Taking an Unmet Needs Analysis Based Approach to Developing Products and Opportunities

Kevin Pang

Director

Life Sciences and Healthcare

March 18, 2015

Innovation is hard…but new product development is even harder!

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But really the big problem is using the wrong framework!

Strategic Fit

Market Attractiveness

Customer segment Capabilities ROI

Analysis Solution Gaps/Needs

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Relative unmet need attainment drives sales

Key Concepts:

Peak year sales

Time to peak year sales

Uptake velocity

Decay after patent expiry

Area Under Curve

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Source: INSEAD

Our agenda for today

Innovation is hard

New Product Development is even harder

How might we work smarter or differently?

We need the right framework for the right job

Explore the concept and application of Unmet Needs Analysis

More focused and targeted applied R&D

Help us with horizontal innovation and tech scouting

Aid us in agnostically developing platforms for entering new markets

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Example unmet need scorecard: atrial fibrillation

Attribute/Feature Weighting Level of attainment Score Efficacious antiarrhythmics

without proarrhythmic side effects 15% 3 0.45 Fixed-dose anticoagulants to replace vitamin K antagonists 15% 5 0.75

Reduction of morbidity and mortality in patients with AF and

heart failure 40% 3 1.20 Antidotes for emerging oral

anticoagulants 5% 1 0.05 Coagulation tests for emerging

oral anticoagulants 5% 2 0.10 Primary prevention of AF 5% 2 0.10

Novel mechanism of action 15% 4 0.6 Total 3.25

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Creating the ideal target product profile

0 0.2 0.4 0.6 0.8 1 1.2 1.4

Efficacious antiarrhythmics withoutproarrhythmic side effects

Fixed-dose anticoagulants to replacevitamin K antagonists

Reduction of morbidity and mortality inpatients with AF and heart failure

Antidotes for emerging oral anticoagulants

Coagulation tests for emerging oralanticoagulants

Primary prevention of AF

Novel mechanism of action

Degree of attainment and opportunity space

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Unmet need-the pharmaceutical industry’s tool for product portfolio development

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Pharmaceutical Product • Product Need (attributes of the drug

regimen) – Efficacy – Safety/Tolerability – Convenience (dosing)

• Disease Seriousness – Mortality – Morbidity (pain, disability,

hospitalization, quality of life, and complications)

• Disease Cost – Direct Costs (both drug and non-

drug medical costs) – Indirect Costs (lost work time for

patients and caregivers)

Your Product • Product Need

– Features and Attributes – Drawbacks – Ease of use/implementation

• Application primacy

– Degree of need – Alternatives available to customer

• Cost of status quo

– Cost of current solution – Cost to supplant (an incumbent) – Cost savings

What we’ve learned so far…

Unmet Needs Analysis can help us better target R&D to avoid creating undifferentiated me-too products

It can help us identify potential white spaces for innovation and measure up our competition

We can be more innovative and effective in finding new sources of technology to bring to bear on our unmet need

Useful for:

Product line extensions

Innovating existing products

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Using unmet needs analysis in a strategic framework

Explaining and Exploiting MegaTrends

Megatrends

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Information Meets Matter

Energy and Infrastructure

Health and Wellness

Connected Objects and Platforms

Exploration and Production

Energy Storage

Autonomous Systems 2.0

Alternative Fuels

Intelligent Buildings

Sustainable Building Materials

Water

Agro Innovation

BioElectronics

Wearable and Flexible Electronics

Advanced Materials

Big Data

Solar

Energy Electronics

Sensors Future Computing

Platforms

Food and Nutrition

Appear when technology/solutions converge on areas/applications with overlapping (though not necessarily synchronized) addressable unmet needs

Feasibility of Solution

Des

irabi

lity

of N

eed

Bio-based Materials & Chemicals

The gravitational well of life-staying on top of things

Pharmas like it here

We like it here!

We enter here

We exit here

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Approaching unmet needs from opposite ends

“Patients want to get healthy, i.e., recover faster”

Patients need better diagnostics

Patients need better medicines

Patients need more convenient delivery options

“I need to not be a patient, i.e., stay well

I need to stay out of hospital

I want fewer required doctor visits

I want more autonomy

More self monitoring and self administration

• Performance diagnostics

• Well being diagnostics

• Self-actionable feedback loops

How Pharma Sees it: How Patients/Consumers See it:

Patients need more of what we do well

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Today’s ‘toys’ seed tomorrow’s markets and build consumer expectations for wearables

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Source: Lux Research Building the Devices of Tomorrow: Electronics Shift to Wearable and Distributed Computing, December 2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0

$2

$4

$6

$8

$10

$12

$14

$16

2003 2008 2013 2018 2023 2028 2033

Wearable device

installed base

(% population)

Wearable device annual

revenues ($ billions)

Hub device revenues Hub device installed base

Installed base continues to grow

What are the now and future markets?

High-end athletics Weekend warriors Fitness buffs Nutritionally aware/enlightened consumers ‘Pre’ people

Pre-hypertensive • Global pre-hypertension prevalence is 31% in adults

Pre-hypercholesterolemic • 35-50% of all U.S. adults

Pre-obesity • 30% of Age >20 in U.S.

Pre-diabetes • 79M adults in U.S. with 11% annual progression rate

Health at Home Aging in Place

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The Innovation Dilemma

Big markets start out small New entrance is difficult by the time a market is in the Billion$ One needs to see the connectedness of markets

Adjacency = markets that share unmet needs and common solutions

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Feasibility of Solution D

esira

bilit

y of

Nee

d

Personalized and Precise: Transdermals

Unmet needs Linear, zero order release

No peak-trough kinetics Sustained release Tunable to level of disease or pain

“Personalized” or “Precision” medicine

Anti-drug abuse properties Application spaces-chronic diseases

Alzheimer’s Parkinson’s Schizophrenia Depression Pain Hormone treatment Diabetes Nutrition

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Advanced excipients, gels, coatings, formulation,

encapsulation Ci

rcul

atin

g do

se

Time

Peak

Trough

Rise

Target dosing

3rd order cybernetics holds the key

We are the first order cybernetic-the observed system

Embedded sensors and diagnostics in wearables that measure, is the second order cybernetic-the observing system

Third order cybernetics is arriving-in the form of big data and analytics about what the observing system finds

This creates huge value for the observed system by delivering higher order actionable information feedback loop

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"the scientific study of control and communication in the animal and the machine."

Sensors & Diagnostics

Big Data Analytics

WEARABLES

Meeting in the middle: Huge opportunities in functional foods + wearables

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Big Pharma Big Food

Functional food Medical food

Physiologic Shift

Healthy “At risk” Early symptoms Full onset

Revenue opportunities

increasing in the center

Reversing the thinking process…

Avoiding anchoring

And taking a market first approach by agnostically looking at unmet needs

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Marketing Strategy

Unmet

Needs

Solutions Construction

Market Attractiveness Capabilities

Strategic Fit

Market Attractiveness

Customer Target Capabilities ROI

Analysis Solution

Construction Gaps and

Needs X X

Conclusions

Better Targeted Product Development

Targeted R&D

• Better, faster, fewer mistakes

Product platform enhancement

• More creative and focused tech scouting

Agnostically look at potential transformative opportunities

Removing ‘anchored’ strategic thinking

Better ‘see’ market opportunities for transformation

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Lux Research Inc. 100 Franklin Street, 8th Floor Boston, MA 02110 USA Phone: +1 617 502 5300 Fax: +1 617 502 5301 www.luxresearchinc.com

Thank you

Kevin Pang, Director 857-284-5691 Kevin.pang@luxresearchinc.com

Case Study: Battery Separators

Key battery component

> 1B m2 produced in 2013

Predicted $7.5B market by 2020

Single component that fits into a larger final product

Lots of experimentation in product development

Greater mechanical strength

High porosity

High thermal stability

Form factor and power key to device embedding

Wearables!

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Source: Lux Research

Using TPPs to Find Differentiation and White Space

Thickness

Porosity

Resistance

Pore size

Gurley value

Thermal stability

Thermal shrinkage

Puncture strength

Young’s modulus

Tensile strength

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0

0.5

1

1.5

2

2.5

Thickness

Porosity

Thermal Stability

Searching horizontally for adjacent technology

thermal stable plastic films

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Unmet need from a Pareto optimization/conjoint analysis perspective

Attribute B

Attribute A

Dominated Alternatives

Pareto Superior Alternatives

“How much must I give up of Attribute (A) to get more of what I want of Attribute (B)?”

Product Development Strategy: What feature/attributes do I pursue and tradeoffs must I make to fulfill an identified unmet need?

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