value creation and commercialization in healthcare product...
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Value Creation and Commercialization
in Healthcare Product Development
Mark Low – May 23, 2018
Changing Mandates in
Medical Devices Product Requirements
• “Historically, we would have sold a product like this on features, benefits, and
relationships.”
• “Today and beyond, we’re looking to sell these things based on evidence.”
• “The changing healthcare environment, with increased scrutiny on cost
containment, has made medical device companies re-think strategies.”
• “If we’re going to ask a hospital to make an investment like this, we need proof
that there’s an improvement in outcomes.”
- Michael Tarnoff, VP and Chief Medical Officer,
Minimally Invasive Therapies Group, Medtronic
In Medical Device Daily, 9/22/15
The New World in Healthcare Delivery
Volume-Based Value-Based
Payment Fee-for-Service Outcome Based
Incentives Volume Value
Focus Acute Episodes Populations
Role of Provider Single Episodes Care Continuum
Information Retrospective Predictive
New Economics Drive New Needs
New Needs Drive New Innovation
In the New Healthcare Ecosystem,
What Constitutes Value in Products?
Lessons Learned by a
Young Product Manager
Product Positioning
Focused on:
• Features
• Advantages
• and Benefits
Lessons Learned by a
Young Product Manager
Product Positioning
Focused on:
• Features
• Advantages
• and Benefits
But in Addition,
Each Product Must Improve:
• Outcome
• Cost
• or Productivity
• Safety and efficacy are still the main criteria
• Measure has expanded to address populations, incorporate
predictive analytics, and span the total continuum of care
• Among alternatives, the solution with the best overall quotient
of sustained benefit over cost wins
• It doesn’t make a difference
unless you do something different.
Improving Outcome
• The test, device, drug or procedure must not only be lower in cost, it should eliminate the need for incurring other costs.
• Take cost out of the total system.
• Reduce length of stay. Eliminate readmission.
• Regarding payment, just because a device or drug has received regulatory approval does not mean cost will be covered or reimbursed.
• The cost value driver is lowering the total relative costof one approach versus alternatives.
Reducing Cost
• Productivity can be measured for the individual,
the procedure, the lab, the department.
It can be measured away from the actual use of the product.
• Example: Unless the test, device or procedure allows an
additional patient to be scheduled in the same overall time or
with fewer resources, there may be no productivity benefit.
• New equipment, procedures, tests, activities need to align
with efficient workflow and information management to
greatest extent possible.
Enhancing Productivity
In the New Healthcare Ecosystem
Innovation Still Focuses on the Same Elements
ProductivityOutcome
Cost
Collectively, Add to Overall Economic Value
Economic Value
Outcome
Cost
Productivity
Understanding Value
Through Customer Discovery
• Innovators should develop estimates of the value associated with
customer needs across the spectrum of the Business Model Canvas
• Value is based on understanding:
• Real decision makers with respect to adoption decisions
in each need area.
• Perceived significance of each need.
• Extent to which available solutions are effectively addressing
- or not addressing - the need.
• The quantitative benefit of the solution relative to current practice.
• Are you providing a must-have solution?
• Does the solution provide a significant differentiation?
• What is the evidence that supports your claims?
Ecosystem - The Net of all the Influences that
will Make or Break your Business
27
95
13
4 8
6Customer RelationshipsValue PropositionsKey Activities Customer SegmentsKey Partnerships
Key Resources Channels
Costs Revenue Streams
The key quantifiable advantages and benefits that set your product apart from competition or current standard of care.
The specific users and/or patients to which the product is targeted.
The elements that will deliver the value proposition;e.g., intellectual property, performance specs., regulatory approval.
The necessary physical, intellectual, human, and financial assets to develop and deliver the product.
a. The costs of developing, testing, and getting clinical/regulatory approval to market the product.
b. The costs of manufacturing, marketing, selling, delivering, training, and supporting the product for the end user.
a. Sources of funds to develop and market the product.
b. Pricing and how the product will get paid for in the market.
Strategic engagements to provide the complete end-to-end solution to the customer.
How the product will be marketed, sold and delivered to customers.
How you will interact with the customer throughout the lifetime of product sale and support.
Value Proposition
The Key Quantifiable Advantages and Benefits
that Set Your Product Apart from Competition or Standard of Care
Value Proposition Statement
• Explains how your product solves a specific customers'
problems or improves their situation (relevancy, to whom),
• Delivers specific benefits (quantified value),
• Tells the ideal customer why they should buy from you and not
from the competition (unique differentiation).
Some Qualifying Questions…
• Is more necessarily better?
• Is less really better?
• Does an improvement in accuracy make a difference?
• How much faster does it need to be?
• How much does it really cost, and to whom?
• Is good enough, enough?
Beginning with the End in Mind:
The Target Product Profile (TPP)
An iterative process that involves:
• Due diligence/research, customer discovery, market data analysis and multidisciplinary brainstorming.
• Target indications and claims.
• Minimal Viable Product and Ideal Product attributes.
• Potential economic value of indications and claims.
• The product’s best differentiating feature or outcome.
• Strategy for positioning the product for exclusivity in the market.
• Reference:https://www.marsdd.com/mars-library/defining-your-target-product-profile-medical-device-products/
Example TPP
Product Properties Minimum Acceptable Result Ideal Result
Primary Indication Medicine for treatment of myocardial reperfusion injury
resulting from MI and subsequent revascularization by
PCI
Medicine for treatment of myocardial
reperfusion injury resulting from MI
Patient Population MI patients undergoing PCI (e.g. angioplasty) to
restore blood flow through an occluded coronary artery
All patients experiencing MI requiring
intervention, both surgical and non-surgical,
to relieve an occluded coronary artery
Treatment Duration Acute Acute
Delivery Mode IV IV
Dosage Form Dissolved in saline for IV injection Dissolved in saline for IV injection
Regimen 3 to 5 treatments over a 5 day span One time injection
Efficacy Reduce cardiovascular death 60 days post treatment
relative to standard of care; reduce incidence of major
adverse cardiac events by 30%
Reduce cardiovascular death 180 days
post treatment relative to standard of care;
reduce incidence of major adverse cardiac
events by 50%; reduction in incidence of
left ventricle ejection fraction < 40%
Risks/Side Effects Devoid of increased vascular complications and
significant mechanism related adverse effects
Devoid of increased vascular complications
and significant mechanism related adverse
effects
• Follow the Patient, Referral Pattern
• Follow the Tests
• Follow the Data
• Follow the Product
• Follow the Money
Walk the Workflow -
The Inhalable Insulin Product Flow Map
From: The Wide Lens. Ron Adner ©2013
The Inhalable Insulin Blindspot
From: The Wide Lens. Ron Adner ©2013
Summary
• Value creation focuses on improving cost, productivity and
outcomes to create overall economic value.
• Elements need to be addressed across the entire
spectrum of the healthcare ecosystem.
• Tools such as the Business Model Canvas, Walking the
Workflow, Target Product Profile, and relentless validation
of the value proposition will guide you to successful
customer discovery.
Translating Research to Development
and Commercialization
www.gcic.org
www.ncai-cc.ccf.org