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2013 – A Year of Access, Convergence and Technology
Rhenu Bhuller
Vice President, Healthcare Asia Pacific
Nitin Dixit
Senior Industry Analyst, Healthcare Asia Pacific Frost & Sullivan

While the healthcare market globally has seen its fair share of ups and downs in the past decade, emerging markets have continued to provide a ray of light to the industry. Emerging markets are developing countries with relatively low per capita income, often with above-average economic growth potential. Emerging markets are complex and different, both from the established markets and from each other. They are diverse markets with their own unique healthcare funding, delivery and distribution characteristics. Countries like Indonesia, the Philippines and India are examples of emerging healthcare markets in Asia.

With a vast population, strong urban to rural movement and the commitment of governments to increase healthcare access, Asia is continuing to keep its promise as the decade's rising star. While China and India are still a key area of interest for manufacturers and are growing strongly not only in pharmaceuticals, but also in medical devices and diagnostics, South East Asia (SEA) is another nugget of opportunity.

SEA provides a combined population of close to 700 million; Indonesia, Thailand and Philippines collectively account for ~440 million population. Healthcare expenditure across most of SEA will remain constant in proportion to the GDP, except for the Philippines and Vietnam where it will increase because of increased government investments. Although the healthcare expenditure proportion as a percent of GDP remains more or less constant, the total healthcare expenditure will rise as the GDPs of these countries rise. Private expenditure accounts for a substantial proportion of the total healthcare spending in SEA countries, although Thailand is an exception . In these countries, the GDP, per-capita income, and the proportion of middle class is rising.

The pharmaceuticals & drugs industry in India is gradually globalizing due to the WTO Agreement. Good opportunities exist in contract manufacturing activities in this segment. The multinational companies manufacturing sophisticated and advanced medical devices such as ultrasound scanning machines, magnetic resonance imaging (MRI) equipment, and so on dominate the medical devices & surgical instruments, orthopedic/prosthetic goods, disposable devices, diagnostic imaging, X-rays, disposable syringes, orthopedic implants, and medical furniture.

This growing middle class is more aware about its health and has access to increasing personal disposable income. As the majority of the private expenditure in SEA is out of pocket, it is dependent on availability of personal disposable income. With increased disposable income, SEA populations (especially the middle class) will be more able and willing to spend on quality healthcare.

Emerging markets promise a high potential for growth due to the rise in their gross domestic products (GDPs), improvements in access to healthcare, increasing protection of intellectual property (IP) and improving regulatory environments. There are also the demographic factors like the oft mentioned increase in the ageing population as life expectancy starts to improve. In addition, there is a general desire in the population overall to gain access to a high standard of care. Healthcare reform programs in emerging markets have dramatically improved the level of healthcare coverage, especially in the “BRIC” countries – Brazil, Russia, India and China.

Beyond the aging population

It's the cliché – ‘changing patient demo-graphics’ are increasing the demand for patient monitoring and imaging technologies that improve clinical outcomes and reduce the risk of procedural complications. Increasing adoption of Minimally Invasive Surgery (MIS) in major countries such as Indonesia, Singapore and India is driving consumption of medical devices in several segments such as General surgery, Gastroenterology, Orthopedics etc. Universal medical insurance coverage in several countries such as China, Thailand and Vietnam is driving elective procedures, such as inguinal hernia, and cataract, and providing basic access of healthcare to a once ‘unaffordable’ segment of population. Additionally, the long-term use of multiple and specialized drugs for the ageing population are becoming common. All these though are enabled through increasing healthcare access beyond urban cities – made possible through diagnostic centers in rural areas, availability of medication (either through local manufacturing or import) and the ability for follow-up care (for example through the use of telemedicine or home healthcare). It is expected that these will also enhance diagnosis and management in oncology, cardiovascular and metabolic diseases and pain management for example. From a medication perspective, Government support for generics and biosimilars is expected to continue. The biosimilars have taken longer than expected to make an impact on the market. While there are regulatory and clinical data challenges that will need to be addressed first before this becomes a reality, healthcare professionals' comfort levels in using biosimilars will have an impact on its uptake. However, we can’t forget that emerging markets, by definition, are markets in transition, and hence have unresolved political and regulation issues, among which are rampant concerns around counterfeit and low quality products, as well as fluidity in regulations. Hence it is always necessary to have alternative scenarios considered when entering or playing in these markets.

Convergence enables potent combinations

In the medical devices market in APAC there is an increasing demand for safety, accuracy and cost efficiency from healthcare service providers. There is a growing trend in the convergence of devices and pharma products, especially in drug delivery. However, to reach its potential, Asia will have to address regulatory and reimbursement hurdles, the lack of sufficient distribution networks, especially in large or complex areas like China and Indonesia, and inadequate training/certification for allied staff.

Historically USA and EU were the key markets for medical device manufacturers however due to pricing pressures and other factors they are focusing on APAC for driving top line growth. The fastest growing markets are, as expected, China (growth rate of 26%) and India (growth rate of 14%). In terms of market size, in 2015, the Japanese market will be the largest ($42.3Bn) followed by China ($33.92Bn) and India ($6.1Bn) market.

The trend of companies that combines biologics with medical devices is one to note in 2013. It offers R&D services during early planning and design (identifying pathways and effector molecules), prototyping and product development. We expect to see products designed, developed and clinically tested in biologic-combination devices, as well as companies currently partnering with a significant number of biopharmaceutical companies to implement its technologies in next generation's products. Such partnership with early-stage companies can reduce regulatory costs and with late stage companies, can to extend its solutions’ patent life by introducing novel drugs/molecules.

Highways to health

The last major evolution in healthcare was heavily driven by the simple fact that significant road systems were put into place in the early 1900s thereby enabling patients to reach treaters and vice versa. We currently find ourselves in a second evolution in healthcare, and again, it is all about new roads. However, this time around, the roads are digital and even beyond that, in the cloud. Preventative (rather than reactive) healthcare issues, such as obesity, are among the most prevalent issues that we face today. Fortunately, new technology is allowing healthcare providers and patients to connect in new and exciting ways, thus making significant strides in addressing the current preventative healthcare crisis. This evolution changes the way we practice healthcare today and how it will evolve in future. These trends will provide patients with information from various sources and allow them to have conversations with healthcare providers rather than a one way download. They will allow treatments and follow-ups to happen beyond the hospital, with home healthcare becoming a major thrust in managing the aging population. The ultimate goal with the use of technology will be to use the large volume of data that can be generated to make informed decision that can increase efficiency in the use of healthcare dollars as well as work towards the ultimate goal of preventive health.

About the Authors

A founding member of Frost & Sullivan's healthcare team, Rhenu Bhuller oversees the healthcare practice for Frost & Sullivan in Asia Pacific. She has almost 20 years of working experience in the healthcare industry and has advised clients on pipeline development, strategy, acquisitions, pharmaco-economics, policy and new business ventures in all segments of the healthcare industry.

Her strengths lie in an in-depth understanding of healthcare markets across the world from government healthcare structures and policy to end user and market evaluations. This provides her with a sound basis and ability to guide companies on the adoption of methodologies and study designs to suit individualized specifications and needs. As one of the region's leading healthcare experts, Rhenu's expert opinions have been heard at private client seminars and industry conferences, as well as in the media like BBC, Bloomberg, CNN and CNBC.

Focused on the pharmaceutical, clinical diagnostics and medical devices sector, she is often sought for her opinions on future trends and directions, and is a frequent contributor to business and trade publications.

Rhenu is also a qualified moderator and trainer and has conducted workshops in healthcare marketing and market research for clients as well as those new to the industry. She is also a sought after moderator for focus groups involving specialist advisory boards and key opinion leaders due to her in-depth understanding and training in this field, and has moderated more than 100 groups with high ranking specialists and officials in both the private and public sector in the last 5 years.

Prior to joining Frost & Sullivan, Rhenu spent 8 years with Bayer Healthcare in various roles from strategy and marketing to in-licensing, portfolio management and research.

Nitin Dixit graduated with a Bachelor of Pharmacy, RGUHS Bangalore, India and has a Master in Business Administration, S.P.Jain School of Global Management, Singapore/Dubai.

He has close to 5 years of healthcare sales management expertise, focusing on the pharmaceutical and medical devices sector in Indian market. He has particular expertise in managing various types of accounts such as private sector and public sector accounts in different locations in India. He has also managed all the key stake holders in the hospitals. He has managed local distributors in both pharmaceutical and medical devices industry in India.

Nitin has experience in covering a broad range of key therapeutic areas such as Cardiovascular Disease, Diabetes, Hernioplasty. He has extensive expertise in sales management by working with leading pharmaceutical MNCs such as Sanofi-Aventis, and MSD, and Medical Device company- Johnson & Johnson medical India. One of the highlights of his career was to successfully launched Januvia by MSD and SecureStrap and PhysioMesh by Johnson & Johnson.

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