• Date: 10/23/2012

The golden days are over 

Interviewee: Wai Chiong Loke, Director Healthcare Advisory, KPMG Singapore

How is the medtech market developing on a global scale?

Wai Chiong Loke: The global Medtech market has been an exciting one in the last one to two decades, but many are saying that the golden age of double digit growth has ended. Around the world, particularly in the developed world where the biggest markets have been, medtech companies are facing severe price pressure from payers, governments, buyers, and their competitors. Increasingly, payers are asking for demonstration of value before treatments are reimbursed or listed. However the picture is not equally bleak around the world – emerging markets remain full of potential.

What’s the current trend in Asia?

Wai Chiong Loke: In Asia, we should still see double-digit growth in large emerging economies like China, India, Thailand, South Korea and Indonesia. In fact, the top three pharmaceutical markets already have two from Asia, and this will likely be similar for medtech. I see three major trends in key countries in Asia: 1) rising demand driven by rising affluence, Asian-specific (or –prevalent) diseases and ageing disease; 2) move away from just being a low cost manufacturing site to being an important consumer market; and 3) the bigger countries are aspiring and becoming powerhouses in research and development.

Which do you see as being the most promising market? Why?

Wai Chiong Loke: Despite the obvious answers of China and India, by virtue of their big populations, I think countries in Southeast Asia deserve deeper consideration. Indonesia, for example, has a 240- million population with a fast-growing GDP-per-capita, but is still sadly underserved today by its limited healthcare infrastructure. There are plans to achieve universal health insurance coverage. Just understanding how many new private hospitals will be built in the next few years across the sprawling country will give an appreciation of the upcoming surge in demand for healthcare and life sciences products, including medtech. In fact, we see similar trends in the other large emerging countries of Asia – Vietnam, the Philippines, Malaysia.

What’s the situation in Singapore?

Wai Chiong Loke: Singapore is similar to Switzerland in many ways: relatively small land-mass and population, but technologically advanced with a strong talent base and economy. Both have pro-business environments and competitive tax regimes. Though we represent small markets in our respective continents, global companies may still opt to base their regional headquarters or hub their regional operations here. Singapore has also built up strong R&D infrastructure and capability in biomedical sciences research over the past decade, and has rolled out incentives for overseas companies who set up R&D activities in Singapore, with the aim to create many more high-value jobs for its people.

What are the biggest challenges facing the sector?

Wai Chiong Loke: I think the biggest challenges can be described within the relentlessly changing environment: 1) Changing disease management and technology, changing regulations, and ultimately leading to the need to change business models. 2) Ageing populations and the chronic disease epidemic have emphasized the need for cost-saving therapies, generics and home monitoring solutions. Technological applications that enable e-health, personal healthcare management and predictive analytics are changing the way diseases are diagnosed and managed over the long term in the community. 3) Stricter regulations with pricing controls and the use of cost-benefit analysis (or health technology assessment) by economic buyers to determine reimbursements for care will impact drug and device makers.

What influence does all this have on the medtech companies’ business models?

Wai Chiong Loke: In the face of these pressures, companies will need to innovate new business models, rethink sales/distribution strategies, consider outsource low-end non-core work, and speed up the innovation cycle (time to market) by collaborating for or acquiring new technology.
Interview: Simone Glarner, Marketing & Communications

Wai Chiong Loke

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    Director Healthcare Advisory, KPMG Singapore


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New financing models and the increasing cost pressure are challenging the healthcare sector today. In parallel they have to ensure long lasting service capability.