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Annual Investors Conference 2015 - Summary

Healthcare Investors Conference 2015HEALTHCARE PARTNERS

Strategic Legal Sponsor:

Cambridge Medical &Rehabilitation Center

Co-Sponsors:

Supporting Organizations:

12th November 2015 Dubai

12th November 2015, DubaiTVM Capital Healthcare Partners Annual Investors Conference 2015 - Summary

Dear Partners, Speakers, Attendees and Colleagues,

Our annual Healthcare Investors Conference is an invitation-only, international industry meeting that offers participants a platform for high-level discourse with the aim of shaping views and strategies for the MENA region, India and Southeast Asia. In November 2015, speakers and panelists took a closer look at the role of healthcare private equity investing in our designated geographies and the expectation and perception of investors in this market.

Governments realise that a leap in healthcare provision – in quantity and quality – is needed, and are welcoming private sector involvement. Private healthcare provision, especially in specialised areas, brings very immediate advantages to local communities and can have a very positive knock-on effect on the public healthcare sector at large. Governments indeed are increasingly working hand-in-hand with companies to create a conducive operating environment for the private sector and transform themselves from owner – operators to buyers of selected healthcare services from the private sector.

In the coming years, we can expect the private sector to thrive and provide the world class service that communities across the region crave. Embedding the private healthcare providers into the public health system in an optimal way, and increasing and improving collaboration at all levels will be crucial.

Openness and transparency appear to be a necessary basis for this development. During our conference we discussed many aspects of this transition and we again found it very beneficial and inspiring to share views with our industry peers. We talked about investing in healthcare in emerging markets, about creating value for investors in private equity, we made diversity, ethical standards and corporate governance the topic of one of the panels, and then homed in on aspects of innovation, both in terms of service provision as well as specifically in the field of medical devices.

I hope you find this summary of the discussion useful and am looking forward to meeting you all again during our 4th Healthcare Investors Conference in Dubai later this year!

Best wishes, Dr. Helmut Schuehsler

Chairman, TVM Capital Group CEO, TVM Capital Healthcare Partners

Presented by Mike Casey Senior Director, Consulting Services, EMPEA

KEYNOTE SPEECH: THE ROLE OF PRIVATE EQUITY IN EMERGING MARKETS

What are the risks of investing in emerging markets in today’s climate? What is the role of private equity in emerging markets and why invest in healthcare? These were some of the questions that were addressed at TVM Capital Healthcare Partners’ 3rd Annual Healthcare Investors Conference on the 12th of November 2015.

In his keynote address, Mike Casey from the Emerging Markets Private Equity Association (EMPEA), a global membership organization, gave a macro overview of investing in emerging markets.

“Emerging markets are where the bulk of economic activity is taking place today,” said Mr Casey. He highlighted a chart from the International Monetary Fund’s October 2015 edition of its World Economic Outlook Database. The chart, on purchasing power parity, described the share of the global GDP from 1992 to 2020, demonstrating that “emerging markets have completely eclipsed G7 economies”.

The chart indicated that G7 countries had captured 51.5% share of the global GDP in 1992, while Emerging Markets captured only 35.7%. However, in the year 2020, G7 countries are projected to have a 28.9% share of the global GDP while Emerging Markets are expected to capture up to 60.9%. Emerging markets will be the core drivers of growth in global consumption, said Mr Casey, citing McKinsey Global Institute’s projections. Global consumption was projected to grow from US$38 trillion in the year 2010 to US$64 trillion by 2025. “70 percent of the growth in consumption expenditures are predicted to come from emerging market economies,” Mr Casey said, referring to the urban consuming class population projections.

G7 Countries 51.5%

G7 Countries 28.9%

G7 Countries

Share of Global GDP(PPP,%)

Emerging Markets 35.7%

Emerging Markets 60.9%

Emerging Markets

1992 1996 2000 2004 2008 2012 2016 2020

65

55

45

35

25

65

55

45

35

25

Emerging markets are capturing a larger share of global GDP

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2014, a year during which deal making in Western Europe slowed down. GPs and LPs are broadening their horizons beyond the BRICs to seek diversification in markets that will offer the next wave of growth, including Sub-Saharan Africa, Middle East, Southeast Asia and Latin America (excluding Brazil). Both investment deal value and targeted new fund-raising reflect the increasing importance of these rising markets. On a parallel note, private equities are trying to have a certain investment focus and to specialize in order to have a competitive edge. Specialization and niche-focus is one of the key trends in 2015. The healthcare sector, among the fastest growing sectors worldwide, is increasingly attracting PE investments.

Mr Casey said that the healthcare sector is a niche market for emerging markets private equity. “Across the 1,600 some odd funds that have been raised since 2008, 20 have been dedicated to healthcare. If you look at the amount of capital that has been raised for these vehicles since 2008, it‘s about 2.3 billion dollars,” he said. Despite this, many companies have been investing in emerging markets private equity healthcare deals.

“I think 12 billion have been invested since 2008,” said Mr Casey. “One notable development is that this is going to be a big year for healthcare in emerging markets. Through the first half of the year we‘ve already seen more capital invested than we did in all of 2014.”

One of the challenges facing the industry is the concentration of capital in fewer funds. “This is quite troublesome because the large funds are getting larger and the smaller funds are having an exceedingly difficult time gaining traction in the market,” said Mr Casey. Another challenge is the appreciation of the US dollar, posing challenges for dollar-based investors and creating economic headwinds.

“There‘s a crisis in terms of access to care globally,” said Mr Casey. “However, within this crisis, there is an opportunity in the healthcare sector. Healthcare investors in emerging markets”, he suggested, “could fund innovative companies that can develop products at lower costs. These can be exported to developed countries facing spiralling healthcare costs and essentially broaden access to care.”

“Companies in emerging markets are becoming better at capturing consumer spend. Unlike 15 years ago when the Fortune Global 500 were predominantly developed market companies, today the landscape is completely different,” Mr Casey said. According to McKinsey Global Institute projections, 45% of Fortune Global 500 companies will be based in emerging markets by 2020. This is a significant increase from the year 2010 during which only 17% of Fortune Global 500 companies were based in emerging markets.

Moreover, Mr Casey cited studies by BCG, a global consulting firm, where 73% of multinational executives report that local firms in emerging markets are their main competitors. “You really want to be investing in the firms that are able to tap into the strong structural trends that are taking place”, he added.

Highlighting data from Cambridge Associates, Mr Casey pointed out that private equity outperformed public markets in the area of absolute returns. Private equity presents a broader opportunity. There are more family-owned companies in emerging markets and access to business opportunities in these companies is not available publicly. “Within the Middle East and North Africa, if you wanted to access the consumer opportunity, you‘d have a much better chance of doing that through private equity.”

Emerging markets private equity is a relatively small industry, Mr Casey said. “Over the last two and a half years, emerging markets have probably accounted for 10 to 13% of all the funds raised to invest in private equity on a global basis. So it‘s still quite small and it represents around 10% of the capital invested in a given year out of all private equity funds that are invested.” Mr Casey added that the amount raised in the emerging markets from 2009 to 2014 was US$248 billion, equivalent to the revenue that Volkswagen had generated in 2014. “If you look at the average amount that is invested in a year - US$28 billion - that was something along the lines of 75% of the equity stake that was in the Kraft Heinz merger that took place this year. So, it‘s a small industry. In grand perspective, it‘s miniscule.”

As emerging markets are increasingly attracting PE investors, emerging markets investment as a percentage of global private equity investment grew to 11% in

Emerging markets public vs. private performance

(Comparative end-to-end returns)

14,3%

-1,4% -1,8%

12,9%

4,8% 4,4%

2,3% 2,1%

12,2%

8,6% 8,8%

12,4%

1 - Year 3 - Year 5 - Year 10 - Year

Emerging markets PE & VC Index MSCI Emerging + frontier markets indices MSCI Emerging markets index

(US$m, %)

7,236 62%

1,808 15%

1,59013%

8207%

Emerging Asia CEE & CIS Latin America MENA Sub-Saharan Africa

Capital invested in healthcare deals by geography, 2008 - 1H 2015


“Specialization is one of the keytrends in 2015.

The healthcare sector, among the fastest growing sectors worldwide, is increasingly attracting PE investments.“

Mike Casey

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Healthcare is currently the nation’s largest industry, and chances are it is going to remain that way for the foreseeable future. The industry’s growth is mainly driven by a growing and aging population, as well as the rising prevalence of numerous chronic diseases. Concurrently, total global health spending is also increasing in order to cater to the rising healthcare demand. Emerging markets are expected to see spending increase quickly over the next five years, due to population growth, rising affluence and government programs to expand access to healthcare. Emerging market growth is subsequently likely to offset slower growth in North America and Western Europe. “With investors eyeing the healthcare sector around the world, healthcare is becoming a necessary market strategy for many GPs”, according to Capital Dynamics managing director Janusz Heath. “There is a rising middle class with a need for investments in the educational and healthcare sectors”, he said, “and many fund managers now have a healthcare specialization. This, however, might make deals more costly, and that does worry us because it drives the pricing up in these areas.”

Similarly, Adil Al Zarooni Emirates Investments decided to get involved in the healthcare sector during the economic crisis as they needed “non-cyclical industries” to invest in. “Although we had limited know-how in the healthcare sector, we wanted to get into ventures that have high levels of growth and with the ability to expand regionally,” said the company’s CEO Adil Al Zarooni.

Working in the healthcare sector in emerging markets is about, in macro terms, helping people become in a better health, according to Safanad’s Chief Financial Officer, Mark Benn. “Curing an illness is the numerator and the cost of doing that is the denominator.” This ratio, he said, varies in different parts of the world. “It‘s a complex interplay of clinical regulations, structural regulations, provisioning and funding. You‘ve got to understand all those cogs in the wheel.”

Neeraj Agrawal, the executive director of Crescent Enterprises, pointed out that most people in the Gulf travel abroad for medical treatments. This, he said, is an opportunity for the GCC healthcare sector to grow. “When we see investment opportunities coming to us, they are not properly baked. They are represented by people who have made a single ‘mom and pop’ shop successful and now need growth capital. We see the opportunity but we don‘t see the knowledge, the skills and the medical standards that are needed to go with it.”

DEG, according to its director Dr Tilman Kruse, is globally involved in the healthcare sector in many ways by providing debt financing to particular projects and investing into healthcare dedicated PE funds. The latter including both specialist and gene-ralist health funds. The healthcare sector in emerging markets, he pointed out, has strong “strategic investor appetite”. DEG, he said, in its healthcare GP selection process does not have specific, globally applicable, strategies as it does not believe that there is something called the right strategy across DEG‘s emerging marktet universe. “A GP may embark on a proper strategy but have the wrong team for doing that or vice versa. Hence, we invest based on each opportunity analysis with a tho-rough focus on team composition and skillset.”

Mr Benn from Safanad emphasized the importance of effective operators. “If you can’t find your perfect choice of operator, it’s all about the trust, vision and the ability to grow with somebody.” While brand names, he added, are valuable, it is critical to recognize the importance of local knowledge which can only be developed by local partners. “It is about management skill and the recognition that the biggest and the best coming from the UK and the US is not going to solve all our problems,” he said. “It is about understanding the differences between what happens in western markets and what happens in emerging markets because that’s when we are going to be able to bring value.”


THE INVESTOR‘S VIEW: HEALTHCARE INVESTING IN EMERGING MARKETS

Panellists:• Neeraj Agrawal, Executive Director, Crescent Enterprises • Mark Benn, Chief Financial Officer, Safanad• Janusz Heath, Managing Director, Head of Private Equity Investment Management Emerging Markets, Capital Dynamics • Dr Tilman Kruse, Director Corporate & Funds Europe/Middle

East/Central Asia, DEG• Adil Al Zarooni, CEO, Al Zarooni Emirates Investments, LLC

Panel Chair:Dr. Helmut Schuehsler, Chairman, TVM Capital Group & Chief Executive Officer, TVM Capital Healthcare Partners

“It is about understanding the differences between what happens in western markets and what happens in emerging markets because that’s when we are going to be able to bring value.” Mark Benn

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The panel focused on the sale of ProVita International Medical Center, a long-term care facility for ventilated patients in Abu Dhabi and Al Ain. The exit process for ProVita began in October 2014 and was signed in June 2015 and completed in August with the sale of ProVita to NMC Health plc, a private healthcare provider, listed on the London stock exchange.

The exit process adopted for the venture, according to Operating Partner & Managing Director Charles P. Floe, was a “classic multi-stage auction process” and was unusual for the Middle East region. “In terms of a process, it was successful as the buyer and the seller met at a price which everyone was prepared to agree on,” said Mr Floe, adding that the process was completed within a timeframe agreed with the board in advance.

Mr Floe highlighted that TVM Capital Healthcare Partners as well as its operating group TVM Operations, spent three to five months preparing for the sale before it went to market. The project was carried out with legal and financial advice from Morgan, Lewis & Bockius LLP and PwC. Out of the initial 45 interested parties, six

made competitive proposals. Mr Floe touched on the critical reasons that contributed to the successful sale of ProVita. “The key areas of healthcare, education and maybe food and beverage are very hot right now and assets are scarce.” This meant that ProVita was considered as a “scarce asset in a hot sector”. He also attributed the success to ProVita‘s management team led by its chief executive officer Michael Davis. “He did a superb job in presenting the company to investors, above all showing his passion for the patients. His command of detail in the course of the process was just critical.” Mr Floe also added that good governance was in place and that they were backed by high clinical expertise and had strong partners in the form of Spaulding Rehabilitation Network and Joslin Diabetes Center.

“We believe it was a win-win stuation. We probably got to a limit to what we could do as TVM Capital Healthcare Partners on our growth path for the company. It was time to turn it over to someone else for the next phase,” said Mr Floe. “NMC was an excellent buyer for the business and we hope that we will see great growth for ProVita from within NMC going forward.”

When asked about the recommended time to involve the legal team into the project, James A. Knight, partner at the law firm Morgan, Lewis & Bockius, said that the ideal time would be six months prior to the start of discussing the sale with potential buyers. This would give sufficient time for legal professionals to study the company’s documentation, conduct a reverse due diligence and ensure that everything is in order.

“You do that before you bring in the buyer groups and the maximum value creation is where there are no surprises and when investors come in and say that this is“ cleaner” than what they have expected. So to do that, you have to give yourself time,” said Mr Knight. This would also provide sufficient space to set up an overall strategy and approach.

“TVM Capital Healthcare Partners has done a very good job in including the financial advisors, the legal and the operating team in coming up with a core team to focus on what has to get done in this timeframe.” Policies and procedures were put in place from the beginning, he said, making it a smoother project.

Similarly, PwC was brought into the process as soon as a decision was made that TVM Capital Healthcare was going through a sale process. This was six months before the sale process began. For Norma Taki, a partner at PwC, having sufficient time was important “from a financial point of view”. “Early identification of issues can create value or diminish value,” she said, adding that this would allow staff to regroup and fix identified issues.

“We underestimate the value that an independent eye brings into looking at the num-bers,” she said, adding that financial professionals would know what professional buyers are looking for and would be therefore able to direct the process. This would also add credibility. She added that consistency of data is another important factor to consider.


VALUE CREATION AND EXIT STRATEGIES

Panellists:• Charles P. Floe, Operating Partner & Managing Director, Corporate Finance, TVM Operations Group • James A. Knight, Partner, Morgan, Lewis & Bockius LLP• Prasanth Manghat, Deputy Chief Executive Officer, NMC Health • Norma Taki, Partner, PwC

Panel Chair:Youssef Haidar, Partner & Managing Director, TVM Capital Healthcare Partners

“M&A transactions must tick at least one of four boxes - for customer value proposition, for people, for process or for the growth of the business.” Prasanth Manghat

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According to Prasanth Manghat, the deputy chief executive officer of NMC Health, the buyer, which has been operating for 42 years in the UAE, there are capacity and capability problems in the Emirates. “We strongly believe when we talk about capacity that it is not only about creating the capacity of beds. We need to recreate the capacities of doctors,” he said, adding that sub-specializations should be created in the UAE to woo patients who otherwise would be travelling abroad for these services. Mr Manghat said that about 400 people from the UAE are estimated to be receiving long-term care in overseas facilities. This, he felt, is a large number in relation to the country’s population of 9 million.

Mr Manghat said that M&A transactions must tick at least one of four boxes - for customer value proposition, for people, for process or for the growth of the business. He added that there are bound to be issues to deal with after the completion of a transaction. “How do you stay together and deal with those issues?” he said. “We strongly believe the right step is to bring them into the system and use the platform to create the economies of scale. Integrate where needed, but don‘t integrate just for the purpose of ticking the box.”

Increasing gender diversity in boardrooms, raising ethical standards and improving corporate governance, these were the key issues raised during this hour-long panel discussion. Chaired by TVM Capital Healthcare Partners’ Founding Partner Hoda Abou-Jamra, the discussion engaged experts from the financial, environmental, legal, and communications sectors.

Gender diversity adds financial gains to a company’s bottom line, said Mr Hassan Fattah from the Brunswick Group, a corporate and financial communications firm. Mr Fattah cited the example of the 30% Club, an initiative that was set up in 2010 to encourage 30 percent representation of women on FTSE boards. “There were about 12.6 percent of women being represented when the initiative was first set up and this has since risen to about 26.1 percent”, Mr Fattah said. “A GCC chapter of this initiative, the 30% Club GCC, was launched on 11 November 2015”, he added.

The 30% Club, Mr Fattah pointed out, aims to encourage thinking not only about gender representation but also about what that can bring to businesses. “What the 30% Club is basically saying is that it makes complete business sense for you to encourage women‘s leadership within your organizations,” he said, adding that they hope to encourage this thinking in the GCC. “There is a variety of research that shows that increasing diversity adds to your bottom line.”


“TVM Capital Healthcare Partners has done a very good job in including the financial advisors, the legal and the operating team in coming up with a core team to focus on what has to get done in this timeframe.” James A. Knight

DIVERSITY, ETHICAL STANDARDS AND CORPORATE GOVERNANCE - IMPORTANCE & CHALLENGES IN HEALTHCARE IN EMERGING MARKETS

Panellists:• Dr Ashraf Gamal El Din, Chief Executive Officer, Hawkamah Institute for Corporate Governance• Hassan Fattah, Partner, Brunswick Group • Deepak Khanna, Chief Investment Officer, IFC • James MacCallum, Partner, Al Tamimi & Co. • Reg Eayrs, Managing Partner Middle East, Environmental Resources Management

Panel Chair:Hoda Abou-Jamra, Founding Partner, TVM Capital Healthcare Partners

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On a parallel note, Dr Ashraf Gamal El Din from the Hawkamah Institute for Corporate Governance pointed out that women do not only add gender but also bring skills and knowledge to organizations. “It is not just about having women because you should have a woman. It‘s the value they bring to the boardroom which is extremely important.” The Emirates, he said, has been leading the region in this area and has come out with regulations associated with women’s leadership. One mandates that boards have to have a female representation. The other stipulates that listed companies must have at least one female director, otherwise they will have to justify and give valid reasons for not having a female director on board. With these regulations and the setup of the GCC chapter of the 30% Club, Mr Ashraf said that “things are moving in the right direction” and that changes will start taking place.

Ms Abou-Jamra of TVM Capital Healthcare Partners agrees, saying that having qualified women represented on boards adds value to companies. “When you put a woman on your board, you are representing the population you are serving. You are also bringing a different point of view and a different approach to your board”, she said.

James MacCallum of Al Tamimi & Co, a UAE-based law firm with offices throughout the Middle East region emphasized the significance of the new UAE law issued in May 2015 on mandatory governance rules applicable to UAE public companies intro- ducing tough measures to promote the election of women onto company boards. He also stressed the importance of avoiding artificial means of involving women such as quotas or women-only positions, instead advocating creating circumstances that promote the election of women onto boards by acknowledging their distinctive talents, not merely their gender.

Mr Deepak Khanna of the International Finance Corporation (IFC), a private sector arm of the World Bank Group, added that experiences in microfinance have shown women to be better at using money and looking after businesses than men.

The panellists tackled also the subject of Environmental, Social and Corporate Governance (ESG). ESG, according to Reg Eayrs of Environmental Resources Management, builds upon corporate social responsibility reports and has a “cradle to grave attitude towards your product or service”. It looks at the supply chain ensuring the operation standards of both the companies and its suppliers. ESG, he added, also identifies opportunities within an organization.

Research on companies with good corporate governance practices have shown that these companies have better operational efficiency and are more profitable than those without good practice in place, said Dr Ashraf. “That really makes sense. If you have corporate governance, this means you have a strong board, the right risk management, and the right ownership strategy in place,” he added.

Dr Ashraf highlighted the results of an Ernst & Young study on the performance of companies from a pan Arab index that was launched in 2011 by Hawkamah, IFC and Standard & Poor’s. The performances of the best 50 companies with good environmental, social and corporate governance practices were compared with the rest of the market. The study found that investments in companies with the best corporate governance in the region resulted in between 50% to 100% more returns on investments compared to the rest of the companies in the market. “That shows that it really makes a difference from an investment perspective to invest in companies with good environmental, social and corporate governance practices,” Dr Ashraf said.

Mr Khanna cited a host of reasons on how having a diverse boardroom and implementing a good ESG practice could benefit companies and essentially make good business sense. He said that after segregating the IFC’s leading and lagging clients, the laggers were found to have eight times fewer women in management and six times fewer women on the board and were four times less likely to have initiatives to reduce greenhouse gas emissions.

In this panel discussion moderated by TVM Capital Healthcare Partners Senior Advisor Carl Stanifer, the panellists discussed several themes concerning innovation in healthcare and the need to commercialize the innovation. Speakers Jochen Duelli and Dhiraj Joshi gave their perspectives on healthcare service innovation in Middle East and North Africa (MENA) while Drs Ronald Ling and Jeff Staples gave their views on the Asian region.

According to Dr Ronald Ling, Operating Partner, TVM Operations Group, service delivery innovation in Asia, with the exception of India, has been lacking. PE deals in Asia, he said, have been hospital focused and there has been a lack of innovation in areas beyond hospitals. However, Dr Ling, a medical doctor by training with 10 years of experience in private equity, stated that he has been seeing signs of innovation in Asia but that they vary from country to country. He asserted that it is now time to be more innovative and to develop creative models, such as the wide


“That really makes sense. If you have corporate governance, this means you have a strong board, the right risk management, and the right strategy ownership in place”

Dr Ashraf Gamal El Din

INNOVATION IN HEALTHCARE SERVICES: THE MIDDLE EAST AND SOUTHEAST ASIA, A HIGH-LEVEL COMPARISON

Panel Chair:Carl Stanifer, Group Chief Executive Officer, Cambridge Medical & Rehabilitation Center & Senior Advisor, TVM Capital Healthcare Partners

Panellists:• Dr Jochen Duelli, Board Member, Arabian International Healthcare Holding Co.• Dhiraj Joshi, Partner – Healthcare Strategy UAE, PwC • Dr Ronald Ling, Operating Partner, TVM Operations Group • Dr Jeff Staples, former Operating Partner, TVM Operations Group

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use of home healthcare remote monitoring technologies. Indeed, a raft of health care private equity activity is demonstrating the increasing importance of the Asian healthcare sector, with Singapore, Malaysia, Vietnam, and Thailand being top geo-graphies for recent deals. Hospital-based businesses (general medical and surgical facilities) were the main focus of deal activity, accounting for 60% of transactions during 2004-2013.

Dr Ling said that he has in fact seen a substantial level of innovation in India. He cited Narayana Health, a network of hospitals in India, which provides coronary open-heart bypass surgeries at extremely low cost “by radically engineering how that is done with great clinical help”. This, he added, was the result of commercial forces, a visionary doctor and the pressure to deliver affordable high quality medical care.

According to Dr Jochen Duelli, a board member with the Arabian International Healthcare Holding Co., the key problem in most of the emerging markets is the lack of healthcare professionals and productivity. He added that innovations must optimise the healthcare system in its key dimensions. “You have to understand how to launch an innovative idea successfully and commercially. And this can be quite a challenge”, he added.

When asked to compare the differences in the healthcare sector in Singapore with other Asian countries, Dr Jeff Staples said that this would not be a fair comparison as Singapore is not an emerging market. However, he compared Singapore to the United Arab Emirates. “Singapore is the petri dish of innovation and quality in Southeast Asia much like Abu Dhabi and Dubai are for the GCC,” he explained.

Dr Staples also talked about the concept of innovation in the MENA and Asia regions. “In order to be innovative in healthcare in emerging markets, you really don’t have to be innovative,” he said. Many of the healthcare delivery providers in MENA and Asia, he elaborated, are ‘mom and pop’ organizations. Processes that have been implemented in developed economies need to be introduced into these ‘mom and pop’ organizations in countries such as China, Thailand, the United Arab Emirates and Qatar. While the process could prove to be disruptive and innovative, it is not innovative as per se, said Dr Staples.

Innovation has not been established in the Middle East, according to Dhiraj Joshi from PwC. The Middle East, he said, does not have a legacy of developing healthcare systems comparable to those in the U.S. and Europe and is not burdened by the law of affordability which is the case in India, referring to Narayana Health’s affordable open heart surgeries.

According to Mr Joshi, the two main drivers in innovation are operational and environmental. He gave Singapore as an example of a country where both drivers work together. Operational drivers in the MRNA region, he said, are usually commercial in nature.

“The healthcare market here is at the stage where investments are pouring in and private entrepreneurs are opening up new hospitals and facilities. The focus hasn‘t yet shifted to a place where performance improvement becomes a mainstay of a boardroom discussion. The mainstay today is where should we invest?”

When asked about balancing creativity with business, Dr Ling advised investors to support entrepreneurs and innovators in order to add value to the equation. “If your investment thesis is to back somebody who is brilliant, innovative and creative, you have to help him fill in the gaps that he can‘t do himself,” he said. This may include providing resources to support the innovator to gain access to international linkages to expand across multiple markets. “You‘ve got to always respect the genius of the entrepreneur and the founder. If you stifle that, it is not going to be good for the deal.”

Dr Staples added that it might be difficult for the “entrepreneur-innovator” to let go of the day-to-day management of the company due to fears that it would stifle creativity and the growth of the business. New processes put in place may also inhibit the practice of revenue-generating individuals such as doctors in the organization. “It is a follow-on effect from what the investors are trying to do at the corporate level. If you put processes in place, it is going to have an impact on the front tips of the organization as well. This reinforces the entrepreneurs’ reticence to let go of the business.”

Mr Joshi raised the topic of “doctor-preneurs“ and said that he has seen in the Middle East successful instances of doctors who are also entrepreneurs. “The biggest of healthcare chains in the Middle East are led by doctors. The investors‘ community has people from healthcare and medicine. The difference here is an outcome focussed approach that will spur innovation.”

In essence, according to Dr Staples, there are more similarities than differences across emerging markets. Skill sets such as dealing with regulators, he explained, can be applied to other developing markets. Adopting and leveraging disruptive and smart technologies, combined with innovative delivery models such as cross- sector/geographic collaborations, may help bring forth practical and sustainable solutions for these regions.


“If your investment thesis is to back somebody who is brilliant, innovative and creative, you have to help him fill in the gaps that he cannot do himself. This may include providing resources to support the innovator to gain access to international linkages to expand across multiple markets.” Ronald Ling

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According to Maher Abouzeid, the president of GE Healthcare in the Middle East and Turkey, the company is going through a process to become more digitally oriented and hence, has built a business known as GE Digital. It hopes to be among the top 10 software companies within five years. “We strongly believe that digitization is the way forward and the future. And within healthcare we started working heavily on digitization because we believe that part of leapfrogging in the healthcare system mainly in the emerging markets is technology and digitization,” said Mr Abouzeid, adding that the transformation is considered massive for GE.

Healthcare, said Mr Abouzeid, has been a major focus area in the GCC countries for the last eight years. ”It‘s driven by the social nature of healthcare and in a way is driven by the Arab Spring. They realize that healthcare and education are the two pillars that they need to secure to make sure that we have a healthy and educated population.” Healthcare expenditure has increased significantly in the region from

2% to as high as 6%, Mr Abouzeid pointed out. Increasing beds and building more hospitals, he pointed out, is not going to help. Rather, it is more about improving the quality of care and reducing costs.

With a burgeoning population and an increase in lifestyle diseases such as cardio-vascular diseases and diabetes, the current healthcare system needs to be transformed into a more “sustainable” one, Mr Abouzeid advised. GE Healthcare embarked on a Public Private Partnership (PPP) project about four years ago. However, it realized that hospitals in the public sector lacked certain skills such as coding and costing. This, Mr Abouzeid said, was a wake-up call for health ministries which began working on coding and bringing in insurance companies. He added that a PPP law has been passed in the UAE and this would further encourage partnerships with the private sector.

Dr Murphy shared his experience of working at a cancer center in Kuwait where he noticed a lack of confidence in the healthcare service delivered at the center. This pushed patients to seek medical treatments abroad. “The issue of increasing confidence in the healthcare delivered locally is a really important one. There are different traditions in the way healthcare is delivered. The inpatient model here for cancer care is very different than the primarily outpatient model we have in Canada or the U.S. There is for instance an absence of social services in the healthcare delivery at home that enables that level of outpatient care. So you will have to build a whole infrastructure around this to optimize cancer care in particular.”

There is a move towards specialization and towards a network of digitized primary care, Mr Abouzeid said. “The million dollar question is are we going to imitate or innovate? Are we going to imitate the existing system that we see in developed countries or are we going to innovate?” He believes that healthcare officials in the UAE would choose the innovation route. “Dubai has the IT infrastructure and technology infrastructure in terms of digitizing the healthcare system and to innovate. So you are going to see lots of leapfrogging happening in the healthcare system in the next two to five years,” said Mr Abouzeid.

GE Healthcare will be investing US$2 billion over a course of ten years in healthcare training and education. Mr Abouzeid said that there is a massive need for this with professionals from different backgrounds, educational qualifications and professional experience entering the local healthcare sector from abroad. By investing in training, they would be assured of a harmonious workforce.

12th November 2015, Dubai

“Healthcare is evolving into increased productivity and improved clinical outcome. For manufacturers of clinical devices, it is about simplifying their devices and improving ease of use.” Robert D. Mitchell

MEDICAL DEVICE INNOVATION RELEVANT TO EMERGING MARKETS

Panellists:• Maher Abouzeid, President & Chief Executive Officer Turkey & Middle East, GE Healthcare • Robert D. Mitchell, President, Endologix, Inc • Derek Young, CEO, i360medical• Youssef Haidar, Partner & Managing Director, TVM Capital Healthcare Partners

Panel Chair:Dr Kieran Murphy, Professor of Radiology, Director of Clinical Faculty, Techna Research Institute

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TVM Capital Healthcare Partners Annual Investors Conference 2015 - Summary


For Youssef Haidar, a partner at TVM Capital Healthcare Partners, affiliation with overseas centers of excellence such as Spaulding Rehabilitation Network and Joslin Diabetes Center is an approach the company uses to train its healthcare staff. The training includes visits from representatives from overseas centers and web based video conferences and training sessions. “We are not isolated. We fully recognize the need to get the right people and constantly train them,” Mr Haidar said. He added that there is also a potential for online education. “The world is developing in such a fast pace and there is absolutely no reason why education needs to be done in any other way.”

Robert D. Mitchell, president of Endologix, a developer of minimally invasive treat-ments for aortic disorders, said that, with the current prevalence of a sedentary lifestyle, it is now timely to focus on lifestyle diseases such as diabetes and cardiovascular diseases. ”There are several opportunities to improve patient care through technology advancements in these sectors,” he said. Innovation should not only be associated with disruptive technologies, but in finding ways to make the procedure more predictable for the operator, thus improving clinical outcome. For manufacturers of invasive medical devices in todays world, it is about simplifying devices and improving ease of use.

Derek Young, the CEO of i360medical, a healthcare solutions and medical device company, agrees. “Our focus is to identify ideation into our groups, qualify that idea generation and move it to process design development, IP and commercialization into the market place,” he said. “There are new technologies that can be available in the market at a price point that is beneficial for everybody.”

Cost, efficiency and productivity come into the picture when simplifying machines, said Mr Abouzeid. He added that, for instance, handheld ultrasound machines can be designed to be used by midwives and technicians in rural areas after just a few hours of training. Similarly, quick scanning CT scans without the need to sedate paediatric patients can be cost saving for hospitals.

“We are pushing the boundaries of technology and these machines are becoming smart machines,” said Mr Abouzeid. “It‘s a combination of getting the machine simpler and at the same time pushing the boundaries of technology and have machines that reduce cost.”

“We strongly believe that digitization is the way forward and the future.

And within healthcare we started working heavily on digitization because we believe that part of leapfrogging in the healthcare system mainly in the emerging markets is technology and digitization.”

Maher Abouzeid

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