Thailand healthcare market facts & figures

THAILAND HEALTHCARE SECTOR MARKET SNAPSHOTMay 2014

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THE UNIVERSAL HEALTHCARE PROGRAM

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SCHEME TYPE POPULATION COVERAGE FINANCING SOURCE

BENEFIT PACKAGES

PURCHASING RELATION

ACCESS TO SERVICES

Social Security Scheme (SSI)

Social insurance, compulsory

Private sector employees, excluding dependents

19% Payroll tax financed, tripartite contribution 1.5% of salary, equally by employee and government

Comprehensive: outpatient, inpatient, accident and emergency, high-cost care, with vary minimal exclusion list; exclude prevention and health proportion

Contract model: inclusive capitation for outpatient and inpatient services

Registered public and private competing contractors

Civil Servant Medical Benefit Scheme (CSMBS)

Fringe benefit

Government employees plus dependants (parents, spouse and up to two children age less than 20 years

7% General tax, non- contribution scheme, mainly from government budget

Comprehensive: slightly higher than SSS and UCS

Reimbursement model: fee from service, direct disbursement to public providers for outpateints; conventional diagnosis related group (DRG) to inpatients

Free choice of public providers, no registration required

Universal Coverage Scheme (UCS)

State welfare The rest of (UCS) population not covered by SSS and CSMBS

75% General tax, mainly from government budget

Comprehensive: similar to SSS including prevention and health promotion for the whole population

Contract model: capitation for outpatients and global badget plus DRG for inpatients

Registered contractor provider, notably within the district

Source: Ministry of Public Health, Ministry of Finance, SSO, Complied by MKE-ISR (Maybank)

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HOSPITALS SEGMENT IN THAILAND

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As of 2013, there were 327 hospitals and more than 1,050 public hospitals in Thailand. In term of positioning and target group hospitals may be categorised into four segments;

Premium Market

Upper-mid tier market

Mid-tier market

Not-for-profit hospitals

such as Bumrungrad, Samitivej, Bangkok Hospital and BNH

such as Phyathai, Piyavej, Vejthani, Vibhavadi, Ramkamhaeng and Vichaiyut

such as Paolo, Kasemrad, and Chularat

such as Siriraj, Ramathibodi, and King Chulalongkorn Memorial

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MEDICAL CLINIC BY TYPE

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As of 2013, there were 18,000 clinics in Thailand. About 78% are in up-country and 22% are in Bangkok

Bangkok Up-Country Total

Medical Clinic 1,958 5,130 7,088

Specialised Medical Clinic 212 1,676 1,888

Dental Clinic 1,283 2,113 3,396

Specialised Dental Clinic 4 37 41

Pregnancy Clinic 23 4,302 4,325

Physical Therapy 74 111 185

Healthlab Clinic 66 320 386

Traditional Doctor Clinic 310 335 645

Acupuncture Clinic 32 31 63

General Clinic 87 164 251

Secondary Dental Clinic 10 29 39

Secondary pregnancy Clinic 4 517 521

Total 4,063 14,765 18,828

Source: Ministry of Health Thailand (as of September 2011)

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KEY TRENDS IMPACT TO HOSPITAL SECTOR

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Increased in min. wages has lead to higher operational cost for reusable products

SHORT-TERM LONG-TERM

HIGH

IMPA

CT

LOW

IMPA

CT

Increased in adoption rate of disposable products as a result of higher operational cost of reusable drape

JCI Standard

AEC 2015 Minimum Wage

Medical Tourism

54 157 206

300

1980

1997

2010

20

13

Minimum wages THB per day (Bangkok)

Source: Ministry of Labour, Thailand

Ease of access of funding => expansion of capacity for private hospitals => higher purchased volume of disposable drape

JCI accredited hospitals tend to use disposable drape as a general practice for operational room Strong growth in Medical Tourism

“The liberalisation of the services sector under the AEC allows foreign investors to hold more than a 70% stake in healthcare sector”

With an investment funds to flow into hospital sector, growth in expansion of operational capacity is expected

Thailand’s JCI Accredited Hospitals

•  As of 2013, there are 21 hospitals that have accredited JCI standard

•  Disposable drape is not compulsory under JCI standard however, using the drapes avoid the complication on quality control standard

1.0

1.1

1.2

1.3

1.4

1.4

1.4 2.0

2.2 2.5

2003

20

04

2005

20

06

2007

20

08

2009

20

10

2011

20

12

Foreign Patients to Thai Hospitals (Million)

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FIVE FORCE ANALYSIS: PRIVATE HOSPITALS

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Low threat of new entrantsHigh Investment. For a 200 bed hospital typically costs between THB 6,000 - 8,000 million; in rural areas it could cost about THB700 - 1,000 million. The start-up operation cost is about THB20 million. Land availability. Suitable land sites are scare especially in high traffic provinces of Bangkok, Chiang Mai and Hua Hin. Limited human resources. The next barrier is the availability of qualified and experienced doctors.

Low bargaining power of suppliersHigh competition especially for local pharmaceutical manufacturers. (there are over 100 companies in Thailand) Private hospitals establish their own company to purchase drugs and source medical equipment

Medium bargaining power of buyers

Patient switch hospital choice at a low cost. This is a result of hospitals that offer a wide variety of health insurance packages and patients are focusing on hospital facilities and special clinics rather than the well-known doctors

High threat of substitute products or servicesPatient goes to private hospitals due to more complex treatments being sought and a growing preference for better services With the UCS now covering 75% of the population, patients can choose to seek treatment in public hospitals

High sector competitionMore than 300 private hospitals. The largest 24 hospitals dominate 75% with a combined market share. Expand medical services such as opening after-hours clinics, Many private hospitals have set up specialised tertiary centers to provide full medical services and to launch new services with attractive pricing and promotion to compete

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MODERN DRUG MANUFACTURERS IN THAILAND

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Up-Country 78 Bangkok

94

# MODERN DRUG MANUFACTURERS (2013)

Upcountry manufacturers clusters: Samutprakan, Chonburi, Chacheongsao, Ayuthaya, Pathumthani, Nonthaburi, Nakhornpatom, Ratchaburi, Lopburi, Samutsakorn and Lumpoon

Total 172 manufacturers

PRODUCTION VALUE BY TYPE (2010)

TYPE OF DRUG MILLION THBALIMENTARY TRACT AND METABOLISM 7,922.02BLOOD AND BLOOD FORMING ORGANS 2,058.90CARDIOVASCULAR SYSTEM 2,888.86DERMATOLOGICALS 2,953.68GENITO-URINARY SYSTEM AND SEX HORMONES 1,332.07SYSTEMIC HORMONAL PREPARATIONS 411.42GENERAL ANTI-INFECTIVES-SYSTEMIC 12,216.79HOSPITAL SOLUTIONS 2,712.54ANTINEOPLASTICS 0.19MUSCULO-SKELETAL SYSTEM 3,907.26CENTRAL NERVOUS SYSTEM 3,836.95PARASITOLOGY 449.34RESPIRATORY SYSTEM 5,738.16SENSORY ORGANS 380.98DIAGNOSTIC AGENTS -VARIOUS 48.11 !TOTAL 46,809.16

Source: Bureau of Drug, Thailand

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MODERN DRUG IMPORTERS (2013)

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THERE ARE TOTAL 655 MODERN DRUG IMPORTERS (2013

IMPORT VALUE BY TYPE (2010)

TYPE OF DRUG MILLION THBALIMENTARY TRACT AND METABOLISM 9,925.30BLOOD AND BLOOD FORMING ORGANS 12,345.51CARDIOVASCULAR SYSTEM 10,835.92DERMATOLOGICALS 1,831.17GENITO-URINARY SYSTEM AND SEX HORMONES 5,573.81SYSTEMIC HORMONAL PREPARATIONS 1,081.40GENERAL ANTI-INFECTIVES-SYSTEMIC 15,074.74HOSPITAL SOLUTIONS 2,298.96ANTINEOPLASTICS 12,400.24MUSCULO-SKELETAL SYSTEM 7,427.41CENTRAL NERVOUS SYSTEM 8,376.05PARASITOLOGY 67.15RESPIRATORY SYSTEM 4,258.04SENSORY ORGANS 3,325.77DIAGNOSTIC AGENTS 1,251.23VARIOUS 577.01TOTAL 96,649.71

Source: Bureau of Drug, Thailand

COUNTRY MILLION THB

SWITZERLAND 5,254.53

UNITED STATES 4,162.59

GERMANY 3,838.81

FRANCE 3,315.51

UNITED KINGDOM 2,876.67

ITALY 2,869.11

INDIA 2,610.27

JAPAN 2,269.05

CHINA 1,554.32

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TOTAL DRUG MARKET VALUE

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YEAR LOCAL PRODUCTION (THB MILLION) IMPORT (THB MILLION)HUMAN DRUG ANIMAL DRUG TOTAL HUMAN DRUG ANIMAL DRUG TOTAL

1987 5,146 309 5,455 2,325 478 2,8041988 6,709 181 6,890 2,571 593 3,1641989 8,373 224 8,597 3,308 625 3,9321990 8,886 291 9,177 3,449 870 4,3191991 9,658 326 9,983 4,216 1,034 5,2501992 10,697 385 11,082 4,683 1,114 5,7971993 11,831 276 12,107 5,075 1,145 6,2211994 12,970 284 13,254 6,087 1,212 7,2981995 15,821 462 16,283 9,276 1,487 10,7641996 18,174 473 18,647 10,435 1,628 12,0641997 19,592 478 20,069 13,376 2,116 15,4911998 16,726 352 17,078 9,739 2,101 11,8401999 19,034 687 19,721 14,232 2,487 16,7192000 20,996 683 21,678 16,700 2,517 19,2182001 23,088 830 23,918 19,968 2,722 22,6902002 24,145 542 24,687 19,868 2,902 22,7702003 26,586 977 27,563 26,025 3,563 29,5882004 31,708 932 32,640 30,546 3,102 33,6472005 29,705 1,426 31,131 38,293 3,337 41,6312006 30,911 1,831 32,745 45,005 3,585 48,5892007 41,232 1,474 42,706 53,000 3,237 56,2372008 35,323 1,518 36,841 64,148 3,170 67,3182009 37,525 2,183 39,708 70,607 4,139 74,7462010 46,896 1,927 48,823 99,660 7,734 107,3942011 56,701 3,166 59,867 98,221 7,088 105,309

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MEDICAL DEVICE MARKET IN THAILAND

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2010 2011 2012 %Growth

General supply 9,407 11,363 14,555 24%Ophthalmology 7,704 8,236 8,630 24%Diagnostic and Therapeutic equipment for internal medicine

8,075 10,051 11,327 18%

Dental 1,947 2,525 2,535 14%Surgery 1,947 721 835 -35%

Laboratory 792 851 1,059 16%

Orthopedic, orthosis and disability aids

1,890 2,053 2,415 13%

Medical Logistic and patient ward

412 709 785 38%

Diagnostic imaging and radiotherapy

3,751 4,067 6,180 28%

General equipment 597 787 1,086 35%

Total 36,522 41,363 49,407 16%

Medical device market in Thailand has been growing steadily on average of 16% over the past three years

There are about 500 medical device importers in Thailand. Most of companies are owned by Thai with a registered capital of around THB 1 - 5 million. These companies are located mainly in Greater Bangkok Region

There are also several large companies who carry a wide range of product portfolio such as Pacific Healthcare, DKSH, Berli Jucker, 3M and etc

Since the last five years, top three imported sources are from the U.S.(THB 26,833 mn), Japan (THB 13,411 mn) and, Germany (THB 6,467 mn)

MARKET STRUCTURE

IMPORTED MEDICAL DEVICE BY TYPE (MILLION THB)

Source: Global Trade Atlas

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MEDICAL DEVICE PRODUCTION IN THAILAND

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2010 2011 2012 %Growth

General supply 48,673 55,384 58,956 10%Ophthalmology 25,499 26,565 23,792 -3%Diagnostic and Therapeutic equipment for internal medicine

8,855 11,185 13,470 23%

Dental 3,610 3,555 3,788 2%Surgery 26 33 57 48%

Laboratory 44 615 2,189 605%

Orthopedic, orthosis and disability aids

358 205 207 -24%

Medical Logistic and patient ward

296 405 439 22%

Diagnostic imaging and radiotherapy

384 317 278 -15%

General equipment 43 602 2,227 620%

Total 87,788 98,866 105,403 10%

EXPORTED MEDICAL DEVICE BY TYPE (MILLION THB)

Local production for exporting medical device market continue to grow on average of 10% over the past three years

There are total about 157 local manufacturers. About 85% are small producers with less than THB 50 mn in registered capital, 21% are mid-size producers (between 50 - 500 mn in registered capital) and only about 3% are the large producers

Medical device is one of the targeted industry by the Board of Investment, Thailand to attract investors to set up production base here

Incentives provided by BOI include tax exemption for machine, corporate tax exemption for 8 years and others

MARKET STRUCTURE

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