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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

SGX-listed Acromec, which designs and builds medical and sterile cleanrooms, has secured another contract in the healthcare sector valued at S$2.9 million (US$2.1 million). It is expected to be completed by the end of the year.
Sydney-based 1st Group, the Australian digital health, media and technology group, has appointed Richard Rogers as chief financial officer. He joins from Lenovo Australia & New Zealand.
Asia-focused market expansion services provider DKSH is to sell its healthcare business in China to Warburg Pincus for SFr100 million (US$100.7 million).
Summerset Group, New Zealand’s third-largest listed retirement village operator, has said that it expects underlying half year profits to jump between 21% and 26% to NZ$43 million (US$29.4 million) and NZ$45 million.
Patient flow management firm Jayex Healthcare has signed a binding licence agreement with medical cannabis company MediCann NZ under which it will be granted the exclusive use and application of its technologies in New Zealand in connection with their proposed sale and distribution of medical cannabis products in line with the expected deregulation in New Zealand of medical cannabis.
IDS Medical Systems Group, a leading medical supply-chain solutions company in Asia, and Tencent-backed We Doctor have formed idsMED WeDoctor China, the country’s first smart medical supply chain solutions and procurement company.
Australian medtech company Resonance Health has signed an alliance partner agreement with Blackford Analysis which grants it rights to integrate and combine Resonance Health products with, or sell and license Resonance Health products in connection with the host application.
Malaysian medical services company Adventa has scrapped plans to raise M$80.2 million (US$20.3 million) after Top Glove Corporation, the world’s largest rubber glove manufacturer, announced legal proceedings against its parent Adventa Capital and two of its directors.



Analysis

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.
Earlier this week, Cigna Corporation released the results of its 2018 Cigna 360° Well-Being Survey – Future Assured. The findings, which were tracked over a four year period, show rising awareness of the need to prepare for old age, which includes being continually active and financially independent. As a result, people are working harder today, and increasingly calling on employers to help in managing workplace stress.
Auckland-based ehealth software company Orion Health is to sell off two significant parts of its business to private equity technology investor Hg for NZ$225 million (US$150.7 million). The sale could revitalise a company that has struggled recently.
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.
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