Financial intelligence for Asia's healthcare markets
 
 
Remember me:

HIAS: Change that is unprecedented

“Asia is going through change that is unprecedented,” said Abrar Mir, managing partner, Quadria Capital, delivering the opening keynote speech at this year’s HealthInvestor Asia Summit at the Marina Bay Sands in Singapore.

The global centre of gravity is shifting to the east, he said. By 2030 the healthcare spend in Asia will be US$4.3 trillion. “It is larger than the US and Europe combined – that is how big the opportunities are,” he said. “And many world leading companies are pivoting the future of their companies to Asia.”

He spoke about the demographic and economic underlying trends. First, the massive boost in the number of new babies born every year. Second, the rapidity of economic change. “In the generation of or parents in the 1950s, not one economy from Asia was in top five in the world. By 2030 four of the five largest economies will be Asian,” he added pointing out that even Indonesia will be larger than UK France and Germany.

The challenge of success and growing urbanisation is that the region has 65% to 70% of the world disease burden. “In Asia this used to be treatable diseases. But the nature of that burden is now chronic. It changes the nature of the burden on healthcare,” he said. Asians are now living 30 years longer than grandparents.

So what are the challenges? First and foremost Mir pointed to infrastructure. “The World Health Organisation predicts that as a minimum there should be four hospitals for 1,000 people. In fact there are 0.4 per 1,000,” he said. Affordable care is also out of reach of most. “You need to remember that 2.6 billion people in Asia live below US$2 per day. Many Asian live one accident away from financial catastrophe”

And third, he points to the fact that the vast majority of the population does not realise that there is a disease burden. “If people do not realise that they have diabetes or cardiovascular diseases, the disease burden increases and accessing that opportunity becomes harder.”

There is also a problem in the market itself. Mir is blunt when he points out that valuations in Asia are crazy. He speaks of the fact that they are unsustainable and calls out the Goldilocks syndrome. Mir mentions a healthcare company in Indonesia that listed at the same time as Facebook. “It had a valuation higher than Facebook,” he said. And the difficult of currency risk is unavoidable (“It is impossible to put into a hedging mechanism”) but for all of the negatives, underlying profitability is irreversible and remains “the wind beneath our wings”.

For companies to be successful, they need to make sure that they have the right business models. Of course there are barriers – not enough doctors, affordability and awareness – but there is opportunity. Some of the best hospital groups in the US have 12% EBITDA margins while in Europe it is typically 15%. “In Asia, despite the fact that clinics and hospitals are treating poorer and cash patients, it is 20% and can be as high as 40-50%,” Mir said.

What underlies Mir’s philosophy is that even though his caveats might sound cautious, he believes that the private sector will lead the way. “Ultimately the entire game is about bigger and better,” he said emphasising that Asia continues to represent a once in a lifetime opportunity. “In Asia I believe anything is possible, but I believe that nothing is ever easy,” he concluded.

Posted on: 18/05/2018 UTC+08:00


News

Chularat Hospital, which operates 13 clinics and hospitals in Thailand, intends to build the Suvarnabhumi Cancer and Radiologist Center Hospital, which will provide specialised medical services to general patients and counterparties in Samutprakan and nearby provinces.
Thomson Medical Group (TMG), Singapore’s second largest healthcare group, has reported EBITDA of S$23.4 million (US$17.1 million) on the back of total revenue for the first half of the year at S$105.5 million.
Healthcare services group Clearbridge Health has reported revenue of S$1.46 million (US$1.1 million) for the three months ended 30 June 2018. The topline growth is nearly four times the S$0.38 million achieved by the group in Q1 and mainly attributed to recent acquisitions including a medical centre in the Philippines in January and in Singapore and Indonesia in April.
Australian hearing implant manufacturer Cochlear delivered net profit of A$245.8 million, an increase of 10% on FY17, which was within the guidance range of A$240-250 million. Chief executive and president Dig Howitt said, “Cochlear continues to deliver on its objective of delivering consistent revenue and earnings growth over time.
Shareholders of Fortis Healthcare, the country’s second largest private hospital chain, have approved the US$584.1 million acquisition plan by IHH Healthcare, Asia’s largest healthcare company – 99.7% voted in favour of the deal.
Retirement village operator Summerset Group Holdings has announced an underlying profit of NZ$45.2 million (US$29.7 million), an increase of 27%, in line with the profit guidance provided in early July.
Leading fully integrated plasma-based biopharmaceutical company China Biologic Products Holdings has appointed Bing Li as chief executive officer. By assuming the CEO position, Li has moved from an independent director to an executive director of the board. Zhijun Tong, the former acting CEO, will continue to serve as an executive director of the board and president of the company.
Beijing-based paediatric healthcare provider New Century Healthcare has taken a 10.1% stake in Chiron Healthcare. Financial terms have not been disclosed.



Analysis

First you must find a clinic space from which to practice. The good news is that space is available at most hospitals. The bad news is that a 1,200 square-foot clinic space at Mount Elizabeth Hospital currently retails for around S$10 million, or US$7.34 million to secure a space less than half the size of a tennis court. By the time you add fittings, equipment and staff, your relationship with your bank manager will likely be under severe strain.
China’s hospital landscape is rapidly changing as operators and owners respond to shifting policy incentives, an aging population, the opportunity to serve Tier 2 and 3 cities, and shifts in consumer preferences.
Today, more and more people are suffering from serious, incurable, and/or rare illnesses. However, access to information on such conditions has been quite limited, to hospitals or internet surfing. Even though there were communities and organizations serving people with certain illnesses, information was not widely available, due to the general nature of the illnesses.
CR Phoenix Healthcare, China’s largest private hospital group, recently announced plans to restructure Beijing Jingmei Group General Hospital, a flagship hospital managed by CR Phoenix under its investment-operation-transfer (IOT) model.
Severe abuses continue in China's organ transplant system – including the sourcing of organs from prisoners of conscience on a large scale – despite Chinese government assertions of reform, finds a new study by the China Organ Harvest Research Center.
Asia Pacific's transition from a volume- to value-based care model has been highly challenging due to the need for large-scale regulatory changes and lack of a funding. Rising healthcare consumerism, digital health adoption, and the growing influence of medical tourism are setting a foundation for population health management, one form of value-based care that shifts the industry focus from episodic, individualised healthcare approaches to collective action against the cost and burden of disease in a society.
Leaders from New Zealand’s health technology industry are looking to Malaysia as a strategic investment opportunity to support the country’s rapidly growing healthcare market.
Ping An Healthcare and Technology, formerly known as Good Doctor, has signed contracts with nearly 200 large corporations, including Vanke, Greentown, Bank of China, China Telecom, China National Nuclear Power, Evergrande Group and provides services to nearly 1.5 million employees, covering 27 provinces, autonomous regions and municipalities.
my images

Podcasts

HealthInvestor Asia twitter feed