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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

StarMed@Farrer Square, the subsidiary of SGX-listed private healthcare provider Health Management International, has agreed to buy additional units in Farrer Square for S$36.7 million (US$26.7 million).
Orthopaedic specialists Asian Healthcare Specialists (AHS) has signed an investment agreement with Vanda 1 Investments, which is managed and controlled by Temasek Holdings unit Heliconia Capital Management.
Medical technology company Medmain has announced the alpha testing of its ground-breaking, pathology diagnostic software: PidPort. This was originally developed in Japan to enable precise and incredibly fast diagnosis of human body pathologies of all types, with most diagnoses completed in less than one minute. Medmain recently began testing the software in hospital sites in Japan, Thailand and Estonia.
Medical diagnostic imaging services provider Capitol Health has acquired a further two clinics in South West WA, which trade under the name West Coast Radiology and service the high-growth area surrounding Eaton (close to Bunbury) and Busselton.
China's Ping An Good Doctor (PAGD) announced its cooperation with more than 100 First-Class Hospitals at Grade III in China, including the 303th Hospital of Chinese People's Liberation Army, Qingdao Eye Hospital, the First Affiliated Hospital of Jinan University and the Third Affiliated Hospital of Southern Medical University, to build comprehensive "smart hospitals". At present, Ping An Good Doctor covers more than 1 million outpatients per day, effectively reducing the burden on hospitals, doctors, patients and the government.
Global alternative asset manager The Carlyle Group together with Meinian Onehealth Healthcare Holdings has invested in and become the single largest shareholder of Adicon, one of the largest independent clinical laboratory companies in China.
RepliCel Life Sciences, a company developing next-generation technologies in aesthetics and orthopaedics, has raised C$5.1 million (US$3.8 million) from YOFOTO (China) Health Industry.
China's Ping An Good Doctor (PAGD) has announced a strategic partnership with Zhongxin Pharmaceuticals. The two parties will build an online cardiovascular disease management centre in China.



Analysis

Abrar Mir is that rare thing in the healthcare sector: a voice of reason. It notable that when he speaks at conferences, the chatter outside the auditorium diminishes and seats suddenly become hard to find. Part of this is thanks to his position as managing partner of Singapore-based private equity fund Quadria Healthcare, which he co-founded in 2012. But as much of it is due to his quiet authority and passion, as it is to the US$1.5 billion he has under management across the Asia Pacific region.
SOHO Global Health was founded in 1946 in Jakarta by Tan Tjhoen Lim as an injectables-focused pharmaceutical company. Today it is one of the largest pharmaceutical manufacturing and distribution businesses in Indonesia with a network that covers more than 80% of the hospitals and 90% of the pharmacies in the country.
Anupa Naik speaks nineteen to the dozen. The chief executive of Symple Wellness, a healthcare company set up in Singapore in July last year as an offshoot of the family office AJ Capital, has barely stood still since then, and shows no sign of stopping any time soon.
After listing on the Hong Kong Stock Exchange at the beginning of May, Ping An Healthcare and Technology, formerly known as Good Doctor, shows no sign of slowing down.
Amy Khor, senior minister of state, ministry of health in Singapore, looks at the challenges of how to deliver healthcare in the future.
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.
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