04 Nov 2013, Nandita Singh, BioSpectrum
Affordable Healthcare Act also known as Obamacare is in the eye of the storm. Despite the widespread outcry, including a "government shutdown" the US is pushing ahead with this healthcare reform, even though a centralized system with government taking responsibility for healthcare delivery end-to-end, for all its citizens, is in itself an anomaly in the free market. The vision is to extend medical insurance cover to every legal resident in the US and the implementation rollout started this October.
Those who haven't followed Obamacare-related developments can read it here
This standardized medical reimbursement implementation penalizes individuals failing to buy one of the government approved medical insurance plans. The one high impact positive effect of this mega rollout is, perhaps the fact, that it will bring into existence an "information exchange mechanism" where medical databases will talk to other relevant databases and will also enable hospitals and doctors to deliver timely, collaborative care with an intricate web of physicians, hospitals, labs, employers, researchers, government and insurance companies anywhere in the US and maybe at approved hospitals outside of the US as well. This in itself will improve patient outcomes by at least 70 percent, given that most of healthcare delivery issues involve, misinformation, miscommunication and reordering of test because records are inaccessible. It is a huge market opportunity for big data analytics firms in the US and elsewhere.
However, for medical devices and drug companies that intend to take their products to the US, which is a large lucrative market because of relatively high cost of healthcare, Obamacare is actually a market entry barrier. Getting into the reimbursement list of drugs will now be the "big one" in go-to-market strategy for companies from Asia. They will also have to figure out the best way to move ahead on the altered routes for market access in the US.
It is a no brainer to say that generics companies will rule. Though these Asian-origin companies mainly headquartered in India and China need to resolve their quality, and procedural compliance issues to remain in the running. The market opportunity is still there but the additional complexity in doing business added to the mix demands that all players re-strategize.
However, the real issue of what will make healthcare affordable - in the US or in the developing countries in Asia or Africa - still remains. Driving healthcare delivery efficiencies can only give more value for the dollars spent. It is unlikely to make healthcare more affordable and deliver on Obama administration's promise. Not in the near term, at least.
Affordability is driven by innovation, which in turn is driven by necessity. The ripple effect of Obamacare on medical devices and drug companies will invariably drive US companies to acquire, partner, strive for innovations that bring down costs resulting in industry consolidation in Asia. From having an Asia strategy to Asia-first strategy will now make more sense to them because of large underserved markets in this part of the world versus the 30 million people that Obamacare will add to the market.
BioSpectrum will be tracking these developments under our new section on Healthcare. Check it out at www.BioSpectrumAsia.com. You can also read, Biopreneur section on the site that showcases entrepreneurs driving innovation and affordability in Asia.