Healthcare
Entering the digital era Global Investor, 02/2012 Credit Suisse
Entering the digital era
Global Investor, 02/2012
Credit Suisse
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Global Investor 2.12, November 2012<br />
Expert know-how for Credit Suisse investment clients<br />
<strong>Healthcare</strong><br />
Entering the digital era<br />
Bernardino Fantini It’s a long way from hand washing to the Human<br />
Genome Project. Dr. Devi Shetty A visit with a cardiac surgeon who has<br />
big ideas – and a bigger heart. S. Yunkap Kwankam How healthcare<br />
is just a phone call away. José Gómez-Márquez Clever minds are hard<br />
at work engineering better healthcare.
Read about pioneering technologies with our human body map<br />
It’s with us all our life, but always seems to be changing and not<br />
always for the better. That’s why researchers are developing<br />
cutting-edge technologies to fix what was once thought unfixable.
GLOBAL INVESTOR 2.12 Editorial — 03<br />
Photos: Martin Stollenwerk | Gerry Amstutz<br />
Responsible for coordinating this issue:<br />
Thomas C. Kaufmann joined Credit Suisse<br />
Private Banking in 2006 as an equity<br />
analyst for nanotechnology in the healthcare<br />
sector. He is currently a senior equity<br />
analyst responsible for global pharmaceuticals<br />
and leads research on innovation,<br />
one of Credit Suisse’s global megatrend<br />
themes. Thomas has a Master of Science in<br />
Biochemistry and a PhD in Biophysics, both<br />
from the University of Basel, Switzerland.<br />
Markus Stierli is Head of Thematic<br />
Research within Private Banking Global<br />
Research. His team focuses on longterm<br />
investment strategies, including<br />
sustainable investment and global<br />
megatrends. Before joining Credit Suisse<br />
in 2010, he taught at the University of<br />
Zurich. Prior to that, he worked in market<br />
risk management at UBS Investment<br />
Bank. Markus holds a PhD in International<br />
Relations from the University of Zurich.<br />
Across the vast universe of modern global healthcare, probably the<br />
single most important driver of change is information and communications<br />
technology (ICT). Its impact may be slower and less obvious<br />
than in fields such as entertainment or retailing, but it is gradually<br />
revolutionizing healthcare. In this Global Investor, Denis Hochstrasser of<br />
Geneva University Hospital and Hans Lehrach of the Max Planck<br />
Institute explain how genomics is combined with other information to<br />
create an avatar of a patient that can be computer-simulated to choose<br />
the best treatment, as a computer model of a car or airplane can be<br />
stress-tested. Eric Green of the US National Human Genome Research<br />
Institute notes that the computer-driven development of genomics<br />
and pharmacogenomics now forms the basis for treating asthma, AIDS<br />
and some cardiovascular diseases. Turning to low-income countries,<br />
S. Yunkap Kwankam of Global eHealth Consultants shows that text<br />
messages are being used in African countries to collect and disseminate<br />
data so as to direct midwives, doctors and medicines to the<br />
right location at the right time, while José Gómez-Márquez at MIT<br />
uses modern communications to help designers in low-income countries<br />
produce innovative low-cost medical equipment. In the field of<br />
mental health, where ICT is helping to raise awareness globally, Deborah<br />
Wan Lai Yau of the World Federation of Mental Health explains her<br />
pioneering work in China on rehabilitation via entrepreneurship, while<br />
Ajay Mahal of Monash University and Victoria Fan of the US Center<br />
for Global Development review mental health issues in India. Some of<br />
these developments reduce costs, but many imply the need for more<br />
funding. Naoki Ikegami of Tokyo’s Keio University explains how health<br />
costs are controlled in Japan, while David E. Bloom and Michael Chu<br />
of Harvard look at experience with privately funded healthcare in<br />
low-income countries. To introduce all these themes, we begin with<br />
an article by Bernardino Fantini of the University of Geneva, who looks<br />
at the historical context, from some of the earliest work in connecting<br />
diseases with specific causes (which allowed some of the simplest<br />
but most powerful preventative measures, such as hand washing),<br />
right through to the development of genomics.<br />
Giles Keating, Head of Research for Private Banking and Asset Management<br />
Global Investor received a gold medal at the 2012 BCP<br />
(Best of Corporate Publishing) Awards – Europe’s most<br />
important corporate publishing competition.
GLOBAL INVESTOR 2.12 Contents — 04<br />
Beyond pills<br />
<strong>Healthcare</strong> is more than the sum of its parts. In framing the articles<br />
that make up this issue, we look beyond medical protocols and statistics,<br />
and the particulars of financing. We introduce real humans who, like<br />
Oscar Pistorius, have personally experienced both the distress of severe<br />
disability and the hope that technology can bring, as well as innovators<br />
on the ground who looked for practical health problems to solve and<br />
did something about them. > Page 08 / 13 / 34 / 40 / 47<br />
Medtech I<br />
Double-amputee Oscar Pistorius says the summer of 2012 is<br />
one he will never forget. That’s when he competed in both the<br />
able-bodied Olympics and Paralympics in London, winning<br />
gold in the latter, and a place in history in the former. Page 08<br />
Economics II<br />
Bindeshwar Pathak’s inventions are clearly not money thrown<br />
down the drain. His Sulabh Shauchalaya twin pit is a pour-flush<br />
toilet system that consumes about one-tenth the water of<br />
conventional toilets and has done much to alleviate basic public<br />
health problems in India. Page 13<br />
Prevention III<br />
Atul Gawande, the “New Yorker” writer who also happens to be<br />
a surgeon, says the Hippocratic Oath – first, do no harm – can<br />
best be kept when physicians realize they are human too<br />
and make mistakes. “Getting the stupid stuff right,” as Gawande<br />
puts it, makes the more complicated stuff a lot easier. Page 34<br />
Access to healthcare IV<br />
Advances in medical technology are not important if they can’t<br />
reach patients, which is often the case in developing nations with<br />
their poor infrastructure and isolated villages. The Schizophrenia<br />
Research Foundation, an Indian non-profit, is trying to change<br />
that by bringing psychiatric services to those in need. Page 40<br />
Med 2.0 V<br />
Physicians are now investigating whether IBM’s Watson<br />
computer can help them sort out the vast amount of patient<br />
information and data they increasingly face. If successful,<br />
the computer could help suggest treatment approaches and<br />
also warn of drug interactions. Page 47
GLOBAL INVESTOR 2.12 Contents — 05<br />
<strong>Healthcare</strong><br />
09<br />
From germs to genes<br />
In the last two centuries, the application of reason and advances<br />
in technology have taken the field of medicine from an art form<br />
to a science. Bernardino Fantini reports on how researchers are<br />
tackling the complex causal chain of diseases.<br />
14<br />
Private enterprise for public health<br />
Private enterprise is contributing a growing share toward public<br />
health as traditional models of healthcare do not appear capable<br />
of delivering as they once did. David E. Bloom and Michael Chu<br />
outline how private investors, entrepreneurs and the public<br />
sector can work together to improve healthcare.<br />
17<br />
A prescription for growth<br />
The pharmaceutical industry looks poised for a growth spurt<br />
thanks to advances in molecular biology, genomics, biotech,<br />
and bioinformatics, and according to Thomas C. Kaufmann,<br />
these fields are yielding tailored treatments that promise<br />
to be substantially more effective.<br />
20<br />
The “virtual” patient<br />
Researchers are working toward developing the concept of<br />
virtual patients. Denis Hochstrasser and Hans Lehrach say<br />
these may be computer-simulated individuals, but their<br />
conditions and treatments are very much part of the real world.<br />
24<br />
The genomic doctor is in<br />
The human genome was first sequenced almost ten years<br />
ago, but the work to interpret a code that is some three billion<br />
“letters” long is just beginning. Eric D. Green explains.<br />
26<br />
The heart factory<br />
Compassion and respect are the bywords where millions live in<br />
poverty. As Bernard Imhasly discovers, that doesn’t mean they<br />
don’t have access to first-class healthcare.<br />
32<br />
eHealth for all<br />
Mobile telephony technology is assisting healthcare professionals<br />
to deliver their services to remote and underserved regions in<br />
Africa, says S. Yunkap Kwankam. He adds that information and<br />
communications technology have transformed healthcare.<br />
35<br />
Japanese lessons<br />
<strong>Healthcare</strong> expenditures have an inherent tendency to escalate.<br />
However, Naoki Ikegami tells us that Japan has tackled the<br />
issue of how to finance healthcare through its single-payment<br />
system, which aims to contain costs.<br />
38<br />
Do-it-yourself tools for health<br />
In resource-poor regions around the world, necessity truly is<br />
the mother of invention. As José Gómez-Márquez reports,<br />
when it comes to medical care, the dearth of appropriate medical<br />
technologies in these areas has fostered the rise of ingenious<br />
do-it-yourself tool design.<br />
41<br />
The neglected cousin<br />
The rapid sociological and economic changes in India are<br />
stressors that are increasingly posing a challenge to mental<br />
health in that country. Mental health has, until recently, been<br />
a neglected issue in India say Ajay Mahal and Victoria Fan.<br />
44<br />
Getting back to work<br />
For those who have suffered from mental illness, reintegrating<br />
into the workforce can be a daunting proposition. Deborah Wan<br />
Lai Yau explains how social entrepreneurship plays a key role<br />
in helping former patients make the adjustment.<br />
46<br />
Future of healthcare<br />
Doing data mining and analysis, IBM’s supercomputer, Watson,<br />
is working its way through vast volumes of healthcare information.<br />
Jim Giles tells us it’s learning how to help doctors make<br />
diagnoses. The ultimate goal: better care and lower costs.<br />
Disclaimer > Page 48<br />
Podcast on www.credit-suisse.com/globalinvestor
GLOBAL INVESTOR 2.12 — 06<br />
The cost conundrum<br />
<br />
Even nations such as Japan and the UK, long looked to as models, are coming under cost pressure.<br />
A glance at the statistics reveals no obvious solution. In general, high healthcare expenditures suggest<br />
higher life expectancy. Lower health expenditures appear to correlate with shorter lifetimes, though<br />
not necessarily. Good healthcare is more than just a matter of money: above all, it requires new ideas.<br />
India<br />
65 years<br />
55 USD<br />
Japan<br />
82 years<br />
4,065 USD<br />
Life expectancy<br />
at birth, 2010<br />
One ring = 5 years<br />
Life expectancy at birth<br />
indicates the average<br />
number of years a<br />
newborn infant would<br />
live, assuming unaltered<br />
conditions throughout<br />
its lifetime.<br />
Health expenditure<br />
per capita, 2010<br />
nominal (USD)<br />
Total per capita health<br />
expenditure is the sum of<br />
public and private health<br />
expenditures, divided<br />
by the total population.<br />
Cuba<br />
78 years<br />
607 USD<br />
United States<br />
78 years<br />
8,360 USD
GLOBAL INVESTOR 2.12 — 07<br />
Switzerland<br />
82 years<br />
7,810 USD<br />
Russian Federation<br />
68 years<br />
525 USD<br />
South Africa<br />
52 years<br />
650 USD<br />
Burkina Faso<br />
50 years<br />
40 USD<br />
United Kingdom<br />
80 years<br />
3,502 USD<br />
Does more money mean better health?<br />
Spending on healthcare (red) is loosely correlated to life expectancy<br />
(blue). Rich countries tend to have high life expectancies. Life is<br />
shorter in poor countries like Burkina Faso, where many die of malaria,<br />
and in South Africa, where 17.8% of people are infected with<br />
HIV. But many factors come into play. The question is not simply<br />
how much money is spent on healthcare per capita. People live to<br />
similar ages in Japan, the USA, Cuba, Switzerland and the UK. But<br />
the UK spends 14 times more per capita than Cuba. <strong>Healthcare</strong><br />
spending as a percentage of GDP also does not explain a country’s<br />
success. Spending is almost equal in South Africa (8.9%) and the<br />
UK (9.6%), but the outcomes for health and life expectancy are<br />
<br />
(91.5%) might appear to be the secret formula for a low-cost long<br />
life. Yet the state also pays the lion’s share in the British system<br />
(83.9%), which is nearly six times more expensive. Costs are also<br />
high in the US system, where public spending amounts to 53.1%<br />
of healthcare expenditures. Source: World Bank
II/13<br />
III/34<br />
IV/40<br />
V/47<br />
Beyond pills I<br />
Technology in the fast lane<br />
In 2012, Oscar Pistorius made history as the first amputee to<br />
compete in the Olympic Games. Pistorius had been competing<br />
in the Paralympic Games since 2004, when he won his first gold<br />
medal in the 200 meters. Nicknamed the “Blade Runner” for<br />
his artificial legs, Pistorius’ prostheses differ from what amputees<br />
wear on the street and represent technological advances in<br />
prostheses especially designed for athletes. His are from Icelandbased<br />
Össur and work like springs. In fact, they are called<br />
the “Flex-Foot Cheetah” and are custom-built prostheses made<br />
out of high-performance carbon fiber.<br />
Oscar Pistorius<br />
Photo: Getty Images
GLOBAL INVESTOR 2.12 — 09<br />
Medical milestones<br />
From germs<br />
to genes<br />
The history of humankind is also the history of medical achievement. Aided increasingly by<br />
technology, the last two hundred years in particular represent an astonishing array of intellectual<br />
and practical breakthroughs in understanding the human body, the nature of disease and<br />
how to treat it. Yet “health for all” remains an elusive goal that depends as much on wise and<br />
effective public health policy as on medical innovation.<br />
Bernardino Fantini, medical historian, University of Geneva<br />
Listen to this article on Global Investor’s Knowledge Platform:<br />
<br />
At the end of the first millennium (current era), human population<br />
growth began to trace a steady upward curve that even the devastating<br />
plague epidemics of the 14th and 17th centuries could only temporarily<br />
interrupt. By the turn of the 19th century, the size and age structure<br />
of populations – at least in the industrialized world – reflected a sustained,<br />
fundamental alteration in living standards and longer lifetimes.<br />
Today, life expectancy in developed countries has increased from 33<br />
years two centuries ago to 80 years. In certain low-income regions,<br />
however, life expectancy remains very low. And in some countries it<br />
is even decreasing. In 1971, Abdel Omran coined the term “epidemiological<br />
transition” to describe these demographic changes, which<br />
result from socioeconomic developments and innovations in medical<br />
theory and treatment over time.<br />
In pre-scientific medicine, as in folk medicine, no link existed<br />
between cause and effect. Moreover, so many different causes might<br />
be evoked to explain a disease (air, food, bad behavior) that it was<br />
impossible to propose a simple therapy for it. At the beginning of the<br />
19th century, an influential school of thinking then current in Parisian<br />
hospitals showed that to the contrary, diseases were unique entities<br />
with specific characteristics associated with equally specific anatomical<br />
lesions. These lesions could be distinguished by analyzing their<br />
symptoms, identifying their clinical signs and directly observing them<br />
in the bodies of patients at autopsy. Replacing the idea of multiple<br />
causality with a single, specific cause changed the way knowledge<br />
about disease is acquired and ushered in the age of scientific medicine.<br />
<br />
In 1847, Ignaz Semmelweis discovered that an infectious agent transmitted<br />
by midwives and doctors was the cause of high mortality in<br />
maternity wards and could be eliminated by assiduous hand washing.<br />
The London cholera epidemic of 1854 led John Snow to geographically<br />
plot clusters of cases, which pointed to a public water pump as<br />
the source of the outbreak . The revolution arising from<br />
the work of Louis Pasteur and Robert Koch on “germ theory” rounded<br />
out the explanation of the cause of disease. The theory suggested<br />
that a contagious or infectious disease is due to the continued and<br />
constant presence of a specific germ (micro-organism) that causes<br />
disease in a person. That germ is the specific and necessary cause >
GLOBAL INVESTOR 2.12 — <br />
01_<br />
The London cholera epidemic of 1854, which ultimately killed 30,000 people, motivated physician John Snow to examine<br />
the network of pipes and pumps that delivered water to the city’s neighborhoods. His now famous map plotting<br />
mortality from the disease in an area of Soho showed that the number of dead was greatest near the Broad Street pump.<br />
<br />
ARGYLL STREET<br />
ARGYLL PLACE<br />
MARLBOROUGH MEWS<br />
GREAT MARLBOROUGH STREET<br />
WORK<br />
HOUSE<br />
POLAND STREET<br />
NOEL STREET<br />
PORTLAND STREET<br />
BERWICK<br />
WARDOUR STREET<br />
CARSLISLE STREET<br />
SOHO<br />
SQUARE<br />
FRITH STREET<br />
DEAN STREET<br />
STREET<br />
MARSHALL STREET<br />
BROAD STREET<br />
CARNABY STREET<br />
KING STREET<br />
PETER STREET<br />
OLD COMPTON ST<br />
GREAT PULTENEY<br />
REGENT STREET<br />
SILVER STREET<br />
PULTENEY ST<br />
STREET<br />
LITTLE<br />
PRINCES<br />
KING ST<br />
RUPERT ST<br />
GOLDEN<br />
SQUARE<br />
BREWER STREET<br />
ARCHER ST<br />
STREET<br />
GERRARD ST<br />
WARWICK STR<br />
Cholera deaths<br />
Pump<br />
of illness, even though other factors may also influence features of<br />
the disease. Organic (i.e., constitutional), behavioral and environmental<br />
conditions all affect exposure to germs and contagion. Koch’s “postulates,”<br />
proposed in 1884, provided a logical, consistent way to establish<br />
the causal connection between a microbe and disease.<br />
New public health practices developed in the wake of this theoretical<br />
innovation. Disinfection by heating made food such as baby<br />
milk safe; inspired by Pasteur’s work, Joseph Lister introduced antiseptic<br />
and aseptic techniques in 1869, which together with anesthesia,<br />
changed the face of surgery by allowing access to the internal structures<br />
of the body; serum therapy, such as that against diphtheria, and<br />
especially vaccination made it possible to immunize organisms and<br />
entire populations against specific germs. The development of microbiology<br />
simultaneously sparked a theoretical transformation (“germ<br />
doctrine”) and a social one (“medicalization of society”) through rapid<br />
deployment of public health policy and generalized prevention<br />
against endemic – i.e., regularly occurring – and epidemic disease.<br />
Edward Jenner introduced the smallpox vaccination in 1796. Now, with<br />
Pasteur’s famous experiments in vaccinating sheep against anthrax<br />
and rabies in humans, vaccination became the prototype of a new<br />
strategy in the fight against infectious diseases based on immunization.<br />
The crowning success of this strategy occurred a century later, in 1977,<br />
when the World Health Organization (WHO) declared the eradication<br />
of smallpox.
GLOBAL INVESTOR 2.12 — <br />
Photo: Cédric Widmer<br />
In the first decades of the 20th century, a series of scientific discoveries<br />
significantly expanded therapeutic options. The chemical industry<br />
discovered aspirin (1899) and, in 1910, salvarsan, the first drug<br />
against syphilis. In the 1930s, thanks to the work of Gerhard Domagk<br />
at Bayer and the group of Ernest Fourneau at the Pasteur Institute<br />
in Paris, sulfonamides offered effective treatment against a variety<br />
of infectious diseases, in particular human African trypanosomiasis<br />
– sleeping sickness – and leprosy. Working in the laboratory of<br />
John Macleod in 1921, Frederick Banting and Charles Best isolated<br />
insulin, which enabled immediate treatment of diabetics. Following<br />
Karl Landsteiner’s discovery of blood groups in 1901, the first blood<br />
bank was created by the Mayo Clinic in 1935. In 1928, Alexander<br />
Fleming discovered that the mold destroying bacterial samples he<br />
was working with contained penicillin. Its active agent was later<br />
isolated in 1941 and tested on a small group of patients. The results<br />
were striking, and large-scale production of penicillin became a priority<br />
for the chemical war industry, along with DDT against the transmission<br />
agents of malaria and typhus. In 1943, Selman Waksman isolated<br />
another product from fungus, streptomycin. Its clinical effectiveness<br />
against tuberculosis was quickly established, signaling, at long last,<br />
control of the primary infectious disease of industrialized, urban society.<br />
<br />
During and after the Second World War, a veritable explosion of science<br />
and technology brought even greater change to medicine and public<br />
health. Technology began to play an increasingly important role in<br />
medical practice owing to medical imaging, microsurgery, intensive<br />
therapy, transplantation, prostheses, immunosuppression and chemoand<br />
radiotherapy for cancer. New disciplines, in particular molecular<br />
biology, immunology and neurobiology, revised the theoretical understanding<br />
of medicine.<br />
At the beginning of the 20th century, Sigmund Freud’s discovery<br />
of the unconscious profoundly altered thinking about psychiatric disorders<br />
and spurred new therapeutic methods. The development of<br />
neuroleptics resulted in drug treatments for these illnesses.<br />
Epidemiology, which studies patterns of disease in populations,<br />
also expanded considerably during the mid-20th century due to innovative<br />
methods of investigation. The prototypes were the Framingham<br />
Heart Study in the 1940s and, more recently, the MONICA Project,<br />
sponsored by the WHO, which involves 41 collaborating centers around<br />
the world. Both followed large groups of men and women to determine<br />
the causes and risk factors of cardiovascular disease. Beginning in<br />
1950, a study by Richard Doll and Austin Hill established the causal<br />
link between cigarette smoking and lung cancer. The search for causal<br />
links between different factors and diseases is also the aim of<br />
so-called evidence-based medicine, which takes into account the<br />
best clinical, scientific and epidemiological data in medical decision<br />
making.<br />
In the area of policy, two events signaled the postwar future, with<br />
the creation in 1948 of the National Health Service in the United<br />
Kingdom and WHO, which was the fruit of an international collaboration<br />
in health that began with the first international health conference<br />
in Paris in 1859. For the very first time in history, health was defined<br />
as a fundamental right of individuals, and one of the essential components<br />
of the stability and well-being that are the goals of humanity.<br />
Bernardino Fantini <br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
The molecular revolution of the 1950s and 1960s, which culminated<br />
in the complete sequencing of the human genome in 2003, brought >
GLOBAL INVESTOR 2.12 — <br />
“In succession, major<br />
infectious diseases were<br />
crossed off the list of<br />
the ten main causes of<br />
death in industrialized<br />
countries, and were<br />
replaced by so-called<br />
degenerative or lifestyle<br />
diseases.”<br />
02_ <br />
In 2008, non-communicable diseases were the primary cause of death for<br />
industrialized nations. Elsewhere, deaths due to heart and cerebrovascular<br />
diseases top the list, but infectious diseases still figure largely. <br />
Ischemic heart disease<br />
Cerebrovascular disease<br />
Trachea, bronchus, lung cancers<br />
Alzheimer’s disease and other dementias<br />
Lower respiratory infections<br />
Chronic obstructive pulmonary disease<br />
Colon and rectum cancers<br />
Diabetes mellitus<br />
Hypertensive heart disease<br />
Breast cancer<br />
Ischemic heart disease<br />
Cerebrovascular disease<br />
Lower respiratory infections<br />
Chronic obstructive pulmonary disease<br />
Diarrheal diseases<br />
HIV/AIDS<br />
Tuberculosis<br />
Road traffic accidents<br />
Hypertensive heart disease<br />
Prematurity and low birth weight<br />
0% 2% 4% 6% 8% 10% 12% 14%<br />
Percentage of total deaths<br />
High-income countries*<br />
Low- and middle-income countries<br />
* High-income countries are: Andorra, Australia, Austria, Bahamas, Bahrain, Barbados,<br />
Belgium, Brunei Darussalam, Canada, Croatia, Cyprus, Czech Republic, Denmark, Estonia,<br />
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Kuwait,<br />
Latvia, Luxembourg, Malta, Monaco, Netherlands, New Zealand, Norway, Oman, Poland,<br />
Portugal, Qatar, Republic of Korea, San Marino, Saudi Arabia, Singapore, Slovakia, Slovenia,<br />
Spain, Sweden, Switzerland, Trinidad and Tobago, United Arab Emirates, United Kingdom<br />
and United States of America.<br />
a deeper understanding of the structure and function of genes and<br />
their role in the development and functioning of the organism (functional<br />
genomics), including susceptibility and resistance to disease. The<br />
genetic basis of hereditary diseases, which are often rare and thus<br />
forgotten, was clarified, opening up the possibility of “genetic therapy.”<br />
These developments have led to efforts to identify individual differences<br />
in how diseases are distributed and how they respond to treatment,<br />
which may one day lead to personalized medicine.<br />
In succession, major infectious diseases were crossed off the list<br />
of the ten major causes of death in industrialized countries. They were<br />
replaced by so-called degenerative or lifestyle diseases including:<br />
cancer, cardiovascular diseases, metabolic diseases, accidents and<br />
chronic diseases . National and international public health<br />
officials believed that, thanks to mass immunization, health protection,<br />
higher living standards, better food and safe drinking water, infectious<br />
diseases would become increasingly rarer, and ultimately disappear.<br />
The devastating polio pandemic that struck mostly industrialized<br />
countries beginning in the 1940s did little to shake this confidence.<br />
On the contrary, Jonas Salk’s and Albert Sabin’s rapid development<br />
of effective vaccines and their immediate application quickly brought<br />
the pandemic under control and reinforced faith in the ability of medicine<br />
to deal with infectious diseases.<br />
However, in the face of mounting challenges, critical examination<br />
of epidemiological concepts showed that infectious diseases continue<br />
to play an important role in human pathology. These challenges<br />
include roadblocks to eradication programs, the evolution of drugresistant<br />
bacteria, the emergence of new diseases – especially AIDS,<br />
the arche typal disease of the late 20th century – and the re-emergence<br />
of diseases formerly believed to be conquered, such as malaria,<br />
tubercu losis and diphtheria. A list of 400 non-reportable diseases<br />
that seemed to be occurring fairly frequently was established around<br />
2000. In the future, disease must be thought of as a permanent,<br />
recurring natural phenomenon. Moreover, it must be interpreted as<br />
the result of Darwinian co-evolution between germs and human<br />
populations. Microorganisms are basic to major physiological functions;<br />
the human body contains ten times more bacteria than it<br />
does cells. Humans and microbes are engaged in a symbiotic relationship<br />
that, in a limited number of cases, becomes antagonistic<br />
and triggers disease.<br />
Newly emergent diseases are largely caused by environmental<br />
and socioeconomic change. Consequently, taking an ecological and<br />
evolutionary approach is critical in analyzing, explaining and mitigating<br />
these diseases. The determining factors of health are many and are<br />
linked to the quality of the environment, land distribution, habitat,<br />
population density, relationships among individuals as well as social<br />
hierarchies and finally, to cultural and moral attitudes that prevail at<br />
any given time. Poverty, conflicts, social instability and economic<br />
crises weaken populations and make them vulnerable to infectious<br />
and chronic diseases.<br />
Biomedical research has come a long way since the 1847 discovery<br />
that rigorous hand washing could eliminate maternity-ward infections<br />
transmitted by doctors and midwives. Today, the forefront of<br />
biomedical research consists of integrating the diverse elements that<br />
make up the complex causal chain of diseases, from individual genes<br />
to populations. Combining a genomic approach to the study of human<br />
populations and a spatial approach to the study of how diseases are<br />
distributed and their social determinants would go a long way to<br />
increasing knowledge and, consequently, the effec tive ness of medical
I/8<br />
III/34<br />
IV/40<br />
V/47<br />
Beyond pills II<br />
Sanitation innovator<br />
As many companies pursue the latest and greatest in advances<br />
in high-tech medical innovations, one inventor has shown<br />
that access to one of civilization’s most significant advances –<br />
the common toilet – is key. Public toilet and bath facilities designed<br />
by Indian sociologist and entrepreneur Bindeshwar Pathak use<br />
only 1.5 liters to flush, compared to 10 liters for a conventional toilet.<br />
They now serve more than ten million people daily in his native India<br />
and are especially useful in water-poor regions. The design won<br />
Pathak the Stockholm Water Prize in 2009 and is seen as a solution<br />
for more than 2.6 billion people worldwide.<br />
Bindeshwar Pathak<br />
Photo: Sulabh International Social Service Organisation
GLOBAL INVESTOR 2.12 — 14<br />
Health economics<br />
<br />
<br />
By many measures, the world today is a healthier place than ever before, yet a daunting set of<br />
deficits and disparities remains to be tackled. For various reasons, it is not clear that the traditional<br />
tandem of government and civil society are up to those challenges. This creates an opportunity<br />
for private enterprise to fill the breach. Indeed, evidence on the actual and potential contribution of<br />
private enterprise to public health is growing.<br />
health economist, Harvard School of Public Health, and senior lecturer, Harvard Business School<br />
In recent decades, the world’s population has enjoyed astonishing<br />
improvements in its health. Yet a daunting set of health deficits and<br />
disparities persist, particularly for the world’s poor and vulnerable<br />
populations. In the developed countries, life expectancy is 78 years,<br />
while in developing countries it is only 67 – and in eight countries,<br />
principally in Africa, it is less than 50. In developed countries, infant<br />
mortality is only six per thousand, whereas in developing countries,<br />
it is 46 per thousand. Spending on health varies too: high-income<br />
countries spend more than 12 times as much per person as middleincome<br />
countries and more than 75 times as much as low-income<br />
countries. To make matters worse, in many of the world’s low- and<br />
middle-income countries non-communicable diseases are on the rise,<br />
including diabetes, cancers, respiratory problems and heart-related<br />
conditions.<br />
In development circles, these health issues are a grave concern:<br />
sick populations undermine the economic power, social fabric and<br />
political stability of society. They are also a source of frustration as<br />
interventions appropriate to preventing or directly tackling the biggest<br />
health risks already exist. The main challenge is getting those interventions<br />
to chronically underserved populations. Fortunately, a new<br />
source of hope is emerging – innovative and scalable private enterprises<br />
that pursue health interventions that help poor people, perhaps<br />
for humanitarian but also for business reasons. This raises the possibility<br />
that developing countries can increase their reliance on private<br />
enterprise and thereby benefit from its core expertise in delivering<br />
goods and services to secure a higher standard of health. Indeed, the<br />
interests of society are well served when both business and public<br />
sectors deploy side by side, each doing what it does best.<br />
<br />
Traditionally, the responsibility for protecting and promoting public<br />
health has resided with governments, sometimes buttressed by civil<br />
society (such as international development organizations and domestic<br />
non-governmental organizations). Government has, in principle,<br />
great legitimacy to operate in this space, as well as the reach to realize<br />
scale economies, take proper account of positive and negative<br />
spillovers, and design efficient and stable health insurance pools to<br />
reduce financial risk.<br />
In some countries, the public sector has performed well. In many<br />
others, it has been unable to marshal the resources and political<br />
wherewithal to do the job. Moreover, governments and civil society<br />
are typically strapped for resources, and frequently inefficient due to<br />
bureaucratic hurdles and corruption. These limitations of the public<br />
sector (and civil society) have created large gaps that can be filled by<br />
the private sector.<br />
Already, private spending on health is significant in countries of<br />
all income levels. In absolute terms, global private spending on health<br />
in 2010 amounted to more than USD 2.4 trillion. While it varies signifi-
GLOBAL INVESTOR 2.12 — 15<br />
cantly across countries, generally the share of total health expenditure<br />
from private sources increases in inverse proportion to the wealth of<br />
the country. As a group, private sources in high-income countries<br />
account for 35% of all health expenditures (with the UK at just 16%,<br />
and the EU at 23%). But in low-income countries, the corresponding<br />
figure is 61%, with India at 71% .<br />
The figures suggest that much of humanity frequently interacts<br />
with the healthcare system by engaging in market transactions, exchanging<br />
goods and services for payment. Low-income earners are<br />
significant participants in this space. A recent attempt to quantify<br />
healthcare markets for those with annual incomes below USD 3,000<br />
(in local purchasing power) estimated the annual base-of-thepyramid<br />
healthcare market at USD 42.4 billion in nominal dollars or<br />
USD 158.4 billion in purchasing-power-parity (PPP) adjusted dollars.<br />
The news here for the health sector investor world is that those<br />
earning PPP USD 3,000 or less can constitute a sizable investable<br />
opportunity .<br />
<br />
Private enterprises for promoting public health are still in an infant<br />
state. But the early evidence is promising, in part because both individuals<br />
and governments are willing to pay for goods and services<br />
that the private sector produces in the healthcare arena. And all<br />
<br />
lower prices, better service and improved value proposals. The private<br />
commercial sector is naturally attracted to opportunities with a potential<br />
for profit. The application of commercial principles promotes<br />
financial sustainability and provides incentives for continuous improvements<br />
in efficacy and efficiency.<br />
Of particular interest are new commercial models in healthcare<br />
that meet the true test of business: revenues exceed costs – yielding<br />
a surplus, the surplus is sustainable over time, and the surplus is equal<br />
to or greater than the yield obtainable in activities of similar type and<br />
risk. In other words, they are organizations that deliver high-impact<br />
health interventions to otherwise underserved populations, while being<br />
enterprises that are profitable and investable thanks to four characteristics:<br />
Many thousands of villages globally are without the most<br />
basic primary healthcare services, but there are hardly any that private<br />
companies cannot reach via marketing and distribution channels. In<br />
South Africa, BroadReach, a for-profit enterprise, has organized a<br />
large network of primary healthcare providers that it supports with<br />
training, clinical decision assistance and management systems. As a<br />
result, providers can deliver advanced HIV/AIDS care and antiretro viral<br />
therapy to patients who previously lacked access.<br />
Take the case of penicillin, discovered<br />
by Alexander Fleming in 1928. Ten years after the discovery, British<br />
scientists Florey and Chain confirmed the drug’s therapeutic benefits,<br />
but it was difficult to mass produce. Eventually the government recruited<br />
the private sector to develop and implement efficient production<br />
methods. Thanks to the efforts of pharmaceutical companies,<br />
sufficient quantities of the drug traveled with the Allied soldiers to<br />
the D-day invasion at Normandy. Shortly after World War II, penicillin<br />
reached the commercial market to meet civilian demand – stopping<br />
people from dying of strep, staph, syphilis and even tiny scratches.<br />
<br />
. In India, Sulabh International invented a toilet system that is<br />
inexpensive, environmentally safe and made with local materials. There<br />
are now 15 million users of its public toilets and another 1.2 million ><br />
01_<br />
<br />
Share of health expenditure from private sources, as a share of total<br />
health expenditure. <br />
India 71<br />
Bangladesh 66<br />
Nigeria <br />
Pakistan <br />
Brazil 53<br />
Indonesia 51<br />
USA 47<br />
China 46<br />
Switzerland 41<br />
Russia 38<br />
Japan 17<br />
United Kingdom 16<br />
0% 25% 50% 75% 100%<br />
02_<br />
<br />
Lower prices, better service and improved value proposals benefit all.<br />
<br />
Eastern Europe<br />
<br />
<br />
Latin America<br />
and Caribbean<br />
<br />
<br />
Africa<br />
<br />
<br />
<strong>Healthcare</strong> market USD billions (PPP)<br />
<strong>Healthcare</strong> market USD billions (nominal)<br />
Asia and Middle East
GLOBAL INVESTOR 2.12 — 16<br />
<br />
<br />
<br />
<br />
<br />
<br />
of <br />
<br />
<br />
<br />
<br />
<br />
<br />
<br />
in private homes. This initiative has helped to make other enterprises<br />
commercially sustainable by creating 60,000 jobs in masonry and maintenance.<br />
Similar undertakings exist in other countries.<br />
<br />
In Mexico, free medical care and medicines are a<br />
constitutional right. Roughly 55 million Mexicans (half of the population)<br />
depend on the public health system. But the public health pharmacies<br />
charged with providing free medicines supply them only 18% of the time.<br />
In 1997, an entrepreneur established Farmacias Similares – a chain of<br />
pharmacies with medicines priced at least 30% (and sometimes 75%)<br />
lower than at traditional retail drugstores, with a doctor’s clinic attached,<br />
charging about USD 2 per visit. Today, the chain has over 3,900 stores.<br />
Every month, 12 million Mexicans use the chain to buy medicines,<br />
and 3.5 million use it to see their doctor. After a seed investment of<br />
USD 2 million, the chain now has annual revenues of over USD 1 billion,<br />
with a net income in excess of USD 150 million.<br />
In India, Aravind Eye Hospital has driven the break-even cost of<br />
cataract operations to about USD 18, and Narayana Hrudayalaya<br />
Hospital has achieved break-even costs for open heart surgery of<br />
approximately USD 2,000 – thanks to world-class business processes<br />
and cost accounting systems. Both institutions match or exceed the<br />
quality levels of the leading US and European hospitals in their specialties.<br />
These reduced costs suggest considerable opportunity for<br />
expansion and replication because they permit these institutions to<br />
earn substantial margins at the prevailing prices. For example, the<br />
price charged by private clinics for equivalent open heart surgeries<br />
is around USD 5,000 or more. In fact, Aravind and Narayana both<br />
choose to use the surplus earned from their full-paying customers to<br />
cross-subsidize lower-income patients. At Narayana, a total of 63%<br />
of open heart surgeries are above break-even prices, while the remainder<br />
are at or below break-even, including some absolutely free<br />
of charge.<br />
<br />
Exciting as the entry of the business sector into public health may be,<br />
we are not suggesting that private enterprise can or should take over.<br />
Whenever commercial healthcare models are developed, business can<br />
scale rapidly and extend its reach at the lowest price to the consumer,<br />
so long as competition remains open and intense. Simultaneously,<br />
the public sector must continue to seek universal access to all those<br />
high-impact health interventions for which no commercial models exist<br />
yet. The government must also monitor and regulate to implement best<br />
practices, and prevent abuse and fraud.<br />
There are also certain needs that the private sector is not best<br />
suited to address on its own, often necessitating a public-private<br />
partnership. A good example of such collaboration is social marketing<br />
designed to encourage adoption of a product or service by a target<br />
population. In Tanzania, the Kilombero and Ulanga Insecticide-Treated<br />
Net Project, implemented from 1996 to 2000, successfully used<br />
social marketing to promote adoption of insecticide-treated bed nets.<br />
Studies show that the donor-supported social marketing accomplished<br />
more than commercial distribution alone might have.<br />
The bottom line is that healthcare for all is an urgent global<br />
priority. In this race to allow every human being to live up to their<br />
potential, the new business models hold the promise that the glaring<br />
gap between knowledge and action in healthcare may be significantly<br />
narrowed by the financial might of private investors and entrepreneurs<br />
– working closely with the public sector and the other major<br />
<br />
<br />
Photo: David Carmack
GLOBAL INVESTOR 2.12 — 17<br />
Pharmaceuticals<br />
A prescription for growth<br />
Over the past century, the pharmaceutical industry has experienced<br />
several periods of rapid growth. Following what one might call a lost decade<br />
for big pharma, the industry is now set for another growth spurt.<br />
Thomas C. Kaufmann, Research Analyst, Credit Suisse<br />
The origins of the pharmaceutical industry as we know it today trace<br />
back to the second half of the 19th century, when a number of apothecaries<br />
and chemical companies – mostly dye manufacturers – started<br />
to focus their activities on the production and application of chemicals<br />
for pharmaceutical purposes. Many of those firms have survived<br />
in one form or another.<br />
Researchers discovered that many diseases were caused by microbes,<br />
and, building on the advances in chemistry and improving<br />
microscopy techniques, the “microbe hunters” of the day searched<br />
for the causes of many widespread illnesses. Around the turn of the<br />
20th century, the search for cures was increasingly being conducted<br />
in an organized manner, and compounds were chemically synthesized<br />
instead of purified from natural sources.<br />
Paul Ehrlich (1854–1915), a pioneer of modern pharmaceutical<br />
research and Nobel Prize winner, was intrigued by the fact that<br />
specific dyes tended to stain specific structures of the cell and postulated<br />
that there is a relationship between the chemical structure of<br />
a compound and its activity. He coined the term “magic bullet.” Ehrlich<br />
was purportedly the first to systematically screen substances for<br />
their therapeutic effect by introducing slight variations to a known<br />
starting compound. His meticulous effort culminated in the discovery<br />
of Salvarsan, a treatment for syphilis, which was endemic at the time.<br />
In 1910, it quickly became the most widely prescribed medicine in the<br />
world – a “blockbuster” drug in today’s terms.<br />
The following decades gave rise to many important breakthroughs:<br />
Insulin was isolated for the first time in 1921 from animal sources and<br />
provided a treatment for a hitherto fatal disease. In 1928, Sir Alexander<br />
Fleming discovered the antibiotic effect of penicillin, without, however,<br />
further pursuing its clinical application. It was only during World War II<br />
that concerted efforts were undertaken to produce the life-saving<br />
drug on a large scale to treat wounded soldiers on the battlefield.<br />
The dawn of molecular biology<br />
This marked the definitive marriage between pharmaceutical sciences<br />
and the chemical industry, and provided unprecedented scale. The<br />
ensuing decades became years of rapid expansion for the industry,<br />
as many major drugs were discovered and patented. In parallel with<br />
this commercial activity, the structure of DNA was elu ci dated by Watson<br />
and Crick in 1953. Some 17 years later, in another Nobel Prize winning<br />
discovery, Werner Arber reported on the use of restriction<br />
enzymes to manipulate gene sequences, heralding a new era. In 1978,<br />
at Genentech, the first biotech company to go public, researchers were<br />
the first to produce insulin by biotechnological means, i.e. using a host<br />
cell to produce a human version of insulin, which until that time had<br />
been isolated from cattle and pigs. The FDA eventually approved the<br />
drug for commercial use in 1982.<br />
Although many observers expected biotechnology to provide a<br />
<br />
pharmaceutical industry around the millennium years were rather sobering.<br />
Research & Development (R & D) productivity declined significantly,<br />
as measured by the number of new approvals per R & D dollar<br />
spent. The regulatory authorities asked for longer and larger clinical<br />
trials to assess product safety, following the negative experience with<br />
Vioxx, an arthritis drug that was discovered to be responsible for<br />
numerous deaths only after being on the market for several years.<br />
At the same time, most pharmaceutical companies were facing<br />
patent expirations on their best-selling drugs and had several painful<br />
setbacks in their development pipelines. A big wave of consolidation<br />
swept through the industry, and large firms were increasingly looking<br />
to acquire external pipeline assets from smaller biotech and pharmaceutical<br />
companies to replenish their product pipelines. At the same<br />
time, R & D expenditures were significantly cut at several companies<br />
in response to declining success rates and considerable shareholder<br />
pressure. ><br />
01_Medicines in development<br />
Due to advances in medical science, some 932 cancer drugs are being<br />
developed – almost a third of all new medicines on the way. Source: PhRMA, USA 2011<br />
HIV/AIDS and<br />
related conditions<br />
88<br />
Alzheimer’s and<br />
other dementias<br />
98<br />
Arthritis and<br />
related conditions<br />
198<br />
Diabetes mellitus<br />
200<br />
Cardiovascular<br />
disorders<br />
245<br />
Mental and<br />
behavioral disorders<br />
250<br />
Respiratory disorders<br />
Parkinson’s and<br />
related conditions<br />
36<br />
Cancer<br />
932<br />
Rare diseases<br />
383 460
GLOBAL INVESTOR 2.12 — 18<br />
A recent examination of the “innovation deficit” of large cap pharma<br />
revealed an interesting insight. A group at the University of British<br />
Columbia looked at the regulatory approvals of drugs over the past<br />
60 years in the USA and classified them according to their novelty<br />
status. They made the observation that the number of true first-in-class<br />
drugs that were approved every year exhibited only minor fluctuations,<br />
whereas many of the drugs launched in the 1980s and 1990s were<br />
follow-on products, or “me too” products. Thus, the recent decline in<br />
approvals cited by industry observers is mostly due to a decline in<br />
“me too” drugs. The underlying pace of true innovation has remained<br />
remarkably stable.<br />
Personalized and targeted treatments are on the rise<br />
Photo: Martin Stollenwerk<br />
Thomas C. Kaufmann joined Credit Suisse<br />
Private Banking in 2006 as an equity analyst<br />
for nanotechnology in the healthcare<br />
sector. He is now senior equity analyst for<br />
the global pharmaceuticals sector, and is<br />
also in charge of research on the Innovation<br />
megatrend theme. He holds a master of<br />
science in biochemistry and a PhD in<br />
biophysics, both from the University of Basel.<br />
It has become more difficult to bring better products to the market<br />
for indications that are already well-served by established drugs. The<br />
low-hanging fruits have already been harvested. Nevertheless, the<br />
ever-increasing understanding of the molecular causes of diseases<br />
and the genetic variations among patients should lead to the identification<br />
of many new targets and to more tailored (or “personalized”)<br />
treatments.<br />
Oncology is a prime example: the level of detail with which<br />
tumors are characterized nowadays has contributed to a significantly<br />
improved outcome for patients. The blood cancer drug Gleevec, from<br />
Novartis, is often used to illustrate this. The drug is only given to<br />
patients who exhibit a specific variation in their genome. It is in<br />
this sense that the treatment is personalized. The resulting outcomes<br />
for patients are truly stunning: with the introduction of Gleevec, the<br />
five-year survival rate increased to close to 90%, compared to<br />
30% previously.<br />
This example shows how the understanding of the biology of a<br />
disease is an important determinant of the level of success one can<br />
expect from a treatment. In this context, it is not surprising that, in<br />
view of the remarkable advances in the understanding of tumors, just<br />
less than one-third of all medicines in development are geared toward<br />
cancer. With the surge in molecular biology and the completion of<br />
the Human Genome Project in 2003, the stage is set for other spectacular<br />
findings. It is noteworthy that it takes 14 years on average to<br />
bring a new medicine to market. Thus, today’s marketed products are<br />
mostly based on biological insights that date back to the late 1990s.<br />
In the meantime, a lot more has been learned.<br />
Another very promising development has occurred in the area of<br />
antibody-drug conjugates, as demonstrated by recent data for Roche’s<br />
T-DM1 for the treatment of breast cancer. Basically, the idea is to use<br />
an antibody’s specificity to direct a potent chemotherapy molecule to<br />
the targeted tumor, and only to the tumor, so that the drug develops<br />
its deleterious effect only at the desired site. T-DM1 has been shown<br />
to dramatically reduce classic side effects, such as hair loss, which<br />
arise from the systemic activity of conventional chemotherapy. This<br />
is as close as one can get to the “magic bullet” Paul Ehrlich once<br />
envisioned.<br />
The combination of biology and chemistry around 1900 was crucial<br />
for the successes of the pharmaceutical sciences in the 20th century.<br />
Similarly, at the beginning of the 21st century, the disciplines of<br />
biotechnology, molecular biology, genomics and bioinformatics could<br />
provide an equally fertile ground for breathtaking advances in medicine.<br />
While it is impossible to predict the exact timing of any future<br />
breakthroughs, research requires patience, perseverance as well as<br />
continued investment. As Louis Pasteur once said: “Luck favors the
GLOBAL INVESTOR 2.12 — 19<br />
14%<br />
7%<br />
7%<br />
43%<br />
* The Pharmerging group consists<br />
of China, Brazil, India, Russia,<br />
Mexico, Turkey, Poland, Venezuela,<br />
Argentina, Indonesia, South<br />
Africa, Thailand, Romania, Egypt,<br />
Ukraine, Pakistan and Vietnam.<br />
** The EU5 group consists of<br />
France, Germany, Italy, Spain and<br />
United Kingdom.<br />
Source: IMS Market Prognosis, May 2012<br />
8%<br />
10%<br />
7%<br />
19%<br />
36%<br />
20%<br />
Rest of Europe<br />
5%<br />
Rest of the World<br />
9%<br />
North America<br />
33%<br />
12%<br />
17%<br />
Pharmerging*<br />
30%<br />
EU5**<br />
13%<br />
Japan<br />
10%<br />
2006<br />
USD 658 bn<br />
2011<br />
USD 956 bn<br />
2016E<br />
USD 1175–1205 bn<br />
A truly global expansion<br />
Today, somewhat more than 10% of the<br />
world popu lation accounts for roughly twothirds<br />
of the worldwide pharmaceutical<br />
market – a ratio that serves as an indication<br />
of the theoretical expansion potential for<br />
drug sales. This is expected to shift dramatically<br />
over the coming years as emerging<br />
market (EM) governments continue to<br />
expand access to healthcare, and due to<br />
a growing middle class that increasingly<br />
demands state-of-the-art medical treatments<br />
and is willing to pay for these out of<br />
pocket. Emerging markets are currently<br />
undergoing the same transition from acute /<br />
infectious diseases to chronic /lifestyle<br />
diseases as the leading cause of death, as<br />
did developed markets in the middle of the<br />
20th century. The adoption of a western<br />
lifestyle leads to a rise in diseases, such as<br />
diabetes, high blood pressure and cancer.<br />
Already today, China is among the largest<br />
markets for diabetes treatments.<br />
Over recent years, pharmaceutical companies<br />
have started to allocate significant<br />
resources to emerging markets, in part to<br />
overcome an increasingly challenging environment<br />
in developed markets and in part<br />
triggered by improved protection of intellectual<br />
property. The expansion into EMs is not<br />
only seen as an opportunity for significant<br />
volume growth, but also as a means to tap<br />
into the local talent pool. Most large pharmaceutical<br />
companies meanwhile have R&D<br />
sites in China, for example.<br />
Even though governments in EMs are<br />
striving to contain healthcare cost inflation at<br />
an early stage, EMs nevertheless represent<br />
a significant and welcome source of growth,<br />
accounting for a growing share of sales.
GLOBAL INVESTOR 2.12 — 20<br />
Big data<br />
The “virtual” patient<br />
<br />
Future and Emerging Technologies Flagship Initiatives aims<br />
to use technological advances, such as the detailed analysis of<br />
individuals’ genes and proteins, to contain healthcare costs<br />
<br />
explain how.<br />
Giselle Weiss, freelance writer<br />
Giselle Weiss: How did the idea of the<br />
<br />
Hans Lehrach: After I joined the Max<br />
Planck Institute in 1994, I got involved in the<br />
Human Genome Project. It was clear that<br />
<br />
<br />
<br />
extremely important component of the medicine<br />
of the future. By 2000, we had started<br />
-<br />
<br />
Why?<br />
Hans Lehrach: Medicine is dangerous.<br />
A virtual patient is easier to revive than<br />
a real one. The average success rate of the<br />
28%,<br />
which means 72% of the patients who get<br />
treated at a very high cost – EUR30,000<br />
per treatment schedule – are actually more<br />
<br />
<br />
otherwise. We need computers to help<br />
<br />
Denis Hochstrasser is Director of the Department of Genetics and Laboratory Medicine<br />
at Geneva University Hospital, Switzerland’s largest acute-care facility. He was a co-founder<br />
<br />
Geneva Bioinformatics SA and Eclosion SA.<br />
complex effects of drugs. Denis always<br />
says …<br />
Denis Hochstrasser: … that most people<br />
would never get on an airplane that had<br />
<br />
In 2000, in a landmark study, the US National<br />
Institute of Medicine estimated that medical<br />
44,000 and 98,000<br />
US hospitals each year.<br />
A follow-up study in 2006 reported that medication<br />
errors in particular injure 1.5 million<br />
people each year, at a cost of USD 3.5<br />
<br />
Why has it taken so long to get to this point?<br />
Hans Lehrach: We previously were<br />
<br />
patient and every tumor. We didn’t have<br />
<br />
-<br />
<br />
But we were missing the detailed characterization<br />
of the patient. Now that we have<br />
<br />
<br />
What specifically could a model tell you?<br />
Denis Hochstrasser: Take a patient<br />
with leukemia. By comparing the patient’s<br />
healthy genome with that of one of the<br />
cancer cells, the model might suggest de-<br />
<br />
through treatment. And a model of the<br />
patient’s liver could indicate which drugs<br />
<br />
<br />
Do you really need a computer model to do<br />
that? Can’t you just rely on experience?<br />
Denis Hochstrasser: <br />
<br />
two or three things, not a thousand.<br />
We get swamped. Computers don’t. And<br />
today, we are inundated with information.<br />
In the old days, a physician would slap<br />
an X-ray up against the window to read it.<br />
Today, a typical scan produces many slices<br />
that are hard for a human to analyze<br />
<br />
looking. I still see patients, and doing<br />
hospital rounds involves consulting thousands<br />
of PDF<br />
<br />
<br />
Hans Lehrach: <br />
-<br />
<br />
that interact and do what you expect them<br />
to do in reality. If you were modeling the<br />
<br />
you would assume that sometimes they<br />
speed up or crash. For the virtual patient,
GLOBAL INVESTOR 2.12 — 21<br />
Photos: Thomas Eugster | Cédric Widmer<br />
we model physiological interactions and<br />
<br />
mental<br />
components of the organism.<br />
What will the virtual patient look like?<br />
Denis Hochstrasser: There are<br />
<br />
USA, uses personal health<br />
information to visualize three-dimensional,<br />
interactive anatomical models of individuals<br />
that run on the iPad or iPhone. Nhumi,<br />
a spin-off of IBMware<br />
plug-ins for displaying virtual human<br />
<br />
physical exercise and having your avatar<br />
<br />
your medical history and genomic makeup.<br />
The virtual patient is actually part of<br />
a larger project called ITFoM (Information<br />
Tech nology Future of Medicine) that is<br />
competing for funding from the European<br />
<br />
<br />
Hans Lehrach: In Europe, we spend<br />
around 11% of GDP on medical treatment.<br />
<br />
of aging societies. Moreover, people<br />
<br />
at the same time they stopped working<br />
under Bismarck. And as we are finding out,<br />
longer living does not necessarily translate<br />
into healthier living. We have a very strong<br />
economic incentive to try and change<br />
the healthcare system.<br />
It’s going to take an enormous amount<br />
of computing power, isn’t it?<br />
Hans Lehrach:<br />
<br />
of a weather report for 500 million Europeans.<br />
We know that, for every patient coming<br />
<br />
tion<br />
of the capacity of a nuclear reactor.<br />
It comes down to how much extra information<br />
and computing power will save you<br />
how much on the medical side.<br />
What do the skeptics say?<br />
Denis Hochstrasser: They say, with<br />
some reason, that the greatest advance in<br />
modern medicine was hand washing. Losing<br />
<br />
would cutting down on alcohol and giving up<br />
smoking. Not ITFoM. But the two are not<br />
mutually exclusive. People do not see themselves<br />
as they are. With a medical avatar that<br />
evolves as a person gets older, they might.<br />
Hans Lehrach: We are currently<br />
<br />
per year, generating many more data than<br />
Hans Lehrach <br />
<br />
<br />
<br />
we did in the entire ten years of the genome<br />
project. In my view, that information<br />
<br />
than the 28% we have in clinical practice.<br />
<br />
cine<br />
now. It’s clear that our models initially<br />
<br />
<br />
<br />
expect from ITFoM?<br />
Hans Lehrach:<br />
tualize drug development. For example,<br />
pharma companies could take drugs<br />
that have failed in clinical trials and get<br />
<br />
patients that actually respond to them.<br />
That would not just save costs and reduce<br />
risks. It would also save time. Look, a drug<br />
patent lasts 20 years. If you can cut the<br />
time to development, which typically is 19<br />
years, to 6 using this type of virtualization,<br />
<br />
<br />
<br />
What does ITFoM mean for ordinary<br />
humans?<br />
Hans Lehrach: If you give people a<br />
computer model of themselves that allows<br />
them to test what will happen if they don’t<br />
jog regularly and watch their diet, that’s<br />
relevant to them. Empowering people to<br />
have more control over themselves is a positive<br />
development and potentially more<br />
far-reaching than making classical medicine<br />
more efficient.<br />
<br />
example of you doing rounds at the hospital,<br />
<br />
Denis Hochstrasser: Instead of me waiting<br />
for the computer to download PDF files,<br />
it shows me an image of the patient and<br />
-<br />
<br />
a toe infection. I go to each of these alerts,<br />
<br />
<br />
the proper therapies with confidence<br />
<br />
edge<br />
and all the knowledge we have<br />
-<br />
<br />
<br />
<br />
<br />
Sounds useful.<br />
Denis Hochstrasser:
GLOBAL INVESTOR 2.12 — 22<br />
Misunderstanding<br />
“Chronic diseases can’t<br />
be prevented”<br />
Effective public<br />
health policy is key<br />
to preventing<br />
chronic diseases.<br />
For example, many<br />
countries have<br />
introduced laws<br />
and regulations<br />
aimed at controlling<br />
tobacco use by<br />
taxing productions,<br />
limiting sales to<br />
minors and re -<br />
st ricting smoking in<br />
public spaces.<br />
Photos: Stockbyte | Getty Images, Christian Schmidt | Corbis, Pia Tryde | Getty Images
GLOBAL INVESTOR 2.12 — 23<br />
How do you get<br />
people moving?<br />
Change their<br />
environment. In<br />
2011, as part of an<br />
effort to combat<br />
obesity, the Los<br />
Angeles County<br />
Department of<br />
Public Health<br />
released a “Model<br />
Design Manual for<br />
Living Streets”<br />
and invited every<br />
city to use it.<br />
Reality<br />
According to the World Health Organization, 60%<br />
of all deaths are due to chronic diseases, including<br />
heart disease and diabetes. Their causes, or risk<br />
factors, are known. Some risk factors, like age and<br />
heredity, cannot be changed. But others, such as<br />
unhealthy diet, lack of exercise and tobacco use,<br />
can be. In fact, WHO reckons that eliminating<br />
these ” risk factors could prevent 80%<br />
of premature heart disease, strokes and type 2<br />
diabetes, and 40% of cancers.
GLOBAL INVESTOR 2.12 — 24<br />
Genome sequencing<br />
The genomic doctor is in<br />
The Human Genome Project’s success in classifying the<br />
three billion “letters” comprising the human genome sequence<br />
is one of the most impressive efforts ever in biomedicine.<br />
Although a person’s genome can now be easily and relatively<br />
inexpensively sequenced, the ability to interpret it has just<br />
begun. Still, initial findings are already making an impact on<br />
medical care.<br />
Giselle Weiss, freelance writer<br />
Eric D. Green, genomics researcher, has worked at the National Human Genome Research<br />
<br />
he received Ph.D. and M.D. degrees from Washington University in Missouri, where he<br />
was appointed in 1992 as an Assistant Professor of Pathology, Genetics and Internal Medicine.<br />
Giselle Weiss: The Human Genome Project –<br />
the massive international push to map<br />
the genetic makeup of humans – concluded<br />
in 2003. In hindsight, what was most<br />
significant about it?<br />
Eric Green: Two things. The obvious one<br />
is to have produced the chemical blueprint<br />
for the incredibly complicated system that is<br />
the human body. That included developing a<br />
catalog of the genes that make the proteins<br />
that carry out everything we do, and also<br />
providing fundamental information about the<br />
code that gives out biological instructions in<br />
other ways. That’s foundational. It’s forever.<br />
It’s for all of humanity and it’s key.<br />
And the less obvious one?<br />
Eric Green: The Human Genome Project<br />
changed the culture of biomedical research.<br />
It did it in several ways, but most important<br />
is that it created a much greater willingness<br />
to share data and make it widely available<br />
as fast as possible. It also revealed the<br />
value of large teams of scientists working<br />
together, rather than individually, in the pursuit<br />
of audacious goals. These things continue<br />
to have huge consequences for science<br />
today.<br />
What originally drove the project?<br />
Eric Green: In the late 1980s, when all<br />
this was just starting, the number of diseases<br />
for which the specific genetic cause<br />
was known numbered just a few dozen.<br />
Yet we knew that there were thousands of<br />
genetic diseases. The rationale for the<br />
Human Genome Project was to open up<br />
the genetic equivalent of a black box.<br />
We wanted to get our hands on the information<br />
we needed to figure out the changes<br />
that cause devastating rare genetic diseases<br />
like Huntington’s disease and that predispose<br />
people to more common diseases like<br />
hypertension and cardiovascular disease.<br />
What are some of the earliest fruits<br />
that genomics will deliver clinically?<br />
Eric Green: I would lead with its effects<br />
on cancer. Because what’s happening with<br />
cancer is truly game-changing.<br />
In what way?<br />
Eric Green: Cancer is basically a disease<br />
of the genome. It involves cells that have<br />
had major genomic changes, aberrations<br />
that cause the cells to grow out of control.<br />
The tools that we have for sequencing<br />
genomes now allow us to look at the genome<br />
of any cancer and actually see what<br />
derangements it contains. Those derangements<br />
tell us why a cancer cell is a cancer<br />
cell, why it behaves the way it behaves,<br />
but more important, how it is broken.<br />
Photo: Steffen Thalemann
GLOBAL INVESTOR 2.12 — 25<br />
“The tools that we have for sequencing<br />
genomes now allow us to look at the<br />
genome of any cancer and actually see<br />
what derangements it contains.”<br />
Which enables you to do what?<br />
Eric Green: Everybody has known for<br />
some time that cancer is not one disease.<br />
People with the same apparent type of<br />
cancer can have very different outcomes.<br />
If you look at those cancers under a microscope,<br />
they look identical. But when you<br />
look at their genomes, they can look completely<br />
different. That information makes<br />
it possible, say, to predict a good outcome<br />
versus a bad one.<br />
So we cannot yet say we have<br />
better therapies?<br />
Eric Green: In most cases, no, but at<br />
least we have better ways of predicting<br />
outcomes. Worldwide, there are dozens of<br />
different cancer sequencing projects where<br />
many tumors of a particular type of cancer<br />
are being collected, sequenced and catalogued.<br />
We think that in the next few years,<br />
these efforts will change the face of<br />
cancer diagnostics for some cancers, and<br />
(fingers crossed!) maybe also provide better<br />
insights for how to treat cancer.<br />
It’s not just disease outcomes that are<br />
different. People respond differently<br />
to drugs too.<br />
Eric Green: How people respond to<br />
medication is also largely genetic. It has to<br />
do with how we metabolize drugs and with<br />
other things about how the drugs are acting.<br />
And we’re learning how to predict that in<br />
advance. There is the whole field of “pharmacogenomics”<br />
that basically uses information<br />
about an individual’s genome to determine<br />
which medication they should get.<br />
Pharmacogenomics is already standard care<br />
for certain medications involved in the<br />
treatment of AIDS, asthma and some types<br />
of cardiovascular disease.<br />
The cost of genome sequencing<br />
has fallen dramatically. Why?<br />
Eric Green: When the Human Genome<br />
Project ended in April of 2003, our institute<br />
published a paper describing a vision for<br />
the future of genomics and calling for the<br />
development of revolutionary new technologies<br />
for sequencing DNA. In fact, we asked,<br />
wouldn’t it be incredible if we could come<br />
up with a technology that would allow us to<br />
sequence a human genome for a thousand<br />
dollars?<br />
You had just sequenced the first<br />
human genome for a billion dollars!<br />
Eric Green: Which is why setting a goal<br />
of sequencing a human genome for a<br />
thousand dollars was, frankly, nothing short<br />
of audacious. But we knew the cost had<br />
to come down. We gave out millions of dollars<br />
to all sorts of scientists, hoping that they’d<br />
take risks and come up with some crazy new<br />
ideas. The private sector saw this as a huge<br />
opportunity as well, and poured in lots of<br />
money. Good ideas emerged, they worked,<br />
and what cost a billion dollars only ten years<br />
ago is now down to just a few thousand.<br />
What was the most surprising<br />
finding about the human genome?<br />
Eric Green: How few genes we have!<br />
For a long time, we figured that, because<br />
we are so complex and smart, the human<br />
genome would have many more genes than<br />
simpler organisms like fruit flies and worms.<br />
But in fact, we have around 20,000 genes<br />
(a few thousand more than a fruit fly<br />
and roughly the same number as a mouse).<br />
The other thing that’s been surprising is<br />
that the majority of the functional parts of<br />
our genome are not genes at all and do<br />
not directly code for protein.<br />
What do they do?<br />
Eric Green: We are still learning about<br />
those other functional parts. We know that<br />
many of them act like dimmer switchers,<br />
determining when and where and how<br />
much a given gene gets turned on, how<br />
much protein gets made and so forth. And<br />
that’s where we probably get most of our<br />
biological complexity.<br />
Earlier you mentioned that, aside from<br />
being able to predict response to this or that<br />
drug or treatment, one day, hopefully,<br />
we might even be able to make better drugs<br />
based on genomic information. What<br />
do we have to know to get to that point?<br />
Eric Green: I think it’s unrealistic to think<br />
about designing drugs just for us based<br />
on our own unique genomic makeup. That’s<br />
just not going to happen.<br />
What will happen?<br />
Eric Green: Genes act in complicated<br />
networks of pathways where A affects B and<br />
B affects C and C leads to D and so forth.<br />
And through genomics – the name we give<br />
to the discipline that studies the genome –<br />
we are learning about what pathways are<br />
altered in a given disease. And that immediately<br />
gives insight about what existing<br />
drugs or what newly developed drugs might<br />
be useful for compensating for that alteration<br />
in that pathway. So knowing which pathway<br />
is altered can actually be more important<br />
for developing therapies than just knowing<br />
what individual gene is broken.<br />
What has been the greatest<br />
disappointment of the genome?<br />
Eric Green: If there is a “disappointment,”<br />
it is that we are recognizing just<br />
how complicated the human genome is. It<br />
has been a bit of a reality check. Because<br />
it is not simply understanding the genes:<br />
my grandchildren, and probably my<br />
great-grandchildren, will still be interpreting<br />
and reinterpreting the human genome<br />
sequence. But it also means that the field<br />
of genomics is going to be a hot one for
GLOBAL INVESTOR 2.12 — 26<br />
The heart<br />
factory<br />
Providing high-quality medical care at an affordable cost is not just a challenge for rich countries.<br />
In poor countries, the nominal cost of hospital treatment may be lower, but poverty puts it<br />
well beyond the means of the vast majority of people. Indian heart surgeon and entrepreneur<br />
Dr. Devi Shetty thinks that the solution lies in economies of scale.<br />
Bernard Imhasly, journalist | Ryan Lobo, photographer
GLOBAL INVESTOR 2.12 — 27<br />
Dr. Devi Shetty is a successful entrepreneur and healthcare innovator,<br />
yet not too busy to do procedures in the OR, or to meet with patients.<br />
Narayana Hrudayalaya provides 10% of all the heart operations in India.<br />
As a young cardiologist in Kolkata, Dr. Devi Shetty treated Mother<br />
Teresa. When he later moved to the state of Karnataka, in South<br />
India, his father-in-law, a successful construction magnate, donated<br />
money for a hospital. Its name – Narayana Hrudayalaya (“God’s compassionate<br />
home”) – encapsulates Dr. Shetty’s vision: no person,<br />
however poor, should be denied first-class treatment merely because<br />
he or she cannot afford an operation. Today “NH,” in Bangalore, is a<br />
franchise that includes hospitals in five other cities, making it the<br />
largest provider of cardiac care in India. Close to 40% of operations<br />
are performed on poor patients. NH’s low break-even costs (around<br />
2,000 dollars) make it possible to apply surpluses from wealthier patients<br />
to cover the costs of those who cannot pay. And because NH<br />
does so many operations, quality is always improving.<br />
Success has not dimmed Dr. Shetty’s devotion to medicine. He<br />
still operates frequently and meets with patients. He wears blue scrubs<br />
even in his office, a plastic cap tied around his head. On a day in<br />
October he sits close to an elderly woman and explains her scans to<br />
her, while a visiting journalist and a representative from McKinsey wait<br />
their turn in another corner of the office.<br />
“Respect.” Dr. Shetty uses the word twice in the space of a few<br />
minutes after his patient – poor, barefoot and haggard-looking – has<br />
left. “You have to respect the poor. They come to us after their heart<br />
ailment has reached an advanced stage and their suffering has<br />
become acute.” Rarely do they have insurance. Seven years ago,<br />
Dr. Shetty launched an insurance scheme that now provides coverage<br />
for over one million families in Karnataka at the cost of ten rupees per<br />
person per month, or two dollars a year. Dr. Shetty uses the word<br />
again: “You have to treat money with respect.”<br />
Compassion and money are written in Dr. Shetty’s DNA. He was<br />
born to a large family in India’s South Canara region, on the western<br />
seaboard. His father died early of severe diabetes, leaving the nine<br />
Shetty children in dire economic straits. But the Shettys hail from ><br />
continued page 31
GLOBAL INVESTOR 2.12 — 28<br />
“How much money can you throw<br />
at the immensity of our social<br />
problems? It will run out very soon.”<br />
To help support Dr. Shetty’s low-cost healthcare coverage model, which gives millions of India’s<br />
poor access to top-quality medical care, short nursing courses are given to patients’ family members<br />
so that they can assist the skeleton staff in delivering post-operative nursing care.
GLOBAL INVESTOR 2.12 — 29
GLOBAL INVESTOR 2.12 — 30
GLOBAL INVESTOR 2.12 — 31<br />
A patient recovers after surgery at one of Dr. Shetty’s hospitals. Despite handling 37 operations a day,<br />
the NH franchise is still far from meeting demand. The group will expand to 14 hospitals by next year.<br />
a business community that understands both the power of money as<br />
a force for doing good and the reality of the bottom line. “Charity is<br />
not scalable,” Dr. Shetty told the Indian daily “Economic Times” after<br />
it recently voted him Entrepreneur of the Year.<br />
Asked what that means, Dr. Shetty replies, “How much money can<br />
you throw at the immensity of our social problems? It will run out very<br />
soon.” Consequently, over time Dr. Shetty has recalibrated his business<br />
model. Now, his is tightly focused on scaling up. “2.5 million Indians<br />
need a heart operation,” he says. “Even with 37 operations a day, we<br />
merely scratch the surface of the problem. We need to expand.” A year<br />
from now, there will be 14 hospitals, all committed to the same goals.<br />
They will replicate the model of Health City, a complex that has sprung<br />
up just behind the original NH in Bangalore, offering a variety of medical<br />
specialties to the poor at low cost through economies of scale.<br />
“We perform 10% of all the heart operations in India,” says Viren<br />
Shetty, Dr. Shetty’s eldest son and an administrator for NH. “Thus,<br />
we can pool resources like blood banks and lab testing. It also gives<br />
us bargaining power. We can buy consumables like sutures as well<br />
as expensive MRI (magnetic resonance imaging) machines at very<br />
competitive rates.”<br />
Another of Dr. Shetty’s healthcare innovations is social: his hospital<br />
in Mysore provides facilities for family members to stay with<br />
patients and support the skeleton staff in delivering post-operative<br />
nursing care. They are given a short nursing course. Even patients<br />
get involved so they can become their own nurse once they are home<br />
again. “We hope to make this a model for India,” says Dr. Shetty, “and<br />
elsewhere as well.” Indeed, his high-quality, low-cost model has attracted<br />
interest far beyond his homeland.<br />
Viren Shetty pulls out his iPhone and points to a text message that<br />
has just come in. It shows the previous day’s income and expenditure<br />
for one of the NH hospitals, as well as the operating cash flow figures<br />
derived from it. Each of the NH hospitals is treated as a profit center<br />
and must generate an outline balance sheet – every day. Dr. Shetty<br />
explains: “A balance sheet every month is like a postmortem report.<br />
But a daily summary is a diagnosis. It helps us to get healthy hospital
GLOBAL INVESTOR 2.12 — 32<br />
Mobile phones and telemedicine<br />
eHealth for all<br />
The developing world has adopted mobile telephony at astonishing<br />
rates, with population and geographic coverage nearing 90%,<br />
even in Africa. The technology is proving an invaluable tool<br />
for sharing health information and gathering data from remote<br />
and underserved regions. But “eHealth” solutions are only as<br />
good as the institutions that support them.<br />
Giselle Weiss, freelance writer<br />
Listen to this article on Global Investor’s Knowledge Platform:<br />
www.credit-suisse.com/globalinvestor<br />
S. Yunkap Kwankam, CEO, Global eHealth Consultants and Executive Director, International<br />
Society for Telemedicine and eHealth, Geneva. Born in Cameroon, he earned his PhD in<br />
electrical engineering from North eastern University. He worked in the USA before becoming<br />
Professor and Director at the Center for Health Technology at the University of Yaoundé.<br />
He was Coordinator of eHealth at the WHO in Geneva for four years.<br />
Giselle Weiss: Information and communications<br />
technology (ICT) has pretty much<br />
transformed the world as we know it. But it<br />
has not transformed healthcare. Why?<br />
S. Yunkap Kwankam: It actually has<br />
transformed healthcare. Perhaps not to the<br />
extent that it has transformed other aspects<br />
of life. In the day-to-day, you cannot go<br />
anywhere without running into IT-enabled<br />
systems. Whereas in health, as a patient, it<br />
is not very obvious to you what ICT systems<br />
are behind the services you’re receiving.<br />
But health workers see the transformations<br />
that have occurred in the health system<br />
thanks to ICT. In fact, we say that ICT is the<br />
third pillar of the health industry.<br />
What are the first two?<br />
S. Yunkap Kwankam: Chemistry, which<br />
in the 19th century launched what would<br />
become the pharmaceuticals industry, and<br />
physics, which in the last century gave<br />
us imaging systems and equipment. ICT is<br />
the foundation of the knowledge-based<br />
health systems of the 21st century. It really<br />
has had a profound impact.<br />
You talk about mobile phones as an<br />
enabling technology for healthcare<br />
in the developing world.<br />
S. Yunkap Kwankam: Close to 5.9 billion<br />
of the world’s people have access to a<br />
cell phone. In Africa, both population and<br />
geographic coverage reach around 90%.<br />
It’s the technology of choice.<br />
For what?<br />
S. Yunkap Kwankam: Patients reaching<br />
health workers, or health workers communicating<br />
among themselves, for one. Just<br />
the communication aspect is an area of<br />
significant impact. Roads and other forms<br />
of infrastructure are so poor that communication<br />
assumes even greater importance.<br />
Can you give me a specific example?<br />
S. Yunkap Kwankam: One of the<br />
applications that is being used currently is<br />
rapid SMS. It allows you to send and<br />
receive data between a cell phone and a<br />
computerized database. For example, in<br />
Bonsaaso, in the Amansie-West District of<br />
Ghana, the Millennium Villages Project<br />
uses a rapid SMS application called Child-<br />
Count+. Mothers enter and send data<br />
relating to their children’s health to project<br />
staff, who record and manage it. This site<br />
also has a telemedicine consultation center<br />
to deliver health services beyond the<br />
physical reach of the healthcare provider.<br />
How does that work?<br />
S. Yunkap Kwankam: In this case,<br />
community health workers in the Bonsaaso<br />
Photo: Cédric Widmer
GLOBAL INVESTOR 2.12 — 33<br />
cluster of villages go around the community<br />
and attend to patients. If they encounter a<br />
problem that they are unable to solve, they<br />
call a nurse or a midwife, or eventually a<br />
doctor for advice about what to do.<br />
How do mothers find out<br />
about these things?<br />
S. Yunkap Kwankam: With SMS you can<br />
broadcast a message to every subscriber<br />
on your network. For example, the MAMA<br />
project (Mobile Alliance for Maternal<br />
Action) provides free health messages to<br />
new and expectant mothers around the<br />
world. Mothers register for the service by<br />
indicating the expected due date or the<br />
birthday of their infant.<br />
But communication is just one<br />
of theadvantages you mentioned.<br />
S. Yunkap Kwankam: Yes, the other is<br />
capturing and analyzing good data to make<br />
informed decisions. An example of that is<br />
SMS for Life, which was trialed in Tanzania<br />
using text messages and electronic<br />
mapping technology to solve a problem<br />
of stockouts of antimalarial drugs.<br />
Before that, central planners did not<br />
know what medicines were available<br />
in what centers.<br />
Cell phones for health!<br />
S. Yunkap Kwankam: Yes and no. The<br />
World Health Organization (WHO) Commission<br />
on Social Determinants of Health<br />
has pointed out clearly that you cannot just<br />
focus on improving the health system.<br />
If you look at what produces health, it is<br />
water and sanitation, food and nutrition,<br />
housing and education. In actual fact, you<br />
have to fix entire economies. You have to<br />
fix governance. You have to fix agriculture.<br />
You have to fix communications.<br />
The major problem faced in many<br />
developing countries used to be that<br />
of communicable diseases.<br />
S. Yunkap Kwankam: That was then.<br />
Now, as life expectancy increases, chronic<br />
diseases are beginning to make up a<br />
greater share of the disease burden. Moreover,<br />
there are huge shortages of health<br />
workers. A WHO report published in 2006<br />
listed 53 countries worldwide where the<br />
number of doctors, midwives, nurses and<br />
pharmacists, per capita, was insufficient<br />
to provide basic services. Thirty-three of<br />
those countries were in sub-Saharan Africa.<br />
Which implies what, in terms of ICT?<br />
S. Yunkap Kwankam: We have to<br />
explore what ICT can do for these other<br />
pathways to good health. We have to shift<br />
the emphasis from ICT for health to ICT<br />
“We have to shift the emphasis from ICT<br />
for health to ICT for development because<br />
many of the challenges that these countries<br />
face are really problems in development,<br />
and not just health alone.”<br />
for development because many of the<br />
challenges that these countries face are<br />
really problems in development and not just<br />
health alone. Another compelling reason<br />
for the shift is that many of the decisions<br />
about investing in infrastructure for ICT in a<br />
country are out of the purview of a health<br />
minister. But health considerations need to<br />
be part of the thinking when that infrastructure<br />
is being put in place.<br />
In the West, we take infrastructure<br />
for granted.<br />
S. Yunkap Kwankam: When I talk about<br />
telemedicine, I always cite the example<br />
of Medgate, out of Basel. Medgate is very<br />
successful. The service currently handles<br />
around four thousand or five thousand<br />
patients a day: people call in either by<br />
phone or the Internet. Statistics show that<br />
half of the people who call in get the<br />
problems resolved. And that’s terrific! But<br />
behind the simple technology of using<br />
a cell phone to call a doctor in the Medgate<br />
center lies a lot of infrastructure, including<br />
payer systems (i.e. insurance schemes),<br />
electronic prescribing and a stable supply<br />
of electricity. In an African country, there<br />
is no guarantee. The infrastructure adds a<br />
layer of complexity to the problem.<br />
Setting aside for a moment the broader<br />
issue of development, what are<br />
some of the limitations of ICT itself?<br />
S. Yunkap Kwankam: One of the biggest<br />
limitations that the technology faces<br />
has to do with legal and regulatory issues.<br />
When you carry out an intervention that<br />
spans several jurisdictions – or countries –<br />
knowing which laws to apply and who has<br />
responsibility can be quite murky. The<br />
regulatory environment has not kept pace<br />
with the advances in technology. Digital<br />
signatures are a case in point. In the end,<br />
you need a paper signature to validate<br />
the electronics. It’s a real bottleneck. So<br />
is interoperability of systems. Cyber abuse<br />
is another obvious problem.<br />
You have constructed a list of six eHealth<br />
“grand challenges” (see box). Could<br />
you share one or two of them with us?<br />
S. Yunkap Kwankam: One is what I call<br />
going to scale. In other words, ICT interventions<br />
have to be commensurate with the<br />
size of the problem. Another is to anticipate<br />
where the health system is going, and use<br />
technology to stay ahead of the game.<br />
The power of ICT is staggering if you think<br />
of it in terms of people, processes and<br />
technology. Leveraging that power can do<br />
<br />
Six eHealth<br />
grand challenges<br />
1. Creating a “knowledge commons” for<br />
eHealth, a widely available repository<br />
of information on eHealth that is global<br />
in scope.<br />
2. Scaling up eHealth interventions,<br />
based on evidence, to a size<br />
commensurate with the magnitude of<br />
the problems to be addressed.<br />
3. Creating integrated eHealth systems<br />
to resolve the perennial issues of siloed<br />
systems and lack of interoperability.<br />
4. Transforming health workers into<br />
ePracti tioners and building individual<br />
and institutional capacity to use<br />
eHealth tools and services.<br />
5. Developing information and<br />
communications technology (ICT) for<br />
health by viewing health as a production<br />
function, and investigating where<br />
ICT can support it.<br />
6. Building ICT for the health system<br />
of the future by anticipating future<br />
needs, thereby reducing the time lag<br />
<br />
intervention to seeing the impact.<br />
Source: S. Y. Kwankam, “Bulletin of the World Health<br />
Organization,” vol. 90, 2012, pp. 395–397.
I/8<br />
II/13<br />
IV/40<br />
V/47<br />
Beyond pills III<br />
Getting things right<br />
Anyone who has ever forgotten something at the grocery store<br />
because they left their shopping list at home can understand<br />
the simple brilliance in making a list. But when Harvard surgeon<br />
Atul Gawande suggested making a surgical checklist to his<br />
colleagues, some 20% balked. Gawande persisted and codified the<br />
benefits of doing so in his bestseller “The Checklist Manifesto:<br />
How to Get Things Right” (2009). Independent studies of the<br />
effect of surgical checklists show that they can reduce mortality<br />
rates by one-third – if everything on the list is followed.<br />
Atul Gawande<br />
Photo: Alyson Aliano, Redux, Redux, laif
GLOBAL INVESTOR 2.12 — 35<br />
Paying for healthcare<br />
Japanese<br />
lessons<br />
Just who pays for healthcare, and how much, depends on varying views of what<br />
constitutes “appropriate” treatment, the amount of income that providers<br />
expect to earn and patients’ expectations of healthcare. Consequently, healthcare<br />
expenditures have a built-in (albeit unsustainable) mechanism for escalation.<br />
Japan’s single-payment system provides one approach to containing costs.<br />
Naoki Ikegami, health economist, Keio University, Tokyo<br />
There are several key issues in paying for healthcare. The first is: what<br />
constitutes “appropriate treatment”? Patients tend to think that this<br />
is a black-and-white issue. In other words, for any given condition,<br />
there is only one course of treatment that is the most appropriate.<br />
However, most healthcare falls in a gray area referred to by physicians<br />
as “it depends” (on the patient). What they do not say is that it also<br />
depends on the resources available, their personal inclinations based<br />
on where they have been trained and how they are paid. If their income<br />
is linked to their activities, the white “appropriate” area will expand.<br />
On the other hand, if income and activities are not linked, this area<br />
will contract, and there will be waiting lists of patients who have<br />
conditions not needing immediate treatment.<br />
The second issue is that healthcare expenditures for the patient,<br />
insurance plans and government represent income for physicians and<br />
hospitals. Personnel costs in high-income countries are typically about<br />
half of the total. So when healthcare providers talk of “costs,” they are<br />
really talking about their income. Should physicians earn about the<br />
same as the average worker or ten times more? How much should they<br />
earn relative to nurses? In many middle-income countries, and among<br />
some specialties in the USA, physicians earn ten times more than<br />
nurses. Limiting delivery to specialists and limiting entry only to those<br />
well trained are said to be prerequisites for maintaining quality. ><br />
Sometimes<br />
appropriate<br />
Physician<br />
Always inappropriate<br />
Always appropriate<br />
Always inappropriate<br />
Patient<br />
01_What is “appropriate” treatment ?<br />
Patients frequently see appropriate healthcare interventions as a<br />
black-and-white issue, whereas for physicians, the question of whether<br />
or not to treat falls into a gray area. Source: N. Ikegami
GLOBAL INVESTOR 2.12 — 36<br />
care<br />
will become a greater<br />
issue in Japan despite<br />
the fact that its health<br />
expenditures have been<br />
relatively well contained.”<br />
For example, in France, only neurologists can diagnose Alzheimer’s<br />
disease and start prescribing targeted drugs. But these restrictions<br />
also reward physicians in some specialties with high incomes.<br />
The third issue is the patient’s expectations of healthcare. The<br />
wonders of healthcare are widely publicized by the media. Accordingly,<br />
in a life-or-death situation, most patients are likely to grasp<br />
at straws, no matter how low the probability of recovery is, or how<br />
much it costs. Many are prepared to sell all their assets and incur<br />
heavy debt if services are not made available by the government. A<br />
low-income earner may be resigned to a low level of housing, but not<br />
to a low level of healthcare. Such being the public sentiment, it is<br />
difficult for any elected politician, except, perhaps, in the USA, to<br />
explicitly state that a patient with low income is not entitled to the<br />
same quality of healthcare as a patient with high income.<br />
No way but up<br />
02_Containing healthcare costs by means<br />
of a single-payment system<br />
Annual changes in Japan’s GDP, medical expenditures and fee schedule<br />
global revision rate, 1980 – 2010. Source: “Health Affairs,” May 2012, p. 1052<br />
%<br />
10<br />
8<br />
6<br />
4<br />
2<br />
0<br />
–2<br />
–4<br />
–6<br />
–8<br />
1980 1985 1990 1995 2000 2005 2010<br />
Gross domestic product (nominal)<br />
Fee schedule global revision rate<br />
Medical expenditures (nominal)<br />
Given that this is the nature of healthcare, it comes as no surprise that<br />
healthcare expenditures have a built-in mechanism for escalating.<br />
Based on past trends, in 2000 the US Centers for Medicare and<br />
Medicaid Services estimated that the health expenditures share of the<br />
GDP would be 38% in 2075. However, in other high-income countries,<br />
such levels of expenditures cannot be even contemplated. The basic<br />
reason is simple: government must contain total healthcare expenditures<br />
because there is a limit to which those with high income and<br />
good health are willing, or more correctly coerced, to pay for the care<br />
of those with low income and chronic illness.<br />
At a more practical level, healthcare competes with other public<br />
services in the annual budget allocation process. This is true whether<br />
health expenditures are primarily funded by taxes, as in the UK and<br />
Nordic countries, or by social insurance premiums as is the case in<br />
Germany and France. The reason it also applies to the latter is because<br />
revenue from premiums must be supplemented by taxes in order to<br />
keep labor costs at an internationally competitive level (typically, half<br />
of the premiums are paid by employers). Thus, how much could be<br />
<br />
Incidentally, making patients pay more does not have much impact<br />
because of the 80:20 rule in health expenditures. That is, 80% of the<br />
total expenditures are spent by 20% of the patients with high costs.<br />
portion<br />
paid by patients with high costs must be increased. However,<br />
forcing them to pay such high amounts would negate the rationale for<br />
governments to finance healthcare.<br />
How, then, can health expenditures be contained? The problem of<br />
containment is not related to how the healthcare system is structured.<br />
For example, Japan’s system has many features that are similar to that<br />
of the USA: over 3,000 health insurance plans, and a delivery system<br />
that is dominated by the private sector. Nor does the government<br />
impose a tight global budget. Providers are basically free to invest and<br />
deliver any service that they think is needed by their patients. As a<br />
consequence, waiting lists are not a social issue. But, as a share of<br />
the GDP, Japan’s health expenditures are only 8.5%, compared with<br />
16.4% in the USA. This difference can mainly be explained by the fact<br />
that virtually all prices and conditions for billing are set by the Japanese<br />
government (see Figure 2).<br />
A single fee schedule key to controlling costs<br />
In the biennial revision of prices, the prime minister first decides on a<br />
so-called global price revision rate based on his evaluation of the<br />
political and economic situation. Next, the price of each item is revised
GLOBAL INVESTOR 2.12 — 37<br />
Photo: Benjamin Parks<br />
individually by the health ministry based on policy priorities, negotiations<br />
and surveys. For example, in the 2002 revision, the global rate<br />
was reduced by 2%, but the price of taking an MRI (magnetic resonance<br />
image) of the head was reduced by 30% because the number<br />
of MRI examinations had increased “inappropriately.” On the other hand,<br />
in the 2008 revision, prices in emergency care and obstetrics were<br />
increased because the government had to respond to media reports<br />
of deficiencies in these areas. Drug prices are generally revised more<br />
objectively, based primarily on the result of a market price survey. The<br />
selling price is typically lower than the price set by the government<br />
because of competition among distributors. Once the actual market<br />
prices have been determined, the revised price is set so that it is only<br />
2% higher than its volume-weighted average market price. These<br />
revisions have resulted in a downward spiral of drug prices.<br />
Revisions of the global rate are reflected in the annual growth<br />
rate of health expenditures. However, expenditures also increase by<br />
non-price factors: advances in technology and demographic factors,<br />
which together have led to annual increase rates of 2% to 3%. An<br />
example of the former is the transfer in “appropriate” imaging equipment<br />
from a simple X-ray to a CAT (computer-assisted tomography)<br />
scan to an MRI, and now to a PET (positron emission tomography)<br />
scan. Until the 1980s, demographic factors used to consist mainly of<br />
increases in population, but since then, the most influential factor<br />
has been the aging of society. The percentage of the population aged<br />
65 and over has been increasing at the rate of 1% every two years;<br />
the current proportion is 23%, making Japan the oldest country in<br />
the world. Incidentally, nominal increases in GDP are more important<br />
than real (GDP-deflated) increases because the price of health services<br />
tends to be determined relatively independently of the consumer<br />
price index.<br />
When the economy was growing at the rate of 5%, as it did in the<br />
1980s, the ratio of health expenditures to GDP remained constant<br />
because small increases in the global rate and increases due to nonprice<br />
factors could be absorbed. But since the 1990s, the economy<br />
has stagnated, and as a result, the share of health expenditures has<br />
increased. Meanwhile, the national debt, already twice GDP, continues<br />
to increase. How to finance healthcare will become a greater issue<br />
in Japan despite the fact that its health expenditures have been relatively<br />
well contained. In order to meet this challenge, the government<br />
must negotiate with provider organizations so that the services delivered<br />
and the income levels of healthcare professionals can be made<br />
<br />
<br />
Naoki Ikegami is Professor and Chair of<br />
the Health Policy and Management<br />
Department at Keio University School<br />
of Medicine. He has served as a consultant<br />
to the World Health Organization and<br />
the World Bank. He is currently President<br />
of the Japan Health Economics Association<br />
and is past President of the Japan Society<br />
for <strong>Healthcare</strong> Administration. He is<br />
also a Senior Fellow at the University of<br />
Pennsylvania’s Wharton School.
GLOBAL INVESTOR 2.12 — 38<br />
Low-cost medical technology<br />
Do-it-yourself<br />
tools for health<br />
The lack of appropriate medical technologies in resource-poor<br />
areas has spurred device “hackers” to create construction<br />
sets for medical equipment that healthcare users and providers<br />
can assemble themselves. This doesn’t just solve an immediate<br />
equipment problem. It also encourages invention.<br />
José Gómez-Márquez, medical device designer, Little Devices Lab, Massachusetts Institute of Technology<br />
Listen to this article on Global Investor’s Knowledge Platform:<br />
www.credit-suisse.com/globalinvestor<br />
Modular, color-coded parts made of rugged materials allow medical professionals in resource-poor settings to design<br />
medical technologies that may be better suited to the particular challenges of their environment than high-tech devices.<br />
In a Nicaraguan coffee village, Mauro Perez,<br />
father of a one-year-old, learned to make a<br />
nebulizer that would later nurse his daughter<br />
out of a month-long pneumonia crisis. His<br />
shopping list at the hardware store? Tubing,<br />
an aerosolizing cup, a bicycle pump and a<br />
paper filter. Two hours away, nurse Danelia<br />
Urbina uses a do-it-yourself (DIY) stethoscope<br />
attachment made out of overhead<br />
transparency slides to transmit heart sounds.<br />
In Ethiopia, a team of engineers at Addis<br />
Ababa Institute of Technology took discarded<br />
television components and used them to<br />
create a device that measures oxygen in the<br />
blood called a pulse oximeter. This is the world<br />
of DIY medical technology, an emerging field<br />
in low-fi medical equipment in emerging<br />
markets. Motivated by enabling technologies,<br />
a growing number of users are venturing<br />
beyond their role as patients and healthcare<br />
providers to become inventors. For healthcare<br />
in the developing world, invention still<br />
matters.<br />
An article in the August 2012 issue of the<br />
prestigious medical journal “Lancet” reports<br />
that 80% of all medical devices in developing<br />
countries are provided through donations.<br />
Only about 40% of these actually function.<br />
Many are dead on arrival, having been designed<br />
to operate not in rugged environments,<br />
but instead in hospitals in OECD countries<br />
with ample replacement parts, reliable training<br />
and solid infrastructure. In clinics found<br />
in resource-poor settings, these particular<br />
design criteria are irrelevant.<br />
Our lab at the Massachusetts Institute of<br />
Technology designs devices aimed at emerging<br />
markets using a strategy centered on<br />
user empowerment. Our partners in developing<br />
countries are our co-designers, not just<br />
our customers. Rather than wait for the health<br />
system to mature and catch up with modern<br />
medical technology, we push the technology<br />
to adapt to the system as it stands. When<br />
your patients are at stake, you don’t wait for<br />
the highway to be built – you design the medical<br />
device equivalent of a Land Rover.<br />
In this setting, selecting the right design<br />
criteria is key. It involves much more than<br />
equipping a device with solar panels, and waterproofing<br />
and ruggedizing it. For example,<br />
in low-income countries, scarcity drives the<br />
reuse of devices that should not be reused,<br />
like needle syringes. Here, a smart design<br />
specification is to force disposability of the<br />
instrument (auto-disable syringes).Wireless<br />
data transfer enables performance tracking<br />
and alerting of remotely located surgical<br />
sterilizers, medicine coolers and neonatal in-<br />
Photos: Jeff Harris | David Carmack
GLOBAL INVESTOR 2.12 — 39<br />
cubators. Finally, taking advantage of locally<br />
available parts to produce medical equipment<br />
helps to lower production costs and increase<br />
fabrication know-how, which in turn promotes<br />
adoption of technology.<br />
Design strategies<br />
Once the design criteria have been established,<br />
the key is to figure out how to achieve<br />
them. This process of invention and design<br />
can be kick-started using a series of strategies.<br />
For instance, hybridization is a mash-up<br />
of two very different objects that transforms<br />
them into more than the sum of their parts.<br />
Cell phone microscopes, such as those from<br />
MIT’s Camera Culture group, are a good illustration.<br />
At its most basic, the device is a<br />
lens on a camera connected to a walkietalkie.<br />
The long-run potential of such combinations<br />
is a network of devices armed with<br />
image recognition algorithms that can share<br />
information and predict disease: the end result<br />
is an early warning system you can store<br />
in your pocket.<br />
Another strategy is the combination of<br />
vintage technologies with modern applications.<br />
What we call “improvisation hunting”<br />
seeks inspiration in the daily efforts of people<br />
in developing country settings to cobble<br />
together their own medical solutions. One<br />
example is the origami asthma spacer designed<br />
at Stanford University in California<br />
after researchers noticed that physicians in<br />
Latin America used cut-up Coca-Cola bottles<br />
to serve as inhaler spacers. This is a 50-cent<br />
innovation for a disease that affects 40 million<br />
Latin American patients.<br />
Once we have decided on a design strategy,<br />
we begin the process of rapid prototyping<br />
through trials in the field. A month in front<br />
of potential users in real-world settings is<br />
worth more than a year in a lab full of whitecoated<br />
engineers. This approach produced<br />
technologies such as our Solarclave (a solarpowered<br />
device for sterilizing surgical tools),<br />
microfluidic (lab-on-a-chip) technologies for<br />
diagnosing diseases and environmental conditions,<br />
low-cost prosthetics, and a DIY device<br />
toolkit.<br />
Arbitraging the supply chain<br />
In the developing world, being locally available<br />
need not mean bamboo and “natural” materials.<br />
Toys have emerged as part of a vast global<br />
supply chain that offers opportunities for<br />
dual-use engineering. For example, the ratchet<br />
mechanism in a toy helicopter can double<br />
as trigger mechanism for a dry powder inhaler.<br />
Electronics inside a talking doll can be<br />
José Gómez-Márquez was born and raised in Honduras. He directs the Little Devices Lab<br />
at the Massachusetts Institute of Technology (MIT) and teaches D-Lab: Health, a course on<br />
designing global health technologies. He is a three-time MIT IDEAS Competition winner,<br />
including two Lemelson Awards for International Technology. In 2009, he was selected for<br />
“Technology Review” magazine’s list of young innovators under 35 (T35), which also named<br />
him Humanitarian of the Year.<br />
repurposed to prototype an alarm for an intensive<br />
care unit. The tight manufacturing<br />
tolerances of Lego bricks lend themselves to<br />
precision diagnostics for modular lab-on-achip<br />
applications.<br />
Helping to foster ingenuity<br />
Construction sets like those of our MEDIKit<br />
Project, now part of LDTC+Labs LLC, consist<br />
of building blocks – traditional devices transformed<br />
into modular, color-coded parts – that<br />
empower doctors and nurses in developing<br />
countries to invent their own medical technologies.<br />
The kits span six areas of medical<br />
technology: drug delivery, paper diagnostics,<br />
microfluidics, prosthetics, vital signs and surgical<br />
instrumentation. The kits show users<br />
how the devices work, enabling them to rearrange<br />
the different component parts to create<br />
a variety of unique devices.<br />
Medical technologies for developing countries<br />
must be affordable and contextually<br />
appropriate. With the right combination of<br />
research and development investment, they<br />
can be profitable. The combination of growing<br />
government health expenses, persistent lack<br />
of infrastructure, and rapid advances in enabling<br />
technologies (rapid prototyping, mobile<br />
telephony, programmable electronics) is<br />
opening the door for many devices to have<br />
an impact on health systems. There is a<br />
strong case for investing in the research and<br />
development and commercialization stages<br />
of the sector. There is also growing evidence<br />
that these technologies can trickle up to developed<br />
world markets. Adherio, a technology<br />
we created for ensuring that Pakistani<br />
patients with tuberculosis follow through on<br />
their medication, is now being transferred to<br />
the USA, where lack of patient compliance<br />
costs an estimated USD 290 billion a year.<br />
Distributed (i.e. non-centralized) and “pop-up”<br />
labs in developing world hospitals are becoming<br />
an attractive option for expensive institutional<br />
research and development centers<br />
with high overheads.<br />
The future is bright for DIY medical technology<br />
thanks to enabling technologies,<br />
global networks of everyday innovators and<br />
the promise of helping scores of patients who<br />
<br />
<br />
With special thanks to Anna Young of Little Devices Lab<br />
for analysis and research.
I/8<br />
II/13<br />
III/34<br />
V/47<br />
Beyond pills IV<br />
Mobile mental health<br />
The World Health Organization estimates that some 450 million<br />
people worldwide suffer from mental disorders. Moreover,<br />
social stigma and a lack of psychiatrists hinder treatment. In India,<br />
where there is one licensed psychiatrist for every 400,000 people<br />
(the USA has 58 per 400,000), a roving RV is changing that.<br />
The Chennai-based Schizophrenia Research Foundation (SCARF),<br />
which despite its name covers a range of mental health issues,<br />
now reaches 800 villages, connecting rural patients with generally<br />
urban-based psychiatrists via teleconferencing. Demand is high,<br />
leaving each patient with only 20 minutes for a consult.<br />
Schizophrenia Research Foundation<br />
Photo: Schizophrenia Research Foundation, India
GLOBAL INVESTOR 2.12 — 41<br />
Mental health in India<br />
The neglected<br />
cousin<br />
In India, longer lifetimes, growing rural-urban migration, smaller families and rapid economic<br />
change all represent stress factors that pose an increasing challenge to mental health with<br />
consequences that are both personal and far-reaching. Although policy makers agree on a broad<br />
strategy for addressing the problem, previous inattention to it and a lack of human resources<br />
mean that implementation will not be easy.<br />
Ajay Mahal, health economist, Monash University, Australia, and Victoria Fan, research fellow, Center for Global Development, Washington, D. C.<br />
According to a recent study in the medical journal “Lancet,” nearly<br />
187,000 suicides occur in India annually. Suicides, particularly among<br />
rural Indian households, have attracted much attention as an unintended<br />
side effect of the Indian growth story and are often linked to loss of<br />
livelihood and indebtedness. Less well appreciated is the broader<br />
public health challenge of mental illness, an important underlying risk<br />
factor for such deaths. In fact, excessive attention to mortality may<br />
have detracted attention from morbidity – departures from a state of<br />
good health and normal functioning – where the impact of mental<br />
illness is mostly felt. Available data suggest that impaired cognitive<br />
7.5% and<br />
11% of Indians aged 60 years and over. But dementia isn’t the only<br />
problem in this sector of the population. In some parts of the country<br />
depression among the elderly has reached rates in excess of 50%.<br />
An illness burden second only to cardiovascular disease<br />
Among younger adults, various types of “mood disorders,” including<br />
depression, are common. Rapid increases in alcohol sales and household-level<br />
studies showing high frequency of alcohol consumption on<br />
a daily basis suggest that alcohol dependence is on the rise. Children<br />
Research found that nearly 13% of children below 15 years of age<br />
suffer from mental retardation and behavioral problems. Recent efforts<br />
to collect nationally representative information on the state of mental<br />
health in India’s population have been marred by controversy, but<br />
there is little disagreement among mental health experts about its<br />
growing significance. The World Health Organization estimates that<br />
mental health conditions account for around 10% of India’s burden of<br />
ill health and death, second only to cardiovascular disease among<br />
non-communicable conditions.<br />
Health outcomes are not the only casualty of mental illness. Research<br />
for developed countries also points to serious adverse economic<br />
consequences. One recent study for Europe concluded that<br />
mental health problems would cost every European household roughly<br />
USD 2,800 in costs of treatment and productivity losses. Similar<br />
data are unavailable for India, but three factors suggest that economic<br />
outcomes of mental illness in India could be comparatively<br />
worse. First, either many people with mental illness belong to the<br />
most economically productive age-groups, or these disorders occur<br />
among children, with implications for the future quality of the labor<br />
force. Second, stigma attached to mental illness and smaller family<br />
are also at risk. One 1990s study of the Indian Council for Medical sizes increase the risk that the emotional and economic burden of >
GLOBAL INVESTOR 2.12 — 42<br />
“Existing third-party public<br />
and private insurance<br />
plans in India do not cover<br />
expenses for care related<br />
to mental health, so<br />
an estimated 79 % of the<br />
total cost is paid for out<br />
of pocket.”<br />
Victoria Fan joined the Center for Global<br />
Development after completing her doctorate<br />
at the Harvard School of Public Health,<br />
where she wrote her dissertation on health<br />
systems in India. She has worked at<br />
various non-governmental organizations in<br />
Asia and has served as a consultant<br />
for the World Bank and the World Health<br />
Organization.<br />
any caregiving will be borne mostly by a small number of close family<br />
members. Finally, data from a nationally representative household<br />
survey point to a significant financial burden on households, because<br />
only about 45% of hospital stays and 20% of outpatient visits related<br />
to psychiatric care occur in subsidized public sector health services;<br />
the remainder occur in the private sector. We have found that existing<br />
third-party public and private insurance plans in India do not cover<br />
expenses for care related to mental health, so an estimated 79% of<br />
the total cost is paid for out of pocket. There are additional implications<br />
for economic inequality. Poorer households are at greater risk<br />
for mental illness relative to their economically better-off counterparts,<br />
but multiple studies also show that mental illness is associated with<br />
inferior economic outcomes.<br />
Rapid change entails factors that undermine mental health<br />
Mental illnesses will remain a prominent feature of India’s public health<br />
landscape for the foreseeable future. The number of people aged<br />
6093 million<br />
at present to more than 323 million by 2050. Consequently, Alzheimer’s<br />
disease and other forms of dementia are likely to be observed with<br />
greater frequency. Women in India are also beginning to live longer<br />
than men, just as in the more advanced economies. This trend has<br />
implications for their mental health in old age, as single elderly<br />
people tend to experience much higher rates of depression according<br />
to multiple studies in India and elsewhere. Moreover, physical ill<br />
health – particularly conditions such as heart disease, diabetes and<br />
cancer – and depression tend to occur together. South Asian populations<br />
are known to be at especially high risk for cardiovascular disease<br />
and diabetes, so their mental health will remain an object of concern.<br />
Broader social forces are also at play. Growing rural-urban migration,<br />
smaller families, rapid economic change and a lack of social safety<br />
nets will expose large numbers of Indian households to a variety of<br />
factors that undermine mental health, including loneliness, economic<br />
uncertainty and a lack of support systems in caring for the elderly<br />
and young children. And India faces long-standing problems of poor<br />
physical maternal health that, in turn, is linked to inferior child health<br />
outcomes and greater risks of mental retardation. While not all mental<br />
disorders are treatable, a number of treatments and prevention
GLOBAL INVESTOR 2.12 — 43<br />
Photos: Steffen Thalemann | Anthony Jeong<br />
practices have been assessed to be effective in low-income settings<br />
such as India’s. These include counseling and psychotherapy (e.g.,<br />
for depression and other behavioral disorders) and pharmaceutical<br />
interventions (e.g., for schizophrenia, dementia and depression).<br />
Evidence, mostly from developed countries, suggests that various<br />
forms of community and family support along with provision of drugs<br />
can also address behavioral problems associated with mental illness<br />
among children. Better population and healthcare provider awareness<br />
of mental illness at the primary care level can help identify cases and<br />
allow timely interventions. Provision of coordinated health services<br />
for mental health and physical health at the primary care stage is<br />
also desirable given the co-occurrence of both sets of conditions in<br />
many patients. Mental health experts largely agree that managing<br />
patients at the level of the community, including ambulatory care<br />
received at primary health centers, is likely to yield high returns in<br />
terms of health gains relative to cost.<br />
Resource constraints complicate the way forward<br />
India lags in the effective implementation of many of these interventions,<br />
in part because mental health has remained a neglected cousin<br />
of the government’s health policy agenda. Available estimates suggest<br />
that mental health attracts no more than 2% of India’s government<br />
health expenditures, considerably less than the health burden it imposes<br />
on the population. Despite the National Mental Health Programme<br />
and a commitment to a community-based mental healthcare<br />
model that dates to 1982, even this limited spending favored hospitalbased<br />
spending. No doubt hospital-based specialized care can contribute<br />
to treating patients with severe mental health conditions. However,<br />
there is a cost to doing so. Hospital-based care isolates patients<br />
and does little to end the stigma attached to mental health. It is also<br />
diffi cult to access, since hospitals tend to be located in urban areas.<br />
A natural solution lies in better integrating mental services at the<br />
primary care level with hospital services, so that only the severe<br />
cases are referred to hospitals. A limited supply of psychiatrists and<br />
healthcare providers with training in mental health, however, adds<br />
an additional layer of difficulty when considering options to expand<br />
community-based mental health services to rural areas. This shortage<br />
is compounded by a reticence on the part of Indian governments to<br />
engage with a rapidly growing private sector, which also happens to<br />
dominate the provision of ambulatory care services as well as “alternative”<br />
or “traditional” therapies. Additional inertia results from healthcare<br />
provision being primarily a responsibility of provincial governments<br />
that tend to be resource-constrained.<br />
India’s policy makers are beginning to recognize the challenge<br />
posed by mental health. For close to two decades, the central government<br />
has left the centerpiece of its community-based approach – the<br />
District Mental Health Programme – essentially adrift. India’s central<br />
Ministry of Health is planning to support a renewed exercise to scale<br />
up this program to cover all districts in the country over the next five<br />
years. A mental health policy group, comprising many experts from<br />
outside the government, is helping to shape this new exercise, after<br />
close consultation with civil society organizations and local and provincial<br />
governments. However, implementation remains a challenge.<br />
And the new strategy offers little in the way of addressing major human<br />
resource shortages, or engaging the private sector. By way of comparison,<br />
one could argue that there is a paradox in which wealthy countries<br />
face a large burden of mental illness despite their wealth. Consequently,<br />
even in such materially developed countries, new approaches and ideas<br />
<br />
<br />
Ajay Mahal is the Finkel Chair of Global Health<br />
at Monash University. He received his<br />
M.A. from the University of Delhi (1986) and<br />
his Ph.D. from Columbia University (1995).<br />
Until August 2010, he was Associate<br />
Professor at the Harvard School of Public<br />
Health and before that a senior researcher at<br />
the National Council of Applied Economic<br />
Research in New Delhi.
GLOBAL INVESTOR 2.12 — 44<br />
Social entrepreneurship<br />
Getting<br />
back to work<br />
Returning to work after a long illness can be difficult. In particular,<br />
people with a history of mental illness face workplace hurdles<br />
that may seem insurmountable. Deborah Wan Lai Yau describes<br />
how helping these patients to reintegrate through social<br />
entrepreneurship benefits everyone involved.<br />
Deborah Wan Lai Yau, President, World Federation of Mental Health<br />
Listen to this article on Global Investor’s Knowledge Platform:<br />
www.credit-suisse.com/globalinvestor<br />
Deborah Wan Lai Yau has devoted her career as a social worker to assisting patients who are<br />
<br />
social entrepreneurship concept to Hong Kong as early as 1994. In 2008, she was recognized<br />
with the Outstanding Women Entrepreneurs Award, conferred by the Hong Kong Women<br />
Professionals and Entrepreneurs Association.<br />
I have always had enormous respect for<br />
patients recovering from mental illness for<br />
their ability and willingness to return to work.<br />
Given training opportunities, they perform as<br />
well as people without mental illness, and<br />
are also able to maintain a healthy lifestyle<br />
and mentally stable outlook. Our society often<br />
fails to appreciate that people recovering from<br />
mental illness represent social capital, and<br />
thus tends to view them negatively. At the<br />
time, I was CEO of a Hong Kong non-profit<br />
organization focusing on mental health – the<br />
New Life Psychiatric Rehabilitation Association.<br />
Consequently, I devoted myself to<br />
giving a new lease on life to people who have<br />
suffered episodes of mental illness.<br />
In the 1980s, my team and I concentrated<br />
on developing community psychiatric rehabilitation<br />
services, mainly residential care and<br />
vocational rehabilitation, such as sheltered<br />
workshops. Once these services were well<br />
developed, we realized that many residents<br />
and sheltered workers were not able to take<br />
the next step owing to a lack of confidence<br />
in facing the public, and stress related to<br />
adjusting once again to work.<br />
So, I organized a pilot project to set up a<br />
daily market stall in the community for selling<br />
Photo: Grischa Rüschendorf
GLOBAL INVESTOR 2.12 — 45<br />
“My ultimate aim is to encourage<br />
<br />
<br />
small businesses.”<br />
fresh vegetables. These came from a sheltered<br />
farm workshop that was founded in<br />
1994 for about 160 workers with psychiatric<br />
disabilities. We called it “simulated business”<br />
because it was intended to resemble as<br />
closely as possible a real work situation in<br />
which persons with psychiatric disabilities<br />
could interact with regular customers. We<br />
provided a job coach to help the former patients<br />
to be salespeople. The project was well<br />
received by both neighboring stall owners and<br />
customers. This successful effort led to us<br />
setting up convenience stores in hospitals<br />
from 1997. Three years earlier, we secured a<br />
public cleaning contract in parks and the city’s<br />
indoor games hall and in 1999 also the first<br />
licensed restaurant in the games hall. These<br />
projects won numerous awards for best practices<br />
in reintegration. After witnessing the<br />
impressive results of providing training and<br />
employment opportunities for persons with<br />
psychiatric disabilities in these projects, the<br />
government subsequently set up a fund to<br />
provide seed money to social enterprises.<br />
Balancing objectives the key to success<br />
Social enterprise has two main objectives.<br />
One, obviously, is social, and in my own experience,<br />
it consists in training and employment<br />
opportunities for persons with a history<br />
of mental illness. The other objective is to<br />
sustain a business with profits generated and<br />
to use the surplus to create other new social<br />
enterprises or to expand the existing one. The<br />
directors of this limited company do not share<br />
in the profits. Balancing social and business<br />
objectives is more difficult than running a<br />
business with profit sharing, as the two objectives<br />
are entirely different. Sometimes, the<br />
managers focused more on the social objective,<br />
and the enterprise failed to produce<br />
sufficient income (neither the directors nor<br />
the managers were former patients). It is<br />
the combination of both types of expertise –<br />
understanding the social objective and marketing<br />
savvy – that makes it a success. I was<br />
fortunate to have recruited a team of marketing<br />
staff to assist me in running the businesses,<br />
and a team of dedicated social workers<br />
to deliver on the social objective.<br />
In response to the growing awareness of<br />
healthy food after the 2003 SARS (severe<br />
acute respiratory syndrome) epidemic, in 2004<br />
I began to set up healthy-living specialty<br />
organic shops that sold organic veggies (again<br />
from the sheltered organic farm) in the railway<br />
concourse, followed by four more shops later.<br />
As of 2009, we had established a total of<br />
20 social enterprises, providing more than<br />
230 jobs for persons with psychiatric disabi l-<br />
ities, the disadvantaged and the able-bodied,<br />
and simultaneously creating over 450 training<br />
positions with a total turnover of over HKD 25<br />
million that yielded a small profit.<br />
A model that others are following<br />
Responding to the success of social enterprises<br />
in Hong Kong, our mainland China<br />
counterparts made numerous study visits to<br />
Hong Kong to learn about this approach to<br />
the disadvantaged. I am glad to say that<br />
Guangzhou City also set up a farm to provide<br />
both employment and training opportunities<br />
to persons with psychiatric disabilities, and<br />
a mental hospital in Xinjiang set up a similar<br />
farm. Ever since my retirement in 2009, I have<br />
traveled widely to different provinces and<br />
cities of mainland China to deliver talks on my<br />
previous working experience, and I encourage<br />
colleagues to come to Hong Kong to see how<br />
we do things. This sort of exchange serves<br />
to show visitors that people with a history of<br />
mental illness can recover and hold down a<br />
job like anyone else.<br />
Naturally, social enterprises run by nonprofit<br />
welfare organizations are limited; they<br />
are “models” of best practice. My ultimate aim<br />
is to encourage business firms to partner<br />
with non-profit organizations to set up actual<br />
small businesses that employ persons with<br />
disabilities or to set up social enterprises<br />
within their own firms. Such an endeavor<br />
represents more than just corporate social<br />
responsibility; it is a commitment to plough<br />
back profits into a company to create employment<br />
positions for the disadvantaged. That<br />
is my vision, and I am optimistic that others<br />
will share it. I am now seeing more young<br />
entrepreneurs enter the field of social enterprise<br />
with financial support from social ventures<br />
providing seed money.<br />
Social entrepreneurship has to be nurtured,<br />
and optimally during young people’s<br />
years at university. I have seen social entrepreneurship<br />
being taken up by various business<br />
schools at Hong Kong’s universities, but<br />
the field still has a long way to go. Since the<br />
enactment of the United Nations Convention<br />
on the Rights of Persons with Disabilities in<br />
2008, the interest of governments in this<br />
area has been growing. Every effort should<br />
be made to provide jobs through social enterprises.<br />
I do hope that more young social<br />
entrepreneurs will decide to go into business
GLOBAL INVESTOR 2.12 — 46<br />
The future of healthcare<br />
Watson<br />
turns medic<br />
More than a year after it won the quiz show, Jeopardy!, IBM’s supercomputer is learning how to help<br />
doctors diagnose patients by mining and analyzing the growing volume of healthcare data. The<br />
ultimate goal is to deliver better care, lower healthcare costs and to provide a tool suited to exploring<br />
medical grand challenges.<br />
Jim Giles, writer<br />
The IBM Watson computer that won the quiz show, Jeopardy!, could<br />
help doctors – already stressed by the vast amounts of information<br />
they are expected to consume – to better diagnose patients. Researchers<br />
estimate that the volume of medical knowledge doubles every five<br />
years. This requires doctors, who are already pressed for time, to<br />
spend their evenings and weekends reading medical journals, not to<br />
mention the continuing education classes they are required to attend.<br />
But despite their massive investment of time and energy, physicians<br />
have no guarantee that a patient will present the same symptoms and<br />
complications as described in the latest scholarly works and research.<br />
No wonder that even the smartest physicians struggle to apply constantly<br />
evolving medical knowledge to treat their patients.<br />
Watson could help physicians with their data and information<br />
dilemma by using content and predictive analytics to “uncover” hidden<br />
diagnostic possibilities lurking in the reams of data. The computer can<br />
cross-reference patient data and look for most successful treatments,<br />
taking drug interactions and medical history into account.<br />
Teaching a new dog newer tricks<br />
It’s the same skill set that made Watson successful in Jeopardy! – the<br />
ability to consider vast volumes of information. In the medical arena,<br />
this includes textbooks, medical research and data about patient<br />
populations and individuals. The computer is expected to be especially<br />
useful in oncology, where physicians struggle to keep up with<br />
the massive amounts of genomic and molecular data for each cancer<br />
type. It potentially has applications elsewhere, such as in the insurance<br />
arena, where the computer could be fed insurance guidelines<br />
and patient history to determine whether a request follows company<br />
policy. WellPoint, a large US insurer, is testing the system for these<br />
purposes.<br />
To date, the technology is most advanced in the cancer field, where<br />
IBM is working with several US hospitals. Still, the technology is a<br />
work in progress. IBM Watson scored 50% on its first test – the Doctor’s<br />
Dilemma, a competition for trainee doctors. To improve the technology,<br />
Watson is now absorbing tens of thousands of records from<br />
Memorial Sloan-Kettering Cancer Center in New York. Physicians<br />
could use the computer to analyze information about similar patients<br />
and conditions, from recent scientific publications or from years of<br />
patient records. The computer might suggest the next piece of information<br />
needed to resolve a difficult diagnostic ambiguity in a case of<br />
atypical symptoms and findings.<br />
IBM Watson will never take the place of a physician, and not every<br />
healthcare organization needs a powerful solution like this. But most<br />
every organization has vast amounts of clinical and business data<br />
going untapped. This data, when analyzed and used effectively, could<br />
be mined for insight, enabling physicians and hospital administrators<br />
to make sense of the enormous amount of data being created from<br />
an increasingly instrumented healthcare world. The emergence of<br />
new technology to mine and analyze the growing volume of structured<br />
and unstructured healthcare data will help deliver better care, lower<br />
healthcare costs, and help us explore the great medical challenges
I/8<br />
II/13<br />
III/34<br />
IV/40<br />
Beyond pills V<br />
The virtual physician’s assistant<br />
The information explosion has made it very difficult for a variety of<br />
professionals to keep up, and physicians in particular struggle<br />
to maintain their knowledge of the ever-growing field of biomedical<br />
science. Increasingly, some are turning to high-powered computers<br />
for help. Now doctors are experimenting with IBM’s Watson –<br />
the supercomputer that defeated human contestants in the quiz<br />
show “Jeopardy!” last year. The idea is to harness Watson’s computational<br />
powers so it can serve as a virtual physician’s assistant.<br />
Researchers say this may be especially useful in the cancer<br />
<br />
tial growth in data.<br />
Watson<br />
Photo: IBM
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