Asian healthcare made notable strides in many areas in 2018, as expected, but there also remains much work to be done. Universal healthcare and digitalization hit a few regulatory hurdles and setbacks. While regional merger and acquisition (M&A) deals and partnerships continued, these remain dwarfed by massive deals in the United States, such as those between CVS-Aetna and the JPMorgan-Berkshire Hathaway Amazon partnership. These signaled a new era of industry integration that has not yet reached Asia. Below our are predictions for the year ahead.
Predictions for 2019
1. Reforms Will Shift Value in Healthcare
Asia had some big successes in progressing universal healthcare last year – such as in India, the Philippines, Thailand, and Singapore – and 2019 will test how robust these initiatives are. Following national elections, we can expect steps towards some painful but necessary guidelines and legislation, which will better define areas where the public sector is deficient and private enterprise can provide support.
As the structural reforms of 2018 begin to take effect, a new wave of opportunities will come in implementing and strengthening value-based care in existing systems. Payers – both governments and private insurers – have been investing steadily to prepare for long-term change management in reimbursements. The Philippines has signalled a move towards an evidence-based diagnosis-related group (DRG) payment scheme across a broader range of services for its PhilHealth social insurance programme. Insurers such as AIA have continued to implement pre-authorisation and other plan features that place a heavier weight on outcomes to determine eligibility for medical care coverage. A new wave of reforms in health technology assessment in Japan and China will emphasize outcome-driven reimbursements and value-added services which will impact the profit margins of providers and pharmaceutical companies.
2. Ecosystem Partnerships Will Go Beyond the Healthcare Industry
While not a novel strategy, ecosystem partnerships will be a major theme in 2019 as the consumerization shift reshapes healthcare as it has done with many other industries. Many pharmaceutical companies and payers have ventured out from their traditional B2B focus, spending on innovation centers and funds in the hopes of finding and owning the next healthcare unicorn. However, other players also see an opportunity to take a share of the region’s growing healthcare spending, and the industry is attracting the likes of regional telcos, banks, and the new kings of Asian tech such as Alibaba, Tencent, and Grab. Such new stakeholders are piloting new technology, financing products, marketplaces, and tie-ups with innovators and incumbents to access new segments of the population. At the same time, we will see trend in more personalized offerings – in terms of health, wealth, and access to information – which has long been a forte of tech and consumer players, but now an increasingly important capability for healthcare incumbents as well.
While these many new parties want a piece of the pie, the eventual winner will be the one that controls the serving dish – the owner of a platform connecting players to customers that governs when and where cash and data flow. Such a platform could be the key to generating insights with real commercial potential and impact for healthcare players. While insurers are well positioned to act first, they don’t currently have access to a broad enough mass market segment and suffer from a relatively low level of consumer trust. However, regional telcos and banks don’t necessarily fare better in this regard. This opens the door for regional disruptors such as Grab, CXA, or Ping An to expand outside their home markets and offer broadly accessible products to underpenetrated markets in Asia.
3. The New Space Race: Asian R&D and Innovation Accelerate
The center of innovation and engineering for medtech and devices is beginning to shift towards Asia. Last year, China developed its first drug-releasing heart stent, and many companies are developing research partnerships with local universities, medtech firms, and hospitals. Singapore and China have made massive investments to attract biotechnology to their shores and creating new global hubs, such as China’s Zhangjiang Pharma Valley.
At the same time, the “CRISPR” babies controversy that originated in a Chinese university at the end of 2018 has also opened a Pandora’s box over the ethics, consent, and morality of gene editing. It also showed some parts of Asia might be prepared to redefine and bend some international norms. If fields like gene editing will be the space race of this generation, we can likely expect key advances to come from the power players in this region, given the large number of research projects combined with looser regulations than in the West.
4. Digitalization and Cyber Risk Hand in Hand
Along with the automation and integration that we predicted in 2018 comes a need to invest in cybersecurity. 2018 was a year of leaks and breaches: In the 12 months to October 2018, 27 percent of healthcare organizations reported a cyberattack. Even Singapore’s much-lauded public healthcare system experienced a high-profile data breach affecting 1.5 million patients, as did Hong Kong. More attacks are likely to occur, and it takes almost five times as long to detect an intrusion for companies in the Asia-Pacific region compared to global counterparts.
Governments are increasingly beginning to understand the risks and how to mitigate them. Singapore, for instance, has responded swiftly and strengthened its healthcare cybersecurity introducing several new measures. That will likely trigger a growing wave of hires for cyber security roles and technology investment in the region. While larger insurers, hospitals, and other stakeholders have gradually built up their cyber resilience, smaller players will also need to make investments in order to retain customers. Public tenders for digital health projects will have lengthy sections assessing risk, given the high-profile nature of these attacks.
The Future Pace of Change
Even with the global geopolitical climate in its most tenuous, unstable state in recent memory, the pace of healthcare change will continue steadily; it must, because Asia’s populations are growing older and sicker. In partnership with BRINK and Marsh & McLennan Insights, we will shine a spotlight on major themes in Asian healthcare throughout 2019.