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Understanding opportunity in Myanmar’s healthcare market
Myanmar in Transition
Amid a general slowdown of the global pharmaceutical market, pharmerging markets
continue to be a formidable engine of gro...
Organized for Outcomes
It is within the Third Wave Reform that
Myanmar’s healthcare industry is taking
shape. Recognizing ...
2.	 A vision of universal healthcare (UHC) and the growth of a consuming class. The NCDP espouses
		 a vision to build UHC...
Infrastructure
Enthusiasm, therefore, needs to be tempered by an informed understanding of the market’s
significant challe...
For a population of just over 51 million people, there are a total of 827 primary care hospitals, 81
secondary care hospit...
Talent Pool
Aside from the infrastructure gaps, sufficient human resources for healthcare is cited as the greatest
challen...
medicine, with little-to-no continuing education or hands-on specialty experience. This lack of
specialty expertise places...
Incoming companies will therefore be tasked with developing a deliberate price/volume strategy
that focuses more on access...
Ultimately, MNCs will need to develop educated strategies that both respond to Myanmar’s current
environment, and anticipa...
For corporate talent, the most important investment is training and development. This,
		 however, is not a job to be done...
IMS Health Asia Pacific IMS Health Headquarters
8 Cross Street, #21-01/02/03/04
048424, Singapore
apac.info@imshealth.com
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White Paper - Myanmar in Transition

Amid a general slowdown of the global pharmaceutical market, pharmerging markets continue to be a formidable engine of growth; across Asia, Africa and South America, these markets are boasting a CAGR of 10-14%. At the outer edges of these growing economies are markets identified by IMS Health as “Frontier Markets” – the next big drivers of growth, opportunity and even innovation.

Among the Frontier Markets, Myanmar is capturing the most attention. With the completion of parliamentary elections in early November of 2015, there are positive signs that the momentum for change and market liberalization will accelerate. Indeed, Myanmar resembles the early days of some of today’s leading Asian developing markets such as Vietnam and Indonesia. However, while understanding the similarities is certainly valuable, the temptation to merely duplicate entry strategies and market assumptions should be resisted. Myanmar’s underinvested healthcare infrastructure, sizeable talent gaps, and significant regulatory and affordability hurdles, require an informed approach, and managed expectations. Multinationals will be challenged to re-evaluate what it takes to play, and what it means to win in both the short and long term.

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White Paper - Myanmar in Transition

  1. 1. Understanding opportunity in Myanmar’s healthcare market Myanmar in Transition
  2. 2. Amid a general slowdown of the global pharmaceutical market, pharmerging markets continue to be a formidable engine of growth; across Asia, Africa and South America, these markets are boasting a CAGR of 10-14%. At the outer edges of these growing economies are markets identified by IMS Health as “Frontier Markets” – the next big drivers of growth, opportunity and even innovation. Among the Frontier Markets, Myanmar is capturing the most attention. With the completion of parliamentary elections in early November of 2015, there are positive signs that the momentum for change and market liberalization will accelerate. Indeed, Myanmar resembles the early days of some of today’s leading Asian developing markets such as Vietnam and Indonesia. However, while understanding the similarities is certainly valuable, the temptation to merely duplicate entry strategies and market assumptions should be resisted. Myanmar’s underinvested healthcare infrastructure, sizeable talent gaps, and significant regulatory and affordability hurdles, require an informed approach, and managed expectations. Multinationals will be challenged to re-evaluate what it takes to play, and what it means to win in both the short and long term. As Myanmar embraces a market economy, the country is gradually gaining ground. GDP and life expectancy have both grown steadily, with salaries, disposable income and economic opportunities all on the rise. For foreign investors, signs of economic and political reform are generating confidence in continued growth and market expansion. Indeed, there appears to be only one direction to go – upward. However, this growth will be organic and prolonged. In healthcare in particular, a historical lack of investment has resulted in low levels of health personnel and infrastructure relative to population. This has, in turn, led to a significant health burden. According to the World Health Organization, for example, Myanmar suffers some of Asia’s highest rates of childhood malnutrition and under-five mortality (56,000 deaths per year), and high (though improving) maternal mortality (200 per 100,000 live births). Moreover, from both a social and regulatory perspective, Myanmar is still struggling to embrace the transparency and accountability that were conspicuously absent in the past. Since the country currently ranks high on the Transparency International corruption scale, conservative caution will be necessary to ensure compliant, and sustainable, business growth.1 “Myanmar has embarked on a relatively swift and pronounced politico-economic change of direction. The examples of countries that have followed similar paths of transformation over the last 30 years should inform a sense of optimism as well as caution”, confirms Tim Walton, Senior Principal, Asia Emerging Markets, IMS Health. To proactively manage and encourage growth, the government has implemented a range of reforms since 2008 to support both public and private contribution to the burgeoning economy. These reforms have taken place over three “waves,” the last of which places specific emphasis on a higher standard of living and development that “directly improves the wellbeing of the people.”2 Myanmar: A Positive Outlook 1 Score of 21 on a scale of 0-100; 0=highly corrupt. Transparency International, Corruption Perception Index 2014 2 Ministry of Health, Health in Myanmar 2014, p9 – www.moh.gov.mm
  3. 3. Organized for Outcomes It is within the Third Wave Reform that Myanmar’s healthcare industry is taking shape. Recognizing the clear link between a strong healthcare system and national progress, Myanmar’s Union Minister for Health identified “health [as] the hub of sustainable development.”3 Indeed, as the political and social environment has stabilized over the past five years, government spending on healthcare has concurrently increased (see Fig 1). However, a comparison to other markets in Southeast Asia (SEA), where spending as a percentage of GDP is typically at 3-4%, demonstrates that the current baseline is extremely low.4 Profound and long term political and financial commitments will be required in order to affect real change and improve the country’s healthcare infrastructure, availability and access models. An increase in government spending, together with direct investment from regional players and pioneering multinationals (MNCs), has led to significant growth of the healthcare market in recent years; the pharmaceutical market alone is forecast to reach US$1 billion by 2018. This growth will be driven by three key factors: 1. The mix of public and private investment. Myanmar’s healthcare sector is financed and serviced by both governmental and private systems. Politically, there are two significant bodies driving the governance, regulation, investment and operations of healthcare in Myanmar: The Ministry of Health (MOH), which serves as the high level governing function and which executes the National Comprehensive Development Plan (NCDP); and the Department of Health (DOH), a subset of the MOH, and the main regulatory body for providers, pharmaceuticals, medical devices, and capital investment. Central to this public-private system is the Myanmar Medical Association (MMA) which facilitates cooperation between providers, and ensures that private practitioners are integrated into public healthcare activities. Private enterprises are currently focused primarily on ambulatory care, though there has been a recent increase in both private hospitals and investments in diagnostic and medical device equipment. It must be anticipated that Myanmar’s public health system will struggle with growth and funding priorities over the next several years, and that some gaps will be filled by private healthcare players. In the longer term, the adoption of a Foreign Direct Investment Law, the removal of international sanctions, and a positive outcome from the 2015 elections ensures that Myanmar is poised to experience rapid economic growth which will have positive implications for investment in its health services. A Young, But Promising, Healthcare Market Fig.1 Healthcare expenditure in Myanmar 2010-2015 3 Health in Myanmar, introduction 4 WHO, World Health Statistics 2014 Healthcare spending as a % of GDP Healthcare spending as a % of overall govt expenditure 4 3.5 3 2.5 2 1.5 1 0.5 0 2010-2011 Percent 2012-20132011-2012 2013-2014 2014-2015 1.05 0.2 0.21 0.76 0.89 0.991.05 2.82 3.15 3.38
  4. 4. 2. A vision of universal healthcare (UHC) and the growth of a consuming class. The NCDP espouses a vision to build UHC and an effective and equitable health system. This represents a long term journey along the three dimensions of UHC – population coverage, service delivery and financial protection. The priorities for development, as outlined by the MOH in 2012, address the first two dimensions: First, to strengthen access and referrals to points of care, specifically primary care, at the township level; and second to build an Essential Medicine program and ensure generic-quality medicines from this list are available at all levels of facilities.5 From a financial protection perspective, a new health insurance scheme was introduced in July 2015, but uptake has been low, with less than 2,000 applications. Today, out of pocket (OOP) healthcare spending accounts for the vast majority (80%) of funding for services. This makes even basic care cost-prohibitive for many of Myanmar’s poorest citizens, especially those in outlying or marginalized areas.6 However, the country’s consuming class is expected to grow from 2.5 million in 2010 to 19 million by 2030.7 It is this growth at the middle of the population pyramid that will ultimately drive pharmaceutical product sales in the short term, enabled by improved access to points of care. 3. Investments in high-need, high-impact therapy areas. Health indicators in Myanmar demonstrate that opportunities for intervention by healthcare players are numerous. IMS Health has conducted market assessments across several communicable and non- communicable disease (NCD) areas and has identified key under- or un-served market opportunities. With the recent expansion in urban living, NCDs, notably cardiovascular, cancers, respiratory, diabetes and other chronic diseases, are now estimated to account for 59% of all deaths. Communicable diseases, in particular tuberculosis, HIV/AIDS and malaria also represent high areas of burden with opportunities for both prevention and treatment. To date, the MOH has been proactive in developing national programs for some of the most critical disease areas in partnership with international donor organizations. However, there is still significant space for partnership and investment in these therapy areas. These levers create an alluring picture of untapped potential for MNCs, who are captivated by the opportunity to take an early-mover advantage, establish a presence in a significant Frontier Market, and play a role in bringing better health outcomes to a population with significant need. Again, this picture must be set in the context of appropriately-managed expectations. Companies wanting to take a position in Myanmar today must do so with a long-term strategic vision and an understanding that a significant ROI can only be the result of sustained investment over an extended planning cycle. 5 Health Systems in Transition, The Republic of the Union of Myanmar: Health System Review, Vol 4. No 3. 2014, p 69 6 Health Systems, p 61 7 McKinsey Global Institute. “Myanmar’s Moment: Unique opportunities, major challenges.” June 2013
  5. 5. Infrastructure Enthusiasm, therefore, needs to be tempered by an informed understanding of the market’s significant challenges. Through its operations in Myanmar, and extensive discussions with clients and partners in the region, IMS Health has identified four critical barriers for MNCs: An under-funded and over-burdened healthcare infrastructure An insufficient talent pool (on both the corporate and provider level) that is inexperienced at best, nonexistent at worst A work-in-progress regulatory environment that is difficult (and potentially costly) to navigate High affordability hurdles While the overall trend of government spending on healthcare is on the rise, current levels are still inadequate to meet demand. As a result, much of the burden of financing, building and improving healthcare facilities falls to local communities, especially in rural and sub-rural areas. Increased funding, however, only addresses part of the story. Myanmar’s healthcare infrastructure is spread over a broad network of hospitals, health centers and other points-of-care with varying degrees of capability. Within these physical structures, there are also significant gaps in quality and functionality. Understanding the hierarchy of access points, and the conditions therein, is a necessary first step in developing a holistic view of the healthcare landscape. Points of care Healthcare delivery in Myanmar ranges from sub-rural health centers, largely focused on ambulatory and primary care, to urban tertiary centers of expertise: Preparing For An Uphill Climb Note: This figure does not include military hospitals. In 2007, there were 29 military hospitals and 14 field medical battalions across Myanmar. Tertiary level Urban hospital (Yangon, Mandalay, Nay Pyi Taw · 1000-bed · 20 disciplines · Intensive care Rural hospital Sub-rural health center (Sub-RHC) · Basic health staff · Ambulatory · Emergency · 16-bed · Emergency · General primary care Township hospital District hospital · Primary/general care · Specialty disciplines: anesthesia, orthopedic, eye, dental, pathology · 25-bed · Aux/admin services · General medicine, surgery, ob, gynaecology, pediatric Secondary level Primary level
  6. 6. For a population of just over 51 million people, there are a total of 827 primary care hospitals, 81 secondary care hospitals and 36 tertiary centers.8 And while Myanmar’s ratio of hospital beds per 1000 people (.06 in 2010) is low, there have been significant improvements over the past decade; a 17.4% increase in public MOH hospitals and a 12.6% increase in RHCs from 2004 to 2013.9 However, the vast majority of the country’s rural poor population is without access to these facilities, either due to cost or geography. Furthermore, many hospitals, especially at the primary/rural level, are without necessary ancillary services or technologies, such as lab facilities or diagnostic imaging. Certainly the discrepancy in capacity and capability between the rural and urban points of care must be addressed if equity in healthcare is to be improved. It should be noted that significantly increasing the absolute investment in infrastructure through the domestic tax-base will be a long battle. The informal employment sector and low incomes dominate, suggesting that investment dollars will have to come from elsewhere – either the private sector or international donor organizations. Conditions Compounding the shortage of facilities are substandard conditions. Buildings – even private clinics – often lack basic functions such as constant electricity and water supply which can result in unhygienic environments. Drug storage is in a similarly rudimentary state, with limited cold chain refrigeration, frequent power outages and open, disorganized shelves. The wholesale markets, it should be noted, do not offer significant improvements, and employ stock control/management systems that are chaotic at best. Improving the healthcare infrastructure in Myanmar is, and will be, in large part at the discretion of the MOH. Looking ahead, it is also likely that these necessary capital investments – public and private – will be allocated via a “bottom-up” approach, according to the needs of each state. 8 National census, 2014; Health systems 9 Health Systems, p 80
  7. 7. Talent Pool Aside from the infrastructure gaps, sufficient human resources for healthcare is cited as the greatest challenge, and thus highest priority, for incoming pharmaceutical companies. The lack of a qualified talent pool can be found at both the corporate/commercial level, as well as at the healthcare provider (HCP) level. “The talent gap is the inevitable consequence of a society that has lived under isolation and sanctions for so many years,” explains Mr. Walton. “Having a people strategy that transfers knowledge and develops talent will be key to long term growth.” Corporate/commercial talent gaps Upon entering Myanmar, multinational companies will find that employees in the healthcare sector have thus far operated with little to no regulations or systematic guidelines, and have no experience with the sophisticated HR, finance or even (notably) pharmacovigilance functions of a multinational company. And while local talent has demonstrated to be both willing and able to embrace a more structured corporate model, the lack of formal training and the need for guidance will be a hurdle to generating short-term momentum. Moreover, such a small pool of experienced and qualified candidates inevitably leads to a “war for talent” among new investors. According to one MNC pharma executive “this is a common phenomenon in developing economies and can only be avoided if we train our people sufficiently enough that they are empowered to leave us, but look after them well enough that they never want to.” Furthermore, as Myanmar embraces a market economy, companies can expect a shift from a purely distributor-based model to a more modern, sophisticated pharma sales model. As a result, a particular area of focus and investment should be Medical Representatives who can take on a dual role of educating and selling to HCPs (physicians and pharmacists). Healthcare practitioner talent gaps Of around 20,000 licensed medical doctors nationwide, IMS Health’s latest estimate is that the prescription market is driven by 4,000 qualified and practicing physicians across 7 urban areas. The significant majority (80%) is concentrated in Yangon and Mandalay (See Fig 2). And while the overall number of HCPs (including nurses and midwives) has been steadily increasing since the early 2000s, it has not yet reached the global standard of 2.28 per 1000 population.10 Initial training for medical professionals is standardized by the MOH Department of Medical Science, with a number of medical universities and post-graduate programs offering degrees in a range of specialties. However, in practice, providers are primarily focused on internal 10 Health Systems, p 78 Source: IMS Health primary research 2015 Mandalay 24% Nay Pyi Taw 8% Lashio 2% Taunggyi 2% Mawlamyine 4% Yangon 56% Magwe 4% Fig. 2 Practicing physicians by urban area
  8. 8. medicine, with little-to-no continuing education or hands-on specialty experience. This lack of specialty expertise places an enormous burden on internal medicine physicians, who often treat patients above and beyond their capability set. According to the latest IMS Health census estimates, there are only 800 specialists in total nationwide. This represents a significant challenge to diagnosis and treatment across multiple therapy areas. Pharmaceutical companies investing in the market should therefore recognize the access and prescription barriers, but also seek opportunities to increase knowledge, capability and specialist understanding within the prescriber base. Lack of medical knowledge in Myanmar is a function of both distance and necessity. Doctors have been, until recently, almost completely disconnected from the global medical community; internet access is subpar, and travel outside Myanmar had been restricted. This has resulted in a pervasive lack of awareness about new products, treatment protocols and disease pathways. But the root cause is largely economic – for a doctor to earn sufficient money, volume and consultations must take priority over new products or specialty patients. It can be expected that as the healthcare sector evolves under a market economy, physician behavior will become more profit-oriented. Therefore, safeguarding a positive doctor-patient relationship, and cultivating both trust and transparency will be critical priorities as this talent pool matures. Regulatory Enviornment As with many emerging economies, and especially those transitioning to a market economy, Myanmar’s regulatory framework is both time-consuming and costly to navigate. For pharma companies, the greatest challenge will be unmonitored distribution practices, particularly the unofficial flow of medicines across the border, and the lack of consistency and government transparency in tendering and registration policies. Together, these factors will force MNCs to re- evaluate both their priorities and their processes. Distribution Independent retail pharmacies are the dominant distribution channel for medicines in Myanmar. These outlets are operated by pharmacists who, for all intents and purposes, serve as physicians, managing both diagnosis and distribution. The lack of regulation over who distributes drugs, and where, has led doctors to operate in a similarly autonomous fashion, even from within the hospital. The repercussions for pharma companies is a distribution system that is both disorganized and unregulated, and therefore extremely challenging to approach; even standard price-volume advantages at the institutional level are hard to achieve. Nevertheless, understanding the pharmacy as the primary point of entry will be essential in building a real picture of market potential. Affordability With only 4% of Myanmar’s population considered part of the “consuming class,” affordability is a significant bottleneck to market growth.11 Today, the majority of Myanmar citizens are poor, with extremely limited access – geographic and financial – to even the most basic healthcare services. Geographically, as discussed, the services closest to most people are confined to basic or emergency care. For specialty treatment, expertise and facilities are both prohibitively far away. Financially, as the bulk of expenses must be paid out of pocket, cost tends to drive decisions about where, and how, to be treated (if at all). 11 Health in Myanmar, introduction
  9. 9. Incoming companies will therefore be tasked with developing a deliberate price/volume strategy that focuses more on access than profit in the short term. Fortunately, the landscape is shifting – as national health insurance and social protection policies gain ground, citizens will have increased flexibility to invest in their own health. On the other side of the affordability spectrum, Myanmar is losing significant patient numbers from the top of the pyramid to nearby countries such as Thailand, India and Singapore, especially for complex and expensive treatments such as oncology or transplants. Such out-bound ‘medical tourism’ poses an obvious challenge (and opportunity) for Myanmar’s domestic healthcare industry and pharma companies, who must work hard to retain this “willing-to-pay” population, and to ensure adequate provision for after-care.
  10. 10. Ultimately, MNCs will need to develop educated strategies that both respond to Myanmar’s current environment, and anticipate a more long-term investment. They will also need to embrace the reality of what success might look like for their bottom line – there is currently a small pie to share. And while an underlying challenge in such a unique market is that “best practice” doesn’t always apply, certain strategies will be core to any successful, and sustainable, approach: 1. Build a tailored portfolio Already, Myanmar is becoming a crowded marketplace in some areas; opportunity is there, but must be captured swiftly and strategically. At one end of the spectrum, low cost products (e.g. antibiotics) carry high volume potential. But competition is already steep in these highly genericized and fragmented markets. At the other end, small but profitable niche markets (e.g. oncology, hepatitis) may offer high returns, but also low volumes that require significant education investment and a thorough pre-launch understanding of patient populations. To succeed, incoming pharma MNCs will need to thoughtfully choose a road. Primary care portfolios may need to enter with a larger basket of brands to maximize efficiencies in promotional spend, a qualified sales team, and a willingness to expand beyond the two main urban areas. These strategies will require less investment in infrastructure, but perhaps more advanced brand planning to understand unmet need and pockets of opportunity. Specialty portfolios should focus on differentiated therapy areas, and transforming or establishing a targeted market. Such an approach may yield high returns, but only if there is a large enough affordable patient population to justify the investment. The successful investor will focus on building new markets through innovation rather than competing in a small market on price. Either strategy will need to address the challenges presented above, and manage internal expectations around short and long term returns accordingly. 2. Invest in people Clearly a high area of need, and opportunity, is Myanmar’s human capital. As discussed, this need falls into two categories: corporate talent and healthcare providers. There is, however, a third area of opportunity that should be considered in support of a long term commitment – patient education and empowerment. Playing To Win Build a tailored portfolio Invest in people Success in Myanmar Cultivate a network
  11. 11. For corporate talent, the most important investment is training and development. This, however, is not a job to be done remotely. Recruitment, training and ongoing development must be done on the ground so as to develop a mutual understanding of culture, expectations and desired outcomes. A focus on training is also paramount for the healthcare provider population, most of whom have little to no experience with continuing medical education, or even have up to date diagnostic training. As with corporate talent, this development will need to be focused and continual. It should also take place in a variety of settings, including at the point of care, and at measured intervals. A better educated, more informed provider population will be a critical catalyst for driving uptake and sustainable adoption of medicines, especially for newer or lesser known disease areas. As a telling example, one pharma executive revealed that many primary care physicians do not know how to diagnose diabetes, nor have they had any experience administering insulin. Patients represent a powerful opportunity for pharma companies to round out their footprint in Myanmar. To date, very little has been done to support or educate patients, as there is often an ethical hesitation to communicate directly with patients. However, through healthcare professionals, associations and other community networks, pharma companies can use patient education as a complement to more traditional people investments. 3. Cultivate a network As with many markets in this region, the ability and willingness to connect and collaborate with local stakeholders and known key opinion leads (KOLs) is extremely valuable. Particularly in areas that require extensive education and awareness campaigns, developing strong relationships and constant contact with doctors and government leaders can critically boost adoption. This is especially true among the provider community. In Myanmar, which is highly hierarchical, doctors are placed at the top, alongside religious and military figures. As such, they occupy significant positions of authority and influence within both professional and community circles. Tapping into this structure through an informed KOL strategy, therefore, will be extremely important in establishing necessary brand equity to drive longer-term ROI. Myanmar presents a plethora of exciting opportunities for the global pharma community; such an untapped market is both rare and short-lived. Positive growth projections, a stable political and economic base reinforced by recent democratic elections, and a growing consumer class are creating an almost overwhelming amount of enthusiasm. However, such enthusiasm should be eased by due diligence and perhaps reduced to a point of cautious, or at least realistic, optimism. Successful market entry in Myanmar will be built on an informed approach that thoughtfully addresses and prioritizes the country’s fundamental infrastructure, talent, regulatory and affordability challenges. Winning will also be contingent on how well companies manage their expectations, and define their area of play. Summary
  12. 12. IMS Health Asia Pacific IMS Health Headquarters 8 Cross Street, #21-01/02/03/04 048424, Singapore apac.info@imshealth.com www.imshealth.com Tel: +65 6227 3006 83 Wooster Heights Road Danbury, CT 06810 IMS Health United States About IMS Health IMS Health is a leading global information and technology services company providing clients in the healthcare industry with end-to-end solutions to measure and improve their performance. Our 7,500 services experts connect configurable SaaS applications to 10+ petabytes of complex healthcare data in the IMS One™ cloud platform, delivering unique insights into diseases, treatments, costs and outcomes. The company’s 15,000 employees blend global consistency and local market knowledge across 100 countries to help clients run their operations more efficiently. Customers include pharmaceutical, consumer health and medical device manufacturers and distributors, providers, payers, government agencies, policymakers, researchers and the financial community. As a global leader in protecting individual patient privacy, IMS Health uses anonymous healthcare data to deliver critical, real-world disease and treatment insights. These insights help biotech and pharmaceutical companies, medical researchers, government agencies, payers and other healthcare stakeholders to identify unmet treatment needs and understand the effectiveness and value of pharmaceutical products in improving overall health outcomes. Additional information is available at www.imshealth.com ©2015 IMS Health Incorporated and its affiliates. All rights reserved. Trademarks are registered in the United States and in various other countries

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