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Changing times of healthcare investment in ASEAN
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We are looking into how ASEAN's healthcare investment landscape and priorities are shifting towards a more value-based approach.
Published February 2023. Available in
Changing times of healthcare investment in ASEAN
By Yoshihiro Suwa and Aditya Agarwal
This article analyses three main elements of healthcare investment in Asia at present momentum.
I. INCREASED DEMAND, FOCUSED ON DOMESTIC MIDDLE CLASS
"In the last 2 years many pharmaco, insurers, and other stakeholders have assigned Ecosystem Officer to drive the industry-wide partnerships. And the topic of the partnerships is across disease awareness, customer/patient engagement, primary and secondary prevention, access to medicine, to new business development. We see massive excitement from all the stakeholders."
Pre-COVID, ASEAN's healthcare investment landscape was dominated by focusing on traditional models like super specialty hospitals and distribution of high-end medical products.
Post-pandemic hyper-awareness and adoption of digital health tools now is focusing on the investment landscape and priorities too are shifting towards a more value-based approach.
From our recent conversations and deal support we see the emergence of a few themes:
Despite the major decline in patient volumes in outpatient and elective surgeries, financial performance of non-medical tourism super-specialty hospitals was healthy in 2020-2021. While medical tourism volumes are eventually expected to come back, hospitals with a healthy mix of universal coverage patients and focusing on the needs of the middle-class, have become relatively more attractive.
Improved universal coverage payment cycles and reimbursement rates have encouraged private hospital groups to increase focus on the middle-of the pyramid.
To find more data and numbers please see the full article published in our Private Equity ASEAN Newsletter Quarterly Edition 4/2022.
II. DIGITAL HEALTH'S RISE
Strategics continued investing during the difficult times as well to meet local demands for the future.
Nearly 35% investments by financial sponsors in the last 2 years have been on HealthTech and Healthcare IT. Telemedicine features prominently in this theme. While at the start and peak of the pandemic most investments were into generic telehealth platforms from our observations and recent trends these shall change to a more nuanced approach.
Investment focus will shift away from pure pipe models to those developed for specific indications and those that effectively help coordinate between online and offline care.
III. INTEGRATED ECOSYSTEMS BEGIN TO TAKE SHAPE
"We expect heightened investor interest going forward into these integrated models as they can increase care efficiency and uncover latent demand in the region."
Ecosystems in pre-COVID healthcare were limited by lack of data integration and analytics to drive care outside clinical walls and a physician driven approach. With growing consumerism and stronger push towards preventative care, we are now seeing integrated ecosystems emerge across markets, aiming to solve for existing inefficiencies.
Care models integrating services across healthcare value chain from hospitals to diagnostic centers and from wellness clinics to pharmacies are being developed in each market of SEA, led by large conglomerates and healthcare groups.
While early in their journey, the ecosystems are expected to increase in number and complexity.
If you wish to read more on this and other topics, please download our Private Equity ASEAN Newsletter Quarterly Special Edition 4/2022 below.
