HealthInvestor Asia Summit 2018
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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

Shares in orthopaedic specialists Asian Healthcare Specialists (AHS) shot up 52% at the open on their Catalist debut today.
Private equity firm Permira’s A$690 million (US$536 million) five-year leveraged buyout loan to help it acquire EQT’s stake in I-MED Radiology Network, Australia’s largest radiology company, has been flexed down.
Joanne Hannah has resigned as chief executive of Total Face Group, the first medical aesthetics company to list on the ASX, effective 1 May.
Lianluo Smart, which develops medical devices and wearable sleep respiratory products, has signed a strategic cooperation agreement with Meinian Onehealth Healthcare, the second largest healthcare provider in China.
After a choppy day of trading that saw shares in HKE Holdings, a Singapore-based contractor specialising in the medical and healthcare sectors, rise as much as 10%, they closed up 1.82% on their debut yesterday.
Summerset Group, New Zealand’s third-largest listed retirement village operator, has purchased land to build a retirement village in the suburb of Te Awa. The 9-ha property will be Summerset’s fourth in Hawke’s Bay. It already has villages in Havelock North, Hastings and Taradale.
Metlifecare, New Zealand’s second-largest listed retirement village operator, has said that its purchase of a 5.3 hectare waterfront site at Orion Point in Hobsonville, West Auckland, is now unconditional. The deal was announced at the end of October last year.
Hong Kong care home operator Pine Care Group has signed a management agreement with Zhejiang Yada Real Estate to operate and manage the Wuzhen Graceland Day Care Centre in Wuzhen, Zhejiang. Financial terms have not been disclosed.



Analysis

In Vietnam, population and GDP growth have encouraged the country to think beyond technology in providing more health for more people.
Focused initiatives drive down medical inflation by more than 50 percentage points, according to a new report from Aon Asia Healthcare.
The Japanese healthcare system is a shining example of strength and resilience. At an average lifespan of 84 years, the Japanese society is not only the healthiest but also the "oldest" in the world. However, the challenges presented by an ageing population pose serious threats to the sustainability of the Japanese health system.
Susann Roth, senior social development specialist, Asian Development Bank, explains how investing in energy makes people healthier.
CFO Luke Chen’s reticence on the Q3 earnings call on Friday now makes sense. Jack Ma’s Yunfeng Capital and Alibaba Investment will buy out iKang Healthcare Group, China’s largest private preventive healthcare services provider, for around US$1.4 billion.
Following news that Malaysian sovereign wealth fund Khazanah Nasional will acquire Prince Court Medical Centre (PCMC) from Petronas, IHH Healthcare, Asia’s largest healthcare company, has signed an agreement with Khazanah to look after the day-to-day running of the medical centre.
Malaysian-based primary healthcare provider Qualitas Medical Group is due to push the button on its S$150 million (US$114 million) IPO in Singapore next week. It will be the first mainboard healthcare listing since IHH Healthcare floated in Kuala Lumpur and Singapore in July 2012.
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.
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