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FUTURE HEALTHCARE SOLUTIONS IN EMERGING MARKETS: VIETNAM

Team Finland Future Watch Report, September 2015

OVERVIEW

2

• Personalized Healthcare is an emerging trend in developed countries

• Both government initiatives and consumer attitudes indicate that there is a growing demand for Personalized Healthcare

• Finland has the opportunity to become a proactive provider of general and specialized healthcare in Vietnam

• This report gives detailed information on consumer preferences, demographics, opportunities and challenges for Finnish companies in Vietnam


VIETNAM

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• Vietnam is one of most the inhabited nations in the world with a population of 90 million.

• Vietnam has a young population with approximately 42% under 24 years old.

• The country has diverse cultures with 54 ethnic groups, but the Kinh ethnic is the largest group, accounting for 86.2% of Vietnam’s population.

• Traditional values, customs, rituals and beliefs have been conserved through thousands years of history, but rapid adoption of Western practices and values is taking place

Team Finland Future Watch Report, September 2015 4

VIETNAM HEALTHCARE SYSTEM

General indicator: Area: 332,000 km2 Population : 92 millions GDP per capita: 2000 USD Health Indicators: % Health budget in GDP: 3% % Health budget in total Government's

expenditure: 11%



The Vietnamese healthcare system currently has an estimated more than 1000 state

hospitals, more than 100 local private hospitals and foreign invested hospitals with a total of 145,000 beds.

Vietnam represents a potentially large healthcare, medical equipment and device market. Identified as one of the national development priorities, the Vietnamese public healthcare sector has received increasing government budget allocations as well as interest from the private sector.

Expand and build new hospitals in some overcrowding areas (oncology, cardiology, trauma, obstetrics, pediatrics etc.)

Develop satellite hospitals to transfer clinical techniques to lower levels

Reform PHC health, strengthen grassroots health


DEVELOPMENT STATISTICS

7

The public health sector has limited abilities to cover all the needs of Vietnam’s growing population. Acknowledging the shortage, Vietnam’s government is now aiming to grow the number and size of private hospitals to account for an ambitious total of a 20% increase in total bed capacity by 2020.

1008 1043

1260

121 157

568

0

200

400

600

800

1000

1200

1400

2010 2013 2020

Hospital growth: Public vs Private

Public Private

176 195

225

8,6 11,7

56

0

50

100

150

200

250

2010 2013 2020

Hospital beds (thousands)

Public Private


DEVELOPMENT STATISTICS

8

82,4

12,9 15,8

90,9

39,8

128,6

0

20

40

60

80

100

120

140

Population Internet users Mobile subscription

CHANGES IN VIETNAM 2005 – 2014 (Millions)

2005 2014



Hospitals in major cities like Ho Chi Minh and Hanoi often do not have the capacity to serve both local patients and those from other provinces. Most of them were constructed long ago and face chronic overcrowding.

Much of the existing medical equipment in public hospitals in Vietnam is outdated

and needs replacement. Many hospitals lack sufficient equipment for surgery and intensive care units.

Vietnamese public hospitals rely largely on state budget to upgrade their facilities,

equipment and services. The total budget for the health sector has increased, but it is still too low to meet the demands in the country.

A shortage of qualified medical staff is common in many hospitals. Doctors and

nurses work under stressful conditions and wages are relatively low.



Due to low quality service on the ground, around 30.000 Vietnamese people go abroad for better check-ups and treatment, spending more than USD 1 billion every year, an indication that domestic consumers are keen to seek out higher quality services, out of pocket.

Shortcomings in healthcare provision mean significant opportunities for investors in Vietnam's healthcare sector.

The profit rate of Vietnamese medical equipment products is between 35%-40%. Such a high profit rate turns the medical instruments market into a big gold mine, extremely alluring to foreign distributors. (Japan –Vietnam Company medical report)


GOVERNMENT PLANS

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• While healthcare has improved in urban areas, there is a need for healthcare investment in rural areas

• Vietnam’s government also aims to enhance the healthcare workforce by 2020

• The government plans to strengthen regulatory practices, provide more autonomy for public hospitals and incentives for the private sector.

• Key decisions have been made at the ministerial level to lay a foundation for the interoperability of eventual healthcare IT applications.

• Many hospitals are basic in their integration with technology. This presents a challenge for eHealth projects in Vietnam.


THE VIETNAMESE CONSUMER

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• Vietnam has a diverse population with varying levels of purchasing power.

• Vietnam has a rapidly expanding middle class with a higher level of disposable income, although extremely poor areas still exist

• As disposable income and purchasing power increase, the population are developing an interest in new healthcare solutions

• Vietnam’s young population cares more about health issues. Early adopters of health technology will find their way to influence and build up the bigger wearable community.

• 42% of Vietnam’s population are aged under 24 years old, although in time this trend may reverse and lead to an aging population


CONSUMER TRENDS – PART 1

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• The Vietnamese population has a high rate of acceptance of mobile technology

with 22 million Vietnamese owning smart phones

• ICT growth is the highest in the region

• Increased health awareness has led to consumers spending more on preventative healthcare.

• Vietnam’s young population cares more about health issues. Early adopters of health technology will find their way to influence and build up the bigger wearable community.

• Vietnam’s use of self-medication is increasing due to ease of access and online information.


CONSUMER TRENDS – PART 2

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• Vietnam has experienced a rise in non-communicable diseases (NCDs) .

• In urban areas, the elderly, supported by younger generations, are integrating more and more frequently with healthcare technology.

• Many households own self-diagnostic healthcare equipment (e.g. blood pressure monitors, blood glucose monitors).

• Use of self-medication among all age groups is increasing due to the availability of information via the Internet and popular health forums.


CHALLENGES FACING HEALTHCARE DEVELOPMENT IN VIETNAM

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• Hospitals below the provincial level (both private and public) have a very limited integration with technology, although larger city hospitals use common medical software applications.

• The introduction of Western medicines and healthcare technology is likely to be difficult among ethnic minority groups where the level of education is low.

• Terrain, accessibility, and infrastructure are also key considerations.

• Our focus groups indicate there is some concern over the feasibility of institutions to provide personalized treatment and the accuracy of Personalized Medicine procedures.

OPPORTUNITIES IN HEALTHCARE IN VIETNAM


OPPORTUNITIES FOR HEALTHCARE DEVELOPMENT IN VIETNAM

• Middle and affluent consumer classes of Vietnam will double in size between 2014 and 2020.

• Opportunities for healthcare development can be found in increasing amounts outside the urban development hubs of Vietnam



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• Vietnam is one of the fastest growing economies is Asia • The shortage of the healthcare services in Vietnam has made the

government to decide to invest significantly to the healthcare facility development

• The healthcare is going through fast development in both private and public sectors

• The “real” purchasing power of the Vietnamese people is rapidly growing and at the same time the interest to the personal health is also growing

• Vietnamese people are used to pay “out-of-the pocket” for the healthcare services and are willing to spend reasonable share of the income for these services

• The private healthcare will be growing fast in the coming years, as the investment atmosphere for this sector in getting more and more interesting for foreign investors

• Also the interest for the personal healthcare equipment and services is growing, especially within younger generation



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• In the survey - most respondents show willingness and a positive attitude to wearable devices, diagnostic tests for Personalized Medicine, and the potential benefits of Personalized Medicine.

• The majority of respondents answered positively when Personalized Medicine was described to them.

• Vietnam has very high integration with the internet and smartphones.

• Younger individuals are the early-adopters who hold influence over the older generation

• Respondents recognise the ability of PM and wearable devices to provide useful information, improve quality of life, and provide more accurate preventative and diagnostic healthcare solutions


mHEALTH ADOPTION AT A GLANCE

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• Low adoption among ethnic minority people.

• High resistance to change among rural healthcare workers.

• High adoption rates among urban healthcare consumers.

• Urban healthcare workers are Interested in technology and willing to learn new

things.

• Favourable online source at www. ykhoa.net.

• Experienced gained from pilot projects by an international NGO to launch mHealth in rural areas


PERSONALISED MEDICINE – KEY FINDINGS

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• Our research shows that while the vast majority of Vietnamese people have not heard of personalized medicine while the majority react positively to its definition.

• Personalized Medicine has a high acceptance rate among cancer and diabetes patients.

• The large majority of respondents would be willing to have diagnostic tests for Personalized Medicine if recommended to by a doctor.

• However, among ethnic minority communities there is a very low rate of understanding and acceptance of Personalized Medicine.


WEARABLE DEVICES – KEY FINDINGS

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• There is a high acceptance of wearable devices to monitor health and chronic diseases in Vietnam.

• Out of pocket expenses occupy a large proportion of healthcare expenditure (49-60%), so the willingness to pay for wearable devices from consumers’ own pockets is high.

• The older generation are not necessarily averse to this technology if it helps with their health.

• Wearable devices are already sold in Vietnam. Early adopters come from a range of age groups and backgrounds.

RECOMMENDATIONS AND SUMMARY



SUMMARY

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• While there are many challenges facing the development of Vietnam’s healthcare system, there are numerous opportunities.

• The high level of inter-reliance and influence between family members means that influencing early adopters in one generation encourages adoption in the elder generations.

• The Vietnamese population are keen to embrace new technologies, particularly in urban areas, and willing to pay out of their own pocket.

• The Vietnamese population, in general, recognize the value of Personalized Healthcare and Wearable Devices.

• Hospital administrations recognize the value of healthcare applications and wish to implement them, although this is a challenging task.


RECOMMENDATIONS

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• Understand the complex and evolving nature of the Vietnamese regulatory framework

• Grey areas and other challenges can be navigated with the aid of a local partner. • Do your research and planning carefully.

• Visit the market and build relationships with your clients to shorten the learning curve of

doing business in Vietnam.

• Always schedule for extra time in negotiations and consultations.

• Understand local business etiquette and its complexities. Especially the concept of saving face.

OPPORTUNITIES FOR FINNISH COMPANIES – EXAMPLE CASES



Opportunities for Finnish Healthcare companies

Bach Mai Hospital Facility 2 Project (public) in Hanam province (60 km from Hanoi).

Investment capital: 205 million USD. 5000 out patients and 1000 in - patients beds. Construction

started in January 2015. Full completion expected in 2017.


2. Viet Duc Hospital Facility 2 Project (public) in Ha nam province Investment capital: 205 million USD. 1000 beds Construction started in January 2015. Full

completion expected in 2017. Funding source: Government


3. Nhi Dong Pediatric Hospital Ho Chi Minh City

Investment capital: 200 millions USD from Government funding sources.

Construction started in 12/2014. Completion expected in June 2016


4. Oncology Hospital Ho chi Minh city. Investment capital: 250 million USD. 1000 in- patient beds. Construction supposed to start in April

2015 (delay till date due to tender arrangement). Full completion expected in 2017.

Funding source: Government

KEY FINDINGS IN ON-LINE SURVEY



HEALTHCARE EXECUTIVE ATTITUDES TO NEW TECHNOLOGIES

33

50%

16,70%

16,70%

16,70%

Healthcare executives ‘appreciation of key technologies in enhancing competitive position 2015-2016

Big Data&Analytics Internet of Things Security/risk management/data governance Mobility

Source: IDC 2015


PERSONALISED MEDICINE – KEY FINDINGS

34

• Our research shows that while the vast majority of Vietnamese people have not heard of personalized medicine while the majority react positively to its definition.

• Personalized Medicine has a high acceptance rate among cancer and diabetes patients.

• The large majority of respondents would be willing to have diagnostic tests for Personalized Medicine if recommended to by a doctor.

• However, among ethnic minority communities there is a very low rate of understanding and acceptance of Personalized Medicine.


WEARABLE DEVICES – KEY FINDINGS

35

• There is a high acceptance of wearable devices to monitor health and chronic diseases in Vietnam.

• Out of pocket expenses occupy a large proportion of healthcare expenditure (49-60%), so the willingness to pay for wearable devices from consumers’ own pockets is high.

• The older generation are not necessarily averse to this technology if it helps with their health.

• Wearable devices are already sold in Vietnam. Early adopters come from a range of age groups and backgrounds.


PERSONALISED MEDICINE – DATA

”HAVE YOU EVER HEARD OF THE TERM ’PERSONALISED MEDICINE’ BEFORE?”

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35 of 189 respondents (18.5%) have heard the term before. The ethnic minority groups questioned found it difficult to understand, even after the definition was explained, as technical terms like ‘genomes’ do not exist in their languages.

81,50%

18,50%

YES NO



REACTIONS TO THE DEFINITION OF PERSONALISED MEDICINE

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Respondents’ reactions were mostly positive. After reading the description of Personalized Medicine, 83.6% said their reaction was positive, 3.2% said negative and 13.2% did not know.

13,20%

83,60%

3,20%

I don’t know Good, positive Bad, negative



”ARE YOU INTERESTED IN LEARNING MORE ABOUT PERSONALISED MEDICINE?

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66.1% of respondents want to learn more, 25.9% are less interested and 7.9% are not interested at all.

7,90%

25,90%

66,10%

Not interested Somewhat interested Very interested



ATTITUDES TOWARDS BENEFITS OF PM – IMPROVED QUALITY OF LIFE

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77.8% of respondents believe Personalized Medicine offers an improvement in quality of life. 10.1% think it’s a minor benefit and 0.5% think it has no benefit. Most of the focus group interviewed thinks that by improving the quality of healthcare, this already warrants an improvement in quality of life.

10,10%

7,78%

0,50%

11,60%

Small benefit Big benefit No benefit I don’t know


PERSONALISED MEDICINE – DATA ATTITUDES TOWARDS BENEFITS OF PM – ABILITY TO TAKE AN ACTIVE ROLE IN PREVENTITIVE TREATMENT

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81.5% of respondents believe that personalized medicine has a major benefit in preventing and treating illness while 9% think it has a minor benefit.

9,50% 9%

81,50%

0%

I don’t know Small benefit Big benefit No benefit


PERSONALISED MEDICINE – DATA ATTITUDES TOWARDS BENEFITS OF PM – IMPROVING THE ACCURACY OF DIAGNOSES

41

79.4 % believe that the improvement of accuracy in medical diagnosis is a major benefit of PM.

11,10%

79%

9,50%

0,00%

I don’t know Big benefit Small benefit No benefit



ATTITUDES TOWARDS BENEFITS OF PM – PM SAVES COSTS IN THE LONG TERM

42

The majority of respondents believe this is true and a major benefit while 10.6 % believe it’s true and has a minor benefit.

71,40%

10,60%

18%

0

Big benefit Small benefit I don’t know No benefit



ATTITUDES TOWARDS BENEFITS OF PM – AVOIDING SIDE EFFECTS

43

74.1 % believe that there is a major benefit of avoiding side effects in PM.

74,10%

10,60%

0,50% 14,80%

Big benefit Small benefit No benefit I don’t know



ATTITUDES TOWARDS BENEFITS OF PM – IMPROVING TREATMENT EFFICACY

44

79.4% believes the improvement of treatment efficacy is a major benefit of PM. 13,80%

79,40%

6,90%

0,00%

I don’t know Big benefit Small benefit No benefit



ATTITUDES TOWARDS BENEFITS OF PM – AVOIDING INVASIVE TREATMENT

45

63.8% believe the avoidance of invasive treatment methods is a major benefit of PM.

68,30%

12,70%

0,50% 18,50%

Big benefit Small benefit No benefit I don’t know



WOULD YOU FOLLOW YOUR DOCTOR’S ADVICE FOR PM?

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57.1% of respondent says they definitely would follow their doctor’s advice. 38.6% may follow their doctor’s advice and 4.2% say they would not.

4,20%

38,60% 57,10%

No Possibly Surely



DO YOU OWN A WEARABLE DEVICE?

47

19.6% of respondents say that they own a wearable device. 19,60%

80,40%

Yes No


PERSONALISED MEDICINE – DATA WHAT INFORMATION WOULD YOU EXPECT TO RECEIVE FROM A WEARABLE DEVICE?

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• 35.7% of respondents say they want to collect and track health information.

• 21.1% want to have ‘smarter exercise’.

• 22.8% want to eat more healthily.

• 8.4% want to plug into social media.

• 6.7% want to control home appliances.

• 5.2% want to get access to entertainment.



WHAT INFORMATION WOULD YOU SHARE WITH FAMILY AND FRIENDS?

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• 30.5% of respondents want to share health information.

• 17.6% of respondents want to share the level of exercise.

• 13.8% don’t want to share any information.

• 10.3% want to share their mood.

• 9.2% want to share their weight.

• 8.4% want to share dietary intake.



WHAT DO CONSUMERS THINK IS A REASONABLE PRICE FOR A WEARABLE DEVICE?

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• USD 45 : 29.6% • USD 90 : 23.3% • USD 145 : 22.8% • USD 220 : 17.5% • USD 450 : 5.8% • USD 900 : 1.1%



CONSTRAINTS ON THE PURCHASING DECISION

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• 64% of respondents said quality would influence their purchasing decision.

• 42.3% said that usability and interface would influence their purchasing decision.

• 40% said that the price would influence their purchasing decision.

• 25% said their privacy would influence their purchasing decision.



IS A WEARABLE DEVICE IN ENGLISH A DISADVANTAGE?

52

• 41.3 % of respondents think that a wearable device indicator In English is a disadvantage.

• 58.7% of respondents do not think that this is a disadvantage

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