Gunjan Bagla of Amritt Inc.

1. © Amritt Ventures, 2010
PROPRIETARY & CONFIDENTIAL 1
Case Studies & Learning
How to Leverage Engineering & R&D
From India and China
in the Med Tech Business
February 13, 2014, Anaheim, California
Gunjan Bagla
Amritt, Inc.
Medical Technology Practice

2. © Amritt Ventures, 2010
Engineers in India help Western
device companies
• “Captive” Engineering Centers for GE, Siemens,
Philips, Covidien, etc.
>> GE Lullaby Baby Warmer, a good example
>> Designed in and for India, sold in Europe as well
External “Engineering Service Providers”
>> For Product design, testing, sustaining engg.
• Clinical Trials of Devices in India
>> Can accelerate time to market in West
IP and patents in cases above are owned by Western companies
PROPRIETARY & CONFIDENTIAL 2
Lullaby Baby Warmer

3. © Amritt Ventures, 2010
Amritt’s Medical Technology Practice
We help V.P.s of R&D, CTOs, CSOs:
• Create, develop and improve offshore R&D centers
• Select and manage outsource R&D partners
• Scout for technologies, partners, and I.P.
• Access new markets and new business models
• Provide top personnel selection & executive
training oriented toward global R&D
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4. © Amritt Ventures, 2010
Amritt: Helping Medical Device Companies to
leverage Emerging Economies
• Working with corporate and business unit leaders at
large and emerging device companies in America and
Europe
>> Helping them to engage with India/China etc.
• Engage directly with markets or via partners.
• Access technologies, products, tech skills.
• Directly or via partnerships.
• Amritt Clients include large and small medical
technology companies globally
PROPRIETARY & CONFIDENTIAL 4

5. © Amritt Ventures, 2010
Improve Engineering Productivity by 10%
PROPRIETARY & CONFIDENTIAL 5
Client
Ask #1
Amritt
Strategy
Client
Solution
• New CEO directed significant increase in R&D
budget but challenged his four CTOs to improve
ROI at the same time
• Build focused captive engineering centers in both
China and India.
• Choose 2 engineering outsourcers in India for high
volume work.
• Train executives on cross-cultural expertise.
• Productivity gain is about 12% in year 3 after
accounting for transition costs. US/EU staff
strength grew about 3%; added over 500 head
count in Asia

6. © Amritt Ventures, 2010
Outsourcer provides turnkey design
PROPRIETARY & CONFIDENTIAL 6
Client
Ask #2
Amritt
Strategy
Client
Solution
• Design complete new diagnostic product using
consumables cartridge from legacy line.
• Value Engineering and Innovation Packaging were
key determinants
• Qualified 3 outsourcers with electro-optical, systems
and prototyping skills. Only one had medical device
legacy.
• Supplier with no med tech heritage won the bid.
Recruited seasoned med tech experts from
GE/Philips captive center. Design cost is over 40%
lower. Product is still in test.

7. © Amritt Ventures, 2010
Create third-party innovation cluster
PROPRIETARY & CONFIDENTIAL 7
Client
Ask #3
Amritt
Strategy
Client
Solution
• U.S. client expanding into Latin America, could not
justify US-based new product development to
serve Latin America market
• Create a network of small innovative product
developers and prototype shops in India to develop
products for Latin America market
• Client provided deep and wide voice of customer.
By Year 2, two complete products developed and
3 others modified to meet Latin American needs.

8. © Amritt Ventures, 2010
Challenges facing today’s
med-tech R&D managers
• Increase the product development pipeline and
reduce time-to-market within tightening R&D budgets
• Develop products that resonate with large, new
emerging markets (the next 2 billion medical
consumers)
• Ensure that the company’s core IP portfolio and
technical talent is protected and enhanced
• Trends driving innovation in medical device sector:
• Data flow between devices and to ERP systems, big data, smart
phones
• Diseases: cancer, cardiovascular, diabetes, obesity, degenerative
conditions
• Manage costs and budgets more tightly
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9. © Amritt Ventures, 2010
Balancing the Med. Device R&D Center:
Size and Access to Local Innovation
Investment in Time & Cost
Staffing
base can
be much
smaller
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Collaborative
R&D relationship
with a domain
expert
Contractual
development
with CRO
Service
agreement
with provider
HarnessingLocalInnovation “Captive”
R&D
Center

10. © Amritt Ventures, 2010
• Captive Engineering/R&D Center
An offshore R&D location staffed by your employees
(Including expats, local hires, or third country transplants)
• Joint Venture
Typically with a local company in-market
• Outsource partner
External service provider, with staff in China/India
• Collaboration
• Including Open Innovation
• Supplier contract
From current supplier (“free” R&D)
Amritt evaluates trade-offs among these.
10
Alternatives for harnessing R&D
resources

11. © Amritt Ventures, 2010
“Captive” versus “Outsource” R&D
11
Captive Outsourced
Perception Permanence
(both home & remote teams)
May seem temporary
Ownership /
Loyalty
To the U.S. company To hiring company (service
supplier)
Flexibility Can do many different things Can ramp up or down easily
Initial setup Requires planning and
commitment
Shorter, less painful
Operational More control but more
responsibility
Less control, potentially less
access to tech staff
Costs Potentially lower, if done well Low enough?
Indicated for Permanence, critical mass,
corporate stamina
Not as strategic. Needs well-
defined projects, flexibility
for exit, intermediate stage
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12. © Amritt Ventures, 2010
Selecting the portion of the development
lifecycle you can offshore or outsource
 Many companies start with offshoring or outsourcing design
verification or analytical testing to India/China
 Over time they move upstream in the product
development process lifecycle
Project A B C D E
Phases
Investigation
Concept
Design
Develop
Test & Verify


 
   
  
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13. © Amritt Ventures, 2010
14
Proactive Globalization
Amritt PRNDL model
Upside:
lower costs
Downside:
Workforce
reduction?
Lose talent
in U.S./E.U.
Upside:
Capacity
increase
w/o capital
Convert
fixed costs
to variable
Develop a
2nd source
Downside:
Follow
competition
Upside:
New skills
& talent
Refocus US
resource on
higher value
Footprint in
new market
Type 1
TACTICALLY
REACTIVE
Type 2
STRATEGICALLY
REACTIVE
Type 3
TACTICALLY
PROACTIVE
Type 4
STRATEGICALLY
PROACTIVE
Upside:
Transform
Value Chain
Deep best-
of-class
supplier &
partner
relationships
Enable
selective in-
sourcing in
transformed
eco-system
Value
1
2
3
4
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14. © Amritt Ventures, 2010
Typical Amritt Advisory Process
15
Assess the need
Initiate the
Investigation
Present Interim
Results
Final Discussion
& Report
Facilitate
Meetings
Reach agreement
with 3rd party
Make hosted
Visits
Agree upon a
detailed
Plan & Schedule
Get
Feedback

15. © Amritt Ventures, 2010
Thank you!
• Research reports available to attendees free
for a limited time, normally priced at $195
• Serving the Next 3 Billion Patients
• The Medical Device Business in India
• Contact us
• Gunjan Bagla
• Amritt, Inc., Medical Device Practice, Cerritos, CA
• usa@amritt.com (562) 402 4435
• http://www.amritt.com/industries/medical-device-india
• http://www.amritt.com/services/global-product-innovation-strategy/
• http://www.amritt.com/services/global-technology-scouting/
PROPRIETARY & CONFIDENTIAL 17