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Taiwan Healthcare

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BCRC document: China - Healthcare Providers.

Business & Company Resource Center
________________________________
Datamonitor Industry Market Research , Feb 13, 2012 pNA

China - Healthcare Providers.

Full Text: COPYRIGHT 2012 Datamonitor
MarketDefinition

The healthcare providers sector is valued as total expenditure on healthcare in each country. This includes final consumption spending on healthcare goods and services.

Goods and services in this sector include inpatient, outpatient, long-term medical care, medical goods including pharmaceuticals and supplies, and collective services such as administration requirements.

Public spending (e.g. by national and local governments, social security schemes) and private spending (e.g. payments made by private-sector health insurers and individual out-of-pocket expenditures) are both included.

Any currency conversions used in the creation of this report have been calculated using constant 2010 annual average exchange rates.

For the purposes of this report, Asia-Pacific comprises Australia, China, India, Indonesia, Japan, New Zealand, Singapore, South Korea, Taiwan, and Thailand.

ResearchHighlights

*The Chinese healthcare providers sector is expected to generate total revenue of $303.9 billion in 2011, representing a compound annual growth rate (CAGR) of 15.9% between 2007 and 2011.

*The outpatient care segment is expected to be the sectors most lucrative in 2011, with total revenue of $106.4 billion, equivalent to 35% of the sector's overall value.

*The performance of the sector is forecast to decelerate, with an anticipated CAGR of 11% for the five-year period 2011 - 2016, which is expected to drive the sector to a value of $512 billion by the end of 2016.

MarketAnalysis

The Chinese healthcare providers sector produced double digit growth in 2010 and is expected to repeat its performance again in 2011. The sector is expected to decelerate towards the end of the forecast period in 2016.

The Chinese healthcare providers sector is expected to generate total revenue of $303.9 billion in 2011, representing a compound annual growth rate (CAGR) of 15.9% between 2007 and 2011. In comparison, the Japanese sector will decline with a compound annual rate of change (CARC) of -0.3%, and the Indian sector will increase with a CAGR of 19.5%, over the same period, to reach respective values of $475.9 billion and $81.7 billion in 2011.

The outpatient care segment is expected to be the sectors most lucrative in 2011, with total revenue of $106.4 billion, equivalent to 35% of the sector's overall value. The medical goods segment will contribute revenue of $80.5 billion in 2011, equating to 26.5% of the sector's aggregate value.

The performance of the sector is forecast to decelerate, with an anticipated CAGR of 11% for the five-year period 2011 - 2016, which is expected to drive the sector to a value of $512 billion by the end of 2016. Comparatively, the Japanese and Indian sectors will grow with CAGRs of 2.1% and 15.4% respectively, over the same period, to reach respective values of $527.4 billion and $167.3 billion in 2016.

Value

The Chinese healthcare providers sector grew by 10.2% in 2011 to reach a value of $303.9 billion.

The compound annual growth rate of the sector in the period 2007-11 was 15.9%.

China Healthcare Providers Market Value
Unit: USD

Year Value Growth
2007 168600000000.0
2008 199800000000.0 0.184579
2009 234100000000.0 0.172097
2010 275800000000.0 0.177811
2011 303900000000.0 0.101913
CAGR 2007-2011 15.8611%

MarketSegmentation

Outpatient care is the largest segment of the healthcare providers sector in China, accounting for 35% of the sector's total value.

The medical goods segment accounts for a further 26.5% of the sector.

China Healthcare Providers Category Segmentation
Year: 2011

Category Percentage
Outpatient care 35%
Medical Goods 26.5%
Inpatient Care 26%
Collective Services 6.5%
Long-Term Care 6%

MarketSegmentation

China Healthcare Providers Geography Segmentation
Year: 2011

Geography Percentage
Japan 41.5768%
China 26.5476%
India 7.13776%
South Korea 6.59023%
Rest of Asia-Pacific 18.1476%

CompetitiveLandscape

The healthcare providers market will be analyzed taking private healthcare providers as players. The key buyers will be taken as health insurance companies, as well as individual healthcare users, and pharmaceutical companies, healthcare equipment and suppliers and qualified staff as the key suppliers.

The degree of rivalry between incumbents is increased due to the size and number of players, as well as high fixed costs, the difficult to exit nature of the sector and lack of differentiation between players.

The strength of buyers is dependent on their size: buyers range from small, individual buyers to larger health insurance companies. However, buyer power is weakened generally by the very small likelihood of backwards integration, coupled with the vital service that players offer.

Suppliers benefit from players' need to have top quality products, meaning they are able to raise prices. Additionally, the products and services that suppliers offer are essential to players and players are unlikely to backwards integrate into the business areas of suppliers.

Strong growth, low differentiation and weak brands mean that the off-putting nature of strict regulations is offset.

Possible substitutes, which include alternative medicine and therapy, may be a cheaper alternative; however, their beneficial effects are debatable and unproven.

In China, the current healthcare system (the New Rural Co-Operative Medical Care System) is funded by the central government, the provincial government and the patient. Around 94% of the population is covered. Few have private health insurance: only 3.5% of total healthcare expenditure comes from private insurers, compared to 50% paid for by patients themselves. However, cover by private health insurance is growing rapidly (growth was 27% between 2000 and 2009). As such, the buyers in this market vary in size from small, individual consumers to large health insurance companies. Private health insurance plans enable policy holders to access private hospitals, of which benefits may include shorter queues, privacy, unrestricted visiting hours and continuity of care (seeing the same doctor throughout one's treatment).

The buyers in this market vary in size from small, individual consumers to large health insurance companies. Whilst non-private hospitals are publicly funded, private hospitals are funded by payment for services by patients and insurers. Thus, if a hospital loses out on a contract with a large insurer, this may have a strong effect on their revenues. Here buyer power is strengthened. However, hospitals may also receive revenues from individual customers.

As treatments can vary widely (from a small, one-off treatment to an expensive, long-term treatment), the effect this can have on revenues varies too. Switching costs may be incurred. For example, for an individual customer, moving to a different market player may mean having to travel further, which would incur time, effort and monetary costs. Additionally, a person may have developed a relationship with a doctor, who may have the added benefit of historical patient knowledge and a rapport.

Although many players offer undifferentiated products, differentiation lies in the reliability and quality of equipment provided, the level of care and expertise of staff, and the areas the hospital specializes in (for example, one hospital may specialize in oncology, and another in brain damage).

Buyers are price sensitive: an individual buyer's life may depend on whether or not they are able to pay for a particular treatment. Health insurance companies are price sensitive due to their for-profit nature of businesses.

Players are more likely to forwards integrate into the business area of buyers, rather than buyers backwards integrate into the business area of players, due to the start-up capital, specialist knowledge, investment in up-to-date equipment and skilled staff needed to open a private hospital.

Hospitals are also subject to strict regulations regarding safety (for both patients and staff), cleanliness and standard of care etc.

The products and services provided by players are not necessarily vital to buyers. For example, a buyer may choose to have a treatment done for aesthetic reasons. However, generally, players' services are essential, which reduces buyer power.

Overall, buyer power is assessed as weak to moderate.

Suppliers to healthcare providers include pharmaceutical companies, healthcare equipment suppliers, and qualified staff. Such suppliers include large, multinational pharmaceutical companies such as Pfizer and SINOPHARM, who possess strong negotiating power due to their sheer size and scale. Many larger companies have expanded their activities into other areas. The Johnson & Johnson brand includes, for example, Neutrogena and Clean & Clear (who supply skin and beauty products) and Acuvue (who supply contact lenses). On the other hand, in 2010, $58.5 billion of Pfizer's total revenues of $67.8 billion were prescription-only human health products. This is an example of the fact that, in general, pharmaceutical companies tend to be reliant on the business they receive from players, which significantly diminishes their power.

Pharmaceutical companies develop, produce and market licensed drugs, which can be essential items. As such, players in this sector are reliant on suppliers, strengthening supplier power somewhat. This is further boosted, given that many players are unable to use alternative inputs, along with the fact that quality of the products provided by suppliers is incredibly important. For these reasons, suppliers are able to negotiate higher prices. Additionally, there is an extremely low likelihood of market players integrating backwards into their suppliers' business areas.

In China, regulations are set by the State Food and Drug Administration (SFDA), whose principals powers include, with regards to pharmaceuticals: drug registration; classification; reviewing and re-evaluation pharmaceuticals; supervision of quality; investigation and punishment of illegal activities and regulation of toxic substances. Supplier power is weakened by the existence of many large, billion-dollar companies who are extremely competitive with one another, who offer products with low differentiated input. As many companies provide similar drugs to treat various diseases, players are able to go to the cheapest supplier. Supplier power is further weakened by the low likelihood of forward integration, given the large capital required for the building, equipment and staff etc.

With regards to suppliers of healthcare equipment, the market is dominated by large scale international incumbents, namely Abbott Laboratories, Siemens Healthcare or GE Healthcare, who benefit from scale economies, meaning they can negotiate heavily on price. Research is highly important for suppliers' revenues, as buyers are increasingly cost aware, meaning they are unlikely to invest in equipment or supplies which offer little improvement on previous models. In addition to this, suppliers must adapt to constant technological and scientific advancements in order to compete successfully with others. Large scale of operations and strong research and development centers allow such players to easily expand into various geographical areas and tap a share of emerging markets. This strengthens supplier power.

However, there is a large degree of regulation present within the market, concerning product labeling requirements, promotion and marketing schemes, quality system requirements, record keeping and medical device reporting. Increased government regulation can increase compliance costs which in turn reduces revenues.

Overall, supplier power is assessed as strong.

New entrants face competition from large, existing incumbents who already benefit from a skilled staff, a good reputation and an existing patient base. Individual buyers face fewer switching costs than larger buyers, such as insurance companies, whose policies offer access to and treatment in certain hospitals.

Any significant differentiation in this sector is due to specialist care, as hospitals offer a certain level of basic care to their patients. Different hospitals may benefit from specialist equipment or specially trained medical practitioners. Differentiation may also occur in terms of quality of care and price.

Entry to this market is possible on a small scale (opening a small, rural health clinic, for example). However, opening a new hospital requires significant capital. Firstly, a premises needs to be purchased or built. Location is important, as hospitals must be easily-accessible to a large number of people, as is compliance to planning regulations with regards to both the building and the surrounding area. Any medical devices used need to meet certain standards and regulations relating to safety, effectiveness and quality.

Regulations are strict: in China, medical devices are regulated by the State Food and Drug Administration (SFDA) in compliance with the Regulations for the Supervision and Administration of Medical Devices. Competent staff must also be hired: medical practitioners must have

relevant qualifications. Hospitals also need staff such as cleaners, administrators, catering staff, computing staff, grounds staff and more. Compliance with these regulations, and others, is likely to significantly increase costs. Larger hospitals benefit from significant capital, which enables them to exert their financial muscle. Benefits of this may be increased negotiating power with regards to suppliers of equipment or pharmaceuticals companies.

Hospitals are competitive with one another on price, quality and efficiency, as improvement means more patients and more patients mean more revenues; existing incumbents are unlikely to acquiesce to new companies entering this market. Players are typically smaller than suppliers, although the small number of them means players hold a certain degree of power. Quality and reliability are paramount, increasing pressure on suppliers. Players are also extremely price sensitive. A supplier who is able to provide a quality and efficient product that is value for money is likely to benefit from a good reputation and, as such, players' loyalty. Brand loyalty is not strong, although reputation plays a role. Buyers are unlikely to stick by a particular hospital if another offers, for example, better care.

Expenditure on health forms a significant part of government' and consumers' spending. This, along with strong market growth in recent years makes the market more attractive to potential new entrants.

Overall, the threat of new entrants is assessed as moderate.

One possible substitute for traditional healthcare services is alternative medicine, which is defined as healthcare practices that are not typically taught or practiced in the realm of conventional medicine. These may be based on cultural, or historical, traditions, rather than on scientific evidence, and include homeopathy, herbal medicine and acupuncture.

Depending on the type and severity of the problem being treated, any alternative medicines or therapies that cure a person may, in fact, be due to the placebo effect, which can account for around one third of recoveries of those using alternative medicine. Alternative medicine success rates vary significantly and tend to be anecdotal, and the efficacy and safety of alternative medicines has been questioned.

One possible substitute to conditions which have a mental, as opposed to physical, basis, is therapy. Types of therapy include psychotherapy, cognitive-behavioral therapy and group therapy. These types of therapies may help with disorders such as depression and anxiety. However, for many, the drugs provided by pharmaceutical companies, healthcare equipment and qualified staff cannot be successfully substituted.

Overall, the threat of substitutes is assessed as moderate.

In the healthcare providers sector, existing incumbents range in size from large, high-tech, specialist hospitals to small, rural health clinics. These larger hospitals face intense rivalry, and tend to compete on efficiency, quality of care and price. Improvement in any of these means more patients at the hospital, which means higher revenues. Such large companies benefit from scale economies, meaning they can negotiate more intensely on price. Individual buyers face fewer switching costs, which may only relate to the time, effort and cost of traveling to a different hospital if its location is further away than their current hospital. Larger buyers, such as insurance companies, may be tied into contracts. Additionally, the policies they have sold in the past relate to certain hospitals where policy holders receive their care and treatments, so it would be difficult to switch for this reason.

Fixed costs are high, and include, among others, employee wages, medical devices and pharmaceuticals. The market may be hard to exit: certain assets, such as specialist equipment, may be hard to divest.

Additionally, increasing restrictions and medical innovations mean that the number of patients who need hospitalization has fallen over recent years, which, in turn, means that those who are hospitalized tend to be the most expensive to treat. This intensifies rivalry.

Most players offer very similar basic care and do not operate in a diverse range of markets. Differentiation may occur in terms of specialist care, which slightly eases rivalry. However, the fact hospitals tend to specialize in one field, increases rivalry.

Strong growth in this sector tends to decrease rivalry somewhat.

Overall, rivalry is assessed as moderate.

This section contains brief overviews of the leading companies in the Chinese healthcare providers sector.

Company

ProductId>9D485CB9-DC02-4D5E-B260-5A4361469A19</ProductId

China HealthCare Holdings Limited

China HealthCare Holdings (CHC) is an investment holding company engaged in providing healthcare and consumer services. The company has operations in Hong Kong and China.

The company has access to healthcare resources, communications infrastructure, and consumer channels.

CHC, through access to healthcare resources, has partnerships with the Chinese healthcare authorities and relationships and contacts with medical institutions and physicians throughout China, and in particular, the Chinese Ministry of Health (MOH), via its Hong Kong window company Guo Kang Pharmaceutical and Medical Supplies Ltd., and in addition, Shanghai Medical Assistance Network (SMAN).

The company, through access to communications infrastructure, has working relationships with wireless and fixed line operators.

Through access to consumer channels, CHC's e-commerce platform has its own proprietary POS terminals placed in about 3,500 retail outlets including all convenience stores and other e-linkages, with about 1,500 retail outlets throughout Shanghai.

The company's subsidiaries include Beijing Universal Medical Assistance Co., Ltd., Beijing Weichang Medical Clinic Co., Ltd., CHC Investment Holdings Limited, Wingames Investments Limited, Rich Base International Investments Limited, among others.

The company recorded revenues of $10.1 million in 2011, as compared to revenues of $227.7 million in 2010. Its net loss totaled $23.4 thousand in 2011, as compared to net loss of $12.7 thousand in 2010.

Company

Chindex International

Chindex International (Chindex) is engaged in the provision of healthcare services and the sale of medical capital equipment, instrumentation and products to the Chinese marketplace, including Hong Kong. The company has operations in China, Hong Kong, Germany and the US.

The company operates through two business segments: healthcare services, and medical products.

The healthcare services segment operates through its United Family Hospitals and Clinics, a network of private primary care hospitals and affiliated ambulatory clinics in China. The company's hospital network operates in Beijing, Shanghai, Guangzhou and Wuxi. United Family Hospitals and Clinics offers a range of family healthcare services, including emergency rooms, clinical laboratory, radiology, anesthesiology department, dental clinic, eye clinic, psychological health center and surgery, among others. It also operates satellite clinics such as United Family Liangma Clinic, United Family Shunyi Clinic, St. Regis Wellness Clinic, and Oncology Center.

The medical products division (MPD) markets, distributes and sells select medical capital equipment, instrumentation and other medical products through its subsidiary, Chindex Medical Limited (CML). Chindex sells medical products manufactured by various major multinational companies, including Siemens, and Intuitive Surgical, for which the company is the distribution partner for the sale and servicing of color ultrasound systems and surgical robotic systems respectively.

CML offers a full-service distribution platform to manufacturers of medical devices, from product registration to marketing and sales, both direct and through a closely-managed network of sub-dealers, to warehousing and sales in local currency, to clinical support, to installation and after-sales service provided by factory-trained engineers. Additionally, CML owns and manufactures several patented technologies, including proprietary blood banking and transfusion equipment, wound closure products, and general surgery theater instruments.

The company recorded revenues of $171 million in the fiscal year ending March 2010, a decrease of 0.1% compared to fiscal 2009. Its net income was $8 million in fiscal 2010, compared to a net income of $5 million in the preceding year.

Company

Parkway Medical Group

Parkway Medical is a private leading healthcare group based in Singapore, operating 16 hospitals with more than 3,000 beds in Asia, as well as patient assistance centers throughout the world.

The company offers healthcare services in the areas of heart and vascular, neuroscience, oncology, musculoskeletal, transplant and cellular therapy, women's and children's chronic disease management. It also provides surgery, radiology and laboratory services, as well as pharmacy services by supplying prescription-only medicines and pharmacy-only medicines.

The company also operates an educational institution that provides education and training programs in nursing, allied health, and healthcare management fields; and invests in real estate and real estate related assets in the Asia-Pacific region, which are used primarily for healthcare and healthcare-related purposes.

In addition, it offers a range of rehabilitation services, including physiotherapy, and occupational therapy and speech therapy to restore physical, mental, and life skills in patients; a range of healthcare services, including general fee-for-service consultations and specialized industrial healthcare consultancy; health screening services, including general screening and scanning; and disease management programs for patients. Further, the company provides cancer treatment services; eye care services to local and international patients and assisted reproductive technologies. It also provides treatment services for brain tumors, arteriovenous malformations, and brain abnormalities.

Its network spans across Asia, Europe, and the Middle East with Parkway Patient Assistance Centers in Bangladesh, Brunei, Cambodia, China, India, Indonesia, Malaysia, Mongolia, Myanmar, Pakistan, the Philippines, the Russian Federation, Saudi Arabia, Sri Lanka, Ukraine, the United Arab Emirates, and Vietnam. The company was incorporated in 1974 and is based in Singapore.

The company recorded revenues of $817 million in the fiscal year ending December 2010, an increase of 15.4% compared to fiscal 2009. Its net income was $91 million in fiscal 2010, compared to a net income of $92 million in the preceding year.

ForecastValue

In 2016, the Chinese healthcare providers sector is forecast to have a value of $512 billion, an increase of 68.5% since 2011.

The compound annual growth rate of the sector in the period 2011-16 is predicted to be 11%.

China Healthcare Providers Market Value Forecast
Unit: USD

Year Value Growth
2011 303900000000.0 0.101913
2012 350200000000.0 0.152369
2013 393200000000.0 0.122839
2014 438900000000.0 0.11618
2015 486200000000.0 0.107912
2016 512000000000.0 0.053096
CAGR 2011-2016 11%

MacroeconomicData

Population

China Size of Population (million)
Population (million)

Year Value Growth
2007 1317.9 50%
2008 1324.7 50%
2009 1331.4 50%
2010 1338.0 50%
2011 1344.6 50%

GDP

China GDP (Constant 2000 Prices, $ billion)
Constant 2000 Prices, $ billion

Year Value Growth
2007 2824.9 1420%
2008 3160.4 1190%
2009 3486.9 1030%
2010 3846.0 1030%
2011 4203.7 930%

NominalGDP

China GDP (Current Prices, $ Billion)
Current Prices, $ billion

Year Value Growth
2007 3494.5 2540%
2008 4532.3 2970%
2009 5050.9 1140%
2010 5807.3 1500%
2011 6695.2 1530%

Inflation

China Inflation
Inflation Rate (%)

Year Value
2007 4.8
2008 5.9
2009 -0.7
2010 3.3
2011 5.5

CPI

China Consumer Price Index (Absolute)
Consumer Price Index (2000 = 100)

Year Value
2007 113.7
2008 120.4
2009 119.5
2010 123.5
2011 130.3
Exchange Rate
Exchange Rate

Year Value
2007 7.61720
2008 6.96225
2009 6.84088
2010 6.77875
2011 6.77875

Article A281996441

(c) 2012 Gale, Cengage Learning.

BCRC document: Taiwan - Healthcare Providers.

Business & Company Resource Center
________________________________
Datamonitor Industry Market Research , Feb 13, 2012 pNA

Taiwan - Healthcare Providers.

Full Text: COPYRIGHT 2012 Datamonitor
MarketDefinition

The healthcare providers sector is valued as total expenditure on healthcare in each country. This includes final consumption spending on healthcare goods and services.

Goods and services in this sector include inpatient, outpatient, long-term medical care, medical goods including pharmaceuticals and supplies, and collective services such as administration requirements.

Public spending (e.g. by national and local governments, social security schemes) and private spending (e.g. payments made by private-sector health insurers and individual out-of-pocket expenditures) are both included.

Any currency conversions used in the creation of this report have been calculated using constant 2010 annual average exchange rates.

For the purposes of this report, Asia-Pacific comprises Australia, China, India, Indonesia, Japan, New Zealand, Singapore, South Korea, Taiwan, and Thailand.

ResearchHighlights

*The Taiwanese healthcare providers sector is expected to generate total revenue of $37.7 billion in 2011, representing a compound annual growth rate (CAGR) of 7.4% between 2007 and 2011.

*The outpatient care segment is expected to be the sectors most lucrative in 2011, with total revenue of $12.6 billion, equivalent to 33.5% of the sector's overall value.

*The performance of the sector is forecast to accelerate, with an anticipated CAGR of 8.2% for the five-year period 2011 - 2016, which is expected to drive the sector to a value of $56 billion by the end of 2016.

MarketAnalysis

After a period of fluctuating growth, the Taiwanese healthcare providers sector is expected to accelerate this year. In the forecast period, strong thus gradually decelerating growth is expected to be seen.

The Taiwanese healthcare providers sector is expected to generate total revenue of $37.7 billion in 2011, representing a compound annual growth rate (CAGR) of 7.4% between 2007 and 2011. In comparison, the Chinese sector will increase with a CAGR of 15.9%, and the Japanese sector will decline with a compound annual rate of change (CARC) of -0.3%, over the same period, to reach respective values of $303.9 billion and $475.9 billion in 2011.

The outpatient care segment is expected to be the sectors most lucrative in 2011, with total revenue of $12.6 billion, equivalent to 33.5% of the sector's overall value. The Inpatient care segment will contribute revenue of $10.6 billion in 2011, equating to 28% of the sector's aggregate value.

The performance of the sector is forecast to accelerate, with an anticipated CAGR of 8.2% for the five-year period 2011 - 2016, which is expected to drive the sector to a value of $56 billion by the end of 2016. Comparatively, the Chinese and Japanese sectors will grow with CAGRs of 11% and 2.1% respectively, over the same period, to reach respective values of $512 billion and $527.4 billion in 2016.

Value

The Taiwan healthcare providers sector grew by 11.4% in 2011 to reach a value of $37.7 billion.

The compound annual growth rate of the sector in the period 2007-11 was 7.4%.

Taiwan Healthcare Providers Market Value
Unit: USD

Year Value Growth
2007 28300000000.0
2008 30900000000.0 9.2692%
2009 31900000000.0 3.2248%
2010 33900000000.0 6.0924%
2011 37700000000.0 11.3729%
CAGR 2007-2011 7.445%

MarketSegmentation

Outpatient Care is the largest segment of the healthcare providers sector in Taiwan, accounting for 33.5% of the sector's total value.

The inpatient care segment accounts for a further 28% of the sector.

Taiwan Healthcare Providers Category Segmentation
Year: 2011

Category Percentage
Outpatient Care 33.5%
Inpatient Care 28%
Medical Goods 21.5%
Long-Term Care 12.5%
Collective Services 4.5%

MarketSegmentation

Taiwan Healthcare Providers Geography Segmentation
Year: 2011

Geography Percentage
Japan 41.5768%
China 26.5476%
South Korea 6.59023%
Taiwan 3.29541%
Singapore 0.666601%
Rest of Asia-Pacific 21.3234%

CompetitiveLandscape

The healthcare providers market will be analyzed taking private healthcare providers as players. The key buyers will be taken as health insurance companies, as well as individual healthcare users, and pharmaceutical companies, healthcare equipment and suppliers and qualified staff as the key suppliers.

The degree of rivalry between incumbents is increased due to the size and number of players, as well as high fixed costs, the difficult to exit nature of the sector and lack of differentiation between players.

The strength of buyers is dependent on their size: buyers range from small, individual buyers to larger health insurance companies. However, buyer power is weakened generally by the very small likelihood of backwards integration, coupled with the vital service that players offer.

Suppliers benefit from players' need to have top quality products, meaning they are able to raise prices. Additionally, the products and services that suppliers offer are essential to players and players are unlikely to backwards integrate into the business areas of suppliers.

Strong growth, low differentiation and weak brands mean that the off-putting nature of strict regulations is offset.

Possible substitutes, which include alternative medicine and therapy, may be a cheaper alternative; however, their beneficial effects are debatable and unproven.

In Taiwan, healthcare is covered by the National Health Insurance, of which a small amount is funded by the patient themselves. Mainly, healthcare costs are subsidized by the Bureau of National Health Insurance. The buyers in this market vary in size from small, individual consumers to large health insurance companies. Private health insurance plans enable policy holders to access private hospitals, of which benefits may include shorter queues, privacy, unrestricted visiting hours and continuity of care (seeing the same doctor throughout one's treatment.)

The buyers in this market vary in size from small, individual consumers to large health insurance companies. Whilst non-private hospitals are publicly funded, private hospitals are funded by payment for services by patients and insurers. Thus, if a hospital loses out on a contract with a large insurer, this may have a strong effect on their revenues. Here buyer power is strengthened. However, hospitals may also receive revenues from individual customers.

As treatments can vary widely (from a small, one-off treatment to an expensive, long-term treatment), the effect this can have on revenues varies too. Switching costs may be incurred. For example, for an individual customer, moving to a different market player may mean having to travel further, which would incur time, effort and monetary costs. Additionally, a person may have developed a relationship with a doctor, who may have the added benefit of historical patient knowledge and a rapport.

Although many players offer undifferentiated products, differentiation lies in the reliability and quality of equipment provided, the level of care and expertise of staff, and the areas the hospital specializes in (for example, one hospital may specialize in oncology, and another in brain damage).

Buyers are price sensitive: an individual buyer's life may depend on whether or not they are able to pay for a particular treatment. Health insurance companies are price sensitive due to the nature of their businesses, which is as for-profit entities.

Players are more likely to forwards integrate into the business area of buyers, rather than buyers backwards integrate into the business area of players, due to the start-up capital, specialist knowledge, investment in up-to-date equipment and skilled staff needed to open a private hospital.

Hospitals are also subject to strict regulations regarding safety (for both patients and staff), cleanliness and standard of care etc.

The products and services provided by players are not necessarily vital to buyers. For example, a buyer may choose to have a treatment done for aesthetic reasons. However, generally, players' services are essential, which reduces buyer power.

Overall, buyer power is assessed as weak.

Suppliers to healthcare providers include pharmaceutical companies, healthcare equipment suppliers, and qualified staff. Such suppliers include large, multinational pharmaceutical companies such as Pfizer and Nanag Kuang, who possess strong negotiating power due to their sheer size and scale. Many larger companies have expanded their activities into other areas. The Johnson & Johnson brand includes, for example, Neutrogena and Clean & Clear (who supply skin and beauty products) and Acuvue (who supply contact lenses). On the other hand, in 2010, $58.5 billion of Pfizer's total revenues of $67.8 billion were prescription-only human health products. This is an example of the fact that, in general, pharmaceutical companies tend to be reliant on the business they receive from players, which significantly diminishes their power.

Pharmaceutical companies develop, produce and market licensed drugs, which can be essential items. As such, players in this sector are reliant on suppliers, strengthening supplier power somewhat. This is further boosted, given that many players are unable to use alternative inputs, along with the fact that quality of the products provided by suppliers is incredibly important. For these reasons, suppliers are able to negotiate higher prices. Additionally, there is an extremely low likelihood of market players integrating backwards into their suppliers' business areas. In Taiwan, regulations are set by the Bureau of Pharmaceutical Affairs (BPA), which was established by the Department of Health (DOH).

Supplier power is weakened by the existence of many large, billion-dollar companies who are extremely competitive with one another, who offer products with low differentiated input. As many companies provide similar drugs to treat various diseases, players are able to go to the cheapest supplier. Supplier power is further weakened by the low likelihood of forward integration, given the large capital required for the building, equipment and staff etc.

With regards to suppliers of healthcare equipment, the market is dominated by large scale international incumbents who benefit from scale economies, meaning they can negotiate heavily on price. Research is highly important for suppliers' revenues, as buyers are increasingly cost aware, meaning they are unlikely to invest in equipment or supplies which offer little improvement on previous models. In addition to this, suppliers must adapt to constant technological and scientific advancements in order to compete successfully with others. Large scale of operations and strong research and development centers, allow such players to easily expand into various geographical areas and tap a share of emerging markets. This strengthens supplier power.

However, there is a large degree of regulation present within the market, concerning product labeling requirements, promotion and marketing schemes, quality system requirements, record keeping and medical device reporting. Increased government regulation can increase compliance costs which in turn reduces revenues.

Overall, supplier power is assessed as strong.

New entrants face competition from large, existing incumbents, such as Mission Care Hospitals and Chi Mei Medical Center, who already benefit from a skilled staff, a good reputation and an existing patient base. Individual buyers face fewer switching costs than larger buyers, such as insurance companies, whose policies offer access to and treatment in certain hospitals.

Any significant differentiation in this sector is due to specialist care, as hospitals offer a certain level of basic care to their patients. Different hospitals may benefit from specialist equipment or specially trained medical practitioners. Differentiation may also occur in terms of quality of care and price.

Entry to this market is possible on a small scale (opening a small, rural health clinic, for example). However, opening a new hospital requires significant capital. Firstly, a premises need to be purchased or built. Location is important, as hospitals must be easily-accessible to a large number of people, as is compliance to planning regulations with regards to both the building and the surrounding area. Any medical devices used need to meet certain standards and regulations relating to safety, effectiveness and quality.

Regulations are strict: in Taiwan, the Pharmaceutical Affairs Law is regulated by the Bureau of Pharmaceutical Affairs (BPA) and the Department of Health (DOH). Competent staff must also be hired: medical practitioners must have relevant qualifications. Hospitals also need staff such as cleaners, administrators, catering staff, computing staff, grounds staff and more. Compliance with these regulations, and others, is likely to significantly increase costs. Larger hospitals benefit from significant capital, which enables them to exert their financial muscle. Benefits of this may be increased negotiating power with regards to suppliers of equipment or pharmaceuticals companies. Hospitals are competitive with one another on price, quality and efficiency, as improvement means more patients, and more patients means more revenues; existing incumbents are unlikely to acquiesce to new companies entering this market. Players are typically smaller than suppliers, although the small number of them means players hold a certain degree of power. Quality and reliability are paramount, increasing pressure on suppliers.

Players are also extremely price sensitive. A supplier who is able to provide a quality and efficient product that is value for money is likely to benefit from a good reputation and, as such, players' loyalty. Brand loyalty is not strong, although reputation plays a role. Buyers are unlikely to stick by a particular hospital if another offers, for example, better care.

Expenditure on health forms a significant part of government' and consumers' spending. This, along with strong market growth in recent years makes the market more attractive to potential new entrants.

Overall, the threat of new entrants is assessed as moderate.

One possible substitute for traditional healthcare services is alternative medicine, which is defined as health care practices that are not typically taught or practiced in the realm of conventional medicine. These may be based on cultural, or historical, traditions, rather than on scientific evidence, and include homeopathy, herbal medicine and acupuncture.

Depending on the type and severity of the problem being treated, any alternative medicines or therapies that cure a person may, in fact, be due to the placebo effect, which can account for around one third of recoveries of those using alternative medicine. Alternative medicine success rates vary significantly and tend to be anecdotal, and the efficacy and safety of alternative medicines has been questioned.

One possible substitute to conditions which have a mental, as opposed to physical, basis, is therapy. Types of therapy include psychotherapy, cognitive-behavioural therapy and group therapy. These types of therapies may help with disorders such as depression and anxiety. However, for many, the drugs provided by pharmaceutical companies, healthcare equipment and qualified staff cannot be successfully substituted.

Overall, the threat of substitutes is assessed as moderate.

In the healthcare providers sector, existing incumbents range in size from large, high-tech, specialist hospitals to small, rural health clinics. These larger hospitals face intense rivalry, and tend to compete on efficiency, quality of care and price. Improvement in any of these means more patients at the hospital, which means higher revenues. Such large companies benefit from scale economies, meaning they can negotiate more intensely on price. Individual buyers face fewer switching costs, which may only relate to the time, effort and cost of traveling to a different hospital if its location is further away than their current hospital. Larger buyers, such as insurance companies, may be tied into contracts. Additionally, the policies they have sold in the past relate to certain hospitals where policy holders receive their care and treatments, so it would be difficult to switch for this reason.

Fixed costs are high, and include, among others, employee wages, medical devices and pharmaceuticals. The market may be hard to exit: certain assets, such as specialist equipment, may be hard to divest.

Additionally, increasing restrictions and medical innovations mean that the number of patients who need hospitalization has fallen over recent years, which, in turn, means that those who are hospitalized tend to be the most expensive to treat. This intensifies rivalry.

Most players offer very similar basic care and do not operate in a diverse range of markets. Differentiation may occur in terms of specialist care, which slightly eases rivalry. However, the fact hospitals tend to specialize in one field, increases rivalry.

Strong growth in this sector tends to decrease rivalry somewhat.

Overall, rivalry is assessed as moderate.

This section contains brief overviews of the leading companies in the Taiwan healthcare providers sector.

Company

Chi Mei Medical Centre

The Chi Mei medical center is an organization based in Taiwan. The center covers the Tainan area, including Yunlin, Chiayi, and Tainan regions, since 1968.

Chi Mei is a 2,203-bed, not-for-profit facility with nearly 4,690 employees and physicians. It sees more than 183,000 outpatient visits and 4,429 inpatient admissions (bed occupancy rate of 90%) each month.

The emergency rooms receive more than 14,000 visits each month making up about 25% of all emergency admissions in the region. Each month, around 4500 operations are carried out at Chi Mei Medical Center. The average length of hospital stay is 6.6 days.

Chi Mei is a non for profit organization and so financial details are unavailable.

Company

Mission Care Hospitals

Mission Care hospitals group is one of the largest healthcare groups in Taiwan. The group's flagship hospital is Min-Sheng General Hospital. This 600-bed hospital provides comprehensive tertiary health care, including a 24-hour trauma center, in the city of Taoyuan. The hospital specializes in minimally invasive spine, open heart, and bariatric surgeries.

Financial information is currently unavailable for Mission Care.

Company

Tzu Chi

The Tzu Chi organization is an international humanitarian organization and the largest non-governmental organization (NGO) in the Chinese-speaking world. It now operates 6 hospitals in Taiwan. The organization also runs numerous foundations and medical missions which operate internationally. The company's name means "compassionate relief".

As a non-profit organization, Tzu Chi has built many hospitals and schools worldwide, including a network of world-class medical facilities in Taiwan and a comprehensive education system spanning from kindergarten through university and medical school. Schools were also rebuilt in the aftermath of earthquakes in Iran, China and Haiti. The organization maintains a small number of nuns, who are self-sufficient, including growing their own food.

Tzu Chi operates its own television channel, "Da Ai" network, along with its own news and television programming. It has also established Chinese schools abroad, such as in Australia and the US, which teach not only Chinese and sign language, but also the ways of community service.

The first Tzu Chi General Hospital was inaugurated on August 17, 1986. In May, 1995, Tzu Chi General Hospital was promoted to be the first medical center in eastern Taiwan and received the ISO 9002 certification in March, 2000. It became the only one medical center with ISO 9002 certification among 18 medical centers in Taiwan.

Financial information is unavailable.

ForecastValue

In 2016, the Taiwan healthcare providers sector is forecast to have a value of $56 billion, an increase of 48.5% since 2011.

The compound annual growth rate of the sector in the period 2011-16 is predicted to be 8.2%.

Taiwan Healthcare Providers Market Value Forecast
Unit: USD

Year Value Growth
2011 37700000000.0 11.3729%
2012 41100000000.0 8.9904%
2013 44600000000.0 8.422%
2014 48200000000.0 8.0886%
2015 52000000000.0 7.9229%
2016 56000000000.0 7.7544%
CAGR 2011-2016 8.235%

MacroeconomicData

Population

Taiwan Size of Population (million)
Population (million)

Year Value Growth
2007 22.9 40%
2008 23.0 40%
2009 23.1 40%
2010 23.1 30%
2011 23.2 20%

GDP

Taiwan GDP (Constant 2000 Prices, $ billion)
Constant 2000 Prices, $ billion

Year Value Growth
2007 434.9 600%
2008 438.1 70%
2009 429.6 -190%
2010 476.4 1090%
2011 500.7 510%

NominalGDP

Taiwan GDP (Current Prices, $ Billion)
Current Prices, $ billion

Year Value Growth
2007 438.0 680%
2008 475.7 860%
2009 441.2 -730%
2010 516.3 1700%
2011 551.7 690%

Inflation

Taiwan Inflation
Inflation Rate (%)

Year Value
2007 1.7
2008 3.5
2009 -0.9
2010 1.0
2011 1.7

CPI

Taiwan Consumer Price Index (Absolute)
Consumer Price Index (2000 = 100)

Year Value
2007 105.9
2008 109.6
2009 108.7
2010 109.7
2011 111.5
Exchange Rate
Exchange Rate

Year Value
2007 32.88259
2008 31.55586
2009 33.08798
2010 31.55146
2011 29.2632

Article A282001829

(c) 2012 Gale, Cengage Learning.…...

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