Mobile health:scaling the value chain

Mobile health is set to generate around $8.8bn of annual revenues for TMT providers in emerging markets by 2017, as governments in emerging economies seek to address poor health outcomes and limited healthcare resources. Services based on the simplest and most commonly used mobile phone features, such as SMS-based medication compliance services or health information call centres, hold the greatest commercial opportunities for telcos in the near term. As governments continue to invest in health systems, more advanced services like remote monitoring will start to gain more traction.

Introduction Emerging markets must address the significant health inequalities that act as a major barrier to economic development and the welfare of their populations. There are unacceptably high levels of communicable diseases in a number of countries, with particularly acute challenges in the lower-income countries of Africa and Asia. Despite significant government and NGO aid, healthcare infrastructure and resources remain inadequate, as systems have developed from a very low base.

While healthcare spend in the vast majority of emerging markets has grown substantially in recent years, this growth in expenditure is not sustainable. Healthcare funding and financing mechanisms are changing significantly and often more rapidly than in developed markets, particularly in more stable and advanced emerging economies like China and Brazil. This is important for those involved in mobile health, as preventative care − early diagnosis, medication compliance, regular doctor consultation − is a major selling point for mobile health adoption. This is one reason why the emerging markets that have the infrastructure in place are increasingly turning to technology, both to improve healthcare access and to help moderate overall healthcare spend.

However, despite evident demand, players within the mobile health ecosystem, ranging from mobile network operators (MNOs) to device vendors and systems integrators, face significant challenges in scaling up mobile health services to a level where they will start to significantly impact health outcomes and generate substantial revenue. The GSM Association (a trade group that represents network operators that use GSM) indicates that there are around 950 mobile health initiatives among its members, ranging from wellness and prevention initiatives to those targeting various elements of health systems. However, the vast majority of these are at pilot stage, demonstrating the uncertainty and immaturity of commercialising and transitioning mobile health into the mainstream.

32 Linklaters / Generation Next: Five pathways to TMT growth in emerging markets / Mobile health

0

2.0

4.0

6.0

8.0

10.0

Mobile health revenues in 2012 ($bn)

Forecast mobile health revenues in 2017 ($bn)

8.786

3.148

Figure 7: Mobile health in emerging markets: TMT market growth forecast Country focus:

NigeriaAligning market opportunity, government support and consumer demandNigeria is a good example of the key role governments can play in supporting mobile health development with an intelligent partnership-led strategy. Mobile penetration in Nigeria was 64% at the end of 2012 and is forecast to grow to 73% by 2017. Healthcare spend was around $1.6bn at the end of 2009, a seven-fold increase from 2000.

The Nigerian government has taken an active role in the Commodities Commission, which was created in response to the UN Secretary General’s call to increase access to medicines, devices and supplies that address avoidable causes of death during pregnancy, childbirth and childhood. The government has set up the National Primary Healthcare Development Agency to help reform and improve healthcare.

The significance of this for TMT players is that the government views mobile health as key to transforming healthcare. The country’s Saving One

Million Lives programme (which aims to improve access to primary health services and commodities by 2015) is incorporating mobile channels and technologies as a key mechanism to achieving this. In December 2012, the mHealth Alliance announced a new partnership with the Nigerian Federal Ministry of Health, GSMA and Intel to leverage mobile computing and telecommunications technologies to support the initiative.

This has opened up opportunities for the country’s telcos. For example, MTN is playing an important role in developing services in the three main categories of mobile health services outlined by the government: prevention, health system strengthening and health worker empowerment. Etisalat is also active in developing innovative health services. For example its Mobile Baby application has trained more than 500 birth attendants and midwives and registered more than 10,000 pregnant women in the programme. Sproxil’s SMS-based drug verification system, launched in 2010, has also benefited from government support.

33

$8.8bnMobile health is set to generate around $8.8bn of annual revenues for TMT providers by 2017.

Market size and growthThe long-term prospects for mobile health are bright. Many emerging markets are embarking on substantial healthcare infrastructure projects. Green-field investment in hospitals and wider healthcare system re-design increasingly involves the deployment of mobile health services as a standard component of healthcare delivery. However, growth prospects vary substantially between markets and service categories and, overall, mobile health development is slow in coming.

Mobile health encompasses a broad range of services, which break down into three main categories. The most ubiquitous mobile health services in emerging markets which leverage basic functionality (i.e. voice or SMS) are available to all mobile phone users (not just smartphone owners) and are often paid for directly by consumers. For example, Mexico’s Medical Home health information phone service has more than 1 million subscribers paying a fixed fee of $5 per month (charged via their mobile phone bill).

The second group consists of more advanced services such as remote monitoring services, which generally involve a medical professional and are often delivered in partnership with healthcare providers, vendors and medical institutions. Vivacell in Armenia is a player that offers this type of service.

The final category is made up of services which leverage sophisticated functionalities such as advanced analytics, for example the use of Android-based geographic applications to map polio risk areas and track the routes covered by polio immunisation teams in Nigeria, a service provided by Etisalat in partnership with

Mobile health:scaling the value chain

Source: Ovum/Linklaters.

Table 5: Risk forecast for foreign investors – Mobile health: top five emerging markets

Market Key risks Risk outline Risk forecast

China Regulation

Literacy

Affordability

Regulation: A lack of policy framework and facilitating regulation may hinder information sharing and public/private partnerships and prolong fragmentation in m-health.

Literacy: Mass market growth will be hampered by low literacy and health awareness levels.

Affordability: Governments with healthcare budgets strained by existing problems may not manage to direct sufficient resources to mobile opportunities.

Sunny

Brazil Regulation

Tax

Privacy

Regulation: A lack of policy framework and facilitating regulation may hinder information sharing and public/private partnerships and prolong fragmentation in m-health.

Tax: High tax on mobile operators and their customers stifles adoption of mobile health – tax incentives may be required.

Privacy: Legal constraints on the sharing of medical data may hamper innovation.

Sunny

India Regulation

Literacy

Affordability

Regulation: A lack of policy framework and facilitating regulation may hinder information sharing and public/private partnerships and prolong fragmentation in m-health.

Literacy: Mass market growth will be hampered by low literacy and health awareness levels.

Affordability: Governments with healthcare budgets strained by existing problems may not manage to direct sufficient resources to mobile opportunities.

Sunny

Nigeria Infrastructure

Literacy

Affordability

Infrastructure: As mobile penetration is not predicted to rise materially during the next five years, this will limit the potential reach of certain mobile health services.

Literacy: Mass market growth will be hampered by low literacy and health awareness levels.

Affordability: Governments with healthcare budgets strained by existing problems may not manage to direct sufficient resources to mobile opportunities.

Cloudy

RussiaBureaucracy Bureaucracy: High levels of bureaucracy and a lack of transparency

can hinder mobile technology from getting integrated into care pathways.

Cloudy

Low risk

Low risk

Low risk

Medium risk

Medium risk

34 Linklaters / Generation Next: Five pathways to TMT growth in emerging markets / Mobile health

Nigeria’s Economic and Social Research Institute. This is the most embryonic category, although in larger and wealthier emerging economies like India and Brazil this category of services is growing faster in green-field healthcare system deployments.

There are two key revenue streams to consider in evaluating the growth prospects for mobile health. One is spend by healthcare organisations (public providers, private hospitals, health insurers and other primary and secondary care organisations) and the other is direct spend by consumers. In emerging markets, consumers will be an important revenue stream for service providers, particularly in markets where progress in building mobile health into mainstream care is slow and consumer demand and ability to pay for better healthcare is higher.

Mobile health: top five emerging marketsSource: Ovum/Linklaters. All figures projected for 2017.

2

Brazil

$734mMobile health revenues

1

China

$3.86bnMobile health revenues

3

India

$602mMobile health revenues

4

Nigeria

$185mMobile health revenues

5

Russia

$162mMobile health revenues

Fifty percent of the 950 mobile health services tracked by the GSMA have been launched in Africa. We believe there are significant opportunities in the longer term, particularly as the use of mobile health is seen as intrinsic to African countries achieving their health Millennium Development Goals (MDGs).

However, according to a 2010 World Health Organization assessment, it is African countries which have made the least progress towards meeting the MDGs. As a result, the GSMA recently launched the Pan-African mobile health initiative, which aims to help develop a sustainable business framework, reduce fragmentation, align health and mobile industry goals and support the implementation of scalable services.

Low risk High risk

It will take some time for this initiative to show concrete results, but this kind of collaborative working across the mobile health ecosystem is a prerequisite to overcoming the barriers to mobile health adoption, particularly in markets with weak healthcare systems.

Challenges include proving the value of mobile health itself, for example achieving a sufficiently robust evidence base to convince health providers and governments to prioritise mobile health over other investments. Other barriers to growth include punitive tax systems or the lack of effective payment models to reimburse and/or incentivise the use of mobile health technologies and services.

35

Go-to-market strategies: addressing the integration challengeThe major challenge facing TMT players in mobile health is integrating services into mainstream care delivery to gain scale. Four key strategies to achieving this are as follows:

1. Develop simple and affordable services: The majority of mobile health services are based on information, advice and simple reminders, which cater to local health needs. This is the quickest win for telcos, as services can be developed and priced as value-adds for existing subscribers and/or co-marketed with partners to the wider population. In Kenya, Safaricom has partnered with Call a Doc to launch “Daktari”, a hotline number providing medical advice on topics such as first-aid and medication guidance. This 24×7 service is charged at $0.22 per minute.

2. Roll-out risk/revenue-sharing business models: Partnerships and effective business models between MNOs and healthcare providers are crucial to building momentum for mobile health. This is key to achieving scale and in starting to ramp up service sophistication. For example, India’s Apollo Hospitals Group has partnered with Aircel for its triaged health information and advice service from its medical contact centres. SUGAR, Apollo’s diabetes management programme, enables patients to send their blood sugar count to the clinician through SMS and mobile applications. An SMS text will then be delivered back to the patient explaining the readings and advising whether further action is required.

3. Leverage the identity and security capabilities of the SIM: One of the major cards telcos hold is their control of the SIM and their expertise in leveraging SIM capabilities for identity, privacy, billing and storage. Some telcos have made a good start down this road. Orange has been a leader in the use of SIM card authentication for healthcare applications and its integration into mobile devices and solutions. For example, it has created an SMS-based service to battle counterfeit drugs in Africa.

4. Consider strategic acquisition of adjacent healthcare organisations: It makes sense for TMT players to acquire expertise in areas that are aligned to their capabilities, such as using the mobile channel for the provision of information, advice and tele-monitoring services. Telefónica’s recent investment in chronic care management firm Axismed (which handles 180,000 patients) is a good example of the kind of strategic investment in providers by operators we can expect to see on a more frequent basis.

Mobile health:scaling the value chain

50%of the 950 mobile health services tracked by the GSMA have been launched in Africa.

36 Linklaters / Generation Next: Five pathways to TMT growth in emerging markets / Mobile health

Mobile health is growing rapidly. It has huge potential, economically and in terms of improved health. But that potential will be realised only if effective scaling can be achieved in moving from simple to complex services and engaging with governments and regulators.

Nigel Jones Healthcare Global Sector Co-leader

37