Why Asia's Healthcare Startups Need To Do More Than Clone Western Success Stories

Can some of the innovation seen in the West be easily copied and applied in the East?

I have personally witnessed a number of healthcare startups in Asia which in some ways clone emerging business models in the West without having the equivalent background or domain expertise of what they are trying to replicate. Of course I will give them credit for trying, as starting a new business is by no means an easy task. However, the applications of the replicated business models seem out of sync with the markets that they are in.

Firstly, they may not have understood the healthcare landscape in the East. In the West, the bulk of the payment to hospitals, clinics and medical centers is borne by insurance and corporate. The quantum is huge, for example, health spending in the U.S. is 17.5% of the GDP, almost $3 trillion.

Is the same happening in Asia? Not even close! The penetration rate of medical insurance in some of the countries in the East are only in the low teens. Most of the healthcare spending is still out of pocket and heavily subsidized by the government. Hence to have the same level of market acceptance could be as good as running an uphill battle. Who will bear the technology/development cost?

Secondly, some of the replicated business models actually could not reduce the cost of health care delivery or make healthcare more personal and seamless as the successful ones in the West. This is not happening in the East because seeking medical treatment/diagnosis can still be affordable (especially in markets with heavy government subsidy), and some technologies, e.g. telehealth, actually make the experience less personal. What do you think of the take-up rate? I doubt it will be widespread. In my opinion, it is important to do a reality check on whether the business model that works well in other countries will be suitable for the market that you operate in taking into consideration health care cost, insurance penetration, regulation, and overall health care landscape.

I have seen business models in India and Indonesia that marry telehealth with delivery of drugs. It is indeed very sexy. However, in these countries, it's hardly necessary. For example, if you’re rich enough in these places, you will want to see your personal doctor that knows your family history instead of a random doctor through telehealth, potentially exposing your personal health data to a random stranger. As for the masses, they will be seeing doctors in the government/public hospital which is comparatively much cheaper or almost free. So the real addressable market is fairly small when applying this technology platform for these countries. Back to fundamentals again.

If the technology or business model is about scalability, then it has to address the issues of the masses and not the niche. The caveat emptor for the investors is to make sure that those behind the new health care startups have sufficient domain knowledge to know how to make a difference.

In Asia's developing countries, the rich will get the delivery of drugs regardless of the existence of any sort of transport companies because they are bound to have a personal driver -- which is relatively cheap to hire -- while the masses may deem the delivery of drugs too expensive to bear.

Medical City Online shares the above article in good faith for dissemination of knowledge without an intent for any monetary benefit while giving due credit to the author.

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