Healthcare Sector Current Market Trends and Opportunities ... ?· A country too big to ignore Indonesia…

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Healthcare Sector Current Market Trends and Opportunities in Healthcare

17 October 2018

Shaveen Sharma

Director of Business Development &

Market Access

British Chamber of Commerce

Indonesia

dr. Andi Saguni, MA

Ministry of Health of the Republic of

Indonesia

Dr. Widiastuty Wibisana, Ph.D

Indonesia Hospital Association

(PERSI)

A country too big to ignore Indonesia is the worlds 4th most populous country and the largest in South East Asia. 260 million

people 43% of the countrys population in under the age of 25.

The ONLY permanent SEA member of the G20, well-positioned to influence global and regional

initiatives.

Indonesia represents around 40% of the total GDP of ASEAN, with GDP growth rose to 5.1% and

reached $3.243 trillion in 2017 and projected to grow 5.3% in 2018 (PWC).

Indonesias middle class is growing rapidly and is the biggest in Southeast Asia. Number of families

with household income exceeding US$ 10,000 is expected to double by 2020.

Indonesian market is very receptive towards new innovations.

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ASEANs economy is currently ranked theseventh largest in the world, with a combinedGDP of US$ 2.4 trillion and is projected to rankas the fourth largest economy by 2050.

The World Bank has stated that for 2018 theeconomic outlook for the region remainspositive and will benefit from an improvedexternal environment as well as strongdomestic demand.

In 2016, UK-ASEAN trade increased by 9.1%and went above 30 billion for the first time.

In 2017, UK is the 2nd largest European investorin ASEAN .

Trade surplus of goods in Indonesia with ASEANincreasing from US$ 7.67 billion (2015) to 9.09billion (2016) and 11.65 billion (2017).

$ 2.4 Trillion

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ASEAN ECONOMIC COMMUNITY (AEC)

Ease of Doing Business Index 2018

#72 of 190 Countries (2018)

# 91 of 190 (2017)

#106 of 187 (2016)

#6 in ASEAN

Logistic Performance Index 2016

#63 of 160 Countries (2016)

#53 of 160 (2014)

#59 of 155 (2012)

#4 in ASEAN

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INDONESIA IN THE WORLD RANK

Global Competitiveness Index 2017

#36 of 137 Countries (2017)

#41 of 138 (2016)

#37 of 140 (2015)

#4 in ASEAN

Complicated and long registration process

Uncertainty in the legislative and regulatory environment

Infrastructure: Lack of infrastructure causes logistics issues

Human Resources: Lack of skills needed by industries

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CHALLENGES TO INVESTING IN INDONESIA

Overview of Healthcare Sector in Indonesia

By 2025, Indonesia healthcare expenditure expected to rise up to US$363 billion,

a CAGR of more than 20% compared to 2010 (Roland Berger).

In 2017, Indonesian government allocated US$ 7 billion for healthcare sector

spending (5% of total budget, 43% year of year increase).

95% of Indonesias medical equipment and devices are imported.

Following a graduated scale-up in implementation of the National Health

Insurance (Jaminan Kesehatan Nasional/ JKN), by 2019 the program will cover all

Indonesians, making it the biggest healthcare system in the world (267 million

people).

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TOP 10 COUNTRY SOURCES FOR INDONESIAN PHARMACEUTICALS IMPORT

1. Switzerland 6. Singapore

2. Germany 7. UK

3. USA 8. Netherlands

4. Denmark 9. Belgium

5. France 10. Italy

Overview of Indonesian Hospital Classification for Public Hospitals:

Hospital level A: provides extensive specialist medical services and extensive sub-

specialist.

Hospital level B: provides extensive specialist medical services and limited sub-

specialists.

Hospital level C: provides at least a minimum of four basic specialist medical services

(surgical, internal, child, and maternity).

Hospital level D: provides at least basic medical facilities.

Classification for Private Hospitals:

Private General Hospital at Priority level: provides general medical services as well as

specialist and sub-specialist care.

Private General Hospital at Madya level: provides general services and minimum of four

specialist care services.

Private General Hospital at Pratama level: provides only general medical services.

Bed Occupancy Rate (BOR) remains low in Indonesia (60% - 85%) compared with other

countries, like Singapore (approx. 90%) and Vietnam (approx. 170%).

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Number of Hospitals in Indonesia Based on Their Administrator

No. Administrator 2014 2015 2016 2017

1. Ministry of Health 14 14 14 14

2. Police 42 42 42 44

3. Indonesian Army Force 121 120 119 120

4.Other Ministries and State Owned Enterprises

65 61 67 14

5. Provincial Government 52 68 75 87

6. District Authorities 456 466 477 504

7. City Authorities 81 87 87 81

8. Private 1024 1093 1164 1334

Total 1855 1951 2045 2198

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Source: Global Business Guide Indonesia

NEGATIVE INVESTMENT LIST FOR HEALTHCARE SECTOR IN INDONESIA

Opportunities in Healthcare for UK Companies

Why now?

A number of hospitals and other healthcare operators have

formed alliances with foreign companies with a view to

tapping their capabilities and expertise in the provision of

healthcare services.

Due to lack of domestic manufacturers, there are profitable

opportunities for overseas companies willing and able to

supply medical and surgical devices to Indonesia.

The implementation of national health care programme or

Jaminan Kesehatan Nasional (JKN) has already prompted

soaring demand for more hospitals and clinics as well as the

staff, technology, pharmaceuticals and supplies for them.

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UK healthcare manufactures opportunities:

o Medical and surgical devices

o Healthcare professional training and education

o Health food supplements

o Healthcare IT system

o Generic pharmaceuticals

Dr. Andi SaguniMinistry of Health of Republic of Indonesia

JAKARTA, 17 OCTOBER 2018

MINISTRY OF HEALTH

REPUBLIC OF

INDONESIA

http://www.bps.go.id/download_file/SP2010_agregat_data_perProvinsi.pdf

INDONESIA DEMOGRAPHIC MAP

Year 2018 :

Total Population : 265 million

Number of Hospitals : 2.825

Number of Health Centers : 9.909

Number of Pratama Clinics : 7.641

Number of Utama Clinics : 969

(15 October 2018)

Healthy Paradigm

Program Mainstreaming of health on the

development Promotive -preventive as the

main principles on health care provision.

Community empowerment

The health care Strengthening

Program The improvement of access on the

primary health system Optimization of existing referral

system Quality improvement

The National Health Insurance

Program Benefit Financing system: Insurance

sharing cost and risks Cost and quality control Targets: all Indonesians

To prove the participation on the schemeIndonesias health card (KIS)

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INDONESIA HEALTH PROGRAM

The implementation continuum of care approach

Health risk based Intervention.

ACCESS & QUALITY OF HEALTH

INFRASTRUCTURE INCREASED

SUPPLY SIDEFULFILLING

FOR THE ACCESS

HEALTH FACILITIES QUALITY

FAIRNESS/EQUITY PHCS FOR UNDER DEVELOPED

AREAS COMMUNITY HOSPITALS /

BORDER HOSPITALS HOSPITALS DEVELOPMENT IN

THE EASTERN INDONESIA

FULFILLMENT RATIO OF FACILITIES TO POPULATION: PHCS, PATIENTS

BED IN HOSPITALS, CRITICAL ROOM, ETC

Optimizing Government Budget for Health, PPP,

Other Source

FRAMEWORK OF INCREASING THE ACCESS & QUALITY OF HEALTH INFRASTRUCTURE

STRENGTHENING THE GUIDELINE FOR HEALTH FACILITIES

ACCREDITATION

1.Strengthening competence of 14

provincial hospitals as national

referral

2.Strengthening competence of 130

regional & provincial referral

hospitals

3.Providing 27 Community Hospitals

4.Development 3 new vertical

hospitals in Eastern part of

Indonesia (Maluku, Papua, NTT).

INCREASING THE ACCESS TO REFERRAL HEALTHCARE (2015-2019)

Referral SystemHospitals

Disparity of the hospital distributionsBeds patient shortage Lack of referral services (radiotherapy/cancer, heart, hemodialysis, dll)

Hospital competance (specialist shortages & maldistribution, under maintain facility , equipment etc)

3rd Level Services capacityICU, ICCU, PICU, NICU

Quality of the services17

CHALLENGES

PROSPECT FOR HEALTHCARE INVESTMENT IN INDONESIA

Public Private Partnership (PPP) : President Decree No. 38 Year 2015, MoH Decree No. 40 Year 2018 in providing healthcare infrastucture (building, medical devices, services)

E-Katalog / e-purchasing

No Health Services Business Sector Requirements

1 Hospital a. Maximum Foreign Investment 67%

b. A maximum of 70% for investors from ASEAN countries;

c. Can be done throughout the Capital of the Province of

Eastern Indonesia except Makassar and Manado

2 Clinic of Specialized Medical Services (CPC 9312),

Specialist Dental Clinic (CPC 9312), Nursing Services (CPC

93191)

a. Maximum Foreign Investment 67%

b. A maximum of 70% for investors from ASEAN countries;

c. Can be done throughout the Capital of the Province of

Eastern Indonesia except Makassar and Manado

3 Acupuncture Service Facility Maximum Foreign Investment 49%

4 Medical and Ambulatory Evacuation Services Maximum Foreign Investment 67%

Dr. Widiastuty Wibisana, Ph.DIndonesia Hospital Market Overview And Trends

Health Status/Disease Burdenand Health System Approach

Governance

Financing

Devices

Drugs

HRH

Health Information

Service Delivery

Demographic-Epidemiology

Transition

Health StatusDisease Burden

21

Unpublished INA data 2016: IHD Stroke TB Diabetes COPD Diare Alzheimer - Road Injuries -Lower Resp. Infection - Chronic Kidney Disease.

22

257 millionpeople will need to be insured in Indonesia by 2019, when universal healthcare is fully established.

USD 363 billionis the national healthcare expenditure expected to rise by 2025; a CAGR of more than 20% compared to 2010 (USD 20 billion).

The rising middle class is expected to drive demand for affordable health care.

21.196Fasilitas Kesehatan Tingkat Pertama (FKTP/HEALTH

CENTERS/CLINICS)

2.230Fasilitas Kesehatan Tingkat Lanjut (HOPITALS AND SPECIALIST

CLINICS)

1.007 OPTICS

2.342 PHARMACIES

379 LABORATORIES182.036.673

TOTAL MEMBER OF JKN

NUMBER OF HEALTH FACILITIES SERViNG THE JKN

27.154

Sumber: BPJS Kesehatan Per 1 Oktober 2017

PROVIDER OF THE NATIONAL HEALTH SECURITY SYSTEM (JKN)

PROV. SULBAR

* 5 Provinsi dengan Rasio TT < 1:1000 penduduk (Jumlah Total TT di RS)

PROVINSI RIAU

PROV. LAMPUNG

PROV.JABAR PROV. NTB

Demand for More Hospital Beds

Indonesia is expected to add about 40,000 beds by 2019 and JKN would be a key driver; one of the early reports shows how the daily patient volume in some of the provinces jumped up after JKN initiation.

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Demand for Qualified and Skilled Healthcare Professionals

The already scarce medical professionals (doctors and paramedical staff), which are way below the global and Organisation for Economic Co-operation and Development (OECD) averages, will be put under pressure by the burden of the increasing number of JKN patients.

investors need to recruit and retain good doctors, in particular, specialists who play an important role in upholding the standard of care and reputation of a hospital, which are ultimately profit-drivers in the business.

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Demand for More Drugs (Generics)

As more patient get access to healthcare through JKN, demand for prescription drugs (generics) will grow; some companies have already preempted this and increased their production capacity to address the increased demand.

Up to 50% of the revenues of a hospital can come from sale of medicines to its patients. Pressure on margin from UHC patients affects manufacturers of generic drugs.

DISAMPIKAN PADA HOSPITAL EXPO INDONESIA, 21 OKTOBER 2016

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Demand for More Medical Equipment and Demand for More Diagnostic Tests

Demand for medical devices is expected to grow at much faster rate in the future as compared with thehistorical growth rate, especially for consumables and imaging devices.

Domestic consumption of following are expected to increase: X-ray films Consumables like gloves, chemicals, catheters Computed tomography/magnetic resonance imaging (CT/MRI) equipment

and consumable associated with advanced imaging procedures

DISAMPIKAN PADA HOSPITAL EXPO INDONESIA, 21 OKTOBER 2016

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1. First-level outpatient services covered under JKN: Simple laboratorium diagnostic tests (blood tests, urine tests, stool tests, and blood glucose tests)

2. Market segments:o Immunochemistry testingo Microbiology testingo Molecular diagnostics testing (high growth area)

Virology Bacteriology Molecular blood donor screening Genetic testing

InVitro Diagnostics Market

GAMBARAN RUJUKAN PELAYANAN CATHLAB-JANTUNG

DISRIBUTION OF CATH LAB and CARDIOLOGICAL SERVICES, 2016

5

13

3

5 3

1 3

3

53

22 11 13

6 20 5 3

1

3

1

2

6

4

11

19

11

5

4

5

8

3

38

221

110

40

25

126

19 72

4

4

4

1

11

19 4

2

9

1

2

Total of Cath Lab: 199 Cath Lab in 171 hospital Total cardiologist = 758 (2015) --> 850 in 2016

1

Thank You

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31

Do your research, make regular

visits

Getting the right local partner is a

key

Build a deep and long maintained relationship with

the locals

Follow market trends as consumers

taste easily challenges in

Indonesia

Price sensitiveBe prepared to

adapt and follow local etiquette

Expand networking as newest

information/regulation might come from unofficial insiders

Patience, it can take a long time

Start now !

MARKET ACCESS TOP TIPS

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