The Covid-19 pandemic highlighted public healthcare shortcomings all around the world. Emerging nations were no exception.
Though many of these benefitted from having a younger population who proved more durable, governments have taken policy action to improve their health systems.
With the proportion of over 65s in emerging markets growing – they are forecast to increase by more than 2.5 per cent a year, more than double the rate that will be experienced in the developed world – these governments realise that the youth factor will fade.
As a result, several governments, Indonesia for example, have responded by rolling out schemes for healthcare insurance to look after the health of their growing and aging populations.
With more funds from governments, and increasingly wealthy consumers, being directed towards better healthcare, all the signs point to an attractive opportunity in the space.
The MSCI Emerging Markets Health Care Index, however, has told a different story.
While it has had its moments (generic drug makers enjoyed their moment in the sun and Covid clearly provided stimulation), the index has returned an uninspiring -1.9 per cent over the past 10 years.
A big slice of the index is accounted for by drug companies. Research and development pipelines is a challenging process. Information tech platforms in China, such as Alibaba Health and JD Health, aimed at online consultation, diagnosis and drug delivery, seemed promising but ran up against intervention from Beijing.
Bed-density is still very low in emerging markets, ranging from 40 per 10,000 head of population in China to just mid-teens in India. This is clearly an opportunity for the private sector.
Bumrungrad Hospital in Thailand has had the added advantage of being a beneficiary of medical tourism, particularly from the Middle East.
Tourism is a major contributor to the Thai economy. It is estimated that some 1 per cent of Thai GDP is generated by medical tourism, of which Bumrungrad has been a major beneficiary. In order to capitalise on this theme, the company intends to build another hospital in the tourist hotspot of Phuket.
It is a similar story in India, where it is estimated that medical treatment is the driver of 7 per cent of all tourists. Is it any wonder, given that a new knee in India comes at a fraction of the price as the same knee in the US ($7,000 vs $50,000).
Apollo Hospitals is a pioneer and leader in the corporate, private sector hospital segment in India and operates one of the largest hospital networks in Asia, with 73 sites across India providing cutting edge medical care and clinical specialities.
Drug stores and pharmacies have perhaps acquired a general retail status. However, given prescription drugs still play a part in the leverage they have we think it is worth making mention of this type of business. Just think about the success of CVS, Walgreen and Boots.
