The Maverick

Game | Gain | Glory

Team : Cognoscente
Varun Ghelani | Kaushik Lakshminarayanan | Yogesh Shivhare

Segment Identification Framework Stage I

Quantitative Factors to evaluate Segment Attractiveness

Relative Market Size Relative Market Growth Relative Profit Earning Market Concentration Relative M&A Deals

Relative Segment Size in %

3.7% 3.1% 20.4% 51.4% 9.1% 6.7%
Healthcare IT Software Telehealth devices Wellness Clinics Point of care Diagnostics CRO

Relative Segment Growth in %

10.5% 93.4% -63.2% -44.7% -26.3% 65.8% -35.5%
Healthcare IT Software Telehealth devices Wellness Clinics Point of care Diagnostics CRO Healthcare training ACO

5.5%

Healthcare training ACO

Relative Segment PE Ratio in %

-17.8% 108.3% -38.8% -36.1% -35.4% 33.2%
Healthcare IT Software

Relative Market Concentration in %

11% 12%
Healthcare IT Software

Telehealth devices
Wellness Clinics Point of care Diagnostics CRO Healthcare training ACO

21%

55%

Telehealth devices Wellness Clinics

65% 15%

15%

Point of care Diagnostics CRO Healthcare training

-13.5%

ACO

Relative M&A Deals in %

3% 24% 14% 7%
Healthcare IT Software

12%

37%

Telehealth devices Wellness Clinics Point of care Diagnostics CRO Healthcare training

3%

ACO

Result of Segment Identification Stage - I

Segment Attractiveness Factor Weightage Healthcare IT Software 2300 1 20% 12.00 11% 19.73 2 -1 -18% 12% 67 1 37% 0.21 Telehealth devices Wellness Clinics Point of care Diagnostics CRO Healthcare training 420 4% 6.00 -45% 15.5 -35% 21% 5 3% -1.30 ACO

Size(Million $US) Relative Size(Million $US) Growth Relative Growth PE ratio Relative PE ratio Industry Concentration M&A Deals Relative M&A Deals Quantitative Score

760 7% 7.00 -36% 14.7 -39% 55% 12 7% -1.55

1030 9% 4.00 -63% 15.35 -36% 15% 5 3% -1.38

620 5% 18.00 66% 31.97 33% 15% 26 14% 1.37

5800 51% 8.00 -26% 20.775 -13% 65% 43 24% -0.43

350 3% 21.00 93% 50 108% 11% 22 12% 3.14

Segments Screened for Stage-II

Healthcare IT Software Point of care diagnostics Clinical Research Organization Accountable Care Organization

Segment Identification Framework Stage II

Qualitative Factors to evaluate Segment Attractiveness

Opportunity for diversification Opportunity for differentiation Segment Stage in Industry Life Cycle Entry Barrier Exit Barrier

Healthcare IT Services High

Point of Care Diagnostics Medium Opportunity for diversification

Healthcare IT Services High

Point of Care Diagnostics Low

Opportunity for differentiation Clinical Research Organizations Medium

Healthcare IT Services Low Industry Exit Barrier Clinical Research Organizations High Accountable Care Organizations Low Point of Care Diagnostics Medium

Clinical Research Organizations Medium

Accountable Care Organizations High

Accountable Care Organizations High

Healthcare IT Services Growth

Point of Care Diagnostics Growth

Healthcare IT Services Low

Point of Care Diagnostics Medium Industry Entry Barrier

Stage in Industry Life Cycle Clinical Research Organizations Maturity Accountable Care Organizations Early

Clinical Research Organizations High

Accountable Care Organizations Medium

Segments Screened for Stage-III

Health Care IT Point of care diagnostics Accountable Care Organization

Segment Identification Framework Stage III

Correlation between each of the identified segments is done to check for the existence of independence among segments to minimize the risk of the portfolio.
Healthcare IT Software x x x Point of care Diagnostics Complementary x x

Correlation Matrix Healthcare IT Software Point of care Diagnostics ACO

Factors to check for Dependence:

ACO Customer Base, Supplier Source Customer Base, Complementary x 1. Customer Base 2. Supplier Source 4. Government Regulation 5. Complementary

3. Common Threats

Since there is a high correlation between (Healthcare IT Software and ACO) & (Point of care Diagnostics and ACO), segment ACO has to be eliminated.

Final Segments Screened

Healthcare IT Software Point of care diagnostics

Segment Screening

Factors to evaluate Competitive strengths of a company

Strength of Assets & Competencies Relative Brand Strength Market Share Market Share Growth Customer Loyalty Relative Cost Position Relative Profit Margin Distribution strength & Production Capacity Innovation Financials Management Strength

Ref: GE Matrix portfolio analysis model

Target Screening
Healthcare IT Healthcare IT Healthcare IT Point of care Point of care Point of care Point of care Point of care SoftwareHealthcare IT SoftwareSoftware- Healthcare IT Diagnostics- Diagnostics- Diagnostics- Diagnostics- DiagnosticsCompany Attractiveness ALPHA Software-Beta Gamma Sigma Software-Delta ALPHA Beta Gamma Sigma Delta Strength of Assets & Competencies 5 5 4 4 4 4 3 4 5 4 5 47 4 2 2 2 2 3 3 2 4 3 4 31 4 4 4 4 3 4 4 4 3 4 2 40 3 2 2 2 3 3 2 2 2 3 3 27 2 1 2 3 3 2 2 2 4 2 3 26 4 4 4 4 3 3 3 3 4 4 5 41 3 4 3 2 3 2 3 3 3 2 4 32 4 4 3 4 4 4 3 4 4 4 2 40 4 2 2 3 3 2 3 2 2 3 3 29 2 3 2 3 3 2 3 2 4 3 3 30

Relative Brand Strength

Market Share Market Share Growth Customer Loyalty Relative Cost Position Relative Profit Margin Distribution strength & Production Capacity Innovation Financials Management Strength Final Score

Assumptions: All the 5 dummy companies exists in all the segments Effectiveness of the type of company(E.g. ALPHA) will vary from Segment to Segment Approach: Rating for each parameter : 5-Excellent, 4-Good, 3-Average, 2-Below Average, 1-Poor Parameter for which data was unavailable, assumed score = 3 (Average)

Result of Target Screening

Preliminary Result: Healthcare IT Software- ALPHA, Healthcare IT Software GAMMA, Point of care
Diagnostics - ALPHA & Point of care Diagnostics-GAMMA

Final Result: Healthcare IT Software- ALPHA & Point of care Diagnostics-GAMMA

Justification: To diversify the portfolio risk, investment has be done in 1 ALPHA and 1 GAMMA company. Since the score of Healthcare IT Software- ALPHA is much more than that of Point of care Diagnostics ALPHA as compared to the GAMMA case.

References
http://www.valuebasedmanagement.net/methods_ge_mckinsey.html http://www.ccjm.org/content/78/9/571.full http://www.aafp.org/online/etc/medialib/aafp_org/documents/policy/sta te/statehcr/aafpacos.Par.0001.File.tmp/AAFP%20ACO%20brief%20Jan%20 2011.pdf http://www.jstor.org/discover/10.2307/2525645?uid=2129&uid=2&uid=7 0&uid=4&sid=21101096950471 http://www.csbsju.edu/documents/libraries/zeigler_paper.pdf http://www.ncbi.nlm.nih.gov/pubmed/22221172 http://www.marketwatch.com/story/home-healthcare-marketequipment-service-telehealthtelemedicine-current-trends-opportunitiesglobal-forecasts-to-2016-2012-07-02 http://www.informationweek.com/news/healthcare/mobilewireless/231601670 http://www.informationweek.com/news/healthcare/clinicalsystems/224700971

References

Problems Facing the Pharmaceutical Industry and Approaches to Ensure Long Term Viability, Donald A. Baines, University of Pennsylvania Spas and the Global Wellness Market: Synergies and Opportunities May 2010, SRI International Economic gains around mergers and acquisitions in the construction industry of the United States of America, Jongsoo Choi and Jeffrey S. Russell http://trainingmag.com http://www.informationweek.com/news/healthcare/EMR/229500682# Understanding Requirements for Computer-Aided Healthcare Workflows: Experiences and Challenges: Xiping Song, Beatrice Hwong, Gilberto Matos, Arnold Rudorfer, Christopher Nelson, Minmin Han, Andrei Girenkov The Future of Pharma: A U.S. Sector Review:A Cognizant Report Transforming Clinical Research in the United States: Challenges and Opportunities by Rebecca English, Yeonwoo Lebovitz, and Robert Giffin http://ycharts.com Point of Care Diagnostics: Status and Future. By Vladimir Gubala, Leanne F. Harris, Antonio J. Ricco, Ming X. Tan, and David E. Williams