Medical Devices and Diagnostics
Radical shifts are transforming how science understands and treats disease; how health care players specialize, partner, and compete. The traditional big pharma model is in decline, as the pipeline for traditional small-molecule drugs slows. One result: a rise in high-growth businesses based on medical devices, along with a convergence of treatments administered by a combination of drugs and devices. There used to be a world of difference between treating a patient with a device – such as a hip replacement or a pacemaker – and using biology and biochemistry. Different ailments required wholly different treatments, often with little in common. But that is changing as medical advances foster combinations of surgical implants and other hardware with support from medicines. Drug-releasing stents were one of the first fruits of this trend, which increasingly requires vastly different sorts of health-care firms to mesh their research efforts.
Medical-device manufacturers will remain attractive acquisition targets especially for big pharma looking to hedge declines in their traditional businesses and the device industry should see continued consolidation while co-operating with biotech and pharmaceutical firms as they see fit.
Identifying market opportunities in the medical device sector in Asia has always been challenging, due largely to the lack of dependable market data and intelligence for companies to make informed investment decisions.
Clearstate specializes in providing medical device usage intelligence, along with in-depth market segmentation analysis services to help companies tap into this fast-growing healthcare sector.
Pharmaceuticals
Pharmaceutical firms, hugely profitable today, are urgently seeking cures to a variety of ailments.
One is the erosion of patent protection. Not only are the manufacturers of cheaper generic drugs becoming emboldened by cost-conscious politicians and legal rulings in their favor, but big pharmaceutical companies are also facing an unprecedented wave of patent expirations over the next five years. This trend is resulting in diminished profit margins.
The industry’s best hope lies in innovation, its traditional strength. However, the difficulty and cost of finding and developing new blockbuster drugs have increased, and pipelines are looking increasingly dry. Companies are now reconsidering their pursuit of blockbuster drugs, as new technology permits the creation of niche remedies. Biopharmaceutical companies are also challenging traditional pharma, creating a number of high-margin sub-sectors in biotherapeutics.
To hedge risks in prescription drugs, many traditional pharma firms are looking to grow their own generics division, as well as increase their presence in diagnostics, non-prescription drugs and biotechnology. Mergers, acquisitions, and alliances are happening at an increasingly rapid rate. The deals in fact go beyond hedging risks in their traditional businesses and heralds a dramatic new convergence of drugs, devices and diagnostics which could lead to innovation and new opportunities for growth.
Clearstate can help traditional pharmaceutical companies better understand not only their own market environment better but those of the related healthcare sectors which they are being compelled to ultimately converge with.
Biotech and Applied Health Sciences
Biotechnology forces continue to penetrate Asia-Pacific, as companies and governments across the region focus on this emerging sector acknowledging its tremendous growth potential and wishing to exploit their cost advantages relative to developed countries. However, as in other parts of the world, growth has originated mostly from the success of a few big companies.
Asian governments also see biotech as a natural fit because it is a technology-based industry. Over several decades, several East Asian economies, including Japan, Taiwan, Singapore and South Korea, experienced rapid growth by developing competitive strengths in high technology industries. But in recent years, many of these sectors have seen shrinking margins due to commoditization and intense price competition. Biotechnology is viewed as the next big thing – an industry which creates highly educated highly compensated jobs with tremendous promise in the decades ahead.
However, beyond the excitement of the science, biotech needs a radically different business model due to a fundamental problem with its traditional financing source. Venture funds like to see quick returns, usually within five years, but the science involved often takes 15 to 20 years to come to fruition – if at all. By some measures such as revenue growth, biotech is indeed booming, however, the industry as an aggregate has yet to turn a profit since its birth 30 years ago, and will likely have to converge with big pharma if it is to gain needed funding.
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Healthcare Services
In health care today, scientific and technological frontiers are expanding at unprecedented rates – even as economic pressures shrink profit margins, intensify competition, and constrain the funds available for investment. Demand for healthcare services is rising rapidly and these trends will only increase in the face of an aging global population, an upsurge in chronic diseases and increasingly expensive therapies. Asia’s population is expected to grow from 3.2 billion in 2002 and with the increase in life expectancy and growing economic affluence, there will be very strong demand for quality healthcare in this region.
Singapore, with its established reputation for healthcare infrastructure and clinical excellence, is poised to tap on this growing demand to entrench itself as a premier regional healthcare hub. Singapore’s clear ambition nonetheless will face off with other emerging healthcare services powerhouses. Both Malaysia and especially Thailand, have been heavily promoting their high quality and cost efficient medical services. India already has the healthcare skills, a buoyant private sector investing heavily in private hospitals and enjoys proximity to Europe and the Middle East, two fast growing outsourced medical services regions. China has also started its healthcare services revolution. Though the Middle Kingdom is not really eyeing overseas patients yet, its domestic needs are so massive that the sector will go through gigantic transformation.
This dramatically evolving landscape offers attractive opportunities for healthcare services suppliers. Hospitals, diagnostic facilities, disease management centers, and outpatient clinics are being built or upgraded and require new medical IT systems, modern medical equipment and better management processes, something new in this sector.
Clearstate can assist clients in evaluating and entering new markets, determining which alliances or acquisitions make the most strategic sense, and developing efficient marketing and distribution strategies.