The State of Healthcare in South East Asia

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CONTENTS A Snapshot of Healthcare in the Region The Big Healthcare Themes for 2014 Healthcare Across ASEAN: Country Overviews Appendix: Digital Healthcare Across ASEAN Appendix: Thoughts for Pharma

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Healthcare in South East Asia is going through a period of unprecedented change… Rapid economic growth Rapid population growth Increasing affluence and demand for better, and in some cases, private healthcare Public healthcare sector reform and broadening The introduction of ‘new’ growing healthcare challenges… Healthcare in South East Asia

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A SNAPSHOT OF THE REGION The WHO says health expenditure per capita in ASEAN is around 4% of GDP: that’s low. The OECD average, as a comparative, is around 9.5%. However health expenditure has increased two and half-times between 1998 and 2010, reaching over $68 billion. Nonetheless, healthcare quality and provision varies widely across SE Asia… Excellent healthcare outcomes Immense developmental challenges Considerable challenges such as infrastructure and human capital issues

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ASEAN TOTAL HEALTHCARE SPEND – OVER $68 BILLION Data from World Bank 2011 (latest available) 605 million people Average age < 27yo

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ASEAN TOTAL HEALTHCARE SPEND AS % GDP = Public + Private Vietnam spends the most, while Myanmar spends the least. Looking at public and private spending, private spending is higher, with the exception of Thailand and Brunei, where public spending is higher. Data from World Bank 2011 (latest available) (Total health expenditure is the sum of public and private health expenditure)

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ASEAN GOVERNMENT HEALTHCARE SPEND % OF TOTAL GOVERNMENT EXPENDITURE Data from World Bank 2011 (latest available) Health expenditure, public (% of government expenditure) (Philippines data not available) Government expenditure on health shows a different – but equally revealing – picture of healthcare provision. Thailand spends the most, Myanmar spends the least. Indonesia again is low down on health spending, coming in second last. The top three – Thailand, Vietnam, Brunei – all have well developed public healthcare systems. As a comparative, the US and UK are spending around 19-16%, against the ASEAN average of 6.7%. ASEAN Average 6.7% OECD Average 17.2%

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ASEAN SPEND PER CAPITA Data from World Bank 2011 (latest available) Health expenditure per capita (current US$) ASEAN Average $422.4 OECD Average $4593 We made this graph to give you an indication of just how far behind ASEAN is in terms of real healthcare spending. As you can see, the comparison between the US and UK is extreme. Singapore is the only ASEAN country that comes anywhere close on comparable terms. This does not mean that healthcare in ASEAN is ‘small beer’; on the contrary, it just goes to show the huge growth potential there is! All ASEAN countries - with the exception of Myanmar, Cambodia and Laos - are opportunity markets for healthcare and demand is rising rapidly. Singapore is rightly proud of the efficiency of its healthcare sector: excellent outcomes achieved at a closely managed cost

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INDONESIA There has been considerable investor interest in Indonesia’s healthcare space, including private hospital groups. The Indonesian government has tried to encourage more private sector involvement in the health sector. The Negative Investment List currently stipulates that foreign investors may now own up to 67% (65% previously) in healthcare related businesses. Ownership in the pharmaceutical sector is capped at 75%. It should be noted however that Indonesia still places limits of foreign ownership and rights. Private investors are taking more interest in Indonesian healthcare. Blackstone, Bain Capital, and Dubai's Abraaj Capital, among others, have all been looking to break into the Indonesian healthcare sector by acquiring a percentage of private Indonesian healthcare operator Siloam, according to Reuters. Siloam is the major hospital chain in Indonesia, but there are also a number of other private providers POINTS OF INTEREST FOR HEALTHCARE INVESTORS LOOKING AT ASEAN

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PHILIPPINES Investments, especially in public-private partnerships (PPPs), are big in the Philippines The government opened for bidding the construction of a 700-bed capacity specialty tertiary hospital earlier this year. The project is estimated to cost US$ 135 million. Large private healthcare investments are also taking place; Makati Medical Centre, one of the leading hospitals in the Philippines, is investing heavily in new laboratories for the diagnosis and treatment of diseases… POINTS OF INTEREST FOR HEALTHCARE INVESTORS LOOKING AT ASEAN THAILAND Thailand has a well-developed healthcare sector. Private investment is increasing rapidly as demand for good quality provision grows as government provision falls behind in quality. Bangkok Dusit Medical Services, the largest private hospital operator in Thailand, has invested in highly profitable non-core medical businesses…

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MALAYSIA Malaysia has increased its 2013 budget by 15% for healthcare to US$ 6.36 billion, as increased demand, plus the government’s desire to reach developed country status by 2020, drives healthcare growth. For digital healthcare providers, big opportunities; from 2010-2014 the government is making a push to expand the use of IT in medical care, health education and health services system management. It is pushing “telemedicine” which allows for virtual medical consultation and training. There has been an issue with telemedicine ‘take-up’ however; despite this private sector demand is strong… POINTS OF INTEREST FOR HEALTHCARE INVESTORS LOOKING AT ASEAN VIETNAM An increase in demand for private healthcare in Vietnam is boosting investments. The government is offering generous incentives to foreign investors in the health sector: foreign healthcare backers enjoy a corporate income tax rate of 10%, tax exemption over the first four years of a project and a 50% subsequent tax break in the following years. Last year, VinMec, the country’s largest and first hotel-like hospital was built, featuring five-star hotel standards, 25 VIP rooms, and two presidential suites. The Triple Eye Infrastructure Corporation is awaiting government permissions to invest over $160 million in building a 200-bed international hospital. The Chandler Corporation, has also made a move on Vietnam's largest private hospital group, Hoan My Medical Corporation, putting in $99 million to acquire an 80% stake…

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SINGAPORE An aging population and a focus on improving healthcare is driving investment in Singapore. The country’s recent health policy was laid out in the ‘Healthcare 2020 Masterplan’… Changes starting in 2014 include a new payment scheme introduced by the government that will cover more patients, more conditions and more treatments. In particular, there will be more support for the elderly and for low income families. Singapore plans to add 3,700 hospital beds and recruit 20,000 more healthcare workers. Two more general hospitals, four community hospitals, and six polyclinics will open by 2020. POINTS OF INTEREST FOR HEALTHCARE INVESTORS LOOKING AT ASEAN BRUNEI Brunei is small but rich! Investment remains high in its well funded healthcare sector. Parkway Pantai, one of Asia's largest private healthcare providers, is in a joint venture with the Brunei Investment Agency to manage a 21-bed specialty cardiac center…

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The Big Healthcare Themes for 2014

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The Big Healthcare Themes for 2014 The year 2014 will be an exciting milestone for healthcare across the region; big changes and challenges await… Some of the main issues will be: The continued opening up of the private healthcare market and the embrace of the Public-Private Partnership (PPP) mechanism The increasing relevance of ASEAN A greater demand for better and wider provision from the public sector More focus on growing but largely ignored health problems

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Private Healthcare Growth Private healthcare growth is continuing to grow at a rapid rate – this trend will continue in 2014… In Indonesia, the government has moved in recent years to encourage more private sector involvement and revised the Negative Investment List to allow for more private sector investment. In the Philippines too, investments in PPPs are big. The government needs private sector cash to sustain state provision. In Thailand, private investment is growing at breakneck speed as demand for good quality provision grows and government provision falls behind. In Vietnam, private healthcare is also on the march. The government is even offering generous incentives to foreign investors in the health sector: foreign healthcare backers enjoy a corporate income tax rate of 10%, tax exemption over the first four years of a project and a 50% subsequent tax break in the following years. South East Asia truly is going private and there are big opportunities for private healthcare providers and health firms. People with more money are prepared to spend more money on their health.

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The Increasing Relevance of ASEAN ASEAN is becoming more important and relevant for countries in the region. The ASEAN Economic Community 2015 and the ASEAN led Regional Comprehensive Economic Partnership (RCEP) demonstrate this.

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The ASEAN Economic Community (AEC) The ASEAN Economic Community (AEC) is the goal of regional economic integration by 2015. The AEC aims at: (a) a single market and production base, (b) a highly competitive economic region, (c) a region of equitable economic development, and (d) a region fully integrated into the global economy.

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THE REGIONAL COMPREHENSIVE ECONOMIC PARTNERSHIP (RCEP) The Regional Comprehensive Economic Partnership (RCEP) is a proposed free trade agreement between 16 Asia-Pacific nations. The 10 ASEAN states plus its FTA partners - Australia, China, India, Japan, South Korea and New Zealand. A combined GDP of around $17 trillion. Makes up about 40% of world trade. 16 countries 3 billion people

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The Increasing Relevance of ASEAN As ASEAN becomes more and more relevant, so to does ASEAN and its influence on healthcare. ASEAN leaders have committed to healthcare as one of the priority areas for region-wide integration. Through mechanisms such as the Healthcare Services Sectoral Working Group (HSSWG), ASEAN is attempting harmonize health regulations, and regulations regarding some medical products and devices. This has important ramifications for the healthcare industry; understanding and working through ASEAN is increasingly important, as it takes on a larger regional healthcare remit.

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The Increasing Relevance of ASEAN The HSSWG is an important part of the ongoing liberalization process of the ASEAN Framework Agreement on Services (AFAS). In the future, Mutual Recognition Arrangements (MRAs) on Medical Practioners, Nursing and Dental Practioners could reshape regional healthcare expertise and allow for much more mobility and skill transfers between ASEAN states; likewise with the development of greater equivalences and regional policy streamlining. Many MRAs have already been signed – for example in dentistry and nursing – the issue is streamlining and follow-through at the national legal level on country by country regulations. ASEAN is and will play a much greater role in shaping regional healthcare in the future. This is also an important issue to consider in terms of equity. Although opening up of markets could be a boost for the healthcare sector across the region, it also risks exacerbating divides; it is possible that the better-off will be better off still and that less developed systems may fall further behind. Greater mobility may also lead to ‘brain drains’ where highly qualified practioners move to ASEAN countries where higher remuneration is available, increasing capacity and skill gaps.

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The Increasing Relevance of ASEAN As ASEAN pushes forward with regional integration, there is also a concern over the greater pressure and demand that will be put on some of the regions ‘healthcare hubs’ - the leading ASEAN countries with good but affordable healthcare systems - specifically Thailand and Malaysia. This is because ASEAN is aiming to implement a regional system where ASEAN member citizens will be able to receive health services in any country in the region with a similar standard. Medical workers will also eventually be allowed to work in any ASEAN country via the full implementation of MRAs. This means that the demand for doctors and hospital services will increase in countries with good, but affordable healthcare systems. All these issues will become increasingly important points of focus for the future and in the run-up to 2015.

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Bigger and Better Public Health Provision Across the region, there is a greater push for universal healthcare provision and better provision where it is currently insufficient. From the Philippines to Thailand where public ‘universal’ system are already in place, governments are under pressure to provide better health services to those in harder to reach regions – mostly in rural areas. Indonesia is about to embark on a hugely ambitious program of ‘universal’ healthcare provision via the introduction of basic health insurance coverage through SJSN. Even in wealthy Singapore, the government is reforming its healthcare insurance policies to focus on increasing affordability, through a reformed MediShield and greater provision for the elderly – with more elderly focused community hospitals planned. It is not just the private health sector which is growing, but an increasingly growing public sector. Looking across the other side of the world to Brazil this year, mass protests took place among Brazil’s middle classes at poor public services and provision, including healthcare. What this lesson tells us is that tax-paying middle classes soon demand better services for their hard earned tax payments.

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A focus on growing ‘new’ health threats As ASEAN nations get richer they become more prone to ‘rich country diseases’ – type-2 diabetes, obesity and ‘sedentary lifestyle’ related diseases are all on the rise across the region. Over 191 million people are now living with diabetes in the Asia-Pacific according to the International Diabetes Federation (IDF). Issues such as mental healthcare also need to be addressed. So far the problem is mainly ignored, marginalized - or even worse - stigmatized. As work and lifestyles become more urban and ‘busy’, stress and mental illness is likely to become a growing health problem.

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A focus on growing ‘new’ health threats The other change is that rapid population growth is overshadowing another important trend; Asia is on track to become the ‘oldest region in the world’ by 2050 according to the ADB. Asia’s elderly population is growing rapidly; it is projected to hit 922.7 million by the middle of this century. Despite this shocking statistic, it should be noted that Asia and South East Asia is very diverse in demographic trends - Japan , China, Singapore and Malaysia face an increasingly elderly population, however much of South East Asia still has very young demographics. There are therefore competing wellness challenges across the region and priorities vary from country to country. This means more age related diseases and healthcare needs; needs which are currently largely ignored and in short supply. Asia is focusing on its young, but it is the elderly which may prove to be a ticking time-bomb for the region. Healthcare companies have a potentially large role to play in providing for this growing need. There is a huge lack of capacity in South East Asia for countries to treat and elderly health conditions such as dementia. This is combined with a lack of palliative care and suitable health support systems. Image by garryknight

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HIV/AIDS According to the UNDP, Indonesia faces a threat of a major HIV epidemic. UNAIDS states that HIV/AIDS in Indonesia is one of the fastest growing epidemics in Asia and that the incidence of HIV is a “concentrated” epidemic, indicating high risk populations where infection rates are over five percent. HIV/AIDS has high prevalence levels in Jakarta and Bali (populous regions), but also serious concentrations in rural areas, usually in close proximity to mining areas. This is especially true of Papua. According to a report by UNAIDS, the cumulative number of reported HIV infections in Indonesia has risen sharply from 7,195 in 2006 to 76,879 in 2011. Some of the major issues include a lack of education and public awareness, and access and use of safe sex precautions (this is complicated by societal taboos and some conservative religious attitudes). The Indonesian government is aware of the issue and has set up a National Strategy to combat the problem, with the goal that by 2014 eighty percent of key populations will be reached through effective preventive reduction programs.

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HIV/AIDS Although HIV/AIDS is a growing concern, countries such as Thailand – which once had serious HIV/AIDS epidemics – have made huge progress in tackling the issue according to the UNDP, through education, public awareness and safe sex promotion. Infection rates have been cut dramatically since 1991 and Thailand is one of the very first countries to have achieved the sixth Millennium Development goal, to begin to reverse the spread of HIV/AIDS by 2015, in advance of the target date.

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Medical Tourism Medical tourism is Big Business in Southeast Asia, especially for Thailand, Malaysia and Singapore. Thailand has perhaps the most advanced medical tourism sector (with end-to-end solutions fully integrated with air travel; hotel accommodation for traveling families and airport greeting). It is estimated Thai medical tourism increased from nearly 400,000 foreign patients, in 2007, to nearly 700,000 in 2012 worth a staggering $3.8 billion. That’s $3.8 billion in direct healthcare spending: the total economic impact may be three times that amount. Another point of interest about the Thai health tourism sector is the wide range of countries from which it takes patients – Japan, Middle East, UK, USA and Australia are the big five – not just from its ASEAN neighbors. Singapore is also a globally renowned medical tourism hub and also a center of excellence in oncology (which accounts for high revenue spend per patient): health tourism patients were worth over $800m in 2011 and nearly half from Indonesia. Heath tourism is set to grow further still within the region, as better of patients from ASEAN travel to different countries for treatment, and the region’s growing medical prominence attracts more foreigners from developed markets.

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Healthcare Across ASEAN

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INDONESIA Small budgets and underinvestment have led to basic indeed poor provision compared to other ASEAN states. Basic primary healthcare provision is provided through an array of government social protection schemes. This does not cover the total population. This will change from 2014 with the introduction of a universal coverage scheme (discussed on next slide); this, however, will still only be basic cover. Indonesia’s healthcare system is also decentralized (since 2001), which has led to varying degrees of quality and provision from region to region – Java has relatively good access to healthcare, but across the 17,000 islands, availability is patchy. ‘Puskesmas’ public health centers are the only available health services available in rural areas (if at all). Healthcare spending is set to rise, due to an increase in state spending, and by encouraging the private sector to boost investments in health infrastructure via PPPs (Public-Private Partnerships). There has been a recent law change, increasing the allowed foreign ownership percentage of hospitals from 65% to 67%, also from Tier 1 major cities to across the country. Key Facts 1,800 total hospitals Only 5 hospitals internationally accredited; all 5 are private 0.3 doctors and 0.6 beds per 1,000 compared to neighbouring Malaysia 0.8 and 1.8 respectively. As a comparative, the OECD Average is 4.8 beds per 1,000 population and 3.2 doctors per 1,000 population Major Hospital Groups Lippo Group – Siloam Hospitals Kalbe Group – RSMK Hospitals Premier Group – RS Premier Hospitals Health Issues Increase in non-communicable diseases ((especially cardiovascular diseases) Growing elderly population Malaria and Dengue fever Tuberculosis Growing HIV/AIDs problem Smoking related diseases

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SJSN AND THE INTRODUCTION OF BPJS (A SEA CHANGE IN INDONESIAN HEALTHCARE PROVISION) Indonesia currently has a basic level of healthcare provision, with half the population – i.e. 125m+ - lacking state health coverage or state or private health insurance. The government is set to introduce basic health health Insurance coverage called SJSN (Sistem Jaminan Sosial Nasional), where from 1st January 2014, it will provide 140 million Indonesians with health coverage implemented by the BPJS (Badan Penyelenggara Jaminan Sosial) state social security provider. Further, it aims to have truly universal coverage by 2019. It will mainly provide for the poor and vulnerable, who are currently catered for under a number of other social protection programs. SJSN is a move towards a more comprehensive and joined up approach to state cover and provision. It is worth noting that with the 2014 elections fast approaching and a 2nd term ‘lame duck’ presidency, the government is content for high public spend levels, such as implementing the health scheme, without tackling politically sensitive and economically costly subsidies. The question remains: will the next government have the political will?

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THAILAND Healthcare in Thailand can generally be categorized as high – especially in relation the rest of SE Asia. The public system covers everything from basic health needs up to operations and access to antiretroviral treatment for HIV. Thailand has had a universal healthcare program in place since October 2001, although it is underfunded and puts a serious demand on public resources. This is one of the reasons why there is growing demand for higher quality private healthcare – the emergence of a dual-track system, a growing policy sticking point in Thailand. Thailand has four main health security systems; The Civil Servant Medical Benefit Scheme (CSMBS) for civil servants and their families, the Social Security Scheme (SSS) for employees of private companies, the Universal Health Coverage scheme (UHC), also widely known as the 30 baht scheme, for low income earners. It also has a highly-developed medical tourism sector, as previously discussed. Key Facts 1,200 total hospitals 2/3rd of hospitals in public sector Average of 2.1 beds per 1,000 people Major Hospital Groups Bangkok Dusit Medical Services (BGH) – Thailand’s largest private hospital chain Bumrungrad Hospital Plc - Thailand’s second-biggest listed hospital operator and a leading hospital chain Health Issues HIV/AIDS, which in the early 2000s emerged as the country’s leading cause of death

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THAILAND 2014 AND BEYOND Despite its healthcare strength, Thailand's national health system is in need of improvement, as high-quality medical professionals are in short supply. Thailand is facing a shortage of doctors, especially at public hospitals in rural areas. According to the Private Hospital Association, it is estimated that 40,000 more doctors are needed to ensure quality healthcare, but there are only 2,500 graduates every year. The ‘2011 World Health Statistics’ report by the World Health Organization stated that in Thailand there are just three physicians for every 10,000 patients, compared to 18.3 in Singapore, 9.4 in Malaysia, 11.5 in the Philippines and 12.2 in Vietnam. This may be exacerbated as the ASEAN Economic Community takes effect. Ageing is also an issue. The population of Thailand is getting old. According to Viroj Tangcharoensathien, senior adviser of Thailand's International Health Policy Program, 11% of the Thai population is over 60 years of age and the trend is rising – more elderly healthcare provision is therefore needed. The proportion of older citizens in the total population is expected to reach 14% in 2015, 19.8% in 2025 and nearly 30% by 2050.

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PHILIPPINES The Filipino healthcare system can generally be considered to be of a good standard. Healthcare is provided by the Philippine Health Insurance Corp (PhilHealth), which has existed since 1995, and operates the National Health Insurance Program. It is estimated that the program covers around eight out of ten Filipinos. State spending on healthcare is limited due to constraints on the state budget. In 2010, a major reform effort was made to achieve universal coverage, reduce payments and provide more comprehensive cover. Some still remain uncovered however; some rural areas only have basic primary healthcare. The Philippines has a decentralized hospital system setting, wherein the Department of Health (DOH) serves as the governing agency for both local government units (LGUs) and the private sector providing services to communities and individuals. The Philippines has a large private healthcare sector in which most expenditure is out-of-pocket, with the remainder being funded through insurance schemes. Medical professionals are of a very high standard, training at the top universities in the country or outside, usually in the US. This has led to a number of Filipino health professionals being ‘poached’ by western countries – such as the UK – who have recruited Filipino nurses to fill shortfalls. Some areas in the Philippines are still understaffed. Key Facts 1,921 total hospitals Private sector hospitals 1,202 State hospitals are much larger than private and account fro 51% of the country’s 93,180 hospital beds Health Issues Heart disease

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The private sector, which is much larger than the public sector in terms of human, financial and technological resources, is composed of for-profit and non-profit providers that cater to 30% of the population. Although the private health sector is regulated by the DOH and the Philippine Health Insurance Corporation, health information generated by private providers is generally absent in the information system of the DOH. Regulation of health science schools and universities is under the Commission on Higher Education, while the regulation of health professionals is carried out by the Professional Regulation Commission. Some of the top private hospitals in the Philippines: St. Luke's Medical Center Makati Medical Center Asian Hospital and Medical Center University of Santo Tomas Hospital The Medical City PRIVATE HEALTH IN THE PHILIPPINES

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MALAYSIA Malaysia has a very high level of healthcare, from basic needs to advanced treatment – GPs to advanced invasive surgery. It may have a low ratio of GDP spend, but its public healthcare system is one of the best in Asia. This is primarily due to a well-developed co-existing government and private healthcare system. A significant amount of coverage and provision is facilitated by private healthcare providers. The government is committed to universal coverage and public medical services are heavily subsidized. For the poor, healthcare is free. A majority of Malaysians have private insurance policies or pay out-of-pocket for private healthcare expenses. Through this ‘two-tier’ system the population has easy access to primary- and secondary-care facilities. The government accounts for around 60% of total healthcare spending in Malaysia, but it is trying to reduce costs by advancing the private sector as an ever greater healthcare provider. Malaysia’s healthcare industry is valued at around US$8.4 billion. The government is pushing for spending on both public and private healthcare to rise to around 7% of GDP by 2020 in order for Malaysia to reach developed-country standards. This may be difficult to meet however, due to Malaysia’s fiscal consolidation and current budgetary constraints. Private and public healthcare demand is set to grow due to an aging population, increased prosperity and greater consumer awareness of private healthcare services. Key Facts 358 total hospitals 138 public hospitals 38,394 public hospital beds 2,880 public health clinics 220 private hospitals 6,589 private medical clinics Major Hospital Groups KPJ Healthcare Berhad IHH Healthcare Berhad Columbia Asia Ramsey Sime Darby Health Care  Health Issues Non-communicable diseases such as heart disease and type-2 diabetes Dengue fever

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VIETNAM Healthcare in Vietnam can generally be described as good to basic cover, but suffers from poor provision in rural areas. Public healthcare provision is also limited. Private healthcare expenditure is rising rapidly owing to increasing prosperity coupled with low level state provision. Vietnam – along with Korea – is reckoned by Big Pharma to have the most corrupt drug purchasing system in the region. In 2010, 60% total coverage was achieved. Vietnam covers its population via a number of programs. One is the Vietnam Social Insurance Agency, for employees of state-owned enterprises and private companies. This is employee and employer contribution based – around 5% of salary. Vietnam also runs a Healthcare Fund for the Poor, with the aim of achieving universal coverage by 2014. Universal coverage, however, is unlikely due to poor health infrastructure, especially in rural areas, and complications involved in covering the informal sector. The government carries around 30% of total expenditure on healthcare, with households making up the rest, increasingly via buying their own health insurance packages. Most healthcare expenditure is now in the private sector, accounting for over 60% out of an expected total healthcare spend in Vietnam in 2014 of $6 billion, up from $3.5 billion in 2009. There is a big push for private health sector involvement; this is driven by the need to upgrade services, lack of state finance, and a growing middle class. The Vietnamese government has implemented a number of laws from 2008 to 2011 to encourage growth and investment in the health sector. The government has encouraged private investment in the health sector, mostly due to Vietnam’s broader social mobilization policy in health; this has been backed by foreign investor tax breaks. The framework for private healthcare providers is therefore relatively good. Key Facts 1,063 total hospitals 137 private hospitals 152,000 hospital beds State hospitals are much larger than private and account fro 51% of the country’s 93,180 hospital beds Health Issues Developing country ailments including rabies, malaria, dengue fever Tuberculosis

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SINGAPORE Despite the relatively low level of spending on healthcare in Singapore, it has one of the best healthcare systems not only in SE Asia, but also in the world. Economically, Singapore may have the world’s most efficient healthcare system. Its facilities are world class and cater from basic services to highly advanced transplant surgery; many people travel to Singapore for ‘medical tourism’. Singapore operates a universal healthcare system through compulsory insurance, subsidies and price limitations. No medical service is free, despite public insurance schemes and subsides. This is designed to ration the use of services. Around 70-80% of Singaporeans obtain their medical care within the public health system via the three major public healthcare finance schemes; Medisave, Medishield and Medifund. Private healthcare demand is still high however, via private insurance schemes. Overall, the ‘Healthcare 2020 Masterplan’ aims to add 4,100 hospital beds by 2020, including 1,900 community hospital beds, mainly to cater to the aging population. The government also plans to build four new acute hospitals between 2020 and 2030. In 2014, MediShield will be renamed MediShield Life, the age ceiling (previously 90 years) will be removed and the compulsory fund will cover all Singaporeans, including those with pre-existing illnesses. The government has also introduced the Pioneer Generation Package, which will pay for healthcare bills for those in the late 60s and older. For low-income families, the qualifying age floor of 40 years will be removed from the Community Health Assist Scheme (CHAS) so that children in these families can also receive subsidized outpatient medical treatments. Subsidies for lower and middle-income patients at specialist outpatient clinics will also be increased. Key Facts 25 total hospitals 10,756 hospital beds 15 public hospitals 10 private hospitals Health Issues ‘Developed country’ ailments such as cancer, cardiovascular diseases and strokes; these account for 60% of all deaths

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BRUNEI Brunei has a very good public health care system, in which all citizens are entitled to free medical care; this is paid for by the state’s rich oil and gas resources. Brunei is also a very small country at the tip of Malaysia, with a population of around 408,000; this makes the system more manageable. A handful of hospitals are supported by health clinics around the country. These facilities are of a high level and provide good treatment for all standard medical needs. Health facilities are very good and a large number of health professionals and doctors receive their training in the UK, North America, New Zealand and Australia; until recently all medical training took place overseas as there were no medical training establishments in the country. The government also funds overseas specialist treatment, usually in Singapore and Malaysia, as part of the paternalist, absolute monarchy ‘social compact with the people’. Key Facts 6 total hospitals 4 public hospitals 2 private hospitals 17 heath centers Health Issues Ageing population Lifestyle related health problems such as inactivity and smoking

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MYANMAR, CAMBODIA, LAOS Healthcare in these three countries can generally be characterized as poor and underdeveloped; the countries themselves could also be categorized the same way. Myanmar’s recent political and economic opening has revealed an extremely impoverished and underfunded healthcare system, which will require substantial investment and time to build up; international donor agencies have recently started working on Myanmar’s numerous public policy predicaments. Cambodia and Laos are increasingly being left behind by their SE Asian peers. Rural agriculturally based economies characterize the current landscape. Government care is therefore very basic, although better in urban areas. For the private healthcare sector, there is little demand due to small income levels (see graph to the left on per capita GDP compared to Malaysia). ‘Subsistence incomes’ do not include allocations for private healthcare. GDP per capita (current US$) - 2011 Data from World Bank (Myanmar data not available) Health expenditure per capita (current US$) 2011

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Appendix: Digital Healthcare Across ASEAN

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3,784,644,400 43% 57% Total Asian Population Rural Urban 1,033,688,491 Internet Users 27% Internet Penetration 3,110,235,171 Mobile Subscribers 82% Mobile Penetration ACROSS ASIA

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Digital health is growing in South East Asia – like the rest of the world eHealth, telehealth, mHealth, social health THE APPLICATION OF DIGITAL HEALTH

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Telehealth Systems Therapeutic & Diagnostic Medical Devices Remote Monitoring Devices Mobile Health Applications Secured Wireless Communication Medical Devices Medication Monitoring Equipment Mobile Health Devices Medical Robotics Personal Health Records Communications Networks Gaming for Health ePrescriptions Patient communities Information websites SOME EXAMPLES

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INDONESIA IT and digital technologies are already being used widely in Indonesia – although there is a huge need for a joined up approach to IT systems integration. So far in terms of IT integrated systems, these are limited, usually to one hospital or one hospital unit, if at all. They are also all found in high-end private hospitals. Potential is ripe! Digital technologies though are widely used; according to Edelman Indonesia’s ‘Healthcare Professionals Survey 2013 ’, 4 out of 5 physicians in Jakarta trawl the internet for work-related information. Digital is already used in helping doctors with limited means and services to make diagnoses. Dokter Gratis (Free Doctor) An App for consultation (iOS, Android) Developed by Warung Kreasi and handled by Medika Consulting group At the moment there are 12 general practitioners to respond to all the chats every day. Working in shifts, it’s claimed that a doctor has the capacity to handle about 1,000 chats per day. The app has so far been downloaded 130,000 times with around 500 chats happening each day SOCIAL AND DIGITAL Some widely used digital apps… Dokita (Dokter Kita – ‘Our Doctor’)  An (Android) app service of Dokita.co, one of the products/ideas by Aibilities; Patients are able to: Consult Submit prescriptions Purchase medicine & medical items Aibilities is a startup company focusing on health issues DIGITAL HOSPITAL TAKEUP Our preliminary research shows that digital hospital and healthcare system take up is low. According to our contacts in the Ministry of Heath, patient-centric e-records have been implemented in a limited number of cases. In the small number of hospitals that they have, such as Cipto Mangunkusumo Hospital (RSCM), there is still limited awareness and understanding. The Ministry says there is plenty of scope for improvement. Most hospitals are still using internal based information systems (HIS), and there are no major digital providers. The only major firm is AdMedika, who provide a Hospital Information System (Hisys); the firm is a subsidiary from Telkom Indonesia.

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PHILIPPINES The digital landscape in the Philippines is changing fast. At present, the Philippines is the networking capital of the world and growing as time goes by. Seeing the necessity of digital health strategy, Philippine healthcare initiatives are now finding its rightful place in the digital space. The government together with the private sector is pushing forward the digitalization of Healthcare information and accessibility for the benefit of the Filipinos. DIGITAL HOSPITAL TAKEUP Government and Private Sector Initiatives Digital Healthcare Week 2013 Conference and Exhibition is a one-stop-shop where policy-makers, senior executives from healthcare providers, care providers, clinicians, nurses, healthcare IT professionals and technologies companies can come together for a week of collaboration, sharing and learning for improving the quality of care and accessibility to healthcare for patients. Full Information: PHIE Workshop Private Sector Partnerships Last July 2013, Smart Communications, Inc. subsidiary Voyager Innovations, Inc. collaborated with Asian Hospital and Medical Center to develop a digital health system that will improve coordination between patients and their healthcare providers. Full Information: Smart subsidiary partners with Asian Hospital for mobile health project

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THAILAND Successive Thai governments have aimed to turn the country into a healthcare hub in South East Asia; however, the country has never had a strategy or a policy for establishing a digital electronic healthcare system. Patient e-records and integrated IT systems are currently not widely used, with traditional administration remaining the primary system for keeping patient records. DIGITAL HOSPITAL TAKEUP There is one example of digital and IT systems beginning to be integrated into healthcare. A Thai IT company has developed its own innovative application, Tele Diang, which could ease problems associated with the country’s shortage of radiologists by offering a pioneering tele-radiologist service. The solution allows radiologists to access the system from other hospitals or even from home via the internet and view the images and send back their interpretations. This has so far been adopted by at least 20 hospitals nationwide, including Praram 9 Hospital and Vejthani Hospital in Bangkok, Srisawan Hospital in Nakhon Sawan province and other provincial hospitals.

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MALAYSIA For digital healthcare providers, big opportunities; from 2010-2014 the government is making a push to expand the use of IT in medical care, health education and health services system management. It is pushing “telemedicine” which allows for virtual medical consultation and training. However… This is a very ambitious national initiative and has failed to get large-scale traction due to a lack of knowledge and execution capabilities. DIGITAL HOSPITAL TAKEUP With the slow nation-wide take up of digital healthcare, hospitals in both the public and private sector have been installing their own system networks – on a case by case, individual hospital by individual hospital basis. There is definitely demand for technology and integrated systems, but no grand joined up strategy at present, such as in the UK.

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VIETNAM In Vietnam, digital healthcare is so far mainly convened to administrative systems, although ‘telemedicine’ is also beginning to be taken up. Digital healthcare growth potential is therefore strong. Predominantly, e-health applications are so far used to support the management and administration of health services, reduce arbitrary work pressure for staff of health facilities, and improve the quality of Information. DIGITAL HOSPITAL TAKEUP In hospitals, the term e-health is understood so far as a software system for the purpose of public health, mainly free software, provided by the state. Current examples include Medisoft (by MOH): the standard software for all hospital statistic medical reports Healthnet Goodsoft E-Health (by IBOSS Vietnam) The introduction of ‘Telemedicine’ has recently been picked up, and some systems are used in tele-consultation, tele-surgery assistance, tele-imaging, and tele-cardiology. This has proved very popular with medical professionals and patients.

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BRUNEI The Government of Brunei aims to have a single electronic health record that is accessible from any government hospital, clinic or healthcare centre. It has signed an agreement to develop the Brunei Healthcare Information System (Bru-HIMS), a nationwide project to digitise patient care documents and provide electronic medical records. iSoft and Ishajaya Technology have been commissioned to build the framework of the digital healthcare system that will provide access to patient data, identity management, process automation for administrative and clinical departments, workflow design and resource scheduling. DIGITAL HOSPITAL TAKEUP Brunei was the first country in the region to have telemedical facilities that allow patients to access stroke specialists in Germany without stepping out of Southeast Asia. Telemedicine has helped connect Jerudong Park Medical Centre (JPMC) doctors and patients with specialists from overseas through satellite technology, video conferencing and data transfer through phones and the Internet, a strategy that will put it closer to its bid to lure medical tourists. Telemedicine has also helped connect doctors and nurses of Neuroscience Stroke Rehabilitation Centre (NRSC) with Krakenhaus Nordwest Hospital in Frankfurt, Germany through a protected data line to allow for assessment, interpretation, and reporting of MR-I and CT imaging.

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Appendix: Thoughts for Pharma

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Pharma Market – South Asia Region US$ 40.5bn, YoY +5.5% -1.6% +9.7% +12% +8.7% +3.6% +5.7% +6.2% +20.6% ASEAN is thus about $15.4-$16.5bn Source: an MNC client’s market assessment Of this our client reckons MNCs have just 20% Rx & 11% OTC market share in Indonesia – but Rx growth c. 16%

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Drugs Spend And Market Size Source: World Health Organization Thailand is key for regional pharma –large predominantly public spend. Thailand also has the second biggest market size. Malaysia is also big spending– mostly private, despite its small market size. Vietnam is mostly private spend, despite large state healthcare provision. The Philippines is almost entirely private spend. Indonesia’s market potential is huge – biggest economy and population in the region with solid growth rates – but from a low base.

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Stephen Lock Edelman Indonesia Stephen.Lock@edelman.com THANK YOU