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Analysis: Asia’s healthcare goldmine

Sumit Sharma, head of health & life sciences, Asia Pacific, at Oliver Wyman and Matt Zafra, engagement manager, health & life sciences, Oliver Wyman, look at the four themes that are going to dominate healthcare this year.

There is an ongoing shake-up in healthcare in the US, as incumbents react to an ever-shifting target of healthcare reform, while also reaching across to link up even greater parts of the value chain in new and interesting ways. In Asia, we have the opportunity to watch and learn as these big shifts and experiments fail, and others succeed.

At the same time, we are sitting on a latent goldmine. Asia has more than half of the world’s population and a wide range of diverse healthcare systems ripe for experimentation. The region has homegrown players that are, we think, more integrated and more nimble at the start than the best from the West (Alibaba versus Amazon), and rather than wait and see, there is an even better opportunity to test and learn.

Here are some of our healthcare predictions for 2018:

Progressing Universal Healthcare – From Fairy Tale to Reality

Much of the global spotlight on healthcare reform last year focused on Obamacare: repeal, replace, or remain? In Asia, however, universal healthcare is quietly but steadily moving ahead. Earlier this decade, Indonesia’s launch of its national healthcare programme, Jaminan Kesehatan Nasional (JKN), unfolded like a drama full of promises, rhetoric, and uncertainty about the future. While there have been implementation challenges, JKN has come a long way since then and seems to be more steady. Similarly, India recently announced an ambitious healthcare plan to cover half a billion people with low cost insurance. Universal coverage in large, emerging markets fuels overall industry growth and leads both to increased healthcare consumption and private sector participation. But it also impacts individual bottom-lines – be it hospitals, pharma, or medical devices – that need to stay agile and find out how to chase the healthcare dollar under evolving coverage frameworks. We are now seeing new care models, such as managed care, once reviled but now rewarded, take root. Even as US reform struggles, this year we expect to see more traction – albeit cautious and gradual – toward right setting care models, and funding and policies of universal coverage across key markets including Indonesia, India, the Philippines, and China.

New Partnerships – Connecting the Dots

Healthcare systems in Asia are disjointed. They are complicated by paper-based systems, privacy laws, and an ecosystem of small, fragmented players. Private partnerships are beginning to plug in the gaps of access to information and influence on the patient. For example, payer + pharma are working together to develop disease management programmes, and providers + healthtech provide remote monitoring tools for chronic patients. These partnerships are also working to shift the balance of power in value capture. Collaborations in online medical commerce in China (for example, idsMED in Hong Kong and WeDoctor – backed by Fung Group in Hong Kong and Tencent) will shake up hospital procurement and the traditional pharma distribution model in what is arguably the world’s most attractive healthcare market. And, on the financing side of the aisle – is there an Asian version of the Amazon-Berkshire-JPMorgan tie-up for employee healthcare on the horizon?

Return of the M&A Hotspots - Bigger and Better 

Private healthcare in Asia was poised to take-off this decade, but last year witnessed a vacuum of deals in traditional large healthcare markets, namely Japan, China, and India. In 2018, we expect a return of investor appetite for three reasons. First, cash-rich conglomerates are increasingly eyeing healthcare as their next venture and seeking opportunities to diversify and leverage their portfolio companies. Second, larger healthcare groups across Asia are hungry for the next phase of growth which will be fuelled by domestic and cross-border acquisitions. Last but not least, as a generation of founder-owners gets ready to cede control, and a new generation of healthtech entrepreneurs emerges, private equity is turning its gaze back to healthcare. The deal hotspots are going to get hotter, not only in major markets, but also in emerging markets like Indonesia, Vietnam and Philippines where unmet needs and economic growth converge, encouraging more investment.

(Finally) Digital Acceleration Across the Ecosystem 

Digital healthcare has had fewer unicorns and more high-profile failures than other disrupted industries. Nevertheless, Asia has more than its fair share of digital players, with US$2.6 billion in investment last year alone. These market shapers are working steadily to tackle Asia’s unmet needs in access, affordability and adherence. And they are generating a lot of noise in the process. The big bets for 2018, however, will be the players that can fix the foundations – enabling data integration, generating data insights, and linking stakeholders together in meaningful ways – and thus rising above the noise of consumer-friendly apps that are soon becoming commoditised, and with limited real commercial value. Governments going digital (Singapore’s National Electronic Health Record, Philippines PhilHealth e-claims and others) will set the stage for a whole host of other solutions (application programme interfaces, data warehouses, forests, and lakes) that enable process efficiencies and information capture across the ecosystem.

This piece originally appeared in Oliver Wyman Health.

Posted on: 07/03/2018 UTC+08:00


News

China Isotope & Radiation, which manufactures diagnostic and therapeutic radiopharmaceuticals products, has launched its HK$1.9 billion (US$247 million) IPO on the Hong Kong Stock Exchange.
Malaysian multinational PRG Holdings has extended the deadline for its M$18.3 million (US$4.6 million) acquisition of O&G focused private medical services provider Roopi Medical Centre.
Hong Kong-listed WuXi Biologics, a subsidiary of WuXi PharmaTech, has started the construction of an integrated biologics conjugate solution centre in Wuxi city.
RHT Health Trust, the first business trust listed on the Singapore stock exchange with a portfolio comprising healthcare assets in India, has confirmed that it has received all outstanding amounts due from India’s Fortis Healthcare for the past financial year.
Shares in Ramsay Health Care, Australia’s largest private hospital operator, slumped today after the group cut earnings guidance. It flagged up “onerous lease provisions” and asset writedowns on a number of its hospitals in the UK.
Following Monday’s 5.9 magnitude earthquake which struck Osaka, Parkway Life REIT, which is owned by IHH Healthcare, has confirmed that its Japan asset managers, operators and residents at its Japan healthcare facilities are accounted for with no reported injuries.
Singapore-listed property developer Perennial Real Estate has incorporated a new subsidiary in China. Perennial (Shanghai) Health Management will be involved in the management of its healthcare business in Shanghai.
Yestar Aesthetic Medical Group, the second largest private aesthetic medical institution group in China, is planning an IPO on Hong Kong’s mainboard. CICC is sole sponsor to the deal.



Analysis

Aon’s inaugural Asia Healthcare Trends Report 2017/18 shows that although Hong Kong has a lower medical inflation rate than the average in APAC, it is the highest in Greater China.
Out of date and unsecure fax machines are still being used to share patient information between healthcare providers in Australia. Not only do fax machines cause frustration for healthcare providers trying to communicate with each other, they can also cause patient harm.
Health and well-being programmes are fragmented and do not meet the needs of stressed Asia workforces, finds Willis Towers Watson. By and large, employers in Asia still miss the mark when it comes to their health and well-being benefits, with many employees feeling that their needs are not met, according to research from the global advisory, broking and solutions company.
According to a survey of biopharma companies by L.E.K. Consulting, the majority of firms from Western Europe or the US are interested in China, specifically those at Phase 2 or later development.
Sara Jost, global healthcare industry lead at BlackBerry, explains that putting the systems and procedures in place to deliver a healthy and secure digital healthcare system will protect patient health information and support medical innovation.
Joseph Soon, global digital director at Bupa, explains why industry players must stay agile in the market and act fast to take every opportunity the digital age has to offer.
The Asia-Pacific (APAC) healthcare industry is undergoing rapid transformation with a dramatic shift in consumer behaviour and expectations, opening up growth opportunities across diagnostics, regenerative medicine, medical tourism and digital health.
Tan Chorh Chuan, executive director at the Office for Healthcare Transformation and chief health scientist at the Ministry of Health in Singapore, explains why population health improvement has to become a crucial area of focus.
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