Keys to successful adjacency moves inside the healthcare sector

Keys to Successful Adjacency Moves Inside the Healthcare SectorEvaluating Market Attractiveness to Capture New Adjacent Opportunities

Keys to Successful Adjacency Moves Inside the Healthcare Sector

INTRODUCTION

I. WHAT TYPES OF ADJACENCIES EXIST?

What’s Driving Healthcare Companies to Look At Market Adjacencies?

II. EVALUATE THE ADJACENT OPPORTUNITY MARKET ATTRACTIVENESS

A) Market Size, Growth & Landscape

Market Statistics

Therapeutic Landscape

Market attractiveness – tackling new geographies

B)CompetitiveSituation&ProfitPoolMapping

Competitive Insights

MappingProfitPools

III. ADDRESS YOUR DATA GAPS AND EXPAND YOUR KNOWLEDGE BASE

Analytics and Data Triangulation

Using Market Assumptions

Tacit Insight and Critical Questioning

CONCLUSION

REFERENCES

ABOUT ORC INTERNATIONAL

ABOUT THE AUTHOR

Contents2

3

4

17

20

21

22

23

3

5

5

5

11

12

12

18

18

19

7

IntroductionORC International previously presented a webinar and white paper entitled “Developing a roadmap for identifying and tracking

adjacent market opportunities” which described a number of successful research methodologies for developing a pipeline of

adjacent market opportunities. In this next series of white papers, we focus on the

healthcare sector and discuss how these opportunities can be evaluated to identify

the right ones for your next strategic move.

Gravitating towards an adjacent opportunity simply because the market growth potential

is high or customers really like your idea is simply not enough anymore and could lead

to disastrous business consequences. Growth is hard and the landscape is littered with graves of failed attempts. The average

success rate of business growth is only 25%, yet companies that have achieved successful growth in adjacencies have success

rates as high as 60% to 80%. It is therefore very critical to develop a rigorous approach to evaluating adjacencies - an approach

that requires asking and answering lots of questions so that you are looking at the opportunity from multiple angles and through

multiple lenses to validate attractiveness.

There are three main components to evaluating adjacencies:

In this whitepaper, we will focus on the first step and discuss approaches to determine the market attractiveness of opportunities in

the healthcare sector.

2


Exploring the customer appeal and acceptance

Understanding the market attractiveness

Relating the opportunity to core competencies

For more information or to download other ORC International whitepapers visit our website at wwww.orcinternational.com.

I. What Types of Adjacencies Exist? There are of course many different ways to grow a business through adjacency moves – business diversification, accelerating

R&D, launching new products, acquisitions, or, as Chris Zook described it in his 2004 book “Beyond the Core”, you can step up an

“organization’s metabolism” to get it to work faster and therefore grow faster.

Targeting market adjacencies is another business approach that can be employed to grow your business.

Adjacencies can be close to your company’s core - such as the selling of existing products through new channels, as in the case of

wanting to sell your nutraceutical products through a new channel such as health spas, or can be further away from the core and

potentially riskier - for example, your company has expertise in neurostimulation devices for pain management, but now decides to

venture into deep brain stimulation.

What’s Driving Healthcare Companies to Look At Market Adjacencies?

The healthcare sector is in troubled times for a number of reasons. The Medical Device segment has been hit by the 2013 Medical

Device Excise Tax, which is draining revenues. According to Forbes, companies have already paid $1BN in tax so far this year.

Further, many companies are cutting jobs as a cost saving measure in order to pay for the tax – an action that often results in the

loss of innovation as talent has to be let go. This stifles the opportunity to grow revenues from new breakthrough products. Global

competition is also rising with the emergence of home grown companies particularly in emerging markets, that manufacture

generic pharmaceuticals and low cost “simpler” versions of high end medical devices to meet the needs of local customers. Patent

legislation proves to be another area of challenge, as demonstrated by the recent decision by the Supreme Court in India to reject

Novartis’ patent on an improved cancer fighting molecule. Pharma companies have also been experiencing the patent cliff - the

loss of patent protection on key blockbuster drugs.

Exploring market adjacencies, especially those close to the core and therefore less risky, can be attractive to the healthcare sector,

as this provides a means to more quickly regain lost revenue caused by these and other market challenges.

3


New Channels

New Products Value Chain Moves

New Customer Segments

New Business

New Geographies

Adjacency Moves

New to World

Complements Next Generation

Internet

Distribution

Indirect

Global Expansion Local

New Models

New SubstitutesNew-to-World

New Segments

Unpenetrated Segments

Micro-segmentation of Current Segments

Sell Capability Outside

Backward IntegrationForward

Integration

4

II. Evaluate the Adjacent Opportunity Market Attractiveness Evaluating market attractiveness has three core elements.

Market Size, Growth & Forecast

Competitive Situation

Value Chain & Profit Pools


1 Market Size, Growth & Landscape Is the market sizeable enough and growing?

2 Competitive Situation

What is the pricing and cost structure of the leaders? Will we have to give up margin to compete on price? Can we step in and grab needed market share?

3 Value Chain & Profit Pools

What are the firm-level, value-adding steps in the chain of activities required to deliver the product/ service? Which steps are most profitable?

A) Market Size, Growth & Landscape

Market Statistics

With any adjacent market opportunity, the first action item is to understand how big the market is and what its future looks like – is

it growing, shrinking or stagnant? Desk-based secondary research is the best starting point for gathering key market statistics and

developing an initial market characterization. There are a number of database aggregators and subscription sources that provide

access to market data in the form of syndicated and open access market research and analyst reports, business publications,

government statistics and industry sector reports. These can be tapped into to develop an initial characterization of the market in

terms of its segments, size, forecasts, key players, market share, and trends.


It’s also important to profile the medical condition or disease state if your adjacency move involves a new therapeutic approach

or treatment modality. You need to uncover what’s on the horizon in terms of new drugs, procedure types, or medical technology

that might change the market landscape and potentially erode the market size if it’s truly disruptive.

Is the disease management profile changing - for example, is the incidence of common age-related ophthalmic diseases coming

down because more people are taking ocular vitamin products? If you are contemplating a surgical device that can be used in single

incision surgeries, you need to understand how many procedures are being conducted this way versus traditional laparoscopy

and what the barriers to adoption might be. Is it surgeon skill level-and if so when might that change? Is the adjunct technology

expensive-and if so, when might the costs come down and become less cost prohibitive?

5


Market Characterization

• Market size and segments• Trends & forecasts• Patient demographics• Key players & market share • Landscape – static or evolving?

6


• Disease profile • Treatment modalities• Emerging therapies• Patient journey • Unmet needs – for patients, HCP, providers and payers

There are a range of sources for helping to profile the therapeutic landscape - these include clinical literature databases, disease

association websites and statistical data sources that report on disease incidence and prevalence. Government reports can provide

detailed insights particularly in areas where there are ongoing healthcare initiatives. Reviewing publications focused on emerging

technologies, treatment innovations and clinical practices is a great way to develop some initial insights into the therapeutic

landscape and how it’s changing. This approach should also be coupled with qualitative interviews with healthcare professionals,

clinical and financial stakeholders and KOLs to garner more tacit or practical insights that you do not always find in the published

domain. You can always conduct a more comprehensive quantitative study with these audiences later on if the opportunity

continues to look good; but in the early stages of assessment, a few qualitative interviews will be sufficient to garner the external

perspective you need.

ORC Case StudyORC’s client in the pharmaceutical sector was considering entering into an adjacent therapy

area and needed a comprehensive understanding of the market dynamics to make a decision

to move forward. ORC searched and analyzed data from drug pipeline databases, clinical

literature, investment analyst commentary and pharmaceutical trade literature. This research

was further supplemented by primary research in the form of interviews with KOLs and high

prescribing physicians to understand clinical practices and treatment trends.

We were able to provide our client with a detailed description of the market in terms of

its size, growth trends, key market players and market share, product pricing, and current

reimbursement landscape. We also articulated the current and future treatment paradigms

and unmet clinical needs. This helped our client to develop a strong understanding of the

overall market landscape from which to determine next steps.


7

Market attractiveness – tackling new geographies

The healthcare sector is continuing to focus on BRIC markets but is also now turning its attention towards the second tier, beyond

BRIC markets, such as Mexico or Turkey, as part of adjacency moves to achieve business growth.

To successfully enter and succeed in these new markets you need to address an additional series of key questions.

What does the healthcare infrastructure look like?

You will firstly need to become intimately familiar with how healthcare is organized and how it operates. Throw aside your U.S. or

E.U. view of the world and even in some cases, your BRIC market perspective, as it could mislead you if the new markets operate

very differently to BRIC.

Take for example a healthcare product that might be designed for utility in a nursing home environment in the U.S. where elderly

patients reside. In India, a nursing home is defined as a healthcare facility with at least 15 in-patient beds, an operating theater,

and qualified physician and nursing staff available around the clock. Therefore, talking to nursing staff in both countries to get their

opinions on your products will lead to very different and potentially conflicting views. Hence you can clearly see the importance of

understanding the native infrastructure and what each type of healthcare facility does in each country to correctly evaluate market

attractiveness.

How is medical care funded?

Going hand in hand with developing an understanding of the healthcare infrastructure is the need to define how medical care is

funded in the adjacent market. This will help you determine who to target when you assess customer appeal in the adjacent market

space - we will focus on this topic in our next whitepaper.

Remember that “reimbursement” is a very meaningful term in the U.S., but less so elsewhere. As such you need to use the right

terminology such as “financial market access,” “patient fees,” “physician compensation,” “medical service cost structure,” etc.,

when asking questions about market access and reimbursement in order to gain the financial picture.


Healthcare Infrastructure & Funding

• Health system organization• Types of healthcare facilities, locations, volume • Care continuum • Market access • Funding, subsidization & insurance• Patient out-of-pocket costs

Published sources of relevant information can range from formal sources such as websites belonging to government health

ministries or organizations such as the WHO and their position or white papers, industry analyst reports focusing on specific aspects

of healthcare in particular countries or regions, to less formal sources such as websites designed for Ex-Pats, which can contain

surprising detail on how the health system in a particular country works and provides a valuable patient perspective.

8

ORC Case StudyORC’s client was interested in several adjacent markets including Turkey, but had little insight

into the country’s healthcare infrastructure. We consulted standard published databases as

well as government websites and industry publications to develop a detailed profile of Turkey’s

healthcare system, key management bodies, types of institutions, and their numbers / size.


The Turkish Grand National

Assembly is the main

policy-making body at

the national level

Private providers operate

within the health care

system, providing services

on a contractual basis for

the beneficiaries of social

health insurance and directly

to patients

Private facilities include

Private hospitals

Foundation hospitals

Independent general

practitioners/ specialists

Out-patient treatment clinics

Labratories and diagnostic

centers

Pharmacies

Ministry of Health is the agency

responsible for the provision of

health care services

Municipalities have some health-related roles and

responsibilities but these are generally restricted to

public health measures

The Ministry of

National Defense

and universities

own health care

facilities in the

public sector

Social Security Institution (SSI)

includes the five main social

security funds, which cover social

health insurance

SSK

Bag-Kur

GERF

Active Civil Servants

Scheme

Green Card Scheme

Provincial

directorates of

the Ministry of

Health within

each province

implement health

policies at the

operational level

Regulatory Environment• Relevant regulatory bodies • Product classification • Approval process and timelines• Local clinical study or testing requirements• Labeling requirements• Licenses, duration, fees• Patent protection laws

What does regulatory environment look like?

Regulations are constantly changing and may even vary from one province, state, or other geographic boundary within a given

country. You may need to employ multiple methodologies to keep track of requirements and remember that in the early stages of

an assessment, you are not necessarily looking for a comprehensive map of how to gain approval and sell in the market, but rather

you need to identify the red flags that can stall market entry.

These questions can initially be addressed by reviewing the websites of country-specific regulatory bodies and government

agencies. You may need to enlist the help of native language experts to help you initially cull published sources if they are written

in foreign languages. However, as you probably well know, there are always nuances and exceptions to the stated information and

plenty of “grey areas” that needs to be unclouded. This is where it becomes imperative to tap into the knowledge and insight of

regulatory experts and in-country specialists who can guide you and indicate potential pitfalls and challenges.

9


Here at ORC, we maintain a proprietary network of experts through our Intota Expert Network, including many that cover the

healthcare sector from several different angles - pharmaceuticals, devices, biologics etc. Some are healthcare professionals, service

delivery or healthcare IT specialists, regulatory experts and more. ORC’s network also includes experts based outside of the U.S.

These can all be engaged to help provide insight into adjacent markets, and even help evaluate adjacent opportunities.

Below is a profile of one of several ORC experts we consulted on behalf of a client in the healthcare consumer products segment

who was branching out into antibacterial consumer products in Asia.

Another way in which ORC can help clients is through our global offices and network of research partners. For example, our offices

in China recently worked in collaboration with our US Healthcare Team to provide insight into the how China’s new community

based healthcare initiatives were being perceived from an in-country perspective while in another situation, one of our regional

research partners helped us to identify leading medical schools where certain surgical procedures were being conducted on behalf

of a client looking to bring a new surgical approach to the market place.

ORC’s Intota Expert Network includes over 13,000 rigorously screened peer-recommended experts in over 30,000 areas of knowledge.

To learn more about ORC’s Intota Expert Network or to request an expert today, please visit www.intota.com

10

ORC Case StudyORC Expert A is the CEO of a consulting firm that specializes in import registration requirements

and regulatory advice to companies wanting to bring new pharmaceutical, device and IVD

products to India. Expert previously worked as a Medical Devices Reviewer for the Central

Drugs Standards Control Organisation (CDSCO), and was also an Assistant Director with the

Food Safety and Standards Authority of INDIA from 2009-2010.


11

What does the healthcare product distribution network look like?

Uncovering how a country operates in terms of getting products to customers can be a complex matter. In some countries,

you may have your own pre-existing network that you can rely upon, but in others, you may have to forge ahead to build new

relationships with distributors and partners. Some may have national presence while others may be more regionally focused.

Talking to a few distributors and customers in different types of healthcare facilities will help you to understand the logistical

challenges you may face making your products available to healthcare professionals, patients and consumers.

Distribution Network

• Channels for product or service access• Distributor types and layers• Level of market reach• Relationships with healthcare facilities• Fee structure


B)CompetitiveSituation&ProfitPoolMapping

When evaluating the attractiveness of adjacent markets, you also need to analyze the competitive situation, explore their value

chains, and understand if and where they are making profit. When coupled with a mapping of the profit pool, this becomes an

invaluable foundation from which to evaluate your own company’s ability to differentiate and target these profit pools to achieve

market success.

Uncovering the Competitive Situation

Identifying competitors is generally not a challenge. Published market sources such as those we mentioned previously will readily

point to market players, or you may already be familiar with them if they belong to the same industry sector as you. The key,

however, lies in understanding their position in the adjacent market space you are targeting.

We will introduce profit pool mapping at this point as there is some definite overlap in the questions and research approaches used

to address this area and the competitive situation.

MappingProfitPools

Before we dive into talking about mapping profit pools, let’s briefly step back and discuss this activity within the framework of

value chain analysis – a process originally defined by Michael Porter in the 1980s which describes the examination of every step a

business goes through, from raw materials to the eventual end user to determine where and how resources are being utilized with

the ultimate goal of getting to a process that delivers maximum value for the least possible total cost.

Value chain analysis is complex and detailed, but for the purposes of this white paper, we are going to direct our attention to

identifying where the profit pools lie within the adjacent market, which competitors are tapping into them, and where the

untapped pools might lie so that you can potentially grab them with your adjacency move.

12

Competitive Situation• Type of competitors• Market position• Go-to-market strategy• Market share and evolution• Infrastructure to support market presence• Customer segments served• New players – market fragmentation


In a 1998 paper published in the Harvard Business Review, Gadiesh and Gilbert describe profit pools as follows:

They describe a detailed four step process to mapping profit pools br0ken down by tasks, guidelines, and outputs. In the table

below – we highlight some of the key activities to mapping profit pools that require data gathering.

A profit pool can be defined as the total profits earned in an industry at all points along the industry’s value chain… A profit pool map opens a window into the underlying structure of the industry, helping managers see the economic and competitive forces that are determining the distribution of the profits

“

”Step 1 Define the Pool

Step 2 Determine the Size of the pool

Step 3 Determine the Distribution of Profits

Step 4 Reconcile the Estimates

13


Step 1 Define the Pool• Examine your industry from three perspectives, your own company’s other players’ and other customers’ • Talk to industry players and analysts to uncover new or emerging business models

Step 4 Reconcile the Estimates• Collect additional data if necessary

Step 3 Determine the Distribution of Profits• Look at your own economics first, then look at large pure players, then at large mixed players, then at sample smaller players • If relevant company data are unavailable ,use proxies such as product-level or channel-level sales

Step 2 Determine the Size of the Pool• Seek a rough but accurate estimate • Take the easiest analytical routes available: go where the data are

14

Providers of care worldwide will see the largest volume gain but not necessarily any increase in their margins. These volume increases will drive 30% of the overall profit pool growth but profitability will be flat or will decline

“

”

Profit Pools• Source of profit pools • Market cost structure• Competitor and market participants • • Pricing• • Margins and profitability • • Value chain • • Unique characteristics to support profit• Untapped profit pools

So how can you go about understanding the competitive situation and mapping profit pools?

The starting point should always be utilizing published sources to help develop the initial knowledgebase. Secondary research in

the form of interrogating business & financial data sources such as annual reports, 10-K filings, Dun & Bradstreet profiles, analyst

reports, industry and trade publications, as well as company websites will get you started on the path addressing some of the

questions you need answered about your competitors and the industry segment from a financial perspective.

There may also be published data on the overall industry profit pool with future estimates, such as the one published for the

healthcare sector by Bain and Co in 2010 and depicted below. According to Bain, the global profit pool for healthcare will increase

over the next 10 years at a CAGR of 4% to grow from $520BN in 2010 to $740BN by 2020 and that new business models will need

to be developed to win profit in the future. For example, they predict that growth in the global profit pool is likely to come from

innovation in the delivery of care or from small service sectors like contract research or manufacturing, which is experiencing

significant growth, especially in emerging markets.


15

Global Healthcare Profit Pool (Revenue)

4000

3500

3000

2500

2000

1500

1000

500

0

(bill

ions

)

Pharma RX

KEY

2010 Revenue ($B)

2020 Revenue ($B)

Pharma GX

Pharma OTC

Medtech IVD CXO Distribution Retail Pharma

Hospital OtherProviders

Care PBM Insurance US

Insurance Non-US

HC IT Nutrition

Charts like this provide some broad directional indicators of areas to focus adjacency moves and which ones to avoid but you really

need to get to the more discrete profit pools within the adjacent market and how they are distributed to truly understand whether

your opportunity has any financial legs.


Adapted from Bain and Co, Healthcare 2020, published 2012

CXO – contract research, manufacturing and sales organizations.

16

True PublicGeneral Media Common Databases

SEC & Gov’t Filings

“Hidden

Public”Obscure databases Subscription websites

Company

WatchersBusiness Decision Makers CustomersConsultants Analysts

Competitor

Current & Former

EmployeesMarketingR&DSales Business Development

Information

recognized as

proprietary and

actively protected

Further, the competitive insights that you seek may not be readily available or the data may be aggregated and hard to segment.

For example, the industry competitors may be engaged in several interconnected activities in the value chain and data for each

activity may not be clearly segmented for you to clearly see where they are potentially making profit.

In these situations, a useful approach to garner a more comprehensive understanding of the competitive situation and uncover

profit pools is by engaging in primary intelligence research – an approach that ORC has utilized for over 20 years following strict

ethical research guidelines. We seek out knowledgeable sources like company watchers (consultants, analysts, business partners)

and also speak with current and former employees in a variety of functions (marketing, R&D, manufacturing, supply chain, sales,

and business development) to help us build a holistic picture of the competitor, including their financials.

We systematically hone in on the people who have the

competitive insights that we are seeking and use an iterative

research process to build our competitor knowledgebase,

validate our findings, and often uncover some surprises along

the way.

Primary intelligence research can be an effective tool to

uncover more insight into a company’s financials, including its

revenues, margins, and profitable areas. It can also be used to

describe a company’s assets and expenditures, channel partner

relationships, and processes that may make it lean or agile in

the adjacent market, which in turn might be its key to tapping

into profit pools.


Competitive Situation

Profit Pool Insights

Target Data and Market Insights

You don’t need to investigate every competitor in the adjacent space – you can start by investigating the top players and then

extrapolate your findings to the smaller companies in the sector.

Public Primary Intelligence Gathering Unobtainable

Industry

Participants &

Partners DistributorsSuppliersTrade Associations

17

ORC Case StudyORC’s healthcare consumer client already had a presence in a few Asian countries

and was now looking to enter adjacent markets, specifically China, India, and the

Philippines, and wanted to understand how competitors were approaching these

markets in order to devise their own market entry strategy. They needed to understand

the competitor’s financial metrics, such as COGS and margin, as well as manufacturing

capabilities, assets, distribution network, and partnerships.

We embarked on a comprehensive strategic intelligence program engaging a wide

variety of targets including sales, marketing, manufacturing and distribution channel

employees and partners to garner the desired insights. Desk research was conducted to

develop foundational knowledge prior to execution of primary research.

We found that competitors were achieving efficiencies and costs savings and profit

through a range of different approaches including:

In-house design of manufacturing equipment which was then built locally rather

than purchasing equipment from established but high cost international

manufacturers

Negotiating daily transportation rates with distributors rather than utilizing

pre-negotiated rates – useful when fuel prices are fluctuating frequently

Capitalizing on brand name strength particularly in rural markets allowing a

higher price to be charged in these areas compared to competitor products

Changing the shape of their product, which reduced its mass, but still allowed it to be

sold at its former price

These and other findings allowed our client to make the determination that they would

not be able to compete and be profitable in one of the three markets – as such they

made strategic plans to enter the remaining two markets.

III. Address Your Data Gaps and Expand Your Knowledge BaseWe all know that there is an abundance of syndicated market research reports published on a variety of topics ranging from disease

treatment modalities to device types to healthcare IT and much more. However, they may not be that helpful for you if your

adjacent opportunity is in a niche segment or in a country that is not covered by these reports. Further, you may not be able to

purchase all of these reports. Even if you can, their methodologies make it hard to compare apples to apples, as you try and piece

information together from different sources. And finally, there is that inherent market know-how that is not readily garnered from

published literature and comes only from direct experience or from talking to those with the requisite experience.

So how can you fill your data gaps and expand your knowledgebase? Well, there are a number of different approaches you can use

as part of any market evaluation exercise – we will discuss a few below:

4

4

4

4


18

Analytics and Data Triangulation

When we say “triangulation,” we mean coming at the problem from more than one angle or point-of-view. For example, in the case

of market potential or market size, you may want to approach the evaluation in several ways:

A “top down” approach that takes the bigger picture into account first. For example, if you’re looking at the market for [new

medical device or treatment x], you might start by evaluating the known market for [medical device or treatment superset].

A “bottom up” approach that essentially takes the opposite approach and looks at data in successive steps. For example, a

bottom up assessment of potential for a new treatment would start with the number with the candidate condition, then

evaluate access, availability, and appeal to arrive at a potential market size.

Syndicated material or expert views offer additional viewpoints. They may be based on either of the previous approaches, or

may take into account other sources of information and points of view such as industry participants.

Once the various data points have been assembled, an assessment can be conducted to evaluate convergence or divergence. In

general, a robust evaluation can provide best case/worst case views that enable more confident management decision-making

about opportunity appeal.

To learn more about one bottom-up approach we developed for estimating market sizing, please refer to our white paper called

“Utilizing an Alternative Method to Effectively Estimate Market Size”.

Using Market Assumptions

Where no data exists, consider using your own assumptions and hypotheses about the market as a starting point and conduct

primary research to validate them.

McGrath and MacMillan wrote an excellent article in the Harvard Business Review in 1995 called “Discovery Drive Planning” that

discusses the importance of validating assumptions as part of strategic decision making. While the article was written nearly two

decades ago and focuses on new ventures, its tenants still hold true and can be applied to evaluating adjacent market spaces.

A company can test the initial assumptions against experience with similar situations, the advice of experts in the industry or published information sources… Consultants to the industry – bankers, suppliers, potential customers and distributors often can provide lost cost and surprisingly accurate information.

“

”

4

4

4


19

While modern ethical research guidelines prohibits the use of payment for information pertaining to competitive intelligence

research – guidelines which ORC strongly abides by – we have successfully used the research approaches advocated by these

authors to help clients validate assumptions and hypotheses about adjacent market spaces on a regular basis using our intelligence

gathering capabilities as described above.

Tacit Insight and Critical Questioning

Adjacent opportunities, particularly if they are organically identified, tend to have internal champions that may find it challenging

to see the obstacles surrounding their opportunity. Bringing in a few external industry or subject matter experts to assess the

opportunity can help not only to fill data gaps and provide insight into profit pools, they can also help inject that much needed

“fresh perspective” – and because it’s from individuals with subject matter expertise, your team is more likely to value their

opinions.

Experts can be engaged as part of one-on-one telephone or face-to-face conversations, forums, and workshops, or even online

message boards where they have the opportunity, to not only provide commentary on your opportunity but also ask those

hard questions that challenge you to think about your opportunity in different ways and may need further investigation and

consideration. Your own project team can become part of the research process and interact with experts to ask new critical business

questions that emerge as a result of the discussions.

Whatever method you select to engage experts, the net result is that the adjacent opportunity can be assessed, challenged, and

improved through the rich conversations with external subject matter contributors.

ORC Case StudyWe engaged two experts from our ORC Intota Expert Network and recruited an

additional two to work with our healthcare client who was interested in identifying and

evaluating adjacent market opportunities in women’s healthcare. The opportunities

had originally been identified through a Lead User research process that we had

previously completed. The rich discussions that we moderated during a workshop

session helped to assess the opportunities from multiple angles, including technical

feasibility, clinical applicability, and financial adoption metrics. Further, the workshop

discussions helped generate additional ideas to fuel our client’s product development

engine.


20

Conclusion Your pipeline building efforts may have identified many new opportunities for consideration and everyone wants solutions and

products with broad market appeal and global applicability.

published literature sources and speaking with a few subject matter experts to learn as much as you can about the adjacent space

and address as many of the core questions as possible. If the opportunity continues to look good – then you can consider investing

additional resources to develop a more robust understanding of the adjacent opportunity and address your remaining questions in

more depth by conducting additional primary intelligence research, investigating value chains, and mapping profit pools.

In the next two white papers – we will look at other components of evaluating adjacent moves in the healthcare sector from the

perspective of:

Customer appeal and acceptance

Relatedness to the core

In aggregate, you will learn how to evaluate opportunities and develop the market facts that you need to develop a business case

for the opportunities that filter to top through the evaluation process.

44


There are many questions that need to

be addressed and as such, there may be a

temptation or desire to conduct a full blown

market investigation with detailed competitor

research to derive a comprehensive set of data

and analyses from which to evaluate the adjacent

move. However, this can easily spiral into a large,

multi-faceted or multi-country study with many

permutations that can stall the process of a quick

and efficient move into an adjacent market.

Rather than looking for every data point for every

opportunity to help you make business decisions

– consider using discrete research approaches, such

as the ones we have described that are focused

around characterizing the market and competitive

landscape and understanding where the profit pools

and margins lie.

You could take a phased approach of culling

TherapeuticLandscape

Market Size

Healthcare Infrastructure

& Funding

RegulatoryEnvironment

Market Attractiveness

Profit Pools

CompetitiveSituation

Distribution Channels

For more information or to download other ORC International whitepapers visit our website at wwww.orcinternational.com.

References • Beyond the Core , Chris Zook, 2004, Bain & Company Inc

• Growth Outside the Core, Zook C & Allen J, Harvard Business Review, December 2003

• U.S. Medical Device Industry in Critical Condition, July 2013, Forbes.com

• India’s Novartis Decision, New York Times, April 4, 2013

Beyond the patent cliff, Mullin R, Chemical & Engineering News, 2010, 90(50): 15-20

• Profit Pools: A Fresh Look at Strategy, Orit Gadiesh and James L Gilbert, Harvard Business Review, May- June 1998

• Healthcare 2020 Bain & Company, 2012

• Discover Driven Planning, McGrath RG and MacMillan IC, Harvard Business Review, 1995, July-August, 4-12

• How to map your industry’s profit pool, Orit Gadiesh and James L Gilbert, Harvard Business Review, May-June 1998

21


ORC International is a leading global research firm with specialty in the Healthcare, Medical Device and Pharmaceutical sectors. We offer a platform of integrated intelligence that combines traditional and forward-thinking methodologies, technology, industry expertise, and skilled research professionals to provide clients with the most comprehensive foundation for providing actionable insight to solve their most pressing business challenges worldwide.

Multi-sourced insights and synthesis, including primary and secondary research, competitive intelligence, social analytics and omnibus services. We can help you:

• Understand and segment your market to identify your highest opportunity segments and identify new market opportunities• Develop new products to address unmet needs in the category• Understand product preferences and purchase behaviors and intentions• Understand awareness, trial, usage, and perceptions of your brands as well as those of key competitors• Identify product line extensions and enhancements• Evaluate packaging options• Examine pricing sensitivity• Tests concepts, claims, and messages• Understand health related behaviors and types of treatments used among target groups

For more information, please visit our website at www.orcinternational.com or contact:

22


Princeton � Boston � Chicago � Cincinnati � Maumee � Minneapolis � New York � Reno � Seattle � London � Manchester � Melbourne �

Hong Kong � Shanghai � Singapore � Sydney

About the Author

Bijel Dholakia MSc Vice President - Healthcare Practice, ORC International

Bijel has over 17 years’ experience conducting global market research and providing strategic insights to clients in the Healthcare sector with a specific focus on the Medical Device segment. She is currently Vice President at ORC International where she applies her expertise in innovation and new product development to clients as they investigate new technologies and concepts as part of the NPD/Stage-Gate and Product Lifecycle management processes. This includes conducting ideation and concept filtering, technology and market assessments, IP landscaping and VOC research around unmet needs, concept adoption dynamics and the purchasing / reimbursement environment. Bijel’s expertise also includes conducting global market research to provide client’s insight on adjacent and emerging markets. She is also actively involved with company relations with AdvaMed. Bijel earned a Bachelor in Science in Human Sciences from University College, London and a Master of Science in Information Science from the City University, London.

23
