World Preview 2013, Outlook to 2018 The Future of Medtech

Transcription

1 World Preview 2013, Outlook to 2018 The Future of Medtech

2 September 2013 Welcome to the EvaluateMedTech World Preview 2013, Outlook to 2018 Launched in October 2012, the EvaluateMedTech service is focused on the medical device and diagnostic industry. Powered by Evaluate s proven platform and high quality market intelligence, it allows life science and healthcare companies, investment banks, management consultancies, service providers and others to easily track and benchmark the sector and perform rapid analysis. Our second annual EvaluateMedTech World Preview brings together many of our analyses to provide a top level insight into the expected performance of the medtech industry between now and Based on EvaluateMedTech s coverage of the world s leading medical device and diagnostic companies, the World Preview highlights trends in medtech including consensus sales forecasts of leading industry analysts by device area to 2018, the top 20 companies in 2018, R&D spend current and future, FDA approvals, M&A and venture financing and enterprise value & focus analysis. About Evaluate Ltd. Evaluate is the trusted source for high quality commercial market intelligence and exclusive consensus sales forecasts to Our services are EvaluatePharma, EvaluateMedTech and EvaluateClinicalTrials. Our award-winning editorial arm, EP Vantage, leverages our market intelligence and analysis to cut through the noise, providing daily opinion and insights. Evaluate s services give you the insights you need to ask the right questions and get the right answers. That s intelligence you can act on. For more information visit: North America: Debbie Paul Tel: debbie.paul@evaluategroup.com Rest of the World: Will Hau Tel: +44 (0) will.hau@evaluategroup.com Asia Pacific: Hiroshi Yamazaki Tel: +81 (0) hiroshi.yamazaki@evaluategroup.com General inquiries about this report: Christine Lindgren Tel: christine.lindgren@evaluategroup.com Disclaimer All intellectual property rights in this report remain that of Evaluate Ltd and/or its respective third party licensors. Whilst all reasonable steps have been taken to ensure that the data presented are accurate, Evaluate Ltd cannot accept responsibility for errors or omissions. Neither does Evaluate Ltd warrant the accuracy, merchantability or fitness for a particular purpose of the data. Nothing in the reports shall constitute investment, financial or legal advice and the contents of the reports are provided for information purposes only. The data is not intended to amount to advice and should not be used as a determining factor in any investment decision. This report may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior written consent of Evaluate Ltd. 2

3 EvaluateMedTech Foreword I n the second edition of the EvaluateMedTech World Preview we can reveal the medtech market is expected to grow at 4.5% per year (CAGR) between 2012 and 2018, achieving global sales of $455bn in 2018 (page 6). The analysis is based on in-depth forecast models for the top 180 global medtech companies available within EvaluateMedTech. This sales forecast represents the only current consensus view from equity analysts of the medtech market. Moving towards specialisation Though the single biggest medtech company, Johnson & Johnson, is a conglomerate, the prevalent trend in the medtech industry is towards increased company specialisation. Following Abbott s highly successful split into two separate companies, one medtech, one pharma, and Covidien shedding its pharma operations, we could see a trend in others following suit in order to become smaller and nimbler. Indeed, J&J itself is considering selling its slow-growing diagnostics business; it would not be surprising if broad-based companies such as Siemens or 3M were to separate into more specialised concerns. Regulatory standards tightening Both the US and European medtech markets are seeing tightening of the rules governing the approval of medical devices. The proposed changes to the CE marking process currently moving through the European Parliament could see device-makers having to meet higher standards to get their products on sale. In the US, the FDA is considering bringing laboratory-developed tests, currently sold without requiring direct regulatory oversight, under its control and the agency s requirements have been getting stricter overall as well. The FDA has approved just 14 new PMAs so far this year a 42% decline compared with the same point last year (page 12). VC squeeze Both changes could potentially lengthen the approval process, and consequently could scare investors away. The medtech industry used to offer venture capitalists a relatively quick return on their investment; VCs will be less keen to stump up cash if they know they have longer to wait for their payday. The 14% drop in the total venture funding in 2012 compared with 2011 suggests this may already be happening (page 19). Growth and maturing In vitro diagnostics is not only the largest segment within medtech, with predicted worldwide sales of $58.8bn in 2018, it is also one of the fastest growing, at a rate of 5.1% (page 13). The huge potential of companion diagnostics is one of the drivers here, and the advent of advanced molecular diagnostics is also contributing. If the proposed changes at the FDA take effect they could also spur growth in this market by forcing the withdrawal of many competing laboratory-developed tests from sale. Elsewhere, though, markets are maturing from a period of fast expansion to one of slower growth. The cardiology, imaging and orthopedic sectors are all growing more slowly than the industry average, and higher regulatory bars and decreased investment could militate against the advent of transformative new technologies. Ian Strickland Product Manager, EvaluateMedTech 3

4 EvaluateMedTech World Preview 2013, Outlook to 2018 Analysis Highlights Worldwide medtech sales forecast to grow by 4.5% (CAGR 2012 to 2018), reaching $455bn by 2018 Medtech set to outperform the prescription drug market with a CAGR of 4.5% vs. 3.8% between 2012 and 2018 but pharma forecast to catch up, with both industries estimated to grow by approximately 5% per year from 2015 to 2018 Johnson & Johnson forecast to be the clear market leader in 2018 with medtech sales of $33.4bn In vitro diagnostics expected to be the world s largest medtech segment in 2018, with sales of $58.8bn Global medtech R&D spend set to grow by 3.9% (CAGR) to $26.7bn in 2018 Siemens predicted to be the top medtech R&D spender in 2018, with investment in new programmes forecast to reach $2bn, but Abbott s spending is increasing fast following the AbbVie split Number of 1st time PMAs decreases 5% to 41 in 2012; 510(k) clearances up 1% to 3,185 FDA approves 14 new PMAs in 2013 to end of August, representing a 42% decline compared with the same point last year Roche maintains leading position within in vitro diagnostics with sales of $11.3bn in 2018, and market share of 19.3% Medtronic maintains top spot in cardiology to 2018 with sales of $9.9bn and a 20% market share Johnson & Johnson set to dominate the slow-growing orthopedics market with 2018 market share of 26.6% and sales of $10.6bn M&A deal value falls by a startling 79% in H vs. H and deal count drops 15% Total deal value of medtech venture financing falls 14% to $3.8bn in 2012 vs but expands 6% to $2.5bn in H vs. H Johnson & Johnson forecast to be the clear market leader in

5 Table of Contents 6 Worldwide Medtech Sales by Device Area in Worldwide Medtech Sales in 2018: Top 20 Companies 8 Worldwide Medtech vs. Prescription Drug Sales ( ) 9 Worldwide Medtech R&D Spend ( ) 10 Medtech R&D Spend in 2018: Top 20 Companies 11 FDA Device Approval Analysis: 2005 to FDA First Time PMA and HDE Approvals 13 In Vitro Diagnostics (IVD) Market to Cardiology Market to Diagnostic Imaging Market to Orthopedics Market to Ophthalmics Market to M&A Analysis: 2008 to H Venture Financing Analysis: 2008 to H Enterprise Value & Focus Analysis: 2013 Latest vs

6 Worldwide MedTech Sales by Device Area in 2018 Worldwide Medtech Sales Forecast to Grow by 4.5% (CAGR) to $455bn by 2018; In Vitro Diagnostics remains Number 1 in 2018 EvaluateMedTech finds that the market for medtech products, based on the consensus forecast for the leading 180 medtech companies, will grow by 4.5% per year (CAGR) between 2012 and 2018, to $455bn. In vitro diagnostics is expected to be the world s largest medtech segment in 2018, with sales of $58.8bn, beating cardiology and diagnostic imaging to the top spot. The fastest growing of the top 15 segments is neurology, which is set to grow at 6.9% per year (CAGR) between 2012 and 2018, to reach $8bn. Diabetic care and orthopedics are forecast to be the slowest growing segments within the top 15, expanding 3.4% per year (CAGR) between 2012 and Analysis on Top 10 Device Areas in 2018, Market Share & Sales Growth ( ) WW Market Share % 18% 16% 14% 12% Diagnostic Imaging Cardiology In Vitro Diagnostics (IVD) 10% 8% 6% Orthopedics Drug Delivery Endoscopy Ophthalmics 4% 2% Wound Management Dental General & Plastic Surgery 0% +3.0% +3.5% +4.0% +4.5% +5.0% +5.5% +6.0% Note: Bubble = WW Sales in 2018 % Sales Growth: CAGR Note: Analysis is based on the top 180 medtech companies. Sales in 2012 based on company reported data. Sales forecasts to 2018 based on a consensus of leading equity analysts estimates for segmental sales. 6

7 Worldwide Medtech Sales in 2018: Top 20 Companies Johnson & Johnson Forecast to be Clear Market Leader in Medtech Sales in 2018 EvaluateMedTech finds that Johnson & Johnson is forecast to be number one medtech company in terms of global medtech sales, with $33.4bn in sales in Nonetheless its share of the medtech market is expected to fall, from 7.9% in 2012 to 7.3% in The fastest growing of the top 20 companies follow two very different business strategies. Lens maker Essilor has a very narrow focus, whereas Baxter is active in many disparate areas including dialysis, drug delivery, wound management and regenerative medicine. Between 2012 and 2018 Boston Scientific is forecast to fall six ranking places, from 10th to 16th. With a CAGR of 2% between 2012 and 2018, the company looks likely to struggle to replace sales from its flagging cardiology businesses. WW Medtech in 2018: Top 10 Companies WW Medtech Sales ($bn) % % % Sales ($bn) CAGR (%) Ranking Change % % +5% +4% +4% +5% % 0 (-) (-) (-) (-) (-) +1-1 (-) (-) +5 Johnson & Johnson Siemens Medtronic Roche General Electric Abbott Laboratories Covidien Philips Stryker Essilor International WW Medtech Sales (2012/18): Top 20 Companies & Total Market WW Medtech Sales ($bn) 2018 Change WW Market Share Rank Company Country % CAGR vs. Sep 12 ($bn) Chg. (+/-) Chg. (+/-) 1 Johnson & Johnson USA % % 7.3% -0.5pp - 2 Siemens Germany % % 4.8% -0.3pp - 3 Medtronic USA % % 4.4% -0.4pp - 4 Roche Switzerland % % 3.0% -0.1pp - 5 General Electric USA % % 2.9% +0.1pp - 6 Abbott Laboratories USA % % 2.8% +0.0pp +1 7 Covidien USA % % 2.7% -0.0pp -1 8 Philips The Netherlands % % 2.6% -0.1pp - 9 Stryker USA % % 2.5% +0.0pp - 10 Essilor International France % % 2.1% +0.5pp Novartis Switzerland % % 2.0% +0.1pp - 12 Danaher USA % % 1.9% +0.0pp - 13 B. Braun Melsungen Germany % % 1.9% +0.0pp Baxter International USA % % 1.9% +0.5pp Becton Dickinson USA % % 1.9% -0.0pp Boston Scientific USA % % 1.8% -0.2pp Olympus Japan % % 1.6% +0.3pp M USA % % 1.4% -0.0pp - 19 St. Jude Medical USA % % 1.4% -0.2pp Fresenius Germany % % 1.3% +0.2pp +5 Total Top % % 52.3% -0.2pp Other % 47.4% 47.7% +0.2pp Total % 100.0% 100.0% Note: Analysis is based on the top 180 medtech companies. Sales in 2012 based on company reported data. Sales forecasts to 2018 based on a consensus of leading equity analysts estimates for segmental sales Change vs. Sep 12 ($bn) column represents the change in the consensus forecast since September

8 Worldwide Medtech vs. Prescription Drug Sales ( ) Medtech Set to Outperform Prescription Drug Market with 4.5% (CAGR) Growth vs. 3.8% between 2012 and 2018, But Pharma Forecast to Catch Up EvaluateMedTech consensus forecast finds that the worldwide market for medtech products is set to outperform the prescription drug market growth with 4.5% growth per year (CAGR) between 2012 and 2018, versus 3.8% for pharmaceuticals. However, from 2015 onwards growth in the prescription drug market is forecast to catch up, with annual growth of 5% forecast each year from 2015 to 2018 for both industries. Overall in 2018 the medtech industry will be 51.0% of the size of the prescription drug market, up from 44.3% in WW Medtech vs Prescription Drug Sales Source: EvaluateMedTech and EvaluatePharma (23 SEP 2013) WW Medtech & Rx Sales ($bn) 1, WW Prescription Sales: +3.8% CAGR WW Medtech Sales: +4.5% CAGR WW Sales Growth % 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% WW Growth Rate: Medtech vs. Prescription Drug Sales % 11% 10% 9% 11% 8% 6% 8% 2012: Euro crisis impacts euro sales converted to dollars. 6% 3% 2% 2% 5% 5% 5% 2009: World economy contracted -2.2% 3% 3% 5% 1% % % 5% Medtech Growth per Year Prescription (Rx) Growth per Year 5% 5% 5% 5% WW Medtech vs. Prescription Drug Sales ( ) WW Sales ($bn) Year WW Medtech Sales Growth per Year +9.9% +11.0% +10.5% +1.2% +5.7% +7.9% +2.5% +2.2% +4.8% +5.3% +5.1% +4.9% +4.7% Medtech as % of Rx 44.3% 44.5% 44.6% 45.5% 45.0% 46.1% 47.0% 49.0% 50.0% 50.7% 50.9% 51.0% 50.9% 51.0% WW Prescription (Rx) Growth per Year +9.4% +10.6% +8.4% +2.2% +3.0% +5.9% -1.7% +0.1% +3.3% +5.0% +5.0% +5.0% +4.6% Source: EvaluateMedTech & EvaluatePharma (23 SEP 2013) CAGR WW Medtech Sales +4.5% WW Prescription Drug Sales +3.8% Note: Prescription drug sales based on top 500 pharmaceutical and biotech companies from EvaluatePharma. Sales to 2012 based on company reported sales data. Sales forecasts to 2018 based on a consensus of leading equity analysts estimates for segmental sales. 8

9 Worldwide Medtech R&D Spend ( ) Global Medtech R&D Spend Set to Grow by 3.9% (CAGR) to $26.7bn by 2018 EvaluateMedTech consensus forecast finds that worldwide medtech R&D is expected to grow at a healthy 3.9% per year (CAGR) between 2012 and 2018 to $26.7bn. The overall R&D investment rate is expected to be around 5.9% of sales in 2018, slightly down from the 6.1% observed in 2012, perhaps due to companies conserving their cash as payers squeeze prices. Within the top 20 companies the reinvestment rate is higher at 7.6% in 2018, but still down on the 8.0% seen in Worldwide Total Medtech R&D Spend in WW Medtech R&D Spend ($bn) % +14.2% +9.6% % +7.8% +1.5% +3.9% CAGR % +4.0% +4.3% +4.2% +4.1% +3.9% 18% 16% 14% 12% 10% 8% 6% 4% 2% R&D Spend Growth % % % -2% -4% WW Medtech R&D Spend by Medtech Companies ( ) WW Medtech R&D & Medtech Sales ($bn) Year Medtech R&D Spend Growth per Year +14.2% +16.4% +9.6% -1.3% +5.5% +7.8% +1.5% +2.9% +4.0% +4.3% +4.2% +4.1% +3.9% WW Medtech Sales R&D as % of Medtech Sales 5.8% 6.1% 6.4% 6.3% 6.2% 6.2% 6.1% 6.1% 6.1% 6.1% 6.0% 6.0% 5.9% 5.9% R&D as % of Medtech Sales (Top 20 in 2018) 8.0% 7.6% CAGR on Medtech R&D Spend Cumulative 5 year R&D Spend ( ) +3.9% $99bn CAGR on Medtech R&D Spend +3.3% Note: Analysis is based on the top 180 medtech companies. R&D spend in 2012 based on company reported data. Forecast medtech R&D spend based on a consensus of leading equity analysts estimates for company level R&D spend, extrapolated to medtech R&D when a company has non-medtech R&D activity. Medtech R&D is not disclosed by a number of companies and this analysis is limited to those companies with sufficient disclosure. 9

10 Medtech R&D Spend in 2018: Top 20 Companies Siemens to Remain Top Medtech R&D Spender in 2018; Abbott Ups Spending Post-Split EvaluateMedTech consensus forecast finds imaging firm Siemens spending the most on medtech R&D in 2018, investing $2bn in new programmes. Of the top 20 companies, lens maker Essilor is forecast to increase its R&D spend the most, with a 9% increase per year (CAGR) from $208m in 2012 to $340m in Perhaps unsurprisingly, some of the more established players are content to rest on their laurels, with the R&D spend of Johnson & Johnson, Philips and Roche tracking behind the industry s 4% average growth rate at just 2% growth each. Of the large-cap companies, Abbott is increasing its R&D expenditure fastest, with a 7% growth rate, reflecting its new focus since spinning off its prescription drug business into AbbVie at the beginning of Medtech R&D Spend ($bn) 2,500 2,000 1,500 Medtech R&D in 2018: Top 10 Companies 2,023 1,899 1,823 R&D Spend ($m) CAGR (%) 1,000 1,280 1,180 1,157 1, % Siemens +2% +3% +7% +2% +2% +3% +2% +2% Johnson & Johnson Medtronic Abbott Laboratories Philips Roche General Electric Boston Scientific St. Jude Medical +5% Danaher Medtech R&D Spend (2011/18): Top 20 Companies & Total Market Medtech R&D ($m) 2018 Change R&D As a % of Medtech Sales Rank Company CAGR vs. Sep 12 ($m) Chg. (+/-) Chg. (+/-) 1 Siemens 1,706 2,023 +3% % 9.3% -0.3pp - 2 Johnson & Johnson 1,681 1,899 +2% % 5.7% -0.4pp - 3 Medtronic 1,557 1,823 +3% % 9.1% -0.2pp - 4 Abbott Laboratories 848 1,280 +7% % 10.1% +1.4pp +4 5 Philips 1,032 1,180 +2% % 9.8% -0.9pp -1 6 Roche 1,009 1,157 +2% % 8.4% -0.8pp -1 7 General Electric 960 1,156 +3% % 8.7% -1.1pp -1 8 Boston Scientific % % 11.9% -0.4pp -1 9 St. Jude Medical % % 12.0% -0.3pp - 10 Danaher % % 7.7% +0.3pp - 11 Covidien % % 5.0% +0.2pp - 12 Stryker % % 5.4% -0.0pp Becton Dickinson % % 7.0% -0.2pp Terumo % % 7.8% -0.0pp - 15 Edwards Lifesciences % % 13.4% -2.0pp Essilor International % % 3.5% -0.1pp Novartis % % 3.7% -0.5pp - 18 Olympus % % 4.5% -2.1pp B. Braun Melsungen % % 3.8% -0.0pp biomérieux % % 13.2% -0.3pp - Total Top 20 14,165 17,193 +3% % 7.6% -0.4pp Other 7,085 9,535 +5% Total 21,251 26,729 +4% 6.1% 5.9% Note: Analysis is based on the top 180 medtech companies. R&D spend in 2012 based on company reported data. Forecast medtech R&D spend based on a consensus of leading equity analysts estimates for company level R&D spend, extrapolated to medtech R&D when a company has non-medtech R&D activity. Medtech R&D is not disclosed by a number of companies and this analysis is limited to those companies with sufficient disclosure Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

11 FDA Device Approval Analysis: 2005 to 2012 Number of 1st Time PMAs Decreases 5% to 41; 510(k) Approvals Up 1% to 3,185 EvaluateMedTech found that the FDA approved 41 new PMAs/HDEs/PDPs (first time approvals) in 2012, a decrease of 5% from the 2011 figure of 43. In 2012 Abbott had the most first PMA/HDE approvals with five, whilst Medtronic had the most overall approvals with (k) clearances held steady, increasing by just 1% year-on-year to 3,185 in FDA Approval Count: 1st PMA/HDE/PDPs, 510(k)s & Supplementary PMA/PDPs Per Year 3,500 No. of 1st PMA/ HDE/ PDP ,205 3,257 3,035 1,062 1, ,102 3,044 1,488 1,498 2,850 1,841 3,150 3,185 2,192 2,380 3,000 2,500 2,000 1,500 1, No. of Sup PMAs/ 510(k)s st Time PMA/ HDE/ PDP 510(k) Supplementary PMA/ PDP FDA Approval Count (1st PMAs/ HDEs/ Supplementary PMAs/ 510(k)s) Year st Time PMA/ HDE/ PDP % Chg. +29% -27% -6% -40% +22% +95% -5% Supplementary PMA/ PDP 735 1,062 1,117 1,488 1,498 1,841 2,192 2,380 % Chg. +44% +5% +33% +1% +23% +19% +9% 510(k) 3,205 3,257 3,035 3,102 3,044 2,850 3,150 3,185 % Chg. +2% -7% +2% -2% -6% +11% +1% Total 3,974 4,363 4,184 4,620 4,560 4,713 5,385 5,606 % Chg. +10% -4% +10% -1% +3% +14% +4% 2012: FDA Approval Count (1st Time PMAs/ HDEs/ PDPs/ 510(k)s) & Medtech R&D Spend PMA/ HDEs - Company First Approval 1 Medtronic 2 Boston Scientific 3 Abbott Laboratories 4 Johnson & Johnson 5 St. Jude Medical 6 Roche 7 Edwards Lifesciences 8 Siemens 9 Novartis 10 Stryker Total PMA/ PDPs - Suppl , (k) Clearance ,185 Total Approvals ,606 R&D Spend ($m) Note: Based on Devices@FDA data. PMA (Pre-market Approval): a class III device which is a life-sustaining or life-supporting implantable device ; usually require trials. 510(k): substantially equivalent to a legally marketed Class I, II, III device (where PMA not required). HDE (Humanitarian Device Exemption): a device for treating or diagnosing a disease/condition that affects <4,000 individuals in the US per year. 1, , , ,

12 2013 FDA First Time PMA and HDE Approvals FDA Approves 14 New PMAs in 2013 to end of August, Representing a 42% Decline Compared with the Same Point Last Year EvaluateMedTech found that the FDA has so far approved just 14 new PMAs (pre-market approvals) and one HDE in 2013 to August 31st. This represents a 42% decline compared with the 24 new PMAs that had been approved at this point last year, perhaps reflecting tighter regulatory standards at the FDA. Four of the 14 approvals (29%) so far this year are in the fast growing molecular diagnostic area FDA First Time PMA Approvals EvaluateMedTech Device Classification Decision Level 1 Level 2 Level 3 Date Company Product Code Name Device Name (Approval Code) Anesthesia & Respiratory 03 May 13 Johnson & Johnson Computer-Assisted Personalized Sedation System Cardiology Cardiology Cardiology Diagnostic Imaging General & Plastic Surgery General & Plastic Surgery In Vitro Diagnostics (IVD) Anesthesia & Respiratory Therapeutic Devices Cardiac Prosthetic Devices Cardiovascular Surgical Devices Interventional Cardiology Other Diagnostic Imaging Surgical Prosthetic Devices Surgical Prosthetic Devices Molecular Diagnostics Other Anesthesia & Respiratory Therapeutic Devices Graft Prosthesis 14 Feb 13 Lombard Medical Technologies Vascular Closure Devices Interventional Catheters & Guidewires Image Analyser Systems 31 Jan 13 Cardiva Medical System, Endovascular Graft, Aortic Aneurysm Treatment 16 Aug 13 Pfm Medical Occluder, Patent Ductus, Arteriosus SEDASYS COMPUTER-ASSISTED PERSONALIZED SEDATION SYSTEM (P080009) AORFIX FLEXIBLE STENT GRAFT SYSTEM (P110032) Device, Hemostasis, Vascular VASCADE VASCULAR CLOSURE SYSTEM (P120016) NIT-OCCLUD PDA (P120009) 22 Aug 13 Parascript Analyzer, Medical Image PARASCRIPT ACCUDETECT (P120004) Breast Prosthesis 14 Jun 13 Johnson & Johnson Prosthesis, Breast, Noninflatable, Internal, Silicone Gel-Filled Breast Prosthesis 20 Feb 13 Allergan Prosthesis, Breast, Noninflatable, Internal, Silicone Gel-Filled Infectious Disease Molecular Diagnostics 20 Jun 13 Abbott Laboratories Assay, Genotyping, Hepatitis C Virus MENTOR MEMORYSHAPE BREAST IMPLANTS (P060028) NATRELLE HIGHLY COHESIVE SILICONE- FILLED BREAST IMPLANTS (P040046) ABBOTT REALTIME HCV GENOTYPE II, ABBOTT REALTIME HCV GENOTYPE II CONTROL KIT, URACIL-N-GLYCOSYLASE (UNG) (P120012) In Vitro Diagnostics (IVD) Molecular Diagnostics Oncology Molecular Diagnostics 12 Jul 13 QIAGEN Somatic Gene Mutation Detection System THERASCREEN EGFR RGQ PCR KIT (P120022) In Vitro Diagnostics (IVD) Molecular Diagnostics Oncology Molecular Diagnostics 29 May 13 biomérieux Somatic Gene Mutation Detection System BIOMERIEUX THXID BRAF ASSAY KIT (P120014) In Vitro Diagnostics (IVD) Molecular Diagnostics Oncology Molecular Diagnostics 14 May 13 Roche Somatic Gene Mutation Detection System COBAS EGFR MUTATION TEST (P120019) Orthopedics Spinal Devices Other Spinal Devices Orthopedics Spinal Devices Other Spinal Devices Wound Management Wound Closure Devices Surgical Sealants 01 Mar 13 Tenaxis Medical 23 Aug 13 LDR Prosthesis, Intervertebral Disc MOBI-C CERVICAL DISC PROSTHESIS (TWO- LEVEL INDICATION) (P110009) 07 Aug 13 LDR Prosthesis, Intervertebral Disc MOBI-C CERVICAL DISC PROSTHESIS (ONE- LEVEL INDICATION) (P110002) Sealant, Polymerizing ARTERX SURGICAL SEALANT (P100030) 2013 FDA HDE Approvals EvaluateMedTech Device Classification Decision Level 1 Level 2 Level 3 Date Company Product Code Name Device Name (Approval Code) Ophthalmics Ophthalmic Prosthetic Devices Other Ophthalmic Prosthetic Devices 13 Feb 13 Second Sight Medical Products Prosthesis, Retinal ARGUS II RETINAL PROSTHESIS SYSTEM (H110002) Note: Based on Devices@FDA data to 31st August PMA (Pre-market Approval): a class III device which is a life-sustaining or life-supporting implantable device ; usually require trials. HDE (Humanitarian Device Exemption): a device for treating or diagnosing a disease/condition that affects <4,000 individuals in the US per year. 12

13 In Vitro Diagnostics (IVD) Market to 2018 Roche Maintains Leading Position within In Vitro Diagnostics Market; J&J Flags EvaluateMedTech consensus forecast finds Swiss giant Roche is the clear market leader within in vitro diagnostics with sales of $11.3bn in 2018, and a 19.3% market share*. But arguably the real success story is Abbott, which is expected to jump two ranking places to second spot between 2012 and 2018, with 2018 sales of $6.3bn. Conversely, Johnson & Johnson s diagnostic business is the slowest growing of the top 10 companies, with sales growing 1% (CAGR) between 2012 and 2018, a factor that may have influenced its recent decision to look for a buyer for the flagging business. Analysis on WW Sales, Market Share & Sales Growth ( ) WW Market Share % 25% 140% 120% 20% 100% 15% 80% Novo: Solid growth in its core insulin franchise, including Tresiba (insulin degludec), and GLP-1 Victoza (liraglutide). Roche Abbott: Strong growth from Point of Care and Molecular Diagnostics 60% 10% Takeda: Actos generic competition expected Siemens Danaher Abbott Laboratories 40% 5% 20% Thermo Fisher Scientific Merck: Strong growth in DPP-IV inhibitor 0% 0% +0% 0 +1% % % % +5% % 1 +7% % +9% 1.4 Note: Bubble = WW Sales in 2018 % Sales % Growth: Sales Growth: CAGR CAGR Top 10 Companies & Total WW In Vitro Diagnostics Sales WW Sales ($m) CAGR 2018 Change WW Market Share Rank Chg. Rank Company vs. Sep 12 ($m) Roche 8,216 11,329 +6% % 19.3% - 2 Abbott Laboratories 4,292 6,292 +7% % 10.7% +2 3 Danaher 4,628 6,197 +5% % 10.5% - 4 Siemens 5,153 6,073 +3% % 10.3% -2 5 Thermo Fisher Scientific 2,912 3,749 +4% % 6.4% - 6 Becton Dickinson 2,538 3,203 +4% % 5.4% - 7 Alere 2,110 2,808 +5% % 4.8% - 8 Sysmex 1,666 2,542 +7% % 4.3% +1 9 Johnson & Johnson 2,069 2,143 +1% % 3.6% biomérieux 1,609 2,064 +4% % 3.5% - Top 10 35,194 46,400 +5% % 78.9% Other 8,421 12,389 +7% 19.3% 21.1% Total Industry 43,614 58, % 100.0% 100.0% ; Consensus sales from equity analysts' reports Note: *Excludes Glucose Test Systems which are included in Diabetic Care classification Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

14 Cardiology Market to 2018 Medtronic Set to Maintain Number 1 Position in Cardiology to 2018 but Asahi Kasei Growing Fast EvaluateMedTech consensus forecast finds that Medtronic will remain the world s number one cardiology company with global sales of $9.9bn in 2018 and a market share of 20%. Asahi Kasei is set to be the fastest growing cardiology company in the top 10 with expected 15% per year growth (CAGR) between 2012 & 2018, driven by its acquisition of ZOLL Medical in Analysis on WW Sales, Market Share & Sales Growth ( ) WW Market Share % 30% 25% 20% Medtronic 15% 10% Takeda: Actos generic competition expected St. Jude Medical Boston Scientific Edwards: Solid growth in transcatheter heart valves segment. 5% Abbott Laboratories Edwards Lifesciences Merck: Strong growth in DPP-IV inhibitor 0% +0% +1% +2% +3% +4% +5% +6% +7% +8% +9% Note: Bubble = = WW WW Sales Sales in 2018 in 2018 % Sales Growth: CAGR Top 10 Companies & Total WW Cardiology Sales WW Sales ($m) CAGR 2018 Change WW Market Share Rank Chg. Rank Company vs. Sep 12 ($m) Medtronic 8,695 9,866 +2% % 20.2% - 2 St. Jude Medical 5,080 5,662 +2% % 11.6% - 3 Boston Scientific 5,008 5,319 +1% % 10.9% - 4 Abbott Laboratories 2,925 3,532 +3% % 7.2% - 5 Edwards Lifesciences 1,866 2,826 +7% % 5.8% +2 6 Johnson & Johnson 1,985 2,667 +5% % 5.5% -1 7 Getinge 1,934 2,626 +5% % 5.4% -1 8 Terumo 1,775 2,558 +6% % 5.2% - 9 Covidien 1,602 2,192 +5% % 4.5% - 10 Asahi Kasei 653 1, % % 3.1% +3 Top 10 31,522 38,747 +3% % 79.5% Other 6,627 9,991 +7% 17.4% 20.5% Total Industry 38,149 48, % 100.0% 100.0% ; Consensus sales from equity analysts' reports. Note: General Electric & Philips do not disclose cardiology sales Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

15 Diagnostic Imaging Market to 2018 Siemens and General Electric to Retain Leading Positions in 2018 EvaluateMedTech consensus forecast finds that Siemens and General Electric remain the dominant forces in the diagnostic imaging industry in 2018, with a combined market share of 53.9%. Of the two, Siemens is forecast to be the world s leading diagnostic imaging company in 2018 just as it was in 2012 based on worldwide sales of $13bn and a 28.7% market share. General Electric is set to close the gap on Siemens, though, with sales expected to grow by 5% per year (CAGR) to $11.4bn in Overall, the diagnostic imaging market is set to grow at 3.8% per year (CAGR) to $45.1bn in Analysis on WW Sales, Market Share & Sales Growth ( ) WW Market Share % 40% 35% 30% Siemens 25% General Electric 20% 15% Philips 10% Toshiba 5% Carestream Health 0% +0% +1% +2% +3% +4% +5% +6% +7% Note: Bubble = WW Sales in 2018 % Sales Growth: CAGR Top 10 Companies & Total WW Diagnostic Imaging Sales WW Sales ($m) CAGR 2018 Change WW Market Share Rank Chg. Rank Company vs. Sep 12 ($m) Siemens 10,421 12,959 +4% % 28.7% - 2 General Electric 8,414 11,353 +5% % 25.2% - 3 Philips 4,878 6,162 +4% % 13.7% - 4 Toshiba 4,522 4,806 +1% % 10.6% - 5 Carestream Health 1,525 1,977 +4% % 4.4% - 6 Hitachi Medical 1,344 1,329-0% % 2.9% - 7 Agfa-Gevaert % % 2.2% - 8 Konica Minolta % % 1.9% - 9 Varian Medical Systems % % 1.7% Shimadzu % % 1.6% -1 Top 10 34,094 41,939 +4% % 92.9% Other 1,985 3,200 +8% 5.5% 7.1% Total Industry 36,079 45, % 100.0% 100.0% ; Consensus sales from equity analysts' reports Note: Segment sales include servicing of machines. FUJIFILM s Diagnostic Imaging sales are not available Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

16 Orthopedics Market to 2018 Johnson & Johnson Set to Entrench Domination of Slow-Growing Orthopedics Market EvaluateMedTech consensus forecast finds that, despite high-profile failures with some of its joint products, Johnson & Johnson is due to be the clear dominant force in orthopedics. It is forecast to command an even greater market share in 2018, 26.6%, than the already-leading 22.1% in 2012, largely owing to its acquisition of Synthes in June Overall, the orthopedics market is set to grow at 3.4% per year (CAGR), slower growth than the medtech industry as a whole, reflecting a lack of technological breakthroughs in a maturing market. Analysis on WW Sales, Market Share & Sales Growth ( ) WW Market Share % 35% 30% 25% JNJ: Acquired Synthes in June 2012 for $19.7bn. Johnson & Johnson 20% Stryker 15% Zimmer 10% 5% Medtronic Biomet 0% +0% +1% +2% +3% +4% +5% +6% +7% +8% +9% Note: Bubble = = WW WW Sales Sales in 2018 in 2018 % Sales Growth: CAGR Top 10 Companies & Total WW Orthopedics Sales WW Sales ($m) CAGR 2018 Change WW Market Share Rank Chg. Rank Company vs. Sep 12 ($m) Johnson & Johnson 7,238 10,642 +7% % 26.6% - 2 Stryker 4,932 6,402 +4% % 16.0% - 3 Zimmer 4,234 5,274 +4% % 13.2% - 4 Biomet 2,796 3,360 +3% % 8.4% +1 5 Medtronic 3,131 3,244 +1% % 8.1% -1 6 Smith & Nephew 2,178 2,394 +2% % 6.0% - 7 Arthrex 1,080 1,575 +6% n/a 3.3% 3.9% +1 8 NuVasive % % 2.1% +1 9 Globus Medical % n/a 1.2% 1.9% Wright Medical Group % % 1.8% +1 Top 10 27,040 35,187 +4% % 88.0% Other 5,684 4,815-3% 17.4% 12.0% Total Industry 32,724 40, % 100.0% 100.0% ; Consensus sales from equity analysts' reports Note: 2018 Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

17 Ophthalmics Market to 2018 Essilor To Replace Novartis as Top Ophthalmics Company by 2018 EvaluateMedTech consensus forecast finds that Essilor will take over from Novartis as the leading ophthalmics company in 2018 with global sales of $9.6bn. The French maker of optical lenses is expected to demonstrate strong year-on-year growth of 9% between 2012 and Elsewhere, a new player has entered the game: Valeant Pharmaceuticals debuts in the top 10 at number 5 following its August 2013 acquisition of Bausch & Lomb, with 2018 sales forecast to reach $2.4bn. Analysis on WW Sales, Market Share & Sales Growth ( ) WW Market Share % 140% 35% 120% 30% 100% 25% 80% Novo: Solid growth in its core insulin franchise, including Tresiba (insulin degludec), and GLP-1 Victoza (liraglutide). Essilor International Novartis 20% 60% 15% Takeda: Actos generic competition expected Valeant: Entered the Ophthalmics space in 2013 following acquisition of Bausch + Lomb 40% 10% 20% 5% Johnson & Johnson HOYA Valeant Pharmaceuticals* Merck: Strong growth in DPP-IV inhibitor 0% 0% +0% % % % % 1 +10% % 1.4 Note: Bubble = = WW WW Sales Sales in 2018 in 2018 % Sales % Growth: Sales Growth: CAGR CAGR Top 10 Companies & Total WW Ophthalmics Sales WW Sales ($m) CAGR 2018 Change WW Market Share Rank Chg. Rank Company vs. Sep 12 ($m) Essilor International 5,716 9,591 +9% % 29.1% +1 2 Novartis 6,206 8,479 +5% % 25.7% -1 3 Johnson & Johnson 2,996 3,519 +3% % 10.7% - 4 HOYA 1,958 2,564 +5% % 7.8% - 5 Valeant Pharmaceuticals* 1,750 2,448 +6% new entry 7.4% 7.4% new entry 6 Carl Zeiss 1,745 2,056 +3% % 6.2% - 7 The Cooper Companies 1,189 1,744 +7% % 5.3% - 8 Abbott Laboratories 1,097 1,322 +3% % 4.0% - 9 TOPCON % % 1.6% - 10 NIDEK % % 1.2% - Top 10 23,402 32,658 +6% % 99.2% Other % 0.8% Total Industry 23,590 32, % 100.0% 100.0% ; Consensus sales from equity analysts' reports Note: *2012 sales figure and market share for Valeant represent those of Bausch + Lomb prior to acquisition Change vs. Sep 12 ($m) column represents the change in the consensus forecast since September

18 M&A Analysis: 2008 to H M&A Deal Value Falls by a Startling 79% in H1 2013; Deal Count Also Drops EvaluateMedTech found that total deal values from M&A of medtech companies decreased by a shocking 79% to $6bn in H1 2013, compared with $31bn in H The number of deals also declined significantly, by 15%, with 95 deals closed in H vs. 112 in H The largest deal in H1 2013, and the only one worth over $1bn, was the acquisition of contraception specialist Conceptus by Bayer. The second half of the year has, however, started more positively thanks to the recent closing of Valeant s $8.7bn acquisition of Bausch + Lomb and Baxter s $3.9bn acquisition of Gambro. Count of Medtech Pharma M&A Deals vs. Total Pharma Medtech M&A Value (2005 ( ) H1 2013) Source: EvaluateMedTech EvaluatePharma (30 (23 APR SEP 2010) 2013) Deal Value Deal ($bn) Value ($bn) FUJ Alcon* [YAM] [NVS] ($20.8bn) $10.4bn Respironics SAN [DAI](Philips) ($15.4bn) $5.1bn Ventana (Roche) $3.4bn S. Goldway (Philips) $3bn SCH [BAY] ($21.3bn) PFE Cons [JNJ] ($16.6bn) AM Optics [ABT] $2.8bn Alcon* [NVS] $28bn ev3 [COV] $2.6bn Target [Acquiror] (Deal Value) 2007 H Organon [SGP] ($15.6bn) Synthes [JNJ] $19.7bn MEDI [AZN] 253 ($15.6bn) Serono [Merck] ($13.8bn) Alcon 224[NVS] ($10.4bn) 2011 Genzyme* [SAN]: $20.1bn Alcon* [NVS] $9.6bn Beckman C [DHR] $6.8bn Kinetic C (P. Equity) $6.1bn 2012 Synthes [JNJ] $19.7bn Gen-Probe [HOL] $3.7bn 173% Growth WYE [PFE] ($68.0bn) DNA [Roche] ($46.8bn) SGP [MRK] ($41.1bn) Deal Count Deal Count 0 $36bn $36bn $13bn $13bn $50bn $77bn $50bn $46bn $77bn $31bn $46bn $6bn H H Deal Deal Value Value ($bn) Deal Deal Count Count Count of Medtech M&A Deals vs. Total Medtech M&A Value ( H1 2013) Year H H Deal Count % Chg. -22% 54% -3% -9% -15% Deal Value ($bn) % Chg. -65% 293% 55% -41% -79% Top 10 MedTech M&A Closed Deals in H1 2013: Ranked on Deal Value Completion Deal Target Country (Status) Acquiror Date Value ($m) 1 Conceptus USA (Listed) Bayer 05 Jun 13 1,100 2 Trauson China (Listed) Stryker 01 Mar Technolas Perfect Vision Germany (Private) Bausch + Lomb 28 Jan Verinata Health USA (Private) Illumina 21 Feb BioMimetic Therapeutics USA (Listed) Wright Medical Group 01 Mar Angiotech's Interventional Business Canada (-) Argon Medical Devices 15 Apr Young Innovations USA (Listed) Consortium of Investors 31 Jan HemoCue Sweden (-) Danaher 09 Apr Palomar Medical Technologies USA (Listed) Cynosure 24 Jun Epocal Canada (Private) Alere 04 Feb Other 1,624 Total 6,468 Note: Analysis based on closing date of deal. *Alcon & Genzyme included in analysis as >25% of company sales are derived from medtech. 18

19 Venture Financing Analysis: 2008 to H Value of Venture Financing Expands 6% in H1 2013; Deal Count Increases 15% EvaluateMedTech found that in H the total deal value of medtech venture financing increased by 6% to $2.5bn, whilst the number of venture financing deals increased by 15% to 216. Morrisville, North Carolina-based TearScience s $70m funding was the largest single round seen in the first half of The cash is earmarked for commercialisation of the company s dry eye therapy. This chimes with the relatively rapid growth seen in the ophthalmics sector Count of Venture Financing Deals vs. Total Venture Financing Value ( H1 2013) $4,502m $4,480m 600 Deal Value ($m) $3,119m 244 $3,605m $3,845m 319 $2,337m 188 H vs. H $2,481m Deal Count H H Deal Value Deal Count Count of Medtech Venture Financing Deals & Value ( H1 2013) Year H H Deal Count % Chg. 36% 8% 20% -26% 15% Deal Value ($m) 3,119 3,605 4,502 4,480 3,845 2,337 2,481 % Chg. 16% 25% -1% -14% 6% Top 10 Venture Financing Deals in H1 2013: Ranked on Deal Value Company Primary Focus Country Financing Round Date Deal Value ($m) 1 TearScience Ophthalmics USA Series Undisclosed 26 Feb Proteus Digital Health Patient Monitoring USA Series F 01 May Mevion Medical Systems Radiology USA Series Undisclosed 25 Jun Natera In Vitro Diagnostics USA Series E 01 May RTI Surgical Orthopedics USA PIPE 12 Jun Nevro Neurology USA Series C 07 Mar BioFire Diagnostics In Vitro Diagnostics USA Series Undisclosed 02 May Avedro Ophthalmics USA Series D 05 Mar EndoChoice Gastroenterology USA Series Undisclosed 04 Jan ElectroCore Neurology USA Series A 09 Apr Other 1,970 Total 2,481 Note: Includes investments in medtech companies only. Does not include pharmaceutical or biotech companies. Includes Private Investment in Public Equity (PIPE). 19

20 Enterprise Value & Focus Analysis: 2013 Latest vs General Electric Number 1 in Latest Enterprise Value Rankings EvaluateMedTech found US giant General Electric to be the largest company by enterprise value operating in the medtech space, with a figure of $497bn. General Electric is expected to derive 8% of its 2013 revenues from its medtech segment. The analysis includes only medtech companies that are forecast to have sales in excess of $1bn in The analysis reveals the extent to which large diversified companies operate within the medtech space. Only two of the top 20 companies derive more than 50% of sales from medtech: Medtronic and Covidien. Even Johnson & Johnson, the clear market leader in medtech, only generates 40% of group sales from medtech. 600 WW Ranking on Enterprise Value in 2013 (Latest) +40% $497bn +13% +26% $240bn +25% $231bn +20% $188bn $139bn +5% +14% $122bn +19% $102bn +28% $83bn +31% $53bn +13% $52bn +35% +30% +25% +20% +15% +10% +5% +0% General Electric Johnson & Johnson Roche Novartis Sanofi Siemens Bayer 3M Medtronic Abbott Laboratories Enterprise Value ($bn) S&P 2013 YTD Return: +18% Share Price Performance YTD (%) Top 20 Medtech Companies in 2013 (2018 Sales: >$1bn): Ranked by Enterprise Value % '13 Sales Enterprise Value ($bn) Share Price ($ ADR) Company Country Medtech 2012 Latest % Growth 2012 Latest % Growth 1 General Electric USA 8% % % 2 Johnson & Johnson USA 40% % % 3 Roche Switzerland 22% % % 4 Novartis Switzerland 12% % % 5 Sanofi France 2% % % 6 Siemens Germany 18% % % 7 Bayer Germany 4% % % 8 3M USA 17% % % 9 Medtronic USA 100% % % 10 Abbott Laboratories USA 45% % % 11 Danaher USA 47% % % 12 Baxter International USA 38% % % 13 Kimberly-Clark USA 8% % % 14 Valeant Pharmaceuticals Canada 18% % % 15 Thermo Fisher Scientific USA 25% % % 16 Fresenius Germany 23% % % 17 Philips The Netherlands 31% % % 18 Toshiba Japan 6% % % 19 Covidien USA 100% % % 20 Allergan USA 14% % % Total Top 20 1,903 2,083 +9% avg. +20% Note: Includes companies with >$1bn medtech sales in Valuation based on share price close and valuation on 13th September Enterprise value for Abbott drops YTD following the spin-out of AbbVie on 1 January

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22 Evaluate is the trusted source for high quality commercial market intelligence and exclusive consensus sales forecasts to Our services are EvaluatePharma, EvaluateMedTech and EvaluateClinicalTrials. Our award-winning editorial arm, EP Vantage, leverages our market intelligence and analysis to cut through the noise, providing daily opinion and insights. Evaluate s services give you the insights you need to ask the right questions and get the right answers. That s intelligence you can act on. For more information visit: Complimentary copies of our World Preview 2013, Outlook to 2018 Report can be downloaded at: General inquires about this report: Christine Lindgren Tel: christine.lindgren@evaluategroup.com Evaluate Headquarters Evaluate Ltd, Fashion Street, London E1 6PX United Kingdom Tel: +44 (0) Fax: +44 (0) Evaluate North America EvaluatePharma USA, Inc., 15 Broad Street, Suite 401, Boston, MA USA Tel: Fax: Evaluate Japan EvaluatePharma Japan KK, Tokyo, Japan Tel: +81 (0) All intellectual property rights in this report remain that of Evaluate Ltd and/or its respective third party licensors. Whilst all reasonable steps have been taken to ensure that the data presented are accurate, Evaluate Ltd cannot accept responsibility for errors or omissions. Neither does Evaluate Ltd warrant the accuracy, merchantability or fitness for a particular purpose of the data. Nothing in the reports shall constitute investment, financial or legal advice and the contents of the reports are provided for information purposes only. The data is not intended to amount to advice and should not be used as a determining factor in any investment decision. This report may not be lent, resold, hired out or otherwise disposed of by way of trade in any form of binding or cover other than that in which it is published, without the prior written consent of Evaluate Ltd. EvalMTWP2013