Strategy & Implementation Summary
Premium Therapy's strategy will be to target both the market for the EMIT MX as well as the market for the lower power EMIT SX. The models will be promoted separately in each of their disparate markets and specialty distributors will be utilized in order to rapidly form robust distribution and sales networks.
An important step will be the establishment of the EMIT system at key medical institutions throughout the country. A strategic partnership has already been formed with the Physical Therapy department at Harvard University. Once an IDE has been obtained and pending investigational review board applications are approved, clinical studies will commence with the assistance of Dr. Henry Dillard, Director of Clinical Services in the Physical and Occupational Therapy department at Harvard University. Dr. Dillard is excited to begin the studies and to be a part of a technology that he feels has the potential to revolutionize the industry. Additional institutions expressing interest in collaborative studies include: University of California - Berkeley, the Therapeutic Institute, and the University of Arizona.
Value Proposition
The true value of Premium Therapy's ElectroMagnetic Induction Therapy (EMIT) technology lies with the patient. In using the EMIT system, the patient stands to gain unparalleled, scientifically proven, therapeutic benefits including: improved treatment of muscular atrophy, effective therapy for neurogenic bowel and bladder, consistent production of analgesia in arthritis and musculoskeletal pain, and reversal of the degenerative changes found in arthritis.
Not only will the EMIT system treat multiple, previously poorly-managed diseases, it will do so in a user-friendly manner with cost-effective, home-healthcare applications. Compared to existing technologies that require trained healthcare professionals to operate the complex machinery, the EMIT system is incredibly user-friendly. In fact, once the patient is shown how to use the EMIT system, there will be no need for continued healthcare provider input other than routine follow-up. Thus, with decreased healthcare professional requirements and home healthcare applications, use of the EMIT system will result in an overall decrease in healthcare costs for the patient while providing superior clinical results.
The value proposition for institutions and healthcare providers to adopt the technology is threefold: 1) Premium Therapy's proprietary position will allow a sustainable premium to be charged for the EMIT system; 2) Even with this sustainable premium, assuming only a 20 percent reduction in requirement for existing therapies with the use of the EMIT system, overall treatment costs will decline (see Appendix 1) and 3) Use of the EMIT system will result in superior patient care.
Marketing Strategy
Marketing efforts for Premium Therapy's technology will involve the targeting of two different populations: 1) healthcare providers treating muscular atrophy, neurogenic bowel and bladder, musculoskeletal pain and/or arthritis, and 2) patients suffering from muscular atrophy, neurogenic bowel and bladder, musculoskeletal pain and/or arthritis.
Premium Therapy's success is dependent first upon demonstrating scientific support for the efficacy of the device and then on creating acceptance among health care providers and patients. Promotional strategies will be reflective of this fact. Of course, acceptance by either patients or providers will provide an impetus for the other group to follow suit.
Sales/marketing will be directed in coordination with specialty distributors contracted by Premium Therapy, thus significantly reducing the company's own required sales/marketing expenditures. The efforts of Premium Therapy's internal sales/marketing forces will be focused on marketing the EMIT system, developing educational tools, and training the specialty distributor sales representatives.
Promotion Strategy
Premium Therapy has already worked closely with physicians to design its products. The importance of working with physicians in developing novel therapies is well known. Initiation of clinical studies with the eager assistance of Dr. Henry Dillard, Director of Clinical Services in the Physical and Occupational Therapy department at Harvard University will be invaluable in the promotion of EMIT as a viable medical therapy. It is expected that once the device is found to be effective, Harvard University will use it as a high-profile example of its technological advancement.
Promotion efforts for Premium Therapy's technology will focus on its two target populations, namely: 1) healthcare providers treating muscular atrophy, neurogenic bowel and bladder, musculoskeletal pain and/or arthritis, and 2) patients suffering from muscular atrophy, neurogenic bowel and bladder, musculoskeletal pain and/or arthritis.
- Healthcare Providers: Acceptance among the more than 550,000 healthcare providers who treat muscular atrophy, neurogenic bowel and bladder, musculoskeletal pain and/or arthritis will be one of the keys to Premium Therapy's success. Even with strong patient demand, if the healthcare providers are unwilling to recommend Premium Therapy's technology, then the market will remain largely untapped. Furthermore, healthcare providers are persuasive in consulting patients concerning novel therapies and those healthcare providers who have embraced Premium Therapy's technology will be powerful advocates.
In marketing the procedure to healthcare providers, the main consideration will be the efficacy of Premium Therapy's technology and its superiority over existing technologies. First and foremost, Premium Therapy will utilize the competent, trained sales force of the specialty distributors to create a demand push for its technology. These efforts will be complemented by Premium Therapy's internal sales force, which will engage in direct calling or visiting in order to encourage trials.
Furthermore, Premium Therapy intends to promote its technology through publications and advertisements in reputable medical journals along with presentations at national conventions. Using this sales/marketing strategy, along with the promise of sustainable premiums for healthcare providers involved with the EMIT system, Premium Therapy expects to generate demand among healthcare providers.
- Patients: Premium Therapy will also market its technology to patient-consumers once healthcare providers have begun to adopt the EMIT system. In promoting Premium Therapy's technology to this population, the most important factor will be concrete research results displaying the superior efficacy of the EMIT system compared to existing technologies. Once these data have been acquired, Premium Therapy will embark on a large-scale, national advertising campaign focusing on television and print media. Using these channels, along with intentionally facilitating publicity, Premium Therapy will be able to generate a demand pull from individuals with conditions treatable with the EMIT system.
Pricing Strategy
The EMIT MX and EMIT SX systems are priced in two components, both in keeping with industry standards. EMIT MX will require more complex, expensive circuitry and will need greater functionality than EMIT SX due to its higher power requirements. Based on these much higher costs, the retail and wholesale price for EMIT MX will be significantly higher than for EMIT SX, but will fall well within the range of industry standards.
Premium Therapy expects to lease the EMIT MX system much more frequently than the SX system, so estimates of one logic controller (LC) per ten patients and one LC per two patients were used for the MX and SX systems respectively. The Arrays of Overlapping Coils (AOCs) are single-patient devices, as they are not designed to withstand the harsh resterilization procedures.
It is expected that the specialty distributor selected for Premium Therapy's technology will use a markup of approximately 50 percent in determining retail price. This is the upper end of estimates received from specialty distributors with quotes ranging from 35 percent to 50 percent. Prices are inclusive of both customer service and technical support as the specialty distributor will provide these functions.
| Component | Wholesale Price | Expected Retail |
| EMIT MX Logic Controller | $13,000 | $20,000 |
| EMIT SX Logic Controller | $2,000 | $3,000 |
| Arrays of Overlapping Coils | $250 | $350 |
Sales Strategy
The key step in generating sales will be to initiate the investment in Premium Therapy's technology after which initial sales efforts are expected to decrease significantly. Therefore, the sales force will be relied on heavily for the initial demand push for the adoption of the EMIT system, then to a much lesser extent for the additional components. While Premium Therapy will maintain a small internal sales force in order to encourage adoption of its technology at select medical centers and to train specialty distributor sales personnel, the bulk of all selling will be accomplished through the use of specialty distributors. The specialty distributors to be utilized have well-established distribution networks and widespread sales contacts, which will prove invaluable in promoting Premium Therapy's innovative technology in the early years of the business plan.
Premium Therapy's internal sales force will initially consist of two personnel in Year 2. This number is expected to increase to approximately twelve by Year 5 with expected dramatic increases in sales. This number is remarkably low as a percentage of sales due to the role of the specialty distributor in providing many sales functions.
Milestones
The following are the key milestones for Premium Therapy's operations:
- Patent process and business plan have been completed.
- Investigational Device Exemption Application filed by June 2002.
- Specialty Distributors selected by June 2002.
- Start-up capital will be raised by August 2002.
- First round of human clinical trials completed by June 2003.
- Full FDA approval obtained by June 2005.
- All other milestones are currently on schedule in accordance with the business plan.
Regulatory Issues
The FDA classifies new devices into one of two categories: experimental or investigational. Experimental devices are innovative devices for which "absolute risk" has not been established, meaning that the initial questions of safety and efficacy have not been resolved. Investigational devices are those for which "incremental risk" is the primary risk in question, meaning that questions of safety and efficacy have been resolved to the satisfaction of the FDA. Due to the precedent set by existing pulsed electromagnetic stimulators as "investigational" devices, Premium Therapy expects its EMIT technology to also be granted the preferable "investigational" status in the form of an Investigational Device Exemption (IDE).
Furthermore, while it is expected that full FDA approval will be gained quickly based on the approval of similar devices, the EMIT system will be produced and marketed prior to this approval. Once the IDE has been granted, Premium Therapy will be able to market and sell the device to interested parties prior to FDA approval with the label "For Investigational Use Only." An example of such expedited market entrance can be seen with Leetonus' LeeTone in which an IDE was obtained and devices were sold prior to full FDA approval. Only minimal delay in market entrance is expected as IDE approvals are typically obtained within an average of 3 months including required revisions.
Once full FDA approval is obtained for therapeutic use of the EMIT system, the market is expected to expand dramatically and entrance into foreign markets will be possible. At this stage, as well, it is expected that insurance companies will begin reimbursing for pulsed electromagnetic therapy, greatly increasing demand for Premium Therapy's products. Full FDA approval will be necessary in order to claim therapeutic efficacy of the EMIT system for each of its indications.
