What will the future

look like under

Industry 4.0 and digital
transformation in the
healthcare space?
Morris Hosseini, Partner

Stuttgart, April 21st, 2015

Across industries, a technological and a sociological revolution are
under way
Trend overview

A TECHNOLOGICAL A SOCIOLOGICAL
REVOLUTION REVOLUTION
Mobile internet / Faster and faster
democratization of penetration of new
Smartphone EXPONENTIAL technologies
TRANSFORMATION
Potentially infinite storage Increasing success of
capacities – Cloud innovative business
• INDUSTRY 4.0 models based on free
M2M communication
• DIGITAL offerings
Decrease of technologies TRANSFORMATION Expectation of immediate
costs and continuous availability
of services
Source: Roland Berger 2
Industry 4.0 can be understood as the full integration and
digitalization of the industrial value creation
Definition of Industry 4.0 (not exhaustive)

Digital transformation > Digital transformation refers to the changes

associated with the application of digital
technologies in all aspects of human society
> Industry 4.0 is the industrial application of the
Car sharing Wearables Mobile devices concepts applied in the digital transformation,
key elements are:
– Complete connectivity with real-time ability
Cloud data Apps Private robots
– Decentralized, intelligent and self optimizing /
organizing
Industry 4.0 – Modular and reconfigurable

E-Commerce > Assessment of Industry 4.0 impact needs to take

Data-based analogies from digital transformation and
Smart Self-learning business Contactless pay specifics of the manufacturing industry into account
handbooks robots models
> The digital transformation in the consumer goods
Smart Home sector is much more advanced than the industrial
Self-optimizing
systems
Predictive application – In the healthcare space, it has now
Home robotics
Maintenance arrived and is changing the landscape

Source: Plattform Industry 4.0, MIT Sloan Management Review, Roland Berger 3
Industry 4.0 combines a wide set of technologies at different stages
of maturity
Example of technology mapping – Extract
1 PRODUCT DESIGN /
PROCESS
2 MONITORING / CONTROL
Monitoring,
command
Virtual Traceability
Flow
industrialization Interconnected management
machines & plants Active sensors
"virtual Automated logistics /
manufacturing Remote monitoring, Internet of Things
3 MANUFACTURING
mobile app, shared Thermal, Precision OPERATIONS
plant" digitalized,
production process databases hygrometric, counting "Smart" machine
simulation sensors... Shared GPAO (self-correction)
Centralized Flexibility
CFAO Laser sensors, vibra
planning and Per piece
management of switches, corrective Additive
RFID tracking manufacturing
machines Automated internal progams
logistic
PLM
MES Precision 3D printing,
Cobotics 4
Gravage laser, engineering
flashcode, Intelligent Assist SERVICES
GPAO, PLM, GV grinding, Multi-support and Devices
Numerical
puces RFID laser cutting, Conditional (INTEGRATION,
multi-operation
CAO, command
Digitalization of HFwelding machines Big data, maintenance MAINTENANCE)
IAO Transfer remote
Batch order-flow
center Retrofit maintenance
management Programmed / 5
Traditional De-programmed SNC, programs, Augmented operator
techniques machines Machine multi-spindle, etc. WORK
installation ORGANIZAT
Duty organization
Lean Manufacturing Learning organization
Task specialization ION

Available maturity / Emerging maturity / Future maturity /

Industrial diffusion Limited diffusion Precursors
Source : Roland Berger 4
The Factory 4.0 ecosystem – A set of technologies about to
interconnect and disrupt plant operations
Factory 4.0 ecosystem
> Give sense to complexity
CYBER SECURITY BIG DATA > Creativity
> Collaborative manufacturing
> Stronger protection for internet CLOUD
based manufacturing COMPUTING
> Technology products with > Customer & marketing
longer life cycle intimacy
SENSORS > Cyber Physical Systems (CPS) > Flexibility
ADVANCED > Numerical command > Perfect match with customer's
CLUSTER OF SUPPLIERS
> Zero default / MANUFACTURING – Full automation needs with production mass
deviation
> Reactivity
SYSTEMS – Totally interconnected systems efficiency
SUPPLIERS – Machine to machine communication > On demand manufacturing
> Traceability
> Predictability MASS
CUSTOMIZATION

CLIENTS

3D PRINTING / NANOTECHNOLOGY / AUTONOMOUS

ROBOT
ADDITIVE MANUFACTURING ADVANCED MATERIALS VEHICLE
LOGISTICS 4.0 INTERNET OF THINGS
> Scrap elimination > Smart value added products > Real time - Autonomy - > Flow optimization
> Fully integrated > Mass customization > Technical differentiation Productivity > Increased security
supply chain > Object tagging
> Rapid prototyping > Connectivity > Full transparency on data reporting > Lower costs
> Interconnected systems > Internet-object
> Perfect coordination Factory 4.0 OF THE FUTURE A communication via low
PLANT OF THE FUTURE B power radio
> Real time data capture
CLUSTER OF PLANTS
> Optimized stocks
> Reduced wastes
> Clean and renewable energies
RESOURCES OF THE FUTURE everywhere
> Energy Storage
> Alternative raw materials
WIND ALTERNATIVE / NON CONVENTIONAL SOLAR GEOTHERMIC

Source: Roland Berger 5

A smart Factory 4.0 is like a social network – People, machines and
resources communicate and interact with each other autonomously
Factory 4.0 – key potential features

Global Social Augmented Smart Virtual

Facilities Machines Operators Products Productions
> The center point of > Social machines > Augmented > Smart products are > A virtual
Industry 4.0 is a are knowledge- operators have an clearly identifiable production is
network of global based, sensor virtually extended and always characterized by
production facilities supported and view on localizable digitalized produc-
> Pooling and bon- spatial distributed production > All information tion systems that
ding with partner unities of autono- processes about the pro- interlink all
companies from mous production > Smart devices as duction process is dedicated people,
the same industry systems for example smart stored on the machines and
will increase > Social machines phones and tablets product (e.g. by resources
profitability share newly gained help employees to using RFID chips) > Analysis of existing
> Interactions between information with fulfill their tasks > Smart products data and simulation
industrial facilities their peers – > The future devel- are therefore able of future states
and their environ- additional opment will further to steer their pro- allows an optimized
ments create socio- configuration efforts intensify the socio- duction process production
economic systems are needless technical inter- autonomously
with lots of benefits actions

Source: Arbeitskreis Industrie 4.0; Roland Berger 6

Data and communication will be the backbone of Industry 4.0 –
Some players with already wide offering and new players entering
Positioning of different players for Industry 4.0 – Factory view
Client

"Virtual" Production
routing

Building automation

Factory 4.0
ERP System

MES System M

M
M
M

Controls & Automation

MES System
New players
ERP System MES System Sensors/Automation Building Automation 3D Data Big Data Services

Data/ > All transaction data > Shopfloor transaction > Sensor status like > Status of all building data, > Product 3D data > Storage capacity
Funct.1) > Asset data data pressure, position etc., e.g. temp., light, access > Factory 3D data > Algorithms and analytics
> Price/cost data > Machine data communication with other control, ventilation > PLM data > Connectivity
> Maintenance data sensors
> Logistic data > Machine control data
Players1)

1) Not exhaustive; examples only

Source: Roland Berger 7

Industry 4.0 and digital transformation work via four levers that are
supported by new enabler technologies and propositions
Example of technology mapping - Extract

Smart
machines
Automated
Data based logistics
routing Robotics (IoT)
Wearables
Active
Demand Big Additive Sensors
prediction data Digital manufacturing
Automation
data
Industry 4.0 / Fourth-party
Predictive Internet logistics
maintenance of things Digital
transformation
Social
Interconnectivity Digital customer networks Infotainment
Cloud interface
Smart computing Mobile
integrated internet
factory /apps E-
Broadband
commerce
Digital
Enabler
products
Propositions
Remote
maintenance

Source: Roland Berger 8

Novel applications along the value chain in MedTech especially from
digital data and increased connectivity
Selected use cases from digitalization in the MedTech industry

Manufacturers Manufacturers Hospitals & Maintenance

Suppliers
(Diagnostics) (Therapy) Doctors & Service

Digital
> Sensors
data > Data analytics > Data analytics
> Predictive
maintenance
services

Automation > 3D-printing (e.g. artificial limbs and implants)

> Additive manufacturing
> Digitalization in operating theatres
> Minimization (e.g. electric engines, smart pills)

Inter- > Remote surgery

> Remote
> Centralized access maintenance
connectivity > Remotely steered implants
to health data > Service upgrades
> Hybrid operations
> Remote trainings

Digital
customer > E-commerce
portals
interface

Source: Roland Berger 9

As an example, Additive Manufacturing brings new options to the
manufacturing and materials world – Potential for disruptive change
Paths of disruption for Additive Manufacturing
Direct production from CAD data
Freedom of design
Complexity for free
Part consolidation
Elimination of tooling
Prod. cost independent from batch size
New manufacturing processes
Path of Individual New Decentra-
disruption products geometries lized
& materials production

Examples > Prototyping > Integration of new, enhanced > Industrial production on demand
> Mass customization functionalities (more efficient – production by quantity
– Medical products products) in high tech materials – by location (decentralized)
– Jewelry > Development of new > Home printing/production
– Gimmicks materials/material properties
> Outsourcing to partners
> Small series production > New repair strategies

New business models (B2B, B2C )

Limited impact Strong impact

Source: Pictures EOS, Roland Berger, NASA 10

Within MedTech, "technical" printing as well Bio Printing has found
first applications in the area of regenerative medicine
Overview Additive Manufacturing technologies
Production Technologies Bio Printing
(DIN 8550)

Master Forming Cutting Joining Coating Change of material

Forming properties
Materials
> Cell suspension
> Cell-encapsulating
Dimension hydrogels
> Microfluidic fill-in for cells
1 Materials Plastic Ceramic, glass Metal > Bio-filaments

Physical Liquid Solid, pastrious materials Powder

condition
Powder Bed VAT Photo-
2 Technology 7 different technologies poly- Technology/Application
Fusion
merization > Inkjet printing
> Acoustic bioprinting
Series > Laser-induced bioprinting
3 Application Personnel Prototypes, Mock ups Production > Laser-guided bioprinting
Printers
> Extrusion-based deposition

Source: Roland Berger 11

Industry 4.0 will have fundamental impacts on traditional ways of
doing
Impacts of Industry 4.0
Flexibility / Mass > Ability to reduce changeover time – seamless production change
1
customization > Dynamic product schedules allowing to adapt real-time to customer needs

Direct client > Closer relationship between producer and customers

2
relationship > Disintermediation and change of business rules

3 De-laborization > Reduced share of labor cost – Reduced dependency to LCC

> Increase machine open time & utilization, reduce breakdown time thanks to conditional maintenance
4 Asset rotation > Reduce stocks along the value chain

Decentralization / > Reduce impact of size / scale effect – Ability to decentralize processes
5
Regionalization > Possibility to relocate production process close to customer needs

Fast-product > New product industrialization is performed seamlessly and without disruption
6
launch > People are guided through virtual tools to adopt new products

> Less working forces in daily operations thanks to automated robotics

7 Shift of skillset > Maintain of needs for medium-qualified workers due to simplified Human-Machine Interface

Source: Roland Berger 12

Moreover, digital transformation impacts the healthcare space far
beyond the product only by tapping into the information dimension
Evolution of healthcare product business offering
Value creation Digital Transformation
as accelerator
Information

Services Services

Product Products Products

t
Differentiation solely Differentiation by providing Differentiation via operational
through product services to key players efficiency, proven product
innovations (physicians, payors, value and customer channels
(≈ 1920s-1980s) providers) (including new services)
(≈ 1980s-2010s) (≈ 2010s-20??)
Value creation

Source: Roche, Roland Berger 13

Data-driven business models have the potential to re-shape the
customer landscape for MedTech and healthcare players
Healthcare market 2020 with data-driven business models – Simplified view
PHYSICIAN PATIENT
> Deciding on B2C HEALTH ADVISORS > Receiving diagnoses
treatment B2B > Advising on wellbeing from automated tools –
based on real-life ADVISORS > Collecting real-life data sets actively participating in
experience provided treatment decisions
by advisors & > Giving NEW DIAGNOSTICS > Actively sharing data in return
increased networks individual > Offering Dx tests directly to patients
treatment advice > Collecting real-life data sets
based on real-life
LAB data and TRADITIONAL PHARMA
diagnostic results
> Providing > Real-time
DIAGNOSTICS > Developing and
diagnostic decision support > Providing instruments/ tools providing innovative
services where to diagnose conditions drugs
required > Providing companion diagnostics > Jointly developing companion
as instructed by data interpreters tests with diagnostics as
instructed by data interpreters

DATA COLLECTORS/ > Collecting and connecting health-related data from all sources
DATA CONNECTORS > Providing data/ information to other players to increase value

DATA INTERPRETERS > Extracting meaningful information out of massive data sets that they may or may not
own themselves (e.g. for companion diagnostics/ treatments based on real-life data)

Traditional established players New players from digital transformation

Source: Roland Berger 14
Leading MedTech players have already understood the value of
data and started to leverage extra value for their business
MedTech players having started to leverage digital transformation
FUNCTIONS R&D PRODUCTION/ MARKETING/ MARKET STRATEGY
LOGISTICS SALES ACCESS
TOPICS

Enhanced value
proposition

Process
optimizations

Simulation/
prediction of
outcomes

New revenue
streams

The key to success is knowing how to get access to the required data (generating or collecting)
and how to generate value out of it (connecting the dots or interpreting the results)

Source: Roland Berger 15

Analyzing this space, Roland Berger has developed a data-based
business model landscape in healthcare
Data-based business model landscape in healthcare

FIRST MATRIX SECOND MATRIX

Database with +290

existing business
models and market
approaches

Stakeholder and data Data type and data

activity matrix source matrix

Source: Roland Berger 16

Leveraging digital transformation requires many different areas of
expertise, hard to find under one roof…
Digital transformation requirements

1
Connect to the Digital world
> Influencers > Schools
Detect innovation
2
> Entrepreneurs > Start-ups
> Think tanks > Incubators

3
> Institutions Conceive new businesses
> Web developers

7
Launch new businesses > Designers
> Accelerators > IT players
ROLAND BERGER & > Data scientist
> Viral marketing

4
TERRA NUMERATA
> Agencies
Proof and test digital innovations
> Prototypers
> Living / Development laboratories
6
Staff digital projects
> Recruiters
> Trainers
> VCs
Finance new businesses
5
> Investment funds
> Crowdfunding platforms
> Development capital

Source: Roland Berger 17

…this is why Roland Berger launched Terra Numerata through
partnerships and alliances
Terra Numerata

> Covering the entire value chain and

meeting clients' needs Detect
Connect
– Consulting
– Investment Launch Conceive
TERRA
– Technical platforms with partnerships NUMERATA
Staff
– Specific expertise (cloud, data scientists, Proof
developer, etc.) Finance test

> Playing the role of an architect within Terra

Numerata offer by ensuring the quality of
services for each part of the value chain
thanks to partnerships with digital
leaders steered by Roland Berger digital
experts

Source: Roland Berger 18