Download - 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.
Source: Frost & Sullivan
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
Source: Frost & Sullivan
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
Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
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%
Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.
• 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
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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.
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.
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
Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.
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
Source: Frost & Sullivan analysis.Note : All figures are rounded. The base year is 2012.
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.
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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
Note: Base year is 2012. Source: Frost & Sullivan analysis.
• 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
Note: Base year is 2012. Source: Frost & Sullivan analysis.
• 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
Note: Base year is 2012. Source: Frost & Sullivan analysis.
• 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.
Source: Frost & Sullivan analysis.
Top Five Companies To Watch in 2013
Company 1
Accenture
Company 2
Cerner
Company Infinitt Healthcare
47
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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
Source: Frost & Sullivan analysis.
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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