Growth, Innovation And Leadership Insights In Apac Healthcare Market June 2009


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Growth, Innovation And Leadership Insights In Apac Healthcare Market June 2009

  1. 1. Growth, Innovation and Leadership Insights in APAC Healthcare Industry June 18, 2009 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. 1
  2. 2. Contents 1 APAC Healthcare Market-Growth Drivers 2 Emerging Technologies-Innovation Platforms Choosing the Right Strategy-How Market 3 Leaders Strive <GPS> 2
  3. 3. Change is Inevitable. HEALTHCARE CEO’S HEALTHCARE CEO’S GLOBAL CEO’S GLOBAL CEO’S 8 in 10 Healthcare leaders anticipate substantial change ahead. 29% Gap between envisioned Gap between envisioned change and past success change and past success atat managing it. managing it. Source: IBM Global CEO Study 2008 <GPS> 3
  4. 4. 10 Key Trends in the Global and Asian Health Care Ind. 1) Cost & Quality, & Demographics of Healthcare 1) Cost & Quality, & Demographics of Healthcare 2) Changing Demographics – Aging Population 2) Changing Demographics – Aging Population “Globalization has radically altered 3) Changing Business Models 3) Changing Business Models the business model for service and manufacturing industries. 4) Evolving and Unique Disease Profiles 4) Evolving and Unique Disease Profiles Health, traditionally regarded as a local industry, is becoming 5) Medical Tourism & Wellness 5) Medical Tourism & Wellness global as well. It’s changing the way the Chinese think about 6) Insurance :: Increasing Accessibility 6) Insurance Increasing Accessibility financing hospitals, Americans recruit physicians, Australians 7) Technology as a Driver 7) Technology as a Driver reimburse providers for care, Europeans embrace competition, 8) Human Resources :: The Brain Drain 8) Human Resources The Brain Drain and Middle Eastern governments build for future generations”. 9) Private Public Partnerships 9) Private Public Partnerships 10) Increasing M&A/ Private Equity Activity 10) Increasing M&A/ Private Equity Activity <GPS> 4
  5. 5. Trend 1 : Cost & Quality, Demographics of Healthcare Healthcare is challenged by three interlocking crises that make present healthcare systems unsustainable: 15% of patients admitted to hospital suffer an adverse event. Rising Costs Quality of Care 8% of adverse events result in death. Changing Demographics 6% of adverse events result in permanent disability. 10-20% of all adverse events is caused by medication errors. 10-15% of hospital admissions occur because providers do not have access to previous care records. 20% of laboratory tests are requested because the results of previous investigations are not accessible. <GPS> 5
  6. 6. Trend 1 : Cost & Quality, Demographics of Healthcare By 2050 Healthcare spending will double, claiming 10 – 15% of GDP Public Per Capita Spending – India : $ 12, Vietnam : $ 42 <GPS> 6
  7. 7. Trend 2 : Demographics – Asia Overview Asian Demographics by Age Distribution Ageing Young but ageing Young <GPS> 7
  8. 8. Trend 3 : Paradigm shift in business model : pharmacogenics will shape the future Past Future Disease definition by symptoms Mechanism Uniformity of disease Heterogeneity Uniformity of patients Variability Universal Treatment Individualized therapy Predictive/preventative care/ Sickness (wellness) <GPS> 8
  9. 9. Trend 4 : Diseases – Best Asian Opportunities A competitive Benchmarking: Scores based on Parameters #1 #2 #3 #4 #5 #6 Methodology: • The seven key factors mentioned in previous slide have been considered to allocate the score to various diseases to find the attractiveness of the disease. The diseases are measured on a scale of 1 to 5 where a perfect score would be 35. • Although infectious diseases ranked low, there is major potential in certain areas such as avian flu etc. <GPS> 9
  10. 10. Trend 5 : Medical Tourism & Wellness Asia had 2 million medical tourists in 2008 Singapore Medical Tourism Medical Tourism Overview Steadily Growing Healthcare Tourism in Singapore • The number of foreigners that seek medical care in CAGR (2001-2006) : 19% Singapore surged with a CAGR (2001-2006) of 18.8% driven by the influx of foreigners (and their families) that work, study, and live in Singapore, as well as patients from other countries that seek medical treatment in Singapore. • In recognition of the importance of quality assurance, 10 public hospitals and 4 private hospitals in Singapore have already been accredited by JCI as of 2008. • Furthermore, the provision of competitively priced medical packages further strengthens the position of Singapore being one of the leading medical tourism hotspot in the region. • Asia has high concentration of HNWI’s. • Predictive and preventative medicine will help Wellness segment grow. <GPS> 10
  11. 11. Trend 6 : Increasing Access to Insurance The Private Health Financing Schemes helped Singapore Hospital Admissions reducing Out-of-Pocket Expenditure and Increased Demand in Hospital Care •Medisave, Medishield and health insurance provided by the private sector have raised the demand for medical care, as measured by the number of hospital admissions; from 265,828 individuals that were MEDISHIELD hospitalised in 1980 to an estimated 416,000 individuals in 2006. MEDISAVE •Inpatient admission to private hospitals grew at a faster rate; they posted an admissions CAGR (1980- 2006) of 4.5% versus 1.2% in public hospitals. •According to MOH, residents have used Medisave for out-patient consultation for a total of S$2M withdrawals and paid for about 60% of their medical costs. In this aspect, Medisave and Medishield has reduced out-of-pocket payment among residents. Broadened Insurance Coverage Paradigm shift towards Increases Patients’ Eligibilities to the private health insurance more costly Private Hospitals <GPS> 11
  12. 12. Trend 7 : Technology opportunities Asia Healthcare Spend by Area, 2009-2020 • Major opportunities within diagnostics and monitoring • Products and services will not be standalone but will be “packaged” to target specific diseases. • Example : predict avian flu, diagnose, treat, monitor <GPS> 12
  13. 13. Trend 8 : Human Resources - the Brain Drain Source : Tekopak <GPS> 13
  14. 14. Trend 9 : Public Private Partnerships (PPP) Public Private Partnerships (PPP) will be the way to go <GPS> 14
  15. 15. Trend 10 : M&A Spend and Private Equity Infusion In 2009 we believe there will be an increase in M&A activity between pharmaceutical and Medical Technology companies. • Biotechnology vs. Pharmaceutical • Company Cash Position is Critical • Biologic assets will continue to attract high • Companies with low cash positions should be avoided Opportunities in the Life Sciences valuations • Companies with low cash reserves are likely to become • This is due to limited generic competition and high insolvent in 6-12 months product margins Sector • Focus on Late Stage Companies • Potential Product Cost Benefit • Focus on life sciences companies with late stage • Strong pressures in 2009 to restrain the growth of assets (late phase II / phase III) healthcare expenses • Pharmaceutical companies will need access to • In this environment products that provide superior cost assets that can provide value in the medium term benefits will be preferred • Early stage life sciences companies in Asia will benefit from this trend • Strong opportunities for companies targeting growth diseases in the emerging markets – Oncology, Cardiovascular Disease and Diabetes <GPS> 15
  16. 16. Closing Statement – Market will start to recover by Q3’09 Subprime mortgage market collapse “The only thing we have Media talks about recession to fear is fear itself.” -- Franklin Roosevelt Reduced investment flows Global financial panic <GPS> 16
  17. 17. Contents 1 APAC Healthcare Market-Growth Drivers 2 Emerging Technologies-Innovation Platforms Choosing the Right Strategy-How Market 3 Leaders Strive <GPS> 17
  18. 18. Upcoming medical device technology platforms Top-10 Medical device based platforms 2005 2010 2015 2020 for the next decade Infection control devices/Wound care Home/Self therapy devices Preventive as well as personal care devices Total disc replacement New innovations in In and Home/Self Vitro Diagnostics like therapy devices will Mircoarrays and Lab- have a very high Robotic devices On-A-Chip have growth rate and brought a revolution in opportunities in Opportunities the field diagnostics. Advanced In Vitro Diagnostics entire spectrum of the market. Virtual reality Intelligent/Automate Tissue generated d devices, Robotic devices and site- devices for surgery Intelligent/Automated devices specific drug and diagnosis will delivery devices are reshape the modern Electrical stimulation being developed for face of the more sophisticated healthcare sector healthcare delivery Site specific drug delivery Tissue generation devices Growth Rate <GPS> 18
  19. 19. Emergence of medical device technology platforms in the next decade High Impact 1. Infection control devices/Wound care 2 1 2. Home/Self therapy 3 3. Total disc replacement 5 4 Projected 4. Robotic devices 4 2 7 Impact on the 9 5 Healthcare 5. Advanced In Vitro Diagnostics 10 1 7 sector 6 9 6. Virtual Reality 6 8 3 7. Intelligent/Automated devices 10 8 8. Electrical stimulation 9. Site specific drug delivery Low Impact 10. Tissue generation devices Low Certainty High Developing countries in Asia: China, India, Developed countries in Asia: Singapore, Japan, Thailand, Malaysia Taiwan, S. Korea, etc. <GPS> 19
  20. 20. Paradigm Shift in the Asian Healthcare Sector The Future of Health Care What does the most effective model of health care for the future look like? How can we found and lay the foundation for health care practice that integrates health promotion and prevention? Can prevention specialists learn from other scientific and practice fields? How can we lay the foundation for this new practice? 20
  21. 21. Influencing Factors – Hospitals Question : Kindly rank the following factors in the order of importance ( 1- most important) when considering the purchase of equipment? Number of Hospitals which ranked 1st, 2nd and 3rd Product Quality is ranked as the second Brand Name 1 1 2 4 1 1 8 most important factor. Any impair on the performance and quality Product Features 2 3 2 5 4 1 of image obtain will impact the hospital’s revenue and reputation. Hence the Product Quality 5 4 7 1 emphasis on this area. Equip. Technology 1 1 4 1 1 3 1 After Sales Support is emphasized as the most important influencing factor as any Price 2 3 3 2 3 1 1 2 potential disruption of service translates to a lost of revenue to the hospital. Delivery Time 2 1 1 4 3 After Sales Support 7 3 1 3 1 2 1 Source: Hospital interviews; Frost Analysis Warranty Length 1 1 1 4 1 2 1 Training Provided 1 2 1 4 3 Ranked 1st Machine Efficiency 2 1 1 3 3 1 Ranked 2nd Ranked 3rd <GPS> 21
  22. 22. Contents 1 APAC Healthcare Market-Growth Drivers 2 Emerging Technologies-Innovation Platforms Choosing the Right Strategy-How Market 3 Leaders Strive <GPS> 22
  23. 23. Range of Strategies to Consider Strategies What they do Successful examples Brand Brand • Sell flagship products globally by builder builder leveraging brand • Create a new category or popularize an Market Market out-of-the-ordinary value proposition maker maker that addresses an unmet local consumer need • Leverage company capabilities to Replicator Replicator duplicate a successful business format in many local markets Scale Scale • Build leading position by leveraging generator generator scale and operational know-how • Cultivate relationships with regulators to Standard Standard ensure favored market position setter setter <GPS> 23
  24. 24. Japan-Formula to Sustain Growth in Revenues and Profits Segment of Strategic Dimension Value Innovation Logic Example Focus Industry Assumption Industry's conditions Toshiba Medical Diagnostic Imaging can be shaped Strategic Focus Competition is not the Olympus Medical Devices benchmark. Pursue quantum leap to dominate the market Customers Target mass buyers based Teijin Home Care on key commonalities. Willing Chemistry to let some customers go Assets and Capabilities Not constrained by what the company Daiichi-Sankyo Pharmaceuticals already had. Pose the question what we would if we were starting anew? Product and Service Offerings Pitch in terms of total solution even if Goodman Co. Ltd Health IT it is beyond indutry's traditional offerings <GPS> 24
  25. 25. CASE STUDIES – MARKET MAKER How Globally 1. New medical technologies and new ways to Approach capture and use medical data to make health systems better. 2. Focus to work with Health organizations to choose wisely within limited budgets when it comes to how and what technology they buy. 1. Make technology a reason to collaborate Results 2. Move information, not people 3 Customize care to patients’ genetic needs 4. Value technology’s impact on productivity and lifespan • Leverage capabilities across markets Key • Build expertise in JV/alliance management Learnings • Cultivate strong local partners Source: Interviews; articles; team analysis <GPS> 25
  26. 26. At concrete level the Senior Management Team has to focus attention and developed practical solutions in areas clustered in 5 workflows Market Internal Primary Facing focus so far Value Proposition ACHIEVE NO. 1 POSITION Organisation Sales & Marketing Priorities Knowledge Management Business Planning & Control Tower <GPS> 2008 2010 2015 2020 26
  27. 27. Concluding Remarks-How to stay SMART in your business? Cost Effectiveness Acquisition thru (overall industry impact) Product Product/R&D Performance Strategic Support of Alliances SMART Influencers Cost Market Reach competitiveness Local/Regional Product Development Process S:Customer Satisfaction M:Margins R:Revenue Growth <GPS> 27
  28. 28. Frost & Sullivan Contacts Jasminder Kaur Nitin Naik PR Manager Vice President, Healthcare Asia Pacific, Healthcare Asia Pacific, +65. 6890 0937 +65.6890.0978 <GPS> 28