Outlook of Iran and Azerbaijan Healthcare Markets

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In 2012 alone, Iran hosted more than 200,000 health tourists, which brought more than $1.5 billion - twice as much as the numbers in 2011. With the high OOP and growing population, as well as its goal to be the hub of medical tourism for the Muslim world, Iran opens up its doors to private investments, especially in the medical devices sector and specialized medicines. Iran and Azerbaijan Healthcare markets offer fresh, new opportunities to global investors.

This analyst briefing will discuss:

- High government focus on growth of the healthcare industry and implementing healthcare reforms
- Growing economies, with their oil-rich and wealthy position
- Increasing awareness and affluence among their population for healthcare consumption

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  • lack of drugs to treat cancer, multiple sclerosis, blood disorders and other serious conditions.
  • Outlook of Iran and Azerbaijan Healthcare Markets

    1. 1. Outlook of Iran and Azerbaijan Healthcare Markets Azerbaijan and Iran’s Healthcare Markets Poised for Growth Uldouz Berenjforoush and Hilal Cura Healthcare August 1, 2013 © 2012 Frost & Sullivan. All rights reserved. This document contains highly confidential information and is the sole property of Frost & Sullivan. No part of it may be circulated, quoted, copied or otherwise reproduced without the written approval of Frost & Sullivan.
    2. 2. 2 Today’s Presenter 7+ years of market intelligence and consulting experience in cross industries such as healthcare, chemical materials and food. Particular expertise in conducting growth consulting studies, developing competitive intelligence environment and analyzing business development opportunities in medical devices, medical technologies and healthcare delivery services segments. Hilal Cura, Research Analyst Frost & Sullivan Turkey
    3. 3. 3 Today’s Presenter Uldouz obtained her B.A. from UC Berkeley double-majoring in Political Economy and Public Health, and her M.S. degree in Finance at Sabanci University. 3+ years of experience in research, conduced market insights highlighting the opportunities in the healthcare market. Currently she is working as a Research Analyst at Frost & Sullivan and is interested in finance, and healthcare sectors. Uldouz Berenjforoush, Research Analyst Frost & Sullivan Turkey
    4. 4. 4 Focus Points An Outlook on Iran and Azerbaijan Healthcare Markets • Top Growth Opportunities Across the Healthcare Segments • Healthcare Services, Medical Technologies and Life-sciences • Economic and Demographical Outlook • Healthcare Indicators and Disease Burden • Healthcare Spending and Healthcare Infrastructure • Medical Tourism
    5. 5. 5 Azerbaijan and Iran: Next Two Global Healthcare Hot Spots • Iran with an aging population of 75 million, represents one of the biggest healthcare markets of the Middle East. • Azerbaijan with an aging population of 9 million, a transitional- state, opening up rapidly and eager for growth. • Natural resources-rich wealthy nations, with a growing GDP represent a new, fresh market especially in the healthcare sector. • Focus on growth and development through healthcare reforms and privatization. • Attractive healthcare consumption markets with unsaturated demand.
    6. 6. 6 Azerbaijan Healthcare Market Outlook
    7. 7. 7 Azerbaijan Offers New Healthcare Opportunities Source: Frost & Sullivan analysis. 2 Healthcare reforms pave the way for development in the private healthcare market. 3 Over 9 million, averaging 30 years of age and a modern life- style, Azerbaijan has seen an increasing number of circulatory diseases as well as hypertension cases 1 Oil-rich, growing Azerbaijan provides opportunities across the healthcare sector.
    8. 8. 8 Healthcare Spending and Demographic Outlook Sources: EIU; IMF; World Bank, Frost & Sullivan analysis. Azerbaijan’s healthcare expenditure is expected to grow to 760 million USD in 2013, 24% more than 2010. 7.2% of Azerbaijan’s population is expected to be above the age of 65 by 2020. 0 20 40 60 80 100 120 2000 2010 2020 Above 65 5.2 5.9 7.2 35–64 28.8 34.3 39.0 15–34 34.3 37.2 30.9 0–14 31.7 22.6 22.9 Population% Population by Age Group, Azerbaijan, 2000, 2010 and 2020 Source: US Census, Frost & Sullivan analysis. Azerbaijan’s is expected to grow at a CAGR of 5% in the next 5 years. 0 1 2 3 4 5 6 7 8 9 10 0 10 20 30 40 50 60 70 80 90 100 2000 2011 2020 Public 8.6 21.5 28.7 Private 81.4 78.5 71.3 % of GDP 4.7 5.2 6.7 %ofGDP HealthcareExpenditure% Total Healthcare Expenditure and as Percentage of GDP, Azerbaijan, 2000-2020
    9. 9. 9 Sources: Azerbaijan Statistics Department; Frost & Sullivan analysis. 0.00 10.00 20.00 30.00 40.00 50.00 60.00 70.00 80.00 90.00 100.00 0.00 50.00 100.00 150.00 200.00 250.00 300.00 350.00 400.00 450.00 2006 2010 2015 Circulatory Diseases 350.00 364.40 428.41 Respiratory Diseases 33.70 26.60 13.08 Cancer 76.70 74.30 67.54 NumberofPeople,per100,000 Leading Causes of Deaths Socio-economic development and modern lifestyle has increased circulatory diseases. The prevalence of hypertension and diabetes is expected follow a rapid growth trend in the next years. Health Indicators and Disease Burden 0 10 20 30 40 50 60 58 60 62 64 66 68 70 72 74 76 2000 2005 2011 Male Life Expectancy 63.79 66.17 67.81 Female Life Expectancy 69.88 71.81 73.64 Infant Mortality Rate 56.7 47.9 38.5 InfantMortalityRate LifeExpectancy Azerbaijan Health Indicators , 2000, 2005 and 2011 Sources: Azerbaijan Statistics Department; Frost & Sullivan analysis.
    10. 10. 10 Government Healthcare Budget 0 100 200 300 400 500 600 700 800 900 2007 2013 Total 226 852 HealthcareBudget,inmillionsUSD Government Healthcare Budget, 2007 and 2013 The budget has increased ten folds in the past 10 years due to increased income from oil. 0.0 20.0 40.0 60.0 80.0 100.0 2003 2011 Government expenditure 12.6 21.5 Private expenditure 87.4 78.5 Percentage) Expenditure on health as a percentage of total expenditure As a result of the reforms Universal Health Insurance coverage is expected to increase to cover entire population. Sources: World Bank; Frost & Sullivan analysis.Sources: World Bank; Frost & Sullivan analysis.
    11. 11. 11 Market Overview—Healthcare Infrastructure 0 2 4 6 8 10 12 14 2006 2011 Beds 8.1 4.6 Physicans 3.6 3.4 Number(per1000) Number of beds and physicians, Azerbaijan, 2006–2011 Source: Azerbaijan Ministry of Statistics, Frost & Sullivan analysis. Between 2006 and 2012, the number of public hospital beds dropped due to the privatization and remodeling reforms to have up-to-date, modern technology available in all hospitals. 146 118 19 76 0 50 100 150 200 250 2006 2012 Number of Hospitals Azerbaijan, 2006–2012 Out-patient clinics Public Hospitals 0 500 1000 1500 2000 2500 0 200 400 600 800 1000 1200 2000 2009 2011 Number of scientists, Azerbaijan, 2000 - 2011 Specialists Practitioners Total
    12. 12. 12 Private Healthcare Services Segment Breakdown Top Growth Opportunities Private Hospitals with the latest available equipment in the market. Specialization and premium services, eg. ophthalmology, car diology and oncology Facilities Management that offers well- trained healthcare personnel. At a Glance.. • Only 2% of hospitals are privately owned which represents unmet needs. • Shortage of well-trained healthcare personnel, and expertise across services such as ophthalmology and cosmetic surgery. • More financing freedom to the hospitals and the healthcare providers.
    13. 13. 13 Pharmaceuticals Segment Breakdown Top Growth Opportunities Lower cost with high quality Anti- diabetics, and oncology segments will have the highest growth High-volume Imports of European pharmaceuticals At a Glance.. • More than 70% of OOP spent on pharmaceuticals. • Over 60% of pharmaceuticals are imported from Turkey, Russian and European countries. • Only one functioning production plant in Azerbaijan, Azerphann.
    14. 14. 14 Medical Devices Segment Breakdown Top Growth Opportunities Lower cost equipment and disposables Private hospitals Unmet local demand for ophthalmology, and oncology and cardiology devices. At a Glance.. • Critical market demand for medical equipment, no domestic production • Turkish firms provide lower- cost equipment. • The Japanese Aloka and Shimadzu brands also popular. • German Siemens dominating the hospitals.
    15. 15. 15 Iran Healthcare Market Outlook
    16. 16. 16 Iran Offers New Healthcare Opportunities Source: Frost & Sullivan analysis. 2 Iran’s healthcare out-of-pocket (OOP) expenditure is at 55%, which is very high compared to other neighboring countries. 3 Iran’s medical devices industry is greatly depended on the imports, which accounts for over 88% of the market. 1 Over 75 million, more than 50% are under the age of 35. A natural- resource rich nation.
    17. 17. 17 Healthcare Spending and Demographic Outlook 0 1 2 3 4 5 6 7 8 9 10 0 10 20 30 40 50 60 70 80 90 100 2000 2011 2020 Public 41.6 39.7 51.1 Private 58.4 60.3 48.9 % of GDP 4.6 6.0 7.7 %ofGDP HealthcareExpenditure% Total Healthcare Expenditure and as Percentage of GDP, Iran, 2000-2020 Sources: EIU; IMF; World Bank, Frost & Sullivan analysis. Driven by healthcare reform and increasing disease prevalence Iran’s healthcare expenditure is expected to grow. With young but aging population of 75 million, Iran presents a significant potential in the healthcare market. 0 10 20 30 40 50 60 70 80 90 100 2011 2013 2020 55-65 6.1 6.1 6.8 25–54 44.8 45.3 49.8 15–24 20.0 19.8 10.7 0–14 23.4 23.8 17.3 Population(,000,000) Population by Age Group, Iran, 2011, 2013 and 2020 Source: World Bank, Frost & Sullivan analysis.
    18. 18. 18 Sources: Iran Department of Health; Frost & Sullivan analysis. The key health indicators of Iran improved within the healthcare reform period implemented after the war however, due to socio-economic development and an urban lifestyle the causes of deaths by cardiovascular diseases and cancers are on the rise. Health Indicators and Disease Burden 0 5 10 15 20 25 30 35 40 45 50 65 66 67 68 69 70 71 72 73 74 75 76 2000 2005 2011 Male Life Expectancy 68.69 69.8 71.16 Female Life Expectancy 70.85 72.95 74.94 Infant Mortality Rate 44 33.7 25 InfantMortalityRate LifeExpectancy Iran Health Indicators , 2000, 2005 and 2011 Sources: EIU; IMF; World Bank, Frost & Sullivan analysis. 38% 18% 14% 6% 6% 18% Leading Causes of Deaths Cardiovascular Accidents Cancer Neonatal Respiratory Others
    19. 19. 19 Government Healthcare Budget An upward trend in healthcare spending per person due to increasing universal health insurance coverage. 0.0 20.0 40.0 60.0 80.0 2003 2007 2011 Government expenditure 40.6 41.4 39.7 Private expenditure 59.4 58.6 60.3 Percentage) Expenditure on health as a percentage of total expenditure Government is dedicated to grow the healthcare expenditure by 4% each year. 4.05 4.10 4.15 4.20 4.25 4.30 4.35 0 50 100 150 200 250 300 350 400 450 500 2006 2009 2013 US$ per head 131.6 220 421 % of GDP 4.15 4.20 4.30 HealthcareExpenditure($Billion) Total Healthcare Spending and as Percentage of GDP, Iran, 2006–2013 Sources: EIU; IMF; World Bank, Frost & Sullivan analysis. Sources: EIU; IMF; World Bank, Frost & Sullivan analysis.
    20. 20. 20 Market Overview—Healthcare Infrastructure 0 0.2 0.4 0.6 0.8 1 1.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6 1.8 2006 2012 Beds 1.38 1.7 Number(per1000) Number of Hospitals Beds per 1000, Iran, 2006–2012 Source: World Bank, Frost & Sullivan analysis. Between 2006 and 2012, the number of hospital beds have increased and we see an upward stable growth trend in the number of physicians per 1000 patients. 0.89 0.91 1.4 1.4 0.00 0.50 1.00 1.50 2.00 2.50 2006 2012 Number of Physicians and Nurses/Midwives per 1000, Iran, 2006–20102 Physicians Nurses and Midwives Source: World Bank, Frost & Sullivan analysis.
    21. 21. 21 Pharmaceuticals Segment Breakdown Market Revenue $3.51 B (2012) Revenue at End of Forecast Period $3.96 B CAGR: 8% (2015) Top Growth Opportunities High-volume Imports of pharmaceuticals with higher quality Oncology, multip le sclerosis, and blood disorders Specialized high-tech medicine and biotechnology At a Glance.. • Iran mainly produces generic medicine and lacks the more high- tech production capabilities. • Shortage of specialized medicine has opened up the doors for high volumes of specialized medicine, more preferably European and American brands.
    22. 22. 22 Medical Devices Segment Breakdown Market Revenue $964 M (2012) Revenue at End of Forecast Period $1.03 B CAGR: 7% (2015) Top Growth Opportunities Transplants, an d ophthalmology, devices . Diagnostic imaging apparatus At a Glance.. • Depended on the imports, which accounts for over 88% of the market. • 70.4% of imports are from the European Union, Germany, the Netherlands and UK dominating the market. Consumables
    23. 23. 23 Medical Tourism Top Growth Opportunities A hub in the Muslim world High-quality and low cost Transplants, Op hthalmology, and orthopedic purposes At a Glance.. • A flourishing market, In 2012, Iran hosted over 200,000 health tourists, twice as much as the numbers in 2011. • Majority of the visits are for transplants, ophthalmology, orthope dics and dentistry purposes. • Iran offers high-quality expertise with low costs. • Investments in infrastructure to better serve the visitors, for example for the Azerbaijani tourists, medical services are provided by the border.
    24. 24. 24 Next Steps Develop Your Visionary and Innovative Skills Growth Partnership Service Share your growth thought leadership and ideas or join our GIL Global Community Join our GIL Community Newsletter Keep abreast of innovative growth opportunities Phone: 1-877-GOFROST (463-7678) Email: myfrost@frost.com
    25. 25. 25 Your Feedback is Important to Us Growth Forecasts? Competitive Structure? Emerging Trends? Strategic Recommendations? Other? Please inform us by “Rating” this presentation. What would you like to see from Frost & Sullivan?
    26. 26. 26 http://twitter.com/frost_sullivan Follow Frost & Sullivan on Facebook, LinkedIn, SlideShare, and Twitter http://www.facebook.com/FrostandSullivan https://www.linkedin.com/groups/Transform-Health-Frost-Sullivan-4823253 http://www.slideshare.net/FrostandSullivan
    27. 27. 27 For Additional Information Anna Zanchi Corporate Communications Healthcare +39.02.4851 6133 anna.zanchi@frost.com Hilal Cura Research Analyst Healthcare 0090 (212) 709 88 04 hilal.cura@frost.com Nils Frenkel Account Manager Healthcare 210-247-2451 Nils.frenkel@frost.com

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