PHM Emerging Markets Healthcare Monitor analyzes India's proposal for US patient trade

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PHM EMERGING MARKETS HEALTHCARE MONITOR
Vol. 4, No. 11
November, 2010
Published by PHM International, Inc.

What We Learned Asia-Pacific Watch MENA Watch
In this month’s issue….
Kenya, Monarchs, India, Qatar,
There is much to comment on this Kosovo & Organs, Malaysia Saudi Arabia,
month. In the What We Learned Pirates at sea and at UAE
Last Month section we see how m-
land…
payments rack up in Kenya and
where organ harvesting is a niche
business. Page 2 Page 5 Page 7

India explores formalization of
patient trade while Malaysia lays
the concrete framework for
private investments. CEE-Russia Watch

Some in the KSA look to duplicate Bulgaria, Russia
its medical infrastructure. And
Russia amps up its healthcare
investments.

Africa’s AMI is soaring to new
heights, including a dubious air Page 11
ambulance.

Our Top 10 Plus One column
looks at the second of what we see
as the most impactful trends for Africa Watch Miscellaneous Conference Watch
the near future. Watch
As always, your feedback is AMI – Africa GE Healthcare, m-Health Africa
appreciated and we look forward
Medical Investments m-Health, Summit
to hearing from you.
Top 10 Plus One
All the best,
Hank Kearney Page 14 Page 16 Page 20

PHM Emerging Markets Healthcare Monitor
PHM International, Inc.  +1.772.388.6496  http://www.phmintl.com/iiservices.html
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What we learned last month…. Back to Table of Contents

Kenya
Last year, the money transferred between mobile devices for payments equaled 11 per cent of
the country’s GDP.

Kingdom of Saudi Arabia
The tallest tower plan in Jeddah is on track.

Saudi Arabia-based Kingdom Holding Company is moving forward with its plan to build a
1.6-kilometre-high tower in the Red Sea port city of Jeddah.

Dubbed the mile-high tower, it will be double the height of Dubai's Burj Khalifa, which is
currently the world's tallest man-made structure.

Architecture and development agreements are in place.

We’re speechless.

Monarchs
The world’s oldest and longest serving monarch has died.

Not England’s Queen Elizabeth, not Thailand’s King Bhumibol Adulyadej, but rather Ras al-
Khaimah’s Sheikh Saqr bin Mohammed al-Qassimi.

The Sheikh ruled this UAE member for 62 years and died recently, age 90.

India
India has 20 million credit cards for 1.2 billion people. Whereas the US has 1.4 billion credit
cards for 300 million people.

Poland
Health Minister Ewa Kopacz presented her draft law introducing private health policies and
granting tax allowances to their buyers.

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The ministry expects the introduction of a private system will result in 4.5 billion zlotys extra
revenue to the public system.

The real news: tax allowances to the buyers of private health insurance.

Obviously, insurers welcome the proposal as it breaks NFZ monopoly on contracts with
hospitals. Device manufacturers, durable medical equipment makers, hospitals, etc. should
also welcome the proposal.

Poland
Warsaw-listed liquors group CEDC will introduce to the Polish market a new vodka in Q4
2010 - unflavored version of the Bison-grass flavored vodka brand Zubrowka.

Drink it with apple juice.

Corruption
Transparency International has released its annual Corruption Perceptions Index.
OECD countries are not doing well. USA falls out of top 20.

Information, searchable database, and downloads available at:
http://www.transparency.org/policy_research/surveys_indices/cpi/2010

Russia
Russian remake of the vintage 1980 US Chrysler Sebring, originally heralded as Russia;s
“best new” sedan and the great successor of the venerable Volga, will fade out of production
after November 1.

GAZ raised international eyebrows when it paid over $150m to Chrysler to buy its 1980’s
vintage Sebring plant lock, stock and barrel and ship it to Russia.

GAZ eventually poured more than $300m into the Sebring, but it couldn’t make of a go of it.

Net Private Capital Inflows 2009
Africa/Middle East $ 46.5 b
Emerging Europe $ 60.7 b
Latin America $137.2 b
Emerging Asia $337.0 b

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Kosovo
This month, EU prosecutors charged seven people for trafficking persons for the purpose of
organ harvesting. This stems from 2008 case.

Similarities abound to allegations of war crime activities and organ trading during the Kosovo
War of 1999 by members of the Kosovo Liberation Army, reported to have kidnapped Serb
civilians and killed them for their organs, which were then sold. Subsequent investigations
did not substantiate those claims.

Somalia
Paul and Rachel Chandler, the British couple kidnapped off their private yacht by Somali
pirates more than a year ago were set free Sunday, November 14.

This means one of the three stories of “where one should not have been”, has been resolved.

Readers of the Monitor may recall from the May 2010 issue, there are 3 situations where
“…They all should have known better than to “wonder” into those environments. The
fact that they find themselves in these situations, after repeated warnings, raises all
sorts of questions.”

The three situations:
Sailing off the coast of Somalia
Hiking along the border of Iran
Hospital investing in Thailand.

Note, Sarah Shourd was released from Iranian prison in September, partially settling this
“wrong place” scenario.

And for those investors still stuck in Thai hospital deals? Hint: multi-national Carrefour
pulled out of Thailand this month.

“Virtue is insufficient temptation.”
~George Bernard Shaw

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Asia – Pacific Watch Back to Table of Contents

India - Hospital Chains Call for Insurance Deal with US
Leading hospital chains in India had a unique proposal for US President Barack Obama when he
visited India earlier this month. These healthcare providers are seeking to put in place a
formalised process between the two countries whereby willing US patients can claim
reimbursements from their US-based health insurers even when they decide to get their medical
procedures done in reputed hospitals in India.

Link to the article:
http://www.financialexpress.com/news/Hospital-chains-call-for-insurance-deal-with-US/707267/
This article was listed in the 15 November, 2010 issue of the PHM Emerging Markets Healthcare News Feed.

I am not sure where to start with this idea and article.

Is the premise of the article (and associated hyperbole from Indian hospital leaders) based on
a lack of knowledge of free-market dynamics in healthcare, or a lack of knowledge of the US
political and economic realities?

For some reason, India has a fixation on the US healthcare market, and an equally
disconcerting infatuation with drawing patients from the US to their domestic healthcare
providers. “The US is the biggest healthcare market” we often hear. So true…..and so what.

But for the leader of an Indian hospital to claim “…President Obama can look at leveraging
the high quality, low-cost healthcare model of India and open new vistas….” shows a lack of
understanding, as I wrote, of both free market dynamics and US political realities.

To begin, any insurance company is free to write policies that would cover US citizens in
India, and visa versa. In fact, the very foundation of the founding of Global Health Access®
in 1999 was such a premise.

So, the first step for Indian hospital leaders interested in flying patients 11,000+ km for a knee
replacement is to start talking with insurance CEOs, not President Obama.

Second, if they are interested in treating Medicare (senior medical care) recipients, here is
where Indian hospital leaders would indeed need to talk with the US political leaders. And
that conversation IS one I would like to listen in on…..imagine.

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For a US politician to even engage in such a conversation would be problematic at best.

Our position for emerging market countries is to develop their own domestic healthcare sector
rather than flying patients to and from other countries for medical care.

But for hospital leaders thinking of using tax based medical expenditures (Medicare) outside
the US? Well, it’s worth a try…..an effort I would advise not bothering with…...HK

Malaysia Plans RM1.1b Health Metropolis
Malaysia has ambitious plans to create a world-class health metropolis based at Universiti
Malaya (UM) to serve as a critical part of the Asean healthcare ecosystem.

Requiring an estimated investment of RM1.1 billion, private sector tenants will fund 90 per cent
of the investment while 10 per cent will come from the Economic Planning Unit’s (EPU)
facilitation fund.

http://www.themalaysianinsider.com/malaysia/article/malaysia-plans-rm1.1b-health-metropolis/

We’re not big fans of “health care cities.” They are primarily government subsidized efforts to
draw global attention to a country’s flagging healthcare sector. (All the while the elites travel
to London, Paris, and New York for medical care.)

But this is different, and Malaysia is different.

To begin: This project is part of the Economic Transformation Programme (ETP), which has
significant requirements for private sector investment. The overall goal of the ETP is to
double the country’s gross national income per head to $15,000 by 2020. That is 10 years
from now.

Second, for several years we have been drawing attention to the current government’s rather
vocal efforts in promoting the development of high skilled knowledge workers.

And Malaysia’s healthcare sector is a major regional player in developing these workers.

And third, this health metropolis and the ETP at large have government back investments
limited to between 8% and 10%.

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Now, let’s add another advantage, which has to do with geopolitical nuances. This advantage
for Malaysia and its health metropolis: the growing importance of the ASEAN group. In
particular, Malaysia is slated to take a leading role within the ASEAN healthcare ecosystem.
This active role in the region’s healthcare growth, combined with the inherent China counter-
balance of the ASEAN pact, further enhances private investment in healthcare in Malaysia.

So, does all this make Malaysia’s plan for a health metropolis too grand? Perhaps.

But, the development of a successful and sustainable health metropolis IS possible. After all,
this is Malaysia…….HK

Back to Table of Contents
MENA - Middle East, North Africa Watch

Qatar - Online Doctor Bookings in Qatar Soon
A website will provide patients a choice of booking an online appointment with a doctor based
on their medical condition, insurance coverage, the doctor’s rating, clinic’s location as well as
other criteria.

Doktor-i.com has plans to expand in Saudi Arabia, Kuwait, Oman, Jordan, Lebanon, and Egypt.
In addition the company plans to launch the site in Arabic shortly.

http://www.thepeninsulaqatar.com/qatar/130435-online-doctor-bookings-in-qatar-soon.html

This is a story that’s perhaps as old as the Internet itself. Ok, maybe not THAT old, but the
concept is one that has been knocked around the world for years.

One of our earlier exposures was a Swiss company known as DrGlobe.com, now a Chinese
language site that is….well, let’s leave it at that.

But a funny thing is happening in the MENA region with online doctor referral and booking
sites. They are gaining traction and we think it is perhaps unique to the region.

Just a few days ago, in dealing with a project in Jordan, we came upon a site that is very
similar to the site mentioned in this article.

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So, the question is, what makes the environment of the MENA region supportive of an
independent, technology driven, online doctor referral programme? Perhaps there are
cultural factors at play? A relatively homogenous society? Trust issues?

For these questions we turned to Dr. Omar Bouhaddau, a member of our expert panel, and
HP Chief Informatician.

From Omar:
“Regarding the ‘doktor-i.com’ piece, it has some common and some novel features.

What is common today, for instance with US insurance companies, is the ‘find a doctor’ feature.
Then typically, the patient would have to link to the doctor’s online software (if the doctor has
one) and book an appointment and more.

What is novel about doctor-i.com is that they offer both features: find a doctor and book an
appointment. This strategy is easier to implement in small geographical areas like Qatar or
Bahrain with fewer number of insurance companies, benefit plans, and provider networks.
However, it may be harder to implement in a larger, eclectic environment.

The Doktor-i.com strategy makes sense from a consumer perspective and for that reason it may
be pointing the way forward. Indeed, from a patient/consumer perspective, as one interacts with
different insurance companies and different doctors, we still have the same user interface to
locate a provider and make an appointment.

And this leads me to ask of the market:

Why would a patient want to learn a different way of doing this as she changes location,
insurance, provider, etc.? And why would every insurance company or every doctor have to re-
create this service?

Why would different software companies continue to create different proprietary flavors, without
significant value ad to the customers or the market?

So, beyond the administrative services now offered by docktori-com, we do know
patients/consumers want to have copies of their medical record and have copies from different
doctors be interoperable (so that my ob/gyn data can be combined with my

cardiologist data, etc.). Then, beyond the personal health record, consumers may ask for decision
support services that can use the data in the personal health record to offer a second opinion on
diagnoses and treatments directly to the patient.

Even better, as a knowledge engineer, I could see the doktori-com software developed in an
“open source community” allowing all the competitive forces to contribute. This would avoid
vendor lock and would reduce the cost of access to providers, especially the ones in small
practices, which are the majority……OB

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Case in point…

Latvia Puts ehealth Services Online and…

Sweden to Go-Live with Online Records

Two relatively small populations turn out variations of a theme……

http://www.ehealtheurope.net/news/6410/latvia_puts_ehealth_services_online
and
http://www.ehealtheurope.net/news/6398/sweden_to_go-live_with_online_records

Saudi Arabia – Fraud at SR1.2b a Year for Health Insurance Firms
The Kingdom's medical insurance companies are losing up to SR1.2 billion a year due to
fraudulent claims and hospitals misusing the identities of insurance card holders.

Medical facilities are also reported as providing unnecessary examinations and services "in many
cases" in order to increase income from medical insurance companies.

http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2010102485997&archiveissuedate=2
4/10/2010

That’s $320,000,000 USD!

Wow. I’m thinking some people learn quickly….health insurance is a new concept in KSA,
but apparently fraud is not.

This is not to single out the Kingdom of Saudi Arabia. Healthcare and insurance fraud is a
universal challenge, yet one rarely discussed in the open. In some instances this type of fraud
can be systemic and most difficult to eliminate.

Here we see in Saudi Arabia a range of insurance fraud issues from identity theft to utilization
fraud. And at approximately 15% of total claims, this type of fraud will be difficult to
eliminate.

I’ll suggest this new industry (private health insurance) has quickly been relegated, by a large
part of the country, to be outside the purview of the moral tenets of the country. This is
potentially a real challenge with long term ramifications………..HK

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KSA - Medics’ Campaign on Facebook Seeks to Prevent Gender Mixing in
Hospitals
The campaign, carrying the title “Pure Hospitals,” called for establishing separate health
facilities for women, in which only women doctors, nurses, technicians and administrators could
work.

“This will preserve the dignity of women patients and provide work opportunities for Saudi
women who are qualified in various fields of medicine,” the campaign page said.

http://arabnews.com/saudiarabia/article167609.ece

Actually, this is an interesting idea, particularly from a Western perspective.

Or should we say, this is an interesting idea from an economic perspective?

I am old enough to remember it was common to have women’s hospitals in the US. But that
was then.

To put it simply: today, the duplication of costs and, more importantly, the restrictive use of
capital – both human and monetary, would add such a burden to the healthcare sector that it
would have little if any long term sustainability.

Is this plausible in a rich economy? Yes. Efficient? No…………HK

UAE - Daman Overhauls Hospital Insurance
Daman, the national health insurance company, announced that its DRG billing system would
reimburse hospitals and clinics the average cost of treating a particular diagnosis –
rather than the actual cost of each patient. There will be a cap on payment for each diagnosed
condition.

“There will be no change felt by either the patient or the doctor other than a dramatic
improvement in health care,” said Dr. Jad Aoun, Daman’s Chief Medical Officer.

http://biomedme.com/health-care/daman-overhauls-hospital-insurance_19050.html

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“Out of the mouths of babes.”

I’ve continually stated USA health insurance companies are abysmally poor at expanding
their business overseas.

Now we see insurance companies oversees can be equally poor at learning from others’
mistakes:
“There will be no change felt by either the patient or the doctor other than a
dramatic improvement in health care,” said Dr. Jad Aoun, Daman’s Chief
Medical Officer.

As predicted (March, 2008), we now see the early rounds of the growing battle between payer
and provider.

And like India, the hospital provider will not win.

Upshot for hospital investors: Stability AND growth.

This will be stability in receivables, stability in costing. Growth will continue as Daman and
other carriers gain market share.

And for boutique investors, or rather investors in vanity hospitals? Little or no
impact………….HK

Central Eastern Europe - Russia Watch

Bulgaria - Parliamentary Group of MRF to Vote Against NHIF Draft Budget
Parliamentary group of Movement for Rights and Freedom (MRF) will vote against the proposal
for the budget of the National Health Insurance Fund (NHIF).

“We could not back a budget that initiates absolutely bad practices – nationalization,
expropriation or collectivizing of insurances which are paid as health insurances by the
Bulgarian citizens, with transfer to the Ministry of Healthcare.”

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http://www.focus-fen.net/index.php?id=n233652
This article was listed in the 1 November, 2010 issue of the PHM Emerging Markets News Feed.

Bulgaria’s National Health Insurance Fund is taking a major beating at the hands of
parliament and ministers.

Doctors to strike. Ministry of Health in money grab. Hospitals in arrears.

What’s a country to do?

Hopefully not copy what they’re doing with the pension programme. The state is ready to pull
social security funds back from the pension managers, even as the IMF states ‘not a good
idea.’

Too often we see a social fund, be they an insurance fund, a pension fund, and so on, as a
source to pay for other budget shortfalls. (Even the super secure “lock box” in the US hasn’t
stopped its plunder.)

The issues in Bulgaria will be repeated in other countries as pressure builds to address their
budget deficit issues. This ultimately has a negative impact on the full development of a
private healthcare sector. For without a full integration of the state’s fund and its citizens,
into the WHOLE of the healthcare sector, the private players remain stuck in a boutique
niche.

Privatization of the national health insurance funds will go a long way to boost development
of the whole healthcare sector.…..HK

Note: The function of insurance is no different if administered by the private sector or state.
In some instances, transparency and good governance are more developed in the private
sector.

Russia Putin to Discuss in Spending 460 Billion Roubles to Modernize Healthcare
Vladimir Putin will chair a meeting in Ivanovo on the programme of modernisation of healthcare
in Russia’s regions.

A government official stated the main target of the regional programmes is to improve the
equipment of the medical facilities.

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“From 2011, we shall start the implementation of the programme to modernise healthcare in the
regions, and the total price of it will make 460 billion roubles,” Putin said earlier. “Over two
coming years we shall spend 320 billion roubles to improve medical facilities in Russia’s all
regions.”

http://www.itar-tass.com/eng/level2.html?NewsID=15662962&PageNum=0

At about $15b USD, now we’re talking some real money.

And the idea of breaking down planning to the regional level is better than any central
decision making in Moscow.

Look to Philips Medical, Siemens, Toshiba and others to absolutely “clean up” in the great
modernization push. (Sorry, GE Medical.)

But, and we knew there was a “but,” there is still little movement towards implementing
market forces to the delivery of healthcare. And we know the reason….politics. Or should we
say the politics of healthcare.

Unleashing market forces into Russia’s healthcare delivery system would have dramatic
implications in the near and long term. The question is: do the politicians have the stomach
for such dramatic changes?

We think the people do……………HK

Russia - Yaroslavl Roadmap
Commentary on the Yaroslavl Roadmap Report, from the Yaroslavl Global Policy Forum 2010

Link to download the report:
http://en.gpf-yaroslavl.ru/sections/state/Report-Yaroslavl-Roadmap-10-15-20-10-Years-to-Implement-15-Steps-to-
Take-20-Pitfalls-to-Avoid

How does one take an economy and business culture built around strong central planning and
then transform it into an entrepreneurial, innovative driver of technology and change?

Through more central planning!

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All kidding aside, the recently published report “Yaroslavl Roadmap 10-15-20” is a great
primer for anyone and any organization exploring the Russian market.

Using examples from other countries, this report plainly illustrates what has happened
elsewhere and what can happen in Russia.

But we particularly like the SWOT analysis, brief as it is. This is the over arching tool for any
sector analysis or any investment in Russia.

For a copy of the report go to:
http://en.gpf-yaroslavl.ru/sections/state/Report-Yaroslavl-Roadmap-10-15-20-10-Years-to-Implement-15-Steps-to-
Take-20-Pitfalls-to-Avoid

Africa Watch

Africa – AMI’s Action Against the Pusan Trust
AMI (African Medical Investments plc) the AIM listed company operating in the African
healthcare sector, has announced the Company is actively taking steps to cancel the 24 million
shares in the Company which are owned in trust for Dr. Solanki, the former CEO of the
Company, his wife and daughter.

The move is due to the criminal proceedings being pursued against Dr. Solanki by the South
African Police Service.

Link to the briefing:
http://www.iii.co.uk/investment/detail?code=cotn:AMEI.L&it=le

Preventable? Some we’ve talked to think yes.

Routine? No.

African Medical Investments (AMI) is gaining a lot of attention since we wrote about them
late last year. (November, 2009)

But when one takes even a cursory look, questions are raised.

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There is a real push-pull going on between the experience and expertise of this company’s
leadership. As written prior, we’re not at all excited about their long term prospects targeting
the trauma segment.

And yet AMI recently announced a new venture: Aero-Medical, an air ambulance service.

The reason for launching an air ambulance service is clear. AMI’s chairman, Mr. Phil
Edmonds, is a mining/oil executive. Extraction industries love air ambulances, and so they
should. We have written positively about emergency services such as Falck, and believe there
is great potential for these types of businesses in frontier countries.

But we have been equally critical about hospitals starting up their own ambulance services in
order to fill their empty beds.

Unfortunately, it appears Mr. Edmonds, short on market analysis, was recently quoted as
stating about the ambulance service “…our Aero-Medical service, which we believe is
desperately needed in Africa."

I am sure one more air ambulance service IS needed in Africa. Just not one owned by a
hospital company. In the air, or on the ground, an ambulance bringing patients to hospitals is
a risky patient supply source for any hospital.

And to bring this air ambulance service to fruition, AMI has maxed it equity line with
Harbinger Capital. Ok, they are finishing another hospital, but…..

Overall, we do think AMI has a strong future. But as we stated last November, we are looking
for a more diverse and sector experienced board. It is still too heavily slated towards
extraction………..HK

Note: The Aero-Medical service being launched will start with a Falcon 20 jet. The carrying
cost, let alone acquisition, (leased or not) will prove to be a significant drain on AMI. Because
these patients will most likely come from AMI affiliated extraction companies, we see AMI’s
receivables facing a potential challenge.

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Miscellaneous Watch
Miscellaneous - GE Boosts Outlook for Health Business
GE Healthcare is raising its projection for profit growth to 10% a year as emerging markets such
as China spend more on medical equipment.

GE Healthcare President John Dineen, spoke to analysts and stated GE Healthcare was
positioned to benefit from trends driving global health-care markets.

http://online.wsj.com/article/SB10001424052748703585004575604851912501736.html

"The fact of the matter is, [every country] has a health-care system, and everybody is trying to
improve their health-care system," Mr. Dineen said. He also stated, China and India are in a
"flat-out buildup."

Back in the August, 2008 issue we commented on Mr. Dineen’s July 17, 2008 appointment as
president:
“We’ll give Mr. Dineen a break, for a while. We look forward to the
development of a coherent growth strategy targeting emerging markets with on
the ground tactical efforts.”

We gave Mr. Dineen time. Time is done.

Let me repeat Mr. Dineen’s statement on 09 November, 2010, a full 17 months after his
appointment as president “…every country has a health-care system…”

This is a coherent growth strategy with on the ground tactical efforts?

This article also reads:
“The company also wants to expand its presence in health-care information
technology and hospital consulting. Hospitals are becoming more efficient and
industrial in their approach, Mr. Dineen said: "We like that. This is our game."

Better late than never to the game?

GE Healthcare has plodded along for the past decade or so as an also-ran. Mr. Dineen isn’t
going to improve the situation because he views market expansion as a necessary evil, pulling
GE out of its comfort zone. In other words, GE Medical and all of GE (Mr. Dineen’s prior
tenure was with…GE Transport.) know they must expand into new markets, study the

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potential to expand into new markets, develop advertising campaigns to expand into new
markets, and when every other player has entered the new market(s) then, and only then, do
they claim “…We like that. This is our game.”

Also at the analyst meeting, GE announced plans to add 900 sales people in China to sell
equipment. Ya think?............HK

Miscellaneous - Health Apps: The Next Big Thing in Smartphone Wave
The report from Berlin-based research2guidance found that both healthcare providers and
consumers are embracing smartphones as a means for improving healthcare.

"With mobile technologies for health, called 'mhealth' or 'mobile health,' we're extending
capabilities to where they don't exist today," says David Aylward, who heads mHealth Alliance,
a partnership founded by the United Nations Foundation, the Rockefeller Foundation and the
Vodafone Foundation.

http://www.ibtimes.com/articles/81695/20101114/smartphone-mhealth-mobile-health-healthcare-mobile-
technology.htm

As we wrote in last month’s issue, we see m-health as one of our Top 10 Plus One Global
Trends in Healthcare. In large part, this is because of the ability to extend a clinician’s reach.

This article illustrates a couple of trial studies, one in Indonesia, a particularly challenging
country for healthcare delivery because of its geographical realities.

Look to innovators working to access “the last billion” to profoundly accelerate this trend.

Additional article:
http://www.mgovworld.org/topstory/using-the-cellphones-to-change-the-world)

The PHM Emerging Markets Healthcare Monitor is also a media sponsor for the upcoming
m-Health Africa Summit in Ghan next month. See “Conference Watch” on page 21…..HK

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Global Trends: Top 10 Plus One

This is the second of many columns that we will place in the PHM Emerging Markets
Healthcare Monitor over the next 10 months or so. This column will briefly illustrate what we
see as significant global trends in the healthcare sector in emerging markets.

There is no order or ranking of the Top 10 Plus One Global Trends in Healthcare:

Top 10 Plus One Global Trend in Healthcare: Explosive growth in emerging market
country’s middle class.

For years we have all known about the changing demographics around the world: namely the
increasing aggregate age of the populations and corresponding increase in societal wealth.
This is incremental growth. And this is not what we are talking about.

Rather, what we see as one of the Top 10 Plus One Global Trends in Healthcare is the sheer
size and pace of the growth of the middle class in emerging markets and elsewhere. This is
exponential growth and it will have a profound impact on healthcare resources. This
pervasive change in how healthcare is delivered will ultimately formalize the two state delivery
system that has long been in place the world over.

Ten years ago China and India had 13% of the world’s middle class; 20 years from now they
will have 44%.

We are seeing the early signs of the coming explosive growth in demand for food, medicines,
medical equipment, and the commodities required to meet this demand.

The MENA region is now the worlds’ largest cereal importer.

In 2014 Brazil, India, and China will spend $2 trillion USD on food, about two times what
they spent in 2009.

The exponential growth in the world’s middle class will demand access to technology at a pace
unknown in the past. We all know the rate of adoption for telephones, television, and the
Internet. Each new development reaches market acceptance at ever a faster rate. And that
rate of adoption continues to accelerate: When introduced, three million iPods were sold in
3.5 years. Yet, with the more recent introduction of the iPhone, three million units were sold
in 80 DAYS.

The impact on healthcare is clear: governments will be pushed to make market changes that
incorporate both open market policies and government backed interventions. But these

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changes will not look at all familiar to the incremental changes taking place today in Russia,
Poland, and elsewhere.

Food riots are almost a norm today. Yet, only in early in 2010 did we first see villagers riot
and burn a hospital in protest to the lack of access to medical care in India.

The supply of skilled healthcare workers will become a national security issue, much like food
commodities. In September of this year Malaysia’s Health Minister urged medical specialists
to return to Malaysia to show their patriotism.

Demand for raw materials used in imaging and other medical equipment will begin to push
against other demand forces, including military and consumer goods. GE Medical, a division
of the multi-national, and defense contractor General Electric, announced in November, 2010
that it now recognizes China as a viable healthcare market.

Governments in emerging markets will drive up their healthcare spend dramatically. And this
will be rapid, both in terms of GDP growth AND as a percentage of GDP. Russia’s stated $15
billion USD infusions pales in comparison to China’s reform efforts. And these spend rates
will repeat in Vietnam, Cambodia, Indonesia, Brazil, and so on. Moving from 3% of GDP to
7%, 8%, even 9% will take an enormous amount of investment. Yet this is an investment the
world’s emerging middle class will demand.

And this exponential growth in the emerging world’s middle class will have a dramatic impact
on other aspects of the world economy, and it directly influences many of our other Top 10
Plus One Global Trends in Healthcare.

Conference Watch
Continued next page…

19 of 21

PHM
International
Conference Watch
M-Health Africa Summit
02-03 December, 2010 Accra, Ghana

http://www.mhealthafricasummit.com

20 of 21

PHM
International

Board of Experts….
Hank Kearney, President of PHM International, Inc., Publisher PHM Emerging Markets Healthcare Monitor.

Omar Bouhaddou, PhD. Senior analyst supporting the EDS (an HP company) accounts with the Department of
Veterans Affairs and the Department of Defense. San Diego, CA.

Venko Filipce, MD. President, PHM Macedonia, LLC, a PHM International licensee. Neurosurgeon in Balkan
region. Skopje, Macedonia.

Krzysztof (Chris) Wasilewski, PHM International Business Development, Poland.

© 2010 PHM International, Inc.

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PHM Emerging Markets Healthcare Monitor analyzes India's proposal for US patient trade

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