2013 APAC2013 APAC HEALTHCAREHEALTHCARE OOUTLOOKUTLOOKCHANGING DYNAMICS THAT WILL DISRUPT AND TRANSFORMHEALTHCARE IN ASIA PACIFIC BY 2018.March 21, 2013
Today’s PresentersRhenu Bhuller, Healthcare Asia Pacific Vice PresidentFrost & SullivanGeeta Dhanoa, Healthcare Associate DirectorFrost & Sullivan2Nitin Dixit, Asia Pacific Advanced Medical Technologies SeniorIndustry AnalystFrost & SullivanNatasha Gulati, Connected Health Senior Analyst
AgendaAgenda Slide Number1. Is the Healthcare Industry at a Tipping Point 032. Size, Breath and Might: The New Game in the Hospital Business 133. APAC Life Sciences Outlook 2134. APAC Advanced MedTech Outlook 285. APAC Connected Health Outlook 376. The Last Word 477. Your Contacts for Additional Information 50
Is the Healthcare Industry at a Tipping Point?4
Economic Uncertainty: A Global PhenomenonWill Braziltranslate its greatdemographic andnatural resourcesinto real globalUncertainty is the NewNormal in FinancialNews ... msnbc.com,Aug. 2011. Will the U.S.address its massivedebt issue, or becomelike Greece?Will Russia bethe Wild Eastthrough 2020?Will Germany,France and theUK be able torescue Greece?5Will Australiaestablish itself asone of theworld’s moststable economiesthrough 2020?into real globalcompetitiveadvantage, to trulytransform itselfinto a credibleglobal power?rescue Greeceand Italy fromtheir debtproblems? Willthe € fail as acurrency?Will Japanrebound from itstragedies of 2011by 2015?Will China be able to prolong its robust growthand drive sustained global recovery, or will thisgrowth engine stall??
2012 marks a watershed in the US healthcare system (US supreme courts decisionto uphold patient protection and Affordable medical care and Obamas re-election)U.S. fiscal woes remain unsolved, an intensifying European debt crisis, a slowdownin China- and Japan versus china political riftAffordable care organizations (ACOs) and device tax cuts is expected to haveimplications for Asian companies supplying parts/components into the US marketIncreasing speed and intensity of product competition-ferocity of genericcompetitionGlobal Trends in Healthcare Market6competitionDeclining R & D productivity garners companies to seek innovation outsideHigher regulatory hurdles leading to greater uncertainty and fewer productapprovalsEmerging markets become the key driver to growth and spendingConsolidation continues to increase including at the hospital sector level
1021.780010001200Expenditure($Billion)Total Healthcare Expenditure, APAC, 2012 - 2018CAGR2012-2018In the Next 6 Years HC Expenditure Will Almost DoubleWith the Largest Share Coming from China, Japan andIndia17.6%3.1% 16.8% 14.9% 10.4% 5.8% 11.4% 6.5%3.1%Healthcare expenditure will continue toexperience growth in the next 6 years in the APACregion as rising patient demands for betterhealthcare result in healthcare reforms in theregion as well as increasing life expectancy7155.2386.5441.276.026.4 12.480.811.7 15.1186.3529.7193.060.622.4113.422.3 22.10200400600Australia China Japan India Indonesia Thailand SouthKoreaSingapore MalaysiaExpenditure($Billion)2012 2018region as well as increasing life expectancyresulting in more elderly requiring long-term careSource: Frost & Sullivan
40%60%80%100%PercentageofHealthcareExpenditure(%)Total Healthcare Expenditure, APAC - % Public : Private, 2012 - 2018Healthcare Expenditure (APAC) Split by Public & Private80%20%2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018PercentageofHealthcareExpenditurePublic PrivateThailandAustralia China Japan India Indonesia MalaysiaS Korea Singapore• Public expenditure accounts for approximately 67% of total healthcare expenditure in the region in 2012with the Japan government spending the largest proportion at 83%.• Public: private Healthcare expenditure in Malaysia is expected to remain stable over the next 5 years.Source: Frost & Sullivan
6776.57762.44268.55000600070008000USD$Healthcare Expenditure per Capita, APAC, 2012 - 201816.1%2.3% 15.3% 13.8% 8.7% 5.5% 9.7% 4.7%3.4%CAGR2012-2018Healthcare Expenditure per Capita low in the 2 largestEmerging Countries (China & India).• Healthcare expenditure per capita is expected toincrease 4.8% across the region by 20189297.33493.663.3 108.9 170.31655.22200.0517.9729.84268.5148.4 237.1 281.22277.43841.4681.1010002000300040005000Australia China Japan India Indonesia Thailand SouthKoreaSingapore MalaysiaUSD$2012 2018Source: Frost & Sullivan
80%90%100%PercentageofPopulationPopulation Distribution by Age, APAC, 2013-2018Over 2.3 billion people in APAC will enter the working population age group of 15-64.11.3% of people will be above 65 years of age.The Consumer Profile is Changing22.9M24.0M1.3B1.4B126.3M124.1M1.2B1.3B242.5M255.8M72.7M79.7M98.6M107.1M48.8M49.8M5.3M5.8MTotalPopulation30.8M34.3M100%10%20%30%40%50%60%70%2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018Australia China Japan India Indonesia Thailand Philippines SouthKoreaSingapore MalaysiaPercentageofPopulation0-14 Years 15-64 Years 65 and AboveNote: All figures are rounded. The base year is 2012. Source: World Bank, Frost & Sullivan analysis.
Urbanization rate increased at a CAGR of 1.2% between 2013-2018 in APAC.China shows the fastest CAGR of 2.1%.124.6 Million People Expected to Move to Urban Areas inChina between 2013 and 2018Increasingurbanization isaccompaniedwith:• Growingconsumerawareness• An expanding60%70%80%90%100%PercentageofPopulationPopulation Distribution Across Rural and Urban Areas,APAC, 2013-201811Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.• An expandingmiddle class• ProgressivelyskewingpopulationdensityAll translatingto increasingdemand forimprovedhealthcareservices0%10%20%30%40%50%60%2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018Australia China Japan India Indonesia Thailand Philippines SouthKoreaSingapore MalaysiaPercentageofPopulationUrban Rural
Chronic and lifestyle related diseases are on the rise in APACThe greatest burden is faced by India and China with the highest reported incidences of diabetes andcancer each year.Threatening Rise in the Incidence of Chronic Diseases9,00012,00015,000NumberofNewCasesPerYearIncidence of Chronic Diseases, APAC, 2013-2018These statisticscannot account for12Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.2013 2014 2015 2016 2017 2018Diabetes 6,637 6,812 6,978 7,134 7,281 7,473Stroke 3,136 3,215 3,296 3,379 3,464 3,551Cancer 2,315 2,365 2,412 2,455 2,493 2,52603,0006,0009,000NumberofNewCasesPerYear(000s)cannot account forthe large APACpopulation that goesundiagnosed.
2012 2013 2014 2015 2016 2017 2018APAC 369.9 411.9 459.0 518.1 585.0 663.6 752.010%11%12%13%14%0300600900GrowthRateRevenue($Billion)Total Healthcare Market: Revenue Forecast, APAC, 2012-2018CAGR = 12.8%APAC Healthcare enjoys a CAGR of 12.8% between2013-2018 while global growth rates continue at lessthan 6% during the same period13Growth Rate (%) 11.4% 11.4% 12.9% 12.9% 13.4% 13.3%Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.78.9%17.4%3.7%Total Healthcare Market: Revenue Forecast byPillar, APAC, 201379.6%17.6%2.8%Total Healthcare Market: Revenue Forecast byPillar, APAC, 2018Life SciencesAdvanced MedicalTechnologiesConnected Health
Size, Breath and Might: The New Game in theHospital Business14
Number of Hospitals by OwnershipNo. of Hospitals by ownership: APAC, 2012-20182012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018Private 544 731 448 478 235 248 225 239 12 13 12 14Public 1541 1551 802 826 1127 1160 137 142 42 42 19 2105001000150020002500No.ofhospitalsSeveral governments inAPAC have increasedefforts to increasenumber of privatehospitals.• Indonesia: Up to 67%No. of Public and Private Hospitals: APAC, 2012-201815*Includes only operational hospitals. India: Includes nursing homesSources: Frost & Sullivan analysis.Ministry of health of respective countries. Country DataNo. of Hospitals by ownership: China and India, 2012-2018Public 1541 1551 802 826 1127 1160 137 142 42 42 19 21Indonesia Thailand Vietnam Malaysia Hong KongIndiaChina• Indonesia: Up to 67%stake in private hospitalsfor foreign investors.• Vietnam: Licenses foropening 3 new privatehospitals in HCMC andHanoi.• China: Allowed 100% FDIin private hospitalsSingapore
0102030405060China India Thailand Indonesia Vietnam Malaysia Hong Kong SingaporeNo.ofHospitalBedsper10,000PopulationHospital Bed Ratio: APAC, 2012(e)Hospital Bed RatioKey Takeaway: About 180 Million new beds will be needed over next decade to meet the healthcaredemand in APAC; more than 40% of that is expected to come from private sector.OECDAverageof 49(2011))16China India Thailand Indonesia Vietnam Malaysia Hong Kong Singaporeper10,000Population• Vietnam: Favorable govt. policy of encouragingprivate companies to invest is expected toexpand bed ratio by 5 by 2020• China: Currently only 6.8% of all beds are inprivate hospitals therefore govt. plans toincrease it to 20% by 2015 this would create aneed for about 400,000 new private hospitalbeds/year.Sources: Ministry of health annual reports of respective countries,Country Data and Frost & Sullivan analysisCountry Target Ratio No. of BedsPlannedYear to beachievedChina 47 2.59 Million 2015India 20 177 Million 2025Thailand NA NA NAIndonesia 9 35500 2015Vietnam 31 115300 2020Malaysia NA NA NAHong Kong Achieved Achieved Achieved
Private Hospital Sector Set for Growth in APAC377.9466.7574.3707.4844.31004.81205.7400.0600.0800.01000.01200.01400.0Private hospital revenue forecasts, APAC, 2012-2018Private hospital revenuesCAGR: 17.1%Base year growth: 23%Key takeaway: Favorable government policies and increasing disposable income changingdemographics and increasing disease burden will drive growth in private hospital.170.0200.0400.02012 2013 2014 2015 2016 2017 2018Base Year is 2012. Source: Frost &Sullivan analysis.• There is a increasing trend of hospital consolidation in private sector in APAC. Several bigger hospital groupsfrom within and outside of APAC are acquiring smaller hospitals in the region due to tremendous marketpotential. Revenues from hospital sector in APAC are projected to account for more than one third of that ofglobal by 2015.• Bigger hospitals acquire a major stake in the smaller hospitals, which generally need financial support togrow, instead of complete buy over. This enables the investing company to implement operational andfinancial system and IT and marketing system in the smaller company.
ImpactMarketDriversDemographics,DiseaseBurden andDisposableIncomeHospitalConsolidationCustomerSophisticationLowHighHospital Industry – Key Drivers and RestraintsGovernmentInitiativesMedicalTourismGrowth inPrivate Sector18Short Term Medium TermMarketRestraintsImpactLong TermInefficiencyChoked PublicHospitalsQualityLowLowHighSource: Frost & Sullivan.InadequateBudgetUneven Distributionof Facilities(Urban Vs Rural)
Why are theysuccessful?Hospitals Extend Beyond their ShoresFortis HealthcareIHH Healthcare Siloam GroupBangkok HospitalGroupName Number ofHospitalsKPJ Group 22Fortis Group 46IHH Healthcare 87Siloam Hospitals 10Bangkok HospitalGroup14Apollo Hospitals 4019successful?KPJ Healthcare• Ability to raise capital from private equity market and operate with highlyscalable business model• Aggressive companies with focus on both organic and inorganic growth• Reputed for good quality of healthcare since over a decade and compete withdifferentiation in service and quality• Ability to raise capital from private equity market and operate with highlyscalable business model• Aggressive companies with focus on both organic and inorganic growth• Reputed for good quality of healthcare since over a decade and compete withdifferentiation in service and qualitySource: Frost & Sullivan Analysis.Apollo HospitalsApollo Hospitals 40Max Healthcare 11Columbia Asia 14
SMART Hospitals Are In The Nascent Stages In APACEnhancedSmallHospitalEfficientRecyclingFlexibleConstructionFutureProofingFableHospital 2.0Zero NetEnergyKey takeaway: Hospitals in APAC are in the nascent stages of innovative hospital designRoadmap of innovative hospital design in APAC202013 2014 20152012 2016 2017 2018 2019 2020 2022 2023Source: Frost & Sullivan analysis, Primary interviews.EnhancedPatientSafetyBetterAestheticsConstructionCurrently only a few hospitals/hospital groups in Asia are investing in innovative hospital designs:• Innovative hospital design e.g. KPJ is investing in a hospital with green building technology.• Better aesthetics e.g. Bumrungrad and Bangkok Hospitals (Thailand).• Small Hospital e.g. Nova Medical Center (India).• Enhanced patient safety e.g. All hospitals with JCI accreditation such as Siloam Hospitals (Indonesia)
Day care center is a lucrative business option whichrequires lesser investment and offers betterprofitability,. A typical day care center breaks even in 2-3 years compared to larger hospital needing 5-7 yearshence it will be one of the top growth businesses.Short TermMedical TourismDay CareSurgery/HealthcareCentre0Due to increasing lifestyle diseases, such as diabetesDriven by rising affluence and increasing demandof quality healthcare Medical Tourism will be oneof the top growth sectors in APAC in shot tomedium term.Growth Opportunities in Top 5 SectorsMedium Term Long Term21In order to remain competitive by increasing operationalefficiency, clinical outcomes and financial profitability,private and public hospitals will invest extensively ininstalling, maintaining and upgrading HIT. Hence HITwill be one of the top growth areas in APAC.Increasing cost of healthcare coupled with existing lowpenetration rates of public insurance will create a bigmarket for private insurance companies.Healthcare ITSpecialty HospitalsPrivate MedicalInsurance00Due to increasing lifestyle diseases, such as diabetesand CHD, Asia will be a big market place for specialtyhospitals.Source: Frost & Sullivan Analysis.Short Term 1-2 yrs; Medium Term 3-5 yrs; Long Term 5-7 yrsCold Warm Hot
APAC Life Sciences Segmentation and DefinitionsLife SciencePharmaceutical & Biotechnology Clinical Diagnostics23Segment Definitions• Pharmaceutical: are drugs prepared for medical treatment; these include originator, generic, and Over-the –counter products• Biotechnology: is the application of developments in life sciences or the use of microorganisms tocreate commercial products for treating humans• Clinical diagnostics: refer to In Vitro Diagnostics that are used to perform tests outside the body onobtained specimens, such as blood or urine; this market includes tests kits, reagents, consumables, andanalyzers; these include microbiology, molecular diagnostics, point of care testing
The Playing Field Changes with the Entry of Local AsianChallengers0%4%8%12%16%02004006008002012 2013 2014 2015 2016 2017 2018Pharma& Biotech 283.6 315.3 350.5 396.6 448.7 510.6 581.1Growth Rate 11.6% 11.2% 11.2% 13.1% 13.1% 13.8% 13.8%GrowthRate(%)Revenue($Billion)Total Pharmaceutical &Biotechnology:RevenueForecast, 2013–2018, APACCAGR = 12.9 %24Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.• Strong R&D focus: Takeda, a leading pharmaceuticalcompany focusing on Cardiovascular & Metabolic,Oncology, Central Nervous System, Respiratory &Immunology & Gastrointestinal & Genitourinary andVaccine has the 7th largest pipeline and recently receivedFDA approval for its 3 diabetes products, NESINA,OSENIand KAZANO• Alliances: Sinopharm, the largest pharmaceutical andmedical distribution network company, with an annualgrowth rate of133%, has set up strategic alliances withMNCs such as Merck and expanding its trade relation withmore than 100 countries. Sinopharm is expected to goshopping for new acquisitions during the forecast period.Some of the strategies for success• Increasing disease incidence of chronic diseases such asdiabetes and cancer as well as infectious disease will drivedemand for newer, better and targeted therapeutics• Patent expiration during the forecast period will affect thesales of leading medicines, including Lantus, Abilify, Rituxan,Crestor, Neulasta, Gleevac, Vytorin and Nexium driving theneed for generics and biosimilars• About 30 new therapeutic products are expected to belaunched during the forecast period which will drive the growthe.g. Nesina® (alogliptin, DPPIV) Onglyza™ (saxagliptin,DPPIV) for Diabetes.
Diagnostics Market Will Be Driven By Molecular TestingAnd Point Of Care Testing (POCT)2%6%10%14%051015202012 2013 2014 2015 2016 2017 2018Clinical Diagnostics 8.9 9.9 11.1 12.4 13.9 15.7 17.7Growth Rate 11.4% 11.7% 11.7% 12.3% 12.3% 12.9% 12.9%GrowthRate(%)Revenue($Billion) TotalClinicalDiagnosticsMarket:RevenueForecast,2013–2018,APACCAGR =12.3 %25Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.• Strategic partnership with Pharma-companies: Roche, world’sleading diagnostics company with >40% of market share in APACMolecular diagnostics market, has established strategic partnershipswith pharma companies to develop companion diagnostics.• Acquisitions and geographic expansion: Qiagen has made aseries of acquisitions and set up offices in India and Taiwan (2011) inorder to expand in APAC.• Innovative products: Seegene, an emerging Korean moleculardiagnostics company that has >20% local market share, focuses ondevelopment of in-house innovative products and technologiesSome of the strategies for success• Need for early detection of HPV, HIV,Cancers and genetic diseases acceleratesthe market growth with molecular diagnostics,point of care testing and immunoassaysbeing the fastest growing segments in thismarket.• Drug and diagnostics co-development willaccelerate M&A activities; globally, total valuewas $15 billion in 2011.• Cancer will be the main focus, followed byinfectious diseaseGrowth Rate 11.4% 11.7% 11.7% 12.3% 12.3% 12.9% 12.9%
Top Five Companies (in Asia) To Watch in 2013Company1MenariniThe company acquired Invida Group which is one of the leading pharmaceutical companyin APAC and will pose a huge opportunity for Menarini to expand in APAC regionCompany TakedaCompany2CSLCSL, a leader in intravenous and subcutaneous immunoglobulin therapies, is nowexpanding in new therapeutic areas26Source: Frost & Sullivan analysis.Company3TakedaIt has the 7th-largest pipeline, in addition to a robust product portfolio, recently got FDAapproval for its three products for type 2 Diabetes treatment.Company4SinopharmA market leader in China for pharmaceuticals, has strategic alliances with MNCs such asMerck, NiliMEDIX; it also has strategic linkages with state government to set upmanufacturing facilitiesCompany5SeegenAn emerging innovative diagnostics company in Korea focusing on innovativein-house developed molecular diagnostics tests and technologies
Three Key Opportunities for the Next Five Years2 Vaccines1 Biologics & Biosimilars272 Vaccines3 Molecular Diagnostics and Point of Care TestingSource: Frost & Sullivan analysis.
Top Three Technology TrendsTech 1.Point of care tests and Rapid molecular tests forinfectious diseases are will the be next focus ofdiagnostics with the application of cutting edgetechnologies such as Real time PCR, Microarray (RNA-Chip) and FISH..Tech 2Early diagnostics, screening for cancers will be the nextkey trend and development of oncology drugs togetherwith companion diagnostics is the next hot area to invest28Source: Frost & Sullivan analysis.Tech 3Genomics, proteomics and genome sequencingtechnologies and its integration with the advanceddiagnostics platforms .Tech 2 with companion diagnostics is the next hot area to investfor companies.
Advanced Med Tech Market Overview2Several M & As, strategic partnerships and investments driving Med. Techmarket in APAC e.g. Medtronic and Stryker acquisitions in China.1Global OEMs are building R&D capabilities in APAC and transferring theirbest practices to the region e.g. GE R&D center in Chengdu.303Green field projects of private hospitals driving growth in capital equipmentinvestments such as CT, MRI etc.4Increasing customers demands for quality healthcare are driving growth inhigh technology medical devices segment.5Domestic players are posing a threat to big OEMs e.g. Mindray in patientmonitoring and Toshiba in medical imaging segment.Source: Frost & Sullivan analysis.
Advanced Medical TechnologiesMedical Devices Medical Imaging Patient MonitoringAdvanced Medical Technologies Segmentation andDefinitions31Segment Definitions• Medical Imaging: It refers to several different technologies that are used to view the human body in order todiagnose, monitor, or treat medical conditions. Each type of technology gives different information about the areaof the body being studied or treated, related to possible disease, injury, or the effectiveness of medical treatment.• Medical Devices: They range from simple tongue depressors and bedpans to complex programmablepacemakers with micro-chip technology and laser surgical devices.• Patient Monitoring systems: It is the term for all the devices that are used to supervise patients. One categoryof such devices is devices that alerts if the patient gets into a critical state. Example of one such device is a heartmonitor.Sources: USFDA, Frost & Sullivan Analysis
Growth in Devices Segment is Driven by Cardiovascular,Orthopedic and Consumable Devices.Key Takeaway: In technologically less advanced product segments such as hospital supplies - price,availability and good service are the only differentiating parameters.10%11%12%13%14%15%0501001502012 2013 2014 2015 2016 2017 2018Medical Devices 49.6 56.2 63.8 72.6 82.1 93.4 106.2GrowthRate(%)Revenue($Billion)Medical Devices Market: Revenue Forecast, 2012–2018, APACCAGR = 13.5%32Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.Medical Devices 49.6 56.2 63.8 72.6 82.1 93.4 106.2Growth Rate 13.1% 13.3% 13.5% 13.8% 13.1% 13.8% 13.7%• Johnson & Johnson – Has invested in high growth areasand launched new products frequently. This will helpcontinue their market dominance of Top 3 position.• Covidien – With products in high growth areas such aslaparoscopic surgery, electrosurgery. biosurgery, vasculartherapy and pain management is set to challenge Johnsonand Johnson• Suppliers/distributors practice differential pricing indifferent segments of customers for e.g. distributorsoffer higher discount and longer payment terms togovernment hospitals.• Increasing accessibility of medical services to patientse.g. Cardiovascular products and Medtronic• Hospital consumables and supplies is the mostfragmented segment with several domestic players.Strategies for success
Product innovation, Price Reduction and InfrastructureUpgrade is Driving Growth in this Segment.Key Takeaway: High initial cost of investment coupled with inadequate re-imbursement are restraining medicalimaging market growth.10%11%12%13%14%15%01020302012 2013 2014 2015 2016 2017 2018Medical Imaging 9.8 10.9 12.2 13.6 15.2 17.1 19.2Growth Rate 11.7% 11.2% 11.9% 11.5% 11.8% 12.5% 12.1%GrowthRate(%)Revenue($Billion)Medical Imaging Market: Revenue Forecast, 2012–2018, APACCAGR = 11.8%33Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.Growth Rate 11.7% 11.2% 11.9% 11.5% 11.8% 12.5% 12.1%• GE: Its strong partnerships with governments, academiccenters and private hospitals for collaborative benefits willhelp the company to maintain its market dominance in theregion. GE generates high revenues from ASAs.• Siemens: It has a market leadership in high end imagingequipments such as PET, CT and MRI as well as in entrylevel segment x-ray and ultrasound. Siemens will continueto maintain its market leadership position by virtue of itsfocus on local markets.Strategies for success• Medical imaging market in APAC is relatively dominatedby Top 3 players – GE, Philips and Siemens. GEdominates in services segment and Siemens in high endproduct segment.• The cutting edge product features, high price (>$1M) andlonger shelf life (~7 years) result in entry barriers in arelatively less contested market place.
Easy to use Multi-parameter Monitors and Blood GlucoseMonitors will Drive Patient Monitoring Market in APAC.Key Takeaway: Innovations such as biosignal processing, wireless technology and data management aredriving demand for products with such innovations in premium segment.10%11%12%13%14%15%024682012 2013 2014 2015 2016 2017 2018Patient Monitoring 4.0 4.4 4.9 5.4 6.0 6.6 7.3GrowthRate(%)Revenue($Billion)Patient Monitoring Market: Revenue Forecast, 2012–2018, APACCAGR = 10.5%34Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.Patient Monitoring 4.0 4.4 4.9 5.4 6.0 6.6 7.3Growth Rate 11.1% 10.5% 10.4% 10.7% 10.6% 10.4% 10.8%• Roche: Market leader in SMBG market due to innovativeproducts, good after sales service, and attractive promotions.Currently dominant, Roche is likely to loose its market share tosmaller companies such as Arkray, Bionime and Omron• Mindray: Its aggressive pricing strategy and customizedproducts for domestic markets will increase its market share inChina and Japan.• Omron: Bio-sensing homecare technology has propelled thecompany to a market leadership position in BP segment. Thecompany is likely to achieve market leadership in BP segment.Strategies for success• Indigenously grown MNCs such as Omron, Nihon-Kohden and Mindray have higher growth rate andmarket share compared to MNCs in PM segment.• Innovations such as biosignal processing, wirelesstechnology and data management are drivingdemand for products with such innovations inpremium segment.
More Changes to Come in RegulatoryEnvironment2Japan increased reimbursement for innovative medical devices (entirely newproduct/technology previously non-existent in Japan). This will encourage OEMs tolaunch new devices at the same time as in US and Europe.1ASEAN to introduce harmonized ASEAN Medical Device Directive (AMDD) that willimprove the medical device importation, registration and distribution regulations in 10member states in the region.353China SFDA increased penalty for Medical Device violations. SFDA also issued newguidelines for adverse events reporting, clinical trials, and labeling.Sources: Ministry of Health of respective countries, Frost & Sullivan analysis.4India to initiate new regulations for medical device new registration and licensing. Thiswill improve the quality of end product consumed. The discussions are still in theparliament.5Singapore reduced regulatory requirement for Class A device dealer licensing andfaster access and lower regulatory fees for Class C and D medical devices. This isexpected to be replicated in Malaysia.
Three Key Opportunities Over the Next Five Years2DialysisHigh number of End Stage Renal Disease patients (South Asia prevalence of 232cases/million population, 2009) coupled with low adoption of dialysis (only 15%1Cardiovascular SegmentLow penetration rates in Cardiac Rhythm Management in Asian markets, compared toWestern countries is an opportunity. Increasing accessibility of cardiovascularproducts to patients who cannot afford them e.g. Medtronic and Sagar hospitalcollaboration in India to increase CRM and ICD adoption.362 cases/million population, 2009) coupled with low adoption of dialysis (only 15%patients with ESRD receive haemodialysis in China) for such patients offers atremendous opportunity for growth.3Diagnostic ImagingRapid technological advancement led by Japanese companies, falling prices (priceattrition accelerating towards 4-5%) and increasing up gradation of healthcareinfrastructure (growth in number of beds) will drive growth.Source: Frost & Sullivan analysis.
Top Five Asian Companies To Watch in 2013Company1ToshibaHas integrated their imaging equipments with PACS and RIS. It is 4th largestplayer in imaging segment and growing at about 12%.Company2HoyaHas strong presence in APAC in endoscopy and bone prosthesis.Company Hitachi37Source: Frost & Sullivan analysis.Company3Has strong revenues ($1932Mn in 2012e) and robust product portfolio in X-Ray, Ultrasound, Flouroscopy, MRI and CT.Company4TerumoOne of the most innovative Japanese companies with cutting edgetechnology in cardiac intervention via wrist.Company5Shandong WeigaoMarket leader in China for medical consumables. Has potential for attractinginvestments and partnerships from MNCs.
Top Five Business ModelsTech 1 M & A deals with medium sized technological companiesTech 2 Contract manufacturingTech 3 Licensing and strategic partnerships38Source: Frost & Sullivan analysis.Tech 3 Licensing and strategic partnershipsTech 4 Customization for local productsTech 5 Annual Service Agreements (ASA) in capital equipments
Connected Health SegmentationRemote PatientMonitoring• Store-and-forwardconsultation• Video DiagnosticConsultation• Remote Doctor/SpecialistServices• DistanceLearning/Simulation• TeleImaging• Home and DiseaseManagement Monitoring• Activity Monitoring• Diabetes Management• Wellness Programs• Remote Cardiac ECG• Personal EmergencyResponse System (PERS)• Medication ManagementConnected Health Industry Segmentation, APAC, 201240Source: Frost & Sullivan analysis.mHealthGeneralHealthcare ITTelemedicine• Professional Apps• Wellness Apps• Fitness Apps• TextingInformationalServices• Distance learning• Medication Management• Electronic Medical Records(EMR)• Electronic Health Records(EHR)• Health Information Exchange(HIE)• Hospital Information Systems• Patient Portals• Hosted Cloud Infrastructure
With Over 200 Local Participants in Every APAC Market,Healthcare IT Presents a Highly Competitive Environment10%12%14%048122012 2013 2014 2015 2016 2017 2018Healthcare IT Revenue 4.7 5.3 6.0 6.8 7.6 8.6 9.8GrowthRate(%)Revenue($Billion) Total Healthcare IT Market: Revenue Forecast, 2013–2018, APACCAGR = 13.1%Key Takeaway: Information Technology will be an integral part of healthcare delivery systems in APAC by201841Healthcare IT Revenue 4.7 5.3 6.0 6.8 7.6 8.6 9.8Growth Rate 12.0% 12.9% 13.7% 12.8% 12.3% 13.2% 13.4%Note: Base year is 2012. Source: Frost & Sullivan analysis.• Superior after-sales services• Thorough training for medical and IT professionalsalong with robust support services• Product flexibilityStrategies for success• Turnkey projects in partnership with the publicsector, that cover several hospitals andambulatory care settings.• Inadequate planning and budget allocation atproject initiation creates hurdles in the short andlong term which hamper adoption and lead tobelow expected returns for both vendors andhealthcare organizations.
APAC Governments are Actively Driving TelemedicineAdoptionKey Takeaway: ICT companies begin to set realistic expectations of growth for the APAC real-timetelemedicine market through 2013-20180%8%16%24%0.050.0100.0150.02012 2013 2014 2015 2016 2017 2018Real-Time TelemedicineRevenues44.6 52.9 62.1 71.8 81.5 90.8 102.5GrowthRate(%)Revenue($Million)Total Real-Time Telemedicine Market: Revenue Forecast, 2013–2018, APACCAGR = 14.1%42Note: Base year is 2012. Source: Frost & Sullivan analysis.• Sustainable and scalable business models• Leverage government incentives to drive adoptionamongst physicians• Device interoperabilityStrategies for success• Governments and healthcare providers arerealizing the long-term benefits of telemedicineand are willing to partner with telecommunicationcompanies to develop innovative businessmodels.• Cost burden of telemedicine infrastructure andservicesRevenues44.6 52.9 62.1 71.8 81.5 90.8 102.5Growth Rate 20.3% 18.6% 17.3% 15.6% 13.6% 11.4% 12.8%
Evolving Demographics will Fuel Growth of RemotePatient Monitoring in APACKey Takeaway: Remote Patient Monitoring Equipment market in APAC is poised for steady growth under theinfluence of public private partnerships4.8%5.2%5.6%6.0%0500100015002012 2013 2014 2015 2016 2017 2018Remote Patient MonitoringEquipment Revenues768.8 810.6 852.8 897.1 945.6 996.6 1052.5GrowthRate(%)Revenue($Million)Total Remote Patient Monitoring Equipment Market: Revenue Forecast, 2013–2018, APACCAGR = 5.3%43Note: Base year is 2012. Source: Frost & Sullivan analysis.• Device manufacturers need to partner with mobiletechnology companies and telecommunicationscompanies to provide an ecosystem of remoteand wireless patient monitoring services.• MNCs are targeting large upcoming private sectorhospitals to win large scale projects.Strategies for success• Growing demand for personalization of remotepatient monitoring and devices.• Consumer awareness is low and is largely drivenby healthcare providers alone. More channels toraising consumer awareness are required.Equipment RevenuesGrowth Rate 5.2% 5.2% 5.2% 5.4% 5.4% 5.6% 5.6%
3G and 4G Adoption will Transform Healthcare Delivery inAPACKey Takeaway: mHealth revenue from voice and services declines through 2012-2018 as business modelsaround mobile broadband evolve0%2%4%6%8%0510152012 2013 2014 2015 2016 2017 2018mHealth Services Revenues 8.0 8.4 8.8 9.1 9.4 9.7 9.9GrowthRate(%)Revenue($Billion)Total mHealth Mobile Services Market: Revenue Forecast, 2013–2018, APACCAGR = 3.3%44Note: Base year is 2012. Source: Frost & Sullivan analysis.• Ability to cope with evolving business models• Ability to move away from minutes to data• Ability to drive consumer involvementStrategies for success• Mobile operators, software developers and devicevendors can collaborate with healthcare providersand medical device manufacturers to build anecosystem of monitoring services.• mHealth needs to move away from a volume-based business model that relies on voice andtext. Low barriers to entry create toughcompetition.mHealth Services Revenues 8.0 8.4 8.8 9.1 9.4 9.7 9.9Growth Rate 6.8% 5.3% 4.3% 3.6% 3.0% 3.0% 2.9%
Developing Standards and Regulations is a KeyArea of Focus Today2Some countries have additional requirements for medical data storage andmanagement which make customization of solutions a competitive advantage.1Most vendors supply products compliant with international standards. Some evenadvertise HIPAA compliance.453Harmonization of product standards, technical regulations and mutual recognition oftest reports and certificates to achieve integration of healthcare services acrossASEAN continues to be a topic of debate.Sources: Ministry of Health of respective countries, Frost & Sullivan analysis.4Personal Data Protection laws, as they come into force across APAC countries, willfurther add to the regulatory requirements expected from vendors in the industry.5Increasing role of organizations such as Integrating the Healthcare Enterprise (IHE)in APAC.
Three Key Opportunities for the Next Five Years2Personalization of devices and sensors for monitoring physiologicalparametersThe most straight-forward approach to driving consumer adoption is by integrating1Electronic Medical Records and Electronic Health RecordsDigitization of medical data is the next big step for healthcare providers. National levelHER programs have already been initiated in developed countries while regionalEMRs are prevalent in developing markets.462 The most straight-forward approach to driving consumer adoption is by integratingremote monitoring technologies in personal belongings such as mobile phones, wristwatches and accessories.3Professional Solutions for Smartphones and Personal Device Assistants toFacilitate Healthcare MobilityMobile phone apps and software that allow medical professionals to view, analyseand action patient data remotely have a pressing demand, particularly amongstprivate healthcare providers.Source: Frost & Sullivan analysis.
Top Five Companies To Watch in 2013Company1AccentureCompany2CernerCompanyInfinitt Healthcare47Source: Frost & Sullivan analysis.Company3Infinitt HealthcareCompany4Philips HealthcareCompany5Mahindra Satyam in partnership with TechMatrix Corp.
Top Five TechnologiesTech 1 Cloud ComputingTech 2 Big Data AnalyticsTech 3 3D Visualization and Imaging Analytics48Source: Frost & Sullivan analysis.Tech 3 3D Visualization and Imaging AnalyticsTech 4 Machine-2-Machine CommunicationTech 5Social Media to Enhance Communication and Information SharingAmongst Healthcare Providers and Consumers
Healthcare Disruptions Across 2013-2018AnalysisRelevant Trends• Aging population• Increasing incidence ofchronic diseases• Rising burden of lifestylerelated diseases• Increasing healthcare costs• Declining profit margins• Evolving consumer profile• Increasing consumerUnmet Needs• Equitable and affordablehealthcare• Early detection anddiagnosis• Improved long term care• Operational efficiency• Sustainable businessmodels• Real-time and personalized50Source: Frost & Sullivan analysis.Strategic Recommendations• Increasing focus on genomic and proteomic research• Leveraging data generated by healthcare providers and other non-healthcare sources to advance LifeSciences and Public Health research and programs• Seeking alternative sources of revenue for healthcare providers• Investing in long-term care technologies partnering with both healthcare and non-healthcare allies toprovide an ecosystem of products and services• Encouraging the private sector participate in education and awareness• Increasing consumerawareness• Dynamic regulatoryenvironment• Real-time and personalizedhealthcare delivery• Competitive workforce
The Last Word - Three Big Predictions1Globalization, economics, convergence, and demographics are expectedto drive the healthcare industry. More companies from outside ofhealthcare will enter this space creating innovation from outside andwithin healthcare forcing new thinking from traditional playersInternational medical insurance will play a pivotal role by increasing52Source: Frost & Sullivan analysis.23International medical insurance will play a pivotal role by increasingfunds and enhancing medical tourism. This is really the time for Asianhospitals to step up to create the infrastructure and branding necessaryas other regions of the world are concurrently doing the sameTechnology will continue in a pervasive way to help leapfrog access andgrowth. By the end of the decade we expect clinical data becoming liquidthanks to EMR and information exchanges
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Your Contacts for Additional Informationwww.frost.comReenita DasGlobal Leader,Growth Partnership ServicesHealthcarerdas@frost.comRhenu BhullerVice PresidentAsia-PacificHealthcarerbhuller@frost.comGeeta DhanoaLife SciencesNitin DixitAdvanced MedTechNatasha GulatiConnected Health56Geeta DhanoaAssociate DirectorGrowth Partnership ServicesAsia-Pacific, Healthcaregeeta@frost.comLife Sciences HomepageNitin DixitSenior Industry AnalystGrowth Partnership ServicesAsia-Pacific, Healthcarenitin.email@example.comAdvanced MedTechHomepageNatasha GulatiIndustry AnalystGrowth Partnership ServicesAsia-Pacific, Healthcarenatasha.firstname.lastname@example.orgConnected Health HomepageContact Us – Start a DiscussionJoin Us – Join Our CommunitySubscribe to our Newsletter – The Next Big ThingGain Access to Visionary Innovation - Register