Frost & Sullivan: Indonesia continues to be one of the more attractive markets in ASEAN for foreign healthcare companies
JAKARTA, Indonesia, June 28, 2014 /PRNewswire/ -- Frost & Sullivan is optimistic on growth in Indonesia's Healthcare market, driven by various factors such as investments into Indonesia and growing availability of healthcare services and access in the country. As the ASEAN region grows, Indonesia with its 247 million population is one of the more attractive markets.
Mrs. Rhenu Bhuller, Senior Vice President, Healthcare Frost & Sullivan said that Asia-Pacific Healthcare expenditure per capita is expected to increase 4.8% across the region by 2018. Indonesia per capita expenditure is expected to increase from US$ 109 to US$ 237 in 2018, representing a year on year growth of close to 14%. The total of APAC healthcare spending is expected to grow from US$1.3tn to US$2.2tn in 2018 at a CAGR 10.5%, with ASEAN growing at 11%, she added.
Mrs Bhuller also noted that Indonesia has one of the fastest growing private hospital sectors in the region. In addition, Indonesia's imports of medical equipment have been on the rise since 2004 indicating underlying domestic demand. While the growth has been uneven from year to year, contributed in some way due to currency fluctuations, the overall trend has been upwards.
Private Healthcare Services – Focus Growth Sector
Within the region, Indonesia and Philippines have the highest shortage of beds and are targets for hospital operators expansions. About 4.2 Million new beds will be needed over next decade to meet the healthcare demand in APAC; more than 40% of that is expected to come from private sector. Frost & Sullivan estimates that more than 35,000 new beds could be added in Indonesia by 2020. One of the larger challenges, however, is the lack of qualified human resources in the healthcare sector, raising a need for in house, as well as across country training programmes. The collaboration with foreign doctors can drive sharing of skills and expertise to local staff.
Favorable government policies, increasing disposable income, changing demographics and increasing chronic disease burden will drive growth in private hospitals. There is a increasing trend of hospital consolidation in private sector in APAC. Several bigger hospital groups from within and outside of APAC are acquiring smaller hospitals in the region due to forecasted market potential. The private hospital market in Asia Pacific is expected to exceed USD 1 billion by 2017, a yearly growth rate of 17% from 2014. However, the track record of foreign investment in hospitals in Indonesia is relatively lower than other countries. Foreign activity has more been around real estate investment trusts acquiring the real estate asset for a hospital from a related party, but there is increasing local activity in hospital development as hospital groups look to expand beyond Jakarta, Bandung and Surabaya.
Another growth driver for this sector is medical tourism. Thailand, Singapore and Malaysia had 2.5 million medical tourists coming through in 2012. Governments in Malaysia and Singapore continue to set aggressive growth targets, and hospitals like Institut Jantung Negara, Malaysia's leading cardiac centre, have established initiatives to woo Indonesian patients.
Healthcare Industry - Business Opportunities, Indonesia, 2014-2018
Pharmaceuticals and Medical Devices
Indonesia's pharmaceutical market is among the top three in terms of growth in ASEAN, and is forecasted to cross USD 10 billion in 2018. Indonesia also has the highest proportion of OTC sales in ASEAN, at 40% of the pharmaceutical market, indicating the propensity of Indonesian consumers towards self medication.
Mrs. Bhuller also said that the middle income local population are increasingly preferring branded generics to lower-cost unbranded drugs. This creates significant opportunities for companies manufacturing branded generics.
The medical devices market is forecasted to grow at 12.5% yearly from 2013 to 2018, and should cross USD 1 billion in 2018. Mrs. Bhuller said that business opportunities exist in surgical equipment, diagnostics and medical imaging equipment and diagnostics.
Future Outlook for Indonesia
Universal healthcare will generate demand in a new population group: by providing access, amongst those that never could have afforded it before. This will further drive demand of generic medication. Generics manufacturers will need to develop strategies to market its off patent generic products to the bottom of the pyramid to play the "high volume, low margin game"
Increase in healthcare spending: Public spending that has traditionally been very low, will have to increase to be able to achieve Universal healthcare by 2019.
Private healthcare services will have to address the huge gap in the healthcare infrastructure as Public hospitals alone will not be able to achieve it.
Different targeting strategies are important to meet gaps in various consumer segments, e.g. the growing middle income group.
Private Players will continue to expand to capture the affluent patient base:
Private hospitals will continue to expand to capture the substantial base of affluent medical tourists that travel to Singapore, Malaysia, Thailand for treatment. Indonesia is starting to promote medical tourism more strongly in areas like Bali with aesthetics treatment.
About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, works in collaboration with clients to leverage visionary innovation that addresses the global challenges and related growth opportunities that will make or break today's market participants.
Our "Growth Partnership" supports clients by addressing these opportunities and incorporating two key elements driving visionary innovation: The Integrated Value Proposition and The Partnership Infrastructure.
- The Integrated Value Proposition provides support to our clients throughout all phases of their journey to visionary innovation including: research, analysis, strategy, vision, innovation and implementation.
- The Partnership Infrastructure is entirely unique as it constructs the foundation upon which visionary innovation becomes possible. This includes our 360 degree research, comprehensive industry coverage, career best practices as well as our global footprint of more than 40 offices.
For more than 50 years, we have been developing growth strategies for the global 1000, emerging businesses, the public sector and the investment community. Is your organization prepared for the next profound wave of industry convergence, disruptive technologies, increasing competitive intensity, Mega Trends, breakthrough best practices, changing customer dynamics and emerging economies?
Contact Us : Start the discussion
Subscribe : Newsletter on "the next big thing"
Register : Gain access to visionary innovation
Media Contact :
Shena Agusta
Corporate Communications Executive, Indonesia
Phone : +62 21 571 0838
Mobile : +62856 8870 992
Email : shena.agusta@frost.com
Share this article