ASEAN states move to universal healthcare

ASEAN has traditionally relied on a mixture of public and private healthcare with an emphasis on the latter. It is a structure that is likely to continue as more countries in the Region begin to move towards theprovision of universal healthcare. For those shortly to implement such schemes in the cases of Indonesia and the Philippines there are big challenges ahead. However, even in these countries, which together account for more than half of the ASEAN Region’s 600 million population, the private sector is likely tocontinue to play an important role in the provision of services to stateinsured patients.

In January 2014, health insurance is due to cover almost 122 million people throughout Indonesia. A tax exempt state corporation, BPJS Kesehatan, has been established to roll out the scheme which is to be extended to the whole of the country’s 240 million population by 2019. Thailand is already a pioneer in the Region having introduced free universal healthcare at the point of delivery in 2002 and demonstratingthat the concept is not out of reach of middle income countries.

Virtually the entire 67 million Thai population is now covered for primary care through to hospital treatment. The Philippines aims to attain universal healthcare by 2016. From this date around 100 million Filipinos will be covered by insurance according to Dr Eduardo Banzon, President of the Philippine Health Insurance Corporation, which has been set up by the Government as a tax free vehicle to enact the scheme.

In some countries in the Region such as Singapore, the private sector is well established as the main healthcare provider. Singapore has a well funded compulsory insurance scheme that allows some of the most advanced levels of health provision to be offered. The Parkway Group’s Mount Elizabeth hospital in Singapore is the first centre in Southeast Asia to offer stem cell transplant therapy for acute tumours.

The country has developed at the top end of hospital treatments offering such specialised care as neurological procedures and heart transplants. Access to such advanced care remains though an aspiration in much of the rest of the Region.

Many countries in the Region will have to make very substantial increases in annual investments in healthcare to catch up with averages in OECD countries. Even in Malaysia, spending is still only one tenth of that in Western Europe and in Indonesia one seventieth according to World Health Organisation 2011 figures. Finding sustainable methods to fund basic healthcare is a challenge and involves a keen focus on cost containment throughout the ASEAN area. There are no easy choices to obtaining the most from limited budgets. Singapore began to restructure its public hospitals to make them run on corporate lines in the mid 1980s. Indonesia has since introduced the self financing methods for its hospitals.

The Philippines, for example, is estimated to require more than 152,000 new hospital beds to serve its population. The Region urgently needs to train more health professionals including technicians as well as doctors and nurses. According to a recent study by the industry expert analysis company, Frost & Sullivan, the proportion of healthcare workers in the Asia-Pacific region is 6.8% per 1,000 of population compared with 18.9% in Europe and 24.8% in North America. Health service coverage remains stubbornly uneven throughout the Region with an average ratio of just three doctors for every 10,000 people in Indonesia, compared to nine per 10,000 of population in Malaysia.

Not surprisingly people live longer in the wealthiest ASEAN countries. Myanmar, while increasing its healthcare spending still has the lowest life expectancy of any country in the Region and also has more than 50% of malaria related deaths. According to a report in 2012 by the Lancet, this is a result of poor diagnosis but also to the prevalence of counterfeit antimalarial medication.

The path is complex and there is no single formula as ASEAN member states adopt different solutions tailored to their own circumstances. However, an improvement and wider coverage of medical services is a priority in the Region. Malaysia’s former Health Minister, Liow Tiong Lai, declared that healthcare is viewed as investment and not as a cost burden to the country encompassing primary, secondary and tertiary care.

As a result, the country has increased its spending on health to 4.4% of GDP compared to 2.9% in 1997. The system, as with others in Southeast Asia works in tandem with private healthcare providers. It is believed that the Region’s shape of future healthcare provision is unlikely to replicate systems in the West but provide an environment for innovative forms of Public Private Partnerships (PPPs) to develop. This may see the Government’s role steadily shifting from provider to regulator with private health companies working in partnership with the state in the provision of services. In Vietnam and Indonesia, for example, private providers are purchasing and managing large items of equipment such as MRI scanners, which are placed in public sector hospitals and paid for over several years. PPPs are already playing a prominent role in the provision of more extensive medical services. An example is the US$130 million teaching hospital under development at Kuantan in Malaysia. Peninsular Medical (PenMedic), a subsidiary of Ahmad Zaki Resources Berhad (AZRB), has a 25 year concession to build and maintain the 300 bed hospital. The hospital, with facilities for 735 students, is due for completion in 2015. Malaysian owned Parkway Group is involved in a PPP project in Brunei.

Other providers such as India’s Fortis and Bangkok Hospital Group have also built up considerable expertise and experience in Singapore, Malaysia and Thailand. The private healthcare sector is also very active in providing services to foreign “medical tourists”. Singapore is estimated to receive more than 400,000 foreign patients a year. A growing international number of patients are attracted by low costtreatments. Hospitals in the Region can offer complex operations ranging from heart-bypass procedures to hip and knee replacements or IVF procedures often at a quarter of the cost in the US or in Europe.

Thai hospital groups have positioned the country as a hub for a variety of procedures. The Tourism Authority of Thailand (TAT) estimates that 2.4 million foreign visitors arrived in the country in 2012 for health services, generating revenues of US$439 million. TAT expects three million medical tourists by 2016 and a doubling of 2012s revenues. Bangkok’s Bumrungrad International Hospital is one of the largest privately run facilities in Southeast Asia. The hospital which has a large number of Middle Eastern patients has a streamlined operation, starting with its own reception area at the international airport and providing serviced apartments for patients families in addition to its clinical services. Demand particularly from Middle Eastern patients has increased dramatically as a result of visitors being allowed to stay for up to 90 days instead of the previous limitation of 70 days. Business is growing and many independent private hospitals in both Bangkok and provincial areas have partnered with larger hospital groups as a means of staying competitive.

Further cross-border investments will also result from the liberalization due to follow ASEAN’s economic integration in 2015. ASEAN builds role in global life sciences The ASEAN Region is poised to occupy a critical and distinctive place in the future of the global technology industry both as a pharmaceuticals manufacturing hub and as a location for bio-sciences research and development.

Singapore is already looked upon as the pharmaceutical hub of Southeast Asia. The top 30 of the world’s leading life sciences companies have made Singapore their base with GlaxoSmithKline, Abbott Laboratories, MSD (Merck), Novartis, Pfizer and Sanofi, all positioned there, where they have collectively invested more than US$4 billion. Moving towards 2015, it is expected that Singapore’s biomedical sector will employ in excess of 15,000 people and achieve 8.5% compound annual growth rate with pharmaceuticals being a key driving force. Singapore’s success in attracting leading bio-technology companies is also reflected in its growing role in new approaches to research. Fewer than 5% of drugs under development gain approval for public use. In the past, exploratory work and clinical trials were distinct and followed each other in a sequence, this was a time consuming and costlyexercise. Translational research aims to bridge the gap between basic research and delivering an effective product. Discoveries made in the laboratory are used in clinical trials with volunteers. Data generated from patients responses can then be fed back to researchers allowing them to modify products where required. As a result new innovative products can be adopted for use much quicker. This type of approach seeks to end compartmentalisation in research and development by translating research findings more rapidly into practical applications through multi-disciplinary collaboration, linking skills in the physical sciences to those in biology and medicine.

In addition to developing new modes of research and development the Region also has the potential to provide entirely new types of drugs. The Malay Archipelago is also one of the world’s most concentrated areas of biodiversity. The rainforests of Brunei Darussalam, Malaysia, Indonesia and the Philippines contain thousands of species of plants. Because the compounds that might be created from these plants are staggering in terms of their scientific and medical applications, scientists from around the world are being drawn to investigate the forests for unknown resources. “Bio-prospectors” have already discovered a wide variety of chemicals in the flora of these tropical forests.

Brunei’s Tropical Biodiversity Centre is forging ahead with plans for a bio-technology industry to develop pharmaceuticals from the microbes found in the Sultanate’s forests. Thailand is seen as a natural base for biotechnology following on from the country’s highly developed agricultural and food sectors and is being advanced by the country’s National Centre for Genetic Engineering and Biotechnology. Thailand has more than 165 companies operating in the area and has also developed as a major centre for pre-clinical trials. Malaysia has also identified biotechnology as a new engine of growth for the economy. In 2012, exports of pharmaceuticals were valued at US$180 million.

It is envisaged that life sciences will generate considerably more in the next five years as the country heads towards being an integral part of global drug development, clinical trials and contract manufacturing. Officials hope that Malaysia will become an increasingly attractive potential destination for foreign biotechnology companies and investors interested in this sector. The Malaysian subsidiary of Germany’s Siogen have already been instrumental in developing allergy therapies.

Vietnam with its availability of skilled labour, and a competitive cost environment, also has the potential to be a leading manufacturer of mass produced biotech products as well as agriculture focused research.

Sanofi, in 2013, announced the launch of a new manufacturing facility to be sited in Saigon High Tech Park in Vietnam’s Ho Chi Minh City. The US$75 million investment is designed to serve Vietnam’spharmaceutical markets and other areas in Southeast Asia. The leading French company has a long established presence in Vietnam with existing plants employing 1,200 people in Ho Chi Minh City.

Increasingly, Southeast Asia offers foreign investors advantageous regulatory and intellectual property environments with access to capital and skilled workforces. The expanding size of the Region’s pharmaceutical market, predicted to reach US$80 billion a year by 2017, underlines the potential.