Empowering Indian pharmaceutical industry to lead globally.
Growth, Innovation and Leadership Insights in APAC Healthcare
1. Growth, Innovation and Leadership Insights in
APAC Healthcare Industry
June 18, 2009
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1
3. Change is Inevitable.
HEALTHCARE CEO’S
HEALTHCARE CEO’S GLOBAL CEO’S
GLOBAL CEO’S
8 in 10
Healthcare leaders
anticipate substantial
change ahead.
29%
Gap between envisioned
Gap between envisioned
change and past success
change and past success
atat managing it.
managing it.
Source: IBM Global CEO Study 2008
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4. 10 Key Trends in the Global and Asian Health Care Ind.
1) Cost & Quality, & Demographics of Healthcare
1) Cost & Quality, & Demographics of Healthcare
2) Changing Demographics – Aging Population
2) Changing Demographics – Aging Population
“Globalization has radically altered
3) Changing Business Models
3) Changing Business Models the business model for service and
manufacturing industries.
4) Evolving and Unique Disease Profiles
4) Evolving and Unique Disease Profiles Health, traditionally regarded
as a local industry, is becoming
5) Medical Tourism & Wellness
5) Medical Tourism & Wellness global as well. It’s changing
the way the Chinese think about
6) Insurance :: Increasing Accessibility
6) Insurance Increasing Accessibility financing hospitals, Americans
recruit physicians, Australians
7) Technology as a Driver
7) Technology as a Driver reimburse providers for care,
Europeans embrace competition,
8) Human Resources :: The Brain Drain
8) Human Resources The Brain Drain and Middle Eastern governments
build for future generations”.
9) Private Public Partnerships
9) Private Public Partnerships
10) Increasing M&A/ Private Equity Activity
10) Increasing M&A/ Private Equity Activity
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5. Trend 1 : Cost & Quality, Demographics of Healthcare
Healthcare is challenged by three interlocking
crises that make present healthcare systems
unsustainable:
15% of patients admitted to hospital
suffer an adverse event.
Rising Costs
Quality of Care
8% of adverse events result in death.
Changing Demographics 6% of adverse events result in
permanent disability.
10-20% of all adverse events is caused
by medication errors.
10-15% of hospital admissions occur
because providers do not have access to
previous care records.
20% of laboratory tests are requested
because the results of previous
investigations are not accessible.
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6. Trend 1 : Cost & Quality, Demographics of Healthcare
By 2050 Healthcare spending will double, claiming 10 – 15% of GDP
Public Per Capita Spending – India : $ 12, Vietnam : $ 42
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7. Trend 2 : Demographics – Asia Overview
Asian Demographics by Age Distribution
Ageing Young but ageing Young
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8. Trend 3 : Paradigm shift in business model :
pharmacogenics will shape the future
Past Future
Disease definition by symptoms Mechanism
Uniformity of disease Heterogeneity
Uniformity of patients Variability
Universal Treatment Individualized therapy
Predictive/preventative care/
Sickness
(wellness)
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9. Trend 4 : Diseases – Best Asian Opportunities
A competitive Benchmarking: Scores based on Parameters
#1
#2
#3
#4
#5
#6
Methodology:
• The seven key factors mentioned in previous slide have been considered to allocate the score to various diseases to
find the attractiveness of the disease. The diseases are measured on a scale of 1 to 5 where a perfect score would
be 35.
• Although infectious diseases ranked low, there is major potential in certain areas such as avian flu etc.
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10. Trend 5 : Medical Tourism & Wellness
Asia had 2 million medical tourists in 2008
Singapore Medical Tourism Medical Tourism Overview
Steadily Growing Healthcare Tourism in Singapore
• The number of foreigners that seek medical care in
CAGR (2001-2006) : 19%
Singapore surged with a CAGR (2001-2006) of 18.8%
driven by the influx of foreigners (and their families) that
work, study, and live in Singapore, as well as patients
from other countries that seek medical treatment in
Singapore.
• In recognition of the importance of quality assurance, 10
public hospitals and 4 private hospitals in Singapore
have already been accredited by JCI as of 2008.
• Furthermore, the provision of competitively priced
medical packages further strengthens the position of
Singapore being one of the leading medical tourism
hotspot in the region.
• Asia has high concentration of HNWI’s.
• Predictive and preventative medicine will help Wellness
segment grow.
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11. Trend 6 : Increasing Access to Insurance
The Private Health Financing Schemes helped
Singapore Hospital Admissions reducing Out-of-Pocket Expenditure and Increased
Demand in Hospital Care
•Medisave, Medishield and health insurance provided
by the private sector have raised the demand for
medical care, as measured by the number of hospital
admissions; from 265,828 individuals that were
MEDISHIELD hospitalised in 1980 to an estimated 416,000
individuals in 2006.
MEDISAVE
•Inpatient admission to private hospitals grew at a
faster rate; they posted an admissions CAGR (1980-
2006) of 4.5% versus 1.2% in public hospitals.
•According to MOH, residents have used Medisave
for out-patient consultation for a total of S$2M
withdrawals and paid for about 60% of their medical
costs. In this aspect, Medisave and Medishield has
reduced out-of-pocket payment among residents.
Broadened Insurance Coverage
Paradigm shift towards
Increases Patients’ Eligibilities to the
private health insurance
more costly Private Hospitals
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12. Trend 7 : Technology opportunities
Asia Healthcare Spend by Area, 2009-2020
• Major opportunities within
diagnostics and monitoring
• Products and services will not
be standalone but will be
“packaged” to target specific
diseases.
• Example : predict avian flu,
diagnose, treat, monitor
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13. Trend 8 : Human Resources - the Brain Drain
Source : Tekopak
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14. Trend 9 : Public Private Partnerships (PPP)
Public Private Partnerships (PPP) will be the way to go
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15. Trend 10 : M&A Spend and Private Equity Infusion
In 2009 we believe there will be an increase in M&A activity between pharmaceutical and
Medical Technology companies.
• Biotechnology vs. Pharmaceutical • Company Cash Position is Critical
• Biologic assets will continue to attract high • Companies with low cash positions should be avoided
Opportunities in the Life Sciences
valuations
• Companies with low cash reserves are likely to become
• This is due to limited generic competition and high insolvent in 6-12 months
product margins
Sector
• Focus on Late Stage Companies • Potential Product Cost Benefit
• Focus on life sciences companies with late stage • Strong pressures in 2009 to restrain the growth of
assets (late phase II / phase III) healthcare expenses
• Pharmaceutical companies will need access to • In this environment products that provide superior cost
assets that can provide value in the medium term benefits will be preferred
• Early stage life sciences companies in Asia will benefit from this trend
• Strong opportunities for companies targeting growth diseases in the emerging markets – Oncology, Cardiovascular
Disease and Diabetes
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16. Closing Statement – Market will start to recover by Q3’09
Subprime
mortgage market
collapse
“The only thing we have
Media talks
about recession to fear is fear itself.”
-- Franklin Roosevelt
Reduced
investment flows
Global financial
panic
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18. Upcoming medical device technology platforms
Top-10 Medical device based platforms
2005 2010 2015 2020
for the next decade
Infection control devices/Wound care
Home/Self therapy devices
Preventive as well as
personal care devices Total disc replacement
New innovations in In and Home/Self
Vitro Diagnostics like therapy devices will
Mircoarrays and Lab- have a very high Robotic devices
On-A-Chip have growth rate and
brought a revolution in opportunities in
Opportunities
the field diagnostics. Advanced In Vitro Diagnostics
entire spectrum of the
market.
Virtual reality
Intelligent/Automate
Tissue generated d devices, Robotic
devices and site- devices for surgery
Intelligent/Automated devices
specific drug and diagnosis will
delivery devices are reshape the modern Electrical stimulation
being developed for face of the
more sophisticated healthcare sector
healthcare delivery
Site specific drug delivery
Tissue generation devices
Growth Rate
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19. Emergence of medical device technology platforms in the next
decade
High Impact 1. Infection control devices/Wound care
2
1 2. Home/Self therapy
3 3. Total disc replacement
5 4
Projected 4. Robotic devices
4 2 7
Impact on the 9 5
Healthcare 5. Advanced In Vitro Diagnostics
10 1 7
sector 6 9 6. Virtual Reality
6 8 3
7. Intelligent/Automated devices
10
8 8. Electrical stimulation
9. Site specific drug delivery
Low Impact
10. Tissue generation devices
Low Certainty High
Developing countries in Asia: China, India, Developed countries in Asia: Singapore, Japan,
Thailand, Malaysia Taiwan, S. Korea, etc.
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20. Paradigm Shift in the Asian Healthcare Sector
The Future of Health Care
What does the most effective model of
health care for the future look like?
How can we found and lay the
foundation for health care practice that
integrates health promotion and
prevention?
Can prevention specialists learn from
other scientific and practice fields?
How can we lay the foundation for this
new practice?
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21. Influencing Factors – Hospitals
Question : Kindly rank the following factors in the order of importance ( 1- most important) when considering the
purchase of equipment?
Number of Hospitals which ranked 1st, 2nd and 3rd
Product Quality is ranked as the second
Brand Name 1 1 2 4 1 1 8 most important factor.
Any impair on the performance and quality
Product Features 2 3 2 5 4 1 of image obtain will impact the hospital’s
revenue and reputation. Hence the
Product Quality 5 4 7 1 emphasis on this area.
Equip. Technology 1 1 4 1 1 3 1
After Sales Support is emphasized as the
most important influencing factor as any
Price 2 3 3 2 3 1 1 2 potential disruption of service translates to a
lost of revenue to the hospital.
Delivery Time 2 1 1 4 3
After Sales Support 7 3 1 3 1 2 1
Source: Hospital interviews; Frost Analysis
Warranty Length 1 1 1 4 1 2 1
Training Provided 1 2 1 4 3
Ranked 1st
Machine Efficiency 2 1 1 3 3 1 Ranked 2nd
Ranked 3rd
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23. Range of Strategies to Consider
Strategies What they do Successful examples
Brand
Brand • Sell flagship products globally by
builder
builder leveraging brand
• Create a new category or popularize an
Market
Market out-of-the-ordinary value proposition
maker
maker that addresses an unmet local
consumer need
• Leverage company capabilities to
Replicator
Replicator duplicate a successful business format
in many local markets
Scale
Scale • Build leading position by leveraging
generator
generator scale and operational know-how
• Cultivate relationships with regulators to
Standard
Standard ensure favored market position
setter
setter
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24. Japan-Formula to Sustain Growth in Revenues and Profits
Segment of
Strategic Dimension Value Innovation Logic Example Focus
Industry Assumption Industry's conditions Toshiba Medical Diagnostic Imaging
can be shaped
Strategic Focus Competition is not the Olympus Medical Devices
benchmark. Pursue
quantum leap to dominate
the market
Customers Target mass buyers based Teijin Home Care
on key commonalities. Willing Chemistry
to let some customers go
Assets and Capabilities Not constrained by what the company Daiichi-Sankyo Pharmaceuticals
already had. Pose the question
what we would if we were starting anew?
Product and Service Offerings Pitch in terms of total solution even if Goodman Co. Ltd Health IT
it is beyond indutry's traditional offerings
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25. CASE STUDIES – MARKET MAKER
How
Globally
1. New medical technologies and new ways to
Approach capture and use medical data to make health
systems better.
2. Focus to work with Health organizations to
choose wisely within limited budgets when it
comes to how and what technology they buy.
1. Make technology a reason to collaborate
Results 2. Move information, not people
3 Customize care to patients’ genetic needs
4. Value technology’s impact on productivity and lifespan
• Leverage capabilities across markets
Key • Build expertise in JV/alliance management
Learnings • Cultivate strong local partners
Source: Interviews; articles; team analysis
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26. At concrete level the Senior Management Team has to
focus attention and developed practical solutions in areas
clustered in 5 workflows
Market Internal
Primary
Facing focus so far
Value Proposition
ACHIEVE NO. 1 POSITION
Organisation
Sales & Marketing Priorities
Knowledge
Management
Business Planning
& Control Tower
<GPS> 2008 2010 2015 2020 26
27. Concluding Remarks-How to stay SMART in your business?
Cost Effectiveness
Acquisition thru (overall industry impact)
Product
Product/R&D Performance
Strategic Support of
Alliances
SMART
Influencers
Cost
Market Reach competitiveness
Local/Regional
Product Development
Process
S:Customer Satisfaction M:Margins R:Revenue Growth
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