Asia Healthcare Challenges & Opportunities

CONFIDENTIAL

Coming Challenges
for Healthcare in Asia

Potential Opportunities
2011 & Beyond

By: KC Yoon
Email: kcyoon07@gmail.com May 2011
1
Mobile: 18675573803; Skype:kcyoon07
Partner, Global China Capital

Framework of Report

Provide Overview & Key Logic of Report Leading to Options

Section One-
Challenges Facing Global Healthcare

Section Two-
Future Scenarios for Asia’s Healthcare Industry

Section Three-
Assessing Partnership Opportunities

2

Detailed Agenda of Report

Provides background to key forces challenging global healthcare

Section One-

Global Healthcare Faces Pressure from Triple Convergence
Trend 1 : Ageing World Populace
Trend 2: Rising Global Healthcare Costs
Trend 3: Unequal Distribution of Healthcare Capabilities
Multiple Impact on Global Healthcare
Impact 1: Nature of Services
Impact 2: Global Healthcare Industry
Impact 3: Healthcare Industry Sectors
Healthcare Spending: Large Differences, Unequal Results
Case Study: US Healthcare System
Rise of Healthcare Consumers

4

Global Healthcare Faces Increased Pressure from the Triple
Convergence of Major Trends ..

Convergence Creates • Opportunities for Global Public & Private
Undue Challenges on Sectors Drive to Create Innovative Solutions
Global Healthcare to Bring the Global Healthcare System back to
System Equilibrium (?)

Triple Convergence

Trend One: Trend Two:
Ageing World Global Rising Global
Populace Health- Healthcare Costs
care
2050

Trend Three:
Unequal Distribution
of Healthcare
Capabilities

Trend 1: Ageing World Populace Results in Significant Shifts in
Global Demographic Profiles…

Globally number of • Old-age dependency ratios will increase
people aged 60 years significantly as the number of elderly
or older will reach 2 increases and the working-age populations
billion by 2050 decline

Shifts in Population Pyramids Old-age Dependency Ratios in Global Regions

Developed Nations

Less-developed Nations

Source: UN 2007

• Europe will witness the highest old-age
dependency ratios at 48% vs Asia with a
relatively younger population at 27% (i.e. ratio
of aged population vs working-age population)
Source: UN 2007

Trend 2: Rising Global Healthcare Costs Expected to Continue in
Coming Years Albeit at Lower Growth rate

2010- Medical • Two most significant factors driving
Costs in 95% of Healthcare costs increase are new medical
Countries technologies and the overuse of care.
Exceeded Inflation

Upwards Costs Trend Expected Major Factors Driving Medical Costs

• Expectations of medical cost trend over • Significant factors driving medical costs
the next 5 years per person

Source: Towers Watson Global Medical Trends Survey of Health
Insurers 2010
Source: Towers Watson Global Medical Trends Survey of Health
Insurers 2010

Trend 3: Unequal Distribution of Healthcare Capabilities from
Developed to Emerging Nations..

Gaps Emerging in • Developed nations confronted with demands
Healthcare on public pension & healthcare; emerging
Capabilities Across nations faces under-developed health
the Globe insurance & shortage of trained healthworkers

Access to Medications & Technology Structural Shortfall -Trained Health Workers
• Structural mismatch- emerging nations with
young populace but lacked trained talent vs
Advanced drugs treatment beyond developed nations faced w limited workforce
reach of poorer healthcare systems-
substitute generics with poorer
efficacy. However major drug patents
expiring 2015

Expensive modern diagnostic systems
unavailable to most nations

Source: WEF Report 2010



Section One-


9

Multiple Impact Across Global Healthcare Value Chain – from
Public Health Systems to Healthcare Industry

Impacting National • Driving increased National Healthcare
Systems to Private spending and changes in healthcare service
Healthcare demands & delivery
Providers

•
Public • - Increased GDP allocation to national healthcare
Healthcare • - Drive for system integration
Systems •

Convergence
of Global • - Changes in demand for healthcare services
TripleTrends Healthcare • - Shift in provision of healthcare services
Industry

• - Geographic shift in location of healthcare players
Healthcare
• - Consolidation/growth in different healthcare
Industry sectors
Sectors

Impact 1: Public Healthcare Systems Allocated Increased Budget
and are Focused on Integration

Increased share • Developed economies will see 30%-50%
Of GDP Allocation to increase in Healthcare’s share of GDP by
Healthcare Across 2050; Emerging countries similarly spending
Nations significant sums to build national systems

Increased Public Spending on Healthcare Integration of Healthcare Delivery

• Projected Increase in Public Spending on • Priority more for developed nations rather
Healthcare in Developed Nations in 2050 than emerging healthcare systems

Source: World Economic Forum -Pensions & Healthcare 2030
Scenario Report
Source: KPMG Report 2010

Impact 2A: Global Healthcare Industry Faces Changes in Nature
of Services Required

Burden of • Major Chronic diseases that now accounts for
Chronic Diseases 60% of all deaths & 43% of global disease
due to Aged burden will rise to 73% and 60% respectively
Populace by 2020

Top 3 Upcoming Chronic Diseases Change in Kind of Healthcare Required

• Top 3 conditions causing highest
prevalence of claims over next 5 years Treatment of upcoming Chronic diseases
i.e. cancer, cardio is expensive & requires
new medical resources, higher cost
medication, etc

Shift from acute care to a “continuum of
care” as mortality rates improves and
patients suffering from chronic diseases
require extensive hospital care

Source: Towers Watson Global Medical Trends Survey of
Healthcare Insurers 2010

Impact 2B: Global Healthcare Industry Faces Shifts in the
Provision of Services

Advances in • Advancements in wireless, device technology
Technology & allows patients to enjoy in-home monitoring
Devices Shifts supported by a call service center or online
Service Provision communications platform

mHealth Potentially Disruptive In-Home Monitoring/ Online Healthcare

• With the growth of smartphones and
availability of connected devices , an era of
eHealth or mHealth is emerging – “provision of
health services and information vis mobile
technologies”

• In-home monitoring provides
best of both worlds: comfort
of staying home with security
of daily monitoring and
proper medical attention.
Allows preventive care &
reduces emergencies.

Impact 3: Global Healthcare Industry Focuses on Growth in Asia

Increasing Demand • China expected to become 2nd largest Pharma
from Asia Driving market by 2015 with market valued at US$103
Focus of Global billion; also significant increase in new drug
Healthcare MNCs R&D

Healthcare Reforms & Investments Migration of Global R&D

• RMB 850 billion investment to improve • China’s CRO Market forecast to grow
healthcare delivery infrastructure- drives significantly
demand for medical devices & systems

Source: MOH Source: Goldman Sachs; Healthcare CROs



Section One-


15

Healthcare Spending – Large Differences but Unequal Results

Higher Spending on • Exposes inefficiencies in respective nation’s
Healthcare does not healthcare spending and policies; additional
necessarily prolong spend has opportunity to be better allocated
lives for improved services

Healthcare Spend vs Life Expectancy

• Based on 2007 OECD Health spend Data: Comparison of per capita
healthcare

Life Expectancy 81 81 76 80 79 73 78 80 80 78
In Years

Case Study: US Healthcare Costs Breakdown Shows Excessive
Spend on Out-patient care, Admin and Medical Goods..

US per capita • Reduction of US Healthcare costs…
Healthcare cost
2X Compared to
Developed Nations

Analysis of US and Selective Developed Nations 2007 Healthcare Cost Breakdown

Breakdown into 3 Major Healthcare Cost Components

Source: OECD and CIA factbook



Section One-


18

Rise of Healthcare Consumers Open New Opportunities and Non-
Conventional Approaches to Meeting Healthcare Needs..

Consumers • Consumers in Developed Nations Seeking
Increasing Desire to Information, Comparing Services &
Manage Healthcare Increasingly Willing to Travel to seek Lower-
Needs cost or Higher quality Healthcare

Consumer Objectives New Services

Consumers want access to info from • Online medical
Access to hospitals, doctors and health plans; database
Information for to better understand providers and • Online scheduling
Decision pricing for healthcare service • Doctor-patient
X-change platform

• Online healthcare
Future Consumers use tools that can
Tools & programs
“Savvy” provide personalized
Services to • Nurse call lines
Healthcare recommendations for improving • Online claims
Manage
Consumers health & disease management management

Embrace Consumers interested in home or • Home Monitoring
Non- self-monitoring devices; alternative Devices
traditional. treatment regimes i.e. TCM; travel to • Homecare network
seek better healthcare • Medical Tourism
Options

Framework of Report

Provide Overview & Key Logic of Report Leading to Options

Section One-

Section Two-

Section Three-

20


Layout scenarios for healthcare in Asia due to global changes

Section Two-

Healthcare in Asia at Unique Cross-road
Ideal Conditions to Build World-class Healthcare Industry
Condition (1): Young Populace
Condition (2): Strong Private-Public Collaboration
Condition (3): Increasing Healthcare Demand
Asia’s Role in a Globally Integrated Healthcare System
Scenario (1): R & D
Scenario (2): Healthcare Service Delivery
Asia- the World’s Largest Medical Tourism Destination
Drivers of Outbound Medical Tourism
Fundamental Factors Favoring Growth

22

Healthcare in Asia at Unique Crossroads – Leverage Global to be
World-class

Opportunity for • Healthcare in Asia to grow from low-base and
Asia to Leverage on can leverage on Global Healthcare
Global Healthcare partnerships to build world-class healthcare
System services

Characteristics of Healthcare in Asia

Young Populace & Poor Healthcare Insurance &
Low Old-age Dependency Provider Coverage

Low-tech Medical Equipment
Relatively Low Demand for
& Generic Drugs
Expensive Healthcare

Global Healthcare
Partnership
Opportunity
Increasingly Wealthy Asian
Populace Demand Better Healthcare



Section Two-

Scenario (1): R & D

24

Ideal Conditions to Build World-class Service (1) – Young
Populace Provides Pool for Healthcare Workforce

Young Populace • As developed nations face a shrinking and
Provides Talent Pool increasingly costly workforce, the young
For Healthcare populace in Asia offers an alternative source
Workforce of trained healthcare workforce

Transforming Asia’s Talent Pool
Partnerships with Nursing
Institutes
• Pool for Medical Professionals- Doctors
+ Nurses
(Philippines & Indonesia already provide Global Medical Facilities
pool of trained nurses; Singapore, Malaysia Collaborate w Local Institutes
& HK have strong medical talent pool)

• Pool for Medical Equipment Operators; Global Healthcare MNCs invest
medical researchers in training
• Pool for Outsourced Medical Admin &
Services- Call-centers; database admin Global Pharma’s outsourced
(India & Philippines already building R&D
significant pool)

Ideal Conditions to Build World-class Service (2) – Strong Public-
Private Collaboration

Govts in SE Asia • Following Govt investments; Private sector
Investing heavily in players have also committed significant capital
Healthcare expenditure to the overall healthcare service
Infrastructure infrastructure

Private Sector Healthcare Investment
SE Asian Governments records the highest private Key driver is impending
healthcare expenditure of any region at 63% of liberalisation of services sector by
total health expenditure 2015 under ASEAN agreement

Private hospitals across region
diversifying service portfolio to
offer broader healthcare services

Presence of several large
healthcare groups- Parkway (SG),
Bangkok Dusit (TH), Sunway
Medical (MY)
Source: WHO 2010

Ideal Conditions to Build World-class Service (3) – Strong
Healthcare Demand

Strong Demand • Increasingly discerning domestic consumers
Driving and need to cater to global consumers due to
Improvements to medical tourism driving providers to innovate
Service in order to position as world-class providers

Medical Tourism by Country 2009
Five Countries Most Visited for Medical Treatments Medical Industry contributes over
US$80billion to Singapore GDP and
is a significant service sector

Thailand’s medical tourism
generates US$940million and
continues to grow strongly

Other SE Asian countries Malaysia
and Vietnam are targeting to grow
this sector
Source: Deloitte, Josef Woodman Oct 2009



Section Two-

Scenario (1): R & D

28

Asia’s Role in a Globally Integrated Healthcare System – R&D
2050

Asia- Hub for • R&D includes drug development as well as
R&D Outsourcing + production of medical devices & IT systems;
Medical Device with majority of activities focused in Asia
Production where manpower/production costs are low

US EU CHINA

Healthcare IT
Identify Med. Device
software
Med. Device Healthcare IT Drug Tgts R&D
R&D software
Identify
Drug Tgts Drug Med. Device
Identify Discovery Production
Drug Tgts INDIA
PreClin+
Drug PreClin+ Clinical
Discovery Clinical

Med. Device Healthcare IT
R&D software

Healthcare IT
software

Asia’s Role in a Globally Integrated Healthcare System – Service
Delivery 2050

Asia – Hub for • Network covers Admin, Database Mgt,
Selective Surgery+ Service Centers Comms with Medical experts,
Aged Hospice Care+ Outpatient and in-patient care; Asia focus on
Service Support In-patient care & aged Hospice services

US EU ASIA

Comms Plt w Online
Medical Healthcare
Comms Plt w
Experts Program
Medical In-Patient
Experts Care
(Medical *
Tourism)
INDIA
Online
Aged Hospice
Healthcare
Service
Program Online Medical
(Retirement
Emergency Database
Homes)
Service
Home-based Centers
Health
Monitoring Call Center
Support
*
In-Patient/ Out-
Patient care



Section Two-

Scenario (1): R & D

31

Asia- World’s Largest Medical Tourism Destination

Potential Global • Asia well-positioned to continue on strong
Medical Tourism growth projections in the market- as even
Market of US$100 more Asian-based destinations enter the
billion in 2010 market i.e. China, Vietnam, Taiwan

Partnerships with
Leading US-based
Medical Institutions

*

Profiles of Leading
Asian Healthcare
Providers

Medical Tourism in Asia- Drivers of Outbound Medical Tourism

Consumers • Industry initially driven by high cost of
Travel to Seek Lower healthcare in the US and Outbound US
Cost + Quality & Safe Tourists; Demand from regional countries
Healthcare increasingly important

Comparative Costs for Selected Surgeries Outbound Travellers to Asia for Medical

Costs in Asia are significantly lower than the US
UK
Inefficient domestic healthcare service and
introduction of medical tourism insurance
driving growth. Preferred destination: India

US
Seeking lower cost healthcare, over 750K US
residents travel annually for medical tourism.
Preferred destination: Thailand

Within Asia
Regional travellers taking advantage of
cheap flights and higher quality service-
Source: American Medical Association Indonesians, Chinese, Japanese

Medical Tourism in Asia- Fundamental Factors Favors Growth

Asia has Strong • Strong mix of medical destinations and
Foundations to development of overall tourism infrastructure
Support Medical to support medical tourism growth; offers
Tourism Growth combination of medical + holiday

Fundamental Factors Strength of Leading Destinations

Thailand
High Quality of Service
Pioneer & leader industry leader with
Associated with Asian Culture established reputation. In 2009; 1.4 M
medical tourists generating US$2 billion

Attractive Holiday environment- Singapore
for Post-surgery Recovery Over 600K medical tourists generating
US$1.4billion with reputation for high quality
and advanced care
Availability of Alternative
Medicine/Treatment India & Malaysia
Emerging with over 450K & 300K tourists
respectively. Attractive to regional
consumers

Framework of Report

Describe framework and criteria in assessing opportunities

Section One-

Section Two-

Section Three-

35



Section Three-

Framework and Criteria for Assessing Partnership Opportunity
Criterion for Screening Healthcare Cluster
Ranking of Potential Healthcare Cluster Opportunity
Recommendations for Shortlisted

37

Framework and Criteria for Assessing Target Sites for
Partnership Opportunity

Opportunities • Screened to ensure Opportunities meet
will Undergo Two Healthcare Cluster as well as Eco-city
Levels of Screenings Development Criteria before Financial
Modeling for Investment Return

Potential HC+ Potential
Shortlist
Healthcare Eco
Cluster HC Sites Ready Opportunities
Sites
Sites

Screened for Screened for Screened for
Healthcare Eco-City Investment
Cluster Criteria Criteria Return
* In this paper screening for
this criterion list shall only
be done at the Country level.

Criterion for Screening Healthcare Cluster Capabilities for Target
Site

Healthcare Cluster • Healthcare Services as the Core Cluster must
as the Core drive sufficient economic activity to support &
Economic Theme sustain the development of an integrated
urban city

Healthcare Cluster Components

Criterion for Screening Healthcare Cluster Capabilities for Target
Site

Criteria Assessed Capabilities
Govt Public HC Funding L M H HH HH- World-class
Supporting Policies L M H HH
HC Insurance Coverage L M H HH
External Assistance (NGO) L M H HH
Regulatory L M H HH
HC Industry Market Value L M H HH
Growth L M H HH
HC Technology Platform L M H HH
HC Delivery Infra L M H HH
HC Comp Competitiveness L M H HH
HC Supply Chain L M H HH
HC R&D L M H HH
HC Workforce L M H HH
Global Interaction L M H HH
HC Private HC Funding L M H HH
Investors
Foreign Investments L M H HH
HC Per capita spend L M H HH
Consumers
Demand for HC L M H HH
Supporting Education & Training L M H HH
HC Financing L M H HH



Section Three-

Summary of Market Opportunity for Healthcare Sectors

41

Summary of Assessment of Healthcare Sectors

Healthcare Govt HC HC HC HC Support
Sectors Industry Competitive Consumer Investor Svcs

M HH HH H H H

Vietnam M M M M H H

Malaysia H H HH M H H

Thailand H HH HH H H H

India M M H M H H

Ranking of Potential Healthcare Opportunities-
(1) China (2) Thailand (3) Malaysia (4) Vietnam

Country Govt HC HC HC HC Support
Industry Competitive Consumer Investor Svcs

China M HH HH H H H

Vietnam M M M M H H

Malaysia H H HH M H H

Thailand H HH HH H H H

India M M H M H H



Section Three-


44

Recommended Shortlist for Consideration

Project Must Also • Re-matching Market Opportunity with
Consider What Potential Value-add results in a Adjusted
Value-add Partner Ranked Recommended List
Brings

Country Market Final Ranking
Opportunity with input
Ranked
China 1 1

Vietnam 4 2

Malaysia 3 3

Thailand 2 4

China Offers Opportunity to Create a World-class Health
Services Cluster and Aged Care Community

Leverage on • Partner can bring Global biotech+healthcare
China’s Competitive management , IT strengths to play to create
Strengths to Create China’s most advanced health delivery
World-class Cluster infrastructure & care services

Create China’s first World-class
Health Delivery Service Hub Site Preferred Location to Tap on Access to
Global Medical Tourism- Zhuhai/Hainan

Access to Univ. or Cluster Must Collaborate w
Global Medical Institutions to create R&D Hub

Build advanced Hospital care facilities
leveraging e-health technologies – target
treatment of chronic diseases
Zhuhai
Create environment for high-end aged care
Hainan homes and wellness care facilities

Asia Healthcare Challenges & Opportunities

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