skepticism.Clean labels,ingredient lists that are uncluttered with mystery substances,were a trending idea not long ago.Do consumers still believe what they read,and will they still spend?Transparency is coming up more often in discussions.It will be interesting to see how the segment can better communicate with the buying public.Big manufacturers such as Conagra and PepsiCo are feeling the pinch as consumers start hunting for true value.As many as 40%“healthy eating”consumers now consider their BFY foods too expensive.33,34,35Will GLP-1 and other weight loss drugs hurt snack makers?Some appear ready to lean into the trend,producing BFY frozen meals that reassure dieting consumers that they are getting true nutrition in smaller portions.Cereal giant Kellogg anticipates the weight loss revolution may benefit cereals that are low in fat content.It will be fascinating to watch how producers up and down the food chain react to consumer dieting demands and the impact of weight loss pharmaceuticals.36 OpenOpen YourYour WalletWallet AndAnd SaySay AhhhAhhh:MergersMergers&AcquisitionsAcquisitions Regulators can make all the rules they want,but its starting to look as if judges and courts will have a big say in healthcare M&A.In June,a federal judge stopped the FTC from blocking Novant Health from buying two Community Health Systems hospitals in North Carolina.The FTC had sued to stop the$320 million deal claiming it created an anticompetitive environment,but a judge disagreed and said the move would actually increase competition in the region.Did the FTC overstep its boundaries?A recent Supreme Court ruling appears to dilute the power of regulatory agencies in areas left vague by the law,returning that power to the courts.It will be interesting to see how this affects healthcare acquisitions should the White House change hands later this year and states seek more control.37,38 As Peloton has back peddled,a one-time acquisition target of the at-home cycling company,Hydrow,is growing.The subscription home rowing fitness company in May grabbed a majority stake in the strength training company Speede Fitness,latching on to the fickle publics move from cardio training to pumping iron.Hydrow makes at-home rowing machines,which can cost up to$4,000.Backed by bigtime private equity players Constitution Capital and L.Catterton,the company boasts several athletes and celebrities as investors,including Taylor Swift beau(and NFL tight end)Travis Kelce.Hydrow has reportedly raised more than$300 million.Peloton introduced its own home-rowing equipment two years ago,but apparently nobody knew about it.39 Publicly traded Simply Good Foods Company in June announced the acquisition of plant-based,ready-to-drink protein shake brand Only What You Need.The move was touted as Simply Goods effort to expand its product offerings into the ready-to-drink market of nutritional supplements and snacks.The deal was valued at$280 million.Denver-based Simply Good produces protein bars,shakes,and snacks under the brands Atkins,Quest,and now OWYN brands.404720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1“Looking“Looking Good,Good,BillyBilly RayRay.”“Feeling“Feeling Good,Good,LouisLouis.”TradingTrading Places,Places,19831983As we untangle the rapidly evolving and wide-reaching field of Wellness and Health Services,its important to watch the trends and market demands.Nothing is more personal than how good we feel.It all starts with our bodies.But both consumers and regulators want to know what we are getting when we spend to maintain our health.41Healthcare at home,telehealth,had its day.But it is starting to look like some patients want to physically sit with a doctor.Remote care providers may have their work cut out for them demonstrating the value of telehealth and care in general.Medical costs in the U.S.continue to rise.Services that find a way to adopt AI personalization into health recommendations may have an advantage.Its becoming what consumers expect.Marketers in both healthy foods and medicine will be pressed to reach healthcare providers and demonstrate why they should recommend their wares in food and medicine to their patients.As for producers of healthy foods and wellness programs,they dont get off the hook with AI either.Consumers are looking for ways to both create healthy menus and fitness programs.We believe how producers in the sector adapt their own offerings to the AI world may set them apart.Again,what have you done for us lately?41,42,43,44 5720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 16Source:PitchBook Financial Data and AnalyticsNote:This data represents recorded transactions only,and is not all-inclusive.Nevertheless,they are typically representative of the industry.TRANSACTIONS BY SEGMENTTRANSACTIONS BY TYPETRANSACTIONS BY LOCATIONTRANSACTION ACTIVITY21 or more transactions11-20 transactions1-10 transactions0 transactionsIf You Are a Business Owner Looking for Additional Transaction Activity If You Are a Business Owner Looking for Additional Transaction Activity Within Your Industry,Please Call Our Offices at 720.221.9220.Within Your Industry,Please Call Our Offices at 720.221.9220.Strategic52%Financial4885 37 79 40 40 -100 200 300 400HealthcareServicesHealthcareEquipmentand SuppliesDigitalHealthFitness&ActiveRecreationNaturalFoods720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 17ACTIVE BUYERSSource:PitchBook Financial Data and AnalyticsNote:This data represents recorded transactions only and is not all-inclusive.Nevertheless,they are typically representative of the industry.FIRMRECENT SUBSIDIARY ACQUISITIONSMOST ACTIVE STRATEGIC BUYERSSELECT SPONSORS WITH ACTIVE PORTFOLIO HOLDINGSFIRMRECENT SUBSIDIARY ACQUISITIONS720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1PUBLIC BASKET8FITNESS&ACTIVE RECREATIONWELLNESS&HEALTH SERVICES SEGMENTS VS.S&P 500Segment Market Cap Performance Running 12 MonthsSource:PitchBook Financial Data and Analytics-35%-25%-15%-5%5%5EUe%Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 Apr-24 May-24 Jun-24Healthcare Equipment and SuppliesHealthcare ServicesDigital HealthFitness&Active RecreationNatural FoodsS&P 500720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 19PUBLIC BASKET(CONTINUED)HEALTHCARE EQUIPMENT AND SUPPLIESHEALTHCARE SERVICESSource:PitchBook Financial Data and AnalyticsNATURAL FOODSDIGITAL HEALTH720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 110U.S.M&A ACTIVITY SNAPSHOTSource:GF DataSource:GF DataOVERALL U.S.M&A ACTIVITYNote:The most current source of GF Data is as of May 2024.LOWER MIDDLE MARKET PRIVATE EQUITY TRANSACTION MULTIPLESEBITDA Multiples By Transaction SizeCAPITAL BREAKDOWN LOWER MIDDLE MARKET PRIVATE EQUITY TRANSACTIONSSource:PitchBook Financial Data and Analytics202120232022YTD 2024$0.0M$100.0B$200.0B$300.0B$400.0B$500.0B$600.0B1,3002,3003,3004,3002023 Q22023 Q32023 Q42024 Q12024 Q2Deals ClosedDeals ClosedCapital Invested5.9x6.1x6.8x6.1x6.8x7.0 x7.3x7.5x8.0 x8.3x8.8x8.6x9.0 x9.4x10.0 x8.5x0.0 x2.0 x4.0 x6.0 x8.0 x10.0 x12.0 x202120222023YTD 2024$10-25mm$25-50mm$50-100mm$100-250mm54B)B6GIEBB)0%9%8GIb67)%9%5UXab962#%7%6%6TUcq%0 0%$10-25mm$25-50mm$50-100mm$100-250mm$10-25mm$25-50mm$50-100mm$100-250mm$10-25mm$25-50mm$50-100mm$100-250mm$10-25mm$25-50mm$50-100mm$100-250mmSenior DebtSub DebtEquity720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1COMPREHENSIVE WELLNESS&HEALTH SERVICES EXPERTISEWellness&Health Services may have stolen the national spotlight in recent years,but we have been involved in the industry for well over a decade.Our experience and drive has placed us at the leading edge of information in the market,giving you an advantage when the time comes to buy,sell or seek investments to grow your business.Our Wellness&Health Services investment banking expertise includes the following segments:11SDR SERVICE OFFERINGSPRIVATE CAPITAL FORMATIONSELL-SIDE ADVISORYBUY-SIDE ADVISORYEXIT PREPARATIONSELECT TRANSACTION EXPERIENCESDR has completed numerous transactions types throughout the Wellness&Health Services industry,including:Scott MitchellScott MitchellManaging DirectorWellness&Health Services TMorgan HoffmanMorgan HoffmanSenior AssociateWellness&Health Services TCONTACT US Long Term,Behavioral,and Recovery Care Outsourced Health Services Day&Medical Spas Fitness&Active Recreation Natural Foods Health Products Manufacturing&Distribution Digital Health720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 1121.“National Health Expenditure Data,”Centers for Medicare and Medicaid Services,U.S.government,accessed Jul.16,2024 https:/www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/historical#:text=U.S. health care spending grew,spending accounted for 17.3 percent.2.“Americans Spend An Average Of$5,300 A Year On Wellness.From Biohacking To Walking Retreats,Here Are The Top 10 Trends Driving The Market,”Yahoo Finance vis Fortune,Alexa Mikhall,Feb.2,2024 https:/ Merger Activity Is Projected To Increase In 2024,”Chief Healthcare Executive,Ron Southwick,Jan.25,2024 https:/ M&A 2024:Recent Deals And Trends,”Finalis,accessed Jul.16,2024 https:/ 5.“Healthcare Mergers May Face More Questions About Cybersecurity,”Chief Healthcare Executive,Ron Southwick,Apr.18,2024 https:/ 6.“Federal Trade Commission,The Department Of Justice And The Department Of Health And Human Services Launch Cross-Government Inquiry On Impact Of Corporate Greed In Health Care,”Federal Trade Commission,news release,Mar.5,2024 https:/www.ftc.gov/news-events/news/press-releases/2024/03/federal-trade-commission-department-justice-department-health-human-services-launch-cross-government 7.“Private Equity Embraces Fitness:6 Deals In The Wellness Sector,”PE Hub,Irien Joseph,May 31,2024 https:/ And Beverage Manufacturers Turn To M&A To Jump-Start Entrance Into New Markets,”Food Manufacturing,Oct.23,2018 https:/ 9.“United States Sleep Supplements Market Report 2024-2029-Rising Demand For Plant-Based Sleep Supplements And Growing Online Sales Drives Market To A Forecasted$1.45 Billion By 2029,With A 5.9GR,”Yahoo Finance via GlobalNewsWire,news release,Jun.20,2024 https:/ Ingredients Market To Cross USD 8.0 Bn In Revenues By 2033|At A CAGR Of 5.7%,”P,news release,Apr.22,2024 https:/ 11.“Unilever Ventures Leads$6 Million Series A Investment In Perelel Healthy Vitamin Company,”Glossy,Lexy Lebsack,Feb.1,2024 https:/www.glossy.co/beauty/wellness/unilever-ventures-leads-6-million-series-a-investment-in-perelel-health-vitamin-company/12.“Buoyed By Beauty And Wellbeing Sales,Unilever Is Leaning Into Its$2 Billion Wellness Group,”Forbes,Pamela N.Danzinger,May 1,2024 https:/ Berry Shouts From The Capitol,Im In Menopause As She Seeks To End A Stigma And Win Funding,”Associated Press,Amanda Seitz,May 2,2024 https:/ 14.“16 Health Systems Help Launch Health&Wellness Marketplace,”MedCity News,Katie Adams,Feb.26,2024 https:/ REFERENCES720.221.9220|SDRVENTURES.COMInvestment Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 113ADDITIONAL REFERENCES(CONTINUED)15.“States Fill Gaps In FTC Health-Care Consolodation Crackdown,”Bloomberg Law,Danielle Kaye,Mar.15,2024 https:/ 16.“You Can Thank Private Equity For That Enormous Doctors Bill,”Wall Street Journal,David Walner,May 30,2024 https:/ Aim To Combat Private-Equity Healthcare Takeovers,”Wall Street Journal Private Equity,Chris Cumming,Apr.18,2024 https:/ 18.“Walmart Shuttering Health Clinics And Telehealth Services Nationwide,”Forbes,Cailey Gleeson,Apr.30,2024 https:/ Group Shutting Down Optum Virtual Care Telehealth Business,”P,Apr.24,2024 https:/ Arent Surprised About Optum Closing Its Virtual Care Business,”MedCity News,Katie Adams,Apr.28,2024 https:/ To Implement Reverse Stock Split To Avoid Delisting,”Yahoo Finance via Healthcare Dive,Emily Olsen,Jun.28,2024 https:/ 22.“One Of The Biggest Hospital Failures In Decades Raises Concerns For Patient Care,”Wall Street Journal,Melanie Evans,May 6,2024 https:/ 23.“Novo Buys Three Plants For$11 Billion To Boost Wegovy Output,”Bloomberg,Naomi Kresge and Christian Wienberg,Feb.5,2024 https:/ Obesity-Pill Trial Results Weigh On Shares Of Eli Lilly,Novo Nordisk,”Marketwatch,Eleanor Laise,Jul.17,2024 https:/ 25.“Gilead To Buy CymaBay For$4.3 Bln In Bets On Liver Disease Treatment,”Reuters,Bhanvi Satija,Feb.12,2024 https:/ To Buy Morphosys For$2.9 Billion;Deal Seen Closing In 1H,”Wall Street Journal,Denny Jacob,Feb.5,2024 https:/ 27.“Experimental Drug Cuts Off Pain At The Source,Company Says,”New York Times,Gina Kolata,Jan.30,2024 https:/ Fitness Market Size,Share&Trends Analysis Report By Type(Cardiovascular Training Equipment,Strength Training Equipment,Others),By Distribution Channel,By Region,And Segment Forecasts,2023 2030,”Grand View Research,forecast period 2023-2030,https:/ Will See Mass Layoffs And Another CEO Exit In Latest Dramatic Attempt To Right The Ship,”Fast Company,Emily Price,May 2,2024 https:/ Banking and Securities Offered Through SDR Capital Markets,LLC,Member FINRA and SIPC.WELLNESS&HEALTH SERVICES REPORT1H 2024 1H 2024|VOL 13|ISSUE 114ADDITIONAL REFERENCES(CONTINUED)30.“9 Top Fitness Industry Trends(2024&2025),”Exploding Topics,Josh Howarth,Jul.2,2024 https:/ 31.RogueF,company website,accessed Jul.17,2024 https:/ Fitness Equipment Market Size,Share,Competitive Landscape 2024-2025,”Allied Market Research,accessed Jul.17,2024 https:/ 33.“Consumer Cutbacks On Spending Hit CPG Profits,Says PepsiCo CFO,”NACS,Convenience.org,Jul.12,2024 https:/www.convenience.org/Media/Daily/2024/July/12/3-Consumer-Cutbacks-Spending-CPG-Profits_CatMan 34.“Do Consumers Believe Better-For-You Marketing On Snacks?”Food Navigator,Donna Eastlake,Jun.10,2024 https:/ 35.“How Pricier,Better-For-You Brands Can Foster Consumer Loyalty Amid The Inflationary Environment,”Bakery&Snacks,Gill Hyslop,Apr.9,2024 https:/ 36.“Food Giants See Opportunity To Profit From Consumers Using Weight Loss Drugs,”Grocery Dive,Christopher Doering,Feb.26,2024 https:/ Denies FTCs Attempt To Stop Novants Purchase Of Two CHS Hospitals,”Healthcare Finance,Susan Morse,Jun.6,2024 https:/ 38.“Supreme Court Strikes Down Chevron,Curtailing Power Of Federal Agencies,”SCOTUSblog,Amy Howe,Jun.28,2024 https:/ Startup That Peloton Once Tried To Buy Is Growing As Workout Trends Shift,”CNBC Gabrielle Fonrouge and Brandon Gomez,May 10,2024 https:/ 40.“The Simply Good Foods Company Completes Acquisition Of Only What You Need(OWYN),”Simply Good,news release,Jun.13,2024 https:/ 41.“The Trends Defining The$1.8 Trillion Global Wellness Market In 2024,”McKinsey&Company,Jan.16,2024 https:/ 42.“Medical Cost Trend:Behind The Numbers 2025,”PwC,accessed Jul.16,2024 https:/ Global Health Care Sector Outlook,”Deloitte,Sara Siegel,2024 https:/ 44.“Food Trends 2024,”Food Insight,Jenny Phillips,Jan.4,2024 https:/foodinsight.org/food-trends-2024/45.“Global M&A Trends In Health Industries(2024 Mid-Year Outlook,”PwC,Jun.25,2024 https:/
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