Financial intelligence for Asia's healthcare markets
 
 
Remember me:

Analysis: Peeking into China’s healthcare deals

China’s hospital landscape is rapidly changing as operators and owners respond to shifting policy incentives, an aging population, the opportunity to serve Tier 2 and 3 cities, and shifts in consumer preferences.

One result: growing m&a activity, with assets changing hands in deals involving China’s TTC Franchise Clinics; Beijing Remote Heart Community Hospital; Chengdu New Century Women’s and Children’s Hospital; and Renyi Hospital Company. Some transactions are driven by the desire to consolidate holdings in key cities; others are deals struck to migrate from non-profit to for profit status.

We also are seeing specialty deals in segments such as dental, fertility clinics, eldercare, and nursing homes. Examples include Harmonicare Medical; OUE Lippo Healthcare; Pine Care/Yada JV; and China Cord Blood. These transactions reflect consumer and investor responses to behavioural and demographic shifts: delayed child-bearing has created demand for fertility support; China’s aging population needs more eldercare and nursing homes. We anticipate that such thematic-driven deals will continue.

Beyond these deals, it is important to note the mindset shift among owners of healthcare assets in China. We are seeing Chinese healthcare operators continue to invest in upgrading their capabilities, their physician mix, and their technology base, for example streamlined electronic health records and pharmacy systems. Big thinking is taking place, including ways to capture genetic information and link that to patient records and population health systems – with all the privacy, regulatory and ethical ramifications involved. Combined with growing investment in artificial intelligence and machine learning systems for diagnostic care, important shifts are occurring in China’s care system.

These early stage shifts in China’s treatment landscape in terms of ownership, quality of outcomes, technology systems, and patient preferences are catching investor attention, both domestic and foreign. Many of the Chinese owners/ operators we talk to want technology and capability partnerships to differentiate themselves further especially in a world in which care starts to become decentralised due to technologies like telemedicine and remote diagnostics.

A number are turning to Singapore, the US and Britain for potential partners. These partnerships can range from systems design to ongoing capability transfers to equity co-investment. In rare cases, we have also seen Chinese investors consider outright acquisition of US assets to cement those ties rather than simply do a co-branding deal.

What the future holds is largely dependent on patient flows and policy makers. As US healthcare is increasingly expensive, medical tourism from the US to Asia is likely to rise if US consumers are confident they will receive equivalent treatment outcomes. One Beijing hospital is hoping to provide that level of comfort by having its medical tourism work overseen by an US-based (Ohio) doctor affiliated with the hospital.

We believe there is a largely unexplored option to seize this opportunity. It involves building hospitals and care facilities on both sides of the Pacific, and forming a single global network that allows for profit sharing, patient record sharing, HCP talent exchanges, use of facilities irrespective of location, and cross-referrals, for example. Such a step could help unlock a different end-game for these partnerships rather than one that simply focuses on cash transfers for technology rights. Reinventing the care model in both markets can be the profitable prize especially given forecasts for population growth.

That said, for Chinese hospitals and treatment facilities, the in-country patient pool will always be the dominant source of revenues. China’s aging population, rising purchasing power, and gender mix will force shifts in care, e.g. dental, beauty treatments, home care and fertility treatments. Be that as it may, innovations that draw upon some of the best practices from global markets can also serve the domestic Chinese consumer and patient well.

Those options and others await investors who can partner with Chinese health organisations to reinvent the care model. Feel free to contact me or my consulting colleagues here in Asia to learn more.

Jude Uzonwanne is a principal with IQVIA, the world's largest pure play healthcare advisory services company. He provides strategy and transaction advice to clients in Asia Pacific region. He can be reached at jude.uzonwanne@iqvia.com.

Posted on: 13/08/2018 UTC+08:00


News

Boston-based TA Associates, a global growth private equity firm, has completed a significant minority investment in Indira IVF, an infertility treatment provider headquartered in Udaipur, Rajasthan.
Digital integrated healthcare ecosystem MyHealthcare has raised $3 million from Sixth Sense Ventures, as part of its ongoing Series A fund raise.
Technology company NEC Australia has secured contracts worth more than A$23 million to enhance information and communications technology interconnectivity within the Western Australia public health system.
Chicago-based recruitment company Professional Diversity Network has announced it intends to enter into the health and wellness industry in China.
Home care booking services portal CaregiverAsia and house-call doctor app Speedoc have entered into an agreement to cross-refer their respective pools of doctors, nurses and other healthcare professionals to each other’s customers.
Jakarta-based healthtech start-up Medigo, founded in May last year, has raised seed funding from Venturra Discovery, the new seed investment arm of Venturra Capital.
Ontorio-based Aleafia Health has increased its strategic investment in CannaPacific, a medical cannabis company federally licensed to cultivate and research cannabis in Australia.
Less than three months after acquiring RHT Health Trust, hospital chain Fortis Healthcare’s international arm and merchant bank Stellant Capital Advisory Services have begun talks to sell a stake.



Analysis

Sumit Sharma and Matt Zafra, head and principal of health & life sciences, Asia Pacific at Oliver Wyman, look at what we can expect in 2019.
Edwin Tong, senior minister for health, explains how the Ministry of Health in Singapore is supporting the growth in the number of seniors with Alzheimer's.
Penny Wan, regional vice-president and general manager, Japan and APAC, Amgen, writes about the public health challenge of cardiovascular diseases.
French-based international ophthalmic optics company Essilor has signed Letters of Intent with the Royal Government of Bhutan and the Central Monastic Body to strengthen the country’s vision care infrastructure.
April Chang, country manager at Cigna Singapore, argues that wellness programmes at work can lead to reduced absenteeism, higher productivity and increased morale among employees.
Steven Fang understands how to set up a healthcare company. Not only is he chief executive and founder of ASX-listed oncology company Invitrocue, he was also the founder of Singapore-based Cordlife Group, a healthcare company which provides cord blood and cord lining banking services.
Imagine a world in which you can consult with your doctor via video. She asks for a blood sample, which can be collected and analysed from a device in your home. After that is diagnosed, the prescription is automatically sent to the pharmacy and Uber then picks it up. The time from diagnosis to drugs at your home is only 60 minutes.
The digitisation of health data through blockchain technology is a groundbreaking solution that will empower patients and provide them with better access to healthcare.
my images


Podcasts

HealthInvestor Asia twitter feed