Industry Overview

7. INDUSTRY OVERVIEW 7. INDUSTRY OVERVIEW (Prepared for inclusion in this Prospectus) Independent Market Research on the Global Healthcare Services (HCS) Industry
01 June 2012
FROST & SULLIVAN © 2012 7. INDUSTRY OVERVIEW (cont’d) © June 2012 Frost & Sullivan The market research process for this study has been undertaken through secondary or desktop research. as well as primary research, which involves discussing the status of the industry with leading participants and experts. The research methodology used is the Expert Opinion Consensus Methodology. Quantitative market information was sourced from interviews by way of primary research, and therefore, the information is sUbject to fluctuations due to possible changes in the business and industry climate. Frost & Sullivan’s estimates and assumptions are based on varying levels of quantitative and qualitative analyses, Including industry journals, company reports and information in the public domain. Forecasts, estimates, predictions and other forward-looking statements contained in this report are inherently uncertain because of changes in factors underlying their assumptions, or events or combinations of events that cannot be reasonably foreseen. Actual results and future events could differ materially from such forecasts, estimates, predictions or such statements. This study has been prepared for inclusion in the Prospectus of IHH Healthcare Berhad (“IHH or the company”) in relation to an initial public offering in connection with its listing on the Main Market of Bursa Malaysia Securities Berhad and Main Board of the Singapore Exchange Securities Limited (“the Listing”). Save for the inclusion of this study in the prospectus issued by the company and in such presentation materials prepared by or on behalf of the Company (reviewed by Frost & SUllivan) in relation to the Listing, no part of it may be otherwise given, lent, resold, or disclosed to non­customers without our written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without our permission. Frost & Sullivan has prepared this study in an independent and objective manner, and it has taken adequate care to ensure its accuracy and completeness. We believe that this study presents a true and fair view of the Healthcare Services industry within the limitations of, among others, secondary statistics and primary research, and it does not purport to be exhaustive. Our research has been conducted with an “overall industry” perspective, and it may not necessarily reflect the performance of individual companies in the industry. Frost & Sullivan shall not be liable for any loss suffered as a consequence of reliance on the information contained in this study (save as may be required by applicable laws and regulations, including, but not limited to, the statutory liabilities under sections 253 and 254 of the Securities and Futures Act, Chapter 289 of Singapore and under sections 214 of the Capital Markets and Services Act 2007 of Malaysia). This study should also not be considered as a recommendation to buy or not to buy the shares of any company or companies as mentioned in it or otherwise. For further information, please contact: Frost & Sullivan (S) Pte Ltd, 100 Beach Road, #29-01/11 Shaw Tower, Singapore 189702. For and on behalf of Frost & Sullivan (S) Pte Ltd: Authorised Signatory Mt!fSanjay Singh Vice President I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) TABLE OF CONTENTS 1 GLOBAL MACROECONOMIC TRENDS 1 1.1 GROSS DOMESTIC PRODUCT (GDP) GROWTH 1 1.2 GDP PER CAPITA 2 1.3 POPULATION GROWTH AND AGEING POPULATION 3 1.4 HEALTHCARE INDICATORS 4 1.4.1 Challenges in a Public Healthcare Delivery System 6 2 OVERVIEW OF THE GLOBAL HEALTHCARE SERVICES (HCS) MARKET 7 2.1 DEFINITION OF HCS 7 2.2 SEGMENTATION OF HCS 7 2.2.1 Development of the Public and Private HCS MarkeL 8 2.2.2 Development and Trends in the HCS MarkeL 9

4.1 SINGAPORE 20 4.1.1 Introduction and Background 20 4.1.2 Overview of HCS model and funding 21 4.1.3 RegUlatory Overview 23 4.1.4 Supply Dynamics 24 4.1.5 Demand Dynamics 26 4.1.6 Competitive Landscape 29 4.1.7 Market Size (‘For-Protit’ Private Hospital Industry Revenue) 31 4.1.8 Primary care clinics 32 4.1.9 Industry Outlook / Prospects 32
4.2 MALAYSIA 34 4.2.1 Introduction and Background 34 4.2.2 Overview of HCS model and funding 35 4.2.3 RegUlatory Overview 37 4.2.4 Supply Dynamics 38 4.2.5 Demand Dynamics 40 4.2.6 Competitive Landscape 42 4.2.7 Market Size (Private Hospital Industry Revenue) 43 4.2.8 Industry Outlook / Prospects 44
4.3 TURKEY 45 4.3.1 Introduction and Background 45 4.3.2 Overview of HCS model and funding 46 4.3.3 Regulatory Overview 48 4.3.4 Supply Dynamics 48 4.3.5 Demand Dynamics 50 4.3.6 Markel Size (Private HCS Industry Revenue) 51 4.3.7 Competitive Landscape .. 51 © Frost & Suflivan 2012 Independent Market Research on Global Heallhcare Services Indusfry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (conl’d) 4.3.8 Indus/ry Outlook I Prospects 52 4.4 INDIA 53 4.4.1 Introduction and Background 53 4.4.2 Overview of HCS model and funding 53 4.4.3 Regulatory Overview 55 4.4.4 Supply Dynamics 55 4.4.5 Demand Dynamics 56 4.4.6 Competitive Landscape 57 4.4.7 Industry Outlook I Prospecls 58 4.5 THE PRC 59 4.5.1 Introduction and Background 59 4.5.2 Overview of HCS model and funding 59 4.5.3 Healthcare Funding Structure 60 4.5.4 Supply Dynamics 61 4.5.5 Demand Dynamics 61 4.5.6 Healthcare Expenditure 64 4.5.7 Competitive Landscape 64 4.5.8 Industry Outlook I Prospects 65

4.6 HONG KONG 66 4.6.1 Introduction and Background 66 4.6.2 Overview of HCS model and funding 66 4.6.3 Regulatory Overview 67 4.6.4 Supply Dynamics 67 4.6.5 Demand Dynamics 68 4.6.6 Healthcare Expenditure 70 4.6.7 Competitive Landscape 70 4.6.8 Industry Outlook I Prospects 71 5 BRIEF OVERVIEW OF THE HCS MARKET IN SELECTED COUNTRIES 72

5.1 INDONESIA 72 5.1.1 Introduclion and Background 72 5.1.2 Industry Outlook I Growth Prospects 72
5.2 VIETNAM 72 5.2.1 Introduction and Background 72 5.2.2 Industry Outlook I Growth Prospects 73
5.3 BRUNEI 73 5.3.1 Introduction and Background 73 5.3.2 Industry Outlook I Growth Prospects 73
5.4 MACEDONIA 74 5.4.1 Introduction and Background .. 74 5.4.2 Industry Outlook I Growth Prospects 74
5.5 SAUDI ARABIA 74 5.5.1 Introduction and Background 74 5.5.2 Industry Outlook I Growth Prospects 75
5.6 UNITED ARAB EMIRATES 75 5.6.1 Introduction and Background 75 5.6.2 Industry Outlook I Growth Prospects 76 5.7 EGyPT 76 5.7.1 Introduction and Background 76 5.7.2 Industry Outlook I Growth Prospects 76

5.8 UKRAINE 77 5.8.1 Introduction and Background 77 5.8.2 Industry Outlook I Growth Prospects 77 I Company No.: 901914·V I 7. INDUSTRY OVERVIEW (cont’d)
5.9 ROMANIA 77 5.9.1 Introduction and Background 77 5.9.2 Industry Outlook I Growth Prospects 78 6 OVERVIEW OF THE HEALTHCARE TERTIARY EDUCATION (HTE) MARKET IN SINGAPORE AND MALAYSIA , 79
6.1 DEFINITION AND SEGMENTATION 79 6.2 EDUCATION REOUIREMENT FOR A CAREER IN HCS 79 6.3 HEALTH EDUCATORS AND CONTINUOUS PROFESSIONAL DEVELOPMENT (CPO) 79 6.4 HTE IN SINGAPORE I MALAYSIA 80 6.4.1 Market Size and Growth 80 6.4.2 Demand I Supply 81 6.4.3 Competition and Positioning 82 6.4.4 Future Trends I Outlook 83 7 ApPENDiX 85 7.1 CURRENCY CONVERSION TABLE 85 © Frost &Sullivan 2012 Independent Markel Research on Global Heaflhcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) 1 GLOBAL MACROECONOMIC TRENDS
1.1 GROSS DOMESTIC PRODUCT (GDP) GROWTH Most countries in the world witnessed a global financial crisis in 2008 and 2009 with GOP growth rates recovering in 2010 after a dip in 2009. The following charts illustrate the historical and forecast GOP growth rates in selected economies between 2006 and 2016.
Source: World Economic Outlook (WEO) Database, September 2011 published online by the International Monetary Fund (fMFj, based on GOP in cons/ant prices. Note: a. As defined by the United Nations (UN) China and India recorded a GOP growth rate of above 8.0% in 2010. In the CEEMENA region, Turkey’s GOP growth rate was higher than the region’s average growth rate. Singapore and Malaysia’s GOP growth rate were also above the Association of the Southeast Asian Nations (ASEAN) average in the same year. The developed economies showed a relatively lower GOP growth rate of less than 5.0% in 2010. The economic outlook for China, India and the ASEAN region is highly positive and annual GOP growth rates between 5%-10% are expected over the next 4 years. Average GOP growth rate of developed countries is expected fo be low, likeiy to be aftected, amongst other things, by the Euro debt crisis. The better economic outlook in Asia and Southeast Asia has led to higher investment by the private sector accompanied by higher public spending in sectors such as infrastructure, education and healthcare. © Frost & SuI/ivan 2012 Independent Market Research on Global Healthcare Services Industry

1.2 GDP PER CAPITA An increase in weallh implies a trend towards the improvement of basic living standards, inclUding better nutrition, sanitation and healthcare. The WEO (World Economic Outlook) report projects growth rates in GDP per capita, to be fastest in the newly developed and emerging economies of Singapore, Hong Kong and Korea. The following charts iilustrate the GDP per capita in 2006, 2010 and 2016 for selected countries in Asia, the CEEMENA region and the developed economies. GDP per capita (at constant prices) for Selected Countries, 2006, 2010 and 2016F
Developed Economies CAGR CAGR CAGR CAGR CAGR ‘0 4.8% 0.7% 1.9% -1.2% 1.7% l: 60., m I CAGR CAGR CAGR CAGR, … I 3.5% 1.0% 2.20% -0.2% ~ 10-j n2006 2010 2016 Source: Data in the above charts are based on GOP per capita data in constant prices in the respective country’s national currency as sourced from the WEO Database, September 2011 published online by IMF. The data above was’ converted to US dollar based using the currency conversion rate for the respective years as depicted in the Appendix. Analysis by Frost & Sullivan. tyote: * AI! CAGRs pertain to the period from 2006 to 2016. “* fn the CEEMENA chart above. Turlwy’s GOP per capita af current prices in 2010 is US$ 10,047 (TL 15,119).
© Frost & Sullivan 2012 fndependent Markel Research on Globall-Iealthcare Services Industry

1.3 POPULATION GROWTH AND AGEING POPULATION Population growth belween 2006 and 2010 was significant in emerging countries with a large population base such as Indonesia, China and India. Population growth was also high in newly developed economies such as the UAE, Saudi Arabia, Brunei, and Singapore (mainly fuelled by immigration). Growth in population is expected to lead to a growing demand for resources and basic needs, particularly for food, clean water, energy and healthcare. The population in countries like Germany and Japan registered a decreasing rate of growth over the same period. The following chart illustrates the population in 2006 and 2010 and the forecasted population in 2016 in selected countries in Asia, the CEEMENA region and selected developed economies. Population Growth in Selected Countries, 2006, 2010 and 2016F DEVELOPED An ageing population is defined as a shift in the distribution of a country’s population towards an older age group, which is mainly caused by the ageing of the baby boomers” who are moving into the retirement age, and further exacerbated by low birth rate, low mortality rate and improved life expectancy. A low birth rate is mainly the result of increasing urbanisation which is associated with increased living costs and a busy lifestyle, both of which are less conducive to family building. Further, in some countries like the People’s Republic of China (PRC), government restrictions on the number of children per family also contribute to lower birth rates. A low mortality rate and improved life expectancy are primarily the result of better living conditions from increased wealth, access to better nutrition, healthcare and sanitation, as well as the political stabilily in countries. An ageing population is expected to lead to an increase in the demand for HCS due to: • higher occurrence of non-communicable lifestyle diseases such as cardiovascular diseases as well as cancer and age related diseases such as arthritis and diabetes, among others;
• higher requirement for diagnosis and hospital-based inpatient and outpatient treatment; and
• longer duration of care.

The following table shows the percentage of ageing population (aged 65 years and above) and the ageing population CAGR between 2006 and 2010 for selected countries. As can be seen from the table, Asia, in particular Singapore, Malaysia, the PRC and Korea, have the fastest ageing population. 1The baby boomers refer to those born during the 1940s -1960s I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Ageing Population (65 years and above), 2006-2010 Indonesia  11,630.9 .  5.2%  13,194.5 .  5.6%  ,_:32%  Thailand  5,163.6  8.2%  5,677.2  8.9%  2.4%  Vietnam Malaysia  4,958.8 1,153.8  5.9% 4.3%  5,298.5 1,440.8  6.0% 5.1%  1.7% r…·…·..~:.?~~~· ..;[?fastest growth  ~  Singapore  356.5  8.1%  456.9  9.0%  r··..·6~46io··~ I Fastest growth and most I ….. ‘” •••••••• La/fluent –..-J  Brunei  12.5  3.3%  14.3  3.6%  3.2%  The PRe  100,981.5  7.7%  119,235.1  8.9%  . ,,’ , i..,..1·.?~(~.~  I I  :]<J fastest growth with a large population base  India  50,938.5  4.7%  57,742.5  4.9%  3.2%  r===========i  Hong Kong  844.7  L…·.1·gj~(~ ..~  904.6  ………….. : 12.7% ~ .  1.7%  One of the highest percentages of ageing  Turkey  4,628.7  6.7%  5,063.0  6.9%  2.3%  Egypt  3,399.7  4.8%  3,913.6  5,0%  3.6%  Romania  3,214.3  14.9%  3,196.4  14.9%  -0.1%  Saudi Arabia  716.3  3.0%  815.5  3.0%  3.3%  Macedonia  228.8  11.2%  243.0  11.8%  1.5%  UAE  30.1  0.7%  0.4%  -7.2%  ~r’:J.:   United Stales  37,108.9  12.4%  40,483.8  13.1%  2.2%  Japan  26,038.2  20.4%  28,947.1  22.7%  2.7%  Germany  16,004.1  19.5%  16,632.7  20.4%  1.0%  United Kingdom  9,724.3  16.1%  10,321.1  16.6%  1.5%  Korea  4,668.2  9.7%  5,446.5  11.1%  3.9%  1.4  HEALTHCARE INDICATORS
Most of the developed and mature economies such as United States and United Kingdom have over 3.0 hospital beds per 1,000 population. In comparison, countries like Singapore, Thailand, Malaysia, Indonesia and India have a ratio of hospital beds per 1,000 population of below 3.0. The following chart shows the hospital beds per 1,000 population ratio data of selected countries in Southeast Asia, Asia, the CEEMENA region and selected developed economies, as compared with the Organisation for Economic Cooperation and Development (OECD) average ratio in 2009 or latest available year. A low proportion of beds per 1,000 population is indicative of latent demand for additional hospital beds reflecting the growth potential for healthcare infrastructure in the country.

© Frost & Sullivan 2012 Independent Markel Research on Grobal Healthcare Services Industry
7. INDUSTRY OVERVIEW (conl’d) Hospital beds per 1,000 population ratio, 2009 (or latest available year)
SOUTHEAST ASiA ASiA CEEMENA DEVELOPED Note: Data for Singapore, Malaysia. Hong Kong, China, India, Saudi Arabia and Turkey are as of 2010, sourced from the data published by the respective countries’ government departments. Data for Russia, Japan, Korea and United Slates are as 012009, sourced {rom the QECD. Data for Vietnam is as of 2009, sourced from government published data, All other countries’ data are as of 2009 or latest available year, sourced from the World Bank. Developing countries in Southeast Asia and other emerging economies in Asia tend to have lower ratios of doctors per 1,000 population and nurses per 1,000 popUlation when compared with developed countries and emerging economies in the CEEMENA region. The development of the healthcare sector is highly related to government policies, investments in the area of healthcare education and the supply of healthcare workers. The following chart shows the doctors per 1,000 popUlation ratio of selected countries in Southeast Asia, Asia, the CEEMENA region and the developed economies, as compared with the GECD average ratio in 2009 or latesf available year. Doctors per 1,000 population ratio, 2009 (or latest available year) ———..-‘..—–. 50, 4.31g4.5 j 335. 3.5 ~ 2.98. 3.0 g 2.5
o …: 2.0 t 1.5 ~ 1.0
.E 0.5 g 0.0 Cl SOUTHEAST ASIA ASIA Note: Data for Singapore, Malaysia, Hong Kong, China, (ndfa, Saudi Arabia and Turkey are as of 2010, sourced from the data published by (he respective countries’ government departments. Data for United States and Japan are as of 2009, sourced from DECO Data for Egypt is as of 2008, sourced from EIU. All other countries’ data are as of 2009 or latest available year as published by the WHO CEEMENA DEVELOPED © Frost & Sullivan 2012 Independent Market Research on Global Heafthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) The following chart shows the registered nurses per 1,000 population ratio of selected countries in Southeast Asia, Asia, the CEEMENA region and selected developed economies, as compared with the OECD average ratio in 2009 or latest available year. Registered nurses per 1,000 popUlation ratio, 2009 (or latest available year)
NoJ§: Data for Singapore, Malaysia, Hong Kong, China, India and Turkey are as of 2010, sourced from the data published by the respective countries’ government departments. Data for United States and Japan are as of 2009, sourced from the DECO. All other countries’ data are as of 2009 or la/est available year as published by the WHO. 1.4.1 Challenges in a Public Healthcare Delivery System Generally, the pUblic healthcare policy in a relatively less-developed country is driven by government initiatives in providing healthcare to its population. The objective of governments in such countries is to provide its population with access to basic HCS, control and eradication of communicable diseases such as tuberculosis, rUbella, leprosy, and Acquired Immuno Deficiency Syndrome (AIDS), providing care for the infirm and elderly, as well as creating awareness amongst the pUblic on ways to prevent diseases. As a country progresses from being under-developed to a developing economy, its public healthcare infrastructure typically lags due to limited funding, resulting in overcrowding in hospitals, shorlage of resources and long waiting times. As a result of the high volume, a need­based system is typically implemented. Furthermore, public HCS tend to have less advanced treatment, medication and drugs. This leads to a growing demand for private hospitals and also an increase in outbound medical travel. In developed countries, the government’s role revolves around ensuring that public interest is protected through implementation of regulations and by channelling private spending in heallhcare to achieve a more sustainable public funding sysfem. In mature economies, a system of universal healthcare or national insurance is usually implemented to cater for public healfhcare funding. Such a system is only sustainable in a country with a large wealthy population segment paying high taxes to fund public HCS. As a result, the majority of the population In developed countries utilises public HCS, resulting in long waiting times and backlog of treatment. In comparison, private healthcare is typically seen as a premium service that provides an alternative option to the wealthier population who are able to pay out-of-pocket (OOP) or can fund private HCS via medical insurance. Private healthcare therefore provides a choice to the patients desiring shorter waiting times and.faster access to quality healthcare. © Frost & Sullivan 2012 fndependent Markel Research on Global Healthcare Services Industry CCompany No.: 9019if\IJ 7. INDUSTRY OVERVIEW (cont’d) 2 OVERVIEW OF THE GLOBAL HEALTHCARE SERVICES (HCS) MARKET
2.1 DEFINITION OF HCS HCS is defined as the provision of consultation, diagnostic, patient care and medication for the prevention or treatment of diseases, ailments, injuries or other physical and psychological health conditions. These services are provided by healtllcare professionals such as specialists and general physicians, supported by medical assistants, nurses and allied health workers. The classification of HCS based on tile type of care delivered is summarised in the following diagram: Categorisation of HCS by Level of Service Basic healthcare I ——–.—–..Jllo-Increasing complexity of treatment! Low reVenue per case Higher revenue per case Treatment ofbasic Specialist consu/lation Specialist consul/alive illnesses careLocal surgeries Routine check-ups Advanced treatmen! & Emergency care comptex surgeriesVaccination services Diagnostics I Imaging Ii Inpatient care Denial services I’Acute treatment IIFirs/-aid .1L ~…_._—Nigher patient traffic ————p. -4——–Lower patient traffic —J> ~ource: Compfled by Frost & Sullivan Primary care is the most basic HCS that is proVided to tile general public, delivered by primary care physicians, nurses or family doctors on an outpatient basis. Primary care services are generally proVided via health centres, clinics and sometimes pharmacies. They also include administering first-aid to injuries and dental services. Secondary care refers to tile intermediate HCS or consultation by medical specialists 10 patients, usually referred by primary care personnel and may be delivered on an inpatient or outpatient basis. Secondary care is typically provided in specialist clinics, hospitals and medical centres that have special facilities for diagnostic, inpatient treatment and general surgeries. Secondary care services are supported by healthcare workers such as nurses, pharmaCists and allied health personnel. Tertiary care is the level of HCS proVided to patients which typically involves specialist consultative care, advanced treatment or complex surgery and inpatient care. Tertiary care patients are usually referred by primary or secondary care personnel. The provision of these services is delivered via hospitals and medical cenlres with specialised equipment and facilities for complex medical interventions. Examples of tertiary care include cardiac surgery, neurosurgery, reconstructive surgery and cancer treatment. Quaternary care is the highest level of HCS which involves high-risk and complex surgeries such as organ transplants.
2.2 SEGMENTATION OF HCS The general HCS model can be segmented into public and private HCS: Public HCS is the foundation for a country’s HCS structure. It refers to HCS provided by the government, typically through appointed ministries or administrative bodies. The services provided are funded through public sector budgets, national insurance schemes andior universal heaithcare programmes. ©Frost & Sullivan 2012 Independent Market Research on Global Heafthcare Services Industry [COmpany No.: 901914-VJ 7. INDUSTRY OVERVIEW (cont’d} Private HCS can be spilt between for-profit businesses and not-far-profit organisations. Private healthcare funding typically comprise of OOP expenditure or private insurance plans, and in some countries, funds from national or social insurance. 2.2.1 Development of the Public and Private HCS Market A country’s HCS public-private mix is highly related to the country’s level of economic development. The following table summarises the relationship between a country’s HCS and its level of economic development. HCS Industry Profiling based on Level of Development in an Economy
_”‘-::BII.IB:’ Infrastructure Healthcare Workforce Healtheare Funding Technology Regulations Examples of Countries ,i _Mainly public primaFY care, F_ Higher number of public rural clinics and outbound non-profit clinics. Low number of public hospitals available in centraVurban areas -Low number of private practices, mainly primaty clinics operated by family doctors · Few {rained doctors and surgeons, mainly generalists · Voluntary foreign doctors serving under not-for-profit! non-government organisation (NPO/NGO) -Very few nurses, mainly care workers with limited formal _. _”, __qU<Jli~?.tl0.r!~, ,. -Low public funding due 10 limited government resources -Larger contribution from charity foundations, the Uniled Nations (UN), Economic Groups and other (NPO/NGO) · Limited heaflhcare insurance structure available -Mainly OOP spending · Basic medical, surgical and imaging equipment Unstruclured -Regulations mainly to maintain workforce and sanilalion / hygiene standards · Cambodia, Laos, Bangladesh, Nepal clinics _Increasing number of publiC hospitals being bum and mainly concentrated in cenlraVurban areas -Growing number of private primary clinics. The slart of private hospitals targeted al the wealthy populallon -Generalist physicians or surgeons mainly locally trailled -Overseas-Irained specialists Growing number of nurses and lechnical assistants Irained in public hospitals or vocational schools -General reliance on laxation -Some contribution from charity, UN, Economic Groups and other NPO/NGO . Growing OOP spending -Small insured popUlation -Developing funding structure for the poor -Basic medical, surgical and imaging equipment . The start of fnformation and Communication Technology (ICT) integration -Evolving, regulating the private sec/or -Inc.reasing standards compliance guidelines -Thailand, Indonesia. Malaysia, india, Egypt, Turk~y, ,9hina . High number of public and private clinics _Growth in the number of secondary and tertiary public heaffhcare . Privafisatioll of public healthcare
-Rapid growth in the numberofprivate hospitals -Higher number of local and foreign trained doc/ors -Increase in number of specialists over a wide range of sub-specialties
-Movement of doctors from pubfie to private sec/or -High reliance on laxation -Large social security con(ribuliol1 transitioning inlo universal healthcare model
-Large OOP spending in particular private sector
-Higher number of insured populalion Governments implement cost-containment .””-~!~~(~gj€~ ­-Advanced equipment mainly in private facilities -Higher ICT integration -Maturing -Higher govemance on private sec/or
-Higher definition on accountability
-Standards compliance enforcement
Singapore, Hong Kong, Korea =-­I I · Continued capacity building in public hospitals and raising standards -Consolidation of the private healthcare sector · Low rale of latent replacemenl
-Higher number of specialisls over a wide range of sub-speciames, · In-migration of foreign physicians, trained nurses and allied workforce , “‘~ i_Very high reliance on (axatlon
-Manda/ory contribution 10 social security/ universal heallhcare model -Low OOP spending Majority insured popula/fon “i” · Sfale·of-tlle-art equipment in both public and private facilities High leT integration -Matured High governance on privale seclor -High definilion on accoun/ability, emphasis on standards compliance · Uniled Kingdom, United States, Germany, Japan Source.: Compiiedby7=rost <.~ ·Sullivan © Frost & Suffivan 2012 fndependenl Markel Research on Global Healthcare Services Induslry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 2.2.2 Development and Trends in the HCS Market Total healthcare expenditure per capita is increasing in most countries. Moderate to high growth was observed between 2006 and 2009, across the developing and newly developed regions in Asia and the CEEMENA region. These countries were either largely underserved and experiencing large capacity building or actively upgrading their healthcare syslems. In these economies, healthcare expenditure is driven by factors such as changing lifestyle, ageing population, political conflicts and war, and the outbreak of highly transferable diseases. The GDP in developed countries such as the United States, United Kingdom and Japan registered a lower growth at a CAGR of sub-3.0% from 2006 to 2009. Nevertheless, the total healthcare expenditure per capita in the developed countries is amongst the highest in the world, mainly due to higher living costs in these countries as well as the higher prevalence of age-related diseases.
SaUTe§.: The World Bank Da/abase and countries dala. Note: Total healthcare expenditure is the sum of public expenditure and privMe expenditure. Public expenditure includes capital expenditure by public HCS providers.
© Frost & Sullivan 2012 Independent Markel Research on Global Hea/!hcare Services Industry 7. INDUSTRY OVERVIEW (conl’d) Global Migration of Healthcare Workers inlo Higher Income Countries Migration of healthcare workers originating from the developing countries into developed and mature economies is mainly driven by the motivation for employment opportunities, higher wages and better living conditions. Developed countries usually have a strict policy regarding the in­migration of healthcare workers, however such policies may be relaxed when there is a severe shortage. In-migration of doctors is apparent in countries such as Singapore, Australia, New Zealand, United States, Canada, Hong Kong and UAE. On the other hand, the in-migration of nurses is often due to the sector being less attractive to the locals due to the lower salary scale. Hong Kong, Singapore and the Gulf countries import nurses from other developing Asian countries such as Malaysia and the Philippines to fulfil the shortages of nurses in their respective countries. Globalisation has also created new opportunities for healthcare tertiary education (HTE) providers in these developing countries to produce local talent for the purpose of supplying staff to the developed countries, in addition to serving their own countries. (Refer to Chapter 6 for more details on HTE). Advanced Technology and ICT (Information and Communications Technology) Integration Advanced technologies are changing the landscape of disciplines such as investigative medicine and micro-surgery. For instance, high-definition imaging equipment with 3-0 visualisation and advanced ultrasound equipment enable doctors to diagnose and detect ailments in its early stage whereas robot-assisted surgery devices reduce surgeons’ level of fatigue during complex surgeries. Technology also plays an important part in addressing the manpower shortage in the developed countries by relieving the need for a larger workforce. Furthermore, the integration of ICT in the healthcare sector allows efficient document handling of patient records and imaging files, which can be seamlessly transferred within or across different hospitals, providing patients with a more personalised service. The United States, Japan and Germany are the major consumers of medical devices as well as being the leading producers and exporters of technologically advanced medical instruments. Based on the WHO global disease statistics, the top causes of mortality predicted in 2030 are expected to be cardiovascular diseases, cancers and pulmonary diseases. Therefore, healthcare providers are increasingly upgrading their facilities with advanced healthcare technologies for better and early diagnosis of such diseases. The use and deployment of such advanced technologies is also likely to support cost savings at patient level resulting from early diagnosis and treatment leading to faster recovery. 2.3 BARRIERS TO ENTRY High Capital Expenditure (CAPEX): Building a healthcare facility incurs significant CAPEX investments. Such CAPEX includes the purchase of land and equipment as well as the consfruction cost of new buildings. For example, in Malaysia, a 200-bed hospital would typically cost between US$ 40 million to US$ 65 million to build, and in urban areas, the cost would be higher. The biggest variable is land cost which varies across locations. The cost of setting up an operation theatre in Malaysia could be apprOXimately US$ 0.7 million. Furthermore, there will be other start-up costs involved for the operation ot the facility. Licensing: The HCS industry is regulated and HCS providers are required to apply for a license in order to operate. The ease of obtaining a private operating license differs between countries. For mature economies, the constraints faced may be greater as these countries typically have a well­developed public l1ealthcare system or may have exhausted the issuance of private licenses. By comparison, private hospital licenses are usually easier to obtain in developing countries such as Southeast Asia and in Middle Eastern countries with underdeveloped healthcare infrastructure and overburdened public resources. In these countries, the private sector is olten encouraged to participate in providing HCS to the general public in order to complement the public HCS. © Frost & Su(fivan 2012 Independent A1arket Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (conl’d) Limited Land Bank: Countries with limited land areas such as Singapore and Hong Kong are among the most difficult countries to obtain new private hospital licenses due to the limitation of land, As such, there could be higher levels of consolidation activities amongst the private sector players in these markets. Regulatory Requirements and Standards: In general, the HCS sector is highly regulated by the government. The industry is subject to high levels of regulations and standards in the administration of its facilities, handling of supplies and in clinical operation procedures to ensure the safety of the general public. A new entrant must be highly familiar with the industry and highly knOWledgeable in the intricacies of HCS. Consumer Confidence in Brand and Industry Recognition: Typically, brand recognition is important in private HCS. The ability to attract specialists already established in their profession to set up a consultation clinic within a private hospital ensures a ready stream of patients and new entrants to a HCS market may have difficulties doing this due to the lack of brand recognition. Furthermore, new entrants have 10 compete with well established service providers who have achieved industry awards and accreditations like Joint Commission International (JCI). Availability of doctors and nurses: The availability of qualified and experienced doctors / specialists and allied healthcare professionals (especially nurses) to support investments in new facilities / expansion plans could pose a challenge to the success of new hospitals / medical facilities. Long training time to become a doctor, in particular, a specialist: It takes approximately 6-8 years to become a fully registered doctor and a further 3-7 years to be trained as a specialist. This long training time is highly challenging and as a result, the number of specialists produced is generally lower than other disciplines for most countries. The availability of such experienced specialists is one of the major barriers to entry for a new private HCS provider. Typical Medical Specialist Career Progression Track
Source: Compiled by Frost & Sullivan
2.4 PRODUCT SUBSTITUTION There is no substitution for HCS. However, within the general HCS models, patients may choose to seek treatment with either a public or a private HCS provider, which are able to provide the range of basic to a more complex HCS.
2.5 VULNERABILITY TO IMPORTS Medical Supplies and Pllarmaceuticals Major producers of medical supplies and pharmaceuticals such as Pfizer, Abbot and Baxter, to name a few, operate a global supply network with manufacturing and distribution facilities present across different regions. Hence, most 01 the medical supplies and pharmaceuticals are easily available from country distribution agents making the healthcare sector less-vulnerable to imports of such items. © Frost & Sullivan 2012 Independent Markel Research on Global Hea/lhcare Services Industry [ Company No.: 901914-V [ 7. INDUSTRY OVERVIEW (cont’d) 3 OVERVIEW OF MEDICAL TRAVEL IN SELECTED COUNTRIES 3.1 DEFINITIONS Medical travel is defined as the activity of seeking medical treatment outside the borders of one’s own country, and requires a patient to travel to a destination country, including making necessary arrangements (akin to a tourist) such as entry visas / permits, transfers and accommodation. Such medical travel is often necessary due to the patient’s prevailing illness, but may also include elective procedures. Typical complex (high intensity) cases include heart surgeries, hip/knee replacement surgeries, cancer treatments and Drgan transplants. Such treatments generally require hospitalisation and in most cases post-operative visits to monitor progress. Elective procedures include enhancement surgeries, gender reassignments and reproduction/fertility treatments. Medical travel is distinct from medical tourism which usually invDlves non-invasive consultative care, wellness therapies or visiting therapeutic rehabilitation facilities for health rejuvenation. Drivers for medical travel It is generally observed that the overall economic development Df a country precedes the develDpment of the healthcare infrastructure therein. However, usually, there is a time lag (despite funds available for investment) largely on account of the following reasons: • Healthcare is a highly regulated industry (in terms of licenses, approvals, monitoring, etc) with specific processes / procedures that need to be strictly follDwed, which leads to bureaucratic and regulatory delays; and
• The time taken to develop qualified, trained and experienced dDctDrs & specialists and allied healthcare professionals (which are the most integral part at the healthcare delivery system in any country) adds to the ‘lag’ effect. The availability of the healthcare professionals can also be impacted by issues such as limited availability of trainers and related facilities.

This lag effect can be noticed in countries like Indonesia and other fast growing economies such as CEEMENA and these often become medical travel source markets. In such markets, the rising affluence and a desire for better quality of care is driving patients to seek medical treatment overseas in destinations such as Singapore and Malaysia, amDng others, where the healthcare infrastructure and availability of such professionals addresses their needs. One Df the primary reasons for Indonesians seeking treatment overseas is the perceived pODr quality of healthcare at home. The limited presence of holistic treatment services in Indonesia and the availability of better quality of healthcare in neighbouring cDuntries, especially Singapore and Malaysia, act as a curb to the growth of and demand for the Indonesian domestic healthcare market. Competitive hospital fees in Malaysia are increasingly attracting Indonesians. In addition, tour operators in Singapore and Malaysia offer specially tailored packages for Indonesian patients. Special referral mechanisms as well as international customer departments at major private hospitals in these countries also serve as friendly points of contact for medical travellers from Indonesia. An increasing trend of hospitals having international accreditations is another driver for medical travel. International accreditation plays an important role for medical lravellers as it acts as a credibility stamp for the medical traveller indicating that the hospital meets international standards of care and quatity treatment. Therefore, the drivers for medical travel are Iypically based on one or a combination of factors related to quality of care, technology, unavailability of treatment in the home country, low access to treatment due to overcrowded facilities and long waiting times in the home country. The patients’ financial capabilities, reputation of doctors at foreign hospitals, distance and connectivity to country of treatment are also key influences on the decision of medical travellers seeking treatment overseas. Singapore and Malaysia are medical travel hubs for travellers from Asia, while Thailand and Turkey typically attract patients from CEEMENA region. © Frost & Sullfvan 2012 Independent t.;farkel Research on Global Healthcare Services Industry
I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont”d) 3.2 SINGAPORE A medical travel destination offering state-or·the-art technologies and medical procedures Singapore is recognised for its HCS and medical expertise. It is one of the most favoured medical travel destinations in Southeast Asia for complex treatments in the field of oncology, organ transplants, cardiology and neurological surgery. The high quality of HCS has always been a driver for the country in attracting foreign patients mainly from Indonesia (47.0%) and Malaysia (14.0%). Strong policies and regulatory frameworks, which are recognised internationally, coupled with active governance, adherence to prescribed guidelines/accreditations and a strong focus on quality put the medical traveller at ease. These position Singapore as the destination of choice for complex treatments in the region. The global financial crisis had an impact on the number of medical travellers and medical travel revenues in 2009. However, the industry recovered in 2010 and recorded revenues to the tune of S$ 856.0 million (US$ 628.0 million) which represented a growth of 10.1 % over 2009. Singapore medical travel revenues and the number of medical travellers are expected to grow at CAGRs of 14.7% and 13.1% respectively between 2011 and 2016. This is attributable to Singapore having established itself as a centre of referral for complex procedures including organ transplants, cardiovascular surgeries and new cutting edge treatments such as, among others, hematopoietic stem cell transplantation. Apart from the presence of highly qualified and specialised transplant surgeons and strong healthcare support infrastructure, the country’s popularity for organ transplants can also be attributable to, but not limited to, the high success rate of non-related living donor transplants, as Singapore HCS is governed by a strong ethical code resulting in high levels of trust in the medical system. Medical Travel MErket Size, Singapore, 2007 to 2016F 2,500 12,030 2,000 ·,1~~~ . 2011E-2016F 14.7% 13.1% 1,500 j 947 1.025 1.021 ‘~ L~_l~'”t~~ 2007 2008 2009 2010E 2011 E 2012F 2013F 2014F 2015F 2016F II Number of Medical Travellers (in thousands) o Revenues (in S$ Million) Source: Smgapore Tourism Board (STB). Estimates by Frost & Sullivan. Note: The above numbers 01 medical travellers represent approximately 60.0% of the total medicallravelfers (patient and (he accompanying family) thai visited Singapore. The number of travellers and revenues per/ain to the actual medical travellers and the amount spent by (he medical traveller on hospital treatment only. It does not include co-travel/er(s) and incidental/ourism related expenses. Estimates by Frost & Sullivan The high occupancy rate and ionger waiting times at major public hospitals in Singapore dissuades foreign patients from choosing public hospitals. As a result, private hospitals such as Mount Elizabeth Hospital, Gleneagles Hospital and Raffles Hospital are the key beneficiaries of the development of the medical travel market and increase in medical travellers. In addition to these hospitals, new premium private hospitals are also expected to benefit from the potential increase in medical travellers The government of Singapore has supported the medical travel industry by encouraging the country’s hospitals to obtain international accreditations such as the JCI or International Organization for Standardization (ISO). One of the key factors that attract and strongly influence the decision of international patients to visit Singapore hospitals is the international accreditations that stand testimony to the quality of its healthcare delivery. For instance, as at 2011,14 hospitals © Frost & Sullivan 2012 Independent Market Research on Global Heaflhcare Services Industry I Company No.: 901914-VJ 7. INDUSTRY OVERVIEW (cont’d) are JCI accredited (it has one of the highest percentages of JCI hospitals over total hospitals) and 11 hospitals are ISO certified. In addition some hospitals in Singapore have set up overseas marketing and patient referral networks to expand their market coverage. The networks can be in the form of marketing agent tie-ups, doctor (referral) networks, government and corporate payer networks. Singapore as a centre of evacuation/emergency treatments for the Southeast Asian region Singapore also acts as an important evacuation centre for emergency treatment in the region. This ensures that the critically ill patients who face emergencies are air-lifted with trained doctors on board. Distinctive characteristics of the connectivity of the healthcare system in Singapore are expected to continuously aid in positioning the country as one of the most prominent medical travel hubs in the Asia Pacific region. Medical evacuation centres in Singapore have played a major role during Bali bombings, accidents during mining and in reaching out to tsunami affected victims. As corporates expand their presence in the ASEAN region, particularly in sectors such as oil & gas and mining, they have tie-ups with key medical evacuation agencies to better serve their employees in times of extreme medical emergencies. Singapore, with its state-of-the-art medical system, serves as one of the key hubs for such tie-ups among corporates. Singapore’s strategic geographical position, air and sea connectivity, and proximity to other Southeast Asian countries enables it to act as a centre for evacuation/emergency treatments and a key medical hub for medical travel source markets. 3.3 MALAYSIA A cost competitive destination for medical travellers from, but not limited to, Indonesia Medical travel market growth in Malaysia is on an upward trend. In 2011, the medical travel market in Malaysia generated approximately RM 509.8 million (US$ 167.0 million) in revenues, having grown from approximately RM 253.8 million (US$ 59.0 million) in 2007, registering a CAGR of 19.0% during the same period. As of 2011, hospitals in Penang received the highest share of medical travel revenue at 49.0%, followed by hospitals within the Klang Valley at 21.0% and Melaka at 10.0%. Upcoming and potential medical travel hubs in Malaysia include the Medini Health Hub in the Iskandar Development Region (please refer to the demand dynamics section in the HCS chapter in Malaysia) and Kota Kinabalu, Sabah. Malaysia attracts a majority of its medical travellers from Indonesia given the close proximity and offering of quality healthcare at affordable prices. It is observed that patients from areas such as Sumatra seek treatment in Penang or Melaka while more affluent patients from Jakarta and Surabaya, among others, generally travel to Singapore for treatment. Since March 2010, Singapore patients can utilise their national insurance fund (Medisave) for day surgery or in-hospital admissions at selected hospitals in Malaysia sourced via appointed referral centres2. As of March 2012, there were 13 hospitals in Malaysia registered under this scheme. The following table lists the referral centres and their respective HCS facilities in Malaysia. [The rest of this page is intentionally left blank] 2 Patients must be referred by the appointed referral centres (Balestier Clinic and Parkway East Hospital) recognised by the government of Singapore prior to travelling to MalaySia for treatment. @ Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d)
I Health Management Balestier Clinic, • Regency Specialist Hospital, Johor Bahru I International, Malaysia Singapore • Mahkota Me~iC;CiIC;ElrJtrf)LT\i1ElI9~9 iParkwayPantaiUmited, … Parkway East • Gleneagles Hospital, Kuala Lumpuri Malaysia Hospital, • Gleneagles Medical Centre, Penang Singapore • Pantai Hospital, Kuala Lumpur • Pantai Hospital, Cheras
• Pantai Hospital, Ampang
• Pantai Hospital, Klang
• Pantai Hospital, Ipoh
• Pantai Hospital, Ayer Keroh
• Pantai Hospital, Penang
• Pantai Hospital, Batu Pahat
• Hgspital, SungCiiPetCirJi

On average, the cost of surgery in a single bedded room in most Malaysian private hospitals is in the range of the cost at B1 wards and C wards in Singapore public hospitals. Several factors such as waiting time, affordability, quality of services/doctors and proximity from Singapore determine the patients’ choice. As a result, private hospitals in Malaysia which provide locations in close proximity to Singapore, have a track record of quality service, short waiting times and competitive price point, and allow patients access to their Medisave, may be well positioned to tap into the segment of Singapore patients who may otherwise have confined their choices to the B1 and C­class wards in Singapore. The surgery cost comparisons between such private hospitals in Malaysia and Singapore’s public B1 wards is estimated as follows:
The Economic Transformation Programme (ETP) outlined by the Malaysian government has identified the healthcare sector as a focus area for development to transform the country into a higher income economy. The Malaysian government has set a target for the medical travel industry to contribute RM 50.5 billion (US$ 17 billion) to the Gross National Income (GNI) by 2020. The target is expected to be realised through various entry point projects under the ETP such as the implementation of marketing plans and collaborations with private HCS providers; foreign governments and insurance agencies in order to attract more medical travellers from countries such as Vietnam, Cambodia, Bangladesh, Canada, Brunei and countries of the Middle East; among others. Furthermore, the government is also providing tax benefits to encourage private HCS companies to obtain international accreditation such as JCI or ISO. To ease entry formalities for patients, the Immigration Department of Malaysia has implemented the Green Lane System at main entry points which expedites custom clearance for medical travellers. Key drivers for the medical travel industry in Malaysia include accessibility to medical travel destinations (for instance, patients from Indonesia have the option of travelling to Penang either through sea or by air; Kuala Lumpur through air-route and Melaka through sea-link), reasonable healthcare costs, the availability of high quality treatment and an advanced medical infrastructure. 3 Class B1 ward =Air-conditioned 4 bedded ward (Source: Ministry of Health Singapore) 4 Class C ward =Fan-ventilated 8 or 9 bedded ward (usually greater than 6 beds) (Source: Ministry of Heallh Singapore) 5 Private hospital wards in Malaysia refer to single bed wards in private hospitals (Source: GECD) I Company No.: 901914~VJ 7. INDUSTRY OVERVIEW (cont’d) Medical Travel Market Size, Malaysia, 2-‘-0-‘-0-‘-7_to_2-‘-0_16_F —. 1,5711,600 1,400
2007 -201tE 19.0% 14.1% 1,200 2011E -201GF 25.2% 14.1% 1,000 800 600

393 379336287400 200 ~~–r iiil753 o 2007 2008 2009 2010E 2011 E 2012F 2013F 2014F 2015F 2016F g Number of Medical Travellers (in thousands) o Revenues (in RM Million)
Source: Malaysia Health Tourism Council (MHTC) and Association of Private Hospitals Malaysia (APHM). Note: The number of travellers and revenues pertain to the actual medical travellers and the amount spent by the medical travellers on hospital treatment only. It does not include co-travelJer(s) and incidental tourism related expenses. Estimates by Frost & Sullivan.
3.4 TURKEY A medical travel destination catering to complex surgeries at competitive prices for patients from the CEEMENA region The medical travel market size in Turkey was estimated at approximately US$331.9 million in 2011. Turkey has emerged as one of the most popular medical travel destinations in the CEEMENA region due to its high quality medical facilities, high concentration of specialists and capabilities in complex surgical procedures. It is strategically located between Europe, Asia and the Middle East which is also a contributing factor to its status as a key medical travel hub. A majority of medical travellers to Turkey were from Germany (39.0%) while Holland, Cyprus and Austria jointly accounted for approximately 17.0% of medical travellers in 2011. Libya is also one of the growing source markets for medical travellers in Turkey. The civil war which started in February 2011 has caused the healthcare facilities in Libya to be overcrowded with the injured. As a result, the more affluent population is increasingly travelling to Turkey to receive medical treatment in a more comfortable setting. Some of the key destinations (in alphabetical order) for medical travel in Turkey include Adana, Ankara, Antalya, Istanbul, Izmir and Kayseri. Medical travellers prefer Turkey due to its quality of healthcare, cost competitiveness and shorter waiting time compared to the majority of the EU countries. Medical Travel Market Size, Turke ,2008 to 2016F 843900 800
2008 -2011E 20.3% 700 2011E -2016F 19.8% 16.3% 600 500
402 400 200 100
300 .~~6 T.~9,.'” ~Tit~T­o 2008 2009 2010E 2011E 2012F 2013F 2014F 2015F 2016F JiI Number of Medical Travellers (in thousands) o Revenues (in USD Million)
Source’ MOH Turkey, Department of Statistics Turkey. Estimates by Frost & Sullivan. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry
I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Note: The number of travellers and revenues pertain to the estimated medical travellers and amount spent by the medical travellers on hospital treatment only. It does not include co-traveller(s) and incidental tourism related expenses. Eslimates by Frost & Sullivan. As of March 2012, there were 38 JCI accredited hospitals in Turkey, which is the highest number of JCI accredited hospitals in a single country in the world. Since March 2011, to support the development of the medical travel industry, the Turkish government subsidises 50% of expenses incurred in applying for the JCI accreditation, for private sector hospitals. Additionally, the Turkish government will also be paying up to 75% of the expenses incurred by hospitals or associations that promote medical tourism abroad. 3.5 THAILAND A key medical travel destination for patients from the Middle East with the added benefit of being a post-surgery holiday destination Thailand is one of the key medical travel destinations in Southeast Asia in terms of the total number of medical travellers and revenues generated. The private healthcare sector has largely contributed to the growth of the medical travel industry in Thailand. The leading private participants in the Thai medical travel industry are Bumrungrad International Hospital, Bangkok Hospital, Vejthani Hospital and Samitivej Hospital. In 2008, the industry was mildly affected by the global financial crisis and saw a drop in medical travel revenue. Nevertheless, it quickly recovered during 2009-2011 and is expected to be on an upward trend moving forward. However, growth is expected to be moderated by the continuing political uncertainty and the effects of recent major flooding in Bangkok. Thailand’s medical travel revenues and number of medical travellers are projected to grow at a CAGR of 5.0% and 3.5% respectively over the years 2011 to 2016, slower than the expected growth in Singapore, Malaysia and Turkey. Medical Travel Market Size, Thailand, 200,,–7~to=-=2-=-O..:..16=..:F,–_ 1,800
2007 -2011E 2.9% 1.4% 2011E -2016F 5.0%
1,600 1,400 1,2161,145 1,1561,200 1,087 1,050 1,000 800 600 400 200 o .,
2011E 2012F 2013F 2014F 2015F 2016F 1\”1 Number of Medical Travellers (in thousands) o Revenues (in USD Million) Source: Thailand Medical Tourism Cluster, Primary interviews. Estimates by Frost & Sullivan. Note: The numbers of medical travellers depicted above include tourists receiving treatment and exclude expatriates. Any incidental tourism expenses incurred during travel are also considered.
The majority of medical travellers to Thailand are from the Middle East region. Patients who visit Thailand often combine a holiday with their medical travel and this is a key attraction for many medical travellers. Although, for certain procedures, the cost of surgery in Thailand is comparable to Singapore, the two countries attract medical travellers from different source markets and generally do not compete in the same space, in terms of medical procedures performed. The government of Thailand has recognised the economic potential of medical travel and is planning to implement initiatives to support and promote this sector. [ Company No.: 901914-V I 7. INDUSTRY OVERVIEW (conl’d) 3.6 POSITIONING AND MARKET SEGMENTS While the four countries mentioned above are popular medical travel destinations, each one primarily caters to a distinctive segment of medical travellers (based on, among others, traveller preferences, medical conditions, and costs). The table below outlines the key benchmarks and highlights the key differences among these four medical travel destinations.
Singapore  High Key Treatments: Cardiology, Cardio-thoracic surgery, Orthopaedics surgery, Reconslructive surgery, and Oncology  CAsd; 20,000 Hip replacement: 11,000 Rhinoplasty: 4,375  Indonesia >47.0% Malaysia 14.0% Russia, Vietnam >4.0% (each) Middle East, Europe, Korea >3.5% (each) North America>1.0%  14  Malaysia  Medium-High Key Treatments: Cardiology, Cardio-thoracic surgery, Orthopaedics surgery, In-vitro fertilisation (IVF), . Reconstructive surgery. and dental related treatment  CABG: 9.000 Hip replacement: 10,000 Rhinopiasty: 2.083  Indonesia 75.0% Singapore/Middle East/Others 21.0% India 4.0%  6  Turkey  High Key Treatments: Ophthalmology. Dental, Orthopaedic. Cardiology, Reconstructive surgery, Oncology. and Neurosurgery  CABG: 10.000 Hip replacement: 10,750 Rhinoplasty: 3.500  Germany 390% Holland 8.0’1″0 Austria 5.0% Cyprus 4.0% Azerbaijan, Russia, Iraq, France 3.0% (each) Belgium 2.0%  38  Thailand  Medium-High Key Treatments: Botox and face lift  CABG: 13.000 Hip replacement: 12,000 Rhinoplasty: 2,500  UAE >40.0% Qatar 9.0% Oman 6.0% Japan, Myanmar> 5.0%  13
Source: Primary interviews. Analysis by Frost & Sullivan India Refer to the section on medical travel in India HCS chapter -under the ‘Introduction’ and ‘Demand dynamics’ sections. 6 Source: GECD, March 2011, compiled from medical travel providers and brokers online and Frost & Sullivan Coronary Artery Bypass Graft © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 3.7 SUPPLY AND DEMAND CONDITIONS The general perception that the growth in medical travel is primarily driven by “cheaper / lower cost treatment” may not necessarily paint the exact picture of the industry in the current economic conditions. Lower treatment cost is typically an enabler for seeking treatment abroad; however the final decision of the medical traveller would also depend on a number of other equally important factors including: • Quality of HCS and Industry Recognition: The main concern in seeking treatment abroad is that the patient can never be fully certain of the real medical condition or quality of service. Patients may assess quality of service by seeking hospitals that have been accredited by an international accreditation body. Accreditation by ISO and JCI are highly sought after by HCS providers in order to gain global recognition.
• Global Healthcare Network and Branding: People tend to benchmark a service or product they are seeking based on familiarity with the product or by association. Typically patients may refer to friends or relatives that have successfully received treatment from a particular specialist or hospital when making their decision. In addition, HCS providers with a global referral centre or hospital network also leverage the same in promoting their services and strengthening their brand name. Both the hospital network and the brand can attract medical travellers to the HCS provider. Furthermore, the strength of having a global operating network is a differentiator especially in the post treatment phase as the hospital may connect the patient with its local operations for follow up rehabilitation sessions. This idea of seamless integration of services, may become an increasingly important decision factor for potential patients in their choice of medical travel destination.
• Transportation and Access to Locations: Another factor considered by medical travellers is safety of flying post-surgery as there may be possibilities of medical complications such as blood clotting leading to embolism, among others. Typically, medical travellers are likely to select destinations with direct flights, or border crossing by land to a neighbouring country, for treatment. Government regulations such as immigration policy of the destination country, complicated and time consuming visa application procedures also influence the choice of the medical travel destination. In addition to the costs related to the medical procedures and accommodation, travel costs are also an important consideration. The rising cost of fossil fuel has impacted the airlines industry and very often, these increases are onward passed to travellers in the form of higher fares. Nevertheless, the availability of low-cost or budget airlines and expansion of their route network in the region has helped to dampen the effect of rising fuel prices and provide greater access for medical travellers seeking treatment in the destination countries. Increasingly, HCS providers are offering value added services especially targeted to medical travellers such as travel, accommodation and visa arrangement packages so as to allow the overall travelling costs to be contained as well as to ensure that the patient’s convenience and comfort are taken care of.
• Internet and Communication Technology: The proliferation of internet and communication technologies has greatly contributed to the marketing efforts of the medical travel industry. HCS providers are reaching out to interested patients globally through websites and other online platforms to provide them information about their services and a point of contact for their hospital. Network tools such as emails or bulletin boards provide a platform to the patients for communicating directly with HCS prOViders. Furthermore, such technologies are also very useful in the situation when patients develop complications after returning to their home country and may need to consult the overseas specialist who administered treatment or obtain medical records on an urgent basis. These tools may also be utilised for remote consultation sessions with overseas specialists as well as for delivering the patient’s health records electronically to any local hospitals for follow up treatment.

7. INDUSTRY OVERVIEW (cont’d) 4 ANALYSIS OF THE HCS MARKET IN SELECTED COUNTRIES 4.1 SINGAPORE 4.1.1 Introduction and Background Singapore is one of the newly industrialised countries and its economy is driven by its services sector (65.0% contribution to GOP) and manufacturing sector (21.0% contribution to GOP). It is one of the very few countries to have achieved an urbanisation rate of 100.0%, leading to high economic growth and wealth. Socioeconomic Indicators, 2006 and 2010The country is supported by a large _”-1Iffm!IIIproductive population (aged 15-64) !GDP (8$ billion) I 230.9 . 303.6 and high employed segment, which !GDPpercapfia-(S’$r-“–“1″‘-“‘-i ··········-1 326 contributes to the increasing wealth L.Cq,l!.!T!!.n..tPfi~es.L…. ….._.i, 50,1 58,579″,1 of the population and a growingI Population (million) 4.6 5.1 I middle income group. The GOP per I 0-14years(%)+ 19.1 17.41 capita is the highest in Southeast 5-64 years (%) 72.3 73.6 Asia. When compared to other countries in the world, Singapore i … ~~. years.a~d above (%) 8.1 9.0 ; ranked high in terms of disposable Non-resident (%) .l ! 21.9 26.9 income per capita. Birth Rate (per 1,000 people) i 10.2 9.3 i Singapore has a well developed(InfaniMoriaiiiy Rate(per1,OOoT . 2.0 I healthcare sector. GovernmentLl:>iE~~s) 2. 1 expenditure per capita for; Crude Death Rate (per 1,000 4.4 4.4 healthcare in 2010 was ……. J..
:PC?Pllll;ltiC?r:tL. . J i approximately S$ 842 (US$ 617), i Total Fertility Rate (per female)1.26 1.15 having grown from S$ 493 (US$IIHe·Expecia·ncy·=Femaie···········… 84.1 310) in 2006. Private expenditure L_(Y~,~~,~l __._,~,_.v~ .. ‘”‘_~,~~_~.,~”.”y __”‘.~_~•.-._. _.”, __,~_~~~.~ yJ, __•• . ·-1 per capita on healthcare in 2010 L_~i!.:_~~.P_:ct.~’:l~X=!”1~I.:Jy:~~~). ‘_ … 7!~6_ .’ L 79.3J was approximately S$ 1,477 (US$ I Total Employed (million) 2.5 3.1 1,083), having grown from S$ ·,, __..•..••_••_.~ ___ _i·,~, ~~~·~~Y”’~h” __~_~_~,,_~~~. -~”~’—‘. __ “‘~”-‘.’-‘._~ 1i 1,146 (US$ 721) in 2006.I Household Income Distribution: jNo;lOiF’-ouseholdswfth Singapore has a low population
I 345,000 490,000 . household income of 5$ I (33% of total) (43% of lotal) base which has expanded at a 6,000 and above CAGR of 3.1 % between 2006 and No:oi househoTdswith 710,000 658,000 2010. The non-resident population i household income less than (67% of total) (57% of total) expanded at a CAGR of 8.5% and I.. 5$6,000 resident population expanded at aUrbanisation Rate (%) 100.0 100.0; CAGR of 1.4% during the same : Source: Yearbook of Statistics 2011, United Nations World Urbanisation! period. The low growth in resident i Prospects Report, MOH Singapore. . popUlation is attributable to the decreasing birth rate. Its ageing popUlation (65 years and above) is around 9.0% of the total population and is increasing at a quicker pace. Cancer, ischemic heart disease, pneumonia and cerebrovascular disease are the principal causes of deaths in Singapore representing over 72.0% of all deaths in 2010. There is a trend of increasing chronic lifestyle diseases mainly attributable to the sedentary lifestyle. As a result, there has been an increase in diseases such as cancer, diabetes, psychological and cardiovascular disease. This increase in lifestyle diseases is among the main drivers for the utilisation of the HCS in Singapore. © Frost & SuI/ivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 4.1.2 Overview of HCS model and funding The government of Singapore manages the pUblic healthcare system through the Ministry of Health (MOH Singapore), which aims to provide access to quality and affordable basic medical services to all residents (citizens and permanent residents; excludes non-residents). This is achieved through providing subsidised medical services while promoting individual fiscal responsibility for the cost of HCS, thus encouraging the adoption of a healthy lifestyle and taking responsibility for one’s own health. ‘ All residents are entitled to basic medical services at government polyclinics and public hospitals, where rates are regulated and subsidised. Patients are expected to pay part of the cost, and to pay more when they require higher levels of service. MOH Singapore licenses and regulates all healthcare establishments such as hospitals, nursing homes, clinical laboratories, medical and dental clinics. However, the rates at private clinics and private hospitals are not regulated and are subject to market forces of demand and supply. HCS Delivery Model in Singapore, 2011 £­Public HCS [_MOH Singapore! •
-Polyclinics -General hospitals -Specialist Centres -Dental clinics HCS Delivery Model
For-Profit HCS Organisations  I  Not·for·Profit HCS Organisations  ~  -Primary care clinics -Hospitals -Specialist Centres -Dental clinics  -Intermediate and Long Term Care (tLTC) -Community Hospitals -Chronic Sick Hospitals -Nursing Homes -Home based IL TC -Centre based ILTC
Source: Frost & Sullivan primary and secondary desktop research Note: IL TC cannot be clearly classified into public and private, as most of them are run by Voluntary Welfare Organisations (VWO) either partially funded by the government or in full by private charity and donations. Due to the lack of clarity, ILTC is classified by the way in which it operates, rather than by who operates it. • Primary HCS: In Singapore, primary HCS include curative out-patient medical treatments, health screening, preventive health programmes for school children, home nursing, day care and rehabilitation for the elderly, health education and health promotion. Private General Physician (GP) clinics account for 80.0% of the primary care market in terms of patient volume, while the public sector caters to the remaining 20.0% of patients. At the point of primary care treatment, when patients have to be referred to specialists, the private GPs may recommend specific hospitals or doctors; however, the patient has the final decision.
• Secondary & Tertiary HCS: In the case of more expensive in-patient hospital care, 80.0% is provided by the public sector and the remaining 20.0% by the private sector (in terms of patient volume). Public sector hospital services are provided by various clusters of general hospitals and specialist centres run by the government. Private sector hospital services are provided by privately-run hospitals and hospital groups, also located in geographical clusters.
• Quaternary HCS: This is the highest level of HCS which involves high-risk and complex surgeries, such as transplantation of the cornea, kidney, liver and heart from deceased donors. Kidney and liver transplants are performed with living donors as well. Very few hospitals, primarily from the private sector, provide quaternary care in Singapore.
• Intermediate and Long Term Care (IL TC) Services: ILTC service (such as care at community hospitals, nursing homes, day rehabilitation and home visits etc.) is mainly

© Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) provided by Voluntary Welfare Organisations (VWO), with support from the government. The government provides up to 90.0% of capital funding and up to 50.0% of operating expenditure for long-term care institutions run by VWO. The VWO raise the rest of their funding through community donations. Sources of Hea/thcare Funding Healthcare expenditure in Singapore can be categorised into public expenditure and private expenditure (which includes expenditure by individuals, employers and private insurance). The components of the national healthcare expenditure are summarised in the following diagram. Components of the National Hea/thcare Expenditure Individual • OOP expenses (Direct payment)
• Insurance premiums
• Medisave contributions (can be used to pay MediShield premiums)
• Medical Insurance premiums for the employee
• Medisave contributions

Government • Subsidies
• Medisave contributions (as an employer) I
Private Insurance provider
• Insurance payouts
• Medisave contributions (as an employer)

Source: Compiled by Frost & SullIVan from various sources Public healthcare expenditure in Singapore refers to the government expenditure on healthcare infrastructure in the form of capital expenditure, healthcare subsidies, and the procurement of pharmaceutical and medical supplies. The funding originates from tax collection and other government income and the majority of it is channelled to MOH Singapore through annual bUdget allocations. Singapore practises a co-payment policy with individual citizens. Private healthcare expenditure is composed of three components in the following order of importance: OOP expenditure, private insurance and contributions from non-profit institutions.
Source:fheWHOHealthcare’ExpendfiureDatabase.ProjeciTon and analysfsby”Frost”8,”Suilivan During the period 2006 to 2011, public healthcare spending grew at a CAGR of 15.9% as compared to the private healthcare spending, which grew at a CAGR of 9.2%. The growth in public healthcare spending is attributable to the government introducing additional healthcare subsidies and various healthcare schemes during the global financial crisis. In dollar terms, the private healthcare spending increased by S$ 2.93 billion (US$ 2.33 billion), while the public spending increased by S$ 2.48 billion (US$ 1.97 billion). © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) The chart below shows the public and private healthcare expenditure further classified into their respective components. ,=-C–…n:..:.ts=-=o~f~P–=-u=-=b-,,-,1J–=-·c–=a:..::…n:..:.d:…;P:…;r:..:.i~va:.:..:t=e–,H-=-e::.;:a”,,-/…..c-E:..::…xr…::c.:..:….:….c..:..:::.:””=–Lin,-,–=-S$billio&2006 to 2010 9.00 III C
~ 8.00 :c 7.00 <fl en 6.00 5.00 4.00 3.00 2.00 /1 <:1 g1.00 I 1.85 ‘,’.’ ._~……,. -T-~'”0.00


2006 2007 2008 2009 2010 DMOH IlISSF DOOP IZlPrivate Insurance BOthers 0.20 0.18 0.17 0.15 0.58 >”‘\.”\ ‘-‘”,’ .. ~~’:’:;/~;:: 042 ~~:~~ Source: The WHO Healthcare Expenditure Database
[Votefi: 1) Public Expenditure Components: MOH (Direct subvention by MOH Singapore via Medisave and MediShield), SSF (Social Security funds such as Medifund) 2) Private Expenditure Components: OOP expense, Private Insurance and Others. The breakdown of ‘Others’ is not available.
4.1.3 Regulatory Overview MOH Singapore’s primary role, along with its statutory boards, is to establish and monitor legislation to ensure the appropriate allocation of resources and achievement of clinical outcomes and professional standards to residents. All hospitals, clinics, clinical laboratories and nursing homes are required to maintain good standards of medical services through licensing by the MOH Singapore. The following table lists the relevant laws and regulations pertaining to the operation and delivery of private HCS in Singapore:
Private Hospitals and Provides for the control, licensing and inspection of private hospitals, Medical Clinics Act 1993 medical clinics, cJinicallaboratories and healthcare establishments. , ‘” ,,_” ..n._,.. ·• _ __• __.._~._”__~,~,w_w···.·_,,_~ ~_ ._,,~~.. (C;;~ClP!E!~:24?1._ . Provides mechanisms to: ensure that registered medical practitioners are competent and fit to Medical Registration Act practice medicine; (Chapter 174) uphold standards of practice within the medical profession; and
:.Ill?i.n.tCiinplJ~ liccgnficjen.C:El i.nJhElIllElc:Jic:?lpr()fes.siOn: Provides guidelines and regulations concerning the removal of organs after Human Organ Transplant death, the prohibition of trading in organs and blood, living donor organ Act (Chapter 131 A) transplants and for the enforcement of the act. Regulation of Imports and Provides for the regulation, registration and control of imports and exports Exports Act (Chapter of any goods in Singapore, including medical supplies and medical 272A) devices. Sourc”i:MOHSingapore,Altorney Genera/’sChamber © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (coni’d)
4.1.4 Supply Dynamics Infrastructure In terms of hospital bed capacity, Singapore has a relatively low total hospital beds ratio (2.22 beds per 1,000 population in 2010), when compared to other developed nations. Though the government has increased the bed capacity of public hospitals periodically (through expansions and new developments), pUblic hospitals are still unable to cater to the rising demand for hospital beds. Public and Private Hospital Beds 2006 to 2010 : Total8eds 11,527L ._…..11,58~’ I· Public Hospital Licensed Beds 8,320 ! 8,3681 . 8,319 ; iprivate Hospital Licensed Beds 3,20~J’~0~’~~]’ . 3,261 i” i Beds per 1,000 population 2.51 i 2.39 : 2.32 .L_ __ _..” ~ _…… . _ “…………… . ~\.~ ‘” ~ .. ~ .
Source: Yearbook of Statistics 2011. Analysis by Frost & Sullivan Note: The decrease in licensed beds between 2009 and 2010 was due to a re·classification by MOH Singapore under which the number of licensed beds became a closer reflection of the number of operational beds. In comparison with the United States, the United Kingdom, Italy and France, the desired bed ratio for an economy like Singapore’s is estimated to be 2.98 beds per 1,000 population (average of the bed ratios in the above mentioned countries). Based on the number of beds to be added in Singapore in the next 5 years, the supply of public and private hospital beds can be projected. In addition, applying the desired bed ratio over the population projected by the IMF, Frost & Sullivan estimates that there will be a significant shortfall in the supply of hospital beds. Hospital beds projection and shortfall anal sis, 2011E to 2016F _ED !Desired Beds [A] i1?,~~~J 1?,9?~J 16,181, 16,464, 16,749’ 17,041 Projected Beds [B] ; 11,509 I 11,873 i 12,093; 13,043, 14,143; 14,393 Public Hospital Licensed Beds i 8,88!J. 8,.881] 8,881; 9,831 10,931 11,181 Private Hospital Licensed Beds i ‘ 2,628 ! 2,9921 3,212 , 3,212 i 3,212 3,212 ,J=>rojectedper 1,000 population : ‘2:19} ..2.:22.. 1’ 2.22: 2.36: 2.51 2.51 /ShortfaJl of beds [A] minus [8] 14,125 L 4,03114,088 : 3,421 I 2,606. 2,648 Source:Popufation projections by IMF.Vpcoming·new hospitai”data from hospital websites and MOHSingapore . publications. Other projections and analysis by Frost & Sullivan. Note: ‘Private Hospital Licensed Beds’ include beds from private hospitals, community hospitals, chronic sick hospitals and inpatient hospice care centres. Desired hospital beds ratio=2.98 per 1,000 population; average of 2010 ratios from the United States, the United Kingdom, Italy and France Public hospitals in Singapore are running at very high occupancy rates of 85.0% to 95.0% (based on weekly data published by MOH Singapore in the first week of March 2012). In view of the current and potential shortfall of hospital beds, the government has announced in its Healthcare 2020 Masterplan, the addition of 1,900 acute hospital beds and 1,800 community hospital beds, as follows: • Ng Teng Fang General Hospital -scheduled to open in 2014, followed by the Jurong Community Hospital in 2015, together adding about 1,000 beds.
• Seng Kang General Hospital -opening date brought forward from 2020 to 2018, in addition to increasing the capacity to a total of 1,400 beds (general hospital + sister community hospital).
• An integrated building will be built near Changi General Hospital and St Andrew’s Community Hospital, adding around 250 acute and community hospital beds by 2014.
• Community hospitals at Yishun and Outram -scheduled to open by 2015, adding about 800 beds.
• Khoo Teck Puat Hospital will convert its rooftop garden into a 32-bed ward by early 2013.

Addition of beds in the private sector is limited to the opening of Mount Elizabeth Novena Hospital (333 beds) and Fortis Specialty Centre (31 beds) in 2012 and the Farrer Park Hospital (220 beds) © Frost & SuI/ivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) in 2013. The difficulty in obtaining a private hospital license due to stringent requirements and scarcity of available land have resulted in only 2 private hospital licenses to be issued in the past 15 years (Mount Elizabeth Novena Hospital and Farrer Park Hospital). Further, since March 2010, MOH Singapore allowed residents to use lVledisave to pay for their hospitalisation in selected private hospitals in Malaysia, thereby increasing the number of private acute beds in the Singapore healthcare system. Parkway Pantai Limited (10 hospitals) and Health Management International (2 hospitals) were chosen by MOH Singapore as local partners to support the move, which help residents access treatment at a comparatively lower cost. Workforce The government’s move to further develop the healthcare infrastructure to meet the increasing healthcare demands requires the current number of doctors (9,030 in 2010) to be doubled by 2020. In order to manage the increasing workforce requirements, the government is increasing intakes into existing medical schools and setting up new medical schools (for example, the opening of Lee Kong Chian School of Medicine in 2013) to produce 500 doctors, 2,700 nurses, 240 pharmacists and 80 dentists every year. In addition, it is expected to allow more foreign trained doctors to practice in the country. An increasing number of doctors are switching from public practice to private practice recently. In order to retain talent within the public healthcare sector, the government has proposed to increase salaries of the healthcare workforce by about 20.0% over the period of 2012 to 2015. To manage the shortfall of doctors in the public sector, the government is exploring a sustainable framework to involve the private sector in public sector healthcare (akin to public private partnership), which would enable private doctors to treat subsidised patients. New models of care are expected to be introduced to tap on the capacity of private GPs to provide residents with accessible, affordable and high quality care. Doctors and Nurses/Midwives 2006 to 2010 _~iII&UI_~ Source: Singapore Medical Council Annual Report 2010, Yearbook of Statistics 2011, Analysis by Frost & Sullivan : Total Doctors  I  6,931  .  7,384j  .  7,841′  8,323  Specialists  ; ,  2,654 !  ~””­ “..  2,962 i,  3,180 ! ;  Public  1,557 .  1,772 !  1,927 ‘  Private  1,09~’  1,190 ;  1,253 :  Non-Specialists  . L_.~m .  4,277 i  4,879 !  5,143 i  Doctors per 1,000 population  !  1.51  1.57 i  .1.64  j  Total Nur;~;;’Mid~iv~;  “”j  20,927 i  24,209 I  26,792 i  Public  11,574  13,711 ;  15,675  Private  I  6,109  6,224 .  6,463  Not in active practice  3,244  .  4,274  4,654  Nurs~s / Midwives per 1,000 p()pu iJ.t1on . . , “…….. . ……L  4.56 ; ‘ ” ‘  ,  ,  4.85 ,  ,  5.28 ,  .  5.34
[The rest of this page is intentionally left blank] © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) Selected Specialists in Sin  a  ore, 2010  Medical Oncology Cardiology ) Cardiothoracic Surgeryi …..:_ .. ­Dermatology Orthopaedic Surgery i General surgery!”,. -. i Urology  ••••• ••• M  c  Neurology Neurosurgery’  .. ·….  .  .  47 19
Source: Singapore It is observed that Singapore has a higher number of specialists per 1,000 population than Malaysia, especially in the specialist disciplines of medical oncology, neurology, neurosurgery, cardiology, cardiothoracic surgery, urology and dermatology. Doctors and Nurses/Midwives Projection 2011 to 2016F_1IfJl(lJ….EmiEmlEmi : Desired Doctors [A] i 15,502 i 15,77111 . 3251 16,609, 16, . Projected Doctors [8] 9,730 i 10,430 11,130 11,830 I 12,530: 13,230 : Projected per 1,000 population I” 1.8S! 1.951 2.05 2.14 i 2.23 2.31 : Shortfall of Doctors : ! i . [AJ minus [B] 5,772 i 5,341 1 4,915 4,495 4,079 ‘ 3,668 IDesired Nurses/Midwives [e]l 46,375 ri , 4_7,..999 : 48,..838 : 4..9,..685.. +’ 5..0,..550. , Projected Nurses/Midwives [0] 32,040 i 37,440 40,140 42,840 45,540 Projected per 1,000 population 6.10 i 6.88 7.25 7.61 7.95
Shortfall of N’urses/IVlicfwive’s”· .f 10,559 8,698 6,845 5,010. [C] minus [0] ..: .14,33~J .’. 12,438 Source: Population projections by IMF. Other projections and dllijJY”,,,,,, Notes: Projected doctors = 700 new doctors per year (500 locally trained + 200 foreign trained) Projected Nurses/Midwives = 2,700 new nurses/midwives per year (based on Healthcare 2020 Masterplan) Desired doctors ratio=2.95 per 1,000 population; Desired nurses/midwives ratio=8.83 per 1,000 population; average of 2010 ratios from the United States, the United Kingdom, Italy and France

4.1.5 Demand Dynamics Ageing Population Puts Pressure on Inpatient Hospital Services Singapore’s ageing population (above 65 years), which is the fastest growing in Southeast Asia (in terms of CAGR growth from 2006 to 2010), is expected to increase pressure on the public healthcare system due to the following reasons: increasing rate of admissions, increasing length of stay, increasing time for treatment, and lower ability of the elderly population to afford private healthcare. Given the above, the government may initiate additional insurance schemes and revise healthcare policies to shift larger portions of the younger, working patient population into the private sector. This is likely to further increase the growth potential of private hospital services. Increasing Number of Foreigners The government, as a part of its economic policies, has liberalised immigration policies in order to attract foreigners to settle in the country. With the increase in the migrant population, it is estimated that Singapore will have more non-residents who are not eligible for healthcare subsidies from the government, forcing them to use private HCS. This implies that private healthcare operators may see growth from the incremental expenditure on HCS by foreigners, paid from OOP or through employers / insurers. I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Introduction of ‘Means Testing’ The government introduced the concept of “means testing” in 2009, which adjusted subsidies provided to eligible patients in public hospitals based on their annual income. The subsidies decrease with increasing annual income, thereby shifting healthcare costs to individuals who can afford treatment in private hospitals. This is expected to further increase the growth potential of the private hospital sector in the long term. Access to healthcare -Medical Insurance MOH Singapore is the regulator of the health insurance industry. The government encourages individuals to subscribe for approved health insurance policies by allowing them to pay the premium from savings in the Medisave account. In addition, employers are encouraged by tax incentives to implement employer-sponsored health insurance schemes. • MediShield is a low-cost national insurance scheme, for which premiums can be paid out of Medisave accounts, intended to cover residents when the balance in their Medisave accounts is insufficient to meet their healthcare expenses. MediShield can cover up to 80.0% of a large medical bill at the Class B2/C level8 in public hospitals.
• In order to help residents who are willing to use private hospitals or Class B1/higher ward classes9 in public hospitals, the government encourages the purchase of Medisave-approved private Integrated Shield Plans (health insurance) in addition to MediShield. The residents can opt for riders, to increase the scope and value of the insurance coverage.
• ElderShield is an affordable severe disability insurance scheme which provides basic financial protection to those who need long-term care, especially during old age. It provides a monthly cash payout to help pay OOP expenses for the care of a severely-disabled person.
• Residents with Medisave accounts are automatically covered under ElderShield from the age of 40. MOH Singapore has appointed 3 private insurers (Aviva, Great Eastern and NTUC Income) to run the ElderShield program. By 2010, the scheme had 921,000 policyholders, up from 835,000 in 2008.

There are different coverage plans for private medical insurance in Singapore -with hospitalisation insurance and insurance for debilitating illnesses. Plans are either single-premium or regular premium. Most private insurance plans cover restructured hospitals (public hospitals, but not fully government-owned) and private hospitals; since there is a minor difference in the premiums for private hospitals and A wards of restructured hospitals, patients are more likely to choose a private hospital plan. Most companies in Singapore pay an annual premium for their employees which cover medical expenses and hospitalisation; however,in order to customise the coverage to their healthcare needs, many employees top this up with personal private health insurance. While the MediShield and Integrated Shield Plans operate on a co-payment model (insurance payouts start only after Medisave deductibles and/or co-insurance payments by the insured), private insurers also offer first dollar coverage plans (the insurer pays for hospital bills on a ‘as­charged’ basis, up to a stipulated cap without any deductibles) that further supplements these plans. Such first dollar coverage provided by private insurers attract many residents, as they do not have to pay OOP expenses, despite the higher than usual premiums involved due to high risk to the insurer. With the liberalisation of insurance policies, more private insurance companies have gained entry into the market, leading to increased competition, lower premiums and broader coverage. This has resulted in an increase in funds for private HCS, driVing more patients to move towards private hospitals. Between 2006 and 2010, private insurance expenditure increased from S$ 581 million BClass 82 = Fan-ventilated 6 bedded ward, Class C ward = Fan-ventilated 8 or 9 bedded ward (usually greater than 6 beds) 9Class 81 = Air-conditioned 4 bedded ward. Higher ward classes include Class A1 and AI + which are air-conditioned single rooms © Frost & Sullivan 2012 tndependent Market Research on Gtobat Healthcare Services tndustry 7. INDUSTRY OVERVIEW (cant’d) (US$ 366 million) to S$ 964 million (US$ 707 million) at a CAGR of 13.5%, as private insurance provides patients with more flexibility. Medical Clusters and Concentration of Specialists In Singapore, the pUblic and private HCS providers are generally grouped together in geographic clusters. This enables easy referrals between the primary service providers, prominent secondary and tertiary hospitals and other ancillary HCS providers within the same cluster. There are 3 major private healthcare clusters and 5 public clusters. The private clusters, namely Orchard, Tanglin, and Novena, account for approximately 70.0% to 85.0% of the private market in terms of private specialist concentration. There is a crossover between the Orchard and Tanglin clusters due to their proximity. Specialists located in clinics around hospitals in these clusters are more likely to refer their patients to adjacent hospitals, due to convenience or partnerships with the hospitals. On the public side, most medical education and research takes place at 2 main clusters -Outram and Kent Ridge. Out of the 1,314 private specialists in Singapore (as of 2010), it is estimated that around 35.0% to 40.0% practice in the Orchard cluster, another 25.0% to 30.0% practice in the Tanglin cluster, 10.0% to 15.0% in the Novena cluster and the remaining are spread around the island. In line with upcoming developments, the concentration of specialists in the Novena cluster is likely to increase in the near future. According to the Healthcare 2020 Masterplan, it is expected that there will be more arrangements between the pUblic and private hospitals within and across these clusters. For example, Changi General Hospital will lease some beds from Parkway East to cope with its increasing patient load. Similarly, MOH Singapore is entering into a memorandum of understanding with Raffles Hospital for subsidised patients. These measures will ensure that facilities within every healthcare cluster operate together to optimise doctor and bed capacity. Government investing heavily in Health Promotion and Disease Preventive Programmes The government is shifting focus from episodic care in the acute hospitals, to keeping people healthy and managing their chronic conditions, which is more effective and sustainable in the long term. The Health Promotion Board (HPB) drives the national health promotion and disease prevention programmes targeted at increasing the years of healthy life and preventing illness, disability and premature death. Its focus is to increase awareness and prevent diseases and conditions at the initial stages, so that the need for more expensive medical treatments and associated expenses can be avoided. The Community Health Assist Scheme (CHAS), formerly known as Primary Care Partnership Scheme (PCPS) enables the lower income residents to seek subsidised primary care at participating private GP and dental clinics. The scheme covers common medical illnesses, 10 chronic conditions and basic dental services. The amendments in January 2012 has increased the qualifying per capita monthly household income from S$ 800 to S$ 1,500 and lowered the qualifying age criteria from 65 years to 40 years, thereby increasing the shift of outpatients from public sector to participating private players. [The rest of this page is intentionally left blank] 7. INDUSTRY OVERVIEW (cont’d) Increase in Private Hospital Admissions Though the historical (2006-2011) growth in private hospital admissions is the same as that of pUblic hospital admissions, the year-on-year growth of private hospital admissions in recent years has overtaken that of public hospitals admissions, indicating a shift from public hospitals to private hospitals for secondary and tertiary care. This growth in private hospital admissions is attributable to the availability of hospital beds and sophisticated services in the private segment, coupled with increased disposable income and private insurance coverage. ~ Total Hospital Admissions  i PUblic Haspitai i Admissions  316,261  325,261  330,071  332,595  357,022  2.45  .. P”;vaieHosp;tal Admissions  99,572  103,972  103,805  112,419  2.46  Public as a % of total  76.1  75.8  76.1  76.1  Private as a % of total  23.9  24.2  23.9  23.9  Y-o-Y Growth Rate (Public) 0/0  0.4  3.0  13  0.8  3.2  4.0
3.1 5.1 4.1.6 Com petitive Landscape Private hospitals In 2011, there were 7 private hospitals in Singapore. Parkway Pantai Limited is the only private hospital group with a network of 3 hospitals while the others are all single entity hospitals. Private HCS providers may be categorised as for-profit or not-for-profit. The for-profit private HCS category comprises 1 hospital group and 3 single entity hospitals that hold licenses for majority of the hospital beds in Singapore. Mount Alvernia Hospital, is the only not-for-profit private hospital. [The rest of this page is intentionally left blank] ” © Frost & SUllivan 2012 Independent Market Research on Global Healthcare Services Industry Li:<‘:mpany No,: 901914-V , 7. INDUSTRY OVERVIEW (cont’d) Positioning of Major Private HCS Providers in Singapore, 2011 (ranked by average per day inpatient bill size) The fol/owing table lists the key private HCS providers (group and single entity) based on the total number of licensed beds and positions them based on the averaae bill size per patient per day: ‘ I : I i Cardlothoracic vascular surgery, I . ~~~;i;a~llzabeth, Affluent domestic i High-end medical I
I 4,836 12,848 PremiumI (Parkway Pantal Central 1,230, Yes I Hematopoietic Stem Cell I patients, Medical I services catenn~ toI 345l!Umit,d) _~__I—–.~ –+–~+:””~~~::;: g~~~,~:;d’~ “,,,”m_s FIII”,”~:”””'” -1——1 I …;.[—–1 I Gleneagles I I I Cardiology, GastroenterOlogy, I Affluent domestic ‘ High-end medical ! I I I I H(pos~ltal P t Central 1,216 I Yes I Llv~r ciransP’alntat’o~, o~stetncs pi?tients, Expatriates, ! services catering to I 272 I 3,972 10,583 I High ar way a:al ~ ‘ I ,ynaeco ogy, . nco ogy, Medical travellers affluent population i I I ‘ ~ limited) I I OrthopaediCS I I —, —–:——-+——-~ . —–.—-t—High eridHCs-1-: i ‘I Raffles HOSPltal’_1 I I Cardiology, Orthopa~dlc, I Expatriates Medical I provider with an 380 I . I’I (Raffles Medical Central N/A I Yes Oncology,Obstetncs travell’ers’ island wide referral (only 190 3,691 8,583 High! L Group) I &Gynaecology i network operational) I i Parkway East –1———1–GeneraiSurgery; Paediatrics, ~~~–h—-i-I —-“I’ Hospital _[ East ! 1083 I Yes Obstetncs and Gynaecol.ogy, I ~ ul~~i~~f:~~o~: : Medium-highend I 113 3014 7568 I MediumtoI (Parkway Pantal i’ I’ I Cardiology, Fertility se~lces p p t ,medical services “I High I ‘td\ I ‘ Id’ IVF easzone ,–‘-~ ~—ll——–j——–1——–j–cardio::i:. G.~diothoraclc -N t-t h ‘t–I-t i I[1_ , I I S N I Mddl h’h’ lon-proI OSpla I !Mount Alvernla I urgery, euro ogy, , I e-Ig Income : with competitive I I Medium to I Hospital I Central … 1,000 I. No Neurosurgery, OrthopaediC, population from the, ricin & multi-I 303 I 2,735 7,704, Hi h Ii I Ophthalmology, General central zone I p g, It’ I I 9 IS t spec/a les ,I [-Thomson i 1———-1——urg_ery Middle-high income i B’rth-d-r–·–;-r—j r—1 I ~~~i~~o~entre I Central i N/A No Obstetricsp:~r~t~i~~0Io9y and bZ~t~~~t~~~~;;e~:t i f~c~se~,:i~r:~~~n I 190 I 2,230 5,615 I Medium i iL t ~i:~~f~in~eh~~J ~-_·-i———-II—~ Orthop,,”‘, G’;”” s;;:;~ cmpoffi:;;~:tom,,~”-“-‘-“”-“”~1–~;-: —I . Heaft~~a~e na West i N/A No Rehabi,litation and I v~~in,IY the industrial I N/A i (34leased N/A N/A [ N/A II Gr0!:122 \_____ _ –L..-. PhySiotherapy ..L workers I ~ to NUH) L~ @ Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 282 7. INDUSTRY OVERVIEW (cont’d) Source: Hospital websites, MOH Singapore, Analysis by Frost & Sullivan  Notes for the table in the previous page:  a. b. c. d. e. f. g. h. i.  The number of private hospital licensed beds in the above table excludes the beds in community hospitals and chronic sick hospitals. However, the Singapore Yearbook of Statistics 2011 includes these two types of beds into the definition of the term ‘private sector hospital beds’. Raffles Hospital has 190 active beds and 190 reserve beds. However, the total 380 beds are considered for the purpose of the above chart. West Point Hospital has 58 beds, of which 34 beds are leased out to NUH. However, the total number of 58 beds has been considered for the purpose of the above chart. The above mentioned average bill sizes are published by MOH Singapore, based only on Medisave claims submitted by the hospitals. The average bill sizes include doctors’ charges. Average per day = total amount of inpatient bills divided by total number of days stayed in hospital (day surgery bills are not included). The comparison only serves as a guide and has not been standardised for the different range of medical specialties in each hospital. Only the following selected surgical specialties are used in the calculation of average inpatient bill sizes: Cardiothoracic Surgery, ENT, General Surgery, Neurosurgery, Gynaecology, Obstetrics, Orthopaedic Surgery, Paediatrics Surgery, Plastic Surgery. The number of accredited specialists may not add up to the total number of specialists in Singapore, as a specialist can be accredited to more than one hospital.  In 2011, there were 1,661 private hospital licensed beds in Singapore among the major private HCS providers (excluding the beds in community hospitals and chronic sick hospitals). IHH’s market share in Singapore, based on the number of beds was 43.9%. This makes IHH the leading private HCS provider in Singapore.  The following chart illustrates IHH’s share in the number of private hospital beds in Singapore during 2011.  IHH’s Market Share by Number of Licensed Beds (Private), 2011

Source: MOH Singapore, IHH, Analysis by Frost & Sullivan 4.1.7 Market Size (‘For-Profit’ Private Hospital Industry Revenue) The ‘for-profit’ private hospitals market size in Singapore was estimated at S$ 768.5 million (US$ 563.6 million) in 2010. The revenues of all ‘for-profit’ private hospitals in Singapore (only revenue from hospital operations, excluding all other HCS) were added up to calculate the ‘for-profit’ private hospital revenue market size. In 2010, IHH’s market share by revenue was estimated to be 69.3%. @Frost& Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) IHH’s Market Size Based on ‘For-Profit’ Private Hospital Industry Revenue in Singapore, 2010
Source: ACRA, IHH, Analysis by Frost & Sullivan 4.1.8 Primary care clinics In 2011, there were approximately 1,400 GP clinics in Singapore. The primary care sector is very fragmented with a large number of GPs in private practice (stand alone, or two or more GPs running a clinic) and only few primary care groups. IHH’s market share in Singapore, based on the number of primary care clinics was 4.3%. This makes IHH one of the leading private primary care groups in Singapore. The following chart illustrates IHH’s share in the number of primary care clinics in Singapore during 2011. IHH’s Market Share by Number of Primary Care Clinics (Private), 2011
Source: MOH Singapore, Clinic websites, Analysis by Frost & Sullivan 4.1.9 Industry Outlook / Prospects Healthcare expenditure is forecast to reach S$ 18.5 billion (US$ 14.6 billion) in 2016, growing at a CAGR of 7.5% during the projection period of 2011 to 2016. The emphasis on healthcare as outlined in the Healthcare 2020 Masterplan is the major driver for investment in the industry, which has spurred the capacity building by both public and private sectors. As new private and public hospitals are expected to be operational during 2012 to 2013 and 2014 to 2018 respectively, the increase in healthcare expenditure is also expected to be apparent during the above mentioned © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) time periods. During the forecast period from 2011 to 2016, public and private healthcare expenditures are estimated to grow at CAGRs of approximately 7.0% and 7.7% respectively. The private hospital market is forecast to grow to S$ 1.2 billion (US$ 0.9 billion) in 2016 at a CAGR of 7.7% during the period from 2011 to 2016. Growth is anticipated to be steady during the forecast period as a result of new hospitals starting operations. Healthcare Expenditure Forecast, 2011E to 2016F
7.5% 7.0% 7.7% 7.7%GAG R (2011 E-2016F) Analysis and Forecast by Frost & Sullivan The chart below illustrates the private hospitals market size growth and forecast for the duration between 2006 and 2016. Private Hospitals Market Size Growth Trend and Forecast, 2006 to 2016F 1.4 ‘2 .,1 ~ 1.2 I :0 J1.0 I<ll­~ Q) 0.8 J ::J c: Q) > 0.6 .]Q) 0:: 0.4 I 1 0.2 .J LI 0.0
2006 2007 2008 2009 2010E 2011E 2012F 2013F 2014F 2015F 2016F Source: Analysis and forecast by Frost & Sullivan During the forecast period, major driving factors for growth in revenue include an increase in private hospital admissions due to increasing affluent population, increasing lifestyle diseases, decreasing government subsidies for high income population and increasing uptake of private insurance. With Singapore expected to maintain its lead position as a destination for quaternary care, the growth in medical travel industry is expected to contribute to the private hospital revenue growth. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d)
4.2 MALAYSIA 4.2.1 Introduction and Background Malaysia is a newly industrialised country with a growing economy and increasing wealth. The country’s economy is mainly driven by its services sector, manufacturing industries and resources (palm oil plantations and downstream sectors, oil & gas, among others) contributing approximately 49.3%, 26.1 % and 15.6% respectively to the GDP in 2010. Malaysia’s urbanisation rate has been on an upward trend, increasing from 67.6% in 2005 to 72.2% in 2010. Socioeconomic Indicators, 2006 and 2010 The country is supported by a large productive population (aged 15-64 years) and a high employed segment, which contributes to the increasing wealth of the population and a growing middle incomePopulation (million) 26.6 28.3 group. The GDP per capita is 0-14 years (%) 32.4 30.3 higher than that in most Southeast Asian countries, with the exception 15-64 years (%) 63.3 64.9 of Singapore and Brunei. 65 years and above (%) 4.3 5.1 Malaysia has a low population base which is on the rise, as aNon-resident (%) 6.9 6.0 result of a moderate to high birth : Birth Rate (per 1,000 people) 22 21 (2009) rate and low infant and crude .. Infant-Mort,lIityf”fate (per 1-····· ..·· ..·.. +·..·.. ········· mortality rate. The principal causes 6.4Ibirths) 6.6 of deaths in Malaysia include old . Crude K!rilrtalfty Rate (p’er ._ _-_. age, ischemic heart diseases, . population) 4.5 4.8 pneumonia, cancer, . CHeExpectancy=Female” cerebrovascular diseases, asthma, 76.3 76.6L(‘(~C1T:!’J septicaemia and transport i Life Expectancy -Male (Years) 71.8 71.7 accidents. Malaysia’s healthcare system is reasonably well developed, : Total Employed (million) 10.1 (2005) 11.1 : Household Income Distribution: however the industry is not yet considered comparable to that of Top 40 percentile developed countries. This is mainly Bottom 20 percentile attributed to the low proportion of healthcare investment by theUrbanisation Rate (%) Malaysian government. In 2009,.-,,–,-,-_ _,.. ., _-_ . : Source: Department of Statistics, the Malaysian government spent , Unit, Malaysia; United Nations World Urbanit;ati<Jn
approximately RM 623.2 (US$ 177.3) per capita on healthcare, whereas United States, United Kingdom and Japan’s public healthcare spending per capita was approximately US$ 3,606, US$ 2,745 and US$ 2,364 respectively. For any developing country, there is an increasing trend of chronic lifestyle diseases mainly attributable to the changing habits of leading a more stressful life, consuming more processed foods which are generally of high sugar and saturated fat content and lower nutrition, long working hours sitting in front of a computer causing neurological stress and occupational diseases, and leading a more sedentary lifestyle with the lack of regular exercise. As a result, there has been an increase in psychological disease, cardiovascular disease, diabetes, cancer and orthopaedic diseases. The following table illustrates the growth in major lifestyle diseases between 2007 and 2009, based on the number of patients receiving outpatient treatment in MOH Malaysia’s specialist medical facilities. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d)
Heart-related disease (cardiology) Di~b~t~~/) ._-~–.. Cancer Neurology
i Ophthalmology Urology Orthopaedic . Neuro-Psychialry ‘Source: Mofl Malaysia AnnualRefJoi-t200iiCJ09 74,639 . 47,836 (2006) r., 59,739 26,844 620,649 i 90,168 639,222 324,450 . 84,615 66,856 62,170 28,682 653,065 92,683 679,930 379,010 101,979 _.”~ ..~. “,._””._._~-­… _­70,079 47,047 29,807 717,390 96,809 , 723,929 ” .j 412,013 Notes: a. Data above is based on the number of patients receiving out-patient treatment in MOH Malaysia health facilities. b. Data refer to new cases in MOH health facilities 4.2.2 Overview of HCS model and funding HCS in Malaysia are available through public and private HCS providers. The following table summarises the HCS delivery model in Malaysia. HCS Delivery Model in Malaysia, 2011 I  I  I  Public HCS  I
I Ministry of Health (MOH)
… -Primary care clinics -General hospitals -Specialist hospitals -Dental clinics -Special medical institutions for highly communicable diseases -Psychiatric hospitals I I Ministry of Higher Education (MOHE) … -Public University teaching hospitals Source: Compiled by Frost & Sullivan HCS Delivery Model I I Other government Bodies

-Ministry of Defence (MOO) Military Hospitals -Department of Aborigines-operated hospitals -Ministry of Home Affairs (MOHA) drug rehabilitation centre I For-Profit Organisations
~ -Primary care clinics -Hospitals -Specialist hospitals -Dental clinics I Private HCS I Not-for-Profit Organisations
~ I Total healthcare expenditure in Malaysia in 2011 was estimated at RM 43.4 billion (US$ 14.2 billion), contributing to approximately 5.1 % of the GOP. Healthcare expenditure in Malaysia comprises mainly public and private expenditure. Other contributions include those from foreign governments, non-government organisations (NGOs) like the WHO, Asian Development Bank (ADB), International Monetary Fund (IMF), among others, which are negligible in value. -Primary care clinics -Hospitals -Dental clinics I Medical Schools I Universities
~ -Teaching hospitals © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (conf’d) The public healthcare system is highly subsidised and government spending on healthcare largely accounts for HCS operational costs, capacity building and the procurement of pharmaceuticals and medical supplies. The funds originate from tax collections and other government income and are mainly channelled to the MOH Malaysia through annual budgetary allocations. In 2011, the public healthcare expenditure contributed to approximately 42.2% or RM 18.3 billion (US$ 6.0 billion) of the total healthcare expenditure. Private healthcare expenditure comprises OOP expenditure incurred by individuals or corporates for healthcare bills, purchase of pharmaceuticals and disbursements made by private insurers for medical expenses. Private healthcare expenditure indicates spending incurred in both public and private healthcare facilities, as well as spending on over-the-counter medication/pharmaceuticals. In 2011, private healthcare expenditure was estimated at 56.9% or RM 25.1 billion (US$ 8.2 billion) of the total healthcare expenditure in that year. The growth in total healthcare expenditure is mainly attributable to an increase in private healthcare spending. Capacity building was apparent in both the public and private healthcare sectors as there was a general uptrend in the number of registered beds observed between 2007 and 2009. The last five years have seen a steady increase in private healthcare expenditure. The graph below shows the total healthcare expenditure and breakdown of public and private expenditure between 2006 and 2011. Healthcare Expenditure Growth Trend in Malaysia, 2006-2011E
30 -\ 25 ‘2 1 I ~ 20:c -I :2 15 ~!E.. I Q)…. 10 ~ “0 c: 1Q) 5 0. ><w I o +-­2006 2007 2008 2009 2010E 2011E [J Public o Private Source: Department of Statistics Malaysia, MOH Malaysia health facts 2007-2010, The World Bank, The WHO. Analysis by Frost & Sullivan. Sources of Healthcare Funding The choice of healthcare treatment recorded in Malaysia is highly related to the availability of healthcare funding, which is typically determined by the employment medical benefit structure or the disposable income of the person. Public healthcare system in Malaysia is heavily subsidised by the government, making the service in pUblic healthcare facilities almost free to the majority of the public. Under the pUblic healthcare system, civil servants, old-age pensioners, school children, and the very poor enjoy free medical and dental services in public healthcare facilities. Hence, they are among the major groups that seek public healthcare treatment. Privately employed persons pay a government-subsidised fee when seeking treatment and medication in public healthcare facilities. Public healthcare facilities lack capacity and suffer from over-utilisation due to insufficient infrastructure investment. In 2009, the government expenditure per capita on healthcare was approximately RM 623.2 (US$ 177.3) versus more developed neighbouring countries such as © Frost & SuI/ivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d)
Singapore and Brunei, whose government healthcare expenditure per capita was US$ 607 (RM 2,146) and US$ 720 (RM 2,545) respectively1O. Despite the government’s intentions to increase capacity and improve public healthcare facilities, the budgetary constraints limit the speed and scale of these developments. Patients who utilise public HCS face overcrowding and long waiting lists for major surgeries and treatments, which can vary from 4 weeks to 6 months. Private HCS on the other hand charge full medical fees to their patients, and can typically provide for surgeries within one week. Consultation charges by doctors are capped based on the Private Healthcare and Services RegUlations 2006. For those employed in the private sector, the Employment Act 1955 entitles employees visiting the GP to be reimbursed or paid by the employer. Usually, this is provided by the private healthcare sector. The following diagram illustrates the healthcare funding structure in Malaysia, for public and private HCS. Sources of Healthcare Funding in Malaysia, 2011 Sullivan. Icharities Notes: a.  Government healthcare expenditure is typically from tax contributions channelled through annual budget allocations  b.  Social Security Organisation (SOCSO) fund through pooled contributions by employer and employee  c.  EPF retirement account by employer contributions and employee savings  d.  Private insurance receives premium from corporate or individual households
4.2.3 Regulatory Overview The healthcare industry in Malaysia is highly regulated. The laws that have been established are fairly comprehensive, and cover all aspects of the HCS industry from licensing operations, to standards and guidelines for services, which include the quality of healthcare professionals and workers, equipment safety, fees structure and advertising prohibition and guidelines. In order to maintain standards and ensure the safety and protection of the general public, these laws and regulations place high requirements on the healthcare service sector in Malaysia. MOH Malaysia is the appointed authority responsible for regulating the HCS industry which includes determining the zoning of areas and issuance of operating licenses to the private HCS providers. The zoning of areas sUbjects private hospitals to proof a need or demand by the community for HCS, ensuring that there is equal distribution of hospitals within the country and to avoid limiting the concentration of hospitals to just certain areas. However, the issuance of new licenses in the same zone is sUbject to MOH Malaysia’s policies and may be revised to accommodate for population growth. The acts that govern the private HCS industry include the Private Healthcare Facilities and Services Act 1998 and the Medicines (Advertisement and Sale) Act 1956 (Revised 1983). All healthcare professionals and allied workforce in Malaysia are, by law, required to register with the respective regulatory boards in order to practice in Malaysia. The registering bodies are Malaysian Medical Council (MMC) for medical practitioners, the Malaysian Dental Council (MDC) for dental practition’ers, the Nursing Board for nurses and the Midwives Board for midwives. Graduates from MOH Malaysia recognised institutions may register and enter the workforce directly whereas foreign graduates are subjected to examinations in order to register and enter the workforce in Malaysia. 10 The World Bank data © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry
7. INDUSTRY OVERVIEW (cont’d) 4.2.4 Supply Dynamics Workforce The supply of healthcare workforce in Malaysia has generally improved over the last 5 years from 2007 to 2011. Despite Malaysia having a steady supply of doctors and nurses, the ratio to population is still considered low when compared to developed countries. The following table shows the growth in the number of healthcare worker from 2006 to 2010, and the MOH Malaysia’s projected workforce level in 2016. Healthcare Workforce in Malaysia, 2006,2010 and 2016F …~~ 2,413 (2007) 2,520 (2009) i 5,492a I Total Doctors21,937 32,979 48,742″I. i· Public 13,335 22,492 N/A i” !. Private 8,602 10,550 N/A ! Doctors per 1,000 population I 0.82 1.16 . 1.67t) i ‘”, ,… ·_”,_. __ .m~ ….._… “~”_,,,”,,’ .._.._._. ,-_._–” -” f Total Nurses 64,309 90,199 N/A i· Public 34,598 47,992 N/At,· “‘·,·,·.····’ 0_._ !. Private 13,044 21,118 N/A
! Nurses per 1,000 population 1.79 2.44 5.0at’· Source: MOH Malaysia website & Annual Report 2009,Social Statistics Bulletin Malaysia 2010, MOH Malaysia Health Facts 2006-2010 Notes: a. MOH Malaysia forecast
b. MOH Malaysia’s target as per the Health Plan 2011-2015

The number of specialists in Malaysia is fairly small and is concentrated mainly in the private sector. This is even more prevalent in disciplines such as cardiology, orthopaedic surgery and obstetrics & gynaecology (O&G), and is the key driver for the general public to opt for private hospitals for the more complex surgeries and procedures. MOH Malaysia has set a target to double the number of specialists in Malaysia by 2016 in order to fulfil the healthcare needs of the population. Selected Specialists in Malaysia, 2011 _mDl~_~~ Medical Oncology ; 25 . 26 . Obstetrics & Gynaecology : 88 . 289 . Cardiology 45 125 Otorhinolaryngology (ENT) 47 98 Cardiothoracic Surgery 21 25′ Ophthalmology 106 125 Dermatology 25 43 Anaesthesiology 154 201 Orthopaedic Surgery 117 182 Neurology 22 27 General surgery 118 171 Neurosurgery 21 27 • Urology 25 50 Source: Naiional si:;eciaiistRegister database retrieved on 3 Feb 2012. Note: The above list is non-exhaustive and not limited to these disciplines. Prior to the Health Plan 2011-2015, foreign healthcare professionals were prohibited by the MOH Malaysia from practising in Malaysia. With the relaxation of these policies and in order to fulfil the shortage of local talent in this area, Malaysia can expect more foreign and qualified healthcare professionals to enter the workforce. I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cant’d) Hospital Beds There is a general shortfall of hospital beds in Malaysia. Malaysia’s number of hospital beds per 1,000 population was 1.94 in 2010, which was lower than the OECD’s average of 3.1. Using the GECD average as a benchmark, the hospital beds shortfall analysis is shown in the following table. Hospital beds projection and shortfall analysis, 2011£ to 2015F
Major Development Projects by MOH Malaysia and the Private Sector (2012-2015) In 2010, there were 2,833 public clinics and 145 public hospitals in Malaysia11 • For primary care, approximately 80 new clinics have commenced operations between January 2010 and April 2011. An additional 50 clinics are expected to be built during the 10th Malaysia Plan (10MP) under the First Rolling Plan (RP1). Major ongoing projects which started during 2011 include the construction, upgrading or expansion of hospitals in Kuala Lumpur, Taiping, Seremban, Kota Sharu, Tampoi, Kangar, Kuala Terengganu, Kota Sharu, Rompin and the Sabah Medical Centre (Hospital Queen Elizabeth II). Other new hospital projects under way are in Lawas and Petra Jaya (Sarawak), Tuaran (Sabah) and Kuala Krai (Kelantan) 12. These expansion and development projects are at different stages of completion and are expected to add at least 3,777 new hospital beds to the public healthcare sector during the period between 2012 and 2015. In 2010, there were 7,954 private clinics and 217 private hospitals in Malaysia13 . There were at least 24 new private hospital development projects throughout Malaysia that have been announced and expected to be operational within the period 2012 to 201514 , alongside several expansion plans for existing hospitals. These are at different stages of completion but are expected to add approximately 6,893 hospital beds in the private HCS sector during the period between 2012 and 2015. The new hospital developments are mainly concentrated in the Klang· Valley, Johor and Melaka. As of Q1 2012, at least 2 of the hospitals announced have started operations, both located in the Klang Valley. New Private Hospitals by Region, 2012 to 2015 Note~: ~-­I Klang Valley b ..IJ~h~~··················· … .. Melaka…  ‘ i T  a 5 2  .  2,427 1,140 910 ………•..•..  ..•………..  . .’  a. Additional beds include beds from new private hospitals planned and the expansion of current private hospitals b. In Ql 2012, 2 new hospitals in  : Sabah  1  500  the  Klang  Valley  have  started  ,~”, i Others  6  2,506  operations  i Total  24  6,893  Sour~: Company annual reports, websites and online media  releases.
11 MOH Health Facts 2010 12 Source: MOF Economic Report 2011/12, Chapter 4: Public Sector Finance 13 MOH Health Facts 2010 14 Company annual reports, websites and media announcements @ Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry [ Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) The following table shows the projected hospital beds for the public and private sector between 2011 E and 2015F. Public and Private Hospital Beds Projection 2011E to 2015F
4.2.5 Demand Dynamics Access to Heafthcare Funds -Medical Insurance One of the most important enablers in accessing healthcare is the accessibility to healthcare funds. Traditionally, those who seek treatment in a private healthcare facility pay OOP for the medical fees. The increasing availability of medical insurance packages in Malaysia has decreased the reliance on OOP spending for private HCS and has encouraged the transition from public to private HCS, in particular for the middle-income population. There were 27 registered medical insurance providers in Malaysia as at March 2012, out of which 9 of the companies also provide Life insurance policies. Examples of companies which provide general medical insurance include Kurnia Insurance (M) Berhad, MSIG Insurance (M) Berhad and ACE Jerneh Insurance Berhad, among others. The growth in the insurance market indicates that the general pUblic is increasingly accepting the benefits of subscribing to private insurance as part of the healthcare funding mix. The accessibility of funds for private HCS is largely dependent on the availability of competitive life insurance and general medical insurance offered in Malaysia subscribed by corporations or individuals. In 2010, the majority of the policies were individual policies (96.5%) and the remaining were group policies. In 2010, the written premium for general medical insurance was RM 643.5 million (US$ 200.4 million), and is forecasted to grow to RM 1.5 billion (US$ 490.7 million) by 2016. The following table illustrates the growth in general medical insurance net premium between 2006 and 2010 and the forecasted growth in 2016. General Insurance Written Premium (Medical) 2006, 2010 and 2016F
Source: Annual Insurance Statistics (2006-2010), Bank Negara Malaysia. Forecasts by Frost & suiiiv[;rJ. .. Growing Middle and High Income Population Segment Malaysia has a growing middle and high income class population. A wealthier population generally aspires for better living conditions and better quality of healthcare. Malaysia has a high national savin~s ratio of approximately RM 281.1 billion or 34.5% of the Gross National Income (GI’JI) in 2011 1 • This provides an opportunity for the private HCS providers to align its service offerings to cater for this segment. The following table shows the percentage distribution of households based on income class for the years 2004, 2007 and 2009. 15 Based on current prices as sourced from the Ministry of Finance, Malaysian Economic Report, Fourth Quarter 2011. @Frost& Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) Percentage Distribution of Household by Income Class, Malaysia, 2004, 2007 and 2009
Iskandar Malaysia -Medical Hub The Malaysian government has identified healthcare as one of the 6 economic growth drivers for Iskandar Malaysia (the other growth drivers being education, finance, creative industry, logistics and tourism), to be developed in the Nusajaya Flagship area which is situated to the West of Johor Bahru. The Nusajaya development spreads across a land area measuring 24,000 acres, and is one of the largest property developments in Southeast Asia and is projected to have a population of 500,000 by 2025. Healthcare development plans in Nusajaya are as follows: • The Afiat Healthpark development is under the ownership of UEM Land Bhd. The Afiat Healthpark hosts the Columbia Asia Nusajaya Hospital, an 82-bedded hospital, supported by other health facilities. The Columbia Asia Nusajaya Hospital commenced operations in June 2010.
• Medini Iskandar Malaysia -a 2,230-acre international mixed-used development under a joint development between Global Capital and Development Sdn Bhd and Medini Central Sdn Bhd. The target population by 2014 is 50,000. The North Medini development will include the building of a 300-bed tertiary healthcare complex by the Parkway-Pantai group which is expected to be operational in end 2014.

The Iskandar development region, being in close proximity to Singapore has an advantage over other cities in Malaysia, and has the potential to emerge as the next medical travel hub in Malaysia. It is expected to cater to domestic demand as well as to medical travellers, particularly from Singapore which is an attractive market for the private HCS industry in Malaysia given its population size of 5.2 million. As the private healthcare cost for a single bed ward in Malaysia is comparative with Singapore’s public B1 ward hospitals, it is anticipated that Singaporeans who utilise the B1 and C wards may look to hospitals in Iskandar as an alternative. (Refer to Section 3.3 Medical Travel-Malaysia for details). 1Care for 1Malaysia -5 Years National Health Plan (2011-2015) The 1Care for 1Malaysia is a national health reform plan announced during the 10th Malaysia Plan (10 MP). The main objective is to alleviate the challenges faced by the public healthcare sector which includes overburdened resources, increasing cost of medical supplies and the migration of specialists to the private sector, as well as the varying quality of healthcare across the public sector, through greater integration with the private sectors. The other objective is to provide the general public with greater access to the private healthcare sector, at the same time addressing the healthcare financing structure in order to ensure that the general public is not burdened by high OOP expenditure. The efforts outlined by the “5 Years National Health Plan (2011-2015)” include: • Contracting out certain auxiliary health services, such as radiotherapy services and emergency purchase of I’v1RI, Computed Tomography Scan (CT-scan) and Intensive Care Unit (ICU) services to private hospitals. This will reduce the public medical costs and provide the private sector with an opportunity to grow in the healthcare delivery market.
• Employment of private specialists on a sessional or honorarium basis
• The introduction of a Full-Paying scheme to several public hospitals, namely Hospital Putrajaya and Hospital Selayang, which now makes it possible for MOH Malaysia specialists to receive referrals from private hospitals at full paying patient rates

© Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) •  The approval of locum practices for MOH Malaysia doctors, which makes it possible for MOH  Malaysia doctors  to  now  legally practice  as  locums  in  private clinics  with  their  head  of  department’s approval -this is to address the brain-drain situation  •  To address the rising rate of lifestyle diseases though wellness campaigns and programmes to  lead a healthier lifestyle.
National Health Financing Scheme The scheme is at the drafting stage and when implemented is expected to be mandatory for all Malaysians. It is to be funded through contributions from employees, employers and the federal government. The implementation of a national health financing scheme will relieve the government from the burden of subsidising healthcare, and channel their funds into investments in the public HCS infrastructure such as for capacity building, upgrading of current facilities and installing state­of-the-art medical equipment and systems, as well as focusing on other areas such as health awareness campaigns and research and development in healthcare. The scheme is expected to relieve the public healthcare system as those covered by the scheme may be allowed to opt for private HCS whereby the scheme may also be utilised. Nevertheless, the actual scheme is yet to be announced by the government. 4.2.6 Competitive Landscape In 2011, there were 221 private hospitals in Malaysia. Many of the hospitals are part of a wider network of hospitals operated by several key service providers. Private HCS providers may be categorised as for-profit or not-for-profit. In the for-profit private HCS category there are 7 major healthcare groups and at least 4 single entity hospitals that command the majority of the number of hospital beds in Malaysia. The following table lists the key for-profit HCS providers (group or single entity) based on the total number of beds available within their facilities. Major a Private HCS Providers in Malaysia, 2011

10(2012) 2 (2012) . .. I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Note: The list above excludes not-far-profit hospitals. The list above is non-exclusive and not limited to these players. Sources: a.  Based on the number of beds.  b.  JCI website and the Malaysian Societ y for Quality in  Health (MSQH) web site.  The M SQH information is c orrect as on  12 March 2012.  c.  The beds information in the table  above was obtaine d on a best effort ba sis a nd as  per pUblished in the  companies’  own  publication and/or websites,  or  announced in  mainstream media.  The  term  ‘beds’ may refer to  licensed or  operational beds.
In 2010, there were 13,186 private hospital beds in Malaysia. IHH’s market share in Malaysia, based 1,993 licensed beds in 2010 was 15.1 %. This ranks IHH as the second leading private HCS provider in Malaysia in 2010. IHH’s Market Share by Number of Licensed Beds (Private), 2010
Source: MOH Malaysia, IHH, Analysis by Frost & Suf/ivan 4.2.7 Market Size (Private Hospital Industry Revenue) In 2010, the private hospitals market size in Malaysia was estimated at RM 6,038 million (US$ 1,880 million), having grown from RM 5,252 million (US$ 1,494 million) in 2009. In 2010, IHH’s market share by revenue was calculated to be 12.5%. IHH’s Market Size Based on Private Hospitals Industry Revenue in Malaysia, 2010
Source: MOH Malaysia, IHH, Analysis by Frost & Sullivan It @Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) 4.2.8 Industry Outlook / Prospects Healthcare expenditure is forecast to reach RM 65.9 billion (US$ 21.6 billion) in 2016, growing at a GAGR of 8.7% during the period 2011-2016. The ETP and 10MP, with the emphasis on healthcare, is expected to be a major driver for investments spurring a flurry of capacity building by both pUblic and private sectors. As most new hospitals are expected to be operational during 2012 to 2016, the increase in private healthcare expenditure is also expected to be apparent during this time period. The public-private integration is expected to relieve the over utilisation of resources in the public sector as the ancillary services such as imaging and laboratory services may be outsourced to the private sector. GAGRs for the pUblic and private expenditure during 2011 to 2016 are estimated at 7.1 % and 9.8% respectively. The following table shows the healthcare expenditure forecast and the private hospitals market size based on revenue between 2011 and 2016. Healthcare Expenditure Estimates and Forecast, 2011E to 2016F
Source: Analysisand Forecast by Frost & The private hospital market size is forecast to grow to RM 15,081 million (US$ 4,934 million) in 2016 at a GAGR of 18.1 % during the period 2011 to 2016. Growth is anticipated to be higher during the forecast period (2012 to 2016) as a result of new hospitals opening during the time period. During this time, major driving factors for growth in revenue for private hospitals include: • higher uptake of private insurance by middle income households which act as enablers to more complex treatments or procedures in private healthcare facilities,
• rising medical costs which are transferred to patients, and
• growth in the medical travel industry generally seeking for certain complex procedures which are cheaper than in the neighbouring medical hubs of Singapore and Thailand.

This is in addition to the increase in utilisation of HGS in general as a result of population growth, ageing population and increasing lifestyle diseases. The following chart illustrates the private hospitals market size growth trend and forecast for the duration 2006 to 2016. Private Hospitals Market Size Growth Trend and Forecast, 2006 to 2016F
Source: Analysis and forecast by Frost & Sullivan 7. INDUSTRY OVERVIEW (cont’d) 4.3 TURKEY 4.3.1 Introduction and Background According to the IMF’s World Economic Outlook Report, Turkey is a newly industrialised country. Turkey’s urbanisation rate has been on an upward trend increasing from 67.3% in 2006 to 69.7% in 2010. Socioeconomic Indicators, 2006 and 2010 Turkey has a large productive-~~
. (TL billion) ……………………………………………………… %~;;~~1~~~~a(TL) Population (million)  .  I 758.4 I 1,254.6 I :…………………………..[…………………..; , 10,908 ~. 15,119 i 69.4 ! 73.0 … “‘j  population (aged between 15-64 years) and high employed segment, which contribute to the increasing wealth of the population and a growing middle  0-14 years (%)  27.9  26.0  income  group.  The  GOP  per  15-64 years (%)  65.5  67.1  i  capita is generally higher than in  65 years and above (%)  6.7  6;9  ‘,!  most countries in the region. Turkey’s large population base is
: Birth Rate (per 1,000 population) 18.6 !….. 17.51 rising as a result of a moderate .InfaniMortaliiyRate (per 1,000 birth rate and low infant mortality 20.6 10.1 Il:lirt~~} . ..; rate. The ageing population (aged Life Expectancy -Female (Years) 75.6 76.8 above 65 years) accounted for ······171.2 71.8 approximately 6.9% of theLife Expectancy -Male (Years) l –,-_._-“~”_._ …” .., . population in 2010 and is Total Employed (million)
20.1 22.6 I expected to increase with higher ……….,
life expectancy and low mortality Household Income Distribution: .~ rate. Top 40 percentile (%)
e 65.8 Turkey’s national healthcare Bottom 20 percentile (%) 17.3 18.4 expenditure grew from TL 40.6 Urbanisation Rate (%) 67.3 69.7 i billion (US$ 28.4 billion) in 2006 …..1 to approximately TL 74.4 billion (US$ 49.4 billion) in 2010, registering a strong CAGR of 14.0% during this period. The growth in healthcare infrastructure and facilities has spurred the demand for healthcare professionals. The government introduced the 2003-2013 “Health Transformation Program” (HTP) in Turkey to address the shortage of doctors, healthcare facilities and increase the quality and efficiency of the healthcare system as well as to enhance the accessibility of healthcare facilities. Driven by the HTP, Turkey’s number of hospital beds per 1,000 population increased from 2.65 in 2006 to 2.74 in 2010. Likewise, the number of doctors per 1,000 population increased from 1.51 in 2006 to 1.69 in 2010. In addition, the private healthcare sector has blossomed in Turkey and there have been noticeable improvements in the quality of public hospitals due to rising competition from private hospitals.
Changing Lifestyle and Burden of Diseases Rapid socia-economic development in Turkey has resulted in an increasing trend in non­communicable/lifestyle diseases such as coronary diseases, cancer, diabetes, hypertension, obesity and chronic obstructive pulmonary disease over the last 3 years. The key contributing risk factors for these diseases are urbanisation, mechanisation, reduced physical activity, an ageing population, air pollution, smoking and genetic predisposition.
© Frost & SuI/ivan 2012 Independent Market Research on Global Healthcare Services Industry In  2010,  lifestyle  diseases  such  as  coronary  diseases,  cancer  and  respiratory  diseases  accounted  for  more than 62% of the hospital deaths  Diabetes  in Turkey. Given the public hospitals,  inadequacy of the private  Hypertension  healthcare  sector  has  concentrated  Obesity  on secondary and tertiary healthcare,  Obstructive Pulmonary f:)i~E)ase (CQP[)) Source: MOH Turkey  4.5  5.0  5.5  offering treatment for such lifestyle diseases. For instance, major industry players in the private healthcare  sector  such  as  Acibadem  Health
7. INDUSTRY OVERVIEW (cant’d) Group, Anadolu Sagllk Merkezi (Health Group), Florence Nightingale Health Group and Memorial Health Group have all allocated resources to specialise in oncology and cardiovascular diseases. Ageing population The increasing ageing population is also signalling an increasing need for HCS, especially for the elderly. MOH Turkey statistics show that people above the age of 65 made up 6.9% of the population in 2010 and this segment is expected to reach 7.6% of the population by 2016. This factor will drive the demand for: the treatment of chronic diseases including cardiovascular diseases; the long-term management of diseases such as osteoporosis and dementia; and home care or home monitoring and geriatric care. These factors will exert increasing pressure on healthcare budgets as they require sophisticated and capital intensive treatment. 4.3.2 Overview of HCS model and funding The major healthcare providers in Turkey are the Ministry of Health (MOH Turkey), the Social Security Institution, the Ministry of Education, the Ministry of Defence, the Ministry of Labour and Social Security and private healthcare institutions. MOH Turkey is the largest healthcare provider in Turkey and essentially the only provider of preventive HCS at a national level. It is also responsible for regulating the private HCS industry and issuing operating licenses to private healthcare facilities. Primary HCS in Turkey is available at family health centres, maternal and child health and family planning centres, population health centres, cancer early diagnosis screening and training centres, medical centres, outpatient centres, private doctor offices and tuberculosis control dispensaries. MOH Turkey provides secondary HCS through general state hospitals and other public hospitals. For public tertiary HCS, University Hospitals primarily cater to the need of general public. There are also specialist hospitals that proVide specific quaternary HCS such as heart related diseases and eye treatments. The healthcare facilities in the public sector are complemented by a smaller network of private facilities. The provision of private healthcare in Turkey is available via medical centres, outpatient centres, private doctor offices, general hospitals and specialist hospitals such as eye hospitals. [The rest of this page is intentionally left blank] i\ idi awoz © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry
[COmpany No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) HCS Delivery Model in Turkey, 2011 HCS Delivery Model I … I Public•HCS I Private HCS I I .. … … ~ Ministry of Education OtherMinistrv of Health • Clinics Ministri~ • General Hospitals • University Hospitals • Medical Centres

• Specialist Hospitals • Outpatient Clinics
• Hospitals i.e. eye and cardiovascular • Specialist Centres
• General Hospitals
• Specialist Hospitals


Source: Frost & Sullivan primary and secondary desktop research. Turkey has a Universal Health Insurance (UHI) scheme that is provided by the Social Security Institution (Sosyal Guvenlik Kurumu -SGK). The UHI scheme provides basic healthcare coverage to all residents including foreigners who are working in the country through public hospitals. Those who are covered by SGK may also receive HCS in private hospitals that have agreements with SGK (either full or partial basis). In addition to the private hospitals, private medical centres may also enter into the agreement with SGK (full or partial basis). There are two types of agreements between SGK and private hospitals as well as private medical centres -full SGK agreements and partial SGK agreements. Under the full SGK agreement, all units of the private hospitals can be utilised to serve SGK patients. In return, private hospitals may charge a premium (30% to 90%) on top of the SGK tariff, plus additional charges for amenities. Under the partial SGK agreement, private hospitals only need to provide cardiovascular surgery, cardiology, oncology, radiation oncology, organ and tissue transplantation, radio surgery, and emergency services. They may only charge a premium of up to 30% for these services to SGK patients. Even after accounting for such premiums, fees paid by full or partial SGK patients are generally lower than that of non-SGK patients. Individuals who seek additional medical services from the private healthcare which are not contracted under SGK need to pay their medical expenses OOP, if they do not have private health insurance coverage. Furthermore, the private hospitals are not bound by these price caps when serving non-SGK patients. Generally, private hospitals and private medical centres under partial SGK agreement are of higher quality compared to those with full SGK agreement because majority of these hospitals are located in major cities. They provide HCS to patients with higher income level who can afford OOP or private insurance payment. SGK patients receive only the basic services payment from the government whereas patients with private insurance coverage can receive a more comprehensive HCS from the private hospital at no additional cost. Despite the availability of the UHI scheme, many employers subscribe to private health insurance schemes for their employees. This way, they can ensure that their employees receive quality treatment at private hospitals. Individuals in higher income groups may also personally subscribe to private health insurance to enjoy these benefits. In 2011, there were 27 private healthcare insurance providers in Turkey such as Acibadem Saglik ve Hayat Sigorta A.$, Allianz, Ak Sigorta Anadolu and YapI Kredi, among others, providing private insurance coverage to approximately 2.3 million people (approximately 3.1 % of the total population). However, private health insurance is not mandatory. According to MOH Turkey, SGK expenditure, including both public and private, accounted for 45.2% of the total healthcare expenditure in 2010, followed by public expenditure (20.9%), OOP expenditure (23.3%), non-profit organisations (8.8%) and private healthcare insurance (1.8%). The following diagram illustrates the payment structure for a healthcare expense in Turkey, for pUblic and private HCS: © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) Healthcare Expense Funding Structure in Turkey, 2011 Sources of Healthcare Funds Healthcare Service Model Social Security Institution (Sosyal Guvenlik Kurumu ­SGK)  Private Insurance
, Public HCS , , , , , , , , ” , , ” ,” Private HCS ~ OOP Expenditure • —–.. Payment to hospitals with full SGK agreement -. -.-…. Payment to hospitals with partial SGK agreement
Source: MOH Turkey, Frost & Sullivan primary and secondary desktop research. 4.3.3 Regulatory Overview The healthcare industry in Turkey is highly regulated. The laws and regulations that have been established are fairly comprehensive, and cover all aspects of the HCS industry including the provision of licenses for medical centres, outpatient centres, specialist centres and hospitals, guidelines for HCS as well as the quality of healthcare professionals and workers. The laws and regulations ensure that high standards are maintained and ensure the safety and protection of the general public. 4.3.4 Supply Dynamics The growth in healthcare infrastructure and facilities has spurred the demand for healthcare resources including healthcare professionals and hospital beds. Workforce Even though the healthcare workforce in Turkey has improved in numbers from 2006 to 2010, the ratio to population is still considered low when compared to the OECD countries average. In order to improve the ratio, the government has passed a law enabling the employment of foreign healthcare professionals in private hospitals in 2012. This initiative will also support the medical travel industry in Turkey. 307,546 Total Doctors 104,475
General Practitioners 33,383 3.8 Assistant Doctors 18,224 3.7 Specialists 52,868 4.7 1.51 Total Nurses I Midwives
Doctors per 1,000 population 126,266 7.0 ;. Nurses I Midwives per 1,000 population 1.82 Total Others
10.8 Source: MOH Turkey Note: Others include dentists and allied healthcare workers Infrastructure The number of hospital beds provides a measure of the resources available for delivering services to inpatients in hospitals. In the private sector, the number of hospital beds accounted for @Frost& Sullivan 2012 Independent Market Research on Global Healthcare Services Industry Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) approximately 14.0% of the total hospital beds in Turkey, recording a CAGR of 16.2% from 2006 to 2010. The following table shows the growth in number of hospital beds from 2006 to 2010, and Frost & Sullivan’s projection up to 2016. The ratio for the number of hospital bed per 1,000 population is expected to approach 3.0 per 1,000 population. Public  168,280  166,988  171,887  173,090  174,821  180,118  181,920  Private  15,416  17,995  30,869  33,740  45,308  Beds per  1.000  2.64  i  2.63  2.74  2.76  2.79  2.81  2.90
population …. .source:!v1oHi’lJrkey.Analysis and forecasts
HCS Licensing In 2002, MOH Turkey established a commission to plan the future development of the Turkish HCS sector and as part of this, several procedures were introduced. Such procedures included the suspension of new issuance of hospital/outpatient clinic licenses, special unit permits for new applicants and approvals for applications to increase capacity in or transfer health personnel to hospitals/outpatient clinics until the planning commission becomes fully effective. Notwithstanding the above, private hospitals that obtained a pre-approval certificate before February 15, 2008 were allowed to pursue the obtaining of other licenses required to commence operations. Hospitals that applied for but were unable to obtain a pre-approval certificate before February 15, 2008 due to certain irregularities could re-apply for the pre-approval certificate subject to irregularities having been solved within 3 months from March 11, 2009. Should such hospitals have completed their applications for the pre-approval certificate before June 11, 2009, they are allowed to pursue the licensing procedure. Other than the above exceptions, MOH Turkey has taken the general approach of not issuing any new licenses. There are three separate licenses that companies need to secure in order to participate in the Turkish HCS market: • Companies need to first obtain the ‘pre-approval’ license which evidence that the architectural design of the building is suitable for the operation of hospital in accordance with relevant provision of the Turkish health regulations. In order to obtain a pre-approval certificate, the construction permit and the building use permit must be obtained from the relevant governmental authorities.
• Following the pre-approval certificate, the applicant must obtain a hospital ‘opening certificate’ from MOH Turkey within 3 years (or if need be, a longer term with prior consent of MOH Turkey) from the issuance date of the pre-approval certificate. The hospital opening certificate evidenced that the hospital’s building, management and healthcare technical reports and services have met the requirement stipulated under the Turkish health regulations.
• Companies then need to obtain the final and main ‘operational’ license for the commencement of patient reception and treatment within six months following the issuance date of the hospital opening certificate.
• In addition to the above, Medical Centre Regulation regulates the medical centres, outpatient clinics and special units. All of these centres should be incorporated only by doctors or by companies whose shareholders are doctors. These entities need to obtain ‘pre-approval’ certificate and ‘operational’ certificate in order to commence operations.

The above mentioned regulations have made it difficult for existing or new players to build new greenfield hospitals. As a result, major HCS players in Turkey have been pursuing M&A activities to expand their market share as well as relocate their facilities to a more strategic location. MOH Turkey has also made a provision to allow the conversion of two medical centre licenses into a single operational hospital license. One medical centre can also be converted into hospital if the qualifications satisfy the regulation terms and conditions. These developments are expected to aid the consolidation of the HCS industry in Turkey. Such expansion plans are also subject to the approval of the commission for planning established by the MOH Turkey and the applications for these transactions must be filed to the Ministry of Health until March 11, 2013. Furthermore, while .. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry [§pany No.: 901914-V] 7. INDUSTRY OVERVIEW (cont’d) the Hospital Regulation permits these expansion plans as being subject to the approval of the commission, the commission is likely to allow expansion plans, especially greenfield facilities, only in developing or underdeveloped cities. 4.3.5 Demand Dynamics Access to Healthcare Funding -Medical Insurance Access to healthcare funds is an important driver for private healthcare in Turkey. Traditionally, those who seek quality treatment in a private healthcare facility pay OOP for their medical fees. In 2011, the number of people with private health coverage had almost doubled from 1.28 million in 2008 to 2.28 million, even though the total insurance premium collection only increased by 46.1 % from TL 1.17 billion (US$ 898.3 million) in 2008 to TL 1.71 billion (US$ 1.02 billion) in 2011. This implied that increasing portions of the Turkish population are covered by private health insurance as insurance premiums are becoming more affordable to the general public. Demand for Quality Services The private sector plays a critical role in expanding the accessibility of healthcare coverage in Turkey. The demand for health services increases every year. The number of inpatients visiting private hospitals increased from 1.2 million in 2006 to over 2.7 million in 2010 (22.5% CAGR). In 2010, the number of private inpatients accounted for 25.5% of the total inpatients in Turkey. Many of them are seeking HCS from private hospitals to avoid long waiting time in public hospitals in addition to receiving better quality services and treatments. Health Transformation Program (HTP) MOH Turkey formulated the HTP to improve the quality and efficiency of the healthcare system as well as to enhance access to healthcare facilities. This has had a positive impact on the private healthcare sector as it is expected to divert more patients to private hospitals. Under the HTP priorities, MOH Turkey has set and implemented among others, the following critical initiatives: • Implementation of Universal Health Insurance (UHI): The three main social security systems, Social Insurance Institution (SSK), Pension Fund for Civil Servants (Emekli Sandigi) and Social Security Institution for the self-employed (Bag-Kur), were combined under SGK, resulting in only one payment agency for healthcare. This has resulted in the expansion of health insurance coverage from 40% of the population in 2007 to approximately 90% in 2011.
• Establishment of Family Doctor Pilot Project: In December 2004, the Turkish government introduced the Family Doctor Pilot Project with the goal to increase the ratio of one family doctor per 2,000 population by 2023. Under this pilot project, individuals who participate in the UHI system will be registered with a primary care family doctor. They would need to visit that particular doctor before proceeding to a hospital for secondary care. Individuals who visit a hospital without referrals from a primary care doctor will likely incur additional charges. l\Jevertheless, this initiative is still voluntary at the moment. Upon full enforcement, this project is expected to reduce the burden on public hospitals.
• Expansion of SGK coverage to private hospitals: In 2007, MOH Turkey extended SGK’s healthcare coverage to include private hospitals with the aim of alleviating the burden on public hospitals by encouraging patients to seek medical treatments in the private sector. Patients seeking basic treatments in both public and private hospitals (with SGK agreements) are now covered under the SGK scheme. However, patients who are seeking better amenities or specialised treatment in private hospital that are not covered under SGK have to pay the premium price charged by private hospitals through OOP expenditure or private health insurance. The expansion of the SGK coverage is expected to encourage the migration of patients from public hospitals to private hospitals with SGK agreements.

Government Incentives In November 2011, the government announced a statutory decree to establish tax-free health zones in Turkey. Currently, investors who invest a minimum of TL50 million in the healthcare industry enjoy a corporate tax rate of between 2% and 10%. Furthermore, under a new plan, the government will also contribute to a social security premium for the employers for up to 7 years. These investment initiatives are designed to boost investment in the healthcare industry. Allowance of Foreign Health Professionals In February 2012, the government passed a law enabling the employment of foreign health professionals in private hospitals. Foreign health professionals with at least a diploma in a medical 7. INDUSTRY OVERVIEW (cont’d) or allied health programme and a good command of the Turkish language are allowed to practice in private healthcare facilities, save for dentists, pharmacists and midwifery. 4.3.6 Market Size (Private HCS Industry Revenue) The private HCS market size in Turkey has grown from TL 17.6 billion (US$ 12.3 billion) in 2006 to an estimated TL 28.3 billion (US$ 18.8 billion) in 2010, recording a CAGR of 12.6%. In 2010, IHH’s market share by revenue was 2.6%. IHH’s Market Size Based on Private HCS Market Size in Turkey, 2010
Source: Analysis by Frost & Sullivan 4.3.7 Competitive Landscape The major healthcare providers in the private sector, with a focus on hospitals with partial SGK and/or without SGK agreements, are summarised below in alphabetical order. Major Industry Players with Partial SGK / Non SGK Agreements in Turkey, 2011 Acibadem Health 8 (1,046) 1 (100) 6 (881) 1,572 Group
1 hospital, 2 Anadolu Saglik medical 1 (222) o 1 (222) 222Merkezi (Health centresGroup) 3 hospitals, 1
Baymdlr Health 2 (239) 1 (121) 2 (242) 360 360medical centreGroup Florence
3 hospitals, 1 3 (550) o 3 (550) 550 550Nightingale Health medical centre C3roup. 4 hospitals, 2
Memorial Health medical 3 (475) o 2 (332) 615 475 Group centres 1 (289) 6 (631) 1 (289) 1,500 920 ,qr()up __ . Source: Compiled by Frost & Sullivan LJniversa(Health 14 hospitals
Note:  a.  Acibadem Health Group is currently in the process of acquiring Jinemed Hospital (with 23 beds) and Jinemed  Medical Centre, which are not included in the table above.  b.  This list is non-exhaustive and not limited to  these players.  The list excludes private hospital groups having  hospitals with full SGK agreements.  c.  The beds information in  the  table above  was  obtained on  a best effort basis and as per published in the  companies’ own publication and/or websites, or announced in mainstream media. The term ‘beds’ may refer to  licensed or operalional beds.
© Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 303 7. INDUSTRY OVERVIEW (cont’d) In addition to the above, hospital groups like Acibadem Saglik Hizmetleri ve Ticaret A.S., Memorial Health Group and Universal Health Group also include hospitals with full SGK agreements in their network. Some of the other major hospital groups that operate hospitals with full SGK agreements include Medical Park Health Group (comprising 17 hospitals and 2 medical centres with approximately 2,450 beds); Medicana Health Group (comprising 6 hospitals and 2 medical centres with approximately 1,170 beds) and BSK (Medline -comprising 6 hospitals with approximately 550 beds), among others. In 2010, there were approximately 28,063 private hospital beds (encompassing hospitals with full SGK, partial SGK and non SGK agreements) in Turkey. IHH’s market share in Turkey, based on the number of beds was 5.2%. Given the fragmented nature of the private HCS market (including full SGK, partial SGK and non-SGK), this ranks them as one of the leading private HCS provider in Turkey. IHH’s Market Share by Number of Beds (Private) in Turkey, 2010
Source: Compiled by Frost & Sullivan 4.3.8 Industry Outlook / Prospects The healthcare market in Turkey is expected to grow as a result of the implementation of the UHI scheme, increasing annual income, health awareness, ageing population, as well as the growing medical travel industry. All these factors are expected to lead to higher healthcare spending in Turkey which is estimated to reach TL 186.1 billion (US$ 103.6 billion) in 2016 from TL 44.1 billion (US$ 30.8 billion) in 2006 at a CAGR of 15.5%. Private hospitals are expected to continue to grow in the healthcare market. M&A activities in the private healthcare sector are also expected to continue to increase as major players continue to grow and expand, further consolidating the market. Due to the license restrictions imposed by the government for building new hospitals, fewer new entrants / industry players are expected in the short to medium term from 2012 to 2015. Private HCS Market Size Growth Trend and Forecast, 2006 to 2016F
Q)  J:  2006  2007  2008  2009  2010E  2011 E  2012F  2013F  2014F  2015F  2016F  fiJ Private Revenue  Ell Public Revenue
Source: MOH Turkey, Analysis and Forecast by Frost & Sullivan.
7. INDUSTRY OVERVIEW (cont’d) 4.4 INDIA 4.4.1 Introduction and Background According to the IMF, India’s nominal GOP rose from US$ 0.9 trillion in 2006 to US$ 1.5 trillion in 2010. The GOP per capita rose from US$ 791.0 in 2006 to US$1 ,265.0 in 2010. The population in India was estimated to be approximately 1.2 billion in 2010, making India the second-most populous country in the world, after the PRC. 4.9% of India’s population was above 65 years of age in 2010. According to the World Bank, the adjusted national income per capita16 of India was US$ 1,024.0 in 2009, up from US$ 742.0 in 2006 at a CAGR of 11.3%. The literacy rate of India went up from 64.8% of the total population in 2001 to 74.0% in 2011 showing an increase of 9.2 percentage points. With an increased national literacy rate and increasing access to information on HCS on the Internet and various interactive forums, there is a rapid increase in awareness regarding HCS across all age groups. According to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), India’s medical travel industry is also expected to grow from approximately US$ 333.0 million in 2008 to US$ 2.1 billion by 2015 at a CAGR of over 30.0%. With strong economic growth, a burgeoning population with rising purchasing power, increasing literacy rates and expected growth in medical travel, India is emerging as a highly attractive market for healthcare delivery. Burdens of diseases in India According to the WHO and World Economic Forum (WEF), the income loss to Indians due to lifestyle diseases including coronary diseases, strokes, cancer, diabetes and respiratory infections was approximately US$ 8.7 billion in 2005, and is projected to reach US$ 54.0 billion in 2015. The rise in patient volumes driven by such lifestyle diseases and the increasing cost of treatment are expected to drive the revenue of participants in the healthcare delivery industry. -~ . Coronary Heart Disease ! 37,871,227 i 46,968,695 61,522,343 Stroke
1,286,000 1,450,804 1,667,372 Diabetes 32,265,639 37,671,965 45,809,149 . Chronic Asthma 28,173,000 31,054,659 34,399,180 ChronicObs!ructivePlJimClnary 17,020,000 21,603,800Qi§ease(QQpD) Cancer 2,060,174 2,243,647 2,496,133 Hypertension 108,507,801 118,051,148 139,361,226 Source: Indian Council of Medical Research (ICMR) 4.4.2 Overview of HCS model and funding The HCS delivery system in India is divided into public and private HCS delivery segments. Each of these segments provides primary, secondary and tertiary care to the population. The public segment focuses on primary and secondary care and caters mainly to the rural population due to its affordability. The private segment focuses on secondary and tertiary care and caters mainly to the urban population with a focus on the metropolitan, tier-1 and tier-2 cities in India. 16 Adjusled net national income is Gross National Income (GNI) minus consumption of fixed capital and natural resources depletion. I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cant’d) HCS Delivery Model in India, 2011 HCS Delivery Model Corporate Hospitals and Trust Hospital Colleges Teaching Institutions and Medical Colleges Clinics


Within the public segment, the government in India has developed large numbers of PHC, which focus on providing immunisation, treatment for malnutrition, pregnancy and child birth as well as treatment of common illnesses, to cater to the primary healthcare needs of the rural population. In India, approximately 70.0% to 80.0% of the total healthcare needs are catered for by the private segment by healthcare expenditure, as evident in table below (Please note that capital expenditure is not considered). This is as a result of limited government healthcare expenditure due to central and state government deficits and the government efforts to promote the growth of the private healthcare segment through measures such as introduction of tax incentives and land allocation. Generally more than 80.0% of private healthcare expenditure is from OOP expenditure. Within the private segment, secondary and tertiary care is provided by private HCS providers, which can be further categorised into the following two segments: • Private corporate hospitals, which are hospital chains operated by healthcare groups such as Apollo Hospitals, Fortis Healthcare and lVlanipal Health Systems.
• Private hospitals include unorganised private segment hospitals, which are owned and run by individual doctors or group of doctors.

India Healthcare Expenditure, 2006 to 2010 Total (INR million) Public Contribution Private Contribution Public asa% of total Private asa % of total Total as a % of GDP 886,140  1,303,683  1,455,109  1,806,969  2,151,429  13.3  24.8  25.8  30.3  29.2  75.2  74.2  69.7  70.8  4.0  4.0  4.0  4.2  4.1
“…. Source:”The ij/fk5Heaithcare Expendfturer5atabase.Pro/ection andanalysis by·FrOSi&.§uiiivan © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) The chart below shows the public and private healthcare expenditure further classified into their respective components. Components of Public and Private Hea/thcare Expenditure (in INR billion), 2006 to 2010 2,500 2006 2007 2008 2009 2010 OMOH IlISSF ElOGS DOOP ClPvt Insurance ONGOs 1lI0PS
Source: The WHO Healthcare Expenditure Database !’Jotes: 1) Public Expenditure Components: MOH (Direct subvention by MOH India), SSF (Social security funds) and OGS (Other government spending).The breakdown of OGS is not available. 2) Private Expenditure Components: OOP expense, Private Insurance, NGOs (Contribution from non-profit organisations) and OPS (Other private spending). The breakdown of OPS is not available. 3) The MOH and NGO components are very small and not visible in the chart above. The corresponding data is given below’ INR billions  2006  2007  2008  2009  2010  MOH  28  33  49  72  81  NGOs  14  15  16  21  25  –
4.4.3 Regulatory Overview In general, the Indian Government has found it difficult to regulate the healthcare sector in India adequately. Despite the existence of regulatory frameworks, effective enforcement and implementation remains challenging for both the central and state governments. However the government has, over time, begun to improve implementation of the regulatory framework, for example, increasing the number of common bio-medical waste treatment plants and approving more private incineration licenses so as to support the operations of HCS providers in India. The key policy maker in India is the Central Council of Health and Family Welfare. Key implementing agencies include the Union Ministry of Health and Family Welfare and Directorate General of Health Services (DGHS). 4.4.4 Supply Dynamics Generally, doctors in India are sourced domestically. According to the Central Bureau of Health Intelligence (CBHI), India had approximately 300 medical colleges and 290 dental colleges with a total admission of 34,595 and 23,520 respectively in 2010. The existence of such educational infrastructure is important to meet the growing demand for doctors and other healthcare professionals in India. The majority of key specialists in India have foreign degrees and are largely concentrated in urban private hospitals. I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Supply-demand gap of trained hospital staff and number of beds in India According to the Indian Brand Equity Foundation (IBEF)17, an additional 0.7 million doctors will be required by 2025 to reach a recommended ratio of 1 doctor per 1,000 people. To maintain the current nurse-to-doctor ratio of 2.2, an additional 1.6 million nurses will be needed by 2025. To achieve the recommendation of 2 beds per 1,000 people by 2025, India needs to make up for a shortage of approximately 1.75 million beds. The projected need for doctors, nurses and beds demonstrates the size of the demand-supply gap in the healthcare industry in India. Healthcare Infrastructure Performance Indicators
Public Clinics 168,986 i 173,795
Total Hospital Beds* Public 492,698 : 576,793 Private 493,118 i 591,641 Total Healthcare Workforce** Total Doctors 1,349,521 ‘1,564,040 Nurses I Midwives 1,402,297 ! 1,698,384 Allied workers (Health Assistants & Workers) 239,521 i 282,609 Source: Central Bureau or Healihfnielligence (CBHI),fheWHO, Miriisiry()( Health and Famiiy Welfare (tvlOHFW) Notes: * The total beds have been derived based on 0.9 beds per 1,000 populations as per the WHO. Public bed numbers are as per CBHI. ** Information on the split of total healthcare workforce into public and private segment is not publicly available.
4.4.5 Demand Dynamics Faster Economic Growth and Greater Urbanization The high economic growth of around 8.4% in 2011 is expected to increase the middle-class population in India. With higher disposable incomes, the Indian population is likely to increase their spending on HCS. This is likely to favour private HCS providers, who are well positioned in secondary and tertiary care, given the inadequacy of public healthcare infrastructure. Growing Medical Travel Industry The Indian government promotes the growth of the medical travel industry in India by offering tax breaks and export incentives to participating hospitals as well as expedited clearance of medical visas. Some of the major countries to contribute to the medical travel revenues in India are the United States, Western Europe, Middle East, Africa, Southeast Asia and Australia. Some of the major specialities, where India has seen significant in-flow of patients, are cardiovascular, orthopaedic, cosmetic surgery, dental treatments and ophthalmic treatments. The growing medical travel market is likely to primarily benefit the private healthcare segment as they provide majority of secondary and tertiary HCS due to greater demand by medical travelers for advanced medical treatments. Increased Coverage of Health Insurance The private health insurance segment in India is one of the fastest-growing sources of healthcare expenditure in India and is making healthcare more affordable to the population. Patients with 17 India Brand Equity Foundation (IBEF) is an Indian organisation that collects collates and disseminates accurate, comprehensive and current information on India. IBEF is a public-private partnership between the Ministry of Commerce, government of India and the Confederation of Indian Industry (CII) with the primary objective of building positive economic perceptions of India globally ‘eH·NA © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 56
I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cant’d) health insurance are more likely to visit private hospitals rather than public hospitals. Hence, the greater penetration and growth of the health insurance sector in India is expected to drive the private HCS industry segment. Insurance products have also increased in variety. Health insurance players have introduced new products covering dental diseases and expenses, diabetes, Human Immunodeficiency Virus (HIV), cancer, pre-existing diseases, outpatient charges and prescribed drugs. India Healthcare Expenditure by source, 2006 and 2010 CAGR (2006-2010) 15.0% 12.5% 18.7% 32.5% Source: The WHO Healt/;care Expendilure Dalabase Nole: The breakdown of lotal expenditure is not exhaustive 4.4.6 Competitive Landscape Major Private HCS Providers in India, 2010 and 2011a
I Specialties: Cardiology, Brain and Spine, lFortis Neurology, Minimal Access Surgeries, 68 4Healthcare Orthopaedic, Nephrology and Urology Specialties: Cardiology, Oncology, Apolio Orthopaedics, Nephrology, Urology, 51 5Hospitals I Neurosciences and §pine ! Sp’eciaities:Cardioiogy: Ne~roiogy: Paediatrics, General Medicine, Narayana13 ! Marrow Transplant, Nephrology and Hrudayalayab Gastroenterology, General surgery, Bone
r~~~~(;!rties:’cardiOiog’Y:NePhr;;IOgy, Manipal Health Urology, Neurology, Oncology, Liver and 15 NoneSystems ! Digestive, Sports and Exercise Medicine,LAndrology andReproductiveServices :SpeCiarties’:Llver’Transplani,Bariatric : Surgery, Cosmetic Surgery, Bone Marrow Global Hospital I Transplant, Spine surgery, Heart 9 None ! Transplant, Hip / Knee Replacement and Kidney. Transpl§:nt Specialties: Cardiology, Oncology, Urology, Care Hospital Nephrology, Orthopaedics, Critical and None Gastroenterology. Specialties: Joint Replacement Surgery, Max Neurosurgery, Cardiology, Spine, NoneLaparoscopic Surgeries, Gastroenterology, Oncology.~()phthalm()logya,n.d IVF Medanta Healthcare Specialties: Cardio Thoracic Surgery, Neuro None Sci(3.n.<::es,()r~~c)paedics,..Tra.llsplants Healthcare tv1.edicily Specialties: Oncology NoneGlobalc Specialties:L.i~er Transplant & S~rgical Columbia Asia Gastroenterology, Intestine Transplant, None Paediatric Surgery, Intervention Cardiology, Cardiotl1oracic and Vasc:ularS~rgery Source: Hospital Annual Reports, Websites, Primary interviews by Frost & Sullivan Notes: N/A denotes data is not available a) List is sorted by the estimated total beds in descending order. b) Narayana Hrudayalaya operates as a trust run hospital group. 10,800 (4,100 251.0operational 8,276 (7,762 operational 340.0
>5,500 80.0 >4,300  170.0  >2,000  58.0  1,760  79.0  >1,300  78.0  1,250  N/A  >1,150  33.8  760  21.5
© Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry Company No.: 901914-V] 7. INDUSTRY OVERVIEW (cont’d) c) All Healthcare Global facilities are cancer centres. Hospital groups such as Apollo Hospitals, Fortis Healthcare and Manipal Health Systems occupy a large share in the India private healthcare industry by revenue. Groups such as Max Healthcare, Healthcare Global and Columbia Asia, although small in market share by revenue, are growing at a rapid pace. Many state governments such as the ones in the states of Maharashtra, Andhra Pradesh and Karnataka are also collaborating with the private sector through Public Private Partnerships (PPP) models to improve operational efficiencies. For example, partnership initiatives range from super­specialty care hospitals (Seven Hills Hospital in Mumbai and Apollo Hospital in Raichur) to primary care hospitals (Karuna Trust in Karnataka). 4.4.7 Industry Outlook / Prospects Moving forward, at an industry level, there is an emergence of medical cities such as Medanta Health Systems in New Delhi and Seven Hills Hospital in Mumbai, to name a few. In our opinion, such medical cities fit market needs of the growing middle income population in India. There is also an emergence of premium healthcare hospitals that serve the high income population largely concentrated in the urban areas, especially the large metros. These hospitals are mainly tertiary in nature, fully single suite with premium services and located in key residential and commercial districts such as Juhu in Mumbai, Saket in New Delhi and Jayanagar in Bangalore. Private hospitals are likely to upgrade their services for medical treatment and diagnostic services in order to provide one stop HCS to domestic and international patients. In order to improve the quality of HCS, private hospitals are likely to outsource support service departments like laboratory, pharmacy and radiology. Moreover, there is a rising demand for quaternary and tertiary care hospitals which focuses on lifestyle diseases and speciality treatment like neurology, cardiology, orthopaedics and oncology. There is a large market gap and opportunities exist for private HCS players in tier-2 cities, where the demand and supply gap is significant, largely driven by the rising purchasing power. Furthermore, an increasing trend of horizontal integration is expected wherein existing players will expand by either acquiring competitor players or adding more hospital beds. This corresponds to a rapid growth in the Indian HCS industry over the next 5 to 10 years from 2012. Hence, focusing on building new private healthcare facilities at strategic locations in India would be beneficial in the long term for private HCS players. Private Equity (PE) investments in India healthcare sector have also witnessed significant growth in recent years and the trend is expected to continue. In 2010, the total PE and venture capital investment in Indian healthcare was nearly US$ 600.0 million as compared with nearly US$ 300.0 million in 2009. The most recent healthcare related PE investment in India is the investment made by the government of Singapore Investment Corporation Pte Ltd. (GIG) in India’s eye and dental care provider Vasan Health Care Pvt. Ltd at US$ 100.0 million for a minority stake in March 2012. 7. INDUSTRY OVERVIEW (cant’d) 4.5 THE PRC 4.5.1 Introduction and Background The PRC’s GOP expanded from CI\JY 21.6 trillion (US$ 2.7 trillion) in 2006 to CNY 39.8 trillion (US$ 5.9 trillion) in 2010, making it the second largest economy in the world in 2010. The country’s GOP growth is mainly driven by its agriculture, services and manufacturing industries. Its GOP per capita increased from CNY 16,456 (US$ 2,066) in 2006 to CI\JY 29,706 (US$ 4,393) in 2010 at a CAGR of 15.9%. The PRC’s population was approximately 1.3 billion in 2010, making it the most populous country in the world. Approximately 119.2 million people (8.9% of total population) are above 65 years of age. According to the IMF’s World Economic Outlook Report, the PRC is a newly industrialised country. The country’s urbanisation rate has been on an upward trend, increasing from 42.5% in 2005 to 47.0% in 2010. Going forward, UN forecasts the PRC’s urbanisation rate to reach approximately 51.1 % in 2015. The number of employed workers in the PRC grew from 758.0 million people in 2005 to 780.0 million people in 2010. The healthcare industry in the PRC has experienced strong growth in the last decade from 2001 to 2011. Since the PRC’s accession to the World Trade Organisation (WTO) in 2001, the country has been an attractive destination for foreign investment. The increase in domestic demand and the continuous rise in exports have contributed to growth in the healthcare industry. Going forward, the government’s initiatives to reform the healthcare system will continue to drive growth. The following chart shows the evolution of the PRC’s healthcare system: Evolution of the PRe’s Healthcare System
The PRC introduced universal health insurance coverage. The PRC practiced market socialism and witnessed rapid growth in its health sector particularly in city areas. Coverage of public health insurance declined to 7% in 1999. The healthcare system in the PRC was unprepared to handle the SARS pandemic, prompting the government to revisit its health policies. The PRC introduced new Healthcare Reform Plan to provide universal health insurance coverage. Source: Compiled by Frost & Sullivan The PRC’s National Ministry of Health (MOH PRC) and the Shanghai Municipal Government built the Shanghai International Medical Zone (SIMZ) in 2005, to support Shanghai’s aim of building a first class medical centre by 2013. SIMZ provides HCS to meet the needs of both domestic patients and overseas medical travellers. In 2009, the government also unveiled a comprehensive healthcare reform plan as a key initiative to improve the country’s HCS and infrastructure. Such measures have strongly underpinned the growth of the healthcare sector in the PRC. 4.5.2 Overview of HCS model and funding MOH PRC oversees the healthcare system in the PRC. The majority of the healthcare infrastructure in the country is owned by the government. There are also locally invested private hospitals as well as private hospitals that are jointly invested with foreign investors. Public hospitals and locally invested private hospitals tend to attract lower income patients who are covered by social health insurance while foreign invested private hospitals cater to foreign expatriates and the population with higher income. Foreign invested hospitals typically charge premium prices in exchange for higher quality services. Generally, patients who visit foreign invested hospitals pay for their medical fees via OOP and private insurance. 7. INDUSTRY OVERVIEW (cont’d) HCS Delivery Model in the PRC, 2011 HCS Delivery Model II

… i-… i-i-i-Clinics General Specialist Tier 3 Hospitals Tier 1 Tier 2 Hospitals -District Hospitals -Military Hospitals Hospitals -Township -Municipal Hospitals -University Hospitals -County Hospitals …………
Source: Compiled by Frost & Sullivan In the PRC, the MOH PRC ranks public hospitals based on the following tier system: ~~rrunW.~i!R NM!~. , Hospitals are well staffed and equipped with modern technology. They are generally located inTier-3 I urban areas. i Hospitals are adequately equipped, but lack the level of service, staff and equipment that are Tier-2 I offered in tier-3 hospitals. Tier-2 hospitals are typically located in lower tier cities. i Hospitals are typically small, poorly equipped, underfunded and understaffed. Tier-1 hospitals Tier-1 1 generally provide basic primary HCS only. 4.5.3 Healthcare Funding Structure Social Insurance There are two main public social health insurance systems in the PRC: the Urban Basic Medical Insurance System (BIS) for urban residents and the New Rural Cooperative Medical Insurance System (t\IRCMS) for rural residents. Both of these insurance programs provide basic HCS to their members. As a result of the expanding coverage of social health insurance schemes, the proportion of OOP healthcare expenditure has dropped from approximately 47.5% in 2006 to approximately 37.5% in 2010. In 2011, a total of 1.3 billion Chinese, or approximately 95.0% of the population had basic insurance coverage. The government aims to achieve equal access to public healthcare for all its citizens by 2020. Private Insurance Private health insurance companies provide complementary coverage for patients to “top up” their health coverage as state insurance schemes only provide coverage for basic medical services. Since 2005, the government has been encouraging the growth of private healthcare insurance schemes. The private insurance industry is expected to reach US$ 90.0 billion by 2020 due to the growing population, increasing income per capita and relatively basic public health insurance coverage. OOP Expenditure Until early 2000, patients in the PRC generally paid their medical fees via OOP. This has been a norm since 1970s due to the lack of universal health coverage. However, the portion paid via OOP is expected to reduce to 28.1 % in 2016 from 47.5% in 2006, due to the expanding social insurance. 7. INDUSTRY OVERVIEW (cant’d) Healthcare Financing System in the PRe Sources of Healthcare Funds Healthcare Service Model
Public HCS Private HCS Source: Compiled by Frost & Sullivan 4.5.4 Supply Dynamics Healthcare Infrastructure and the Availability of Healthcare Workforce The PRC’s national healthcare expenditure grew from approximately CNY 1.0 trillion (US$ 125.6 billion) in 2006 to approximately CNY 1.9 trillion (US$ 281.0 billion) in 2010, registering a CAGR of 17.4% during this period. Healthcare Infrastructure Performance Indicators • :I
Hospitals Public Private Hospital Bedsa Public Private Workforce 15,192 …………•,.”.,….
2,560,041 2,372,812 187,229 . 4,738,618 20,918 13,850 7,068 3,387,437 3,013,768 373,669 5,876,158 Doctorsb  2,082,530  2,413,259  Registered Nurses  1,454,206  2,048,071  Allied workers  1,201,883  1,414,828
Source: MOH PRC Notes:  a.  Exclude clinic beds and specialised institution  b.  Include registered doctors and assistant doctors  4.5.5  Demand Dynamics
Demand for Quality Healthcare The annual income per capita in urban households increased from CNY 12,719 (US$ 1,597) in 2006 to reach CNY 18,858 (US$ 2,368) in 2009 (14.0% CAGR). Rising income and higher standards of living will exert pressure on healthcare providers as the demand tor better HCS increases. Most public and local private hospitals are unable to provide high quality patient centric HCS. Hence, there is a high demand for high end foreign medical service providers to expand in urban areas in the PRC, especially in tier-1 cities such as Beijing, Shanghai, Shenzhen and Guangzhou. The table below highlights the income distribution in the PRC by region. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d)
Historical Trend of Annual Income Per Capita of Urban Households in the PRC (CNY) ~LWW .”111It~IMI’JIIlilf#llIlllf11III:”””’iIW”_Wel;f. Source: PRC StatisiicaiYearbook and analysis by Frosi& Sullivan’ i National  ‘  12,719  ‘  14,909  I  17,068  ‘18,858  14.0%  I  r~~~!’~~-“”‘”  16~-380″  .  ’18’,545″‘1’–‘2’0′,9’65’-“­ “23~15i  .! ….···12~2o/~–“1  i Central !West  10,573 10,443  12,392 12,131  …  ri  14,062 13,917,  15,539; 15,523  13.7% i 14.1%1  [NorthEast  ..  ,  10,490  ‘  i?,306J  14,162  15,843  i  14.7%.J
Rising Affluence in the PRe Estimated Number of Millionaires in the PRC (2011) According to the Hurun Wealth Report 2011, there are approximately 791,500 millionaires in the top 10 provinces with 1_.E3.§iE~g…. ” IE3(),hi1i. ………..170,.900 …. most number of millionaires. These 10 provinces are mostly located around Bohai IGlJClrlgd()ng …L Pearl 157,°°0. Economic Rim (Bohai), Yangtze River …. !YCingtzEl . 1~?, OOe..O……….. : Delta (Yangtze), Pearl River Delta (Pearl) ~h§jii1rlg .. ..J.'{Ci~gJze .. 126.,000 and Sichuan Basin (Sichuan). The i concentration of wealth in these 4 basins of.~iCl.rl.g~lJ. ..L’T’i1ng.t~El” ‘ .6.8,!°00. 1 the PRe demonstrates the relatively higher ; FuJiarl Pearl ……… 36,990 purchasing power of the population in §hi1nd()ng Bohai ~~,OOO these regions as compared to other parts of the PRC. Therefore, it is likely that these Bohail~LiCl(),Qirlg., … …. ?~,090 ; populations demand better HCS, as i Sichuan ! Sichuan .24,99° …..i······················· compare to other parts of the PRC, which I Henan ,..i’T’angge … 1(3,500 may include choice of renowned doctors for diagnosis, better medicine and even betterIJ<:>!al()!!<:>p1g.p~l:)yitlc§~” .!91.,?99., hospitalisation services such as single bed i Source: Hurun Wealth Report 2011 services. Such demand is likely to drive theI Note: 1) Millionaire is an individual with personal wealth of growth of the private HCS market in these , CNY10 mil/ion (US$I.5 million) or more. regions. Development of Private Health Insurance Premiums for private healthcare insurance increased from CNY 36.8 billion (US$ 4.2 billion) in 2006 to CNY 53.1 billion (US$ 7.8 billion) in 2009 (13.0% CAGR). The private insurance market is expected to continue to grow significantly due to high medical costs. Rise in Diseases and Ageing Population The increase in diseases prevalence amongst the urban population, caused by a sedentary lifestyle, will continue to boost demand for HCS in the PRC. The following table shows the main causes of death in urban areas: ~_IIfiII~~_ Cerebrovascular diseases 17.7 18 19.6 20.4 Respiratory diseases 13.1 13.1 11.9 10.5 Heart disease 17.1 16.3 19.7 20.8 Cancer 27.3 . 28.5 . 27.1 , 27•• t ;. … :_–­.. Viral hepatitis 102.1 108.4 106.5 107.3 Pulmonary TB 86.2 88.6 88.5 81.1 Source: PRC Statistical Yearbook 7. INDUSTRY OVERVIEW (cont’d) Meanwhile, the Chinese population is also rapidly ageing due to its falling mortality rate and the one child policy. The aged population in the PRC is expected to account for 25.0% of the total population by 2030. This is expected to further create a growing market for HCS in the PRC. Increasing Urbanisation The economic reform in the PRC has transformed the country into a newly industrialised country. The country’s urbanisation rate has increased from 42.5% in 2005 to 47.0% in 2010 and is expected to reach approximately 51.1 % in 2015. The growing population size in urban area particularly in tier-1 cities will further drive the demand for HCS in the PRC, providing opportunities for private sector. Rural Population In 2010, 53.0% of the PRC’s population (approximately 710.1 million people) lived in the rural areas. The distribution of hospitals in the PRC is mainly concentrated in the eastern region and dense central region. As a result, people living in rural areas generally have poor access to private hospitals due to their geographical locations and low income. Shortage of Medical Professionals Private hospitals are facing difficulties in retaining qualified medical workforce. The increasing demand on these medical professionals has resulted in physicians and nurses commanding high salaries. In view of this situation, the government has allowed licensed physicians to practice across several hospitals and clinics at the same time. New Healthcare Reform 2009-2011 In January 2009, the PRC introduced a new healthcare reform plan with the aim of improving the affordability, quality and accessibility of HCS in the PRC. Approximately CNY 1.13 trillion (US$ 165.7 billion) was allocated to this initiative and the five major goals of the healthcare reform plan were: • Expanding basic medical insurance coverage: The new healthcare reform aims to provide universal health coverage to the entire population by 2020. Additionally, the government is setting a higher reimbursement rate to encourage patients to get treatment from primary healthcare centres.
• Establishing a national essential drug list system: Under the Essential Drug System (EDS), the government will catalogue a list of necessary drugs to be produced and distributed by the MOH PRC. EDS aims to lower the price of medicines by streamlining the distribution channel in the medicine supply chain and setting a ceiling price for these drugs.
• Improving grassroots medical infrastructure: In PRC, most patients prefer to visit renowned hospitals, expecting to receive better and more reliable treatment. This has resulted in overcrowding and long waiting times at these hospitals. The government plans to invest in the construction and renovation of primary healthcare infrastructure, especially hospitals at county levels, township clinics, clinics in remote villages and community health centres in less­developed cities to enhance the quality of primary healthcare.
• Providing a more equitable access to basic HCS: The new healthcare reform aims to expand the network of local hospitals and clinics as well as improving the access and quality of public health services. This will allow healthcare facilities to be repositioned, such that primary care will be shifted from current tertiary care providers to community health centres and primary care clinics. These tertiary care providers such as university hospitals may then provide specialised HCS. Additionally, the government is also allocating subsidies to hospitals providing special HCS such as inoculation and health education in order to increase the emphasis on disease prevention.
• Pilot programs to improve pUblic hospitals: Pilot programs have been launched to reform public hospitals to improve their services in terms of administration, operation, and supervision. l\Jew referral systems will encourage patients to seek outpatient services in local community hospitals or rural clinics before being referred to larger hospitals by the community hospital. This referral system will ease the problem of overcrowding hospitals.

© Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 315 7. INDUSTRY OVERVIEW (cont’d) In order to encourage greater utilisation of smaller clinics and sanitation stations, pUblic hospitals are expected to limit the provision of high-end operations services and complex medical procedures. Instead, the demand for such specialised high-end operations / procedures will be increasingly provided by private hospitals. 4.5.6 Healthcare Expenditure In 2011, the PRC’s total healthcare spending amounted to approximately CNY 2.1 trillion (US$ 325.8 billion) having grown from CNY 1.0 trillion (US$ 127.0 billion) in 2006 at a CAGR of 15.7%. The PRC’s total healthcare expenditure comprises government healthcare expenditure, social healthcare expenditure and OOP expenditure accounts. In 2011, the government, social healthcare and OOP expenditure contributed approximately CNY 594.1 billion (US$ 92.0 billion), CNY 759.2 billion (US$ 117.6 billion) and CNY 750.0 billion (US$ 116.2 billion) respectively. The CAGR for government, social healthcare and OOP expenditure during the period 2006 to 2011 was 23.5%, 18.6% and 9.3% respectively. OOP expenditure, as a percentage of the total healthcare expenditure, has been on a downward trend, due to increased healthcare spending by social health insurance and the government. 4.5.7 Competitive Landscape There were approximately 7,068 private hospitals in the PRC in 2010. The government had approved approximately 200 healthcare institutions with foreign ownerships until 2010, of which, approximately 65 private hospitals were in operation by then, which accounted for approximately 1.0% of the total private hospitals in the PRC. The table below summarises major foreign private HCS players in the PRC in alphabetical order. List of Major Foreign Private HCS Players in the PRC
Global Doctor Dongguan 9 N/A 9 N/A Shenyang Changsha .•… C3uangzhou Global Healthcare . Shanghai 2 N/A N/A 2 Healthway Shanghai 10 N/A 9Medical Center Hangzhou Parkway Pantai : Shanghai
8 20 8 N/AGroup . Chengdu Raffles Medical
Clinic Shanghai N/A N/A Shanghai East International Shanghai 26 N/A Medical Center Shanghai Landseed Shanghai N/A N/A Hospital Shanghai Sun­Tee Medical Shanghai 20 N/A Center Beijing United Family Shanghai
12 196 93Hospitals Guangzhou . Tianjin, Wuxi
Source: Compiled by Frost & Sullivan from various sources through primary and secondary research Note: This list is non-exhaustive. Institutions include medical centres as well as hospitals. Medical centres include dental clinics. Hospitals include general hospitals and specialised hospitals. .. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 6,000  ,  5,000  ~  4,000 c ,g iii 3,000 >­z () 2,000  ~  40.3%  1,000  2006 2007 2008 a Public Healthcare Expenditure  2009 Social Healthcare 2010  Expenditure ” Out-Of-Pocket Healthcare Expenditure 2011E 2012F 2013F 2014F 2015F 2016F
7. INDUSTRY OVERVIEW (cont’d) In addition to the list above, foreign private companies like Asia Pacific Medical Group (APMG), which operates a network of six hospitals and a clinic, are working in close partnership with public hospitals in the PRC. 4.5.8 Industry Outlook / Prospects The HCS market in the PRC will continue to grow due to the growing and ageing population, increasing income and purchasing power and increasing prevalence of lifestyle diseases. The total healthcare expenditure is forecast to reach CNY 5.0 trillion (US$ 789.8 billion) in 2016, growing at a CAGR of 18.8% from 2011 to 2016. The government has recently indicated that it is opening up the HCS sector for investment from the private sector by encouraging foreign private healthcare groups to collaborate with local hospitals. OOP expenditure is expected to contribute to CNY 1.4 trillion (US$ 221.9 billion) in 2016, recording an estimated CAGR of 13.2% during the period from 2011 to 2016. This is expected to create significant growth opportunities for private hospitals in the PRC especially those that are foreign owned. Collectively, both local and foreign entities will leverage each other’s strengths to provide management expertise, financial investment and brand awareness in the private healthcare sector. The foreign owned private hospital sector in the PRC is still in its nascent stage. However, opportunities fuelled by demand from the expanding upper middle classes in the tier-1 cities like Shanghai and increasing demand and lack of supply of better quality HCS, especially in the tertiary acute care segment, present market opportunities for foreign private healthcare groups. Source: The PRC Statistical Yearbook. Forecast by Frost & Sullivan [The rest of this page is intentionally left blank] 7. INDUSTRY OVERVIEW (cont’d) 4.6 HONG KONG 4.6.1 Introduction and Background Hong Kong’s GOP expanded from HKD 1.5 trillion (US$ 193.1 billion) in 2006 to HKD 1.7 trillion (US$ 218.8 billion) in 2010. The country’s GOP is mainly driven by its international trade, tourism and finance service industries. Its GOP per capita increased from HKD 213,826 (US$ 27,527) in 2006 to HKD 244,577 (US$ 31,484) in 2010 (3.4% CAGR). Hong Kong’s population was approximately 7.1 million in 2010. It has a growing ageing population with 12.7% of its population above 65 years of age in 2010. Hong Kong is a developed country with an urbanisation rate of 100.0% based on the United Nation’s World’s Urbanisation Prospects report. The number of employed workers in Hong Kong grew from 3.5 million people in 2005 to 3.7 million people in 2010 and approximately 28.6% of its working population having a monthly household income within the top 50th percentile of the household income scale (approximately HKD 30,000 (US$ 3,862) and above). 4.6.2 Overview of HCS model and funding HCS Delivery Model in Hong Kong The Hong Kong healthcare system is broadly categorised into public healthcare and private healthcare. The private sector is the main provider of primary care whilst the public sector concentrates on prevention, secondary and tertiary care services. The public HCS in Hong Kong is subsidised by the government and is financed by taxation. As a result, the system is often crowded and patients are subjected to long waiting lists. Nevertheless, some public hospitals allow private inpatient care but for a fee which eventually may cost more than treatment at a private hospital. Hong Kong’s health matters are regulated by the Food and Health Bureau which is the policy­making body. The bureau oversees two departments: the Department of Health which is responsible for the management of public health matters, and the Hospital Authority which is responsible for the management of Public Hospitals. • The Department of Health of Hong Kong (DOH) is focused on the provision of primary care services, health promotion and disease prevention services. As the advisor to the government, the DOH is responsible for executing healthcare policies and statutory functions. The department operates a number of specialised clinics, treatment centres, child assessment centres, travel-health centres and other clinical services.
• Hospital Authority provides medical treatment and rehabilitation services to Hong Kong residents, which include citizens and permanent residents. The Hospital Authority also manages 74 primary care clinics.

The DOH is tasked with monitoring private hospitals’ compliance with regulations. The Hong Kong Private Hospital Association is an independent body that further encourages the monitoring of the private hospitals in Hong Kong. All medical practitioners that practice western medicine must register with the Medical Council of Hong Kong, which oversees the conduct of all medical professionals. @Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry
7. INDUSTRY OVERVIEW (cont’d) Hea/thcare Funding Government Subsidies: Hong Kong’s public healthcare system is heavily subsidised and financed mainly by taxes. All medical and surgical costs including surgeons’ fees and operating rooms are paid for by the government, whereas patients need only pay for hospital lodging. The waiting list for surgery in public hospitals is much longer as compared with the private hospitals, as patients are treated according to the urgency of their need for surgery. Hong Kong residents that are under 11 years of age receive public sector services at a subsidised price. Insurance: Expatriates working in Hong Kong do not qualify for public healthcare. Their employers typically subscribe to group medical insurance schemes to cover their medical expenses as part of their expatriate packages. However, these insurance packages differ from company to company and some coverage may not be as comprehensive as other companies, thus employees may have to top up or pay OOP for some of the procedures. 35.0% of Hong Kong’s population is covered by private insurance18. The insurance is an enabler for the general public to seek medical treatment in private hospitals with reduced waiting time. The government has recognised the need to reform the health sector to reduce pressure on the demand for public healthcare and the burden on tax payer’s money, thus they are formulating plans and currently consulting working groups, organisations and government bodies for feedback. In the interim, the government is encouraging the general pUblic to subscribe to private insurance to reduce the burden in the public sector. OOP expense: OOP eXf)enses accounted for 69.0% of the total private health expenditure in Hong Kong in 2007/200819 • Hong Kong private hospitals also receive many medical travellers from the PRC who pay OOP. 4.6.3 RegUlatory Overview 4.6.4 Supply Dynamics Workforce Development In 2009, there were 12,424 doctors registered in Hong Kong, out of which 5,700 were specialists. Approximately 60.0% of the doctors in Hong Kong were private doctors. In 2010, the doctor per 1,000 population ratio was approximately 1.78 which is less than the OECD average (2009 ­2.9).The government is increasing training opportunities for local healthcare professionals and is seeking to attract additional international medical talent to promote the exchange of expertise, research and professional training. Hong Kong is also suffering from a shortage of nurses and the 18 Source: US Commercial Service to Hong Kong, 19 Source: Food & Health Bureau : Hospitals, Nursing Homes , and Maternity Homes I Registration Ordinance i Medical Registration I Ordinance 1884 j . -‘””—~’—–‘y-_.~~~.-, Insurance Companies ! Ordinance i The law dictates that any person who intends to operate a healthcare ‘ I institution in the form of a private hospital, maternity home or nursing home: ! must obtain prior approval from the Director of Health, subject to having i,<?ptain,€.9,<lPP!O\l~<:J!i:lrl<:J ‘f()Lb.~JI dirlg,i,n,i:ldvance.”.,I The Hong Kong Medical Council was established as the regulating body for: I the medical sector, whose functions include assessment and registration of : i medical practitioners, formulation of industry guidelines and standards, , i investigation of misconducts and supervision of medical education and :
“”Ltri:lilling:.. ‘ I The Commissioner of Insurance was established to regulate the insurance ‘ I industry in Hong Kong. Its function includes supervision and formulation of , I industry guidelines for the protection of policy holders, however its I jj~risdictiO,rl,.exclud~pricing()f polic;ies. ‘ I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) industry is importing nurses mainly from the Philippines20 . The Health Authority is considering opening extra nursing schools to address the problem in the long term. Public-Private Partnership (PPP) One of the biggest initiatives by the government is to enhance Public-Private Partnerships (PPPs) within the healthcare sector. Encouraging PPP is likely to increase cost effectiveness as both public and private hospitals could buy bulk supplies and share expertise/human resources (such as having private hospital doctors participate in services or operations in public hospitals on a part time basis to relieve the overburdened public sector). Some initiatives to promote PPPs include the development of a city wide electronic healthcare record system, instituting a series of pilot projects for treatment of chronic diseases with the private sector and co-payment funding/relief of up to HKD 5,000 (US$ 644.4) for cataract surgeries in private healthcare centres. Four New Private Hospital Sites Allocated The government has identified 4 parcels of land located at Won~ Chuk Hang, Tseung Kwan 0, Tai Po and Lantau Island, for developing private hospitals. As of 13 April 2012, tenders for two of the four land sites (Tai Po and Wong Chuk Hang) have been called for, with a closing date of 2ih July 2012. The call-for dates of the other two tenders are yet to be announced. All four identified land sites are drawing many interested parties to bid for the limited offering and will result in Hong Kong potentially having an additional four private hospitals within the next 1-5 years. Capacity Building in the Public and Private Heafthcare Sectors In 2010, Hong Kong’s hospital bed to 1,000 population ratio was 4.4 which is higher than the OECD average (2009 -3.1). Nevertheless, the ratio has declined from 4.5 in 2006. The government has planned to establish a public paediatric medical centre with more than 400 beds at the Kai Tak Development Area21 • The Tsuen Wan Adventist Hospital is currently adding a new wing and this would add over 300 hospital beds to the private healthcare system. Medical Equipment and Supplies Hong Kong is heavily dependent on imports of medical equipment. In 2009, medical equipment imports amounted to US$ 1.46 billion, and the United States was the leading supplier of high end equipment with 28.0% of total import market in that year. In addition, an estimation of 55.0% (US$ 0.8 billion) of Hong Kong’s total medical equipment re-export is geared towards the PRC as Hong Kong is a sourcing agent for medical products for the PRC. Medical supplies in Hong Kong are mainly procured from international vendors such as Johnson and Johnson and Baxter International, among others. 4.6.5 Demand Dynamics Availability of Insurance and Government Incentives Due to the high government subsidy on public healthcare, the waiting list for public hospitals is constantly on the rise. Furthermore, public healthcare treatment is administered to patients on a priority basis. Hence patients with slow progressing illness may not be able to get immediate treatment to curb the illness in its early stages in public hospitals. The availability of insurance either through employers or private funding is allowing patients the option to choose more expensive private healthcareas an alternative method of obtaining treatment. In the survey conducted by the Census and Statistics Department in 200822 , 2.42 million people (around 34.0% of Hong Kong’s population) were covered by private health insurance, out of which 45.0% were through private purchase, 35.0% covered by employers and 20.0% covered by both privately purchased and employers. 20 GMA News in Philippines on 26h July 2011 21 US Commercial Services to Hong Kong, 22 Thematic Household Survey 2008 I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) Government Policy Limiting Mainland China Mothers Utilising the Public Maternity Services Hong Kong maternity wards receive a high traffic of Mainland China mothers who choose to give birth in Hong Kong hospitals for their new-born to automatically obtain the Hong Kong citizenship. The demand exists in both public and private hospitals. To manage the limited resources in the public hospitals, the Hong Kong government has capped the number of Mainland China ladies allowed to utilise the public maternity services. As a result of this policy, the Mainland China mothers turn to the private HCS, contributing to the increase in demand for private maternity services. In 2010, 47.0% of new-borns out of 88,000 delivered in Hong Kong in 2010 were by mothers from Mainland China. Furthermore, out of the new-borns that were born in Hong Kong from Mainland China mothers, approximately 25.0% were delivered in public hospitals in Hong Kong, and the remaining 75.0% in private hospitals23 • In future, the Hong Kong government has indicated that it may ultimately disallow Mainland China mothers to utilise the maternity service in public hospitals completely, and this will be a boost for the private HCS. Increasing Demand for Complex Medical Procedures from Mainland China With increasing confidence of Chinese patients in the treatment of complex procedures such as heart conditions, complicated renal conditions, etc from specialists from Hong Kong, there is a growing demand for doctors and surgeons from Hong Kong. China nationals are increasingly choosing Hong Kong as a destination for their medical needs as they feel that they are likely to receive higher quality services. This is expected to drive the demand for private sector medical services in Hong Kong. Changing Lifestyle and Environmental Conditions in Hong Kong The changing lifestyle, eating habits and stressful environment conditions-mainly due to the high urbanisation trend, access to vaccination and healthcare, growing wealth, competitive working lifestyles leading to a higher rate of sleeping disorders, anxiety and depression, lack of exercise and increased consumption of processed food, have affected the disease profile of the Hong Kong population. In 2010, the most prevalent lifestyle disease in Hong Kong was cancer, heart-related diseases and cerebrovascular diseases. Furthermore, Hong Kong is highly affected by pollution caused by the industrialisation of Southern China, resulting in a higher prevalence of respiratory diseases. The increase in these lifestyle diseases in Hong Kong is the major cause for an increase in healthcare demand in the country.
Malignant neoplasms  12,316 •  13,075  Diseases of heart  6,372  6,636  Pneumonia  4,978  5,814  Cerebrovascular diseases  3,513  3,423  Chronic lower respiratory diseases  2,096  2,093  Nephritis, Nephritic syndrome and Nephrosis  1,347  1,493  Septicaemia  737  826  . Dementia  317  767  Diabetes mellitus  506  522  Source: Centre for Health Protection, Hong Kong  23 China Daily
7. INDUSTRY OVERVIEW (cont’d) 4.6.6 Healthcare Expenditure In 2011, Hong Kong’s healthcare expenditure amounted to HKD 102.6 billion (US$ 13.2 billion), having grown from HKD 75.2 billion (US$ 9.7 billion) in 2006 at a CAGR of 6.4%. In 2011, public and private healthcare expenditure contributed approximately HKD 46.2 billion (US$ 5.9 billion) and HKD 56.4 billion (US$ 7.2 billion) respectively, having grown from HKD 38.8 billion (US$ 5.0 billion) and HKD 36.4 billion (US$ 4.7 billion) in 2006 respectively. The CAGR for public healthcare expenditure during the period 2006 to 2011 was 3.6% whereas the CAGR for private healthcare expenditure for the same duration was 9.2%. 4.6.7 Competitive Landscape HCS industry in Hong Kong is mature and expanding. In 2011, there were 38 public hospitals and 12 private hospitals in Hong Kong registered under the Department of Health, Hong Kong. Most of the private hospitals are independent entities except the Caritas Group and Adventist Health which have a network of 2 hospitals each in Hong Kong. Most of the private hospitals in Hong Kong are not-for-profit organisations. Hence any surplus has to be invested back into the hospital by way of training, upgrading the equipment etc. The table below shows the list of the private hospitals in Hong Kong. List of Private Hospitals in Hong Kong, 2012
, –
7. INDUSTRY OVERVIEW (cont’d) 4.6.8 Industry Outlook / Prospects The total healthcare expenditure in Hong Kong is forecast to grow to HKD 145.3 billion (US$ 18.7 billion) in 2015, from HKD 102.6 billion (US$ 13.2 billion) in 2011. The CAGR during the period 2006 to 2015 is estimated at 7.6%. Private healthcare expenditure is expected to contribute to HKD 87.2 billion (US$ 11.2 billion) in 2015, whereas public healthcare expenditure is expected to contribute to HKD 58.1 billion (US$ 7.5 billion). CAGR for private and public healthcare expenditure between 2006 and 2015 is estimated to be 10.2% and 4.6% respectively. Healthcare Expenditure Growth and Forecast, 2006 to 2015F
2006 2007 2008 2009 2010E 2011 E 2012F 2013F 2014F 2015F B Public Healthcare Expenditure EJ Private Healthcare Expenditure Source: IMF, Forecast by Frost & Sullivan HCS in Hong Kong are a legacy from the colonial days of Great Britain. It has an overburdened public healthcare system and private hospitals that mainly originate from Christian missionary groups. 11 of the 12 private hospitals in Hong Kong are non-profit organisations where their profits are reinvested back into the hospital by way of expansion, training, medical research and equipment upgrades. The charges of these private hospitals are unregulated, resulting in high charges to patients who are paying OOP. Growth in the industry will be determined by the issuance of four land parcels at Wong Chuk Hang, Tseung Kwan 0, Tai Po and Lantau Island, earmarked for private hospital development. Hong Kong is an attractive destination for mothers from mainland China to deliver their babies, thereby availing quality care and Hong Kong citizenship, and avoiding penalties of one child policy in the mainland. Thus, there are opportunities for new entrants to Hong Kong’s private healthcare sector as public sector hospitals are unable to meet the local demand and the influx of Chinese patients seeking medical treatment. [The rest of this page is intentionally left blank] © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry . 71 323 7. INDUSTRY OVERVIEW (cant’d) 5 BRIEF OVERVIEW OF THE HCS MARKET IN SELECTED COUNTRIES 5.1 INDONESIA 5.1.1 Introduction and Background The GOP in Indonesia was approximately 6,422.9 trillion Indonesian Rupiah (US$ 700 billion) in 2010 and the population reached 237.9 million in the same year. HCS in Indonesia are provided by public and private sectors. Authorities that are responsible for public HCS include the Ministry of Health Indonesia, provincial government, district and municipal government, armed forces, police and other ministries. According to Indonesia Department of Health, as of 2010, there were 1,632 hospitals in Indonesia, out of which 794 were public hospitals and 838 were private hospitals. There were 143,428 registered general beds in Indonesia out of which 63.4% were public registered beds and the remaining 36.6% were private registered beds. In the same year, there were a total of 9,005 primary care health centres in Indonesia. In 2010, the healthcare expenditure in Indonesia stood at approximately 179,301.5 billion Indonesian Rupiah (US$ 19.8 billion) which accounted for 2.8% of total GOP. In 2009, private healthcare expenditure contributed approximately 48.3% of the total healthcare expenditure and approximately 73.2% of the private healthcare expenditure was OOP expenditure. The public HCS is heavily subsidised by the government. The general population pays a nominal fee to access public healthcare whereas the low income population in Indonesia is covered under a health insurance scheme that allows them to access HCS in both public and private sectors. This scheme is expected to benefit a population of approximately 76.4 million. 5.1.2 Industry Outlook / Growth Prospects The government is currently implementing the Strategic Plan 2010-2014 with the objective of improving the national health status by controlling nutritional status, diseases and medicine usage in the country. In addition, the government also encourages development in the private healthcare sector, especially the development of secondary and tertiary HCS in order to mitigate capacity constraints in the public hospitals. The healthcare expenditure in Indonesia was recorded at approximately 203,999.8 billion Indonesian Rupiah (US$ 23.4 billion) in 2011. Going forward, the healthcare expenditure in Indonesia is forecast to reach approximately 416,757.3 billion Indonesian Rupiah (US$ 46.2 billion) in 2016, at a CAGR of 15.4% between 2011 and 2016. Despite the healthcare development plans in Indonesia, it is a common practice for Indonesians to seek HCS in foreign countries such as Singapore and Malaysia for better quality HCS. Indonesia has therefore emerged as a medical travel source market for such neighbouring countries. According to the Indonesian Medical Association, Indonesians spend more than 8.8 trillion Indonesian Rupiah (US$ 1.0 billion) per year on medical treatments overseas. 5.2 VIETNAM 5.2.1 Introduction and Background The GOP in Vietnam was VNO (Vietnamese Dong) 1,980,914 billion (US$ 104 billion) in 2010 and the population reached 87.8 million in the same year. The healthcare expenditure was VNO 135,505.7 billion (US$ 7.2 billion) in 2010, out of which Vf\IO 84,228.6 billion (US$ 4.5 billion) (around 62.2%) was private healthcare expenditure. The private healthcare expenditure comprised mainly of OOP expenditure. HCS in Vietnam are dominated by the public sector based on the number of hospitals, although private healthcare expenditure is generally more than public healthcare expenditure. As of 2011, approximately 90% of all hospitals were public, with over 1,000 public hospitals and only 121 . private hospitals. Public sector offers HCS through four service tiers -commune, district, provincial and central. The Ministry of Health of Vietnam (MOH Vietnam), which is part of the central tier, handles health policies and administration. ” © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 72 I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 5.2.2 Industry Outlook / Growth Prospects The government has drafted a 5 year health plan24 which is targeted to improve several aspects of the healthcare sector including relieving the overburdened healthcare system through the building of new hospitals and clinics. The implementation of the plan is expected to cost approximately VNO 436.8 billion (US$ 23.1 billion). Furthermore, the government is also providing fiscal incentives to the private sector for bUilding new hospitals. There is a high level of demand for quality HCS in Vietnam. With its large population, Vietnam is recognised as a potential market offering opportunities for foreign investors in medicine and healthcare. According to the MOH Vietnam, around 40,000 Vietnamese citizens spend about VNO 20.7 trillion (US$ 1.1 billion) on medical treatment services overseas each year. Vietnam can therefore be considered as a medical travel source market. 5.3 BRUNEI 5.3.1 Introduction and Background25 Brunei’s population in 2010 was 398,920 and 3.5% of its population is greater than 65 years (ageing population). The leading causes of mortality were cancer, heart diseases, diabetes mellitus and cerebrovascular diseases. The total healthcare expenditure was estimated at BO 479.7 million (US$ 354.1 million) or 2.8% of GOP. Of this, the private sector constituted around BO 72.4 million (US$ 53.8 million) which mainly comprised OOP expenditure. Private expenditure on health registered a CAGR of 2.0% from BO 66.0 million (US$ 49.0 million) in 2005 to BO 72.4 million (US$ 53.8 million) in 2010. In Brunei, HCS are provided by public and private sectors. In 2010, there were 4 public hospitals and 2 private hospitals. The private hospitals were Jerudong Park Medical Centre and Gleneagles JPMC Cardiac Centre. In the same year, there were 16 health centres, out of which 15 were public and 1 was private. Brunei had a large number of foreign doctors contributing 68.9% out of 563 doctors in 2010. 5.3.2 Industry Outlook / Growth Prospects As of 2010, there were 1.35 doctors per 1,000 population and there were 0.1 pharmacists per 1,000 population. This low ratio of healthcare professionals to total population is expected to serve as a significant opportunity for healthcare professionals looking to enter the Brunei healthcare market. The government of Brunei has signed an agreement to develop the Brunei Healthcare Information System (Bru-HIMS), which is a nationwide project to digitise patient care documents and provide electronic medical records. This is expected to result in a single electronic health record that is accessible from any government hospital, clinic or healthcare centre. A key driver for the private healthcare industry in Southeast Asia, including Brunei, is the impending liberalisation of the services sector in 2015 under the ASEAN Economic Community (AEC). Under this agreement, investors will be able to hold over 70% stake in healthcare (one of the four services sectors). [The rest of this page is intentionally left blank] 24 MOH Vietnam 25Source: Ministry of Health, Health Information Booklet 2010.
I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’dj 5.4 MACEDONIA 5.4.1 Introduction and Background Macedonia had a total population of 2,061,000 in 2010. Approximately 17.0% of the population were under 15 years of age and an approximate 11.0% of the population were over 65 years of age. Life expectancy at birth is around 72.8 years for men and 78.1 years for women. The country’s disease prevalence pattern is similar to European countries with non-communicable diseases representing the major cause of morbidity and mortality. The country has seen a steady improvement in the total healthcare expenditure as a percentage of GOP from 6.9% in 2007 to 7.1 % in 2010. Private healthcare expenditure has registered a growth of 3.7%, from 9.1 billion Oenar (US$ 179 million) in 2005 to 10.9 billion Oenar (US$ 236 million) in 2010, accounting for approximately 36.2% of the total healthcare expenditure. Compulsory health insurance is the primary source of healthcare revenues. It is undertaken through the publicly owned health insurance fund. With the introduction of the recent health reforms, a large number of public primary health care (PHC) organisations have been privatised to improve the quality of care by encouraging competition. There has also been a marked shift from a fixed salary system to a per capita payment system for physicians in the public primary healthcare system. The higher salaries in the private healthcare industry are driving the outflow of qualified healthcare professionals, including clinicians, from the public sector to the private sector. 5.4.2 Industry Outlook / Growth Prospects Enhancement of healthcare, increased satisfaction of patients, raising the quality of HCS, modernisation of equipment, education of doctors and overhaul of infrastructure are expected to be the main priorities of the Macedonian government in 2012. A majority of funds are expected to be allocated to preventive and curative programmes, such as securing insulin for diabetes patients, rare diseases programmes, etc. One of the main goals of the Ministry of Health of Macedonia is to attract more medical travellers into Macedonia. Macedonian and medical travellers currently pay the same price for health services in private hospitals, whereas medical travellers pay 100.0% more than Macedonians in state hospitals. 5.5 SAUDI ARABIA 5.5.1 Introduction and Background The HCS in Saudi Arabia is categorised into 2 tiers. The first tier HCS mainly provides primary care and providers include public, private and not-for-profit healthcare institutions. Public institutions include healthcare centres and clinics monitored by the Ministry of Health of Saudi Arabia (MOH Saudi Arabia). On the other hand, private HCS providers include private clinics and private polyclinics. Not-for-profit foundations such as the Saudi Red Crescent Authority (SRCA) set up first aid centres and first aid ambulances. Second tier HCS provide specialist treatment and surgery and are mainly located in urban areas. Types of such HCS institutions include general hospitals, advanced hospitals and specialist hospitals, which may be operated by the government (MOH Saudi Arabia) and other government departments or are privately operated. The number of hospitals in Saudi Arabia reached 415 in 2010, of which 288 were public hospitals and 127 were private hospitals. The number of healthcare professionals has also seen an upward trend from 2006 to 2010. Currently, all citizens of Saudi Arabia receive free healthcare treatment in public healthcare institutions. The healthcare expenditure in Saudi Arabia comprises both pUblic and private expenditure. In 2009, total healthcare expenditure reached 67.0 billion Saudi Arabian Riyals (US$ 17.9 billion), of which 33.0% was accounted by private healthcare expenditure. The government also sponsors medical treatment for citizens in specialised foreign hospitals if their conditions require such treatments. This annual sponsorship amounts to approximately 1.0 billion Saudi Arabian Riyals (US$ 266.7 million). I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) HCS in Saudi Arabia is mainly driven by the increasing expatriate population that constituted approximately 31.0% or 8.4 million out of total population of 27.1 million in 2010. In January 2006, the government had made it compulsory for all expatriates to have medical insurance coverage provided by the private sector. 5.5.2 Industry Outlook I Growth Prospects The healthcare expenditure in Saudi Arabia was estimated to be approximately 101.5 billion Saudi Arabian Riyals (US$ 27.1 billion) in 2011 and is forecasted to reach approximately 138.5 billion Saudi Arabian Riyals (US$ 36.9 billion) in 2015, at a CAGR of 8.1 %. Private healthcare expenditure is expected to increase as a result of the growth in expatriate population. The Saudi Arabian government is currently planning to further reform the HCS industry. The objectives to be achieved through the reformation include: • an increase in the number of local healthcare professionals;
• reorganisation and restructuring of the MOH Saudi Arabia;
• an increase in the autonomy of hospitals through decentralisation;
• an introduction of private insurance scheme for all citizens and pilgrims;
• privatisation of public hospitals;
• improvement of the accessibility to health services; and
• implementation of e-health and national health information system.

5.6 UNITED ARAB EMIRATES 5.6.1 Introduction and Background The United Arab Emirates (UAE) is a federation of 7 emirates namely Abu Dhabi, Dubai, Sharjah, Ajman, Umm al-Quwain, Ras al-Khaimah and Fujairah. The country has a decentralised system in providing HCS. The table below illustrates the government bodies that oversee the UAE’s HCS system: !iVrlnislryofHealth . UAE (MOH UAE) , Federal Health , Authority (FHA -LJAE) Dubai Health -Authority (DHA , UAE) V'” .. __ ….•..·~’ •.•W” • ‘_AV_~~.,. Health Authority of , Abu Dhabi (HAAD ! UAE) The MOI-TUAEisihefeder’afauihoriiyinchargeo{regulaiing healthcare in the Northern Emirates of Sharjah, Ajman, Umm al-Ouwain, Ras al-Khaimah and Fujairah. i -r’heFHA-UAEwas-‘estabifshed in December 2009 to take over the responsibilities] of the Ministry of Health. i i The DHAUAEisihe regulatory body thai oversees ihehealthcare sec!orin I Dubai. i ! .•__~ _. ‘, . w_w_,_••• ” ···_V·~”””·~_’YA_,_·_·~·_··O>··,h·~ .. ,,·~ ··,,_,~_ •• -.” ..! The HAAD UAE is the regulatory body that oversees the healthcare sector in Abu i Dhabi. . Source: Ministry of Health UAE, FHA UAE, DHA UAE and HAAD UAE The rapid population growth in the UAE, driven mainly by the influx of expatriate workers, has exerted significant pressure on its healthcare infrastructure. From 2006 to 2010, the UAE’s population grew from 4.7 million to 7.5 million, registering a growth of 63% for that period. Only approximately 13% of the total popUlation are the UAE nationals. Meanwhile, the rise in chronic lifestyle diseases such as diabetes, respiratory, cardiovascular disease and cancer continue to boost demand for HCS in the UAE.. As a result, the private healthcare sector has become an important sector in providing HCS to UAE’s population. As at the end of 2010, the UAE’s total healthcare expenditure was recorded at 30.6 billion UAE Dirham (US$ 8.3 billion), out of which 33.3% is made up of private healthcare 7. INDUSTRY OVERVIEW (cont’d) expenditure. Therefore, it can be seen that the significant increase in the UAE’s population is expected to remain the key driver of demand for HCS. Everyone in the UAE has access to healthcare via mandatory insurance. The UAE nationals enjoy free healthcare under the Thiqa national insurance scheme while expatriates must obtain health insurance in order to work in the UAE. These insurance schemes provide the UAE nationals and other residents access to both public and private healthcare providers. In addition, they can also utilise these insurance schemes to seek for treatment overseas. 5.6.2 Industry Outlook I Growth Prospects The healthcare expenditure was estimated to be approximately 38.6 billion UAE Dirham (US$ 10.5 billion) in 2011. Going forward, healthcare expenditure is projected to reach approximately 78.1 billion UAE Dirham (US$ 21.3 billion) in 2016, at a CAGR of 15.2% between 2011 and 2016. The government continues to attract top healthcare institutions and medical personnel to the UAE by actively promoting health clusters like the Dubai Healthcare City and DuBiotech in order to provide better healthcare for its nationals and other residents. 5.7 EGYPT 5.7.1 Introduction and Background According to the Egypt Central Agency for Public Mobilisation and Statistics, Egypt has a population of approximately 81 million and, has according to the CIA World Fact Book, over 31 % of its population below the age of 15 years. The country has a high life expectancy at 70 years as compared with other countries in the region (for example, Nigeria has an average life expectancy of only 52 years). The healthcare system in Egypt is state funded through an extensive network of health facilities enabling ease of access to the majority of its population. Despite strong presence of government health insurance, there is a growing market for private spending. In 2010, the general government expenditure accounted for approximately 37.4% of the total healthcare expenditure. Private healthcare expenditure has registered a growth of 15.9% from EP (Egyptian Pound) 16.7 billion in 2005 (US$ 2.9 billion) to EP 35.1 billion (US$ 6.3 billion) in 2010. Healthcare spending contributed approximately 4.7% to Egypt’s GDP in 2010. The figure may appear low when compared with a similar measurement in US and major European countries; but is relatively higher as compared with other emerging markets. In 2007, the government of Egypt announced an intention to devise a new healthcare plan to provide complete insurance coverage to all its citizens by end of 2011. A funding of US$ 900 million was allocated to the development and modernisation of 4,500 local healthcare centres. Public sector accounts for the bulk of hospital care in Egypt. However, the share is steadily declining due to declining quality standards and funding. There has been a significant increase in private healthcare facilities. Between 2006 and 2010, the number of beds in private hospitals increased from 12,277 to 26,307 at a CAGR of 21 %. An estimated 60%of primary healthcare visits took place at private clinics and hospitals, indicating a shift in interest to quality care and an increase in healthcare spending in the private healthcare sector. 5.7.2 Industry Outlook I Growth Prospects The government has developed a comprehensive plan to deliver healthcare with a shift from curative to preventive care. There is an increase in the number of doctors at 2.1 doctors per 1,000 population in 2008 as compared with 0.8 doctors per 1,000 population in 1990. The implementation of this system is expected to increase the demand for private healthcare in Egypt. In November 2011, the public-private partnership unit of the Ministry of Finance of Egypt announced construction of a 200 bed gynaecology and obstetrics specialist hospital in the Smouha area and a new hospital in the Mowassat area specialising in neurosurgery and kidney ailments. 7. INDUSTRY OVERVIEW (cont’d) According to the WHO, the incidence of non-communicable diseases such as neuro-psychiatric and digestive diseases are rising in Egypt. An estimated 9.8% of the population were infected by Hepatitis C chronically and the study estimates 500,000 new infections a year. Deaths due to high instances of Hepatitis B also reveal poor hygiene standards in the medical field and open avenues for high quality private healthcare in Egypt. 5.8 UKRAINE 5.8.1 Introduction and Background Owing to a steep decline in health and living standards, Ukraine reflects low healthcare indicators. The average life expectancy was estimated at 62 years in 2010, down by three years when compared with 1990. The regional average for European countries is 75 years. Adult mortality rates in Ukraine are the highest in the European region at 199 deaths per 10,000 adults with the regional average at 145 deaths per 10,000 adults. About a half of adult mortality is attributable to infection. The total expenditure on health as a percentage of GDP was 7.7% in 2010. Private expenditure on health has increased from 11.4 billion Hryvnia in 2005 (US$ 2.26 billion) to 36.6 billion Hryvnia in 2010 (US$ 4.7 billion) at a CAGR of 26.1 %. During the same period OOP expenditure as % of private healthcare expenditure was 93.4%. The eastern European region is an attractive HCS investment hub. Ukraine has a steadily grOWing market for medical consumption products with an ageing population, slow improvement in general health and rising disposable incomes. Hence, there is a significant need to improve standards of healthcare to boost investor confidence. 5.8.2 Industry Outlook / Growth Prospects The HCS industry in Ukraine is transitioning from a capacity based system from the Soviet era to a modernised system. The current public healthcare system provides HCS to all citizens free of charge. However in practice, only basic services are covered. With rising income levels, ageing population and a growing demand for quality healthcare, private expenditure on healthcare is expected to increase. The private healthcare market is at an initial stage of development. Steps were taken to legislate voluntary medical insurance with an announcement for introduction of a social medical scheme by 2015-2016, following the healthcare reform. A number of legal barriers need to be removed for the set-up of such a system including constitutional amendments guaranteeing healthcare. This system, if implemented, presents opportunities for private healthcare players as the expectation of quality healthcare would be higher than that was provided by the government system. 5.9 ROMANIA 5.9.1 Introduction and Background Romania spends less on healthcare as a percentage of the budget than any other country in the European Union. In 2012, Romania is likely to spend about 29.14 billion Romanian New Lei (US$ 8.8 billion) which is only around 5.6% of its GDP on healthcare, almost half the EU average. In 2010 it ranked last in this aspect among 33 countries, according to the European Healthcare Consumer Index. In 2010, private healthcare constituted 21.9% of the total healthcare expenditure. Private expenditure on health has registered an annual growth of 15.9% from 3 billion Romania New Lei (US$ 1.02 billion) in 2005 to 6.3 billion Romanian New Lei (US$ 1.98 billion) in 2010. The country has a low prevalence of communicable diseases but an increasing rate of cardiovascular diseases, cancer and other external causes. There is also an increased incidence of preventable lifestyle diseases. 7. INDUSTRY OVERVIEW (cant’d) 5.9.2 Industry Outlook / Growth Prospects With a promising future for the private hospitals, private investors invested over 438.0 million Romanian New Lei (US$ 144.1 million) in 2011 in new private clinics and hospitals in the country to improve the same. The proposed Healthcare bill, presently in its draft stages, could potentially mean major changes for the healthcare industry in the country. The draft law, which has been put out to the public for debate, is expected to allow the privatisation of all hospitals and public clinics, leaving a minimum package of services with the government. Additionally, the public sickness fund, is likely to be replaced by private insurance and contributions to a private healthcare contractor are likely to become mandatory. Industry sources opine that public hospitals could be transformed into joint stock companies or charitable institutions which will result in better management of these hospitals. This is expected to drive the private healthcare sector in Romania. [The rest of this page is intentionally left blank] 7. INDUSTRY OVERVIEW (conf’d) 6 OVERVIEW OF THE HEALTHCARE TERTIARY EDUCATION (HTE) MARKET IN SINGAPORE AND MALAYSfA 6.1 DEFINITION AND SEGMENTATION HTE refers to education beyond the secondary school level up to postgraduate level, in medicine, dentistry, nursing and midwifery, and health sciences. The main objective of obtaining HTE is to ultimately be a healthcare worker and serve the general pUblic. HTE is provided by colleges, polytechnics, medical schools, universities and other registered educational institutions. The course structure typically combines academic studies and practical trainings in teaching clinics and . hospitals. Graduates of HTE may be awarded with the professional certificate, diploma, advanced diploma, Bachelor’s degree, Master’s degree or PhD degree (Doctorate), depending on the course attended. HTE is typically regulated by governments through their appointed bodies whose main function is to ensure that the education institutions comply with the regulations, standards and gUidelines in order to maintain the quality of graduates produced. 6.2 EDUCATION REQUIREMENT FOR A CAREER IN HCS The following table illustrates HTE education qualifications by discipline and the career options available within HCS and other related sectors. Generally, the track to pursuing a career in healthcare varies between disciplines as well as by the individual country’s standards. All professional careers in HCS generally require the personnel to be registered with the relevant institutions or authorities prior to entering the workforce. General Practitioner, Healthcare Services Administrator, Occupational Health Officer, Medical Journalism …………………..,.
Pn~;tnr:’lrJlJl:’ltp. (i.e. MRCP, MRCS, Specialist, Health Consultant, Medical Researcher, Health Educator, Lecturer ) . Certificate / Diploma Registered Nurse, Assistant Nurse, Nursing Aide Nursing
Bachelor’s Degree (i.e. BSc, Registered Nurse, Nurse Anaesthetist, Nurse Midwife BMid) Bachelor’s Degree (BDS) Dental Practitioner Dentistry
Postgraduate (i.e. MDPH, MRes, (Lecturer, Specialist MSc. (Crin). PhD, MPhil)
i Clinical· ·Laboraiory i’echnidan,BiomedicaiEqLJipmeniTechnician, Certification / Diploma Radiographer, Radiation Therapist, Operating Room Technician, i Qpticiiln,()fillljygiElrlist .. Health Clinical Laboratory Technologist, Occupational Therapist, Physical Sciences Bachelor’s Degree (i.e. BSc) , Therapist Assistant, Optometrist (O.D). Pharmacist (Pharm.D), .. F’bysio~~erilpi~t_… .. Postgraduate (i.e. MSc, PGDip, : Lecturer, Clinical Laboratory Specialist, Specialist in Blood Banking, PGCert ! Specialist in Haematology, Research Scientist Source: Compile(iby”Fros(&’SuJJi~an … ,~, ..,_._-.__ .,”~. Note: The examples above are typical of the British healthcare tertiary education. 6.3 HEALTH EDUCATORS AND CONTINUOUS PROFESSIONAL DEVELOPMENT (CPO) In addition to supplying new healthcare workers, HTE is also a close collaboration between the educational institutions and the HCS industry to foster a culture of continuous learning. Practicing healthcare professionals may contribute their hours as health educators and share real-life experiences with students and at the same time, be kept informed of new research and breakthroughs in healthcare. Furthermore, HTE institutions are also the centre for CPO certifications. In most countries including Singapore and Malaysia, there is a mandatory requirement for practicing doctors, dentists and nurses to attend CPO training in order to maintain their license as a registered practitioner. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 6.4 HTE IN SINGAPORE I MALAYSIA HTE services market in Singapore and Malaysia are provided by public and private institutions. Programmes offered comprise pre-university, undergraduate and postgraduate programmes that include diploma, advanced diploma, Bachelor’s degree, Master’s degree and PhD degree (Doctorate) programmes. Students in public educational institutions complete their programmes domestically while students in private educational institutions have the option to complete their studies fully locally or partially abroad. Funding such as scholarships, education loans and financial aids are available to HTE students. The relevant authorities or councilslboard governing the HTE market in Malaysia include the Ministry of Health (MOH Malaysia), Ministry of Higher Education (MOHE), Malaysian Qualifications Agency (MQA), MMC, Malaysian Dental Council and Nursing Board Malaysia. In Singapore, the authorities and other responsible governing parties are Ministry of Health (MOH Singapore), Ministry of Education (MOE Singapore), Singapore Medical Council, Singapore Dental Council, Singapore Nursing Board and Allied Health Professional Council. For the purpose of this report, only the medical education programme in Malaysia and nursing education programme in Singapore are analysed in the fol/owing sections. Generally, the academic duration for a medical program in Malaysia is 5 years. Doctors will need another 4 to 7 years of postgraduate training to qualify as a general specialist or sub-specialist and to be registered with the National Specialist Register. In terms of overseas career opportunities, medical graduates from HTE institutions in Malaysia may be required to complete a local language test and qualifying exams as well as undergo training or housemanship in order to become fully registered doctors. In Singapore, nursing degree courses and nursing diploma courses I pre-registration courses take up to 3 years to complete. Registered and enrolled nurses in Singapore are able to work in the United Kingdom, United States and Malaysia without any additional tests or exam requirements. However, enrolled or registered nurses would have to be evaluated indiVidually by authorities overseas prior to their recruitment. 6.4.1 Market Size and Growth The following table shows total HTE medical programme and nursing programme enrolments and graduates in both Malaysia and Singapore.
Total HTE Graduate*  4,642  17,592  30.5%  . Total Medical Programme Enrolment**  14,528  18,972  5.5%  Total Medical Programme Graduate**  2,712  2,485  -1.7%  Total Nursing, Health and Social Science Programmes Enrolment”*  2,716  77,544  95.5%
Total Nursing, Health and Social Science 247 13,172 121.5%Programmes Graduate*** Total HTE Graduate 1,665 4.5% Total Medical Programme Enrolment 1,188 1,560 5.6% )……………. ……………..•…………………………………………. ,
Total Medical Programme Graduate 229 251 1.9% ………….. ;……….. ..•.. ‘.
Total Nursing Programme Enrolment 1,600 1,881 3.3% Total Nursing Programme Graduate 5.1% Source: Department of i–fjgherEducatj()IJ,MOi–fE, Ma”ay~;ia; \AOi–f~;jlJgap(;re, An,3IV5:/S Notes: * Refers to total domestic HTE enrolment and graduate of medical, dental, nursing and health and social sciences programmes at Doctorate, Master’s degree, Bachelor’s degree, advanced diploma, diploma and certificate levels. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 7. INDUSTRY OVERVIEW (cont’d) .. Refers to domestic enrolment and graduate of medical programmes at Doctorate, Master’s degree, Bachelor’s degree, diploma and certificate levels. *.. Refers to domestic enrolment and graduate of nursing and health and social sciences (presented as one category from the source) programmes at Doctorate, Master’s degree, Bachelor’s degree, advanced diploma, diploma and certificate levels.
In Malaysia, the total HTE enrolment was estimated to increase more than four-fold from 2006 to 2011, mainly due to the growth in the number of HTE institutions from 21 to 3626 during this period. The market share for private HTE enrolment was 73.3% in 2011, underlying the importance of private HTE in Malaysia. The enrolment of medical programmes constituted 17.3% of total HTE enrolments in 2011, and increased at a slower rate of 4.5% from 2010 due to the MOH Malaysia’s announcement in 2011 to limit new medical programmes. Meanwhile, enrolments for domestic private undergraduate medical programmes were increased by 0.6% from 6,245 in 2009 to 6,280 in 2010. Similarly, the total HTE graduates were estimated to increase by almost four times from 2006 to 2011. The number of medical graduates was estimated to be reduced by 8.4% from 2006 to 2011, and was mainly attributed to the drop of the medical programme enrolment in the public educational institutions in 2005. Meanwhile, the number of domestic private undergraduates for medical programme had increased by 0.8% from 650 in 2009 to 655 in 2010. The total HTE enrolment in Singapore was estimated to increase by approximately 20.0% from 2006 to 2011, mainly driven by the estimated increase in medical and dental programme enrolments. The enrolment of nursing programme was estimated to constitute 47.9% of total HTE enrolment in 2011, at a growth rate of 17.6% from the total nursing enrolment in 2006. Total HTE graduates in 2011 were estimated to grow by approximately 25.0% from 2006 whereas the growth rate of nursing graduates over the same period was 28.2%. 6.4.2 Demand / Supply In 2011, there were a total of 36 HTE institutions in Malaysia. 11 of these institutions were public in nature while the remaining 25 were private institutions. From 2006 to 2011, 11 new medical educational institutions were established in Malaysia, bringing the total number of medical educational institutions in the country to 29 (refer to HTE institutions highlighted in bold in the footnote). 18 out of these 29 institutions were privately-run. The Malaysian HTE market is driven by factors such as the growing demand for healthcare professionals in the country and global market, the government’s effort in driving the market, availability of education funding to students and partnerships with established foreign educational institutions. Constraints that exist in the HTE market include lack of training hospitals, shortage of nursing job vacancies, the ability of existing institutions to establish partnership with foreign educational institutions, rigorous educational path and course financing. The number of HTE institutions in Singapore had grown from 13 in 2006 to 16 in 2011. In 2006, there were 11 HTE institutions offering nursing education in Singapore and the number had grown to 13 in 2011. The HTE market in Singapore is driven by factors such as the government’s efforts to ease the shortage of healthcare professionals, availability of funding to students and the established profile of the domestic and foreign partnered educational institutions at the global level. Market restraints include the limited places in HTE institutions and the rigorous educational path. 26 These 36 HTE institutions are institutions that offer undergraduate and postgraduate medical, dental and pharmaceutical programmes as well as institutions that offer nursing degree programme: Universiti Malaya, Universiti Kebangsaan Malaysia, Universiti Sains Malaysia, Universiti Putra Malaysia, International tslamic University Malaysia, University Malaysia Sarawak, University Malaysia Sabah, Universiti Sains Islam Malaysia, Univesiti Teknologi Malaysia, University Darullman Malaysia, Universiti Pertahanan Nasional Malaysia, IMU, Monash University Sunway Campus, Management & Science University -International Medical School, Bangalore, Melaka Manipat Medical College, Penang Medicat College, AIMST University, University Kuala Lumpur, UCSI University, Allianze University College of Medical Science, Cyberjaya University College of Medical Sciences, MAHSA University College, Taylor’s University, Newcastle University Medicine, University Tunku Abdut Rahman, MASTERSKILL University College of Health Science, SEGi University College, Insaniah University College, Perdana University, Open University Malaysia, Lincoln University College, KDU University College Malaysia, Internationat University College of Arts & Science, HELP University, The University of Nottingham, Malaysia Campus and Penang International Dental College. © Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry I Company I’lo.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) The common barriers to entry for both Malaysian and Singaporean HTE markets include the high capital expenditure required to establish HTE institutions, the difficulty to obtain operating licenses to run private HTE institutions and competition with established HTE institutions. 6.4.3 Competition and Positioning As of 2011, there were 29 HTE institutions providing medical programmes in Malaysia, out of which only 20 (including IMU) were recognised under the Medical Act 1971. According to the MMC, in 2010, only 7 private medical educational institutions out of these 20 recognised institutions produced doctors who had provisional registration with the MMC, as shown below. In addition, the ratings of these institutions under the 2009 ‘Rating System for Malaysian Higher Education Institutions (SETARA)’ carried out by the MQA are also shown. The objective of SETARA is to measure the quality of teaching and learning at the undergraduate level of universities and university colleges in the country through six tiers (being Tier 6 as the highest tier).
Melaka Manipal Medical College 266 35.6 N/A IMU 139* 18.6 Tier 5 …………………………………………………………………………………….
: AIMST University 136 18.2 Tier 4 ……….1..
j Penang Medical College 115 15.4 ; N/A University Kuala Lumpur Royal College of 43 5.7 N/AMedicine Perak ‘” ,~~,~~–~.,”-~.-.. -~, .._._._”.~,._.~_ …” …_..-~.”-. UCSI University34 4.5 Tier 4 l.MonashTinivers]ty,–Jeffrey Cheah-School’-~ ;-Tier5 (Sunwa-y15 2.0!_<:lLM_e<:Ji.c:~ne and He?lt~§_gjE:!!1.c:E:ls . __ ._J!ClrTlPLJ”L , Total 748 100.0 Source: MMC andMQA,Anaiysls byFrost 8,-Suilivan Note: * Excluded medical students transferred to IMU’s network of partnered medical educational institutions. The number of provisionally registered doctors who graduated from these 7 private medical educational institutions in Malaysia stood at 748 in 2010, out of which 139 were from the IMU and hence, indicated a market share of 18.6% for IMU. In terms of SETARA, IMU was ranked Tier 5 in 2009 and this was the highest achievable rating in the exercise. In terms of the total enrolment of undergraduates in the medical programme in private educational institutions, the number stood at 6,280 in 2010. IIVlU recorded 1,432 enrolments in the same year which translates to a market share of 22.8%. Given the fairly significant market shares based on these two approaches and the high SETARA rating achieved by the IMU, IMU is considered as one of the leading HTE institutions in Malaysia. In addition, IMU is the first private HTE institution offering local and foreign programme in Malaysia. The nursing education in Singapore is provided by 4 pUblic HTE institutions and 9 private HTE institutions. In 2011, the estimated number of enrolment for nursing programmes was 1,881. Parkway College’s nursing enrolments was recorded at 541 in the same year, indicating a market share of 28.8%. 7. INDUSTRY OVERVIEW (cont’d) 6.4.4 Future Trends / Outlook The following chart shows the growing trends for total HTE and medical programme forecast enrolments in Malaysia from 2006 to 2015. 140,000 120,000 100,000 80,000 60,000 40,000 20,000 GAGR (2011 E-2015F) Total HTE Enrolment: 2.2% GAGR (2006-2011 E) Medical Programme Enrolment: 5.0%
——-~ 1Total HTE Enrolment: 32.8% ­———-115562 119,924 o .­
2006 2007 2008 2009 2010E 2011E 2012F 2013F 2014F 2015F mTotal HTE Enrolment !UMedical Programme Enrolment Source: Department of Higher Education, MOHE Malaysia; Analysis by Frost & Sullivan Notes: Total HTE enrolment refers to total domestic enrolment of medical, dental, nursing and health and social sciences programmes at Doctorate, Master’s degree, Bachelor’s degree, advanced diploma, diploma and certificate levels. Medical programme enrolment refers to domestic enrolment at Doctorate, Master’s degree, Bachelor’s degree, diploma and certificate levels. The HTE and medical programme enrolment trends are expected to be on an upward trend from 2011 to 2015, achieving forecasted CAGRs of 2.2% and 5.0% respectively. CAGRs for total HTE and medical programme enrolments between 2006 and 2015 are forecasted to be 18.2% and 5.3% respectively. Meanwhile, the HTE graduates trend is forecasted to increase from approximately 17,592 in 2011 to approximately 19,704 in 2015, at a CAGR of 2.9%. Graduates from the medical programmes are expected to increase from approximately 2,485 in 2011 to approximately 2,934 in 2015, at a CAGR of 4.2%, indicating a higher supply of doctors to the healthcare workforce in Malaysia to meet the targeted doctor per population ratio of 1:600 by 2016. Private HTE institutions are expected to maintain a dominant market share in the HTE market in Malaysia, with enrolment market share forecasted to be 71.4% in 2015. The government will continue to develop the private education sector under the ETP. One of the entry point projects (EPPs), “Building A Health Sciences Education Discipline Cluster” is specifically set to drive the private healthcare education sector and a total fund of RM1.4 billion (US$ 458.9 million) has been allocated to drive this EPP. [The rest of this page is intentionally left blank] @Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 335 7. INDUSTRY OVERVIEW (cant’d) Similar trends are also expected in Singapore as depicted in the following chart:
2006 2007 2008 2009 2010E 2011E 2012F 2013F 2014F 2015F l!llTotal HTE Enrolment [J Nursing Programme Enrolment Source: MOH Singapore, Analysis by Frost & Sullivan Overall, enrolment trends are expected to be on an upward trend from 2011 to 2015 as the Singaporean government is putting efforts to ease the shortage of doctors and nurses in the country by increasing programme intakes. The annual nursing programme intake is expected to increase to 2,700 since 2012 as announced by the government. The forecasted CAGRs for total HTE and nursing programme enrolments between 2011 and 2015 are 5.2% and 9.5% respectively. CAGRs for total HTE and nursing programme enrolments between 2006 and 2015 are estimated to be 4.7% and 6.0% respectively. The HTE graduate trend is expected to increase from approximately 2,076 in 2011 to approximately 3,099 in 2015 at a CAGR of10.5%. Nursing graduates are forecast to increase from approximately 1,606 in 2011 to approximately 2,430 in 2015, at a CAGR of 10.9%. The increasing nursing enrolment and graduate trends are expected to be the main driver to the projected increasing trend of nurses/midwives in Singapore. [The rest of this page is intentionally left blank] Company No.: 901914-V I 7. INDUSTRY OVERVIEW (cont’d) 7 ApPENDIX 7.1 CURRENCY CONVERSION TABLE
1.2647~~~~ ;:;~~~”-MalC!y§[~n ~l!l9.9jL+-__M'{!i_T–.. -.–~.§2~L~–.—-3.426§ . .~~?j’?”‘p”_.§_~~§.1 ! 3:?_U_§’_~._ .._ 3.0511 1.7963-11.6744 -.—–·–In::;~i~U L~: r:; I–4~~~~~~ t-·—-i~;~~1—-‘–i3:~~~~ 4~:-~~~1t.–4~:;~i~-“–­I.. . fL__• ._. _ . ._____ . .. ._._,__ 46.7352 50.4999—-. ._-6.4554 6.294£L·-~~~;~S~O~~~~:;~ ~~t ;.~~~ 1—~~~~——-~~~~~-.-.-.—-1~:~1—i.-~~;~–:7.7587 ______Thai ?.9./]l’ THB 1].8533. j 32jJ.§.~9 __ 32.7474 34.0942 i 31.5!.§0 30.2803 __________;z ~———_—-. .__” .. 7.7841 30.8485 1 __!J~53·.8.J2JL__1…~389.8QQO ! ?~ __?,Z17.9.-4.QQ f—.9,{g0.?.?!!.Q.. 16,180.3000 17,483.3000 I 18, 20,452.0000 20, 755.800JL ~.~~_BrUJ.Jei Dq{‘;r i B.tJD I 1.5~.~=’j’i§§§_-1_.397§ —-1A371r—1.3j§?”_,__ 1.2390 1.2464_._–‘-­3.7495L.. …_.__SauQi Ri:@J..1……§..Il.!i .}”7497 j .~:Z.4i§_ _ ~J46?… .~’_2’j6~J—-.~J.L/.L/.L/-1–_. 3.7489 3.6723 i~. s.g)!£!ian Poynd :”_….EQP 5.6596 I __~.§675 5.3865 5.5083 [ §,-~~~L 5.9156 . UAE Dirham i AED 3.6720 I 3.f?Zl:J 3.6717 3.6718 r ~.67?.L{ 3.6724 6.0074 _____.__L8f1§.§…. f–__._7.9?J 7_~-‘R’O~~~:~t~;~;;+-~~Z i —~~~~~~–._——-::~~-g —-~:~~;~ ~:~~~ j——f.-~.~~~.–. 3.0394 3.3226————.-~, —–,———~——–.~-I .–.~-+­43.8309 46.7164i·–_M§~~~~~a;-!a~~~! i~~-~–:~:;~~~ i—–~~~if7 ——::~~~~-l ~~::~~~ : ~~::~~~+-. 29.3303 30.2245—_._. .—­79.7000 78.8300~.–~-~?:~;:~;~~~~]—~:~ i—:-il~;~H=~~~~ I 9~::~~ 1 ~~ 0.6235 0.6376 :.._ _SoU!f}-Ko@an \!’JV __.L_._..JJ40. t~!2~1 __. -~2.?:?11tt-_.J.,2.26. 740Q..J 1,272.6800 ! !.J§1:?~.Q9J. 1,105.7300_ __1..J..?~.2100 ~ . Euro I E.J!R J. 0.79671.__Q:!.1QB 0.6832 i 0.7190 I 0.754i?J 0.7188 I 0.7642] Notes: All currency exchange rates are sourced from The respective year’s annual average exchange rate is applied to the local currencies throughout this report, to compute the US$ equivalent. Exchange rates for 2005 to 2011 are actual annual average exchange for the respective years. Exchange rates for 2012 is the average of the period January 1,2012 to March 21,2012 and is applied to all forward looking numbers in this report. @ Frost & Sullivan 2012 Independent Market Research on Global Healthcare Services Industry 337


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