Hareesh Nair, director of the Asian private equity group Quadria Capital, speaks to H&TI of e-health current trends in South and Southeast Asia.
He talks about:
– the important gap between supply and demand for healthcare services in Asia;
– strengths of Singapore in e-health;
– main differences between the Asian and US market, which he knows well;
– The leadership of the USA and Europe in the market.
What is your opinion on this market in Southeast and South Asia?
There exists a significant gap between supply and demand for healthcare services in Asia. Many countries here have generally increased and improved their general levels of wealth, their capital, but they have not increased their spending of healthcare compared to the rest of the world.
The reason why there is a gap is that many economies depend on the private sector for delivering healthcare. The public sector has traditionally not been able to afford significant expenditure investments in this space and the government is taxing the people or taxing corporations to provide healthcare. They provide public partnerships to have domestic and potentially foreign investors to come in and, so, they address that gap.
E-health, if applied correctly, can be part of the solution to address the gap, therefore creating opportunities for providers of such services in Asia.
Are companies such as Quadria Capital part of that?
At Quadria, as one of Asia’s largest private equity funds which focus on private healthcare, we also have played a role in providing significant capital to invest into good healthcare companies, strong management teams who can scale their business models and provide healthcare services for the private sector to help feed the gap.
As a firm, we have played a significant role in helping the private sector to feed that gap. For example, one of our Partners, Dr. Amit Varma, helped grow Fortis into one of the largest healthcare groups in India. Since then, Amit, Abrar, and the Quadria team have invested capital into over 10 large healthcare groups. Other groups in Southeast Asia, like Parkway in Singapore, or KPJ in Malaysia, are also feeding that gap in private sector.
So it is interesting to set up an e-health business in Asia…
The Asian pharma sector along would surpass the combined United States and the Europe spending by 2020 at $750B. This provides further context that, Asia is, in my view, a significant market that is worth investing in.
Dr. Kevin Yap, a lecturer specialized in e-health, told H&TI that he thinks Singapore can make a difference in the international e-health market through its expertise in telemedicine and mostly in cyber-pharmacy. Do you agree?
Singapore can make a difference in telemedicine, certainly, but the focus should go beyond the city-State. Telemedicine is a very broad area. It may be the field of primary consultation or second opinion, or diagnostic industrialization or teleradiology and also of remote care or mobile diagnostic. There is so many different topics! Singapore may not develop all the solutions.
I think that many countries, many companies have creative ideas to resolve local problems and help with finding solutions. In Singapore, you have the issue that many of the private hospitals in the country depend on foreign patients to fill capacity. So how do you find patients that connect from overseas to their providers in Singapore. How to provide with get access to credible diagnostic therapy or even just medical consultations? That may be Singapore’s problem, to find patients they come in.
Each country has his own issues that he is dealing with. Is there one company that is going to solve all of the problems? I don’t think so anytime soon. Even if Google and Microsoft have tried, they haven’t succeeded yet to be the one stop solution for all e-health. I believe successful companies will be working closely with doctors and hospitals for implementation, not just the consumer.
Is there a real difference between the Asian market and the others, like the US market for example as you know it quite well?
The US is the largest healthcare economy in the world, by far. They are now spending over 2,5 trillion dollars every year, meaning 16 or 17 % of GDP of the country. They are looking for different solutions than those Asian countries are looking for. In the US, they are looking for efficiency in terms of cost and provisions as opposed to Asia which is more focus on giving access to high quality care.
One driver of efficiency in the US has resulted in the HITECH Act, which is a government proposal that has encouraged hospitals to have access to technology solutions in order to improve healthcare.
The good thing about Asia is that the region is not depending on legacy systems and processes, so, they can avoid to make the challenges faced in the US and Europe by applying e-health in the future. For example, people are communicating on mobile phone here. Asia don’t need to put lines and cables across the entire continent like they did in western countries. That is actually positive, that is much more efficient and cheaper to communicate that way.
In the US, the government will pay for healthcare, whatever it cost. But here, in South east and South Asia, healthcare is much more dependent to the private sector. We have a private market in which consumers are much more sensitive to pricing. They will be much more vigilant to pricing crisis and skeptical of what value services can bring.
There are less government subsidies or benefits that you private enterprise may depends on compared to the United States for healthcare service. So, models will have to be different.
In your opinion, will US still the world leader in e-health in the coming years?
I feel that the US and Europe will continue to be the world leader in developing health technology. I don’t think it is going to change any time soon given leadership in education and research funding.
However, that doesn’t mean that you won’t find good ideas coming from Asia. Asian intervention in most of economies is coming from the technology and from innovations in terms of business model. In Asia, they may actually find ways to do more with less. The solutions to the Asian healthcare problems don’t necessarily stem from complicated ground breaking scientific innovation, but rather cost effective means of innovating old processes.
Asian intervention in most of economies is coming from the technology and from innovations in terms of business model. In Asia, they may actually find ways to do more with less. Companies will be forced to resolve local problems with local restraints, and businesses in the US and Europe will not have adequate ability to solve these problems without deep understanding of the culture and environment unless they are local.