Global: Pharmaceuticals/biotech comprises 70% of market with lowest growth rate Life Sciences & Health IT with highest growth rate (2010) APAC Medical Imaging at 36% of global market Pharma at 25% of global market. LS/HIT only 8% of global market 2009- apac is 23% 2010- 24% 2012 2010- pharma – 25% of global market 2012- 29% Devices- 24% of global market 26% Imaging- 32% 36% LS/HT is 8% of global market 9.4% Diagnostics 18% 19%
Australian healthcare market split in 2010 Pharma & biotech – 65% Med devices – 18% Clinical diagnostics – 6% Life sciences & health IT – 8% Medical imaging - 3%
Drivers API- Outsourcing from US$, Europe Global R&D- Next battle ground will be China- Novartis, Pfizer is expanding china operations Pharma is fastest growing market. China ~CAGR 16-17%. India CAGR~ 12-13: S.Korea~ 9-10% More than 500 biotechnology-derived medicines are in development. Non small cell lung cancer : APAC no. of patients : 500,000. Breast cancer : 250,000, Colorectal : 200,000 RESTRAINTS: • Unresolved political and changing regulations reduces confidence in the market, and could mean a reduction in focUS$ in these countries for MNCs • Concerns on quality of generics, parallel imports and counterfeits • Integration of MNC Pharma as result of large acquisitions last year (Pfizer-Wyeth, MSD-Schering, GSK-Stiefel, etc). Dedicated BUS$iness Units rather than Globally controlled BUS$ Biotech 150 Billion at CAGR 7-8%.. Majority of sales come from Vaccines
Source of revenue data: Datamonitor Industry Profile report Dec 2009 Drivers Growing demand for lifestyle disease drugs: “ Costs from diabetes alone are projected to increase 436 per cent (from 2003 to 2033), from $1.6 billion to $8.6 billion. These trends are largely caused by the increasing numbers of overweight and obese people (for diabetes) and the ageing population” Australian Treasury Intergenerational Report 2010 Uptake of new drugs e.g. PBS Section 100 highly specialised drugs: e.g. Herceptin (TRASTUZUMAB) Cost to PBS ($) 2005: $0; 2006 $6,8m; 2007 $62.3m; 2008 64.1m; 2009 74.7m Govt support for generics e.g. Gereric Medicines Awareness campaign. The DoHA commissioned the National Prescribing Service (NPS) to develop and deliver a campaign which ran in 2008 & 2009 e.g. “On the PBS the proportional share of PBS cost to Government of medicines manufactured by generic manufacturers has trended downwards, while the proportional share of PBS prescriptions has increased... In general, the data suggests that the PBS is buying more generics at a cheaper price while maintaining access to new innovative medicines” DoHA Impact of PBS Reform Report Restraints Saturated market – e.g. PBS & Medicare allow access to medicines & healthcare for the whole population Government attempts to restrain PBS expenditure e.g. PBS Reform – Announced Nov 2006 by DoHA to ensure long term sustainability of the PBS. PBS reform was originally forecast to save $580 million over the five years 2006–07 to 2010–11. The forecasts were reduced to $103 million ($110 million including the Repatriation Pharmaceutical Benefits Scheme (RPBS)) as a result of subsequent policy changes and other factors. Impact of BPS Reform Report p.8 PBS reform was originally estimated to produce savings to Government of $3 billion over 10 years. PwC modelling puts the figure in the range of $3.6 billion to $5.8 billion Impact of BPS Reform Report p.14
Data based on AIHW Projection of Health Expenditure 2003-2033 (Dec 2008) . 2010 figures calculated based on the numbers in the report. Antineoplastic & immunomodulating agents market data based on IMS data MAT Q2 2009 Generics ” Australia's generics market is expected to undergo significant growth, boosted by improved substitution rates, government enthusiasm and products currently worth some AUD1.9bn (US$1.4bn) coming off patent over the next five years. In 2008, generic drugs accounted for 12% of the total pharmaceuticals market, and are forecast to increase market share to 14.5% by 2013, or some US$1.08bn at consumer prices. In terms of number of prescriptions written, Australia has one of the lowest generic penetrations in developed countries at around 30% of prescriptions, compared with 75% in the UK and approximately 50% in the US, although the government is looking to change this, in line with its cost-containment efforts.” Business Monitor International Pharmaceuticals & Healthcare Report Q2 2009 p.51-52
Drivers Convergence of the medical and drug indUS$try, eg. Drug eluting stents and glucose monitoring systems incorporated into insulin pumps, Cedasys Greater physician need for better and more precise medical devices in effort to reduce medical errors and improvement in patient safety Silver indUS$try devices - joint replacement, medical aids, number of beds, monitoring devices, etc. Challenges Regulatory hurdles-Longer patent review and approval times for new medical devices, Organ Transplantion Acts Distribution Networks- Geographic Expansion can be challenging due to inexperienced distributor staff. Training Issues- Making the US$e of products simple to US$e when the new products are targeted at Allied Staff, Nurses. Ex Cedasys (reducing time and cost, integration of patient monitoring and drug delivery devices) Key Take aways Global MNCs increase local manufacturing to reduce costs and improve accessibility of devices to secondary and primary care sector -Global MNCs- examples Hill Rom, GE Healthcare, Waters - J&J (AAA), Delphax ( spinal implants)
DRIVERS The government’s commitment to provide over $530 million over 4 years to reduce elective surgery waiting times. This will result in in over 40,000 additional elective surgery procedures annually. Around 70,000 Australians have a joint replacement surgery in a year. In Australia, private health insurance covers around 43% of the population. This encourages the demand for better medical care and increases expenditure on medical equipment. RESTRAINTS 1) As access to medical care, rising costs and device quality concerns become key issues, there will be changes that will impact the regulatory and reimbursement procedure of medical devices. 2) New technologies and materials that are being developed from stem cells and nanotechnology might replace the conventional technologies and devices used for treatment of orthopedic and cardiovascular conditions.
Drivers Total laboratory automation is favored by large hospital – Hub & Spoke Model, Faster response time Increased US$age of home care monitoring devices for blood pressure, and blood glucose monitoring as patient volume rises Early Detection- Increased pressure from reimbursement and government to move towards preventative healthcare- early cancer detection. Challenges Different cUS$tomer sets- R&D, Hospitals etc Allignment of payors, etc: Backend and front end integration of system is yet to be achieved Price Pressures_Increase competition with local Asian company that copied MNC products. Key Take Aways Sample Management- Collection, Storage will take back seat to other challenges like Volume Optimisation and Transport. IT-Data Management Tools (applications) need to be developed to transmit the information to newly developed web portal tools like EMR, PHR etc Incorporation of IT will be the new bUS$iness model
DRIVERS The National Cervical Screening Program aims to reduce morbidity and deaths from cervical cancer, in a cost-effective manner through an organised approach to cervical screening. The Program encourages women in the target population to have regular Pap smears. Bowel cancer is one of the most common forms of cancer in Australia, and around 80 Australians die each week from the disease. Chronic diseases presently make up more than 70 per cent of Australia’s overall disease burden and this is expected to increase to 80 per cent by 2020. Around 900,000 cases of diagnosed diabetes in Australia. Over 100,000 new cases of cancer diagnosed in Australia every year. Prevalence of cardiovascular disease in Australia is around 4 million. Factors such as ageing of population, lifestyle changes due to economic growth will increase the demand for medical products.
Drivers V alue based medical imaging products will be required to deal with this Phenomenon Ability to integrate Medical Imaging equipments with a hospital‘s information system is becoming increasingly important to hospitals. Case in Example: S.Korea, where diagnostic tests done on imaging devices which are unable to transmit reports to HIS, have lower re-imbursement rates Turnkey Project Contracts on Rise- OEMs will need to acquire non-traditional skills like consulting, design and planning etc. Examples of US$ $ 10 Million contracts on the rise for these projects. Challenges New CUS$tomer Sets- From corporate centers to stand alone diagnostic. Example in ASEAN countries like Malaysia there is a rise in these centres Price Erosion- Costs of High end ultrasound machines, C-arms and DR equipment has fallen by over 15-20% in the last 3 years. DRGs- Implementation of this system directly impacts margins Key Takeaways Leveraging existing installed base- US$e of Retrofit systems, Third party service contracts
DRIVERS Around 15 million diagnostic imaging procedures performed in Australia (around 3 million procedures performed in the public hospitals) Australia Diagnostic Imaging Association estimates that about 70% of diagnostic imaging services delivered in Australia are now funded through Medicare and this is growing . Presence of private diagnostic imaging groups such as I-Med, Primary Health care and Sonic Healthcare. Government is increasing competition and improving patient choice in Australia’s diagnostic imaging sector through deregulation and encouraging providers to compete for patients on price and convenience. BreastScreen is a national breast cancer screening program for women which operates in over 500 locations nationwide. Over 1.6 million women screened across Australia every year. RESTRAINTS Australia has 51 CT scanners (2 nd highest in the world after Japan) and 5 MRI machines per million population. Australia’s healthcare sector has invested heavily in high-cost equipment in recent years and there is current reluctance to invest in additional I infrastructure. 2) Mergers/acquisitions leads to formation of large private diagnostic imaging groups. I-Med (220 clinics), Primary Health care (161 clinics). Leads to price erosion as less number of customers and increasing bargaining power. Also, less demand for medical imaging modalities fuels price competition between suppliers.
Drivers 1) Operational Efficiency, Reducing Costs- Widespread adoption of Clinical Applications, EMR. Leading markets include Singapore, Australia, Taiwan, S.korea 2) Consumer Demand- Are more savvy, increased internet penetration- china largest users Strong demand for healthcare services- IT has come into the core role of “essential” services and maximise Challenges Interoperability- Most of cUS$tomers have disparate IT platforms. Integration- Connectivity issues between departments especially the pathology dept to obtain real time results Skilled Resources- CME programs need to being designed especially for allied staff who may not be IT savvy Take-Aways Hong Kong has US$$ 400 Mil budget for EMR implementation and Malaysia has launched..XX The human factor, is a key impediment in HIT adoption- Change Management Programs are extremely essential Hongkong and Malaysia are the two countries to watch out in terms of the new health initiatives during 2010-2012
Market split in 2009: Health IT market - $525 million / Life sciences IT market - $422 million DRIVERS South Australia is d eveloping Australia’s first fully integrated state wide electronic health record system through the $315 million Careconnect.sa program. Western Australia is investing in a $300 million ehealthWA program to invest in pharmacy information systems, clinical information systems and patient administration systems. NeHTA’s strategic plan includes two major tasks - Developing healthcare identifiers and coordinating the progression of the priority e-health solutions. There is a $196 million national fund allocation to NEHTA over three years to June 2012 . E-Health can benefit individual through better management and coordination of their care, increasing quality and safety and significantly decreasing costs and benefit clinicians through improved collaboration in care, using decision support tools to reduce potential adverse effects. Reducing medication error which is a leading cause of adverse events in Australia. RESTRAINTS Higher ICT investment in industries such as banking and finance as compared to healthcare in Australia. Traditionally, state governments have allocated higher ICT budgets for other departments such as transport, judiciary as compared to helathcare. Healthcare facilities have implemented obsolete, unsupported core applications that lacked industry standards in the past that pose a big challenge in the integration with new modules . They are now replacing these systems with capable, industry-standard products.
Departmental solutions – Radiology information systems, cardiology information systems, pharmacy information systems, etc. Patient & revenue cycle management – Patient administration systems,
Asia Pacific Healthcare Outlook Focus : Australia Analysis of Best Opportunities 24 th February 2010
*Life Sciences & Healthcare IT includes: Software, Hardware, IT services Asia Pacific Lifesciences and Health IT Market Interoperability challenges hinder adoption Market Drivers Market Restraints
Strong and sustained demand for healthcare services
Consumer demand for quality and access to information
CAGR 7% CAGR 11.3% APAC Share 50.6 54.6 58.4 62.5 Note: All figures are rounded; the base year is 2009. Source: Frost and Sullivan 14.5% 15.7% Lifesciences & Healthcare IT, US$ Bn, 2009-2012
Australian Life Sciences and Health IT Market Government’s continued commitment to e-Health Life Sciences & Health IT Revenues, US$ Bn, 2009-2012
ICT initiatives by state health departments
NeHTA’s role in accelerating the adoption and awareness of e-health initiatives.
Patient demand to improve the efficiency and quality of healthcare
Chronic under-investment in healthcare IT
IT still not being recognized as the key enabler for successful change to healthcare delivery
Implementation of high-risk legacy systems in the past
Market Restraints Note: All figures are rounded; the base year is 2009. Source: Frost and Sullivan
Top Opportunities – Australian Life Sciences and Health IT Market Clinical IT Systems
Spending on departmental systems (radiology, cardiology, pharmacy, acute care, etc,) 2010: ~US$ 160 mn; CAGR: 15.3%
Modernization of the healthcare system, implementation of more accurate and reliable systems and shift from lengthy to short and more clinically intense hospital stays is driving investment in departmental systems.
Spending on infrastructure, interoperability and EHR solutions: ~US$ 45mn; CAGR: ~17.3%
State eHealth programs such as Healthelink (NSW Health) and government’s commitment to development of the right technology necessary to deliver the best e-health system is accelerating the growth in this segment.
Solutions for Patient and Revenue Cycle Management
Spending on patient and revenue cycle management solutions 2010: ~US$ 104 mn; CAGR: 6.1%
T he steps taken by healthcare facilities to improve the quality and outcome of healthcare, reduce the administrative burden, and adopt a more standardized approach towards application of information systems is the key driver for this market segment.
Patient administration solutions being adopted in public hospitals in South Australia (careconnect.sa), Western Australia (eHealthWA) and Victoria (HealthSMART).
Note: All figures are rounded; the base year is 2009. Source: Frost and Sullivan
Time Growth Home-based care Personalized medicine POCT/Self Monitoring Clinical IT Endoscopy Administrative IT EMR/EHR Source: Frost & Sullivan. Where to place your bets in 2010- 2012 : Australia Biologics Joint replacement Oncology, Diabetes Cardiovascular INNOVATION TRIGGER SUPER GROWTH NORMALISATION LEADERSHIP