investing proton therapy in china (part)
TRANSCRIPT
• How To Build A Proton Therapy Center• Technology
• What is proton therapy?• Proton therapy emerges as the latest option to improve
radiotherapy delivery • Proton therapy overcomes key barriers and becomes
commercially feasible• Proton therapy centers in U.S.: 23 in operation, 13 in
development or under construction• Market
• Rapid growth of cancer cases demands increased capacity of treatment
• China grows fastest in cancer cases• Proton therapy will cover nine of top ten cancers in China• Exponential growth of demand on proton therapy• Projected market size of China: 150 proton therapy centers• China has two centers in operation
• Finance• Investment in proton therapy: revenue• Investment in proton therapy: investment IRR• Investment in proton therapy: sensitivity test• Pricing: how much would people pay for proton therapy?• Price vs. patient throughput: how do they affect investment
return?
• How to improve patient throughput?• Operating margin: a key consideration during negotiation• Five or one: large center or single unit?
• Human & Organization• Proton therapy investment: stakeholders analysis• Proton therapy investment: key hospitals for collaboration
--- cancer specialty hospitals• Proton therapy investment: key hospitals for collaboration
--- top 50 general hospitals• Case study: a tier-3 city’s ambition to own proton therapy
• Project & Planning• Proton therapy investment: structure of a possible deal
(example)• Access potential market: how do overseas investors
engage in business development?• Proton therapy investment: project by phase, risk &
solution• Readiness of proton therapy project
• Appendix: top 50 general hospitals in China
Outlin
e
Outline
Outlin
eHow To Build A Proton Therapy Center
Real Estate
Healthcare
Technology
Investment
Choice of location, approval of land, construction planning and design
Hospital operation, medical staff training, patient referral
Vendor support, equipment installation, image & IT support
Funding resources, investment modeling, transaction/tax advisory
Building proton therapy center requires expertise of multiple dimensions. All those expertise need to be carefully orchestrated for successful outcomes. In order to build proton therapy center in China, synergy of resources from both China and United States can facilitate success of investment.
Culture Negotiation, relationship development, risk management
• A frontier radiology technology to treat cancer• It uses proton beam to kill tumor cells• It has advantage over conventional radiation, with little damage
to surrounding healthy tissue• For 30% of all cancer cases, proton therapy has significant
advantage over conventional radiation. For the remaining 70% cases, conventional radiation works as effectively as proton therapy for now
• Proton therapy was invented in late 1980s. There are 23 proton therapy centers in U.S. and more to come (refer to “technology: PT centers in U.S.”)
Tech
nology What Is Proton Therapy?
• Conventional proton therapy facility needs large construction area of 100,000 square feet. A latest compact version including a single treatment room uses much less construction area of 2,800 square feet
• Proton therapy center operates like a nuclear plant. Its equipment accelerates proton beam to 2/3 of light speed for treatment. The center is always built in ground floor and underground like a nuclear bunker, with wall fortification required to block radiation
• Navigated by magnet, photon beam can be guided into up to 5 treatment rooms. Which means the maximum capacity of a center is five treatment rooms
• Patient will lie still on a treatment bed, while the equipment can be rotated 360 degree in order to orient proton beams to tumor foci. Its precision can reach 0.5 mm (tumor won’t be totally still because it moves along with breathing and heart beating)
• Among 5 treatment rooms, a popular setup includes 4 rotational and 1 fixed beam room. It reflects breakdown of treatment types, because some patients won’t need rotational beam
Tech
nology Proton Therapy Emerges As The Latest Option To
Improve Radiotherapy Delivery
HDRT: high dose radiotherapy
Due to advantage of its technology (proton vs. photon), proton therapy represents the latest trend of radiotherapy(RT) by delivering high dose radiation precisely, to achieve faster, better, and safer therapy
Since the technology was invented nearly three decades ago, how come it hasn’t been popular until recently? There are a few key barriers:• Debate about advantage of proton therapy over conventional
radiotherapy. It’s not until recent two years when accumulated data show convincing outcomes • Proton therapy can focus on tumor without radiating surrounding
tissue. The figure on the right compares radiated areas by proton therapy and conventional radiotherapy in a heat map. Proton therapy can focus on tumor alone, while conventional radiotherapy affects unintended nearby organs such as heart
• 30% of all cancer cases can significantly benefit from proton therapy. Doctors can advise patient whether his/her case should be subject to proton therapy or conventional radiotherapy
• Scope of investment. Construction of a proton therapy center used to take four years or longer. Total investment can be $200 million for a 5-treatment room center. Investors hesitated on large amount of money, long time line, and uncertain buy-in from patients and providers. Those hurdles can be overcome, which results in acceleration of investment to new proton therapy centers
• Reimbursement. Medical insurance doesn’t always have a complete coverage of proton therapy. For example, if conventional radiotherapy receives $2,000 reimbursement, while proton therapy costs $5,000, medical insurance will only cover $2,000 for proton therapy. The remaining $3,000 will come from patients or providers. Large patient volume is the key to drive down operating cost. Now proton therapy is almost on par with conventional radiotherapy if managed properly
Proton Therapy Overcomes Key Barriers And Becomes Commercially Feasible
Tech
nology
Proton therapy can be less expensive than surgery and chemotherapy
Tech
nology PT Centers In United States: 23 In Operation, 13
In Development Or Under Construction
Robert Wood JohnsonNorthwestern Medicine
U.Florida Health (UFPTI)
U.Florida Health Cancer Center Orlando
S Lee Kling, St. Louis
TPTC Provision Healthcare
Ackerman Cancer Center
Procure, Oklahoma City
Procure, Princeton
Willis Knighton Cancer Center
Hampton Univ.
Loma Linda (LLUMC)
Maryland MPTC
Mayo Clinic Arizona
Mayo Clinic Rochester
MD Anderson
U. Penn
Scripps, San Diego
SCCA Seattle
Texas Center for PT (Baylor)
Mass General (MGH)
CDH
St. Jude Children’s
Oklahoma Univ.
University Hospital
Georgetown Univ.
Georgia PT (Emory)
Cincinnati Children’s
Beaumont Health
Baptist Health South FL
McLaren Health, Flint New York PT Center
Dallas PT Center (UT Southwestern)
UCSF Ocular
Los Angeles PT CenterScott Hamilton PT Center
Johns Hopkins Sibly
Center in operation
Center in development or under construction
Marke
t Rapid Growth Of Cancer Cases Demands More Capacity Of Treatment
Cancer ranks No.2 as cause of death. Aging population and improved life expectancy result in rapid growth of cancer cases. By 2030, new cancer cases will be 80% higher than current level, reaching 25 million per year
• China has 3 to 3.5 million of new cancer cases per year. Because of its fast aging population (300 million over 65 years old by 2030), by 2030 China will have 5.6 million new cancer cases a year
• The top three cancer types are lung, stomach, and liver cancer, which correlates with sustaining social-environmental health factors such as smoking, air pollution, diet, and high incidence of hepatitis
Marke
tChina Grows Fastest In Cancer Cases
• Different cancer type has its geographical distribution. For example, liver cancer incidence is high in southern coastal provinces where people consume a lot seafood. Geographical distribution of cancer types will become a factor when investors choose sites of new proton therapy centers
• Geographical difference of wealth can implicate affordability of premium treatment. According to GDP per capita, coastal provinces and some inland regions are more likely to pursue premium health technology than provinces in Midwest
Geographical Distribution Of Cancer Types
Blue: stomach cancerYellow: esophagus cancerGreen: liver cancer GDP Per Capita By Province
Proton therapy has been used to treat 9 out of top 10 most prevalent cancers in China. Liver cancer is the only exception. Besides cancer, proton therapy has potential to treat other medical conditions.
Marke
t Proton Therapy Will Cover Nine Of Top Ten Cancers In China
Marke
t Exponential Growth Of Demand On Proton Therapy
A conservative estimate projects 4X growth of number of treatment rooms in 10 years. Purchase of proton therapy equipment has accelerated since last year. Some PT vendors have reported backlog of orders.
• China has 3.5 million of new diagnosis cancer cases per year. This number will increase to 5.6 million by 2030 due to aging population, equivalent to 3% annual growth
• Between 20% to 30% (average 25%) of cancer cases should be treated by proton therapy: 3.5 million X 25% = 875K cases per year
• Assuming 10% of all patients can afford and would pay for proton therapy: 875K X 10% = 87.5K cases per year
• Therefore, market size of proton therapy in China is 87.5 thousand cases per year• If there are 87.5 thousand cases per year, how many proton therapy centers does
China need?• China needs to build 150 proton therapy centers (or 350 treatment rooms total) to
fulfill demand (refer to finance, table of revenue projection), with 3% annual growth
• Assuming China will take 5 years to build 150 centers (30 per year), and every center costs $100 million, the nation needs to invest $3 billion per year in proton therapy centers
• Reality check: is China willing to spend $3 billion per year to improve its cancer treatment?
• In 2013, 5.4% GDP or $511.3 billion was spent on healthcare in China. The nation could pay $6 billion by itself, but would be more willing to attract non-government investment for such projects
Marke
tProjected Market Size Of China: 150 Proton
Therapy Centers3.5 million new
patients per year
Market size: 87.5 thousand patients will need and can pay for
proton therapy
Market demand: around 150 proton
therapy centers
In operation• Wanjie Center, Zibo (Shandong Prov.) has been in operation since 2004.
Because of management and other issues, Wanjie has not fully realized its marketing potential
• Shanghai Proton and Heavy Ion Center uses technology provided by Siemens, and is co-managed with Fudan University. It opened in 2014. Because carbon cation instead of proton is used, strictly speaking it does not belong to proton therapy. The center is for research, not for commercial purpose
In development or under construction• Beijing 301 Military Hospital is planning a proton therapy facility (5 treatment
rooms). The center may be designated for privileged citizens due to its military background. The facility will locate in Zhuozhou (Hebei Prov.), 30 miles southwest to Beijing. Zhuozhou is chosen because there’s no land in downtown Beijing. The center will use IBA technology
• Tianjin Cancer Hospital signed a deal, pending for approval. It will use IBA• Shenyang (Liaoning Prov.) signed a deal, pending for approval. It will use Varian• Shiyan (Hubei Prov.). The hospital will expand to 3,000 beds, and become a
cancer hospital. It will use Varian• Guangzhou is planning a 3-room proton therapy center, and expected to open
in late 2018. It will use IBA
Marke
tChina Has Two Centers In Operation
Major vendors:• Varian (U.S.)• IBA (Belgium)• Hitachi (Japan)
Center in operation
Center in development or under construction
Shenyang
Zhuozhou, Hebei
Tianjin
Weifang, Shandong
Shanghai
Shiyan, Hubei
Guangzhou