The post coronavirus commercial landscape provides fresh, new opportunities for UK leaders in digital health to explore rapid growth in China, Japan and Korea. This article is based on our coronavirus webinar series on Digital Health and opportunities in Far East post Covid-19.
The UK’s dynamic life sciences sector is one of its biggest success stories, and it now has an opportunity to grow even more quickly. Already worth £74bn to the national economy and employing 241,000 people, life sciences businesses are well-placed to expand internationally in the wake of the coronavirus pandemic, particularly in the crucial Far Eastern markets of China, Japan and Korea.
The outlook for the digital health industry in these territories is particularly exciting. UK businesses are at the forefront of digital transformation in the sector, pioneering technologies with the potential to improve individuals’ health and wellness. The willingness and appetite of Asia’s markets to embrace these solutions has been substantially boosted by coronavirus.
China, for example, is already regarded as a global leader in the adoption of technologies such as wearables and online consultations. Internet health care in China is expected to be worth £22bn by 2026. But Timothy Johns, China Head, Digital Health at the Department for International Trade, believes the coronavirus pandemic will accelerate this growth. The crisis has encouraged both healthcare providers and patients to embrace new technologies, he says.
‘China already has this culture of digital health technology spurring the market, with physicians taking into account health data from wearables and other tools in their consultations,’ explains Johns. ‘But coronavirus has been a lightning rod for the sector, with healthcare practitioners quick to realise they could capitalise on the infrastructure they already had, using new solutions to avoid being overwhelmed.’
Japan, meanwhile, is amongst the top three healthcare markets in the world, while Korea is also a significant market. Both countries offer universal healthcare systems based on insurance. Hospitals are largely owned by private sector operators. The potential for digital health in both is significant, argues Graham Barker, Head of Medtech & Life Science at the international business development consultancy Intralink.
‘Both countries are embracing digitisation as a means of bringing healthcare expenditure under control,’ Barker says. ‘Where they differ from China is there is some suspicion amongst the medical fraternity; it has taken longer for these technologies to be introduced.’
Coronavirus could prove to be a turning point in this regard, Barker argues. In both Japan and Korea, ageing populations, low birth rates, the difficulty of sustaining care and the need to control healthcare costs all mitigate in favour of digital health. But until the pandemic, doctors in both countries had moved only cautiously towards tele-medicine. Coronavirus prompted more rapid adoption, which may now be sustained.
Across these markets, there will now be many more opportunities to make progress. The Chinese authorities see digital health as a means to improve quality of care and access to care, albeit with a careful focus on cyber-security and data privacy.
Hospital information systems, for example, are a particularly fast-growing sub-sector of the digital health industry. Tele-healthcare, spanning areas such as video consultations and remote medication management, and mobile-health, featuring wearables and apps, are also growth areas. Tele-medicine facilities are widely available in Chinese hospitals.
In Japan, where tele-medicine has been slower to take off amid both regulatory and cultural barriers, policymakers have now seen real-life evidence of its significant advantages. Similarly, in Korea, where doctors have been even more nervous about tele-medicine, these services became invaluable in hospitals and elsewhere during the coronavirus pandemic, resulting in tightly observed pilot projects taking place with a view to liberalising the current controls.
Artificial intelligence (AI) is also an area of interest across the region. The potential for AI to help healthcare providers offer more personalised treatments is attracting much excitement.
Certainly, regulation is an issue and there will be other gaps to bridge. In China, work is still needed on reimbursement models, with several large companies now trialling different operating models. In Japan, insurers have begun to offer at least partial coverage of tele-medicine. One question now is the extent to which this will continue post-coronavirus.
Calling UK businesses
Nevertheless, the digital healthcare opportunities for UK companies in Asia are significant and evolving at pace. ‘The sheer scale of the need in China is remarkable,’ says Johns. ‘There is a huge imperative to increase the quality of care and to improve access to quality care.’ Barker adds: ‘In Japan, it will be very interesting to see how much innovation is retained after the emergency damps down. in Korea, progress may be slower, though pilot projects have taken place in some hospitals.’
In China, primary care stands out as an area of interest, with doctors exploring a variety of different ways for technology to improve interactions between patient and healthcare professionals. UK providers have a real chance to leverage the world-class practices and experience of the NHS system, embedding that expertise in new tools and technologies.
Similar opportunities for UK businesses exist in Japan and Korea. Areas of particular interest include AI, big data and precision medicine. The digitisation of hospital processes will also offer opportunities, in areas such as electronic health records. Consumer healthcare applications are attracting increasing government support. UK exporters will have to differentiate their products from those available from domestic providers, potentially in the elderly care market, for example.
The key will be to move quickly to exploit these opportunities, argue both Johns and Barker. While UK businesses have established reputations and well-developed technologies, competition from both domestic businesses and international rivals is likely to pick up quickly. ‘China’s own capabilities have improved very quickly in recent years, so there is no time to waste,’ warns Johns.
Johns tips the digital health sector to continue its rapid growth, stimulated by the coronavirus crisis and the pace of technological development in the country, as well as the Government’s emphasis on healthcare reform. Businesses therefore need to seize the initiative. The partnership model, for example, may be a good way to move into China at speed.
There are similarly exciting opportunities in Korea and Japan, adds Barker, but again these need to be taken with some urgency, especially given the regulatory and compliance issues that need to be overcome during early stages. ‘People need to be there now, building the partnerships and relationships with hospitals and key opinion leaders,’ he warns. ‘The direction of travel is very clear, and while there are complexities, these won’t get any easier if you leave it for later.’
How Santander can help
We are uniquely positioned to help UK businesses enter these markets and rapidly commercialise the opportunities they present. Thanks to the strong in-country ecosystems we have grown and nurtured, particularly local banks such as the Industrial Bank of Korea (IBK), Mitsubishi UFJ Financial Group (MUFG) and Bank of Shanghai, companies can be connected to a vast number of local partners by accessing the client networks and connectivity expertise of each of these organisations. Scott Reeves, Country Specialist for Japan and South Korea, notes that ‘whilst the ability to access local financial services is important for any internationally trading business, the means to connect to local buyers, sellers or partners that you can trust is equally as important. Our banking partners can provide both. IBK, for example, banks the largest number of SMEs in South Korea. Since its founding by the South Korean Government almost 60 years ago, it has developed financial tools and crucially, the non-financial expertise to help domestic and foreign SMEs grow in South Korea. MUFG on the other hand is the largest bank in Japan, has almost 20 years’ experience in providing business-to-business connections in Japan and can provide UK businesses with direct links to a vast number of Japanese SMEs, large corporates and even the ‘Keiretsu’ mega-corporations, being itself a member of the Mitsubishi Group.’
Most of our sector specialists come from the industry. Phil Jennings our Head of Life Science Sector is one of them, with a background in international sales development. He understands the steps that UK companies need to take to internationalise and develop their overseas sales and is available to support the right opportunities.
Leveraging the support of partners back home may also be crucial in making the breakthrough in the Far East. For example, our relationship with Intralink has seen it help clients overcome some of the barriers facing new entrants in that market. Providing advice on the right entry strategy, understanding local culture and gaining access to local partners. Our partners, including Bank of Shanghai, in China offer similar levels of support.
ChongYoon Kwon, International Trade Community Manager at the Industrial Bank of Korea, points to work done at the height of the crisis, helping our UK clients and the Government to source personal protective equipment manufactured by their Korean customers. There’s huge potential to build on these foundations, she says.
It’s also important to recognise that while international travel remains difficult in the wake of the pandemic, much progress can be made from the UK. We’re running a series of digital events to support exporters, including virtual meet-the-buyer sessions that introduce UK companies to potential customers in overseas markets.
Certainly, the Far East is open to doing more business with UK exporters. China, in particular, has a track record of welcoming innovative companies from other economies. Such openness may now increase as the region’s businesses think about how to reconfigure international supply chains in response to the coronavirus crisis. The onus is therefore on UK companies to begin building relationships and partnerships in these exciting new markets.
Listen to our coronavirus webinar series on Digital Health and opportunities in Far East post COVID-19 and hear from speakers including Timothy Johns, China Head, Digital Health, DIT, Graham Barker, Global Lead for Medtech and Life Science, Intralink, ChongYoon Kwon, International Trade Community Manager, Industrial Bank of Korea. Access our webinar recording.