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A land of opportunity: HealthInvestor Asia Summit 2019

On 14 May at the Marina Bay Sands Convention Centre, Singapore, the HealthInvestor Asia Summit 2019 brought together healthcare experts from across the region. Against the backdrop of a robust healthcare market with positive macro factors, speakers and delegates delved into the opportunities and challenges, and analysed the changing face of the region’s healthcare market

The Asia healthcare market is an attractive space in terms of growth and opportunity; healthcare services, medical devices, life sciences and medical technologies, are all thriving.

The message that really came to the fore over the course of the HealthInvestor Asia Summit is that this is a sector that’s undergoing fundamental change: demand for healthcare is rapidly growing, due to the acceleration of population growth and an ageing demographic; incomes are rising, the increased prevalence of non-communicable diseases is altering healthcare needs and better access to healthcare and treatments is changing patient expectations.

Lay of the land

Investor Publishing’s own managing director Vernon Baxter began proceedings with an overview of the healthcare landscape, considering the developments that make this a sector of continued and growing interest to investors and opened up a forum for discussion.

From there Fabio de Mola of L.E.K. Consulting provided his data-based analysis of the market looking in detail at investment activity, industry trends and the strategies that are being successfully applied in the ASEAN region. De Mola made clear that while the idea of high multiples may not be easily realised in the region, a buy-and-build model is well-suited to a market where “there’s enough room to grow”.

De Mola pinpointed some of the key trends in the sector – the consumerisation of healthcare, digital healthcare, which he noted requires another four to five years to be investible, as well as underserved and hard to serve niches, expanding access to new and existing therapies and, of course, data and what he termed “data assets”.

Alice Chern Chern Gwee joined from the Singapore Exchange (SGX), introducing delegates to the SGX and the role it plays in the region. “SGX is Asia’s gateway to capital.” She said telling that overseas companies represent close to 50% of total market capital of companies listed on the SGX and highlighted the valuable support SGX provides local and overseas companies.

Delegates raised questions on the advantages of listing on the NASDAQ and the SGX, rather than the NASDAQ and Hong Kong Exchange (HKEX), and Chern Chern Gwee advised that it very much depended on the investor’s platform. If it’s a Chinese company then HKEX will be more suited, however, regional or global companies should list on the SGX.

Eye on the market

Next up was a panel of leading operators from across the ASEAN healthcare market, led by Baxter. ‘What’s moving the market?’ considered the challenges and opportunities for those planning to scale a platform across the region. De Mola had earlier advised, “What’s going to change is what makes money for investors,” and this was picked up on by panellists who took a closer look at the macro factors impacting the market.

Mervyn See of Sumitomo Mitsui Banking Corporation observed changing population demographics – underpinned by growth in population wealth, as well as age – and the resulting strain that this is putting on the system and funding for that system. He noted the resulting move away from “traditional bricks and mortar approach” to healthcare, towards new models of care – for example, acute care to preventative care as a more financially sustainable model.

The panel also considered whether change is consumer or system driven. Christina Low of Singapore Medical Group felt that the consumer – and how they interact with healthcare – is reshaping the market and noted that opportunities for relationships and collaboration with new players in the market – even those previously outside of it – are emerging as a result. Eugene Hong of DBS Bank provided a more leftfield perspective, noting that as we have seen a wave of populism within the political sphere, so too have we seen it in the healthcare sphere and as the ‘consumer’ rises, they rule the market.

With the foundations laid, panellists looked at how healthcare operators and providers can achieve scale across different regions. Hong took a regulatory perspective, highlighting the difficulties of taking the same product or services into different regions. However, if it is a region-wide brand with localised provisions that can work. Low, whose company SMG operates in a number of countries in the region, agreed, adding that it required a “parent company with presence” approach. Hong added that scale cannot be gained in a single country, it must be at a South East Asia level.

Asked to identify the sub-sector they’re most positive about, panellists listed health and digital tech (and the data therein), as well as value-based care and independent diagnostic chains – all of which cropped up throughout the summit.

A PE perspective

After a brief recess, Tom Platts of Stephenson Harwood was welcomed to the stage to lead a panel on the role of private equity in Asia healthcare, accompanied by three key private equity figures. Starting on a positive note, Vikas Sharma of Deloitte Finance said Asia healthcare is “one of the most active sectors”, with a market second only to the US in size.

May Lo of Quadria Capital added that the SE Asia healthcare market is a relatively nascent sector, but that the focus is diversifying and burgeoning start-ups bring more innovative business models. She also noted that the global economic landscape such as the China-US trade war is shifting growth opportunities into alternative jurisdictions, for example, Vietnam.

Yuan En Lim of Everstone Capital Asia, asserted that scale is a pervading challenge in SE Asia, noting that there are more “national champions” than regional ones – lamenting that there’s no “one stop shop” for investors looking at SE Asia. That, the panel agreed, is why PE is important.

PE is a meaningful way to add value to business, En Lim noted, delivering growth and the opportunity to organically grow a platform, or enter new markets, and reach a level of professionalisation. Observing that bigger players are consuming the market share Sharma referred us to the adage, “If you can’t beat them, join them”.

When investing, En Lim emphasised the importance of valuation, “It’s about the short-term investment and the long-term gain.” Simply put, if you’re looking at exiting a business in three years’ time, you need to have the next 10 planned – and that 10-year plan needs to be part of your pitch.

Patients without borders

With the consumerisation of healthcare high on the agenda, Dr Milind Sabnis joined to discuss the resulting increase in medical tourism. Access to and quality of healthcare, transportation and cash were all identified as underlying drivers of this growing kind of tourism in the area. 

Dr Sabnis also noted that how people are ‘consuming’ health is changing – with that comes the need to consider customer satisfaction and customer experience. While different markets have different interests. For example, Singapore is expensive but it is still the top destination for high-end procedures.

Anbu Srinivasan of Fresenius Medical Singapore took us from medical tourism to the opportunities and challenges that healthcare service providers are faced with. Healthcare services in the region are being provided in a myriad of settings – including rural areas where access to care is difficult – Srinivasan observed, and shared how Fresenius Medical was overcoming these challenges. He also identified what he termed “themes” in the sector – such as value-based care, data, AI and machine learning, and home-based care – and looked at the technology really driving the market forward.

He also took a realistic view of AI/machine learning reminding the room that this requires a rich data set, as well as control over the outcomes – “It’s easy to let the technology drive the solution,” he cautioned. However, where applied correctly, he expects to see predictive models, prescriptive models and also risk stratification.

Build it up

The conversation continued into the networking lunch, after which delegates returned for ‘Building scale and quality in the Asia healthcare market’. Investors from across the sector – led by de Mola – discussed the M&A market, drilling down into particular regions and sub-sectors, and looking into investment strategies and the cost of quality assets – which panellists agreed continues to rise.

When it comes to achieving scale, Hui Hsing Ma from TVM Capital Healthcare said that it’s not always easy and that certain models lend themselves to scaling better than others. Jiadi Yu of IFC provided an example of a provider that had successfully achieved scale and picked out the elements that had enabled this, namely: a tiered inter-dependent delivery model, leasing of hospitals, a centralised skills supply scheme, clear divisions of labour force and a relentless focus on standardisation of clinical process.

Ewan Davis from Quadria Capital noted that, in order for an operator platform to be scalable beyond its ‘home country’, it is advisable that there are working relationships with regional partners.

When asked in which sector was there the greatest opportunity to scale in the SE Asia region? Davis said pathology and diagnostics, noting a “huge, unstoppable opportunity”. Hui said home care was an area to focus on.

The doctor will see you now

Technology – or healthtech – was an area of interest that cropped again and again as a strong future opportunity. DoctorAnywhere’s Lim Wai Min joined us to discuss how his digital doctor is an alternative solution to the growing demand the SE Asia health and care sector is faced with. According to the World Economic Forum on ASEAN, the cost of healthcare delivery was estimated to be $420 billion in 2017, a figure it says will increase by 70% over the next two decades. Having a solution that offers some cost-effective relief is very desirable and Wai Min made this point exactly.

The way he sees it, as the technology improves and the data storage technology improves so too does the care it supports. He explained how the smartphone revolution is bringing healthcare forward and concepts such as gamification, which long ago entered the classroom, are beginning to be used to encourage patient engagement with their healthcare. Further, emerging technologies such as AI and machine learning and the harnessing of patient data – diligently and with respect of patient privacy – are paving the way for something new and that is supporting doctors, not replacing them.

Oncology was an area that had been picked up in earlier discussions, Simranjit Singh of Guardant Health furthered the discussion, focusing on precision oncology, trends in the market and what the future may hold. Singh said the treatments available for cancer have been advancing in recent years and is less seen as a death sentence with genomic profiling becoming a more common approach to maximise precision care and ensure “right drug, right patient, right time”.

Even in oncology, Singh says the patient is leading treatment, and what they are looking for requires patients, developers and clinicians to come together. Not only does precision oncology benefit the patient’s individual needs, Singh notes that this it also saves money. The new modes of treatment emerging are redefining how cancer will be treated and, according to Singh, the expanding scope of precision oncology includes recurrent monitoring and early treatment.

Accelerating access

Led by healthcare and finance experts, the final panel of the summit, ‘Innovative financing models for expanding access to healthcare’, explored investment opportunities for healthcare financing. Panellists agreed that additional funding was required; they considered traditional sources such as government frameworks, but ultimately concluded that “financers need to bring healthcare financing solutions to the table".

Adrienne Mendenhall of ACCESS Health International Southeast Asia, Frank Troise of SoHo Capital and Jeff Weisel of EY, considered how to expand access to healthcare, discussed the level of government involvement required in healthcare and the concept of trying to cover everyone – which they concluded meant people would be thinly covered – serving as a safety net for the poor, but not adequate for middle class up.

The panel was also asked about the role of insurers in this, to which they replied as a chorus, “innovation”. Innovation in the insurance sector would lead to the development of new products and ultimately boost innovation, they said. Mendenhall added that this is likely to happen organically with the involvement of fintech, it’s just a matter of how fast.

Mayank Gurani, from the University of Singapore, delivered the final presentation providing an overview of medtech innovation in the region and what’s happening in that arena to accelerate it. Gurani said corporate partnerships are the way to unlock the value of medtech innovation, noting that physicians are not so well-trained in business.

Gurani made clear that there are platforms for tech innovation – such as JUMPStart – working with start-ups to develop different technologies, in areas such as femtech. He also added that Singapore wants to attract such start-ups – that are home-grown and external.

Baxter closed our HealthInvestor Asia Summit 2019 with a succinct round-up of the day’s content. What became clear is that this is a market opportunity and ripe for growth, which is reflected in investor appetites. The healthcare sector is being reshaped – moulded by changing demographics, shifting socio-political trends and advances in medicine and technology, but also a willingness to embrace innovation.

Posted on: 31/05/2019

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