Healthcare in Emerging Markets: Challenges & Opportunities
Jan 21, 2015
Healthcare in developing countries is undergoing rapid changes. The healthcare systems in those countries are facing challenges such as the burden of rising and aging populations and with it the delivery of adequate healthcare to the masses.
The so-called BRICS (Brazil, Russia, India, China, and South Africa) are among the fastest-growing economies in the world.
Rising populations in these countries will lead to increased demand for medical devices and diagnostic equipment in the near future. For instance, between 2006 and 2011, pharmaceutical sales doubled in emerging markets such as the BRICS countries, according to the U.S. consulting ﬁrm Strategy& (formerly Booz & Company).
Above all, emerging markets need to focus on cost-effectiveness and scalability to meet high patient volumes. Some regions have integrated telemedicine and novel organizational structures in an attempt to meet demand.
Health Expenditure in Emerging Markets
Global Health Expenditure (in Trillion US$)
- A 2014 report by the World Economic Forum estimates that one-third of all global health expenditure will occur in emerging economies by 2022.5
- Innovation and demand soar in emerging economies: Spending on healthcare in countries such as China and India will continue to rise in line with their economic growth, and they will become major markets for healthcare companies. Serving them will require innovations in technologies, delivery, and business models.11
Gaps Between Rich and Poor Countries
- There is still a large gap between rich and poor countries with regards to life expectancy: A child born in a poor country in 2012 is likely to have a life expectancy that is about 17 years (female) or 16 years (male) shorter than a child born in a rich country.6
Brazil & India: Different Solutions for Access to Healthcare
The healthcare systems in Brazil and India are facing the challenge of managing rising patient volumes through more efficient processes. A comparison of hospital bed density has both countries at the bottom of the list.
Since 1988, Brazil has guaranteed free public healthcare to all citizens through Sistema Único de Saúde (SUS). With its strong and steady growth, Brazil’s economy is considered a growth market, one step ahead of emerging countries. Generally, people in the southern part of the country are healthier than their northern counterparts. The country created an economic evaluation agency called CONITEC (formerly CITEC), and research indicates that it has become a stumbling block to market access. Brazil has, however, been successful in setting up manufacturing partnerships with major pharmaceutical firms, including Bristol-Myers Squibb for the distribution of its HIV drug, Reyataz, and GlaxoSmithKline (GSK). In exchange for technology and knowledge transfers, the state provides GSK a set price and volumes for its pneumococcus vaccine for children.
India’s healthcare system can be a conundrum. Most of its 1.2 billion population go without proper healthcare. Only the very wealthy can afford to visit private hospitals, stocked with the latest imaging and medical devices. To address this problem, a handful of hospital systems use a “hub-and-spoke” model. Top hospital systems located in the country’s urban centers recruit and consolidate highly specialized physicians who work in well-equipped facilities. These hubs are connected to “spoke” clinics in rural areas. These individual clinics provide cheap basic care and diagnoses, but refer patients to larger hubs for surgery and other complicated care needs. Physicians in the hubs use telemedicine to advise rural patients. India’s doctors, accustomed to a heavy and constant patient load, continuously sharpen their skills to improve precision and ﬁnd ways to reduce costs. Another core aspect of efﬁciency in India’s healthcare system is the rigid separation of health worker roles. For example, a doctor would not record a patient’s basic intake information. Indian doctors rely heavily on established protocol for many procedures, which lessens waste and helps prevent mistakes. Hospital systems monitor how doctors use medical supplies, and then ask suppliers to modify them accordingly, usually saving money in the process.
China: Boosting the Public Healthcare Program
Like India, China’s healthcare system has long maintained a mix of public and private health providers. The countries face similar challenges in providing care to billions over a vast geographical area. Chinese people are mostly concerned about rising medical costs and unequal access to health services. The Chinese government wants to increase its investment in the country’s healthcare delivery stream and boost its public healthcare program. The government plans to make health expenditure as much as 7 percent of overall gross domestic product (GDP) by the year 2020, compared with 5.5 percent, or US$350 billion, in 2010 (Source: McKinsey). Among other things, the healthcare infrastructure is going through a large-scale expansion. At the same time, however, medical specialists are in short supply.
Tech Explosion Meets Population Explosion
Tech Explosion Meets Population Explosion
- Forecasts predict that Brazil, Russia, India, China, and Indonesia will be the sources of the most dynamic growth in digital consumption. The number of regular Internet users in these countries has doubled during the last six years.2
- Advancing computerization: The global healthcare business intelligence (BI = transformation of raw data into useful information for business analysis purposes) market was valued at an estimated US$2,376.6 million in 2013 and is expected to reach US$4.7 billion, growing at a compound annual growth rate (CAGR) of 14.8 % in the next five years.10
More Reachable via Cell Phone
- The increase in cell phones enables communication with healthcare providers and advances healthcare in developing countries.7
- 59 percent of patients in emerging markets already use mobile health applications or services (vs. 35 percent in developed markets)12
South Africa: Lack of Healthcare Infrastructure
With a per-capita GDP of US$12,504 in 2013, South Africa is the wealthiest nation in Africa. As such, pharmaceutical leaders consider South Africa and northern African countries to be important second-tier emerging markets, and the greatest growth in these pharmaceutical markets is expected to be in anti-infective and antiviral medications.
However, South Africa is facing the challenge of birth and death rates that are almost equal, leading to stagnating population numbers. Also in terms of disease patterns, in African countries the development rates are high. Compared with other continents, the mortality rate due to cardiovascular disease will rise most strongly in Africa with an increase of 72.7% by 2030.
African countries are trying to catch up, but few have sufficient capital to invest in brand-new healthcare infrastructure. In an attempt to provide healthcare, some African countries have child health programs by Pesinet, a French NGO, in which community health workers check in on families and thus serve as gateway to qualified nurses and doctors. A recent survey by Strategy& found that the top factors limiting access to African markets include a lack of healthcare infrastructure, affordability, and reimbursement or public funding.
Global health systems offer lessons for others. While mature markets naturally provide medical equipment and supplies to emerging nations, they also have much to learn from these regions, many of which have taken a “leapfrog approach” to innovative health delivery.
2GrowGlobally.org, MCI Group, http://bit.ly/1sMT5Xk
3World Health Statistics, http://bit.ly/1otsccd
5World Economic Forum: Health Systems Leapfrogging in Emerging Economies – Project Paper, P. 5, http://bit.ly/1qMVwag
6World Health Statistics, http://bit.ly/1otsccd
7IDC Worldwide Mobile Phone Tracker, http://bit.ly/1hJymTx
8Strategy&: Pharma emerging markets 2.0 & How emerging markets are driving the transformation of the pharmaceutical industry, P. 19
9CIA World Factbook, http://bit.ly/VUpNv5
10MarketsandMarkets, http://bit.ly/1rDtfJD (all references last accessed on 08/29/14)
11Harvard Business Review (hbr.org), http://bit.ly/1vKUNdY (last accessed 8/26/14)
12SAP Business Trends, http://bit.ly/1reQlk3)