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Indonesia and Vietnam Healthcare Outlook 2012

Where are the healthcare opportunities in these emerging markets

Rhenu Bhuller, VP – Asia Pacific


Healthcare
29 June 2012
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Today’s Presenters

Rhenu Bhuller, VP, Healthcare-Asia Pacific


Frost & Sullivan

• Rhenu Bhuller has close to 20 years of healthcare industry knowledge, including


more than 10 years of consulting expertise in the pharmaceutical and biotechnology
sectors. She is an industry expert and has particular expertise in new market and
therapeutic area analysis; sales, marketing and business planning; market entry
and business strategy; strategy discussions with c-suites, government officials, etc.

• She is a regular keynote speaker at industry conferences and is also often featured
in the media, such as BBC, Bloomberg, CNN, and CNBC.

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Globalization, consumerism and prosperity are the major
trends that will impact healthcare in SEA
Globalization:
• World is becoming smaller: cheap air- travel, connectivity,
internet, medical tourism
• Increased healthcare awareness because of multiple media

INFRASTRUCTURE
1
Consumerism:
• Increased self medicating behaviour; ease of access (online)
• Increased expression of consumer individuality through brand
choices
2 3

Prosperity:
• Increasing disposable income, financial independence leading to
exploring more choices
• Increased health awareness has led to consumers spending more
on health prevention and OTC Source: Frost & Sullivan

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APAC among the fastest growing economies over the
next 5 years

CAGR
2.9%

lia
s tra
Au

Source: Data in the above charts were based on GDP per capita data in the respective country’s national currency as sourced from the WEO online database. The data above was
converted to US dollar based on the currency conversion rate for the respective years. Analysis by Frost & Sullivan

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Diverse population structures with varying levels of
purchasing power
Hi
gh
in m
c om u ris
o
G e, lt
ro 5- ica
w 10 ed y
Lo ing %
of ,m -pa
ru we m a y o r
ra r id po fl p e,c t fo
l a ec dl pu c n
re on e la Se ran da
c t io n
as o
m
la
ss n su e
ep C
ic in d
e t H
pr at en sic
of ir v
ile P nm ba
, v er
o
G

Increasing consumer power

•Rural population, low income, relies on


government support.
•Upwardly growing middle class, living in
tier 2 cities, educated, can pay for some
level of healthcare
• High income category, first adopters of
new technology, services, private HC lia
t ra
s
Au

Sources: World Economic Outlook (WEO), World Bank and countries data. CAGR data is for 2006 to 2016

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Total Indonesia and Vietnam Healthcare Market Size

Healthcare Industry: Revenue Forecast


Indonesia and Vietnam, 2011–2015
Market Drivers
• Growing middle-class population in
12000.0
Indonesia; per capita income expected to
10000.0 CAGR grow from $2,580 in 2011 to $3,500 by
12.7% 2015.
8000.0
• Rise in non-communicable disease
6000.0 incidence, cardiovascular disease will
CAGR account for 31 percent of total number of
4000.0 8.7% deaths in Indonesia by 2030, followed by
2000.0 other chronic diseases at 28 percent.
• Vietnamese government intervention to
0.0 enhance healthcare workforce by 2020.
2011 2012 2013 2014 2015
Year
Market Restraints
Indonesia 5549.30 6016.30 6515.90 7072.10 7742.50
$ (Billion) • Per capita healthcare expenditure is far
below global average (lowest is Vietnam
Vietnam 2647.20 2970.40 3332.70 3746.80 4266.50 and Indonesia).
$ (Billion) • Shortage of healthcare professionals in
both countries.
• Efflux of medical tourists seeking treatment
in other countries; 400,000 Indonesians
patients travel annually.
Source: Frost & Sullivan analysis.

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Indonesia—Healthcare System

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Indonesia—Healthcare Indicators

Healthcare Indicators: Indonesia, 2007–2011

Healthcare Indicators 2007 2008 2009 2010 2011


Population (Million) 226 229 232 238 245

Population Growth Rate (%) 1.3 1.3 1.3 1.07 1.04

Birth Rate (per 1,000) 19.65 19.24 18.84 18.10 17.76

Mortality Rate (per 1,000) 6.90 6.85 6.80 6.28 6.26

Life Expectancy (Female) (years) 72.7 73.1 73.4 74.0 74.3

Life Expectancy (Male) (years) 67.6 68.0 68.3 68.8 69.1

Key Features

• The population of the country as of 2010 stands at 238.0 million people. It is recorded as the fourth
most populous country in the world.
• The population of the country is expected to grow at a consolidated pace of 1.0 percent for the 2010‒
2015 period.
• Life expectancy at birth has increased by 16 months per person from 2007 to 2011, and decreasing
mortality rates are a result of improving healthcare services.

Source: IMF, CIA World Fact Book, Indonesian Department of Health, Frost & Sullivan analysis.

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Disease Information – Major Causes of Death

Source: Indonesian Association of Medical Doctors (Ikatan Dokter Indonesia, or IDI)

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Indonesia—Health Care Delivery System

Healthcare System

Public Private

Puskesmas Specialty General


MOH Provincial District Private
Pustus and Private Private
Hospital Hospital Hospital Clinics
Mobile Hospital Hospital
Clinics

Source: Ministry of Health and Frost & Sullivan analysis

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Indonesia—Hospital Categorization

Class A (>400 beds) Extensive specialist medical


= 10 services + extensive sub
specialists
Public Hospital Class B (100-400 Extensive specialist medical
beds) = 120 services + limited sub
specialists
Has minimum of four basic
Class C (50-100
specialist medical
beds) = 250
services
Hospitals (General
and Specialty) Class D (<50 beds)
Provides basic medical facilities
= 126

General medical services +


Priority specialists and sub-specialists
Private Hospital Minimum four specialists medical
Madya services

Pratama General medical service

Source: Indonesian Department of Health, Frost & Sullivan analysis

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Indonesia—Hospital Classification

Hospital Classification by Type Hospital Classification by Specialty


Percent of Hospitals by Type and Percent of Specialist Hospitals
Sector, Indonesia, 2010 Split by Specialty, Indonesia, 2010

Public
(Military) Mental
15.3% Leprosy
8% 6.6%
Public Pulmonary
(Ministry of Others TB
Health) 19.5% 3.0%
Public (State
36% or other govt
dept-owned)
5% Eye
3.9%

Maternity
19.5%
Pediatric
Private 32.1%
51%

Source: Indonesian Department of Health, Frost & Sullivan analysis

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Number of Hospitals: Regional Spread

Aceh Hospitals are concentrated in major cities in the Sumatra


No. of hospitals:
35 and Java province, such as Jakarta, Surabaya, Medan.

Sumatra Selatan
No. of hospitals:
34

Sumatra Utara Jawa Barat


No. of hospitals: No. of hospitals:
130 144
Jawa Timur
No. of hospitals:
171 Sulawesi Selatan
No. of hospitals:
Sumatra Barat 62
No. of hospitals:
41

DKI Jakarta
Jawa Tengah Bali
No. of hospitals:
No. of hospitals: No. of hospitals:
124
162 34

Source: Ministry of Health, Indonesia

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National Health Strategic Plan: Infrastructure Targets

• Aim to increase the number of community health centers from 9,133 in 2010 to 10,856 in 2014
• Develop hospitals to achieve a ratio of 1 bed per 1,000 population in 2014
• Indonesia also aims to achieve sufficient numbers of medical professionals:

Source: Indonesia Human Resource for Health; Development Plan, 2010


Regional Health Forum, 2006

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Indonesia—Healthcare Expenditure Forecast

Health Industry: Healthcare Expenditure Forecast by Type


Indonesia, 2007–2015

30.00
45.00
Private Government 40.00
25.00 35.00
30.00
20.00 12.8 25.00
11.3 20.00
15.00

n
ilo
b
($B

)
ilon)

15.00 9.5
E

10.00
xpenditur

7.3 5.00
10.00 0.00

GP
iam
rn
tso
e
v
4.7 2013F 2014F 2015F

D
r(U
S E
iu
d
n
p H
lth
x a
e
4.3 13.6
12.1 Private
5.00 10.3
7.8 14.66 16.96 19.95
5.1 5.7 Expenditure
0.00 Government
15.44 17.44 19.95
2007 2008 2009 2010e 2011e 2012e Expenditure

Source: EIU, World Bank, Frost & Sullivan analysis

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Indonesia—Health Insurance Coverage

Health Insurance Coverage, Indonesia, 2010

Enrolment (% of
Scheme Target Population Funding Source(s)
insured)
Jamkesmas Poor and near poor, based on General revenue (100%
(Askeskin) individual and household funded by central 32.3
targeting government)

Jamkesda Poor and near poor, District/Out‐of‐


homeless, orphans and non- Pocket, Based on 13.5
civil service teachers affordability

Askes Active civil servants and Member contribution of 2


dependents, civil service and percent of salary plus
military retirees government match of 2 7.4
percent
Jamsostek Private formal sector Member contribution of 3
employees (and dependents) percent of salary for
of firms with ten or more singles, 6 percent for 2.1
employees families

Private Health Private formal sector Out‐of‐pocket


Insurance employees and dependents 7.7

Not insured 37.0

. Source: MOH, Frost & Sullivan analysis

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Vietnam—Healthcare System

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Vietnam—Healthcare Indicators

Healthcare Indicators: Vietnam, 2010


Healthcare Indicators 2010
Population (M) 88.3
Population Growth Rate (%) 1.0
Birth Rate (per 1,000) 17.0
Mortality Rate (per 1,000) 6.8
Life Expectancy (Female) (years) 74.7
Life Expectancy (Male) (years) 69.5

Key Features

• The population of the country as of 2010 stands at 88.3 million people. Vietnam’s population size is
expected to expand about 9.2 percent from 2006 to 2014, and is likely to grow 1.0 percent annually
from 2010–2014.

• The increase of life expectancy (73.9 years in 2006 to 74.7 years in 2010) have led to an increase in
aging population.

Source: Datamonitor, Worldbank, http://vietnam.unfpa.org, Frost & Sullivan analysis

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Vietnam—Major Causes of Death

Major Causes of Death: Vietnam, 2010

Source: World Health Organization, 2009, Frost & Sullivan analysis

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Vietnam—Health Care Delivery System

Healthcare Delivery System: Vietnam, 2010


Government Professional Units under Ministry
•Curative:30 hospitals with beds
•Preventive:17 institutes or centres
MINISTRY OF HEALTH
•Quality Control: 5 institutes or centres
•14 Department and Administration
•Training:14 schools or colleges
•The Cabinet
•Centre for health education and communication
•Inspectorate
:17 units
Provincial People’s
Committee
Professional Units under the PHS
PROVINCIAL HEALTH •General and specialized hospitals for curative care
SERVICE •Preventive Health Centres
•Office •Quality Health Centres
•Inspectorate •Training Middle Level Schools or Colleges
•Centre for health education and communication
People’s Committees
at District
PROVINCIAL HEALTH •District General •District Preventive
SERVICE hospitals Health Centres
•Office •Clinics
•Inspectorate

People’s Committees
at Communes
COMMUNAL HEALTH
Village Health Workers
CENTRES
•Head
•Healthcare Workers
Source: Department of Health, Vietnam; Frost & Sullivan analysis

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Vietnam—Classification of Public Health System

Public Healthcare Infrastructure, Vietnam, 2009

Type Department Descriptions

Provincial Health Department of the • 304 general and specialist provincial hospitals in 64
Province of the People’s provinces, mostly with 50–100 beds and consultation and
Committee treatment rooms.
• 64 preventive medicine centres, 61 medical secondary
schools, and 61 pharmaceutical companies.
District Health Department of the • 3,014 medical specialist groups and 1,507 hospitals and
District of the People’s polyclinics (more than 600 hospitals nationwide)
Committee • About 100 beds in each of the hospitals; focus is on
obstetrics, geriatrics, and paediatrics
Commune Health Station of the • More than 10,600 commune health stations, with 4–6
Commune of the Peoples beds, a delivery room, and a cabinet stocked completely
Committee with medicines.
• Staffed with doctors, pharmacists, and nurses who
transport serious cases to district and central hospitals.
• Volunteers involved largely in providing immunization
and family planning services.

Source: The National Bureau of Asian Research, US and Frost & Sullivan analysis

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Vietnam—Key Health Care Infrastructure Statistics

Public Healthcare Infrastructure Statistics: Vietnam, 2009

CAGR %
Infrastructure 2006 2007 2008 2009
(2006–2009)

Total Number of Hospitals 903 956 974 1,002 2.6%


Regional Polyclinic 847 829 781 682 (5.3%)
Sanatorium and Rehabilitation
51 51 40 43 (4.2%)
Hospital
Medical Service Units in Communes,
10,672 10,851 10,917 10,979 0.7%
Precincts

Total Number of Beds 1,31,500 1,42,800 1,51,800 1,63,900 5.7%


Number of Beds Per 10,000
23.8 25 25.8 27.1 3.3%
Population

General Doctors 52,800 54,800 57,300 60,800 3.6%


Assistant physician 48,800 48,800 49,800 51,800 1.5%
Nurses 55,400 60,300 65,100 71,500 6.6%
Midwives 19,000 20,800 23,000 25,000 7.1%
Pharmacist 16,300 18,100 19,700 21,600 7.3%

Source: General Statistics Office (GSO) of Vietnam, Frost & Sullivan analysis

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Vietnam—Regional Spread of Healthcare Infrastructure

Central hospitals in Vietnam are facing a shortage of beds; in some hospitals, a single bed is being shared by two or sometimes
even three patients. GSO statistics show that there were just 2.58 hospital beds per 1,000 people in Vietnam in 2008. According
to MOH, demand for beds in provincial hospitals is 115.0 percent while in major cities it is 250.0 percent.

Hospital Description

Hanoi
Bach Mai Hospital It is a multi-field medical facility and one of the largest in Vietnam, recognized as one of the
three specialized medical centres specializing in internal medicine.
L’Hôpital Francais de The hospital stands as a 68-bed multi-disciplinary care facility offering essential medical and
Hanoi surgical services, supported by 20 rotation doctors and 93 qualified nurses.
Viet Duc Hospital It is the largest surgical centre in Vietnam. The hospital has more than 500 beds for patients
and 18 surgery rooms and can perform over 800 open-heart operations annually.
Central Vietnam

Hue Central Hospital The hospital is one of three largest in the country, providing 2,078 beds. HCH is organized
into 52 clinics and para-clinic departments, notably the Cardiovascular Center, Blood
Transfusion Center, and Training Center.
Ho Chi Minh City

Chợ Rẫy Hospital It is the largest general hospital in Ho Chi Minh City. At present, the hospital has 35 clinical,
11 subclinical, and 8 functional departments.

Source: Ministry of Health Vietnam, Frost & Sullivan analysis

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Vietnam—Healthcare Expenditure

Government and Private Expenditure on Health: Vietnam, 2006–2012

9.00
8.00
7.00
6.00
5.00
4.00
3.00
n B
ilo
) ($

2.00
1.00
H

0.00
rE
iu
d
n
p
xlth
c a
e

2006 2007 2008 2009 2010 2011 2012


Private Expenditure 2.63 2.98 3.98 4.19 4.53 4.77 5.02
Government
1.29 1.99 2.05 2.52 2.76 3.01 3.25
Expenditure

Source: WHO, Frost & Sullivan analysis

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Mega Trends and Healthcare Market Trends

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Key Mega Trends impacting Indonesia and Vietnam

Future
The Middle Economic
High

Bulge Growth

Connectivity
Generation Y

Increase in Urbanization
Working Age
Population
“She-conomy” Future Infrastructure
Degree of Impact

Private public
partnerships

Top Industries of
Wealth the Future
Innovating
Watchers
to Zero Health, Wellness “Value for Many”
and Well Being Business Model
Space
Jam
“Click-n-Connect”
Mobile users

Future Energy
Power Generation

E-Mobility
E-Governance
Low

Low Probability of Success High

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What’s Trending for Indonesia Between 2012 and 2015

Indonesia’s per capita expenditure on pharmaceuticals is expected to remain below the US $30 mark
by 2015 as patients continue to be responsible for the bulk of their medical bills.

Indonesian health ministry established a supervisory body, the Indonesian Hospitals Supervisory
Agency (BPRSI), in Nov 2011.

The University of Indonesia is constructing a new hospital at its Depok campus; the Japan International
Cooperation Agency will provide a loan of $158.0 million to the university to establish UI Hospital.

Indonesian Q3 GDP growth came in at a strong 6.5 percent year-on-year for 2011.

As of December 2011, the Indonesian health insurance program for the poor, Jamkesmas, covered
76.4 million people.

In Q4 2012, some of the major reforms announced by Indonesian MOH include a merger of ASKES
and JAMKESMAS, and five committees are now working to set the insurance system.

Source: Frost & Sullivan analysis

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Examples of investments into Indonesia

A state pharmaceutical company PT Bio Farma announced that


it is to spend USD 60 million on a facility to produce blood plasma
Singapore-based Invida Group, a specialty
products, including albumin and Factor IX. The plant will be the
biopharmaceutical company announced a
first of its kind in Indonesia and will be built using assistance from
joint venture with the local Indonesian drug
South Korean and Australian pharmaceutical companies, based
manufacturer PT MUGI Laboratories. Under
on guidelines stipulated by the WHO.
the terms of the agreement, Invida will seek
to expand its operations in Indonesia to
Philips supplied most of $140m in
include the importation of raw materials and
medical equipment for the first
auxiliaries and the manufacture of
dedicated cancer research centre
pharmaceutical products.
and the biggest hospital in
Indonesia. Philips, which has group
sales of $32bn and 120,000
employees, has set up a regional
headquarters in Singapore with
almost 300 staff with a view to
increasing its share of the medical
and home healthcare products in
Indonesia, the Philippines and
Vietnam.

Siemens in Indonesia has provided support to public and


private hospitals by installing computed tomography,
magnetic resonance imaging systems, and angiographic
systems, as well as conventional x-ray units and life
support systems. Siemens supplied the first 128-slice
computed tomography (CT) Somatom Definition AS+ in
Indonesia.
Sources: Company websites, Frost & Sullivan
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What’s Trending for Vietnam

In Vietnam, new health service facilities


Quality of public hospitals in Vietnam is
are expected to be charged an
likely to improve following the
enterprise income tax of 10% rather
establishment of private hospitals by
than the previous 28%.
Singapore-based Thomson International
and Pacific Healthcare, Malaysia-based
Columbia Asia and the French Hospital of
Hanoi, owned by the French company
Eukaria S.A.

Vietnamese government’s health care


development plan, extending to 2020,
aims at doctor patient ratio of 8,
pharmacists of 2, and 25 hospital beds Vietnam’s healthcare expenditure is
per 10,000 patients. growing in next five years with its
healthcare spending as a % of GDP
surpassing most ASEAN countries,
forecasted grow up to 8.3% of GDP in
2014.

Vietnam government aims to modernize


traditional medicine by 2020. According to
a plan, hospitals that offer traditional Regulatory reforms, ASEAN
alternatives to patients will receive new harmonisation
equipment in 2015
Source: Frost & Sullivan

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For Additional Information

Donna Jeremiah Carrie Low


Corporate Communications Corporate Communications
Asia Pacific Asia Pacific
+61 (0) 8247 8927 +603 6204 5910
djeremiah@frost.com carrie.low@frost.com

Dewi Nuraini
Corporate Communications
Indonesia
+62 21 571 0838
dewi.nuraini@frost.com

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