Asia Pacific Healthcare Outlook Focus : Australia Analysis of Best Opportunities 24 th February 2010

2 1. Overview of Healthcare Market: Key Takeaways 2. In-depth Sectoral Analysis, APAC and Australia 3. Summary: Best Opportunity Analysis, Australia Agenda

3 Global Healthcare Market: 2009 US and Europe were impacted in a major way by global crisis Asia also slowed down but not as much as the West Valuations were low and M&A was high, many smaller Biotech companies struggled Major organizational restructuring occurred, along with portfolios being reassessed Recovery of the markets to a large extent with strong growth in Asia Start of major patent expiries M&A activity down in the West but could be important in Asia, restructuring will continue Asia becoming increasingly important as a market and outsourcing hub 5Ps to drive market: Preventive, Preemptive, Personalized, Predictive, Personal Responsibility Global Healthcare Market: Setting the Scene Outlook for Healthcare Industry from Source: Frost & Sullivan

4 23.9%27.2% 23.2% 26.4% CAGR 12.2% CAGR 12.2% CAGR 6.5% CAGR 6.5% Global & APAC Healthcare Revenues US$ Bn, By 2015 APAC could represent ~40% of global market! Source: Frost & Sullivan Rest of the World APAC Global vs. Apac: The New Frontier By 2012 APAC expected to be close to 27% of global market

5 Asia Pacific Market : 2009 Slowing down of GDP in mature markets – Japan took a big hit Global consolidation left a difficult mess for integration on a local level – job losses and portfolio realignment Price cutting and playing the margins game The bubble burst for Medical Tourism Asia started to set up infrastructure for offshoring and outsourcing for US/EU companies Asia Pacific Market : 2012 A shift in the center of the world economically and strategically to Asia Asia to move from export led development to consumption led growth APAC the fastest growing pharma market and API production hub Increased government attention to primary and community based healthcare. Increased use of mobile technology in healthcare service delivery Asia is However Transitionaing Moving toward a Multi–Polar World Order Source: Frost & Sullivan

6 Australian Healthcare Market By 2012, Australia is estimated to be almost 5% of the APAC market Australian Healthcare Revenues, US$ Bn, Source: Frost & Sullivan

7 1. Overview of Healthcare Market: Key Takeaways 2. In-depth Sectoral Analysis, APAC and Australia 3. Summary: Best Opportunity Analysis, Australia Agenda

8  Unresolved political and regulations issues  Quality concern of generics & counterfeits  Government tenders favour local manufacturers 24.6 % 28.5% APAC Pharmaceuticals Market Earlier diagnosis improves disease management and length of therapy Note: All figures are rounded; the base year is Source: Frost and Sullivan Market Drivers Market Restraints  Long term use of multiple and specialized drugs for the ageing population  Government support for generics and biosimilars  Enhanced diagnosis and management in oncology, cardiovascular, pain etc CAGR 6.6 % CAGR 6.6 % CAGR 12.9 % CAGR 12.9 % Pharma Revenues, US$ Bn, APAC Share

9  Saturated market with low unmet needs  Government attempts to restrain PBS expenditure & BPS reforms Growing demand for lifestyle diseases drugs in an aging population e.g. cancer, cardiovascular, diabetes Uptake of new, expensive drugs Strong government support for generics Australia Pharmaceuticals Market Mature market driven by lifestyle diseases Pharmaceuticals Revenues, US$ Bn, Market Drivers Market Restraints Source: Frost & Sullivan

10  Australia Cardiovascular market 2010 :~ US$ 3.15 Bn, with expenditure on pharmaceuticals for cardiovascular conditions growing at an average of 2.9% pa. Largest growth in dollar terms  Australia diabetes market 2010 : ~US$ 935mn. Expected to be one of the fastest growing markets, with expenditure on pharmaceuticals for diabetes growing at an average of 13.9% pa 0 00 Source: Frost & Sullivan. Generics Cardiovascular and metabolic diseases Neurological Conditions Oncology  Australia Neurological Conditions market 2010: ~ US$644mn  Expected to be one of the fastest growing markets, with expenditure on pharmaceuticals for neurological conditions growing at an average of 13.4% pa Top Growth Opportunities : Australia Pharmaceuticals Market  Australia generics market 2010 : ~ US$ 830 mn; Expected growth of ~ 7% pa  Government focus on increasing use of generic s as a means of cost reduction, opportunities from drugs coming off patient  Australia antineoplastic & immunomodulating agents market 2010: ~US$ 1.10Bn, with expenditure on pharmaceuticals for oncology growing at an average of 8.1% pa  Strong government support for cancer research, diagnosis and treatment Biologics  Heavy research & development activity into biologics and ability to afford high cost treatments is expected to lead to strong growth in the biologics market.

11 Regulatory and reimbursement hurdles Lack of sufficient distribution networks Inadequate training/certification for allied staff APAC Medical Devices Market Transition to a mindset of monitoring 23.8 % 25.8% Market Drivers Market Restraints Safety, accuracy, efficiency, cost Silver industry devices Convergence of devices and pharma products Medical Devices Revenues, US$ Bn, APAC Share CAGR 5.8% CAGR 5.8% CAGR 10.2% CAGR 10.2% Note: All figures are rounded; the base year is Source: Frost and Sullivan

12 Medical Devices Revenues, US$ Bn,  Government’s commitment to reduce elective surgery waiting time  Increasing number of joint replacement procedures due to ageing population  Expansion of private health insurance results in demand for better medical care Market Drivers  Increased medical device safety concerns could slow device approval cycle  Development of new technologies will replace conventional treatment methods. Market Restraints Australian Medical Devices Market Demand for better quality of healthcare driving growth Note: All figures are rounded; the base year is Source: Frost and Sullivan

13  High cost of genomics and proteomics tests  Mutually exclusive target customers  Reimbursement issues APAC Clinical Diagnostics Market Shift in business model from instrumentation to service revenues 17.8% 18.5% Market Drivers Market Restraints  Lab automation  Home care monitoring  Emphasis on early detection Clinical Diagnostics Revenues, US$ Bn, APAC Share CAGR 7.3% CAGR 7.3% CAGR 6% CAGR 6% Note: All figures are rounded; the base year is Source: Frost and Sullivan

14 Clinical Diagnostics Revenues, US$ Bn,  Government programs for National Cervical and Bowel Cancer screening  Increasing incidence of chronic diseases and significant demographic trends  Increasing public awareness leads to early detection and monitoring of chronic diseases Market Drivers  Market maturity will lead to price erosion hindering market profitability  High healthcare costs discourages development of new tests/systems Market Restraints Australian Clinical Diagnostics Market Demand for better quality of healthcare driving growth Note: All figures are rounded; the base year is Source: Frost and Sullivan

15 APAC Medical Imaging Market Turnkey projects drive double digit growth in Asia Market Drivers Market Restraints  Rise in turnkey projects  Increasing corporate wellness programs  Integration of Imaging with information systems  New customer sets to be addressed  Price erosion CAGR 6% CAGR 6% CAGR 12.7% CAGR 12.7% Medical Imaging Market Revenues, US$ Bn, Note: All figures are rounded; the base year is Source: Frost and Sullivan APAC Share 30.3%

16 Medical Imaging Revenues, US$ Bn,  Increase in patient demand  Increase in the number of Medicare funded diagnostic imaging services  Increasing competition in the diagnostic imaging services sector  Government initiatives such as BreastScreen Market Drivers  Market saturation due to high penetration of medical imaging modalities  Increasing pricing pressure Market Restraints Australian Medical Imaging Market Digital imaging to drive growth Note: All figures are rounded; the base year is Source: Frost and Sullivan

17 PACS  Australian PACS market in 2010: ~US$ 49 million; CAGR: 9.0%  Focus by healthcare providers to integrate imaging with IT and integrate PACS with the hospital information system to improve efficiency and quality of healthcare  Increasing demand for cardiology PACS and orthopedics PACS solutions outside the radiology department Top Growth Opportunities CR/DR  Australian CR/DR market in 2010: ~US$ 66 million ; CAGR: 10.0%  Teleradiology - Shortages of radiologists require better information sharing and the need to share and transfer reports and images  Increase in the number of diagnostic imaging procedures. Around 15 million diagnostic imaging procedures performed in Australia. Around 3 million procedures performed in the public hospitals. Note: All figures are rounded; the base year is Source: Frost and Sullivan

18 Top Growth Opportunities Note: All figures are rounded; the base year is Source: Frost and Sullivan SMBG  Australian self monitoring of blood glucose (SMBG) devices market in 2010: ~US$ 150 million; CAGR: 6.0  Increasing public awareness about diabetes and the need for glucose monitoring  Strong government support in form of initiatives such as National Diabetes Services Scheme  The total number of diabetic patients registered with NDSS has increased to 897, 867 at a CAGR of 9.8% in the period Minimally Invasive Surgery  Increase in day surgery procedures - In 2009, around 57% of total patient separations in hospitals were same day separations.  Number of day procedures in 2009: ~4.8 million; CAGR: 4.5%  Gastrointestinal endoscopy (around 0.64 million), Arthroscopy (0.14 million) are among the top 5 high volume procedures in Australia  Technological advancement, benefits to hospitals (economic savings) and patient benefits (shorter stay in hospital, reduction in risk of acquiring hospital infections)

19  Interoperability  Integration  Lack of skilled resources *Life Sciences & Healthcare IT includes: Software, Hardware, IT services Asia Pacific Lifesciences and Health IT Market Interoperability challenges hinder adoption 14.5% 15.7% Market Drivers Market Restraints  Operational efficiency  Strong and sustained demand for healthcare services  Consumer demand for quality and access to information Lifesciences & Healthcare IT, US$ Bn, CAGR 7% CAGR 7% CAGR 11.3% CAGR 11.3% APAC Share Note: All figures are rounded; the base year is Source: Frost and Sullivan

20 Australian Life Sciences and Health IT Market Government’s continued commitment to e-Health Life Sciences & Health IT Revenues, US$ Bn,  ICT initiatives by state health departments  NeHTA’s role in accelerating the adoption and awareness of e-health initiatives.  Patient demand to improve the efficiency and quality of healthcare Market Drivers  Chronic under-investment in healthcare IT  IT still not being recognized as the key enabler for successful change to healthcare delivery  Implementation of high-risk legacy systems in the past Market Restraints Note: All figures are rounded; the base year is Source: Frost and Sullivan

21 00 00 00 Clinical IT Systems  Spending on departmental systems (radiology, cardiology, pharmacy, acute care, etc,) 2010: ~US$ 160 mn; CAGR: 15.3%  Modernization of the healthcare system, implementation of more accurate and reliable systems and shift from lengthy to short and more clinically intense hospital stays is driving investment in departmental systems.  Spending on infrastructure, interoperability and EHR solutions: ~US$ 45mn; CAGR: ~17.3%  State eHealth programs such as Healthelink (NSW Health) and government’s commitment to development of the right technology necessary to deliver the best e-health system is accelerating the growth in this segment. Top Opportunities – Australian Life Sciences and Health IT Market Solutions for Patient and Revenue Cycle Management  Spending on patient and revenue cycle management solutions 2010: ~US$ 104 mn; CAGR: 6.1%  The steps taken by healthcare facilities to improve the quality and outcome of healthcare, reduce the administrative burden, and adopt a more standardized approach towards application of information systems is the key driver for this market segment.  Patient administration solutions being adopted in public hospitals in South Australia (careconnect.sa), Western Australia (eHealthWA) and Victoria (HealthSMART). Note: All figures are rounded; the base year is Source: Frost and Sullivan

22 1. Overview of Healthcare Market : Key Takeaways 2. In-depth Sectoral Analysis, APAC and Australia 3. Summary: Best Opportunity Analysis, Australia Agenda

23 Time Growth Home-based care Personalized medicine POCT/Self Monitoring Clinical IT Endoscopy Administrative IT EMR/EHR INNOVATION TRIGGER SUPER GROWTH NORMALISATION LEADERSHIP Source: Frost & Sullivan. Where to place your bets in : Australia Biologics Joint replacement Oncology, Diabetes Cardiovascular

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