Healthcare whitepaper 20150218.pptx

Guillaume  Corpart  +1  (305)  441-­‐9300  x302  [email protected]  www.globalhealthintelligence.com  

February  2015.  ©  2015,  Global  Health  Intelligence.    All  rights  reserved.

Global  Health  Intelligence  whitepaper  Latin America’s 9 healthcare trends to watch in 2015

4%

7%

7% 2%

Emerging markets will shape healthcare growth

…GHI delivers intelligence to win globally.

Source: Global Health Intelligence analysis based on data from the OECD, CEPAL, WHO, the World Bank and certain

local ministries

Healthcare expenditure will grow 2 to 3x as fast in emerging markets…

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Latin America’s 9 healthcare trends to watch in 2015

La/n  America’s  healthcare  market  is  evolving  in  ways  that  will  present  new  opportuni/es  for  firms  willing  to  invest  in  the  region.  The  report’s  insights  are  intended  to  enable  decision  makers  to  seize  the  right  opportuni/es  and  inform  their  go-­‐to-­‐market  strategies  throughout  the  region  accordingly.        This  report  outlines  4  key  themes  driving  change  in  customer  behavior  and  market  context:  

1.  The  aging  populaQon  

2.  The  prevalence  of  chronic  diseases  

3.  The  beginnings  of  healthcare  technology  innovaQon  

4.  Policy  changes  

As  well  as  5  developments  in  specific  segments  of  the  healthcare  market  with  important  implicaQons  for  investors:  

1.  PharmaceuQcal  sales  growth  

2.  Predominance  of  generic  drugs  

3.  ConsolidaQon  of  pharmacy  retailing  

4.  OpportuniQes  in  the  region’s  16,000+  hospitals  

5.  The  appeal  of  the  medical  device  market  

Forward

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To  learn  more  about  Global  Health  Intelligence,  our  services,  consulQng  engagements  and  speaking  opportuniQes,  please  contact:    Guillaume  Corpart,  Managing  Director  +1  (305)  441-­‐9300  gc@globalhealthintelligence  www.globalhealthintelligence.com  

9 drivers and opportunities

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EVOLVING  CONTEXT  AND  CUSTOMERS   OPPORTUNITIES  IN  A  CHANGING  COMPETITIVE  LANDSCAPE  

1.  Demographics  will  create  opportuniQes  

for  the  private  sector  

5.  Pharmaceu/cal  sales  will  grow  12%  per  year  

through  2017  

2.  Chronic  disease  prevenQon  and  

treatment  will  drive  growth  in  certain  

healthcare  segments  

6.  Generics  will  account  for  65%  of  LaQn  

America’s  retail  pharmaceuQcal  drug  sales  by  

2016  

3.  Technology  advancement  will  create  

opportunity  for  new  market  developments  

7.  The  consolida/on  of  pharmacy  retailing  will  

generate  investment  opportuniQes  

4.  Brazil  invites  foreign  investment  to  

private  healthcare  

8.  The  potenQal  of  LaQn  America’s  16,000+  

hospitals  

9.  Imported  medical  devices  account  for  over  

$10  billion  in  LaQn  America  

Evolving Context and Customers

SHIFTING  DEMOGRAPHICS  

LaQn  America  is  basking  in  a  2-­‐to-­‐3  decade  demographic  sweet  spot:  

•  There  is  lower  popula/on  growth,  driven  by  urbanizaQon,  greater  access  to  educaQon  and  a  larger  proporQon  of  women  in  the  workforce  

•  Popula/on  aged  over  65  will  rise  at  a  rate  three  Qmes  higher  than  the  growth  rate  for  the  populaQon  as  a  whole  in  2000-­‐2025  

This  will  shia  healthcare  needs  moving  forward  

OPPORTUNITIES  

1.   Private  enterprise  could  play  a  greater  role  in  coping  with  increased  demand,  parQcularly  in  non-­‐hospital  care  such  as  clinics,  ambulatory  services,  hospice  care,  nursing  faciliQes,  and  home  care  

2.   Technology,  IT  and  the  private  sector  have  opportuniQes  in  lowering  healthcare  access  costs  (especially  of  an  aging  populaQon)  in  fields  such  as  telemedicine,  healthcare  IT,  medical  devices  and  medical  technologies  

3.   Preven/ve  care  and  health  promoQon  are  on  the  rise,  expanding  opportuniQes  for  healthy  eaQng,  exercise  and  diets  

1. Demographics will create opportunities for the private sector

7

40%   41%   32%   23%   18%  

56%   55%  62%  

67%  64%  

3%   4%   6%   10%   18%  

1950   1975   2002   2025   2050  

0-­‐14   15-­‐64   65+  

Percentage of Latin American population by age group, historic and forecast  

Demographic  bonus   Demographic  dividend  

Probability   High  

Impact   Regional  

Speed   Slow  

THE  PREVALENCE  OF  CHRONIC  DISEASES  

Non-­‐communicable  diseases  will  be  the  cause  of  84%  of  deaths  in  La/n  America  by  2030  

•  Obesity  is  at  the  heart  of  the  discussion  as  it  is  a  trigger  for  condiQons  such  as  diabetes,  high  blood  pressure  and  cholesterol,  heart  disease,  strokes  and  respiratory  and  gastrointesQnal  diseases  

•  Cancer  is  also  on  the  rise  –  esQmates  show  that  1  million  people  will  succumb  to  cancer  annually  by  2030,  with  1.7  million  cases  diagnosed  annually  

IMPLICATIONS  FOR  HEALTHCARE  

1.   Preven/on  is  a  vast  area  of  opportunity  for  pharmaceuQcal  companies  and  food  manufacturers  

2.   Improving  healthcare  access  and  the  quality  of  detec/on  methods  is  an  area  of  future  growth  for  medical  imaging  equipment  manufacturers  and  providers  of  diagnosQcs  services  and  equipment  

3.   The  increasing  demand  for  drugs  designed  to  treat  cancer,  diabetes  and  heart  disease  will  affect  local  and  internaQonal  laboratories  

2. Chronic disease prevention and treatment will drive growth in certain healthcare segments

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Adult obesity in the world, as a percentage of total population

Probability   High  

Impact   Regional  

Speed   Medium  

2%  2%  3%  4%  

14%  15%  

17%  19%  19%  

25%  31%  

35%  

India  China  Japan  Korea  Poland  Brazil  Russia  

South  Africa  Turkey  Chile  

Mexico  USA  

Two  types  of  transformaQve  changes  to  modern  healthcare  could  eventually  take  LaQn  America  by  storm:    

1.  EFFICIENCY  GAINS  IN  PUBLIC  HEALTHCARE  EXPENDITURE  

•  Telemedicine,  which  can  help  reduce  the  high  cost  of  spreading  healthcare  infrastructure  in  rural  areas,  is  a  new  area  of  growth  for  medical  equipment  manufacturers  who  supply  integrated  technology  soluQons  

•  “Big  data”  analysis,  which  can  yield  cost  savings,  remains  costly  and  is  not  yet  widespread  even  in  U.S.  hospitals,  yet  early  movers  may  reap  many  dividends,  especially  with  government  customers  looking  to  boost  cost  efficiencies  

2.  THE  PERSONALIZATION  OF  MEDICAL  TREATMENTS  

•  Mobile  health  apps,  which  enable  users  to  monitor  their  health  and  manage  chronic  diseases,  are  a  growing  market  in  the  region,  where  smartphone  use  is  expected  to  double  by  2017,  accounQng  for  40%  of  the  region’s  populaQon  

•  3D  prin/ng,  beginning  to  be  used  in  the  medical  technology  industry,  is  unlikely  to  disrupt  LaQn  America’s  healthcare  sector  in  the  near  future,  offering  a  longer  horizon  for  maximizing  profits  from  tradiQonal  medical  devices  sales  

3. Technology advancement will create opportunity for new market developments

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Probability   Medium-­‐Low  

Impact   Brazil,  Mexico,  Colombia  

Speed   Medium  

The  Brazilian  government  announced  in  January  2015  that  it  would  allow  foreign  investment  in  the  private  healthcare  sector,  marking  a  significant  turning  point  with  broad  implica/ons  for  investment  in  the  healthcare  sector:  

INCREASED  HEALTHCARE  SPENDING  

•  Aaer  growing  from  8.9%  of  GDP  in  2011  to  9.1%  in  2013,  healthcare  spending  is  now  projected  to  rise  to  $255.5  billion  by  2017.  

FOREIGN  FIRMS  TO  PLAY  IN  THE  HOSPITAL  MARKET  

•  Hospitals  and  clinics,  to  be  open  to  foreign  investment  for  the  first  Qme,  have  great  potenQal  –  Brazil’s  concentrated  hospital  market  and  their  revenue  streams  make  for  rich  pickings.  

PROTOCOL  STANDARDIZATION  

•  Foreign  investment  is  likely  to  accelerate  the  professionalizaQon  of  hospital  management  pracQces,  which  will  create  opportuniQes  for  investment  in  IT  systems,  management  skills,  and  tools  to  monitor,  control,  and  report  key  performance  indicators.  

SUSTAINABILITY  OF  THE  SUS  

•  Investment  in  the  private  healthcare  sector  has  the  potenQal  to  shia  the  burden  away  from  the  public  healthcare  system,  the  Sistema  Único  da  Saúde  (SUS),  which  could  gradually  stabilize  the  SUS’s  long-­‐term  financial  health.  

4. Brazil invites foreign investment to private healthcare

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Probability   High  

Impact   Brazil  

Speed   Medium-­‐Fast  

Opportunities in a Changing Competitive Landscape

38%   35%  

24%   21%  

18%   23%  

12%   11%  8%   10%  

$954  bi   $1,172  bi  

North  America   Europe  Asia  /  Afirca  /  Australia   Japan  LaQn  America  

DEFINING  DEVELOPMENTS  

The  growing  middle  class  will  spend  more  on  healthcare,  as:  

•  An  increased  use  of  generics  will  conQnue  to  be  the  main  consumpQon  papern  

•  Local  producers  of  generic  drugs  are  becoming  the  driving  force  of  the  pharmaceuQcal  market    

•  The  consolida/on  of  pharmacies  and  the  conQnued  expansion  of  retail/supermarket  chains  will  accentuate  

MARKETS  THAT  STAND  OUT  

1.   Brazil,  accounQng  for  43%  of  the  region’s  pharmaceuQcal  sales  between  2013-­‐2017,  is  expected  to  become  the  world’s  fiah  largest  pharmaceuQcal  market  by  2016  

2.   Mexico  is  the  second  largest  market  in  LaQn  America  with  17%  of  the  region’s  sales  

3.   Colombia  and  Peru  present  strong  growth  prospects,  albeit  from  a  small  base  

5. Pharmaceutical sales will grow 12% per year through 2017

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Probability   High  

Impact   Brazil,  Mexico,  Colombia,  Peru  

Speed   Fast  

Share of global pharmaceutical spending by region 2013-2017

Ý  12%  Ü  3%  

Ý  12%  

Ü  2%  

Ü  3%  

CAGR    2013-­‐2017  

2013   2017  

GROWTH  OF  THE  GENERIC  MARKET  

As  healthcare  expenditure  grows  in  the  region,  two  market  forces  will  drive  the  growth  of  the  generic  drugs  market:  

•  The  expira/on  of  46  patents  in  the  U.S.  will  invite  greater  compeQQon  to  provide  low-­‐cost  alternaQves  for  popular  drugs  

•  Governments  who  heavily  subsidize  the  health  system,  notably  Brazil,  ArgenQna  and  Colombia,  turn  to  generics  as  their  opQon  of  choice  

The  use  of  generics  is  expected  to  increase  16%  per  year,  unQl  reaching  65%  of  all  drug  sales  by  2016  

THE  WINNERS  

1.   Local  generics  manufacturers  have  been  growing  28%  per  year,  selling  generics  70%  more  economically  than  their  patented  counterparts  

2.   Large  pharmacy  and  retail  chains  have  leveraged  their  buying  power  and  logisQcs  networks  to  sell  greater  volumes  of  generics  at  the  expense  of  smaller  medical  distributors  and  pharmacies  

$79  

$86  

$466  

$631  

$62  

$234  

$122  

$417  

$14  

$40  

$88  

$143  

$0   $300   $600   $900   $1,200  

ROW  

Pharmerging  markets  

Developed  economies  

Global  Spending  

Branded   Generic   Other  

$78  

$58  

$458  

$602  

$45  

$111  

$88  

$239  

$12  

$25  

$82  

$115  

$0   $300   $600   $900   $1,200  

ROW  

Pharmerging  markets  

Developed  economies  

Global  Spending  

6. Generics will account for 65% of Latin America’s retail pharmaceutical drug sales by 2016

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Pharmaceutical spending by class of drug and type of market, 2011 vs. 2016 forecast

Probability   High  

Impact   Brazil,  Mexico,  Chile,  Colombia  

Speed   Fast  

7. The consolidation of pharmacy retailing will generate investment opportunities

14

Probability   High  

Impact   Regional  

Speed   Slow  

Dominant  local  pharmacy  chains,  which  are  expanding  both  in  terms  of  geography  and  breadth  of  services,  will  become  ever  more  appealing  to  foreign  investors  –  the  sector’s  consolidaQon  and  diversificaQon  is  playing  out  in  three  ways:  

1.  DIVERSIFICATION  INTO  BASIC  MEDICAL  SERVICES  

The  expansion  of  low-­‐cost  and,  in  some  cases,  free  medical  checkups  and  exams  onsite  within  the  premises  of  pharmacy  outlets  is  set  to  conQnue  

2.  VERTICAL  INTEGRATION  OF  THE  PRODUCTION  CHAIN  

Pharmacy  chains  are  venturing  into  the  producQon  of  private  label  generic  drugs,  becoming  producers  and  distributors  of  pharmaceuQcals  

3.  CONSOLIDATION  OF  THE  DISTRIBUTION  CHANNELS  

The  trend  of  medical  distributors  and  pharmacy  retailers  forging  Qghter  bonds  is  beginning  to  take  place  in  LaQn  America  as  well  

Pharmaceutical sales in leading Latin American countries, US$ millions

$36 $37 $38 $40 $42 $45 $49

$16 $17 $18 $19 $20 $21 $22 $2 $4 $4 $4 $5 $6 $6

$0

$20

$40

$60

$80

$100

2011 2012 2013 2014 2015 2016 2017

Brazil Mexico Colombia

THE SIZE OF THE OPPORTUNITY  

While  hospital  spending  in  LaQn  America  lags  behind  that  of  the  U.S.  and  Europe,  the  size  of  the  opportunity  warrants  a  closer  look  –  La/n  America  is  home  to  16,000+  hospitals  

TRAGETTED INVESTMENT

Analyzing  hospital  demographics  can  uncover  a  wealth  of  opportuni/es,  including:  

•  50%  of  hospitals  in  Brazil  are  located  in  six  states  

•  20%  of  hospitals  in  Brazil  have  over  100  beds  

•  25%  of  hospitals  in  Mexico  are  located  in  three  states  

•  10%  of  hospital  physicians  in  Mexico  are  pediatricians  

•  Amongst  other  

8. The potential of Latin America’s 16,000+ hospitals

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Probability   High  

Impact   Brazil,  Mexico,  Colombia,  ArgenQna,  Peru,  Chile  

Speed   Slow-­‐Medium  

Number of hospitals by country

5,700

6,700

3,900

2,400

1,650

1,000

420

US Brazil

Mexico Colombia Argentina

Peru Chile

IMPORTED  DEVICES  TRUMP  LOCAL  PRODUCTION  

Most  countries  in  the  region  have  liple-­‐to-­‐no  local  manufacturing  of  medical  devices  or  medical  technology.  As  a  result,  most  countries  rely  on  imports,  especially  for  high-­‐end,  complex  devices.    

Mexico,  Brazil,  Argen/na  and  Colombia  together  account  for  more  than  75%  of  imported  devices.    

TOP  MARKETS  

•  Brazil  is  the  region’s  largest  and  most  mature  market  for  medical  devices  –  it  accounts  for  50%  of  the  U.S.  exports  to  the  region  and  has  a  strong  domesQc  manufacturing  industry  of  its  own.  

•  Mexico  is  the  region’s  largest  importer.  Its  proximity  to  the  U.S.,  developed  road  systems,  integraQon  into  the  NAFTA,  and  robust  export  manufacturing  industry  make  it  a  natural  expansion  when  looking  outside  the  US.      

•  Beyond  the  top  four  markets  —  Brazil,  Mexico,  ArgenQna  and  Colombia  —  a  second  Qer  stands  out,  including  Chile,  Peru  and  Costa  Rica,  which  each  benefit  from  the  right  condiQons  to  make  them  apracQve  to  medical  device  suppliers  and  manufacturers.    

9. Imported medical devices account for over $10 billion in Latin America

16

Probability   High  

Impact   Regional  

Speed   Medium  

Medical device imports by country

Mexico,  $2.9  

Brazil,  $2.2  

Colombia,  $.7  

ArgenQna,  $1.9  

Others,  $2.7  

$.  

$1.  

$2.  

$3.  

$4.  

2009   2010   2011   2012   2013   2014  

US$,  billions  

www.globalhealthintelligence.com

To  learn  more  about  Global  Health  Intelligence,  our  services,  consulQng  engagements  and  speaking  opportuniQes,  please  contact:    Guillaume  Corpart,  Managing  Director  +1  (305)  441-­‐9300  gc@globalhealthintelligence