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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

Medical rubber glove manufacturer Hartalega Holdings has incorporated a 70% owned subsidiary company in China called Foshan Dynamic.
Singapore-based dental group Unity Denticare is the latest company to sign an MOU with Malaysian online healthcare booking app BookDoc. The company has now pretty much cornered the dental market in Singapore. At the end of March signed an MOU with Q&M Dental Group, which operates the largest network of private dental outlets in the island state.
The majority of bondholders have decided to redeem their paper in Singapore-listed integrated healthcare services and facilities provider International Healthway Corporation.
Leading domestic media organisation Singapore Press Holdings is moving into healthcare with the acquisition of Orange Valley Healthcare from KV Asia Capital for S$164 million (US$118 million). The acquisition will be funded with a mixture of cash and debt.
TalkMed Group, a provider of medical oncology and palliative care health care services, has reported a 1.7% decline in profits for the first quarter of the year to S$8.4 million (US$6 million) on revenues that rose 1.4% to S$16.2 million.
Care home operator Pine Care Group has sold a care home in Kwun Tong, Kowloon, for HK$6.6 million (US$853,000) to Goal Achiever Ventures, a company incorporated in the British Virgin Islands.
Shares in Aoxin Q&M Dental Group (AQMD), a spin off of Singapore’s Q&M Dental Group, jumped 17.5% on their SGX debut today. The company raised S$9.1 million (US$6.5 million) selling 57 million shares at S$0.20 each on the Catalist board. SAC Capital handled the deal.
Wenzhou Kangning Hospital, the largest private psychiatric specialty care service provider in China, has delayed plans to list on the Shanghai Stock Exchange, thanks to difficulties with its lawyers.



Analysis

Jonathan Tan, director of Asia Pacific Risk Centre, explains how an aging population and the rise in non-communicable diseases is threatening the affordability of insurance premiums across the region.
“The Asia Pacific healthcare sector’s growth trajectory will be decidedly positive. The expansion of universal healthcare across the region will boost utilisation of medical services, even as the prevalence of chronic diseases rise in tandem with the shift in lifestyles and an ageing population,” says BMI Research in Singapore in a new report on healthcare in Asia.
After a visit to Myanmar, Jiadi Yu, principal investment officer at the IFC in Hong Kong, is optimistic about the country’s health market.
Amid questions about the direction of the global economy, investors doubled down on healthcare as a safe haven in 2016, driving up both the number and the value of deals, according to Bain & Company’s sixth Global Healthcare Private Equity and Corporate M&A Report.
Susann Roth, senior social development specialist, Asian Development Bank, explains how Vietnam is seizing the opportunity of digital health.
The Commonwealth Scientific and Industrial Research Organisation’s new medical technologies and pharmaceuticals roadmap sets out a path for how Australia could become an important player in medical technologies and pharmaceuticals, which is expected to grow to almost A$3 trillion (US$2.3 trillion) globally by 2025.
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).
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