Indonesia and Vietnam Healthcare Outlook 2012

Where are the healthcare opportunities in these emerging marketsWhere are the healthcare opportunities in these emerging markets

Rhenu Bhuller, VP – Asia PacificHealthcare

29 June 2012

2

1. Want to Ask a Question? – Simply press Ask a Question on the player.

2. Want to Share this webcast? – Click on the Share button on the player

3. Use the Full Screen button ( bottom right- hand corner) on the player

4. Escape button to return to normal view on your keyboard.

5. Ratings button on the player for your valuable feedback.

Ensure a comfortable presentation today!

3

Today’s PresentersToday’s Presenters

Rhenu Bhuller, VP, Healthcare-Asia Pacific Frost & Sullivan

• Rhenu Bhuller has close to 20 years of healthcare industry knowledge, including more than 10 years of consulting expertise in the pharmaceutical and biotechnology sectors. She is an industry expert and has particular expertise in new market and therapeutic area analysis; sales, marketing and business planning; market entry and business strategy; strategy discussions with c-suites, government officials, etc.

• She is a regular keynote speaker at industry conferences and is also often featured in the media, such as BBC, Bloomberg, CNN, and CNBC.

4

Globalization, consumerism and prosperity are the major trends that will impact healthcare in SEA

Globalization: • World is becoming smaller: cheap air- travel, connectivity, internet, medical tourism• Increased healthcare awareness because of multiple media

Consumerism: • Increased self medicating behaviour; ease of access (online)• Increased expression of consumer individuality through brand choices

Prosperity: • Increasing disposable income, financial independence leading to exploring more choices• Increased health awareness has led to consumers spending more on health prevention and OTC

2 3

1

Source: Frost & Sullivan

INFRASTRUCTURE

5

APAC among the fastest growing economies over the next 5 years

Source: Data in the above charts were based on GDP per capita data in the respective country’s national currency as sourced from the WEO online database. The data above was converted to US dollar based on the currency conversion rate for the respective years. Analysis by Frost & Sullivan

Australia

CAGR 2.9%

6

Diverse population structures with varying levels of purchasing power

Sources: World Economic Outlook (WEO), World Bank and countries data. CAGR data is for 2006 to 2016

Lower economic profile,

rural areas

Increasing consumer power

•Rural population, low income, relies on government support. •Upwardly growing middle class, living in tier 2 cities, educated, can pay for some level of healthcare• High income category, first adopters of new technology, services, private HC

Governm

ent dependant f

or

basic HC

Growing middle class

Private

insura

nce, co-p

ay

High income, 5-10%

of population

Self pay, m

edical touris

m

Austra

lia

7

• Per capita healthcare expenditure is far below global average (lowest is Vietnam and Indonesia).

• Shortage of healthcare professionals in both countries.

• Efflux of medical tourists seeking treatment in other countries; 400,000 Indonesians patients travel annually.

Market Restraints

• Growing middle-class population in Indonesia; per capita income expected to grow from $2,580 in 2011 to $3,500 by 2015.

• Rise in non-communicable disease incidence, cardiovascular disease will account for 31 percent of total number of deaths in Indonesia by 2030, followed by other chronic diseases at 28 percent.

• Vietnamese government intervention to enhance healthcare workforce by 2020.

Market Drivers

Total Indonesia and Vietnam Healthcare Market Size

CAGR12.7%CAGR12.7%

CAGR8.7%

CAGR8.7%

Healthcare Industry: Revenue ForecastIndonesia and Vietnam, 2011–2015

Source: Frost & Sullivan analysis.

0.0

2000.0

4000.0

6000.0

8000.0

10000.0

12000.0

2011 2012 2013 2014 2015

Year

Indonesia 5549.30 6016.30 6515.90 7072.10 7742.50$ (Billion)

Vietnam 2647.20 2970.40 3332.70 3746.80 4266.50 $ (Billion)

8

Indonesia—Healthcare System

9

Indonesia—Healthcare Indicators

Healthcare Indicators: Indonesia, 2007–2011

Key FeaturesKey Features

• The population of the country as of 2010 stands at 238.0 million people. It is recorded as the fourth most populous country in the world.

• The population of the country is expected to grow at a consolidated pace of 1.0 percent for the 2010‒2015 period.

• Life expectancy at birth has increased by 16 months per person from 2007 to 2011, and decreasing mortality rates are a result of improving healthcare services.

• The population of the country as of 2010 stands at 238.0 million people. It is recorded as the fourth most populous country in the world.

• The population of the country is expected to grow at a consolidated pace of 1.0 percent for the 2010‒2015 period.

• Life expectancy at birth has increased by 16 months per person from 2007 to 2011, and decreasing mortality rates are a result of improving healthcare services.

Healthcare Indicators 2007 2008 2009 2010 2011            

Population (Million) 226 229 232 238 245

Population Growth Rate (%) 1.3 1.3 1.3 1.07 1.04

Birth Rate (per 1,000) 19.65 19.24 18.84 18.10 17.76

Mortality Rate (per 1,000) 6.90 6.85 6.80 6.28 6.26

Life Expectancy (Female) (years) 72.7 73.1 73.4 74.0 74.3

Life Expectancy (Male) (years) 67.6 68.0 68.3 68.8 69.1

Source: IMF, CIA World Fact Book, Indonesian Department of Health, Frost & Sullivan analysis.

10

Disease Information – Major Causes of Death

Source: Indonesian Association of Medical Doctors (Ikatan Dokter Indonesia, or IDI)

11

Indonesia—Health Care Delivery System

Healthcare System

Public Private

MOH Hospital

Provincial Hospital

District Hospital

Puskesmas Pustus and

Mobile Clinics

Specialty Private

Hospital

General Private

Hospital

Private Clinics

Source: Ministry of Health and Frost & Sullivan analysis

12

Indonesia—Hospital Categorization

Hospitals (General and Specialty)

Public Hospital

Private Hospital

Class A (>400 beds) = 10

Class B (100-400 beds) = 120

Class C (50-100 beds) = 250

Class D (<50 beds) = 126

Extensive specialist medical services + extensive sub

specialists Extensive specialist medical

services + limited sub specialists

Has minimum of four basic specialist medical

services

Provides basic medical facilities

PriorityGeneral medical services + specialists and sub-specialists

Madya

Pratama

Minimum four specialists medical services

General medical service

Source: Indonesian Department of Health, Frost & Sullivan analysis

13

Indonesia—Hospital Classification

Public (Ministry of

Health)36%

Public (Military)

8%

Public (State or other govt dept-owned)

5%

Private51%

Percent of Hospitals by Type and Sector, Indonesia, 2010

Mental 15.3% Leprosy

6.6%Pulmonary

TB3.0%

Eye3.9%

Maternity 19.5%

Pediatric32.1%

Others19.5%

Percent of Specialist Hospitals Split by Specialty, Indonesia, 2010

Source: Indonesian Department of Health, Frost & Sullivan analysis

Hospital Classification by Type Hospital Classification by Specialty

14

Number of Hospitals: Regional Spread

Source: Ministry of Health, Indonesia

BaliNo. of hospitals:

34

Sumatra SelatanNo. of hospitals:

34

DKI JakartaNo. of hospitals:

124

Sumatra UtaraNo. of hospitals:

130

Sumatra BaratNo. of hospitals:

41

Sulawesi SelatanNo. of hospitals:

62

Jawa BaratNo. of hospitals:

144

Jawa TengahNo. of hospitals:

162

AcehNo. of hospitals:

35

Jawa TimurNo. of hospitals:

171

Hospitals are concentrated in major cities in the Sumatra and Java province, such as Jakarta, Surabaya, Medan.

15

National Health Strategic Plan: Infrastructure Targets

• Aim to increase the number of community health centers from 9,133 in 2010 to 10,856 in 2014• Develop hospitals to achieve a ratio of 1 bed per 1,000 population in 2014• Indonesia also aims to achieve sufficient numbers of medical professionals:

Source: Indonesia Human Resource for Health; Development Plan, 2010Regional Health Forum, 2006

16

Indonesia—Healthcare Expenditure Forecast

Health Industry: Healthcare Expenditure Forecast by TypeIndonesia, 2007–2015

5.1 5.7 7.8

10.3 12.1 13.6 4.3 4.7

7.3

9.5

11.312.8

0.00

5.00

10.00

15.00

20.00

25.00

30.00

2007 2008 2009 2010e 2011e 2012e

Expe

nditu

re

($ B

illio

n)

Private Government

2013F 2014F 2015F

Private Expenditure 14.66 16.96 19.95

Government Expenditure 15.44 17.44 19.95

0.005.00

10.0015.0020.0025.0030.0035.0040.0045.00

Go

ve

rnm

en

t v

s P

riv

ate

H

ea

lth

Ex

pe

nd

itu

re (

US

D

bill

ion

)

Source: EIU, World Bank, Frost & Sullivan analysis

17

Indonesia—Health Insurance Coverage

Scheme Target Population Funding Source(s) Enrolment (% of

insured)

Jamkesmas (Askeskin)

Poor and near poor, based on individual and household targeting

General revenue (100% funded by central government)

32.3

Jamkesda Poor and near poor, homeless, orphans and non-civil service teachers

District/Out‐of‐Pocket, Based on affordability

13.5

Askes Active civil servants and dependents, civil service and military retirees

Member contribution of 2 percent of salary plus government match of 2 percent

7.4

Jamsostek Private formal sector employees (and dependents) of firms with ten or more employees

Member contribution of 3 percent of salary for singles, 6 percent for families

2.1

Private Health Insurance

Private formal sector employees and dependents

Out‐of‐pocket 7.7

Not insured 37.0

Health Insurance Coverage, Indonesia, 2010

. Source: MOH, Frost & Sullivan analysis

18

Vietnam—Healthcare System

19

Vietnam—Healthcare Indicators

Key FeaturesKey Features

• The population of the country as of 2010 stands at 88.3 million people. Vietnam’s population size is expected to expand about 9.2 percent from 2006 to 2014, and is likely to grow 1.0 percent annually from 2010–2014.

• The increase of life expectancy (73.9 years in 2006 to 74.7 years in 2010) have led to an increase in aging population.

• The population of the country as of 2010 stands at 88.3 million people. Vietnam’s population size is expected to expand about 9.2 percent from 2006 to 2014, and is likely to grow 1.0 percent annually from 2010–2014.

• The increase of life expectancy (73.9 years in 2006 to 74.7 years in 2010) have led to an increase in aging population.

Healthcare Indicators 2010

Population (M) 88.3

Population Growth Rate (%) 1.0

Birth Rate (per 1,000) 17.0

Mortality Rate (per 1,000) 6.8

Life Expectancy (Female) (years) 74.7

Life Expectancy (Male) (years) 69.5

Source: Datamonitor, Worldbank, http://vietnam.unfpa.org, Frost & Sullivan analysis

Healthcare Indicators: Vietnam, 2010

20

Source: World Health Organization, 2009, Frost & Sullivan analysis

Vietnam—Major Causes of Death

Major Causes of Death: Vietnam, 2010

21

Vietnam—Health Care Delivery System

Source: Department of Health, Vietnam; Frost & Sullivan analysis

Healthcare Delivery System: Vietnam, 2010

Government

MINISTRY OF HEALTH•14 Department and Administration•The Cabinet•Inspectorate

Provincial People’s Committee

PROVINCIAL HEALTH SERVICE•Office•Inspectorate

PROVINCIAL HEALTH SERVICE•Office•Inspectorate

People’s Committees at District

People’s Committees at Communes

COMMUNAL HEALTH CENTRES•Head•Healthcare Workers

Professional Units under Ministry •Curative:30 hospitals with beds•Preventive:17 institutes or centres•Quality Control: 5 institutes or centres•Training:14 schools or colleges•Centre for health education and communication :17 units

Professional Units under the PHS •General and specialized hospitals for curative care•Preventive Health Centres•Quality Health Centres•Training Middle Level Schools or Colleges•Centre for health education and communication

•District General hospitals •Clinics

•District Preventive Health Centres

Village Health Workers

22

Type Department Descriptions

Provincial Health Department of the Province of the People’s Committee

• 304 general and specialist provincial hospitals in 64 provinces, mostly with 50–100 beds and consultation and treatment rooms.

• 64 preventive medicine centres, 61 medical secondary schools, and 61 pharmaceutical companies.

District Health Department of the District of the People’s Committee

• 3,014 medical specialist groups and 1,507 hospitals and polyclinics (more than 600 hospitals nationwide)

• About 100 beds in each of the hospitals; focus is on obstetrics, geriatrics, and paediatrics

Commune Health Station of the Commune of the Peoples Committee

• More than 10,600 commune health stations, with 4–6 beds, a delivery room, and a cabinet stocked completely with medicines.

• Staffed with doctors, pharmacists, and nurses who transport serious cases to district and central hospitals.

• Volunteers involved largely in providing immunization and family planning services.

Vietnam—Classification of Public Health System

Source: The National Bureau of Asian Research, US and Frost & Sullivan analysis

Public Healthcare Infrastructure, Vietnam, 2009

23

Vietnam—Key Health Care Infrastructure Statistics

Infrastructure 2006 2007 2008 2009CAGR %

(2006–2009)

           

Total Number of Hospitals 903 956 974 1,002 2.6%

Regional Polyclinic 847 829 781 682 (5.3%)

Sanatorium and Rehabilitation Hospital

51 51 40 43 (4.2%)

Medical Service Units in Communes, Precincts

10,672 10,851 10,917 10,979 0.7%

Total Number of Beds 1,31,500 1,42,800 1,51,800 1,63,900 5.7%Number of Beds Per 10,000 Population

23.8 25 25.8 27.1 3.3%

General Doctors 52,800 54,800 57,300 60,800 3.6%

Assistant physician 48,800 48,800 49,800 51,800 1.5%

Nurses 55,400 60,300 65,100 71,500 6.6%

Midwives 19,000 20,800 23,000 25,000 7.1%

Pharmacist 16,300 18,100 19,700 21,600 7.3%

Source: General Statistics Office (GSO) of Vietnam, Frost & Sullivan analysis

Public Healthcare Infrastructure Statistics: Vietnam, 2009

24

Vietnam—Regional Spread of Healthcare Infrastructure

Central hospitals in Vietnam are facing a shortage of beds; in some hospitals, a single bed is being shared by two or sometimes even three patients. GSO statistics show that there were just 2.58 hospital beds per 1,000 people in Vietnam in 2008. According to MOH, demand for beds in provincial hospitals is 115.0 percent while in major cities it is 250.0 percent.

Source: Ministry of Health Vietnam, Frost & Sullivan analysis

Hospital Description

Hanoi

Bach Mai Hospital It is a multi-field medical facility and one of the largest in Vietnam, recognized as one of the three specialized medical centres specializing in internal medicine.

L’Hôpital Francais de Hanoi

The hospital stands as a 68-bed multi-disciplinary care facility offering essential medical and surgical services, supported by 20 rotation doctors and 93 qualified nurses.

Viet Duc Hospital It is the largest surgical centre in Vietnam. The hospital has more than 500 beds for patients and 18 surgery rooms and can perform over 800 open-heart operations annually.

Central Vietnam

Hue Central Hospital The hospital is one of three largest in the country, providing 2,078 beds. HCH is organized into 52 clinics and para-clinic departments, notably the Cardiovascular Center, Blood Transfusion Center, and Training Center.

Ho Chi Minh City

Chợ Rẫy Hospital It is the largest general hospital in Ho Chi Minh City. At present, the hospital has 35 clinical, 11 subclinical, and 8 functional departments.

25

Vietnam—Healthcare Expenditure

Government and Private Expenditure on Health: Vietnam, 2006–2012

Source: WHO, Frost & Sullivan analysis

2006 2007 2008 2009 2010 2011 2012

Private Expenditure 2.63 2.98 3.98 4.19 4.53 4.77 5.02

Government Expenditure 1.29 1.99 2.05 2.52 2.76 3.01 3.25

0.001.002.003.004.005.006.007.008.009.00

He

alt

hc

are

Ex

pe

nd

itu

re($

Billio

n)

26

Mega Trends and Healthcare Market Trends

27

Key Mega Trends impacting Indonesia and Vietnam

Low Probability of Success

Deg

ree

of

Imp

act

Lo

wH

igh

High

Urbanization

Generation Y

Increase in Working Age

Population“She-conomy”

The Middle Bulge

Wealth Watchers

Future Economic Growth

Space Jam

Connectivity

Innovating to Zero

E-Mobility

Future Infrastructure

Top Industries of the Future

“Value for Many” Business Model

Health, Wellness and Well Being

Future Energy Power Generation

Private public partnerships

E-Governance

“Click-n-Connect”Mobile users

28

What’s Trending for Indonesia Between 2012 and 2015

Indonesia’s per capita expenditure on pharmaceuticals is expected to remain below the US $30 mark by 2015 as patients continue to be responsible for the bulk of their medical bills.

Indonesian health ministry established a supervisory body, the Indonesian Hospitals Supervisory Agency (BPRSI), in Nov 2011.

The University of Indonesia is constructing a new hospital at its Depok campus; the Japan International Cooperation Agency will provide a loan of $158.0 million to the university to establish UI Hospital.

Indonesian Q3 GDP growth came in at a strong 6.5 percent year-on-year for 2011.

As of December 2011, the Indonesian health insurance program for the poor, Jamkesmas, covered 76.4 million people.

In Q4 2012, some of the major reforms announced by Indonesian MOH include a merger of ASKES and JAMKESMAS, and five committees are now working to set the insurance system.

Source: Frost & Sullivan analysis

29

Examples of investments into Indonesia

Philips supplied most of $140m in medical equipment for the first dedicated cancer research centre and the biggest hospital in Indonesia. Philips, which has group sales of $32bn and 120,000 employees, has set up a regional headquarters in Singapore with almost 300 staff with a view to increasing its share of the medical and home healthcare products in Indonesia, the Philippines and Vietnam.

Singapore-based Invida Group, a specialty biopharmaceutical company announced a joint venture with the local Indonesian drug manufacturer PT MUGI Laboratories. Under the terms of the agreement, Invida will seek to expand its operations in Indonesia to include the importation of raw materials and auxiliaries and the manufacture of pharmaceutical products.

A state pharmaceutical company PT Bio Farma announced that it is to spend USD 60 million on a facility to produce blood plasma products, including albumin and Factor IX. The plant will be the first of its kind in Indonesia and will be built using assistance from South Korean and Australian pharmaceutical companies, based on guidelines stipulated by the WHO.

Sources: Company websites, Frost & Sullivan

Siemens in Indonesia has provided support to public and private hospitals by installing computed tomography, magnetic resonance imaging systems, and angiographic systems, as well as conventional x-ray units and life support systems. Siemens supplied the first 128-slice computed tomography (CT) Somatom Definition AS+ in Indonesia.

30

In Vietnam, new health service facilities are expected to be charged an

enterprise income tax of 10% rather than the previous 28%.

Quality of public hospitals in Vietnam is likely to improve following the

establishment of private hospitals by Singapore-based Thomson International and Pacific Healthcare, Malaysia-based

Columbia Asia and the French Hospital of Hanoi, owned by the French company

Eukaria S.A.

Vietnamese government’s health care development plan, extending to 2020,

aims at doctor patient ratio of 8, pharmacists of 2, and 25 hospital beds

per 10,000 patients. Vietnam’s healthcare expenditure is

growing in next five years with its healthcare spending as a % of GDP surpassing most ASEAN countries,

forecasted grow up to 8.3% of GDP in 2014.

Vietnam government aims to modernize traditional medicine by 2020. According to

a plan, hospitals that offer traditional alternatives to patients will receive new

equipment in 2015

What’s Trending for Vietnam

Source: Frost & Sullivan

Regulatory reforms, ASEAN harmonisation

31

Next StepsNext Steps

Request a proposal for or Growth Partnership Services or Growth Consulting Services to support you and your team to accelerate the growth of your company. (apacfrost@frost.com)

Register for Frost & Sullivan’s GIL Community Newsletter and keep abreast of innovative growth opportunities(www.frost.com/news)

32

Your Feedback is Important to Us

Growth Forecasts?

Competitive Structure?

Emerging Trends?

Strategic Recommendations?

Other?

Please inform us by “Rating” this presentation.

What would you like to see from Frost & Sullivan?

33

Follow Frost & Sullivan on Social MediaFollow Frost & Sullivan on Social Media

http://www.facebook.com/FrostandSullivan

http://www.linkedin.com/companies/4506

http://www.slideshare.net/FrostandSullivan

@Frost_Sullivan

34

Thank You!Thank You!

For enquiries, please contact us at apacfrost@frost.comFor enquiries, please contact us at apacfrost@frost.com

35

For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+61 (0) 8247 8927 djeremiah@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 5910carrie.low@frost.com

Dewi NurainiCorporate CommunicationsIndonesia+62 21 571 0838dewi.nuraini@frost.com