opportunities in brazil's healthcare sector
TRANSCRIPT
Guillaume Corpart +1 (305) 441-‐9300 x302 [email protected] www.globalhealthintelligence.com
May 2015. © 2015, Global Health Intelligence. All rights reserved.
Global Health Intelligence on: Healthcare in Brazil
Opportunities ahead
About the Presenter
Guillaume Corpart Managing Director
Founder of Global Health Intelligence Co-‐Founder of Americas Market Intelligence 15+ years in consulOng in La:n America
SERVICE EXPERTISE
• Market strategy • Market sizing and
segmentaOon • Monitoring • CompeOOve intelligence • Customer segmentaOon • Market research
PROJECT EXPERIENCE • 400+ consulOng engagements • 200+ CI assignments
INDUSTRY EXPERTISE
• Medical devices • Capital equipment • Consumables • PharmaceuOcals
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Global Health Intelligence
Hospital demographics
The world’s largest hospital demographics database focused on emerging markets
Medical import data The most expansive healthcare equipment import staOsOcs in LatAm
Tailored research
Refined with 15+ years Market Intelligence experience: • Market sizing and segmentaOon • Partner search & market due diligence • CompeOOve profiling • Pricing and cost analysis • Best pracOces • PosiOoning and opportunity idenOficaOon
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Provides advice to guide investment decisions in emerging markets.
Table of contents
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1. Brazil’s economy and what it means for healthcare
1. Brazil’s economy: Boom, Boom … 2. … Bust? 3. Healthcare is an economic priority
2. Overview or Brazil’s healthcare system
1. The gap between aspiraOon and reality 2. A perverse and interdependent relaOonship 3. The balance between SUS and Private care 4. Fragmented private care
3. Recent developments and outlook
1. Foreign investments and ConsolidaOons 2. Private hospital income & expenditure 3. Trends & Outlook
4. Q&A Session
• The Brazilian economy grew at a CAGR of 15% between 2003 and 2014.
• During this Ome, the middle class grew from 44% to 60% of the populaOon.
• This translates to 42 mi people entering the consumer class.
• There are 140 mi people in SES A/B, C.
• Sustained by the high price of commodiOes, rising wages, strong credit growth, lower interest rates.
• 2013-‐2014: nega:ve growth and consistently revised downward forecasts for 2015.
Brazil’s economy: Boom, Boom …
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0%
10%
20%
30%
40%
50%
60%
70%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2003 2005 2007 2009 2011 2013
GDP (US$ bi)
Middle class (as % of society)
Sources: The World Bank, IPEAD, IBGE, Ministerio de Desenvolvimento Social, PwC, FGV.
Middle class: HH earning between R$ 1,395 and R$ 4,650 /m
GROWTH OF THE BRAZILIAN ECONOMY AND ITS IMPACT ON THE MIDDLE CLASS
• The slowdown in the Chinese economy resulted in downward pressures on the price of commodiOes and thus a plumme:ng of the Real.
• The price of commodiOes dropped by 66% from July 2011 to March 2015, during which Ome the Real dropped by a corresponding 51%.
• Infla:on is at 8.2% per year, the highest since 2005.
• Unemployment is at 6.2%, rising trend since 2013.
• Civil protests of 2013/14/15 – healthcare is a cornerstone of the manifested anger, along with corrupOon scandals (Petrobras).
• Is Brazil’s :me over? Unlikely. But it is a rude awakening with considerable consequences.
… Bust?
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Sources: www.xe.com, IndexMundi (Iron Ore)
51% drop in value
The fate of private healthcare is intricately Oed to that of the middle class.
F/X RATE: US$ 1 = R$ X
Healthcare is an economic priority
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Sources: World Bank, World Economic Forum, IPEAD, IBGE, Ministerio de Desenvolvimento Social, PwC, FGV, Datafolha.
• While the Brazilian economy is expected to slow, Healthcare will remain strong (and possibly even grow).
• Other key sectors include Natural Resources, Agriculture, Manufacturing (dropping)
• Health is the #1 priority in public opinion, ahead of issues such as violence/security, corrupOon, educaOon, unemployment or poverty.
• 80% of new healthcare users come from the new middle-‐class.
• Insurers have low-‐cost plans for the new middle-‐class.
• The “demographic dividend” will play in the country’s favor through 2029.
• Government policy will anract investments, focused on increasing the availability and quality of care to the populaOon.
POPULATION
PopulaOon: 200 mi Upper + Middle class: 140 mi (70%) UrbanizaOon: 89%
ECONOMY
GDP: US$ 2,245 bi Healthcare expenditure: 9% of GDP (Priv.: 4.9%, Pub.: 4.1%) Medical device market: US$ 5 bi Clinical trials: 2,000+
HOSPITAL STRUCTURE
Number of hospitals: 6,950 Number of hospital beds: 452,000 Hospital admissions (SUS): 11.5 mi
INSURANCE
Private health insurance: 54 mi (27%) Geographies: 65% of contracts in South-‐East
RANKINGS
Ease of doing business: 120 (out of 189) Global compeOOve index: 57 (out of 144)
The gap between aspiration and reality
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• It is a cons:tu:onal right for all ciOzens to have healthcare coverage through the Unified Healthcare System (SUS – Sistema Unico de Saude).
• Inequali:es are high in a system meant to provide care for all. • The SUS has been underfunded since its concepOon – lack of
equipment and doctors, lack of geographical coverage. • Private plans (originally conceived as supplemental to public
insurance -‐ PPP) have become a parallel system for those who can afford it.
• Private plans offer a higher quality of care, but revert back to SUS for not-‐covered (expensive) procedures.
• 63% of private plans are hired through businesses. • Consumers are willing to pay for bener healthcare.
• The government accounts for 46% of HC spending, down from 75% in 2000 and compared to 70% in OECD countries.
Sources: The Economist, The Lancet.
A perverse and interdependent relationship
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Sources: The Lancet, PwC.
INFECTIOUS DISEASES
Dengue fever Visceral leishmaniasis
Repeated epidemics, out of control Increasing
NON COMMUNICABLE DISEASES
Overweight/obesity Diabetes Hypertension Psychiatric diseases Asthma Cancers of the breast, lung, prostate, colon
Rapid increase Increasing High prevalence, sOll increasing High prevalence High prevalence Increasing
EXTERNAL CAUSES
Homicides Traffic-‐relates injuries and deaths DomesOc violence
Decline but sOll at epidemic levels Decline but sOll at epidemic levels High prevalence
• There is a perverse and interdependent rela:onship between the SUS and Private insOtuOons.
• The private does not make money from the SUS yet ~2/3 of procedures conducted are hired by SUS.
• Without the SUS, many private hospitals would go out of business. Without private insOtuOons the SUS could not deliver care.
• Despite its limitaOons, the SUS can be credited for its achievements.
• Increased access to primary and emergency care, reach universal coverage of vaccinaOon and prenatal care, and invest in the expansion of human resources and technology.
“The continuous expansion of the private subsector is subsidized by the state, while the public sector is often underfunded, thus
compromising its ability to guarantee quality of access to care.”
The balance between SUS and Private care
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• Public insOtuOons: Primary care clinics, Emergency units. • The SUS depends on contracts with the private sector, especially for diagnosOc and therapeuOc support services.
• Private insOtuOons: Hospitals, OutpaOent clinics, DiagnosOc and therapeuOc services. • Provision of secondary care by the SUS is problemaOc, because service supply is restricted and oten given
preferenOally to individuals with private health plans.
Public Sector (SUS) 47%
Private HC
insurance 23%
Out-‐of-‐pocket 30%
Public (SUS) 36%
Private for profit 33%
Private non profit
31%
COVERING HC EXPENSES HOSPITAL BEDS: 452,000
“Brazil is not for beginners” - Tom Jobim
Sources: The Economist, The Lancet, PwC.
Fragmented private care
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• The private hospital market is regional and fragmented • The largest private hospitals in the country are philanthropic and/or
nonprofit. • No private hospital group owns more than 1% of the market based on
number of beds. • No private hospital group has naOonal coverage.
• The 7 largest private health insurance companies (all with more than 1 mi lives insured), hold less than 30% of all beneficiaries.
• There are over 1,000 private insurance plans covering ~46 mi people.
• Private hospitals oten leverage their experience to manage marginalized insOtuOons – due to economic, insOtuOonal, or geographic reasons.
• Demand for new investment in hospitals – to increase access and coverage.
• 13,000 hospital beds are needed by 2017. • Avg. occupancy rate of private hospitals (2012): 77%.
LARGEST HOSPITAL GROUPS & INVESTMENTS EXPANSION, RENOVATIONS, ACQUISITION OF MED. EQUIPMENT – 2012
• Rede d’Or: US$ 143 mi
• Sirio-‐Libanes: US$ 116 mi
• Albert Einstein: US$ 112 mi
• Beneficiencia Portuguesa: US$ 82 mi
• Amil: US$ 128 mi
Sources: The Economist, The Lancet, PwC.
• Three months ater President Dilma Roussef announces that foreign players can now have ownership in Brazilian hospitals, Carlyle invests US$ 600 mi to hold an 8% stake in Rede d’Or.
• Rede d’Or is the largest independent hospital operator in Brazil, with 4,500 beds and 29 hospitals. • The money will be used for new construcOons, expansion of current faciliOes and the financing of new acquisiOons.
• Further M&A ac:vity is imminent increasing industry consolidaOon and standardizaOon. • GIC holding of Singapore is looking to buy 14% of Rede d’Or.
Recent developments: Foreign investments and Consolidations
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April 28, 2015
January 26, 2015
Sources: The Wall Street Journal, Latin Lawyer.
Private hospital income & expenditure
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• The ANAHP (NaOonal AssociaOon of Private Hospitals) seeks to encourage and empower hospital members to use standardized indicators (management tool and as sector benchmarking).
• Metrics include Financial, OperaOonal, Human Resources, Healthcare Services Management, Clinical Care Quality and Safety, Clinical Care Protocols, Sustainability
Personnel costs 42%
Hospital supplies 25%
Other supplies
3%
Tech. and Op.
contracts 8%
Support & LogisOcs contracts
5%
UOliOes 3%
Maint. and Tech. support 3%
DepreciaOon 4%
Other expenses
7% Daily rates & fees 25%
Hospital supplies 48%
DiagnosOcs and Therapy
unit 16%
Other Services / OperaOonal
5%
Other / OperaOonal
6%
Sources: ANAHP, 2012 data.
PRIVATE HOSPITAL EXPENDITURE PRIVATE HOSPITAL INCOME
Trends & Outlook
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MARKET DYNAMICS HOSPITALS HOSPITAL SYSTEMS DAY-‐TO-‐DAY
• Government regulaOon to anract investment
• PE money to flow into Brazil – Strong M&A acOvity
• Expansion / ConsolidaOon of private groups
• ModernizaOon of public infrastructure
• Growth of home care • Growing elderly
populaOon
• Cost reducOon • Regulatory compliance • Technology • InnovaOon • InternaOonal
accreditaOons • Increased accountability
and transparency • Management informaOon
systems
• InternaOonal benchmark • Engagement to improve
data collecOon and sharing • Standardized metrics on
cost / quality / outcome • Increasing informaOon
exchange between stakeholders
• Cost of procedures
• Healthcare IT • Medical imaging • InterconnecOvity /
Smartphone boom • Medical records • Equipment updates • Training
• Healthcare needs to be more effecOve and innovaOve.
“Brazil is the country of the future; and always will be.”