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Analysis: What will drive medical inflation in 2017?

The Aon Asia Market Review 2017 report forecasts a net medical inflation rate of 6% in Asia for 2017, marginally down on the 6.3% recorded last year.

Within the region several countries have the unenviable distinction of posting double digit forecast increases for 2017. These include Indonesia, Malaysia, Pakistan, South Korea and Vietnam. Conversely, the key markets of China (3%) and Singapore (8.7%) are forecast to experience significant declines in medical inflation year-on-year.

The now well-established drivers of medical inflation globally include an ageing population, the proliferation of chronic or non-communicable diseases and advanced medical technology. All of these cost-drivers are evident in Asia.

Across the region, two of the chronic diseases most responsible for lost productivity and premature death are hypertension and type two diabetes. The World Health Organisation reports that high blood pressure is the leading risk factor for death, claiming 1.5 million lives each year in southeast Asia. One in three adults in the region is hypertensive.

The Asian Diabetes Prevention Initiative reports that 60% of the global diabetic population lives in Asia, with 113.9 million adults in China affected, representing 11.6% of the adult population. In 1980, the corresponding figure was less than 1%. In India, 65.1 million adults have diabetes. These numbers give China and India the dubious distinction of having the largest number of diabetes sufferers in the world. The high prevalence of these chronic illnesses is largely attributable to modifiable lifestyle behaviours.

Evidence suggests that middle-class consumers in emerging markets increase their spending on healthcare. This is attributable to several convergent factors: adaptation of western lifestyle, demand for improved health outcomes, inadequate public healthcare systems, and proliferation of private healthcare providers inclusive of advanced medical technology.

To illustrate the above point, international consultancy firm McKinsey has forecast that consumer healthcare spending in China will grow at a compound annual growth rate of 11.6% between 2005 and 2025 with India in close proximity of 9% over the same period.

Given the proliferation of chronic illness and the contributory impact of modifiable lifestyle behaviours related to diet, exercise, alcohol, tobacco, and stress, it is encouraging to note that medical plan insurers in several markets are increasing their commitment to wellness-related services. Looking to the future, these services will need to be more targeted, both with regard to addressing the co-morbidities that are driving the claims experience and engaging those demographics most at risk.

You can download the Aon Asia Market Review here.

Posted on: 08/02/2017 UTC+08:00


News

The A$3.5 million (US$2.7 million) share purchase plan from medical diagnostic imaging services provider Capitol Health has been significantly oversubscribed and the company will increase acceptances to A$5.2 million.
Singapore-listed medical supplies group QT Vascular has secured up to S$20 million (US$14.3 million) funding from investment group GEM Global Yield Fund over the next 30 months via a subscription for shares in the company. Initially GEM’s capital commitment is for S$10 million, and QT Vascular can opt for a further S$10 million on the same terms.
Cayman Islands-incorporated G Medical Innovations, which develops mobile health technologies, is to raise A$10 million (US$7.7 million) on the ASX with the ability to accept oversubscriptions for a further A$2 million. Otsana Capital is lead manager.
Hong Kong-listed healthcare company China Wah Yan Healthcare has reported an improved net loss for 2016 of HK$338.6 million (US$43.6 million) on revenues for the year were up 52.6% to HK$194.2 million.
Healthcare furniture and equipment manufacturer LKL International has reported a 48.3% decline in profits for the third quarter of the year to M$1.2 million (US$271,000) on profits that fell 37.7 to M$7.3 million.
New Zealand-based cancer diagnostics company, Pacific Edge (PEB) has received an additional grant of up to NZ$3 million (US$2.1 million) to its existing growth grant from Callaghan Innovation to enable further research and development of its edge cancer diagnostics technology.
Dublin-based and ASX listed IT healthcare company Oneview Healthcare has announced that Lancaster General Health (LGH), a 663-licensed bed, not-for-profit health system, and member of the University of Pennsylvania Health System, will use its patient care system.
As expected Mega Medical Technology, which manufactures and trades in dental prosthetics in China, has reported a loss of HK$20.3 million (US$2.6 million) for 2016 on revenues that rose 88.2% to HK$188.1 million. At the end of January it issued a profit warning.



Analysis

The takeover of Australian private hospital operator Pulse Health by Healthe Care, Australia’s third largest hospital operator has been put on hold for two months. Yesterday Pulse applied to the Supreme Court of New South Wales to delay a scheme meeting planned for Wednesday this week to approve its takeover, until 1 May.
The renounceable non-underwritten 11-for-200 rights issue for SGX-listed private healthcare provider Health Management International (HMI) has received strong interest from investors. It had a 145.7% subscription rate, raising gross proceeds of S$18.5 million (US$13.1 million).
Timothy Low, chief executive officer of Farrer Park Hospital in Singapore, explains how high end medical treatment can find its niche as belts around the region are tightened.
Michael Custer, analyst at Solidiance in Shanghai, explains that healthcare service providers will come out on top from China’s healthcare reforms.
Asia is no longer the benign liability environment that it once was. Michael Griffiths, regional director of healthcare at Aon Singapore, explains why.
Rhenu Bhuller, partner at Frost & Sullivan, examines the evolving implications of the Trump election on the healthcare industry in Asia.
Healthcare Partners has increased its hostile takeover bid for NZX-listed specialist medical investment firm Abano Healthcare Group. It is now offering NZ$10.16 per share (US$7.34) per share, up from NZ$10.00 per share. The increased offer takes into account the dividend that Abano paid last month.
Real estate group OUE has made a S$62.9 million (US$44.4 million) takeover bid for financially troubled International Healthway Corporation (IHC), a Singapore-listed integrated healthcare services and facilities provider.

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