Market Overview

The Asia-Pacific region has seven of the world’s ten most populous countries, and is home to over 4.5 billion people. With the population of Asia accounting for 60% of the global population, the demand for healthcare services is increasing in line with the unprecedented growth of the middle class population, presenting huge opportunities for healthcare companies looking to enter the market.

Both public and private hospitals in Asia are increasingly looking to invest in efforts to increase operational efficiency, improve clinical outcomes, and boost profit margins.

The Asian Market

  • Growth

    Healthcare demand in Asia is reaching unprecedented growth, with rapid population growth (expected to increase by 625 million people by 2040 compared to 2016)*. A significant factor is the rising middle-class population making the Asian market a major opportunity for healthcare companies.

  • Healthcare

    Opportunities in healthcare is not limited to Asia’s local population, but also a growth in the medical tourism industry as well. Malaysia saw over 850,000 healthcare travellers in 2015, hitting 90% of its target by September and generating around US$205m. Over the next ten years China is predicted to see travel spend rise 86% to US$255 billion.**

  • IT Solutions

    Private and public hospitals in Asia are increasingly looking to invest in IT Solutions. Mordor Intelligence has predicted that the healthcare analytics market, valued at $990m in 2014, will reach $4.1bn by the end of 2020. This represents growth of 26.6% CAGR over the six year forecasted period.

  • Revenue

    The Asia Pacific Healthcare market represents an impressive 29% of global revenues. The region has a current market size of close to US$500 million and is still the fastest growing region globally, witnessing a projected growth rate of 11.5% for 2016 (4.6% higher than the projected growth rate for the rest of the world).***).

  • Population

    The Asia-Pacific region has seven of the world’s ten most populous countries, and is home to over 4.5 billion people, 60% of the world’s population.

  • Smart Data

    Smart data has been growing trend for the Asia Pacific healthcare sector with a focus on data collection and data analytics, to enable personalised medicine and improve overall healthcare for the entire population.

The Asian Market By Country

Singapore’s health policy is laid out in the “Healthcare 2020 Masterplan” where there is a focus on driving investment in the country. In 2016, the Health Minister announced that the healthcare budget had more than doubled from $4.7bn in 2012 to $11bn in 2016 with one new acute or community hospital on average coming online every year until 2020. The overall aim is to add 6,600 places in community care, home care, and palliative care. 7,900 hospital beds will also be added by 2020. Healthcare spending in Singapore is expected to reach over $13bn in 2020. Plans beyond 2020, include four new acute hospitals and Singapore’s next integrated hospital development progressively opened from 2022 comprising an acute hospital, community hospital, and a nursing home with about 1,800 beds in all . Six new polyclinics will be built by 2020 and another six to eight more by 2030.

Deloitte has estimated that healthcare spending in Thailand will reach $18.7bn in 2018, representing 8% growth between 2014 and 2018. The medical device industry in Thailand is currently worth an estimated $1.3bn with growth at 12% CAGR, taking it to just shy of $1.9bn by 2019. Diagnostic imaging is predicted to increase 17.3% and patient aids by 5.4% between 2014-2019. Around two thirds of medical devices are imported, with 30% of these coming from the USA, while Japan, Germany and other EU countries are other key sources. Medical tourism accounts for 10% of the Thai economy with around 1.4 milllion medical tourists each year.

By 2020, healthcare spending in Malaysia could rise as high as US$20 billion from US$12 billion in 2013, according to Frost & Sullivan. In 2014, total two-way trade for Malaysia’s medical device industry was US$1.98 billion. The medical device market was worth an estimated $1.7 billion in 2015, but is growing and represents a quarter of healthcare expenditure, according to ReportBuyer. In addition, the pharmaceutical market was worth $2.3 billion in 2015 and is projected to reach approximately $3.6 billion by 2020 at a CAGR of 9.5%.

Malaysia is an emerging centre of medical tourism in APAC and in 2015, Malaysia’s medical tourism industry was estimated to have earned revenues of US$350 million, Frost & Sullivan has noted. While the country holds less than 3% of APAC medical tourism revenues, growth rates are above market at 15% year-on-year.

Japan is the third-largest spender on healthcare in the world after the US and China, and the majority of health care spending is publicly funded. It represents around 11% of the global healthcare industry, with healthcare spending of around US$300bn, and a medical devices market worth around £20bn. US companies supply almost one-quarter of the medical device market and about 15% of Japan's pharmaceutical consumption.

Indonesia’s healthcare expenditure is expected to grow at a 10.6% CAGR between 2016-2020, exceeding growth in BRIC countries, according to The Economist Intelligence Unit. By then, Indonesia will be considered an ‘ageing country’, with more than 10% of the population being more than 60 years old. It already has the highest number of diabetes cases in the region. It continues to attract healthcare investment and infrastructure development due to expected impact of the 2019 universal health coverage pushed through the BPJS Health agency and regulations permitting increased foreign investment in the healthcare sector, according to Frost & Sullivan. Large private hospital groups are looking to expand their representation away from the big cities into provincial cities, EIU notes, and also to retain some of the medical tourism market - an estimated 600,000 Indonesians travel abroad for medical reasons each year. Indonesia’s broadband investment will fill network coverage gaps in last-mile rural locations in the country by 2020.

According to a Deloitte report from 2015, China's annual healthcare spending should grow at an average rate of 11.8% a year in 2014-2018, reaching $892bn by 2018. Spending will be driven primarily by consumers’ rapidly increasing incomes and the government’s public healthcare reforms. China is reforming its healthcare provision, as without it, health spending would increase in real terms from 3.5 trillion yuan in 2014 to 15.8 trillion yuan in 2035 — an average increase of 8.4% per year, according to the World Bank. The number of people over 65 years old in China is now at 140 million and is expected to increase to 230 million by 2030. 
The medical devices sector is one of the fastest growing market sectors and the second largest in the world, but is dominated by domestic suppliers. However, overseas supplier product quality is rated highly with the US, Germany and Japan being the leading importers into a market which had total sales volume of RMB 255.6 ($40.57) billion in 2014, 20% growth on 2013.

Public healthcare investment and increasing private wealth could boost healthcare expenditure by 16.1% per annum in India, the strongest anticipated growth in Asia-Pacific. However, this is from a low starting point compared to other countries, according to Deloitte. Government commitments to improve health infrastructure from around 1.2% of GDP to 2.5% of GDP within five years. The Indian healthcare market is worth US$100 billion, and is set to grow at a CAGR of 23% to US$280bn by 2020. Healthcare delivery in India, which includes hospitals, nursing homes and diagnostics centres, and pharmaceuticals, constitutes 65 per cent of the overall market. An estimated 600,000 to 700,000 additional hospital beds will be needed over the next five years, an investment opportunity of around US$25-30bn according to the India Brand Equity Foundation. Medical tourism in India is worth US$3 billion per annum, with tourist arrivals estimated at 230,000. It is expected to reach US$6 billion by 2018, with the number of people arriving in the country for medical treatment set to double over the next four years.

Healthcare expenditure in Sri Lanka is estimated to have increased from US$2.2bn in 2014 to US$2.9bn in 2015. The private sector accounts for around 60% of this. Budgetary funding allocated to the Ministry of Health is rising steadily, from around US$680m in 2015 to an estimated US$825m in 2017. In 2015, the Government spent around US$1.2bn providing universal healthcare, a 20% rise on the previous year. Private hospitals saw growth of 21% CAGR between 2012-15, compared to 10% in the public sector. Despite low expenditure on healthcare in Sri Lanka, health indicators are similar to more developed countries in the region, with non-communicable diseases on the rise and accounting for 85% of deaths in the country.

The growth in both public and private healthcare will increase the opportunities to export medical equipment and pharmaceuticals to the island. For example, US firms exported around US$21m worth of optic and medical instruments to Sri Lanka in 2013. The opportunities for exporting medical equipment are likely greater because the government imposes prices controls on all imported medicines.

 

*UNESCAP 2016 **Malaysia Healthcare Travel Council ***Frost & Sullivan 2016