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Inside this issue
• Understanding opportunity in Myanmar’s healthcare market
• The next battleground for consumer health companies in Asia Pacific
• The expanding value of observational studies
• Navigating China’s growing medical device market
InsightIssue 6 | 2016
Myanmar in transition
Understanding opportunity in Myanmar’s healthcare market...............................................................................................5
After decades in isolation, Myanmar’s emergence onto the world stage is generating tremendous excitement, especially for
healthcare players who are eager to bring better healthcare outcomes to a population with significant need. However, there
are significant challenges that cannot be underestimated. This article reviews the infrastructure, talent, and regulatory
hurdles that will challenge healthcare multinationals to re-evaluate what it means to enter this Frontier Market.
The next battleground for consumer health companies in Asia Pacific......................................................................... 11
The consumer health market is evolving rapidly, nowhere more so than in the retail environment. This article examines
the retail trends exerting the most pressure in Asia Pacific, and how those trends are reshaping channel dynamics and
strategies for companies.
Building a more complete picture
The expanding value of observational studies........................................................................................................................... 17
Increasingly, healthcare stakeholders are demanding a more complete picture of the economic, clinical and personal
value of drugs and medical services. Here, we discuss the expanding potential of Enriched Observational Studies to
complement clinical evaluations, both in Asia Pacific and around the world.
Policies, pressure and potential
Navigating China’s growing medical device market...........................................................................................................21
The medical device market in China is evolving into a robust growth sector. However, a range of new policies are poised
to exert significant pressure on domestic and MNC firms alike. This article outlines this ‘new normal’ environment, and
how companies can — and should — adjust to capture opportunity.
Welcome to the 6th edition of IMS Asia-Pacific Insight. As pharmaceutical markets follow a general trend of economic
slowdown, both globally and here in Asia Pacific, finding innovative and creative pockets of opportunity has never
been more critical.
Therefore, this issue of Asia Pacific Insight magazine focuses on the theme of “what’s next?” New areas of play, new
methodologies and even wholly new geographies are poised to disrupt the healthcare landscape in this region and
fundamentally change how and where businesses operate. Furthermore, how stakeholders respond to this sea-
change — including their appetite for changes in their own role and skill set — will be crucial to their success in the
For some, this may mean re-defining what success means to your organization. In Myanmar, for example, our
leading-edge analysis of this exciting, but tenuous market urges decision makers to critically manage operational
expectations around reality, rather than aspirations.
For others, such as those in consumer health, a rapidly evolving landscape is dramatically changing the rules of
engagement, demanding fast adoption of new strategies, skills and even business models.
And finally, articles discussing an enhanced approach to generating robust RWE and a “new normal” environment
for medical device companies in China demonstrate the value of information in generating better outcomes and
Asia Pacific continues to be a tremendously diverse healthcare environment and as such demands informed expertise
and insights to navigate. IMS Health is committed to providing our clients in this region with the information,
analysis, and intelligent perspective necessary to identify opportunity and cultivate success.
Myanmar in transition
Understanding opportunity in Myanmar’s
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
Among the Frontier Markets, Myanmar is capturing the most attention. With the completion of
parliamentary elections in early November 2015, there are positive signs that the momentum for
change and market liberalization will accelerate. However, 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.
Myanmar: A positive outlook
As Myanmar embraces a market economy, the country is
gradually gaining ground. GDP and life expectancy have
both been growing 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 certainly be organic, and
prolonged. “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,”
says Tim Walton, Senior Principal, Asia Emerging
Markets, IMS Health.
A young, but promising, healthcare market
As the political and social environment has stabilized
over the past five years, government spending on
healthcare has concurrently increased (Fig 1).
A comparison to other markets in Southeast Asia,
though, where spending as a percentage of GDP is
typically at 3-4%, demonstrates that the current
baseline is still extremely low 1
Nevertheless, increases in government expenditure,
together with direct investment from regional players
and pioneering MNCs has led to the significant growth of
the healthcare market in recent years; the pharmaceutical
market alone is forecast to reach US$1 billion by 2018.
And so an alluring picture of untapped potential emerges
for multinational companies (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. However, this picture
WHO, World Health Statistics 2014
Fig.1 Healthcare spending in Myanmar 2010-2015
Healthcare spending as a % of GDP
Healthcare spending as a % of overall govt expenditure
2012-20132011-2012 2013-2014 2014-2015
Source: Ministry of Health, Health in Myanmar 2014, www.moh.gov.mm
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.
Preparing for an uphill climb
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 three critical barriers
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
Points of care
Healthcare delivery in Myanmar ranges from sub-rural
health centers (RHCs), largely focused on ambulatory and
primary care, to urban tertiary centers of expertise (Fig.2).
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.2
And while Myanmar’s
ratio of hospital beds per 1,000 people (.06 in 2010) is
low, there have been significant improvements over the
past decade; a 17.4% increase in public hospitals and a
12.6% increase in RHCs from 2004 to 2013.3
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
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.
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.”
National census, 2014; Health systems.
Health Systems, p 80
An insufficient talent pool (on both the corporate and provider
level) that is inexperienced at best, nonexistent at worst
High affordability hurdles
An under-funded and over-burdened healthcare
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
· 20 disciplines
· Intensive care
Sub-rural health center
· Basic health staff
· General primary care
· Primary/general care
· Specialty disciplines: anesthesia,
orthopedic, eye, dental, pathology
· Aux/admin services
· General medicine, surgery, obstetrics, gynaecology, pediatric
Fig.2 Myanmar's healthcare Infrastructure
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.
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 (Fig 3).
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 1,000 population 4
Initial training for medical professionals is standardized by
the Ministry of Health’s 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 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.
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.
With only 4% of Myanmar’s population considered part
of the “consuming class,” affordability is a significant
bottleneck to market growth5
. 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).
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.
Health Systems, p 78
McKinsey Global Institute. “Myanmar’s Moment: Unique opportunities, major challenges.” June 2013
Nay Pyi Taw
Fig. 3 Practicing physicians by urban area
Source: IMS Health primary research 2015
Playing to win
Ultimately, MNCs will need to develop educated strategies
that 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. To succeed, incoming
pharma MNCs will need to thoughtfully choose a road:
- Primary care portfolios. Low cost products
(e.g. antibiotics) carry high volume potential.
These strategies will require less investment in
infrastructure, but perhaps more advanced brand
planning to understand unmet need and pockets of
√ Build a larger basket of brands to maximize
efficiencies in promotional spend
√ Develop a qualified sales team and a
willingness to expand beyond urban areas
- Specialty portfolios. Small but profitable niche
markets (e.g. oncology, hepatitis) may offer high
returns, but also low volumes. Such an approach
will require a large enough affordable patient
population to justify the investment.
√ Focus on differentiated therapy areas that can
transform or establish a targeted market
√ Invest in education programs and pre-launch
patient population research
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.
For corporate talent:
√ Focus on training and development
√ Ensure recruitment, training and ongoing
development is done on the ground, not remotely,
to foster a mutual understanding of culture,
expectations and desired outcomes
For healthcare providers:
√ Develop focused, continual training (most of which
will be a new experience)
√ Training should take place in a variety of settings,
including at the point of care
There is, however, a third area of opportunity that should
be considered in support of a long term commitment —
patient education and empowerment.
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.
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
this population, 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
Particularly in areas that require extensive education
and awareness campaigns, the ability and willingness
to connect and collaborate with local stakeholders and
known key opinion leaders (KOLs) is extremely valuable.
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, and affordability challenges.
To read our full white paper on this topic, which includes
a deep dive analysis of Myanmar’s healthcare system,
and the challenges facing MNCs as they approach this
landscape, please contact:
Senior Principal, Asia Emerging Markets, IMS Health
Senior Consultant, Primary Intelligence at
The next battleground for consumer health
companies in Asia Pacific
The consumer health market is proving to be an extraordinary pocket of opportunity in Asia
Pacific. This is not necessarily surprising. Driven by a myriad of social and cultural changes,
consumers are increasingly invested in managing their own health - and doing so outside
traditional points of care. What is surprising is the pace at which the market is evolving, and
how that change is disrupting business models across the value (and supply) chain.
Nowhere is this more apparent than in the retail environment, which is fast becoming a priority
battleground for consumer health companies. Trends such as pharmacy consolidation, the rise
of convenience stores and modern trade, and the emergence of innovative new channels
(e.g. e-commerce) are converging to inspire a ‘re-think’ of everything from product distribution
and consumer engagement, to the internal capabilities necessary to execute successful strategies.
This article examines the retail trends exerting the most pressure in Asia Pacific, and discusses
how those trends are reshaping channel dynamics for consumer health players.
Around the world, consumer health manufacturers and
marketers are paying more and more attention to retail
environments – and with good reason. Some of the
most disruptive trends in healthcare are fundamentally
shifting not only where consumers buy medicine and
wellness products, but also why and how they make that
choice. Proactive, informed channel management, then,
has become an immensely important area of play.
In Asia, the challenge is, as usual, complex. Here, retail
channels are extremely fragmented and there is a wide
variety of models in play.
“This is already an incredibly complex environment that
has seen a number of critical changes in recent years,”
explains Anthony Morton-Small, Senior Principal, IMS
Consulting Group. “Now, the shifts in channel structure
and the emergence of disruptive new channels – much
of which we’ve already seen in Western markets of
Europe and North America – will really challenge
companies to evolve their strategies and dramatically
elevate their capabilities.”
IMS Health has identified three core trends that are
poised to have the greatest impact on channel
management for consumer health companies in
1. Pharmacy consolidation
2. The rise of convenience stores and modern trade
3. The emergence of new channels
Together, these forces will transform what it means
to play, and ultimately what it will take to win, in the
region’s retail channels.
It is a familiar story in retail: changes in shopping
behavior, the pressures of modernization, and declining
trade margins force (either organically or disruptively)
the decline of independent shops and small businesses,
and give rise to consolidated chains and big businesses.
In the pharmacy channel, however, this process has
unique implications; changes here are both a signal and
a driver of fundamental shifts in how consumers – and
by extension companies – manage and engage with
In Asia, we’ve seen three distinct developments that
are shaping a more consolidated pharmacy landscape.
Understanding the dynamics of these levers, and their
impact on business models, is essential for consumer
health companies as they seek to optimize opportunity
in this traditional channel.
1. The consolidation of independent pharmacies
One of the key characteristics of an independent pharmacy
is a reliance on service over product. In this environment,
the pharmacist is at the center; offering advice and
marketing personal reputation and community
standing – which are the primary forces of differentiation.
Such a model yields high loyalty, but low footfall and sales
per store. Volume, or rather the lack thereof, is also an issue;
this model suffers from eroding high margins and decreased
buying power with wholesalers. It is not surprising, then,
that as larger chains have emerged in urban areas, the
number of independent pharmacies has declined.
To remain relevant and competitive, individual pharmacies
are opting to form cooperative buying groups to negotiate
better margins from wholesalers, while still maintaining
unique product selection and service levels in their
stores. Significantly, how these affiliations manage
their consumer-facing brand differs across markets.
In Australia, banner groups1
such as Guardian, AMCAL
and Terry White Chemists have a similar look-and-feel
across all stores. In South Korea, on the other hand,
individual pharmacy owners still control the appearance
of their own stores.
2. The rise of pharmacy chains
The chain model enables a more uniform, and ultimately
a more profitable, approach for many pharmacies.
Strategic cost management and higher buying power
with manufacturers ensures competitive pricing and,
subsequently, higher sales per store. The management
of such a model, however, is, and must be, fundamentally
different from the ‘mom and pop’ shop; while pharmacist
services are still important, direct marketing of OTC
products is also necessary. Additionally, strong store
branding (disconnected from the reputation of an
individual pharmacist), membership discounts and
longer hours make chain pharmacies very different
physical environments for both companies and consumers.
3. The professionalization of retailing,
merchandising & buying
To date, many companies have been able to operate
on a somewhat informal basis, using experience and
relationships to dictate ‘one-off’ strategies with
independent pharmacies. However, with the evolution
of the channel and the growth of pharmacy chains,
a more sophisticated, more corporate approach is
required. To succeed, and capture a meaningful share
of voice – and share of shelf – in larger chain businesses,
companies must embrace the subtle shifts in success
levers across the marketing 4Ps: product, place,
promotion, and price.
“Companies need to understand that to play in this new
arena, new skills are going to be required. They need to
evolve beyond just selling to stores and towards selling
through stores, and take a much more strategic and
disciplined approach to key accounting management,
retail engagement and point-of-sale activation,” says
Convenience stores & modern trade
The influx of consumers into cities over the past decade,
and the subsequent growth of a busier, more demanding
consumer culture, has transformed the retail landscape.
Convenience stores, in particular, have become incredibly
prevalent, surpassing pharmacies and drugstores as the
primary point of sale not only for daily necessities, but
also for consumer health products.
South Korea, for example, has seen the successful
entry of convenience stores into the OTC market, and in
Thailand the mighty 7-11 convenience chain is currently
experimenting with both standalone pharmacies and
pharmacy shop-in-shops. Also on the rise (though at
a slower pace of growth) are large, multi-site corporate
retailers. These ‘modern trade’ players, such as Giant
and Carrefour, represent an entirely new model serving
the urban Asian consumer.
A new consumer
There has also been a qualitative shift in how consumers
are engaging with their own health, largely due to
increased media investment and growing government
policy reforms regarding health management.
Media campaigns, including advertisements, magazines,
and blogs, have been particularly powerful in raising
awareness about the impact of unhealthy lifestyles.
As a result, consumers are increasingly interested in,
and capable of, maintaining their own health. They are
also demanding a wider range of settings in which to
purchase health products, integrating ‘health shopping’
with general purchases such as food and even cosmetics.
While the pharmacy, convenience and modern trade
channels are challenging consumer health players to
adjust, wholly new channels such as mobile and internet
retailing are demanding a 360-degree transformation in
how, and where, business is conducted.
“E-channels and direct selling models are growing
rapidly in this part of the world. In China, for example,
both e-tailing and direct selling of OTC medications and
nutritional products are seeing 100% year on year growth
rates,” confirms Veronita Rusli, Senior Manager,
Consumer Health, IMS Health. “It would be a costly
mistake to assume that these emerging markets do not
already have a firm grasp on innovative digital models.”
Indeed, many companies in the region are already
“Banner group”: A cooperative association of individually-owned pharmacies who join together to negotiate better prices with wholesalers, and to
share support for marketing, advertising and promotional services.
exploring entirely new brand and supply chain strategies
driven by online platforms. Alibaba’s Alipay™
is a prime
example, offering payment, logistics and marketing
solutions that enable unprecedented access to, and
for, the Chinese market. This model has completely
revolutionized how demand can be satisfied across the
In Asia, as in the rest of the world, the emergence of
these new channels has come ahead of regulation and
policy frameworks. Such a dynamic has allowed business
models to develop quickly, but it has also meant that
there are significant unresolved issues on the horizon
that could threaten long term sustainability, including:
• Taxation of internet sales
• Cross-border shipping regulations
• Lack of prescription drug control in e-tailing
However, this lack of policy infrastructure is also a
profound opportunity. Consumer health companies in
Asia have the unique chance to help shape future policy,
both to their advantage and to the advantage of burgeoning
The evolution of retail channel dynamics in Asia Pacific
discussed here will ultimately force a sea change in how
and where consumer health products are distributed.
To proactively and sustainably grow in this new landscape,
companies will need to critically consider the following
1. Anticipate and evaluate channel development regionally,
but tailor implementation at the local/country level (Fig. 1)
While the overall trend in the region is moving toward
a consolidation of pharmacy and other retail channels,
each country is at a different stage. Implementation
strategies should embrace both a macroscopic
understanding of the models in play and specific
activities tailored to specific markets.
2. Understand the changing role of stakeholders,
and the implications for commercial success (Fig. 2)
In this evolving channel, stakeholder roles across the
value chain are shifting: Consumers are becoming more
self empowered and less reliant on pharmacists' advice;
pharmacists are acting more as business partners than
product pushers; and marketers are increasingly
Fig. 1 Otc distribution channel mix (country average across Asia Pacific)
Distributors & Wholesalers
DKSH, Zuellig, Mega, Tedis, Saphaco
Selling product into a single store Selling products B2B and B2C
Fixed pricing Variable pricing
Fixed investment Flexible resource allocation
Full range of products Fast selling SKUs
High margins (individual purchaser) Low margins (group purchasing)
High field force spend Trade marketing spend
Multiple small buying points Single large buying point
Fig. 2 Moving from product-centric to consumer-centric strategies
Modern trades include convenience stores, supermarkets, hypermarkets; 3
Non-store retailing includes direct selling, internet retailing, home shopping
Source: Euro Monitor
embracing a consumer-centric, rather than product-
centric orientation. To maintain commercial success,
companies will need to go back to basics, re-evaluating
their approach along the four core principles of marketing;
product, price, place and promotion.
3. Understand the key success factors to win in
clinical, value and convenience channels
In addition to addressing the change in stakeholder roles,
commercial strategies will also need to accommodate the
(increasing) variety of channel settings. Clinical, value
and convenience model all carry different requirements
for SKU ranges, pricing strategies and on-site marketing.
Ultimately, the more tailored commercial activities can
be to the environment, the greater the opportunity for
market penetration and long term sustainability.
4. Understand the capabilities necessary in your
organization to deliver more professionalized
retailing, merchandizing and trade buying
In many cases, this will require significant investment
to either bring in new talent, or train existing resources.
As we’ve seen in other regions, without this level of
professionalization, any external commercial activities
could face a potentially prohibitive uphill battle.
5. Evaluate the opportunity and disruptive potential
of new online and direct selling channels
The single-channel model is gradually becoming a symbol
of the past. Looking ahead, successful strategies will
engage not just multi-channel models, but also cross-
channel and omni-channel strategies that engage
customers and retailers on a higher, more sophisticated
and more ubiquitous level. These new channels will
converge in a holistic, 360-degree approach to consumer
engagement and retailer management.
• Customers experience
a single type of
• Retailers have a single
type of touchpoint
• Customers experience a
brand, not a channel within
• Retailers leverage their
'single view of the
customer' in coordinated
and strategic ways
• Customers see multiple
• Retailers understand
sales requirements for
different channels, but
activities are not
• Customers see multiple
touchpoints as part of
the same brand
• Retailers have a 'single
view of the customer'
but operate in functional
Product recommendation x x
On-site consultation x x
Loyalty program x
Low price x x
High selling SKUs x x
Key success factors (e.g Pharmacy
(e.g. big box
Driving account support and recommendations
Managing accounts for growth
Assessing appropriate stock weight
Understanding account needs and expectations
Maximizing shelf space and prime positions
Building the relationship with the account
Achieving listings and full ranging
Senior Principal, IMS Consulting Group
Senior Manager, Consumer Health, IMS Health
The consumer health retail landscape in Asia Pacific
is undergoing a multi-faceted shift: Independent
business models are increasingly moving toward
consolidation; social and demographic shifts are
empowering new players; and new technologies and
channels are reshaping the very boundaries of the
market. These changes will force consumer health
companies to fundamentally change how, where and
with whom they do business.
Those companies who are not only able to adjust their
strategies, but who are also willing to re-evaluate and
re-orient their very business models, will be the ones
that stay ahead of the pack.
To read our full white paper on this topic, which
includes a deep dive analysis of these trends, as well
as key lessons from mature markets, please contact:
Building a more complete picture
The expanding value of observational studies
Increasingly, healthcare stakeholders are demanding a more complete picture of the economic,
clinical and personal value of drugs and medical services. This trend has led to a proliferation
of efforts on the part of regulators, payers and pharmaceutical companies to generate and
capture Real-World Evidence (RWE) across the value chain.
This article will examine the expanding potential of Enriched Observational Studies (EOS)
to bring together two core elements of RWE: Economic insights and patient-reported outcomes.
It will also discuss how EOS can - and should - complement clinical evaluation. Finally, it will
review how this trajectory is playing out in the diverse markets of Asia Pacific, and where the
challenges and opportunities in that landscape lie.
A new value demand
The demand to better measure and demonstrate value
in healthcare reflects the convergence of several key
trends. Together, these trends signal a critical shift from
a narrow focus on treating disease, to a more holistic
approach to health and wellness across the entire
1. Regulators are requiring more long-term safety data
gathered in real-world settings, taking into account
co-morbidities and other lifestyle inputs.
2. Healthcare costs are under increasing pressure, both
at the government level and at the corporate/R&D level,
forcing more intense scrutiny on the cost and demonstrated
value of medicines.
3. Payers are increasingly demanding outcomes- or
value-based data to support reimbursement policies
and decisions; randomized clinical trial outcomes are
no longer sufficient in gauging the effectiveness of a
treatment (read IMS Health’s 2015 article on Risk-Sharing
Agreements in Asia Pacific for more insights on this trend).
4. The rise of patient-centric models is demanding a
multi-faceted approach to treatment that addresses the
full continuum of care, before, during and after treatment.
This is particularly relevant for chronic illnesses; the aim
has become to improve life, rather than just prolong it.
As a result, Real-World Evidence (RWE) is garnering
more and more attention, and is proving to be a critical
component in both clinical and economic decisions
about medicines. To generate this data, observational
studies, which gather data from patients outside the
clinical trial setting, and usually over a long period of
time, are increasingly valuable.
A more complete picture
Observational studies (OS) have long been a standard
methodology for understanding the long-term safety
of medical treatments. The potential, however, is much
“We are witnessing a true paradigm shift in what data
should be used and how it can be used,” explains Roy
Leong, Head of Observational Studies, APAC, IMS Health.
“Historically, observational studies generated data that was
solely used for clinical evaluation. Now we are seeing the
potential to use this methodology beyond that setting
and gather valuable insights, especially around cost
effectiveness and patient-reported outcomes.”
An observational study is one in which participants are not
randomized or otherwise assigned to an exposure. The choice
of treatments is up to the patients and their physicians.
By nature, then, observational studies help to understand
the impact of treatments in real-world, non-interventional
settings, rather than clinical trials, thus bridging the gap
between efficacy and effectiveness measurements.
From a methodological standpoint, observational studies
provide significant benefits over randomized clinical
trials (RCTs), whose data is useful in assessing efficacy,
but lacks “external generalizability” and is therefore
generally inappropriate for measuring real-world
This limitation is primarily the result
of the patient population; RCTs are built around smaller,
more restrictive groups that rarely represent the
complexities of real-world users (Fig.1).
Observational studies can include four types of studies that
gather information across the life of a treatment (Fig.2):
• Retrospective studies (a relatively new addition to
the OS continuum) gather insights about patients
prior to starting treatments, including prior
diagnoses and treatments, lifestyle, etc.
• Chart review studies collect medical data from past
• Cross-sectional studies collect information from an
entire patient population at a specific point in time
• Prospective studies collect baseline exposure
information and then follow up with patients over time
Ultimately, observational studies provide key insights into
real-world applications that help build a much more
complete picture of a drug’s impact. These insights can
√ Patient compliance
√ Physician prescribing behavior
√ Supplemental/additional drugs
A new, expanded approach
Conventional observational studies were limited to
analyzing the long-term impact of treatments in large
populations. This was a useful but narrow approach to
understanding clinical safety. However, by expanding
the focus of research to include economic insights and
patient-reported outcomes, a definition of treatment
value beyond the clinical setting is dramatically clarified.
Furthermore, widening the time scope of the study, to
include both mined retrospective data and prospective
data in a single observational study, enables a truly
longitudinal approach to value. This new approach is
called Enriched Observational Studies (EOS).
In the face of rising cost pressures, regulatory,
reimbursement and portfolio decisions are increasingly
being linked to outcomes-based or value-based data.
Data generated from EOS is extremely valuable in
assessing, and therefore managing, the disease burden
for all healthcare stakeholders.
• For policy makers, EOS data can inform more
streamlined resource allocation and spending both
across therapy areas and within targeted patient
• For payers, real-world outcomes support a range of
reimbursement decisions, increasing access for
patients. This is especially true for innovative
medicines where cost is high and effectiveness is,
as yet, uncertain.
• For manufacturers, EOS data builds a more accurate
picture of unmet need, enabling focused, responsive
R&D activities and generating higher returns on
investment across the product lifecycle. It also
critically informs price negotiations across markets.
Enriched Observational Studies that bring together
commercial and clinical perspectives can also provide
critical evidence to support health economics and outcomes
research (HEOR) such as cost of illness studies, economic
modeling and other cost effectiveness analyses.
Payne, Krista., et al. Making the ‘MOST’ of Prospective Observational Studies. Evidence Matters Online; www.unitedbiosource.com;
Fig. 2 Four types of studies applied in observational studies
Fig. 1 Observational studies vs. conventional randomized clinical trials (RCTs)
Observational studies Conventional RCT studies
More flexible, they reflect real practice Strict inclusion criteria
Patients might take more than one drug Restricted to only one treatment
Co-morbidities Exclusion of patients within risk groups
High sample size Small sample size
Long follow up Short follow up
Lower cost Expensive
Retrospective studies Prospective studies
Patient-reported outcomes (PROs), gathered via interviews
and validated questionnaires, and anonymized for privacy,
have become a critical dimension in the generation of
Real-World Evidence. Insights include valuable information
about how treatments affect quality of life (for both the
patient and caregiver), gained or lost productivity, ease
of compliance, and other key dimensions of effectiveness.
Roadblocks in Asia, and beyond
Unfortunately, many health systems today lack the data,
technology and regulatory framework to support the
widespread adoption of Real-World Evidence and to use
these new insights to affect real change. Asia Pacific,
in particular, faces high barriers to understanding and
embracing the value of RWE. Here, the multitude of
systems, regulations and resources (or lack thereof) has
hampered progress and left the region behind the rest of
the world when it comes to generating and integrating
new types of data into healthcare evaluations. How each
country evaluates data, where that data comes from, and
how much is available varies significantly across the region.
The opportunity, however, is certainly there. IMS Health
has identified three levers poised to act as powerful change
agents in the region’s appetite and ability for an innovative
approach to data and value-based evaluations of medicine:
1. Mature markets like Korea, Taiwan and Japan (and
to a certain extent, China) are embracing new
methodologies and robust Health Technology
2. International price referencing across many markets
is elevating the demand for value-based data.
3. The rise of universal healthcare coverage goals in
Vietnam and Indonesia is highlighting the need for
more (and better) cost effectiveness studies in order
to control healthcare spending.
Similar themes can be found around the world. A recent
roundtable between the Institute of Health Economics in
Canada and AstraZeneca outlined a range of issues facing
the future of Real-World Evidence, including
• The lack of a clear policy framework for when and
where RWE should be used
• The disconnect between RWE, innovation and research
• Limited participation in generating RWE across all
stakeholder groups – particularly in aligning public
and patient outcomes with policy priorities
• Lack of common healthcare information technology
(HIT) data structures and vocabularies
These issues, while focused on Canada, are also relevant
to other healthcare markets across both the developed
and developing world, as they point to an overall lack of
consistent, strategic investment in RWE as a standard in
While Enriched Observational Studies clearly represent
a profound opportunity to elevate both the quality and
quantity of value-based insights, they do not exist in
a vacuum. To realize the maximum benefit from EOS,
companies should consider the following:
1. Start early. Using EOS can build critical insights
about patient populations, regulatory hurdles, and other
potential challenges or opportunities that may affect
pipeline or launch strategies.
2. Anticipate HTA obligations. Understanding what RWE
will be necessary to support HTA submissions and other
regulatory requirements enables a more directed and
strategic investment in EOS.
3. Consider partnerships. Collaborating with established
partners to host EOS (and subsequent disease registries)
should be a key strategic consideration; partnerships can
enable multiple stakeholders to meet both business and
Nason, Eddy., Husereau, Don. Roundtable on Real World Evidence: System Readiness – Are we ready to use routinely collected data to improve health system performance.
Summary Report, September 2014
A paradigm shift is underway in how the healthcare
community understands, measures and demonstrates
value. Traditional models of research, such as
randomized clinical trials and standard market data
reports, are increasingly giving way to Real-World
Evidence, which delivers a more complete, and
ultimately a more reliable, picture of the economic,
clinical and personal value of a treatment.
Enriched Observational Studies represent this new
approach to value, combining commercial, clinical,
and patient-reported data to build a better picture of
outcomes. By integrating such studies, companies
can more effectively negotiate, improve launch
preparedness, and more accurately evaluate new
markets and partnership opportunities.
To continue the conversation, please contact:
Roy Leong, Head of Observational Studies, APAC, IMS Health at firstname.lastname@example.org
Policies, pressure and potential
Navigating China's growing medical device market
The medical device market in China has historically been a small, loosely regulated market that
has lagged behind the larger pharma sector in terms of both maturity and accessibility. Today
though, the tide is shifting; as the pharma market slows, the medical device market continues
to grow and is expected to occupy an increasingly large portion of the total Chinese healthcare
The future, however, will be a complex mix of opportunities and challenges. A range of new
policies are poised to exert significant pressure on domestic and multinational firms alike,
ultimately creating a “new normal” for the medical device industry. Understanding these
policies, monitoring their progress, estimating their impact, and developing a coping strategy
will be critical in navigating this market over the next five to ten years.
Despite an overall economic slowdown, healthcare
continues to be a significant area of focus and investment
for China. The result has been a broadening of access
and affordability, and the rise of a newly sophisticated
patient population, both of which signal huge growth
potential for the still under-developed medical device
√ Increased government funding of insurance
schemes, combined with rising disposable income
and private insurance options, means improved
affordability of medical devices.
√ Increased investment in accessibility has grown the
number of patients treated by a CAGR of 7% over the
past 5 years.
√ A growing interest and education in personal health
has created demand for safer, higher quality medical
devices to complement treatment regimens.
As a result, IMS Consulting Group expects that the
medical device sector will expand to account for 20% of
the total healthcare market in the next 5 years, up from
15% today. However, this is still significantly below the
benchmark set by developed markets.
“Both the per capita consumption of medical devices
and the ratio of device spending to total healthcare
expenditure in China is still far below developed markets
such as Japan and the US. This indicates significant
potential in the long run,” confirms Su Hua, Principal,
IMS Consulting Group.
A “New Normal”
As the market grows, however, so too does attention
from the government, which has recently announced a
number of new policies meant to enhance oversight and
regulation of medical device registration, pricing, and
distribution, among others. Such policies are expected
to have enormous impact on domestic and multinational
(MNC) firms alike and will certainly result in a “new
normal” characterized by greater regulation, and slower
growth; Over the next few years, the market is expected
to dip to a CAGR of 14% after years of robust 19% growth
Significantly, many of these shifts in policy are for the
benefit of local firms, highlighting China’s clear intention
to encourage, and continuously support, the expansion
of domestic products’ market share. This is especially
Fig. 1 China medical device market size
IMS China Market Prognosis, Sep.2015
true at the provincial level, where recent announcements
and purchasing agreements are clear signals of domestic
favorability (Fig. 2).
However, although the short term impact may be negative
for MNCs, the policies discussed here will ultimately
raise barriers to entry and encourage consolidation in the
device sector — both of which are trends that will benefit
large, innovative MNCs in the long term.
Many of the new policies for the medical device sector are
focused on implementing a more regulated registration
process (and one that is subsequently more accessible for
“The reform of medical device registration is expected
to accelerate local opportunity in specific sectors, and
also to accelerate industry consolidation by ultimately
eliminating companies without capital and technical
strength” confirms Colin Yu, Engagement Manager, IMS
The following are three landmark decisions that are likely
to have the greatest impact on medical device companies.
These reforms will transform the competitive environment,
especially for class I and II players. For innovators, the
competition will intensify, as the barriers to entry are
lowered, or even removed. For commodity players, these
reforms represent a smoothing of the approval process,
making it faster and easier to secure registration for class I
and II devices. For class III products, however, registration
will become significantly more time consuming, more
expensive, and will necessitate investment in clinical
trials; here, innovators surely have the advantage.
1. Authority is delegated to municipal and/or provincial
The authority to approve all classes of medical devices
has historically resided at the national level. Now,
however, domestic devices in class I and II can be approved
at the municipal or provincial level where there is a more
favorable and supportive environment (imported products
must still go through national-level approval).
2. Registration time and cost has increased for innovators
The length of time needed to gain approval can often
be prohibitively long, especially for new and innovative
(often class III) products, or for companies that rely on
being first-to-market. Quickly introducing innovative
products will be extremely challenging. MNCs and
innovators with greater technology capabilities and
more capital will win (Fig. 3).
3. Clinical trial requirements have changed
Clinical trial exemptions can now be granted to local class
II devices, further increasing the efficiency and speed of
the registration process for domestic companies. Imported
class II devices, while also eligible for clinical trial exemption,
must produce data from the original country. For class III
Medical devices in China are monitored by the State Food and Drug Administration (SFDA) and organized into three classes
(I, II and III). The rubric for classification evaluates products on a spectrum of risk to patients; the more potential risk to the
patient, or the more oversight necessary for safe and effective use, the higher the classification.
Sichuan province 2014 Increase local players' competitiveness — Domestic products
now enjoy extra scores in tendering and favorable tax policies to domestic products.
Jiangsu province 2014 Require hospitals to purchase locally-manufactured
products — Province now equipped for pilot hospitals to purchase local products such as CT.
Zhejiang province 2014 Require hospitals to purchase locally-manufactured
devices — Now mandatory with the first domestic nuclear magnetic resonance (NMR).
Hubei province 2014 Support local innovative products — Province is now equipped
with 120 sets of local, innovative medical devices in 60 pilot medical facilities.
Guangdong province 2014 Provincial tenders policy tilt to local — Shenzhen,
Dongguan now exclude imported products in provincial tenders.
Fig. 2 Provincial policies favoring local players
Fig. 3 Increased registration cost for class III MNC devices
Source: Policy review, industry expert interview, IMS Health analysis
devices, however, new requirements for clinical trials will
further elevate the cost to gain market entry.
In all, the medical device market, in terms of registration,
will now closely resemble the larger pharma market,
especially for MNCs.
In this “new normal” environment, MNC and local
manufacturers will both face dramatically increasing
pricing pressures, the result of new tendering policies
that will significantly cut prices, limit opportunities
and force an entirely new approach to the price-volume
In many ways, the practice of tendering in the medical
device sector resembles that of the pharma industry 10-15
years ago. Hampered by an irrelevant evaluation structure
and a challenging reference system, the tendering process
poses enormous challenges for local and MNC device
manufacturers alike. A new policy of extending reference
pricing to the regional or national level will be especially
challenging; prices will be set according to the lowest price
in the country, rather than in a smaller, more relevant area.
Such regulations have the potential to cut prices by
20-30%, especially in larger cities.
Distribution has historically been a costly and corrupt
system in the medical device sector, primarily because
high-value medical device distributors are often also
responsible for a wide range of services along the value
chain, notably sales and marketing. And while their
precise role can vary depending on size, the markup
imposed on products to cover such activities can
be astonishingly high, and rarely consistent or
substantiated. The subsequent opportunity for
corruption is, unsurprisingly, widespread, driving retail
prices that are several times higher than ex-factory
In order to regulate these margins and business behaviors,
and ultimately to protect patients from bearing the costly
burden of such high retail prices, the government has
proposed a series of strict margin caps. For many
companies, particularly MNCs who often suffer from
low price ceilings, such regulations will necessitate
significant adjustments to pricing, partnership and
Responding to the “New Normal”
For many MNCs, the policy shifts discussed here have
resulted in decreased growth and restricted market
access. Medtronic, for example, has experienced a
slowdown over the past 2 years due in large part to
tendering, price pressures, and anti-corruption policies.
Similarly, BioMerieux’s growth decelerated under intense
competition due to healthcare reforms and prolonged
registration processes for portfolio updates. Both of these
companies needed to take swift strategic action to mitigate
the long term impact of new policies.
For other MNCs, there are several options to consider
in order to build a more stable financial and commercial
strategy in this environment:
1. Refine pipelines: Higher barriers of entry for Class
III products can be an advantage. Prioritize pipelines
to focus on more innovative products and
be prepared for longer registration timelines.
2. Consider M&A: Mergers, acquisitions, or other local
partnerships can broaden product portfolios and
3. Localize: Localizing production, or forming a
joint venture with local manufacturers can reduce
costs and achieve a valuable local production label,
both of which are necessary to stay ahead of new
4. Differentiate: Launching products with innovative
features that better serve physicians’ needs can
significantly increase bargaining powers in tendering.
5. Improve compliance: New commercial models can
proactively address current distribution pressures,
and leverage networks to remain up to date on
Of course the right course of action will vary by company,
and will depend on a variety of factors, including
appetite for risk, size, capital and more. Nevertheless,
these recommendations signify a critical call to action for
MNCs — adjust your business model, and your capabilities,
to fit the “new normal,” or risk losing valuable market
share and future opportunities.
To continue the conversation, please contact:
Hua Su, Principal, IMS Health China at email@example.com and
Colin Yu, Engagement Manager, IMS Health China at firstname.lastname@example.org
Asia Paciﬁc +65 6412 7365 • USA +1 (703) 992 1025 • Europe +44 (0) 20 3075 4800 • Latin America +52 55 5089 5205
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