Asia’s healthcare sect to account for one-third of the global market, 2015

May 22, 2012

Large firms in the healthcare sector in Japan and the United States are looking for opportunities in Southeast Asia, including Thailand, as revenues in Asia’s healthcare sector could account for one-third of the global market in 2015, according to a study by research and consulting firm Frost & Sullivan.

Meanwhile, the healthcare industry in Thailand is bracing for the Asean Economic Community in 2015.

Speaking at a recent panel discussion titled “Is the Healthcare Industry in Thailand Ready for AEC?” industry experts agreed there is room for growth for the Thai healthcare business when the single market opens. Apart from hospital services having international standards, Thailand is developing biopharmaceutical products and medical devices to reduce reliance on imported products.

Hospital consolidation and diversification is likely to continue stretching beyond regional borders from 2012 to 2015, leading to changes in purchasing and services provided.

The liberalisation of the services sector under the AEC allows investors to hold more than a 70% stake in four major service sectors, including healthcare. Hospitals are diversifying to increase competitiveness. For example, Bangkok Dusit is aggressively increasing investment in non-core medical businesses, from US$16.6 million to $133.3 million (Bt4.122 billion), Frost & Sullivan said in its research.

More non-traditional healthcare players are likely to acquire stakes in health institutions, or vice versa, while traditional hospital players are extended to other healthcare-related fields such as health education, clinical research or medical device research and development.

Healthcare companies find Southeast Asia most attractive after India and China. Within the region, Indonesia, Singapore, Malaysia, Vietnam and Thailand are countries investment funds are most bullish about. Between 2004 and 2011, foreign direct investment (FDI) markets recorded 653 cross-border investment projects in Asia from 321 companies in the pharmaceutical and biotechnology space, worth a total of $28.6 billion. China received 186 inward investments, followed by India with 157 and Singapore with 94.

British firm GlaxoSmithKline (GSK), Swiss company Novartis, and Germany’s Bayer led the investment charts over this period with 21, 16 and 13 projects respectively.

“Among Asean countries, Thailand is very strong in terms of medical services. Pricing is also a key to success,” said Rhenu Bhuller, global vice president for healthcare of Frost & Sullivan.

Asia-Pacific countries are expected to see more than 150-per-cent growth in healthcare expenditure from 2010 to $2.93 trillion in 2020. Thailand’s healthcare expenditure is expected to grow by 8.4% annually from 2010 to $25 billion in 2020.

She said the generic market in Asean would also be more attractive. More hospitals have upgraded or have refurbished to brace for higher demand. In the Thai market, hospitals in Bangkok served more than 43 per cent of medical tourists coming to Asia and contributed 22% of revenue in 2010. Of the medical tourists, more than 50 per cent came from the Middle East.

Surapong Ambanwong, chief medical and international business officer of Prasit Patana, operator of Phyathai Hospitals, said that when the AEC takes effect in 2015, more healthcare firms were expected to form partnerships in terms of financing and management.

He said information and communications technology systems also would become a bigger part of the change in medical services to improve operations and cost control. In addition, the advanced technology would help the healthcare businesses provide electronic marketing and sales to their clients.

He added that a larger number of senior citizens, along with global warming, would be factors in setting medical-service trends.

Preecha Bhandtivej, president of the Thai Medical Device Technology Industry Association, however, said there was no government support for medical equipment, as each body conducted research and development separately. But the results of R&D have never been materialised.

“The government should promote SMEs in the healthcare business to manufacture medical equipment in a bid to reduce imports,” he said, adding that the Kingdom now had more than 2,000 small and medium-sized enterprises in the medical-equipment business.

Boyd Chongphaisal, general manager of GlaxoSmithKline (Thailand), said two major factors global pharmaceutical brands focused on were how to capitalise and control cost.

Last year, the domestic pharma market saw a rise of 1.3 per cent to Bt100 billion, which was on par with the country’s growth in gross domestic product. In fact, if the pharma market’s growth is higher than that of GDP, the industry must be considered healthy. However, drug prices are subject to innovation, appropriate pricing, customised product offering and trust. He added that before 2007, the domestic drug market had seen double-digit growth every year. The main reasons are that cost containment has led to a reduction in the development of new drugs and the number of generic drugs has increased.

Surapong said one of the major constraints challenging the healthcare business was lack of human resources, particularly pharmacists and technicians. China, India, Bangladesh and Western countries encounter the same problem of shortage of specialists and professionals.

Per-capita healthcare expenditure in this region is far below the global average, the lowest being in Vietnam and Indonesia. According to Frost & Sullivan’s study, the proportion of healthcare workers in the Asia-Pacific region is 6.8 per 1,000 population, compared with 18.9 in Europe and 24.8 in the US in 2010, Bhuller said.

Based on the research, the Asia-Pacific pharma market will grow at almost triple the rate of the rest of the world, accounting for one-third of the total by 2015.

Thailand’s medical-device market in 2011 was worth $900 million and is expected to reach $15 billion in 2015. The combined population of India, Indonesia, Malaysia, Vietnam, the Philippines and Thailand is estimated to be 1.69 billion, but they together represent only 6.7% of the global medical-devices market.

Thailand’s hospital infrastructure and upgrading drive for the medical-imaging market was $70 million in 2011 and is expected to reach $100 million in 2015.

An estimated 5 million beds, or 25%, will be provided by the private sector in Asia by 2015. The projected number of beds in Thailand in 2015 is expected to be 87,516 in pubic hospitals at a compounded annual growth rate of 2.6%, and 36,820 in private hospitals, at a compounded annual growth rate of 1.8%.

Category: General health news

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