Global Market trends and developments. Paul Smit SVP of Strategy & Business Development May 31 st, 2007
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1 Global Market trends and developments Paul Smit SVP of Strategy & Business Development May 31 st, 2007
2 Agenda Healthcare and Demographics Healthcare System challenges Key Technology Developments Conclusions
3 Growth in Life Expectancy continues to beat expectations Australia Iceland Japan The Netherlands New Zealand non-maori Norway Sweden Switzerland UN Worldbank Olshansky et al. UN Fries, Olshansky et al. Coale, Coale & Guo Worldbank, UN Bourgeois-Pichat, UN Siegel Bourgeois-Pichat UN, Frejka Dublin Dublin & Lotka Dublin Source: Oeppen et al., Science 2002
4 While the world population grows and ages World population by age group, Europe s population by age groups, Source: UN, 2006 Revision of World Population Prospects,
5 At similar rates across the world China s aging population will be a more serious issue than in the US % of population over 60 years of total population Increasing the need for healthcare services
6 Previously fatal diseases are becoming manageable Increasing the number of people with chronic disease Source: Cutler and McClellan, 2001, US
7 Same major diseases in emerging and mature markets China Germany India Japan Russia USA China Germany India Japan Russia USA Source: WHO
8 And have become the leading cause of death in developing countries Source: WHO, World health report, 2003
9 Emerging markets starting to invest in Healthcare 6000 Healthcare expenditure per capita, US $ Canada France Italy Japan United Kingdom United States China Which leaves ample room for growth
10 driving continued growth in Healthcare, the world s largest service sector 2% 1% 5% 8% Americas Europe, Mid-East, Africa China/HK Worldwide Healthcare Expenditure: >US$ 4,000 bln in 2006 The Americas makes up 54% of the worldwide spend 54% Japan 30% Source: Medistat India Rest of Asia Healthcare Expenditures to grow from ~9% of worldwide GDP to ~11% in % To reach $ 10,000 bln in 2020 $ bln 8% 6% 4% 2% 10,000 4,000 6% CAGR 0% Source: WHO, PMS Internal Analysis Source: PriceWaterhouseCoopers, Healthcast 20202
11 Agenda Healthcare and Demographics Healthcare System challenges Key Technology Developments Conclusions
12 Large variability found between Healthcare Systems Country Rankings Australia Canada Germany New Zealand United Kingdom Overall Ranking (2007) Quality Care Right Care Safe Care Coordinated Care Patient-Centered Care Access Efficiency Equity Healthy Lives Health Expenditures per Capita, 2004 United States $2,876* $3,165 $3,005* $2,083 $2,546 $6,102 Source: Mirror, mirror on the wall, the Commonwealth Fund, May 15, 2007
13 Which is reflected in the outcome of in-hospital procedures Deaths due to surgical or medical mishaps per 100,000 population in Differences in mortality between developed countries Best result Poorest result US Germany Canada France UK Australia OECD Median Source: The Commonwealth Fund, calculated from OECD Health Data, 2006 Japan The Netherlands 0 Heart infarct Colon Cancer Stroke Heart Infarct: In-hospital mortality within 30 days Colon Cancer: In-hospital mortality Stroke: In-hospital mortality, based on individual hospitals Source: OECD Health working paper 22, 2006
14 And is now becoming a serious public issue 50,000 and 100,000 die in hospitals after medical errors 1 # 8 cause of death, before car accidents, breast cancer or AIDS Medication errors hurt 1.5 mln people in the US healthcare facilities 2 Analyses in other countries have revealed similar situations 1 in 3 people in the US believe they or their family members have experienced medical errors 3 1 in 5 say it was serious Sources: 1 To err is human, Institute of Medicine, : News, The National Academies, July Survey of the Kaiser Family Foundation, 2004
15 ... Driving the emergence of new models for Care Delivery and Reimbursement Root causes: Fragmented care delivery stimulated by fee-for-service Lack of incentives for improvements Lack of consumer insight in costs and quality of care Increasing demand for: Transparency in quality and performance Competition on quality and outcome Care delivery along care cycles New payment models that reward results
16 Agenda Healthcare and Demographics Healthcare System challenges Key Technology Developments Conclusions
17 Taking the costs out of Chronic Care Telemonitoring offers continuous care Traditional Model Telemonitoring Model Health Status Data Collected Doctor Visit Doctor Visit Doctor Visit Doctor Visit Doctor Visit Doctor Visit Doctor Visit Doctor Visit Relative Health Status Relative Health Status Care Manager Intervention Care Manager Intervention ER Visit ER Visit Hospital Admissions Time Time
18 with proven clinical and financial outcomes Reduced Hospitalizations Cost Savings Days in Hospital Nurse Telephone Support Home Telemonitoring Total Cost per Patient (Euro) Home Telemonitoring Service Nurse Telephone Support Hospitalization/Medical Cost 0 Hospital Days per Hospital member Days/Hospitalization* 0 Nurse Telephone Support Home Telemonitoring 26% fewer days in hospital than with Nurse Support 10% cost savings over Nurse Support program ROI of 2.1 vs. Nurse Support Source: TEN-HMS Study, Univ. of Hull, UK
19 Early diagnosis and screening: Preventing heart attacks 1/3 of all deaths in the world is due to cardiovascular disease 1 Estimated direct and indirect costs 2 ~$ B, ~10% 20% of the world s Healthcare spending 70% of all cardiovascular events is due to vulnerable plaque vulnerable plaque, # 1 cause of death 1 WHO CT, MR and US procedures 2 American Heart Association, WHO, Philips Establish validated biomarkers, HRP Initiative
20 Early Diagnostics and Screening: Colon Cancer Top 4 cancer type in occurrence Lowest survival rate after lung cancer [USA] Slowly developing disease CT ready for screening
21 Improving the Stroke Care Cycle: opportunities at various points of care Recognition Identification Treatment Monitoring USA: # 3 cause of death Recognitions Activations of BMS First Aid Screening Risk Reduction Education Therapy Education Rehabilitation Education Monitoring Less than 5% of victims receive the right treatment 40% of victims die within a week 30% lose independence 11% of people aged years suffer a silent stroke Sources: AHA, various Healthcare IT to seamlessly integrate all process steps
22 Conclusions Demographics around the world drive up demand for healthcare services over the next 30 years Reimbursement systems need improvement to optimize for patient results and costs, and to reduce medical errors Advances in medical technology will continue to expand into new applications improve integrated Care delivery through optimized Care Cycles
23
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