Asia is getting wealthier, older—and potentially sicker, as rates of non-communicable disease rise across Southeast Asia. Yet governments aren’t investing enough in public health care, threatening to open up a massive funding gap.
“Asia has more diabetes, cancer and cardiovascular patients than anywhere else in the world,” Abrar Mir, co-founder and managing partner of Singapore-based health care private equity firm Quadria Capital, tells Fortune.
ASEAN governments aren’t keeping pace on public health spending, due to competing priorities like economic development and infrastructure. Southeast Asian governments allocate less than 4% of their GDP to healthcare, compared to 9% in OECD countries.
Mir argues that shortfall open up space for private capital, adding that 70% of hospital beds in Asia are funded by the private sector. “In this region, private capital is essential in building out social infrastructure,” he says. “If you don’t have it, many people would go without access to basic health care.”
Quadria, which has about $4.2 billion in assets under management, invests in health companies across Southeast Asia, including Indonesia’s Hermina Hospitals, Malaysia-based Straits Orthopaedics, and Vietnam’s mother-and-baby retailer Con Cung. The firm also partners with sovereign wealth funds, development finance institutions and impact investors, though Mir declined to cite specific names.
Southeast Asia, however, is further back on the value chain, and attracts global firms due to its low production costs, rather than an edge in health care innovation. “Over time, we think this will translate to innovation as it has in China, but in Southeast Asia, it isn’t there yet,” Mir says.
Regardless, Mir concludes that Asia’s health sector holds immense potential. “Today’s health care firms must have a clear strategy in Asia, or they will no longer be global leaders,” he says.
“We can do it better and cheaper.”
