Powering the Future of Healthcare in Asia Pacific

How technology will change healthcare delivery

The Creative Destruction of Healthcare

Chapter

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Powering the Future of Healthcare in Asia Pacific

Why have we commissionedthe report?

IN THIS ISSUE

• Moore’s Law• The Innovator’s

Dilemma

• The Healthcare Revolution

• Dramatic Changes in Healthcare: A Tectonic Shift

• Healthcare’s New Paradigm

• What are the Legal Consequences of the Healthtech Revolution?

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Chapter

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Data-driven Healthcare

About the Authors

Ben McLaughlinben.mclaughlin@bakermckenzie.com

Toby Pattentoby.patten@bakermckenzie.com

Julien de Salaberryjulien@propellgroup.biz

Seck Yee Chungyeechung.seck@bakermckenzie.com

Ben McLaughlin is the head of the Baker & McKenzie Healthcare Group for Asia Pacific, leading more than 170 lawyers who focus on advising clients in the healthcare industries. Ben is rated by Chambers Asia Pacific and Best Lawyers as one of Australia’s leading lawyers in mergers and acquisitions (M&A).  With a practice focus on healthcare M&A, Ben is also rated as a leading adviser on corporate governance. He was a finalist for “Partner of the Year” at the Lawyers Weekly 2015 Australian Law Awards. > Read more

Toby is a special counsel in our healthcare team. Toby has more than 10 years’ experience in healthcare regulatory, intellectual property, privacy and commercial law. In addition to his legal experience, Toby has a bachelor of science in biochemistry. > Read more

A globally recognised expert on healthtech, Julien de Salaberry is the founder and CIO of The Propell Group, a boutique venture investor and advisory firm focused on healthtech early-stage companies. He has directed strategy for some of the world’s leading healthcare companies, including Eli Lilly, Boston Scientific and Merck & Co. He was part of the team that wrote the book iDisrupted. > Read more

Seck Yee Chung is a partner based in Baker & McKenzie’s Ho Chi Minh City office and leads the information technology and communications, healthcare, and M&A practices in Vietnam. He focuses on investment projects and M&A deals, and advises on commercial and regulatory matters. This includes foreign direct investment, market access and licensing, data use and privacy, over a diverse range of industries, such as pharmaceuticals, medical devices, clinical trials, cosmetics, and IT and data services. > Read more

Key trends and innovation momentum drivers in Asia Pacific healthcare

Preface

The delivery of healthcare is poised for a radical change. The unparalleled ability to collect, mine and analyse health data, the increasing sophistication of bio-sensors, and the exponential rise in the use of smart phone devices provides opportunities for a radical re-think in how to economically and efficiently provide healthcare solutions for populations across Asia Pacific. This will affect healthcare systems providers as well as individuals. Healthcare resources that have been constructed largely to treat disease will need to be re-thought, to take advantage of technologies that monitor to prevent illness and to intervene early.

Countries across the region in various stages of development are grappling with the possibilities of this healthtech revolution and the legacy issues of twentieth-century healthcare infrastructure for twenty-first-century healthcare solutions. In doing so, many issues are raised about the use of new technologies in healthcare that regulators lag behind in answering. It is these issues that we seek to address.

This digital revolution of medicine will not only significantly benefit

developed health systems, but will also allow developing economies to leapfrog over expensive development stages to establish better, effective health systems. For Asia Pacific’s developing economies, following the same evolutionary steps of developed economies is neither feasible nor required. It will prove too costly, take too long and lead to falling into the same pitfalls experienced by developed health systems. Above all, it fails to take advantage of the technology innovation that is disrupting the delivery of healthcare.

The provision of modern-day healthcare across Asia Pacific concerns all stakeholders such as physicians, patients, hospitals, investors and ministries of health. The region faces a considerable public health challenge which is driving healthcare spending growth faster than GDP growth and will continue to negatively impact productivity. By 2030, India stands to lose approximately 18 million potentially productive years of life due to non-communicable disease-caused deaths.

Asia Pacific healthcare is a paradox of significant unmet medical needs compounded by an under-invested and immature health system infrastructure. It has a large population that mostly pays for its own healthcare and is experiencing fast-growing power of purchase, driving the desire for greater choice and access to health services.

In this era of radical technological change and innovation, the legal and regulatory landscape is undergoing gradual transformation and harmonisation. The ASEAN Medical Device Directive is an example of this. The healthcare industry now faces the issue of “law lag,” as laws are a number of steps behind technological advances.

We are seeing common themes emerge across Asia Pacific in legal developments, with a focus on data protection laws, the regulation and promotion of medical devices, and the ability to protect, enforce and commercialise intellectual property. Governments and legislatures are charged with the challenging task of balancing the need for effective regulatory compliance with the need to foster and accelerate innovation and development, as well as to reduce overall healthcare costs.

The opportunity to power the future of healthcare in Asia Pacific through technology innovation will transform the delivery of better healthcare.

In these pages, we illustrate why we believe Asia Pacific stakeholders have an unprecedented opportunity and we propose how this could be achieved.

The Creative Destruction of Healthcare

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Considered one of the most influential economists of the twentieth century, Joseph Schumpeter served as Austria’s finance minister and became a professor at Harvard University.

In the mid-twentieth century, Joseph Schumpeter, the noted Austrian economist, popularised the term “creative destruction” to denote transformation that accompanies radical innovation. Over the past few years, our lives have been radically transformed through digital and technology innovation. But the most precious part of our existence—our health—has thus far been largely unaffected —insulated, and almost separated from this digital revolution. Until now.

Medicine is about to go through its biggest shakeup in history.

Asia’s developing economies face a significant and growing challenge to their ambitions to build an OECD standard of healthcare infrastructure and delivery. Two main challenges face these economies:

The prohibitive cost of building such a healthcare system

The increasing disease burden ranging from preventable communicable

diseases to the growing trend in non-communicable

diseases brought on by ageing and lifestyles

Asia’s policy makers must therefore choose between two options:

The conventional, long, expensive and unsustainable road which developed economies have been following

Taking full advantage of the health technology innovations and new operating models which are transforming and will continue to transform healthcare across the globe

A founding father of Silicon Valley, Gordon Moore co-founded chipmaker Intel in 1968.

You can interpret the term Moore’s Law in two ways. There is its original meaning, which refers to the speed at which transistors on integrated circuits double. Alternatively, you can use the term as a metaphor to describe any form of rapid technological advancement. In its metaphorical sense, Moore’s Law is now one of the most important rules in business and the economy today.

To borrow words used by consultancy firm McKinsey:

Moore’s Law

Today, a human genome can be sequenced in a few hours and for a few thousand dollars, a task that took 13 years and $2.7 billion to accomplish during the Human Genome Project.

Or to quote Craig Venter—one of the leading scientists in the world today—in a lecture he gave at the BBC in 2007:

The Innovator’s Dilemma

First published in 1997, Christensen’s book suggests that successful companies can put too much emphasis on customers’ current needs, and fail to adopt new technology or business models that will meet their unstated or future needs. He argues that such companies will eventually fall behind. Christensen calls the anticipation of future needs “disruptive innovation,” and gives examples such as the personal computer.

Harvard Business School Professor Clayton Christensen is the world’s authority on disruptive innovation and was named the World’s Most Influential Business Management Thinker in 2011 and 2013.

The innovator’s “dilemma” comesfrom the idea that organisations will reject innovations based on the fact that customers cannot currently use them, thus allowing these ideas with great potential to go to waste.

Asia has a broad spectrum of health systems and challenges, with Myanmar at one end after decades of under investment, and Japan the opposite end of the spectrum, with an OECD-standard health system.

Whatever the level of maturity of any Asian economy’s health system, we advocate that all of Asia’s healthcare stakeholders need to overcome their innovator’s dilemma and take full advantage of the technological advances that are shaping the new healthcare paradigm powered by Moore’s Law.

Over a short period of time genome projects, which, 10 years ago required several years to complete, now take only days.

He suggested that within half a decade “it will be commonplace to have your own genome sequence, something that just a decade ago required billions of pounds and was considered a monumental achievement.” He said, “Our ability to read genetic code is changing even faster than changes predicted by Moore’s Law.”

Metaphorical Moore’s Law may yet prove to be even more extreme in numerous medical disciplines such as nanotechnology or synthetic biology.

Two factors enabling transformation of healthcare

Factor 1

Factor 2

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2

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2

The innovator’s ‘dilemma’ comes from the idea that organisations will reject innovations based on the fact that customers cannot currently use them, thus allowing these ideas with great potential to go to waste.

CrEATIvEDESTrUCTIoN

MoorE’S LAW

1950S 1965

Popularised by Austrian economist Joseph Schumpeter, this refers to the transformation accompanying radical innovation.

Intel founder Gordon Moore’s observation that computing speeds double every two years, an idea that can also be applied to technology and economics.

INNovATor’S DILEMMA THE HEALTHCArE rEvoLUTIoN

Coined by Harvard professor Clayton Christensen, this refers to companies rejecting innovations based on the fact that they cannot currently be used, with the ideas ending up going to waste.

Dramatic changes of medicine brought about by mobile connectivity and bandwidth, Internet, social networking, increasing computing power and data universe, information systems, imaging, genomics and wireless sensors.

1997 2015

The Healthcare Revolution

We are set to see a truly radical change. Healthcare will focus on prevention. Up to now, healthcare has always concentrated on diseases. We only tend to receive medical attention if we are ill and usually rely on symptoms to drive us to seek a qualified medical opinion. Technology will be used to prevent us from becoming sick. It will enhance us all in ways that were once thought to be the exclusive domain of science fiction.

mobile connectivity and bandwidth

social networkingInternet increasing computing power and the data

universe

genomics wireless sensorsinformation systems imaging

Dramatic changes in healthcare—a tectonic shift

Technologies that will create this transformation include wearable technology, genome sequencing, collection, mining and analysis of big data, 3-D printing, nanotechnology, regenerative medicine, bionic technologies, and exoskeleton technology, to name but a few. We will, however, only consider the most relevant to Asia Pacific in this report.

Nowadays, diseases that kill us are rarely epidemics as medicine has been very good at solving these; instead, each one of us is at risk of diseases of lifestyle, e.g.,Type 2 diabetes (T2D). If we could only make better decisions about our lifestyle, we could eliminate a substantial number of deaths from modern conditions. This is even more applicable in an era where good and comprehensive information is available.

Technology is set to enable us to make these decisions. It will also enable us to enjoy better, more customised care and live longer in the future.

The creative destruction of healthcare is being driven by the convergence of the following factors:

Healthcare, which has to date been exclusively disease centric, is now becoming prevention centric or outcomes driven. In other words, a health system, which has so far been entirely focused and geared to curing or managing a disease, will transform into one focused on prevention of disease. This type of health system is gaining increasing traction here in Asia Pacific with economies such as Australia, Korea and Taiwan following the lead of economies such as the UK, Canada and Japan where health outcomes, daily average treatment costs and cost per QALY (qualified adjusted life years, which is a generic measure of disease burden, including both the quality and quantity of life lived, and used to assess the value for money of a medical intervention) are being assessed as part of the holistic healthcare consideration.

These advances can be categorised into three categories as follows:

One additional non-data-driven technology innovation which will have a positive impact on the delivery of healthcare in Asia is 3-D printing. We will consider its impact in a later chapter.

DATA

SHArED INForMATIoN

CLoUD

DEvICES

BIo-SENSorS

The variety, veracity, velocity and volume of health data that is being collated and analysed to define actionable insights

The ability of the computing power and software on devices to address both consumer and medical needs

The ability to monitor our bodies and continuously gather data about human biology suggests new possibilities for both biomedical research and clinical practice

Healthcare’s New Paradigm

In this era of the creative destruction of medicine, we are also seeing a gradual transformation of the legal landscape in response to radical innovation in medical and health technology. Traditionally, the relationship between technology and the law has been underscored by the notion of “law lag,” meaning that legal cultures are generally a number of steps behind technological advances. This is no different for healthcare, and is particularly relevant to big data. The ever-increasing methods of collecting data, from mobile phone applications to biosensing wearables to telemedicine, will challenge the traditional concepts of “personal information,” “consent” and “medical devices.”

Balancing the desire to unlock potential against the requirements for regulatory compliance is another component of the Innovator’s Dilemma.

Privacy laws regulate how organisations collect, store, use and potentially disclose “personal information” identifying individuals. Organisations must ensure that they comply with these laws, as the legal consequences of non-compliance can be substantial, not to mention the risk of damage to reputation in the case of a serious data breach.

In some cases, the regulatory compliance regime may restrict or even prevent innovators from pursuing new ideas, concepts or technologies. In the alternative, it is argued that if individuals do not trust the effectiveness of data protection laws, they will be less likely to engage in digital healthcare, which could threaten the highly beneficial applications of technological advances.

Legal regulation must address these concerns by adopting appropriate measures to protect privacy.

We will introduce our readers to key regulatory compliance matters, from data protection laws to the regulation and promotion of medical devices. Moreover, we will consider how companies can add value to their assets and businesses by understanding and utilising intellectual property rights protection.

What are the Legal Consequences of the Healthtech revolution?

Promoting innovation should be a central objective of data regulation, yet the unprecedented ability to collect, analyse and store vast amounts of data raises new concerns about individual privacy rights.

The traditional barriers, created by the lack of inter-operability (people, process, information) between stakeholders, are being dramatically removed or lowered by advances in technology.

Ben McLaughlin on key implications of healthtech for healthcare stakeholders

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Baker & McKenzie’s Asia Pacific Healthcare Group has advised global pharmaceutical, life sciences and medical devices companies for more than 50 years.

The Firm ranked Band 1 in the Chambers Asia Pacific Life Sciences rankings for two consecutive years (2014-2015). In Asia Pacific, Baker & McKenzie has more than 150 lawyers, more than 20 of whom have healthcare and medical-related qualifications, as well as a number of non-lawyer medical practitioners who hold doctorate degrees in fields such as biotechnology, pharmacology, nursing and bioethics. Our team has a thorough appreciation of issues facing our clients, from compliance pressures and complex pricing and reimbursement difficulties, to red-flag issues such as anti-corruption.

As a trusted advisor to the world’s largest healthcare companies, the Baker & McKenzie Asia Pacific Healthcare Group offers cutting-edge value-added services to help clients stay abreast of key industry trends.

These products include

•Webinars

•Client seminars

•Publications such as From Pills to Tablets and Investing in the Healthcare Industry

•Mobile apps such as the MapApp, which won the Innovative Use of Technology Award at the FT Innovative Lawyers Asia Pacific Awards 2015 (download it on the App Store)

•Thought leadership reports (example: Powering the Future of Healthcare in Asia Pacific)

Ben McLaughlinHead, Asia Pacific Healthcare Groupben.mclaughlin@bakermckenzie.com

About the Asia Pacific Healthcare Group

Ben McLaughlin talks about Baker & McKenzie’s strengths and value-added client services

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Data-driven Healthcare

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