2013 apac healthcare outlook

2013 APAC 2013 APAC HEALTHCAREHEALTHCARE OOUTLOOKUTLOOK

CHANGING DYNAMICS THAT WILL DISRUPT AND TRANSFORM

HEALTHCARE IN ASIA PACIFIC BY 2018.

March 21, 2013

Today’s Presenters

Rhenu Bhuller, Healthcare Asia Pacific Vice President

Frost & Sullivan

Geeta Dhanoa, Healthcare Associate Director

Frost & Sullivan

2

Nitin Dixit, Asia Pacific Advanced Medical Technologies Senior

Industry Analyst

Frost & Sullivan

Natasha Gulati, Connected Health Senior Analyst

Agenda

Agenda Slide Number

1. Is the Healthcare Industry at a Tipping Point 03

2. Size, Breath and Might: The New Game in the Hospital Business 13

3. APAC Life Sciences Outlook 21

3

4. APAC Advanced MedTech Outlook 28

5. APAC Connected Health Outlook 37

6. The Last Word 47

7. Your Contacts for Additional Information 50

Is the Healthcare Industry at a Tipping Point?

4

Economic Uncertainty: A Global Phenomenon

Will Brazil translate its great demographic and natural resources

into real global

Uncertainty is the New

Normal in Financial

News ... msnbc.com, Aug. 2011. Will the U.S.

address its massive debt issue, or become

like Greece?

Will Russia be the Wild East

through 2020?

Will Germany, France and the UK be able to rescue Greece ?

5

Will Australia establish itself as

one of the world’s most

stable economies through 2020?

into real global competitive

advantage, to truly transform itself into a credible global power?

rescue Greece and Italy from

their debt problems? Will the € fail as a

currency?

Will Japan rebound from its tragedies of 2011

by 2015?

Will China be able to prolong its robust growth and drive sustained global recovery, or will this

growth engine stall?

?

2012 marks a watershed in the US healthcare system (US supreme courts decision to uphold patient protection and Affordable medical care and Obamas re-election)

U.S. fiscal woes remain unsolved, an intensifying European debt crisis, a slowdown in China- and Japan versus china political rift

Affordable care organizations (ACOs) and device tax cuts is expected to have implications for Asian companies supplying parts/components into the US market

Increasing speed and intensity of product competition-ferocity of generic competition

Global Trends in Healthcare Market

6

competition

Declining R & D productivity garners companies to seek innovation outside

Higher regulatory hurdles leading to greater uncertainty and fewer product approvals

Emerging markets become the key driver to growth and spending

Consolidation continues to increase including at the hospital sector level

1021.7

800

1000

1200

Exp

en

dit

ure

($ B

illi

on

)

Total Healthcare Expenditure, APAC, 2012 - 2018

CAGR2012-2018

In the Next 6 Years HC Expenditure Will Almost Double With the Largest Share Coming from China, Japan and India

17.6%3.1% 16.8% 14.9% 10.4% 5.8% 11.4% 6.5%3.1%

Healthcare expenditure will continue to experience growth in the next 6 years in the APAC region as rising patient demands for better healthcare result in healthcare reforms in the region as well as increasing life expectancy

7

155.2

386.5441.2

76.026.4 12.4

80.8

11.7 15.1

186.3

529.7

193.0

60.622.4

113.4

22.3 22.1

0

200

400

600

Australia China Japan India Indonesia Thailand South Korea

Singapore Malaysia

Exp

en

dit

ure

($ B

illi

on

)

2012 2018

region as well as increasing life expectancy resulting in more elderly requiring long-term care

Source: Frost & Sullivan

40%

60%

80%

100%

Pe

rce

nta

ge

of

He

alt

hc

are

Ex

pe

nd

itu

re

(%)

Total Healthcare Expenditure, APAC - % Public : Private, 2012 - 2018

Healthcare Expenditure (APAC) Split by Public & Private

8

0%

20%

2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018

Pe

rce

nta

ge

of

He

alt

hc

are

Ex

pe

nd

itu

re

Public Private

ThailandAustralia China Japan India Indonesia Malaysia S Korea Singapore

• Public expenditure accounts for approximately 67% of total healthcare expenditure in the region in 2012 with the Japan government spending the largest proportion at 83%.

• Public: private Healthcare expenditure in Malaysia is expected to remain stable over the next 5 years.


6776.5

7762.4

4268.55000

6000

7000

8000

US

D$

Healthcare Expenditure per Capita, APAC, 2012 - 2018

16.1%2.3% 15.3% 13.8% 8.7% 5.5% 9.7% 4.7%3.4%CAGR

2012-2018

Healthcare Expenditure per Capita low in the 2 largest Emerging Countries (China & India).

• Healthcare expenditure per capita is expected to increase 4.8% across the region by 2018

9

297.3

3493.6

63.3 108.9 170.3

1655.2

2200.0

517.9729.8

4268.5

148.4 237.1 281.2

2277.4

3841.4

681.1

0

1000

2000

3000

4000

5000

Australia China Japan India Indonesia Thailand South Korea

Singapore Malaysia

US

D$

2012 2018


80%

90%

100%

Perc

en

tag

e o

f P

op

ula

tio

n

Population Distribution by Age, APAC, 2013-2018

Over 2.3 billion people in APAC will enter the working population age group of 15-64.11.3% of people will be above 65 years of age.

The Consumer Profile is Changing

22

.9M

24

.0M

1.3

B

1.4

B

12

6.3

M

12

4.1

M

1.2

B

1.3

B

24

2.5

M

25

5.8

M

72

.7M

79

.7M

98

.6M

10

7.1

M

48

.8M

49

.8M

5.3

M

5.8

MTotal Population

30

.8M

34

.3M

10

0%

10%

20%

30%

40%

50%

60%

70%

2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018

Australia China Japan India Indonesia Thailand Philippines South Korea

Singapore Malaysia

Perc

en

tag

e o

f P

op

ula

tio

n

0-14 Years 15-64 Years 65 and Above

Note: All figures are rounded. The base year is 2012. Source: World Bank, Frost & Sullivan analysis.

Urbanization rate increased at a CAGR of 1.2% between 2013-2018 in APAC. China shows the fastest CAGR of 2.1%.

124.6 Million People Expected to Move to Urban Areas in China between 2013 and 2018

Increasing urbanization is accompanied with:• Growing

consumer awareness

• An expanding 60%

70%

80%

90%

100%

Pe

rce

nta

ge

of

Po

pu

lati

on

Population Distribution Across Rural and Urban Areas, APAC, 2013-2018

11

Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.

• An expanding middle class

• Progressively skewing population density

All translating to increasing demand for improved healthcare services

0%

10%

20%

30%

40%

50%

60%

2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018 2013 2018

Australia China Japan India Indonesia Thailand Philippines South Korea

Singapore Malaysia

Pe

rce

nta

ge

of

Po

pu

lati

on

Urban Rural

Chronic and lifestyle related diseases are on the rise in APACThe greatest burden is faced by India and China with the highest reported incidences of diabetes and

cancer each year.

Threatening Rise in the Incidence of Chronic Diseases

9,000

12,000

15,000

Nu

mb

er

of

New

Cases P

er

Year

Incidence of Chronic Diseases, APAC, 2013-2018

These statistics cannot account for

12


2013 2014 2015 2016 2017 2018

Diabetes 6,637 6,812 6,978 7,134 7,281 7,473

Stroke 3,136 3,215 3,296 3,379 3,464 3,551

Cancer 2,315 2,365 2,412 2,455 2,493 2,526

0

3,000

6,000

9,000

Nu

mb

er

of

New

Cases P

er

Year

(000s) cannot account for

the large APAC population that goes

undiagnosed.

2012 2013 2014 2015 2016 2017 2018

APAC 369.9 411.9 459.0 518.1 585.0 663.6 752.0

10%

11%

12%

13%

14%

0

300

600

900

Gro

wth

Ra

te

Re

ve

nu

e (

$ B

illi

on

)Total Healthcare Market: Revenue Forecast, APAC, 2012-2018

CAGR = 12.8%

APAC Healthcare enjoys a CAGR of 12.8% between 2013-2018 while global growth rates continue at less than 6% during the same period

13

Growth Rate (%) 11.4% 11.4% 12.9% 12.9% 13.4% 13.3%


78.9%

17.4%

3.7%

Total Healthcare Market: Revenue Forecast by Pillar, APAC, 2013

79.6%

17.6%

2.8%

Total Healthcare Market: Revenue Forecast by Pillar, APAC, 2018

Life Sciences

Advanced Medical Technologies

Connected Health

Size, Breath and Might: The New Game in the Hospital Business

14

Number of Hospitals by Ownership

No. of Hospitals by ownership: APAC, 2012-2018

2012 2018 2012 2018 2012 2018 2012 2018 2012 2018 2012 2018

Private 544 731 448 478 235 248 225 239 12 13 12 14

Public 1541 1551 802 826 1127 1160 137 142 42 42 19 21

0

500

1000

1500

2000

2500

No

. o

f h

osp

ita

ls

Several governments in APAC have increased efforts to increase number of private hospitals.

• Indonesia: Up to 67%

No. of Public and Private Hospitals: APAC, 2012-2018

15

*Includes only operational hospitals. India: Includes nursing homesSources: Frost & Sullivan analysis. Ministry of health of respective countries. Country Data

No. of Hospitals by ownership: China and India, 2012-2018

Public 1541 1551 802 826 1127 1160 137 142 42 42 19 21

Indonesia Thailand Vietnam Malaysia Hong Kong

IndiaChina

• Indonesia: Up to 67% stake in private hospitals for foreign investors.

• Vietnam: Licenses for opening 3 new private hospitals in HCMC and Hanoi.

• China: Allowed 100% FDI in private hospitals

Singapore

0

10

20

30

40

50

60

China India Thailand Indonesia Vietnam Malaysia Hong Kong Singapore

No

. o

f H

os

pit

al B

ed

s

pe

r 1

0,0

00

Po

pu

lati

on

Hospital Bed Ratio: APAC, 2012(e)

Hospital Bed Ratio

Key Takeaway: About 180 Million new beds will be needed over next decade to meet the healthcare demand in APAC; more than 40% of that is expected to come from private sector.

OECD Average of 49 (2011))

16

China India Thailand Indonesia Vietnam Malaysia Hong Kong Singaporepe

r 1

0,0

00

Po

pu

lati

on

• Vietnam: Favorable govt. policy of encouraging private companies to invest is expected to expand bed ratio by 5 by 2020

• China: Currently only 6.8% of all beds are in private hospitals therefore govt. plans to increase it to 20% by 2015 this would create a need for about 400,000 new private hospital beds/year.

Sources: Ministry of health annual reports of respective countries, Country Data and Frost & Sullivan analysis

Country Target Ratio No. of Beds Planned

Year to be achieved

China 47 2.59 Million 2015

India 20 177 Million 2025

Thailand NA NA NA

Indonesia 9 35500 2015

Vietnam 31 115300 2020

Malaysia NA NA NA

Hong Kong Achieved Achieved Achieved

Private Hospital Sector Set for Growth in APAC

377.9466.7

574.3707.4

844.3

1004.8

1205.7

400.0

600.0

800.0

1000.0

1200.0

1400.0

Private hospital revenue forecasts, APAC, 2012-2018

Private hospital revenues

CAGR: 17.1%

Base year growth: 23%

Key takeaway: Favorable government policies and increasing disposable income changing demographics and increasing disease burden will drive growth in private hospital.

17

0.0

200.0

400.0

2012 2013 2014 2015 2016 2017 2018

Base Year is 2012. Source: Frost & Sullivan analysis.

• There is a increasing trend of hospital consolidation in private sector in APAC. Several bigger hospital groups from within and outside of APAC are acquiring smaller hospitals in the region due to tremendous market potential. Revenues from hospital sector in APAC are projected to account for more than one third of that of global by 2015.

• Bigger hospitals acquire a major stake in the smaller hospitals, which generally need financial support to grow, instead of complete buy over. This enables the investing company to implement operational and financial system and IT and marketing system in the smaller company.

Imp

act

Ma

rke

t D

rive

rs

Demographics, Disease

Burden and Disposable

Income

Hospital Consolidation

Customer Sophistication

Low

High

Hospital Industry – Key Drivers and Restraints

Government Initiatives

Medical Tourism

Growth in Private Sector

18

Short Term Medium Term

Ma

rke

t R

es

tra

ints

Imp

act

Long Term

Inefficiency

Choked Public Hospitals

Quality

Low

Low

HighSource: Frost & Sullivan.

Inadequate Budget

Uneven Distribution of Facilities

(Urban Vs Rural)

Why are they successful?

Hospitals Extend Beyond their Shores

Fortis Healthcare

IHH Healthcare Siloam Group

Bangkok Hospital Group

Name Number of Hospitals

KPJ Group 22

Fortis Group 46

IHH Healthcare 87

Siloam Hospitals 10

Bangkok Hospital Group

14

Apollo Hospitals 40

19

successful?

KPJ Healthcare

• Ability to raise capital from private equity market and operate with highly

scalable business model

• Aggressive companies with focus on both organic and inorganic growth

• Reputed for good quality of healthcare since over a decade and compete with

differentiation in service and quality

• Ability to raise capital from private equity market and operate with highly

scalable business model

• Aggressive companies with focus on both organic and inorganic growth

• Reputed for good quality of healthcare since over a decade and compete with

differentiation in service and quality

Source: Frost & Sullivan Analysis.

Apollo Hospitals

Apollo Hospitals 40

Max Healthcare 11

Columbia Asia 14

SMART Hospitals Are In The Nascent Stages In APAC

Enhanced

Small Hospital

Efficient Recycling

FlexibleConstruction

Future Proofing

Fable Hospital 2.0

Zero Net Energy

Key takeaway: Hospitals in APAC are in the nascent stages of innovative hospital design

Roadmap of innovative hospital design in APAC

20

2013 2014 20152012 2016 2017 2018 2019 2020 2022 2023

Source: Frost & Sullivan analysis, Primary interviews.

Enhanced Patient Safety

Better Aesthetics

Construction

Currently only a few hospitals/hospital groups in Asia are investing in innovative hospital designs:• Innovative hospital design e.g. KPJ is investing in a hospital with green building technology.• Better aesthetics e.g. Bumrungrad and Bangkok Hospitals (Thailand).• Small Hospital e.g. Nova Medical Center (India).• Enhanced patient safety e.g. All hospitals with JCI accreditation such as Siloam Hospitals (Indonesia)

Day care center is a lucrative business option which requires lesser investment and offers better profitability,. A typical day care center breaks even in 2-3 years compared to larger hospital needing 5-7 years hence it will be one of the top growth businesses.

Short Term

Medical Tourism

Day Care Surgery/Healthcare

Centre

0

Due to increasing lifestyle diseases, such as diabetes

Driven by rising affluence and increasing demand of quality healthcare Medical Tourism will be one of the top growth sectors in APAC in shot to medium term.

Growth Opportunities in Top 5 Sectors

Medium Term Long Term

21

In order to remain competitive by increasing operational efficiency, clinical outcomes and financial profitability, private and public hospitals will invest extensively in installing, maintaining and upgrading HIT. Hence HIT will be one of the top growth areas in APAC.

Increasing cost of healthcare coupled with existing low penetration rates of public insurance will create a big market for private insurance companies.

Healthcare IT

Specialty Hospitals

Private Medical Insurance

0

0

Due to increasing lifestyle diseases, such as diabetes and CHD, Asia will be a big market place for specialty hospitals.

Source: Frost & Sullivan Analysis.Short Term 1-2 yrs; Medium Term 3-5 yrs; Long Term 5-7 yrsCold Warm Hot

APAC Life Sciences Outlook

22

APAC Life Sciences Segmentation and Definitions

Life Science

Pharmaceutical & Biotechnology Clinical Diagnostics

23

Segment Definitions

• Pharmaceutical: are drugs prepared for medical treatment; these include originator, generic, and Over-

the –counter products

• Biotechnology: is the application of developments in life sciences or the use of microorganisms to

create commercial products for treating humans

• Clinical diagnostics: refer to In Vitro Diagnostics that are used to perform tests outside the body on

obtained specimens, such as blood or urine; this market includes tests kits, reagents, consumables, and

analyzers; these include microbiology, molecular diagnostics, point of care testing

The Playing Field Changes with the Entry of Local Asian Challengers

0%

4%

8%

12%

16%

0

200

400

600

800

2012 2013 2014 2015 2016 2017 2018

Pharma& Biotech 283.6 315.3 350.5 396.6 448.7 510.6 581.1

Growth Rate 11.6% 11.2% 11.2% 13.1% 13.1% 13.8% 13.8%

Gro

wth

Ra

te

(%

)

Re

ve

nu

e ($

Billio

n)

Total Pharmaceutical & Biotechnology: Revenue Forecast, 2013–2018, APAC

CAGR = 12.9 %

24

Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.

• Strong R&D focus: Takeda, a leading pharmaceutical company focusing on Cardiovascular & Metabolic, Oncology, Central Nervous System, Respiratory & Immunology & Gastrointestinal & Genitourinary and Vaccine has the 7th largest pipeline and recently received FDA approval for its 3 diabetes products, NESINA,OSENI and KAZANO

• Alliances: Sinopharm, the largest pharmaceutical and medical distribution network company, with an annual growth rate of133%, has set up strategic alliances with MNCs such as Merck and expanding its trade relation with more than 100 countries. Sinopharm is expected to go shopping for new acquisitions during the forecast period

.

Some of the strategies for success• Increasing disease incidence of chronic diseases such as

diabetes and cancer as well as infectious disease will drive

demand for newer, better and targeted therapeutics

• Patent expiration during the forecast period will affect the

sales of leading medicines, including Lantus, Abilify, Rituxan,

Crestor, Neulasta, Gleevac, Vytorin and Nexium driving the

need for generics and biosimilars

• About 30 new therapeutic products are expected to be

launched during the forecast period which will drive the growth

e.g. Nesina® (alogliptin, DPPIV) Onglyza™ (saxagliptin,

DPPIV) for Diabetes.

Diagnostics Market Will Be Driven By Molecular Testing And Point Of Care Testing (POCT)

2%

6%

10%

14%

0

5

10

15

20

2012 2013 2014 2015 2016 2017 2018

Clinical Diagnostics 8.9 9.9 11.1 12.4 13.9 15.7 17.7

Growth Rate 11.4% 11.7% 11.7% 12.3% 12.3% 12.9% 12.9%

Gro

wth

Ra

te

(%

)

Re

ve

nu

e ($

Billio

n)

Total Clinical Diagnostics Market: Revenue Forecast, 2013–2018, APAC

CAGR = 12.3 %

25


• Strategic partnership with Pharma-companies: Roche, world’s

leading diagnostics company with >40% of market share in APAC

Molecular diagnostics market, has established strategic partnerships

with pharma companies to develop companion diagnostics.

• Acquisitions and geographic expansion: Qiagen has made a

series of acquisitions and set up offices in India and Taiwan (2011) in

order to expand in APAC.

• Innovative products: Seegene, an emerging Korean molecular

diagnostics company that has >20% local market share, focuses on

development of in-house innovative products and technologies

Some of the strategies for success• Need for early detection of HPV, HIV, Cancers and genetic diseases accelerates the market growth with molecular diagnostics, point of care testing and immunoassays being the fastest growing segments in this market.

• Drug and diagnostics co-development will accelerate M&A activities; globally, total value was $15 billion in 2011.

• Cancer will be the main focus, followed by infectious disease

Growth Rate 11.4% 11.7% 11.7% 12.3% 12.3% 12.9% 12.9%

Top Five Companies (in Asia) To Watch in 2013

Company 1

MenariniThe company acquired Invida Group which is one of the leading pharmaceutical company in APAC and will pose a huge opportunity for Menarini to expand in APAC region

Company Takeda

Company 2

CSLCSL, a leader in intravenous and subcutaneous immunoglobulin therapies, is now expanding in new therapeutic areas

26

Source: Frost & Sullivan analysis.

Company 3

TakedaIt has the 7th-largest pipeline, in addition to a robust product portfolio, recently got FDA approval for its three products for type 2 Diabetes treatment.

Company 4

SinopharmA market leader in China for pharmaceuticals, has strategic alliances with MNCs such as

Merck, NiliMEDIX; it also has strategic linkages with state government to set up manufacturing facilities

Company 5

Seegen An emerging innovative diagnostics company in Korea focusing on innovative in-house developed molecular diagnostics tests and technologies

Three Key Opportunities for the Next Five Years

2 Vaccines

1 Biologics & Biosimilars

27

2 Vaccines

3 Molecular Diagnostics and Point of Care Testing


Top Three Technology Trends

Tech 1

.

Point of care tests and Rapid molecular tests for infectious diseases are will the be next focus of diagnostics with the application of cutting edge technologies such as Real time PCR, Microarray (RNA-Chip) and FISH. .

Tech 2

Early diagnostics, screening for cancers will be the next key trend and development of oncology drugs together with companion diagnostics is the next hot area to invest

28


Tech 3Genomics, proteomics and genome sequencing technologies and its integration with the advanced diagnostics platforms .

Tech 2 with companion diagnostics is the next hot area to invest for companies.

APAC Advanced MedTech Outlook

29

Advanced Med Tech Market Overview

2Several M & As, strategic partnerships and investments driving Med. Tech

market in APAC e.g. Medtronic and Stryker acquisitions in China.

1Global OEMs are building R&D capabilities in APAC and transferring their

best practices to the region e.g. GE R&D center in Chengdu.

30

3Green field projects of private hospitals driving growth in capital equipment

investments such as CT, MRI etc.

4Increasing customers demands for quality healthcare are driving growth in high technology medical devices segment.

5Domestic players are posing a threat to big OEMs e.g. Mindray in patient monitoring and Toshiba in medical imaging segment.


Advanced Medical Technologies

Medical Devices Medical Imaging Patient Monitoring

Advanced Medical Technologies Segmentation and Definitions

31

Segment Definitions

• Medical Imaging: It refers to several different technologies that are used to view the human body in order to

diagnose, monitor, or treat medical conditions. Each type of technology gives different information about the area

of the body being studied or treated, related to possible disease, injury, or the effectiveness of medical treatment.

• Medical Devices: They range from simple tongue depressors and bedpans to complex programmable

pacemakers with micro-chip technology and laser surgical devices.

• Patient Monitoring systems: It is the term for all the devices that are used to supervise patients. One category

of such devices is devices that alerts if the patient gets into a critical state. Example of one such device is a heart

monitor.

Sources: USFDA, Frost & Sullivan Analysis

Growth in Devices Segment is Driven by Cardiovascular, Orthopedic and Consumable Devices.

Key Takeaway: In technologically less advanced product segments such as hospital supplies - price, availability and good service are the only differentiating parameters.

10%11%12%13%14%15%

0

50

100

150

2012 2013 2014 2015 2016 2017 2018

Medical Devices 49.6 56.2 63.8 72.6 82.1 93.4 106.2

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ B

illi

on

) Medical Devices Market: Revenue Forecast, 2012–2018, APACCAGR = 13.5%

32


Medical Devices 49.6 56.2 63.8 72.6 82.1 93.4 106.2

Growth Rate 13.1% 13.3% 13.5% 13.8% 13.1% 13.8% 13.7%

• Johnson & Johnson – Has invested in high growth areas

and launched new products frequently. This will help

continue their market dominance of Top 3 position.

• Covidien – With products in high growth areas such as

laparoscopic surgery, electrosurgery. biosurgery, vascular

therapy and pain management is set to challenge Johnson

and Johnson

• Suppliers/distributors practice differential pricing in

different segments of customers for e.g. distributors

offer higher discount and longer payment terms to

government hospitals.

• Increasing accessibility of medical services to patients

e.g. Cardiovascular products and Medtronic

• Hospital consumables and supplies is the most

fragmented segment with several domestic players.

Strategies for success

Product innovation, Price Reduction and Infrastructure Upgrade is Driving Growth in this Segment.

Key Takeaway: High initial cost of investment coupled with inadequate re-imbursement are restraining medical imaging market growth.

10%11%12%13%14%15%

0

10

20

30

2012 2013 2014 2015 2016 2017 2018

Medical Imaging 9.8 10.9 12.2 13.6 15.2 17.1 19.2

Growth Rate 11.7% 11.2% 11.9% 11.5% 11.8% 12.5% 12.1%

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ B

illi

on

)

Medical Imaging Market: Revenue Forecast, 2012–2018, APACCAGR = 11.8%

33


Growth Rate 11.7% 11.2% 11.9% 11.5% 11.8% 12.5% 12.1%

• GE: Its strong partnerships with governments, academic

centers and private hospitals for collaborative benefits will

help the company to maintain its market dominance in the

region. GE generates high revenues from ASAs.

• Siemens: It has a market leadership in high end imaging

equipments such as PET, CT and MRI as well as in entry

level segment x-ray and ultrasound. Siemens will continue

to maintain its market leadership position by virtue of its

focus on local markets.

Strategies for success• Medical imaging market in APAC is relatively dominated

by Top 3 players – GE, Philips and Siemens. GE

dominates in services segment and Siemens in high end

product segment.

• The cutting edge product features, high price (>$1M) and

longer shelf life (~7 years) result in entry barriers in a

relatively less contested market place.

Easy to use Multi-parameter Monitors and Blood Glucose Monitors will Drive Patient Monitoring Market in APAC.

Key Takeaway: Innovations such as biosignal processing, wireless technology and data management are driving demand for products with such innovations in premium segment.

10%11%12%13%14%15%

0

2

4

6

8

2012 2013 2014 2015 2016 2017 2018

Patient Monitoring 4.0 4.4 4.9 5.4 6.0 6.6 7.3

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ B

illi

on

) Patient Monitoring Market: Revenue Forecast, 2012–2018, APACCAGR = 10.5%

34


Patient Monitoring 4.0 4.4 4.9 5.4 6.0 6.6 7.3

Growth Rate 11.1% 10.5% 10.4% 10.7% 10.6% 10.4% 10.8%

• Roche: Market leader in SMBG market due to innovative

products, good after sales service, and attractive promotions.

Currently dominant, Roche is likely to loose its market share to

smaller companies such as Arkray, Bionime and Omron

• Mindray: Its aggressive pricing strategy and customized

products for domestic markets will increase its market share in

China and Japan.

• Omron: Bio-sensing homecare technology has propelled the

company to a market leadership position in BP segment. The

company is likely to achieve market leadership in BP segment.

Strategies for success• Indigenously grown MNCs such as Omron, Nihon-

Kohden and Mindray have higher growth rate and

market share compared to MNCs in PM segment.

• Innovations such as biosignal processing, wireless

technology and data management are driving

demand for products with such innovations in

premium segment.

More Changes to Come in Regulatory Environment

2Japan increased reimbursement for innovative medical devices (entirely new product/technology previously non-existent in Japan). This will encourage OEMs to launch new devices at the same time as in US and Europe.

1ASEAN to introduce harmonized ASEAN Medical Device Directive (AMDD) that will improve the medical device importation, registration and distribution regulations in 10 member states in the region.

35

3China SFDA increased penalty for Medical Device violations. SFDA also issued new guidelines for adverse events reporting, clinical trials, and labeling.

Sources: Ministry of Health of respective countries, Frost & Sullivan analysis.

4India to initiate new regulations for medical device new registration and licensing. This will improve the quality of end product consumed. The discussions are still in the parliament.

5Singapore reduced regulatory requirement for Class A device dealer licensing and faster access and lower regulatory fees for Class C and D medical devices. This is expected to be replicated in Malaysia.

Three Key Opportunities Over the Next Five Years

2

DialysisHigh number of End Stage Renal Disease patients (South Asia prevalence of 232 cases/million population, 2009) coupled with low adoption of dialysis (only 15%

1

Cardiovascular SegmentLow penetration rates in Cardiac Rhythm Management in Asian markets, compared to Western countries is an opportunity. Increasing accessibility of cardiovascular products to patients who cannot afford them e.g. Medtronic and Sagar hospital collaboration in India to increase CRM and ICD adoption.

36

2 cases/million population, 2009) coupled with low adoption of dialysis (only 15% patients with ESRD receive haemodialysis in China) for such patients offers a tremendous opportunity for growth.

3

Diagnostic ImagingRapid technological advancement led by Japanese companies, falling prices (price attrition accelerating towards 4-5%) and increasing up gradation of healthcare infrastructure (growth in number of beds) will drive growth.


Top Five Asian Companies To Watch in 2013

Company 1

ToshibaHas integrated their imaging equipments with PACS and RIS. It is 4th largest player in imaging segment and growing at about 12%.

Company 2

HoyaHas strong presence in APAC in endoscopy and bone prosthesis.

Company Hitachi

37


Company 3

Has strong revenues ($1932Mn in 2012e) and robust product portfolio in X-Ray, Ultrasound, Flouroscopy, MRI and CT.

Company 4

TerumoOne of the most innovative Japanese companies with cutting edge technology in cardiac intervention via wrist.

Company 5

Shandong WeigaoMarket leader in China for medical consumables. Has potential for attracting investments and partnerships from MNCs.

Top Five Business Models

Tech 1 M & A deals with medium sized technological companies

Tech 2 Contract manufacturing

Tech 3 Licensing and strategic partnerships

38


Tech 3 Licensing and strategic partnerships

Tech 4 Customization for local products

Tech 5 Annual Service Agreements (ASA) in capital equipments

APAC Connected Health Outlook

39

Connected Health Segmentation

Remote Patient Monitoring

• Store-and-forward consultation

• Video Diagnostic Consultation

• Remote Doctor/Specialist Services

• Distance Learning/Simulation

• TeleImaging

• Home and Disease Management Monitoring

• Activity Monitoring

• Diabetes Management

• Wellness Programs

• Remote Cardiac ECG

• Personal Emergency Response System (PERS)

• Medication Management

Connected Health Industry Segmentation, APAC, 2012

40


mHealth

GeneralHealthcare IT

Telemedicine

• Professional Apps

• Wellness Apps

• Fitness Apps

• Texting Informational Services

• Distance learning

• Medication Management

• Electronic Medical Records (EMR)

• Electronic Health Records (EHR)

• Health Information Exchange (HIE)

• Hospital Information Systems

• Patient Portals

• Hosted Cloud Infrastructure

With Over 200 Local Participants in Every APAC Market, Healthcare IT Presents a Highly Competitive Environment

10%

12%

14%

0

4

8

12

2012 2013 2014 2015 2016 2017 2018

Healthcare IT Revenue 4.7 5.3 6.0 6.8 7.6 8.6 9.8

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ B

illi

on

) Total Healthcare IT Market: Revenue Forecast, 2013–2018, APACCAGR = 13.1%

Key Takeaway: Information Technology will be an integral part of healthcare delivery systems in APAC by 2018

41

Healthcare IT Revenue 4.7 5.3 6.0 6.8 7.6 8.6 9.8

Growth Rate 12.0% 12.9% 13.7% 12.8% 12.3% 13.2% 13.4%

Note: Base year is 2012. Source: Frost & Sullivan analysis.

• Superior after-sales services

• Thorough training for medical and IT professionals

along with robust support services

• Product flexibility

Strategies for success• Turnkey projects in partnership with the public sector, that cover several hospitals and ambulatory care settings.

• Inadequate planning and budget allocation at project initiation creates hurdles in the short and long term which hamper adoption and lead to below expected returns for both vendors and healthcare organizations.

APAC Governments are Actively Driving Telemedicine Adoption

Key Takeaway: ICT companies begin to set realistic expectations of growth for the APAC real-time telemedicine market through 2013-2018

0%

8%

16%

24%

0.0

50.0

100.0

150.0

2012 2013 2014 2015 2016 2017 2018

Real-Time Telemedicine Revenues

44.6 52.9 62.1 71.8 81.5 90.8 102.5

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ M

illio

n)

Total Real-Time Telemedicine Market: Revenue Forecast, 2013–2018, APACCAGR = 14.1%

42


• Sustainable and scalable business models

• Leverage government incentives to drive adoption

amongst physicians

• Device interoperability

Strategies for success• Governments and healthcare providers are realizing the long-term benefits of telemedicine and are willing to partner with telecommunication companies to develop innovative business models.

• Cost burden of telemedicine infrastructure and services

Revenues44.6 52.9 62.1 71.8 81.5 90.8 102.5

Growth Rate 20.3% 18.6% 17.3% 15.6% 13.6% 11.4% 12.8%

Evolving Demographics will Fuel Growth of Remote Patient Monitoring in APAC

Key Takeaway: Remote Patient Monitoring Equipment market in APAC is poised for steady growth under the influence of public private partnerships

4.8%

5.2%

5.6%

6.0%

0

500

1000

1500

2012 2013 2014 2015 2016 2017 2018

Remote Patient Monitoring Equipment Revenues

768.8 810.6 852.8 897.1 945.6 996.6 1052.5

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ M

illio

n) Total Remote Patient Monitoring Equipment Market: Revenue Forecast, 2013–2018, APAC

CAGR = 5.3%

43


• Device manufacturers need to partner with mobile technology companies and telecommunications companies to provide an ecosystem of remote and wireless patient monitoring services.

• MNCs are targeting large upcoming private sector hospitals to win large scale projects.

Strategies for success• Growing demand for personalization of remote patient monitoring and devices.

• Consumer awareness is low and is largely driven by healthcare providers alone. More channels to raising consumer awareness are required.

Equipment Revenues

Growth Rate 5.2% 5.2% 5.2% 5.4% 5.4% 5.6% 5.6%

3G and 4G Adoption will Transform Healthcare Delivery in APAC

Key Takeaway: mHealth revenue from voice and services declines through 2012-2018 as business models around mobile broadband evolve

0%

2%

4%

6%

8%

0

5

10

15

2012 2013 2014 2015 2016 2017 2018

mHealth Services Revenues 8.0 8.4 8.8 9.1 9.4 9.7 9.9

Gro

wth

Ra

te (

%)

Re

ve

nu

e (

$ B

illio

n) Total mHealth Mobile Services Market: Revenue Forecast, 2013–2018, APAC

CAGR = 3.3%

44


• Ability to cope with evolving business models

• Ability to move away from minutes to data

• Ability to drive consumer involvement

Strategies for success• Mobile operators, software developers and device vendors can collaborate with healthcare providers and medical device manufacturers to build an ecosystem of monitoring services.

• mHealth needs to move away from a volume-based business model that relies on voice and text. Low barriers to entry create tough competition.

mHealth Services Revenues 8.0 8.4 8.8 9.1 9.4 9.7 9.9

Growth Rate 6.8% 5.3% 4.3% 3.6% 3.0% 3.0% 2.9%

Developing Standards and Regulations is a Key Area of Focus Today

2Some countries have additional requirements for medical data storage and management which make customization of solutions a competitive advantage.

1Most vendors supply products compliant with international standards. Some even advertise HIPAA compliance.

45

3Harmonization of product standards, technical regulations and mutual recognition of test reports and certificates to achieve integration of healthcare services across ASEAN continues to be a topic of debate.

Sources: Ministry of Health of respective countries, Frost & Sullivan analysis.

4Personal Data Protection laws, as they come into force across APAC countries, will further add to the regulatory requirements expected from vendors in the industry.

5Increasing role of organizations such as Integrating the Healthcare Enterprise (IHE) in APAC.

Three Key Opportunities for the Next Five Years

2

Personalization of devices and sensors for monitoring physiological parametersThe most straight-forward approach to driving consumer adoption is by integrating

1

Electronic Medical Records and Electronic Health RecordsDigitization of medical data is the next big step for healthcare providers. National level HER programs have already been initiated in developed countries while regional EMRs are prevalent in developing markets.

46

2 The most straight-forward approach to driving consumer adoption is by integrating remote monitoring technologies in personal belongings such as mobile phones, wrist watches and accessories.

3

Professional Solutions for Smartphones and Personal Device Assistants to Facilitate Healthcare MobilityMobile phone apps and software that allow medical professionals to view, analyse and action patient data remotely have a pressing demand, particularly amongst private healthcare providers.


Top Five Companies To Watch in 2013

Company 1

Accenture

Company 2

Cerner

Company Infinitt Healthcare

47


Company 3

Infinitt Healthcare

Company 4

Philips Healthcare

Company 5

Mahindra Satyam in partnership with TechMatrix Corp.

Top Five Technologies

Tech 1 Cloud Computing

Tech 2 Big Data Analytics

Tech 3 3D Visualization and Imaging Analytics

48


Tech 3 3D Visualization and Imaging Analytics

Tech 4 Machine-2-Machine Communication

Tech 5Social Media to Enhance Communication and Information Sharing Amongst Healthcare Providers and Consumers

Strategic Recommendations

49

Healthcare Disruptions Across 2013-2018

Analysis

Relevant Trends

• Aging population• Increasing incidence of

chronic diseases• Rising burden of lifestyle

related diseases• Increasing healthcare costs• Declining profit margins• Evolving consumer profile• Increasing consumer

Unmet Needs

• Equitable and affordable healthcare

• Early detection and diagnosis

• Improved long term care• Operational efficiency• Sustainable business

models• Real-time and personalized

50


Strategic Recommendations• Increasing focus on genomic and proteomic research• Leveraging data generated by healthcare providers and other non-healthcare sources to advance Life

Sciences and Public Health research and programs• Seeking alternative sources of revenue for healthcare providers• Investing in long-term care technologies partnering with both healthcare and non-healthcare allies to

provide an ecosystem of products and services• Encouraging the private sector participate in education and awareness

• Increasing consumer awareness

• Dynamic regulatory environment

• Real-time and personalized healthcare delivery

• Competitive workforce

The Last Word

51

The Last Word - Three Big Predictions

1

Globalization, economics, convergence, and demographics are expected to drive the healthcare industry. More companies from outside of healthcare will enter this space creating innovation from outside and within healthcare forcing new thinking from traditional players

International medical insurance will play a pivotal role by increasing

52


2

3

International medical insurance will play a pivotal role by increasingfunds and enhancing medical tourism. This is really the time for Asianhospitals to step up to create the infrastructure and branding necessaryas other regions of the world are concurrently doing the same

Technology will continue in a pervasive way to help leapfrog access andgrowth. By the end of the decade we expect clinical data becoming liquidthanks to EMR and information exchanges

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Advanced MedTech

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Life Sciences Homepage

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