LIFE SCIENCES Archives

02/11/2016by EOS Intelligence EOS Intelligence No Comments

A Doctor under Your Skin: Wearable Medical Devices in India, Brazil, and China

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From smart glasses that allow a surgeon to operate having his patient’s medical records at sight to an intelligent contact lens that measures glucose levels of its wearer, technological innovations are changing the world as we know it. Wearable medical device market growth has been promising and the industry is expected to reach a value of US$7.8 billion by 2020, growing at a CAGR of 19% from 2015 to 2020. Since 2015, the USA and Europe have been two key markets hosting majority of users of these new technologies. However China, India, and Brazil are expected to increase its demand for wearable devices driven mainly by rapid expansion of smartphone users and an increasingly aging population. Is these emerging economies’ current set-up favorable for medical wearable to maintain a steep growth?

The use of wearable medical devices is skyrocketing due to aging populations, fast adoption of new trends, and greater incidence of chronic conditions around the world. An increase in health awareness across the globe and a simultaneous increase in worldwide wearable medical device shipments estimated to reach 97.6 million units by 2021, growing at a staggering CARG 108% between 2016 and 2021, might indicate the industry’s large growth potential.

Brazil, India, and China (BIC), in particular, have been registering increasing rates of chronic diseases such as heart failure, diabetes, and obesity for the past several years. Therefore, these countries have started to be considered as the next destinations to focus on in search for high growth-potential wearable medical devices markets.

Regardless of the fact that wearable medical devices are thriving in the USA and Europe, in countries such as Brazil, India, and China, these devices are bound to face challenges that could translate into major roadblocks for the market to grow. For instance, although wearable medical devices have proved to be a significant aid when monitoring and preventing illnesses, these are not yet considered an essential product for healthcare consumers. Consequently, BIC buyers, who tend to also be highly price sensitive, may refrain from purchasing such solutions if the retail price is high in comparison to their purchasing capabilities. As a result, this behavior may lead to a stalling sales volume in these markets and, subsequently, a slowdown in the wearable medical market growth.

In addition, the growth of wearable medical technologies in BIC is challenged by deficient regulatory frameworks with regards to categorizing and supervising such devices for their import and commercialization in each market. Currently, regulatory frameworks are mostly outdated and do not include specific category for wearable devices with proper security measures. Moreover, as these wearables are battery-operated, improper testing due to lack of regulation can affect their safety as well as may reduce the trust consumers need to develop in order to accept and use the device. Further, this inadequate regulatory scenario may drive away potential market players (including key providers).

EOS Perspective

Global wearable medical device market is witnessing a steep growth driven mainly by changes in demographic profiles of many populations and a growing incidence of chronic conditions. In developed economies, wearable medical technology is experiencing high adoption rates and its role in the healthcare sectors is strengthening, mainly because physicians already use such solutions during consultations, whether to monitor, diagnose, or treat a patient. In emerging economies such as Brazil, India, and China, wearable medical technology has even more room to continue expanding, however, current scenarios in these countries may partially impede this growth.

Some of the key issues in these markets include the problem of import regulations unfitted for wearable medical devices, and this seems to be an important issue which needs to be sorted out in the short term to avoid driving potential players and manufacturers away from BIC markets. At the same time, the high retail price makes the wearable devices unaffordable for a large percentage of the population causing low rate of adoption among patients, and hindering medical wearables’ market growth.

Further, the fact that healthcare providers are not planning to include such devices in public health insurance schemes and reimburse the cost of wearable devices as part of their health plans, lowers the chance of this technology reaching higher number of consumers. This limited accessibility to wearable medical devices in BIC markets may result in low consumer’s awareness about their benefits, or even their existence.

Local governments should reform and adapt their import regulations to fit the wearable medical devices characteristics, allowing a better flow of these products to enter the countries without risking human health. At the same time, for wearable medical devices to healthily grow in these promising and widely populated markets, manufacturers and retailers should aim to lower a wearable device retail price. A way to achieve this could be by adding wearable devices to private health care plans (and encouraging public health insurers to do the same) – especially for chro
nic diseases patients and people over 60 years old. This will most likely allow consumers to purchase such a device at a lower retail price or rely on their healthcare reimbursement policies.

28/09/2016by EOS Intelligence EOS Intelligence No Comments

Shire-Baxalta Deal – Post Merger Opportunities

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In January 2016, Shire Plc., an Irish specialty biopharmaceutical company, announced that it will combine with Baxalta Inc., a biopharmaceutical company that was formed as a result of spun off biopharmaceutical division of Baxter International, to become one of the global leaders in the rare diseases segment. The US$32 billion merger deal closed in June the same year and the merged company will be known as Shire. Benefitting from Ireland’s relatively low corporate tax rate, the new company aims at becoming a global leader in rare diseases and expects to deliver robust compound annual growth with over US$20 billion in annual revenues by 2020. While prior to the acquisition, Shire Plc. used to get 45% of its revenue from rare disease treatments, with the Baxalta deal, Shire expects its rare disease portfolio revenue to rise to 65% in the combined entity, clearly indicating the key focus of the newly formed company.

Shire Plc. M&A activity over the past three years helped the company fortify presence in the rare disease specialty, leading way to future synergies achieved through the Baxalta deal. In 2014, Shire Plc. acquired US-based Lumena Pharmaceuticals in a US$260 million plus deal. With this acquisition, Shire Plc. added late stage development compounds for the treatment of rare hepatic diseases and treatment of non-alcoholic steatohepatitis (NASH). In 2015, the company forged another big takeover, a US$5.2 billion deal with NPS Pharmaceuticals, a rare-disease drug specialist. Via this transaction, Shire Plc. gained ownership of lifesaving drugs named Gattex and Natpara expanding its rare disease product portfolio in the gastrointestinal (GI) segment.

While adding new products to its product list, Shire Plc. growth strategy focused on building a portfolio predominantly in rare conditions. Another addition to the list was Cinryze, a medicine for hereditary angioedema (HAE) condition, which came with the buyout of ViroPharma, a US-based biotechnology company, for about US$4.2 billion in 2014. This was followed by acquiring US-based Dyax Corporation in 2015 for nearly US$6.5 billion adding DX-2930, an injectable to lower the rate of HAE attacks, to the list of rare disease drugs. Shire Plc. deals, which consistently focused on inorganic growth in the rare disease market, were complemented by organic development of a robust pipeline also within the rare disease scope.

Rare diseases drugs, often named as orphan drugs, have been among the key focus areas for many pharmaceutical companies over the past two decades, as such products bring in high profit margins and regulatory benefits coming from their development. The new company created through the Shire-Baxalta deal is therefore likely to benefit from the new combined rare disease drugs range. With the acquisition of Baxalta, Shire has a diversified portfolio with a combined rare disease platform in the fields of immunology, oncology, hematology, neuroscience, ophthalmic, GI, as well as LSDs and HAE. Baxalta brings a particularly valuable portfolio of treatments to the table, as even during the talks with Shire Plc. on the planned merger, in January 2016, it inked a deal of US$1.6 billion with Symphogen, a Danish biotechnology company. Through this agreement, for an upfront payment of US$175 million paid to Symphogen, Baxalta acquired exclusive rights to six cancer immunotherapies, focusing on growing area of cancer research called immuno-oncology. The Shire-Baxalta deal gives the newly formed Shire the opportunity to take these therapies through later-stage trials to the market.

Shire also plans to take advantage of Baxalta’s new manufacturing facilities. The new entity announced it would increase its research activity in the Baxalta’s R&D site in Cambridge, Massachusetts research campus, one of the hubs for biotech research that opened in December 2015. It would add another 100 to 200 jobs to the existing research team of 400 people at the center.

EOS Perspective

Shire, thanks to the synergies and elements brought in to the deal by both companies, has a promising starting point due to two key factors:

Strong financial tax profile: Despite the fact that Shire focuses in its operations on the US market, the company expects to lower its effective tax rate to between 16% and 17% by 2017. This can be achieved as the rare disease business is based in Ireland where tax policies are simpler and more accommodating.
Robust rare disease product portfolio: Shire has more than 50 clinical programs in different stages of development focusing on rare diseases. With more innovative products under its umbrella, Shire is likely to have a huge share in the orphan drug product market globally.

At present, only assumptions can be made about the future shape of the combined entity. With clear directions laid down of what the company management would like to achieve, it would be interesting to see whether Shire is able to accomplish the set mark of becoming world leader in rare diseases.

07/09/2016by EOS Intelligence EOS Intelligence No Comments

Traditional Chinese Medicine: Ready for the Global Stage?

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In late 2015, Chinese researcher Tu Youyou was awarded the Nobel Prize for creating anti-malaria drug, using Traditional Chinese Medicine (TCM). Artemisinin, an active compound extracted from an aromatic herb sweet wormwood (which has been in use for treating malaria in China for more than 1,500 years now) was the key ingredient in preparing the prize-winning drug.

Based on herbs and other natural ingredients, the traditional medicines in China treat a range of health conditions, including common cold, pain, gastrointestinal ailments, and chronic illnesses, among others. TCM sector, fully supported by the Chinese government, has its own ecosystem in the country comprising dedicated practitioners, educational institutes, and the pharmaceutical companies manufacturing traditional medicine products.

Despite having been in use for more than 2,000 years (as claimed), domestic market for traditional medicines is smaller in comparison to that of conventional prescription and Over-The-Counter (OTC) drugs. The sector requires competitive TCM products for market expansion. However, this looks a distant possibility, as TCM-based clinical trials account for only about 5% of all trials (open studies) in China at present. This can be attributed to dearth of large organized TCM players with enough funds to invest in R&D. It also suggest that majority of Chinese consumers of traditional medicines rely on time-tested legacy preparations.

The State Council (the highest administrative body in China) meeting held in February 2016 asked for strengthening the sector through policy initiatives, such as increasing the number of traditional medicines in national essential medicine list, ensuring higher quality supervision (farm-to-factory), promoting modern production techniques, and consolidating a largely unorganized sector at supply side. The plan is also to support research and development and to look for ways to hasten industrialization and export of TCM.

Amid the urgency shown by the State Council, and in the light of recent Noble Award, it would be interesting to see if traditional medicines have the potential to provide alternative to conventional medicines at global stage, or will they largely remain a domestic (Chinese) phenomenon.

EOS Perspective

Though policy makers in China see enough potential still waiting to be tapped, the traditional medicines sector needs to overcome challenges in overseas as well as domestic market.

It is apparent that the Chinese government’s efforts to promote traditional medicines overseas in foreign markets have not yielded desired results. For instance, to boost TCM trade, the government announced a program in 2012 to establish 10 TCM trading centers worldwide. While there are no updates available on proposed plans to set up these TCM trade centers, in 2015, the first center of traditional Chinese medicine in Central and Eastern Europe was opened in a Czech hospital, as a pilot project.

The policy makers in China need to work around the fact that the expansion of traditional medicines beyond China is constrained due to doubts about their efficacy and possible side effects. One of the ways to allay fears of non-Chinese consumers (in order to ensure wider acceptance) is to get recognition through Western regulatory bodies, such as FDA. However, this can be a time consuming process, as evident from the history of TCM registrations outside China.

At present, the best approach seems to be to strengthen domestic TCM sector while identifying the TCM-friendly overseas markets and the therapeutic segments with potential to be successful abroad.

For competing at global level, TCM sector requires more TCM-focused companies, such as Dihon, Chinese herbal and OTC manufacturer (which was acquired by Bayer in 2014 with Bayer’s intent to strengthen its position in Chinese OTC market that currently consists of about 50% of herbal medicines). Dihon boasts of a strong TCM portfolio, including its star product Dan E Fu Kang, which is marketed as a gynecological medicine for women’s health indications. Dihon-like companies that have a few best-selling TCM drugs under their belt are exactly what the Chinese TCM sector needs in order to develop and expand abroad.

If successful, the envisaged state policies might lead to creation of a number of large TCM companies, with enough financial power to invest in research and development, thereby creating a robust traditional medicine portfolio. At present, only few known large players, such as Traditional Chinese Medicine Co. and Jiangsu Kanion Pharmaceutical, are operating in the Chinese market.

TCM sector’s international expansion should focus on OTC drugs with safety and success record proven in China, and introducing these drugs in markets where regulatory requirements for market approval are less stringent e.g. in Asia and Africa. Manufacturers of TCM can also look for complementing the existing conventional medicines (instead of replacing them) for life threatening diseases e.g. cancer. While not treating the actual disease, traditional medicines can contribute to providing a wholesome treatment. For instance, past studies in China suggest that TCM is effective in treating side effects, such as radiation injury and inflammation, nausea, and gastrointestinal disorders due to radio/chemotherapy.

It may take long for TCM to challenge conventional medicines and make commercial impact at global level. Till it happens, the traditional medicine market will remain China-centric. Only disruptive policy interventions will make the sector dominant at domestic level, thereby setting the stage for a global take-off.

20/07/2016by EOS Intelligence EOS Intelligence No Comments

FDI Regulations in Indian Pharmaceutical Sector: A Game-changer?

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In June 2016, the Indian government liberalized its FDI policy in the pharmaceuticals sector by allowing 74% FDI under automatic route in brownfield pharmaceutical investments (investment in an existing plant). Earlier, even though 100% FDI was allowed in the brownfield projects, government approval was mandatory for investments beyond 49% stake. In greenfield pharmaceutical investments, the existing FDI policy allows 100% FDI under the automatic route. The recent changes effectively introduce a new regime, under which a foreign company is now allowed to hold a majority stake in an Indian pharmaceutical company without government approval in either brownfield or greenfield projects.

This has been done with a view to boost the development of the Indian pharmaceutical sector. The move is likely to increase the number of investments in the sector along with a decrease in investment timelines leading to a greater inflow of capital in a short span of time. In addition, the policy is likely to result in Indian pharmaceutical companies exporting products to the USA and EU, encouraging the sharing of technologies and overseas investment. An increase in the inflow of funds will also lead to the promotion of R&D activities in the country.

That being said, the liberalization of the FDI regulations has also a potential to threaten competition in the Indian pharmaceutical sector, as seen previously with Ranbaxy. In 2008, Daiichi Sankyo, a Japan-based company acquired a majority stake (including brands, R&D facilities, and production units) in Ranbaxy, a leading Indian generic manufacturer, for US$ 4.6 billion. However, the investment proved unfruitful as post the acquisition, Daiichi faced several regulatory hurdles with the US Food and Drug Administration regarding drug testing authenticity and manufacturing criteria. In addition, four of Ranbaxy’s plants were banned from selling medicines in the USA and Daiichi was made to pay US$ 500 million to the US Justice Department in order to settle the lawsuit. In 2014, Ranbaxy was acquired by India-based Sun Pharma with Daiichi as the controlling shareholder before Daiichi sold its entire stake in Sun Pharma for US$ 3.18 billion in 2015. Once a renowned brand, Ranbaxy has now lost its independent status and exists only as a shadow of Sun Pharma.

Thus, the new FDI regime could easily lead to the sale of several Indian generic pharma companies to pharmaceutical players intending to enter the Indian pharma market, which is considered a generic pharmaceuticals hub with market size estimated at US$ 20 billion as of June 2016. The policy could lead to foreign players grabbing market share and exercising greater control to sway the government to alter the IP regime. This could lead to India losing its independent industry providing low cost essential medicines.

However, things could also take an entirely different turn. Large, well-established Indian pharmaceutical companies might not be looking to receive new investments, which could lead to the acquisition of small and medium-sized Indian pharmaceutical companies by foreign players. This move could lead to the inflow of capital in these small companies, promotion of R&D activities, increased manufacturing of medicines, and higher exports.

While the impact of the FDI regulations change will be seen in the next couple of years, the government has already taken an arduous task of maintaining a balance between foreign investment-friendly regime and guarding the local generic medicines laws while protecting local players from large foreign companies.

07/04/2016by EOS Intelligence EOS Intelligence No Comments

Government Trumps Pfizer Deal

Since its announcement last year, a US$160 billion Pfizer-Allergan merger has been under an ongoing discussion, with great synergies and tax savings expected if the deal was to be finalized, (we wrote about it in our ‘Pfizer-Allergan Deal – What’s in Store for Allergan’ article in February 2016).

However, discussions came to an abrupt end, when the merger was called off on April 6th, 2016 in the wake of changes in tax rules by the US government to check inversions. New rules disregard last three years’ (at the time of deal) acquisitions by a foreign company in the USA in determining its market value. It is a general feeling that the three-year rule was introduced primarily to stop Pfizer-Allergan deal. Since its announcement, the deal was a talking point in political debates with some presidential hopefuls taking an open stance against it.

To secure maximum tax benefits of inversion deal, Pfizer shareholders were required to own 50-60% of the merged entity. Allergan’s market capitalization stood at US$120 billion (against Pfizer’s US$200), owing to three deals, i.e. Allergan-Actavis merger (US$66 billion), Forest Laboratories acquisition (US$25 billion) and Warner Chilcott purchase (US$5 billion), struck in last three years, thereby giving Pfizer shareholders more than 50% of the combined entity. However, this will not be the case now due to drastic reduction in Allergan’s market value as a result of three-year window provision. This also means that both the companies will have to go back to the drawing board.

For Pfizer, this means the need for an increased focus on management of its vast portfolio of drugs (a mix of patent and off-patent products) with an intent to further improve profitability. While Pfizer’s patented drugs command higher prices, the off-patent ones are subject to price decline thereby impacting the company’s profitability. After the announcement of Pfizer-Allergan deal, there were speculations about sale/spin-off of Pfizer’s off-patented portfolio. However, with revenue loss due to the broken deal, the plan (if still any) to sell off-patented business is likely to be put in freezer for some time to come. This could also mean more efforts on research and development front, and being inherently a research driven company, Pfizer has some potentially lucrative drugs in pipeline (including cholesterol lowering and cancer drugs).

For Allergan, the broken deal means looking for alternative ways to strengthen its position outside the USA. The company can take inorganic route to achieve this. No headway was made towards operations restructuring of the merged entity. Therefore, in all likelihood, the research and development assets of Allergan will remain intact, one positive outcome for the company out of the broken deal, as it has some good candidates in the field of ophthalmology, urology, and women’s health. With sale of its generic business to Israeli rival Teva Pharmaceuticals in July 2015, Allergan showed the intent to focus on patented products, therefore the company will have to look for means to raise its R&D budget.

The broken Pfizer-Allergan deal will remain in discussion in coming days from the point of view of missed opportunities for both Pfizer and Allergan, as well as for the political angle involved. Even if the decision was politically motivated, it may have put moratorium on inversion as a strategy for the time being, and it would be interesting to track moves not only in the pharmaceutical space but in other industries as well, following the new regulatory regime.

03/02/2016by EOS Intelligence EOS Intelligence No Comments

Pfizer-Allergan Deal – What’s in Store for Allergan

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In November 2015, Pfizer and Allergan announced a US$160 billion merger deal. Once finalized, the Pfizer-Allergan deal would follow three large mergers/acquisitions concluded by Pfizer in the last 15 years. Though relocation to Ireland to save higher corporate tax in USA is apparently the main purpose of this merger, it is expected to create a pharmaceutical powerhouse with more than US$60 billion in annual revenue. In the light of competitive advantage this deal is anticipated to yield, it becomes imperative to look at Pfizer’s evolution since its first mega deal in 2000.

Pfizer acquired US-based Warner-Lambert in a US$110 billion deal in 2000. With this acquisition, Pfizer gained ownership of blockbuster anti-cholesterol drug Lipitor, besides some popular consumer health brands, such as Listerine. Lambert deal was shortly followed by US$60 billion purchase of US-based Pharmacia in 2003. The deal, while catapulting Pfizer’s revenue by more than US$12 billion, allowed it to gain control of successful brands, such as Celebrex (inflammation) and Xalatan (glaucoma), along with R&D pipeline of cancer drugs and a specialist-focused sales force of Pharmacia.

Pfizer waited six years for its next acquisition, and bought US-based Wyeth for US$68 billion in 2009. This deal came amid imminent expiry of Pfizer’s 14 patents through 2014, including its best-selling drug Lipitor in 2011. Pfizer looked to benefit from Wyeth’s leadership position in vaccines, nutritionals, and biologics, including Prevnar, the first pneumococcal vaccine for infants. Wyeth’s portfolio potential had indeed been locked, as evident in the net 30%-90% increase in sales of its key brands between 2009 and 2014, post-acquisition.

These three deals helped Pfizer in becoming a US$50 billion company with a diverse product portfolio. However, it came with a challenge of ensuring operational efficiency and leveraging synergies with acquired companies. This was achieved through a range of adjustments, including lay-offs to eliminate overlaps and to consolidate various functions. Pfizer deals were severe on the employees of acquired companies, with more than 90,000 jobs eliminated (which may have included those lost to attrition) between 2000 and 2014. At the time of each deal, there were apprehensions regarding the future of research and development in Pfizer. Though the company managed to maintain its R&D budget at about 16% of revenues, several sites (including six from Wyeth and two from Pharmacia) were closed post acquisitions. It was soon reflected in the company’s product pipe line, with only 17 applications filed for new product approval between 2007 and 2014, in contrast to 43 during 2000-2006.

To sum up Pfizer’s strategy, the company acquired rivals with blockbuster brands to boost its topline, and to benefit from pooling of resources. The strategy worked on most counts, except for Celebrex where the sales failed to take off partially due to pull-out (from market) of a rival drug (Merck’s Vioxx) in 2004 owing to safety reasons. Notwithstanding the criticism for massive lay-offs, Pfizer managed to create a lean organization, thereby improving its revenue per employee.

Pfizer’s next acquisition target, Allergan, came in to existence following Ireland-based Actavis’ acquisition of USA-based Allergan Inc. in March 2015, post which the combined entity was renamed Allergan. Allergan then sold its generic drugs business to Israeli rival Teva Pharmaceuticals in July 2015.

As Pfizer’s deal with Allergan looks in sight, there are speculations regarding future shape of the combined entity in terms of employee strength, sales focus, and future product pipeline (i.e. R&D).

Pfizer-Allergan deal involves trimming of sales and administration expenses by more than US$1.0 billion. This is likely to be achieved (mostly) in North America where Allergan operations are concentrated.

Cuts worth more than US$600 million are expected in R&D. With Teva deal, Allergan showed intent to focus on branded proprietary drugs, and Pfizer is also a predominantly green-field research organization. Therefore it is not clear yet, which product programs will face the ax due to little overlap in research focus of two companies.

As Allergan declared end to lay-offs in June 2015, it was expected that most of the Actavis acquisition-related restructuring activity was over by the time Pfizer-Allergan deal was announced. This means the cost savings linked with Pfizer-Allergan merger will result from the existing operations (as of November 2015) of the two companies.

EOS Perspective

Based on precedence of Pfizer takeovers, there is a likelihood that Allergan might bear most of the brunt of cost cutting measures. However, at the outset, a simple merger is not likely to impact either efficiency or earnings (from R&D perspective) of the combined entity due to nearly identical revenue per employee (as of 2014) for both the companies, and Allergan’s significantly lower R&D expenditure (8% of its revenue vs. Pfizer’s 16%).

Cost cutting is likely to be undertaken with an eye on revenue and profitability in mid to long term. From Allergan’s perspective, we anticipate this to be achieved through the following:

Focus on products in the pipeline with good growth prospects: Allergan’s Rapastinel (anti-depressant) and Vraylar (schizophrenia) are in this category; another option for Pfizer-Allergan is to focus on drugs that are in advanced stages of trials i.e. Phase III and IV
Focus on high revenue earning products: While most Pfizer products (including those off-patented in recent years) generate revenues in the range of US$200 million to US$5 billion, Allergan’s portfolio is still underdeveloped (due to limited global exposure) except for few products from central nervous system (CNS), gastroenterology, and women’s health segments

At present, only mere speculations can be offered regarding the future shape of the combined entity, as no concrete steps have been announced. It will be interesting to track the decisions taken by Pfizer-Allergan in the coming months to achieve targeted cost savings.

29/12/2015by EOS Intelligence EOS Intelligence No Comments

Universal Healthcare Is Needed, but Isn’t Enough – Assessment of Public Health Insurance Targeted at Vulnerable Populations in South America

Ensuring an equal access to healthcare services that are affordable and of decent quality has increasingly been on the agenda of several developed as well as developing countries across the world. Throughout 2014 and 2015, we published a series of articles focusing on the South Asian region, in which we looked into various aspects of the universal healthcare in The Philippines, Cambodia, Vietnam, and Indonesia, followed by our final article in the series presenting holistic view on bridging the health insurance coverage gap in the region. But South Asia is not the only region working to achieve improvements in the functioning of healthcare systems and the universal health insurance coverage. In South America, where universal healthcare is more prevalent and public health insurance coverage gap is narrower than in most Asian nations, several countries have shown a range of approaches to enhance the equality to access and quality of services within their public healthcare. While the approaches differ, the common focus across the region has been to broaden the inclusion of particularly vulnerable groups of populations, such as the poor, elderly, and the unemployed. We are taking a look into public healthcare systems in selected countries to asses their strength in terms of catering to these beneficiaries.

As universal healthcare systems are unrolled and implemented to include large part of the country’s population, regardless of the geography, a well-functioning public health insurance system must focus on two important components: clear classification of its beneficiaries and appropriate structuring of the healthcare services financing.

In order to ensure the right terms of access to the public healthcare system, a country’s population that can benefit from such public insurance is typically segmented into various groups, such as the working population, grey economy workers, poor population, and the senior citizens. The strength of a public health insurance system lies in its ability to effectively target these various groups with dedicated plans and schemes, as these sections of the population may have different healthcare needs.

A public health insurance system is usually financed through government funding and contributions from the employed population (which apart from the formally-employed population can also include informal sector), with most of the public funding directed at subsidizing the healthcare for poor citizens and other underprivileged groups (depending on their proportion in total population). A system with specific coverage targeted at each of these groups is likely to be more efficient in terms of generating required finances, redistributing them according to beneficiary requirements, and in channeling healthcare resources.

South American countries are known for their inclination to provide or to work towards providing universal healthcare to their citizens. While the shared focus across the region has been to improve equity in access and financing of health services, in several cases leading to tangible positive health outcomes of the populations, public health insurance systems in most of these countries have evolved over a period of time to their current state through experimentation and deliberations over various policies to achieve a system that works best in the local scenario.

South American countries adopted various models to develop and enhance their public healthcare systems and, based on respective exigencies, their public health insurance systems are unique. Despite these differences, a broad level country comparison is possible on the basis of some common parameters, to evaluate how healthcare needs of key population groups are addressed in these countries. This comparison indicates the relative strength of public health insurance systems from the target beneficiaries’ point of view.

EOS Perspective

As South American example indicates, the development and implementation of universal healthcare system is not a solution as such, but rather a first step to ensure that healthcare needs of all population groups, especially the vulnerable ones, are well taken care of. Universal healthcare systems with no dedicated, targeted programs oriented specifically at certain groups in terms of type and availability of services, provisions and procedures, access to healthcare facilities, and assigned funding, are likely to be able to address needs of these groups only to a limited extend.

From beneficiary’s point of view, this results in unavailability of certain health services, lower trust in the system, and might simply lead to negative health outcomes of these populations. Given their limited financial abilities, these beneficiaries are unlikely to turn to private sector where their healthcare needs would be met (unless private insurance players, looking to fill gaps, with or without government collaboration, are able to provide cost-effective health insurance coverage, again targeted specifically at these groups).

25/03/2015by EOS Intelligence EOS Intelligence No Comments

Universal Health Access in Southeast Asia – Bridging the Coverage Gap

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Affordable and accessible health care service is a common objective for governments across developed as well as developing nations.

Global trends suggest that generally countries, as they attain prosperity, tend to move towards a Universal Health Care (UHC)/ Social Health Insurance (SHI) regime, in which 100% population is provided with health care coverage (scope varies from country to country). There are some exceptions in the developed world, with the USA being an example.

In the Southeast Asian region, each country is at a different phase/stage regarding the implementation of universal health access. Several of these countries, such as Indonesia, Philippines, and Thailand, have implemented UHC (as a policy). The remaining countries in this region have various types of health insurance schemes to cover certain sections of the population, and are experimenting with some schemes to judge their effectiveness. It is expected that these countries will eventually work towards the common goal of achieving 100% UHC.

The following illustration captures the current health care sector situation (from UHC/SHI perspective) in four Southeast Asian countries (Cambodia, Indonesia, Philippines, Vietnam), and highlights few areas that require immediate attention in order to successfully manage universal health access for their citizens.

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Details on country-specific social health insurance design and infrastructure:

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LIFE SCIENCES

A Doctor under Your Skin: Wearable Medical Devices in India, Brazil, and China

EOS Perspective

Shire-Baxalta Deal – Post Merger Opportunities

Traditional Chinese Medicine: Ready for the Global Stage?

FDI Regulations in Indian Pharmaceutical Sector: A Game-changer?

Government Trumps Pfizer Deal

Pfizer-Allergan Deal – What’s in Store for Allergan

Universal Healthcare Is Needed, but Isn’t Enough – Assessment of Public Health Insurance Targeted at Vulnerable Populations in South America