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COCHLEAR IMPLANT * Sub Industry: Health care equipment-Biotechnology * Three main products: Cochlear Nucleus, Cochlear Baha and Cochlear Hybrid * High cost of implant * Competitors: Advanced Bionics Corp, California and Med-El Corp. Austria, Sonova * Demographics-hearing loss population-America its biggest market * Partnership with complementary products manufacturers (Switzerland’s Phonak Group) * Providing incentives to surgeons – negative point * China and India market making same products at less cost * Poor performance in past 3 years-impact of product recall * Competitor: Advanced Bionics : Acquired by Sonova- Swiss company (AB is subsidiary of AB) and partner with Phonak * Cochlear has 65% of the $860m worldwide cochlear implant market, compared with Sonova’s 15% (http://www.epvantage.com/Universal/View.aspx?type=Story&id=382175&isEPVantage=yes) * Moreover, competition for Cochlear is heating up. The US company Advanced Bionics is launching new products at the same time as Cochlear. Austria’s Med-EL has launched an all-in-one speech processor. Denmark’s William Demant has bought Neurelec, a second-vertically integrated competitor Cochlear. * Cochlear’s mission is: “We help people hear and be heard. We empower people to connect with others and live a full life. We transform the way people understand and treat hearing loss. We innovate and bring to market a range of implantable hearing solutions that deliver a lifetime of hearing outcomes.”Cochlear’s strategy is focused on customer experience, operational excellence, product innovation, people engagement and value creation.Cochlear’s product innovation strategy is to create and bring to market a segmented portfolio of innovative and quality products. Cochlear offers a range of advanced solutions to address different types of hearing loss such as: * cochlear implants, designed to help those people with moderate to profound sensorineural hearing loss; and bone conduction implants, designed to help those people with conductive hearing loss, mixed hearing loss or single-sided deafness. * Cochlear’s implant systems comprise an implant which is inserted during surgery and an external sound processor. This external sound processor can be upgraded with new technology as it becomes available. For the financial year ended 30 June 2013 (F13), 89% of Cochlear’s sales revenue was from cochlear implant (Nucleus) products and 11% from bone conduction (Baha) products. This proportion of sales is consistent with that for the prior year. * The barriers to increasing the penetration of the candidate base include: awareness of implantable solutions as a viable option; patient motivation; lack of clear referral paths; affordability and funding availability; and clinic capacity. * Operates in complex industry-different countries-different penetration rates-cultural and economic situations. Cochlear estimates that more than a quarter of a million people have been implanted with one of its implants. Cochlear’s business model includes supporting these customers with innovative and compatible products, through the sale of sound processor upgrades and accessories and ongoing product support.Effects of foreign exchange * The CI500 series implant was voluntarily recalled in September 2011. Recall costs of $138.8 million were recognised in the prior year as a charge to cost of sales ($101.3 million after tax). * R&D expenses of $124.7 million increased 5%, reflecting the deliberate strategy to maintain momentum in the future development work of R&D. During F13, there was a net loss of $2.5 million (2012: loss of $0.3 million) on the translation of foreign assets. * The clinical and business environments in which Cochlear operates are dynamic and evolving. Cochlear is committed to identifying and supporting the clinical trends as they will shape its future operating environment. A good example of this is the ongoing trend for bilateral implantation * http://www.who.int/mediacentre/factsheets/fs300/en/

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