2. Executive Summary
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
Key Findings about the
Brazil Market
Growth Strategy
Recommendations
• Fraction of the population can benefit from DBS, due
to cost, awareness, and access constraints
“Start small” by developing relationships with
key surgeons at academic health centers
• Market presents strategic opportunity for Medtronic
to develop a neuro foundation
• Untapped potential due to lack of infrastructure
Leverage DBS treatment for PD to build
awareness of company and other therapies
• Patients and providers need to be educated about
DBS
• Relationships important for business
Utilize neurological organizations in Brazil and a
contract sales force to invest in training and
awareness
• 12th largest economy in the world
• Growing middle class, can afford good healthcare
• Decentralized universal health coverage, room for
improvement
Long-term, invest in infrastructure and build a
Medtronic presence in Brazil
3. 74% 26%
Public Sector Private Sector
Primary
Care
Hospital
Ownership 37% 63%
80% 20%
Insurance
Coverage
Health
Expenditure 55% 45%
• 66% of private
spending is out of
pocket
• 7,500 hospitals; 70%
have <100 beds
• 181 teaching
institutions
• Public system only
covers basic &
preventive care
The growth opportunity for DBS in Brazil lies in the wealthy privately-
insured population
Health
Spending per
Capita
$240 $1200
Source: Frost & Sullivan; team analysis
Brazil’s Healthcare System
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
4. HealthcareTrends in Brazil
Source: Frost & Sullivan; Bloomberg
• Expected to reach $113.7 Billion in 2011 and
growing at 7.6% CAGR
Rising Health
Expenditures
• By 2012, the population over 60 is expected to reach
24 million due to increasing life expectancyAging Population
• Middle class purchasing power is growing
• Demand for private insurance coverage is expandingIncreasingWealth
• Low reimbursement in the public sector
• Cost containment efforts in the private sector
• Vertical integration may assist in market penetration
Health Insurance
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
5. Reimbursement
Public (SUS) Private Insurance
• Requires preapproval by BMA
• Restrained adoption of new medical
devices
• Low reimbursement
• Reimbursed based on expenses
• Compensation tied to price indexes
• Report is either approved or rejected
by insurance
DBS is not covered by
most private insurance;
it is necessary to make
a special request
Dr. Juliana Zuiani
Neurosurgeon,Hospital
Das Clinicas,Campinas
Source: Frost & Sullivan; Interview with Dr. Zuiani
SUS covers the full cost of the
procedure, including the device,
but it can only occur at certain
centers and they are always
overbooked
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
6. Care Pathway
Patient Primary Care
Misdiagnosis
Neurologist Neurosurgeon
Referral ReferralAppointment
Drug
Therapy
DBS
Procedure
PD is major
health concern
but often
misdiagnosed
Dr. Juliana Zuiani
Neurosurgeon,Hospital Das Clinicas,Campinas
We are working on a project
to make DBS procedures
more accessible by comparing
the procedure cost to the
amount spent on medications,
even for epilepsy!
Source: Interview with Dr. Zuiani
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
7. The Brazil DBS Market
201 Million
Total Population
252,460
PD Prevalence
75,738
Surgery Candidates
1,131
Market Size
$38 MM Market Size
0.1%
30%
1.5%
Source: Frost & Sullivan
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
8. Growth Strategy Recommendations
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
SHORTTERM
Invite 10 thought-leader surgeons to US for
training
Employ contract sales force to develop
provider relationships
Develop referral pipeline by marketing to
neurologists
• HospitalarTradeshow in June 2011
• SBN (Brazilian Neurological Society)
• Associacao Brasil Parkinson
• Brazilian Journal of Neurosurgery
Focus on patients with ability to pay out-of-
pocket
Differentiate by offering financing options
Develop training center in Sao Paulo
Seek further private insurance
reimbursement approval
Partner with local governments to develop
new procedure sites
Seek new indications to expand market size
(e.g. Epilepsy)
Investigate partnerships with Philips and GE
LONGTERM
Educate,Train, and Invest in
Infrastructure
9. Risks
St. Jude could move aggressively
and capture shareCompetition
Focus on developing provider
relationships & expand training
Type of Risk Description Mitigation Plan
Patients and/or providers may
not adopt DBS as therapyAcceptance
Invest in provider education and
clinical evidence
Healthcare administration shifts
to municipalitiesDecentralization
Partner with local regulatory
bodies to minimize impact
Increased utilization of DBS
procedure may lead SUS or
insurers to deny reimbursement
Reimbursement
Develop additional clinical
evidence on DBS benefits and
publish in neuro publications
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
10. Summary
Contract Brazilian
Sales Force
Train Physician/Sales
Force in US
Training
Center
Build Local
Relationships
Build Reimbursement
Approval
Short-Term (1-2Years) Long-Term (3-5Years)
Financials
Relatively
Untapped
Market
Maintain
Market Share
against St. Jude
Foundation for
DBS therapy for
other
applications
Promote sales
of other Neuro
therapies
Springboard
into other
Mercosul
countries
Strong Case to
Grow Brazil
DBS Market
Patient
Hospital
Physician
SUS
ANVISA
Sales
Force
MDT
Partners
Local
Orgs
STRATEGY
OPPORTUNITY KEY STAKEHOLDERS
Exec
Summary
Brazil’s
Health
System
HC Trends
Reimburse
ment
Care
Pathway
DBS Market
Business
Case
Recommen
dations
Risks Summary
12. Dopamine Agonists
Levodopa / Carbidopa
MAO-B Inhibitors
COMT Inhibitors
Surgery
Brazil Parkinson’s Disease
Quality of Life Study
(144 Patients)
•87.5% Levodopa
•29.2% Dopamine
•9.7% COMT inhibitors
Carod-Artal et al, 2007 Move Disorders
Disease Progression
Mild PD Moderate PD Severe PD
13% Patients17% Patients 70% Patients
Barbosa et al, 2006 Move Disorders
Clinical Pathway
13. High Industry Attractiveness
Bargaining power of customers
(High)
• Few patients qualify with indicators
and contra-indicators for therapy
• Switching costs very high: $33.5k vs.
generic drug pricing for 1-5 years in
Brazil
Competitive Rivalry (Medium)
• St. Jude’s Libra and LibraXP DBS
vs. Medtronic’s Activa DBS
• Beginning stage of growth
• Physician training opportunity
Substitutes (Medium)
• National branded drug launch deterrent =
price controls
• Physician willingness to switch is low
• Patient incentives to switch are high
• DBS - effective, reversible, tailored
• Dopamine – liver and kidney risk
• Apomorphine – 70+ Demographic, low life
quality
Threat of New Entrants (Medium)
• Reimbursement already established by
SUS
• Hospital and payer vertical integration
• High cost of infrastructure and
distribution
• Learning curve/device expertise high
• Long development period
Supplier Power (Low)
• Medtronic vertical integration
• No threat of forward integration
14. The Patient Purchase Funnel
Sources: Frost & Sullivan; team analysis
Synovate Global Healthcare Survey Reveals Patient
Power
*US prevalence percent applied to brazil
Tactics
*585,000 Potential (Diagnosed +
Undiagnosed)
PD Prevalence
252,460
Primary Care Diagnosed PD
75,738
Neurologist Diagnosed
Surgery Candidates
75,738
Surgery
Candidates
1,131
Awareness
Conversion
Commitment
Purchase
Free Family Counseling (Brazilians 2X as
likely vs. the world to consult family)
Neurologist Comparative Effectiveness
Training
Patient special circumstances financing
options
Neurologist training and referral
pipeline - tradeshows
Primary Care Physician training and
referral pipeline - tradeshows
Sponsored awareness campaigns
15. Diverse in nature
Mix of Native American, Portuguese, and Africans form bulk of population
Also includes Italian German, Spanish,Arab, and Japanese immigrants
Religion: Mainly Catholic, has largest catholic population in the world
Communication Style
Informal; no strict rules of protocol
Opinionated- will say how they feel
Steady/Direct gaze associated with sincerity (face to face conversation= sincere)
Views on time
Time is somewhat flexible
More emphasis placed on people, relationships, completion of transactions
Human needs more important than schedules
Taboos
Don’t start business discussion before the host does; meetings usually begin with casual chatter.
Wait to bring up the topics related to politics, poverty, religion, etc until trust has been established
Meetings
Allow for a good amount of small talk before speaking about business.
Turn up on time, especially if you are the one seeking the goods and/or services from a Brazilian
counterpart.
Interrupting someone who is speaking is common behavior.
Avoid confrontations. It is best not to appear frustrated with your Brazilian colleagues
Brazilian Culture
16. SUS = Unified Health System in Brazil
• Has one of the largest public health systems in the world->
agreement with almost all hospitals in Brazil
• In network are public hospitals, private and university, which
guarantees citizens the constitutional right of access to health care.
• 6,500 hospitals in the country available to the SUS, 48% of them
private hospitals. Offer simple outpatient care to organ transplants.
• 69 federal, 618 state and 2,278 municipal hospitals
• 190M people, 80% of whom depend totally on SUS
SUS
