Dr R K Powar continues her series of blogs on management skills by looking at the application in the workplace of Maslow’s theory of human needs and their impact on motivation.

Most of us have heard of Maslow’s Hierarchy of Needs, probably coming across it in training sessions, team building, management courses etc. However, it is something that is applicable to almost everything we do, including the working part of our lives.

Abraham Maslow’s Hierarchy of Needs states that each of us is motivated by needs. Our most basic needs are inborn, having evolved over millions of years. Maslow's theory helps to explain how these needs motivate us all.

Maslow’s Hierarchy of Needs states that we must satisfy each need in turn, starting with the most important: the basic needs for survival itself. It is only when the lower-order needs of physical and emotional well-being are satisfied that we are concerned with the higher-order needs for influence and personal development. However it must be noted that if the things that satisfy our lower-order needs are swept away, we are no longer concerned about the maintenance of our higher-order needs.

The Hierarchy of Needs as defined by Maslow is:

1. Biological and physiological needs – air, food, drink, shelter, warmth, sex, sleep, etc.

2. Safety needs – protection from elements, security, order, law, limits, stability, etc.

3. Belongingness and love needs – work group, family, affection, relationships, etc.

4. Esteem needs – self-esteem, achievement, mastery, independence, status, dominance, prestige, managerial responsibility, etc.

5. Self-actualisation needs – realising personal potential, self-fulfilment, seeking personal growth, etc.

Levels 1 to 4 are deficiency motivators (we are driven by lack); level 5 is a growth motivator (we are driven to achieve growth) and is relatively rarely found.

Organisations spend a great deal of time and resources motivating staff, usually by offering training, and all too often it is thought that when employees have had training they will automatically become experts at understanding their own needs as well as those of their work colleagues. The two examples below show that the crippling of needs is usually a cause of stress, particularly at level 4:

• You can’t motivate someone to achieve their sales targets (level 4) when they're having problems with their marriage (level 3).

• You can’t expect someone to work as a team member (level 3) when they're having their house repossessed (level 2).

So while Maslow’s Hierarchy of Needs can be useful in providing depth in understanding people, it can only prove useful if there are good listening and communication skills in place and the time and trouble is afforded to learn about the needs of staff in the workplace, i.e. using the softer skills of management.

Dr R K Powar has over ten years’ experience in the pharmaceutical industry and provides a range of tailored programmes to help staff improve on their Softer S’s skill base.

E-mail: r11osyconsultants@yahoo.co.uk

LinkedIn: http://uk.linkedin.com/in/r11osyconsultants

Twitter: @ravipowar

New research shows that SME growth provides the best prospect for economic recovery in the UK. But, as private equity firm ECI notes, finding the cash to reach out to global partners and markets can be a critical hurdle.

With continued pressure on governments across the Western world to reduce their expenditure, together with sustained macro-economic uncertainty and a tightening of bank funding, times are not necessarily easy for the average healthcare company – which often relies on the public purse for reimbursement and debt funding for growth. One might therefore expect the short-term outlook for growth to be somewhat muted, despite the backdrop of positive longer-term demographic drivers of demand.

Hence it is interesting that a recent survey of UK SME businesses by ECI Partners, a UK-based midmarket private equity firm, has found executives to be generally positive about growth prospects over the next 12 months, with 74% of respondents anticipating headcount growth and 60% expecting double-digit turnover growth.

The results met with a warm response from the Government, with Mark Prisk, Minister of State for Business and Enterprise, saying: “It’s good news that despite a tough few months, nearly three-quarters of the SMEs surveyed by ECI are looking to recruit over the next year and half expect to see substantial profit growth in that period. Up and down the country, it is Britain’s SMEs that are driving our economic recovery.”

Reaching out

This year, the survey conducted each summer by ECI Partners gained responses from a total of 246 chief executives from UK growth companies from a range of sectors with turnover between £10m and £200m. The results paint a positive picture against the gloomy economic backdrop of the Eurozone crisis and sluggish UK economy, and suggest that there remains growth potential amongst SME businesses – which account for around a third of UK private sector employment.

Steve Tudge, a Managing Director of ECI, commented: “Despite the barriers to growth, which are principally cited as a weaker macro-environment and funding constraints, we continue to be optimistic about the prospects for good mid-market companies.”

Executives see the key growth drivers to be increasing international sales – with Europe and the USA remaining the dominant international markets, though India and China are becoming more important – and organic growth through investment in sales and marketing and new product development. Over 40% of companies are also planning to increase their use of overseas suppliers to improve their margins.

Internal cash flows are viewed as the most likely source of funding for this growth, though around half of respondents say they are likely to seek bank debt within the next 12 months (despite continued complaints about its cost and due diligence requirements) and around 40% are also likely to look at private equity backing. Fewer than 10% of companies see the public markets as accessible, perhaps reflecting the recent volatility and liquidity issues associated with the AIM market.

Healthcare respondents are less bullish about high growth than their peers in other sectors, and are noticeably less positive about growth than they were last year. This no doubt reflects, in part, the political uncertainty surrounding the current UK healthcare reforms and the public sector spending constraints that are impacting on the health and social care sectors.

Despite this, companies remain more confident of raising growth financing – and of raising it from private equity firms, with over 50% saying that was a likely consideration over the next year.

Financing growth

What does all this mean for SME healthcare businesses in the UK? The sector certainly faces challenges in responding to Government spending cuts, which are tending to put pressure on margins if not always on volumes.

However, opportunities for growth remain amidst these challenges, particularly for companies who are able and willing to venture beyond the UK in order to seek new customers and cheaper suppliers.

Of course, this internationalisation can put a strain on smaller businesses, which may lack the scale to fully support an international infrastructure. Private equity groups with experience and expertise in this process can potentially offer support to management teams in this position – whether by making introductions, sharing best practice or simply financing the required infrastructure.

There are significant sums of capital available for investment from the UK private equity industry, and there remains an appetite to invest in market-leading healthcare businesses. Thus private equity should be considered seriously as an option by management teams in the healthcare industry who are looking to fund growth to help their companies succeed in the current economic environment.

ECI is a private equity group that has been investing in mid-market growth businesses for over 35 years. It invests across sectors, with a focus on UK and Irish companies. Healthcare companies in its current portfolio include a primary care provider (Harmoni), assisted living specialists (Premier Bathrooms, DLP) and medical software companies (Clinisys, Ascribe).

Revenue was up 10% in Q3 at Lundbeck to DKK 4.9 billion but profit from operations fell nearly a quarter (22%) after restructuring its R&D department.

Growth was driven by an increase in revenue from a number of its key products and milestone payments following the launch of escitalopram in Japan.

Ulf Wiinberg, Lundbeck’s President and CEO, says the company is “very pleased with yet another strong quarter” after its branded products delivered “solid results”.

Sales of Sabril increased by nearly half (47%) to DKK 77 million, compared to the third quarter in 2010, with revenue also up for Xenazine in the US by a fifth, compared with the same period, to DKK 191 million.

Lundbeck’s key products, Cipralex, Ebixa and Azilect, which grew 5%, 18% and 20% respectively, compared to the period last year, helped boost revenue from International Markets up 20% to DKK 901 million.

“We are now entering a new era with many new product launches,” said Ulf Wiinberg. “With the launch of Lexapro in Japan, the continued roll out of Sycrest and the forthcoming launch of OnfiTM in the US, we have expanded on our product diversification and strengthened our long term growth prospects substantially.”

The Government needs to do more to support life sciences in the UK and create an environment where the industry can flourish, a new survey has found.

RSA’s The UK Life Sciences Leaders’ Survey 2011 revealed worries over the NHS reforms, medicine pricing and reimbursement, employment issues and the cost of research amongst its leaders.

Nick Stephens, CEO of RSA, says the Government “urgently needs to do more to ensure that education, regulation, access to medicines and the NHS research base align to support the industry’s continued contribution to the UK economy”.

The report is the second annual survey of industry bosses. Last year the general feeling was of optimism with leaders believing the recently elected coalition Government would improve the business environment.

But twelve months later the mood has changed with results finding leaders claim the UK is not competing effectively globally, creating opportunities for early phase/smaller companies or making the most of its unique selling points: the NHS and skills in innovation and discovery.

Leaders also raised concerns about the increasing cost of working in the UK, the implication of R&D as a result of the NHS reforms, the regulatory burden on operations and the process from development to market. They also advised that fiscal and tax incentives should be given to SMEs to help their growth and the UK compete globally.

Worries were also raised about the introduction of value-based pricing. However, in contrast, health technology assessments were broadly welcomed as a means of enhancing value and meeting therapeutic requirements, the report found.

During the tough economic environment, the survey found that leaders would focus on innovation, creating flexible organisations and processes, and refocusing research and development to weather the current storm.

In a perfect world, leaders revealed they would investing in R&D and make the healthcare sector, regulatory and commercial environment work closer together to achieve better outcomes for patients and the pharmaceutical industry.

Stephen Whitehead, CEO, ABPI, says the survey shows more support is needed for biopharmaceutical companies in the ever-changing NHS. “There is much that the Government has done to support the industry, particularly through the Growth Review and the Office for Life Sciences,” he said. “But we need to build on this as part of a continuing relationship with NHS and Government to explore how unnecessary bureaucracy can be eliminated from the healthcare system so that new treatments can reach patients as quickly as possible.”

West Midlands home care specialist Salts Healthcare has acquired Healthlink, a Dispensing Appliance Contractor (DAC) covering Sussex, Hampshire, Kent and Surrey.

The acquisition will enable Salts to make its UK customer service network fully national, increasing its number of care centres to 17.

Sussex-based Healthlink has been run for 30 years by its founder and owner Liz Box, who is due to retire.

Family-owned Salts Healthcare, established over 300 years ago, specialises in stoma and continence care products.

The company’s home delivery service, Salts Medilink, provides specialist nurses and rapid prescription delivery via a network of customer care centres.

According to Peter Salt, Salts Healthcare’s Managing Director, the company “provides a vital service to ostomy and continence patients throughout the UK”. He added: “That passion to provide the very best service is found across the Healthlink team, and it’s that same quality of care and professional principles that attracted us.”

“This is a new chapter for both me and the company, and I’m delighted that my work will be continued with the same passion by Salts Healthcare,” said Liz Box. “As a family-owned firm, I know that Salts will look after my company, my staff and most importantly the patients.”

For Salts Healthcare, the last year has seen new product launches, significant export growth and the acquisition of UCI Healthcare.

Philip Salt, CEO, (pictured above with Liz Box and Peter Salt), commented: “Our early history shows we were originally metal workers who progressed to surgical instruments. This adaptation was borne out of our home-made but specialist skills and the desire to innovate. The same principles apply now, especially in a global economy with pressures for cheaper products coming from across the world.”

Global revenues from small-molecule targeted cancer therapies are expected to reach $27.3bn in 2015, a new report predicts.

visiongain’s Small-Molecule Targeted Cancer Therapies: World Market 2011-2021 found that the overall market generated $20.3bn last year but is set to grow as more patients are diagnosed with cancer.

Dr Syed Ahmed, a senior healthcare industry analyst, visiongain, says there is still “an under-met need for therapeutic agents” and the therapies “remain a crucial part of the pharmaceutical market from 2011 to 2021.”

The report found that there were more than 13 million patients worldwide diagnosed with cancer in 2009. But there may be as many as 20 million new cases by 2025, it says.

Targeted cancer therapies block the growth and spread of tumours by interfering with with molecules involved in tumour growth and progression. Most of these are either small-molecule drugs or monoclonal antibodies.

The market is currently dominated by Novartis’ Glivec/Gleevec (pictured), the report says, but ‘blockbuster’ brands are set to lose their patent protection in the next ten years paving the way for generic competition.

“A strong R&D pipeline for small-molecule cancer therapies makes this industry segment dynamic and promising for pharmaceutical companies," said a report analyst.

Sales increased more than 10% at Sanofi in the third quarter to €8.7 billion, despite the loss of €471 million due to generic competition compared to the same period a year ago.

Total sales grew 10.1% along with an 11% increase in growth platforms after strong performances in its diabetes, vaccines and consumer health divisions.

Christopher A. Viehbacher, Sanofi CEO, says the return to growth in sales and earnings is an “important milestone as the company progressively puts the patent cliff behind it”.

Growth platforms and Genzyme accounted for 68.5% of total sales after the recently acquired business recorded sales up 6.9% to €768 million.

Pharmaceutical net sales were up a tenth to €6.9 billion and helped year-to-date net sales rise 5.5% to €20 billion, despite generic competition to Lovenox, Ambien CR and Taxotere in the US and Plavix (pictured) and Taxotere in the EU plus the impact of US healthcare reform and EU austerity measures.

Its diabetes division was driven by a strong US and Emerging Markets performance which resulted in a 12.4% increase in sales after Lantus recorded growth of 14.6% and 23.4%, in respective markets. Growth in Sanofi’s vaccine division also increased 16.7% after a solid demand for seasonal flu medication in the US.

The Sanofi Group now expects 2011 business net income to be between 2%-5% lower than last year’s total. “We continue to make strong progress in R&D with the submission of five new products and also in the tight control of our costs,” said Mr Viehbacher.

It was reported this week that Sanofi is set to overtake Pfizer as the world’s biggest pharmaceutical company by 2016.

Submissions have been recently filed for Lyxumia (lixisenatide) in the EU, Aubagio (teriflunomide) and Zaltrap (aflibercept) in the US; Visamerin/Mulsevo (semuloparin) in the US and EU; plus Kynamro (mipomersen) in the EU.

The company released its Q3 performance on the day it announced it was cutting jobs in its US R&D and sales divisions.

Novo Nordisk has increased operating profits by 12% in the first nine months of the year after sales growth rose due to the performance of Victoza (pictured), NovoRapid and Levemir.

Sales of modern insulins increased by 11% after Victoza sales nearly DKK 3.9 billion which resulted in net profit jumping nearly a fifth (19%) to DDK 12.4 billion.

Lars Rebien Sørensen, President and CEO, says Novo is “pleased” to see its key products “drive strong underlying sales growth”.

The Danish-based company has now updated its outlook for the year and expect sales growth to be between 10%-11% and operating profits growth be in the region of 17%-19%.

In North America sales increased by 17% and in other International Operations by 16%. Gross margin improved by 0.2% which Novo says reflects a favourable product mix development due to an increase in sales of modern insulin versus lower human insulin sales.

Regulatory dossiers for the company’s new generation of insulins, Degludec and DegludecPlus, were also submitted to the European and US authorities in September. “The filing of our new-generation insulins, ultra-long-acting Degludec and DegludecPlus, in the US and Europe is a major milestone in the expansion of our leadership in diabetes care."

Novo has now adjusted its preliminary outlook for next year which indicates a high single-digit sales growth and an operating profit increase near 10%.

The company increased its operating profit by nearly a third in 2010.

Merck saw revenues increase by 3.8% to €2.5 billion and net profit rise 7.5% to €227 million in the third quarter after solid performances by its pharmaceuticals and Millipore divisions.

Revenues at Merck Serono increased 5.4% to €1.4bn after increased global sales of Rebif and Erbitux (pictured) whilst its Millipore division saw revenue reach €588 million compared to €559 million the same period a year ago.

Karl-Ludwig Kley, Chairman of the Executive Board of Merck KGaA, says the results leave the Group “well positioned as we head into the end of the year”.

Its Executive Board now forecasts annual Group revenues between €10-10.2 billion and the debt resulting from the 2010 acquisition of Millipore to decrease at an “excellent pace”.

Administration expenses were down 2.7% to €124 million with other operating expenses and income also declining slightly by 1.3%. R&D costs increased to €371 million in Q3 due to a combination of late-stage clinical trials and the strong Swiss franc.

Earnings before interest and tax were also down 8.4% with underlying core operating result – which excludes Merck Serono and Millipore – decreasing by 21.5% of revenues as a result of the weakening of the Performance Materials division, the Group claimed.

Generic organic revenue growth in Merck Serono increased nearly 9% after its multiple sclerosis treatment Rebif recorded global sales of €426 million and the cancer treatment Erbitux earned € 218 million, primarily as a result of growth in emerging markets.

“The Merck Group produced solid third-quarter revenue growth in a difficult environment, driven mainly by good performances from the Merck Serono and Merck Millipore divisions,” said Karl-Ludwig Kley. “We are making progress in driving our change agenda forward and we will provide important updates on this endeavour in the first half of 2012.”

France is Europe’s biggest importer and exporter of medical devices. However, current reforms are driving cost reduction and efficiencies. Medtech Business in association with Espicom takes a look at the French market for medical technologies.

France is one of the top five medical device markets in the world, accounting for around 3.9% of the global market.* Within Europe, the market ranks behind Germany and is a similar size to that of the UK.

The country has a well-developed healthcare system, combining public hospitals with commercial clinics that are the main providers of elective surgical treatment. While the public sector is the largest purchaser of most diagnostic and therapeutic equipment, the private sector is the dominant purchaser of surgical equipment and supplies.

The high level of healthcare expenditure (11.8% of GDP) and the substantial health deficit are major concerns that have prompted various reform programmes aimed at curtailing costs and improving efficiency in the healthcare system. For this reason, the medical market is only likely to see moderate growth, rising from US$8.3 billion in 2011 to US$9.8 billion by 2016.

Despite several high-profile investment programmes, France continues to lag behind its European neighbours in some high-technology fields, most notably imaging and radiotherapy equipment. A second five-year cancer plan has now been launched which aims to increase the numbers of scanners.

With flagging domestic production in several sectors the French medical device market is increasingly reliant upon imports, which now account for around 80% of consumption. However, many imported products are re-exported to other countries.

 

The market in 2011

In 2011, the French medical device market (see Figure 1) is valued at US$8,280 million. Consumables is the largest product category, accounting for 20.9% of the overall market, followed by diagnostic imaging (19.8%).

Espicom estimates that the medical device market will grow at an average annual growth rate of 3.5% between 2011 and 2016 – bringing the total market value to US$9.8 billion by 2016.

Orthopaedic and prosthetic devices are expected to continue to be the most dynamic sector of the market, with growth forecast to be more than double the rate for the overall market. Conversely, diagnostic imaging is forecast to have the lowest growth during the 2011–16 period.

 

Predictions for market segments

Figure 2 shows Espicom’s predictions for the major segments of the medical device market.

1. Consumables. The market for medical consumables is estimated at US$1,729 million. The consumables market grew at an annual rate of 5.1% in US dollar terms between 2006 and 2010. Imports supply the greater part of the market. Espicom estimates the consumables market will continue to grow by an average of 3.5% over the next few years.

The wound care products market is forecast to grow at an average annual rate of 2.9% in US dollar terms during the 2011–16 period. Syringes, needles & catheters has been the fastest growing sector of the consumables market and will continue to be, with a CAGR of 4.1% to 2016.

2. Diagnostic imaging apparatus. The market for diagnostic imaging is estimated at US$1,636 million. The market grew at an annual rate of 2.8% between 2006 and 2010. France lags behind its European neighbours in the diagnostic imaging field, though the second cancer plan aims to increase provision of MRI, CT and PET scanners.

Imports supply the greater part of the market, though their market share is lower for radiation apparatus due to the strength of the domestic manufacturing industry. The USA and Germany are the major sources of supply. Espicom estimates that the imaging market will grow by an average of 2.1% between 2011 and 2016.

3. Dental products. The market for dental products is estimated at US$859 million, equal to 10.4% of the total medical device market. The dental products market grew at an annual rate of 4.2% between 2006 and 2010. It is forecast to grow at an annual rate of 3.5% over the next few years, taking the total to US$1,020 million by 2016.

4. Orthopaedic & prosthetic devices. The market for orthopaedic & prosthetic devices is estimated at US$1,336 million, equal to 16.1% of the total medical device market. The orthopaedic & prosthetic devices market grew at an annual rate of 9.2% between 2006 and 2010.

Imports have seen particularly high growth in recent years, though a corresponding increase in exports in this sector indicates that not all imported products are destined for the domestic market. The majority of orthopaedic imports are supplied by Switzerland and the USA.

The orthopaedic & prosthetic devices market is forecast to grow at an annual rate of 6.1% in US dollars over the next few years, taking the total to US$1,794 million by 2016.

5. Patient aids. The market for patient aids is estimated at US$1,131 million, equal to 13.7% of the total medical device market. The patient aids market grew at an annual rate of 4.5% between 2006 and 2010.

French imports of patient aids far exceed the value of the domestic market due to a high level of re-export activity, particularly for pacemakers. Switzerland and the USA are the leading suppliers of portable aids, whilst the USA and China are the major sources of supply for therapeutic appliances.

The patient aids market is forecast to grow at an annual rate of 3.9% over the next few years, taking the total to US$1,367 million by 2016.

 

Imports

The value of French medical device imports has recorded a steady rise over the past decade, reaching US$10.4 billion in 2008 before falling back to US$10.3 billion in 2009.

Imports of consumable items amounted to US$1,780.6 million in 2009. Imports fell by 1.0% over 2008 in US dollar terms (though they increased in euro terms). Syringes, needles, catheters & cannulae are the largest subcategory.

Diagnostic imaging imports totalled US$1,564.0 million in 2009, equal to 15.2% of the total. This was the weakest performing category in 2009, with a fall of 16.4%.

Imports of orthopaedic & prosthetic devices were worth US$1,549.1 million in 2009, equal to 15.1% of total medical device imports. This was the fastest growing category in 2009, with a rise of 26.6%. All three subcategories – artificial joints, orthopaedic appliances and other artificial body parts – recorded strong growth.

Patient aids are the largest import category, with imports worth US$2,624.1 million in 2009, equal to 25.5% of total medical device imports. Pacemakers accounted for 54.7% of imports in this category in 2009, but also accounted for more than half of patient aid exports.

The leading suppliers of French medical imports in 2009 were the USA, Switzerland and Belgium, with the UK ranking eighth as a supplier with imports worth US$288,964 (2.8% of the total).

 

Exports

In 2009, medical device exports registered a 3.0% fall in value to US$9.2 billion, having recorded steady growth in previous years with a CAGR of 6.8% for the 2005–2009 period.

In 2009, 69.5% of all French medical device exports were sent to the rest of the EU, with the Netherlands taking a 17.6% share, followed by Germany with 14.4%. The UK took 6.6% of French medical device exports.

Outside Europe, the leading destination is the USA, which accounted for 9.1% of exports. The USA is the leading destination for French exports of diagnostic imaging apparatus.

Next month, Medtech Business will look at the medical technologies market in Germany.

This article is based on information from Medical Market Outlook reports published quarterly by Espicom Business Intelligence. *All figures are in US $. For further details of the 66 markets covered, please visit www.espicom.com/outlookm1